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Simple Ways To Increase Your Savings: Part 2
Stress And CortisoneMost people do not realize how many of the common day-to-day sicknesses and illnesses are initially sparked off from stress. Stress then causes an entire chain ..... 1. Skip one big expense a year. You might be able to realize some meaty savings simply by skipping your winter vacation, trading in your turbocharged sports car for an economy-type, or ditching your upscale health club membership and switching to the YMCA.
2. Hold a garage sale to raise cash. By getting rid of an old computer, TV, stereo, dining set, or exercise machine, you could earn $300 to $3,000 more in just a day or two.
3. Use your flexible spending account (FSA), if you have one. Don't pass up the opportunity to pay medical and dependent-care expenses with pretax dollars through these accounts. A family of four is almost certain to spend $1,000 a year on doctors, dentists, and prescription medicines. Your tax savings if you pay these bills from an FSA can be at least $280.
4. Make higher down payments. When financing your next major purchase (a new car, new kitchen, etc.) put up as much money as you can and keep your borrowing down. By not financing $500 at 12% over three years, you can keep $98 jingling in your pocket; not financing $5,000 saves you $979.
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5. Use a home equity loan to pay off high-rate debts. Replace consumer debts at, say, 18% with a home equity loan at 12%, and you'll cut your interest costs by a third. In addition, the interest on a home equity loan can be fully deductible on your income tax return. Let's say you consolidate $10,000 in car payments and credit card cash advances with a home equity loan. Counting the tax break, a taxpayer in the 28% bracket will save $936.
6. Pay in cash. This high-discipline technique will teach you a lot about the difference between what you want and what you really need. Moreover, by paying in cash, you avoid paying finance charges. For example, trimming your credit card balances by $500 this year can save you almost $100 in interest if your card issuer charges 18.6% interest.
7. Don't pay for financial services you could get for free. Using only no-fee checking accounts, no-fee credit cards, and no-load mutual funds can save you $100 a year or more. For instance, checking accounts often run $60 a year; annual fees for credit cards typically range from $15 to $50.
8. Squirrel away your next raise. This tip is an example of the rule financial planners love to tout: Pay yourself first. To squeeze out money for your savings, earmark your next raise as savings toward a specific goal. If you earn $40,000, for instance, a 5% raise will give you $2,000 to set aside toward your baby's college fund.
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