My resolution in 2010 is to save money. Many of us are honing in on our grandparents, asking them to revisit those Depression-era habits that drove us crazy as kids: reusing coffee filters was my pet peeve at home. Did we really save doing that? I can see the value in using the clothes line vs. the dryer (mom always said, "Even when it's freezing, hang laundry outside. When they're dry, they'll become unfrozen and wave in the wind.") Here are some great pointers for 2010:
Use those new gift cards before you lose them. If a store goes bankrupt, or if the card is issued by a mall or a bank, your card could be subject to service fees and expiration dates. Another money-saving tip: If your gift card balance is below $10, you can receive it in cash.
Do not be suckered into "free trial" offers. They set you up for automatic debits or credit card charges, and often have a narrow window for cancellation before you wind up paying money. According to consumer warnings from the Better Business Bureau, Federal Trade Commission and Visa Inc., some companies offering free trials-on everything from colon cleansers to debt reduction plans-also create automatic deductions for special "services" or subscriptions. Read the fine print before opting for any "free trial" offers.
Pay off credit card debt. Use an online credit card calculator, such as at bankrate.com or credit.com. If you've got a $5,000 balance with an 18% interest rate and make only monthly minimum payments, it will take over ten years to pay off the card (IF you stop spending on it!). Not to mention how much you are really paying over that time period in interest charges. That new item may not have been so appealing if you saw what you are really paying in the end up front on the price tag. If you get a year-end gift or bonus, consider applying it to your January balances.
Evaluate your automatically billed services. Are you really using roadside service, ring tones, texting, premium tv channels (those great series do come out on DVD eventually - consider Netflix instead, and catch them in a few months). Or if you or your kids are continually hit with too many fees for text messages, switch to an unlimited plan. Don't use your cell phone much? Consider switching to a prepaid phone. The smart phones are great fun, but can be a time drain if you play the games, and time is money, right?
Cut your utility bills. Just a few household changes can save hundreds of dollars a year over time. If you replace 20 household 100-watt light bulbs with 27-watt fluorescent bulbs, you can save over $200 a year (up front, they cost more, so it is a long-term savings). Shorter showers can save, too. A family of three dropping shower times from 17 minutes to 11 can save over $100 a year, not to mention conserving gallons of water. Turn off your television set manually: using the remote control power button only puts it on "idle", and you're paying to power the unused tv.
Take advantage of federal tax breaks, including those for purchasing a home (now for existing homeowners "moving up" as well as first time home buyers), paying college expenses or adding household energy improvements. "There've been a lot of things loosened up for consumers this year," said John Hogg, who oversees 16 Jackson-Hewitt tax preparation offices in Sacramento. "Many of these credits have never been available before; others, like the new home buyer's credit and college tuition credits, are worth more this year than last. If people take advantage of these, their tax liability could be significantly less for 2009."
The first-time home buyer's credit increased to $8,000 and was extended to April 30, 2010. Existing homeowners who haven't purchased a home in the last three years can get a maximum $6,500. The tax credit for college students has been extended to a full four years and up to $2,500 annually, including textbooks. The vehicle sales tax deduction applies to any new purchase made by Dec. 31 this year.
For families, there's also the child-tax credit and the earned income tax credit (EITC) for low- income households. For instance, a married couple with three children and family income of $22,000 could qualify for a federal refund of more than $9,000 through the combined credits. Due to layoffs and furloughs, many families with reduced incomes may qualify for the first time this year.
Don't get sick: That's one of the surest ways to save. Get plenty of sleep, exercise regularly, and make healthy food choices. And if you have a flexible spending account through your employer for health care expenses, don't forget to submit your receipts for reimbursement by Dec. 31 or your company's deadline. If you fill out the correct paperwork, you'll get a nice check in the mail.
Delete unsolicited e-mails, calls or letters asking for personal financial information. Phony messages pretending to be from the IRS, FDIC and your bank can siphon money faster than you can click open their fraudulent online messages. Do not open attachments in e-mails unless you are expecting them. Computer viruses can cost you time and money (if not lost information).
Wishing you good luck and prosperity in 2010. If you are considering a home sale or purchase (or both) to take advantage of the new tax credit, contact me. Whether you are in my area or halfway across the country, I am partnered with a global network of the top brokers and can find the right realtor for you
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