Money Hacks

This information is from the U.S. government.

Most lenders calculate finance charges using an average daily account balance, which is the average of what you owed each day in the billing cycle. Look for offers that use an adjusted balance, which subtracts your monthly payment from your beginning balance. This method usually has the lowest finance charges.

Stay away from offers that use the previous balance in calculating what you owe; this method has the highest finance charge. Also don’t forget to check if there is a minimum finance charge.

With the debt snowball, you don’t start with your highest interest rate obligations, but those with the smallest balances. You attack the debts you can eliminate most quickly.

The debt snowball and debt snowflake concepts can also be applied to other financial goals, such as:

building an emergency fund
• saving for retirement
• paying down your mortgage

This may be counter-intuitive — in fact, it really bothers some people — but it works.

Extended warranties or service contracts are rarely worth what you pay for them. This has been documented repeatedly from many sources, including Consumer Reports, yet people still buy them. They’re not always a bad deal (I always take them out for laptop computers), but most of the time, you’re better off self-insuring.

Instead of paying for service contracts, put the money you would have spent into a separate savings account. When something goes wrong, pay for the repairs out of this fund.

The cardinal rule of shopping is to use a list.

The list represents your grocery needs: the staples you’re out of, and the food you need for upcoming meals. When you stray from the list, you’re buying on impulse, and that’s how shopping trips get out of control.

Sure, a magazine only costs $5, but if you spend an extra $5 every time you make a trip to the supermarket, you waste a lot of money.

If your employer matches 401(k) contributions but you don’t invest, you’re throwing away free money. It’s difficult to find a better deal than employer-matched retirement contributions. If you have one available to you, try to at least contribute enough to it to get the full match from your company.

If you want free entertainment, there’s a ton of it to be found in your local community. The only problem is that it can be difficult to be aware of what is going on. There’s a solution to that: call your city hall and also give a ring to your chamber of commerce and ask for a community calendar.

In many cities, a weekly or monthly community calendar is printed and given away freely, which lists community activities of all kinds. Circle some that you like and attend them — you can’t get a bigger savings than having an entertaining evening for free.

[This information via The Simple Dollar.]

Take 90 minutes to have a serious conversation about your household financial situation.  Set up an appointment with your significant other to review where you are at financially.  Set goals for debt reduction, setting up an emergency fund, and for saving money to purchase something you both would enjoy.  Be specific in the steps you will take to reach your goals and how you will hold each other accountable.  Be truthful about setbacks and celebrate your sucesses.

Ron at The Wisdom Journal suggests a “sneaky” way to save.

Learn to fix your favorite restaurant meals at home and save the cost difference. If a family of five eats out once per week, this can easily save $150 per month. Plus, making your own southwestern egg rolls is a lot of fun!

[This information via The Wisdom Journal, and used with permission.]

Try not to get frustrated about money. Don’t let your situation get you down. Don’t focus on the big picture. Do keep your eyes on your goal, but concentrate on taking small steps. Do the best you can at this moment.

If you know you have problems in certain areas, work to improve them. Don’t expect to become perfect overnight.  

Money is more about mind than it is about math. Our financial decisions are often based on psychology and emotion rather than on pure numbers. Nearly everyone understands intellectually that credit card debt is bad, for example, but for millions of people, this understanding isn’t enough.