Some of us have been hit harder by the recession than others. But, we’re all in this together. As our economy shifts and changes we all need to focus on spending wisely. Here are twelve bonus money-saving tips to cope during a recession. Let’s focus on what we can control.
1. Itemize when you file your taxes this year. Taking the
time to fill out the “long form” will allow you to take legitimate
tax deductions. That could save you money if you will owe taxes
this year. Just make sure not to take deductions you can’t prove
with receipts — paying IRS fees are NOT fun.
2. Avoid a tax refund. Yes, it might feel like gift. You
might enjoy getting receiving it! But, if you get a tax refund that
means you could have had that money working for you all year long.
Uncle Sam doesn’t pay interest! Adjust your withholdings so you
don’t get such a large refund next year (or, ideally, no refund at
all).
3. Avoid getting your refund early from anyone except the government. Those “rapid refunds” are loans. And the interest rates are outrageous! If you need your refund early, file early. Don’t be tempted to let a third-party “spot” you on your eligible refund.
4. Do your banking online. It will save you
time and postage and is perfectly safe. Find the best online bank
by browsing community reviews in our Marketplace.
5. Emergency fund. Let’s say it again: emergency fund.
Ideally you want to have 3-6 months of expenses stockpiled if you
lose your job, have an accident, or need a major car or house
repair. Building an emergency fund can be a challenge but it can be
done. Commit to contributing a certain amount of money each week.
Diverting it to a new account helps you refrain from spending
it.
6. Face and fix your debt. Now more than ever
it is important to pay off your credit cards. Do not close your
account. You want to protect your credit score. Cut them up and
start paying them down. The sooner they are paid the sooner you’ll
have your freedom. A recession is stressful enough. Do yourself a
favor and do whatever is necessary to pay off your credit
cards.
7. Keep paying your bills on time. If this isn’t possible
you need to do two things: first, choose carefully which bill to
set aside for later payment.
Geezeo Expert Farnoosh Torabi
gives an excellent approach here. Second thing to do? Figure
out which bills you can reduce or eliminate.
8. Pay extra when it is possible. The name of
the game is to get out of debt while simultaneously growing your
savings cushion. Whenever you have extra money be sure to split the
money between debt service and savings. Some people disagree: they
look at the interest you’re spending on the debt versus the
interest earned on savings and clearly the math says pay it to your
debt. But, I prefer the psychological cushion of an emergency fund
(no matter how small). Decide your approach.
9. Use or set up a FSA (Flexible Spending Account). Many
employers will automatically deduct part of your pre-tax salary for
healthcare or childcare costs. Pre-tax dollars are better to spend
than after-tax dollars (to the tune of your tax bracket). One
caution: most FSA have yearly renewal. If you don’t use the money,
you lose it. Plan accordingly.
10. Don’t neglect your retirement fund. Day-to-day pressures can make it easy to cheat yourself out of saving for tomorrow. You’ll need to take the “tough love” approach. Make sure your contributions are automatically deducted. Or, resolve not to spend on an unnecessary indulgence before the contribution is made.
11. Review, review, and review your budget again. All of us have areas where we can tighten the belt. Maybe you don’t really “count” that money you spend on small items every day. Instead we wonder, where did it all go? There is just one way to find out. Set a budget and review it regularly to stay on track. Spending cash will help you spend less than if you mindlessly use your debit or credit card.
12. Get your credit report and correct any mistakes. A bad mark or mistake on your credit report can equal higher interest rates or worse. You are entitled to one free credit report a year. Get yours and promptly fix any inaccurate information.
