Money saving tips
It’s easier to keep the money you have than to earn more. When individuals or families find that their bank accounts are short, the first reaction is often to look for ways to make more money. The better alternative, however, is to save the money that comes in and spend wisely what needs to go out for basic expenses.
Here are some ideas to save money:
home insurance
Home insurance is an essential component of responsible home ownership. It protects you against losses incurred during fire, storm, theft and other events specifically described in any policy. As with any expense, it’s wise to shop around for the best value at the minimum price.
To understand coverage so a consumer can compare like items, it helps to understand the terminology used in writing homeowners insurance policies. Home insurance has five basic elements; Personal property, housing, medical coverage, liability, loss of use.
· Personal property pays for household items such as furniture, appliances, and clothing that are damaged, destroyed, or stolen from your home.
· Home insurance covers the structures themselves. This generally covers the house and any other buildings such as a detached garage or storage buildings on the property.
· Medical coverage pays medical bills for people injured on your property. Since a dog is considered the owner’s property, the owner is also covered if their dog bites someone, even if the bite occurs somewhere else.
· Liability pays when you are found responsible for a bodily injury or someone else’s property is damaged. For example, if a dead tree in your yard falls on a neighbor’s house and you’re considered negligent because you didn’t remove the tree, your policy covers that.
· Loss of use often pays up to 20% of a home’s insured value while your home is uninhabitable while repairs are being made.
When contacting insurance companies, be sure to be clear about what they do and don’t cover and how much they cover. Ask about deductibles and any special provisions such as excluding types of damage endemic to a particular area, such as earthquakes in the California Bay Area, or damage from hail and wind on the gulf coast.
Before shopping for coverage, determine the highest deductible you can afford. The deductible is the amount you will have to pay before the insurance company steps in and pays the rest. Investigate the company’s financial rating, which is an indicator of its ability to pay your claims, and its claims index, which indicates its willingness to pay your substantiated claims in a timely manner. You can get this information from your state’s Department of Insurers. Insurance isn’t a good deal if it doesn’t provide the coverage you need or if it folds financially at a critical time.
The key to savings here is to carefully review the policy, know what you need and how much you can afford to pay in deductibles.
Tenants need to protect their investments
Most people may not consider furniture, appliances and household items as an investment, after all most of them depreciate over time. If it is true that these items depreciate, how much would it cost to replace these items, especially all at once?
Tenants have an interest in obtaining financial protection against the loss of their household goods due to fire, flood or theft. For a small fee, an insurance company, often the same one that insures your vehicle, can also cover your household inventory.
Talk to several insurance agents and find out what type of coverage their company offers, how much it costs, what the deductible is, and whether the payments are for replacement cost or value.
Although it may cost a little more, replacement value covers the cost of replacing items with comparable new items in today’s market. Some policies only pay the current value of an item, in addition to which you must pay the deductible. In this case, there may be no payment.
Get the best coverage you can afford with a reputable, stable company that has good reviews filed with the state insurance board. You owe it to yourself to insure the value of long-term investments like bedroom suits, leather furniture, and appliances designed to serve a family for years.
Your salary
Most people find that each paycheck with a raise disappears just as quickly as the paycheck they received before the salary or cost of living increase. It is strange that no matter how much money one earns, it all seems to be spent. To counter this trend, several contemporary authors have advised the establishment of various savings plans.
One way to save money is to never recognize a raise. When your salary increases, collect the difference between the usual amount and the increase. With the next raise after that, cash in at least half of that as well. You don’t miss out on what you never had, so it’s a pretty simple way to save some money.
What about this tax refund? Spend it? Save it? Of course, it makes sense to put that money aside for emergencies or to save for a long-term shopping goal. It’s easy to think you just have to buy something with that money when you know it’s coming, but if you deposit it directly into your savings account, you’ll never see it and hopefully won’t be tempted to spend it.
Another paycheck bonus is the fifth week of the month when you get an extra paycheck. If you get paid weekly or bi-weekly, that extra check should be set aside in savings. Your monthly rent doesn’t increase with that fifth week, and your car, phone, and utility payments are also monthly, so there’s no reason to spend that money on anything other than savings goals at long term. Even making an extra payment on the house ticket is a good use of money. Or pay the credit card bill with the highest interest rate, then close that account.
House purchase
Be a wise investor, before buying a home, make sure it will appreciate in value by evaluating the neighborhood the home is in and the quality of the workmanship of the home itself. Plus, savings can be built into the mortgage or added on as they become achievable.
Sure, you’re negotiating the best possible purchase price for a home, but the haggling doesn’t stop there. Get online or on the phone with mortgage lenders now. Buy the lowest interest rate possible. You can often get a better deal on interest by paying down the principal with a larger down payment. If you can deposit 20% and have good credit, the terms should be good. If you can deposit even more money, sometimes the mortgage company will allow you to pay off the points on the loan or give you a lower interest rate.
If you don’t have a lot of money in savings, you may be able to borrow a small amount from your family at a lower interest rate than the mortgage company can offer. In this case, taking out a small loan in this way will be advantageous in the long term because the interest rate on the 80% financing will yield generous savings.
Another option for saving money on a home is to get the 15-year loan rather than the traditional 30-year mortgage. This saves the interest that would have been paid on the balance for half the term of the loan, while increasing the monthly payment by only a few hundred dollars.
What if you don’t have a lot of savings, your credit has a few flaws, or you can’t afford the higher payment that comes with a 15-year mortgage than a mortgage 30 years old? You can still save a bundle on your home by paying the monthly bill in two installments. Pay twice a month, once the first, then again on the 15th. Make each payment half of what the monthly payment totals. If you do this over time, you’ll save on the amount of interest you would have paid on that part of the payment that came in early.
It’s also worth making at least one or two extra payments each year. With the money saved by not buying impulsive or unnecessary items, a decent amount of money can be collected for payment of the additional house payment.
This truth should be obvious, it’s easier to save the money you have than to make more of it. So save what you can and spend what you owe wisely.
