Mid Year Money Tips 2016
Global uncertainty, volatile markets and elections are out of your control, but as we start the second half, here are some Mid-Year Money Tips. Check even a couple off the list and you will be in better financial shape and feel virtuous for having completing them! Track your Money: In the age of easy to use apps like Mint, Digit and Level Money, not to mention bank apps, there is no excuse for getting a handle on what’s coming in and more importantly, what’s going out!
Attack your Consumer and Student Loan Debt: Create a list of outstanding debt and divide it into two categories: Consumer (credit card/auto) and Student Loan. Put the highest interest rate debt at the top, followed by other loans, in descending order. Attack the highest interest loan first and once you whittle it down, shift the money towards the next highest one.
Check/Repair Credit: About half of Americans (46 percent) say they have checked their credit score within the past year, according to a Bankrate.com survey. That is simply crazy—you need to know what’s on your report and your score BEFORE you try to borrow money to buy a car or house. Go to AnnualCreditReport.com to review/correct your report and be persistent-it can often take time and energy to have errors removed.
Refinance your Mortgage: Mortgage rates are flirting with near four-year lows and house prices have increased. That means that a lot of homeowners who may have been unable to refinance may now qualify.
Insurance: Homeowners. Don’t wait for a natural disaster to occur before you review your policy. The three biggest mistakes are: 1) under-insuring; 2) shopping for price only/not comparing apples to apples; and 3) not reading policy details. Also, check to see if you have at least 20 percent equity in your home -- if so, you may be able to drop your Private Mortgage Insurance (PMI). Auto. If you have an old car worth under $5,000, eliminate collision and comprehensive coverage and increase deductibles. Liability. You may be able to earn discounts by purchasing car, homeowner’s and umbrella liability insurance coverage from one company. Life. Needs often decline as you age, so you may be able to get rid of an old policy or consider replacing an expensive policy with a cheaper term one.
Retirement: Still haven’t calculated your number? You are not alone. According to the Employee Benefit Research Institute’s Retirement Confidence Survey 2016, less than half (48 percent) of workers report they and/or their spouse have ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement. Go to your retirement plan website or use EBRI’s “Choose to Save Ballpark E$timate”.
Investments: The fallout from the Brexit vote was a good reminder that market gains can quickly evaporate before your eyes. The end of the quarter is the perfect time for long-term investors to rebalance accounts so that allocations remain in check. If possible, choose auto-rebalancing so you don’t have to worry about the direction of markets or when its time to reallocate.
Estate Planning: PLEASE DRAFT/UPDATE YOUR WILL! I advise hiring a lawyer to prepare a will, power of attorney and health care proxy/living will. If you insist on doing it yourself, you can use a software program like Quicken WillMaker. All of your estate documents and final instructions should be stored in a safe place – don’t forget to provide copies to your executor/trustee. Those with larger estates, or who want more control over the disposition of assets, may consider a revocable or changeable trust.