(MONEY Magazine) – It's the time of year when belts are getting tighter all over America--both literally (as in too many helpings of holiday fruitcake) and figuratively (as in how are we ever going to afford the Christmas credit-card bill?). So as MONEY's holiday gift to you, we are going to stuff your stocking with eight simple moves that could put $1,000 or even more back into your pocket. Specifically, we aim to point out some surprisingly common money mistakes that cost Americans roughly $126 billion a year. Some of these financial goofs--such as paying too much in property taxes or in credit-card interest--involve spending more than you should. Others--like failing to get the maximum matching contributions from your employer in your retirement savings plan or trying to time the stock and bond markets--involve missing out on easy profits. In all cases, however, avoiding these errors is as simple as, well, unwrapping a present.

Why then do so many people fall so easily into these money traps? Because, says Seattle financial planner Mark Spangler, Americans today have weightier financial problems on their minds. Spangler, who is chairman of the National Association of Personal Financial Advisors, explains: "People worry so much about major financial decisions, such as finding the best mortgage or a great deal on a new car, that they overlook little fixes that can add up to big money." To help you identify and steer clear of these cash crunchers, MONEY interviewed more than five dozen financial planners, investment advisers, tax experts, consumer advocates and, of course, actual consumers. Here are the eight great money mistakes, starting with the one that costs Americans the most.

MISTAKE: TRYING TO TIME THE MARKET COST: $44 BILLION

From 1984 through 1995, the average stock mutual fund posted a yearly return of 12.3%. Yet during that same period, the average stock fund investor earned a mere 6.3% a year, according to new research by the Boston market research firm Dalbar. Similarly, during this 12-year stretch the average bond fund returned an impressive 9.7% annually, while the typical bond fund investor earned just 8% on average.

What's going on? Too many of the country's 40 million fund investors chase performance. They stampede out of lagging funds and into those that have posted strong past returns or have been awarded top ratings by research firms like Morningstar. The problem is that a fund's record looks best just before its investment strategy stops working--and investors who pile into hot funds often arrive just in time for the collapse. "People are buying and selling funds to try to time the market or a particular fund's success, but it just doesn't work," says Dalbar analyst Diane Cullen. Such fund hopping is costly to investors, who now have $1.5 trillion stashed in stock funds and $834 billion in bond funds.

Based on Dalbar's findings, MONEY calculates stock fundholders missed out on $39 billion in profits in '95 alone. That's the amount of additional returns they would have earned had they bought the average equity fund at the start of the year and held on to it. Add that to the estimated $5 billion forgone by bond fund investors last year, and the penalty for market timing hit $44 billion in '95.

WHAT YOU SHOULD DO:

Choose a fund for its consistency and because it matches your goals--not because it puts up prodigious but potentially temporary performance numbers. Then stay put. There are only two reasons to play musical portfolios: If your investment rationale has changed (say you need more conservative funds as you approach retirement) or if the fund itself changes (for example, if the fund adopts an investment style radically different from the approach that originally attracted you). "Underperformance itself is not a reason to get out of a fund unless it lasts three years or more," says Washington, D.C. financial planner Paul Yurachek. "The smartest thing investors can do is stick to their guns."

MISTAKE: KEEPING TOO MUCH IN THE BANK COST: $29 BILLION

Americans have $1.2 trillion stashed in bank passbook savings and money accounts, earning an average of 2.2% to 2.7% annual interest, or $30 billion a year. By simply switching those funds into nonbank money-market accounts, which boast an average return of 4.9%, we could be earning as much as $29 billion more on our money each year. Think of it this way: If you deposited $10,000 in a passbook account a year ago, you'd have $10,220 today. Your neighbor, whose money was in a bank money-market account, would have $10,270. Meanwhile, the adventurous soul down the block who dared to risk putting his dough in a nonbank money-market fund would have $10,490.

True, passbook accounts and bank money funds are insured by the Federal Deposit Insurance Corporation (up to $100,000 per depositor per bank), while nonbank funds are not. But using safety as the excuse to forgo nonbank money markets is akin to bringing a fur coat to Death Valley because it might snow. Consider this: No individual investor has lost a penny in a money-market fund. The short-term corporate and government securities that these funds own are among the safest in the investment world, backed by Uncle Sam and the bluest of U.S. blue-chip companies. And in the rare instances when a money-market fund has faltered, the fund operators have rushed in to make depositors whole. Says Maria Scott, editor of the AAII Journal, a magazine for individual investors: "A nonbank money-market fund offers a much greater yield, and for most investors, it's worth the risk."

WHAT YOU SHOULD DO:

Use the bank only for cash machine transactions or direct deposit of paychecks. If you're truly fretful about safety, you can sacrifice a fraction of a percentage point in yield for the added security of a money-market fund that invests solely in Treasury securities, which are backed by the full faith and credit of the U.S. Government. Here are two solid choices, both offering free check writing: Strong Money Market (current yield: 5.2%; $1,000 minimum balance; 800-368-5593) and Vanguard Money Market Treasury (5.1%; $3,000; 800-962-5121).

MISTAKE: CARRYING A HIGH-INTEREST BALANCE ON YOUR CREDIT CARD COST: $17 BILLION

Americans are addicted to plastic: According to credit-card tracker RAM Research of Frederick, Md., the typical U.S. family owns 14 credit cards, with an average total balance of $5,800. All told, our credit-card habit sticks us with more than $453 billion in outstanding revolving debt today, up 84% from $246 billion five years ago, at an average annual interest rate of approximately 18%. If all that debt were paid off tomorrow, according to the nonprofit Consumer Federation of America, Americans would save more than $50 billion in finance charges. That's unrealistic, of course, but by taking two steps--negotiating for a lower interest rate and paying off an extra $25 each month rather than just the minimum payment due--cardholders could save $17 billion a year. Remember, once you start running a balance, your interest charges typically accrue from the date you purchase an item. WHAT YOU SHOULD DO:

Start by calling your credit-card issuer (the toll-free number is on your monthly statement), and ask for a lower rate. Tell them you'll transfer your balance to another card unless they cooperate. That's what Katherine Friedman, 24, did. The New York City literary agency assistant, who owes more than $1,000 on her MasterCard, wheedled her interest rate down to 10% from 18%. "I told them I had another card offering me a 6.9% rate, and they agreed to lower theirs to 10%," says Friedman, whose phone call saved her $80 a year in finance charges.

If your card issuer won't go along, transfer your balance to one of the 15 or more cards that charge 10% or less for at least six months. For a list of low-rate cards, send $4 to Bankcard Holders of America (524 Branch Dr., Salem, Va. 24153). And no matter which card you use, pay off as much as you can above the minimum due, even if it's only $10. If you were carrying a balance of $1,900 with an interest rate of 18% and you made only the minimum payment of $15 each month, it would take 23 years to eliminate your debt, and you would wind up paying a total of $5,997, or $4,097 in interest. By spending only $10 more per month, you'd get rid of the debt in just five years and pay only $1,019 in interest, a savings of $3,078.

MISTAKE: PAYING SKY-HIGH BANK FEES COST: $16 BILLION

When it comes to inventiveness, Thomas Edison has nothing on the nation's banks, which have created a seemingly never-ending list of fees to siphon money from customers. Since 1991, the number of different types of fees and service charges that banks can nail customers with has risen from 96 to 270, according to banking industry consultant Siefer Consultants. These various and sundry levies range from the average $1.18 banks charge when you use another institution's automated teller machine to the $19 you're likely to get dunned when you bounce a check. Bank revenues from fees, according to the Federal Deposit Insurance Corporation, hit $16 billion last year. Says Edward Mrkvicka, a former banking executive and author of the soon-to-be published Your Bank Is Ripping You Off (St. Martin's, $12.95): "The typical family can save more than $300 a year by avoiding excessive bank fees."

WHAT YOU SHOULD DO: Scrutinize your monthly statements, since you're probably being charged for services that you don't need or can easily get elsewhere; for example, credit unions often have free checking if you carry a balance as low as $25. If you feel you're being nickel-and-dimed, call up your bank and complain. "Banks will often waive outrageous fees if a customer complains loudly," says MONEY contributor Beth Kobliner, author of Get a Financial Life: Personal Finance in Your Twenties and Thirties (Fireside/Simon & Schuster, $11). In addition, here are four smart moves that could save you $175 a year:

--Don't write rubber checks. The typical consumer bounces two checks a year. By keeping your checkbook balanced, you could save at least $38 annually.

--Use your own bank's ATM whenever possible. Given that the average consumer uses a cash machine 84 times a year, this move could save you more than $99.

--Buy your own checks. Banks charge an average of $19 for a year's supply of 200 checks. But outfits like Current (800-426-0822) or Checks in the Mail (800-733-4443) will send you the same quantity for as little as $4.95 to $5.99. Annual savings: $14.

--Ask for check imaging, rather than receiving the actual canceled check. By receiving photocopies of your checks, you can save the $24 a year in fees that banks charge for sending you the real deal.

MISTAKE: BUYING LIFE INSURANCE COVERAGE THAT YOU DON'T REALLY NEED COST: $8 BILLION

One of the hoariest cliches in personal finance has it that life insurance is sold, not bought. Too true. Last year, Americans were sold an $8 billion bill of goods from the nation's 665,000 life insurance agents. That's the amount consumers paid in premiums for unnecessary insurance--out of a total of $78 billion in life insurance premiums--according to industry experts. Usually these wasteful policies pay out only if you die in a specific manner, such as a plane crash, or cover only a certain part of your finances, such as your credit-card debt. Says Robert Hunter, insurance director for the nonprofit Consumer Federation of America: "Typically, you don't need any specialty coverage. What you need is conventional life insurance if you are a breadwinner and have a dependent."

Four types of life insurance that consumers commonly buy but don't need are credit-card life insurance, which covers outstanding debts in the event of your death; life insurance for children; dread-disease insurance, which also includes health coverage for a specific disease; and accidental-death insurance, such as flight insurance. Credit-card insurance isn't worth it because the more you pay off on your loan, the less your insurance is worth. Once your balance hits zero, the policy is worth zero. Since life insurance is primarily a means of replacing someone's income in case of their death, insuring your children doesn't make sense unless your kids earn big money. Dread-disease insurance and accidental-death insurance, on the other hand, are too narrow ever to make sense. "It's like buying toothpaste by the squeeze instead of by the tube," says Hunter. Even if you're the sort who worries about dying of Ebola or getting killed in an avalanche, you're still better off with a broader policy, like term life insurance. A healthy 35-year-old woman could expect to pay about $35 for a two-week flight insurance policy worth $100,000, or around $910 a year for annual coverage. But a term policy, which would cover much more than the unlikely chance of a plane crash, would cost only $89 for a year. WHAT YOU SHOULD DO:

Put your checkbook away. If you've got good term life coverage, the only form of specialty insurance that you might want is life insurance for a child who earns a significant income, say from acting or professional sports. To see if that's the case with you, call USAA Life Insurance (800-531-8000) or Ameritas (800-552-3553), two no-commission insurers who will level with you. If you decide you do need the policy, find out how much it would cost to add a rider to your existing plan rather than taking out a separate policy. As with any menu, ordering a la carte will cost you.

MISTAKE: MISSING OUT ON EMPLOYER MATCHES IN YOUR 401(K) PLAN COST: $6 BILLION

Imagine you were offered hundreds or thousands of dollars a year, no strings attached. Now imagine that you turned it down. What a crazy thought! Nobody would pass up free dough, right? Wrong. Each year, some 12 million Americans do just that. That's the number of people with a 401(k) retirement savings plan at work who don't contribute the maximum each year to their plan--or don't contribute at all. In so doing, this group forgoes an estimated $6 billion a year in employer matches--the money your boss kicks in to encourage you to save.

Here's the math: According to a 1996 survey by Buck Consultants, the typical employer matches 50 [cents] to each dollar contributed by employees, up to 6% of salary. In other words, if you invest 6% of your salary, your company will kick in another 3%, for an immediate 50% return on your investment. But of the 29 million people who are eligible to participate in 401(k) plans, a full 7 million don't. This group is not only forgoing a terrific way to invest their money tax deferred but are also taking a pass on any company match that their plans may offer. According to a study this year by Access Research of Windsor, Conn., if these nonparticipants signed up for their 401(k)s and contributed up to the match limit, they'd get $5 billion in matching funds from their employers each year. Then there are another 5 million employees who participate in their 401(k) but don't contribute enough to qualify for a full employer match. Those folks are missing out on $1 billion annually. In total, employers are sitting on roughly $6 billion in unclaimed matches.

If you're feeling sheepish about committing this particular financial faux pas, think how Mark Witkowski, 25, a pension administrator for Falls Church, Va. Retirement Planners & Administrators, must feel. Witkowski, who earns $30,000 a year as an accountant for companies' retirement plans, contributes just 2%, or $600 a year, to his 401(k) plan--even though his employer matches 100% of contributions up to 5%. By contributing only 2% of his salary, Witkowski is missing out on $900 a year in company matches. He plans to increase his contribution to 5% by next year to take advantage of the full company match. WHAT YOU SHOULD DO:

Contribute as much to your retirement plan as you think you can afford--and then contribute some more. Unusual is the budget that can't be trimmed without too much pain. Says Marilyn Capelli, a financial planner in Bloomfield Hills, Mich.: "It is very rare for me to look at someone's spending and not find enough waste to cut so they can take advantage of their 401(k)." One big believer in 401(k) plans is Labor Secretary Robert Reich. He recently told MONEY that employees whose employers are willing to match should contribute to a 401(k) "unless it's absolutely impossible for you to live on your present wages and also put aside something for retirement."

MISTAKE: PAYING TOO MUCH PROPERTY TAX COST: $3 BILLION

There's a strong chance you're overpaying the taxes on your home. Tax experts estimate that a third of all U.S. homes (average value: $121,500) are assessed at too high a value, translating into $3 billion in excess property tax payments. Yet a minuscule 2% of homeowners challenge their assessments. If you're among the other 98%, who pay an average of $1,458 in property taxes each year, you may be missing a sure bet: More than half of all assessment challenges result in a tax reduction, tax pros say, for an average saving of roughly 10%. "It's like fighting a parking ticket," says Robert Wood, a tax director at the accounting firm Coopers & Lybrand. "Generally, if you show up, you tend to get something."

That's what Robert Schultz, 43, an engineer in suburban Denver, did. When the assessment on his four-bedroom house was raised from $229,000 to $239,000 in 1992, Schultz contested the increase and shaved $103 off his yearly tax bill. When his house got reassessed one year later at $269,000, the experienced Schultz again challenged the hike. Once again he successfully negotiated the appraisal down, to $239,000, saving him $310 for the year and every year thereafter. Schultz's total savings so far: a satisfying $1,034. Says Schultz, who estimates that he spent about an hour filling out the paperwork, two to three hours doing research and getting comparable assessments at the county office and an hour preparing his arguments: "It wasn't that hard to challenge my assessments, and the savings really add up." WHAT YOU SHOULD DO:

Start by checking your assessment card, which can be found at your local assessor's office (the telephone number will be listed in the government section of your phone directory). It's not uncommon for assessors to mistakenly overstate the number of bedrooms in your home or the total square footage. Then compare your assessment against those of at least three comparable homes in your neighborhood. You can get this information at the assessor's office, or you can call the AHA Home Sales Price Line at 800-914-3377. For $7, they'll fax a list with an average of 12 comparable listings. Finally, if you think you've got a case, call your assessor and ask how to begin what is generally a fairly simple but potentially time-consuming challenge process. For further help, the National Taxpayers Union offers a 12-page, $2 pamphlet called How to Fight Property Taxes. Send a check to the National Taxpayers Union at 108 N. Alfred St., Alexandria, Va. 22314.

MISTAKE: FORKING OVER FULL-SERVICE BROKERAGE COMMISSIONS FOR NO SERVICE COST: $3 BILLION

Last year, individual investors stuffed $8.6 billion into their stockbrokers' pockets in the form of commissions on stocks listed on the New York and American stock exchanges. According to Perrin Long, the dean of brokerage industry analysts, those investors could have saved about a third of that, or $3 billion, by switching the bulk of their trades from full-service brokers, who give advice, to discounters, who simply execute your order. Such companies--led by Charles Schwab (800-435-4000), Fidelity (800-544-8666) and Quick & Reilly (800-672-7220)--typically shave 50% to 80% off the retail commission costs.

Patronizing a full-service firm such as Merrill Lynch or PaineWebber makes sense if you need expert advice. These so-called wirehouses boast research departments that are chock full of securities analysts who are on the prowl for new investment ideas. But thanks to the proliferation of information on publicly traded companies, a growing number of individual investors tap other sources of financial information--ranging from financial publications like Money to the Internet. Indeed, Long estimates that in 55% of all trades by individual investors last year, the customers neither requested nor received advice from their brokers. Nonetheless, an astonishing 80% of those buy and sell orders were placed through full-service firms. That means that in 44% of all trades made last year, people paid full-service prices but got discounter service. The reasons: habit and nerves. Says Long: "It's hard to make a major financial decision without talking to someone else first. A full-service broker holds your hand." WHAT YOU SHOULD DO:

Let go of that hand if you feel confident in your own ability to research an investment. If you don't already have an account at a discount brokerage, open one. That doesn't mean you have to sever your ties with a full-service broker whose picks (or whose research department) you trust. But when you come up with a good stock or fund pick, based on your own solid research, why fork over some of the profits to a broker who is little more than an order taker? These days, the only money you should be giving away is to your favorite charity.