Even the mention of words like frugality and thrift send some people over the edge because, for them, those words conjure up thoughts of poverty and deprivation.

They assume that cutting costs is tantamount to diving into dumpsters to find one’s next meal. No wonder so many people prefer a life of debilitating debt to one of frugality.

USCurrency

Let me set the record straight. Please.

There is nothing undignified about spending less than you earn. That’s called living below your means, and it’s a fabulous way to live! When you spend less than you earn, you have some to save. And to give away, too. When you spend less than you earn, you are not dependent on credit to get by. It is a very good thing.

So you may be wondering how you can move from overspending to spending less, without giving up your quality of life. It starts with prioritizing everything according to how important it is to your life. Then only spend on things at the top of the list, ruthlessly cutting your spending on the things that don’t matter. Read more

Should I invest or pay off debt? That has to be at the top of the most common questions I have received over the years. And the answer is a solid—it depends! But only on one thing:

If you do not have an emergency fund saved and stashed in a safe place—and I’m talking about at least $1,000—you should save madly while you keep paying the minimums required on your burgeoning debt. Once you have an emergency fund in place, the answer to that question is clear:

Dear Mary: I have $13,000 in credit-card debt. I have designed a plan in which I would pay the amount of interest charged to me on my last statement plus $930 each month. The way I figure it, by doing this I will have this debt paid off in 15 months. I am going to have to dip into my investment account to come up with that additional amount each month, but I can do that. I could also just pay off the whole amount from my investment account (it is not a tax-advantaged retirement account), but I don’t prefer to do it that way. My investment account is at about $209,000 and I really don’t want to go under the $200,000 mark in that account. What is your suggestion? Anonymous

Dear Anon: You don’t say the interest rate you are paying on that debt, so I am going to assume it’s the current average rate of 17.55 APR. You don’t say how your funds are invested, so I will assume you are invested in the stock market (some equity stock, some bonds). Read more

Cutting expenses is the way to spend less so you have money to save. But unless you are actually putting that money into a safe place to be held for some future use, you’re not really saving at all. You’re just spending less.

Even if you cannot save a great deal of money right now, that’s okay. It’s not the amount you save that matters as much as the fact that you make saving money a regular habit.

Grab all the discounts. Many mortgage lenders and student loan companies offer incentives for their customers who set up automatic payments for their monthly payments. It’s worth knowing you’ll never be late, and if you can get even 1/4-point reduction in the interest rate over time that will really add up to be something significant. Automobile insurers give discounts to good drivers, non-smokers, good students, cars with particular safety-equipment and any number of other situations. But you have to ask. Make the call.

Set dollar limits. Okay, so this sounds curiously like “budgeting.” It is. Deciding ahead of time the amount you are willing to spend for anything is to impose important limitations on yourself.

Fee yourself. Banks and credit-card companies don’t seem to have much trouble socking us with unbelievable fees, so take a lesson from them and fee yourself. Every payday impose a self-tax equal to one-hour’s pay. Consider it the price for having a job and put it straight into your savings account. Give yourself ample warning that upon your next raise, the fee will jump to two-hours’ pay. Every time you make a withdrawal from the ATM or you write a check, charge yourself a set fee of $1 by recording the actual amount plus a buck. Deposits? A $10 fee for each deposit sounds about right. When you’ve collected $50 or $100 in fees from yourself, settle up and transfer the whole amount straight to your savings account.

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The most important thing you can do to make your personal economy strong is to have an umbrella—an emergency fund with at least enough money to pay all of your bills for three to six months. Wait. Cannot even imagine being able to save that much? No worries. Start small. Let’s say $1,000.

Weekly, save 10 percent of your paycheck. Too much? OK, start with 5 percent or even 1 percent and build up from there. Just start!

FIRST THING. This is going to be hard, but I know you can do it: Make your planned savings amount the very first bill you pay—before anything else. Once you have accumulated say $50, go to your bank or credit union and open a savings account. While you are there, set up an automatic deposit authorization into your emergency savings account. Here’s a secret: You won’t miss what you don’t see in the first place. Okay, you’ll miss it for the first few paychecks, but soon you really will not miss it.

GET RID OF NON-ESSENTIALS. Give up the little things such as cable TV, eating out, and gym membership and landline. That’s a start, you’ll know instinctively how to add to this list.

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This is a Book Reivew by Jeff Tompkins, Jr.  The opinions expressed herein are the reviewer’s own and meant only for informational purposes.

The Automatic Millionaire by David Bach

Reviewer: Jeff Tompkins, Jr.

Let’s face it, unless you’re a Marine, you’re probably not that crazy about the word “discipline.” It smacks of rules and constraints. Most of us just aren’t that keen to always do even those things that we know are good for us. Particularly in our financial lives. We know we should save more, spend less, invest smarter. We should be disciplined in these areas to achieve financial security.  So how do we get disciplined? According to the The Automatic Millionaire, by David Bach, we automate .

Bach focuses first on the idea of paying ourselves first. By this he doesn’t mean setting aside a couple of twenty dollar bills under your mattress each payday.  That would require discipline and the central theme of The Automatic Millionaire is that no one is disciplined enough to regularly save that way. Instead, Mr. Bach argues that the only way to get around our lack of discipline is to automate paying ourselves first, effectively taking our lack of discipline out of the equation.

Automating ones savings is becoming more and more prevalent in a tech-dominated world. It’s automatic, because once you set it up you don’t have to do a thing each month for it to continue putting funds into your 401k account or other savings vehicle. It’s the first money out so before you do any spending at all, you are saving. Read more

For more years than I like to admit, I’ve been collecting and disseminating timesaving and money-saving tips. Readers e-mail them to me, hand them to me on little scraps of paper and even send them in the mail. Some are hilarious, others downright weird. And the very best ones show up in this column.

I will admit that not all of my favorite tips could single-handedly turn a person’s financial situation from red to black. Or free up hours every day. Take the tip for sharpening scissors, which is right now in my personal top 10: Tear off a length of aluminum foil. Fold it in half three or four times to create multiple layers. Now cut several times through all those layers with your dull scissors. They’ll be sharp as a razor in no time at all.

My common sense told me such a tactic would make slightly dull scissors totally worthless. But I was wrong. This tip really works, and it works so well I offered up my good dressmaker’s shears to its power. Read more

It was an honor to be invited to spend a few days on the campus of Indiana Wesleyan University to speak to the students on money matters—specifically the student loans many students will take with them as part of their college experience.

Remember the days when to get a loan you had to qualify and prove you had the capacity to repay the debt? Well, for college students those days are history. They do not need to have a job or a co-signer to get huge amounts of money both in federal student loans. From what I discovered on my visit, students (and their parents in many cases) are more than willing to accept as much as they can get in federal student loans because these days that’s just the normal way to pay for college.

But here’s the good news. These young adults are willing to listen to advice from someone who’s been around the block with debt. Seizing the moment, I told them:

Accept the least amount of help possible not the most available. Just because you can borrow enough money each semester to pay for tuition, room, board and books doesn’t mean you should. You’ll never believe how difficult it is to pay back. Check yourself out of governmental outpatient care. Get a job. And in the summer get two jobs or three. Finish your degree as soon as possible instead of taking it slow and easy. Make your own way as soon as possible and you’ll reap the benefits for the rest of your life. Read more

You need more money. You need it now. So what are your choices? You have two: You can increase your income or you can reduce your spending.

INCREASE INCOME

Get a bigger paycheck. Ask for a raise, land a new job that pays a lot more than your current job or get a second (or third) job to supplement your current income.

Win a lottery. Do keep in mind when considering this option that your chances of being struck by lightning are much better than winning a lottery.

Sell assets. Finding a cash buyer for your grandmother’s sterling silver, the boat or other asset you own is another option for increasing your income. Read more