Better Savings Rates in 2010: 12 Monthly Resolutions
January 21, 2010
Personal savings rates were up overall in 2009, according to the U.S. Bureau of Economic Analysis--a trend reflective of new habits and attitudes resulting from the poor economy. But if you are like most Americans, an uptick in personal savings rates last year should be just the beginning.
People often begin the year with resolutions about saving money, then quickly forget those good intentions. This isn't only because of the New Year's Eve champagne--it's difficult to sustain the savings discipline over the long year ahead. If you've already slipped from your grand plans to save more in 2010, don't give up. Break down your savings goals into manageable, measurable steps.
Money-Rates Guides Your Savings Program All Year Long
To make it easier, Money-Rates.com is offering a series of 12 monthly resolutions that will help you get on track this year and stay there. Commit to one of the following each month, and it should help you have a better financial year in 2010.
- Take a fresh look at your mortgage. This is at the top of the list because mortgage rates are so low right now. Especially if you have paid down your mortgage for several years, see if you could switch to a 15-year mortgage to get an even lower rate. In mid-December, Freddie Mac reported that national average 15-year mortgage rates were at 4.32 percent--you may never see anything like that again in your lifetime.
- Direct deposit paychecks into savings or money market accounts. The less you actually handle your money, the less you'll spend.
- Look into your cable, Internet and landline costs. With both cable and phone companies offering combination plans for these services, you should check the market once a year to see if you can save money. Also, if you are a heavy mobile phone user, consider whether you even need a landline anymore.
- Take full advantage of tax-deferred savings plans like 401(k)s or IRAs. The first priority is to take advantage of any employer match available to you. Beyond that, the more you can make use of tax-deferred savings vehicles, the faster your retirement money will accumulate.
- Reexamine your mobile phone plan. Besides shopping around, the main thing is to consider is whether the plan you have suits the way you use it. There are Web sites-Consumer Reports recommends billshrink.com--that analyze your phone usage and recommend plans that may save you money.
- Build emergency savings. Many people dipped into their reserves in 2009. Start a plan to build them back up in 2010.
- Kick a bad habit. Nobody expects you to be perfect, but bad habits tend to be costly. Whether it's cigarettes or cappuccinos, doing without or doing with less can make you healthier and save you money. Little steps toward frugality can lead to "radical" savings, as much as $12,000 in a year, according to MSN's Jennifer Mulrean.
- Attack your credit card debt. Credit card debt is like having a hole in your pocket--whatever you manage to save tends to leak back out. As money guru Suze Orman points out, paying down credit card debt is the most important priority before investing for retirement. Formulate a plan to eliminate recurring debt balances by paying off more than your minimum monthly payment.
- Eliminate high-interest credit cards. While you're looking at credit card debt, rank your credit cards by interest rate--these may have changed radically of late. Your first goal should be to pay off the most expensive card, and then start working your way down the list.
- Shop for better savings account rates. Yes, savings account rates can be lower than other investment vehicles, but that doesn't mean you have to settle for next to nothing. Comparing savings accounts or money market accounts takes just a few minutes but can earn you extra interest for months afterward.
- Compare insurance quotes. This should be an annual habit. In particular, look at combining policies with one provider for extra savings.
- Be thoughtful about holiday gifts. It's okay to be generous, but spend wisely. Also, consider things like baking cookies or offering babysitting services--some gifts can cost you very little, and the recipient might appreciate them more than yet another cashmere sweater.