Thinking Big, Saving Big

You're brown-bagging your lunch, but it doesn't seem like you have much extra cash in your wallet. While it's fine to pinch pennies, say personal finance consultants, to save big bucks, you have to think bigger.

You’ve given up your morning coffee-and-danish and you’re brown-bagging your lunch, but it doesn’t seem like you have a lot more cash in your wallet than you did when you weren’t pinching pennies. While it’s fine to pinch pennies, say personal finance consultants, to save big bucks, you have to think bigger.

The first place to look for savings is your car. Start by not buying a new car, which will lose almost half its value over the next three years. By letting the first buyer absorb that loss, you can pick up a three-year-old set of wheels in good condition for thousands of dollars less than you’d pay for a new one. If you’re already driving a car that’s more than three years old, hang on to it if it’s in good shape.

Loan payments on a $15,000 car you bought in 2007 are most likely north of $400 a month, which could fatten up your bank account nicely if you started to put that money away once your loan is up. Car insurance is another place to save. Upping your collision deductible can slash your insurance bill by as much as 10% to 30%.

Paying down credit card debt to save on sky-high interest charges is a no-brainer. Making the minimum payment on $10,000 worth of debt at 15% will cost you $1,500 or more a year in interest, not to mention that it will take you decades to pay it off. Some consumer gurus suggest making two payments a month instead of one, which will reduce your balance faster and lower the interest you pay on it. It’s also the equivalent of making one extra payment a year, which will help you pay down the debt in less time.