Save Big or Why Save At All
1. You may lower the price of a round trip air fare by as much as two-thirds by making certain your trip includes a Saturday evening stay-over, and by purchasing the ticket in advance.
2. To make certain you have a cheap fare, even if you use a travel agent, contact all the airlines that fly where you want to go and ask what the lowest fare to your destination is.
3. Be flexible, if possible. Consider using low fare carriers or alternative airports and keep an eye out for fare wars.
1. Since car rental rates can vary greatly, shop around for the best basic rates. Ask about any additional charges (extra driver, gas, drop-off fees) and special offers.
2. Rental car companies offer various insurance and waiver options. Check with your automobile insurance agent and credit card company in advance to avoid duplicating any coverage you may already have.
1. You can save thousands of dollars over the lifetime of a car by selecting a model that combines a low purchase price with low financing, insurance, gasoline, maintenance, and repair costs. Ask your local librarian for new car guides that contain this information.
2. Having selected a model, you can save hundreds of dollars by comparison shopping. Call at least five dealers for price quotes and let each know that you are calling others.
3. Remember there is no “cooling off” period on new car sales. Once you have signed a contract, you are obligated to buy the car.
1. Before buying any used car:
• Compare the seller’s asking price with the average retail price in a “bluebook” or other guide to car prices found at many libraries, banks, and credit unions.
• Have a mechanic you trust check the car, especially if the car is sold “as is.”
2. Consider purchasing a used car from an individual you know and trust. They are more likely than other sellers to charge a lower price and point out any problems with the car.
1. Don’t decide to lease a car just because the payments are lower than on a traditional auto loan. The leasing payments may be lower because you don’t own the car at the end of the lease.
2. Leasing a car is very complicated. When shopping, consider the price of the car (known as the capitalized cost), your trade-in allowance, any down payment, monthly payments, various fees (excess mileage, excess “wear and tear,” end-of-lease), and the cost of buying the car at the end of the lease. Keys to Vehicle Leasing: A Consumer Guide, published by the Federal Reserve Board and Federal Trade Commission, is a valuable source of information about auto leasing.
1. You can save hundreds of dollars a year by comparing prices at different stations, pumping gas yourself, and using the lowest-octane called for in your owner’s manual.
2. You can save up to $100 a year on gas by keeping your engine tuned and your tires inflated to their proper pressure.
1. Consumers lose billions of dollars each year on unneeded or poorly done car repairs. The most important step that you can take to save money on these repairs is to find a skilled, honest mechanic.
Before you need repairs, look for a mechanic who:
• is certified and well established;
• has done good work for someone you know; and
• communicates well about repair options and costs.
1. You can save several hundred dollars a year by purchasing auto insurance from a licensed, low-price insurer. Call your state insurance department for a publication showing typical prices charged by different companies. Then call at least four of the lowest priced, licensed insurers to learn what they would charge you for the same coverage.
2. Talk to your agent or insurer about raising your deductibles on collision and comprehensive coverage to at least $500 or, if you have an old car, dropping this coverage altogether. Taking these steps can save you hundreds of dollars a year.
3. Make certain that your new policy is in effect before dropping your old one.
1. You can save several hundred dollars a year on homeowner insurance and up to $50 a year on renter insurance by purchasing insurance from a low-price, licensed insurer. Ask your state insurance department for a publication showing typical prices charged by different licensed companies. Then call at least four of the lowest priced insurers to learn what they would charge you. If such a publication is not available, it is even more important to call at least four insurers for price quotes.
2. Make certain you purchase enough coverage to replace the house and its contents. Insurance Insurance “Replacement” on the house means rebuilding to its current condition. 3. Make certain your new policy is in effect before dropping your old one.
1. If you want insurance protection only, and not a savings and investment product, buy a term life insurance policy.
2. If you want to buy a whole life, universal life, or other cash value policy, plan to hold it for at least 15 years. Canceling these policies after only a few years can more than double your life insurance costs.
3. Check the National Association of Insurance Commissioners website (www.naic.org/ servlet/cis.Main) or your local library for information on the financial soundness of insurance companies.
1. You can save more than $100 a year in fees by selecting a checking account with a low (or no) minimum balance requirement that you can, and do, meet. Request a list of these and other fees (including ATM and debit card fees) that are charged on these accounts.
2. Banking institutions often will drop or lower checking fees if paychecks are directly deposited by your employer. Direct deposit offers the additional advantages of convenience, security, and immediate access to your money.
Savings an Investment Products
1. Before opening a savings or investment account with a bank or other financial institution, find out whether the account is insured by the federal government (FDIC or NCUA). An increasing number of products Banking/Credit Banking/Credit offered by these institutions, including mutual stock funds and annuities, are not insured.
2. To earn the highest return on savings (annual percentage yield) with little or no risk, consider certificates of deposit (CDs) or U.S. Savings Bonds (Series I or EE).
3. Once you select a type of savings or investment product, compare rates and fees offered by different institutions. These rates can vary a lot and, over time, can significantly affect interest earnings.
1. If you carry large credit card debts, you can reduce your annual credit card interest payments by as much as $1000 or more by paying off your entire bill each month.
2. If you are unable to pay off a large balance, pay as much as you can and switch to a credit card with a low annual percentage rate (APR). You can find listings of credit card plans, rates, and terms on the Internet, in personal finance magazines, and in newspapers.
3. You can reduce credit card fees, which may add up to well over $100 a year, by getting rid of all but one or two cards, and by avoiding annual, late payment, and over-the-credit limit fees.
1. If you have significant savings earning a low interest rate, consider making a large down payment or even paying for the car in cash. This could save you as much as several thousand dollars in finance charges.
2. You can save as much as hundreds of dollars in finance charges by shopping for the cheapest loan. Contact several banks, your credit union, and the auto manufacturer’s own finance company.
First Mortgage Loans
1. Although your monthly payment may be higher, you can save tens of thousands of dollars in interest charges by shopping for the shortest-term mortgage you can afford. On a $100,000 fixed-rate loan at 7% annual percentage rate (APR), for example, you will pay over $75,000 less in interest on a 15- year mortgage than on a 30-year mortgage.
2. You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15- year $100,000 fixed-rate mortgage, just lowering the APR from 7% to 6.5% can save you more than $5,000 in interest charges, and paying two points instead of three would save you an additional $1,000.
3. Check your local newspaper for mortgage rate surveys, and call at least four lenders for information about their rates (APRs), points and fees. Compute precisely how much each mortgage option will cost and its tax implications.
4. Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.
1. Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more. Calculate precisely how much your new mortgage (including points, fees and closing costs) will cost and whether, in the long run, it will cost less than your current mortgage.
Home Equity Loans
1. Be cautious in taking out home equity loans. The loans reduce or may even eliminate the equity that you have built up in your home. Equity is the cash you would have if you sold your house and paid off your mortgage loans. If you are unable to make payments, you could lose your home.