Six Saving Strategies for the New Year
If the recession taught us anything, it’s the importance of savings. Maybe you’ve already made some adjustments to your saving strategy, good. But even if you did, many people have learned that the notion of a safety net is a bit of an illusion when the economy is as tough as it’s been. Nobody ever says they saved too much.
So, if nothing else, in 2012, make your resolutions about going the next level in saving.
Here are some things to put on your must-keep list.
Go small if you have to
A lot of little changes add up to big savings. To get started, consider the My Savings Machine at Bills.com. It shows you how to save big with just trims on basic expenditures. For example, eliminating just $20 a week between a combination of lattes, lottery tickets or groceries can save you more than $1,000 in one year. If you’re starting to panic about the holiday bills that will rear their heads in January, start saving now for an all cash holiday next year, at http://www.bills.com/ways-to-save.
Take control of your health expenses
If you’re a fan of money management site Mint.com, you might like Simplee.com. The site allows you to track, manage and pay your medical expenses all through one central place with explanations and advice offered in easy to understand language. The site can help you save money, time and stress when it comes to medical bills.
Additionally, if you haven’t thought about haggling when it comes to your medical bills, do so. Start negotiating. Before receiving medical treatment, figure out how much you can afford to pay, and then pitch that amount to your doctor, recommends Scott Cramer, president of Cramer & Rauchegger. Then too, just like a pair of jeans costs less at one shop versus another, so does medication -- comparison shop between pharmacies.
Find a silver lining in the real estate cloud
Home values lost nearly $700 billion in the U.S. last year, but real estate doesn’t have to be a total losing proposition. With interest rates still at historic lows, take advantage of refinancing. If you’ll shave at least a percentage point off your existing rate, it’s likely worth it to refinance. The savings could be huge and go a long way in providing extra cash to put toward retirement or to start or continue to fund an emergency reserve. If you have three months of living expenses set aside, build it to six. Resolve that this is for “emergencies” only, not for paying for your overdosing on a fun night on the town, expensive shoes or the latest electronic gizmo.
Also check your real estate tax assessment. Appeal if it’s too high based on your neighborhood’s prices, suggests Eleanor Blayney, the CFP Board’s consumer advocate. To further still cut costs associated with home sweet home, check your homeowner’s insurance to see if you are carrying more than you need for replacement coverage. Negotiate any and all home improvement projects you have on tap for 2012.
Stick to a budget
These days, even billionaires need a budget, so get over it. You know the big monthly obligations like your mortgage or rent, but it’s the gray areas that get you in trouble. Develop a specific monthly budget for your household. Determine how much you will spend on everything and consider it done. If you really want to stretch yourself in 2012, consider going cash only. When the cash is gone, the fun is done.
Just say no to debt
Would you really like to shock your creditors? Pay your bills before they’re due. This could help you save hundreds of dollars in accumulated interest. Make a plan and always pay off more than the monthly minimum with a focus on paying off high-interest rate cards first.
You can also transfer a big balance to a card offering a zero percent introductory APR for the first 6-12 months, and pay it off in that time period, again saving on interest.
Running on autopilot may work for the captain of a plane once they’ve found that ultimate altitude, but it’s no way to grow your money. Review your investment portfolio, monitor performance and see if you need to re-balance. Set it and forget it can mean much less savings in the long run. While you’re reviewing investments, it’s also a good idea to look at your suite of insurance policies. What’s changed in your life? It could be that you no longer need as much coverage and can save money on premiums.
What’s the message of this resolution story? If you want to be in a better financial position at the end of 2012 -- no sleepwalking, take charge.