You Can Become Richer in 2012 Using 10 Simple Techniques
Website DIVISIONS (Over 600 articles to help you to grow in every facet of your life)
Written by Jimmie Burroughs 
Email this article to a friend
Becoming richer is becoming smarter in how you choose to live your life. Those who spend their money unwisely will never be able to save much; those who learn to spend wisely are the ones who have plenty of money down the road.
In this modern time of digital technology, the word smart is connected to a lot of things. For instance, bombs were once considered dumb; they were dropped from planes in quantity with hopes that some would hit the target. Not so today; bombs have become very smart. Once dropped from the plane they take over and head straight for the target.
Your old way of managing your finances may be the dumb way. So, getting smart about how you use your money is how you become richer in 2012, or any other time. Stay dumb and miss the target; get smart and hit the target every time. Below are the ways to become richer in 2012 using 10 simple techniques:
1. Spend less money
Spending less does not mean that you need to cut back on the quality of life. It means spending smarter. Here is a personal example of not spending smart. I was paying near $40 per month for a health food supplement that I like. One day I got a little smarter and begin to search the Internet for the same identical product, made by the same company and discovered I could buy it for under $20 from another website. How much time did that take? About 15 minutes to save me about $240 per year.
If you have no qualms about buying used clothing, you can save a ton of money. There was a time when I would never consider buying anything used until I grew a little smarter and discovered I could buy some items of clothes that were like new and quality brands for a fraction of the new cost. Shop at Goodwill in an affluent area of your city and see for yourself. I bought a pair of $350 shoes for $10 that were like new, a new George Forman grill for $2, Levies Jeans for $8. That is just a sample of spending smart; there are numerous ways to buy what you need for less if you learn to spend smart.
2. Save more money
Smart people save more money. If you have a problem disciplining to save money, then bypass it by using an automated plan for saving. Some companies have a plan where they will automatically transfer part of your pay into whatever savings or investment you prefer. If your employment doesn’t, talk to your bank and have them to do it when you deposit your pay check.
Use the piggy bank method: save your change and small paper currency. From time to time deposit it into your savings.
A good rule of thumb is to give 10% of your before tax income to charity and save 10% for your future needs and plan to live on the remaining 80%. 10% savings will mount up to a large amount of money over time, especially if it is well invested to compound annually.
3. Avoid paying fines and penalties and late fees
Some folks could have a nice savings by avoiding the above. Avoid traffic fines by driving carefully and staying within the law, and I might add also that this could save you a lot of money by avoiding accidents and medical costs related to accidents.
Pay your bills on time and avoid the large penalties that are charged for late payments. In late fees alone, over $11 billion per year is taken in by the credit card industry. The best way to make sure your bills are paid on time, if you have a problem remembering, is to set up and automatic debit on your checking account; but if you do, make sure that the account always has sufficient funds to cover the debit.
Late fees for having an overdraft can be large. It is estimated that consumers paid $38.5 billion in overdraft penalty fees in 2011. The average overdraft fee is around $35 for each overdraft, and then the merchant may also charge an equal amount and it may only be for a $10 check that winds up costing you an additional $70. That is anything but smart.
4. Establish a budget and stick with it
It is true that keeping up with your spending can require time and a bit of a hassle, especially if you are trying to monitor the spending of two people, but it is necessary if you plan to keep on top of your spending. There’s a free service, Mint.com that you can use to establish your goals and automatically track your spending; it will give you a complete record of your spending 24/7.
Paper and pencil are absolute; use your computer or phone to do the work for you. There are dozens of apps available and many for free that you can use. Read this app review article from Moolanomy as a start.
5. Start a plan for assets allocation
There are a couple of ways to do this. You can use and investment broker if you trust someone else to handle you money according to your best interest. I’m yet to find that person so I insist on handling my own investment portfolio.
The downside of this is that you will have to learn something about investments or you could wind up losing a lot of money. There are some investment newsletters available on the Internet that are free, and many books have been written on financial investment.
A good rule of thumb is to subtract your age from 100 and that amount is what could have invested into stocks; since stocks have a higher volatility rate, they need to be limited. If you’re 30 years old, that means you’d invest up to 70% in stocks. Even though stocks are more risky, they usually have a greater earning potential.
The older you get the less your investment in stocks, the reason being is you have less time to recover in case of a down turn in the market before retirement. The remaining investments can be allocated for safer investments like the money market or bond mutual funds.
You might want to check the Vanguard 500 Index fund (VFINX) which is believed to be a good pick for a stock investment. These suggestions are not set in stone, and they are not to advise you, but only information for you to consider. Do some homework and decide what best suits your own personal financial needs.
6. Take advantage of discounts
Use Coupons: save time by Subscribing to RSS feeds from site deals like Slickdeals, Techbargains, and Dealnews, using a free service like Google Reader. Below are a few more that you can check. I haven’t used these so you will have to decide for yourself if they are for you:
http://sites.google.com/site/amazonfreecoupons/ http://freecouponsprintablediscounts.com/amazon-promotional-code/ http://www.dealjuggler.com/amazon-coupons-amazon-discounts
7. Avoid same as cash deals
Here’s a little secret that a lot of folks are not aware of when they enter into one of those same as cash deals. Although you’re not paying interest for the first 12 months or whatever, the interest is accruing. What this means is, if you haven’t paid off the balance in the designated time, you will start paying interests, and also will be charged with the back interest. This is why companies are eager to offer you this feature. They know in many cases that the account will not be paid on time and they will be able to charge the interest. It is only a good deal if you know for sure that you will be able to pay it off on time.
8. Cut up your credit cards
Why do you need a credit card?
People often say they need their credit card for booking flights, hotel rooms, and renting cars. This is true but you can use alternatives such as a debit card with a Visa logo. However, I prefer to only use my regular debit card in selective situations because they are easier to be compromised for fraud. I think the best alternative to a credit card is from PayPal. PayPal has a secured MasterCard which is linked to your PayPal account. It is good wherever MasterCard is accepted. There are a couple ways your charges are handled: you can maintain a PayPal balance for paying bills and it can also be connected to a backup, which is normally your bank.
Credit cards are bad in a number of ways.
- They charge interest on your purchases if not paid off each month
- They give a false feeling of getting something for free, which encourages spending
- They can raise your interest enormously high if you are late on payments
- They make it easy to never get out of debt
The smart thing for most people is not to have or use a credit card. A word of caution: If you do decide to cut up your credit cards, don’t cancel them all at once because it can cause your credit rating to fall. I have some that have been hanging around for years that I never use.
9. Consider refinancing your home if rates are low and timing is right
Refinancing your mortgage does not always make sense. So, determining when to refinance your mortgage is crucial. The first thing to do is to determine what it is you wish to accomplish. Below are some of the reasons most people refinance:
- Lower interest
- Extend the number of years
- Reducing the payment amount
- Debt consolidation
- Getting out of an adjustable-rate into a fixed rate
After you have clarified your reasons for refinancing you, then can decide whether the timing is suitable or not. If the interest’s rates are high, that might answer your question but there are other things to consider also. One is whether you plan to stay in your present home for and adequate time in order to make the refinance payoff.
How long it takes to offset the closing cost before you begin to realize the savings depends on what the going rate of interest is. I refinanced recently and the closing cost was around $3,000, so based on that it would have taken me around 20 months to recognize the savings on the monthly payments. That is if I had gone for the same amount of years that were remaining, but instead I went for reducing the amount of years by 10 years. Still the monthly payment was a little less because of the much better rate of interest. So as you can see it made very good sense for me to refinance and the timing was perfect.
Some of the reasons for refinancing given at the top can be bad decisions, depending on the circumstances of course. Extending the number of years on a loan is not wise unless it is the only alternative to stay in your house. A 30 year loan is never good if you can handle a 15 year loan. Also, consolation may just result in the temptation to buy more and soon be in the same boat again. .
Before you refinance, take some time to understand your current mortgage and how well it serves you. Think carefully on the new loan terms and interest. Is your credit good enough to be qualified for the lower interest? Does the loan have a prepayment penalty. Can you customize your payment to include by monthly payments or set up an automatic debit? Finally, as mentioned above, are you planning to stay where your are for at least two years?
10. Check for lower insurance rates for your home and cars
There are a lot of different auto and home insurance companies to select from. They all must comply with state and federal regulations, but that being said some are still better than others as far as pricing and service.
Price comparisons are easy to discover by using auto insurance rates on the Internet. Some of the other things you need to know require a little footwork.
Start with your State’s Insurance Department. Each state has an insurance department; they may go by different names; you can learn from them about any complaints that have been issued toward insurance companies.
Local Body repair Shops deal with various insurance companies and could quickly tell you which gives the best service.
Insurance brokers also can give you a lot of information about different companies. It is good to have an insurance agent nearby in case you have an accident and need his assistance.
Standard & Poor’s ratings are another source to find out how a company is rated and how strong they are financially. Some companies have gone under; Fitch Ratings is another source for information.
The discounts that each company offers can differ; so, findings the best one can require a little time and research. The company I use offers discounts if you insure multiple cares and or also include your home insurance.
Conclusion:
I suggest that you also read my article on “10 proven steps for financial freedom”. Learning how to stay out of debt and save money for you future is a matter of acquiring certain skills. Financial success rarely happens on its on, but usually requires some smart planning and action.
Ads by Google
___________________________________________________________________________________________________________
To subscribe to blog simply click on the RSS button on the left, and copy and paste the URL of our RSS feed into your RSS reader. ARTICLE INDEX _________________________________________________________________________________________________________ FREE Reproduction Rights – Feel free to publish this article on your website as long as the following information is included at the end of the article:
Jimmie Burroughs is the author of JimmieBurroughs.com ; get more tips on personal development: www.JimmieBurroughs.com
JimmieBurroughs.com is founded and maintained by Jimmie Burroughs Nashville, Tennessee. _____________________________________________________________________________________________________________ © 2011 Jimmie Burroughs. All rights reserved