Smart Buying

Don't Waste Your Money: Life Happens

You took your eye off the ball.

TIPS 22-26

Tell it to the judge

When I was Kiplinger's car writer, I got a new vehicle to test every week. And if I was putting, say, a Porsche 911 Turbo through its paces, I sometimes lost track of my speed. I got caught going more than 20 miles per hour over the speed limit -- reckless driving in most states -- three times in a four-year period. Reckless driving results in more than a stiff fine; it can also jack up your insurance premiums for three to five years. I went to court twice and had the charge reduced. Judges really have heard every excuse in the book; they showed me leniency because my record was clean for the previous year. I had to pay the full fine, but my premiums didn't budge. -- Mark Solheim

Late fees on bills

If you pay a stack of bills every month, it's easy to overlook one or two every now and then. But if you miss a credit card payment by even one day, you will pay a late fee of $25 ($35 if it's the second time in six months). Solution: Track your bills at budgeting sites such as Mint.com and Yodlee Moneycenter and set up payment alerts delivered via e-mail or text messaging. Want to pay at the last minute? Go to the credit card Web site and enter your checking account information. You can now pay by phone, too, without paying a fee -- as long as you don't speak to a live human. Have a long track record of on-time payments? Call customer service and ask to have the fee waived.

Broker-fee bloat

Many brokers have added small fees for sending paper statements or for sending copies of old statements. Vanguard has the fewest and least-costly nuisance fees. But its commissions for buying and selling bonds and options are on the high end. OptionsXpress and Zecco are the all-around winners on costs. If you invest in mutual funds, you can find plenty of brokers that will let you buy and sell funds without paying a transaction fee. Charles Schwab and Muriel Siebert each offer 2,000 mutual funds without transaction fees, while TD Ameritrade and Fidelity offer about 1,700 each.

Fund expense creep

A fund's expense ratio seems inconsequential when considered on a year-by-year basis. If you pay, say, 1% versus 0.9% on a $10,000 account, that tenth of a percentage point costs just $10a year. But investment expenses have a way of creeping up on you because your account isn't going to be worth $10,000 forever.

When you've got $100,000, that tiny difference costs you $100. Over 30 years, a minuscule 0.1-point difference adds up to $5,546, assuming that you started with $10,000, added $100 to the account each month, and earned an average of 8% annually (before fees). At least do an annual check to see if the fund beats its index by enough to cover the added cost. And consider Kiplinger's list of our favorite 25 no-load funds -- with low expenses.

Sagging credit score

Letting your credit score slip can mean sinking thousands of dollars more into interest payments -- particularly if a blemished score drives up the rate on a new mortgage. To lift your score into the stratosphere, pay all of your bills on time -- even if you pay only the minimum -- and keep your credit-utilization ratio (the amount of money you owe on your cards as a percentage of total limits) at 30% or less.

See more ways to stop wasting your money.

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