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Six Saving Strategies for the New Year

Six Saving Strategies for the New Year

If the recession taught us anything, it’s the importance of savings. Maybe you’ve already made some adjustments to your saving strategy, good. But even if you did, many people have learned that the notion of a safety net is a bit of an illusion when the economy is as tough as it’s been. Nobody ever says they saved too much.

So, if nothing else, in 2012, make your resolutions about going the next level in saving.

Here are some things to put on your must-keep list.

Go small if you have to

A lot of little changes add up to big savings. To get started, consider the My Savings Machine at Bills.com. It shows you how to save big with just trims on basic expenditures. For example, eliminating just $20 a week between a combination of lattes, lottery tickets or groceries can save you more than $1,000 in one year. If you’re starting to panic about the holiday bills that will rear their heads in January, start saving now for an all cash holiday next year, at http://bills.com/ways-to-save.

Take control of your health expenses

If you’re a fan of money management site Mint.com, you might like Simplee.com. The site allows you to track, manage and pay your medical expenses all through one central place with explanations and advice offered in easy to understand language. The site can help you save money, time and stress when it comes to medical bills.

Additionally, if you haven’t thought about haggling when it comes to your medical bills, do so. Start negotiating. Before receiving medical treatment, figure out how much you can afford to pay, and then pitch that amount to your doctor, recommends Scott Cramer, president of Cramer & Rauchegger. Then too, just like a pair of jeans costs less at one shop versus another, so does medication -- comparison shop between pharmacies.

Find a silver lining in the real estate cloud

Home values lost nearly $700 billion in the U.S. last year, but real estate doesn’t have to be a total losing proposition. With interest rates still at historic lows, take advantage of refinancing. If you’ll shave at least a percentage point off your existing rate, it’s likely worth it to refinance. The savings could be huge and go a long way in providing extra cash to put toward retirement or to start or continue to fund an emergency reserve. If you have three months of living expenses set aside, build it to six. Resolve that this is for “emergencies” only, not for paying for your overdosing on a fun night on the town, expensive shoes or the latest electronic gizmo.

Also check your real estate tax assessment. Appeal if it’s too high based on your neighborhood’s prices, suggests Eleanor Blayney, the CFP Board’s consumer advocate. To further still cut costs associated with home sweet home, check your homeowner’s insurance to see if you are carrying more than you need for replacement coverage. Negotiate any and all home improvement projects you have on tap for 2012.

Stick to a budget

These days, even billionaires need a budget, so get over it. You know the big monthly obligations like your mortgage or rent, but it’s the gray areas that get you in trouble. Develop a specific monthly budget for your household. Determine how much you will spend on everything and consider it done. If you really want to stretch yourself in 2012, consider going cash only. When the cash is gone, the fun is done.

Just say no to debt

Would you really like to shock your creditors? Pay your bills before they’re due. This could help you save hundreds of dollars in accumulated interest. Make a plan and always pay off more than the monthly minimum with a focus on paying off high-interest rate cards first.

You can also transfer a big balance to a card offering a zero percent introductory APR for the first 6-12 months, and pay it off in that time period, again saving on interest.

Review everything

Running on autopilot may work for the captain of a plane once they’ve found that ultimate altitude, but it’s no way to grow your money. Review your investment portfolio, monitor performance and see if you need to re-balance. Set it and forget it can mean much less savings in the long run. While you’re reviewing investments, it’s also a good idea to look at your suite of insurance policies. What’s changed in your life? It could be that you no longer need as much coverage and can save money on premiums.

What’s the message of this resolution story? If you want to be in a better financial position at the end of 2012 -- no sleepwalking, take charge.

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Apache | | Comment #1
Ms. Nash - Nice article but I think you are "preaching to the choir". I don't get the idea that the people who spend time almost daily (like I do) reading Ken's forum and blogs, do not know how to save money. There isn't one idea you have given that I did not implement many years ago. One thing many people do not know and I was glad to see you mention it is how to cut down on medical expenses. I have a doctor who was doing our bloodwork in his office which is in a hospital building and he let the hospital do his billing for him. Usually with my insurance my lab work is at no cost to me but if it is done with a hospital's tax id, I had to pay $150 each time I saw him with my extra copay! I wrote a letter to him and his office manager letting them know their system was too costly to their patients and I was going to have my blood work and lab done at an outside lab which my insurance covered for me at no charge. He would have to give me an RX for it before each visit and it meant an extra trip for me but it saved me $150 on every visit! Most people do not like to bring up bills to doctors but if they don't they can spend hundreds of dollars unnecessarily.

Whenever my family or I have had a hospital stay, I always offer to pay "our" part in asap for a 25% discount. I have never been refused so far. Like you wrote, there are many ways to save money but one must be dedicated to finding what they are. I always am interested in what others do to keep their money in "their" pockets. I think in this forum we have a wealth of information on that subject.

Thanks for your input. Happy New Years to All!
Anonymous | | Comment #2
We are a big choir together
Anonymous3 | | Comment #3
I do not mind posts like this, Posts like this let me know I am at the right place. I may learn something, you never know.

This is a very valuable web site for me, I come here everday
Georgette | | Comment #5
Great article. Even "common sense" points are worth repeating. Bravo.
emdtech | | Comment #6
Good general advise to those that have been absent with applying common sense to finances.

I do want to make one point on the refinancing suggestion: most people are lazy with handling finances. They tend to postpone options that cost money (ie closing costs) to save money in the long run. Also, they may not be able to refinance if the appraised price of their home is lower than their equity position as banks still want a 20% equity position maintained. Some bank may even have higher standards you must meet. Therefore, for the majority of the population that could really "benefit" by refinancing (to lower their monthly payments based on securing a lower interest rate), will not be able to do so as they do not meet the equity minimums.

Great recommendation to those that can take advantage of the lower interest rates offered in today economic environment.

Anonymous | | Comment #7
Great article, IMHO.