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This chapter is from the book

Learning to Spend Less

"Living below your means" is a simple and often-stated concept in personal finance. But what isn't explained is how exactly to spend money smarter, so you have some left over.

Many personal finance experts advise you to "pay yourself first," which is now a tired cliché for socking away money before you start paying your bills. But that works only if have enough self-control not to continue spending and simply throw the charges on a credit card. That leads to the illogical situation many Americans face—saving money in the bank at less than 5 percent interest at the same time they're paying 18 percent interest on their credit cards. Their return on that "investment" is negative 13 percent.

Ultimately, it all comes down to spending.

Standard cost-cutting advice makes sense, such as eating out at restaurants less often and forgoing a fancy coffee every morning. But it's not nearly enough to free up the thousands of dollars you need to make a difference in your life.

What you need are both overall strategies and specific ways to reduce spending. It's stuff you could probably research and figure out for yourself, if only you had unlimited time and access to the nation's leading experts. With those resources, you could investigate every alternative to buying expensive ink-jet cartridges, figure out whether extended warranties are a good deal, and read books on how to buy insurance.

But you don't have that time. So, you bought this book instead. With this book, you won't have to figure out for yourself which contradictory tips are true about saving money with home heating and cooling, for example. This book will just tell you. It will say, flat out, "This is right. This is wrong."

This book won't give you dozens of dopey ideas on saving a few pennies here and there—no tips on making your own laundry detergent or reusing dryer lint.

We'll cut to the chase and whack out the biggest offenders of wasteful spending and highlight the easiest cost cuts to make.

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