Suze Orman’s 6 Top Tips

Getting the very most out of the money you have requires big picture thinking. With that in mind, here are six terrific long term strategies you can put into play right now to save yourself thousands of dollars per year.

1. Reassess your home.

   Get a reassessment of what your home is worth now, because it’s likely not worth nearly as much as it was a few years ago. And if you bought during the home buying frenzy of 2005-06, it may have lost 40% to 50% of its value. So get an accurate assessment of its current value on the books. Why? It could save you thousands in home insurance and taxes paid. A friend in West Chester, PA., bought her home at the peak of its sales history – and paid all of the taxes that came with it. I persuaded her to get a reassessment. As a result, she’s saving $5,000 in taxes a year.

2. Update your insurance.

   Many people have one company that insures their home and another that insures their cars. Big mistake. You can save 10% or more in premium costs by having both with the same company. Just ask for a new rate quote to check out how much less you’ll pay.

Another point to consider is that it’s a good idea to increase your auto deductible to $1,000. Why? Because car insurance should cover only major damage, not scratches or dings. If you make a habit of claiming small stuff, you’ll see premiums rise dramatically or your insurer will drop you.

3. Diversify your savings.

   If you are eligible for a company 401(k) or a similar retirement plan, contribute the maximum that your employer will match. Anything less is leaving money on the table. After that match amount, contribute nothing because tax rates are as low as can be right now. If you have extra money to invest, put it in a Roth IRA instead. Although your contributions are taxable income now, the Roth is great because your investment earnings can grow tax-free. If you’re investing in the long haul, not being subjected to the possibility of higher income taxes is a big plus.

4. Increase your exemptions.

   Many folks are thrilled to get a $2,000 or $3,000 refund from the IRS each year. But think why you’re getting it: You’ve overpaid taxes and given Uncle Sam an interest-free loan! At the same time, many Americans are carrying huge credit card debt with interest rates of 8% to 32%. Reducing your tax refund from $3,000 to zero will effectively get you $250 a month to pay down that savings-robbing debt. You can reduce your tax refund by increasing your withholding allowances through your employer.

5. Say “no” to store cards.

   With the holiday shopping season ahead, many retailers are now soliciting customers to sign up for a store card to save 10% on their purchases. So shoppers sign up and spend the entire credit limit−say, $500−just to save $50. But these store cards carry higher interest rates (like 21% or more) than standard cards. And guess what? The more store cards you have maxed out, the worse your credit rating will be, which means you’ll be charged more to borrow for a home, car or whatever you need.

6. Borrow wisely for college.

   With the credit crisis, banks are less likely to give private student loans, so students are getting their parents to cosign. Keep in mind that interest on a private student loan is averaging 12% now according to Forbes. But a PLUS loan, which parents can take out in their own names, is fixed at only 8.5% interest. Also, if your child will enroll in college in the next five years, make sure your investments are in safe, fixed interest generating options, not in stocks.