5 ways to tame your budget
You can’t do anything about the U.S. consumer price index, the official inflation measurement that is on the rise, giving headaches to people who worry about the consumer-driven economy.
But believe it or not, you are totally in charge of your “personal price index,” and tweaking it to save hundreds or even thousands of dollars a year doesn’t have to hurt -- too much.
Here are five tips:
1. Fix mortgage rate
If you have an adjustable-rate mortgage, refinance with a 30-year fixed-rate loan. Your biggest monthly expense will flat-line -- and eventually drop off a cliff.
Knocking even half a percentage point off will save about $32 a month on each $100,000 borrowed. On a $400,000 loan the 30-year savings would be $46,080.
Last week, you could get a 5.375% rate for a conforming 30-year fixed loan. That translates into a monthly payment of $2,240 on a $400,000 mortgage. If the best rate is more than what you’re paying on your ARM, and you’re not threatened with an imminent rate hike, be patient -- and pay attention, because rates could drop in the near future. Make www.bankrate.com a favorite in your Web browser and check rates at least once a week. Daily, if you’re that kind of person.
2. Appeal property tax
If you purchased your home in the last few years, there’s a very good chance you’re paying too much property tax, given the way home values have plunged. The county will reassess your property to reflect the lower value, which can save you hundreds -- maybe thousands -- of dollars.
You’ll find instructions and forms on the websites of your county assessor’s office.
3. Plan a weekly menu
Arguably the most expensive items in your refrigerator are the ones that spoiled before you ate them -- all cost, no return.
To avoid having your vegetable bin turn into a petri dish, never set foot inside a grocery store without a list. Sit down with your family, your housemates or yourself once a week and make up a menu for each day, like the stay-at-home spouses of yesteryear. Post it somewhere that you’ll see in the morning so you’ll remember to take the pot roast out of the freezer or that today is the day you promised yourself to bring tuna on rye to work for lunch.
4. Shop for life insurance
Term life premiums have dropped dramatically. A person who bought a $500,000, 20-year level-premium term policy a decade ago, at age 35, is paying about $700 to $800 a year, says Byron Udell, president of AccuQuote.
If that person is still in good health, he can replace the remaining 10 years on the policy at less than half the cost -- about $310 annually.
5. Use rewards cards
True confession: I am a credit card junkie. I use plastic to buy clothes, books, groceries. I’d use plastic to pay my mortgage if I could. Understand, I never have a revolving balance. As soon as the bill comes, I pay it. So, all I get from using a credit card is “float” -- about 20 extra days to pay -- and “rewards” of cash or gift certificates. In an average year, these rewards pay me between $400 and $600.
Make sure you have the discipline to pay off your cards every month and never purchase something that you wouldn’t otherwise buy just because you’re using plastic.
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