Readers Digest recently published an article, 29 tips to save money. So, I thought it would be good to take a look at it. However, there was one tip that they left out. More on that later. For now, we will summarize their 29 tips in 10 basic tips.
1. Itemize your 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.
2. Free Checking - Don't fall for advertised "free checking" gimmicks. Make sure your checking is really free. That means no minimum balance to maintain the "free" status. (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.
3. Cut up your extra credit cards.
4. 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.
5. Contribute to your company's retirement plan (be it a 401k, 403b or simple IRA).
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 Many people don't realize that the contributions you put in Roth IRAs can be withdrawn free of penalties at any time.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.
6. Pay your bills on time.
7. Pay extra on your mortgage. - I have said this repeatedly....the sooner you get your mortgage paid off the better of financially.
8. Think twice about life insurance. - If you are single and don't have any dependants, then you really don't need 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.
9. Write your will. - Even if you are single, write a will. I cannot stress that enough.
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.
10. Bank online. - This is something I do religiously every month. I rarely use stamps anymore. All, because I use my Credit Union's online bill pay system.
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.
So what was the tip they left out? The tip that would have made it 30 tips? Simple! Don't buy this magazine.
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go ahead share your thoughts with me now.
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