Seven Ways We’re Wasting Money
We're into April now and I'm in the processes of reassessing our household budget. I did a little digging and found seven ways we are wasting money.
Wasting money doesn't always mean that we're bad with money, it just means that we need to keep a closer eye on where it's going.
We get monthly statements and bills from our phone, internet, cable and electric companies showing how much money they're taking, but our mutual funds don't do that. You'll have to do a little extra work, but look carefully on your paperwork. You'll find that some mutual funds charge high fees including trading and management fees that eat away at your return. You don't notice the fees because they're automatically deducted so you just notice lower returns. Look for funds that charge less than a half a percent in annual fees. There are some that charge .1% and if you need help, don't pay 1% for someone to help you. Instead, there are websites that can assist you.
What's Your Credit Score
Your credit score is so important. It determines your interest rate for credit cards, car loans and mortgages and it even determines the amount you pay for car insurance. Some employers also use it to figure out if they want to hire you or not. If you don't know what your credit report looks like, there could be some items on it that are causing you to pay higher rates and you don't even know it. The higher your score, the more money you can save. You always hear "Qualified buyers can get 4 percent interest..." Well, to be a "qualified buyer" you need a score of 760 or higher. Anyone with a score between 620 and 760 will pay one full percentage point higher (or more) than they would have if their score was better. Over the life of a loan, that can be tens of thousands of dollars. For example; if you get a $150 thousand dollar mortgage at 4.5%, that's $67 thousand 500 dollars in interest so you'll end up paying $217 thousand dollars for the house. If you get that same $150 thousand dollar mortgage at 5.5% interest, you'll end up paying $82 thousand 500 dollars in interest or $232 thousand 500 dollars for the same house. That's a difference of $15 thousand dollars. So, call your bank or credit union and get your credit score as soon as you can.
Lower Your Interest Rates
Speaking of interest rates, the one good thing about higher interest rates is that they can always be lowered. All you need to do is ask. If you make a reasonable argument including solid payment history, the worst they can say is no. As for mortgages, car loans, student loans and the like, even if you had a pretty good rate when you took it out, interest rates have lowered and if your credit score is better, you may be able to qualify for a lower rate. With your credit cards, take advantage of the zero percent balance transfer rate. Not taking advantage is just throwing money away.
Every driver must have car insurance in the state of Minnesota. It's the law, so there's no way around it, but there is a way around paying high premiums. Raising your deductible and canceling certain types of coverage are just a couple. Another way is by buying your homeowners or renter's insurance policy and your car insurance from the same company. My sister saved a ton by shopping around and comparing rates online and it only took a few minutes.
Brand Name Products
We all get sucked in to the trap, myself included. Look past the flashy commercials and catchy slogans and you could save some serious cash. Many store brands are made by the very same company, so it's the same product, but it costs WAY less.
Like car insurance, life insurance is necessary, but it's not necessary to spend so much money on it, yet we do. The best way to save when you're buying life insurance is to get term life insurance and get the cheapest policy you can. As your circumstances change, consider how much life insurance you're going to need , or even get rid of the separate policy all together.
Do You Take the 401K Match?
A lot of companies will match dollar for dollar up to a certain amount, so get the maximum amount taken out of your check that you can and get that company match. It's free money and it's dumb not to.