My family currently uses low-volume garbage service. It costs half of the standard 32-gallon cost. We had to get our own can, but we found an inexpensive stainless steel 20-gallon can. It saves us $10 a month. It also helps the environment by forcing us to recycle and compost whatever possible.
The biggest thing we do to reduce waste is use cloth diapers. When we do use disposable (for baby-sitters or travel) we use the more "natural" brands made by Seventh Generation (available at Babies R Us) or Nature Baby (available at Target). The cost is only minimally different, and they are just as high quality. Our baby has never had diaper rash except for when we were using up diapers we'd gotten as gifts.
One huge space-user in the garbage can is styrofoam packaging. We just bought an exercise bike this week, and with the small can we can't even fit one of the styrofoam pieces in it! However, clean EPS styrofoam can be recycled. To find a collection site in your area, try Alliance of Foam Packaging Recyclers. We'll be taking this to a local EPS recycler, which helps the environment, and saves us $20 (our sanitation company's "extra item" fee).
$10/month might not seem like much, but over time, it adds up! Plus, with the $20 "extra item" fee we save by recycling as much as possible, I estimate we save at least $160/year.
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