Tuesday, March 04, 2008

20 Ways to Save More Money

20 Ways to Save More Money

I found and excellent ariticle over at Kiplingers magazine on 20 ways to save. Below is the article along with my comments.

You've heard of the saving crisis in America. You've probably even thought, 'yeah, I should probably save more.' But eking out an existence is tough on a starting salary and sometimes comfort takes precedence over cutting corners. Besides, if you can only save $50 or $100 a month, is it really worth it? The answer: absolutely.

I use to think that however almost 15 years ago I started saving $50 per month for my kids education. Each year when I could I would increase the amount of the monthly withdrawl. Overtime it has really added up and of course this is due to the miracle of compounding and the advantages of starting early.

By starting to save now, you're giving your money -- however little it is -- time to grow on its own. The magic of compound interest means that you can contribute less money for fewer years if you start when you're young and still end up with more cash than someone who waits.
For example, if Natasha starts saving or investing when she's 25 and saves $100 a month for ten years then lets the money sit, her stash will grow to $174,928 by the time she turns 65 (assuming an 8% annual return). If Anna waits to until age 35 to start saving, and socks away the same $100 a month for the next 30 years, she'll have only $135,940 by 65. Anna will have contributed three times as much as Natasha, but will end up with nearly $39,000 less.

It always amazes me when I meet young people who are not saving for their retirements. Start early and you will benefit greatly. Additionally, as you move along in your life you will find that even as you make more money you will spend more money. So get use to saving right away. Check out this book The Retired Millionaire Exposes Everything! Click Here! .

This week is America Saves Week, and it makes as good a time as any to get started. Think you don't have enough money to save? We've compiled a list of our best tips to find extra money in your budget to sock away. These strategies won't require you to take a vow of poverty -- we know money's tight already. Rather, they're small and simple cost-cutters that'll help you get started saving as soon as possible.

1. Give yourself a raise and bank it. Boost your take-home pay by adjusting your tax-withholding and have the difference in pay automatically transferred to an online savings account. Kiplinger's tax-withholding calculator can help you revise your W-4.

I have never been good at figuring out my with holding. So if you can do it great. What I do instead is use a special savings account which automatically pulls money out of the checking account and pops it into an account at is used for special items. For example, I use my special savings account for a Christmas fund, paying property taxes, paying for kids annual tuition bills. How many of us are still paying off our Christmas debt. If you had a special savings account your bill would be paid off or at least alot less.

2. Enroll in a 401(k). If your employer offers a 50-cent match for every dollar you contribute, even adding $60 a month will net you over a grand a year. Plus, you defer paying taxes on your contributions, giving you a bigger paycheck now.

Enrolling in a 401K is a triple whammy and that is a good thing. First of all most of the 401K have a matching plan so if you save 6% they match like 3%. Second the money you save in a 401K is tax free dollars meaning that you earned the money, banked it in the 401K without and taxes being taken out. It is the number 1 and in most cases the only tax deduction most of us have left. And finally, the third items is the money in your 401K grows tax free. Sweet!

3. Raise your car insurance deductible. Upping your out-of-pocket outlay from $250 to $1,000 can save you 15% or more off your premium.

I totally agree with the high deductible. However, I would add the following, first of all you can only raise your deductible once. I recommend that at least every 2 years you shop your car insurance around. My house insurance was $900 a year. I went to a new broker and they lowered my house insurance to $600. Then of course every year it went up, like $100 a year. So after 2 years of that I called the current broker and asked why it was going up so high and what they could do about it. The broker is an independant and they shopped it around for me. They were able to get the payment down to $575. That was even lower then where I started out 2 years ago. Pretty cool!

4. Pay off your credit card. Carrying a $1,000 balance at 18% blows $180 every year on interest that you could put to better use elsewhere.

I have wrote about paying off you debts in this blog extensively, you have to learn how to stop using credit cards and payoff your debts. First of all, don't borrow money from a credit card company. Borrow money from a bank, you will find much cheaper loans at a bank. Second don't incurr debt on something that doesn't last like a dinner out or a vacation. Who wants to be paying for last years vacation this year and you are already thing about this years vacation and the bills.

5. Go green. Control energy costs with a programmable thermostat. Prices start around $50, but you'll cut your heating-and-cooling bill by 10-20%.

Another idea, just turn down the thermostat and where a sweat shirt. Also another great way to save on energy costs is to drive slower. I use to run up and down the freeway way to fast. I back it down to 70, and you would be amazed what is does for your mileage. Also, if you don't have a garage, don't pre-start your car in the morning. This wastes a ton of gas.

6. Bundle up. Getting a package of phone, Internet and cable from one provider can save you about $50 a month.

This one really pisses me off. Our stupid cable bill is $120 a month, phone is $38 and that doesn't include cell phones. One tip I have on the cell phones, consider using a pay as you go phone with no contract. My wife has one and her cell phone bill is only $200 per year. That is only $16 a month. We buy her a $100 card when she needs more minutes and it last almost 6 months. Also, cut the long distance service on your land line. We use calling cards. It is only $.04 per minute.

7. Use your employer's FSA. Flexible spending accounts let you pay healthcare costs with pre-tax dollars. If your company offers them, take advantage and save 33% or more.

This is your second largest deduction that you can take right out of the pay check. These are tricky though, because if you don't use the money you loose the money. They also tend to be a lot of record keeping. But I still use mine.

8. Get a credit card with rewards. Spending $80 a week on gas and groceries? Putting it on a card with 5% cash rebates will earn you nearly $200 a year.

I am a huge fan of cash back cards. The caution here is don't sign up for a cash back card and then not be able to pay off your credit cards. Additionally, make sure your cash back cards don't have an annual fee. No sense in paying $100 to get $200 back.

9. Kick the habit. Smoking is hard on your health and the wallet. Three packs a week averages $50 a month. Learn more about how getting in shape can fatten your wallet.

My work is even offering cash incentives to get healthy and stop smoking.

10. Brown bag it. Instead of spending $8 on takeout every day at work, bring a bagged lunch for $5. You'll save $60 a month and $720 a year.

Eating lunch out is expensive. I disagree with the math here. I think you can bring your lunch for less than $5 and when you eat out it is usually a lot more than $8. Huge savings here when you start to cut back on the number of family dinners out. Another thing to consider is to cut back on the drinking in the bars. Have a beer at home they only cost $.50 at home and they are $3 to $4 in the bar!

11. Negotiate your rate. Instead of paying an APR of 18% on your credit card, call your issuer and ask for a lower rate. If you have good credit, your lender might consider it and if you can provide examples of offers you've gotten from other companies, it'll strengthen your case.

I recently wrote a post on negotiating with credit card companies.

12. Travel on the cheap. Bypass the old trifecta of travel search engines (Travelocity, Expedia and Orbitz) and head straight for Sidestep.com, which will search them all -- saving you money and time. For last minute deals, try Site59.com. And see our list of the 25 Best Travel Sites for more cost-cutting resources.

I recently wrote a post on finding cheaper flights. Vacations are expensive! Consider driving, not staying at a resort, you never spend time in the room anyway.

13. Insure yourself. Even if your company has a health plan, you may be able to do better for yourself. Pairing a high-deductible medical policy with a health savings account -- which lets you put away pre-tax dollars for out-of-pocket medical expenses -- can save money on premiums. Shop around at http://www.ehealthinsurance.com/.

14. Make media free. Dust off your library card and enjoy DVDs and books for free. If you'd normally rent a movie a week and buy a book a month, you can cut costs by $30.

15. Change your calling plan. The average wireless-phone user spends about $60 a month, including taxes and fees. If you talk for 200 or fewer minutes per month, switching to a prepaid plan where minutes cost 25 cents a minute could save you $10 a month. Compare plans at http://www.myrateplan.com/.

16. Park your car. Why pay $25 a week in gas when you could pay half that to use public transit? Or check out carpooling at http://www.erideshare.com/ and http://www.carpoolconnect.com/.

17. Ditch your gym. Forget the $40/month gym membership that'll cost you almost $500 a year and check out community centers in your area. Some may be free or charge a minimal fee such as $100 a year. Or buy a good pair of running shoes and work out the old-fashioned way.

18. Reshop your auto insurance. Using a comparison site like InsWeb can help you determine if you've got the best deal.

19. Learn to cook. Cooking at home saves on your food budget and it could even improve your dating prospects -- who isn't impressed by someone who can prepare a great meal? Check out Nine Ways to Get Ahead for more practical financial advice.

20. Keep track of your money. The best way to save is to know what you spend. It might not be pretty, but detail every expense for a month to get an idea of where you can cut back. Nearly everyone has some fat they can trim from their spending to put toward a savings goal.

Thanks for visiting and feel free to leave a comment or idea. By the way I am running a little survey to get my readers opinion on what items I should write more about so please take the survey, it is over on the left hand side of the page. Also for related articles check out the tags below. You might find something usefull. If you enjoyed this post please Subscribe to Strategies for Life.

1 comment:

Bob said...

Do you have some ideas on how to save money. Leave me a comment and share!