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With the bleak economy, and forecasts of even tougher times ahead, many of us are stressed out by the financial crisis and searching for new ways to save money.

The good news is that there are dozens of ways to cut costs around the house and lower your day-to-day expenses. Here are some commonsense ways to reduce your spending, get grounded, and stop throwing away money you might not even realize you're wasting.

1. Lower your health care costs.

Health care is one of the biggest annual expenses the average American faces. While it's crucial to have comprehensive health coverage for yourself and your children, there are many ways to cut costs without compromising your care.

Where to start? Save money by setting some aside to spend on health care. A flexible spending account (FSA) with your employer lets you create a pool of pretax income that you can use throughout the year on a variety of medical expenses, which can save you as much as 50 percent on health care costs. You can use an FSA to pay for things such as deductibles and copays, dental work, braces and orthodontics, chiropractic treatment, eyeglasses and contact lenses, and even certain over-the-counter drugs like cold medicines and pain relievers.

Before you start contributing, though, be sure to determine how much you're likely to spend, because any unused balance is non-refundable -- you use it or lose it.

2. Look for a high-deductible health care plan.

This step may dramatically lower your insurance premiums. If you're healthy and rarely visit the doctor for anything other than scheduled checkups, you might find that the savings from lower monthly payments outweigh the cost of copays for your visits. But be careful if your health care plan does not cover services that you expect to use during the year, such as regular checkups, screening tests, blood tests, or medications that you regularly use. These costs can add up quickly if they are not covered.

3. Save money on prescription drugs.

Many name-brand medications have generic equivalents, and several major drugstores and retailers have low-cost generic programs available. Check with your doctor to determine the best choices for you.

4. Get help from your doctor.

Let your doctor know if you are on a limited healthcare budget -- often he or she can help you choose medications that are less expensive than the ones currently prescribed for you. Your doctor can also help you prioritize by choosing the health care matters that can be most safely delayed until you have more resources, or direct you to public health settings where you may be able to obtain certain health services for a lower cost.

5. Seek out free and low-cost health services.

If you don't have health insurance, check out local clinics, free or discounted medical and dental screenings, and free or low-cost flu shot programs offered through many health departments. Community clinics often offer free or sliding scale fees, but be prepared to wait for several hours to see a doctor in some cases. Get cavities filled right away, so you won't need expensive crowns or root canals down the road -- most dentists are happy to work out a payment plan with you.Also check your local dental schools. Some offer low-cost -- or even free -- treatment performed by students under close supervision by their professors.

6. Find out if you're eligible for free or reduced care.

In 1946, Congress passed a law called the Hill-Burton act that gave hospitals, nursing homes, and other health care destinations grants and loans to build or modernize their facilities; in return, they promised to provide free or reduced care to all community residents who needed it. If your income is at or below the current federal poverty guidelines, you can apply for free care. You may be eligible for reduced-cost care if your income is two times the poverty guidelines, or for nursing home care if you earn three times the poverty figure. Eligibility standards may vary among Hill-Burton facilities. Find a list of the Hill-Burton hospitals in your area here: http://www.hrsa.gov/hillburton/hillburtonfacilities.htm.

You can apply for Hill-Burton free care before or after you're treated -- and even after a bill has been sent to collection. Apply at the business or admissions office (you may be asked to provide pay stubs and other documentation).

Some states also require all hospitals to provide charity care if a patient's income is two or three times the federal poverty level or less, so check with your doctor about guidelines.

7. Invest in an ounce of prevention.

Really, the best way to save on health care is to eliminate the need for it. The old saw about prevention being the best medicine is right: Getting exercise, eating well, losing weight, cutting down on alcohol, and quitting smoking can save you big bucks in the long run. Try to pick a health plan that covers preventive care services you think you will need to be using in the year ahead.

8. Pay off your credit card each month.

When it comes to expenses, credit cards are often Public Enemy No. 1. Interest, late payment charges, and fees can add up to hundreds of dollars each year.

Ideally, use cash or a debit card to make most of your transactions, and pay off the full balance of your credit cards each month. If you can't, make a list of your credit cards, what you owe on each, and each card's interest rate. Make an effort to pay off those with the highest interest rates first, but be sure to pay at least the minimum on all your cards each month, and always pay on time.

9. Slash your cards' interest rate.

If you have cards with high interest rates, try to get that rate reduced. According to a survey conducted by Consumer Reports, as many as 50 percent of people who contacted their credit card company for a lower interest rate were successful. And more than three out of four were able to have a penalty fee waived.

10. Transfer debt to low-interest cards

Experts advise against taking out new credit cards to finance debt. However, transferring a balance from one card to a new card with a lower interest rate can be a good idea, if the rate remains low for the life of the debt. But be careful -- many low-interest credit cards may look appealing at first glance, but charge exorbitant transfer fees or revert to a higher interest rate later. Also, canceling cards can negatively affect your credit rating.

11. Better yet, pay in cash.

You'll save hundreds or even thousands of dollars in interest. Also, you’re less likely to buy on impulse.

12. Save your home-equity line for true emergencies.

Don't use your home-equity line as a piggybank -- lenders can reduce or even freeze your line of credit if your home drops in value.

13. Get a fixed-rate mortgage.

If you have an adjustable mortgage, you've probably already noticed your loan payments creeping up. Get a fixed-rate loan. If you can't refinance because the value of your home has taken a nosedive, contact your lender anyway -- you may be eligible for one of the new federal programs for distressed homeowners.

14. Create a rental unit.

Create a new income stream by renting out a room. (Be sure to verify references, though, and do a criminal and credit check.) Better yet, turn part of your house into a separate rental unit. One San Francisco Chronicle reader reporter that several years ago he fixed up a cottage in the backyard and added another small kitchen to the guest quarters of his house. "We have a separate entrance for that," he added, "and the rent we get for it and the cottage covers our mortgage."

15. Cut the cable.

Few people will dispute the joy of having hundreds of television channels, high-definition sports programs, and dozens of first-run movies at their beck and call. But with monthly cable or satellite television bills sometimes reaching $100 or more, it might be time cut the cord -- or at least let go of some of those premium channels .

You can still see many of your favorite shows on network TV and by watching programs on the Internet through video Web sites like Hulu and YouTube. And for movies, think back to your childhood. Remember that building with the books and the card catalog? What was it called? Ah, yes, the library. Your library is likely to have many popular movies on DVD -- and they're free.

16. Cook at home.

Eat at home as often as you can. If you have time to do some serious cooking (think double batches), you can freeze meals for nights when you're too tired to cook and are tempted to order takeout. It will be cheaper and probably healthier, too. Try to eat more meatless meals each week -- instead of meat, you can substitute low-cost, healthy proteins like beans, peas, or lentils. If you're really broke, most cities have food banks that offer free groceries; many houses of worship also provide free meals and clothes.

17. Take your lunch to work.

Sure, it's fun to eat out, but it really adds up. If you spend $2 a day on a lunch you make yourself rather than paying $6 to $12 a day at a sandwich shop, you'll save more than $1,000 a year.

18. Give your car a break.

Carpooling, taking public transportation, riding your bike, and walking are great ways to reduce your monthly fuel and parking costs. And starting in 2009, people who use a bicycle as their primary way to get to and from work will be eligible for a $20-a-month, tax-free reimbursement from their employer.

19. Have fun without paying for it.

Stuck in the predictable (and pricey) dinner-and-a-movie rut? There may be dozens of activities -- tours, talks, and performances -- taking place in your town each week that are either free or very inexpensive. Check your local paper's community calendar for listings.

20. Plant your own "victory garden."

During World War I and World War II, Americans were encouraged to plant "victory gardens" to support the war effort and boost morale. You can support your effort to cut your food bill by planting a small patch of hardy fruits, vegetables, and herbs in your yard. If you have enough room, you may even want to consider keeping a laying hen or two for "farm-fresh"eggs.

21. Clean up on household supplies.

Instead of buying household cleaning supplies, try making your own. They're not only cheaper but also easier on the environment. One part white vinegar and one part water, for example, makes a handy all-purpose cleaner that you can use on anything except marble surfaces. You can even make your own dishwasher detergent by mixing one and a half tablespoons of baking soda with two tablespoons of borax.

22. Open a retirement account.

Okay, you've saved a lot by not eating out every day, but where is that money going? At least 10 percent of what you earn should be going directly into a savings or retirement account. The financial group Morningstar notes that if you put $2000 a year into the stock market between age 24 and 30 -- and that investment earned an average of 12 percent a year -- by age 65 you'd end up with about $1 million, thanks to the magic of compounding interest.

23. Update the tools of your trade.

If you're a contractor, try to assemble what you'll need to keep working in the event of a slowdown. For some, that might be a truck to haul equipment; for others, it will be an updated computer and video equipment. It's also good to brush up on old skills and learn new ones, perhaps at your local city or community college.

24. Support your community.

If you've taken any physics classes, you might recall that every action has an equal and opposite reaction. So keep in mind that holding on to more of your money means that less of it gets into the hands of your local shops and restaurants -- and the people who work in them. Small businesses are particularly vulnerable in tough economies, so try to support them where you can.

For instance, instead of driving to the next town to buy household items in bulk at a warehouse store, consider walking or biking to your corner market to buy just what you need. If taking the entire family out to dinner seems like an extravagance, think about having lunch once a week at your local café. And don't forget to tip your server.

25. Give of yourself.

During difficult times, fewer tax dollars can result in slashed funding for social programs, so the poor need your help more than ever. Even if you can't afford to donate money, dropping off some inexpensive canned items at your local food bank or volunteering your time at a local shelter can make a big difference to those in need.

26. Relax.

This, too, shall pass. While the current economic picture is bleak, keep in mind that the United States economy has experienced -- and recovered from -- 32 recessions since the 1850s, and 10 since the end of World War II, the longest of which lasted 16 months. So while now is the time to cut back and save money, it's not the time to panic.

-- James Burke and Nancy Montgomery are senior editors for Consumer Health Interactive.

References

First published December 11, 2008
Copyright © 2008 Consumer Health Interactive

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