10 Year-End Financial Tricks

It’s trick or treat time!

An article on Kiplinger’s Personal Finance by Erin Burt offers ten year-end financial tricks that I think are helpful in getting people being disciplined in saving and spending. I especially like the idea of saving automatically and setting a fund for big expenses (auto insurance, vacation, or a high definition TV).

So, here’s Erin Burt‘s tricks and some of my interpretations. Click here for the full article.

  • Give up your daily latte: If you give up that $4 latte you have everyday and invest $120 a month instead, you could have a whopping $765,000 in 40 years with a 10% annual growth rate.
  • Put your credit card on ice: Don’t charge with your credit card if you already carry a debt.
  • Use cash for all your expenses: Set aside the money ahead (budgeting), so don’t over-spend when the money isn’t there any more. (This I don’t agree. As a matter of fact, I charge almost everything with my credit card. But you do have to be financially responsible for all the charges you but on your plastics: pay your balance in full every month!)
  • Pay your bills automatically: (in full every month) so you don’t have to remember to write the check. And it saves you that 39 cents stamp too. But be sure to cancel the automation before you take the 0% BT your card offered.
  • Ask for a lower interest rate on your credit card: It doesn’t hurt to ask for a better rate, especially if you carry a debt.
  • Put your savings on autopilot: Participate in your employer-sponsored 401(k) plan and automatically send a couple of hundreds on your pay day from your zero-interest direct-deposit checking account to a high interest savings account before you even see the money.
  • Save regularly for recurring expenses, too: If you anticipate a big annual expense, set up a savings account in advance and contribute to it regularly so you don’t feel you get a hit in the pocket when the big bill comes.
  • Set long-term goals with a buddy: Be patient and focus on your long-term goals instead. Resist the urge for making a wholesale scale change of your portfolio even if it doesn’t grow as fast as you expect.
  • Ignore your annual raise or year-end bonus: Don’t spend them or raise your living standard. Instead, maintain your current level of living as if you never get the raise and invest the extra money you get.
  • Give yourself a raise: Adjust your “withholding” rate in your W-4 form so you don’t overpay Uncle Sam.

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