miércoles, 10 de septiembre de 2014

Here's a short list of where you too might find a little extra money in your budget.

Recently, I took a long hard look at our bills and began brainstorming about what I could do to help our finances. There had to be hidden money there somewhere, I just had to find it. I made it my mission to find areas outside the norm of cutting back on groceries and other discretionary spending. What I found was money I didn't realize I was wasting. Here's a short list of where you too might find a little extra money in your budget.
Credit Cards:

While most people are aware of balance transfers from a card with a higher APR to one with a lower introductory or low balance transfer rate to save money over the short term, another avenue to explore is calling up your credit card company and attempting to renegotiate your rate. I admit it, I pay most of my bills online and give the charges a cursory glance when the bill arrives in the mail. One thing that I failed to notice was that my interest rate of my Discover card had jumped to 18.99% APR. The last time I remembered seeing a rate was about 14% a few years ago and it had been fixed at that point. It was now variable! If you carry a balance on your card, and your account is in good standing, it is worth a shot to call your company and ask if a lower rate is available. I was able to negotiate my rate down 2% less, not much, but to someone with a larger balance, it could mean a good savings. The friendly customer service representative invited me to call back anytime and see if there was a better rate available for me. The worst your credit card company could say is no.

Discover currently offers a 1% cash back on purchases and occasionally runs special promotions where you earn more if you use your card under certain circumstances, e.g. at hotels, gas stations, etc. Work your card! This program is especially fruitful for those who do not carry a balance, as it is effectively free money. $20 in rewards can translate into $25 gift cards. Take the time to think about what kind of rewards you would like to earn, be it airline miles, gift cards, etc. and choose your credit card such that it benefits you the most.

Car Insurance:

The public is well aware of Progressive's ads where they will give you their rate and the rate of other competitors. Simply put, shopping around can save you money. Check with prospective agencies to determine whether or not they give multi-policy discounts. Erie Insurance, for instance, gives multi-policy discounts for carrying your homeowner's and car insurance through them. Geico recently invited me to allow them to view our credit history in hopes of getting a reduced premium. Since our credit is excellent, we were offered a $50 discount on our insurance. Check with your agency to determine whether or not they have a similar program.

Are you over insured? Re-evaluate your policy needs every year and don't just auto renew. If you drive an older car that is paid off and not subject to a lien, you don't necessarily need collision. Check the Kelly's Blue Book value on your car and make sure you would be getting your money's worth if you had an accident. If you are driving a car worth $2,000 and have an accident that causes $4,000 worth of damage, your car will likely be totaled and you would receive just the value of your car. If you are paying more to drive your car than it is worth, then you need to make the proper adjustments to your auto policy.

Homeowner's Insurance:

How low is your deductible? According a Federal Government PSA, raising your deductible from $500, which many insurance agents recommend, to $1,000 may drop your payment by as much as 25%. Don't allow yourself to be lulled into paying a higher than necessary amount just because you want the cheaper deductible in case you need to make a claim. If you did need to make a claim, it would have to be in excess of $500 to be considered, and you would be responsible for the first $500 of it anyway. Raising your deductible to $1,000 increases your exposure by a mere $500 per claim and if you are able to save 20% even by raising your deductible to $1,000, you would save $100 per year, thus only really have $900 exposure per claim, or only $400 more.

With regard to car insurance, depending on your market, it may or may not be worth it to raise your deductible. If you live or work in a high crime area or high accident area, you may want to leave your deductible where it is since the likelihood of filing a claim is higher. If you live mostly rural or in a low accident area, raising your deductible may make perfect sense.

Are you over insured? If you carry a mortgage of any kind on your home, also referred to as Deeds of Trust in some states, your insurance company has your mortgage company listed as a loss payee. What that means that in the event of a total loss, your mortgage company is going to see the insurance proceeds before you do. Your mortgage would then be paid in full, since you must carry insurance for the full value of your loan(s). Anything left over is yours.

Don't confuse the replacement value of your home with the value of your home. If your home burned to the ground, your building lot is still present. Your policy should carry replacement cost of the structure and not insure the entire amount of the land plus building unless your loan amount includes both. This is a great place to save money, especially if your home is free and clear of liens. Your insurance company will ask you basic information about square footage, number of rooms, etc. and calculate the replacement cost of your home for you. Caveat: I did ask about this and the insurance agent did forewarn me that if she did an analysis and the replacement cost was higher than what I was insured for, they would re-write my policy for the larger amount and charge me accordingly. Do so only if you are sure that your home building costs in your area are not excessive.

Last but not least, review your policy for redundant coverage. My homeowner's policy had redundant coverage for identity theft and I had them remove the redundant rider which saved $25 off my policy.

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