How To Live On Less

By Linsey Knerl | January 27, 2011 AAA

According to the U.S. Census Bureau, the number of Americans living in poverty rose to a record number in 2009. Whether the recession pushed you into the lowest class, or just caused you to have to reevaluate your existing budget, there are less painful ways to reduce your cost of living. These strategies will require some level of sacrifice, but can help those on a reduced income get by gracefully. (The Oracle of Omaha has a net worth in the billions, but his lifestyle is not as rich as you may think. To learn more, read Warren Buffett's Frugal, So Why Aren't You?)

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Downsize Your Dwelling
Smaller homes aren't just cheaper to buy, they are also usually more affordable to maintain. Many people find that the loss of a few hundred square feet in their living space is well worth the reduction in heating and cooling bills, property taxes and furnishing costs. If you are a single dweller or don't have a growing family to plan for, the move to minimum accommodations may net significant savings.

Less home doesn't always mean more savings. Be sure that you carefully inspect any potential smaller home for traps that may cost you more down the road. Insulation, windows, heating systems, plumbing, wiring and roofing are all examples of very involved replacement projects. Hire a professional if you are unsure of the condition of any home on the market - before you buy!

Scan Your Subscriptions
A monthly audit of recurring costs can help you crack down on unnecessary expenditures. That subscription to a magazine you never read, for example, could be canceled with just a phone call and could put an extra credit card payment back into the budget. If you don't use it, enjoy it, or notice it, it can probably be cut - for good!

Since most membership fees are charged quarterly or even annually, they could go unnoticed if you don't check your bills often. Make a date every month to review bank and credit card statements to ferret out those sneaky charges that may have escaped your attention.

Lose the Latte
Many have heard of the "latte factor" by now, but the principle doesn't just apply to saving money on coffee costs. Even if you don't share the spending habits of most Americans, there are purchases you could probably cut out in order to free up some cash. Save up all your receipts for a week, and take some time to see what you are really spending money on. Whether it be golf, music downloads or library late fees, there is probably at least one area of spending you could cut back on (or abandon) with little discomfort.

Not ready to give up your caramel latte just yet? Check into giving up just one a week, or make a few at home, to put a positive change into action with just as much satisfaction. (For additional related reading, refer to Squeeze A Greenback Out Of Your Latte.)

Find More Free Fun
Long walks on the beach are widely romanticized, and yet these types of free entertainment are rarely maximized. Start jotting down a "bucket list" of life experiences you want to tackle, and separate out the ones that won't cost a thing. These are the activities you should start with first, planning one a weekend (or month) until you have them all accomplished.

If the thought of abandoning your regular hot spots and social groups get you down, exchange just one or two of your regular events with something free you can do at home. Invite your same circle of friends, or reach out to meet new people. Sites like Meetup.com are full of hobby enthusiasts who want to hear about your thoughts on topics like social media, knitting and politics. (Vacationers are faced with a major financial risk: spending too much money. Find out how to avoid it. Check out All-Inclusive Vacation Keeps Travelers On Budget.)

Don't Lose the Little Luxuries
While a bare-bones budget may help you meet your financial goals, it won't make life as enjoyable as it could be. Resist the urge to scrap all the small costs of doing things you enjoy, and don't forget to factor in some cash for celebrations like birthdays and anniversaries. It doesn't cost more than $20 every few months to indulge in a home-made steak dinner or a few matinées at your local theater. If you can accommodate it, enjoy it!

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It almost always costs more to do something alone. Splitting the price of everything from meals to movies is a great way to maximize funds and maintain relationships. Before you dismiss the idea of an occasional night out, run the idea by your frugally-minded friends. They may be able to pitch in funds for a fun evening out!

The Bottom Line
Whether you need to adjust for losing a job, or are reeling from a recent pay decrease, there are ways to make it work for you. Just remember that saving money is a lifelong strategy that will change as your lifestyle evolves. There is no one right way for everyone!

For the latest financial news, check out Water Cooler Finance: Anti-Government Protesters Rock Egypt.

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