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How to: Save a lot of money

By Gregory Karp, The Morning Call (Allentown, Pa.), Source: MCT News Service

Do you find that money "slips through your fingers" or you're constantly surprised it runs out before the month ends?

That might be a signal that you earn too little, spend too much _ or maybe you're simply disorganized.

Poor planning and disorganization can cost you big-time, said Russell Wild, a financial adviser and co-author with Regina Leeds of "One Year to an Organized Financial Life."

"I'm often astonished by people who come in and are well-organized in other areas of their lives but are completely disorganized when it comes to finances," he said. "They're bleeding money."

Poor organization is expensive in countless ways: Credit card late fees and checking account overdrafts. Paying additional taxes. Overspending on last-minute gifts because you didn't plan ahead. Failing to brown-bag a lunch. Not filing for a cash merchandise rebate. Paying for memberships you don't use. Losing out on discounts at retail stores and the supermarket. Paying more interest on loans than you need to.

"Spending time taking care of finances is an investment just like putting away cold cash," Wild said.

Here are tips:

_Bill paying: Does your system work? Have you checked out online bill paying? Do you at least have automatic deposit of your paycheck?

Don't be afraid to spend a little money on file folders or a label-maker or other inexpensive tools that will help you stay organized and avoid clutter. Develop a system for keeping receipts. You might need them to return items, file for rebates or claim tax deductions.

Couples should determine clear responsibility for bill paying.

_Credit: If you won't get organized about anything else, pay careful attention to your credit cards. Paying interest on balances, incurring penalties and damaging your credit score will hurt your money health. Look up your credit report at AnnualCreditReport.com. Mistakes on those reports are rampant and can lower your credit score, which means you will pay more than you have to for loans. You're entitled to one free report a year from each of the three credit reporting agencies. Pull one every four months to keep constant tabs on your credit.

_Shop smart: Disorganized people don't use coupons, store loyalty cards or online promotional codes. They don't seek out store sales, comparison shop or try to negotiate prices. That wastes money. If you haven't re-examined your TV-Internet-phone package, insurance, investment fees and monthly subscriptions, you might be spending more than you need to. "People are busy these days, which leads them to take a default position with their finances," Wild said. "By blocking off time to comparison shop, people can often save a lot of money. I think people tend to overestimate the time involved."

_Budget: "Most people know where their money is coming from; few people know where their money is going," Wild said.

For just a few weeks, keep a log of where the money is going. If you mostly use debit and credit cards, much of that spending will be recorded for you on a statement. Don't get hung up on methods. Pencil and paper, spreadsheet, finance software or budgeting Web sites all work.

Armed with real information about spending, you can develop goals, which involves nothing more than answering a simple question: Is my money going where I want it to?

If not, get organized and make changes.

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ABOUT THE WRITER

Gregory Karp is a personal finance writer for The Morning Call newspaper in Allentown, Pa. Readers may send him e-mail at greg.karp@mcall.com.

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