1) Do you have a savings
account? If so, check to see what the bank is paying you in interest.
If it’s hovering around one or two percent then get out! You
need to start shopping for a new bank. You can easily triple your
return just by opening an account with internet banks such as Netbank
and ING Direct. The reason they are called internet banks is because
they do not normally have a physical presence like their counterparts,
which allows them to keep their costs low and offer higher interest
rates. Your yearly savings, based on a $1000 deposit are $20! Worried
about the risk? Virtually none. The Federal Deposit Insurance Corporation
(FDIC) insures each account up to $100,000.
2) Lower that phone bill! Most of us are accessible
24-7 via a myriad of ways: office phone, home phone, cell phone,
instant messenger, email, and pager. Even with all of these options,
many of us are still paying through the nose per minute in long
distance charges. If you haven’t already, call your local
phone service provider and ask to join its unlimited long distance
calling plan. Based on the service provider, you’ll only pay
$34.95 - $50.00 plus taxes.
Voice over IP (VOIP) is another technology that has become popular.
It requires that the user have high speed internet access (DSL or
Cable) and a phone adaptor that can be bought directly from the
service provider (Sunrocket, Vonage, AT&T) or at retail stores
such as Best Buy and Circuit City. The cost savings is a bit more
significant, dropping your bill down to $24.95 for unlimited service
in the United States and Canada or as low as $9.95 for a minute-based
plan. Not bad, eh? The one downside to VOIP service is that it is
dependent on your high speed internet access, so if the net goes
down, so does your phone line. Another downside is that the technology
isn’t 100% accurate at recognizing where a customer is calling
from when dialing 911. Still, the quality is almost as good as a
standard phone, so if you can live with all this, then VOIP might
work for you!
Also, most people do not realize this but it is possible to negotiate
the rate for a cell phone plan. Just call your service provider
and ask to speak with the cancellation department. (NOTE: This usually
works better when your plan is about to expire, as you will have
more leverage with your service provider.) Tell them that you are
considering switching cell phone providers, and they will typically
ask you what they can do to keep your business. You can usually
negotiate for extra minutes, free roaming, text messaging, nights
starting at an earlier time (7 pm instead of 9 pm) or free web access.
A few months ago, I was able to negotiate 120 extra minutes, free
roaming, and nights starting one hour early, for 15% less than what
I was paying previously.
3) Hate staying in? Get the Entertainment Book. The Entertainment
Book has hundreds of coupons and discounts from fast food to fine
restaurants to movie theaters, plays, museums, and even airline
tickets. For about $40, this book will last you all year. Of course
the key is to use it as much as possible. If you keep it in the
car, you will be more apt to use it. Sometimes a friend and I try
new restaurants based on the deals listed in the book. Better yet,
make a friend who has the guide, and then try out the restaurants
with them. You automatically get a 50% discount on the second entree.
(Annualized Savings based on frequency of usage: $50-$500 or more)
4) Love Monsoon Wedding, but hate paying those late fees
when you forget to return it? Join Netflix or Blockbuster.com or
any one of the growing online DVD rental companies. For a flat monthly
fee, you can watch unlimited movies (only limited by the type of
plan and shipping time). Keep them for as long as you want. Heck,
don’t even return them. You will be charged the same monthly
fee until you cancel.
5) Save, Save, and Save some more! Max out on that 401(k) and Roth
IRA. According to Suze Orman, an internationally acclaimed finance
guru, most people do not put in the maximum in their 401(k) or simply
are not taking advantage of their companies matching programs. Folks,
this is free money! Keep in mind that many companies will have a
vesting schedule, which is anywhere from one to five years. Note
that you do have to pay taxes once you are eligible to take it out
at retirement. The Roth IRA is after-tax money that you invest in
an account which grows tax free. The best part of the Roth IRA is
that once you are eligible to take money out, you do not have to
pay any tax! Moreover, you can take out up to $10,000 without penalty
from either account if you are a first time home buyer. The 2006
limit for the 401(k) is $15,000 and $4,000 for the Roth IRA. Over
the years, I’ve accumulated a sizable sum by maxing out both
accounts. According to the IRS, the downside is that I can’t
touch them till age 59 ½ otherwise there’s a penalty
of 10% plus any additional taxes.
6) Use that flexible spending account your company offers. If you
are planning to have major medical bills, then this is a great option.
Granted you need to plan in advance, as most companies require you
to allocate your deduction before the start of the calendar year.
The FSA allows you to use pre-tax dollars which can result in savings
of up to 30%. For example, let’s say you are getting LASIK
surgery which costs $4,000. Savings - $1200 in saved taxes. Need
I say more? Ask your employer for details!
7) Get to sleep on time so you can cut down on Starbucks. Millions
of people spend an average of $4 everyday on a grande mocha cappuccino.
Put that $20 a week in your internet savings account and watch your
money grow. In fact, when you go out to restaurants, order water,
and save a few bucks every time. Not only are you saving money,
but you are also avoiding all that sugar and calories, thereby improving
your health. Imagine saving $1040 each year, just by reducing your
trips to Starbucks. You might even save money on gas too!
8) Get to know your grocery store! If you are like me, you eat
most of your meals out. If you replaced even one of those meals
everyday eating in, you could save a lot of money. If you passed
on the daily $10 dinner, you could save $70 on a weekly basis and
$3,640 annually. Go one step further, and take turns with friends
doing potlucks. You can save money and have a good time all at once.
9) Ever get that feeling that your monthly interest payments seem
higher than the actual principal on your credit card? Lower the
interest rate on that credit card. If you often carry a balance
each month, but make more than just the minimum monthly payment,
then you can easily decrease your interest rate. As the financial
market is very competitive, many credit card companies will let
you negotiate a better interest rate. If you don’t like what
they are offering, then shop around. A good place to shop is www.bankrate.com.
While you are at it, make sure to sign up for rewards options like
free miles, points, or cash back cards. These essentially give you
free money. Some good examples are the United Mileage Plus card
that offers 1 mile per dollar spent, the Shell Oil Card that rewards
up to 5% of your purchases in credit towards gas, and the Discover
Card that offers 2% cash back. Although some of the rewards cards
do charge an annual fee, it might worth it to sign up. For example,
I use the United Mileage Plus card which has an annual fee. In the
past 10 months, I have accumulated almost 50,000 miles, enough for
two free round trip tickets in the US. Not bad for $60!
10) There’s another reason all those aunties keep asking
when you’re getting married. Consider the following: By getting
married, you can save quite a lot of money in housing costs, living
costs, food costs, and yes, even your taxes. A few years ago, Congress
passed an act that repealed the marriage tax penalty that put couples
in a higher tax bracket because they were filing jointly as opposed
to filing two individual returns. I wonder if this explains why
my parents have been on my case for the past few years! Maybe wisdom
does come with age.
With these simple but effective ideas, you can
keep thousands of dollars in your pocket. Now that you have a few
ideas, you can see that by making a few adjustments to your lifestyle
and mindset, you can be well on your way to a financially sound
future. Say goodbye to the one-ply!
Amit Garg lives in the Washington DC area.
Back to Top
|
