Making New Year’s resolutions can be a bit like popping the cork on New Year’s Eve and watching the fizz go flat before the hangover happens. Studies reveal that about 60% of all people who set goals for the New Year throw in the towel before February rolls around, and that can trigger a sense of personal failure. We definitely don’t want that to happen. Here are some foolproof ways to keep your promises to yourself to save money in 2016, without fail, for a more rewarding and prosperous New Year.
Get the Jump on Interest Rates
The Federal Reserve just implemented the first rate hike in almost a decade, which is going to have a huge financial impact on consumers this year. But the greatest impact won’t be felt until the middle of the year, so if you need to borrow, take advantage of historically low rates before they go the way of the dinosaur and become extinct. For example, a savings of just one percent on a 30-year, $250,000 mortgage, adds up to a total savings of approximately $50,000 over the lifetime of the loan.
Split Up Your Mortgage Payments
Another tried and true strategy to reduce the principal balance on your mortgage and to save tons of interest: send a payment every two weeks. Don’t worry—you don’t double your payments to pay twice as much. Instead, you simply divide your normal payment into two increments, so the amount you pay each month remains exactly the same. By paying half of your payment every two weeks, you wind up paying a full extra month’s worth of mortgage payments each year.
How is that possible? It’s because of how our 52-week, 12-month calendar operates. As you know, some months have five weeks in them, not four. Thus, if you pay every two weeks for 52 weeks, you actually make 13 monthly payments—not just 12. Check with your mortgage service company and ensure they don’t charge a fee to process two payments a month. Most of them are happy to get half of your payment early, so it shouldn’t be a problem.
Leverage Your Health Insurance to Stay Fit
Many major health insurance providers offer free wellness programs or reimbursements to help you meet goals such as weight loss or smoking cessation. Some policies even cover alternative therapies such as acupuncture, biofeedback, and visits to a chiropractor. Under the Affordable Care Act, or “Obamacare,” for instance, your health insurance likely covers the cost of a gym membership. That helps you to keep two New Year’s resolutions at the same time: you can save money while taking care of your health. Talk to your insurance company to find out more.
Combine Smart Habits with Smart Technology
You can also avoid payment of unnecessary fees and penalties when you use online credit card features. Go to the preferences section, and you can set up alerts to notify you by text or email whenever your balance exceeds a certain dollar amount. This helps to ensure that you never miss a payment—an event that triggers significantly higher interest rates on your balance and damages your overall credit. To really amp up your savings, why not set up an automatic draft from your checking account into a money market savings account or IRA? That way funds will be swept into the piggy bank every month, right off the top, before you have an opportunity to spend that hard-earned cash. You can start with virtually any amount and then try to increase it over time.
Credit cards don’t have to be financial liabilities, either. With a reliable rewards card, you can earn cash back on every transaction. Pick a card with no annual fee, and get in the habit of paying off the balance every month before it’s due. That way you never pay interest or fees, but you do earn the rewards. One of the best options for this kind of strategy is the Double Cash card from Citi Bank. You earn 1% cash back on every purchase. Then, when you pay off your balance on time, you are rewarded with another 1% cash back, which is a great incentive to help you stick to your financial goals.