Getting a slightly higher paycheck every two weeks instead of that April bonus can make it harder to track the extra money. Tax refunds, on the other hand, are easy to track, since taxpayers receive the money in one lump sum. An ING Direct survey found that most refund recipients save the money or use it to pay off debt. The average refund is $3,000, according to the National Endowment for Financial Education, which is no small safety net.
The downside: The financial experts are right. If you overpay, you are giving the government a free loan, and you might need the extra cash to cover ongoing expenses.
5. Skip insurance on everything but the big stuff.
Liz Pulliam Weston, author of The 10 Commandments of Money, says most consumers get insurance "exactly backward," insuring small items such as cell phones or gifts put in the mail, but then under-insuring themselves when it comes to car, health, and even life insurance. "You don't want insurance to cover what you could pay yourself out of pocket. Insurance should be reserved for catastrophic expenses—those you couldn't easily cover on your own," she says. If you lose your cell phone, for example, chances are, the cost of buying a new one wouldn't break the bank, at least compared with needing a sudden appendectomy or even antibiotic.
One problem with the insurance market is that some financial planners stand to benefit financially from selling their clients certain types of insurance. (Stick with fee-only advisors to bypass this conflict of interest.) Weston recommends doing your own research instead of saying "yes" to expensive, cash-value life insurance, for example. Cheaper term insurance, which offers coverage for a set number of years, is often the smarter move.
The downside: If you tend to lose your cell phone often, you're on the hook for hefty replacement costs.
What do you think—could these extreme money moves work, or are they just crazy?