Tips on Saving November 13, 1990 It is likely that the next several years will be financially difficult and as the bull years of the 1980s wind down the 1990s will bring an ultimate return to traditional financial and savings techniques. One of the most basic is saving. Twelve basic ways to increase your savings are: Treat your savings like a monthly bill – Put aside the money before you spend it. Once a month, when you pay your bills, write out a check to deposit in your savings account. Use an automatic savings plan – It is hard to spend money that you never see. Have a set amount deducted from your paycheck at your firm or transferred from your checking to your savings account. Make regular payments – After paying off a loan or another debt, continue to write a check for at least half the amount and deposit it in your savings. Pay off your credit cards – Starting in 1991 this interest will no loner be tax-deductible. Pay cash – Don’t carry credit cards except for certain purposes. By paying with cash or check you increase your awareness of what things costs and at the same time reduce finance charges. Use credit cards only for business expenditure (where you need a receipt), when travelling, big ticket items, extra warranties, and better return privileges. Understand your credit card charges – credit cards are not created equal. Some charge lower interest rates than others; some do not have annual fees. Defer taxes – Money put into an IRA, Keogh, 401(k), SEP, 403(b), 457(k) or other qualified retirement plan accumulates tax-free until withdrawn. Other ways to defer taxes include municipal bonds, EE Savings Bonds, Single Premium Annuity Plans. Use employee stock option plans – ESOP – These offer employees opportunity to accumulate stock with pre-tax dollars. Reinvest dividends – Skip a big expense – pick out one large expense, eliminate it or find a cheaper solution. Take one less vacation cut a trip in half; work out at the Y instead of a ritzy health club. Consolidate high rate debts – Replace consumer debts on which you are paying inflated interest payments with a home equity loan at a lower rate (tax deductible too). There sometimes is a free lunch – don’t pay if the service is available for free. Buy treasury issues through the mail or your area Federal Reserve Bank, use a discount broker (If you don’t need the broker’s advice and services), no fee checking accounts and no load mutual funds. As always if you have any questions as to the applicability to your personal situation please call me.