Financial Planning 1

Ways to Save Money

Every dollar saved is generally worth about $1.33 earned.

Home Buying and Mortgages

The price of a home should not exceed twice your annual family income. The payment should ideally be no more than 25% of your income. If you are in debt and in too expensive a house, it may pay to "downsize." Living below your means for awhile will pay big dividends in the future.
Go for a shorter mortgage and save tens of thousands of dollars on interest.
Pay one month ahead. Then you'll never have to worry about late fees if there's a problem paying on time one month. Late fees accrue interest if not paid immediately.
Pay a little extra on the principal each month if at all possible. The earlier in the mortgage you do this, the more it will save you. Even $25/month will make a huge difference in the long run.
You are paying far more to the bank for interest than you are saving on income tax with a home mortgage deduction. Don't think of losing that deduction as a bad thing. Would you rather pay the bank or the government? I'd rather pay the one that costs less (the government in this case).
Don't hurry when you're looking to buy a house. Be shrewd. Don't allow emotions to rule. Figure the total costs over the lifetime of the mortgage.
Consider refinancing if interest rates go down significantly and you plan to be in the house for a long time to come.

Insurance

Increase the deductible in order to reduce the premium. Although this is taking a risk (you pay more if something does go wrong), assess the likelihood of something going wrong and "self-insure" for the deductible. Keep at least that amount in your emergency fund and take all precautions to prevent an accident or incident.
It pays to pay more for increased liability limits on car insurance.
Consider a blanket liability policy. They are inexpensive and will be well worthwhile in the case of a major disaster.

Vehicles

Buy used cars, or buy new cars in Portland, Oregon. Cars typically lose a great deal of their value the minute they are driven off the lot and are no longer "new."
Learn to do your own minor repairs, change your own oil, etc.
Read the owner's manual and do what it says to extend the life of the car. Drive gently.
Save gas by calling around first. Carry an old telephone book in your car.
Group your errands to save trips. The less you drive, the less you spend.
Keep emergency supplies in the car, including flares, jumper cables, a survival kit (in Alaska at least), and a hidden key (in case you lock yourself out).

Clothing

Shop in secondhand clothing stores.
Care for clothing so it lasts.
Shop around and shop the sales.

Food

Don't waste food. A typical family spends at least $10,000/year on food and wastes about 15% of that. That amounts to $1,500, almost enough to fund an IRA.
Shop from a list and avoid impulse buying as much as possible. Don't shop when you're hungry.
Clip and organize coupons. Put kids in charge of the coupons if you don't have time and pay them the amount they save you. At least then the money stays in the family.
Comparison shop. Check unit pricing. Look up and down on the shelves. The most expensive items are often at eye level.
Eat at home and cook your own meals as much as possible. Or know where to eat cheap. Make eating at nice restaurants a very special occasion, for anniversaries and birthdays.

Taxes

Group all your property taxes for two years in order to take an itemized deduction without a home mortgage deduction. Then claim the standard deduction every other year.

General

Beware of deals that tell you the more you spend, the more you'll save. The more you spend, the more you spend. "Free frequent flier miles" could fit into this category.
Don't use plastic in the presence of kids, especially little kids. (Better yet, don't use it at all.) That includes ATM cards, credit cards, debit cards, etc. Kids learn plastic is a magic ticket to wealth and power. On average, people spend 33% more when they use credit, even if they pay off the balance each month.
Save all receipts in a box for the month so you know where your money is going.
Use a bank or credit union that doesn't charge you to write checks or make deposits. Some of these institutions nickel-and-dime you to death.
Throw away all promotional material from credit card companies without reading it. They know how to manipulate you.
Use the free public or school libraries. Be sure to check out some of the many books on how to save dollars!
If you are in the 28% tax bracket, consider setting up a small business at home and hiring your kids. They will pay income taxes at the 15% level and they can save some of their earnings in an IRA.
Consider letting kids spend 30% of their income as they wish (no parental interference), 30% toward something special like skis (parents can use this to teach math and delayed gratification), and 30% in a long-term investment. The remaining 10% is the tithe. It is dangerous for kids to get the idea that all of their income is discretionary. That's not life. Better to give them more and teach them how to use it.
Don't give kids money or buy things for them whenever they ask. You are not a money tree and it teaches them false expectations. Plan how you're going to transfer money to them (allowance, jobs, combination) and stick to the plan. If they run out of money, they run out. They learn. It's less painful now than as adults. No "loans" or "advances." Consider "matching funds" for large purchases like cars, musical instruments, etc.
Reduce, reuse, recycle, conserve. This not only saves the earth, it saves dollars which are better used for God's work and your future.
If you have a major expense coming up, like a new roof, live with the old one until you have the cash saved.
Keep everything well maintained. Use everything carefully. Keep it organized.