How to save money with 7 savings wins

Learning how to save money is a big part of living a Rich Life.

And contrary to popular belief, it isn’t just aimlessly tucking money away in a savings account or under your bed. It’s about:

• Good goal setting
• Practical systems
• Human psychology

Knowing how to save money allows us to invest in the things we want in the future (e.g., college tuition for your kids, a down payment on a home, wedding expenses). These are what we call Big Wins — and they’re the backbone of why we save money.

I want to show you some of the biggest wins you can earn after learning how to save money now.

• How to save money with 7 wins
• Money saving win #1: Automation
• Money saving win #2: Negotiation
• Money saving win #3: The A La Carte Method
• Money saving win #4: Lower your rent
• Money saving win #5: Prepay your debt
• Money saving win #6: The envelope method
• Money saving win #7: Use a sub-savings account
• 10-year savings strategy
• Next steps: The 7 big wins

How to save money with 7 wins

Without a doubt, the two biggest game changers when it comes to saving money are:

1. Automating your finances. Eliminate the stress of figuring out what to do with your savings
2. Earning the Big Wins. It’s way easier to earn an extra $30 a day than to save $3/day

When you automate your finances and focus on the Big Wins, you’ll see explosive growth in your savings and earnings almost instantly. And the best part: You can do all these things in a few hours and then you never have to think about them again.

Here are seven money saving wins that incorporate one or both of those aspects.

Money saving win #1: Automate your finances

One reason we don’t regularly save money is due to the pain of putting money into our savings accounts each month.

It’s the reason why cutting out lattes or skipping lunch is a terrible way to save more money.

And so, just like cutting out luscious, perfectly foamed lattes, we might put away money for savings once or twice — but if we have to make the decision EVERY paycheck, we’re setting ourselves up to fail.

 

That’s why automated finances work so well. You can start to dominate your finances by having your system passively do the right thing for you. Instead of thinking about saving every day — set it and forget it.

To do this, you need just one hour today to follow these steps:

Step 1: Set up your bills so they’re sent to you on the 1st of the month
This is assuming you’re being paid on the first of the month. If not, just adjust the day accordingly.

Call your credit card, electric company, internet service provider, Netflix, whatever, and have them bill you on that date. This streamlines the process and allows you to know when exactly your bills need to be paid.

There may be a couple of months of odd billing as your accounts adjust, but it will smooth itself out after that.

Step 2: Set up your contributions to your 401k
Before your paycheck even arrives into your checking account, make sure that you have your 401k plan set up with your employer and that you’re at least putting in enough money to collect the employer match. It means that for every (pre-tax!) dollar you contribute your company will match that amount up to a certain percentage.

This ensures that you’re taking full advantage of what is essentially free money from your employer. Let them help you save more money for retirement.

For more on 401ks, be sure to check out my article on retirement accounts. For now, it’s time to move onto step three …

Step 3: Automate your checking account
Once your paycheck actually arrives into your checking account, the money will now go into 4 different places:

• Roth IRA: Like your 401k, you’re going to want to max it out as much as possible. The amount you are allowed to contribute goes up occasionally. Currently, you can contribute up to $5,500 each year.
• Savings account: Here, you should use “sub-saving accounts” for long-term goals like your wedding, vacation, or down payment on your house (more on this later). Many banks provide the option to create smaller sub-accounts in your normal savings account — perfect for goal setting.
• Credit card: Make automatic payments for recurring services like Netflix, Birchbox, and gym memberships using your credit card. Also, if you’re maxing out your 401k and Roth IRA, you’re going to have plenty of guilt-free spending money in here for things like the occasional night out or fun purchases you want to make.

  Log into your credit card’s website and set up automatic payments with your checking account so your credit card bill is paid off each month. You can rest assured that you will have enough money in your checking because you’ve already set up automatic payments with everything else.

• Misc. bills: These are for bills that can’t be paid off with a credit card such as rent, electric, water, and gas.

Set it up so that your checking account automatically sends funds to these four areas on your bank’s website — or you can just call your bank and have them do it for you. Or you could go to the bank in person, sort out your accounts and make a new friend.

For a more detailed explanation, you can check out my 12-minute video on how to automate your finances here.

Bonus: I wrote a huge, free guide to personal finance and how to manage your money that goes into even more detail on the strategies described here.

Money saving win #2: Negotiate your bills

Once you have your finances automated, the next step in learning how to save money is to negotiate for lower prices on your bills.

It’s a little-known fact that you can negotiate many of your bills with a one-time phone call. In fact, you can save HUNDREDS a month on bills for your:

• Car insurance
• Cell phone plan
• Gym membership (less likely but still possible)
• Cable
• Credit card

It’s simple too. There are only three things you need to do to negotiate with these companies on fees and rates:

1. Call them up.
2. Tell them, “I’m a great customer, and I’d hate to have to leave because of a simple money issue.”
3. Ask, “What can you do for me to lower my rates?”

Of course, you’re going to want to adjust this formula for whatever company you’re calling. Check out my video on negotiating your bills for more on this topic.

Bonus: For the exact word-for-word scripts that I used to negotiate my bills, download the Ultimate Guide to Personal Finance.

Money saving win #3: Implement the A La Carte Method

This is a GREAT method to save money on services for which you have a subscription, like:

• Netflix
• Gym memberships
• Spotify
• Amazon Prime
• Magazines

“But Ramit, how am I supposed to give up my Netflix account or Amazon Prime?!”

Well, chances are you’re WAY overpaying for these things anyway.

In fact, a conservative estimate shows that we spend over $1,800/year on subscriptions alone.

The convenience is undeniable — subscriptions are a fantastic way to automate our lives.

BUT in this case the automation is working for THEM and not for YOU.

When was the last time you scrutinized your monthly subscriptions and canceled one?

Probably never. Yet compare this to any time you went out shopping, saw something you liked, but didn’t buy it.

Read that again. It’s the key to cutting your spending through your subscription items you’re probably not getting very much value out of.

Which is why I suggest the A La Carte Method.

The basic idea of this system is to cancel all your discretionary subscriptions — magazines, Spotify, Netflix — and buy what you need a la carte.

• Instead of paying for a ton of movies and shows you’ll never watch on Netflix, buy only the shows you want to watch on Amazon or iTunes for $1.99.
• Buy a day pass for the gym each time you go (around $5 – $10).
• Buy songs as you want from Amazon or iTunes for $0.99 each.

This FORCES you to be conscious with your spending — like my friend who spends $21,000 a year going out. By utilizing the same principles that make automating your finances great, you will have to actively think about each charge you make when it comes to buying a song or TV show.

Of course, this isn’t for everyone. I encourage you to use this if you find yourself short on cash and wondering why you can’t save more money each month.

If after about two months, you find yourself spending enough money on these items to justify the subscription, by all means pick it up again. If not, then you’ve saved yourself some major cash.

Money saving win #4: Lower your rent

Your rent is NOT fixed and beyond negotiation. Like your bills, rent can be negotiated and lowered too. This is one of the biggest misconceptions there is to renting.

The key to that is going into it with the right mindset and preparation.

Here are five steps you can start taking today to lower your rent:

Step 1: Determine the exact rent reduction you want
Before you even call up your landlord, make sure you have a goal in mind — whether it be a certain price or percentage you would like to see negotiated.

When you know what you want, not only can you communicate that crisply to your landlord, but you can also demonstrate WHY they should accept less.

Step 2: Have something ready in return
You can’t just tell your landlord “I want to take $200 per month off my rent” and expect them NOT to laugh in your face … you have to be ready to offer something in return.

Why would your landlord benefit from your lowered rent?

Here are a few things many landlords will happily lower rents for:

• Prepay months in advance
• Sign an extended lease
• Offer to extend the termination notice from 30 days to 60 or 90 days
• Offer to give up your parking space if you don’t have a car
• Promise not to smoke in the apartment thereby saving the landlord money when you move out
• Promise not to keep pets even if they’re allowed
• Make a deal for referrals if they have low occupancy

If you know what they want and can offer it to them, your chances of succeeding in negotiation increases significantly.

Step 3: Practice. Practice. Practice.
Meaning, if you’re new to negotiations, don’t try to go against a reluctant landlord — yet.

Negotiation is a skill, and like any other skill, you need to practice to get good at it. I suggest you negotiate your credit card and bills before tackling this.

Once you’re ready, you can get my word-for-word rent negotiation scripts here.

Money saving win #5: Prepay your debt to save thousands

If you have student loans, you can actually save thousands of dollars each year — by spending more each month.

“Uh, Ramit. How can I possibly save more by spending more?”

Well let’s say you have a $10,000 student loan, at a 6.8% interest rate and a 10-year repayment period.

If you go with the standard monthly payment, you’ll pay around $115/month.

But check out how much you can save per year if you paid just $100 more each month:

Even prepaying $20 more per month can save you HUGE amounts of money.

If you can prepay even a small amount more per month, the benefits can be significant. See for yourself by calculating your savings using this calculator.

Money saving win #6: The envelope method

The envelope system is a great way to be more conscious about your spending.

It works by putting physical cash for all your monthly expenses (e.g., gas, going out, shopping) into dedicated envelopes.

For example, you might have an envelope for “Restaurants,” so everytime you go out to eat you’ll take money from it to spend. Once you’ve used all the money in the envelope, you’re finished for the month!

This method is flexible in terms of being able to dip into other envelopes if there’s an emergency. However, there’ll be less money to spend for the month on that category of expenses.

You don’t need to use physical envelopes either. One of my friends who started tracking her spending a while back had a great system: She set up a separate bank account with a debit card.

At the beginning of each month, she transferred around $200 in it. So when she goes out, she spends that money. And when it’s gone, it’s gone. It’s a fantastic system that helps her be conscious of what she spends.

Whatever system you decide to use, you just need to make sure to decide how much you’re willing to spend in each category (and that’s all up to you).

You can set up your envelope system in three steps:

1. Decide how much you want to spend in each major category each month.
2. Put money into each envelope (e.g., $200 for groceries, $150 for eating out, $60 for entertainment).
3. Spend the money — but when the envelopes are empty, that’s it for the month.

If you set up a debit account, be sure to call your bank and tell them you DON’T want them to allow you to spend more than you have in your account (this is known as overdraft protection). If you don’t do this, you might run into a ton of overdraft fees.

(By the way: If you do slip up and find yourself slapped with some fees, here’s a handy guide for getting them waived.)

Money saving win #7: Use sub-savings accounts

Sub-savings accounts are some of my favorite ways to save money for any purchase.

These are accounts that you can create along with your normal sub-savings account — but dedicate them to specific purchases.

That means:

1. Putting money away towards your savings goals
2. Saving cash when you automate your finances

I remember when I first found sub-savings accounts, it was like the heavens opened up and “Hallelujah” started playing. I made one and named it “Down Payment” so I could save for a down payment on a house.

Over the months, the money I saved in the account grew bigger and bigger and I felt really proud of that.

While I did this, a buddy of mine was also saving — BUT he was just putting away cash blindly into an account he hadn’t dedicated to anything.

Though we might have had the same amount saved away, the difference between us psychologically was staggering. Where he felt despair about trying to save money, I was motivated.

For me, I wasn’t working towards $20,000 for a down payment. I was working on saving $333 a month over five years — a perfectly achievable goal, especially after I tracked my progress.

Eventually, my friend did open up his own sub-savings account. He told me that doing so changed his entire perspective on saving money for the better.

Go to your bank’s website and open up a sub-savings account. You can even name it to reflect whatever it is you’re saving up for.

Once you do that, be sure to automate your finances so you’re passively putting money into it each month.

What’s next?

So you have all the savings basics nailed down — automating your finances, lowering your bills, negotiating your rent … what do you do next?

First off, congratulations!

You’re ahead of 90% of your peers when it comes to your personal finance. But that doesn’t mean you should get complacent.

In fact, from here I’d suggest doing two things:

1. Set up a 10-year savings strategy
2. Focus on Big Wins

10-year savings strategy

This is the next level of saving — the one that’ll take you from amateur penny-pincher to pro-saver. Once you’ve gotten the basics taken care of, you can now start implementing a 10-year strategy.

This involves asking people 10 years older than you what they wish they’d saved for — and start saving for it.

This sounds obvious, but it actually requires admitting that — despite your superior financial acumen — you’re still going to have the same expenses as everyone else.

Yeah, it’s nice to imagine you’re going to be a millionaire one day, sipping piña coladas from a beach while your investments make money for you … but reality will be ready to smack you upside the head with things like:

• Wedding expenses: And don’t even begin trying to tell me something like “I just want to have a small simple wedding.” Shut up. Your wedding will be nice and it will be expensive like everyone else’s.
• Kids and their expenses: If you plan on having a child one day, you can bet you’re dropping A LOT of money on them.
• Down payment on a house: You’re definitely gonna want to save for this if you plan on owning a home one day.

Remember when I talked about sub-accounts in your main savings accounts? Well, you’re going to start setting up sub-accounts for any and all of these goals.

Then you’re going to automate your checking account so it sends funds into the accounts as soon as you receive your paycheck.

This may seem simple — and it is — but you can’t just scoff at this for being too easy and do nothing. I challenge you to consciously choose 1 of 3 options for this today:

1. I’m going to do this within the week
2. I’m not going to do this because I’m going to do another strategy within the week
3. I’m not at this stage yet … I’m going to pick up your book (or another book, or just do it) and get there

Next steps: The 7 Big Wins

Next time you hear the same old tired advice on saving money — keeping a budget, or cutting back on $3 lattes — ask yourself: Has that really worked for the millions of people who’ve tried it?

Are they really not “trying hard enough”?

Or is there perhaps a systemic problem urging people to waste their limited willpower on near-meaningless tasks with little reward?

Should we instead focus on high-leverage areas that will result in massive payoffs?

There are just a few Big Wins in life where — if you simply get them right — you almost never have to worry about the small things. If you can focus on the 5-7 Big Wins, rather than 50 little things, you can have an insurmountable edge in life.

Here are the 7 wins I suggest you tackle ASAP — and we’ve already covered a few of them.

1. Automate your finances
   
2. Start investing early
   
3. Improve your credit score
   
4. Land your Dream Job
   
5. Negotiate a raise
   
6. Make money on the side
   
7. Negotiate your rent

Put another way — how can we focus on using Big Wins so we can save money … AND get on with doing the things we truly love?

For your first Big Win, I want to give something to you: My Ultimate Guide to Personal Finance.

Along with the things you learned in this article, I’ll also show you my systems for earning and investing your money. Just enter your name and email below and I’ll send it straight to your inbox for FREE.

How to save money with 7 savings wins is a post from: I Will Teach You To Be Rich.

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How To Open a TFSA

The Tax-Free Savings Account (TFSA) is the best long-term savings vehicle available to Canadians, but less than 40% of eligible savers are making use of it. If you don’t have one, it’s time for you to open a TFSA. How the TFSA works The Tax-Free Savings Account (TFSA) is a registered account introduced in 2009 [...]

The post How To Open a TFSA appeared first on Money After Graduation.

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5 ways to avoid overdraft fees

Overdraft fees are total BS.

When consumers overdraft their accounts, it’s by an average of $24 — but then they often get hit with an average of $34 in fees.

In 2016, Americans paid $15 billion in overdraft fees. That’s more than 80 million Hamilton tickets, or three billion Big Macs (that’s a dozen Big Macs for every American).  

Rather than just sit around and complain about overdraft fees, though, I want to show you how to beat the banks at their own game.

In fact, you can actually negotiate your fees away with a simple script.

But first, let’s take a look at what overdraft fees are exactly, as well as what a few banks are going to charge you.

What is a bank overdraft fee?

Overdraft fees occur when you take more money out of your checking account than is currently in there. When this happens, your bank will charge you a fee to facilitate the transaction.

Though the fee will vary from bank to bank, here are overdraft fees from a few of the most popular banks as of August 2018:

BANK	OVERDRAFT FEE
Chase	$34
Bank of America	$35
Wells Fargo	$35
US Bank	$36
PNC Bank	$36
Citibank	$34

 

Overdraft fees occur per transaction, which means you can do it multiple times a day. So even though $34 here or $36 there might not seem like a lot, you can find yourself saddled with $100+ in fees if you do it several times a day.

Even if you don’t do it multiple times a day, one overdraft hit is bad enough. In fact, getting an overdraft fee just one time is often enough to wipe out your interest gains for an entire year.

Luckily, you can negotiate to get them waived if you have the right scripts. That’s why I want to show you exactly how you can get your overdraft fees waived with a simple phone call with your bank.

The exact script to get overdraft fees waived

Here’s a truth not a lot of people know: All bank fees are negotiable.

Most banks understand that people are occasionally forgetful, so they’re very willing to waive a first-time fee if you ask. After the first time, it gets harder but can still be done if you’re determined.

Remember: Your bank wants to keep you as a customer. A well-executed phone call can often make a difference.

Here’s how I was able to waive an overdraft fee I got years ago: I called up my bank and the conversation went like this:

RAMIT: Hi, I just saw this bank charge for overdrafting and I’d like to have it waived.

BANK: I see that fee. Unfortunately, we’re not able to waive that fee. It was [some BS excuse about how it’s not waivable].

RAMIT: Well, I’ve been a good customer with the bank for X years now and would still like to get it waived since this is a rare occurrence. What else can you do to help me?

BANK: Hmm, one second sir. I see that you’re a really good customer. I’m going to check with my supervisor. Can you hold for a second?

[hold]

I was able to check with my supervisor and waive the fee. Is there anything else I can help you with today?

And just like that, I got my overdraft fee waived. This script works so well for a number of reasons:

1. I repeated my complaint and asked the bank rep how they could constructively help me.
2. I’ve been a loyal customer to the bank for many years, which you should always use to your advantage when calling to negotiate.
3. I was polite but firm. Nothing can force a negotiation to go sour faster than a bad attitude.

You can use this exact script in order to get yours waived too.

And it doesn’t just work for overdraft fees — you can use this for other bank fees too, like processing fees, late fees, and even ATM fees.

For more tactics on negotiations, make sure you check out my article on how to negotiate anything.

What to do if they say no?

But there is always the chance they still say no to your request — and that’s okay. When that happens, there are three options you can take:

1. Persist. Banks pay hundreds of dollars in customer-acquisition costs and don’t want to lose you. If you’re persistent enough and make it hard for them to say no, you’ll have the upper hand if they try to shoot you down.
2. Hang up and call again. Sometimes getting your fee waived is a matter of hitting the right bank rep. If the first bank rep keeps shutting you out, politely thank them for their time, hang up, and dial the number again.
3. Pay the fee. You’re not going to win all negotiations. Sometimes you’re going to have to just pay the fee. BUT if you have the right scripts and prepare, you can be infinitely more ready than you were before.

When it comes to overdraft fees though, the best system is the one where you don’t have to worry about them at all. That’s why I suggest learning how to avoid getting overdraft fees entirely so you don’t have to concern yourself with negotiating the rate away.

4 other ways to avoid overdraft fees

Prevention is better than a cure. So rather than deal with the consequences of overdraft fees, avoid them entirely with these four methods:

1. Opt out of overdraft protection
2. Account transfers
3. Envelope system
4. Get a new checking account

Opt out of overdraft protection

When you sign up for a checking account, many banks try to convince you to sign up for something called overdraft protection. It’s the policy in which the bank will cover you when you overcharge on your debit card, but charge you the overdraft fee for the trouble.

However, if you choose to opt out of overdraft protection, your card will simply get declined every time you attempt to charge more money than you currently have in the account.

Sure, it might be embarrassing if you’re on a date and it turns out you can’t pay for dinner because your card got declined — but it can go a long way in saving you money on overdraft fees.

Account transfers

Some banks offer an overdraft protection service that works by transferring money from another account to the one you’re trying to take money from.

This can be from another checking account, a savings account, or even a credit card (depending on what your bank offers).

For example, say you’re using your debit card to buy dinner. Your debit card is linked to your checking account, which doesn’t have enough money in it. If you have an account transfer set up, it’s okay! If you’ve depleted the money in your checking account, money will just be transferred from your savings to cover the costs.

NOTE: Some banks charge a small fee with this practice as well — though it’ll be much lower than your overdraft fee.

Envelope system

This is a great system to help you keep track of your expenses for anything.

And it’s simple: At the beginning of each month, you allocate cash for things like going out, groceries, gas, and whatever else into envelopes. Once you’ve spent the money in those envelopes, you’re done spending for the month.

Of course, if there’s an emergency you can definitely dip into other envelopes — but that only means you have less money to spend in those areas.

You can set up your envelope system in three steps:

1. Decide how much you want to spend in each major category each month.
2. Put money into each envelope (e.g., $200 for groceries, $150 for eating out, $60 for entertainment).
3. Spend the money — but when the envelopes are empty, that’s it for the month.

You don’t even need to use physical envelopes. One of my friends used to track her spending with a separate bank account and debit card, while opting out of overdraft protection.

When the month started, she’d transfer around $200 into the account — and when she went out, she would only spend that money. Once the money was gone, she’d stop spending.

Whatever system you decide to use, you just need to make sure to decide how much you’re willing to spend in each category (and that’s all up to you).

Get a new checking account

One great way to avoid overdraft fees entirely is to get a checking account with a bank that doesn’t have them.

My favorite: Charles Schwab Investor Checking.

A few highlights:

• No fees
• No minimums
• No-fee overdraft protection
• Free checks
• Deposit checks via pre-paid envelopes or via iPhone app (snap photos of your check — no need to go into branch)
• An ATM card
• Unlimited reimbursement of any ATM usage

That’s right. There’s no-fee overdraft protection AND unlimited ATM reimbursement.

How often do you go out with friends and have to withdraw money from out-of-network ATMs? How often do you find yourself at a cash-only taco place at 3:30am, needing to withdraw $20, but you hesitate because of onerous ATM fees?

Those fees can add up, and Schwab reimburses you for all of them. If you rack up $200 worth of ATM fees in a month, you’ll see a $200 deposit from Schwab before the month ends. This means you can use ANY ATM — corner stores, other banks, whatever — without having to look for some specific bank’s ATM.

Some people will balk at using Schwab because it’s an online bank. That’s fine, but I urge you to reconsider: It’s rare to find a checking account that (1) avoids screwing you at every turn, and (2) actually rewards you for using them.

Master your personal finances

Once you learn how to avoid getting nickeled-and-dimed by your bank, you’ll be well on your way to living a Rich Life.

And you don’t need any fancy get rich quick schemes or snake oil. All you need is determination and the right systems put in place to help you get the most out of your financial situation and not have to worry about living “frugally” (aka sacrificing the things you love).

That’s why I’m excited to offer you something for free. I have an offer: My Ultimate Guide to Personal Finance.

In it, you’ll learn how to:

• Master your 401k: Take advantage of free money offered to you by your company … and get rich while doing it.
• Manage Roth IRAs: Start saving for retirement in a worthwhile long-term investment account.
• Automate your expenses: Take advantage of the wonderful magic of automation and make investing pain-free.

Enter your info below and get on your way to living a Rich Life today — and avoid overdraft fees forever.

5 ways to avoid overdraft fees is a post from: I Will Teach You To Be Rich.

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Should I buy a new car? 9 reasons to buy new

“Should I buy a new car?”

If you asked almost every personal finance pundit that question, they’ll give you a bunch of reasons why you should buy used instead.

Some common reasons they give:

• “Used cars cost less.”
• “Used cars have lower insurance.”
• “Cars depreciate fastest in the first two years of ownership.”
• “Cars are built better than ever so there’s less risk than before in buying used.”

So of course, we should all be buying used … right?

I disagree.

Used cars can be a good way to go. But to apply a broad rule that “used is the best” is short-sighted. In fact, I think there are more reasons why people should buy a new car than used.

“Should I buy a new car?”

I wound up asking myself that question years ago in college. With lots of business meetings I had to make, I figured I’d rather not have missed any of them because my stupid 12-year-old van broke down.

So that November, I started looking for a new car.

The date was intentional: You can get amazing deals at the end of the year when dealers want to beat their quotas. First, I test-drove a few cars and researched them, narrowing it down to a Honda Accord or a Mercedes C230. (Both were four-door models because Indian people hate coupes. Seriously.)

The Mercedes was sporty and cool and kinda affordable (if a little bit of a stretch for me). But I decided against it for a few reasons: Service is absurdly expensive and I would just be angry every time I had to get stuff done at a dealer, plus insurance is more, etc.

But the real reason I didn’t want to get the Mercedes is, where do you go from there? You can’t get a Geo Prizm after driving a Mercedes for a few years. So I decided it would be stupid to get a Mercedes as a 22-year-old. Plus, cars are important to me, but not that important.

I decided to get a Honda Accord. Now I had to choose between buying a new or used car.

9 reasons you should buy a new car instead of a used car

Here are a few things I debated before choosing a new over a used car — and you should too.

1. Cost. Sure, a new car costs more. But over the long term, not that much more. And the value — not just monetarily — can be much higher.
2. Reliability. Above all, I wanted to get a car that wouldn’t break down. I had enough stuff going on in my life and I want to avoid car-repair issues (time, $) as much as possible. I was willing to pay slightly more for this certainty.
3. Not a piece of crap. Buying a car takes an enormous amount of time. I planned to have this car for many years and I didn’t want another piece of crap. As a result, this baseline requirement reduced the disparity between new and used prices.

   In other words, I wouldn’t save a ton of money getting a used car because I wanted a pretty good car, regardless. Quick note: This is admittedly a little bit of vanity. But I’ve written time and time again about spending on things you love (more on this later). I love driving and I do it a lot. It’s not strictly functional for me. I even sprang for the V6 model. Plus, there are other ways to minimize your total cost, which I’ll get to in a minute.

4. Cash I’d have to put down. This is important. If you don’t have any cash (or very little), a used car is more attractive because the down payment (i.e., money you have to pay immediately) is typically lower. And if you put $0 down, the interest charges on a new car will be much more. In my case, I had cash available to put down.
5. Interest rate. The interest rate on your car loan will depend on your credit, which is why having a good credit score is so important. If you have a solid credit score, your interest rate will be lower.

   This becomes more important over a longer-term loan. Each dealership will negotiate differently. Don’t be afraid to walk out if the dealer tries to change the finance terms on you last minute. This is a common trick.

6. Resale value. One of my friends bought a $20,000 Acura Integra, drove it for about seven years, and then sold it for 50% of the price. That means she got a fantastic deal on driving a new car for seven years.

   To check out how your potential car might fare, visit Kelley Blue Book and calculate the resale prices in five, seven, and 10 years. You’ll be surprised how quickly most cars depreciate and how others (Toyotas and Hondas especially) retain their value.

7. Insurance. The insurance rates are lower for a new car compared to a used car. Even if they’re only slightly different (say, $50 / month), that can add up to real savings over a few years.
8. Gas mileage. With gas prices on a roller-coaster ride, you may want to hedge your bets and consider a fuel-efficient or even hybrid or electric car. This could be an important factor determining the value of a car over the long term.

   And let’s be honest: How cool would it be to be the only guy on your block with a Tesla?

9. New-car smell. Good god, is there a better smell on earth? This wasn’t really a requirement but I just wanted to mention how much I love it. This, and the smell of Payless ShoeSource. Find me at the mall, walking in and out of Payless over and over.

The lowdown on buying a new car vs a used car

Here’s the deal: Buying a used car might save you upfront money, but it may cost you a lot more over the long term. If you decide to buy a good used car, in my opinion you might as well spend a little more to mitigate the risks of car repair, etc. That’s the risk/reward perspective.

Another perspective, cost vs value, influenced me more. Buying a new car seems scary because the numbers are so high ($20,000!). But that’s what financing is for — especially at extremely low rates like 2% – 4%. You can put down as much money as you’re comfortable with.

But the biggest factor in my purchase was the total-value concept: You can get a new car for a relatively low cost over the long term by doing a few sensible things.

Now, most of the pundits who talk about buying new vs used cars seem to assume that people are completely stupid and will do things like pick a bad car that looks sexy but is a poor choice financially (e.g., a Dodge Neon vs a Honda Accord), spend a lot on the initial purchase price, not shop around for competitive insurance, not take good care of the car, and sell it when they see something shinier.

If you do these things, then yes, you totally deserve to pay a HUGE price for your car.

Instead, you should follow a few common sense ideas when it comes to buying a car.

5 common sense ways to save money on a new or used car purchase

Whether you decide to buy used or new, there are five common sense practices you can employ to getting the best deal for your car.

1. Pick a good car — for the long haul. A lot of people want to prioritize how a car looks over anything else. What color is it going to be? Two-door or four? Does it come with those Lambo doors that open sideways?

   But you should really prioritize getting a good, reliable car that you’ll be able to drive around for at least 10 years.

   Like saving for retirement, you are investing in your car for the long term. This isn’t like clothes where you can just cycle out of it after a year or two. You want to hold onto your car for as long as you possibly can because it costs so much.

   Especially since it’s only going to depreciate in value over time:

2. Negotiate mercilessly with dealers. I have never seen so many people make bad purchase decisions as they do when they get in a car dealer’s office. If you’re not a hardball negotiator, take someone with you who is. Better yet, don’t even go to the dealer!

   I bought my car for $2,000 under invoice by spending a month researching and planning. When I decided to buy, I had 17 car dealers bidding against each other to get my business by fax / email, while I reclined and watched Laguna Beach (wow, that’s a dated sentence). And I only went in one dealer’s office: the winning one. Also, I started negotiations at the end of the calendar year, when dealers are salivating to beat their quotas.

3. Get a great interest rate. Your interest rate matters to the total cost of ownership, especially if you don’t put money down to start. This is why having a good credit score matters — if you have multiple sources of good credit, your interest rate will be lower.
4. Get a straightforward loan. Don’t do stupid things like getting an upside-down loan, where you owe more on the car than it’s worth. I know a girl who bought a new Lexus, but decided she didn’t like it five months later and traded it in for something else. She now has an upside-down loan and a distinct lack of common sense.

   Treat your car like a stock and plan to hold it for a long, long time. This is hard because we’re judged on how new our car is. But with each year you drive your car payment-free, you’re saving tons of money.

5. Your car’s price is vastly dependent on its condition. Go to Kelley Blue Book and experiment with pricing. Try the same car in Excellent, Good, Fair, and Poor conditions.

So I decided to get a new car. Let’s assume my car cost $20,000 ($25k sticker price, negotiated). If I can pay it off in five years, and drive it for three years afterward, I can sell my car for about $10,000.

That’s about $1,250 / year. And it only gets better as you drive the car longer with no payments. In other words, you save more in non-payments than the car depreciates.

Bonus: Want more ways to save? Check out my new Ultimate Guide to Personal Finance.

When SHOULDN’T I buy new?

This isn’t a black-and-white situation though. There might be times when, yes, maybe you should buy use or even think about holding onto the car you DO have for a little longer.

There are only two reasons, though, that truly determine whether or not you should get a new car: Your ability to afford it, and your Rich Life.

First, you need to be able to afford the car. This might seem obvious but I promise you, you’d be shocked at how many people jump into one of the biggest purchases of their lives without first asking themselves, “How am I going to pay for this car?”

And so they end up signing a financing contract that they can’t really afford and end up going into debt for their car.

Pro tip: NEVER GO INTO DEBT FOR YOUR CAR.

If you do, there are ways to get out of it. But prevention is better than the cure.

You can find out how much new car you can afford right now with the 20/4/10 rule.

This easy back-of-the-napkin trick can give you a rough idea of what’s realistic for you and your finances.

Here’s how it works:

• 20% down payment on the car.
• 4-year car loan or less.
• 10% or less of your gross monthly income goes towards car expenses including gas, insurance, DMV fees, repairs, parking/speeding tickets, and interest payments.

Imagine you want to purchase a new car for $30,000 and you earn roughly $50,000 a year. That means you need to put at most a down payment of $6,000 (20% of the cost) and spend no more than $417 a month (10% of your income) on expenses for it.

The second reason you might not want to buy a new car is your Rich Life. I’ve talked about this philosophy many times before but here’s a quick breakdown: Your Rich Life is being able to spend and invest money into whatever makes you happy while ignoring everything else.

It can be something like buying first-class flights for your parents to come visit you, or something as simple as ordering appetizers when you go out.

While you spend on the things you love though, you’re also conscious in mercilessly cutting out the costs of things you don’t actually care about.

For example, I have a friend who spends $5,000 / year on shoes. At first, that seems like an eye-popping amount. HOWEVER, my friend is able to afford it because she makes a healthy six-figure salary, she has a roommate, she doesn’t buy lunches every day because she eats for free at work, and doesn’t spend her money on things like the gym, electronics, or anything else she doesn’t care about.

The result: She can spend $300 – $500 on around 10 – 15 pairs of shoes each year.

The same can be applied to you and a new car. Ask yourself, “Does a new car fit into my vision of a Rich Life? Will it really make me happy or am I just doing it for societal pressures?”

If the answer is no, you shouldn’t get that new car. If it’s yes, then awesome! Check out a few of my articles on making expensive purchases below for more.

• Find out how much car you can afford
• The best time of year to buy a car
• Conscious Spending Plan

Here’s the bottom line: I don’t like when pundits say that buying a used car is the only way to go. It’s not.

Buying a new car can be a smart choice if you pick the right car, negotiate extremely well, and stay disciplined about shopping for insurance, maintaining your car, etc.

Because buying a car is such a big purchase, I’m fine spending a little more money and time upfront to mitigate risk and get a great car that will last for a long time. And by being sensible about how long you drive your car for (longer is better), you can get a new car for a great value.

It doesn’t have to be a purely numbers-oriented decision. I loved my car — it was fun to drive, and if I had 10x the money, I would still get it.

I’m giving away the first chapter of my New York Times bestseller: I Will Teach You to Be Rich

This is the start of my six-week personal finance program for 20- to 35-year-olds. It’s a completely practical approach based around the four pillars of personal finance — banking, saving, budgeting, and investing — and the wealth-building ideas of personal entrepreneurship.

In my book, I cover:

• How to save time by not wasting it managing money
• The “guns and cars” myth of credit cards
• How to negotiate like an Indian — the conversation begins with “no”
• Why “Budgeting Doesn’t Have to Suck!”
• How to get things rolling — for real — with only $20
• What most people don’t understand about taxes
• How to avoid the Super Mario Brothers trap by making your savings work harder than you do
• The difference between cheap and frugal
• The hidden relationship between money and food
• Why getting started is more important than being the smartest person in the room

And now you can get the first chapter completely free.

Should I buy a new car? 9 reasons to buy new is a post from: I Will Teach You To Be Rich.

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FREE Debt Payoff Schedule Spreadsheet

Here’s a free debt repayment schedule to help you get your finances on track! The secret to getting out of debt fast is making extra payments, no matter how small. Often people think $5 or $10 won’t matter in the grand scheme of things, but depending on your balance and the interest rate, even a [...]

The post FREE Debt Payoff Schedule Spreadsheet appeared first on Money After Graduation.

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How to lower car insurance in 4 steps

Car insurance rates are rising — by a lot.

According to the Federal Consumer Price Index, consumers saw a 7.6% rise in car insurance from 2017 to 2018. That’s more than double the average annual rise in car insurance rates.

Learning how to lower car insurance premiums is more important for consumers than ever. To help, I want to go over my system to do exactly that — as well as give you 10 great scripts to use to uncover even more savings.

• “Who has the cheapest car insurance?”
• How to lower car insurance — in 4 steps
  • Step 1: Find how much coverage you need
  • Step 2: Find your current plan
  • Step 3: Shop around
  • Step 4: Lower your car insurance with scripts
    • Renegotiate your current policy
    • Negotiate a new policy
• 10 scripts for lowering car insurance
• Beyond car insurance negotiations

But first, a cautionary tale.

“Who has the cheapest car insurance?”

When I first purchased car insurance, I only focused on answering one question: “Who has the cheapest car insurance?”

In my search to answer that question, I ended up getting it from a company with fantastic insurance rates because I wanted to save money each year.

But it was also the worst insurance company in the world.

The company lost my paperwork, “accidentally” overcharged me, and spammed my mailbox every week with letters. Eventually, I got fed up.

So I did what I should have done in the first place and shopped around.

After calling a bunch of places and negotiating with different insurers, I found a RELIABLE company that I liked that wouldn’t screw me with hidden fees. Doing this actually ended up saving me nearly $200 every six months (almost $400 a year).

If I would have compared and negotiated from the start, instead of just going with the cheapest one, I would have saved hundreds of dollars and lots of headaches.

My point? Insurance is not a commodity. If you go with the cheapest insurer and it turns out that they “accidentally” overcharge you and — worst case scenario — can’t even fulfill your claim, then it’s your fault.

How to lower car insurance — in 4 steps

I want you to avoid the mistakes I made.

That’s why you want to pick a reputable company that won’t overcharge you with hidden fees or try to upsell you with policies you don’t need.

And negotiating a great rate with these companies isn’t that complicated either — as long as you follow the steps I outline below and use the right scripts.

Step 1: Find how much coverage you need

Most U.S. states — besides New Hampshire and Virginia — require you to get car insurance as well as a certain amount of liability coverage you need.

When it comes to the amount of liability that’s required, you’ll typically need to find coverage in three areas:

1. Bodily injury (per person). This is the amount that is covered for each person who gets hurt during an accident.
2. Bodily injury (total). The most an insurance company will cover for bodily injury per accident.
3. Property damage (total). This does not include your own property. This amount only covers the damage sustained to the property of others.

Though every state requires you to get a certain amount of liability coverage, the full amount of the coverage varies.

Here’s a comprehensive list of car insurance minimum coverage requirements for each state (e.g., Alabama requires $25,000 for bodily injury per person).

STATE	BODILY INJURY (PER PERSON)	BODILY INJURY (TOTAL)	PROPERTY DAMAGE (TOTAL)
AL	$25,000	$50,000	$25,000
AK	$50,000	$100,000	$25,000
AZ	$15,000	$30,000	$10,000
AR	$25,000	$50,000	$25,000
CA	$15,000	$30,000	$5,000
CO	$25,000	$50,000	$15,000
CT	$20,000	$40,000	$10,000
DE	$15,000	$30,000	$10,000
FL	$10,000	$10,000	Not required
GA	$25,000	$50,000	$25,000
HI	$20,000	$40,000	$10,000
ID	$25,000	$50,000	$15,000
IL	$25,000	$50,000	$20,000
IN	$25,000	$50,000	$10,000
IA	$20,000	$40,000	$15,000
KS	$25,000	$50,000	$25,000
KY	$25,000	$50,000	$10,000
LA	$15,000	$30,000	$25,000
ME	$50,000	$100,000	$25,000
MD	$30,000	$60,000	$15,000
MA	$20,000	$40,000	$5,000
MI	$20,000	$40,000	$10,000
MN	$30,000	$60,000	$10,000
MS	$25,000	$50,000	$25,000
MO	$25,000	$50,000	$10,000
MT	$25,000	$50,000	$20,000
NE	$25,000	$50,000	$25,000
NV	$15,000	$30,000	$10,000
NH*	$25,000	$50,000	$25,000
NJ	$15,000	$30,000	$5,000
NM	$25,000	$50,000	$10,000
NY	$25,000	$50,000	$50,000
NC	$30,000	$60,000	$25,000
ND	$25,000	$50,000	$25,000
OH	$25,000	$50,000	$25,000
OK	$25,000	$50,000	$25,000
OR	$25,000	$50,000	$20,000
PA	$15,000	$30,000	$5,000
RI	$25,000	$50,000	$25,000
SC	$25,000	$50,000	$25,000
SD	$25,000	$50,000	$25,000
TN	$25,000	$50,000	$15,000
TX	$30,000	$60,000	$25,000
UT	$25,000	$65,000	$15,000
VT	$25,000	$50,000	$10,000
VA**	$25,000	$50,000	$20,000
WA	$25,000	$50,000	$10,000
D.C.	$25,000	$50,000	$10,000
WV	$25,000	$50,000	$25,000
WI	$25,000	$50,000	$10,000
WY	$25,000	$50,000	$20,000

*(Coverage is optional but this is the minimum if you purchase it)
**(Required if you choose to purchase coverage. If not, you must pay a $500 uninsured motorists fee)

For an even more comprehensive look at what your state might require for car insurance, be sure to check out your state’s department of transportation website.

Other coverage options
Aside from state requirements regarding liability, most car insurers will provide five other coverage options. Deciding which ones you want is a matter of personal preference and factors like how old your car is.

The coverages are:

1. Uninsured motorists. Some states require you to be insured to protect against uninsured motorists. This coverage helps you in the event that you get into an accident with someone who isn’t insured and can’t pay for your car repair and/or medical bills.
2. Medical costs. If you’re injured in an accident, the insurance company will pay some or all of your medical bills (depending on the coverage and how much the bill is).
3. Personal injury protection. Like uninsured motorists coverage, some states require you to get this as a minimum. This pays for any medical expenses or lost wages you might encounter due to a collision.
4. Collision. This coverage typically protects your vehicle against collisions with other motorists or objects. Good if you’re prone to accidentally backing up into the mailbox.
5. Comprehensive. This coverage tends to cover the whole gamut of things that might happen to your car such as hail, water, and fire damage; if it gets stolen; vandalism; or total destruction. I wouldn’t suggest getting this coverage if your car is already pretty old or isn’t worth much.

As I discussed in my article on how much auto insurance you need, I highly suggest you get collision and comprehensive coverage as well. Along with liability insurance, you’ll be insured against the likeliest of events that will occur to you and your car.

There’s even a good chance you’ll need those policies anyway if you’re leasing your vehicle.  

So consider your options and decide what you want out of your insurance coverage. Once you do that, you’ll be ready for step two.

Step 2: Find your current plan

If you don’t have your current plan in front of you, how can you know how to lower your car insurance?

That’s why you need to find out what your current policy looks like. Go digging through the glove compartment for it, check your files, or call your insurance company. This is important information you can leverage when negotiating with your current insurance provider.

At a very least, you need to know how much you’re paying and for what services.

Here are the numbers of the most popular car insurance providers that you can use to call to find out your policy now.

Geico:	1-800-861-8380
AAA:	1-866-539-8033
Allstate:	1-866-704-9900
Progressive:	1-800-776-4737
State Farm:	1-800-STATE-FARM (1-800-782-8332)

By now you should have your policy in front of you. This includes what type of car insurance coverage you have as well as your deductibles and how much you’re paying in premiums.

You’re now ready to begin comparing it with other car insurers.

Step 3: Shop around

To start, you can use a rate comparer tool such as this one to compare quotes from different insurers.

I prefer talking to a rep on the phone, though, because they always tell me about other deals that the websites don’t offer.

When consulting with a rep or looking up quotes online, be sure to find out how much exactly you’ll be paying in these two areas:

• Premiums. This is the price you’ll pay for your plan. Typically, insurers offer 6-month and 12-month policies, and provide options for payment plans including paying for coverage all at once, quarterly, or month by month.
• Deductibles. This is the portion you’ll pay out of pocket before your insurer pays the rest.

Not many people know this but you can actually lower your premiums by opting for higher deductibles. According to a report from InsuranceQuotes.com, you can lower premiums by 9% by raising deductibles from $500 to $1,000.

This is all a matter of personal preference though. If you’re a good driver and/or don’t typically drive your car often, opt for higher deductibles for lower premiums.

If you’re accident prone, drive a lot, or have kids that plan to learn how to drive soon, definitely opt for the lower deductible.  

No matter the case, you should know exactly the coverage you want along with the limits for each. That way it makes everything much simpler to compare.  

To help keep everything organized, you can use an Excel or Google Spreadsheet. Here’s a good template to leverage during your search.

	Premiums	Deductibles	Collision	Comprehensive	Medical Costs	X Coverage
Acme Insurance	$X,XXX	$X,XXX	$XX,XXX	$XX,XXX	$XX,XXX	$XX,XXX
IWT Car Insurers	$X,XXX	$X,XXX	$XX,XXX	$XX,XXX	$XX,XXX	$XX,XXX
Collisions R Us	$X,XXX	$X,XXX	$XX,XXX	$XX,XXX	$XX,XXX	$XX,XXX

Once you get a few solid quotes, compare them to what you’re currently paying. You’re going to be able to make a sound argument with your insurance rep as to why you should get a lower rate once you do.

Which brings us to…

Step 4: Lower your car insurance with this script

Now it’s finally time to call up insurance reps — including the one you currently have — and negotiate an awesome deal with scripts.

This is the meat of how to lower car insurance payments.

Before you do that, though, there are two things to keep in mind when speaking to a representative.

1. Stay polite — but firm. Don’t just call up the rep and scream, “GIVE ME LOWER CAR INSURANCE!!!!” (I’ve tried, it doesn’t end well.) You need to handle the negotiation with finesse and civility — even if the representative is short with you. Nothing throws a wrench into negotiations quite like pissing off the one person who can help you.
2. This is not a win/lose situation. You can’t just make a demand and expect the person to give it to you. However, insurance companies are willing to offer discounts to make or keep high-value customers. Prepare to make your case as to why you’re such a good customer and you’ll see results.

Keep those two things in mind when you call up the representative and I promise you, you’ll find a great deal.

Renegotiate your current policy
If you already have a car insurance policy but just want to negotiate for better rates, use the following script.

ACME INSURANCE: Hello, Acme Insurance. How may I help you today?

YOU: I’d like to negotiate a policy. [Other insurance company] is offering to insure me for $XXX less for [coverage]. I’d like to know if there’s a better deal from you, please.

Wait for their response. Negotiating with this technique is much harder to do with car insurance companies than banks — but it is possible. If they’re stubborn and try to shoot you down, keep pressing at it. Don’t make it easy for them to say no.

ACME INSURANCE: Sorry, but our rates are fixed at this time and we can’t change it do to [some BS excuse about why they can’t give you a lower rate].

YOU: Well, I’ve been a good driver for X years now and would love a lower rate. What else can you do to help me?

ACME INSURANCE: Hmm, one second sir. I see that you’re a really good customer. I’m going to check with my supervisor. Can you hold for a second?

[hold]

I was able to check with my supervisor and can lower that policy by X%. Does that work?

Getting a response like that is the best-case scenario. However, there might be the chance that they deny you a discount based on this tactic alone. If this happens, I suggest you do the following:

1. Don’t stop until you get a yes. Persistence is integral in negotiations. If you keep at it and make a strong case, they’ll be backed into a position where they’ll want to give you what you want.
2. Try again later. Like the Magic 8-Ball says, sometimes you just have to try again later. If the first car insurance rep keeps shutting you down, thank them for their time, hang up, and dial again for a new rep. This one might be a little more amenable to your suggestions.  
3. Refocus your negotiations. If they won’t give you a discount because their competitors are offering better rates, don’t worry. There are still other ways to get fantastic deals — which I’ll go into in the next section.

This isn’t the only way to get a lower car insurance rate, though. By asking certain questions, you’ll be able to unlock deals you didn’t even know existed.

Negotiate a new policy
You might be searching for your first car insurance policy ever. Or you might be looking to see what’s better than your current one.

No matter the case, it’s time to start digging deep and asking detailed questions to uncover the saving these companies have hidden from you. The majority of people won’t even ask questions like these, so reps will be caught off guard — giving you the advantage.

First, you’re going to want to start the same as above. Here it is again.

ACME INSURANCE: Hello, Acme Insurance. How may I help you today?

YOU: I’d like to negotiate a policy. [Other insurance company] is offering to insure me for $XXX less for [coverage]. I’d like to know if there’s a better deal from you, please.

If they shoot you down, remember you can always:

1. Reiterate the fact that you want a better deal and keep persisting.
2. Hang up the phone and call back to negotiate with a different rep.

If one insurance company refuses to budge after three to five calls, change course and call a different one on your list. Rinse and repeat until you have a lower insurance policy.

10 scripts for lowering car insurance

If you get the lower rate — or even if you don’t —  you can refocus the negotiations and start asking for the hidden deals that many car insurers don’t tell you about.

Here are 10 good scripts to ask to uncover those gems:

1. “How much would I save if I insure my car and house with you?” Some insurers will discount you if you insure your house through them as well as your car.
2. “What about renewal discounts? What can you offer me as a discount for long-term membership?” Reminding them of the fact that you’re looking to be a longtime customer goes a long way in ingratiating yourself to them.
3. “Can I save money by prepaying my entire year up front?” Many insurers will offer huge policy discounts if you prepay for an entire year.
4. “Let’s check my car. I know other firms offer discounts for features like anti-lock brakes. What about you?” Not many people realize this, but many car insurance companies will offer better premiums if your car has safety features such as anti-lock brakes, airbags, and four-wheel drive.
5. “What kind of low-mileage discounts do you offer?” If you find yourself taking the bus or biking to work more than you ever drive, you might qualify for a low-mileage discount with car insurance companies.
6. “If I enrolled in a defensive-driving course, what kind of discount would you offer? Oh, really? Which courses qualify?” Car insurance companies want you to be a safe driver. That’s why some are willing to discount you if you take a course aimed at making you one.
7. “What about discounts for my employer? (Tell them the specific name of your employer.)” Some employers partner with car insurance companies in order to get great rates for their employees. Check to see if your company does this.
8. “Some insurance companies offer discounts for low-risk occupations (engineers). What kind of competitive rates do you offer?” Insurance companies take a look at many things when it comes to determining your rate — including your employment. After all, a NASCAR driver is probably going to have higher rates than a CPA.
9. “Am I paying for roadside assistance? What other additional benefits am I paying for?” Many times, you don’t need certain benefits such as roadside assistance (if you’re in AAA, you already have it). In fact, many credit cards offer roadside assistance as well. Getting rid of these “benefits” could give you a good discount.  
10. “Can you walk me through the deductible changes I could make to save money?” Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30%. Going to a $1,000 deductible can save you more than 40%. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.

Learning how to lower your car insurance seems like a lot of work — and it is.

But this is the work that 99.9999% of people out there won’t do, which means your returns can be substantial if you do them.

Try some of these tactics out this week and let me know what you find in the comments.

Beyond car insurance negotiations

If you couldn’t tell already, I LOVE negotiations — mostly because I got it from my parents.

I remember my dad once dragged me with him as he spent an entire week negotiating at a dealership on the price of a car.

After many days of back and forth with our salesperson, they finally reached a price they could agree on. BUT as he was literally about to sign the contract, he asked the dealership to throw in some extra floor mats.

They said no.

And he walked away.

An entire week’s worth of bargaining them down to an incredibly fair price, only to walk away when they didn’t give him something he could have bought for less than 50 bucks at Target.

What’s my point? Two things:

1. My mom and dad are incredibly Indian.
2. You have to be stubborn to be a good negotiator.

I’m a big believer that negotiations can open up HUGE savings for you.

That’s why I want to give you something that’ll help you save and earn more money through negotiations and other proven systems: The Ultimate Guide to Personal Finance.

The money you save on lowering your car insurance is great, but it’s small compared to everything you can save when you optimize your personal finances.

That’s why I’ve outlined my entire system in this no-BS guide on how to make your personal finances work for you.

And it’s all for FREE.

Put your info in the box below and I’ll send you a free PDF of the Ultimate Guide. You’ll be one step closer to living a Rich Life.  

How to lower car insurance in 4 steps is a post from: I Will Teach You To Be Rich.

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How I Saved Over $5,000 In My Baby’s College Fund By Her First Birthday

One of the first things I did after my daughter was born was start saving for her post-secondary education. Setting up my baby’s college fund was one of the best ways I knew of to provide her with long-term financial security. More accurately, long-term financial security I never had. Why I’m saving in my baby’s college [...]

The post How I Saved Over $5,000 In My Baby’s College Fund By Her First Birthday appeared first on Money After Graduation.

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8 steps to selling a house

Maybe you have to move for work.

Maybe your financial situation changed and you can’t afford your mortgage.

Maybe you want to go off the grid, throw your cell phone into a river, and travel the country in an old VW van.

Also, your name is just “Reingold” now.

Whatever your situation, one thing might be clear to you: It’s time to sell your house.

The process can be confusing though — that’s why I want to show you the exact timeline and steps you need to take in order to sell your house.

• Are you selling your house for the right reasons?
• Selling a house in 3 months
• Within a week
  • Step 1: Choose your route
  • Step 2: Pick a price
• 3 months before listing
  • Step 3: Clean out the home
  • Step 4: Hire a home inspector
• A month before listing
  • Step 5: Stage your home
  • Step 6: Hire a photographer
• Week of listing
  • Step 7: List your home
  • Step 8: Sell your home

First, we need to make sure you’re doing this for the right reasons.

Are you selling your house for the right reasons?

It’s no secret I think real estate investing can be a bad decision. One of the reasons I hear from people that drives them to sell their homes: “My house is probably worth WAY more than it was when I bought it.”  

Probably — but only because that’s how inflation coupled with good home maintenance works.

We’ve all probably heard stories from old people talking about how they bought their house during the Taft administration for a sack of corn and a firm handshake and now it’s worth $1,000,000.

The truth is, when you factor in taxes, maintenance, and other real estate expenses, most houses make a very poor investment.

Yale economist and Nobel laureate Robert Shiller reported that from 1890 to 1990, the return on residential real estate was just about zero after inflation.

Even Warren Buffett, one of the world’s wealthiest men, points out that houses don’t necessarily increase in value. By the way, he’s still living in the same five-bedroom house he bought in Omaha, Nebraska, back in 1958.

BUT if you’re selling your home because of reasons like work, family, financial troubles, or going off the grid, etc … that’s fine. Just know that it’s not going to be the cash cow you might have thought it was going to be.

If that’s the case, I want to show you how to do exactly that.

Selling a house in 3 months

The time you actually sell your house will vary depending on where you live.

Housing markets differ from city to city. You might live in an area where it’s a seller’s paradise and everyone is looking to buy a house.

Or you might find yourself in a buyer’s market, where people can’t get rid of their homes fast enough.

Whatever your case, I’ve provided the exact steps you need to take in order to sell a house — along with a rough timeline.

Within a week…

Below are all the steps you need to accomplish this week in order to get the ball rolling with selling your house.

Step 1: Choose your route

There are two routes you can take when selling your house: For sale by owner (FSBO) or hiring a real estate agent.

Both have their benefits and drawbacks, so let’s jump into each now so you can make the right decision for you:

For sale by owner (FSBO)
If you go the FSBO route, there’s the potential to save money on the real estate agent’s commission, since most agents get about 3% – 6% on the sale of a house.

So on the sale of a $300,000 home, you could lose as much as $9,000 – $18,000. Of course, you save even more the higher the price of your home is.

If you decide to go this route, you need to be serious and diligent about listing your home on places such as Craigslist, Zillow, and Facebook real estate groups for your hometown.

You’ll also be on your own when it comes to things like:

• Home appraisal and pricing
• Listing on a Multiple Listing Service, which could cost hundreds of dollars if you do it on your own (more on this in a bit)
• Finding reputable home inspectors and photographers
• Showing the home to potential buyers

Of course, you can avoid all that headache by going the route the majority of people take when selling their home: Getting a real estate agent.

Real estate agent
A good Realtor will be able to add a TON of value to the process you wouldn’t be able to get otherwise, including:

• Getting your house in front of potential buyers. Real estate agents have access to the Multiple Listing Service (MLS). This is a comprehensive online resource that has listings to the vast majority of properties in the country — and it’s a resource many American households turn to when searching for new homes. Since only real estate agents can list houses on the site, this gives them an edge on homeowners selling on their own.
• Saving you time. A Realtor will do all the legwork of scheduling and showing your home to potential buyers, as well as the tricky negotiations that will occur when a buyer decides to make the purchase.

According to a 2017 report by Zillow, 36% of home sellers attempt the FSBO route — but only 11% are eventually able to sell their home without an agent. That’s because the challenges of selling a home are often too confusing for the layman. That’s why you might just want to make it easy on yourself and hire a Realtor.  

Of course, a real estate agent will take a commission from your home sale. But that price might be worth it to you to avoid the stress.

Note: We’ve been using Realtor and real estate agent interchangeably — however, they’re not exactly the same.

A real estate agent is someone who sells property or helps you sell property. Realtors are also real estate agents, but they’re members of the National Association of Realtors.

As a part of this membership, though, Realtors must abide by a strict code of ethics. The code outlines requirements for how Realtors interact with clients.

Respect for other Realtors and the clients themselves is sacrosanct (mostly because violating them can cost them money and get them sued). As such, the code of ethics is the key distinction between a normal licensed real estate agent and a Realtor — and might be a factor in choosing an agent for you.

You can check out the entire code of ethics here. 

For our intents and purposes (and since the vast majority of home sellers will hire a real estate agent anyway), we’re going to assume you’re going to get a Realtor from here on out.

ACTION STEP: Find a good Realtor.

While you don’t necessarily have to go the Realtor route to get a good real estate agent, you might want to, since they’re bound by a code of ethics.

There are a few good ways you can find a good real estate agent though:

• Referrals. If your friend or family has sold their houses recently, ask them if they know of any good agents.
• Find a Realtor. Check out the National Association of Realtors agent listings for a list of certified Realtors in your area.
• Open houses. By going to open houses, you’ll be able to get an inside look at how a Realtor conducts themselves. Get their contact information if they’re attentive and show that they know the ins and outs of the house.

Come up with a list of five to ten good Realtors and give them each a phone call expressing your desire to sell your house.

Be sure to ask them for proof of their licensing, examples of the types of homes they typically sell (you’ll want an agent who normally sells homes like yours), and even the contact information of recent clients. You can call these clients later and vet your potential agent.

Pick one of the agents. Your Realtor will work with you in order to pick a date for when your listing goes up. They’ll also work with you on home pricing, which brings us to …

Step 2: Pick a price

Your real estate agent will run a comparative market analysis (CMA) to determine a good price for your home.

This is a comprehensive report comparing your house to other similar houses in your area that are listed to be sold. These houses will be comparable to yours in terms of size, the number of rooms, the number of bathrooms, etc.

A good agent will walk you through the report and help you come up with an estimated price for your home.

It’s important to keep in mind that while you believe your house is worth one thing, the market is the true determining factor of your home’s price. If you price your home too high, people aren’t going to want to buy. Price it too low, and you risk losing out on thousands.

Work with your agent. They’ll help you come up with a good, objective price for your home.

3 months before listing

Once your agent and you come up with a price as well as a listing date, it’s time to prep your house for when it finally goes on the market. Below are all the things you’ll need to do to make sure your home is in top shape to sell.

Step 3: Clean out the home

Move anything that isn’t essential to your day-to-day life out of your home. This means things like:

• Electronics (TV, stereos, the 15 Amazon Alexas you got for Christmas)
• Art (paintings, statues, etc.)
• Books
• Seasonal clothes
• Non-essential cookware
• Workout equipment
• Whatever

Decluttering does the double duty of helping you pack and move ahead of when you sell your house, while also making your house more presentable for potential buyers.

ACTION STEP: Get a storage space and declutter your home.

If you don’t already have a place to move your things to, get a storage unit to store your items until you do.

PRO TIP: Get a portable storage unit in order to make moving day all the easier for you.

Step 4: Hire a home inspector

Home inspectors help assess your home for anything that could negatively impact its value.

This includes things such as:

• Electrical
• Plumbing
• Gas
• Structural (walls, foundation, ceilings, windows, etc.)
• Heating / Cooling

A home inspector will look at these specific areas throughout your house. When they’re finished, they’ll give you a report on any issues they run into.

With most homes, they’ll likely find a good number of issues. However, it’s important to note that you don’t have to repair every little thing.

However, if you want to really maximize the value of your home, you’ll want to address big issues such as plumbing, foundation, and electricity.

ACTION STEP: Get your home inspected and make repairs.

Your real estate agent should be able to refer you to a solid home inspector. They’ll work with your inspector to come up with a list of repairs you should make before the home goes on the market.

You can also head to the website of the American Society of Home Inspectors to find a certified inspector. Much like the National Association of Realtors, this trade organization binds its members by a code of ethics and provides them with certification.

A month before listing

You’ve made the repairs and cleaned out your home. Now you’re ready to put the finishing touches on before potential buyers see it.

Step 5: Stage your home

It’s now time to make sure your house looks attractive for potential buyers as well as the photographer (more on that in a bit).

This means giving your home a DEEP clean. Every surface needs to be cleaned and polished. The carpets need to be destained. Dingy walls should be washed and repainted.

Make sure your house is well lit. Replace old / burned out light bulbs and consider getting lamps for darker rooms. You don’t want potential buyers to walk in and feel like a vampire lives there.

Also, keep your closets empty. Potential buyers should be able to walk into your walk-in closets and peek into your pantry and see a spacious area. They want to envision their things in there. Not yours.

While it’s important to keep your inside space clean, don’t forget the outside of your house too. You’ll want to maximize “curb appeal” (how your house looks from the sidewalk or curb) as much as possible.

Some things you might want to do:

• Power wash your driveway and deck.
• Add a fresh coat of paint to your door and trimming
• Place plants and flowers near your door.
• Consider removing that novelty welcome mat from your entryway

“Huh. I don’t remember the listing saying we needed to bring anything.”

Once your home is clean and looks good, it’s time to have some pictures to show it off. Which brings us to …

Step 6: Hire a photographer

Don’t think you can snap a few pics on your iPhone, slap a filter on it, and call it a day. A good photographer can make or break your home listing.

They’re responsible for giving potential buyers a look at your house for the first time. As such, they’re on the vanguard of the house selling process.

That’s why you need to hire not only a photographer, but also a good photographer. Doing so will 10x your chances of getting your home looked at by your potential buyer.

This is classic “Craigslist Penis Effect” — the idea that if you’re even a little better than your crappy competition, you’ll find great success (e.g., sending a thoughtful message on a Craigslist personal ad rather than just sending a picture of your bollocks like everyone else).

ACTION STEP: Get attractive photos of your house.

There are a few places you can look into when finding a real estate photographer.

First, your agent likely has a list of great photographers they’ve worked with already. They’ll be perfect if you’re looking for a trusted, proven photographer.

Second, check out listings of homes similar to yours and see what photos really stand out to you. If the photographer’s contact information isn’t listed, you can contact the Realtor directly and inquire about the photographer.

Find at least five potential photographers. Look at their portfolio to make sure their photos are well lit, showcase the outside and inside of the houses well, and have actually sold the houses. Once you’re done, just choose one and arrange for a time for them to come photograph your house.

Week of listing

The big day is almost here. Your house is clean, the photos are taken, and everything is set for you to list your home — which brings us to …

Step 7: List your home

Once your home is listed and your real estate agent has staked a sign in your yard, it’s time to conduct showings.

Much of this will be up to your real estate agent. But there will occasionally be times when you’ll need to interact with the potential buyer and answer questions.

When that happens, it’ll typically be a short-notice showing. That’s fine. Just do the best you can to clean up any clutter that might be lying around, and politely answer their questions.

For open houses and showings planned in advanced, there’s no obligation for you to stick around — in fact, it’s probably better you’re not in your home.

This allows potential buyers to more easily imagine themselves living in your house. So make plans to be out of the home during these times.

Once your home is listed, though, congrats! Most all of the hard part is over.

I say most because you still need to negotiate and sell your house.

Step 8: Sell your home

So you’ve hooked a few potential buyers — it’s now time to reel them in.

(That’s how fishing works right?)

Your agent should have run a credit and background check into the potential buyer’s information to make sure they’re able to purchase the home. They’ll also give you the asking price offered by each of the potential buyers to you.

The asking price will be lower than the price you decided on in step two. After all, your buyer wants a good deal too. At this point, you need to decide upon a settlement price. Your agent will help you come up with a number.

A few things to keep in mind when deciding upon a number:

• Real estate agent’s commission
• Home inspector’s cost
• Repairs and improvement costs
• Closing costs (this is typically on the buyer but you might encounter it depending on the market you’re in)
• Taxes and fees (homeowners association, attorney fees, insurance, etc.)

There’ll be likely a few rounds of negotiations. Don’t get nervous about this process. You can learn the skills needed to negotiate through the process with a few systems. Check out our article on how to negotiate anything to learn how to master the art of negotiations today.

Once you’ve negotiated the price and agreed on a sale — CONGRATS! You just sold your house.

From here, you’ll be working with your real estate agent, an attorney, as well as the buyer in order to sign the contracts. Once you’re done with that, it’s time to pack up and move out … but I’m definitely not helping you with that.

8 steps to selling a house is a post from: I Will Teach You To Be Rich.

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