By David Futrelle, George Mannes and Cybele Weisser, MONEY Magazine
Smart real estate moves
Good ways to tap home equity; or raise the value of your home. Five smart real estate moves in all.
June 7, 2005: 10:07 AM EDT
NEW YORK (MONEY Magazine) - It seems like these days everyone has an opinion about what to do with your house. Here are some smart moves from MONEY Magazine that can help you make the most of your real estate, whether you're buying, selling or staying put.
Open a home-equity line of credit -- for the right reasons
Do: Open a home-equity line of credit and use it for the right reasons: to tap as a rainy-day fund, to finance college for your kids or yourself, or to pay down credit-card debt. Don't: Raid your home's equity to fund vacations, plasma TVs and that Beemer you can't afford.
Fix your ARMS
Replace an adjustable-rate mortgage with a 30-year fixed-rate version (recently at 5.8 percent). Short-term rates are already heading up, but long-term mortgages are still historically cheap. Lock in now and never worry again about your housing costs spiraling out of control.
Lower the thermostat automatically
Pick up a setback thermostat for less than $100 at your local hardware store or Home Depot. When you're sleeping or at work, it will automatically adjust the heat (or the AC). A 10-degree drop can knock as much as 15 percent off your utility bills.
If you're selling, think about the curb appeal
Before you put your home on the market, plant a daisy or two. Simple landscaping should cost less than $500 but will increase your sale price by a couple grand. Other high-return/low-expense projects: Put a coat of fresh paint on the front door, turn up the wattage in your lamps, and hire a pro to deep clean.
Renovate
Average cost to fix a dated or cramped kitchen: $42,660. Average fraction of that you'll add to your home's value: 80 percent. Pleasure derived by creating a gathering spot that fosters more family time: off the charts.
Money management tips
Automate investing and keep an eye on your credit score. Just two smart money management moves.
June 7, 2005: 10:08 AM EDT
NEW YORK (MONEY Magazine) - Some of these may seem like no-brainers, but all are worth a look, and a few might just change your life.
Automate your financial life
Call your mutual fund or broker to have monthly investments routed from your bank. Do the same for your monthly utility, cell-phone and cable payments. You'll find it easier to budget, and you'll never pay a late fee again.
Know your credit score
Order your credit score from all three major credit bureaus for $45 from Myfico.com. True, you're entitled to free copies of your credit reports this year, but one detail will be missing: the magic number that lenders and insurers use to judge your credit-worthiness. Pay for that.
Don't take it with you
Pass on money to your children now rather than bequeathing it. Gifts of up to $11,000 a year are tax-free. Besides, your kids and grandkids will thank you -- which they can't do if you're dead.
Digitize the financial drudgery
Buy either Quicken or MS Money, software that will help you track your spending, see your portfolio allocations, estimate next year's tax bill -- all the tedious tasks you know you ought to do but never would unless someone made it very easy. Pick up the premium edition of either program for $70 and change at Amazon.com. You'll spend a couple of hours on initial setup, but from then on, you'll be amazed at what you can do with your money, once you know what you're doing with your money.
Have a financial plan
Hire a financial planner to review your retirement and college savings plans. At www.garrettplanningnetwork.com and www.myfinancialadvice.com, you'll find planners who work by the hour (usually $150 to $200 per). Getting on track will take eight to 10 hours up front, plus an hour or two for a yearly checkup.
Stop assuming you're immortal
Hire a lawyer to craft a will, a durable power of attorney, a living will and a health-care proxy. It may cost $1,500 to $2,000 (more for large or complicated estates), but could save your heirs thousands in taxes and fees. Unless, of course, you live forever.
Great ways to save
Can running shoes save you money? Yes -- and we have six more ideas to help you save.
June 27, 2005: 5:15 PM EDT
NEW YORK (MONEY Magazine) - Saving money can be as easy as collecting your spare change for sorting, and as smart as maximizing your 401(k) match for the free money. Here are more smart saving tips.
Max out your saving
Put as much as you possibly can into your 401(k). Assuming a 7 percent return and a 50 percent match, upping your annual contribution by one grand and keeping that up for 30 years will fatten your nest egg by $153,110 (not a misprint). You can stash away a maximum of $14,000 this year (a thousand more than last year), or $18,000 if you're 50 or older.
Don't toss the spare change
At six-month intervals, find a coin sorter and deposit your change in a savings account. (One MONEY staffer's family saved $1,000 in stray coins last year.)
Fill 'er up with regular
If your car's engine isn't supercharged or turbocharged, run it on regular gasoline. If the engine doesn't knock or ping, it's fine. You aren't hurting your engine or its performance. In most engines, all premium gasoline does is cost you more money.
Take advantage of the concierge
Book a room on the hotel's concierge floor. It'll cost $20 to $40 more than the same digs on another floor, but consider the freebies: drinks, hors d'oeuvres, dry cleaning, shoe shining and help with reservations.
Start your kids saving early
Have your child open an IRA. Kids who earn money from an afterschool or summer job can put as much as $4,000 a year into a Roth IRA. After five years of tax-free growth, he or she can make penalty-free withdrawals for college -- or get a jump on retirement.
Bundle your communication bills
If you spend more than $50 a month on local and long-distance phone service from two different companies -- or more than $110 a month on phone, cable and high-speed Internet from three different ones -- you may be able to save up to 25 percent by ordering a bundled service from one provider.
Buy running shoes
How is investing in $120 sneakers a smart money move? Let's see: Running reduces the risk of heart disease and stroke, lowers blood pressure and burns more calories than any other exercise -- for less than a $50-a-month gym membership.
Dealing with taxes
From flexible spending accounts to deducting a home office, read our smart tax moves.
June 7, 2005: 10:16 AM EDT
NEW YORK (MONEY Magazine) - Taxes may be inevitable but they don't always have to be painful. Here are four tips to make the dreaded yearly experience a little better.
Reduce your taxable income
Fund a flexible spending account at work. Your boss deducts pretax money from your paycheck, which you then use to pay for medical expenses ranging from insurance deductibles to aspirin to acupuncture. Every $1,000 you put in (you can contribute as much as $5,000 a year) cuts your tax bill by about $300. Sign up in open enrollment every fall.
Cut your losses
Sell a stinky stock or fund. In a taxable account, your losses can offset capital gains and cut your taxes, thus converting a dumb investment into a smart tax break. If you change your mind, you can always buy the fund back.
Donate your shares
Donate stock, not cash, to charity. Not only will you help those in need, you'll forever avoid taxes on any gains on the stock -- and you can deduct the full value of the shares on your tax return. The charity will be happy to help you with the paperwork.
Monetize the spare bedroom
Start a business from your home, however small, and magically, expenses ranging from Internet access to plumbing repairs can become at least partly deductible. There are rules, of course: You have to use your home workspace exclusively for work, among other things. Print out Publication 587 from www.irs.gov for details. Just don't read it when you're tired.
Intelligent investing
Read tips from the pros, and common sense ideas, on how to maximize your investments.
June 7, 2005: 1:28 PM EDT
NEW YORK (MONEY Magazine) - Making the most of your investments can be as simple as diversifying across asset classes and rebalancing once a year. The following tips include wise words from the pros and advice about splurging on that once-in-a-lifetime stock.
Save on a schedule
Invest the same amount in a mutual fund every month. That ensures you'll buy more shares when they're cheap and fewer when they're expensive. T. Rowe Price's Automatic Asset Builder program, for one, lets you contribute as little as $50 a month to nearly any of its funds -- and limbo under the usual $2,500 minimum initial investment (800-638-5660; www.troweprice.com).
Watch those fund expenses
Look for mutual funds that have expenses below 1.33 percent for stock funds and 0.89 percent for bond funds. Study after study shows that keeping investment costs low is the best way to increase your odds of earning a high return. Cheapest of the cheap are index funds from Vanguard (800-851-4999; www.vanguard.com) or Fidelity (800-343-3548; www.fidelity.com).
Have some splurging money for risky investments
If you really want to own the next big thing, set aside no more than 5 to 10 percent of your portfolio for those "swing for the fences" choices. You'll get your thrill -- but won't do yourself too much harm if (as is more common) the stock doesn't live up to its hype.
Own some foreign stocks
Diversify your portfolio beyond our shores and you'll reduce risk and have a shot at higher returns. Put at least 20 percent of your money overseas. Start with two MONEY 50 funds: Artisan International (Research) for stocks, and American Century International Bond (Research) for bonds.
Rebalance once a year
Every Aug. 1 (or pick your own day), trim back investments that have grown and add to those that have lagged to match your ideal portfolio allocation (use our Asset Allocator). Do this once a year and you automatically sell high, buy low and, studies show, add measurably to your final return. Or put your money in a fund that allocates for you, such as Fidelity's Freedom Funds (800-343-3548; www.fidelity.com).
Buy large-cap growth stocks
"They're the cheapest that I've seen them, compared with bonds, since 1981," says Tom Marsico, manager of two top-performing large-cap funds, Marsico Growth and Marsico Focus. He likes GE (Research), UnitedHealth (Research), Genentech (Research) and Procter & Gamble (Research), which are dominating their markets and generating cash.
Buy Berkshire Hathaway
Long-time value investor Wally Weitz points out that at $2,840 for each B share (Research), you're buying, at a discount, a highly diversified portfolio overseen by the greatest investor ever, Warren Buffett. "Whether the market goes up or down, or interest rates go up or down -- whatever opportunities come or go," says Weitz, "Warren's thinking about investing your money on a daily basis."
Buy quality stocks
Stocks that Bill Nygren, manager of Oakmark and Oakmark Select, likes include Wal-Mart (Research), Home Depot (Research) and Kohl's (Research). "The opportunity five years ago was in mundane businesses left behind in the irrationally exuberant market," he says. "The opportunity today is superior large businesses that are priced as if they were average."
Savvy consumer moves
From getting the most out of your frequent flier miles to buying a used car.
June 7, 2005: 10:18 AM EDT
NEW YORK (MONEY Magazine) - Being a savvy consumer isn't easy these days. Here we have thirteen great ideas to get you started. One thing to keep in mind is that bargaining never goes out of style.
Splurge with your miles
Use your frequent-flier miles to buy a business- or first-class seat. Coach seats on domestic flights are so cheap that they're rarely the best use of your miles -- and those reward seats are scarce to boot. You'll spend 25,000 miles for a free seat worth $150 on a coast-to-coast flight, whereas 100,000 miles gets you a $3,000 business class seat to Europe and a shot at a good night's sleep.
Get your credit-card fees waived
Ask your issuer to waive that $30-to-$70 annual fee. The ability to take your business elsewhere confers great power. Use it. Many issuers will blink if they think you'll walk. Missed a payment just once? Cite your on-time record and ask them to kill the late fee.
Pay to replace your stuff
When you insure your home, make sure your policy includes replacement-cost coverage, not the default, called actual cash value. It'll cost about 10 percent more but will pick up the full price of rebuilding and refurnishing your home.
Dicker with the doctor
For routine and scheduled procedures like orthodontics, MRIs, colonoscopies or medically prescribed physical therapy, call your insurer and find out what it considers a "reasonable and customary amount" for the treatment. Then ask your doctor to match it. He or she probably will. Patients who ask get a lower price about half the time.
Buy used instead of new
Buy a used car instead of a new one, and let someone else pay for the depreciation. In a car's first year, that averages 30 percent, according to Edmunds.com. What that means: For about $25,000, you can buy either a new Toyota Camry or a 2004 Lexus IS300. What's smarter?
Get stability control on your car
On your next new car, get electronic stability control, a safety feature helps prevent skids and spins. Studies show it reduces SUV single-vehicle crashes by 67 percent. It's standard on vehicles ranging from the Audi A3 to the BMW Z4, and a $500 option on others. For a list of ESC-equipped vehicles, go to www.esceducation.org.
Say no to over-priced wine
Never spend more than $20 on a bottle of wine (special occasions excluded). True aficionados know that some of the wine world's greatest pleasures can be found at the lower end of the wine list. If your snobby friends look askance at you for bypassing some overrated white Bordeaux in favor of an unpretentious but inexpensive pinot noir with a lovely fruity nose, get new friends.
Back up your data -- often
Buy an external hard drive and copy all the precious data on your computer. How devastating would it be it to lose all your family photos, financial records and music files? Don't wait until your hard drive dies to find out. The easy-to-use Maxtor OneTouch II external hard drive is $160 to $300 (depending on capacity) at www.compusa.com.
Shred so it can't be read
Buy a paper shredder. When it comes to identity theft, real-world thieves eyeing your trash cans like hungry raccoons are a bigger threat than Internet hackers. Invest in a cross-cut shredder, and turn your financial documents into confetti. Personal shredders can go for as much as $90; Amazon.com sells the Fellowes Shredmate Cross Cut Shredder for just $50. (For more identity-theft tips, click here.) Plus: Free confetti!
Get rewards you will actually use
Switch your airline miles or other merchandise rewards to a credit card with rewards you'll actually use -- like cash back. Search for a no-fee card that suits you at www.cardweb.com or www.bankrate.com.
Change your oil
You'll improve your chances of the odometer setting records by doing so on the automaker's suggested schedule. Don't sabotage your diligence with cut-rate oil. Look for the American Petroleum Institute's seal of approval on the bottle.
Get a fast connection
Upgrade to a broadband Internet connection. A high-speed connection via cable TV or DSL phone service costs more -- expect to pay about $30 to $40 a month compared with monthly dial-up rates of $10 to $24 -- but you'll save time and money banking online, researching your investments or booking a vacation.
Don't carry a credit card balance
If you have cash wallowing in a money fund or bank account at 1 percent and a credit-card balance at, say, today's average rate of 13 percent, write a check for the balance immediately. That's a 13 percent return -- with no risk.
Great ways to better yourself
Whether networking for a new job or going back to school these smart moves can improve your chances.
June 7, 2005: 10:19 AM EDT
NEW YORK (MONEY Magazine) - Investing in yourself is some of the best advice you can get -- but where to start? Below we have some ideas about that.
Network your way to a better job
Meet a former colleague once a month for a bite to eat. A regular $30 out-of-the office lunch could reward you with a fat, up-to-date Rolodex the next time you're in the job market.
Spend down your assets for college financial aid eligibility
If you think your kid might qualify for aid, selectively spending down your assets and your child's can increase your chances of getting it. A year or two before your kid's junior year in high school, use any extra cash to pay off credit cards. If your child has an UGMA or UTMA custodial account, spend it on other education expenses, such as SAT tutoring or a computer for him or her.
Read up on your industry
Subscribe to a publication -- a business magazine, a trade rag, a learned journal -- that no one else in your office reads. Collect ideas, share said ideas with your boss, reap rewards.
Send the kids to college
Spend whatever it takes, save whatever it takes, borrow whatever it takes. Education is the smartest investment you can make in your children's most valuable asset, their earning power. College graduates make 80 percent more than people with only a high school diploma, which adds up to an extra million over a lifetime.
Go back to school
A recent study found that going back to school to get an M.B.A. can add a full 45 percent to your salary.
Speak confidently
No one ever got a raise by being a wallflower. Spend a few hundred dollars on a public speaking class at a community college or get training and practice at Toastmasters (www.toastmasters.org). Annual dues: $50.
Get disability insurance
You have about a 30 percent chance of becoming disabled for three or more months at some point in your working life. Disability insurance keeps the cash flowing. You need this. If you're not covered at work, get a policy that pays 60 to 70 percent of your earnings until age 65. For help shopping, go to www.iii.org.
From CNN MONEY