Slash Your Bills (page 4 of 5)

Taxes and Inflation Issues

7. Fight City Hall
Property taxes are on the rise across America, thanks to higher home values and cutbacks in state budgets that shift more school costs onto cities and towns. The tax bills can be whopping, but they are also subjective, based in part on an assessor's educated guess as to the value of your home. Experts say anywhere from 30 to 60 percent of homes are overvalued, costing homeowners hundreds or even thousands of dollars a year.

Yet few homeowners bother to challenge their assessment, for a number of reasons. Often the tax is lumped into the mortgage payment, so people don't notice it. Still others assume that "fighting city hall" is futile. Finally, communities have a sneaky way of placating homeowners: Many assess homes at a reduced percentage of the actual value, so when a homeowner receives a notice that his $300,000 home is assessed at $200,000, he thinks he's getting a good deal. In fact, he may not know that the town assesses at 50 percent of actual value, so his house should really be assessed (for tax purposes) at $150,000.

People who challenge their assessments stand a good chance of winning. About 40 percent did in Nassau County, New York, in 2003, for an average annual savings of $881.

The first step is to carefully check your assessment (it's available at your municipal office) for errors, such as a miscalculation of the square footage. If your home has problems that might lower its value, like a cracked foundation, make note. Compare your data with that of your neighbors' homes (it's all public information), to make sure similar houses are being assessed equally as required by law.

If you think your home has been overvalued, talk to the assessor. It's his job to keep valuations fair. Bringing good records and photographs helps.

File a formal appeal (time limits generally apply) if you don't get anywhere. Go to ahahome.com, the website of the American Homeowners Association, for more information.

8. Think Long-Term
When prices are going up, it pays to buy early. "Inflation simply means it'll cost you more in the future for things you can buy for less today," says financial advisor Ric Edelman, author of The Truth About Money. "The way to lock in current costs is by making long-term commitments. And the longer you're willing to commit yourself, the better the deal will be."

Examples include payment plans for heating oil that lock in the current price for the season, and extended cell-phone contracts. Still more savings can be had by putting all your insurance needs under one company. With some cable companies, you can save by bundling digital phone, cable TV and high-speed Internet into one bill.

"Ordinary everyday costs really add up during times of inflation," says Edelman. "It's important that you inflation-proof every aspect of your finances."

How much can you save? Look at it this way: Just about anyone can find ways to trim $50 a month from the family budget. If you earn $46,000 a year (the median household income), that's like giving yourself a one percent raise. Combine that with your three percent cost-of-living increase and you're already ahead of inflation.

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