Does your homeowners policy
still cover all of your personal
possessions? Have your life insurance
needs changed in the past year?
applying for big loans, check your credit score. If
it’s low, spend a few months taking positive steps to
improve it. You could save yourself thousands in interest.
“I will get the lowest credit card rate
possible.” Call customer service and ask to have your interest
rate lowered. That request often is honored for customers in good
standing. To avoid interest charges, don’t spend more than you
can afford to pay off each month. If you already have a lot of debt,
consider consolidating your high interest-rate cards. If you have a
rewards card with a high annual fee, switch to a no-fee card.
“I will pay off my debt.” Excess debt can affect
many areas of your life, from your credit report and your borrowing
power to your physical and mental health. If you owe a lot of
money on loans, credit cards, etc., create an action plan that will
help you assess, manage and pay off your debt. For suggestions
on how to do that, read our article, “Get Out of Debt and
Into Financial Freedom.”
“I will calculate refinancing costs to
get a better mortgage rate.” Interest rates are still
relatively low but have risen some in recent months. It may make
sense to act now to refinance your home, saving you money every
month. First, determine whether the costs are worth it. Refinancing
to a new 30-year loan with a lower interest rate could result in an
increase in your monthly cash flow—but you’ll be making mortgage
payments for a few more years. Also, calculate how long it’ll take
you to break even on your refinancing costs.
“I will fully insure my home, car and
life.” As life changes, so do your insurance needs. Spend some
time reviewing your coverage. Does your homeowners policy still
cover all of your personal possessions? Have your life insurance
needs changed in the past year? Are your beneficiaries up to date?
Review your coverage annually: You may save money by reducing
some unnecessary coverage, or you may find areas where an
increase is needed.
“I will make regular contributions to
my retirement accounts.” Consistently contribute
to your 403(b), regardless of what the economy is doing. Those
are pre-tax dollars that accumulate on a tax-deferred basis. Make
sure you diversify your investments, and rebalance at least once a
year. For assistance in choosing investments, contact the adviser
assigned to your account, or speak to a licensed financial adviser.
You also can contact the NEA Retirement Program to discuss
supplementing your retirement fund.
“I will resist the urge to borrow from
my future self.” No matter how big of an expense you’re
facing, resist the temptation to pull money out of your retirement
account. That money went in tax-free, but you’ll have to pay interest
as you repay the loan. Switching employers before the loan is paid
off can incur penalties. And the reduction of funds in your account
means less money is compounding, so you’ll end up with less
at retirement. If you need cash fast, look into a home equity loan
or a personal loan.
“I won’t give Uncle Sam an interest-free
loan.” Many people love to get a big tax refund check
each spring, but that’s money you could have earned interest
on all year long. Examine how much money is taken out of your
paycheck in the form of deductions and pre-tax payments (403(b),
flexible spending). If it’s too much, increase your deductions,
then reroute your extra funds into your savings account,
403(b) or other investment vehicle.
“I will get credit for helping others.” It feels
good to get rid of excess belongings by donating what you no longer
use. Take the time to track what you give to charity so you can claim
the value on your taxes. The same goes for donating cash.
“I will get reimbursed for all the
classroom supplies I buy.” Keep track of work-related
expenses, which can be deducted up to $250. Let parents
know what you need, and ask for help.
“I will buy only what I need.” Nobody likes the
b-word, but try not to think of it as creating a “budget.” Instead,
evaluate what you consider to be your absolute must-haves, then
don’t buy anything that isn’t on the list. Or, if that’s too drastic, keep
track of everything you do buy so you can get a handle on your
expenses and cut back where you tend to overspend. When you
invest in personal financial software such as Quicken, or use an
online site such as Mint.com—where every purchase you make is
documented in black and white—making future spending decisions
and setting financial goals will become much easier.
“I will hunt down discounts to avoid
paying full price.” If there’s something you need to
purchase, try to wait until it’s on sale and you have a coupon. Sign
up for emails, texts and postcards through your favorite retailers
to get coupons and sale notifications. When shopping online, do a
search for the retailer’s name and “coupon code” before you buy
to reduce your costs. Shop through NEA Click & Save for extra
discounts and rewards online.
“I will pay my bills on time.” Getting smacked
with a $25 late fee on a $30 department-store bill really cuts into
the great deal you snagged on that new pair of pants. In addition,
late payments on some bills, including store credit cards, will be
reflected on your credit report and drag down your credit score.
Sign up for as many automatic billing programs as possible. Or, if
you like to pay the old-fashioned way, set up a reminder in your
smartphone’s calendar so you’ll mail your checks on time.
14 | KNOW • Volume 17 Issue 1