What would it feel like to open your wallet and find hundreds of dollars you didn't know you had? What if your money multiplied like that month after month?
It's not magic or marketing hype -- it can be done. Pinpricks in your financial life, however, can turn into massive money-gushers. Patching these holes while they're still manageable is the key to achieving wealth.
The problem is that it's easy to ignore the tiny cracks. We're busy -- there's the mortgage, credit cards, insurance, college savings, carpools, vacation plans, retirement accounts, work benefits, the kids, cat, guinea pig. So the little stuff is relegated to the back burner. We think:
- What's the harm in following the payment plan the lender has laid out?
- Why go to the trouble of moving your portfolio to a cheaper brokerage house just to save a couple of bucks per trade?
- Who cares how our 401(k) is paid out after we leave a job, as long as we take it with us?
Those three small, seemingly innocuous money issues -- everyday financial decisions that pop up regularly -- can end up costing thousands of dollars a year. Consider the following:
- It'll take you 10 years and cost you an additional $10,000 in interest alone on a $10,000 credit card balance if you pay only the minimum amount required.
- The difference between 10 trades at a full-service broker and 10 at an online discounter is more than $600. That's $600 of your money lining your broker's pocket, not multiplying in your portfolio.
- Say sayonara to 35% or more of your 401(k) balance to taxes (the early-withdrawal penalty plus ordinary income tax) if you cash it out instead of rolling it directly into an IRA.
See how easy it is for slow leaks to turn into big money blowouts?
Caulk your cash leaks
Imagine those little leaks draining money from your bank account a dozen times over, month after month.
That's what we did when we developed a new service called Motley Fool GreenLight. Why "GreenLight"? A green light is the universal signal to move forward -- the all-clear sign that it's time to advance. When it comes to finances, however, the directions aren't always as clear. People become paralyzed by the number of choices they face. Or they get sideswiped by unexpected -- or even expected -- life and market events.
Each month, my co-Fool Shannon Zimmerman and I scour the world of personal finance and distill all the noise into easy-to-follow, immediate recommendations that will put money in your pockets and make it grow.
In addition to the monthly newsletter, there's a companion website packed with tons of helpful background info (organized by life stages -- e.g., "singles," "couples," "families," and "empty nesters" -- and topics); hands-on Get It Done Guides; and a crowd of Fools on the GreenLight boards willing to chime in on just about any money topic under the sun. We've organized it so you can easily find answers to your most pressing personal-finance questions ...
- Getting ready for retirement? Time to dial down your exposure to growth stocks and consider picking up some dividend-payers like Coca-Cola
(NYSE:KO)and Citigroup (NYSE:C)that have stable, long-term track records.
- Just had a child? Congratulations. It's never too early to start looking into ways to save for college.
- Need to allocate your assets better? One common mistake is that young people allocate far too much of their portfolio to bonds. For guidance, take a look at Vanguard Target Retirement 2045
(FUND:VTIVX). It holds 10% of its assets in bonds and 90% in equities. What's more, more than 15% of the equity portion is stashed in international stocks such as Taiwan Semiconductor (NYSE:TSM), TevaPharmaceuticals (NASDAQ:TEVA), and Toyota (NYSE:TM).
- Searching for the best deal to refinance your mortgage? Good choice. Although interest rates are rising, they're still at historical lows.
- Looking to boost your savings? There are lots of ways -- like carrying cash instead of using credit cards -- to keep more of the money you earn.
Of course, there are tons of financial questions out there, and we want GreenLight to be your go-to source for trusted, conflict-free, easy-to-act-on money advice. We're dedicated to showing you how to make the very most of the money you make -- step-by-step, month after month.
Hey, there's $450!
Our No. 1 goal with GreenLight is to save you time and money -- to identify the big gushers in your plan and help you quickly plug the leaks. Our mandate with every issue is to unearth at least $450 in money you didn't even know you had.
Where's all that dough hiding?
In your bank account. With interest rates rising, there's no need for your everyday money to languish in a low-rate checking account.
In your insurer's profit margins. You may be able to slash your insurance tab by deep-sixing three kinds of useless policies -- credit card insurance, life insurance for a child, and mortgage insurance.
In Uncle Sam's pocket. The retirement tax credit is one of the most beneficial tax breaks available for those who qualify. Shockingly it's also one of the most overlooked -- even some tax pros miss it when completing their client's returns.
Our first issue doled out more than $10,000 of money-making and money-saving secrets. We highlighted tax paperwork tricks ($438), one fund and two stocks that have walloped the S&P over the past 10 years (turning $1,000 into nearly $6,000), and a simple trick for shaving 60% off your grocery bill. Issue two -- hot off the presses! -- could stuff your wallet with an extra $7,200. (FYI: Your subscription includes access to back issues and much more.)
Start counting your extra cash
When it comes to your finances, those seemingly undetectable cracks in your checking account, portfolio, bills, and rainy-day fund can seriously sideline your dreams. Let us help you patch them up.
Dayana Yochim gets giddy every time she finds a $5 bill in her coat pocket. She can hardly contain herself when she finds ideas for GreenLight thatnet readers fistfuls of cash. Dayana does not own shares of any company mentioned in this article. Coca-Cola is a Motley Fool Inside Value pick. The Fool's disclosure policy is priceless.