Thursday, January 8, 2009, AM | 2 Comments
Did you make any resolution for the new year? Was it about your personal finances? Well! Any kind of resolution does not mean anything if you don’t follow it through.
There are some habits – especially the way you were raised – that you don’t need resolution for.
For example, I am a spender but not in a big way. I use my credit cards more wisely. I pay my bills in full and on time. I use my credit card for almost everything.
In any case, here are a few ways you can save money in 2009 and into the foreseeable future.
The old adage “A penny saved is a penny earned” always holds true. I don’t think you need someone else tell you how to save money. But to get you organized, there are some websites that can help you do just that.
You can do research on your own. I found the following websites. Just follow instructions on each site to sign up and work your financial chores. Take your time and understand the basics of each site.
Although all of the sites are secure, some people are still not comfortable linking bank accounts directly to a budgeting site. So use them at your own discretion. They are all pretty much secure.
The online money-management tools let you easily track all your accounts: checking, savings, credit, loan and investment. Signing up is fast and free; to get started, you need only provide an e-mail address and zip code, then select a password.
By the way, I use TD Bank where I have checking and savings accounts. I pay all my bills online. So far, it is free.
If you are more interested in an online community, this is the site for you.
This site specializes in group budgeting and IOUs among friends. Invite friends to join and for each person who accepts, you will earn a 60-cent credit toward an upgrade. Take a Tour. Check out its Help Center, FAQ and more importantly its Forums.
Set up Flexible Health Account with your employer
Check with your employer. If it offers this benefit, you can stash pretax dollars in the account and use the money to pay for out-of-pocket bills, including physician co-payments, prescription drugs, eyeglasses and braces for the kids’ teeth.
A flex account can save you hundreds of dollars in federal, Social Security and, in most states, state income taxes. In addition, you can tap the entire amount at any time, even if you have contributed for only a couple of months.
Under the use-it-or-lose-it rule, you could forfeit any money left in the account at the end of 2009. But many companies now offer a grace period until March 15 of the following year.
As a matter of fact, if you have money left over from 2008, treat it as a bonus to help pay for a major expenditure in early 2009. Check with your employer.
Cut the cost of your Credit Card
You can do this once you understand how you will use your credit card. Once you know the purpose for your card why you got that in the first place, then you can choose a card that will save you money in the long run. Also, funnel your credit card rewards into retirement savings.
Increase your 401(k) contributions
With stocks on sale, now is a great time to build – or rebuild – your retirement account.
For 2009, the contribution limit for 401(k) accounts rises to $16,500. You can add another $5,500 if you will be 50 or older by the end of the year. Contributing the full $16,500 would save you $4,950 in taxes for the year, assuming a 25% federal tax bracket and a 5% state income tax.
If you cannot take advantage of contributing the maximum dollars allowed, you should kick in at least enough to capture any employer match.
Open an Online account
Most banks allow this feature. I use my own neighborhood bank – TD Bank for my online banking.
To avoid the temptation to spend all the money, set up an automatic monthly transfer from your checking account or arrange to have part of your paycheck deposited directly into your new rainy-day fund.
Raise your car insurance deductibles
Increasing the deductible on your car insurance from $250 to $1,000 can save up to 15% on your premiums. Raise it at least to $500.
Last but not least, File a new Form W-4
If you got a tax refund for 2008, adjusting your withholding will fatten your paycheck for 2009.
With an average refund of about $2,400, you could be entitled to three extra exemptions. In the 25% tax bracket, that could boost your take-home pay by $2,625 per year.
If you are afraid you would spend the extra money, then don’t do it. I know the Government would get the interest for that extra money, but I think its better you get the extra refund with no interest.