These are difficult times that we are living in right now. We all know that many jobs have been lost, savings have most likely been annihilated, and home values have deflated all over the country.
If you haven’t experienced any of these things, then count yourself as being very lucky. The mere threat of any or even all of them is constantly looming. Until the economic climate stabilizes, here are five things that you can do to best manage your money for any eventuality.
1. Eliminate Your ARM Mortgage –
If you have an adjustable rate mortgage (ARM), there may not be a better time to refinance and get into a stable, fixed rate. 30-year fixed-rate mortgages are currently near an all-time low. Refinancing into a fixed-rate mortgage means that you’ll never have to worry about turbulent fluctuations in your monthly mortgage costs again. Remember, there are some upfront fees for closing on a Refinance. If you are thinking about doing a re-fi, make sure you have enough cash on hand for all of the loan origination fees and the closing fees.
2. Pay Down Your Credit Card Debt –
It may seem counter-intuitive, but your money is actually better utilized when paying down high interest credit card balances than it is stowed away in a savings account. What you pay in credit card interest rates far exceeds what you would earn in a savings account. You’re only truly making money on savings when you’re not paying more in interest than you earn.
3. Term Life Insurance Vs. Whole Life Insurance –
Whole life insurance can be great for peace of mind, and can provide a small income during retirement, but you might want to consider an alternative. Term life insurance has a much lower premium than whole life insurance and coupled with maximum contributions to an individual retirement account over that term could provide the security of life insurance with a higher rate of return, and much higher nest egg for retirement, than you would otherwise have.
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4. Establish a CD Ladder –
Most banks offer Certificates of Deposit (CD) with a variety of maturity dates and corresponding interest rates. By investing in each of these levels and instructing each to roll over to the highest/longest level at maturity, you not only compound interest many times over with a no-risk investment, you guarantee you’ll have access to extra money on a regular basis, should you need it.
5. Shred Everything –
Your money is worthless to you if it suddenly disappears one day. Identity theft is commonplace these days and you can’t do enough to protect yourself. Every bill, credit card offer, and account statement is an opportunity for financial exposure. Shred everything before it reaches a trashcan. Also, make sure your Internet passwords are of sufficient strength and variety, too. This will help protect you more from Internet hackers.
