A mortgage or insurance may be inevitable, but overpaying for it isn't. Here are easy ways to cut common costs in your life so you can get on with enjoying it more.
Wasting money doesn't necessarily mean you're bad with money. You don't have to be a shopaholic or a frivolous squanderer to spend more money than you should. Often, there are leaks in our budgets that could easily be fixed if we knew what to look for. And some of these big money mistakes can be eliminated without even making a significant change to your lifestyle.
So before you vow never to eat out or take a vacation again, try to plug these money leaks that you may not have even noticed.
1. Investing in expensive mutual funds. Unlike utility companies, mutual funds don't send you a monthly statement showing how much of your money they're taking. Even though the cost is hard to find, mutual funds that charge high fees are eating away at your returns. High fees, which can include trading costs and fund management fees, can go unnoticed because investors don't get a bill. Instead, the fees are simply deducted from your account, reducing the overall return on your investments.
Instead of investing in expensive mutual funds, look for funds that charge less than 0.50% in fees annually. You can find index funds that charge less than 0.1%. And if you need some help with your investing, rather than paying 1% or more for someone to manage your investments, use a service like Betterment. This online service makes investing a snap, and it recently lowered its fees.
2. Ignoring your credit score. Everyone knows just how important a good credit score is, but most people probably don't think of it in terms of wasting dollars. Your credit score affects everything from your interest rates to auto insurance premiums. It can even affect your chances of getting a job, as some employers use credit history as part of their hiring criteria. It's simple: The higher your credit score, the more money you are going to have in your pocket.
For example, while you may be able to qualify for a mortgage with a credit score of 620, you won't get the best rates. To qualify for the top rates, you need a score of around 760 or higher. And the difference between a score of 620 and 760 can be more than a full percentage point in the interest rate. Over the life of a mortgage, the better score can save you tens of thousands of dollars in interest. (Do you know your credit score? Take this MSN Money quiz and get a free estimate.)
3. Failing to lower your rates. The only good thing about high interest rates is that they can be lowered. You can lower you rate on just about anything, including credit cards, mortgages, car loans and student loans. There are several ways to get lower rates, but the easiest one is simply to ask. Particularly with credit cards, just requesting a lower rate has proven to be very effective. (Find credit cards with better rates.)
With mortgages, car loans and student loans, refinancing is also an option if rates are lower. And keep in mind that even if prevailing rates have not changed since you took out your loan, you still might be able to get a lower rate if your credit score has improved. With credit cards, consider taking advantage of 0% balance transfer options. There are plenty of opportunities to lower your rates, and not doing so is just throwing money away.
4. Overpaying for car insurance. Auto insurance is one of those necessary evils in life. We all hate to pay for it, but we have to have it. Fortunately, there are many ways to reduce car insurance premiums with just a little effort. For example, you can raise your deductibles or even cancel certain types of coverage for older vehicles. Auto insurance companies offer numerous discounts, and comparing insurance online takes just minutes. (Compare insurance rates on thousands of makes and models.)
5. Buying brand-name products. It's easy to get caught up in buying brand names. After all, these big companies force-feed us with their captivating slogans on a daily basis. Looking past the pretty labels and catchy commercials, however, will save you money. Many off brands are made by brand-name companies, so the product is basically the same, but with a better price. This is especially true for prescriptions and over-the-counter medications.
6. Buying too much life insurance. Like car insurance, life insurance is a necessary expense if others are relying on your income. The key is to buy only the life insurance you need at the cheapest available price. For many, this means buying term life insurance, not a universal or whole life policy that combines life insurance with investment products. And as your life circumstances change, consider whether you can reduce the amount of insurance you need, or even eliminate it completely.
7. Failing to get the company 401k match. Getting the most out of your 401k is essential to your retirement planning. Many companies will match a portion of an employee's contributions to a 401k. But to take full advantage of a company match, you must contribute a certain amount, which varies by plan. By not making the most of an employer's matching contributions, many employees lose what would otherwise be free money. So take advantage of your 401k by contributing at least the amount your employer will match. (Will your 401k provide enough for retirement?
From Financemsn.com/ Posted by Mags
So before you vow never to eat out or take a vacation again, try to plug these money leaks that you may not have even noticed.
1. Investing in expensive mutual funds. Unlike utility companies, mutual funds don't send you a monthly statement showing how much of your money they're taking. Even though the cost is hard to find, mutual funds that charge high fees are eating away at your returns. High fees, which can include trading costs and fund management fees, can go unnoticed because investors don't get a bill. Instead, the fees are simply deducted from your account, reducing the overall return on your investments.
Instead of investing in expensive mutual funds, look for funds that charge less than 0.50% in fees annually. You can find index funds that charge less than 0.1%. And if you need some help with your investing, rather than paying 1% or more for someone to manage your investments, use a service like Betterment. This online service makes investing a snap, and it recently lowered its fees.
2. Ignoring your credit score. Everyone knows just how important a good credit score is, but most people probably don't think of it in terms of wasting dollars. Your credit score affects everything from your interest rates to auto insurance premiums. It can even affect your chances of getting a job, as some employers use credit history as part of their hiring criteria. It's simple: The higher your credit score, the more money you are going to have in your pocket.
For example, while you may be able to qualify for a mortgage with a credit score of 620, you won't get the best rates. To qualify for the top rates, you need a score of around 760 or higher. And the difference between a score of 620 and 760 can be more than a full percentage point in the interest rate. Over the life of a mortgage, the better score can save you tens of thousands of dollars in interest. (Do you know your credit score? Take this MSN Money quiz and get a free estimate.)
3. Failing to lower your rates. The only good thing about high interest rates is that they can be lowered. You can lower you rate on just about anything, including credit cards, mortgages, car loans and student loans. There are several ways to get lower rates, but the easiest one is simply to ask. Particularly with credit cards, just requesting a lower rate has proven to be very effective. (Find credit cards with better rates.)
With mortgages, car loans and student loans, refinancing is also an option if rates are lower. And keep in mind that even if prevailing rates have not changed since you took out your loan, you still might be able to get a lower rate if your credit score has improved. With credit cards, consider taking advantage of 0% balance transfer options. There are plenty of opportunities to lower your rates, and not doing so is just throwing money away.
4. Overpaying for car insurance. Auto insurance is one of those necessary evils in life. We all hate to pay for it, but we have to have it. Fortunately, there are many ways to reduce car insurance premiums with just a little effort. For example, you can raise your deductibles or even cancel certain types of coverage for older vehicles. Auto insurance companies offer numerous discounts, and comparing insurance online takes just minutes. (Compare insurance rates on thousands of makes and models.)
5. Buying brand-name products. It's easy to get caught up in buying brand names. After all, these big companies force-feed us with their captivating slogans on a daily basis. Looking past the pretty labels and catchy commercials, however, will save you money. Many off brands are made by brand-name companies, so the product is basically the same, but with a better price. This is especially true for prescriptions and over-the-counter medications.
6. Buying too much life insurance. Like car insurance, life insurance is a necessary expense if others are relying on your income. The key is to buy only the life insurance you need at the cheapest available price. For many, this means buying term life insurance, not a universal or whole life policy that combines life insurance with investment products. And as your life circumstances change, consider whether you can reduce the amount of insurance you need, or even eliminate it completely.
7. Failing to get the company 401k match. Getting the most out of your 401k is essential to your retirement planning. Many companies will match a portion of an employee's contributions to a 401k. But to take full advantage of a company match, you must contribute a certain amount, which varies by plan. By not making the most of an employer's matching contributions, many employees lose what would otherwise be free money. So take advantage of your 401k by contributing at least the amount your employer will match. (Will your 401k provide enough for retirement?
From Financemsn.com/ Posted by Mags
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