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Frugal for the future

Many years ago, you could look forward to a new year in which you'd get a raise, your stocks would go up and the value of your house would climb — all guaranteeing that you'd make more money.

In the economy of 2011, it might be wiser to focus on what you're spending.

Fortunately, we are looking at a U.S. economy that could grow at a stronger pace than last year, according to several forecasts. But the unemployment rate is still likely to be high. And many consumers will still be shaking off their financial troubles of recent years.

So we offer 11 ideas for 2011: financial strategies to make or save a little money this year.

If personal finance were fashion, budget would be the new black; getting back to basics, the new vogue.

1. See where you must spend money — rent, mortgage, insurance, student loans, car payments, etc., and then cut back where you can.

"Budgeting is the new investing, in terms of wealth creation," said Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards.

2. Watch your mailbox.

No, not for a sweepstakes check. Be careful to keep the crooks away from your year-end bank statements, 401(k) statements, W-2 forms, 1099s and other financial data that may still be coming by mail. Don't let your mail sit in the box for days; bring it in.

"It's high-value mail for identity thieves," said John Ulzheimer, president of consumer education for

Many people think of identity theft as a high-tech cyber crime, but Ulzheimer said thieves know that they can get lots of data in January out of your mailbox — or even your briefcase — as paperwork is sent out for tax time.

Things to consider doing: Get a locked mailbox. Sign up for statements online. If you're worried, get a free credit report at

3. Use low interest rates to your advantage.

If you can, this could be a good time to refinance your mortgage. Or take advantage of low mortgage rates to buy a house. Or pay off as much credit-card debt as possible. Most credit cards have variable rates, and your interest on past and future purchases will go up when the prime rate or other benchmark rates go up.

"Although mortgage rates have recently increased, it may still be advantageous to refinance ... particularly if you can trade away the uncertainty of an adjustable rate for the predictability of a fixed rate," said Greg McBride, senior financial analyst for

4. Pay attention to your tax bill — and potential tax breaks — long before the April 18 filing deadline.

Ideally, you'd want to calculate what taxes you'd owe as part of your regular monthly budget, Blayney recommends. The idea is to avoid tax-time surprises, good or bad. If you're getting a huge refund, that's money you might have used to avoid credit-card debt — or pay down debt — during the year.

After reviewing your tax situation, you may want to consider altering your tax withholding at work.

5. Pay attention to small, mysterious charges that could cost you an extra $9 or more a month — adding up to more than $100 a year — for such things as club memberships or credit monitoring services.

Edmund Mierzwinski, consumer program director for U.S. PIRG, the federation of state Public Interest Research Groups, said consumers should check their phone bills, as well as credit card and bank statements, each month to make sure they weren't tricked into signing up for some plan that has regular monthly fees.

In December, Minnesota Attorney General Lori Swanson filed a lawsuit against Discover Bank, alleging it deceptively charged some credit card customers for pricey optional products, sometimes by making customers think that they were receiving a courtesy call.

Sometimes people aren't even aware they're paying for such things unless they look at their bills.

You should dispute such a charge immediately in writing with both your credit card company and the vendor that posted it.

6. Plug the leaks.

We're not just talking about pulling out a caulk gun. Look at your receipts, your credit card statements, your bills, and see where you're spending $10 at a pop on basically, well, nothing. Are you constantly taking out money from an ATM where you pay a fee? Could you make that first cup of coffee at home?

Reconsider whether you want to pay for a gym membership, video rental club or other service. Are you using it enough to make it worth the cost?

7. Bump up your savings for retirement. Immediately.

For one year only, in 2011, we're seeing a 2 percent payroll tax cut that will put a little more money into the paycheck. A thought: Why not turn that into an extra 2 percent contribution each week into your 401(k)?

Barbara Weltman, contributing editor for J.K. Lasser in New York, said the 2 percent reduction in Social Security taxes for 2011 on employee earnings will bump take-home pay by $20 for a worker earning $1,000 a week. In a year, that's $1,040 to save.

And it could amount to even more if your employer matches contributions to the 401(k) plan — say 50 cents for every dollar you contribute up to a certain limit.

Here's a payroll tax calculator from to help you figure out what this break means to you:

8. Shop around for interest rates — on a car loan, certificates of deposit, mortgages and other financial products. Don't just opt for the first rate you see.

9. Stop playing along with Suze Orman and asking, "Can I Afford It?" The answer most of us give ourselves is usually "Yes." What's another $10 T-shirt or $20 DVD? The three real questions to ask in 2011: "Where am I going to put this? When will I use it? Why do I even want to buy it?"

10. Take a cold, careful look at your take-home pay. Consider that money as "working income," suggests Bruce Bickel, senior vice president at PNC's wealth-management group in Pittsburgh.

How do you manage it?

Consider using 70 percent for living expenses; 20 percent toward a buffer fund to save for bigger necessities, such as a car, and for emergencies, and 10 percent for longer-term savings, such as retirement or college.

If you're in your 50s or 60s, you'll want to save more toward retirement.

11. Do that one thing you've been telling yourself for years you'd get to. Maybe it's a will, an estate plan, a college fund. Or teaching your teenager how to balance a checkbook. Work hard to pay down debt. Find those old savings bonds and, if they've matured, cash them in. Double-check the beneficiaries on IRAs or 401(k) plans. It's a new year — don't just make a financial resolution. Make this the year you actually follow through with one.

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