It is easier to hang onto the money you have than to make more of it. When individuals or families find their bank accounts short the first response is often to look for ways to make more money. The better alternative, however is to save the money that comes in and spend wisely what does need to go out for basic expense.
The following are a few ideas for saving money:
Home Owners Insurance
Homeowners insurance is an essential component of responsible home ownership. It protects you from losses sustained in fire, storm, theft, and other events specifically outlined in any policy. As with any expense it is wise to shop for top value at minimum price.
To understand the coverage so that a consumer can compare like items it is helpful to understand the terminology used in writing insurance policies for homeowners. There are five basic components to homeowners insurance; Personal Property, Dwelling, Medical Coverage, Liability, Loss of Use.
· Personal Property pays for household items such as furniture, appliances, and clothing are damaged, destroyed or stolen from your home.
· Dwelling insurance covers the structures themselves. This usually covers the house and any other buildings such as a detached garage or storage buildings on the property.
· Medical coverage pays the medical bills for individuals injured on your property. Since a dog is considered property of the owner, the homeowner is also covered should their dog bite someone, even if the bite occurs at another location.
· Liability pays out when you are found liable for a personal injury or someone else’s property is damage. For example, if a dead tree in your yard falls on a neighbor’s house and you are deemed negligent because you didn’t remove the tree your policy covers that.
· Loss of use often pays up to 20% of the insured value of a home while your home is uninhabitable during repairs.
Be sure when you contact the insurance companies that you are clear about what they do and do not cover and the amounts they cover. Inquire about deductibles and any special provisions such as exclusion of types of damage endemic to a particular area such as earthquakes in the California Bay Area, or hail and wind damage on the Gulf Coast.
Before you shop for coverage, determine the highest deductible you can afford. The deductible is the amount of money you will have to pay before the insurance company kicks in and pays the rest. Investigate the company’s financial rating, which is an indicator of its ability to pay your claims, and its complaint index, which indicates its willingness to pay your justified claims in a timely manner. You can get this information from your state’s Department of Insurance Carriers. The insurance is no bargain if it does not provide the coverage you need or folds financially at a critical moment.
The key to savings here is to examine the policy carefully, know what you need and how much you can afford to pay in deductibles.
Renters Need To Protect Investments
Most people might not think of furniture, appliances, and household goods as an investment, after all, most of them depreciate over time. While it is true that these items do depreciate, what would it cost to replace these items, especially all at once?
Renters have an interest in securing financial protection from loss of their household goods due to fire, flood, or theft. For a small fee an insurance company, often the same one that insures your vehicle, can provide coverage for your household contents as well.
Speak with several insurance agents and find out what kind of coverage their company offers, how much it cost, what the deductible is, and if the payments are for replacement cost or value.
Though it may cost a bit more, replacement value covers the expense of replacing the items with new ones comparable on today’s market. Some policies only pay for the current value of an item, on top of which you must pay the deductible. In that case, there may be no payout at all.
Get the best coverage you can afford with a reputable and stable company that has good reviews on file with the state board of insurance. You owe it to yourself to ensure the value of long term investments like bedroom suits, leather furniture, and appliances designed to service a family for years.
Most people find that each paycheck with a raise disappears as quickly as the paycheck they received before the pay or cost of living raise. It is peculiar that no matter how much money one makes it all seems to get spent. To counter that trend several contemporary authors have advised implementation of various savings plans.
One way to put money aside it to never acknowledge a ay raise. When your paycheck increases, bank the difference between the usual amount and the increase. With the next raise after that, bank at least half of that as well. You don’t miss what you never had, so this is a fairly painless way to save money.
What about that tax refund? Spend it? Save it? Well of course it makes sense to put that cash aside for emergencies or to go toward saving for a long term purchase goal. It is easy to think that you ‘just have to’ buy something with that money when you know it is coming, but if your have it direct deposited to your savings account you will never see it, and hopefully not be tempted to spend it.
Another paycheck bonus is that fifth week in the month where you get an extra paycheck. If you are paid weekly or bi-weekly, that extra check should be set aside in savings. Your monthly rent does not increase with that fifth week, and your car, phone and utility payments are monthly too so there is no reason to expend that money on anything other than long term savings goals. Even making an extra payment on the house note is a good use of the money. Or pay off the credit card bill with the highest interest rate, then close that account.
Be a smart investor, before buying a home be sure it will appreciate in value by evaluating the neighborhood the home is in, and the quality of workmanship on the home itself. In addition, savings can be built into the mortgage or added on as they become feasible.
Of course you negotiate the best possible purchase price on a home, but the haggling doesn’t end there. Now get online or on the phone with mortgage lenders. Shop for the lowest possible interest rate. You can often get a better deal on interest by paying down the principal with a bigger down payment. If you can put down 20% and have good credit, the terms should be good. If you can put down even more money, sometimes the mortgage company will allow you to pay down the points on the loan or give you a lower interest rate.
If you don’t have that much money in savings you might be able to borrow a small amount from family at a lower interest rate than the mortgage company can offer. In that case taking out a small loan in this way will be of benefit over the long run as the interest rate on the 80% financing will pay off handsomely in savings.
Another option for saving money on a home is to get the loan for 15 years rather then the traditional 30-year mortgage. That saves the interest that would have been paid on the balance for half the life of the loan, yet increases the monthly payment by only a couple hundred dollars.
What if you don’t have that much in savings, your credit has a few blemishes, or you can’t afford the higher payment that goes with a15, rather than a 30-year mortgage? You can still save a bundle on your house by paying the monthly note in two installments. Pay twice a month, once on the first, then again on the 15th. Make each payment half of what the monthly payment totals. If you do this over time, you will save on the amount of interest you would have paid on that portion of the payment that came in early.
It is also worthwhile to make at least one or two extra house payments each year. With the money saved by not buying impulse or unnecessary items, a decent amount of money can collect for payment toward the extra house payment.
This truth should be evident, it is easier to save the money you have than to make more of it. So save what you can and spend wisely what you must.