Your 6 biggest money problems, solved

You know you should be taking better care of your money. And you’ll start. Really you will. Right after you’ve cooked dinner, helped the kids with their homework and walked the dog. (Ooh, “Grey’s Anatomy” is on.)

For many of us, “manage finances” is right down there with “clean out the basement” on the bottomless “to-do” list. We put it off until life is less hectic. But with headlines screaming about the housing meltdown, skyrocketing fuel costs — even a bona fide recession — chances are your money problems feel more urgent now than ever.

Well, help is here. Real Simple polled readers on the financial matters that worry them most, then created a completely doable, low-stress action plan for dealing with each irksome issue, from overspending to underbudgeting.

Got 30 minutes? Take on the “do right now” suggestions. Feeling more motivated? Move on to “next steps.” Think of the time you spend on your finances as money in your pocket.

Worry 1: I spend too much
Why is this such a pervasive problem? Credit cards are partly to blame (have plastic, will spend), but it turns out you really were born to shop. Scientists have learned that when you anticipate buying something tantalizing, like a chic cashmere cardigan, your brain releases dopamine, a chemical that helps produce feelings of well-being.

“It’s the same stuff that floods your brain when you have sex or eat a big, gooey slice of chocolate cake,” says Jason Zweig, author of “Your Money and Your Brain.” Saving money doesn’t trigger the same rush, at least not for most of us. Overspending can also result from poor planning or sheer lack of time — which may be why the average American family spends almost as much eating out ($225 a month) as eating at home ($285). Whether you overspend for fun or convenience, you can break the habit.

Do right now:
Make shopping harder. First, delete bookmarked shopping sites from your computer. Next, gather the pile of catalogs by your bed, call the toll-free number for each, and ask to be removed from the firm’s mailing list. Or go to catalogchoice.org, a free service that helps you unsubscribe from hundreds of catalogs.

Open your wallet and remove all but one credit card. Put the rest away in a drawer — or cancel them. When you don’t see those department-store cards looking back at you in your wallet, there’s less temptation to spend.

Change some of your everyday habits. Plot out the most risk-free routes to and from work and on your daily errands. If lattes are your weakness, that means giving a wide berth to expensive coffee shops. If clothes are your passion, steer clear of trendy boutiques.

Cut out convenience foods. Walk to your refrigerator, open it, and take out some baby carrots. Put a handful into five small plastic bags. Toss some almonds or other nuts in five more plastic bags. Presto — your snacks for the workweek, none of which involves expensive (not to mention often unhealthy) packaged foods. Want to save even more? Start bringing your lunch to work and planning (and shopping) for the entire week on Sunday.

Next steps:
Try cash. You’ve heard this before, but it bears repeating: If you don’t put purchases on a credit card, it’s impossible to spend more than you earn. Next Monday embark upon a week in which you use only cash or a debit card. Then try another week and another, until this behavior becomes second nature.

Make sure everything you buy is returnable — from bags to boots to bookcases — and always keep the tags for at least two weeks. That’s plenty of time for the thrill of the purchase to wear off. You can then assess with a clear eye whether you truly need that snakeskin clutch.

Find new ways to get a dopamine rush. Sign up for a class you’ve always wanted to take, like salsa dancing or Pilates. And the next time you get the urge to shop, log on to YouTube and watch some silly videos: more entertaining and much cheaper.

Read freemoneyfinance.com. This blog has an active group of readers who post their own suggestions on everything from overlooked tax deductions to saving money on hotel rooms. Another great source on saving: the book “Your Money or Your Life,” by Joe Dominguez and Vicki Robin, which shows how living simply can be the path to financial independence.

Worry 2: I save too little
You and everyone else. The average American household saves a paltry 0.4 percent of its disposable income, down from 2.4 percent in 1999, according to the U.S. Department of Commerce. One culprit may be low interest rates. When you’re making very little money from your savings account, you have less incentive to save and more incentive to spend (and borrow).

One way to get yourself to save more is to have a clear goal. Another is to have money automatically deducted from your paycheck or bank account.

Do right now:
Make your savings goals feel intensely real. What do you want or need? A remodeled kitchen? A one-year sabbatical in Italy? To retire to a condo in Waikiki at the age of 55? Having appealing goals will make putting aside part of your paycheck palatable. “You can even try subliminally seducing yourself,” says author Jason Zweig. “Change your computer passwords to reminders like ‘gleamingkitchen’ and ‘retiretohawaii.’ The more often you type those phrases, the more likely you are to internalize the goals and to feel that the future is now.”

Open a 401(k) retirement account, if you haven’t already (and your employer offers one). You’ve heard it a million times, but this really is the easiest and smartest way to save long-term. The money comes directly out of your paycheck, you don’t pay taxes on it until you retire, and employers often match part of your contribution. In addition, the contributions will reduce your overall taxable income. Don’t worry about making an investment selection right away. For now, just pick a safe cash equivalent, such as a money-market fund. If you don’t know how to start contributing to a 401(k), call your employer’s benefits department for help.

Start a savings fund for immediate needs, like your next vacation or that kitchen project. Ask your bank to move a specific amount each month (say, $100) from your checking account into a savings account. Or set up the transfer yourself at the bank’s Web site.

Next steps:
Invest wisely. Move your retirement money into a target-date fund, which most large 401(k) plans offer. These funds automatically adjust the mix of stocks, bonds and cash they hold over time to maximize your return and minimize your risk, and they’re perfect for people who want to invest wisely but don’t quite know how. To choose a target date, all you need to figure out is the year you’ll start withdrawing the money. For example, if you are 40 and want to retire when you’re 65, put your retirement savings into a target-date fund with the year 2033.

If your 401(k) plan doesn’t offer a target-date fund, go to your plan provider’s Web site for information on how to pick the best mix for your portfolio. For more help, read Andrew Tobias’s terrific book “The Only Investment Guide You’ll Ever Need.”

Move your savings into a mutual fund. Once your savings account hits $1,000 or so, transfer the money into an account at one of these three established mutual-fund families (most funds require a minimum investment): Vanguard (877-662-7447), Fidelity (800-343-3548) or T. Rowe Price (800-541-6066). You will earn a higher interest rate and have a variety of funds to choose among. Call the toll-free number and a representative will walk you through the process. The fund company can deduct the money directly from your checking account after your paychecks are deposited.

Worry 3: I’m frustrated by high gas prices
Energy prices, in general, are on the rise, but the most dramatic spike has been for gasoline — up one-third over the past year, to an average $3.05 a gallon. If commuting to work by bike is unrealistic, consider these options. (For excellent tips on how to reduce all your home-energy costs, read the advice here.)

Do right now:
Go to gasbuddy.com and enter your ZIP code. You’ll be connected to a network of Web sites that pinpoint which gas stations near you charge the lowest and highest prices. For example, a recent search of the Chicago area found a Marathon station in Oak Forest charging just $2.91 a gallon, vs. $3.53 at a downtown BP. Plan your next fill-up accordingly.

Clean out the junk in your trunk. Hauling around unneeded poundage — a case of water, tools, a spare stroller — forces your car to work harder. A hundred extra pounds in the trunk reduces fuel economy by up to 2 percent, according to the U.S. Department of Energy (DOE). If you spend $200 a month on gas, shedding that weight can save you $48 a year.

Next steps:
Check your oil, air filter and tire pressure. Keeping your car well-tuned can increase fuel efficiency by up to 17 percent, according to the DOE.

Treat your car like your skin. Keep it out of the sun whenever possible. That’s because gasoline can evaporate right out of the tank (especially when the cap isn’t screwed on tight), and it evaporates faster when the car is hotter. So always drive straight into the garage, rather than parking in the driveway. When doing errands, park in the shade or in a parking garage.

Buy a fuel-efficient car. When it’s time to replace the car you have, go to the DOE-run Web site fueleconomy.gov. There you can compare the fuel efficiency of various models. You’ll find, for example, that driving a small hybrid car (average purchase cost: $22,000) for 25 miles costs $1.60 in gas, compared with about $5 for a basic four-wheel-drive SUV (average cost: $31,000). If you drive 10,000 miles a year, your savings would be nearly $1,400.

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