14 simple tips for cutting costs in 2014

Transform your spending habits in the new year

1. Implement the PERK system
Try sitting down and reviewing all your expenses in each category to determine which costs can be "Postponed" until a later date, "Eliminated" from your budget, or "Reduced" going forward, and which expenses you absolutely have to "Keep" (hence the acronym PERK).

2. Lower recurring bills
Go to LowerMyBills.com to see if you can lower your recurring bills, like cable and cell phone. Bear in mind you can contact these companies directly to negotiate and make sure you have the most efficient plan for your needs. These two tips can work for pretty much any bill or expense.

3. Pay per view
The average American cable subscriber spends $900 a year on the service. But how many of us watch all those channels we're shelling out the money for? If you currently pay for premium cable service, test whether you really use or need it by calling your provider and putting the service on "vacation mode." After a month of doing without five different MTVs and 17 different "on demand" channels, you can decide whether to restore or ditch the extra service.

My guess is that instead of getting every channel imaginable, you'll be fine if you swap out traditional cable for Hulu Plus or Netflix, which are (at the time of writing) only about $8 a month and both offer on demand TV and movies. You could also consider a set-top box, such as Apple TV or ROKU, for under $100, which allows you to stream a variety of digital content (TV shows, movies, etc.) via the internet.

4. Never pay for music
If you have some favorite artists or go through cycles of mild obsession with certain albums, then use a free service like Pandora or Spotify. It will cost you only if you really hate the commercials. Not only will these services let you listen to the exact songs you want to hear, but they will also introduce you to new music you never knew you loved.

5. Calculate value
Each year, American women ages 30–49 spend an average of approximately $1,200 on cosmetics alone. That's $12,000 over a decade, enough to buy a car! And it's not just women: The industry sold $1.5 billion worth of men's grooming products in 2010.

I'm not saying to cut good-quality beauty products out of your life (although I do recommend checking out generic brands to save); I'm just suggesting you pay attention to value, which takes into account not just price but also the number of times you'll actually use the item. To figure out your cost per use, simply divide the cost of the item by the number of times you use it. This is an equation I keep in my head every time I shop.

6. Space out treatments
Again, if trips to the hairdresser are something you care about, I'm not here to tell you it's time to break up with your stylist. But how about spacing things out? Instead of reading this tip now and forgetting to actually take action, head straight for your calendar, and book your next (spaced-out) appointments now.

7. Utilize rewards
There are all sorts of companies that will reward you for dining out, so make sure to take advantage. For example, making a reservation on OpenTable usually earns you 100 points — let these add up and cash them in for a check that you can use at any OpenTable restaurant. It's pretty nice to get a discount just for making a reservation!

8. Entertain at home
Next time you're running out to meet a friend at a restaurant or a bar, remember that grabbing food or drinks at home can have enormous cost savings (not to mention convenience). The average U.S. diner spends over $450 per month on eating out (and that doesn't include drinks). So skip the reservation and pick up a bottle of wine and snacks instead. Added bonus: You won't be rushed to give up seats as soon as you pay the bill!

9. Create a waiting period
Instituting a waiting period before making a purchase can actually change your brain chemistry: If you take a break from an item for just two days, you'll be one-third less likely to buy it. Worried you'll forget what you wanted? I make a list of my wants on my phone. Sometimes I buy them. Sometimes they become gifts for my birthday. Oftentimes, I decide I don't really want 'em! Or, Pinterest lets you pin any photo on the web to a virtual bulletin board for safekeeping until you can sleep on whether this item is truly a "need."

10. Be savvy about marketing tricks
Do you really like that bathing suit, or do you just like the fact that it costs $75 instead of its usual $150? Often, the "discount" may just be a marketing ploy. Research from the new field of neuromarketing reported in The New York Times has shown that if you have two similar items on a page, one selling for $200 and the other for $250, most people will choose the cheaper item. But add a third item at a higher price point, like $300, and now the same customer will buy the $250 item. Sites often add high-price items they're unlikely to sell, seducing you into buying up. In other words, beware of the midrange buy.

11. Stick to a budget
Never embark on a gift excursion without a budget beforehand. This is especially true around the holidays. If you go shopping with an itemized list and a budget for each individual gift, it will make it far easier to resist temptations and stick to your limits.

12. Know these quirky gift card finds
While gift cards may seem like a cop-out, they are popular for a reason. Especially handy is the Tango card, a flexible gift card that can be used at many retailers (such as Amazon, Target, and Zappos), put toward several charities (including Habitat for Humanity and the National Park Foundation), or even redeemed for cash. You can also buy gift cards for less than face value at sites like GiftCardGranny.com, where you can maximize those budgeted dollars.

13. Recognize that more generous gifts are not always better
When you give a gift, it often makes the recipient feel the need to return the kindness. Though you have the purest intentions, you can imagine that giving a fancy gift to a friend who is struggling to make ends meet may actually lead to stress. A modest but thoughtful gift is more likely to make everyone happier than an overly extravagant one.

14. Time your shopping
Like fashion, furniture has its seasons. Office furniture like desks and bookshelves tend to be cheaper in January, while October is the best time for dining room furniture. Patio furniture usually goes on sale at the end of the summer. Bedroom furniture is a perennial need, so it doesn't have a predictable sales pattern . . . but mattresses and box springs tend to go on sale in May and again in the fall.

Also, keep in mind regular holidays such as Independence Day, Labor Day and Memorial Day, when department stores have major sales. Items like bed frames and coffee tables can easily last you a decade. Treat these purchases as big investments, buy slowly, and make sure that these are a fairly timeless style that you won't find repulsive ten years down the road.

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