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| DollarWise | 5 ways to find 'free' money that's really free
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Most saving solutions involve changing your lifestyle or your habits. Not these. Here are the prime places to look for money that's already rightfully yours.
By Jennifer Mulrean
Most people wouldnt refuse financial gifts even as small as $5 or $10. But those same people find it difficult to believe such small amounts make a significant difference to their bottom line. Theyd rather have their daily luxuries, such as that afternoon latte, than forgo all the fun for what they see as measly savings.
Fine. In fact, drink up. Not all strategies require you be more saver than spendthrift.
Here are some ways to save on things you already pay for -- without changing your lifestyle or habits in the least. Think of it as the reclamation of money youre currently overpaying to others. In short, "free money" that's there for the re-taking.
Lower your regular expenses
One of the easiest ways to waste money is to overpay for a service. Here are some of the more common overspending culprits:
Cell-phone service: You thought you were going to need 3,000 minutes a month, only to find 300 or 400 would do. If youre at or near the end of your contract, or if your service provider is willing to waive the early-termination fee, you should change the deal as soon as possible. Consider this: Verizons Americas Choice 3,200-minute plan runs about $200 per month; youll spend just $40 for its 400-minute Americas Choice plan. Provided you dont start going over on your minutes and incurring pricey overage charges, thats $160 in savings each month, or $1,920 a year. Even changing from the Americas Choice 1,100-minute plan at $80, would still cut your phone bill in half for an added $480 in your pocket.
Local and long-distance calling: If youre not using all your cell-phone minutes each month on a plan that doesnt allow you to roll them over, you can offset your landline costs with those otherwise-wasted minutes. Already doing this? Try bundling your local and long-distance plans if youre regularly spending more than $50 per month. Many bundled plans start at around $50 before taxes and fees and allow you talk for as long as you want without the shocker bills. Calculate carefully, though. If your usage is erratic, youll pay the same rate every month, meaning no breaks for vacations when your usage normally plummets.
Checking account: How long has it been since youve taken a look at the monthly fees your bank assesses on your checking account? By switching to a non-interest-bearing account, you can tie up far less money and avoid higher fees. Bankrate.coms annual survey of checking accounts found that average monthly fees are up to $10.86 on interest-bearing accounts, vs. $3.72 for regular checking accounts. Youll have to keep $2,258 socked away in that interest-bearing account to avoid fees, versus the $245 minimum for the non-interest account. What are you giving up? Average yields sat at a paltry 0.27% in the fall of 2003, the time of the Bankrate report. Meantime, if you're able, try to plan your ATM withdrawals. The average fee youll pay for using another banks ATM machine is $2.69 -- $1.40 to the ATMs bank and $1.29 to your own. Eliminating just one of these withdrawals a week can save you $140 per year.
Insurance: There are a number of ways to save on your insurance policies. Ask your insurance provider for discounts: Besides the usual good student and safety discounts on auto policies, ask for a multi-policy discount if youre insuring more than one vehicle. Raise your deductibles on older cars or drop collision coverage altogether if your car is worth less than $1,000. Raising your deductible from $200 to $500 can reduce your premium by as much as 30%, according to Insure.com. For more ideas on how to save, visit the following Decision Centers: Save on health insurance, Drive a hard car-insurance bargain and Avoid insurance rip-offs.
Dont overpay to borrow
Credit cards. Think 2% or 3% isnt worth fighting for on your credit cards APR? Consider the following: If youre an average American, you owe $8,940 in household credit card debt, according to CardWeb.com's CardData Service. At the average APR of 16.44%, youll pay $1,470 per year in interest alone. For every 1% decrease in APR, youd save $89. But the difference is far more dramatic over the life of your debt. Figuring you can make monthly payments of 5% of your debt per month, youll pay $3,334 in total interest at the higher rate. But at an APR of 13.44%, youll have paid $2,551 -- 23% less.
Also, plenty of cards come with added perks, such as airline miles or, better yet, cash back. American Express Blue Cash card rewards you with up to 5% cash back; the GM card awards 5% back toward a GM new car purchase or lease. On the average credit card debt of $8,940, that works out to $447. Use MSN Moneys Credit Card Analyzer to find other low-rate and cash-back cards. Also, you can check CardWeb for a list of the monthly perks credit cards are offering.
Your mortgage. The biggest savings potential here is to get rid of PMI, or private mortgage insurance. PMI protects the lender should you default on your loan. Youre obligated to pay this so long as your equity remains below 20%, but once you cross that magic threshold, you should ask your lender to drop the fee. The law actually says your lender must drop the fee once your equity crosses 22%, provided you have a conventional loan originated or refinanced after July 29, 1999 and you have a good payment history. But if you have an older loan, you could be paying this unnecessarily without realizing it. Depending on the size of your mortgage, this could be adding hundreds of dollars to your mortgage cost annually. Read more, here.
Maximize your current resources
Use what youve got. Paying for Internet access already? E-mail can be a great way to cut your long-distance phone costs. It may not be a substitute for your weekly heart-to-hearts with Mom, but it probably should substitute for the when can we chat? calls. Why spend precious pennies leaving voice mail?
Similarly, if youre buying the same magazine title at the grocery checkout stand more than a few times a year, consider subscribing. Youll usually spend anywhere from 25% to 50% less for the same number of issues on a subscription.
Get rid of what you dont use. If youre not using it, you shouldnt miss it when its gone. Donate your unwanted items for a tax deduction, have a garage sale or sell them on eBay. If youre paying for a storage unit for all that stuff, thats one more monthly bill you can eliminate.
Dont ignore potential income
Take advantage of any employer-matching on retirement accounts. Deferring some income until retirement doesnt mean youre taking a pay cut; remember, the money in your retirement account is still yours. Ignoring any employer match on your contributions is like turning down a 3% raise every year (or whatever percentage your employer will cough up).
Pay the right amount of taxes. Sure, some people like the hefty refund checks come spring, but by taking the right number of exemptions on your W-4, you keep more money in your own pocket throughout the year to invest as you please. A good rule of thumb if youre married and both working is to take the most allowances on the higher-paying job and none on the lower-paying job. For 2003, a single taxpayer earning $20,000 per year could keep an extra $39 in each paycheck by claiming one additional allowance, MSN Money tax guru Jeff Schnepper calculates. It doesnt sound like much, but it adds up to $468 a year. Read more on withholding strategies here. And dont forgo your refund altogether. Make sure the IRS has your address if youre owed a refund. Every year, thousands of checks are returned to the IRS because the recipients cant be found. By October 2003, more than 115,000 advance child-tax-credit checks and 92,000 refund checks for the 2002 tax year remained unclaimed. (If you think you may be due a refund, call the IRS at 1-800-829-1040 or check its site.)
Check on old accounts. Think you may have left money on the table when you moved to another neighborhood and state? Did you fail to let everyone know your new address? There are plenty of free sites that list people who are owed money by insurance companies, banks and utilities. Try MissingMoney and CashUnclaimed.
Ask for a deal
My husbands co-worker, JJ, has no problem fighting for his right to save -- even when it goes against a stores verbal or written policy. Newly married, he and his wife recently bought a couple of chairs for their living room. The problem: They didnt go with the couch theyd bought from the store some months back. Though they had exceeded the return window by some number of months -- not days or weeks -- the store agreed to take the couch back. This is standard operating procedure for JJ; he regularly saves on everything from hotels to clothes and cell-phone service.
The lesson here for the rest of us: Dare to ask for the deal -- at the rental car counter, at hotels -- even from the plumber or doctor. Fellow MSN Money columnist Liz Pulliam Weston offers more tips on how to bargain for everything, here.
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