Fiscal fitness -- some post-tax suggestions for refunding yourself

Today's "R.O.I." column in the WSJ, "The Do It Yourself Tax Cut," notes:

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.

And offers 14 fairly low-effort ways to put a little more money in your pocket. I've listed them for you after the jump. My editorial comments are in italics.

1. Change bank accounts so your savings are making the best interest possible. The column advises going to Bankrate.com to find the best rates. I did this -- just click on the "checking and savings" tab and see what the going interest rates are in your area.

2. Stop using other banks' ATMs. I cannot believe that this still needs to be pointed out to people in 2008.

3. Brown-bag your lunch. Here, the author and I agree on the practice but disagree on the cost savings. He's estimating that you'll save at least $416 per year if you replace one $8 lunch per week with a homemade lunch. I'm countering that you still have to factor in the cost of the food that you're bringing from home. I'd put the cost of a brown-bag lunch at $3, and I'd assume that your work days amount to 48 weeks, not 52 weeks like the author did. So that's a cost savings of $144 per annum. That's a nice little chunk, but why not embrace brown-bagging by default? Eating out daily could cost you $1920 per annum (assuming $8 per meal and 48 working weeks per year), compared to $960 if you brown-bag it four days per week and go out with your coworkers every Friday. You're halving your lunch costs! Do it!

4. Change your household and car insurance, and raise your deductibles.

5. Sign up for credit cards that give back cash rebates or rewards. The author estimates that you can get back as much as $200 per annum with these. I like the mileage cards, because I can usually "save" more in terms of flights back home.

6.  Get rid of your telephone service. The argument here is that it's silly to pay for both land lines and mobile accounts, so why not ditch the land line and get Skype for your home-chatting needs? I go back and forth on this.

7.  Change your cellphone plan, your provider or both. He's got a point: you can probably negotiate with your carrier for a better deal if you threaten to leave.

8. Rethink your TV costs. Here, he argues, "basic cable, a Netflix account and a DVD recorder can easily save $600 a year." I argue that it depends on how much TV you watch and what you watch. But I can do that, because I've been able to write HBO off as a tax deduction for the past two years.

9. Watch how often you eat out. Quoth the article: "Just cutting one $100 meal, or two $50 meals, a month will save you $1,200 a year." Quoth me: For much of the country, is the advice about cutting out a $100 meal even relevant? I'd like to see the cost savings when a household moves from three QSR meals per week to one.

10. Buy a cheaper car and pay cash. What did not get added: buy a car with decent gas mileage so you can continue to realize lower expenses. Also, I swear by the ratings in Consumer Reports. Get the car issue before you go shopping.

11. Change your investment balance. Fewer mutual funds, more index funds, says he. Also: if you're not maxing out your 401(k) and IRA, you should be.

12. Shop online. The author cites lower costs, so long as shipping doesn't offset the savings. My note: yes, e-commerce is often easier and may be less expensive, but if you're shopping for a gift for a faraway recipient, be sure to compare any shipping costs against what you'll pay at the USPS and plan accordingly. Sometimes buying locally and using the Post Office is a better deal.

13. Stop buying so much crap. His estimated savings per annum for this step are around $500. My editorial comment: Or five of those trips to Target where you plan to  just go in for a bottle of Method cleaner and  you roll out a full trolley, wondering, "What just happened in there?" (I do not let myself go to Target without a list because of this phenomenon.)

14. Save energy. I am one of those people who gets uncomfortable if I'm in a house and there's a light burning in an empty room. You have no idea how many times I've been a guest somewhere and have had to remind myself that it's rude to turn off the host's lights in a room nobody's in. But seriously -- check your electrical and water consumption and watch the bills drop.

Comments

[Brianne]

I think the eating out theory is similar to the latte theory. I don't spend all that much money when I eat out and I spend much more in groceries when I try to make healthy meals over the weekend with the idea of eating the leftovers for lunch all week.

If you weren't already buying that latte each day, then you were never spending the $3 in the first place.

And I'm tired of being told I should max out my 401K and Roth IRA each year. Maybe when I'm out of credit card debt, have a paid for car, and clean up my $30K in student loans. But for now, I just can't afford to put away 1/3 of my income (i.e. $20K) in retirement.

[TA]

There are also banks that refund any ATM charges you incur by using other banks. I haven't paid an ATM fee in years, and I use whichever machine is closest.

[Jecca]

I second that, TA. USAA doesn't have brick-and-mortar branches, so they refund all fees and you can deposit checks by scanning them and sending images (haven't tried that yet -- still mail 'em in).