----------------------------------------------------
** PENNY PINCHING **
----------------------------------------------------

If you often feel as though your money runs out before the month ends, you may need to look a little harder for ways to save a buck or two. Obviously, expenses such as increased health care costs and home heating bills are out of your control. 

But there are plenty of places you can control your cash flow, areas that you may not have realized were eating up such a large chunk of your budget. The Early Show financial advisor Ray Martin highlights a few of them: 

Food 

"One of the first places people cut when they need to manage with less money, is eating out," Martin says. According to the U.S Bureau of Labor Statistics, the average household (average = income of $44,650) spends over $2000 eating out each year That's about 4.5 percent of the family budget. You can only assume that households who earn more than this spend more. 

Martin figures the average couple spends $50 on a restaurant dinner. "If a couple cuts their weekly dining out down to once a month, they can save $150 or more," he says. "This could also be good for the waistline." 

Yearly Savings: $1800 

His advice is to bring your lunch to work as well. Even if you only spend $5 a day, that adds up to $100 a month. Keep in mind that this tactic also calls for some smart grocery shopping. For instance, don't buy pre-packaged cheese and crackers, you'll save money by buying a block of cheese and a box of crackers. 

Yearly Savings: $1200 

Finally, don't waste money buying bottled water every day. Assuming your bottle is $1.50, you could wind up spending $360 a year on this. Martin buys one bottle and then fills it up at home or the office water cooler. 

Yearly Savings: $360 

Banking 

It's key to avoid those nasty ATM fees charged when using another bank's machines. Bankrate.com estimates that consumers paid $2.27 billion in surcharges in 2002. (MarketWatch.com) 

The average bank hits non-members with a $1.50 service charge; that's on top of the charge your own bank often charges when you use an out-of-network ATM. So, each time you use an ATM that's not your own, it costs about $3. These numbers continue to increase. 

Yearly Savings: $150 

To make matters worse, one in four banks levy a fee each time a customer chooses "debit" and punches in her PIN at store checkout counters. Typically, this fee is .50; a variety of newspapers report that more banks are considering adding this charge. 

The average consumer uses a debit cards 14 times a month. At .50 a pop, that adds up to $84 a year. Always choose to use your bankcard as "charge" instead of "debit." 

Yearly Savings: $84 

Also use your bank's online bill-paying service - you direct the bank to write and mail checks to pay your bills. This saves you the cost of postage, about $6 a month, and the cost of checks, about $18 a year. 

Yearly Savings: $90 

Insurance 

"The average cost of insuring cars is expected to rise 9 percent nationally in 2003. That will follow increases of 8.5 percent this year and 6 percent in 2001, said the Insurance Information Institute, a national trade organization." (Associated Press) 

You can fight these increases in a couple of ways. Companies often offer a discount if you buy both your homeowners and auto insurance from them. Even more significantly, raise your deductible on your insurance to $500 or $1000. You can save up to 10 or 15 percent. 

Yearly Savings: $200 +++ 

Gas 

Less than 10 percent of cars on the road actually require "premium" gas but 20 percent of all gas consumed is premium. Premium gas does not improve fuel economy or boost power, so don't think you're squeezing something "extra" out of your engine when you spend more on gas. 

Thanks to so many technical advances, only high-performance vehicles (meaning high-end BMWs or Mercedes) really need high-octane gas. So read your owner's manual and only use premium gas if the manufacturer specifically calls for it. Some older cars may also need a gas upgrade. 

Yearly Savings: $200 +++ 

Heating Bills 

"Turning the thermostat down five degrees for four hours a day can save 10 percent on your heating bill," Martin says. "In the northern part of the country, that can save $150 to $300 this winter. You can do this yourself or buy a programmable thermostat to do it for you." 

Also consider wrapping your hot water heater with insulation and using lower watt light bulbs or florescent light bulbs. 

Yearly Savings: $150 

None of the above tips are groundbreaking, or totally unreasonable. That's what makes the savings seem even more incredible. Anybody can do this. Just make sure the money ends up in a savings account or other investment, Martin suggests. 

$4418.00

---------------------------------------------------------------------------------

Take a look at where you spend your money and you might be surprised to find that your budget has more money leaks than the federal government. 

It doesn't have to be that way. You can live well for less. Without much pain and effort, you can make some simple financial moves and can squeeze out a few hundred, even a few thousand dollars in savings each year.

One of the first places people cut, when they need to manage with less money, is eating out. If a couple cuts weekly dining out down to once a month, they can save $150 a month, or more. This could also be good for the waistline. 

Another savings tip in this area is to bring your lunch to work. I do it and I figure this saves me over $100 a month in cafeteria food and beverage costs.

I don't smoke so I can't comment on the addiction. But with a pack-a-day habit running $120 a month, let alone the other health related costs, I'd put this at the top of the list to cut if you want to save some real money each year. 

Where to save

Here is a list of more penny-pinching moves and their estimated monthly or annual savings. You might be surprised see how the savings can really add up:

Avoid ATM and transaction fees by using only in-network ATMs and avoiding PIN-based debit cards. Keep your bank balance above the minimum to avoid additional account fees. This can save you $150 to $250 per year in ATM and bank fees. 
Use a no annual fee credit card if you don't carry a balance. If you carry a balance each month, use a low rate card. This can save you $75 per year in fees and over $150 a year in interest charges even if your average balance is as low as $1000. See Bankrate.com for a list of available no-fee and low rate credit cards. 

Use your banks on-line bill payment service - they write and send your checks according to your on-line direction. This can save you the cost of checks and $80 to $150 in postage per year. 

Raise your deductible on your auto and homeowners insurance to $500 or $1,000. Buy these policies through the same insurance company. This can save you ten to 15 percent, or $200 to $350 a year on these costs. 

Compare costs at the gas pump and use regular grade gas. This can save $4 to $6 per fill up, or $200 to $300 per year. Also, keeping the engine tuned, your tire pressure up and your speed down can save an additional $100 a year. 

Turning the thermostat down five degrees for four hours a day can save ten percent on your heating bill. In the northern part of the country, that can save $150 to $300 this winter. You can do this yourself, our buy a programmable thermostat to do it for you. 

Wrapping your hot water heater with insulation can save an additional $50 to $100 a year. Using lower watt light bulbs can add to the savings. 

Whoever said talk is cheap never looked at a phone bill. Drop optional services such as answering services (buy a $25 answering machine instead) and don't use directory assistance. This can save you $75 to $100 per year. Also, cancel that extra cell phone, reevaluate your calling plan, or call only during nights and weekends when costs are lower - this can save you $250 to $500 a year. 

While you're at it, dropping that extra phone line can save $35 a month. You won't need it for Internet access if you upgrade to cable or DSL Internet connection. Pay for the cable internet connection by dropping premium cable programming channels and dropping your dial-up web service subscription - how much TV are you watching when you are at work anyway. 

You can save a bundle when you buy food in bulk, avoid prepackaged items such as deli meats and cheese and don't be brand loyal. Also, fill a water bottle and bring that to work instead of buying bottled water and soda. These tips can save $30 to $50 a month, or $360 to $600 a year. 

Cancel unnecessary magazine subscriptions. Instead, ask friends which magazines they subscribe to and drop the ones you both buy. Then swap magazines with each other every month. This will save you $15 to $30 per cancelled subscription per year. 

When clothes shopping, check the care instructions and try to avoid "dry clean only" items. If conditions permit, hang work clothes up at the end of the day and wear again before taking to the dry cleaners. At home, wash your clothes in cold water and only do full loads. This extra attention can reduce your cleaning and laundry costs by $20 to $50 a month. 

If you plan a trip this winter, make sure to book your trip in advance and plan the return on a weekend. This can save over 60 percent on the cost of round trip airfare. Also, if you will need to rent a car, shop around, prices can vary as much as 20 to 50 percent among the car rental companies for the same car. Also, fill the tank yourself and avoid the insurance add-ons to save even more. 

How does this penny-pinching add up? Let's see...

Assuming a family of four, in a typical house, in the northeast.... the total savings could be over $8,200 a year. Even if you don't smoke, already limit dining out and bring your lunch to work, the rest of the tips add up to $3,785 a year. That's not too shabby.

---------------------------------------------------------------------------------

Hunt, who plunged her family into massive debt over 12 years before finally getting it under control, is a proponent of what she calls 'Debt-Proof Living'. The key factor? Save 10 percent of everything you earn each month, while you're still employed. 

"When you're saving 10 percent of everything -- salaries, bonuses, birthday money -- you build a contingency plan," said Hunt. "It's specifically designed to fill in the gap when you and your income part company. A job is not forever and nowadays that's true more than ever." 

Build three months of living expenses and then aim to build six months, she said. Park it away from your other retirement and savings plans and set it up to be automatically deleted from your check so you don't miss it. Be sure and put it somewhere that offers growth, but also gives instant liquidity, such as a passbook savings account or a money market savings account. 

Another part of her debt-free living advice involves giving away 10 percent, or even 2 or 3 percent. "By doing that, people stay balanced and not so drawn to the glitz and glamour credit can give." The bonus is not only philanthropic, but there are also tax benefits of gift giving. 

Jonni McCoy, author and founder of the 8-year old site, Miserlymoms.com, suggests to her readers that no matter how tight the budget, they try to put something aside. "Even if it's $10 a week or $10 a month. You really have to do something for a rainy day or retirement." 

Start in the kitchen 

Want to cut your budget quick? Check out your food bill, say frugal experts. Restaurant and fast or instant food is a staple in the lives of many, said McCoy. "They have no clue how to shop or cook. They have to start from the very beginning." 

When she decided to stay home with her kids and live on her husband's income, she was forced to drastically cut her grocery budget and eventually sliced 60 percent off it by cooking simple meals from scratch. Her book, 'Miserly Meals' offers 200 recipes that cost less than 75 cents a serving. 

Gary Foreman, publisher/editor of The Dollar Stretcher, suggests keeping a "price book" handy when you shop, to write down the lowest prices you pay for each item you buy frequently, noting the store, the date and units. 

"Do this for a period of time and you'll quickly be able to tell when you're really getting a good price on an item or not. When you get a real deal for something you use frequently, which won't spoil, you can stock up. You can save 15 to 20 percent." 

His other favorite is freezer meals, simply doubling up whenever you cook, for example, making two lasagnas instead of one. "I find so often that families get to the end of the workday, and take everybody out to a restaurant or a drive-through." Not only is that expensive, but it's unhealthy, he said. 

Families also spend too much on specially packaged food for kids that you assemble yourself for cheaper. "For the life of me, I don't understand people buying pre-packed cheese and crackers and giving them to their kids to take to school," said Foreman. 

Baby boom babies 

The temptation for first-time parents to give junior the best is a strong desire. "A lot of women, who are now mothers, and have been in the workforce would like to stay home with their kids, but don't know how to do it," said Foreman. 

Do you really need a new stroller and all new clothes? Relatives, friends, garage sales, charity shops and secondhand stores can offer a wealth of used clothes, bassinettes and equipment, frugal experts say. 

McCoy, who was one of those mothers who decided to stay home and live on one income suggests new mothers make their own baby food by boiling meat and veggies, blending with water, pouring in ice cube trays and freezing. 

Of course, mother's milk is also cheaper than formula and she also has saved money by trying off-brands of diapers, though she notes cloth diapers didn't help much. "I found that I washed them as many times. Add in utility and dryer costs and it worked out to be almost as expensive as a disposable." 

If living on one income scares you, consider what you'd be paying in childcare and saving on dress clothes for work and other expenses, said Foreman. He and others say if you plan to be a stay-at-home parent, start living on one salary way before Junior arrives. Check out Baby on a budget at Dollar Stretcher's site. 

Shabby chic 

Decorating is an area that frugal livers have turned into an art form. Nikki Willhite, editor of the Pennypincher Ezine, said many homeowners trying to save money have managed to decorate their homes for cheap, something that has caught on in the wealthier classes. 

"It's all about finding value in things from the past that have withstood the test of time. Take things that were once in the attic or garage and display them in your living room," said Willhite. Examples of this would be wood furniture that has had four visible coats of paint on it. 

"Things that are chipped, rusting, anything that's old, solid," with some going as far as beating new furniture with chains to make it look old, she said. But it's not really about buying new furniture. 

"It's cheap things you can find at the curb that, with a little sanding or varnishing, looks good. All hand-me-downs are good. In the past you needed pristine furniture, but now slipcovers are in. You can furnish a whole room for $500." 

"You want your room to look like it evolved over time. It's kind of like a poor man's antique. It's considered really cool to pull together a house on a low budget." 

Check out these Web sites for ideas on cheap home d├ęcor: The Rental Decorating Digest and The Budget Decorator. 

Odds and ends 

Additional tips from the frugal experts: 

Half.com by EBay -- Unlike auctions, offers a fixed-price, online marketplace to buy and sell high quality, new, overstocked, remaindered and used products like books, CDs, movies, consumer electronics 
Down with the debit card -- Cheapskate's Hunt advises her readers to leave the card at home and just take cash out at the beginning of each week. "It's a proven fact you will spend between 30 percent and 50 percent more with a debit card." 
Cheap entertainment -- McCoy said that families overlook free museums, tours and a variety of other options for a day out. "It's getting people to rethink what entertainment is. You don't need the closest amusement park in order to have a fun day." And before you buy that book, check out your library and many also offer free or low-cost video or DVD rentals. 
Off the rental track - "We recommend people find a way to buy a house, even if it's something small. Rent is throwing money out the window," said McCoy. This means maybe asking a relative for help with the down payment. First-time homebuyers have an even easier route, as they're not required to put down as much of a down payment. Check out FHA home loans. 
Gift Giving -- Homemade gifts are in and not just for Christmas. How about a homemade scrapbook or homemade cookie mixes or pasta sauces? If your family went overboard this Christmas, get a system of name drawing for next year in place. 
Health insurance -- A tough one for all the frugal sites, but experts suggest if you find your family without health insurance, at least try to get catastrophic illness for the adults. For qualifying families, the Department of Health for each U.S. state offers a low-cost or free children's health program. 

Articles from CBS Television