Cheaper, Better, Faster (27 page)

Investing—guidelines for beginning investors

As a beginning investor, any plan you consider should have all the following features or you run a great risk of failure: (1) The investment must be simple to understand and easy to follow. (2) It must take very little time to administrate. (3) It should not cause you stress or anxiety. (4) It must not change your lifestyle or cause
disharmony in your home. (5) You must be able to handle the investment entirely on your own. (6) It must have the advantage of liquidity (getting your money back quickly in the event of an emergency). (7) It must work equally well for the person with very little to invest as well as the wealthy investor.

Investing—mutual fund instead
of lottery tickets

Instead of throwing away $2 a week on lottery tickets for the next 50 years, invest that money in an aggressive-growth mutual fund. Don't even think of saying that such an investment is too risky. Investing your money in the lottery is the ultimate risk, and for all practical purposes carries a high-percent guarantee that you'll lose your money. Remember: The lottery is a tax on the ignorant.

Legal fees

If you hire a lawyer on contingency (a percentage of the settlement, plus expenses), make sure the expenses are deducted from the total first. Example: Say the settlement is $15,000, and the attorney cut is a third plus $3,000 of expenses. Deduct the $3,000 first, and then pay the lawyer a third of the balance, or $4,000. If you pay the lawyer first, you'll have to pay a third of $15,000, or $5,000 plus the expenses.

Lending money—to friends and family

Don't lend money to people you know. If you decide a loan is in order, make sure you can consider it an outright gift. If you happen to receive repayment, it will be an unexpected bonus.

Lending money—when
someone asks

If someone asks you for a loan, say you were just going to ask him for one. That usually ends the conversation.

Library fines

Avoid overdue fines at the library. Most libraries renew
books online or over the phone.

Phone—ask for credit for wrong long-distance dial

Always ask for credit immediately whenever you dial a wrong long-distance number. Don't be embarrassed. It's routine. Just call your service provider and make a very quick report.

Phone—ask for credit with long service interruptions

If your phone service is interrupted for more than 24 hours, ask for a credit.

Phone—block making long-distance calls

If your long-distance bill is really out of control, and you are determined to get that expense under control, take drastic measures. Instruct your phone company to block all long-distance calls. Now you will be able to place only local, toll-free, and 911 phone calls. And if you absolutely must call long-distance, use a prepaid calling card, or check your long-distance minutes on your cell phone contract.

Phone—time your calls to save

Put an egg timer by the phone as a reminder to hang up before you talk yourself into debt.

Record keeping—business
information

When you write a check to a company you haven't done business with before, jot down the address and phone number in your checkbook register so it's handy in case you need to check on your order.

Record keeping—documents in safe or freezer

Keep wills, insurance policies, and other important papers in a fireproof safe, or wrap them in plastic and put them in a sealed container in the freezer. They will be easily accessible and protected in case of fire.

Record keeping—documents on CD

Be prepared by scanning your family's important documents—birth certificates, passports, Social Security cards, insurance policies, property deeds, car titles, immunization records, pet medical records, school transcripts, business licenses, education degrees, and tax returns. Now burn the files onto two CDs. Keep one in a safe place and have a trusted friend or relative in a different state (your point person) keep the other disk.

Record keeping—documents tucked
away

Roll your important papers and store them in cardboard tubes. They can be tucked away and will stay crease-free.

Record keeping—filing system for the family

Establish a color-coded family filing system. Use green folders for financial statements, red folders for kids' school papers, blue for car and home documents, yellow for medical papers, and orange for personal items. You'll know right away where your financial paperwork is.

Record keeping—filing system for sorting

Set up temporary finance files labeled “To be filed” and “To be tossed.” In the first, place items that need to be saved permanently or long-term for taxes, and so on. In the second file, put dated material that can be tossed. Once a month, file the first and dump the second.

Record keeping—home contents on video

Film your home inside and out for insurance records. In case of a fire, you need to have evidence of the expensive wall coverings and decorator window coverings. While you are taping, narrate aloud, describing your home's contents in detail. Keep DVD in a safe-deposit box or transfer the digital files to a disk. Make
sure the date is well documented. Film again every few years or when considerable changes are made.

Record keeping—wallet contents photos

Make a photocopy of everything in your wallet. Now if you lose your wallet, you'll have a record of the important information in it and can move quickly to have things replaced or canceled.

Record keeping—warranties

Buy a large, three-ring binder and a supply of plastic pocket inserts. Whenever you purchase a product, whether it's an appliance, lawn tool, or toy, staple the receipt to the owner's manual or warranty paperwork and file it away in one of the pockets. Now whenever something stops working or has a problem, you'll have the paperwork and all the information at your fingertips, including the customer service number. Or you could scan and retain these documents electronically, as well. Always call—even if the warranty is expired—explain the situation, your purchase details, and then ask one simple question: What can you do for me?

Saving on expenses—discount for paying
cash

Request a discount whenever you pay cash in a store that honors standard bank credit cards. Since they have to pay from 3 to 7 percent of the bill to the card company on a credit purchase, they should be willing to give you at least part of the difference in the form of a discount. It won't always work, but it's worth a try. If the owner or manager thinks you are going to use credit and at the last minute you inquire about a discount for cash, you'll be more successful.

Saving on expenses—
discount on newspaper subscription

If you subscribe to a newspaper, check to see if discounts are offered for paying an entire year's subscription in advance.
Some papers offer a 10 to 15 percent discount. If you find you don't read the newspaper on the weekdays, change your subscription to Sunday only. You won't feel guilty, and you'll save a bundle.

Saving on expenses—garbage service

If neither you nor your neighbor regularly fill your garbage cans, ask if the family is interested in splitting garbage collection costs. Check to see if your city or county ordinances prohibit this. Many don't.

Saving on expenses—lunches out

Here's a reasonable and practical way to handle the high cost of eating lunch out every day. On Monday take $25 cash and put it in an envelope to be used only for your lunches. If it's gone before Friday, you'll have to pack your lunch.

Saving
on expenses—mailing books

Use fourth class or “media mail” when shipping books through the US Postal Service. The savings are amazing.

Saving on expenses—mortgage escrow adjustment

Ask for a refund of any excess funds your mortgage lender is keeping in an escrow account. One woman discovered that her bank was collecting $100 a month more than necessary to cover anticipated property tax and insurance bills. When she asked that her monthly assessment be reduced to
¹⁄₁₂
of the total annual bill, the bank quickly agreed and that reduced her monthly expenditure. She also received a refund for the more than $500 excess amount that was in the fund. You have to ask.

Saving on expenses—“won't be
undersold” savings

Even though the store where you made a recent purchase doesn't advertise a “we won't be undersold” policy, always take a chance. If, say, the day after you make the purchase, you notice a sale by their
competitor and the same item is offered at 50 percent off, take your purchase back—along with the competitor's ad—and simply ask what they can do for you. You'll be surprised what companies will do to keep a customer.

Savings—automatic deposits

Make arrangements with your employer to automatically deposit a certain percentage of your paycheck directly into your savings account and the balance into your checking. What you don't see you won't miss, and this is the most painless way to start saving.

Savings—bills instead of change

If you don't like dealing with change jars, commit to paying yourself a dollar every time you make a purchase. Think of it as charging yourself a service fee for shopping. You'll think twice about unnecessary stops at the mall and end up saving a lot in the bargain.

Savings—coupon savings back
in cash

Many banks are opening convenient branch offices in major grocery stores. If this is true for the supermarket you frequent, open a savings account. Now when you buy groceries, write the check for the total before coupons are subtracted. Ask for your coupon savings back in cash (the equivalent of writing a check for more than the purchase amount, or using a debit card with cash back), and make a deposit to your savings account on your way out with that cash. Also, make a point of writing your check for more than the purchase by $5 to $10 if you can manage. Stash that cash in the bank as you leave too. It's a painless and convenient way to save.

Savings—create change to save

When you write a check for groceries, round it up and take the difference in change and deposit it each evening into a change jar you have at home. Example: If the bill comes to $33.02, write the check for
$34 and stash the 98 cents in change. You'll be surprised by how much change you'll accumulate in a year.

Savings—creative methods to save what you've saved

If you find yourself borrowing back the money you've determined to save, here are some tips for how to put some space between you and the stash: (1) Keep your savings and checking accounts in different banks; (2) open a passbook account, which will limit your access to the funds; (3) open your savings account in a bank in another city and make all of your deposits by mail; (4) establish an account that requires two signatures to withdraw.

Savings—don't spend coins

Collect loose change by making a personal rule not to spend it. Make it a habit to dump your pockets and purses every night into one collection receptacle. You won't miss the change, and you'll be amazed by how much you can save.

Savings—IRA contribution early in year

Try to contribute to your individual retirement account (IRA) as early in the year as possible. The difference between making your contributions each January 1 rather than December 31 of the same year could spell thousands of dollars of additional earnings in your account over the decades.

Savings—make payments to yourself after debt
payoff

As you pay off a credit card or other loan, keep making the same payments into your savings account instead of sending them to the lender.

Savings—mileage reimbursements
for a new car

Each month submit your expense report for the work-related miles you put on your car. Once you receive the reimbursement check, stash it into a special account for the sole purpose of saving for a new car. Usually the gasoline
costs required to drive for job-related purposes can be absorbed into your regularly monthly spending. This is a great way to force yourself into a savings plan.

Savings—pay yourself

Once a month, or whenever you pay your bills, write a check to deposit in your money market fund or your savings account. If you can't start with 10 percent, start with less and increase the amount each month. Or use an automatic savings plan—let the bank take your savings out of your paycheck. You won't miss what you don't see.

Savings—reimbursements
into savings account

When you are reimbursed for travel or other out-of-pocket expenses, save the money, and put it in your savings account instead of your checking account, where it will just disappear.

Savings—US savings bonds interest

Here's how to earn double interest. Buy US Series EE Savings Bonds on the last day of the month with money that has been earning interest in another account during the month. The bond starts accruing interest as if purchased on the first day of the month. Example: Buy a bond on June 30. When you receive the bond about 21 days later, it will be recorded as of June 1.

Savings—with kids

Open school savings accounts for your kids. Most banks offer these no-fee, no-minimum accounts for kids. Teach them how to fill out deposit slips and make their own deposits. These accounts usually have no minimum balances or service fees.