Where to Stop Wasting Money in 2010
It all starts with awareness.
It's not that I think money grows on trees -- quite the opposite, actually. However, what I realize is that I need to raise my level of awareness in order to catch some of the mistakes I've made.
For example, I made a deposit this past week. Too bad I didn't make it a day earlier, because I had paid some bills online and they cleared a day earlier than I expected. I was so happy to be making the payments when I did, because they were on time, and therefore not incurring any late fees. However, what I made up in late fees, I paid in bank fees. Yes, if you're rolling your eyes right now thinking, "how dumb was that" -- don't worry -- I'm a step ahead of you. I'm rolling my eyes, too.
There were three late fees of $35 each (Chase is expensive like that). However, I called the bank to plead my case and beg for mercy. Since it had been over a year since I'd made such a silly faux pas, the representative was willing to remove two of them, and I was only on the hook for one. (I decided to send $50 from the refund to Haiti.)
Speaking of mistakes made in 2009, one big one I made on a regular basis was paying the bill late. Most companies -- whether they're the car payment or the credit card company -- charge some kind of late charge when you're late. I got caught in a rut there for a bit last summer that was hard to get out of, and as such was paying late payments on about three accounts every month. I have since fixed that problem, but it killed me to see how much money was wasted in late fees.
Unfortunately, there was no way around it for me, since it was completely dependent on when my clients paid me, and I had no backup. I have since fixed that with a reserve account so I can at least stay on time, even if I can't get ahead. Yet.
The third area was my car insurance. First of all, don't believe all the hype about the commercials or what you "think" will be the least expensive. Commercials are designed to get you interested in calling about their rates. The trick is knowing what to ask for.
First of all, if you call a company and ask for a "quote," they'll send you the "standard coverage": $25,000/$50,000/$10,000. What this means is that there is $25,000 liability coverage per person, $50,000 liability coverage per accident, and $10,000 of property damage. The standard deductible is $250. What this means is that in the event of an accident, you pay the first $250 and the insurance company pays the rest up to your limit (in this case, $25,000).
Well, the first thing that comes to mind is "$25,000 isn't going to cover very much." If you actually kill or even maim someone, you are very likely to end up in a lawsuit. Not that you wouldn't if you had $100,000 or $250,000 of coverage...but $25,000 barely covers a few days in the hospital. Anyway, the lower the deductible, the higher the premium!
So imagine, for a minute, if you were to "self insure" for another $250 or $500, your premium would reduce quite a bit. Depending on the insurance company -- up to 15%. Now, you could either pocket the difference, and keep the precariously low coverage, or you could apply the difference to higher limits -- say, $100,000/$300,000. If you do some homework in this area, you can save a big chunk of change.
So, in summary, resolutions for 2010:
1. Pay attention to deposits and online payments so you don't end up paying overdraft fees to the bank.
2. Pay your accounts on time so you can avoid late fees (even if it means creating a little fund that pads you for the next month if your income is uneven).
3. Look at your deductibles and your coverage on your car insurance to see if you can either save money or increase your coverage at no additional cost. (This works for homeowner's insurance too!)
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