Last week we talked about the five big things that we all overspend on. I’m not talking about your morning latte or bottled water. Those kinds of indulgences will cost you more than necessary, but only by a few bucks. Those things aren’t the reason you feel like your savings are dwindling.
Instead last week we covered the Big Five. The five things that are major drains on your expenses. You simply don’t need to pay so much for in order to live well. We also talked about the 5 easy changes you can make to put a bunch of green back in your wallet.
Today I’ve got four more for you. If you make these four changes I can practically guarantee you will save yourself hundreds, if not thousands, of dollars each and every year. In this era of constant negative news about possible stock market pull backs, unemployment woes and inflation you need to have savings on hand and the least painful way to do that is to cut out over spending habits. Let’s take a look at four easy changes that will bring you BIG savings this year.
Its tax time right now and finding savings here can be a huge win for your finances. Did you get a refund from Uncle Sam last year? If you made roughly the same amount this year then you essentially gave the government an interest free loan. Not cool, especially when you know that they wouldn’t do the same for you. Talk to your company’s HR department about adjusting your withholdings. The bonus being your paychecks will get a boost.
If you consistently owe Uncle Sam money every time tax season rolls around you need to reduce your taxable assets. Contribute more money to your 401(k) plan or other retirement account. Open and contribute to an IRA. The money you put in these accounts is still yours and the government can’t tax you on it this year.
For more great tax cutting tips re-read my letter on how to stop paying taxes legally.
Technology is another one. We spend so much money buying the latest and greatest innovations that we don’t even realize how much money we are overpaying.
Just like cars, electronics depreciate very quickly. Within months, possibly weeks, that brand new TV you bought can be found cheaper (and probably with more features) at the store. Additionally, waiting time allows time for competitors to put out similar products, which will move prices lower. Not to mention the longer a product is on the market, the more time a company has to make more of them, which also drives down prices.
Never buy technology products that are first of their kind to the market. If you can hold off just a few months, that same item will be cheaper and more widely available. Take 3-D TV’s for instance, in July 2010 the average price for a 47 inch 3-D TV was $900 or more. Just 12 months later the same TV’s average price was down to $400 a unit. That’s a lot of savings in a short amount of time.
By the same token you can save yourself money not by spending less, but by how you pay for your purchases. Never use cash when you can use a rewards credit card. Granted this advice is only for people who consider themselves good with credit cards and by that I mean you pay off your balance every single month, without fail.
Rewards cards are exactly what they sound like, credit cards that offer you incentives for using the card. Typical incentives include cash back, statement credits, airline miles, gift cards and points to put towards purchases. All of these incentives are like getting free money.
The more purchases you make, the more free money you acquire. Whenever possible use reward credit cards to pay for every day purchases, instead of using cash.
It might seem weird at first, but in fact using a credit card can actually save you money in the long run. Check out creditcards.com and click on the word REWARDS in the left hand column for a list of the best rewards credit cards.
I have the Bank of America Cash Rewards card. It rewards me with 2% cash back at grocery stores and 3% cash back when I fill up my tank and 1% everywhere else. Plus I use it to get a 10% bonus when I redeem the cash back I’ve earned into my savings account. Free money is fabulous.
You can also save yourself a lot money by buying generic medicine, instead of its brand name counterpart. This is a hot button issue for a lot of people so let me first say that the U.S. Food and Drug Administration constantly tests generic medicines for safety and to make sure they are just as effective as brand name drugs.
Generic medication is not made with inferior ingredients to reduce costs. Rather the lower price comes about since drug companies aren’t building in advertising costs and they don’t have to develop the medication from scratch. Both of which significantly drops the cost of a medication. Once a generic medication is approved by the F.D.A. many pharmaceutical companies can produce and sell the drug, which also lowers the price.
There has never been a study done that showed generic medication was less effective as its name brand counterpart. If there was, no one would use it! Don’t be one of the folks that insists on paying more just for a brand name.
If you’re keeping count that’s nine items that will save you big bucks this year. O.K. it’s only four, but if you re-read my letter from last week you’ll find five more.
These 9 items represent big drains on your finances. You can easily save hundreds, if not thousands, if you make a few simple changes to what you buy and how you buy it.
That’s what we’re all about here at League of Power. Saving you money and helping you make more of it. Check out John Hollister’s Friday column, he has a great idea for you on how to make more money starting this very weekend.
Keeping Money in Your Pocket,