Wednesday, September 05, 2007

Thursday Thirteen #32 -- Tips for hanging onto more of what's yours


THIRTEEN WAYS TO BUILD &
PROTECT A NEST EGG

as humbly suggested by

THE GAL HERSELF

I spend my workdays thinking about money. My client is a venerable insurance and financial services provider, and I write their marketing materials. Through my work I’ve learned a lot about money … not all of which I’ve taken to heart. (Any of you familiar with Sophie Kinsella’s Becky Bloomwood? I see charming, albeit smaller scale, similarities between the Shopaholic and myself.)

At any rate, I’d like to share 13 of the things I’ve learned while working on this account. These tips are smart, simple, and they can make a difference. Do as I say, not as I do, and adopt as many as you can.

1. You’re not alone. Nobody feels they save enough money. I’ve sat through focus groups and read testimonials from people of all ages who believe they have made unwise decisions when it comes to saving for tomorrow. So let yourself off the hook. Forget the past and instead concentrate on your future.

2. Establish an emergency fund, and then use that for emergencies. Retirement savings tend to be tax-deferred, so you lose both interest and tax benefits if you take money out of your IRA to repair the roof or buy a new furnace.

3. Pay yourself first. Save a little extra each month, no matter what. One way to build your incremental savings fund is with US Savings Bonds. You can buy them online, any time, day or night. They pay competitive interest, and it’s tax-deferred (which means you get to keep more of it). And if you absolutely must, you can cash bonds in after just 12 months. www.treasurydirect.gov

4. Yes, you can so come up with extra money every month! Don’t dismiss a savings idea because it’s “only a few cents” or “just a dollar.” Cut coupons and then put the 35¢ you saved on Barilla Pasta into a cash jar. Go to a movie matinee instead of the evening movie, again dropping the difference into the money jar. Pass on a single latte each week … limit yourself to just one beer at happy hour … switch to the store brand catsup … With a little discipline, you’ll find the change in your cash jar can rapidly turn into incremental savings. (This is one where I fall short. I save the money, but I don’t stash the savings away; I buy more purses.)

5. Walk the extra block and only make withdrawals from your network ATM. Eliminating the fees charged by both your bank and the out-of-network ATM can save the average consumer $150/year.

6. If your employer has a savings plan, participate! The money is deducted from your check so you won’t be tempted to spend it, plus you’ll be lowering your federal taxes.

7. Know how much you pay in credit card interest every month. Don’t work on paying off the card with the biggest balance, even though that’s the account that may require the largest payment. Instead concentrate on paying off the account with the highest APR. In the long run, that will save you more money.

8. Make sure you’re actually going to use your bonus points, airline miles, etc. Most of the credit cards that offer rewards charge an annual fee. If the miles expire before you can use them, you may have just wasted that $50/year fee. Better to switch to a card that doesn’t pay you back … but also doesn’t cost you anything.

9. Emergencies really do wipe people out, so make sure you have the right kind, and right amount, of insurance. Health, disability, renters/homeowners, auto are a good place to start. As I inch closer and closer to 50, I’m taking a closer look at long-term care insurance, too.

10. On the other hand, don’t carry insurance you don’t need. For example, whole life insurance doesn’t make a whole lot of sense for most singles, parents of grown children, or homeowners whose homes are paid off. If all you need is enough to put you in the ground (the Gal said delicately), less expensive term life insurance can cover those final expenses just as well. Yes, whole life does earn equity you can borrow against, so it’s never a BAD idea. But you must have the policy quite a while before you can do that, and if you put the difference between a whole life premium and a term premium in a savings or investment account, you could very well make more money. (Of course, you have to have the discipline to do that, and discipline is not always my greatest virtue.) Discuss this with an accountant, or a financial planner, or your friends. Just don’t discuss it with your insurance company. Trust me, I know which one type of policy they will recommend you buy: the whole life because it makes more money for them.

11. Keep your cancelled checks and receipts. Qualifying charitable contributions are tax deductible, and there’s no reason to leave that money on the table. Cutting a check to the a veterans’ organization or dropping that bag of clothes off at Goodwill are nice things to do, so why not reward yourself with a (legally) lower tax bill? Just make sure you have the proper documentation.

12. Switch to Energy Star appliances and lightbulbs. It’s the “green” thing to do in more ways that one. You’ll be helping the environment, and you’ll make a dent in your monthly utility bill. (I’ve been good about this one, and my new Energy Star ac and refrigerator use so much less power that they completely neutralized the rate increase my neighbors complain about.)

13. Track your phone and viewing habits. It may sound silly, but it’s not. You might be able to save every month with a more appropriate cell phone or cable plan. Do you go over on your minutes every month? A more inclusive calling plan may actually save you money. Are you paying for cable channels you don’t watch? It might be cheaper to just rent movies.


Now, go forth and SAVE! And if you need financial advisors with good, honest faces, I suggest you contact LS and BB.




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26 comments:

  1. Anonymous6:29 PM

    Hey gal,
    All good suggestions -- and as you know more about this than I, I will listen and take your advice. Conversely, if you ever need your appendix out, you know who to ask.
    your ol' pal

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  2. Great tips! I worked as an assistent registered accountant, so I'd like to think do all this! :-)
    Thanks for visiting my TT. Great you discovered Robbie, there's a lot to explore!

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  3. Thanks for the pointers! Happy TT!

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  4. Even though these tips are common sense, it's easy to forget to put them into practice. I need to really concentrate on the ATM one you gave.

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  5. great suggestions! I used to get savings bonds when I worked on a military base...no reason not to start again! Thanks for the link :-)

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  6. Anonymous8:35 PM

    VERY well researched and stated. Kudos to you!!

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  7. Wow..what great info. Thanks so much:) Happy TT.

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  8. What a great idea for a 13 and since I am such a lazy, bad blogger lately....I did mine to complement yours, kind of tongue in cheek ways to waste money. Thank God for 401K and automatic payroll deposit.

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  9. Anonymous9:02 PM

    Thank you -- reminds me, I need to pay bills tonight.

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  10. Anonymous9:13 PM

    Wow, really, really great suggestions and tips! Thanks so much for sharing -- excellent, sound, and helpful advice.

    Happy T13, and thanks for visiting mine!

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  11. hmm I.Need.To.Hire.You :-)

    Great advices!!!! Happy TT!!!

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  12. These are all great tips! I need to try to do a couple more of these. Thanks!

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  13. Anonymous11:02 PM

    These are great tips. I already do some of these and I'll check into the rest.

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  14. Great suggestions! Happy TT!!!

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  15. Hey that is a list full of good advice and I think I do all but 4 but i will double ck myself now TYSM fo the free advice!!
    http://joyismygoal.blogspot.com/

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  16. Anonymous1:49 AM

    Great and helpful tips! Happy TT! :)

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  17. Fantastic list. I agree that most people feel they should save up more money, but few really put such plans into action.
    I am out of a job at the moment and live on unemployment benefits, which is no fun whatsoever. But even from that meagre budget I save a part for my retirement fond every month, even though I'm just 32. I rather don't fill up my car for a week than forgoing those payments.
    It's all about priorities, I guess.

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  18. Anonymous5:40 AM

    Great advice.

    An emergency just wiped out our savings recently and now it's back to slowly building back up. I'm just thankful we're both healthy and have the time to save again.

    Glad I hit your list today. :)

    ~X

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  19. These are some fantastic tips. I was just talking to my husband about this yesterday, saving for the future that is. It can be very difficult to think that far in advance when you have bills to deal with today. We keep plugging away at it though.

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  20. a fantabulous list. I put the dollar away that we save not paying for the wifes parking since I drive her to the train. Its not much but 5 bucks is 5 bucks.

    now, about that financial services provider, you and mrs duck should talk

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  21. what excellent advice -- if only I were capable of following *any* of it! :/

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  22. Anonymous11:00 AM

    Helpful tips. I'm looking into bonds in comparison to other interest-earning options.

    Happy TT!

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  23. Suze Ormond would be proud! These are great suggestions. Save Save Save. It's such a maze of options out there. One tip on savings - there are great online savings rates now and they make it easy to transfer money in and out - I use HSBC.com but there are others. I used to just get a piddly 1% from my creit union - now we get between 5 and 6%! it's great to see that "free" interest money coming in.

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  24. Anonymous12:50 PM

    Great advice! We try to follow these guidelines...but life happens!

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  25. Great advice :-)

    Funnily I had what seems to be an annual conversation with a sales rep from a financial institution I deal with who wanted me to take some insurance. Each year they give me the spiel and each year they fail to mention that the insurance can only be claimed on by someone other than me who would suffer financial hardship from me not being in work anymore. I often wonder how many single people with no dependants are paying out each month when no one will ever be able to claim if something happens to them.

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