ReAnn Rothwell’s Money Saving Ideas, Tax & Organizing Tips

 If your idea of financial organization is having only one shoebox stuffed with bills, (See Bookkeeping by Box) please continue reading! {grin} Tidying up and getting organized could save you a bundle.

When you put your financial papers in order, you end up going over them and ways to save money jump out at you.

The hardest part of this project is getting started.

Next, you have to make time (I have offered guesstimates of how much you will need at each stage).

For many people, it helps to set up a schedule.

• Weeks one and two: Go through your big bills and check out ways to cut your payments (this means getting on the phone and perhaps the Internet, so it is your longest job).
• Week three: Grit your teeth, tote up how well (or how poorly) your savings and investments did last year, and note what you should change for 2008.
• Week four: Fix up your filing system so that everything is in its place. Then you will not have to face such a mess next year!

Here are some projects that should be on your to-do list. How much they will pay off depends on how conscientious you have been up till now. My scoring system on potential savings: from $ (enough to buy a few dinners out) to $$$$$ (enough to buy dinner in Seattle).

1. Analyze your phone bills

TIME: 4 HOURS

POSSIBLE SAVINGS: $$

Gather past bills to see what you are paying for local, cell and long-distance service. Also, determine your calling patterns: Do you use long distance mostly on weekends for family, or during the week for business?  Do you really need all of the bells and whistles on your cell phone plan? Then compare offers (by phone and online) from competing companies to find out where you can get a better deal. Check per-minute rates, monthly fees, taxes, all additional charges, and exactly when evening and weekend rates apply. This exercise always takes me more time than I can believe. But that is what dark winter days are for. The payoff can be substantial.

Two Websites that might help: trac.org, whose WebPricer helps you compare what you would pay at five leading long-distance companies; and saveonphone.com, which shows you deals from online companies, some with rates as low as 3.9 cents per minute.

2. Review your checking account.

TIME: 20 MINUTES

POSSIBLE SAVINGS: $

Look at your last three bank statements and circle every fee. You may be paying $300 or more a year without knowing it. Once you have spotted those money nibblers, you will be able to think of ways to reduce them.

Take an interest-paying checking account: You are earning an average of just 0.6 percent today, paying around $10 a month in service charges and getting socked for $20 or more if your account falls below a high minimum balance. You might save if you switched to a no-interest account.

Sit down with your bank and ask them if a different kind of account would cost less for you or shop around and find a different bank that has a checking plan that will work better for you.

3. Refigure your mortgage.

TIME: 25 MINUTES

POSSIBLE SAVINGS: $$$

Run the numbers to see if it pays to refinance (you will find calculators at bankrate.com and eloan.com). You could save money even if rates are just 0.5 percentage point below what you are paying now.  Look at one of two strategies for refinancing: 1) Get a new loan for the term remaining on your old one, to lower your monthly payments. 2) Cut your term to 15 years or less - paying a little more each month but cutting your interest costs by a huge amount.

4. Reduce your debts.

TIME: 90 MINUTES

POSSIBLE SAVINGS: $$$

Add up how much interest you paid on credit card debt and other loans last year. Figure out a way to add $25, $50 or $100 per month to debt repayment, and you will save hundreds or more. (See my post “Feel Like You’re Drowning in Debt?”)

I recommend setting up as many automatic systems as you can. For recurring expenses like car loans, have payments deducted directly from your checking account. Then set aside an hour every other week to write checks for your other bills (waiting a month often leads to late fees).

5. Reevaluate your life insurance.

TIME: 30 MINUTES.

POSSIBLE SAVINGS: $$$

If you are carrying term insurance and you are in good health, go shopping. Another company may well be offering lower rates - saving you $100 a month or more. Ask your agent to check for something cheaper, or do it yourself through Web services such as insure.com or term4life.com.

6. Redirect/ add to  your retirement money.

TIME: 3 HOURS

POSSIBLE SAVINGS: $$$$$

If you are getting a raise this year, divert it into your 401(k) or IRA. That is the best way to catch up on any money you lost in the stock market drop. Think about putting at least a part of your Economic Stimulus Money into your IRA.

Maximum IRA contributions for 2007 = Age 49 and below $4,000/ Age 50 and above $5,000. For 2008 = Age 49 and below $5,000/ Age 50 and above $6,000

7. Do a homeowners’ insurance inventory.

TIME: 6 HOURS

POSSIBLE SAVINGS: $$$$

Have you truly protected yourself in case of fire? Walk through your home with a video camera, recording not only your furniture, jewelry, and rugs, but also the contents of your drawers and closets. Mention how much special objects cost. Ask your agent for a home inventory form and fill it out.  Without these records, you will have a hard time proving to your insurer what you lost. Keep records in a bank safe-deposit box.

8. Prepare a treasure map.

TIME: 2 HOURS

POSSIBLE SAVINGS: $$$

Here is another long-term money saver. Untold millions of dollars are lost every year because, after a death, the children or grandchildren cannot find all the assets. To be sure this does not happen to you; leave your family a master list. It should include your insurance policy numbers, bank accounts, brokerage accounts, retirement accounts, deeds and mortgages, tax records, the location of your safe-deposit box (and the key!), employee benefits and the phone number of the office that handles them, Social Security number, personal papers such as your marriage certificate or military discharge, your computer passwords, credit card numbers, health insurance card, the names of your lawyer and accountant, and where your will is. (See my post  ”Free Financial Order - Be Prepared”)

9. You don’t have a will?

TIME: 8 HOURS

POSSIBLE SAVINGS: $$$$

Hey, this is already 2008! Make a call to your favorite lawyer.

Just can not do all of this on your own?

Feeling Overwhelmed?

How can I help you get organized?

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