||Ways to Save Money in Various Personal
Here are tips that will help you save money in
various areas of your life:
- 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.
- 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.
- Be flexible, if possible. Consider using lowfare carriers or alternative
airports and keep an eye out for fare wars.
- 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
- 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.
- 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
- 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
- Remember there is no "cooling off" period on new car sales.
Once you have signed a contract, you are obligated to buy the car.
- 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
- Have a mechanic you trust check the car, especially if the car is sold
- 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.
- 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.
- 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.
- 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
- You can save up to $100 a year on gas by keeping your engine tuned and
your tires inflated to their proper pressure.
- 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.
- 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
- Talk to your agent or insurer about raising your deductibles on collision
and comprehensive coverages to at least $500 or, if you have an old car, dropping these
coverages altogether. Taking these steps can save you hundreds of dollars a year.
- Make certain that your new policy is in effect before dropping your old
- 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.
- Make certain you purchase enough coverage to replace the house and its
contents. "Replacement" on the house means rebuilding to its current condition.
- Make certain your new policy is in effect before dropping your old one.
- If you want insurance protection only, and not a savings and investment
product, buy a term life insurance policy.
- 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.
- Check your public library for information about the financial soundness
of insurance companies and the prices they charge. The July 1998 issue of Consumer Reports
is a valuable source of information about a number of insurers.
- 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 that are charged on these accounts.
- 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 and Investment Products
- 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 offered by these institutions, including
mutual stock funds and annuities, are not insured.
- To earn the highest return on savings (annual percentage yield) with
little or no risk, consider certificates of deposit (CDs) and treasury bills or notes.
- 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.
- You can save as much as a thousand dollars or more each year in lower
credit card interest charges by paying off your entire bill each month.
- 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). For a modest fee, RAM
Research Corp. (800-344-7714) will send you a list of low-rate cards. You can obtain a
list of low-rate cards by accessing "www.ramresearch.com.cardtrack" on the
- You can reduce credit card fees, which may add up to more than $100 a
year, by getting rid of all but one or two cards, and by avoiding late payment and
over-the-credit limit fees.
- 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.
- 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
- 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 8% annual percentage rate (APR), for example,
you will pay $90,000 less in interest on a l 5-year mortgage than on a 30-year mortgage.
- 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 8.5% to 8.0% can save you more than $5,000 in interest charges.
On this mortgage, paying two points instead of three would save you an additional $1,000.
- If your local newspaper does not periodically run mortgage rate surveys,
call at least six lenders for information about their rates (APRs), points, and fees. Then
ask an accountant to compute precisely how much each mortgage option will cost and its tax
- 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.
- 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. Ask an accountant to calculate precisely how much your
new mortgage (including up-front fees) will cost and whether, in the long run, it will
cost less than your current mortgage.
Home Equity Loans
- Be cautious in taking out home equity loans. These loans reduce the
equity that you have built up in your home. If you are unable to make payments, you could
lose your home.
- Compare home equity loans offered by at least four banking institutions.
In comparing these loans, consider not only the annual percentage rate (APR) but also
points, closing costs, other fees, and the index for any variable rate changes.
- You can often negotiate a lower sale price by employing a buyer broker
who works for you not the seller. If the buyer broker or the broker's firm also lists
properties, there may be a conflict of interest, so ask them to tell you if they are
showing you a property that they have listed.
- Do not purchase any house until it has been examined by a home inspector
that you selected.
Renting a Place to Live
- Do not limit your rental housing search to classified ads or referrals
from friends and acquaintances. Select buildings where you would like to live and contact
their building manager or owner to see if anything is available.
- Remember that signing a lease probably obligates you to make all monthly
payments for the term of the agreement.
- Home repairs often cost thousands of dollars and are the subject of
frequent complaints. Select from among several well established, licensed contractors who
have submitted written, fixed-price bids for the work.
- Do not sign any contract that requires full payment before satisfactory
completion of the work.
- Consult Consumer Reports, available in most public libraries, for
information about specific brands and how to evaluate them, including energy use. There
are often great price and quality differences among brands.
- Once you've selected a brand, check the phone book to learn what stores
carry this brand, then call at least four of these stores for the prices of specific
models. After each store has given you a quote, ask if that's the lowest price they can
offer you. This comparison shopping can save you as much as $100 or more.
- To save as much as hundreds of dollars a year on electricity, make
certain that any new appliances you purchase, especially air conditioners and furnaces,
are energy-efficient. Information on the energy efficiency of major appliances is found on
Energy Guide Labels required by federal law.
- Enrolling in load management programs and off-hour rate programs offered
by your electric utility may save you up to $100 a year in electricity costs. Call your
electric utility for information about these cost-saving programs.
- A home energy audit can identify ways to save up to hundreds of dollars a
year on home heating (and air conditioning). Ask your electric or gas utility if they can
do this audit for free or for a reasonable charge. If they cannot, ask them to refer you
to a qualified professional.
Local Telephone Service
- Check with your phone company to see whether a flat rate or measured
service plan will save you the most money.
- You will usually save money by buying your phones instead of leasing
- Check your local phone bill to see if you have optional services that you
don't really need or use. Each option you drop could save you $40 or more each year.
Long Distance Telephone Service
- Long distance calls made during evenings, at night, or on weekends can
cost significantly less than weekday calls.
- If you make more than a few long distance calls each month, consider
subscribing to a calling plan. Call several long distance companies to see which one has
the least expensive plan for the calls you make.
- Whenever possible, dial your long distance calls directly. Using the
operator to complete a call can cost you an extra $6.
Food Purchased at
- You can save hundreds of dollars a year by shopping at the lower-priced
food stores. Convenience stores often charge the highest prices.
- You will spend less on food if you shop with a list.
- You can save hundreds of dollars a year by comparing price-per-ounce or
other unit prices on shelf labels. Stock up on those items with low per-unit costs.
- Since brand name drugs are usually much more expensive than their generic
equivalents, ask your physician and pharmacist for generic drugs whenever appropriate.
- Since pharmacies may charge widely different prices for the same
medicine, call several. When taking a drug for a long time, also consider calling
mail-order pharmacies, which often charge lower prices.
- Make your wishes known about your funeral, memorial, or burial
arrangements in writing. Be cautious about prepaying because there may be risks involved.
- For information about the least costly options, which could save you
several thousand dollars, contact a local memorial society, which is usually listed in the
Yellow Pages under funeral services.
- Before selecting a funeral home, call several and ask for prices of
specific goods and services, or visit them to obtain an itemized price list. You are
entitled to this information by law and, by using it to comparison shop, you can save
hundreds of dollars.