Ask the Advisor: Money Saving Tips - Save $10k in 10 Years

Question: I earn enough money to pay my bills, but I just can't seem to have enough at the end of the month to save money. Do you have any tips for saving money?

Saving money can be difficult; but the difficulty is not always because of a shortage of money, it's most often because of a shortage of basic budgeting ideas.

There are lots of ways to save but before you start eating Ramen noodles and living in a cave, think of ways that you can easily cut back without too much sacrifice: Budgets, like diets, often fail because of goals that are too difficult to achieve.

Here are 10 Easy Ways to Save $10,000 in 10 Years:

1. Cut back on eating out: If you eat out four times per month, consider cutting it to two. This can easily save more than $40 per night out. At a rate of $42 per meal, times two per month, you will save $84 per month, which amounts to $10,080 in 10 years.


2. Cut your cable: The average American spends approximately $75 per month on cable television. Many spend up $100 on TV. By now you know the math: If you save $83.33 per month for 10 years (120 months), you will save $10,000. As an alternative to cable or satellite, most public Libraries have a wonderful variety of DVD movies and popular TV shows for you to check out--all for free.


3. Get books and magazines at the Library: If you like to read like I do, think of how much you can save by getting your reading supply from the Library. I can check out up to ten books at a time for 30 days and my Library has copies of widely read publications, such as The Wall Street Journal. If you must read a certain magazine or you don't have time to go to the library, go ahead and subscribe. Newsstand prices are up to three times higher than subscriptions.


4. Buy Pre-owned cars: Depending upon what kind of car you buy, you could easily save $10,000 immediately by simply buying used cars (excuse me, I mean "pre-owned"), instead of new.


5. Keep your car for ten years: You don't have to buy used cars to save money. If you like to buy new cars, keep it for ten years, rather than five. This can save much more than $10,000 over ten years.


6. Refinance your mortgage to a lower rate: If you lower your rate from 6.00% down to 5.00% on a $200,000 loan, you will save $124 per month. Even after as much as $4,000 in closing costs, you will save $10,880 over ten years.


7. Sell Your Junk and Stop Buying More Junk: In the past year, my wife and I have had three garage sales (netting an average of $300 each), sold most of our CDs (over $100) and sold a handful of gold jewelry that we never wear ($250). That's $1,250 of junk! I know there's more we won't need and my two young kids outgrow their clothes quickly. If I keep selling and slow down on the buying, I think I can easily save $10,000 in ten years.


8. Shop Around: For example, I shop at the lower-end grocery store for the basic food necessities and only shop at the higher-end grocery store for specialty items. This saves my family around $60 to $70 per month. We also look first at the local Goodwill store for clothing items, such as jeans, children's clothes and even business apparel. Buying gently-worn clothing saves our family an additional $50 per month, for a total shopping savings of $110 to $120 (over $13,000 in 10 years).


9. Use Coupons: Let's face it. Your well-being depends upon buying the necessities (and rewarding yourself from time-to-time with life's little pleasures). Do not buy anything until you've spent at least a few minutes looking for a deal. Forgive the plug but start right here at Savings.com.  I found great potential for a 10-year/$10k savings after just perusing around a few of my favorite categories, such as Finance and Books, Music & Video.


10. Invest Your Savings: If, for example, you invested the money you saved (in a low-cost Index fund, of course) from the previous nine savings ideas, you would be able to put away an additional $750 per month. At a decent return of 7% on your investment, you'd have $130,571 in ten years. Do it for twenty years and you'll have nearly $393,000. Do it for thirty years and you'll amass close to $1 million.

What strategies do you use to save money? Share them with me in the comments.

Kent Thune is a Certified Financial Planner™ and owner of an independent, "fee-only" investment management firm in Mount Pleasant, SC. Kent is also a freelance writer. To read more of his work or to find out how to contact Kent, please visit his blog at The Financial Philosopher. Have a question? Email AsktheAdvisor@savings.com.

_{Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment} ^{advice. Under no circumstances does this information represent a recommendation to buy or sell securities.}