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Getting started: Spending choices that offer most bang for your buck

McClatchy-Tribune Information Services

January 26, 2015


If youíre pulling together your budget for 2015 or have made "spend less" one of your New Yearís resolutions, consider this tip: Rather than simply cut back on dinners out or trips to the mall, think instead about how to spend more meaningfully.

Jonathan Clements, a columnist for The Wall Street Journal Sunday, makes that point in his book, "Jonathan Clements Money Guide 2015," a road map of sorts for managing your money in the year ahead. He says that to make our dollars really count, we should look back at how we spent our discretionary money in 2014. Then ask the question, were those expenditures satisfying?

If the answer is no, you know where to start tightening your budget.

A good way to get started is to look at a year-end credit card summary, which some banks provide. The summary gives you an overview of how much you spent in certain categories throughout the year, say, transportation and groceries.

You can also sign up for services such as Mint.com, which aggregate online financial accounts and track spending in real time. Mint will also look at past purchases and calculate how much youíve spent, on average, in any one area.

Research shows that experiences tend to be more gratifying than possessions, and Clements suspects that will be the case for most people when they think about their purchases in 2014.

"What made you most happy was, probably, going out to dinner with friends or taking a vacation with the family," he said. "It wonít be the new refrigerator."

In my case, I got a new refrigerator in late December.

"I still really like it," I said.

"Wait a month," Clements said.

Thatís because, eventually, things start to lose their luster: A new car will one day need repairs. A new refrigerator gets dirty and cramped. Our memory of experiences, on the other hand, tends to grow fonder over time.

"The broken-down car just sits in the driveway, taunting you," Clements said.

Once youíve gotten your priorities set, you can make spending decisions that give you more bang for the buck and free up dollars for other goals, such as paying off debt or building up savings.

Jessica Flaherty, 30, graduated from law school in 2009 with more than $100,000 in student loan debt. She works in the nonprofit sector in Brunswick, Maine, and isnít making the high salary she expected to earn when she was in school. To chip away at her sizable debt load, she doesnít buy as many new clothes and other items.

But some things were just too important to cut.

"I kept the day-to-day things, like getting coffee," Flaherty said. "I canít make good coffee myself. Iíve tried, and no one wants to work with me if I havenít been caffeinated."

She also allows herself to go out with co-workers for a sandwich once a week.

"I didnít want to miss that social aspect at work," she said. "That was important to me."

In 2012, Kelsey Folmar decided that she and husband, Kendan, should pay off his remaining $17,000 in student loan debt. Using Mint.com to scour their finances, she discovered they had spending leaks, including convenience store purchases, which alone averaged $130 per month.

After plugging those leaks ó and renting a room in a family memberís home for only $400 per month for nearly a year ó the couple, both 27 and living in Houston, paid off the debt last April. But all the while, they allowed themselves some indulgences.

"We had a budget for going out to eat," Kelsey said. "Itís just something my husband and I have always enjoyed. It was the one thing we splurged on."