Writer: D'Lyn Ford
LAS CRUCES -- Doing a good job of managing money depends as much on what a family decides not to buy as on what is actually purchased.
Making right choices is only half the job, said Susan Wright, consumer education specialist with New Mexico State University's Cooperative Extension Service. Deciding what to avoid also is important.
Convenience checks offered by credit card companies may seem like good deals, but they will cost more than a regular charge, Wright advised. The interest rate charged for convenience checks is higher than for regular purchases and it is charged from the day the check is written. It would be less expensive to simply charge the items and skip the check-writing step.
"When your credit card company invites you to skip a month's payment so you can pay other bills Ñ think twice," she said. "You will be charged interest on what you do not pay. That amount will be added to your bill, and then you will have to pay interest on the interest."
Some types of insurance also can be avoided to save money, Wright said. For instance, credit card insurance makes sure that credit card companies will be notified if cards are lost or stolen. "You will save at least $25 by making those calls yourself," she said. "The insurer promises to help you avoid having huge bills run up on your account Ñ something that you do not have to worry about. You are responsible for a maximum of $50 of fraudulent charges."
If your family has adequate life and disability insurance, think carefully before buying credit life insurance. Lenders often push credit life insurance, which pays off the debt in case of death or disability. But it is usually more expensive than other insurance and it is not required.
Life insurance for children is something many young parents are tempted to purchase. Often it is purchased with the idea of providing a college fund for the child. But the money would be better spent to increase the coverage for the parents, Wright said. Couples should insure themselves, if they want to use life insurance to fund their child's college expenses. Even this is not the best way to save money for a college education, she added.
In addition, watch out for offers to refinance the family home with a biweekly mortgage company. "The trouble of refinancing and the fee for the biweekly payment service can be avoided," Wright said. "Do it yourself by making one extra mortgage payment each year. Let your mortgage holder know the extra payment is to pay down the principal of your mortgage."
Credit repair firms often promise to remove negative credit information from credit reports for a fee. "You can save hundreds of dollars by checking and correcting your credit report yourself," Wright said. "If you find information that is incorrect, you do not have to pay to have it removed Ñ the credit bureau will do this for you free of charge."
Alert the bureau to the error, and it will investigate within 30 days, she said. People also can add a 100-word explanation for items in credit reports that may have a negative slant. Most major credit bureaus will provide a free credit report to people who have been denied credit based on their report. The fee is usually $8 to check a report to see what it contains.
© 2013 New Mexico State University Board of Regents
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