As many of us cautiously turn back the flap of the tent we crawled inside during the recession, we are as determined as ever not to get ourselves in financial trouble ever again. News reports are bouncing off the walls with all-time highs in the stock market, falling unemployment rates, and an economy on the upswing. So what can we do in 2015 to hold onto our money and make it go further? Here are a few tips to get you started:
- Build up your Emergency Fund. You need enough money to get you through 3 to 6 months of unemployment or enough to cover copays for a medical emergency. For example, take the savings from lower prices at the pump and bank the difference from last summer. Cut back on eating out or entertainment long enough to build an adequate fund amount.
- Don’t try to pay off a low interest rate mortgage if investing that money could make more. For example, if you’re paying 4% on your mortgage and getting an adjusted tax break in the 3% range, then you’ll make more over the course of a year if you put that $100,000 into an index fund making an 8% return.
- Negotiate your costs. In Ohio, you can choose who generates your electricity or gas. Haggle with everyone — utilities, bankers, landlords, salespeople and so on. Call your credit card company and ask for a lower interest rate. You don’t get it if you don’t ask for it.
- If you get a lower price, bank the savings. Whether from a lower interest rate on a credit card or eating out less often, whatever you saved is not “savings” unless you put that amount into a separate account, like the Emergency Fund, and leave it there.
- Become best friends with Google. Use Google on your computer or smartphone to shop lower prices for whatever you need to purchase, from grocery coupons to big-ticket items like TVs and cars. In fact, someone recently saved $700 on an auto part that needed replacing on his car. Just Google “coupon” along with the name of whatever you plan to buy. Deduct what you actually paid from the retail price and write yourself a check for the difference. Over the next 12 months, you’ll be surprised at how much your Emergency Fund grows.