Every month, when you get your bills, you probably sit down and start paying them without thinking much about it. These fixed expenses – the rent or mortgage, utilities, cable, insurance – get paid each month as a matter of habit. And with a nine-to-five, non-stop lifestyle, who has time to look closely at each bill and consider whether the same services could be procured more cheaply?
But you should. It’s your hard-earned money. Take some time to think about where it all goes, and you may be able to make your household income go further, while still enjoying all the things you enjoy now.
1. Mortgage rates. You may have gotten a good rate a few years ago when interest rates were higher. Now that mortgage rates have gone down, are you still paying that higher rate?
Refinancing your existing mortgage may require paperwork, but most banks will help you through the process, lowering your interest rate and saving money on interest for as long as you own that house.
If you’re planning on moving in the near future, it may not make sense to refinance an existing mortgage, but if you’re homebodies – there to stay – talk to your bank’s mortgage loan officer* to see about options for lowering your interest rate.
2. Insurance. Insurance is all about lowering the risk in our lives. We pay insurance companies to assume some of the risk for contingencies from health emergencies to a tornado.
However, you can overspend on lowering risk. For example, if your auto policy has a $200 deductible, you’ll pay more for it than for a policy with a $1500 deductible because the insurance company assumes more risk. So, if you’re a safe driver with an unblemished driving record, and you could afford to pay that $1500 deductible in case of a claim, you can probably lower the cost of car coverage by switching to a higher deductible. The same applies to other types of insurance – homeowners, business, health – and other coverages that typically include a deductible. Assess your risk exposure to help lower the cost of protecting yourself, your family, and your personal assets.
Before automatically renewing each policy, check to see if another reputable carrier can provide the same coverage for less.
3. Fees. Late fees on credit cards, mortgage penalties when the “grace period” runs out, late fees on utility bills, even late fees on DVD rentals – all these fees add up, and if they add up each month because you’re not paying attention, you’re throwing away money. Get in the habit of paying incoming bills within 48 hours of receipt. No one likes to pay those bills, but if you can eliminate a few fees each month, you’ll end up with a lot more money in the long run, as well as helping keep your credit score healthy.
4. Savings. Oh sure, we want to save, but there never seems to be enough left over. So you ignore the future, and how much money you’ll need to get the kids through school, move to a bigger house, and enjoy a worry-free retirement.
Are you saving enough? Visit your local bank branch about ways to increase the amount you save each month. You can create college tuition accounts that grow tax free, personal health savings accounts to help you prepare for the unexpected, an individual retirement account – IRA – for a more secure retirement.
Change your bill paying sequence. The first check you write should be to yourself, for deposit in a long-term savings fund that will grow to meet financial needs in the years ahead.
Save as much as you can as early as you can. The longer you’re invested in a college tuition plan, the larger the cash balance, and the more manageable those college tuition payments. Save for tomorrow, even if it “stings” a little today.
5. Memberships collecting dust. You bought a gym membership, went twice, never went again. You have a warehouse store club card you never use. You pay annual dues to a local organization, but you don’t attend those monthly “rubber chicken” luncheons.
Drop these memberships, if possible, even if you have to pay a penalty. In the long run, you’ll save. Also, read the fine print. Some of these memberships “automatically renew for your convenience,” and stick you with another year’s membership because you didn’t realize it.
If you don’t need it or want it, cancel it and save – even if it’s just a little money. All those small savings add up over the course of a year.
6. Credit card debt. Credit cards can be useful money management tools, smoothing out the financial bumps of life. However, if your credit cards are maxed out, and your personal economy is over-extended, you’re paying a lot for that debt.
Pay down credit card debt and keep your balance under control. Always pay more than the minimum due, and if you’re using one credit card to pay off another, talk to your bank rep to help control the interest you pay on debt.
7. Magazine subscriptions. If you don’t read it, cancel the subscription. This one is a total no-brainer, and again, if you can save $20 by cancelling one subscription, add it to the total annual savings you’ll enjoy by managing your personal economy.
Think about where your money goes each month, and ways to cut that outflow of cash. The next time you sit down to pay the monthly stack of bills, go through each one to find ways to cut costs – daily, monthly, yearly.
*To find out more about mortgage options from Nevada State Bank, please visit https://www.nsbank.com/mortgage/index.jsp.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.
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