First Person: Make Your Spending Pay You Back

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The challenge in personal finance is to make our limited resources go further and in order to accomplish that we need to "think smart." Thinking smart means that we not only examine our spending habits but also our actions.

In 2005, I donated my time to the probate court in Danbury, Conn. and served as Conservator for a person who had disabilities and was unable to manage her own financial life. Her only source of income was her social security of $550 per month plus $100 in food stamps. It was crucial that a budget be constructed that would allow her to live more comfortably.

The first step was to determine how she spent her money. She owned her condominium, and although there was no mortgage, there was a monthly common charge Payment was due on the 10th of each month and if it was late there was a $25 fee assessed. She always missed the deadline. I arranged for her bank to send a check automatically each month and that eliminated the late fee.

I reviewed her phone bill and saw that she had a plan that allowed for unlimited calling, but was $60 per month. She used the phone to make local calls, with an occasional call out of state. I enrolled her in a more appropriate plan and saved her $30 per month. These two steps gave her 10% more money!

Not each case is as extreme, and there are other ways to make your dollars go further. I love buying things with rebates, and I am certain that everyone else does as well. How many times though, have I neglected to mail in the rebate form? I am guilty of that in the past, but now I have a system. The moment I bring the product home, I complete the rebate form, follow the instructions and then make a photocopy of the paperwork and submit it.

Buying in bulk is supposed to save you money and for many items, it may. If you are buying a perishable item, something that does not have a long shelf life, you may be wasting money. Buying three bananas for a dollar is a good deal, especially if one costs 40 cents. It is not such a good deal when you have to discard one or two bananas because they have gone bad. Buy only in quantities that you can use before the product goes bad.

Credit cards, when used wisely, are a wonderful tool. Not only does their use provide a record of how money is spent, they may even reward us with points, miles or cash back. Think about how much you spend and multiply it by 1 or 2 percent. That bonus could be a nice evening out, and all that you have to do is find the right credit card.

My five tips to help you think smarter are:

- Avoid late fees by using automatic payments

- Examine the enrollment and usage of phone and cable plans

- Apply for rebates promptly

- Buy in quantities that make sense

- Use a credit card that offers rewards

More from this contributor:

First Person: Til Debt Do Us Part

Personal Strategic Defaults Are a Character Weakness

Tax Cheaters Please Step Forward

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