The Wall Street Journal
R.O.I.
By BRETT ARENDS
The Do-It-Yourself Tax Cut
April 21, 2008
Nobody likes paying taxes, but the way we Americans complain about them
you'd think they were the only way we're getting skinned.
Reality: We're getting nickel-and-dimed all the time, and in lots of ways we
don't even notice. And yes, it really adds up. If we counted the cost, most
people would be stunned.
OK, tax is center stage right now. Last week was April 15. This week will
come "tax freedom day," the notional point in the year when the average
citizen starts working for themselves. Many people are eagerly awaiting
their rebates and their $600 stimulus checks. (Note: Thanks to the deficit,
these aren't really rebates. They're just loans from your kids. Something to
think about before you blow the money on a flat-screen TV.) And the
presidential campaign may very well hinge on taxes and how to balance the
budget.
So here's a radical idea: A do-it-yourself tax cut.
Don't wait for the politicians to pass a law or some bureaucrat to mail you
a check. Don't wait for Uncle Sam to put more money in your pocket. Here are
14 ways to do it that you do tomorrow on your own.
1. Change bank accounts. You could be earning at least 3% interest on the
balance in your checking account. Instead you're probably earning virtually
nothing -- and maybe paying a "relationship" or "account maintenance" fee
while the bank has free use of your money. Bankrate.com tracks the best
deals around. Savings: An easy $100 a year. At least.
2. Stop using other banks' ATMs. Sure it's a pain to have to remember to go
your own bank and get enough cash. But you'll live. If you use other banks'
ATMs you may be getting dinged for fees twice -- once by that bank, and one
by your own. It adds up. Do it three times a week and it could easily cost
you $300 a year.
3. Brown bag it to work. No, I'm not kidding. Just look at the sandwich
shops near your office every lunch hour. They're probably packed, recession
or not. But if you spend just $8 a day extra eating lunch, that costs $2,100
over a year. Do the math. Just brown bagging once a week, at an $8 saving,
saves $416 a year. That's from making your own sandwich once a week.
4. Change your household and car insurance. Shop for a better deal. And
raise your deductibles. Savings: Maybe $200.
5. Sign up for rewards credit cards. Outraged at what you're paying for
groceries and gasoline? You can often get 3% back on a lot of purchases by
signing up for the right cards. It sounds trivial, but these are real
savings. Savings: Maybe $200 a year.
6. Get rid of your POTS. That's "Plain Old Telephone Service." If you
already have high-speed Internet at home, why are you also paying $40 a
month or more for a phone? Switch to a Voice Over Internet Protocol provider
like Skype. It costs a few cents a call. Easy saving: At least $400 a year.
7. Change your cell phone plan, or your provider -- or both. You're almost
certainly paying too much. If you don't believe me, call your provider and
threaten to leave. I'll bet they offer you real savings to stay. What does
that say about your current bill? Some companies -- like T Mobile -- are
competing aggressively on price. There are plans that can stop you getting
skinned when you go over your monthly minutes. Most people can probably save
a couple of hundred bucks a year on their bill. And while we're on the
subject, do you want the latest phone with all the bells and whistles? Fine,
that will be $200. Alternatively you could keep your old phone, and sell the
subsidized new one to some other sucker on eBay. That's worth another $100 a
year. Total savings: Maybe $300.
8. You pay how much for TV? When you count the cable or satellite service,
often in several rooms, premium channels, and TiVo, some people spend well
over $100 a month. Basic cable, a Netflix account and a DVD recorder can
easily save $600 a year. And DVDs come with an amazing new technology that
lets you watch them on any room in the house at no extra fee. You pick the
disc up and carry it."
9. The biggest waste of money for most people? "No. 1 on the list is eating
out and drinking out," says Jan Geiger, a veteran financial planner in
Atlanta, Ga. "That's absolutely, by far, No. 1." She says most people never
add it all up. When she makes her clients do just that, "They usually freak
out. It can easily be $400, $500 or $600 a month." No, you don't have to
live on noodles. Just cutting one $100 meal, or two $50 meals, a month will
save you $1,200 a year.
10. Buy a cheaper car and pay cash. Yes, that brand new luxury car says
"smart and rich." Unfortunately, it only says that about your car dealer.
About you it says "pretentious, and probably in debt."
11. Change your investments. If you're like most Americans, a lot of your
money is invested poorly. That means you're not maximizing your investment
in tax-free vehicles like 401(k)s and IRAs. And it means you're paying
rip-off fees for mediocre mutual funds. Few are worth them: Most of the time
you're better off in index funds. Savings: maybe $500 a year.
12. Shop online. When you see something in the stores, don't buy it. Go home
and check out the price online. I'll bet it's a lot cheaper, even when you
include the shipping. You may also skip state sales tax. Sometimes the
savings can be staggering. And if you get an online loyalty credit card,
such as the one offered by Amazon, you can save an extra 3%. If you just
save 10% this way on a mere $2,000 worth of spending a year,
congratulations: You have just made $200.
13. Cutting out crap. Remember before we paid for "iced tea" and water? And
half of what people buy has no obvious purpose or merit. If you don't
believe me, go to the mall and look around. And most gifts are a total waste
of money. I'll bet the typical household could save $500 a year just cutting
out crap.
14. Stop wasting energy. No, you don't have to shiver through the winter or
swelter in the height of summer. But a handful of simple steps can probably
save you $200 a year. Among them: Switching off electronics at the socket
overnight so they don't keep draining power.
These are only ballpark figures. The actual savings will vary enormously by
household. But just the steps above can save a household thousands a year.
That is, for most, a far bigger number than any tax proposals you will hear
about in the campaign.
This is not a political column. The debate about higher taxes or lower
spending can be carried on elsewhere. But it does seem to make sense to
tackle costs everywhere we find it, and not just in our tax bills.
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>>> 911 service?
>>>
>>
>> I must ask, how many times a year are you calling 911?
>i've never called 911, but if i should have to, i'll be happy
>to have it.