I'm a fan of money-saving tips, but I often get overwhelmed by too much advice at once. Does that happen to you?
I also find that important advice is mixed in with silly stuff, like “refinance your mortgage” with “use your coffee grounds twice”!
Furthermore, I have read that men get advice that's global and involves managing the whole budget, whereas women get advice that's very detailed and targeted at saving a few pennies here and there.
I don't know if that's true, and Lord knows I'm no financial expert. But I'm going to tell you two things that definitely fall in the category of “learn from my mistakes” and hopefully won't overwhelm you.
First, do everything you can — do whatever it takes — to pay your bills on time.
And by this I mean the bills that charge you a late fee.
Are you spending hours clipping coupons that will save you a few bucks and then spacing out on your cell phone bill? Do you realize that a late charge of $25 on a bill of $100 represents a 25% interest rate? Would you take out a loan that charged you 25% interest? You'd be mighty foolish to do so, and yet that is what is happening when you forget to pay this bill.
Credit card companies are notorious for changing their due dates slightly every month. If you are one day late with your payment, you will likely be slapped with a $39 late fee.
Do you realize that if your balance is, say, $1000, this is a 3.9% interest rate (not compounded, I can't do that kind of math, but my way understates the rate) on top of whatever rate you are already paying? So if that card charges you 7.9% (which is too high), you are actually paying 11.8% (way too high!) by being late.
So if you are like me, and have several cards because of the benefits you get (free shipping from L. L. Bean, points at Amazon, frequent flier miles, etc.), your chances of missing a due date are pretty good, and then all your benefits are wiped out. It would have been better to pay $11 in shipping that sweater than $39 in a late fee!
Stop and think of how many coupons you would have to clip to get back that $39!
If you don't keep your checking account balance up to date, you risk bounced-check fees, which amount to a very expensive loan from the bank. You can check your balances online, you know!
Solution: Get into the habit of touching base with your bills every Monday morning.
Make a list of when your bills are due and tape it next to your computer. Enter the dates in your tickle file (Google Calendar is a great application — try it!) so that you get an email reminding yourself to pay on time. Do what it takes to stop getting smacked down by these fees!
And this talk of interest rates brings me to my second tip for saving big money.
Second, take advantage of a good offer to transfer your credit-card balances to a lower-rate card.
Get out your bills and check the interest rate — it's printed there on the statement.
Get the best rate you can (you can even call the company and ask them to lower your rate — sometimes that works!). Lately I've gotten many offers for 2.99%. Do it! Just make sure that it's for the life of the balance, not just a few months.
Then: don't use that card for purchases! That's where they get you. Just keep your transferred balance on there and pay it off as you are able.
So those are two tips from a sadder but wiser budget balancer. I'm no expert, but even I can tell that you will save more money doing these two things than hunting down a cheaper can of beans!
lizzykristine @ Upli says
I agree that you need to have the big money-drains in order and as firm habits before trying the piddly ways of saving money…. Good point.I pay the bills as soon as they arrive. Well, not immediately. But within 24-48 hours.To make this work, we save up for the bills in advance. Ie, as soon as rent was paid for April, the very next paycheck included an allotment toward May rent. So the money is already there when the bills arrive and I can send off immediately. No late fees; no time to forget about a bill; no accidentally missing a moved-up due date.If your method is opposite (get the bill, then allot part of the paycheck) switching order is kind of awkward. But it sure has been worthwhile for us. Usually our check clears the bank before the bill was even due….
Cass @ That Old Hous says
Good advice, all of it. I think you are right in that men get the "big picture" advice, while women take a more "up close" approach to money matters. I know that's true in our household.Here's wishing good luck to everyone needing to more carefully watch where all those dimes and dollars go! And I think I'm going to call a couple of credit card companies, myself.Best wishes… Cass
Decadent Housewife says
Excellent advice, Leila.
Sandy says
Great, great tips. I agree, touch base with your bills one a week.Fun visiting you!
G.L.H. says
Wonderful advice (although we actually employ this one already!) Thank you so much for sharing it, especially for younger families.I called my credit card company (who does that "rotating due date" thing). They told me they would still rotate the date, but I could have it done so it didn't happen "before" the 15th of the month (one of my bill-paying days).Great advice, as always!
Habou says
Excellent advice, Leila. Like mother, like daughter. Sometimes I pay on-line within a few days of charging without waiting for the bill. By the way, you can use coffee grounds twice (as you know). The used grounds can be put in your compost or dug right into your garden. Great stuff.
Chinamama4 says
Not only do the credit card companies hit you with a late fee, but now they're using even one late payment as an excuse to lower your credit limit (usually to right where your balance is), and to raise your interest rate to something ridiculous like 25%!!! Wise advice, indeed!
jennygirltherat says
Excellent advice. For someone like me (truly brainscrambled) it was still too much to keep up with! My husband and I finally consolidated, paid it off, and cut up the cards. We keep an Amex for travel and emergencies, and an equity line for big-ticket household repairs like a new roof. Amex, utilites, mortgage. That's it. It hurts sometimes to forego but the peace of mind is is bliss.
Caution Flag says
Great advice! We have learned those lessons the hard way, but it felt so good to finally learn them.
sewingchick says
Yes, I totally agree! I remember in college a roommate would pay with a check, and then his check would bounce, and then a late fee would be slapped on us… Argh! Thank goodness for the internet and the invention of internet banking and automatic withdrawal! I only have to pay my credit card bill (I only have one credit card), and my water bill. All of the others are automatically deducted. I would totally recommend it!
Anne says
Yes! I was skeptical of autopayment, but I’m totally sold now. We use it for everything we can. The only times I’ve been hit with late fees were on cards I don’t use often, when I wasn’t using autopay. Plus, if you have it set up, and it doesn’t go through and you get hit with a late fee, they’ll be sure to refund it because it was their error, not yours. I also find it’s a helpful for avoiding the temptation to not pay everything in full every month (thereby saving those interest rates too).
Lori says
We follow both of these rules very carefully. I get tempted by the "save 15% if you apply for our credit card today" thing, but I hear my husband's voice in my head: "Don't do it!!!!" I listen.