Ask:
I know that this might be a silly question, as we're all here to figure out how to get a cart of groceries for $5, but DH and I have been discussing what we want to do with our upcoming tax refund. One thing I've thought of is to pay our car insurance in full for the year. It would save us per month, giving us the money for groceries, etc. Any other thoughts? Has anyone paid anything like that in advance or does anyone manage to pay ahead/over for things? Or is this a silly question?
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Totally NOT a silly question! Actually, think how much money you will SAVE as you are not dishing it out once a month. I actually discussed this with my dh as well, and we will be paying a few things in advance as well. I'm going to pay my phone, cable and insurance ahead to make my monthy headache go away somewhat.
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Not a silly question at all. We've done it in the past as money allows. This year I want to take my tax refund and pay off our vehicle.
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That is a great idea- especially if your insurance charges you service fees for paying monthly- you should check with them and see if you can get a discount for paying the full year. We usually pay 6 months at a time- because I hate paying those little service charges! Also one thing to consider if your tax refund is huge is redoing your/or your spouse's w4 at work. If you are getting a huge refund you have basically given the government a tax free loan for the last year. If you could get that money back over the year and save it even in a small time savings account- your money is working more for you- just my opinion.
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The only way I will do that is if I will make less on interest over the course of a year than I would to go ahead and pay it.
For example, if I have $3 fee every month to pay it that way and an interest rate that is low, then it would be worth it to pay ahead. If you can put the money in a CD for 12 months at 5% or higher, it probably would not. It just depends how much you pay.
I pay our property taxes in full four months before they are due because we get a rebate if we do that. This year might be the first year it isn't cheaper to do it that way since CD rates are so low. I will look at it when it gets closer (November).
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I would go ahead and pay it. That way it is one less bill to stress about - I always love when I can pay things early!
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I would do it...Our Ins co. charges a $3 fee to do installments, we well as our homeoners, so not only would we save a monthly headache, we'd save $72 a year...hmm... I may just have to re-visit that thought after we get our return!
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we are right now trying to start that... it gets rid of later fees too! Beware though, making extra car payments (unless you pay it off) usually go to the payoff amount and doesn't keep you from having to make a monthly car payment. I found that out the hard way. It's a GREAT idea IMO
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We only pay ahead if we don't have any outstanding credit card debt, which by the end of the week will be the case again (wedding FINALLY paid off). We generally pay ahead on loans that charge interest (car, mortgage and student loans). By paying ahead on those you can save a significant sum over the life of the loan (especially on a thirty year mortgage).
We also save to buy oil in advance of the heating season. You get a big discount around here if you buy that in advance.
We generally don't pay ahead on monthly expenses because there isn't any benefit for us. We aren't earning interest on the money anymore and there isn't any benefit to us other than having the money out of hand. If that is a concern you could set the money aside in a separate savings account and then transfer in one twelfth each month to put toward bills. That way you are still earning interest, but the money isn't sitting in your normal account tempting you to spend!
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It would be a great idea if you already had an emergency fund in place. Also, after the year of pre-paid insurance (if you go this route) will your insurance company let you go back to monthly payments, or will you be obligated to make once a year payment from here on out? Something to ask your insurance company about.