Monday, March 2, 2009

Money-Saving Tips from Morningstar

Now that the stock market has plunged to 1997 levels, Morningstar, the company from whom I get financial info and where I do our mutual fund research, has decided to tell its customers how to save money. I guess most of us have little to invest these days, so M'star offers "101 Ways to Cut Expenses." Investing right now is probably extremely wise, financial advisers tell us — although burning money in your fireplace may seem like a slightly more profitable alternative.

There are a number of very good suggestions here, along with the usual "use the library" and "stay away from Starbucks" advice we're hearing from all quarters. I particularly liked:

11. Stop buying clothes that are "dry clean only." Learn to iron. (I recently figured out that I can wash wool and cashmere sweaters in my machine, which has a "hand wash" cycle. I won't try this with woolen pants, although I'm soo tempted.)

12. Don't renew subscriptions to publications you don't have time to read. (I save up stacks of New Yorkers for reading in the hot tub on vacation in Maine. I should rethink my whole magazine addiction.)

22. Play golf less often.... (No problem. I'll skip playing golf forever.)

30. Pay cash when possible—psychologically it's harder to spend cash than using credit cards, and you'll save on interest charges. (Even though I pay my credit card in full each month, the idea of paying for stuff in cash makes me feel mild panic. So I should probably try it. But I get cash back from using my credit card — nearly $180 last year.)

44. Raise the deductible on your homeowner's and car insurance policies. (Once you get through the bureaucracy, this can save a bundle. Smart idea. But you should probably use the savings to improve your coverage.... Do not pass Go. Do not collect $200.)

50. Keep track of your cost basis on investments ot save money on taxes when you sell an investment. (This also strikes fear into my heart. I don't buy and sell many mutual funds, but even so, doing this would be a huge PAIN. But they're right. I still nurture a tiny hope that Fidelity is doing it for me. If they aren't they should be.)

63. Don't get divorced. (I'm all over this one.) 

64. Quit smoking. (But if you live longer, doesn't that ultimately end up costing you more money?)

91. Track your spending. If you write it all down, you'll probably spend less. And you'll know exactly where your money goes. (Painful as this one will be, tracking expenses is a sensible and illuminating practice. Even if it's just for a month, you can see how those purchases add up. But if you do it continuously, it starts to seem sad, compulsive and weird.)

I'd like to add one more item to this list:

102. Reconsider your Morningstar subscription.  I pay for an annual subscription so I save over their monthly plan. But I think it will be a long time before I need to buy, sell, or research funds. So, sorry, M'star, you've been great, but you've also inspired me to put a hold on paying you until the economy gets back to, say, 2004 levels.

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