Things to think about when Purchasing a Car that may Save You Money
|When picking the shade of a car to buy you might be thinking mostly about making a personal statement. But you may also want to think about how the hue will affect your bank statement too. Here are some factors to consider when making the choice.
A couple of myths dispelled
Know Your Starting Point
Obtain a copy of your credit report from all three credit bureaus so that you have a clear understanding of what is says about you and your current credit scores.
Develop A Plan
If there are errors on your credit report, have the credit bureaus investigate and correct them. Set goals and time frames for future major credit endeavors.
Bankruptcy Today – Homeowner Tomorrow
If you recently filed bankruptcy or if you don’t have any open credit, it is necessary to have new positive items being reported on your credit report. Try to obtain several new accounts or sources such a secured credit card, department store cards or being put on someone else’s account as an authorized user. The lower your starting credit scores, the more your need to have positive items reporting.
For secured cards remember the following:
- Never carry over balances as the interest rates are very high.
- Purchase one thing on credit that you would normally pay cash for – say for $20.00 and as soon as the bill arrives write the check and pay the bill. If paid in full during the 25 day grace period no interest is charged. Follow this practice consistently and NEVER miss a payment.
Keep Older Accounts Open
If you already have credit open, keep the accounts you have had for the longest period of time. Even if there were late payments on it in the past, pay it on time now and the length of time it has been open will help your credit.
Make Your Payments On Time
Pay Down Your Credit Card Balances
Target to have the total amount of outstanding revolving debt at 40%, or less, of the total available credit limits.
Once new positive sources are created, avoid all unnecessary inquiries – don’t fill out any additional applications for credit.
For home purchase or refinance, old collections/judgments/unpaid taxes/ unpaid child support/ must be dealt with. Look at the date of the item, compare to statute of limitations for that item, and plan a strategy to address each.
Who says you have to live a life of austerity? Even those of us with serious budget constraints can often indulge in “non essential” items from time to time. Here are some of the most common splurges – and the thriftiest way to get them.
Books, magazines, music, DVD’s, videos: Remember the public library? Free. You just can’t keep what you borrow (but hey, it reduces clutter). Or buy used – the written word does not age. Pre-owned music and movies are often a bargain, and if you purchase from a reputable source you can usually return it if it doesn’t work. Oh, and after you are done enjoying it? Sell it back.
Gourmet coffee: Fancy coffee drinks can easily run over three dollars a cup. Rather than forgo the café altogether, order drip coffee for a third the price. Doctor it up with flavored creams, cinnamon, nutmeg, and chocolate that are usually provided for free. Or switch to tea – it’s almost always the least expensive item on the menu.
Theater Tickets: Simply must see the latest show? Go for free by volunteering to be an usher. Inexpensive seats can often be had during preview nights and matinee seatings. Discounts are usually available for groups, teachers, seniors, and students. For performances that haven’t sold out, theaters will often sell remaining tickets (called “rush tickets”) hours before curtain time for a fraction of their original cost. Many big cities have ticket outlets that sell day-of-the-show tickets for half-price.
Organic grocery items: Die-hard organic food aficionados will debate whether pesticide-free, free-range products are a luxury or a necessity, but no matter – they can often be bought without the considerable markups associated with luxury grocery stores. Farmers markets, co-ops, even swap meets are all good places to seek deals. Stock up and freeze organic delicacies when they are at the peak of their season, abundant and cheap.
Fine dining: If it’s the white tablecloth experience you’re craving more than the actual food, refrain from going when you’re starving so you’re not tempted to over order. Or go for lunch or breakfast rather than dinner – the food is the same but the cost is greatly reduced. Look for coupons and promotions in local newspapers. Many frugal foodies invest in “Entertainment” books. They offer “two-for-one” deals at some of the most exclusive restaurants in town (as well as for more reasonably-priced eateries).
Massages: True, it’s not the same as the real thing, but massage chairs can work wonders for tired, stressed-out shoppers. A famous luxury store located in most malls almost always has display models on the floor, just waiting for some weary soul to sit in them. Investigate massage schools in your area too – they are often on the lookout for people to practice on.
Cosmetics and beauty products: Let’s face it, when we buy department store products, it’s often the label we are attracted to, not the superior quality. So buy the item from your favorite line with the absolute lowest price point: i.e., a $12 make-up remover rather than the $120 eye cream. “Gift with purchase” promotions are a great way to stock up on indulgent skin care products and cosmetics as well. For the price of a lipstick and a sun block you can get a whole slew of complimentary goodies.
Designer clothes, accessories, jewelry: Fashion mavens on a shoestring look to consignment stores, online auctions, and estate sales to purchase top-notch glitz for a fraction of what it would cost new or retail. Even thrift shops sometimes stock high-end items, particularly if they are located in the swankier part of town. Look for shops that benefit the ballet or the symphony; moneyed fashionistas often donate to them first. Designer-inspired goods are another way to get the look of luxe. Low-cost replicas make real sense for trendy fashions.
Classes: Community colleges offer some of the best educational courses around, and for rock bottom prices. If you care more about the knowledge than the credit, ask about auditing the class for free.
Hair salons: Have some time on your hands? Be a hair model at a high-end salon. It will take longer than if you are paying for it, but since highlights and a cut often cost several hundred dollars, an extra hour (or two) in the chair is often the most economical way to get the latest look.
Spas: Okay, so the spa really is a major splurge. But instead of wishfully pressing your nose against the windows of your favorite indulgence, consider booking an appointment for a manicure or for time in the steam room rather than a pricey facial or body treatment.
Health clubs: Avoid signing up for a membership in January, that’s when most gyms bump up prices for countless New Year’s resolution makers. Be on the lookout for specials that are offered in the summer months. Find out if a portion of the initiation fee and membership dues are covered by your health plan. Inquire about family memberships or if you can get an extra discount if a friend joins with you – it pays to ask. Do not be afraid to negotiate fees with the salesperson – prices are rarely set in stone.
What is the current state of your closets? Are they stuffed to the brim with clothes, shoes, suitcases, cleaning supplies, your high school chemistry textbook, etc., or can you do cartwheels in there? Is every horizontal surface covered in piles and piles of stuff or bare save for a few knickknacks?
If your house is filled with clutter, you probably know you won’t make the cover of Better Homes and Gardens, but you may not be aware that it could be costing you money too. Many people buy or rent bigger (and usually more expensive) places so they can have more closets or other storage space. Or they may opt for the smaller space and pay rent on a storage unit. A clutter-filled house can also lead to increased entertainment costs – you don’t want your friends to see the mess (or are sick of seeing it yourself), so you go out. Duplication is another way clutter can cost you. Have you ever spent money on something you already had because you had no idea where it was and did not want to spend hours looking for it?
If the thought of actually having to go though all your stuff makes you sweat, don’t worry. Here are some tips that can help make the decluttering process as painless as possible:
- Do a little at a time: You are less likely to get discouraged and give up if you set a series of small goals spread out over time (e.g., clean the closet in the master bedroom tomorrow, clean the garage next weekend) instead of trying to clean up the whole house at once.
- Take a picture of sentimental items: Do you have some items that you never use but nevertheless have a hard time getting rid of because of their sentimental value (such as the doll you bought for your daughter who is now 25)? Taking a picture can make it easier to part with them since you know you will have a reminder even if they are no longer collecting dust in your closet.
- Donate or sell: While some of your items may be worn out and only welcomed by the trash bin, there may be many things you can sell to a consignment or thrift store or donate to charity. Think of your cleaning as putting money in your pocket or helping others, instead of just a chore.
- Use the “one in, one out” rule: After you go through all that effort to get rid of what you don’t need, you probably don’t want the house to revert back to its former messy state a few months from now. A good way to prevent this is to get rid of something whenever you purchase something new. You buy a new t-shirt at the mall – when you get home, go into the drawers and get rid of an old one.
By taking the time to declutter, you’ll be cleaning all the way to the credit union.
Expecting a substantial income tax refund this year? If so, you are in the majority – over 70 percent of Americans get money back at the end of the tax year, with the average refund being close to $2,000. Rather than having those precious dollars being absorbed into your normal spending routine, get the most out of your cash.
- Pay down high interest loans and lines of credit. With average annual interest rates for credit cards and personal loans hovering around fifteen percent, paying off that Visa card before making other investment decisions makes good sense.
- Fund Your Retirement Account. About 30 percent of all working Americans have no money invested for their retirement. If you are one of them, seriously consider making a contribution to an IRA contribution right away.
- Invest it. Instead of just working for money, let money work for you. If you invested one lump sum of $1,500 in the stock market, over thirty years at 12 percent interest (the 30-year market average) you’d have $ 53,924. (Do your research first before making any investment decision, of course.)
- Open an emergency account. Most Americans don’t have money set aside for those financial emergencies that always seem to happen when there is no cash in the coffer. A large tax refund is a great start an emergency account. It should eventually total between three to six months worth of essential living expenses.
- Pay for repairs. Maintaining expensive possessions now will result in dollars saved tomorrow. Use the money to repair that leaky roof before it develops into a bigger problem; replace those dangerous bald tires with new, safe ones.
- Start a personal endowment. Investing in your emotional, physical, intellectual, and career growth is a wise use of money. Whether it’s paying for a gym membership or a cooking class, you’ll feel effects of this type of investment fast.
- Make an extra home mortgage payment (or two). Though you won’t feel the benefit immediately, doubling up on a mortgage payment now can save you months of mortgage payments later.
- Donate to a charity. Giving back to the community is a wonderful way of supporting a cause that you are passionate about. Even better – in many cases at least a portion of your donation is tax-deductible too.
- Open a 529 College Savings Plan. A four-year college education can cost upwards of $100,000. Save for your child’s college education with a 529 plan. It works much like a Roth IRA, and withdrawals are completely tax-free when used for higher education purposes.
- Plan a vacation. If you are in a fluid financial position, and can truly afford a bit of luxury, do something you’ve been dreaming of. Money is to be enjoyed as well as earned, saved, and invested. Go ahead. Book that cruise.
Although all the preceding ideas are excellent uses for a lump-sum amount of cash, remember that instead of planning for a refund, it’s best to come out even. A tax refund is an interest-free loan to the government, and money that is not in your pocket every month. If you have been getting a refund back each year, consider changing your withholding exemptions so less tax is withheld from each paycheck. While a tax refund may feel like a gift from Uncle Sam, it’s not – it’s money that you have overpaid on your income taxes.
Happy New Year! As you review your finances from the holidays and try to keep your sanity, it may be time to also review your financial institution. Many people are not aware of credit unions or what they do. Here are just some benefits of joining a credit union.
- You do not have to belong to a particular group or have a specific occupation to join; today, many credit unions are open to almost anyone with very few stipulations. Being member-owned and not-for-profit, the credit union exists to serve is its members. Typically, they offer lower interest rates on mortgages, auto loans and credit cards with lower fees. This helps its members save more money over the long-run. Credit unions are governed by a member-elected, unpaid volunteers which means local accountability.
- Tech-savvy; most credit unions have all the latest technology such as APPs, online banking, mobile site and social media sites such as Facebook, Twitter and even YouTube and Instagram. One of the best features of the APP is the mobile deposits of checks. It is a simple process. Log in to your mobile account, select the deposit check icon, state the amount of the check, take a photo of the front of the check, take a separate photo of the back of the check and select deposit. Members are also able to pay bills, find locations and ATMs, make a transfer and even apply for a loan all through the APP. Most credit union APPs are free though your smart device and are compatible with iPhones, tablets and androids.
- Member-specific savings; credit unions also provide personal loans to members when in need of financial assistance. Financial literacy is also an important benefit that credit unions provide. Helping members understand and manage their credit; improve their credit score and eliminate debt are additional benefits of joining a credit union. Many credit unions have specified fee-free ATMs locations throughout the country. They are also federally insured by the NCUA, the sister organization of the FDIC.
- Educating the public; many credit unions offer free seminars on topics such as credit, getting out of debt, purchasing a car or home and retirement. Credit unions have partnerships with businesses and organizations to provide discounts exclusively to its members. They also give back to the community by generously supporting other not-for-profit organizations.
As you progress through life, it is wise to see if your financial institution is still the best choice for you. It not only saves dollars, it makes sense.
Losing weight is the most common New Year’s resolution, but becoming a better money manager isn’t far behind. If you’d like to get your spending in shape, too, adopt some of these resolutions this January.
Analyze your spending
Some financial institutions offer apps or calculators that help you split your spending into categories, such as housing costs, grocery expenses and entertainment. There are also many third-party apps with similar features. These tools show you where your money is going and help you identify areas — such as spending on entertainment — where you might be able to cut back.
Check your credit
You’re entitled to one free credit report per year from each of the three major reporting agencies: Equifax, Experian and TransUnion. Request a different one every four months through AnnualCreditReport.com to keep a close eye on your credit. If you find serious errors, tell the reporting agency. According to federal law, it must investigate your claim, usually within 30 days.
Your credit has a major impact on whether or not you’re approved for mortgage and car loans, as well the interest rates you’re charged. Having a high score will make it easier for you to qualify for loans with low interest rates.
Take the thought out of bill payments
Your monthly bills all arrive at different times, from different providers, in different forms. What if you could manage them all in one place?
Online bill pay isn’t terribly new, but if you haven’t tried it yet, you should. You can receive and view all your bills, make or schedule payments, and review your payment history in one platform. This makes it harder to misplace any important information.
Payment history makes up a large part of your credit score. If you make payments on time and in full, it will improve your score. Online bill pay is a good way to ensure that you don’t miss any payments.
Revisit your mortgage and insurance policies
We tend to set it and forget it once we’ve signed up for insurance. But if you shop around every year, you might find a better deal on auto, home or health insurance.
In a similar vein, it’s a good idea to examine the terms of your existing loans, particularly if you’ve raised your credit score since you qualified. If you refinance, you could qualify for a lower interest rate, which would reduce your monthly obligations.
Developing or improving your money management skills is a great way to kick off the new year. And if you stick with it, the dividends are just as positive as the benefits of regular workouts at your gym.
Peter Lewis, NerdWallet
© Copyright 2015 NerdWallet, Inc. All Rights Reserved
The holiday season is underway and more than ever, consumers will shop by mail, phone and the Internet. This means greater opportunities for thieves who hope that shoppers will drop their guard in pursuit of bargains and hard-to-find items. Protect yourself from fraud for a happy holiday season:
- Check out the seller. Be sure anyone selling though the Internet has a physical address, phone number and clearly posted policies relating to payment, refunds, delivery schedules, and the privacy of your information. Those selling by mail and phone should provide the same information. When in doubt, contact the Better Business Bureau for a reference.
- Be wary of unsolicited phone calls. Thieves sometimes pose as well-known retailers, offering special deals available only by phone. Shop by phone only when you make the call, and to a merchant you know and trust.
- Check out the product. Some sellers try to hide the fact the offered item is refurbished or a previously returned item. Be certain of the product description in the ads and examine items carefully when they arrive.
- Don’t email financial information. Email isn’t that secure and legitimate sellers won’t request payment in this fashion. Enter personal and financial information only when there is a “lock” icon on the browser’s status bar and look for the URL to read “https” versus “http”.
- Don’t open suspicious attachments. Some Internet identity thieves will send spam email offering unbelievable bargains on hot items such as digital cameras, computers, and mp3 players. The email includes an attachment that promises to explain how to obtain the promised item. By opening the attachment, however, you download a program that searches your computer for your personal information, and transmits that data to the thief.
- Keep your virus protection software and personal firewall up-to-date. Many software packages have features that allow an automatic check for updated virus definitions or enhanced protection; use these options to guard against hackers and thieves. Don’t forget to use hard-to-guess passwords to further protect sensitive data.
- Be careful using unfamiliar ATMs. Need cash on your shopping trip? ATM’s are popping up everywhere but some are found in high traffic areas where there are opportunities for thieves to observe your pin entry and use small cameras to film your transaction.
- Know Your Rights. All retailers (including those using the Internet) must ship your order within the time limit they promised in their offer. If they didn’t state a time limit they must ship within 30 days of receiving payment. If the retailer cannot ship within the promised date, they must allow you to cancel the order and receive a timely refund.
- Keep Records. Save all documentation related to your purchases, including emails detailing on-line purchases. Make note of all phone purchases, including the phone number you called, when you called, and who you spoke with. Always ask for a confirmation number for your order to quickly reference the purchase if the item fails to arrive or you are not satisfied.
Want more important consumer and personal finance guidance? Contact the financial professionals at BALANCE. As a benefit of being an account holder at [Your Financial Institution], counselors are ready, at no charge to you, to answer questions and help you develop a personal finance strategy. Visit http://www.balancepro.net or call toll-free: 888.456.2227.