How to save $10,000 in 2009

To stash away the big bucks, first chop expenses in housing, transportation and food. Here are lots of ideas to make that possible.

[Related content: savings, save money, spending, housing, Liz Pulliam Weston]

By Liz Pulliam Weston

MSN Money

If you were hoping for a list of small tweaks you could make in your spending to save $10,000 a year, sorry.

The reality is that $10,000 is a lot of money. And saving big money usually means making big changes in the areas where we spend the most, such as:

• Housing.

• Transportation.

• Food.

Many people balk at chopping these basic expenses, notes Vicki Robin, a founder of the simple-living movement and co-author of the landmark book "Your Money or Your Life," first published in 1992 and recently reissued in a new edition.

But those willing to entertain alternatives often find they can cut their expenses dramatically. Surveys of those who tried the nine-step "Your Money or Your Life" program -- which teaches people how to achieve financial independence by reordering their spending priorities -- found that participants trimmed their spending, on average, by 25%, Robin said.

The following are ways people have found to substantially reduce their costs to live, move and eat. Perhaps some will inspire you.

Saving on shelter

On average, one-third of the money Americans spend goes to housing costs. Trimming that bill can reap significant savings. Some ideas:

Rent for less. Smart Spending blogger Donna Freedman gets reduced rent in exchange for managing a small apartment complex. Others alternate stays in short-term or inexpensive rentals with housesitting or caretaking gigs.

Patricia Walker, 64, typically gets paid $5 to $12 a day to housesit in the Mexican retiree mecca of Ajijic. That's more than enough to pay the $160 monthly rent on a tiny casita she uses between housesitting gigs.

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"This is an area where there are a lot of wealthy Americans and Canadians, and when they travel they don't want to leave their homes alone," said Walker, a former Californian who blogs about her life in Mexico. "Right now I'm getting paid to live in a mansion, with a maid three days a week and a gardener, and they pay for everything."

Walker said she finds her housesitting jobs through word of mouth. People looking for longer-term stints can subscribe to The Caretaker Gazette for $29.95 a year.

Move. Downsizing to a smaller house or a less-expensive area can dramatically improve your financial prospects. Anne Crawford, 49, sold her home in Northern California after two decades there and paid $93,000 cash for a small house in her hometown of Omaha, Neb. The move not only freed her of a mortgage but allowed her to pay off her other debts and supplement her savings.

• Tell us: How are you cutting your spending?

Share. Having roommates may feel like something you should outgrow, but plenty of people decide the savings more than make up for the loss of privacy. For years, Robin and a crew of roommates shared a large Seattle home that also served as headquarters for her New Road Map Foundation.

More recently, a family that Robin knows decided to offer a room to someone who provided both part-time child care and lawn care. That arrangement essentially turned unused space into a big savings for the family's budget.

Continued: Rethink your car

Rethink your car

The federal government's latest Consumer Expenditure Survey indicated that the average household spent $8,758 a year supporting an average of two cars. But you can easily spend more than that on a single car in an area where insurance costs are high. Research firm Runzheimer International estimated a 2009 midsize sedan would set its owners back $8,764 to $13,200 a year, depending on where the family lived.

Yearly car expenses:

City	Cost	City	Cost
Detroit	$13,200	Knoxville, Tenn.	$9,077
Philadelphia	$12,266	Dayton, Ohio	$9,049
Los Angeles	$12,069	Eau Claire, Wis.	$8,988
Newark, N.J.	$11,684	Bismarck, N.D.	$8,926
Providence, R.I.	$11,443	Sioux Falls, S.D.	$8,764

Source: Runzheimer International. Costs include fuel, oil, tires, maintenance, insurance, depreciation, taxes, license and registration fees for a 2009 Ford Fusion driven an average of 15,000 miles driven a year within a 50-mile radius of the city.

Clearly, not owning a car, or owning one car fewer, can save you a bundle if you can pull it off. Some alternatives:

Car sharing. If you live in an area served by the car-sharing service Zipcar, you can pay an annual fee and hourly charges to have access to a number of vehicles parked around your town. If you live in other areas, renting a car occasionally and using public transportation the rest of the time can make sense.

• Tell us: Do you have spending resolutions for 2009?

Carpooling. If you must own a car, try to make it a "site of production" rather than just a "site of consumption," as Robin puts it. That means using it to make money, or at least be reimbursed for some of your costs, such as by carpooling.

"What people chip in for gas often exceeds what you had to pay to fill up the car," Robin said.

Car maximizing. You can save more than a quarter-million dollars over your adult life simply by owning cars for 10 years instead of five. You can save even more if you buy those cars used. Read "Make your car last 250,000 miles" for tips on how to keep your vehicle running smoothly longer.

Eat for less

You can trim an out-of-control food bill substantially by eating out less and making more meals from scratch. Combining coupons with weekly sales can chop an additional 25% or more from your bill. (Read "Click your way to lower food bills" for more.)

Being vegetarians, as Oregon residents Sandy Aldridge and Dale Lugenbehl are, can save you a bundle as well, since meat is relatively expensive.

But Aldridge and Lugenbehl take it a step further by growing most of the food they eat. Instead of spending more than $500 a month on food, which is average for two-person households, the couple spend "less than $30 a month, sometimes considerably less," Aldridge said. (See "5 foods it's cheaper to grow." )

• Video: 7 things that are getting cheaper

Aldridge acknowledges that tending a garden and processing the produce can be a lot of work, but she finds it preferable to running back and forth to a grocery store. Also, the couple don't grow their own just for financial reasons, but as a way of lessening their environmental impact.

"Because we grow things organically, we don't use any chemical pesticides or fertilizers. It also eliminates transportation of the produce," Aldridge said. "You really can't get anymore bio-regional than picking things from your backyard."

What they don't grow, they "purchase in serious bulk -- 25- and 50-pound sacks of grains and beans, 5-pound sacks of nuts," Aldridge said. "That packaging, for the most part, is compostable, so we just return it to the soil."

Continued: 10 ways to save $1,000

OK, now for the tweaks

Not inspired yet? Then consider these 10 ways to save at least $1,000 a year:

Put $4,000 more into your 401(k) plan. If you're in the 25% federal tax bracket, you'll reduce your tax bill by at least $1,000 (more if you also pay state and/or city income taxes).

Contribute to a flexible spending account. Your workplace probably offers these accounts, which allow you to put aside pretax money to pay medical or child care expenses. Not only do your contributions escape income tax (which range from 15% to 35% on the federal level), but you also don't pay Social Security or Medicare taxes, saving you an additional 7.2%. If you're in the 25% federal bracket, a $3,105 contribution will save you at least $1,000 in taxes. You just have to be sure to use the money by the end of the plan's year; otherwise, you forfeit whatever's left in your account.

Stop smoking. Quitting a pack-a-day habit will save nearly $1,500 if you pay $4 per pack.

• Tell us: How are you cutting your spending?

Join the 21st century. Plenty of 20-somethings know the truth: You don't need a cable TV subscription or a land phone line, as long as you've got a broadband Internet connection. Many TV shows are available for free, either on network sites such as CBS.com or at MSN TV or Hulu.com. And there are plenty of ways to make phone calls for less, including via Skype, Vonage and MagicJack, which costs $40 for a whole year. If you're spending more than $84 a month on your TV and phone, dropping both could save you $1,000 a year.

Do your own nail care. Even at the cheap places, a weekly manicure/pedicure will set you back more than $20, plus tip.

Drink (tap) water. The alternatives cost you. If you drink one bottle of soda (at $1.25 each), and your weekly consumption includes a latte ($4), an alcoholic beverage ($6) and a case of bottled water ($5), you can save more than $1,200 by drinking plain tap water, even considering the $30 you blow on a purifying pitcher.

Stop driving like a maniac. Driving the speed limit and avoiding aggressive moves, such as fast accelerations and slamming on the brakes, can improve your fuel economy by a combined average of 42%, according to Edmunds.com. That means savings of more than $1,000 for someone who drives 20,000 miles a year, gets 20 miles to the gallon and pays an average $2.50 a gallon.

Pay off your credit cards. If you carry a $10,000 balance, you're probably paying at least $1,000 in unnecessary interest (assuming the current 11% average interest rate).

Rethink date night. Dinner ($40, easy) and a movie ($14 for two tickets) once a week sets you back $2,800 a year. If you're paying a baby sitter, add $2,000 more or so to the tab. You can chop the bill in half just by going out every other week. Another way to save: alternating baby-sitting with another family. (See "10 hot dates in a bad economy.")

Cut your clothing bill in half. The average household spent $1,881 on clothing in 2007; the tab for a family of four was $2,859. Some of that was doubtless necessary spending to replace outgrown shoes and worn-out jeans. But if your closet is already chock-full and you're still adding to it, you might want to call a timeout on clothing purchases. Check out sites such as The Budget Fashionista for advice on looking stylish for less.Liz Pulliam Weston's latest book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of a Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Published Jan. 15, 2009