Sacramento Head Start Alumni Association

More Than Two Dozen Ways to Save Money

Sep 06, 2004

More Than Two Dozen Ways to Save Money

Lucy H. Hedrick
Hedrick Communications

Special from Bottom Line/Tomorrow


egardless of the state of the economy, you don't want to pass up any opportunity to save money. Of the hundreds of ways to save, here are some of the best. Stop procrastinating. Put them to work for you now.

PERSONAL FINANCE

Banking. Credit unions are a thrifty alternative to banks -- they usually charge less for consumer loans and pay more interest on savings. Call local credit unions to inquire about membership or contact the Credit Union National Association, Inc. (www.creditunion.coop, 800-358-5710) to find the address of your state association. Ask about credit unions you may be eligible to join.

Important: Only join a credit union that has deposits insured by the National Credit Union Administration (NCUA). It provides federal protection identical to the protection that the Federal Deposit Insurance Corporation (FDIC) provides banks.

Check money-saver: Order checks directly from a printer (such as www.123checksonline.com or www.checkworks.com) rather than purchasing them through your bank. Savings: About 50%.

Debt. Reduce your debt to save money. One way: Use money from savings accounts that pay low interest to pay off high-interest credit card debt.

Example: If you have a money market account paying 0.75% and credit card debt costing 14%, you're losing 13.25% in interest each year.

Credit cards. Select the right type of card for your needs. Call around or visit www.bankrate.com to explore your choices. What type of card you should look for...

If you carry a balance, opt for a low-rate card.

If you pay off your balance each month, choose a no-fee card.

If you spend a lot monthly, opt for special-offer cards. You can earn airline mileage, cash back or points toward merchandise.

Examples: Discover (www.discovercard.com) gives up to 2% back in cash... Shell MasterCard (www.866getshell.com) lets you earn 5% on purchases of Shell gasoline and 1% of other purchases toward future gasoline purchases... VehicleVantage Visa ( www.nc-cardservices.com) gives you a 1% rebate good toward the purchase of any new or used car, truck or motorcycle.

Insurance. Comparison shop for your insurance needs to find the lowest prices. Check other insurers or go to www.insure.com to get quotes from more than 200 leading insurers. More...

Cut car insurance 30% by increasing your deductible from $250 to $500.

Cancel collision coverage on cars older than five years.

Don't take insurance coverage when renting a car -- your own policy, and even major credit card companies to which the rental is charged, will cover any liability.

YOUR HOME

Mortgages. You can save thousands of dollars in interest costs by accelerating your mortgage. Options...

Pay additional principal with each payment.

Pay one-half the monthly amount every two weeks. That adds up to one extra payment each year.

If there are more than 15 years remaining on your mortgage, refinance using a 15-year loan. You'll pay more in the short run but save thousands overall.

Utilities. Check to see if your utility company has two-tier pricing. If so, run major appliances (washer, dryer, dishwasher) at off-peak times -- weekends, holidays and weekdays between 10 pm and 10 am.

Buy energy-efficient appliances. They may cost more up-front, but you'll save in operating costs over the life of the appliances. To check energy ratings, look at the Energy Guide label on the appliance or go to www.energyguide.com.

Selling your home. Market it yourself to save the usual 6% real estate commission. Make sure you have the time and ability to advertise and show your home to its best advantage.

If you can't, consider using a discount Realtor. Foxtons (800-225-5398, www.foxtons.com), which operates in Connecticut, New Jersey and New York, charges 2%. Help-U-Sell (800-366-1177, www.helpusell.com) charges a flat fee payable at closing, the amount of which varies nationwide.

Savings: On a $200,000 home, you could pay as little as $4,000 (2%), rather than $12,000.

Moving. Save on the cost of a move by...

Moving on a weekday. Costs are 50% lower than on a weekend.

Packing everything yourself to save at least 10%.

Getting a binding estimate in writing before contracting with a mover. In about 25% of nonbinding estimates, the actual cost of the move exceeds the estimate. With a binding estimate, the price is guaranteed.

INVESTMENTS

Fixed income. Buy government instruments to save on purchase costs and taxes. Savings bonds (Series EE and I) can be purchased from your bank or the US Treasury on-line at www.savingsbonds.gov. Interest is state tax free. Federal tax on interest can be deferred and may even be exempt if used to pay for higher education costs.

Treasury bonds and notes can be purchased directly from the Treasury on-line (www.publicdebt.treas.gov/sec/sectrdir.htm) or at a Federal Reserve bank. Here, too, there's no purchasing fee and interest is state tax free.

Equities. Save on investment costs by buying no-load mutual funds -- the annual management fee is usually less than 1% and there are no sales fees to buy or to sell.

Buy stock through dividend reinvestment plans (DRIPs), which allow you to purchase stock directly from the company and reinvest dividends for more stock. There's usually only a small administrative charge for purchases (see www.moneypaper.com).

THE LAW

Power of attorney (POA). Giving a POA to a spouse, adult child or friend can save you money should you become incapacitated. Your family can avoid the expense (court costs and attorneys' fees) of going to court to have someone appointed to manage your financial affairs.

Divorce. Mediated divorces cost about 50% of what contested divorces cost. Caution: Don't use mediation if you have questions about your spouse's honesty, if he/she is involved in criminal activity or is mentally incompetent, or there is current physical abuse.

CARS

Here are ways to cut your costs...

Pump your own gas. Also, add oil and windshield fluid yourself. Buy oil and fluid by the case at an auto discount store.

Think twice before buying an extended-service contract. It may merely duplicate the manufacturer's warranty. Check the facts on auto-service contracts at the Federal Trade Commission Web site at www.ftc.gov. Click on "Consumer Information," then "Automobiles."

COMPUTERS

Buy a used computer (if it has a vendor warranty) or a refurbished one (which usually comes with a vender warranty, although it may be a limited one). The best is a manufacturer-refurbished computer, one which has been restored to exact manufacturer specifications and comes with a manufacturer's warranty. Find these at www.gateway.com, www.dell.com and www.ubid.com. Prices usually run about 25% below a comparable new computer.

TRAVEL

Take advantage of discounts and special offers...

Travelers as young as 50 qualify for discounts on hotels, cruises, airlines and car rentals if they are members of the American Association of Retired People (AARP). You don't have to be retired to join. Membership is $12.50 per year.

When booking a hotel room, ask for a discount through AARP, military, business or any other discount plan available to you.

If you have the time, volunteer to get off an overbooked flight -- in exchange for cash or free round-trip tickets.