Live within your means. Spending too much is a relative problem. If you spend $40,000 per year and your income is $50,000 annually, you should be in good shape and will be able to save a decent chunk of your income. But if your income is only $35,000 per year and you spend $40,000 annually, you’ll be accumulating debt or spending from your investments to finance your lifestyle. How much you can safely spend while working toward your financial goals depends on what your goals are and where you are financially. At a minimum, you should be saving at least 5 percent of your gross annual income (pretax — that is, before taxes are deducted from your paycheck), and ideally, you should save at least 10 percent.

       Search for the best values. The expression “You get what you pay for” is an excuse for being a lazy shopper. The truth is that you can find high quality and low cost in the same product. Conversely, paying a high price is no guarantee that you’re getting high quality. When you evaluate the cost of a product or service, think in terms of total, long-term costs. Buying a cheaper product only to spend a lot of additional money servicing and repairing it is no bargain. Research options and comparison shop to understand what’s important to you. Don’t waste money on bells and whistles that you don’t need and may not ever use. Is that $700 (or $1,000) smartphone significantly better than the best $200 or $300 smartphones?

       Don’t assume brand names are the best. Be suspicious of companies that spend gobs on image-oriented advertising. Branding is often used to charge premium prices. Blind taste tests have demonstrated that consumers can’t readily discern quality differences between high- and low-cost brands with many products. Question the importance of the name and image of the products you buy. Companies spend a lot of money creating and cultivating an image, which has no impact on how their products taste or perform. When you’re grocery shopping, consider the store or house brand. Most of the time the ingredients are the same as the brand-name product (and may even be made by that same manufacturer). You don’t need to shell out money to pay for the name, as store/house brands are typically much less costly than the well-known brands in a given category.

       Get your refunds. Have you ever bought a product or service and not gotten what was promised? What did you do about it? Most people do nothing and let the company off the hook. Ask for your money back or at least a partial refund. If you don’t get satisfaction from a frontline employee, request to speak with a supervisor. Most larger companies have websites through which you can submit complaints. Reputable companies that stand behind their products and services will offer partial refunds or gift cards good toward a future purchase. If all else fails and you bought the item with your credit or debit card, dispute the charge with the credit-card company. You generally have up to 60 days to dispute and get your money back.

       Trim your spending fat. What you spend your money on is sometimes a matter of habit rather than a matter of what you really want or value. When was the last time you comparison priced and shopped for the most common things that you buy? See Chapter 5 for lots of tips for reducing your spending.

       Turn your back on consumer credit (for example, credit-card debt, auto loans). Borrowing money to buy consumer items that depreciate (such as cars and electronics) is hazardous to your long-term financial health. Buy only what you can afford today. If you’ll be forced to carry a debt on credit cards or an auto loan for many months or years, you can’t really afford what you’re buying on credit today (see Chapter 19 for the details on saving on cars). Not only does consumer debt enable you to spend more than you can afford today, but the interest rate on that consumer debt is generally high, and it isn’t tax-deductible.