Starting from next Monday, USA Today will run a six-week series "Financial Diet." The goal? Allow Americans to follow some easy steps to achieve better financial health. I have no doubt that USA Today will be able to deliver it -- I am always an admirer of the newspaper's down-to-earth style.
Take a look of what's ahead:
Week 1: Start by cutting the little expenses
Week 2: Make (and stick to) a budget
Week 3: How to cut credit debt
Week 4: Basic retirement planning
Week 5: Saving for college
Week 6: How did we do on our diet?
Now let's discuss how to cut the little expenses. As a starter, USA Today gave a quick lesson on "latte factor": if you save $3 by skipping a cup of latte every day, and sweep your savings to an retirement account that earns 10% every year, your savings will be worth $1.6M in 50 years, thanks to the power of compouding. (I'm not a coffee person, but I do understand to some people, it's intolerable cruelty to miss latte for 50 straight years.)
Where can you squeeze a few bucks from your daily expenses? While we are waiting for USA Today's Monday issue, let me share a few painless ways to save:
1. Get a (really good) reward card. Don't settle for 1% cashback. If you can get a credit card like Citi Driver's Edge (5% rebate on everything in the first 9 months), or Citi Dividend Platinum (5% cashback on gas, grocery and drugstore purchases, 1% on everything else), you can easily shave $100 off every $2,000 monthly credit card purchase.
2. Mortgage comparison shopping. If you haven't refinanced in the last two years, this is the sure-bet to cut your expenses in one shot for the next several years. Take a look at PFBlog's review on Bankrate vs LendingTree.
3. Insurance comparison shopping. If you haven't done this before, look beyond your current insurer and make sure you are paying a reasonable premium. Plus, get away from whole life insurance -- stick to term life insurance and invest your money elsewhere.
The above steps actually saves month without even requiring you to say good bye to your daily shot(s) of expresso. Sounds good?