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50 ways to save money.

Illustrations by Carl Weins

Cost cutting is nothing new. But the recent economic downturn has made the homely virtue of thrift that much more compelling. The jobless rate still has been hovering above 5 percent, and many families are wallowing in a swamp of credit-card debt--about $8,400 each. All that's enough to make most breadwinners anxious to build up cash reserves and to welcome into their lives a new financial discipline.

In this report, we offer you more than the usual austerity measures. These ideas would be smart to act on no matter where the economy goes. They come from the experts at Consumer Reports and its testing laboratories, from Appliances to Electronics, to Foods, Home Improvement, and Textiles. We added tips from our finance, travel, and health staffs; pointers from our Auto Test Division; and shopping advice from our Market Intelligence staff.

We have organized our recommendations into 11 categories where you can pick and choose what suits you. Be sure to leave room for frills, however. As with a maintenance diet, if you don't indulge in an occasional treat, you will never be able to stick to the program.


Insurance

Man pulling coins out of piles of coins.

One. Raise the deductible on your homeowners insurance policy. A boost to $1,000 from $200 may save as much as 25 percent of your premium. You can use the savings you reap to cover future deductibles. Ask for discounts if your house has security devices such as burglar alarms, dead-bolt locks, smoke detectors, or sprinkler systems.

Two.Give your auto insurance an annual checkup. Companies change rates constantly, and alterations in your family (your kids grow up and move away, for example), your commuting habits, your neighborhood, and your driving record can dramatically influence what you pay. You can pay more than double in premiums for the same policy in almost any state, depending on the company you choose. For a quick read on rates, get quotes on the web at Insweb www.insweb.com). Some state insurance departments also publish lists of comparable auto-insurance rates; you can call their toll-free numbers or visit their web sites for information.

Three. Take advantage of every discount. Many insurers will give you a 5 to 15 percent break on your homeowners policy premiums if you give them additional insurance business--for example, by buying both your homeowners and auto insurance from the same carrier. Companies may also grant concessions on auto premiums for cars equipped with safety features such as antilock brakes or front and side air bags. Completing a defensive-driving course can further drive down your premiums. And if you have teenage drivers, you may get a break if they have good grades or attend a college more than 100 miles from home and don't take a car to campus.

Four. Ask for a premium or top-tier rate on your auto insurance. Insurance companies sort customers according to the likelihood that they will file a claim. A clean driving record and a good credit score, which insurers believe is indicative of people less likely to file claims, can substantially lower the cost of your auto insurance.

Five. Think about dropping collision and comprehensive coverage if the premiums cost more than 10 percent of the value of your older car. Any claim you file would likely be less than the premium plus the deductible. You should also consider raising your auto-insurance deductible from $200 to $500 or even to $1,000. A $1,000 deductible can trim your auto premium by 40 percent or more.

Six. Give your health insurance an annual checkup. Health plans are constantly changing coverage options, and a chronic condition, a potential pregnancy, or a new regimen of medications may make your current policy less cost effective in the coming year. You should sit down with a human resources staffer at your workplace to help you determine which of the policies that are offered best suits your needs.


Banking

Dollar sign.

Seven.Consolidate accounts at one bank to qualify for free checking. Don't leave more money than necessary in savings accounts, however, because they now pay only 1 to 2 percent annually. Instead, use a high-yield money-market account or invest in a one-, three-, or five-year certificate of deposit. For no-fee checking accounts that have no minimum-balance requirement, try credit unions and small community banks.

Eight.Link your checking account with your money-market account so that you have overdraft protection. Doing so costs absolutely nothing, and with bounced-check charges now running close to $25 each, you shouldn't take the chance of accidentally incurring one.

Nine.Avoid "foreign" ATMs, those at banks not your own. Most banks will levy a fee of $1 to $1.50 for a withdrawal. And the foreign bank may add another $1.50 charge. If you need cash fast, you're better off making a small debit-card purchase at a store and getting cash back. Be careful, however. Some banks are charging fees for debit purchases made with PINs (Personal Identification Numbers).

Investments

Piggy bank jumping through hoop of fire.

Ten.If you are investing in taxable accounts (those outside of your tax-deferred retirement savings plans), look into municipal bonds or muni-bond funds. The interest is exempt from federal income taxes, which have a top rate of 37 percent. Another tax-lowering possibility: a stock index fund. Funds using the Standard & Poor's 500 and other broad market indexes as benchmarks usually have low expense ratios and generate fewer capital-gains distributions than many actively managed funds. Short-term capital gains are taxed at investors' marginal income-tax rate while long-term capital gains (those held on investments for more than a year) are taxed at only 20 percent.

Eleven.Don't buy stock mutual funds in the last six weeks of the year, when they typically make dividend and capital-gains distributions. You will wind up paying taxes on funds you owned for only a few days.

Twelve.Combine investment accounts at one firm to avoid multiple account-maintenance fees. With $100,000 to $250,000 on deposit, you can qualify for premium services such as discount commissions, free research, expedited service, and some financial-planning help. No-load fund families that offer such benefits: Fidelity Investments and T. Rowe Price.



Personal care and wardrobe

Clothing and personal care items.

Thirteen.Cut down on your dry cleaning. A care label that says "dry clean only" means just that, but we found in our testing that simple-weave, plain-color silk or wool sweaters usually can be safely washed by hand in cold water. And (surprise, surprise!) cashmere sweaters can be machine washed. Be sure to turn them inside out and use the gentle cycle. Silks with fancy weaves or intensely colored prints as well as structured garments, such as jackets with interfacing and linings, should go to the dry cleaner. To lengthen time between dry cleanings, give clothes a day's rest between wearings and an airing before returning garments to the closet. Use a clothes brush to remove lint and dust, and empty all pockets before hanging up garments.

Fourteen.Don't get suckered into buying expensive skin-care products. We found in our test of moisturizers, for example, that you can safely use inexpensive body lotions on your face. There's no need to buy specialty night or eye creams. They are simple moisturizers and provide none of the uplift or wrinkle reduction they claim. Don't pay extra for moisturizers with vitamins. Although the vitamin-A derivative tretinoin in the prescription product Renova has been found effective in improving the appearance of sun-damaged skin, dermatologists doubt that the concentration of vitamin A in a cosmetic is high enough to make a difference. And, although antioxidant vitamins C and E appear to protect human cells when ingested, there's no certain evidence that they revitalize them when applied to the skin.



Energy

Lightbulb.

Fifteen.Use compact fluorescent bulbs (except with dimmer switches, electronic photocell on/off switches, and electric timers) for all lights that run more than four hours a day. They cost about $10 each but can provide as much light as a 100-watt incandescent bulb while using only about 25 to 30 watts. We calculate that using electricity at the average rate of 8.4 cents a kilowatt hour, an incandescent bulb will cost $84 plus about $5 for 10 replacements. By contrast, a compact fluorescent will cost only about $35 in total.

Sixteen.Don't rinse your dishes before placing them in the dishwasher. Unless you have been dining on Krazy Glue, the gunk should come off without prewashing, saving both water and energy costs.

Seventeen.Right-size your cooking. When baking a potato or other small portions, use a toaster oven or microwave oven instead of a conventional oven. When using the stovetop, match the size of the pot to the burner size. Doing so will keep heat from escaping into the atmosphere, boosting your energy expense.

Eighteen.
Put a lid on it. Covering a pot brings the water to a boil more quickly, also saving energy.


Nineteen.Don't get your water piping hot. Set your hot-water-heater thermostat at 120° F (or "low"). That's hot enough for most needs--including dishwashers, which generally have booster heaters. If your hot-water heater feels warm to the touch, wrap it in an insulating blanket to limit energy loss. Use warm- or cold-water settings for the laundry, and wash only when you have full loads.

Twenty.Turn off computers and TVs when they're not in use. Running a computer and its monitor 24 hours a day, 365 days a year, uses some 1,800 kilowatt hours. At 8.4 cents each, that adds up to about $150 annually. Putting the central processing unit and the monitor on sleep mode will save about three-quarters of that expense. A 36-inch color TV may use 180 watts. Leaving it on eight hours a day costs about $44 a year.


Debt

Mortgage being refinanced.
Man reaching for credit card with lower interest ratye.
Woman cutting up credit card.

Twenty-one.Ask your credit-card company for a lower interest rate. A card issuer pays an average of $140 to acquire a new customer. So the company doesn't want to lose you, particularly if you carry balances. If your rate drops from 17.9 percent a year to 9.9 percent and you're planning to repay in 36 months, you'll save nearly $400 a year on an $8,400 balance.

Twenty-two.Refinance your car. Rates on auto loans have dropped from over 9 percent two years ago, and you can now find deals for 6 percent. On a $25,000 vehicle, refinancing can translate into some $970 in savings over the remaining three-year life of the loan. Don't extend the loan, or you'll end up paying more, and avoid any extra fees.

Twenty-three.Repay credit-card debt with a home-equity loan. Interest rates on home-equity loans were recently about 5.25 percent a year. If you have a $20,000 credit-card balance with a 17.9 percent rate and pay $500 a month, it will take you more than five years to wipe out the debt and cost nearly $11,000 in interest. By contrast, a 10-year home-equity loan for $20,000 will lower your monthly payment to $215 and cut your total interest expense to $5,750. And there's a bonus: You can deduct the interest. Just make sure you can repay the loan; if not, you risk losing your house.

Twenty-four.Ditch credit cards that carry an annual fee. There is no reason you should be charged for the honor of paying annual interest that now averages about 14 percent a year. Look for no-fee cards at www.bankrate.com.

Twenty-five.Pay an extra $100 on your mortgage each month. Doing so will trim more than 5 years off a 30-year mortgage and a total of $63,309 off the interest charges (on a 7 percent $200,000 mortgage) you'll pay over the life of the loan.



Driving

Dollar being stretched.

Twenty-six.Idling doesn't pay. Zero miles per gallon is what you get when you park with the engine on. So do it as infrequently as you can. After starting the car in the morning, begin driving immediately rather than letting the car warm up. An engine warms up faster while it's operating. Still, a car runs least efficiently when the engine is cold. So avoid making lots of short, separate trips and cold starts by combining all your errands into one trip.

Twenty-seven.Drive smoothly. Hard acceleration and braking waste fuel. According to the EPA, such herky-jerky driving can lower your mileage by 33 percent on the highway and 5 percent around town. Similarly, when you move out from the curb, get up to speed promptly but not abruptly.

Twenty-eight.Stick with regular. If your car specifies regular gas, don't bother buying premium. It won't make your car go faster or operate more efficiently, and it's about 14 percent more expensive. Even if the car manufacturer recommends higher-octane gas, check with your dealership. Many cars can operate well on either grade. Don't buy premium oil or special additives. Our testing has shown that they are not worth the expense.

Twenty-nine.Stay tuned. Your car's mileage depends on proper maintenance. A clogged air filter alone can cause up to a 10 percent increase in fuel consumption. Follow the owner's manual's maintenance schedule religiously and drive in for a checkup if you sense unusual odors, sounds, or vibrations.

Thirty.Check tire inflation monthly. The EPA says that one tire that is underinflated by only two psi (pounds per square inch) results in a 1 percent increase in fuel consumption. The recommended pressure for your car can be found on a label inside the car, in a doorjamb, or inside the glove-compartment lid.

Thirty-one.Travel light. Remove your roof rack, bicycle rack, or overhead storage boxes when you are not using them. Even when empty, they produce an aerodynamic drag that reduces your mileage.



Shopping

Woman at supermarket.

Thirty-two.Join a warehouse club and buy groceries in bulk. Stick to paper goods, detergent, and other nonperishables unless you are diligent about rewrapping 5-pound trays of hamburger. Some big-ticket necessities--tires, prescription drugs, and eyeglasses, for example--can also give you a payback on the annual membership fee. Just be careful not to overspend on tempting home-electronics gear while picking up a case of toilet paper.

Thirty-three.Consider a consignment shop before buying new. Stores with the highest-quality inventories can be found in ritzy neighborhoods, and the proceeds often benefit hospitals and other community institutions. Best bets: kids' snowsuits, dressy clothing, and unupholstered furniture.

Thirty-four.Shop during the right season for bargains. You can usually find good buys when new models are introduced, and retailers must get rid of older merchandise. In the spring, look for portable audio products, microwave ovens, and room air conditioners. Refrigerators go on sale before Memorial Day. Late summer brings deals on TVs; and in September, you can find washers and dryers on sale. Vacuum cleaners sell for less in December, and bikes go on sale after Christmas. Midwinter is the best time to buy DVD players, VCRs, and camcorders. Computers go on sale quarterly when new models arrive.

Thirty-five.Cook a whole month's food ahead of time. By buying in bulk and cutting down on fast-food and take-out, says Deborah Taylor-Hough, author of "Frozen Assets: How to Cook for a Day and Eat for a Month" (Champion Press, $14.95), she cut the monthly food bill for her family of five from $700 to $300. It takes her one day a month to cook family-size servings that she freezes for use later. For more information, visit her web site at http://hometown.aol.com/oamcloop/index.html.



Entertainment

Cell-phone tower.
 

Thirty-six.Use the public library for books, CDs, and videos. With paperback prices now averaging nearly $8, new CDs around $15, and rented videos at $3 a night, these are freebies that are hard to turn down.

Thirty-seven.Form a baby-sitting cooperative with friends and neighbors. Hiring a teenager for four or five hours on Saturday night can easily add $20 or more to an evening out. Exchanging hours instead can save you money and leave your kids with adults you can trust.

Thirty-eight.Idolize movie matinees. Many movie chains offer matinee discounts. Vouchers offered by AAA for members shave $3 from movie tickets at participating theaters. For information, call your local AAA office or go to www.aaa.com and type in your ZIP code.

Thirty-nine.Join discount dining programs. These are growing in acceptance as pricier restaurants have increasingly participated. Two large companies market the programs. iDine (800-422-5090; www.idine.com) allows members to register their credit cards, which then qualifies them for 20 percent discounts at 7,800 restaurants. Annual membership costs $49 a year, but members can avoid the charge if they spend $245 at member restaurants. Entertainment (800-374-4464; www.entertainment.com) sells books of coupons for local restaurants in 166 North American markets. The books cost from $25 to $45 and entitle their consumers to 50 percent discounts or buy-one-get-one-free deals. The books also include discounts on hotel and restaurant chains.

Forty.Reserving your seat 21 days in advance will clip at least 50 percent off your airline tickets. But if you can't manage that much advance planning, try a travel consolidator; it's a specialized agency that purchases blocks of unused tickets from airlines and resells them at discounts of about 50 percent. The American Society of Travel Agents recommends using a trusted travel agent to locate a reliable and reputable consolidator. You should also check the Better Business Bureau in the city where the consolidator is located to see whether any complaints have been lodged against the company you are considering.



Telecom

Globe with telephone and cable hookup.

Forty-one.Return to a dial-up connection for your Internet service provider unless you need a fast connection for your work. DSL or cable connections can run $40 to $60 a month, while a phone link costs $12 to $25 a month. Potential annual savings: at least $180 unless you order an extra phone line. Make sure your access number is local.

Forty-two.Avoid using directory assistance. At 30 cents for local numbers and as much as $2 a pop for long-distance numbers, the fees can really add up. Two long-distance requests a week would top $200 a year. Instead, use your phone book or free Internet directory-assistance services, such as Infospace.com.

Forty-three.Use a prepaid calling card for calls made on the go--on vacation, at pay phones, and at friends' homes. The card from your long-distance carrier is not always the best bet because it may impose a surcharge. The best deals are on cards from warehouse clubs. BJ's, for example, costs 3.47 cents a minute and carries a 24 cent surcharge when using a public phone. When at a hotel, call from a pay phone in the lobby. From your room, you may be hit with a flat per-call charge as high as $4.

Forty-four.Once a year, ask your current carrier and a couple of competitors whether another calling plan suits your current usage. Phone companies change their plans all the time. To guide you to the lowest cost, try the Telecommunications Research & Action Center's WebPricer, which compares long-distance plans for five large carriers (available at www.trac.org). By sending a check for $5 and a self-addressed, stamped envelope to TRAC, P.O. Box 27279, Washington, D.C. 20005, you can receive its "Tele-Tips Residential Long-Distance Comparison Chart."

Forty-five.Think about canceling long-distance service if your calls total less than $10 a month. No matter how little you call, you'll still have to pay flat monthly charges that can total $10 a month. Instead use a prepaid phone card. If you program the access numbers into your home phone, dialing can be quick and easy.

Forty-six.Consider dropping premium cable services, which cost $7.95 to $9.95 or more each per month. Not all the movies shown on those extra channels are gems, and you can save by renting those you really want from the local video store. If you need cable for reception, you can order basic-tier cable service, which generally runs anywhere from $8.95 to $17.95 a month.

Forty-seven.If you can't do without cell-phone service, make sure you have the right plan. Many people have huge buckets of free off-peak minutes and only tiny portions of free peak minutes. Cell-phone carriers have recently added an hour to peak time, which now ends at 9 p.m., instead of 8, abbreviating off-peak hours in which you can use your big buckets of minutes. If you find you're running up extra charges, call the carrier and ask for a new plan. If you meet with resistance, ask for the terminations representative, who is authorized to grant concessions.



Taxes

Man looking at 401(k) with magnifier.

Forty-eight.Challenge your property taxes. According to the National Taxpayers Union, 30 to 60 percent of all property in the U.S. is assessed at a higher value than it's worth. About half the people who challenge their assessment win a reduction. For more information, order "How to Fight Property Taxes," a guide available for $6.95 from the National Taxpayers Union, 108 Alfred St., Alexandria, Va. 22314 or at www.ntu.org.

Forty-nine.Open a flexible spending account for health-care or dependent-care expenses if your employer offers one. A health-care account allows you to use pretax dollars withheld from your salary to pay for medical expenses not covered by your insurer. Examples: deductibles and co-payments, contact lenses, glasses, dental care, and prescription drugs. A dependent-care account can help defray the expenses of child care for kids up to age 13 or for elderly dependents claimed on your taxes. To qualify for dependent-care coverage, you must work or attend school full-time.

Fifty.Take advantage of the new Saver's Credit for retirement contributions. If your income does not exceed a specified maximum ($50,000 for married couples filing jointly, $37,500 for heads of household, or $25,000 for others), you can get a tax credit on money you invest in an Individual Retirement Account, a 401(k), or other employer-sponsored savings plan up to a maximum of $2,000. Depending on your income, the credit ranges from 10 to 50 percent of the amount invested. Better yet, you still receive all the other benefits that normally come with retirement accounts: a deduction for the contribution and tax-deferred interest until you withdraw the money.



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