It’s also important to evaluate your insurance needs. For example, increasing your out-of-pocket deductible from $250 to $1,000 can save you 15% or more on your car insurance. Also, consider using the same insurer for your home and auto insurance — you could save up to 15% for a multiple-line policy.

Also, make sure you’re not paying for insurance you don’t need. Take life insurance, you need it only if someone is financially dependent upon you (such as a child).

by miltedflower

There are many ways to throw your money away. Take cars for example, they lose most of their value in the first few years, meaning thousands of dollars down the drain.

On the other hand, recent used vehicles (those that are less than five years old) can be a real value because you get a car that’s still in fine working order for a fraction of the new-car price. You’ll  also pay less in collision insurance and taxes as well.

Cars aren’t the only things worth buying used. Pre-owned clothes, books, toys, exercise equipment and furniture can offer vast savings.

There are some things you’re better off buying new, including mattresses,linens, shoes, computers and safety equipment (such as car seats and bike helmets).

The truth of the matter is, there’s really nothing complicated with making a household budget plan. There’s no requirement for you to use computer budgeting software or anything fancy like that, all you’ll need is a pen or pencil, and a piece of paper. First, recall all your expenses for the past 4 months and write them down – these includes your bills, and practically everything that takes cash out of your pocket. Everything means – no matter how small or inexpensive the commodity is, like a pack of gum, write it down. They may not mean much individually, but adding up “small” items can equate to a sum that can do some damage.

Once you’ve done that, write down the total at the bottom of the page. The next step you to take for the creation of your household budget plan is list down all the total income you’ve earned for the past four months. This can be from your day job, part-time job, returns from investments, and anything else providing a consistent stream of income. Then, add them up and write them at the bottom of the page as well. Next step is to divide the totals by four, which will give you the average monthly expenses and income.

The ideal situation would be income average greater than expense average. However, if it’s opposite for you, that’d been you could be on your way to debt trouble, then meaning you’d need to make adjustments. Cut out the items sucking the cash out of you pockets, the ones that you don’t need, specifically. That’ll help you fix the household budget plan, and make sure you earn more than you spend. From there, you plan where you allocate your funds for the coming expenses for the next month, and other months to come. That way, you’ll have better control over what you spend your money on, and know exactly where it’s going.

Here are some relatively painless cost-cutters that are sure to shrink your spending:

Make a shopping list – when you are working with a budget, it’s best to plan ahead what items you intend to purchase. Make a list of everything you need, and stick to it. This will keep you from going to the store for a few items and ending up with a trunk load. It will also keep you from impulse purchases. Make it a rule to avoid adding extra items to your cart. If you see items you want that are not on your list, add them to your next shopping list, after you’ve had time to think about where you can fit another purchase into your budget.

Stop eating out – eating out costs considerably more than cooking at home. Stops at the coffee shop or convenience store, quick snack from the vending machine, and the fast food drive through, all add up. Carry snacks with you on errands, bring your lunch to work, start an office collection to stock coffee and tea for employees. Not only will you save money, you’ll probably eat healthier.

Buy generic – we’ve all been conditioned to believe name brand products are superior. If you give them a try, you’ll see that many generic or store brand products are generally just as good, often indistinguishable. Buying bargain labels can cut your weekly grocery bill by almost half. Several grocery chains have recently developed their own line of store brand products with excellent quality. Remember, someone has to pay the price of the heavy advertising done by name brand products. 

Use what you have – whether it’s leftovers in the fridge or food in the cupboard, beauty supplies, or clothes you never wear, there are probably a lot of unused or partly used items around your house. Take an inventory of what you have before you run to the store. You can usually  find things lying around the house that can be put to good use. Not only will you spend less, but you’ll clear out some of the clutter in your home.

Become a bargain hunter – make it your goal to save as much money as you can every time you shop. Seek out sales in the newspaper and make note of items on sale that you use regularly. Make shopping to save a game, you’ll be surprised at the rush you can get from finding great bargains.

Following a budget and cutting costs doesn’t have to be painful. It’s all a matter of how you approach it. Keeping a care free, positive attitude will make a positive difference in your life and in your overall financial reality.

- Read and learn how to save money during an economic recession. Walk off to the nearby library or bookstore and have a book. William Boner has authored a few books on the subject and there are others as well. Keeping yourself educated is crucial.

- See if your existing job is in a critical sector to avoid layoff during the recession. Most jobs in health care, food production and supply, home based freelance jobs are safe bets. 

- Make a list of your spending habits. Make an effort to change them to only necessitates. 

- Even if people are apprehensive to spend there is still money to be made if you have skills or services that people need. Discover some niche that is making money. Grow food to sell, learn the skills like house repairs, rent out space.

- Do not take further debt during an economic recession. If you learn to live on less money than as the economy picks up you’ll make more money more rapidly with the skills you learned during the recession.

- Make your lunch on your own and take it to your workplace with you. This will not only save money during an economic recession but you will also have the exact food that you like to eat. It will healthier than what you would pay for by going out to eat. 

- Water your grass on your own and turn off your sprinklers. This will save quite a few bucks by doing your own watering. 

- You should buy the things like thermos and carry your own coffee with you to your business place. Spending money each day on coffee and other beverages does not seem right if you are trying save money during an economic recession.

- Don’t buy excessive shoes and clothing. 

- Meet with others and buy and sell what you have for what you need. You can do this kind of business activities with your friends and neighbors. These are a few very valuable ways to save money during an economic recession.

Strive hard to find out other means to cut corners. Always ponder before you spend the money. Also, hunt for different means to earn extra bucks, such as by freelance home based jobs.

1 This will be a good year to invest in stocks.

No one can tell you exactly when or where the market will bottom. But most business-cycle experts agree that the bottom will be found sometime this year, and that it probably won’t be too far below where the market is today.

So a smart strategy will be to put some money in the market today, and keep doing it over the course of the year. If you’re still shaken over massive losses from last year, this may be hard advice to swallow. But the biggest mistake you can make as an investor is to ride the market down, lose faith, pull out and miss the upturn.

Even in the Great Depression, the market bottomed out in 1932, with the Dow Jones Industrial Average at 41, down from a peak of 381 in 1929. By 1937, it had climbed back to a respectable 194. That didn’t make investors whole. But for those who stayed in, it certainly soothed the wounds.

2 It will be a good year to invest in real estate.

This one’s a bit trickier, since real-estate prices are “sticky” on the downside. Homeowners don’t like to admit that the value of their pride and joy has fallen by 30%. So they’ll put their house on the market at an inflated price and hope some fool will bite.

I was at a Vermont ski resort last month and noticed this oddity: Brand-new condominiums were selling at a price considerably below those of second-hand condos of roughly equal size and location. The reason? I assume it’s because the resort owners have a better sense of the market’s real value than the average person, still desperate to recoup a bad investment.

But here’s the thing: Fixed-rate mortgages are already at historic lows, and the government is going to use every tool in its bag to get them lower over the course of the year. So if you find a piece of property you want, if the seller is willing to recognize how far the market has truly fallen, and if you have good credit — three big ifs — you can benefit from a once-in-a-lifetime double bonus of low prices and low interest rates.

This strategy requires some patience. Just as real-estate prices don’t fall as precipitously as the stock market, they don’t rise as rapidly, either. You may have to wait a decade to reap the full benefits.

3 Americans will learn to live within their means.

Around our house, the crisis is already having a salutary effect. Our teenagers suddenly seem to understand that unlimited dinners out with friends aren’t a birthright, and that blue jeans don’t have to carry triple-digit price tags.

Multiply that by 300 million, and you have a nation that has rediscovered that you can’t spend what you don’t earn. Houses are no longer ATMs, and credit cards no longer come with each day’s mail.

That sudden realization, of course, is what’s causing the economy to swoon. But this reckoning was inevitable, so it’s best to get on with it. Let’s hope these lessons last for decades.

4 President Obama will have a historic opportunity to reshape public policy.

Speaking at the Wall Street Journal’s CEO conference in November, Mr. Obama’s chief-of-staff-designate, Rahm Emanuel, said the words that have become his team’s rallying cry for 2009: “You never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before.”

The Obama team is busily preparing a stimulus package that, when all is said and done, wiltal between $750 billion and $1 trillion — far larger than any fiscal stimulus in the history of the world. And with the economy still sliding downward, it’s a good bet few politicians will want to stand in the way.

That will give the new president an opportunity to do things his predecessors could only dream about. Roads will be rebuilt, schools will be refurbished, medical records will be computerized, and windmills will be constructed, all across the land.

Will some of that money be wasted? Of course. But the sums involved are so huge that there’s a good chance someone, somewhere, will benefit.

5 Your (federal) taxes won’t rise.

Never mind those campaign calls for higher taxes on the wealthiest Americans. Truth is, no politician is going to push for general tax increases in the midst of a severe recession.

You may wonder: How is the government going to pay for that trillion-dollar stimulus package? Or the multitrillion-dollar bailout of financial institutions, auto companies and anyone else sideswiped by the current crisis? Or the continued wars in Iraq and Afghanistan? Or the (still) rapidly rising cost of the baby boomers’ retirement?

Well, that’s the sweet secret of the current crisis. While the American people are learning to live within their means, the new American government has discovered an unlimited (for now) line of credit. The United States may have led the world into this crisis, but the world now seems more than willing to lend us unlimited amounts of money to lead the way out.

This, too, is unsustainable. A reckoning will come. But that’s a problem for 2010 and beyond.

Source : The Wall Street Journal - By ALAN MURRAY

Even if the only thing you manage to do is to simply think about saving money every day, I guarantee that you’ll be in better financial shape this time next year.

One Question to Stop Mindless Spending

How many times have you gotten your credit card bill or bank statement and wondered what you got for $39 at Acme Mart or where that $100 ATM withdrawal went?

Wonder no more. If you vow to save money every day, you’re likely to make smarter decisions with every dollar that passes through your hands.

Ask yourself every time you whip out your wallet: “Hey, is there some way I can spend less today?” The simple act of acknowledging the opportunity to cut costs will bring mindfulness to your everyday spending. It will take a little while to remember to ask that pointed question, but after you do it for, say, a week, it’ll start to become second nature.

There are other ways to make more mindful money decisions, too:

Kick the Plastic Habit

Credit cards are a major cause of overspending. When we whip out the plastic, our mind goes numb; we don’t process the transaction the same visceral way we do when we spend cash. (Think of it like using poker chips in Vegas, only without Wayne Newton tunes in the background.) In fact, some experts say people spend 15% to 30% more when using credit instead of cash.

Spending actual cash forces you to think about every dollar you spend, so you experience a physical reaction to forking over $1s and $5s.

Try this trick to get in tune with your spending: Institute the “envelope” approach to budgeting for a few weeks, whereby you carry around just the amount of cash you want to devote to various spending categories (lunch, entertainment, cute shoes) for that week. See how it affects your purchasing. Chances are it’ll keep you from frittering away your money — so much so that you’ll tell the whole family to play along.

Keep the Bigger Picture in Constant View

How much joy does a stale turkey sandwich from the corner deli add to your life? What about that gossipy magazine you tossed into your grocery cart while waiting in the checkout line? How much closer do those purchases get you to that two-week cruise or covering Junior’s college costs?

Think of every financial decision in the context of your larger life goals, be it getting a new briefcase, paying cash for your next car, or securing your retirement. No, that doesn’t mean sacrificing all short-term pleasures (love those gingerbread lattes, by the way). But combined with the budgeting method I’ve outlined here, this is a pretty powerful motivator to keep the mindless spending in check.

Write a list of your big money goals on a small index card and keep it in your wallet. This constant visual reminder of what you really want to do with your money will make you think before you buy anything that doesn’t align with your real wishes.

Always Shop With a List

Studies show that as much as 60% of supermarket purchases are unplanned. With the average family shelling out $5,000 for groceries every year, that’s $2,000 of unnecessary stuff running across the scanner.

It may be cliché, but shopping with a list will keep you honest. Lists (and that “envelope” budgeting method, again) are great for big-ticket retail excursions, too, such as holiday shopping and “Skip Work to Go to the Outlet Mall Day.” Y’all celebrate that one too, right?

Happy Habit Trails

Try out a few of these money practices over the next month. You might be surprised how quickly they become habit — and how much more attractive your finances look when it’s time to ring in 2010.

Source : The Motley Fool - by Dayana Yochim

There is nothing wrong with adopting this mindset. After all, it is the thought that counts, right?

Here are some suggestions on how to make this holiday time a happy one for all, without spending a fortune doing so.

· Talk with family members and make a pact to buy gifts only for the kids, preferably one gift per child.

· Instead of displaying the large Christmas tree with two or three dozen lights, purchase a small one that can be placed on a table.

· Decorate your house with homemade items you have on hand. Let your creative side shine through! Engage your family members to help as well.

· Holiday meals can be expensive; ask each family member to bring one favorite dish. Don’t forget dessert!

· Make homemade gift baskets for friends. Use your culinary skills and bake a delicious assortment of cookies and cakes. You can purchase the basket and ribbon at a dollar store.

· Send e-cards to family and friends. You can save quite a bit of money on postage.

The holidays are a time when family members and friends come together and enjoy each other. It’s not about gifts – nor is it about whose home is the best decorated. It’s about taking the time to acknowledge how blessed you truly are.

For some, the commercialization of Christmas has taken the joy and wonder out of it. To some extent, most would agree. If you can think back to when you were a child, perhaps your parents could not afford to give you many presents – but the one or two you did receive were wonderful, right? The red wagon or the shiny new bike – these memories can never be forgotten.

At a time when unemployment is rising, companies are going out of business, and homes are in foreclosure; think of those who are less fortunate than you. If you are in good health and have friends and family near or far with whom you can communicate and/or spend the holidays with – be thankful!

Even though it’s the season to be frugal, no price can be put on spending time with those you love.

The Commerce Department reported Friday that retail sales dropped by 1.8 percent in November. The decline, which was slightly below the 1.9 percent dip that had been expected, was the fifth straight monthly drop, a record stretch of weakness.The downturn was led by a 2.8 percent fall in auto sales, which had been expected since automakers had reported that November was their worst sales month in more than 26 years.

Meanwhile, the Producer Price Index, which tracks costs of goods before they reach consumers, fell 2.2 percent last month as gasoline and other energy prices retreated, according to the Labor Department. That followed a record 2.8 percent plunge in wholesale prices in October, and November’s price drop was larger than the 2 percent decline economists expected.

Falling prices might sound good for buyers, but a prolonged, widespread decline would do serious economic damage, dragging down incomes, clobbering home prices even more and shrinking corporate profits.

The reports come a day after the Labor Department said initial jobless claims rose to the highest level in 26 years, though the work force has grown by about half over that time.

The latest economic data illustrate the negative cycle currently bedeviling the economy: consumers tighten their belts as the unemployed — and those who fear for their jobs — spend less, reducing retail sales and leading companies to cut back further.

Most Americans expect the jobs situation to get even worse, according to a poll released Thursday by the Pew Research Center for the People & the Press. More than 60 percent believe unemployment will increase next year, and 73 percent plan to cut back on holiday gifts this year.

Economists anticipate more gloomy data later Friday. The Commerce Department is expected to report that business inventories fell by 0.2 percent in October, which would be the second straight monthly decline.

Businesses cut back on their inventories by that amount in September, the first decline since March 2007, and the biggest setback in more than three years. Inventories are closely watched signals of business confidence. When companies are reducing their stockpiles because they are worried about future sales, it can further depress overall economic growth.

The jobless claims data were worse than already downbeat projections. Initial applications for unemployment benefits rose to a seasonally adjusted 573,000, the Labor Department said Thursday. That was nearly 50,000 more than economists were expecting and up from a revised 515,000 the week before.

Adding more damage to the already ravaged labor market, Bank of America said Thursday it expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch, which it agreed to buy in September.

Separately, the U.S. trade deficit rose unexpectedly in October to $57.2 billion, partly because of dampened demand for American exports. Analysts had been expecting a decline because of falling oil prices.

The numbers came before the Senate rejected the $14 billion auto-industry bailout bill late Thursday after the United Auto Workers refused to accept Republican demands for swift wage cuts.

Senate Majority Leader Harry Reid said he hoped President George W. Bush would tap the $700 billion Wall Street bailout fund for emergency aid to the automakers. The White House said it was evaluating its options.

News of the Senate vote sent world stock markets down Friday.

General Motors Corp. and Chrysler LLC executives have said they could run out of cash within weeks without government help. Ford Motor Co., which would also be eligible for federal aid under the bill, has said it has enough cash to make it through 2009.

Besides Bank of America’s announcement, more layoffs in other industries were announced Thursday. Tool maker Stanley Works said it plans to cut 2,000 jobs and close three manufacturing facilities.

Sara Lee Corp., known for food brands such as Jimmy Dean and Hillshire Farm, said it will cut 700 jobs as it outsources parts of its business.

Source: Yahoo!Finance - By Christopher S. Rugaber, AP Economics Writer

AP Economics Writers Jeannine Aversa and Martin Crutsinger contributed to this report.

1. If your owner’s manual allows it, use regular gas instead of the premium blend. There is a thirty to fifty cent difference between the cost of regular and premium gasoline. If your car is designed to run on regular gas, there is no advantage in using premium. You will not get better mileage; you will only be needlessly paying more for your gas. Of course, if your car requires premium, you should never use regular as it may damage your engine.

2. Keep your engine well maintained. Using a dirty air filter can decrease your gas mileage by as much as 40%. Change the air filter according to the manufacturer’s recommendations. However, if you drive in areas with a lot of dust and dirt in the air, you should change the air filter more frequently.

3. Ensure that your tires are inflated to the proper pressure. Tires that are incorrectly inflated can reduce your gas mileage by a considerable amount. Use a tire gauge to check the tire pressure. Do not rely on the gauge that is attached to the air hose where you get air. They are frequently inaccurate.

4. Drive slower! The number one reason why people get low mileage is driving too fast. When it comes to gas mileage; speed kills! Traveling at 75 miles per hour as opposed to 55 mph can slash your gasoline mileage by a whopping 25%. 

5. Keep your car well maintained mechanically. Old worn out spark plugs rob your car’s gas mileage and power. In a six-cylinder car the presence of just has one fouled spark plug wastes 17% of the gas you buy. 

6. The number one tactic to reduce your gasoline costs is convert your car to run on water! That’s right, there are conversion manuals that show you how you can adapt any vehicle to run on water. This process alone can improve your gas mileage (and reduce your fuel costs) by as much as 60%!