Worried about how you're going to pay for the holidays? Here's a plan: Find painless ways to save on things you pay for all year. There are plenty of opportunities, if you know where to look.
"If you treat a few big things as discretionary purchases and shop around, you can save hundreds of dollars," said Steve Krenzer, president of Experian's interactive media group, which operates LowerMyBills.com.
Here are five money-saving ideas. Few people will be able to take advantage of them all, but even one or two could help recoup the $431 Americans expect to spend for gifts on average this holiday season.
Refinance your home: Interest rates on home loans have remained naggingly high -- between 6% and 7% -- for most of the last two years. But in the last week rates dropped significantly, said Jeff Lazerson, president of MortgageGrader, a Web-based loan company. That spells opportunity for anyone who bought or refinanced a home in the last two years -- or anyone with an adjustable-rate mortgage.
Fixed-rate, 30-year mortgages with no upfront fees were going for 5.75% early this week, Lazerson said. For someone paying 6.25% now on a loan balance of $500,000, refinancing into this loan would save $161 a month, or about $1,930 a year.
Of course, if you have little or no equity in your property because of tumbling home prices, you won't qualify for a new mortgage. You'll also have to document your income.
It's worth noting that you can get an even lower rate -- 5.25% -- if you are willing to pay upfront fees, called points, and closing costs. But those fees can easily run thousands of dollars. And it would take 18 months of reduced payments just to recover that cost, Lazerson said.
Unless you're certain you won't refinance again or sell your home in that time, the no-cost loan is the better deal.
Appeal your property tax: Although the slide in housing prices might prevent you from refinancing, the downturn can be a benefit when it comes to your tax bill.
Property taxes are usually tied to a home's assessed value. If you bought your home when prices were in the stratosphere, then chances are your home's assessed value is significantly higher than its current market value. This would also be the case if your assessment was raised during the housing boom -- if you live in a state where assessment increases are allowed. (They're not in California.)
