The Early Show

Making Resolution To Save Money Stick

December 21, 2007 / 8:36 AM EST / CBS

The Early Show asked several people on the streets of New York what their No. 1 New Year's resolution will be and they all said the same thing. No -- not losing weight -- it was -- saving money.

That didn't surprise the show's money maven, Ray Martin.

In Part Two of his three-part series offering year-end financial advice, he pointed out Friday that people may already be realizing they may have spent a tad too much during the holidays. They're facing high winter heating bills. More significantly, the credit crunch and housing downturn are hitting people where it hurts - right in the pocketbook.

More than half of Americans, 52 percent, say they're not saving enough, according to a brand new study by the Consumer Federation of America. Seventeen percent say they can't afford to save at all, while 35 percent say they're saving, but not enough to meet short- and long-term financial needs.

The New York Times recently reported that, in 1985, Americans were saving $11 for every $100 they brought home; now the savings rate is around zero, and household debt is at a record high.

When The Early Show asked people how they intended to follow through on their resolution to save money in '08, most said things such as, "I'll spend less time at the mall."

Trying to cut back on spending is a common response, and it's certainly a good idea.

And Martin pointed to something he truly believes almost everyone needs to do: "Most taxpayers get a refund, with the average last year at about $2,450. Instead of giving too much money to the IRS and feeling the pinch at home, now, more than ever, is the best time to file a new Form W-4 and claim more withholding allowances, which reduces the taxes withheld from your paycheck. If you typically get a refund each year, it would just be a little smaller, but your take-home amount would be bigger.

The real key, Martin continued, is to have that "extra" money each week funneled directly into a savings or retirement account. You won't miss the money on a week-to-week basis, since your take-home pay will stay the same. Even if you say you're going to save that refund check, the temptation to spend at least a portion of it is great, and Martin's plan eliminates that temptation altogether.

What if you actually need to spend that extra money each week? Or if you don't receive a tax refund regularly? What ELSE can you do to save money?

Beyond making major changes -- getting rid of a car, moving to a smaller home, getting a second job, etc. -- this is a case of small changes making a big impact, Martin stresses.

Some of the most "painless" ways to save -- which don't involve "sacrificing" things such as your morning coffee, etc -- are spelled out in this column filed by Martin:

Spend Less and Save Thousand$

Where does your money go? Do you often find that there is month left over at the end of the money?

Money-gobbling culprits such as high gas prices and home heating bills, and increased costs for health insurance, may seem to leave little opportunity for saving money.

But take a second look at where your money goes and you might be surprised to find that your budget has more money-losing leaks than the federal government.

It doesn't have to be that way. You can spend less, save more, and still live well. Without much pain and effort, you can make some simple moves and 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 their weekly dining out down to once a month, they can save $150 a month, or more. This can 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 but, for those who do, it is a stupid thing to do. Not only does it ruin your health, it also wastes a lot of money. It can cost more than $120 a month to support a pack-a-day habit, not to mention that people who smoke have much higher health-related costs. If you smoke, put stopping smoking at the top of your New Years resolutions list if you want to save some real money each year.

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 $1,000. Log on to www.bankrate.com for a list of no-fee and low-rate credit cards.

Use your bank's on-line bill payment service -- it writes and sends your checks according to your online 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 $1000. Buy these policies through the same insurance company. This can save you 10-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 at night and on 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, DSL or other high-speed Internet connections. Pay for the high-speed link by dropping premium cable programming channels if you use cable 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 stop being 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 them again before taking them 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 it in advance and plan the return on a weekend. This can save over 60 percent on the cost of roundtrip 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 chump change.

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