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7 choices that could save you $25k each year

choices that save you money
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Charis Brown |
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Clark talks a lot about one simple idea: "Spend less than you make." This is perhaps one of the biggest keys to winning with money.

But what isn't so simple or easy is understanding how different choices can impact our finances. When our eyes become bigger than our wallets, that's when we're headed for trouble!

In fact, a recent study from GoBankingRates found that 50% of people with six-figure incomes have less than $1,000 saved. Additionally, 29% of those earning $150,000 or more per year had less than $1,000 saved, while 6% had nothing saved. 

It seems we have some work to do when it comes to understanding our money! 

Here are 7 choices that could save you $25,000 over the course of a year — if you chose the cheaper alternative.

Read more: These 6 lifestyle changes saved one couple $1,200 a month

1. Coffee at home versus coffee out: $1,000 per year

According to a survey of American workers by Accounting Principals, we spend roughly $1,092 on coffee out, or $20 per week. But, coffee at home costs us roughly $.08 per cup, or $.42 to $.50 per cup for Keurig coffee. Just by drinking coffee at home, we could save about $1,000 per year!

Read more: How you can make over $100K by skipping your morning coffee

2. Drinking water versus soda: $850 per year 

Every year, the average American household spends an estimated $850 on soda. And to top it off, soda, whether it's diet or regular has some nasty health consequences, such as increased risk of diabetes and obesity. Drinking free water is cheaper — and healthier too! 

Read more: 5 serious health risks of drinking diet soda

3. Shop smart for groceries: Save $2,000 or more a year 

Grocery expenses are one of those budget categories that can get out of control if we aren't careful. But luckily, there are lots of ways to save on groceries if we make some simple changes to our routines. One couple got so skilled at the art of saving on groceries that they spend less than $60 a month! 

Check out the below ways to save a bundle on groceries:

4. Buying less house than you can afford: $10,500 per year 

Let's face it: The normal process of buying a home isn't necessarily in keeping with the habits of the financially successful. For many Americans, buying a home involves finding the biggest home you can qualify for, and then buying that home with as little money down as is legally allowed.

At least, this was the process for my husband and I when we bought our first homes separately in our early twenties. This was just before the housing bubble crashed and millions of Americans, including us, were left with underwater mortgages and loans we couldn't possibly afford long-term. 

After that and after selling those houses, we learned our lesson and together bought a home we could afford comfortably on one income. 

As one wise Clark.com reader named Duane said, "The best advice we got was to buy the least expensive home you can live in. Maintain it properly and pay it off early." 

Not only is this sound financial advice, it can save you big too! Buying a $150,000 home versus a $300,000 home can save you around $10,518 per year.

Read more: Why you should buy a house below your means

5. Avoiding debt like the plague: $6,658 per year

Most of us take on too much debt. A recent NerdWallet analysis found that the average American has $15,310 in credit card debt and $132,086 in total outstanding debt from auto loans, student loans, credit cards and mortgages. Not only that, but Americans are paying $6,658 in interest per year, which is roughly 9% of the average household income. This is money that could be used for savings, retirement or to fund a child's education! 

Though carrying revolving credit balances is the worst kind of debt and should definitely be avoided whenever possible, what about auto loans and mortgages? Isn't this "good debt?"

Although auto loans and mortgages may typically be seen in a positive light, they each have a major impact on your wallet. Even considering the tax deductions a mortgage might garner, it's much smarter financially to not even have the mortgage than to pay thousands of dollars of interest on it. Tax deductions in general are puny compared to the monstrous amount of interest you'll be paying on any loan, which is why Clark does not carry debt of any kind — even mortgage debt. 

Having too much or not being able to save because your money is tied up in loans can be financially disastrous. The truth is there are people who pay cash for cars, homes and anything else they want to own. Our friend Duane had this advice to share about cars loans and mortgages: "Save up for everything you want including vehicles and your next home."

Although it may seem unrealistic to be able to avoid debt such as a mortgage for a home, just bear in mind that when you take on a loan from the bank, that bank is making hundreds of dollars a month that you could be keeping for yourself. Maybe it's a goal of paying off your house early instead of waiting a while and saving up the cash, or choosing a 10- or 15-year mortgage instead of a 30-year mortgage. Whatever the case, be sure you understand how much interest you're paying to the bank and not to the principal when you take on any kind of debt. 

Read more: How to buy a house with cash

6. Eating at home and bringing your lunch: Save $3,008

Although it isn't necessarily convenient or fun all the time, avoiding the urge to eat out and bringing lunch to work has a big impact on our budgets. The U.S. Bureau of Labor Statistics found that in 2015, Americans spent $3,008 on food away from home. Additionally, Visa did a survey and found that people spend $1,043 on lunch annually. 

No doubt, eating out can be a great way to connect with friends, hang out with family and enjoy a reprieve from not having to spend time working in the kitchen. Bringing lunch requires preparation and planning ahead. But, there is a big case to be made for avoiding going out to eat and bringing lunch: It can save you big! Not only that, but eating at home versus going out it can also help you lose weight too! 

Eating at home doesn't have to be completely devoid of any fun or kill your social life. Instead of going out with friends, why not host a potluck party? 

Read more: Mom with 13 kids reveals her secrets to making $1 mealsรขโ‚ฌโ€น

7. Opt for Redbox, Netflix and free forms of entertainment: Save $2,500

Going out to the movies is amazing, but it's also quite expensive. Way back in the day, a ticket to a movie cost just $.07! Now it costs around $8.42. Add in an expensive bag of popcorn and soda, and you've spend about $40 just for two people! 

Tickets to sporting events, concerts and other forms of entertainment such as bowling can cost a lot of money, especially for an event everyone wants to see. According to the U.S. Bureau of Labor Statistics, Americans spent about $2,842 on entertainment in 2015. 

But if you're willing to give up a little, it can save you a lot. Waiting until a movie comes out on Redbox saves you big, as does going bowling during a discount night. One cheap date night my husband and I have tried is going to high school football games. It may not be quite the same as watching the NFL, but it's still exciting nonetheless. 

If we begin to really understand the impact our choices have on our wallets, we might end up making much different choices that can keep more money in our pockets. Remember that even though there may be things that are out of our control in life, we are still in charge of the choices we make, and small positive changes over the course of time can make a big impact on our wallets and our future.

Read more: TV and movies: Your free and cheap guide

Money 101: 5 basic money rules you can live by forever