Everyone wants to save more money, but with all the things we have competing for our attention, it can be difficult to figure out how to get started. Particularly if you’ve already spent a lot of time focusing on how to increase your savings, you may think that you’re currently implementing just about every strategy you know of.
But it’s quite likely you could be doing more, because saving money can come in many different forms. Adding funds to build up your savings and investment accounts is what we usually think of as “saving,” but you can also save money by reducing your expenses. One area in which there’s usually a high potential for reducing expenses is on your borrowing needs.
Here is some borrowing advice and suggestions on ways to save money while borrowing in 2016.
Pay Off Your Highest Interest Credit Card. For most households, the interest rates that they pay on consumer debt (such as credit cards) are probably the highest rates among all their debt. By working to completely pay down the balance on just a single high interest credit card could end up saving you hundreds of dollars per year.
Consider Refinancing Your Mortgage. As we begin 2016, mortgage interest rates continue to hover near their all time lows. Depending on the current interest rate of your home mortgage, you can save significant amounts on your borrowing costs by refinancing to a lower rate. If you plan to stay in your home for at least the next 5 to 10 years, then you could potentially save tens of thousands of dollars over the life of the loan by refinancing to a lower rate.
Negotiate Firmly. Are you planning to purchase an automobile this year? If so, then it pays to begin the car buying process with a strong negotiating mindset. Know exactly what you’re willing to pay for a particular car, and work to negotiate down to that price. If you aren’t able to get your car at the price you want, don’t be afraid to walk away from the negotiation and shop elsewhere.
Audit (and Reduce) Your Other Borrowing Fees. Remember that your borrowing costs are comprised of more than just the interest you pay. Many loans and other extensions of credit come with other types of fees. These fees might include points for a new home mortgage, fees for receiving paper account statements, as well as late fees and transactional fees. Make sure you know what you’re paying, and whether you can reduce or eliminate those fees. For example, if you’re still paying PMI (private mortgage insurance) on your home mortgage, but your outstanding loan balance is now less than 80% of your home’s current value, you should contact your lender right away to remove that charge.
Pay Attention to Your Mortgage Interest Deduction. We can expect a number of changes to the federal tax code in 2016. One of the changes currently being discussed is reducing or eliminating the availability of the home mortgage interest tax deduction. Make sure you know the current law before you make any significant new borrowing decisions.
While saving money is a year-round practice, you can use the start of 2016 as an opportunity to start boosting your current savings by spending less when you borrow.
Tags: borrowing advice, Mortgage, refinance