When we were getting ready to have our first child, my husband, Jeff, and I sat down to take a good hard look at our finances and figure out if we could afford an 18-month unpaid parental leave. The reality that confronted us was more sobering than the prospect of two years' worth of dirty diapers and very little sleep.

There we were, both working full time, earning a combined income in excess of $100,000 and never thinking twice about buying what we wanted (OK, so we drew the line on driving a Mercedes-Benz and taking four-star European romps). We didn't realize just how sloppy our spending habits had become until we began tracking every cent for three months. Talk about a wake-up call.

So we took a red pencil to our expenses and started mercilessly slashing them. Simply eliminating our daily coffee purchases saved us $120 a month, or $1,440 a year -- more of a jolt than the pricey java we'd been drinking. Other changes included eating out less often, dropping Jeff's rarely used squash club membership, getting a library card to sign out books instead of buying them, switching to a cheaper phone company, paring back on new clothing purchases (OK, that one hurt a bit) and dropping cable TV.

Incredibly, we were able to stash away an extra $800 a month, or almost $10,000 a year. Not only did the savings finance the year-and-a-half parental leave, but we also both decided to go back to a shorter workweek. Because we had forced ourselves to be more frugal, we could actually work less and live more. What a concept. The experience taught us there are plenty of ways to cut back without resorting to a nuts-and-berries existence. Here's how you can save thousands -- and not feel a pinch.

1. Pay off the plastic. Are you making only the minimum payment on your credit card every month? If so, you could still be paying for that silk blouse long after it's faded and frayed. The average Canadian owes $1,269 to credit card companies. At 18 per cent interest, that's about $230 a year you could save if you paid your balance off each month.

2. Swap credit cards. If you tend to carry a balance on your credit card, you would be better off switching to a low-interest card to ease your payment pain. There are no-frills cards that charge as little as 10 per cent versus the average 18 per cent. On a balance of $1,000, that eight per cent difference adds up to $80 over 12 months.

3. Get money for nothing (and your cheques for free). Drive right on by any ATM machine that's not hooked up to your bank. You'll save $1.50 every time. And run from those generic cash machines you see at convenience stores. They charge an additional $1.50 or more on top of regular transaction fees, which means you could pay $3 just to take out $20. If you avoid ATM fees eight times a month all year long, you'll have an extra $144 in your pocket.

4. Be your own designer. You may not have the style savvy of the experts on "Trading Spaces," but that doesn't mean you can't try your hand at hanging wallpaper or laying linoleum. Instead of hiring a pro at $30 an hour for eight hours, paint that bedroom yourself and save at least $240.

5. Watch how your garden grows. Annual bedding plants can soak up a wad of cash; you can easily spend $60 on a few trays of annuals that will wither before winter. You can save another $60 on perennials by swapping plants with friends and neighbours instead of going to the garden centre. Next spring forget the annuals, exchange favourite perennials with friends and grow $120 in the bank, instead.

6. Don't ring up phone charges. Stick to basic service and ditch extra services you don't really need, such as call waiting ($6 a month), call display ($8) busy call return ($5) and inside wire-care maintenance insurance ($5). You'll save $288 a year.

Page 1 of 4 -- Find four things you can do right now to make your home more energy-efficient (and less of a cash-guzzler) on page 2

7. Do a toy swap. Instead of buying your kids every new toy that comes along, consider trading videos, toys or sports equipment with another family a few times a year. You'll get a bunch of new stuff to play with and it won't cost you a dime. Simply trading two video games (at $30 each) would save you $60.

8. Rethink insurance. Increase the deductible on your home insurance from $250 to $500 and slash your annual rate by about 10 per cent. Upping the deductible to $1,000 results in another 10 per cent savings. A 20 per cent cut on an $800 policy ensures you have $160 in your wallet.

9. Be green and lean. It costs about $250 to keep all those incandescent bulbs shining bright in your home every year. Switching to energy-efficient compact fluorescent lamps can shave $150 from that annual expense. They may cost more, but they last up to 10 times longer.

10. Empower your shower. Low-flow shower heads cut the amount of hot water you use in half. With two 5-minute showers a day, you'll save $100 a year.

11. A cheaper way to chill. Next summer, instead of cranking up the air conditioner, cool off under a ceiling fan. Fans cost about $1.50 to operate each month, while air conditioners cost up to $40 a month. In three months, you'll have a cool $115.

12. Pick up your pizza from a neighbourhood place. If you order pizza each Friday, pick it up yourself and save on the delivery charge ($2.50) and tip ($2.50). (Prices often include the delivery cost. Ask them to give you the cost for a pickup.) That's $20 a month, or $240 a year more dough.

13. Keep the heat in. If you combine all the cracks and leaks in a typical home, you'll end up with a 2.4- by-three-metre hole in the wall. Plug them up and pocket some cash. Caulking and weather-stripping can reduce your heating bill by up to 25 per cent, or $500 on $2,000 in annual heating costs.

14. Launder with care. Use cold water in the wash -- it works just as well and causes less shrinking and fading. If you run your dryer for 30 minutes, 20 times a month, it'll cost you $23 in energy alone. Instead, install a clothesline or set up a few drying racks. Switching two loads a week to cold water saves you $36 a year; add in the $276 for the dryer and you'll clean up with $312.

15. Slip on a sweater and slippers. Simply lowering your thermostat to 20 C (68 F) in winter can save on heating costs. Better yet, install a programmable thermostat and set it to turn the heat down automatically at night or when you leave home, and to turn it up before you wake or return. You'll save about 10 per cent on your heating costs -- or $200 on annual heating costs of $2,000.

16. Cook at home. Eating out gobbles up money faster than the taxman. Brown-bag it to work and cook at home. Three lunches (at $7 each) and one family meal out a week ($50) comes to $284 a month, or $3,408 a year. Cut that back to one lunch a week and one family dinner a month and you'll pocket $2,472 a year.

Page 2 of 4 -- Discover easy ways to cut back on little indulgences (like take-out coffee) on page 3

17. Go veggie. Pile on the beans, lentils, pasta or rice and have vegetarian dinners twice a week. You'll shave about $15 a week, or $780 a year off your grocery bill.

18. Shop at discount grocery stores. They may not have exotic olive bars, and you'll have to bag your own groceries, but you can save big-time by going the no-frills route -- about 15 per cent to be precise. That's about $20 on a weekly $135 grocery trip, which bags you $1,040 over 12 months.

19. Be your own brewmaster. Wine kits at do-it-yourself stores make it easy to bottle your own Barolo. It costs about $100 for 30 bottles of wine, or just over $3 a bottle. If you normally buy five bottles of wine a month at $10 each, you'll save $400 a year. If you're a beer drinker who goes through six cases of 24s a year, it would cost about $210. Make your own and you'll pay only $130, a savings of $80 a year. Total savings for alcohol: $480.

20. Opt for potluck. Inviting friends for dinner? Share the load and lessen the expense by making it potluck. Make the main dish yourself and have others bring the rest. You could easily save yourself $25 on food and have more energy to be a great host. If you host six dinners a year, that's a savings of $150.

21. Pack your java. You don't need to forgo your daily coffee habit, just make it at home and put it in a vacuum flask, instead. If you spend $3 on take-out coffee five days a week, that's $780 a year; make coffee at home and you'll pay about 30 cents a cup, or $78 for the year. Wake up to a savings of $702 -- more than enough to finance a fancy vacuum flask with change to spare.

22. Get some rabbit ears. No one on her deathbed ever regrets not watching more "Judge Judy." If you can live without cable TV (minimum $25 a month), you can bank $300 a year. (Or reduce your 70-channel extended package, $45, to basic cable and save $240 a year.)

23. Simplify birthdays. Who says kids' birthday parties have to rival the Oscars? Skip the pony rides, store-bought theme cake, expensive paper plates and loot bags. Have a home party or rent the local pool for a couple of hours and shave $100 off the party payout. With two kids you are $200 ahead.

24. Get thrifty. Cruise the aisles at Value Village or your local secondhand shop. You're apt to find name-brand buys for yourself and your kids. If you normally spend $600 a year to outfit your child, you could do it for $250 instead. Annual saving (per person): $350.

25. Hit the garage sales. Save on everything from books and toys to clothes and bikes. The key is to buy only essentials and not loads of stuff just because it's a bargain. It's a cinch to save $100 on household purchases if you check out these sales twice a year.

26. Shop with a strategy. Plan your trips to the mall so you go with a purpose and avoid the impulse spending. If you normally make 10 trips to the mall a year and spend $50 on impulse buys each time, you could be saving $500.

27. Wait for the video. A family of four can pay as much as $48 for tickets and $25 for food and drinks during a night out at the movies. Rent a video ($5) and make your own popcorn instead, and you'll save $408 if you would normally go to the show six times a year.

Page 3 of 4 -- Do you spend too much at the movies? Find easy ways to save cash with other fun ways to stay entertained on page 4

28. Indulge in some afternoon delight. If you can't bear to miss hotly hyped first-run movies, go to a matinee instead. It'll cost a family of four $24. Skip the pricey popcorn and save another $25 on concession stand treats. Do this four times a year and save a $196.

29. Make the library your local entertainment centre. If you usually buy two softcover books a month (at $17 each), rent four videos (at $5 each) and pick up two magazines ($4 each), you can save $744 a year by using your library card instead.

30. Start a babysitting co-op. Exchange babysitting services with friends or fellow parents at your kids' school and save the $6 an hour you'd pay for a teenager to come over while you're out. Even if you only go out twice a month for eight hours in total, you'll save $576 a year.

31. Say it with crayons. Have your kids make homemade birthday cards for the slew of parties they get invited to. (They can do the same for relatives and teachers, too.) If you normally buy 10 cards a year (at $5 each), that's $50 you can pocket.

32. Rethink the fencing lessons. Some kids' lessons and activities can cost $75 a month or more. Look for affordable programs at your local community centre. It can cost $80 a month ($960 a year) for your child to take karate classes at a karate school. A YMCA program can cost as little as $76 for three months ($304 a year). Kick the cost and save $656.

33. Pump it up. If your tires aren't properly inflated, they'll require more energy to roll, which wastes gas. Keep them properly filled and you'll save five per cent on fuel costs. That's another $104 savings on gas.

34. Pitch a tent. When you are planning next summer's vacation, think sleeping bags instead of hotel beds. Campsites are usually about $20 a night compared with a rented room at $130. A two-night getaway under the starry skies will save you $220 if you forgo the fancy suite. Make it a week and your nest egg grows by $770.

35. Give up your gym membership. Hike the local trails or bike or jog around your hood. At $30 a month or more, you'll lighten your financial load by at least $360.

36. Drugstore savvy. Instead of reaching for that brand-name headache remedy or cough syrup, opt for the generic store brand and save about 20 per cent off the price. If you normally buy 10 nonprescription products a year at $8 each, you'll save $16.

37. Up in smoke. If you're one of the 26 per cent of Canadian women who smokes, think about what it's costing you in terms of both your health and your pocketbook. A three-pack-a-week habit burns up $96 a month, or $1,152 a year.

38. Fill 'er up. Self-serve gas stations are about five per cent cheaper than full serves. If you spend $40 a week on gas ($2,080 a year), you'll keep an extra $104 in your pocket by zipping up your parka, getting out of the car and lifting that nozzle and filling the tank yourself.

39. Skip the car wash. Break out a bucket and rags and give the minivan a scrub down yourself and save $10 a month, or $120 a year.

40. Save big on car insurance. Increase your deductible from $250 to $500, bundle your auto and home insurance with one insurance company, drop collision and/or comprehensive insurance (only on much older vehicles) and check to see if you are eligible for discounts for low-mileage, airbags, antitheft devices, etc. You could save as much as 35 per cent ($450) on a $1,500 policy.

TOTAL SAVINGS: $15,659

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