Cheap Gift Tags

Have a fistful of paint swatches left over from your recent bathroom redo? Or maybe you splurged on a roll of nice wrapping paper but can't find matching gift tags. A simple fix: Cut out round tags from those colorful paint chips (if you need more than a few, ask the store for cards with discontinued shades.) Punch a hole in your tag; tie on with embroidery floss or thin ribbon.

How to Afford the Big Stuff

By Mary Hunt Posted July 08, 2008 from Woman's Day

Define the goal

The first, most important step is to figure out what your next big money decision will be. You may not be aware you have any, but the truth is you have several to choose from. Do you think big medical expenses could arise in the next several months? Is your car beginning to show its age? Let’s say, for example, your refrigerator is slowing down. At 12 years old, you anticipate it has about three years left. Knowing this gives you something valuable: time to start researching and saving. What style and size do you need? About how much will it cost? Are there options you should consider? Brands you should avoid? Look into it now.

Identify the terms

If you start saving for the refrigerator right now, you'll have about 36 months. Let's say you determine that it'll cost about $1,600. Divide that amount by the term of 36 months. The result is about $44. You'll need to save $44 each month, starting now, so you'll be able to replace your refrigerator in three years.

Make it smaller

Cut your goal into pieces—smaller payments are psychologically easier to handle. So instead of 36 months, divide the cost of the refrigerator by 156—the number of weeks in the term. With this slight change in terms, you only need to save $10.26 each week to reach your goal.

…and predictable

View this as a new, regular bill you must make each month. It'll soon become as ordinary and predictable as your mortgage or car payment.

Set up an account

Don't keep this stash in a drawer or even in your regular savings account—it puts the money within easy reach and makes it too available for you to borrow for some other purpose. Open an interest-bearing account specifically for the item you want to buy instead.

...and make it automatic

Set up an automatic savings plan to regularly transfer money from your other account.

Visualize the goal

Stay focused by finding a picture of the item. Post it where you'll see it often, like on the fridge. This will go a long way in motivating you. Get creative and draw a grid over the picture with a pen and ruler so you have the same number of squares as payments you'll make. After each payment, fill in a space on the grid with a highlighter.

Pay a little more now and then

Look for new ways and frugal choices that will result in money you can put toward reaching your goal even faster. The money you saved on groceries this week? Use it as an extra payment. The loose change in a jar on your dresser? Use that, too.

One goal at a time

About now you're probably thinking about several savings goals you want to work on simultaneously. I understand your enthusiasm, but I know from experience that it's best to start slowly. If you have additional funds, use them to reach this goal before starting on another. In time, as you become adept with managing big money decisions, you'll be able to handle several at once.

Pay Off Your Mortgage Early

By Woman's Day Staff Posted July 08, 2008 from Woman's Day

Start Off Right

Make the first payment count
When you buy a home, many lenders require one month’s interest to be prepaid as part of the closing costs, with the first payment due in the second month after closing. If you choose to make your first payment in the initial month, that entire amount will go to reducing the principal. Making this one payment at the start lops off $7,394 in interest and six months from a $200,000 30-year mortgage at 6.5 percent interest.

Less is more
Let’s say you qualify to buy a $250,000 home with a $200,000 mortgage at 6.5 percent interest for 30 years, payable at $1,264 per month. A better strategy would be to buy a $150,000 house with a 30-year $100,000 mortgage at 6.5 percent ($636 payments). By paying the larger amount each month ($1,264), you’ll pay this mortgage off in 8.5 years. Sell and upgrade to a $250,000 home, use the entire $150,000 as a down payment and repeat.

Get fixed
Even though interest rates are creeping upward, if you have a primary mortgage and home equity loan with variable rates of interest, refinancing both into a fixed-rate mortgage may be a wise move. With a fixed rate you always know what to expect. Caution: As tempting as it is to cash out some of your equity (the current market value minus what you owe on your mortgage) as you refinance, leave all of your equity alone so it can appreciate.

Pay It Down Faster

Biweekly is good
Paying half of your monthly payment every two weeks (26 half-payments each year) turns out to be 13 full monthly payments in a year. That extra payment is the secret behind the power of the biweekly payment schedule. But unless you join a biweekly program that charges steep fees and locks you into that schedule, your mortgage company is not likely to accept half-payments.

You can do the very same thing yourself. Each month when you make your regular mortgage payment, write a second check for one-twelfth of one payment and designate it for “Principal Prepayment Only.” Send the two checks together. Do this every month and in one year you will have made the equivalent of 13 monthly payments—with no fees, no obligations and no lender approval required. This strategy will drop about seven years from your payback term (depending on the other terms) and save you thousands of dollars in interest.

Don’t cash out
The equity in your home is a precious commodity because it is an appreciating asset, providing the housing market keeps going up in your area. Taking out cash through home equity loans widens your debt and increases your monthly payment. You risk owing the lender more than the home is worth. If that equity is money you really need for some other purpose, consider selling your home now and downsizing to a cheaper area. Your goal is to achieve 100 percent equity before you retire. If you keep taking out cash to pay off credit cards or pay for college, you’ll never pay off that mortgage.

Get fixed
Even though interest rates are creeping upward, if you have a primary mortgage and home equity loan with variable rates of interest, refinancing both into a fixed-rate mortgage may be a wise move. With a fixed rate you always know what to expect. Caution: As tempting as it is to cash out some of your equity (the current market value minus what you owe on your mortgage) as you refinance, leave all of your equity alone so it can appreciate.

Expand Your Profit

Widen the gap
You need to maintain a healthy gap between the amount your home is worth and the amount you owe—never less than 20 percent is my advice. Concentrate on widening that gap by paying off your mortgage early and you’ll sail through any market downturn.

Spruce up
While you have no control over housing market values, you can keep your home at the top of your neighborhood’s value by performing routine repairs and maintenance. Even in a down market your home will be more likely to stay at the top of its class when it reflects your pride of ownership.

Keep paying it down
It doesn’t matter if you plan to be in your home for two years or for 20. No matter when you sell this house, your goal should be to come out with your original down payment, plus lots of equity for the next down payment. You want to use all of that money to make the largest down payment you can and take out the smallest mortgage possible. And you want to do that every time you buy. That’s the way to build wealth on an ordinary income.

You can buy and sell a dozen times in your home ownership career, and if you’re careful to move your equity into the next home—just as you move your furniture and other possessions—you should be able to own the last one free and clear, in time for retirement.

Cut Cell Phone Charges

Get a tuneup:
Instead of purchasing a plan and then forgetting about it, comparison-shop every few months to see if you're paying too much. If you find a better deal, contact your phone company and try to negotiate a more affordable plan.

Dispute the charges:
If there's a fee on your bill you don't understand, call and question it. Be prepared and polite, but be persistant. Take names and lots of notes. If the rep says no, speak with a supervisor. Keep moving up the ranks until you hear a "yes".

Go prepaid:
Got a chatterbox in the family? Switch to a prepaid cell phone, which has a set number of minutes. When you go over, the phone goes dark until the next fill-up.

Buy refurbished:
Did your cell phone get run over or dropped in the toilet? Rather than buying a pricey new one, consider a refurbished phone. Also known as "buyer's remorse phones," these are the cell phones that consumers bought and returned within their 30-day trial period. AT&T offers them for up to 75 percent off popular-model phones.

It's Too Good A Deal to Pass Up

The truth:
We've all been there-loath to walk away from a 40% off; buy-one-get-one-free; or $10 each, three for $25 specials. But these promotions and others like them (including a discount on your entire purchase if you open up a store credit card and charge the purchase to your new account) almost always entice us to buy things we wouldn't have bought in the first place, or to purchase more than we really need.

What to do instead:
Remind yourself that stores run sales to improve their bottom line-not yours. Always jot a list before you shop, and only go down aisles or into departments that have those things. Ignore markdowns unless you genuinely need the featured item (and if you are required to buy multiples to get the lower price, make sure you'll use them all). Lastly, even if you have a generous coupon to redeem if you use your store card, don't charge more than you can pay when the bill comes-the sky-high interest rates of store cards negate any savings.

This Mortgage Seems Like a Lot Now, But We'll Be Able to Afford it When We Get Decent Raises

The truth:
Locking yourself into a mortgage that you can't comfortably pay for on your current income can spell trouble in a number of ways. In today's economic climate, sizable jumps in salary are generally hard to come by, and job security isn't guaranteed. You have to realize that you could lose your house if your salaries don't increase like you think they will. And if you're a first-time homeowner, your income may not go as far as you think due to higher utility bills, maintenance expenses and emergency repairs. Stretching yourself too thin also doesn't leave you any leeway if one of you wants to, say, start a business or go back to school, or if unexpected medical expenses crop up.

What to do instead:
Opt for a mortgage you can afford based on present earnings. Limit mortgage payments, including taxes and insurance, to 25% of your gross monthly income-less than the 33% many lenders recommend.

There's No Harm in Borrowing From My 401k and Paying Myself Back

The truth:
If you borrow from your emploer-sponsored retirement plan, you do not benefit from the tax-deffered growth you would have enjoyed had you left the money in your account. In addition, the cash you use to repay the loan comes from aftertax dollars, which means when you retire and withdraw your money, you will pay taxes on it again. If you can't pay back the loan within five years, you have to fork over a 10% early-distribution fee and pay taxes on the borrowed amount.

What to do instead:
Exhaust every other option-sell off personal belongings, refinance or downsize your home, or borrow from relatives (make a written repayment plan). Tapping your 401(k) should be a last resort.