- You may lower the price of a round trip air fare by as much as two-thirds by making
certain your trip includes a Saturday evening stay over, and by purchasing the ticket in
- To make certain you have a cheap fare, even if you use a travel agent, contact all the
airlines that fly where you want to go and ask what the lowest fare to your destination
- Be flexible, if possible. Consider using lowfare carriers or alternative airports and
keep an eye out for fare wars.
- Since car rental rates can vary greatly, shop around for the best basic rates. Ask about
any additional charges (extra driver, gas, drop-off fees) and special offers.
- Rental car companies offer various insurance and waiver options. Check with your
automobile insurance agent and credit card company in advance to avoid duplicating any
coverage you may already have.
- You can save thousands of dollars over the lifetime of a car by selecting a model that
combines a low purchase price with low financing, insurance, gasoline, maintenance, and
repair costs. Ask your local librarian for new car guides that contain this information.
- Having selected a model, you can save hundreds of dollars by comparison shopping. Call
at least five dealers for price quotes and let each know that you are calling others.
- Remember there is no "cooling off" period on new car sales. Once you have
signed a contract, you are obligated to buy the car.
- Before buying any used car:
- Compare the seller's asking price with the average retail price in a
"bluebook" or other guide to car prices found at many libraries, banks, and
- Have a mechanic you trust check the car, especially if the car is sold "as
- Consider purchasing a used car from an individual you know and trust. They are more
likely than other sellers to charge a lower price and point out any problems with the car.
- Don't decide to lease a car just because the payments are lower than on a traditional
auto loan. The leasing payments may be lower because you don't own the car at the end of
- Leasing a car is very complicated. When shopping, consider the price of the car (known
as the capitalized cost), your trade-in allowance, any down payment, monthly payments,
various fees (excess mileage, excess "wear and tear," end-of- lease), and the
cost of buying the car at the end of the lease. Keys to Vehicle Leasing: A Consumer Guide,
published by the Federal Reserve Board and Federal Trade Commission, is a valuable source
of information about auto leasing.
- Consumers lose billions of dollars each year on unneeded or poorly done car repairs. The
most important step that you can take to save money on these repairs is to find a skilled,
honest mechanic. Before you need repairs, look for a mechanic who:
- is certified and well established;
- has done good work for someone you know; and
- communicates well about repair options and costs.
- You can save several hundred dollars a year by purchasing auto insurance from a
licensed, low-price insurer. Call your state insurance department for a publication
showing typical prices charged by different companies. Then call at least four of the
lowest-priced, licensed insurers to learn what they would charge you for the same
- Talk to your agent or insurer about raising your deductibles on collision and
comprehensive coverages to at least $500 or, if you have an old car, dropping these
coverages altogether. Taking these steps can save you hundreds of dollars a year.
- Make certain that your new policy is in effect before dropping your old one.
- You can save several hundred dollars a year on homeowner insurance and up to $50 a year
on renter insurance by purchasing insurance from a low-price, licensed insurer. Ask your
state insurance department for a publication showing typical prices charged by different
licensed companies. Then call at least four of the lowest priced insurers to learn what
they would charge you. If such a publication is not available, it is even more important
to call at least four insurers for price quotes.
- Make certain you purchase enough coverage to replace the house and its contents.
"Replacement" on the house means rebuilding to its current condition.
- Make certain your new policy is in effect before dropping your old one.
- If you want insurance protection only, and not a savings and investment product, buy a
term life insurance policy.
- If you want to buy a whole life, universal life, or other cash value policy, plan to
hold it for at least 15 years. Canceling these policies after only a few years can more
than double your life insurance costs.
- Check your public library for information about the financial soundness of insurance
companies and the prices they charge. The July 1998 issue of Consumer Reports is a
valuable source of information about a number of insurers.
- You can save more than $100 a year in fees by selecting a checking account with a low
(or no) minimum balance requirement that you can, and do, meet. Request a list of these
and other fees that are charged on these accounts.
- Banking institutions often will drop or lower checking fees if paychecks are directly
deposited by your employer. Direct deposit offers the additional advantages of
convenience, security, and immediate access to your money.
Savings and Investment Products
- Before opening a savings or investment account with a bank or other financial
institution, find out whether the account is insured by the federal government (FDIC or
NCUA). An increasing number of products offered by these institutions, including mutual
stock funds and annuities, are not insured.
- To earn the highest return on savings (annual percentage yield) with little or no risk,
consider certificates of deposit (CDs) and treasury bills or notes.
- Once you select a type of savings or investment product, compare rates and fees offered
by different institutions. These rates can vary a lot and, over time, can significantly
affect interest earnings.
- You can save as much as a thousand dollars or more each year in lower credit card
interest charges by paying off your entire bill each month.
- If you are unable to pay off a large balance, pay as much as you can and switch to a
credit card with a low annual percentage rate (APR). For a modest fee, RAM Research Corp.
(800-344-7714) will send you a list of low-rate cards. You can obtain a list of low-rate
cards by accessing "www.ramresearch.com.cardtrack" on the Internet.
- You can reduce credit card fees, which may add up to more than $100 a year, by getting
rid of all but one or two cards, and by avoiding late payment and over-the-credit limit
- If you have significant savings earning a low interest rate, consider making a large
down payment or even paying for the car in cash. This could save you as much as several
thousand dollars in finance charges.
- You can save as much as hundreds of dollars in finance charges by shopping for the
cheapest loan. Contact several banks, your credit union, and the auto manufacturer's own
First Mortgage Loans
- Although your monthly payment may be higher, you can save tens of thousands of dollars
in interest charges by shopping for the shortest-term mortgage you can afford. On a
$100,000 fixed-rate loan at 8% annual percentage rate (APR), for example, you will pay
$90,000 less in interest on a l 5-year mortgage than on a 30-year mortgage.
- You can save thousands of dollars in interest charges by shopping for the lowest-rate
mortgage with the fewest points. On a 15-year, $100,000 fixed-rate mortgage, just lowering
the APR from 8.5% to 8.0% can save you more than $5,000 in interest charges. On this
mortgage, paying two points instead of three would save you an additional $1,000.
- If your local newspaper does not periodically run mortgage rate surveys, call at least
six lenders for information about their rates (APRs), points, and fees. Then ask an
accountant to compute precisely how much each mortgage option will cost and its tax
- Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a
great deal over the lifetime of the mortgage. An increase of several percentage points
might raise payments by hundreds of dollars per month.
- Consider refinancing your mortgage if you can get a rate that is at least one percentage
point lower than your existing mortgage rate and plan to keep the new mortgage for several
years or more. Ask an accountant to calculate precisely how much your new mortgage
(including up-front fees) will cost and whether, in the long run, it will cost less than
your current mortgage.
Home Equity Loans
- Be cautious in taking out home equity loans. These loans reduce the equity that you have
built up in your home. If you are unable to make payments, you could lose your home.
- Compare home equity loans offered by at least four banking institutions. In comparing
these loans, consider not only the annual percentage rate (APR) but also points, closing
costs, other fees, and the index for any variable rate changes.
- You can often negotiate a lower sale price by employing a buyer broker who works for you
not the seller. If the buyer broker or the broker's firm also lists properties, there may
be a conflict of interest, so ask them to tell you if they are showing you a property that
they have listed.
- Do not purchase any house until it has been examined by a home inspector that you
Renting a Place to Live
- Do not limit your rental housing search to classified ads or referrals from friends and
acquaintances. Select buildings where you would like to live and contact their building
manager or owner to see if anything is available.
- Remember that signing a lease probably obligates you to make all monthly payments for
the term of the agreement.
- Home repairs often cost thousands of dollars and are the subject of frequent complaints.
Select from among several well established, licensed contractors who have submitted
written, fixed-price bids for the work.
- Do not sign any contract that requires full payment before satisfactory completion of
- Consult Consumer Reports, available in most public libraries, for information about
specific brands and how to evaluate them, including energy use. There are often great
price and quality differences among brands.
- Once you've selected a brand, check the phone book to learn what stores carry this
brand, then call at least four of these stores for the prices of specific models. After
each store has given you a quote, ask if that's the lowest price they can offer you. This
comparison shopping can save you as much as $100 or more.
- To save as much as hundreds of dollars a year on electricity, make certain that any new
appliances you purchase, especially air conditioners and furnaces, are energy-efficient.
Information on the energy efficiency of major appliances is found on Energy Guide Labels
required by federal law.
- Enrolling in load management programs and off-hour rate programs offered by your
electric utility may save you up to $100 a year in electricity costs. Call your electric
utility for information about these cost-saving programs.
- A home energy audit can identify ways to save up to hundreds of dollars a year on home
heating (and air conditioning). Ask your electric or gas utility if they can do this audit
for free or for a reasonable charge. If they cannot, ask them to refer you to a qualified
Local Telephone Service
- Check with your phone company to see whether a flat rate or measured service plan will
save you the most money.
- You will usually save money by buying your phones instead of leasing them.
- Check your local phone bill to see if you have optional services that you don't really
need or use. Each option you drop could save you $40 or more each year.
Long Distance Telephone Service
- Long distance calls made during evenings, at night, or on weekends can cost
significantly less than weekday calls.
- If you make more than a few long distance calls each month, consider subscribing to a
calling plan. Call several long distance companies to see which one has the least
expensive plan for the calls you make.
- Whenever possible, dial your long distance calls directly. Using the operator to
complete a call can cost you an extra $6.
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