We all know 2008 was a tough year economically, right? The stock market plummeted, foreclosures and bad debt threatened to bankrupt several large businesses and individual retirement accounts took major hits. It is situations such as this that all the self-styled financial advisors come out of the woodwork, all preaching they and they alone know what is best for poor ignorant people like us. In fact, let’s take a look at some of the sillier suggestions on how to save a buck.
First up is Stacy Rapacon from Kiplinger.com who says we can refile our W4 to claim exemptions in order to increase take home pay; of course in the first of the year you will be paying the income taxes that were not withheld during the previous year. Another piece of advice is to raise the deductibles on your car and homeowners insurance to $1000 to reduce premiums. You may save a couple hundred bucks a year in premiums but what do repairs cost; remember you are now on the hook for the first $1000 of any type of repairs. That’s not so bad if your repair bills are going to be in the thousands but what happens if you have two or three minor accidents in the year with an average bill of about $700? Now you’re out $2100 but you only saved about two hundred bucks in premiums. We can drop our high interest credit cards and go with a card such as a rebate card like the American Express Blue; great deal, you get 1% rebate for gas, groceries and pharmacy purchases and .5% rebate on everything else and if you charge $15,000 dollars worth of purchases you can possibly bump your rebate to 5% and 1.5% respectively, “saving” you a whopping $490 a year. So you spend $15,000 to get $490.
Our second advisor, Brett Arends, from Wall Street Journal Online, advises we could buy a bread maker and possibly save about $200 a year by not buying store bread. That’s not all, we can also get a credit card with a great sign-up bonus like AirTran’s Visa card; you pay a $40 annual fee and use it once to get enough “reward miles” for a free $250 flight then you cancel the card! We can get rid of our premium cable package and subscribe to NetFlix to get movies and television shows that we download off the internet and watch at home. Sure my cable package (tv and internet) is pricey but we stay at home most nights to begin with and record stuff on the DVR as well as On Demand programming which is totally awesome. We could plant our own gardens to maybe save about $50 a year, or maybe we can make our own coffee since everybody drinks Starbucks because they don’t know how to make good coffee at home (yeah, right)
Our last guru is Steve Santiago from BankRate.com, who tells us to raise our insurance deductibles to $1000 (remember this, boys and girls?) He also advises us to turn down the temperature on the water heater to save money and protect us from those pesky scalding injuries from too hot water; we can also turn down the thermostat so when it is 15 degrees outside set it to a balmy 60 degrees (I don’t know about you but that is too cold for me) He tells us to buy one of those coupon books with all those great discounts like $2 off movie tickets or $5 off dinner at the national burger chain.
Don’t get me wrong, they do seem to give out some good advice about upping 401k’s and going to the library rather than buying books, but most of the good advice is moot if you are already living within your means. It’s really not that hard to do, you just spend less than you earn and how hard can that be?