Money Tips For 2009

1. Get your spending under control by using a free online budgeting Web site, such as Mint.com. This secure site tracks your checking, credit-card and investment accounts and offers money-saving tips, such as where you can cut costs or get a better rate on your credit card. Other free sites, including Wesabe and Geezeo, offer similar budgeting tools, but focus more on their online communities where users share strategies.

2. Set up a flexible spending account to help pay for medical expenses. If your employer offers this benefit, you can stash pretax dollars in the account and use the money to pay for out-of-pocket bills, including physician co-payments, prescription drugs, eyeglasses and braces for the kids’ teeth. You can even spend the money on over-the-counter medications, such as antacids and pain relievers.

3. File a new Form W-4. If you got a tax refund for 2008, adjusting your withholding will fatten your paycheck for 2009. With an average refund of about $2,400, you could be entitled to three extra exemptions. In the 25% tax bracket, that could boost your take-home pay by $2,625 per year.

4. Raise your insurance deductibles. Increasing the deductible on your car insurance from $250 to $1,000 can save up to 15% on your premiums — or about $125 per year on an average premium of $829. Upping the deductible on your homeowners policy can slice your rate by about 25%, or $191 on an average premium of $764.

5. Cut the cost of credit. If you tend to carry a monthly credit-card balance, go with a low-interest-rate card, such as Wells Fargo’s Prime Rate card, with a 5% interest rate and $19 annual fee. For gasoline or travel perks, try the BP Visa card or >Simmons First Visa Platinum Travel Rewards card.If you’d rather pocket a cash rebate, consider the American Express Blue Cash card. You’ll get a 1% rebate for gas, groceries and drugstore purchases, and you’ll get 0.5% back on everything else. Big spenders can bump up those rewards to 5% and 1.5%, respectively, after dropping $6,500 for the year. Charging $15,000 worth of everyday purchases would save you $490.

6. Open an online savings account, such as the one at www.fnbodirect.com, which was recently paying 3.25%, or about $100 a year on a $3,000 deposit. You can open the account with just $1, and there are no monthly fees or minimum-balance requirements. To avoid the temptation to spend all the money that’s now lining your pockets thanks to our first five tips, set up an automatic monthly transfer from your checking account or arrange to have part of your paycheck deposited directly into your new rainy-day fund.

7. Bump up your 401(k) contributions. Already have an emergency stash? With stocks on sale, now is a great time to build — or rebuild — your retirement kitty. For 2009, the contribution limit for 401(k) accounts rises to $16,500, and you can add another $5,500 if you’ll be 50 or older by the end of the year. Contributions aren’t subject to federal or state taxes, so loading up on the full $16,500 would save you $4,950 in taxes for the year, assuming a 25% federal tax bracket and a 5% state income tax. Can’t afford the maximum contribution or want to use part of your savings for something else? Try to kick in at least enough to capture any employer match.

Source : Kiplinger.com - by Stacy Rapacon