Cheaper, Better, Faster (26 page)

Education—consider nursing or dental hygiene training

Become a nurse or dental hygienist. By majoring in one of these skills in your undergraduate program, you will have a profession that you can develop, which can also provide employment while attending medical or dental school. Becoming a nurse or dental hygienist in a shortage area or in the military may qualify you for student loan forgiveness.

Education—for seniors

Many colleges and universities across the country offer senior citizens the opportunity to take classes and earn degrees for free or at a considerably reduced fee. Proof of age (starting at 55 to 65) and state residency is usually required. These senior discount programs are often not publicized, so it is advisable to call the admissions office to inquire.

Education—reimbursement from
employer

Go to work for a company that offers tuition reimbursement to its employees. There's nothing wrong with seeking employment with companies in locations and with policies that fall in line with your personal education goals.

Education—scholarships

Your time spent searching, researching, and applying for scholarships for yourself or your kids will be time well spent. Scholarships represent tax-free income.

Education—tuition for employees in higher education

Before you enroll at a college or university, find employment there. Employees are usually entitled to reduced, if not free, tuition.

Home business logo—tap local marketing classes

If you are starting a home business, check with your local community college or university. College art classes will design business logos as part of a class project, marketing classes will often help with brochures, and photography classes will take pictures.

Housing—
building your home is a huge risk

Have your head examined before you attempt to build your own home. Unless you are a developer or professional contractor, you are in for a few surprises, not the least of which is that it will take twice as long as promised and cost twice as much as estimated.

Housing—buying, house-hunting
photos

Use your digital camera or phone to snap pictures of each house you're interested in. Attach the photos to corresponding notes and information, and at the end of the day, rather than being confused, you'll have a clear
record of exactly what you saw.

Housing—buying, interest
on earnest money

When purchasing a home, make sure you will earn interest on your deposit during the escrow period.

Housing—buying, worst house in good neighborhood

If you're looking for a bargain, buy the worst house in a good neighborhood. You can always fix up a house, but you can't change the location.

Housing—buying or selling,
document with photos

Take photographs both inside and outside of your house, and make them part of the contract along with a list of what stays with the property after the sale. This eliminates debate at the closing as to whether the dining room fixture was a crystal chandelier or a bare bulb.

Housing—buying or selling, win-win negotiation

When negotiating the purchase or sale of a home, always ask for more than you are willing to accept—even if that is beyond your level of expectation and you're sure they'd never agree. More than likely the other person will meet you halfway, in essence splitting the difference. That's what makes both of you winners. You get more than you ever dreamed possible, and they didn't have to give nearly as much as they thought you expected. It's called the “art of negotiation.”

Housing—
mortgage interest rate reduction

Inquire if the financial institution servicing your mortgage offers an interest rate reduction when payments are automatically paid from your checking account. Example: A credit union recently introduced a
¼
percent reduction for any member who authorizes automatic withdrawal.

Housing—mortgage principal prepayment, pay down

Pay more than your monthly mortgage payment in the form of a second
check
on which you have clearly written “principal prepayment.” This is probably one of the best things you can do with extra cash. And you have no unsecured debt. You will pay down the principal more quickly, which will result in a tremendous savings of future interest.

Housing—
mortgage principal prepayment, payoff

The One-Twelfth Trick. While your mortgage should be the very last debt you target for payoff, when that time comes, here's a slick way to do it. At the same time you make your regular mortgage payment each month, make a second payment that is equal to
¹⁄₁₂
(one-twelfth) of one payment. Clearly mark this second payment as “Principal Prepayment Only.” Do this every month and at the end of one year you will have made the equivalent of 13 monthly payments. This simple trick will cut your payoff time by years and save thousands in interest.

Housing—renting, rent control

If you rent, find an area with rent control. If the law is in place, you might as well take advantage of it and enjoy the secure feeling that your rent will not be unreasonably increased.

Housing—selling, rent out before
selling at a loss

If you are going to sell your home at a loss, try to hold off awhile and rent it out so you can take advantage of the tax loss when you eventually sell. Check with your accountant. If you can show it as an investment rather than a personal residence, you might be able to recoup some of the loss.

Insurance—auto, collision deductible

Increase the deductible on your auto insurance and save collision insurance. For
example, if your insurance policy currently provides for a $200 deductible, meaning you will be required to pay the first $200 of any claim, increase it to $500 and your premiums will drop dramatically. Call your insurance agent to get quotes on various deductible amounts. Just make sure that if you do have a claim, you'll be able to come up with the deductible no matter how much it is. You'd be wise to have an amount equal to your deductible stashed in an interest-bearing account just in case, and then drive defensively to reduce the risk of ever having to use it.

Insurance—auto, collision for
older vehicle

Eliminate collision insurance on an older vehicle. Depending on its condition, an older car may not be worth the expense of insuring for more than liability. Conventional wisdom says that if a car is worth $2,500 or less, drop the collision. You'd be better off putting an amount equivalent to the collision premiums into an interest-bearing account and saving it toward another car. Of course you should never drive without the liability coverage required by the state in which you reside.

Insurance—auto, discounts for defensive
driving course

Many states offer significant auto insurance discounts if the driver has recently completed a defensive driving course. Call your insurance agent and inquire if this applies in your state. If it does, sign up!

Insurance—auto, discounts for
low mileage

Most insurance companies offer discounts to low-mileage drivers.

Insurance—auto, keep
agent updated

Make sure your agent has all of the correct information including your teenage son's good driving record and 3
years' experience. All of these things might matter.

Insurance—auto, liability umbrella policy

Instead of carrying $1 million liability insurance on a single auto to be well protected when participating in car pools, insuring younger drivers, and so on, consider carrying a $1 million liability umbrella policy, which in most cases will cover all of your cars and your principal residence. The annual premium should be around $100 if all your policies are with the same company, if you have clean driving records and no inexperienced operators.

Insurance—auto, rate reduction for changed driving requirements

Be sure to let your auto insurance company know of any changes to your driving requirements, such as switching from driving to work to joining a car pool or not commuting to a job as you once did. Both of these events could result in a significant rate reduction.

Insurance—don't buy too much

Make sure you have adequate protection but not excessive coverage, no matter what type of insurance you are considering. And by accepting higher deductibles, you can afford better coverage.

Insurance—
don't make small claims

Too many small claims can lead to policy cancellations or premium hikes. Insurance companies think that someone who files frequently is heading for a serious accident.

Insurance—health, a must expense

Never be without health insurance. High deductibles with low premiums are recommended if you are and plan to remain healthy, because this type of coverage is for catastrophic events. One uninsured catastrophic illness or accident could wipe out everything you have saved and planned for.

Insurance—health, check at school

If your family can't afford full medical insurance for each member, consider the school accident insurance offered to each child at the start of the new school year. For as little as $10, your child or college student may be eligible for insurance that would cover the normal, but expensive, childhood accidents. Most kids' medical bills are the result of accidents (broken bones, damaged teeth, stitches, and other injuries), so this type of insurance makes a lot of sense.

Insurance—health, shop frequently

Shop for your health insurance coverage regularly. With many companies, the first-year premium is much less, so switching may not be a bad idea. If your employer offers a menu of coverage options, check them all carefully and determine which is best for your particular situation. Never cancel one coverage until you have another fully in place.

Insurance—home, discounts for security systems

Ask about homeowners' insurance discounts for security systems, smoke alarms, and good driving records. Always ask! The agent or company may not volunteer the information.

Insurance—home, mortgage: buy life insurance instead

Typically overpriced, mortgage insurance (not to be confused with private mortgage insurance called PMI, which is completely different) is like life insurance because it pays off your remaining mortgage balance in the case of your demise. But who says your spouse or heirs would want to apply insurance proceeds to pay off the mortgage, which may be the lowest interest debt you leave them? If you have this type of coverage, they'll have no choice. It is far better to buy regular term insurance. It's much cheaper and leaves your heirs with more options.

Insurance—home, mortgage: cancel
private (PMI) coverage

Private mortgage insurance (PMI) is usually required to protect the lender against the possible default of a buyer who enters into a mortgage with less than 20 percent down payment. In most situations PMI can be canceled once the equity reaches 20 percent either by paying down the mortgage or the property appreciating in value. But it will not happen automatically. You must call and get the ball rolling. Expect to be required to prove the market value of your home and that you now have at least 20 percent equity. PMI is expensive, and you could be paying $1,500 or more each year in premiums. Do whatever you must to cancel it if you qualify. PMI does not protect the borrower in any way. It's for the lender all the way.

Insurance—home, renter's coverage a must

If you rent, buy a tenant's policy. This is a must. Landlords are not responsible for your belongings in case of disaster.

Insurance—home, replacement value
for possessions

Add a replacement-cost rider to renter's or homeowner's insurance. It may cost a little more, but in case of a claim, you will be glad you added the rider. Without it, the company will depreciate the value of every item, and you will be a big loser.

Insurance—life, adjust when dependents change

Cut back on life insurance as your dependents become independent. Providing for a spouse alone costs less than a spouse and eight kids.

Insurance—life, avoid TV and mail offerings

Never buy life insurance from television or direct mail ads. This is a sleazy marketing ploy. The premiums are at least 400 percent too high for the
coverage, and the exclusions are mammoth.

Insurance—life, for kids

Don't buy life insurance for kids. It makes absolutely no sense. Insure only wage earners (including stay-at-home moms), whose untimely demise would create a financial hardship.

Insurance—life, for singles

If you're single, buy life insurance only if someone is financially dependent on you and would suffer an undue financial hardship if your income were to suddenly disappear. Most singles have no reason to carry life insurance.

Insurance—life, travel coverage
not necessary

Don't pay extra for travel insurance. Statistically, it is highly unlikely you will die in an accident, and even if you do, the basic life insurance you carry should be sufficient.

Insurance—pay premiums annually

If possible, pay insurance premiums annually. Avoid the added costs for monthly or quarterly billing.

Insurance—take higher deductibles

In essence, you partially self-insure by being willing to take the chance that you won't get sick, you won't crash the car, and you won't be burglarized. The higher the deductible, the lower the premium. The insurance company actually compensates the customer who is willing to share a great portion of the risk.