This was originally published on Monday, January 19, 2015, in the Pacific Daily News. Click here to subscribe to the PDN.
When setting financial goals, many of us want to reduce our debt, increase our savings or just break even. That is easier said than done. There are some things, such as the economy, fuel prices or rising utility rates, that are beyond our control. But there are some little things we can control that may help save money.
• Earning interest. How much interest a bank offers is something beyond our control, but you can choose to put your savings in a higher interest rate savings account. Shop around. Some FDIC-insured banks will pay higher interest than others.
• Hidden Fees. Look at your bank statements. Are there hidden fees you were not aware of? If you are not sure what they are, contact your bank.
• Credit cards. Try to use credit cards for emergency uses only, especially those with high interest rates. If you do use your credit card, keep the balance low so that you can pay it off in one or two payments. Keeping your credit card at a high balance accrues interest and affects your credit score.
• Credit Score. Check your credit score for free at annualcreditreport.com. Check for mistakes on your report and correct them as soon as possible. A poor credit report can lead to high interest rates or difficulty in getting a loan.
• Overdraft protection. Some banks offer a protection plan that lets you over withdraw your account; some up to $500. You usually have to pay a monthly fee for this service. Although it sounds like a good idea, it can create a cycle that will be hard to break. The overdraft protection is really a loan. The next time you deposit money into your account, that money will be used to pay off the loan leaving you short on money that you will need later on. Instead, establish an emergency fund for those unforeseen woes.
• Mortgage. Have you reassessed your mortgage rate? Mortgage rates are still a lot lower than they were 10 years ago. If you can refinance your mortgage at a lower rate or shorten your mortgage term you may be able to save a great deal of money. You also can pay a little more every month to help you pay off the mortgage sooner and pay less interest.
• Insurance. Most people do not reevaluate their insurance or pay for coverage that they really don’t need. Maybe you had a major life change and have not updated your policy. Take some time to read your policy and understand exactly what you are paying.
• Retirement fund. Are you maximizing your retirement fund? One of the biggest concerns is being able to retire with enough money to survive. Even when times are hard, adding a little to your fund will help in the long run.
• College. With the rising costs of education, college students should take advantage of financial aid. Many students are getting online degrees or going abroad to lower tuition costs. Avoid creating a large debt that you will be paying for years after you graduate.
• Planning for the worse. Do you have a will, advance directive or a power of attorney that will state what your wishes are in case you become incapacitated or pass away? Having these important documents will eliminate a lot of confusion and stress on your loved ones.
• Now is the time. Don’t wait till you make more money or get a new job. Getting your financial affairs in order as soon as you can pays off in the long run. A little goes a long way.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.