By Recession Tips
1. Write it down.
2. Make a budget.
3. Pay yourself first.
4. Examine your monthly debits.
5. Be realistic about your cable television needs.
6. Ditch the land line.
7. Get an unlimited text messaging plan.
8. Talk to your spouse and/or children about your economic situation.
9. Shop with a list and stick to it.
10. Use coupon codes when shopping online.
11. Make day trips close to home instead of going on an extravagant vacation.
12. Develop a “prison workout.”
13. Buy a coffeemaker.
14. Drink lots of water.
15. If you’re a man, cut your own hair.
16. If you’re single, use an online dating service.
17. Wake up early.
18. Press “Mute” during commercials.
19. Sleep on it.
20. Avoid “convenience” stores.
21. Unless you drive a Ferrari, don’t buy premium gasoline.
22. Reduce your stress.
23. Clean out your closets and your garage.
24. Bring your lunch.
25. Pay more than the minimum credit card payment each month.
26. Pay off your high interest rate credit cards before low interest rate cards.
27. Bathe and brush your own pet.
28. Develop a charity plan.
29. Eat at restaurants on special occasions only.
30. Never sign up for store credit cards.
31. Be smart about who you let into your inbox.
32. Use your public library.
33. Have a snack and drink a large glass of water before going shopping.
34. Get a Netflix membership.
35. Use movie theater outings for special occasions only.
36. If you have pets, find a veterinarian who offers free ancillary care.
37. If you don’t drink, never “split the check” with people who do.
38. Take digital photos and store them on your computer.
39. Always carry an energy bar.
40. Use a water filter.
41. If you are single, go for a walk on your first dates.
42. Never use ATM’s that charge a fee.
43. Forget about picking stocks.
44. Buy store-brand trash bags.
45. Join a professional association.
46. Buy your clothing from outlet stores.
47. Never borrow money to pay for food, utilities or clothing.
48. If your employer matches 401k contributions, contribute (at minimum) the percentage they match.
49. Stay away from the freezer aisle.
50. Go outside for some fresh air and sunlight.
51. Call your credit card companies and ask them to lower your rates.
52. Buy dessert at the grocery store.
53. Become familiar with all of the benefits offered by your employer and use them.
54. Cancel your newspaper and magazine subscriptions.
55. Don’t leave your job until you have another one lined up.
56. Never buy anything located near the checkout counter.
57. Don’t use your checking account overdraft protection as a regular line of credit.
58. Trade babysitting nights with a friend or neighbor.
59. Ask for discounts on products and services.
60. Sleep for eight hours each night.
61. If you can’t pay all of your taxes, set up an installment plan.
62. Monitor your credit.
63. Avoid checking account overdraft and credit card over limit fees.
64. Use store discount cards.
65. Pay your bills on time.
66. If you’re signing up for a monthly service, ask for any setup fees to be waived.
67. If you can’t pay a bill, call your creditor and ask to work out a payment plan.
68. Ask your boss whether layoffs are planned at your company.
69. Open your mail.
70. Use dollar-cost averaging to invest in an index fund.
71. Trade in your booze and cigarettes for a gym membership.
72. If you have cable television, skip the HDTV purchase.
73. Never take an early withdrawal from your retirement account.
74. Take public transportation when possible.
75. If you have to drive to work, set up a carpool.
76. Buy generic prescription medication when available.
77. Use coupons for grocery shopping.
78. Don’t exceed the posted speed limit.
79. Consider public school for your kids.
80. Beware of phone/cable/internet bundles.
81. Turn down the heat.
82. Avoid flagship shopping districts.
83. Forget about keeping up with the Joneses.
84. Before making a large purchase, calculate how many hours of work it takes for you to make that much money.
85. Instead of giving a birthday or Christmas gift, write a heartfelt letter to someone.
86. Don’t buy lottery tickets.
87. Use positive self-talk to attract wealth and income.
88. If you work for someone else, start a side business.
89. Beware of the grocery shrink ray
90. Know how much you and your time are worth.
91. If you are single, do not get involved in any way with a spendthrift.
92. If you need to purchase an expensive item, bring competitors’ advertisements with you to the store.
93. Don’t read catalogs (even for fun).
94. Don’t lend money to your friends.
95. Don’t “invest” in “get rich quick” programs.
96. No one needs 50 pairs of shoes.
97. Do not go to Las Vegas or Atlantic City (or anywhere else where gambling is legal).
98. Diversify your sources of income.
99. Live like your parents lived.
100. Don’t go it alone.
Showing posts with label Saving During Reccesion. Show all posts
Showing posts with label Saving During Reccesion. Show all posts
Sunday, February 1, 2009
Thursday, January 29, 2009
29 Ways to Save More Money During The Recession
Not sure how you'll survive the current economic crisis? Stick to these 29 money basics and you'll thrive anytime.
By Beth Kobliner
The financial gurus will be debating for years how we got into the mess we're in-and how we'll get out of it. But while the talking heads are talking, you'd like to know how to shore up your resources so you won't have to worry about every little hiccup in the stock market. Here are time-tested strategies you can master—how to spend less, reduce your debt, make the most of your tax breaks, and finance your retirement. The idea, says William Speciale, a Boston-based adviser with the financial planning firm Calibre, is to focus on what you can control: "Little steps can really make a huge difference."
Taxes
Forget the short form. Most taxpayers-65 percent of us, to be specific-just take the standard deduction. But you may save money by itemizing your deductible expenses. It doesn't matter if you use an online program (like turbotax.intuit.com or completetax.com), a current tax guide, or a storefront preparer. Out-of-pocket health care charges, business expenses (including some for job searches), and charitable donations are just a few of the items you may be able to deduct. Fill out the long form, known as the 1040, and compare numbers. If your total deductions are greater than $5,450 (the standard deduction for 2008 for a single person) or $10,900 (for a married couple filing jointly), you'll save money by itemizing when you file.
Your kids should file a tax return. The Internal Revenue Service (IRS) doesn't care how old they are. If they earn more than $5,450 in a given year (in wages and/or interest income), they have to file-even if you claim them as dependents. And if they make less than that, they should still file because they'll get back all the money their employer withheld. Help them fill out the paperwork. It's a great learning experience that may earn them some extra cash.
Avoid a tax refund. You may feel giddy knowing you'll get a check from the IRS this spring, but you shouldn't. Getting money back means you're essentially lending money, interest free, to the government for the year. Better to have that cash in your account than lend it to Uncle Sam. So if you've been getting big refunds or have had a big life change (a marriage, a baby, a divorce, a radical increase or decrease in income), adjust the withholding allowances on your W-4 form. You can do that for your 2009 taxes now at irs.gov. Use the withholding calculator to determine the correct figure for you. Then print a new W-4, fill it out, and give it to your payroll department.
Avoid "rapid refund" programs. Sure, they sound great. After all, what can be better than getting your money fast? A tax-prep chain might try to get you to agree to one of these "instant" or "anticipation" options. Don't take the bait. This is not your refund. It's a loan—and a very high-interest loan at that. The average for 2008 was 123 percent. If you file electronically, even if it's through a tax chain, the IRS will deposit your refund directly into your bank account within a week or two.
Checking and Savings
Make sure your free checking is really free. A lot of banks advertise it, but read the fine print. If the minimum balance is steep-thousands of dollars, in some cases—look for a bank with no minimum requirement. This could save $100 a year or more. Bankrate.com is a good site for comparing accounts. (And don't waste $2 on ATM withdrawals at another bank's machines.)
Bank online. You'll be surprised how easy it is to pay bills, transfer funds, save automatically, and keep track of it all. In fact, gathering records at tax time will be a cinch. And by setting up the automatic bill-payment option, you'll help protect your credit score. Banking online is actually safer than banking at a brick-and-mortar institution. Banks have spent a fortune to make sure their sites are among the most secure on the Internet. Besides, most cases of identity theft happen the old-fashioned way—by crooks who raid your mailbox.
Keep your money in supersafe places. Aim to amass at least six months of emergency expenses, in case you lose your job or become disabled. Where's the best place to keep it? FDIC-insured bank savings, CD, and money market accounts are still three of the most secure places. (The government recently increased the limit it will insure to $250,000 per account until December 31, 2009.) Money market funds that invest in Treasury bills are supersafe, too, but low yielding. Internet banks and credit unions tend to pay higher interest rates, but go to fdic.gov and check to make sure they offer the same government-insured guarantee. Look into Series I bonds, or I bonds, which are just as safe and are guaranteed to keep up with inflation. They're also free from state and local taxes (and possibly federal tax, if you use them for college costs). The downside? You can't redeem them for at least a year. And if you cash them in before five years, there's a small penalty. Other savings options, including corporate and tax-exempt money market funds, are a bit riskier. Compare yields at cranedata.us.
Debt
Cut up your extra credit cards. But don't close the accounts. Yes, it's smart to reduce your temptation to splurge by destroying your cards. But if you actually cancel them, it could hurt your credit rating. Here's why: Lenders worry about how close you are to using all the credit available to you. If you close an account, you lose its credit line. As a result, you are using a greater portion of the reduced amount you can now borrow. How many cards do you need? While the average American household has nine, two or three active cards should be plenty.
Pay your bills on time. A single late payment means that you could pay a much higher interest rate on any future loans and on your existing credit card accounts. That's because even one missed payment can lower your credit score by as much as 100 points. That plunge means that lenders view you as a risky customer. If you're shopping around for a mortgage, you could end up paying as much as a full percentage point more. That's an increase that could ultimately cost you tens of thousands of dollars in interest. Set up automatic payments to make sure you're never late on your major bills. The sooner you can show lenders you're back on track, the better.
Pay $10 more each month. Most American households keep their credit balances at around $2,000, but about 10 to 15 percent carry balances that are $9,000 or higher. If you paid the minimum $224 required on that $9,000 balance each month, it would take you 31 years and over $13,000 in interest to pay it off. Increasing your payment by just $10 a month, to $234, until you've paid off the balance would save you $8,900. And you'd get rid of the debt in five years. (To check your own balances, try the calculator at bankrate.com.)
Put your savings to work. Many people who are deep in debt usually have some savings stashed in a bank account. They argue that they don't want to use their hard-earned savings to pay off debt. But do the math: It would make sense to keep the money in savings only if the bank is paying you an interest rate higher than the one your credit cards charge. Paying off a card with an interest rate of 13 percent is the equivalent of earning 13 percent interest on your money after taxes. There are no savings or investment options with that kind of guarantee. Experts caution that you still want to keep emergency cash on hand. A good rule is to take 5 percent of your paycheck to pay off debt and put an additional 5 percent into savings.
Pay more on your mortgage. You may have heard that because the interest is tax deductible, a mortgage is a good debt. But even if you're getting a tax break, you're still paying interest—and the longer you've had the mortgage, the smaller the tax break (because you pay less interest each year). As with all debt, paying it off sooner is better. So once you've paid off your credit cards and other high-rate debt, go ahead and add an extra payment each year (or spread it out over 12 months). If you do that over the life of a 30-year fixed loan with a rate of 6 percent, you'll shave roughly 20 percent off the total interest you pay. On a $150,000 mortgage, that means saving about $26,000.
Reduce your credit card interest rate. It may be time to get nervy with the credit card companies. If you pay your bill on time and your credit card company still raises your rates or lowers your limits, call the company's toll-free number (ask for the retention department) and explain that you're thinking of taking your business elsewhere. You may reap a rate reduction. No matter what you've heard about the current credit crunch, banks are still motivated to keep good customers. And check your accounts often. These days, banks are increasing rates even on good customers.
Get your credit report for free. You're entitled to one free report from each of the three credit bureaus (Experian, TransUnion, and Equifax) every year. Beware, though. Many sites advertising "free credit reports" are actually fronts for companies trying to sell you services—credit monitoring, debt consolidation, credit repair-most of which you don't need. The reports are free, but you'll be automatically signed up and billed for these products. Get your reports from annualcreditreport.com, which is sponsored by the three bureaus and the Federal Trade Commission. You can purchase extras on this site, too, but just stick with the free reports. If you want to see your credit scores (a numerical representation of how good a credit risk you are), you'll have to pay $48 at myfico.com.
Insurance
Shop around for car insurance. An online search and a few phone calls can turn up vastly different rates in the same area. You'll also want to ask about lesser-known breaks. For example, even if your kids are grown and out of the house, they might be able to get a substantial discount if they insure their cars through the company you use. One place to start is carinsurance.com. Once you've found the best rate, ask your insurance agent if he or she can match it.
Sign up for an FSA. Many employers offer flexible spending accounts as a way to set aside part of your salary for health care and child-care costs. You can pay for everything from Band-Aids to orthodontic work with pretax money, which translates into a discount of about 30 percent or more, depending on your tax bracket. But plan carefully. If you don't use all the money in your account within the year (at many companies, you have until March 15 of the following year to submit receipts), you lose whatever's left.
Keep grown kids on your health insurance policy. If you're going to end up lending (or giving) your children money for coverage, it's much cheaper to keep them on your policy as long as possible. In some states, you can do this until they are 26, whether they're still in school or not. (New Jersey will give you until they turn 30.) Some states require proof that they are single, without children, and that they live in the same state as you. For the rules where you live, go to statecoverage.net. Even if your state doesn't mandate extended coverage, your plan might, so call your human resources department for details.
Hold off on that long-term-care insurance. The soaring cost of extended nursing care has prompted many people in their 40s and 50s to sign up for long-term-care insurance in order to lock in a rate. It's true that the premiums go up as you get older, but not by the huge amount you might expect. According to data collected by America's Health Insurance Plans, a 65-year-old may end up paying just $126 more a year than someone who bought a policy at age 55. During those ten years, that person would spend close to $19,000 on coverage, even though he or she probably won't need it until age 83 or so (if at all). Depending on your health, the best time to buy is between 60 and 65. Until then, make retirement savings the priority, not long-term-care insurance.
Sign up for disability insurance. It helps protect your income in the event you become unable to work for a long period. Ideally, you should have enough to replace 60 to 70 percent of your salary. If your company plan doesn't provide this much coverage, consider buying more on your own. It can be costly, but it's worth it if you can afford it. Visit affordableinsuranceprotection.com or unum.com for quotes.
Think twice about life insurance. If you don't have dependents, you may not need it. If you do have kids or other dependents, you're probably better off with term life insurance until, say, your children are grown and can take care of themselves. It's generally less expensive than whole-life or other types of policies that build up value until you die or cash them in. Agents will tell you that whole-life insurance is a good investment because your money builds up tax-free, but these policies often have very high fees. You're better off putting that money toward your 401(k) and IRA instead. To comparison shop for term life policies, try term4sale.com.
Write your will. Although no one likes to think about dying, you need to. A will doesn't have to be a fancy contract that teams of lawyers slave over. It's just a written record of whom you want to entrust your kids and assets to when you die. You can write one using a simple boilerplate form and then sign it in the presence of witnesses (usually two people who aren't named in the will). The legal publishing company Nolo has a good template and instructions you can download for less than $25. (These templates are valid in all states except Louisiana. Of course, if your situation is complicated or you'd like a professional to look it over, consult an attorney. You can search for lawyers by state at actec.org.) You'll also want to make sure all the beneficiaries on your life insurance policies and bank and retirement accounts are up-to-date.
Retirement
Contribute to your company's 401(k). If your company matches funds, sign up. This will be the best investment you can possibly make. Typically, a company will kick in 50 cents for every dollar you save, up to 6 percent of your salary. That's the equivalent of earning an immediate 50 percent return-a rate you can't get anywhere. Yet incredibly, one in three American workers who are eligible isn't taking full advantage of it. With the matching funds, you can more than double the size of your 401(k) in 20 years, even if the stock market remains flat. For a family making $44,000, your contribution may cost you as little as $30 a week, money you won't even miss after a while.
Put retirement savings ahead of college savings. This sounds crazy to parents who need to come up with tuition money well before it's time to retire. But because of the tax breaks and the flexibility of retirement accounts, you're much better off contributing to a 401(k) or an IRA and taking out loans for college. Many people don't realize that the contributions you put in Roth IRAs can be withdrawn free of penalties at any time. That's very different from the college savings plans, called 529s, that smack you with a significant penalty if the money is not used for college. Another plus: Most schools don't count money in your retirement accounts when assessing how much financial aid they'll offer you. (For more detailed advice, check out Kalman Chany's book, Paying for College Without Going Broke.) Once you've saved the maximum amount that the government allows in your retirement accounts, then research 529 plans at savingforcollege.com.
Say no to company stock. Think of Lehman Brothers, Bear Stearns, and Enron. All were once on top, but when they went under, many employees were left without jobs and with retirement accounts that were overloaded with worthless company stock. You already have a huge stake in the company because you depend on it for your paycheck. Don't risk your retirement money as well. If your employer offers company stock as a 401(k) option, don't take it. If you get company stock as part of your matching-funds plan, sell it as soon as you're allowed to and switch that money into some other type of investment. Ask your HR representative for details.
Don't worry about Social Security. You've probably heard the dire predictions that anyone younger than 35 can't expect to collect Social Security. Even in bleak economic scenarios, though, Social Security will probably pay you 65 to 80 percent of your currently promised benefits. And with some fairly modest changes—like raising the retirement age or increasing payroll taxes for anyone earning more than $250,000 annually-the system can be shored up for decades to come. Make sure you're saving enough so you don't have to count on the program for your entire retirement income.
Stay away from individual stocks. In spite of what you may hear from your cousin the broker, buying the stock of a single company is generally not wise. It's essentially putting all your eggs in one basket-and paying broker fees that could eat up your earnings. In fact, you don't really need a broker. Instead of buying individual stocks, invest directly in mutual funds, which spread your dollars among a group of stocks. It's usually safer, cheaper, and simpler. But remember, you should do this only with money you can invest long term and can afford to lose in the short term.
Stick with index funds. You'll want to go with a special type of mutual fund called an index fund, which buys a little piece of each of the companies that make up established market benchmarks like the S&P 500. One of the best-kept secrets of investing is that in the long run, index funds perform at least as well as the funds that charge high fees and have a professional stock picker making the choices. And how are index funds doing these days? As of early December, they had actually lost less than the average stock fund run by the so-called experts. For a list of low-cost index funds, go to vanguard.com or fidelity.com.
Don't buy investment products from your bank. Banks sell a wide range of mutual funds, annuities, and individual stocks and bonds. These aren't FDIC-insured, and they tend to be more expensive than what you could get elsewhere because banks usually charge high sales commissions. Buy directly from mutual fund companies instead. Go with companies like Vanguard or Fidelity, which charge low fees and no commissions.
Build a portfolio. The rule of thumb is to put 50 percent of your long-term savings in stocks and 30 percent in bonds and keep 20 percent available in cash (that means in a savings or money market account where you can withdraw it at a moment's notice). In tough times especially, getting the right mix will depend on the risk you're willing to take and how soon you'll need your money. Stocks are generally more risky than bonds, but there are exceptions. For example, bonds issued by companies that are in questionable financial health-called junk bonds or, more euphemistically, high-yield bonds are a lot riskier than, say, stock in utility companies. Financialengines.com, which charges about $40 for a three-month subscription, is a great site for calculating the right mix.
Bonus
TipTake care of your health. Eat right, exercise, and get plenty of sleep. Says Rutgers finance professor Barbara O'Neill, "The last thing you want in a financial crisis is huge medical bills."
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Taxes
By Beth Kobliner
The financial gurus will be debating for years how we got into the mess we're in-and how we'll get out of it. But while the talking heads are talking, you'd like to know how to shore up your resources so you won't have to worry about every little hiccup in the stock market. Here are time-tested strategies you can master—how to spend less, reduce your debt, make the most of your tax breaks, and finance your retirement. The idea, says William Speciale, a Boston-based adviser with the financial planning firm Calibre, is to focus on what you can control: "Little steps can really make a huge difference."
Taxes
Forget the short form. Most taxpayers-65 percent of us, to be specific-just take the standard deduction. But you may save money by itemizing your deductible expenses. It doesn't matter if you use an online program (like turbotax.intuit.com or completetax.com), a current tax guide, or a storefront preparer. Out-of-pocket health care charges, business expenses (including some for job searches), and charitable donations are just a few of the items you may be able to deduct. Fill out the long form, known as the 1040, and compare numbers. If your total deductions are greater than $5,450 (the standard deduction for 2008 for a single person) or $10,900 (for a married couple filing jointly), you'll save money by itemizing when you file.
Your kids should file a tax return. The Internal Revenue Service (IRS) doesn't care how old they are. If they earn more than $5,450 in a given year (in wages and/or interest income), they have to file-even if you claim them as dependents. And if they make less than that, they should still file because they'll get back all the money their employer withheld. Help them fill out the paperwork. It's a great learning experience that may earn them some extra cash.
Avoid a tax refund. You may feel giddy knowing you'll get a check from the IRS this spring, but you shouldn't. Getting money back means you're essentially lending money, interest free, to the government for the year. Better to have that cash in your account than lend it to Uncle Sam. So if you've been getting big refunds or have had a big life change (a marriage, a baby, a divorce, a radical increase or decrease in income), adjust the withholding allowances on your W-4 form. You can do that for your 2009 taxes now at irs.gov. Use the withholding calculator to determine the correct figure for you. Then print a new W-4, fill it out, and give it to your payroll department.
Avoid "rapid refund" programs. Sure, they sound great. After all, what can be better than getting your money fast? A tax-prep chain might try to get you to agree to one of these "instant" or "anticipation" options. Don't take the bait. This is not your refund. It's a loan—and a very high-interest loan at that. The average for 2008 was 123 percent. If you file electronically, even if it's through a tax chain, the IRS will deposit your refund directly into your bank account within a week or two.
Checking and Savings
Make sure your free checking is really free. A lot of banks advertise it, but read the fine print. If the minimum balance is steep-thousands of dollars, in some cases—look for a bank with no minimum requirement. This could save $100 a year or more. Bankrate.com is a good site for comparing accounts. (And don't waste $2 on ATM withdrawals at another bank's machines.)
Bank online. You'll be surprised how easy it is to pay bills, transfer funds, save automatically, and keep track of it all. In fact, gathering records at tax time will be a cinch. And by setting up the automatic bill-payment option, you'll help protect your credit score. Banking online is actually safer than banking at a brick-and-mortar institution. Banks have spent a fortune to make sure their sites are among the most secure on the Internet. Besides, most cases of identity theft happen the old-fashioned way—by crooks who raid your mailbox.
Keep your money in supersafe places. Aim to amass at least six months of emergency expenses, in case you lose your job or become disabled. Where's the best place to keep it? FDIC-insured bank savings, CD, and money market accounts are still three of the most secure places. (The government recently increased the limit it will insure to $250,000 per account until December 31, 2009.) Money market funds that invest in Treasury bills are supersafe, too, but low yielding. Internet banks and credit unions tend to pay higher interest rates, but go to fdic.gov and check to make sure they offer the same government-insured guarantee. Look into Series I bonds, or I bonds, which are just as safe and are guaranteed to keep up with inflation. They're also free from state and local taxes (and possibly federal tax, if you use them for college costs). The downside? You can't redeem them for at least a year. And if you cash them in before five years, there's a small penalty. Other savings options, including corporate and tax-exempt money market funds, are a bit riskier. Compare yields at cranedata.us.
Debt
Cut up your extra credit cards. But don't close the accounts. Yes, it's smart to reduce your temptation to splurge by destroying your cards. But if you actually cancel them, it could hurt your credit rating. Here's why: Lenders worry about how close you are to using all the credit available to you. If you close an account, you lose its credit line. As a result, you are using a greater portion of the reduced amount you can now borrow. How many cards do you need? While the average American household has nine, two or three active cards should be plenty.
Pay your bills on time. A single late payment means that you could pay a much higher interest rate on any future loans and on your existing credit card accounts. That's because even one missed payment can lower your credit score by as much as 100 points. That plunge means that lenders view you as a risky customer. If you're shopping around for a mortgage, you could end up paying as much as a full percentage point more. That's an increase that could ultimately cost you tens of thousands of dollars in interest. Set up automatic payments to make sure you're never late on your major bills. The sooner you can show lenders you're back on track, the better.
Pay $10 more each month. Most American households keep their credit balances at around $2,000, but about 10 to 15 percent carry balances that are $9,000 or higher. If you paid the minimum $224 required on that $9,000 balance each month, it would take you 31 years and over $13,000 in interest to pay it off. Increasing your payment by just $10 a month, to $234, until you've paid off the balance would save you $8,900. And you'd get rid of the debt in five years. (To check your own balances, try the calculator at bankrate.com.)
Put your savings to work. Many people who are deep in debt usually have some savings stashed in a bank account. They argue that they don't want to use their hard-earned savings to pay off debt. But do the math: It would make sense to keep the money in savings only if the bank is paying you an interest rate higher than the one your credit cards charge. Paying off a card with an interest rate of 13 percent is the equivalent of earning 13 percent interest on your money after taxes. There are no savings or investment options with that kind of guarantee. Experts caution that you still want to keep emergency cash on hand. A good rule is to take 5 percent of your paycheck to pay off debt and put an additional 5 percent into savings.
Pay more on your mortgage. You may have heard that because the interest is tax deductible, a mortgage is a good debt. But even if you're getting a tax break, you're still paying interest—and the longer you've had the mortgage, the smaller the tax break (because you pay less interest each year). As with all debt, paying it off sooner is better. So once you've paid off your credit cards and other high-rate debt, go ahead and add an extra payment each year (or spread it out over 12 months). If you do that over the life of a 30-year fixed loan with a rate of 6 percent, you'll shave roughly 20 percent off the total interest you pay. On a $150,000 mortgage, that means saving about $26,000.
Reduce your credit card interest rate. It may be time to get nervy with the credit card companies. If you pay your bill on time and your credit card company still raises your rates or lowers your limits, call the company's toll-free number (ask for the retention department) and explain that you're thinking of taking your business elsewhere. You may reap a rate reduction. No matter what you've heard about the current credit crunch, banks are still motivated to keep good customers. And check your accounts often. These days, banks are increasing rates even on good customers.
Get your credit report for free. You're entitled to one free report from each of the three credit bureaus (Experian, TransUnion, and Equifax) every year. Beware, though. Many sites advertising "free credit reports" are actually fronts for companies trying to sell you services—credit monitoring, debt consolidation, credit repair-most of which you don't need. The reports are free, but you'll be automatically signed up and billed for these products. Get your reports from annualcreditreport.com, which is sponsored by the three bureaus and the Federal Trade Commission. You can purchase extras on this site, too, but just stick with the free reports. If you want to see your credit scores (a numerical representation of how good a credit risk you are), you'll have to pay $48 at myfico.com.
Insurance
Shop around for car insurance. An online search and a few phone calls can turn up vastly different rates in the same area. You'll also want to ask about lesser-known breaks. For example, even if your kids are grown and out of the house, they might be able to get a substantial discount if they insure their cars through the company you use. One place to start is carinsurance.com. Once you've found the best rate, ask your insurance agent if he or she can match it.
Sign up for an FSA. Many employers offer flexible spending accounts as a way to set aside part of your salary for health care and child-care costs. You can pay for everything from Band-Aids to orthodontic work with pretax money, which translates into a discount of about 30 percent or more, depending on your tax bracket. But plan carefully. If you don't use all the money in your account within the year (at many companies, you have until March 15 of the following year to submit receipts), you lose whatever's left.
Keep grown kids on your health insurance policy. If you're going to end up lending (or giving) your children money for coverage, it's much cheaper to keep them on your policy as long as possible. In some states, you can do this until they are 26, whether they're still in school or not. (New Jersey will give you until they turn 30.) Some states require proof that they are single, without children, and that they live in the same state as you. For the rules where you live, go to statecoverage.net. Even if your state doesn't mandate extended coverage, your plan might, so call your human resources department for details.
Hold off on that long-term-care insurance. The soaring cost of extended nursing care has prompted many people in their 40s and 50s to sign up for long-term-care insurance in order to lock in a rate. It's true that the premiums go up as you get older, but not by the huge amount you might expect. According to data collected by America's Health Insurance Plans, a 65-year-old may end up paying just $126 more a year than someone who bought a policy at age 55. During those ten years, that person would spend close to $19,000 on coverage, even though he or she probably won't need it until age 83 or so (if at all). Depending on your health, the best time to buy is between 60 and 65. Until then, make retirement savings the priority, not long-term-care insurance.
Sign up for disability insurance. It helps protect your income in the event you become unable to work for a long period. Ideally, you should have enough to replace 60 to 70 percent of your salary. If your company plan doesn't provide this much coverage, consider buying more on your own. It can be costly, but it's worth it if you can afford it. Visit affordableinsuranceprotection.com or unum.com for quotes.
Think twice about life insurance. If you don't have dependents, you may not need it. If you do have kids or other dependents, you're probably better off with term life insurance until, say, your children are grown and can take care of themselves. It's generally less expensive than whole-life or other types of policies that build up value until you die or cash them in. Agents will tell you that whole-life insurance is a good investment because your money builds up tax-free, but these policies often have very high fees. You're better off putting that money toward your 401(k) and IRA instead. To comparison shop for term life policies, try term4sale.com.
Write your will. Although no one likes to think about dying, you need to. A will doesn't have to be a fancy contract that teams of lawyers slave over. It's just a written record of whom you want to entrust your kids and assets to when you die. You can write one using a simple boilerplate form and then sign it in the presence of witnesses (usually two people who aren't named in the will). The legal publishing company Nolo has a good template and instructions you can download for less than $25. (These templates are valid in all states except Louisiana. Of course, if your situation is complicated or you'd like a professional to look it over, consult an attorney. You can search for lawyers by state at actec.org.) You'll also want to make sure all the beneficiaries on your life insurance policies and bank and retirement accounts are up-to-date.
Retirement
Contribute to your company's 401(k). If your company matches funds, sign up. This will be the best investment you can possibly make. Typically, a company will kick in 50 cents for every dollar you save, up to 6 percent of your salary. That's the equivalent of earning an immediate 50 percent return-a rate you can't get anywhere. Yet incredibly, one in three American workers who are eligible isn't taking full advantage of it. With the matching funds, you can more than double the size of your 401(k) in 20 years, even if the stock market remains flat. For a family making $44,000, your contribution may cost you as little as $30 a week, money you won't even miss after a while.
Put retirement savings ahead of college savings. This sounds crazy to parents who need to come up with tuition money well before it's time to retire. But because of the tax breaks and the flexibility of retirement accounts, you're much better off contributing to a 401(k) or an IRA and taking out loans for college. Many people don't realize that the contributions you put in Roth IRAs can be withdrawn free of penalties at any time. That's very different from the college savings plans, called 529s, that smack you with a significant penalty if the money is not used for college. Another plus: Most schools don't count money in your retirement accounts when assessing how much financial aid they'll offer you. (For more detailed advice, check out Kalman Chany's book, Paying for College Without Going Broke.) Once you've saved the maximum amount that the government allows in your retirement accounts, then research 529 plans at savingforcollege.com.
Say no to company stock. Think of Lehman Brothers, Bear Stearns, and Enron. All were once on top, but when they went under, many employees were left without jobs and with retirement accounts that were overloaded with worthless company stock. You already have a huge stake in the company because you depend on it for your paycheck. Don't risk your retirement money as well. If your employer offers company stock as a 401(k) option, don't take it. If you get company stock as part of your matching-funds plan, sell it as soon as you're allowed to and switch that money into some other type of investment. Ask your HR representative for details.
Don't worry about Social Security. You've probably heard the dire predictions that anyone younger than 35 can't expect to collect Social Security. Even in bleak economic scenarios, though, Social Security will probably pay you 65 to 80 percent of your currently promised benefits. And with some fairly modest changes—like raising the retirement age or increasing payroll taxes for anyone earning more than $250,000 annually-the system can be shored up for decades to come. Make sure you're saving enough so you don't have to count on the program for your entire retirement income.
Stay away from individual stocks. In spite of what you may hear from your cousin the broker, buying the stock of a single company is generally not wise. It's essentially putting all your eggs in one basket-and paying broker fees that could eat up your earnings. In fact, you don't really need a broker. Instead of buying individual stocks, invest directly in mutual funds, which spread your dollars among a group of stocks. It's usually safer, cheaper, and simpler. But remember, you should do this only with money you can invest long term and can afford to lose in the short term.
Stick with index funds. You'll want to go with a special type of mutual fund called an index fund, which buys a little piece of each of the companies that make up established market benchmarks like the S&P 500. One of the best-kept secrets of investing is that in the long run, index funds perform at least as well as the funds that charge high fees and have a professional stock picker making the choices. And how are index funds doing these days? As of early December, they had actually lost less than the average stock fund run by the so-called experts. For a list of low-cost index funds, go to vanguard.com or fidelity.com.
Don't buy investment products from your bank. Banks sell a wide range of mutual funds, annuities, and individual stocks and bonds. These aren't FDIC-insured, and they tend to be more expensive than what you could get elsewhere because banks usually charge high sales commissions. Buy directly from mutual fund companies instead. Go with companies like Vanguard or Fidelity, which charge low fees and no commissions.
Build a portfolio. The rule of thumb is to put 50 percent of your long-term savings in stocks and 30 percent in bonds and keep 20 percent available in cash (that means in a savings or money market account where you can withdraw it at a moment's notice). In tough times especially, getting the right mix will depend on the risk you're willing to take and how soon you'll need your money. Stocks are generally more risky than bonds, but there are exceptions. For example, bonds issued by companies that are in questionable financial health-called junk bonds or, more euphemistically, high-yield bonds are a lot riskier than, say, stock in utility companies. Financialengines.com, which charges about $40 for a three-month subscription, is a great site for calculating the right mix.
Bonus
TipTake care of your health. Eat right, exercise, and get plenty of sleep. Says Rutgers finance professor Barbara O'Neill, "The last thing you want in a financial crisis is huge medical bills."
Keep Your Money Safe
Supersafe
- FDIC-insured bank savings, CD, and money market accounts
- FDIC-insured credit unions
- Series I bonds
- Money market funds that invest in Treasury bills
Somewhat Riskier: Corporate and tax-exempt money market mutual funds
Riskiest: Bank investment products not FDIC-insured Individual stocks***
Learn More
A clip-and-save guide to the sites in this feature.
Taxes
- irs.gov: Calculate withholding, track refunds.
- turbotax.intuit.com and completetax.com: Tax-prep software.
Checking and Savings
- bankrate.com: Compare accounts.
- cranedata.us: Compare yields on investment accounts.
- fdic.gov: Determine whether your bank is FDIC-insured.
Debt
- annualcreditreport.com: For your free annual credit report.
- myfico.com: For your numerical credit score.
Insurance
- actec.org: Search for an attorney to write or review a will.
- affordableinsuranceprotection.com and unum.com: For rate quotes on disability insurance.
- carinsurance.com: Compare rates.
- nolo.com: For templates and instructions on writing a will.
- statecoverage.net: For the specifics on health coverage in your state.
- term4sale.com: Compare term life insurance policies.
Retirement
- fidelity.com and
- vanguard.com: Low-fee, no-commission index funds.
- financialengines.com: Determine the right mix of stocks and bonds.
- savingforcollege.com: Research college plans.
From Reader's Digest
Friday, January 23, 2009
50 Ways to Save Money during a Recession
By Cheap Lee
Let’s face it. An economic crisis is no time to have money troubles. But, most of us can’t help it. We work hard and try to live the life we want. Sometimes the cards are not dealt in our favor. Even if we have picked up some personal finance lessons along the way, we still seem stuck in mud. We have become blind sighted by our current economic crisis, and need to adjust our situation to live as frugally as possible in order to make what we have last.
Now we may not be able to sell our SUV or home in the next month or two, but there are some alternative ideas to help cushion the economic blow to your wallet.
1 – Buy generic versus brands. Branded items, like Cheerios, Charmin, Christian Dior, are so ingrained in our conscious as superior that we forget that other items exist. Unfortunately, we also forget the impact on our wallets. By starting to buy generic items we can start to see savings of $25 or more on a shop
2 – Rethink entertainment. Instead of buying $10 a piece movie tickets or spending $5 at the video store, consider joining Netflix, where you can download free movies to your computer or get several movies delivered to your door for the cost of less than two movies tickets, or consider other forms of cheap entertainment. $40 a month
3 – Downsize the dinner options. It feels almost luxurious to go out for dinner, knowing others have prepared a delicious meal so you don’t have to. And it may seem one meal won’t kill you but saving $10 by eating at home or skipping the $5 appetizers or saving $5 on tips with counter service can easily add up to $200 to $300 for the entire month.
4 – Dump cable TV. I have eliminated cable a long time ago, and just rely on Internet service. Not having TV may seem hard at first, but the result has been a life changer for me. I am more creative, like writing this blog, and have more free time to pursue the things I want to do. For $50 of savings a month, I can make it without the boob tube.
5 – Re-examine insurance. While health insurance for some is a must have, there are supplementary insurance you might pay that may not have a pressing need at this moment. Talk to your insurance professional to see what costs can be reduced or eliminated.
6 – Kid’s allowance. Don’t let them push you around. Yes, you want to give them the best, but in order to genuinely secure a better future for them, determine what is important to them now and what is important to their future.
7 – Electricity. During the summers and winters, this bill can get mighty large. Call your local utility company and ask them what steps you can take to cut your electricity bill. Switching to CFC bulbs (twirly bulbs) is a good start, but more of your electric bill will come from A/C, heat, hot water, the dryer and that new plasma TV you bought.
8 - Credit Cards. You can’t stop making credit card payments, but at least you can call them to negotiate better rates. Use some of the credit card offers to help negotiate a better rate. $20-$40 or more a month on $10,000 balance
9 – Carpooling/Telecommuting/Bike or Walk to work – All these options can equate to saving a weekly $50 tank of gas, reduce wear and tear, and decrease potential maintenance costs.
10 – Cell versus home phone. Decide which is needed more and eliminate the other. If you can, I would consider eliminating the home phone because there are cheaper options like Skype for home telephone services. And if your phone company won’t give you Internet access without having local phone, give high-speed cable from your cable company a try. For the light computer users, trying going to a free WiFi area or the library, and get connected there.
11 - Ask the boss to go corporate casual or just casual. Wearing casual clothes may not only be more durable and last longer, but you can also skip the pricey dry cleaning bill
12 – Cancel Memberships. If you have gym memberships you don’t use or memberships to organizations you don’t go to, cancel them. Unless you use these types of memberships weekly and it helps you to focus or acts as a personal getaway, take the opportunity to consider alternatives, like jogging, biking, etc.
13 – Storage Facility? Do you have a storage facility that you use for your junk? Sell it and then cancel the storage unit. A recent WSJ article says people who use a facility with short-term intentions end up keeping them for 5 years. $100 month
14 – House cleaning/pool service/lawn service/pest control. Can you do any of these services on your own? Borrow a lawn mower or pool brush from your neighbor if you have too. $25 or more a month
15 – Sell your stuff. Unless it may be super valuable for eBay, have a garage sale or post your items on Craigslist. Sure you won’t get top dollar in this environment, but you may something
16 – Rent out a room. There are plenty of folks who need a simple place to stay, and renting out a room maybe a good short-term way to raise money. But before you do, I highly recommend preparing a few hurdles for any prospective tenant like a criminal check, a credit check and a rental history check, along with reading a few good books on renting out to a tenant or calling a licensed real estate agent for help. Without the right preparation and legal documents, this too becomes a legal or financial nightmare.
17 – Renegotiate your mortgage. You may or may not have any money you can refinance, but you can definitely talk to your bank or a mortgage broker about lowering your rate. Although you may incur additional costs, a lower rate may offset them if you can get a significant drop in your rate.
18 – Private versus Public School. If you are paying monthly for private school, you can either put your kid in public school or renegotiate a lower tuition based on your changing financial situation
19 – Beer/Colas/Coffees. These beverage items are the real cost killer when you add it up. Your $4 lattes, $4 beer or twice a day $2 soda or $2 bottled waters add up to $120 a month alone. Tap water is free and healthier for you.
20 – Use coupons. As goofy and “grandma” as it sounds, clipping coupons still works. Sunday newspapers or popular coupon sites are still great sources for coupons.
21 – Change you supermarket. As recent Wall Street Journal article compared several well-known supermarkets chains to a Wal-Mart Supercenter on the exact same food items, and found Wal-Mart to be significantly cheaper. Savings: $15 or more on full grocery shop.
22 – Haircuts. While Supercuts and Hair Cuttery are a great start for cheap haircuts, I can usually find a local barber charging even less. Since they don’t need to pay royalty fees or franchise fees, they can charge a few bucks less. If you are brave enough to do it on your own, go for it.
23 – Dog food. It may be tempting to go for the cheaper brand, but changing a dog’s diet is not healthy for them. Instead, buy the “Costco” size and store in a cool, dry and bug free place.
24 – Pet Medications. I use heartworm and flea medication every month for my dog, Rudy. I order from an Australian company, Petshed.com. They are cheaper for the flea medication and they also offer a generic medication for heartworm prevention. Here are also other things you can do for Fido.
25 – Skip Lotto. In tough times, more people play the lotto lowering your odds of winning, which is pretty low to begin with. If you must, once is enough.
26 – Dental Care. Teeth cleanings are a must, especially if I have to look at you. But taking properly taking care of your teeth will help to keep future costs and recommended visits down. Keep in mind; most times cleaning are done by the hygienist, not the dentist, so your costs shouldn’t be more than $50. I can usually find some specials in the local paper.
27 – Gift cards or cash, instead of gifts. Give a gift card instead of a gift, or better yet, give cash and avoid the transaction fee. You will keep yourself from spending more than you should. If you do decide to buy a gift card, make sure the gift cards aren’t store specific either. While Uncle Fred loves Home Depot, he may need to pay some bills or get food instead.
28 – Canceling certain newspapers. Think about canceling the daily paper, and just have the Sunday paper delivered. The Sunday newspaper can be a goldmine for coupons, and use the online version for the rest of the week.
29 – Downsize the department store. Target, Wal-Mart and other stores can offer substantial savings to those who are in need of clothes. You would be surprised what great stuff they have, but pay attention to those return policies. Goodwill or other consignment shops can also provide some valuable treasures. But, purchase only what you need. Cheap doesn’t mean free for all.
30 – Spend time with the kids. If you don’t spend time with the kids, they will want to spend time with their friends at the mall spending your money.
31 – Washer/Dryer. Use cold only for washing clothes, and hang dry what you can. The hot water and the dryer can get pretty expensive to run.
32 – Electronics. Shut down your computer and unplug electronics when they are not in use. Surprisingly, electronics still drain electricity even when they are off. This includes cell phone chargers, too.
33 – Car Repairs. Having to repair your car when you are already tight on money is no fun. Here are some things I have done to bring down the cost: (1) most mechanics will offer a free diagnostic, (2) call at least 3 other mechanics with the specifics of the problem and ask for a quote on the labor (you’d be surprised the difference in price), (3) ask about using after market parts or bring your own parts and (4) don’t be forced into doing something you don’t want.
34 – Be aware of ATM fees. A recent trip to an ATM machine costs $3, plus what my bank charges me. Fortunately, I use a discount broker that covers this cost on both ends. If you are not so lucky, find convenient banks to where you normally get funds or just draw out a little more than usual and keep most hidden at home. Replenish as needed.
35 – Pricing out gas. Be cognizant of the differences in gas prices. While a penny may not make a difference, 20 cents for a 20 gallon tank saves $4 every time. Use Costco, Wal-Mart, and sites like Gas Price Watch to help spot the lowest cost stations.
36 – Need to do some traveling? Use price aggregators sites like Kayak or Trax.com (my favorite) to find lower fares for flights, hotels and car rentals.
37 – Negotiate. When was the last time you tried to negotiate on price? Start with smaller objects, and graduate to hotel rooms and other services or products you buy. If you talk to the right person, you can negotiate almost anything.
38 – Watch the “stupid” fees. These can come from returning videos late to overdrawing your balance to overdue books. Take a moment to figure out what you normally do wrong to cause fees and setup a simple system like using “Post Its” to correct your habits.
39 – Stop the Catalogs. Junk mail, like catalogs, can entice even the ever meager into a full-blown impulse purchase; get rid of the temptations.
40 – Quite Smoking. What a great reason to kick the habit! It costs too much, and your insurance premiums go up because of it.
41 – Re-examine last year’s taxes. If you have the time and gumption, there may have been a few deductions you may have missed. If they are large enough, the government may owe you money.
42 – Walk-In Clinic. For less serious emergencies or injuries, a Walk-In Clinic may offer the same service as a hospital with less cost. But first, see what the local clinic is able to do and not do. Then, take notice of their hours of operation so when an emergency comes up, you can make the right choice. Some pharmacy chains like CVS now have nurse practitioners who can diagnose and prescribe, at lower rates.
43 – Challenge your property assessment. Since the values of homes have gone down in the last few years, you may be able to challenge the city or county on your property taxes. Do some research to see if this is plausible, and then contact your municipality. Weigh your options.
44 – Moving can be a headache, but it doesn’t have to be expensive. You may want to consider alternatives like U-Haul, Penske or Budget Truck. Call all three and negotiate between them. Once a quote is secured, contact a local personnel service that specializes in manual labor to help with the move.
45 – Re-shop for car insurance and homeowner’s insurance. Consider switching carriers. I switched to Geico and didn’t have to change my deductible at all. I saved $40 a month. In addition, talk to your agent about alternatives to your current homeowner’s insurance.
46 – Larger grocery shops. Going to the grocery store once or twice a month will force you to buy only what you need and reduce your urge for impulse buys (outside of dairy, of course). Always make a list before you go.
47 – Use the library. Depending on your location, this can be a great place for books, DVDs and CDs. Some smaller libraries are able to broaden their reach and thereby your selection with other regional libraries. Keep that in mind to find more of what your want.
48 – Go on a diet. I am not talking about joining an expensive diet program, but check a few books out of the library and educate yourself. Diets usually mean less costly food, or sometimes just less food consumption in general, which translates to less out of your pocket.
49 – If you must buy something, use a site that compares prices, like Pricegrabber, Pricescan, Bizrate, Nextag, Shopping.com, eBay and Froogle. One neat site I like is Priceprotectr.com. This site helps you make sure you made a great deal by informing you if your item drops in price up to 30 days after purchase. Price adjustments are good not only for online items, but brick and motor retailers often offer adjustments for many items they sell like clothes or tools for a limited period of time.
50 – Try to fix it yourself first. I never started out being great a something, like fixing the computer, changing the spark plugs, or a number of other things I picked up along the way. But I surprise myself when I first learn how to do these things from a “How To” book or YouTube video. Obviously, you want to start small and simple to help build your skills and confidence. Whenever an opportunity presents itself, always take a moment to consider the possibility.
Let’s face it. An economic crisis is no time to have money troubles. But, most of us can’t help it. We work hard and try to live the life we want. Sometimes the cards are not dealt in our favor. Even if we have picked up some personal finance lessons along the way, we still seem stuck in mud. We have become blind sighted by our current economic crisis, and need to adjust our situation to live as frugally as possible in order to make what we have last.
Now we may not be able to sell our SUV or home in the next month or two, but there are some alternative ideas to help cushion the economic blow to your wallet.
1 – Buy generic versus brands. Branded items, like Cheerios, Charmin, Christian Dior, are so ingrained in our conscious as superior that we forget that other items exist. Unfortunately, we also forget the impact on our wallets. By starting to buy generic items we can start to see savings of $25 or more on a shop
2 – Rethink entertainment. Instead of buying $10 a piece movie tickets or spending $5 at the video store, consider joining Netflix, where you can download free movies to your computer or get several movies delivered to your door for the cost of less than two movies tickets, or consider other forms of cheap entertainment. $40 a month
3 – Downsize the dinner options. It feels almost luxurious to go out for dinner, knowing others have prepared a delicious meal so you don’t have to. And it may seem one meal won’t kill you but saving $10 by eating at home or skipping the $5 appetizers or saving $5 on tips with counter service can easily add up to $200 to $300 for the entire month.
4 – Dump cable TV. I have eliminated cable a long time ago, and just rely on Internet service. Not having TV may seem hard at first, but the result has been a life changer for me. I am more creative, like writing this blog, and have more free time to pursue the things I want to do. For $50 of savings a month, I can make it without the boob tube.
5 – Re-examine insurance. While health insurance for some is a must have, there are supplementary insurance you might pay that may not have a pressing need at this moment. Talk to your insurance professional to see what costs can be reduced or eliminated.
6 – Kid’s allowance. Don’t let them push you around. Yes, you want to give them the best, but in order to genuinely secure a better future for them, determine what is important to them now and what is important to their future.
7 – Electricity. During the summers and winters, this bill can get mighty large. Call your local utility company and ask them what steps you can take to cut your electricity bill. Switching to CFC bulbs (twirly bulbs) is a good start, but more of your electric bill will come from A/C, heat, hot water, the dryer and that new plasma TV you bought.
8 - Credit Cards. You can’t stop making credit card payments, but at least you can call them to negotiate better rates. Use some of the credit card offers to help negotiate a better rate. $20-$40 or more a month on $10,000 balance
9 – Carpooling/Telecommuting/Bike or Walk to work – All these options can equate to saving a weekly $50 tank of gas, reduce wear and tear, and decrease potential maintenance costs.
10 – Cell versus home phone. Decide which is needed more and eliminate the other. If you can, I would consider eliminating the home phone because there are cheaper options like Skype for home telephone services. And if your phone company won’t give you Internet access without having local phone, give high-speed cable from your cable company a try. For the light computer users, trying going to a free WiFi area or the library, and get connected there.
11 - Ask the boss to go corporate casual or just casual. Wearing casual clothes may not only be more durable and last longer, but you can also skip the pricey dry cleaning bill
12 – Cancel Memberships. If you have gym memberships you don’t use or memberships to organizations you don’t go to, cancel them. Unless you use these types of memberships weekly and it helps you to focus or acts as a personal getaway, take the opportunity to consider alternatives, like jogging, biking, etc.
13 – Storage Facility? Do you have a storage facility that you use for your junk? Sell it and then cancel the storage unit. A recent WSJ article says people who use a facility with short-term intentions end up keeping them for 5 years. $100 month
14 – House cleaning/pool service/lawn service/pest control. Can you do any of these services on your own? Borrow a lawn mower or pool brush from your neighbor if you have too. $25 or more a month
15 – Sell your stuff. Unless it may be super valuable for eBay, have a garage sale or post your items on Craigslist. Sure you won’t get top dollar in this environment, but you may something
16 – Rent out a room. There are plenty of folks who need a simple place to stay, and renting out a room maybe a good short-term way to raise money. But before you do, I highly recommend preparing a few hurdles for any prospective tenant like a criminal check, a credit check and a rental history check, along with reading a few good books on renting out to a tenant or calling a licensed real estate agent for help. Without the right preparation and legal documents, this too becomes a legal or financial nightmare.
17 – Renegotiate your mortgage. You may or may not have any money you can refinance, but you can definitely talk to your bank or a mortgage broker about lowering your rate. Although you may incur additional costs, a lower rate may offset them if you can get a significant drop in your rate.
18 – Private versus Public School. If you are paying monthly for private school, you can either put your kid in public school or renegotiate a lower tuition based on your changing financial situation
19 – Beer/Colas/Coffees. These beverage items are the real cost killer when you add it up. Your $4 lattes, $4 beer or twice a day $2 soda or $2 bottled waters add up to $120 a month alone. Tap water is free and healthier for you.
20 – Use coupons. As goofy and “grandma” as it sounds, clipping coupons still works. Sunday newspapers or popular coupon sites are still great sources for coupons.
21 – Change you supermarket. As recent Wall Street Journal article compared several well-known supermarkets chains to a Wal-Mart Supercenter on the exact same food items, and found Wal-Mart to be significantly cheaper. Savings: $15 or more on full grocery shop.
22 – Haircuts. While Supercuts and Hair Cuttery are a great start for cheap haircuts, I can usually find a local barber charging even less. Since they don’t need to pay royalty fees or franchise fees, they can charge a few bucks less. If you are brave enough to do it on your own, go for it.
23 – Dog food. It may be tempting to go for the cheaper brand, but changing a dog’s diet is not healthy for them. Instead, buy the “Costco” size and store in a cool, dry and bug free place.
24 – Pet Medications. I use heartworm and flea medication every month for my dog, Rudy. I order from an Australian company, Petshed.com. They are cheaper for the flea medication and they also offer a generic medication for heartworm prevention. Here are also other things you can do for Fido.
25 – Skip Lotto. In tough times, more people play the lotto lowering your odds of winning, which is pretty low to begin with. If you must, once is enough.
26 – Dental Care. Teeth cleanings are a must, especially if I have to look at you. But taking properly taking care of your teeth will help to keep future costs and recommended visits down. Keep in mind; most times cleaning are done by the hygienist, not the dentist, so your costs shouldn’t be more than $50. I can usually find some specials in the local paper.
27 – Gift cards or cash, instead of gifts. Give a gift card instead of a gift, or better yet, give cash and avoid the transaction fee. You will keep yourself from spending more than you should. If you do decide to buy a gift card, make sure the gift cards aren’t store specific either. While Uncle Fred loves Home Depot, he may need to pay some bills or get food instead.
28 – Canceling certain newspapers. Think about canceling the daily paper, and just have the Sunday paper delivered. The Sunday newspaper can be a goldmine for coupons, and use the online version for the rest of the week.
29 – Downsize the department store. Target, Wal-Mart and other stores can offer substantial savings to those who are in need of clothes. You would be surprised what great stuff they have, but pay attention to those return policies. Goodwill or other consignment shops can also provide some valuable treasures. But, purchase only what you need. Cheap doesn’t mean free for all.
30 – Spend time with the kids. If you don’t spend time with the kids, they will want to spend time with their friends at the mall spending your money.
31 – Washer/Dryer. Use cold only for washing clothes, and hang dry what you can. The hot water and the dryer can get pretty expensive to run.
32 – Electronics. Shut down your computer and unplug electronics when they are not in use. Surprisingly, electronics still drain electricity even when they are off. This includes cell phone chargers, too.
33 – Car Repairs. Having to repair your car when you are already tight on money is no fun. Here are some things I have done to bring down the cost: (1) most mechanics will offer a free diagnostic, (2) call at least 3 other mechanics with the specifics of the problem and ask for a quote on the labor (you’d be surprised the difference in price), (3) ask about using after market parts or bring your own parts and (4) don’t be forced into doing something you don’t want.
34 – Be aware of ATM fees. A recent trip to an ATM machine costs $3, plus what my bank charges me. Fortunately, I use a discount broker that covers this cost on both ends. If you are not so lucky, find convenient banks to where you normally get funds or just draw out a little more than usual and keep most hidden at home. Replenish as needed.
35 – Pricing out gas. Be cognizant of the differences in gas prices. While a penny may not make a difference, 20 cents for a 20 gallon tank saves $4 every time. Use Costco, Wal-Mart, and sites like Gas Price Watch to help spot the lowest cost stations.
36 – Need to do some traveling? Use price aggregators sites like Kayak or Trax.com (my favorite) to find lower fares for flights, hotels and car rentals.
37 – Negotiate. When was the last time you tried to negotiate on price? Start with smaller objects, and graduate to hotel rooms and other services or products you buy. If you talk to the right person, you can negotiate almost anything.
38 – Watch the “stupid” fees. These can come from returning videos late to overdrawing your balance to overdue books. Take a moment to figure out what you normally do wrong to cause fees and setup a simple system like using “Post Its” to correct your habits.
39 – Stop the Catalogs. Junk mail, like catalogs, can entice even the ever meager into a full-blown impulse purchase; get rid of the temptations.
40 – Quite Smoking. What a great reason to kick the habit! It costs too much, and your insurance premiums go up because of it.
41 – Re-examine last year’s taxes. If you have the time and gumption, there may have been a few deductions you may have missed. If they are large enough, the government may owe you money.
42 – Walk-In Clinic. For less serious emergencies or injuries, a Walk-In Clinic may offer the same service as a hospital with less cost. But first, see what the local clinic is able to do and not do. Then, take notice of their hours of operation so when an emergency comes up, you can make the right choice. Some pharmacy chains like CVS now have nurse practitioners who can diagnose and prescribe, at lower rates.
43 – Challenge your property assessment. Since the values of homes have gone down in the last few years, you may be able to challenge the city or county on your property taxes. Do some research to see if this is plausible, and then contact your municipality. Weigh your options.
44 – Moving can be a headache, but it doesn’t have to be expensive. You may want to consider alternatives like U-Haul, Penske or Budget Truck. Call all three and negotiate between them. Once a quote is secured, contact a local personnel service that specializes in manual labor to help with the move.
45 – Re-shop for car insurance and homeowner’s insurance. Consider switching carriers. I switched to Geico and didn’t have to change my deductible at all. I saved $40 a month. In addition, talk to your agent about alternatives to your current homeowner’s insurance.
46 – Larger grocery shops. Going to the grocery store once or twice a month will force you to buy only what you need and reduce your urge for impulse buys (outside of dairy, of course). Always make a list before you go.
47 – Use the library. Depending on your location, this can be a great place for books, DVDs and CDs. Some smaller libraries are able to broaden their reach and thereby your selection with other regional libraries. Keep that in mind to find more of what your want.
48 – Go on a diet. I am not talking about joining an expensive diet program, but check a few books out of the library and educate yourself. Diets usually mean less costly food, or sometimes just less food consumption in general, which translates to less out of your pocket.
49 – If you must buy something, use a site that compares prices, like Pricegrabber, Pricescan, Bizrate, Nextag, Shopping.com, eBay and Froogle. One neat site I like is Priceprotectr.com. This site helps you make sure you made a great deal by informing you if your item drops in price up to 30 days after purchase. Price adjustments are good not only for online items, but brick and motor retailers often offer adjustments for many items they sell like clothes or tools for a limited period of time.
50 – Try to fix it yourself first. I never started out being great a something, like fixing the computer, changing the spark plugs, or a number of other things I picked up along the way. But I surprise myself when I first learn how to do these things from a “How To” book or YouTube video. Obviously, you want to start small and simple to help build your skills and confidence. Whenever an opportunity presents itself, always take a moment to consider the possibility.
Tuesday, January 20, 2009
10 Ways to Save Money During the Recession
By Curtis Ophoven
1) Stay alert as to what is going on in the financial industry. A recession can shake things up very quickly, causing old industries to collapse (like the housing market) and new industries to be born (like the alternative energy market).
The information you gain could save you a lot of money and lead you to new opportunities. Make it part of your daily routine to read a few articles each day and a few books each year. Like author of Rich Dad Poor Dad, Robert Kiyosaki’s, new books called “Financial IQ”. Being prepared for opportunities is perhaps the best strategy you can have. The people who are out of debt and stay informed, could stumble upon a once in a lifetime opportunity.
2) If you don’t already have a budget, it’s time to create one. Use a budget to reduce your unnecessary expenses (which average 30% in the US). A budget could very likely help you save your family from a financial hardship. Here is a great Free Budgeting Tool.
3) Pay down your debt and build a savings account of three to six months of your living expenses. This will be a great help if you get laid off and have to find a different job. Get out of consumer debt as fast as you can.
4) Invest in your children’s education. Education is going to continue to be very important as the global economy has little need for unskilled workers. Most Colleges and Universities are out of touch with the market, teaching skills that have little value in an economic downturn. Your education is too expensive to get a degree in basket weaving. Technical colleges are much better at reacting to market changes, offering programs that are relevant to the current job market – and they are cheaper.
5) Move your investments to lower-risk securities like bonds during the market shakedown, than move back to stocks after the market hits the bottom – in a few years. Another option is to invest in commodities like gold, silver, wheat and corn, which are returning high profits, but they are also very risks, so be careful and don’t bet the farm. The coming inflation and sinking dollar will push long term interest rates higher, paying good returns for anyone that has cash.
6) Your mortgage payment is likely to be your largest monthly bill. Reduce your mortgage with one of the many options including downsizing, doubling up, renting, refinancing or even foreclosing. Here is a good article about this: What to do with Your House
7) Put off dreams with large financial commitments, like remodeling or purchasing a new home. If you have been planning to finish your basement this summer, it might not be a bad idea to wait until next summer – just in case you need the money or run into an opportunity to invest it for a large return or get a good deal on a product being liquidated at a huge discount due to oversupply from the economic slowdown (like a pickup truck, the lots are full of them).
8) Reduce your food costs, by eating out less and buying more food from the grocery store. Plant a small fresh salad and vegetable garden this summer to increase your health and save some money. Food costs are going up for many reasons, Ethanol, population growth, rising cost of oil (falling dollar), increase in natural disasters, etc. A small garden investment could result in a large savings.
9) Create another income stream, even a small one. Maybe you take a second job for a month to pay off a credit card or maybe you sell your baseball cards on Ebay or maybe you find another way to start a small business on the side. Here is a good article about this: Get Your Own Customer
10) Instead of going on an expensive vacation, consider an alternative family vacation this year like - sleeping outdoors under the stars. Many America’s have grown up with an annual family vacation, but it’s time to stop the tradition – at least for a few years. It you don’t have the cash to pay for your vacation, then it’s probably not a good idea to put it on your credit cards.
1) Stay alert as to what is going on in the financial industry. A recession can shake things up very quickly, causing old industries to collapse (like the housing market) and new industries to be born (like the alternative energy market).
The information you gain could save you a lot of money and lead you to new opportunities. Make it part of your daily routine to read a few articles each day and a few books each year. Like author of Rich Dad Poor Dad, Robert Kiyosaki’s, new books called “Financial IQ”. Being prepared for opportunities is perhaps the best strategy you can have. The people who are out of debt and stay informed, could stumble upon a once in a lifetime opportunity.
2) If you don’t already have a budget, it’s time to create one. Use a budget to reduce your unnecessary expenses (which average 30% in the US). A budget could very likely help you save your family from a financial hardship. Here is a great Free Budgeting Tool.
3) Pay down your debt and build a savings account of three to six months of your living expenses. This will be a great help if you get laid off and have to find a different job. Get out of consumer debt as fast as you can.
4) Invest in your children’s education. Education is going to continue to be very important as the global economy has little need for unskilled workers. Most Colleges and Universities are out of touch with the market, teaching skills that have little value in an economic downturn. Your education is too expensive to get a degree in basket weaving. Technical colleges are much better at reacting to market changes, offering programs that are relevant to the current job market – and they are cheaper.
5) Move your investments to lower-risk securities like bonds during the market shakedown, than move back to stocks after the market hits the bottom – in a few years. Another option is to invest in commodities like gold, silver, wheat and corn, which are returning high profits, but they are also very risks, so be careful and don’t bet the farm. The coming inflation and sinking dollar will push long term interest rates higher, paying good returns for anyone that has cash.
6) Your mortgage payment is likely to be your largest monthly bill. Reduce your mortgage with one of the many options including downsizing, doubling up, renting, refinancing or even foreclosing. Here is a good article about this: What to do with Your House
7) Put off dreams with large financial commitments, like remodeling or purchasing a new home. If you have been planning to finish your basement this summer, it might not be a bad idea to wait until next summer – just in case you need the money or run into an opportunity to invest it for a large return or get a good deal on a product being liquidated at a huge discount due to oversupply from the economic slowdown (like a pickup truck, the lots are full of them).
8) Reduce your food costs, by eating out less and buying more food from the grocery store. Plant a small fresh salad and vegetable garden this summer to increase your health and save some money. Food costs are going up for many reasons, Ethanol, population growth, rising cost of oil (falling dollar), increase in natural disasters, etc. A small garden investment could result in a large savings.
9) Create another income stream, even a small one. Maybe you take a second job for a month to pay off a credit card or maybe you sell your baseball cards on Ebay or maybe you find another way to start a small business on the side. Here is a good article about this: Get Your Own Customer
10) Instead of going on an expensive vacation, consider an alternative family vacation this year like - sleeping outdoors under the stars. Many America’s have grown up with an annual family vacation, but it’s time to stop the tradition – at least for a few years. It you don’t have the cash to pay for your vacation, then it’s probably not a good idea to put it on your credit cards.
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