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This chapter is from the book

Spending Smart Is Not About Deprivation

Spending Smart is not a "live cheap, die loaded" plan or some exercise in fiscal anorexia.

Diets don't work if you're constantly hungry. And a plan to cut spending won't work if you have to say no to buying things you really want. The goal is to reallocate spending to satisfy all your needs and many of your wants.

You do that by plugging the leaks of wasteful spending and forcing your dollars to go where you want them to. It's about spending on purpose rather than by accident and habit.

Who cares which phone company is providing your dial tone? Switch to a lower-cost carrier and save hundreds of dollars per year. Insurance policies are generally the same. They guarantee a certain payout if bad things happen to you, a car accident, house fire, even death. Why would you pay more for one policy over another? And does a jar of sale-priced Skippy peanut butter taste any different than if you paid full price?

Life is full of spending choices, and making smarter decisions time after time adds up.

The average four-person household spends more than $62,000 a year, according to government statistics. Cutting spending by just 10 percent reaps a cool $6,200 a year, or $517 a month. That would go a long way toward paying off debt. Or, you could redirect that money into buying a nicer car or paying for a home improvement.

Or, if you started investing that money, you'd save more than $300,000 in cash in 20 years, assuming a modest 8 percent return.

That's the power of not spending.

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