Real Estate





You can save several hundred dollars a year by purchasing auto insurance from a low price, licensed insurer.  Call your state insurance department for a publication show-ing typical prices charged by different companies.  Then call at least four of the lowest-priced, licensed insurers to learn what they would charge you for the same coverage.


Talk to your agent or insurer about raising  your deductibles on collision and comprehen-sive coverage to at least $500 or, if you have an old car, dropping these coverage's alto-gether.  Taking these steps can save you hundreds of dollars a year.


Make certain that your new policy is in effect before dropping your old one.




If you want insurance protection only, buy a term life insurance policy.


If you want to buy a whole life, universal life, or other cash value policy, plan to hold it for at least 15 years.  Canceling these policies after only a few years can more than double your life insurance costs.


Check your public library for information about the financial soundness of insurance companies and the prices they charge.  The July, August, and September 1993 issues of Consumer Reports are a valuable source of information about a number of insurers.


You can save more than $100 a year in fees by selecting a checking account with a minimum balance requirement that you can, and do, meet.


Banking institutions often will drop or lower checking fees if paychecks are directly deposited by your employer.  Direct deposit offers the additional advantages of convenience, security, and immediate access to your money.




Before opening a savings or investment account with a bank or other financial institution, find out whether the account is insured by the federal government. An increasing number of products offered by these institutions, including mutual stock funds and annuities, are not insured.


To earn the highest return on savings (annual percentage yield) with little or no risk, con-sider certificates of deposit (CDs) and treasury bills or notes.


            Once you select a type of savings or invest-ment product, compare rates offered by different institutions. These rates can vary a lot and, over time, can significantly affect interest earnings.


Credit Cards


            You can save as much as several hundred dollars each year in lower credit card interest charges by paying off your entire bill each month.


            If you are unable to pay off a large balance, switch to a credit card with a low annual percentage rate (APR). For a modest fee, Bankcard Holders of America (703-389-5445) and RAM Research Corp. (800-344-7714) will send you a list of low -rate cards.


            You can reduce credit card fees, which may add up to more than $100 a year, by getting rid of all but one or two cards, and by avoid-ing late payment and over-the-credit limit fees.


Auto Loans


            If you have significant savings earning a low interest rate, consider making a large down payment or even paying for the car in cash. This could save you as much as several thousand dollars in finance charges.


            You can save as much as hundreds of dollars in finance charges by shopping for the cheap-est loan. Contact several banks, your credit union, and the auto manufacturer's own finance company.


First Mortgage Loans


            You may save tens of thousands of dollars in interest charges by shopping for the shortest term mortgage you can afford. On a $100,000 fixed-rate loan at 8% annual per-centage rate (APR), for example, you will pay $90,000 less in interest on a 15-year mortgage than on a 30-year mortgage.


            You can save thousands of dollars in interest charges by shopping for the lowest-rate mortgage with the fewest points. On a 15-year, $100,000 fixed-rate mortgage, just lowering the APR from 8.5% to 8.0% can save you more than $5,000 in interest charges. On this mortgage, paying two points instead of three would save you an additional $1,000.


            If your local newspaper does not periodically run mortgage rate surveys, call at least six lenders for information about their rates (APRs), points, and fees. Then ask an ac-countant to compute precisely how much each mortgage option will cost and its tax implications.


            Be aware that the interest rate on most adjust-able rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.


Mortgage Refinancing


            Consider refinancing your mortgage if you can get a rate that is at least one percentage point lower than your existing mortgage rate and plan to keep the new mortgage for several years or more. Ask an accountant to calculate precisely how much your new mortgage (including upfront fees) will cost and whether, in the long run, it will cost less than your current mortgage.


Home Equity Loans


            Be cautious in taking out home equity loans.  These loans reduce the equity that you have built up in your home.  If you are unable to make payments, you could lose your home.


            Compare home equity loans offered by at least four banking institutions. In comparing these loans, consider not only the annual percentage rate (APR) but also points, closing costs, other fees, and the index for any variable rate changes.


Real Estate


Home Purchase


            You can often negotiate a lower sale price by employing a buyer broker who works for you, not the seller.  If the buyer broker or the broker's firm also lists properties, there may be a conflict of interest, so ask them to tell you if they are showing you a property that they have listed.


            Do not purchase any house until a home inspector that you selected has examined it.


Renting a Place to Live


            Do not limit your rental housing search to classified ads or referrals from friends and acquaintances. Select buildings where you would like to live and contact their building manager or owner to see if anything is avail-able.


            Remember that signing a lease probably obligates you to make all monthly payments for the term of the agreement.


Home Improvement


            Home repairs often cost thousands of dollars and are the subject of frequent complaints.  Select from among several well established, licensed contractors who have submitted written, fixed-price bids for the work.


            Do not sign any contract that requires full payment before satisfactory completion of the work.




            To save as much as hundreds of dollars a year on electricity, make certain that any new appliances you purchase, especially air conditioners and furnaces, are energy-effi-cient. Information on the energy efficiency of major appliances is found on Energy Guide Labels required by federal law. Check with your electric utility to learn if it has a program to help reduce the costs of any appliance purchases.


            Enrolling in load management programs and off-hour rate programs offered by your electric utility may save you up k) $100 a year in electricity costs. Call your electric utility for information about these cost-saving programs.


Home Heating


            A home energy audit can identify ways to save up to hundreds of dollars a year on home heating (and air conditioning). Ask your electric or gas utility if they can do this audit for free or for a reasonable charge. If they cannot, ask them to refer you to a qualified professional.


Local Telephone Service


            Check with your phone company to see whether a flat rate or measured service plan will save you the most money.


            You will usually save money by buying your phones instead of leasing them.