Continued from previous blog...
6) Invest your new savings. As you put money side (see above) your “pay-yourself-first” money could become automatic contributions to a mutual fund or other stock-oriented or real estate investmet fund. If you need the money to be more liquid than that, consider an online savings or money market account that gets linked to your current checking account. Many of these online-only accounts are insured by the FDIC and pay annual percentage yields between 5-6 percent and in some cases even higher.
7) Pay extra towards your mortgage each month. By paying $100 extra towards your principal each month on a $150,000, 30 year fixed mortgage at 6.5%, you’ll save more than $50,000 in interest over the term of the loan and be able to payoff your mortgage approximately seven years early. Just by paying an extra $25-$50 each month can make a huge difference. Paying off your mortgage early may mean eliminate some of the tax benefits of home ownership, however if owning your home outright and spending less on interest are some of your goals, then it is worth it.
8) Eliminate credit card debt. The best way to avoid creating problems for yourself in 2007 is to use your credit cards cautiously and sparingly. Pay off your entire balance off each month, if at all possible. However, if you’re already in serious credit card debt as 2007 begins, transfer your credit card balances to a card with a lower interest rate. You’ll save over $700 if you transfer a $2,000 balance from an 18-percent card to an 8.25% card and then pay off your balance at a rate of $50 a month. You'll even receive better result the lower the interest rate.
Transfer balances to cards with rates of 0-4% percent and concentrate on paying them off entirely while those low rates last. Another option may be to take out a second mortgage on your home. Obviously, paying 7% on a second mortgage, which is tax deductible, toward your home is far better than paying 18-20% on a compounding interest credit card. If you do use credit cards, make sure that your credit card is at least paying you back with some sort of incentive program. I found a credit card that allows me to earn points on my daily purchases toward our annual vacation trip, including airline miles and hotel accommodations.
Since most of my expenses each month are incurred at Office Depot, I found a rebate card that rewards specifically for these types of purchases. Of course, you will need to make sure that you are paying off your balance each and every month. Paying a high interest rate on your credit card will negate any savings you accrue on your incentive plan.
9) Avoid over-the-limit and late fees. If you keep finding yourself getting hit with extra finance charges because your credit card bill is regularly due before you’ve received your paycheck or your over the limit, call your credit card company and ask to have your due date changed. It might take a few months for this change to kick in, but it’s worth the wait.
10) Quit smoking and other bad habits. Depending on the “sin taxes” where you live, you could save more than $2,000 a year if you go from being a pack-a-day smoker to a non-smoker. You’ll also qualify for significantly cheaper life-insurance rates a non-smoker. Cigarette taxes in Texas just increased by $1.00 a pack in 2007, if there's never been a better reason to quit...there is now. Also, don't buy lottery tickets. Yes, they may claim you can't win if you don't play, but you've got a better chance of being struck by lightning.
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