You Can Find Extra Money to Save

Financial-planning articles often recommend cutting down on expenses by giving up your daily latte and bringing your lunch to work. Those steps will save you some money. But there are other ways to save hundreds—or thousands—of dollars without having to make daily sacrifices. These strategies can help.

Take advantage of all tax breaks. The savers' tax credit could reduce your tax bill by up to $1,000, for example, but many people don't know about the write-off. Read "Three Tax Breaks When Starting Out" for opportunities to increase your refund. Once you receive your refund, invest it.

Boost insurance deductibles. Raising your auto and homeowners insurance deductibles to at least $1,000 can lower your premiums by 15 percent or more.

Pay off high-interest credit cards. Increasing your payments can save you a lot of money. If you have a $5,000 credit-card balance with an 18 percent interest rate and make only the minimum payment each month (4 percent of the debt, which would be $200 for the first month), it would take 12½ years to pay off the balance and cost $2,916 in interest. Bumping your payments to $500 a month would pay off the debt in less than a year and save more than $2,000 in interest.

Benefit from rebate cards. Some of the best rebate cards can give you as much as 5 percent back on your purchases. Search for rebate or cash-back cards that don't have an annual fee, and pay off the balance every month so you won't owe a dime in interest.

Earn more interest on savings. Instead of keeping your emergency cash in a no-interest checking account, move some cash to a top-yielding money-market or savings account. Also check out certificate of deposit rates for money you won't need for a year or more.

Save more at work. When you make pre-tax contributions to your 457, investing $200 per month reduces your paycheck by only $150 if you're in the 25 percent tax bracket. Continue at that pace and you'll have more than $350,000 in 35 years, if your investments return 7 percent per year. Increase your savings when you get a raise—before you get used to having the extra cash.