- The Washington Times - Tuesday, November 14, 2000

Jack Weber of Sterling, Va., knows something everyone should know: how to save money on everything he buys without sacrificing quality or his quality of life. Mr. Weber shares his strategies in a new book, "Honey, I've Shrunk the Bills."
"It's sort of a point of view that I grew up with and that really became a challenge to me in terms of getting the best deal that you can whenever you need to buy something," he says. "With a little amount of effort, you can save an incredible amount of money. There is probably $5,000 to $10,000 of real fat that you spend every year and you can put back in your pocket."
In today's fast-paced environment, many people mistakenly believe that time is more valuable than money, Mr. Weber says, but by educating oneself about money matters, everyone can save.
From groceries to big-ticket items such as automobiles and home mortgages, shopping around to get the best buys pays off, says Lynne Strang, director of communications for the American Financial Services Association (AFSA) in the District. AFSA is a trade association for consumer-credit companies.
Make it a game by getting the whole family involved. Keep a savings journal to track the money saved, as Mr. Weber does. As he says, saving money is easier than making it.
Where to begin? The first step is to prepare a budget and stick to it, Ms. Strang advises. She says making a budget is effective for addressing your financial picture in a positive way. She also suggests comparison shopping.
"Just as you comparison-shop for products and services, you should comparison-shop with your financial instruments, too," Ms. Strang says.
To help consumers learn about budgeting, AFSA has created "The Consumer's Almanac," a 16-page publication that can be retrieved on line for free through the Federal Consumer Information Center at www.pueblo.gsa.gov/cic_text/money/almanac/calmanac.htm.
The publication also can be ordered directly from AFSA. A number of other consumer publications are available at AFSA's Education Foundation Web site (www.afsaef.org).
"The Consumer's Almanac" helps users organize and project monthly as well as annual expenses.
"I think a budget is the first step," says Doris Dobkins, a stay-at-home mother in Lincoln, Calif., who has written the book "Financial Freedom From A to Z" and created a home-study course that incorporates it.
"One of the best things we have done is [go] back over our expenses for the past two years and [write] down everything we have spent money on and categorized it," she says. "It showed us that every year we were getting into debt $4,000 to $5,000, and this showed us why because we were not accounting for emergencies with our vehicles, car registration, etc."
Mrs. Dobkins, the mother of two girls, ages 4 and 6, gave up her career as a program director for a nonprofit health care company, which provided 50 percent of the family's income, to stay home and raise her children a year and a half ago.

Groceries

One of the most overlooked areas where cost cutting can be effective is grocery shopping.
Stopping at the store for one or two items and coming out with more is common. There is a reason for that, Mr. Weber says. A grocery store uses the same psychology as a casino to get the consumer to buy more than intended by eliminating clocks and placing basics, such as milk and bread, in the back of the store, he says.
"The first thing you will notice when you go to a store is that they flow you into the impulse area bakeries, prepared food and produce," Mr. Weber says.
Jonni McCoy, a stay-at-home mother in Colorado Springs, agrees.
"There is definitely a real science to how a supermarket is laid out. Things to your right are going to be impulse items, more expensive items… . if you intentionally go the opposite way, you should save money," she says.
Mrs. McCoy devotes 11 chapters to groceries in her book "Miserly Moms: Living on One Income in a Two Income Economy." She says she did so "because that's where we found a tremendous amount of extra money. The reason groceries can work is because that's an unfixed area of your budget. There are so many little ways to tweak money out of there," she says.
Never go to the grocery store on an empty stomach, "The Consumer's Almanac" advises. "Instead of money, spend time to plan and prepare."

Automobiles

Being an educated consumer is critical when purchasing a car. The first decision involves whether to buy a new or used car. A used car will cost less because new cars depreciate greatly, says Paul Taylor, chief economist at the National Automobile Dealers Association. Between 1992 and 1996, new-car prices increased 6 percent to 7 percent a year. Since then, however, price increases have dropped to 4 percent a year, Mr. Taylor says.
The Internet offers several sites with valuable information about the car-buying process, such as www.edmunds.com and www.intellichoice.com.
Edmunds.com Inc. is a privately held company that was founded in 1966. It publishes guides about new and used vehicles and was ranked No. 1 by the Wall Street Journal's survey of car-shopping Web sites. The site offers a complete guide to the car-buying process and is filled with valuable information.
Intellichoice Inc., which publishes automobile-related consumer reports, was founded in 1986 and is a subsidiary of Primedia Inc., a large niche publishing company in New York. The Complete Car Cost Guide was selected as best reference book of the year by Library Journal, the oldest (1876) independent national library publication. The guide contains a section that shows a used car's original price, its wholesale value and its retail value to provide consumers with tools when shopping for a used car.
With a vehicle identification number (VIN), the Carfax.com site can provide, for a nominal fee, the history of a used car, including accidents.
"The Consumer's Almanac" advises buyers to seek the expertise of a mechanic before purchasing a used car.

Credit

"Consumer education is very important when it comes to financing, and potential borrowers would be well-served to do some research before they approach a lender about securing a loan or filling out an application for a credit card," Ms. Strang recommends.
"The subject of credit is a very important one in people's lives, and it's one they don't always understand very well," says Daniel Ray, managing editor of Bankrate.com, whose site (www.bankrate.com) has won best-of-the-Web reviews from Smart Money, Forbes and Fortune magazines.
Bank Rate Monitor, a 20-year-old financial publisher, debuted its Web site in 1995. The company surveys some 4,000 financial institutions around the country to provide unbiased rates on banking products.
"Our site is objective. We have a group of 35 folks in research who do nothing but call banks all day and find out what their rates are," Mr. Ray says.
A recent inspection turned up a Capital One Visa card (800/822-3337) with a zero percent introductory rate going to a 9.9 percent fixed rate with no annual fee. For a $35 annual fee, Pulaski Bank & Trust Master Card (800/980-2265) has an 8.75 percent fixed rate.
"The number of offers is at an astonishing level it set an all-time record this last quarter," Mr. Ray says. "I just saw a study that said there were nearly a billion offers in the second quarter of 2000 in the U.S. Rates nationwide hit an all-time low of 0.4 percent."
However, don't be too quick to jump on low introductory rates.
"The game that a lot of folks played when these low rates came out was to jump from introductory rate to introductory rate. You could save money in the past doing this, but credit-card companies have gotten wise to it," Mr. Ray says. "Now, if you read the very, very, very, very, very fine print, you'll find that they charge a transaction fee of 2 or 3 percent of the amount that you transfer." Also, Mr. Ray says, transferring credit-card balances too often can adversely affect your credit rating.
The Bankrate.com site also contains a section on credit scoring, how it works and how you can improve your credit rating.
"Buying a house is one of the most important steps you'll take financially in your life, and the mortgage rate you get depends in large part on the credit rating that you have," Mr. Ray explains.
The Fair Isaac Co. determines the credit score, but until recently, the method used to determine that score was a well-guarded secret. The company has been forced to become more open in how it judges people, Mr. Ray says. Its Web site sets forth the factors used in determining credit.
"There are specific things you can do to improve your score, and we have written a lot of stories about that," Mr. Ray says.
For those shopping for a mortgage, Bankrate.com contains a section for comparing rates by city and state. A recent check for the District revealed a 7 percent rate from East West Mortgage Co. (800/844-1015) for a 30-year fixed rate with 2.38 points. A 30-year fixed mortgage with a 7.63 percent rate with 1 point was available at First Union bank (800/ASK-FUNB).

Holiday spending

With the approaching holiday season, monitoring credit-card spending is even more important.
"An important key is planning ahead allocating ahead of time how much you can afford and being disciplined. Otherwise, the bills that arrive in January could be a rude shock," Ms. Strang says.
"The Consumer's Almanac" provides holiday spending tips, such as joining a holiday savings club, allowing time to plan and comparison-shop, shopping with catalogs and budgeting purchases.
AFSA has a free holiday budget chart to keep track of who's on your shopping list, the amount budgeted, gift ideas and estimated expenses. If you have a large list of family and friends, AFSA suggests drawing names to keep holiday spending under control.
Another suggestion is to shop at year-end sales to get seasonal bargains.
As Mr. Ray so aptly says: "It used to be just cash that could burn a hole in your pocket. Now, credit cards are capable of inflicting third-degree burns."

Travel

Holidays also make one think about traveling. Here again, it pays to be an educated consumer.
Airlines "have made a science out of figuring out how to sell the same seat for the absolute maximum somebody is willing to pay for it," Mr. Weber says. He gives an example of a round trip from Washington Dulles International Airport to San Francisco International Airport without a Saturday-night stay at a fare of $1,600. If reservations are made less than 14 days in advance, the price would be about $2,200, he says.
His strategy for saving money is to buy back-to-back tickets. Rather than purchasing a round-trip ticket at full price for a midweek itinerary, purchase one round-trip ticket from Washington to San Francisco with a Saturday-night stay and another round-trip ticket from San Francisco to Washington with the day you actually want to return.
Mr. Weber, who employs this strategy in his business travel, says that by purchasing tickets this way, the traveler can pay a total of $900 to $1,000, thus creating a savings of $600. Of course, using this strategy requires buying tickets from different airlines.
For weekend travel, many airlines offer discounted fares on their Web sites. These airlines have this service:
US Airways http://usairways.com.
American Airlines www.amrcorp.com.
Southwest Airlines www.southwest.com.
Continental Airlines www.flycontinental.com.
Trans World Airlines www.twa.com.
Another Web site (smarterliving.com) provides an air-fare database that is updated every Wednesday morning for weekend travel. It offers a search by departure and arrival cities and has Internet-only air-fare specials offered by more than 20 airlines within the United States and Canada. The site is privately owned by a Massachusetts family firm and also provides car-rental and hotel searches.
A recent search uncovered a $99 round-trip fare from Ronald Reagan Washington National Airport to John F. Kennedy International Airport in New York on American Airlines. Delta Air Lines had a $108 round-trip fare to Lester B. Pearson International Airport in Toronto. National Airlines had a $298 round-trip fare from Reagan Airport to San Francisco. United had round-trip fares from Dulles to Tampa International Airport for $153, Orlando International Airport for $162 and Miami International Airport for $189.

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