Finances and Bill Paying Part 2 How to Find Powerful Ways To Beat The Recession By Saving Money?
Part II Finances and Bill Paying 1. Credit Cards Are a Huge Often Time Unnecessary Expense Use credit cards only for emergency. Although convenient, credit cards are dangerous and damaging. In addition, if you have a credit card that has a $1,000 balance and you pay only the minimum payment each month, it will take you between 20 and 30 years to pay off that $1,000 balance since the majority of money is going strictly toward the interest and not the principal amount. If you have credit cards and your credit is in good standing, call your credit card company, and ask for your interest rate to be lowered. It is truly that simple. Unfortunately, most people do not even realize this is an option so they never make the call. Just tell the representative that you want a better rate on your credit card and they will take care of your request. 2. Mortgage Payment Paying one additional mortgage payment each year, whether in a lump sum or monthly increments, can lower a 30-year loan down to 18 years. If you pay more than one extra payment, the number of years will decrease even more. Since this additional payment will be applied only to the principal and not the interest, you end up saving thousands and thousands of dollars once the home is paid off. 3. Insurance Shop around for insurance and work with a good agent that can provide information on discounts such as good student, multi-car discount, etc. Some people think the price of insurance is the same from one company to the next. However, prices can vary dramatically and to ensure you get the best deal, you need to consider all your options. 4. Utilities Set up some rules in your home such as turning lights off when leaving the room, having only a parent adjust the air or heat, leaving the doors or windows open when letting either cold or hot air into the house. Utilities are expensive and a great money saver is to monitor how they are used in your home. Another great idea is the investment of buying an energy-efficient hot water heater. If you cannot afford one, lower the setting so you are not heating water so hot. The hotter the setting, the more energy used. If you go away on away from the house for several days, considering turning your heat or air off. If just going away for the day or night, this is not recommended. It's more efficient is used for times when you will be away from the house three or more days. 5. Unsecured Creditors Make a list of all your unsecured debts along with creditor contact information and payoff amount so you can have an accurate record of how much you owe. Choose one creditor, possibly a credit card, and focus on paying off that bill. Once you have achieved that goal, choose another. Start with the debt that has the highest interest rate since it is the one costing you the most money. Be sure not to make this a vicious cycle. Once you have paid off a bill, don't run out and make another one just because you have paid one off. 6. Buy versus Rent or Lease When looking at homes or automobiles check the rent and lease options. Depending on your particular situation, renting or leasing may be a better financial decision. Weigh all your options and see which choice makes the best sense from a financial standpoint. 7. Proper Maintenance Purchase an annual home warranty policy. These policies can run from $350 to $500 a year and offer extremely valuable options. The way most of these policies work is that if you have something break, such as your garage door, dishwasher, air conditioner, etc., for a minimal fee, usually $50 to $100, a serviceperson will come to your home to fix the item. Best of all, if you have five things broken and the same serviceperson is qualified to fix all of them, you are still charged the $50 to $100 fee once, not five times. For your automobile, you might look into purchasing an extended warranty. If you ever need either one of these policies, they will save you tremendous value. 8. Company Stock / 401K Contributing to employee stock options or a 401K plan is a wonderful opportunity to save. Most companies will match your contribution, sometimes dollar for dollar, up to a maximum, generally 6%. From each pay check, you can have a small amount of money deducted (1%) and up. Over time, that money grows and since the business is providing a match, you get free money. 9. Pay on Time For every payment you pay late, you are charged a late fee, which can range from $25 to $50 or more depending on the company. Therefore, if you just made a $50 payment but it was paid late, nothing was paid toward the debt. Instead, the entire $50 went toward an unnecessary fee. To avoid spending unnecessary money, be sure you mail your check in time to avoid these fees. 10. Selling your Home If considering putting your home on the market, make sure you work with a reputable realtor. A good realtor versus one that is not as experienced can be the difference of thousands of dollars. A good realtor will know exactly what you need to do to your home to get it in the best selling condition, which in turn will get you more money. In addition, experienced realtors know all the best methods for advertising and selling your home while saving you the most money. 11. Check Receipts and Statements If you were to check your grocery or store receipt, approximately 50% of the time you would find an overcharge. This happens all the time and in some cases, the charge can be substantial. The same is true for credit card statements, bank statements, phone bills, etc. Check the detail because it is quite common to find errors. These mistakes can easily be corrected simply by asking and providing a copy of the receipt or statement. 12. Challenge the Doctor/Hospital If you have stayed in the hospital recently, you know the outrageous charges associated with everything used. While you could buy a box of bandages for a small cut in the drug store for $5.00, at the hospital, they will charge you $10 for one bandage. While the government and insurance companies are cracking down on these charges, you should check things closely and challenge anything that is ridiculously priced. The same is true for your doctor. One woman having a hysterectomy was asked by her doctor if she wanted her appendix removed at the same time. The patient thought it was a good idea and agreed. However, after the surgery when the bill came, there was an additional $1,200 for the removal of the appendix although the doctor never mentioned an extra charge. The woman called her doctor to discuss and the doctor removed the charge. If something seems way out of balance, question it. Something else that most people do not know about is what is called "professional courtesy." If you are having financial difficulties, you can ask your doctor if they will write off any balance owed as a professional courtesy. Many will and if not the full amount, at least some. 13. Overdraft Protection Almost everyone has at one point or another had an insufficient check. Most banks charge $20 per returned check, which if not careful with your account, can quickly add up to a lot of money. If you have a savings account, consider adding overdraft protection onto your checking account so if you ever go into a negative balance, the money would automatically be covered by your savings. Most banks offer this service free. 14. Bank Accounts Make sure you work with a qualified banker that can set up the "right" kind of account for your type of spending. There are numerous options specifically designed for people that write a good number of checks versus those who do not. Check with your existing bank to ensure you have what you really need and if they are not willing to work with you, change banks. In general, credit unions are good options. Their rates are typically lower and because they are employee owned, you can find better options 15. Appropriate Deductions Rather than spending money just for the sake of spending, change the amount of deductions you have taken from your pay check for your 401K or stock options. This is especially great if your company offers a competitive matching program. Increasing the amount you have deducted can quickly add up to a nice savings and is especially nice for retirement. 16. Christmas Fund Many banks and financial institutions offer a Christmas Fund program. This is an excellent way to put aside some money for your holiday shopping so you do not end up with a ton of spending. With these programs, you do not even miss the money and better yet, less stress around the holidays. 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