Tips to Improve your Bottom Line in the New Year
In '10 New Year’s Resolutions for Saving Money' author Laura Coffey offers 10 simple ideas to save some green in 2007. She even guarantees that if you follow through on just one or two of these tips, you’ll unavoidably improve your bottom line in the New Year. Check ’em out:
1. Slash the Incidentals – Read through one of your credit-card statements, looking out for ongoing monthly fees that you may have utterly forgotten about. Cancel any club memberships you don’t use, magazine subscriptions you don’t read, and any other unnecessary charges that may have slipped through the cracks.
2. Pay Yourself First – If it seems like all the money you make falls straight through your fingers and gets gobbled up by bills and other expenses think about a reasonable amount you could start to view as yet another monthly bill, and instead squirrel it away in savings.
3. Decide Where to Put that ‘Payment’ – Decide where to put your “pay-yourself-first” money, be it in a mutual fund or other stock-oriented fund. If you need the money to be more liquid than that, consider an online savings or money market account that gets linked to your current checking account. Many of these online-only accounts are insured by the Federal Deposit Insurance Corp. (FDIC) and pay annual percentage yields between 4 percent and 5 percent or even higher, as opposed to paltry yields of about 0.2 percent to 0.5 percent for traditional savings accounts. To find such an account, go to Bankrate.com.
4. Pay Ahead on Your Mortgage - By paying an extra $100 a month toward the principal on a $150,000, 30-year mortgage with a fixed interest rate of 6.5 percent, you’ll save more than $51,000 in interest and be able to retire your mortgage nearly seven years early. An extra monthly payment of even $20 or $25 can make a surprising difference.
5. Shed Credit Card Debt - The best way to avoid creating problems for yourself in 2007 is to use your credit cards cautiously and sparingly, always being sure to pay the entire balance off in full and on time each month. If you’re already in a serious credit card pickle from 2006, try transferring your credit-card balances to a card with a lower interest rate ASAP. Or better yet, transfer balances to cards with rates of 0, 1 or 2 percent and concentrate on paying them off entirely while those low rates last. For more details on dealing with credit card debt, check out the Sound Money Tips Credit Card Guide.
6. Rearrange Your Pay Dates – If for instance, you keep finding yourself getting hit with extra finance charges because your credit card bill is regularly due before you’ve received your paycheck, call the credit card company and ask to have your due date changed.
7. Quit Smoking! - Depending on the “sin taxes” where you live, you could save more than $2,000 a year if you go from being a pack-a-day smoker to a non-smoker. You’ll also qualify for significantly cheaper life-insurance rates.
8. Max Out Retirement Savings - Contribute as much as you can to a 401(k) or 403(b) tax-deferred retirement plan. You’ll get an automatic tax break, plus your employer may match part of your contribution – often 50 cents for each dollar you contribute, for up to 6 percent of your pay. If your employer doesn’t offer this benefit, open a traditional individual retirement account or a Roth IRA and start saving anyway.
9. Review Your Estate Plan – Do you have a will or living trust? If not, get that taken care of this year. If you already have such documents, make sure they’re up to date. This is especially important if you recently had children or if kids might be in your future.
10. Analyze Your Workday Expenses - Instead of eating in restaurants every day, bring your lunch to work from home as often as you can; take your clothes to the dry cleaners early to avoid paying extra for same-day service; and if it’s feasible where you live, try commuting to work by bus or by another form of public transportation. It could save you money and give you added reading and relaxation time.
Comments
I would add to #5, that, once you've paid off your credit card debt, you can then begin maximizing your rewards by funneling normal spending through credit cards (and paying off your balance in full each month).
A good tool for finding the card that will pay you the most is the rewards calculator at Credit Card Tune-Up: Discover the Best Credit Card Reward Deals.