Easy ways to save money

Source: Tweaks That Help Fatten Your Wallet BY JONATHAN CLEMENTS

Easy money savings ... More earnings on your short-term money with little risks or efforts.

I think that some advice are good advice and some are not.

1. Losing Balance.

Suppose you have $10,000 in your checking account earning zero interest. You might shift $8,000 to EmigrantDirect, HSBC Direct or one of the other high-yield online savings accounts, where you can find yields around 5%. This simple maneuver could garner you $400 over the next 12 months.

Great advice!

2. Taking Credit.

Let's say you have $5,000 of credit-card debt incurring 14% interest. By using $5,000 from your checking account to pay off that debt, you would save $700 a year.

Great advice!

3. Heading Home.

Shrinking your checking account may leave you uneasy, because you view it as your emergency reserve. But you can always open a home-equity line of credit, which you can then tap if you find yourself in a financial pinch.

Great advice!

4. Losing Interest.

You also could save a bundle by refinancing your mortgage. If you have a 30-year loan costing 7%, you could slash monthly payments by refinancing at 6% or less.

Or, think about making extra principal payments instead. Suppose you have $10,000 in a savings account earning 3%. If you use that cash to pay down your 7% mortgage, you will be better off by $400 over the next year.

Something to think about. It requires some efforts.

5. Taking Shelter.

Many folks hold bonds and other conservative investments in their taxable account because they like having low-risk investments they can easily unload if they need cash. Meanwhile, they stash stocks in their retirement account. This seems logical, because stocks are designed for long-term growth and retirement is often years away.

But what seems logical isn't always right. Let's say your taxable account holds $100,000 of municipal bonds yielding 4%, while your retirement account contains $100,000 of stocks.

If you swapped the stocks into your taxable account and moved your bonds to your retirement account, you should improve your portfolio's return. A big reason: Instead of owning 4% munis, you could use your retirement account to buy taxable bonds that might yield 5.5%. The extra 1.5 percentage points of yield would add $1,500 to your portfolio over the next year.

What if you suddenly need $10,000? If you don't want to tap your home-equity line of credit, you could sell $10,000 of the stocks in your taxable account. To maintain your stock exposure, you would then move $10,000 from bonds to stocks within your retirement account.

This advice is too sophisticated - risky to put money which for emergency reserve into stocks or stock funds! And the retirement money should be asset-allocated.

6. Trimming Taxes.

When you held munis in your taxable account, you weren't paying any federal income taxes on the interest and possibly no state income taxes, either. By contrast, the stocks you now hold in your taxable account could be generating hefty tax bills.

To avoid those hefty bills, favor low-cost stock index funds. That way, any taxable distributions you receive should be mostly qualified dividends and long-term capital gains, which are taxed at a maximum 15%.

Again sophisticated advice - to put money that may be needed in short-term into stocks or stock funds!

7. Boosting Yield.

As you shift your bond money to your retirement accounts, think carefully about which fixed-income investments you buy.

To improve your yield, favor no-load bond funds with rock-bottom annual expenses. Mr. Roth also suggests hunting the Internet for high-yielding certificates of deposit. These CDs offer handsome rates and your account should be protected by the Federal Deposit Insurance Corp.

Great advice as retirement money should be asset-allocated.

8. Insuring for Less.

To cut insurance costs, consider raising the deductibles on your homeowner's insurance. "Companies have been dropping customers if they have lots of claims, so people aren't filing claims," says Ross Levin, a financial planner with Accredited Investors in Edina, Minn. "You might as well raise your deductibles."

While you're at it, see if you can trim your life-insurance costs. "It's a good time to be shopping for term insurance," Mr. Levin says. "If you shop online, you can get great rates, especially if you're in good health and you've never smoked."

Great advice to save on the housing expenses.

9. Snatching the Match.

Don't overlook possibly the most attractive money saving: the employer's matching on your 401(k) contributions. In a common arrangement, an employer will kick in 50 cents for every $1 you invest, up to 6% of your pay. That's like an instant 50% return on your money.

On top of that, you will get investment gains, tax-deferred growth and an immediate tax deduction.

Great advice to save for the long-term!