Saving Money: Small Changes for Big Results

by Sean Bryant on February 27, 2015

Saving Money

We all know that we need to save money but, for those of us who have been playing the savings game, sometimes cutting out our daily latte and making our own lunches, just won’t cut it anymore. The good news is that there are things you can do now that will help save money later. These simple actions can reap big rewards in future.

Proper Car Maintenance

Getting those little maintenance tasks done regularly can save you a lot in terms of expensive car repairs later on and makes your car more efficient and safer. Take your tires for example – studies by the NHTSA show that worn tires can increase the chance of being involved in an accident by 23.6 percent.

It makes sense then to regularly check your tire tread and to start looking for replacements before they become worn. Tires don’t need to cost a fortune but should be of good quality.

Take BF Goodrich touring tires, for example. These tires are good value for your money because they improve the way the car handles in both wet and dry conditions, score high in terms of comfort and looks, and are built to last. Save money in the future by getting tires that have a longer tread life.

Annual Insurance Premiums

Did you know that many insurance companies will offer you a discounted rate if you pay your premiums upfront once a year instead of monthly? It is in the company’s interest to have you pay upfront because then they know you won’t just shop around and change insurers (plus they get your money earlier and the interest they can earn adds up).

While it may be tough to find the money upfront, you pay less in terms of administration charges and premiums and do not have to worry about lapsed payments. GEICO, for example, charges up to $5 per installment payment, so if you pay upfront instead of spreading the bill over 6 months, you’re saving $30 per contract, or $60 per year, just on transaction fees. Check today with your car and home insurance companies to see whether a discount will apply if you pay upfront.

Use Your Mortgage as a Savings Vehicle

If you only pay the minimum monthly amount on your mortgage, you will end up paying nearly double the original purchase price in terms of interest. Fortunately, you can help reduce this amount without even increasing the monthly repayment.

By paying bi-weekly (every two weeks) instead of bi-monthly (twice a month), you’ll make 26 payments per year instead of the 24 you’d make with a bi-monthly plan. This effectively means you’ll make one extra monthly payment per year. While this doesn’t sound like a huge change, the difference will astound you.

Let’s take this example:

A 30-year, 4 percent mortgage, in the bi-weekly scenario, would be paid off in 25 years, 10 months. That’s more than 4 years of savings, just for making an extra two payments per year. That’s a huge advantage, and as interest rates rise, the savings increase. A 7 percent interest loan would be paid off in less than 24 years! Wells Fargo is one company that offers bi-weekly payments. And if you really want to increase the benefit, they offer weekly payments, too!

Saving money does not have to mean depriving yourself. It just means looking at things from a new perspective.

The following two tabs change content below.

Sean Bryant

Sean Bryant created in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and his wife are avid world travelers. He enjoys spending time with his two kids and dog Charlie.

Latest posts by Sean Bryant (see all)

Comments on this entry are closed.

Previous post:

Next post: