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Surprising ways you can save $5,000 this year

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As we begin a new year, you may still find yourself reeling from the budget-busting holidays. After all, who can resist the smiles generated by all those glittering gifts? The good news is that January provides a clean slate for you to renew your commitment to your financial goals by setting spending limits and looking for new ways to save throughout the year.

You’re probably tired of hearing that the only way to get ahead financially is to give up that daily outing to your favorite coffee shop or your periodic visits to the salon. However, with a little strategic thinking and some discipline, you may uncover several new ways to save that won’t cramp your style. From the inner workings of your home to the checkout line of your favorite store, consider these untapped opportunities to realize unexpected savings — up to $5,000 this year alone! Sound impossible? There’s only one way to find out, so take a look:

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Consumer calendar: The year’s best deals

Did you know that April is the best month to buy a laptop, and October is the time to invest in a gas grill? By using these month-by-month guidelines from Consumer Reports, you can score the best deals on essentials for your home and family:

January: Linens, toys, winter clothing

February: Humidifiers, indoor furniture, treadmills and ellipticals

March: Small electronics, TVs, winter sports gear

April: Digital cameras, lawn mowers, spring clothing

May: Athletic gear, carpeting, mattresses

June: Pans and dishware, summer sports gear, swimwear

July: Indoor and outdoor furniture, swimwear

August: Air conditioners, backpacks, snow blowers

September: Bikes, shrubs and perennials, small electronics

October: Computers, gas grills, winter coats

November: Baby products, GPS navigators, toys

December: Home appliances, toys, TVs

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Fortify your 401(k)

Stretch your savings even further by automatically contributing to your 401(k) plan. Unlike other savings and investments, most plan contributions are deducted before federal income taxes — which reduces your taxable income.
Savings potential: $750

Without
401(k)

With 401(k)

Annual Salary

$50,000

$50,000

Your Annual Pre-Tax Contribution

$0

$3,500

Net Salary After Contribution

$50,000

$46,500

Estimated Federal Income Taxes

$5,719

$4,969

Total Saved for Retirement

$0

$3,500

Estimated Current Tax Savings

$0

$750

In your home

  • Keep your house humming for less. With few exceptions, when it comes to your laundry, cold water gets the job done. What’s more, a $3 investment in a hot water temperature card can help you fine-tune the temperature to the ideal zone of 120-130 degrees — and for every ten degrees you lower it, you’ll save $10 a month1. The same applies to your thermostat during colder months; for every degree you turn it down, you’ll save three percent in home heating costs2. A home energy audit — typically a free service from your utility company — can identify areas where money might be flying out the window and outline steps for making your home more energy efficient.
    Savings potential3: $570
  • DIY. Many simple home repairs don’t require a garage full of high-tech tools or an electrician’s license. Before dialing up your handyman when something needs to be repaired, take a little time to determine if you have the skills and the time to fix it yourself. By tackling common household problems yourself — such as clogged drains — you can reduce costly house calls and the labor charges that go with them.
    Savings potential4: $600
  • Put it in a jar. The coins and small bills left in your pocket or wallet at the end of each day can add up to big amounts over time. Every time you find yourself with $5 in hand, you can drop it in a jar; and toss in your loose change while you’re at it. The savings will accumulate in no time.
    Savings potential5: $330

Potential savings in your home: $1,500

On the road

  • Keep your motor running. Skipping regular maintenance like oil changes or tire rotations may be tempting, but it can end up costing you more over time. For example, when two pounds per square inch (PSI) of air pressure seep out of your tires, fuel efficiency drops by one percent, which can add up to around $76 per year6. Also, try cleaning out your car — toting around unnecessary items can increase gas and maintenance expenses.
    Savings potential7: $600
  • Fly frugally. When shopping for airline tickets online, when and how you browse matters. For the best bets, begin looking online 50-100 days in advance of your trip, and consider midweek or off-season travel. Also, keep an eye on your browser cache and be sure to clear it before you conduct a new fare search. If a search engine is keeping tabs on your airfare search, it may hike prices.
    Savings potential8: $255
  • Save on your stay. When it comes to booking a hotel, procrastination can often pay off. Though you’ll need to be patient as you hold out for a last-minute deal, look for apps and web sites that let you book hotel rooms up to one week in advance, with big discounts. Eleventh-hour calls to the hotels themselves can also yield money-saving deals.
    Savings potential9: $239

Potential savings on the road: $1,094

At the doctor’s office

  • Walk in. When a sore throat or stuffy nose gets you down, a visit to your primary care doctor might not be necessary. If you’re experiencing routine symptoms, consider heading to a walk-in clinic — they’re typically more convenient and less expensive than a full service medical practice, and may save you both time and money.
    Savings potential10: $180
  • Avoid sticker shock. According to the Medical Billing Advocates of America (MBAA), as many as 80 percent of medical bills contain errors11, which often go unchecked and can lead to medical debt. By carefully reviewing your medical bills and asking your doctor’s billing specialist to explain costs, you can prevent potential billing errors from impacting your credit.
    Savings potential12: $579
  • Shape up for less. If treatment for a medical condition includes exercise, check with your health plan to see if it will discount that gym membership with a doctor’s referral. In fact, some health plans cover up to 60 percent of gym membership fees (even without a referral) so don’t hesitate to ask — you might uncover a discount that’s good for your health and your wallet.
    Savings potential13: $360

Potential savings at the doctor’s office: $1,119

When you shop

  • Use what you have. The average American throws away up to $44 of food each month14. To break the cycle of waste, try formulating a meal plan with an emphasis on what’s currently in your pantry before you hit the grocery store. At the store, stick to your list to avoid impulse buys that may get tossed.
    Savings potential15: $529
  • Shop your closets first. Studies show we return almost nine percent of what we buy16, often because we have similar items already hanging in our closet. Before shopping, take inventory of what you have, and keep receipts so you can exchange or return what doesn’t work. While you’re at it, double-check your medicine cabinet before you peruse the makeup aisle. Women spend upwards of $600 per year on personal care products, with one study showing that up to 83 percent of them go unused. To avoid kissing more money goodbye, first see how many lipsticks linger on your shelf before reaching for that new cosmetic.
    Savings potential17: $642
  • Use your gifts. Consumers shell out an average of $174 on gift cards18 annually, so chances are you’re carrying at least one in your wallet. Yet Americans have accumulated billions of dollars in unused gift cards — which is like carrying around cash that you never spend. If you have pre-paid plastic in your wallet, capitalize on money that has already been spent by using it first.
    Savings potential19: $144

Potential savings when you shop: $1,315

Savings summary

Potential savings in your home: $1,500

Potential savings on the road: $1,094

Potential savings at the doctor’s office: $1,119

Potential savings when you shop: $1,315

GRAND TOTAL: $5,028

While these ideas will start you down the path toward savings, with a little creativity, you can likely find even more ways to pocket extra cash. Better yet, watch that $5,000 grow by directing it toward your savings or investment accounts. Consider this: If you save an extra $100 each month for just five years, you may have enough to cover a full year of tuition and fees at a public college20. Now, that’s money well saved, with dividends you’ll appreciate for years to come.

Learn more and take action

  • Feeling motivated? Bank of America has even more money-saving tips for you to consider.
  • If your 401(k) is with Merrill Lynch, visit Benefits OnLine® at 401(k) > Current Elections > Contribution Rates > Change Contribution Rate to see how increasing your contribution rate could impact your take-home pay.
  • Check out this video series for real people’s thoughts and tips on ways you can organize your finances, prioritize your goals and create a healthy financial life.
 
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1 Association of Energy Services Professionals.

2 Energy Information Administration.

3 Calculated based on: water temperature ($10 month for every 10 degrees) x 12 months = $120; heating costs by lowering thermostat - 3% lower costs for every degree x 3 degrees x $1024 (average cost of natural gas heat per year) = $90; home energy audit — savings found by homeowner on energy.gov = $360.

4 Calculated based on average cost of unclogging a drain x 3 times a year; source: Angie’s List.

5 Calculated based on $20/month x 12 months + $90 average household stray change per year; source: Reader’s Digest.

6 Discovery.com.

7 Calculated based on average cost of four new tires; source: Angie’s List.

8 Calculated based on $85/ticket for domestic flight x 3 people (average size of American family); sources: Expedia Air Travel Trends, Census Bureau.

9 Calculated based on 25% off average American Hotel rate of $137/night x 7 nights; source: Hotels.com Hotel Price Index.

10 Calculated based on $45 savings/visit x average four times a year; source: Convenient Care Association.

11 https://www.aarpmedicareplans.com/aarpoptum/worried-about-errors-on-your-medical-bill.

12 Calculated based on average amount of medical debt in collections; source: Consumer Financial Protection Bureau.

13 Calculated based on fee of $50 a month; source: Forbes.

14 Natural Resources Defense Council.

15 Calculated based on $44 x 12 months; source: Natural Resources Defense Council.

16 National Retail Federation.

17 Calculated based on $144 in annual savings from unreturned, unused items + unused personal care items = 83% of $600; sources: Reader’s Digest, Princeton University, Redbook/escentual.com.

18 National Retail Federation.

19 Calculated based on average card value of $48 x 3 cards; source: Reader’s Digest.

20 YWCA report, “Beauty at Any Cost”.

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