|
20
Fiscal To-Do's for 2002
|
| |
|
Lose
weight. Check . . . Exercise three times a week. Check
. . . Trash the cookies, and get started on a healthy
diet. Check.
|
|
|
|
OK,
while you're making New Year's resolutions to fix your
physical condition, here's an idea: How about some resolutions
that will help you build up your financial condition.
Follow these suggestions for 2002 resolutions, and you
can pump up your wallet while that pile of bills loses
weight.
|
|
|
| Don't
scramble your nest egg: Think twice about using your
home equity to pay off credit card debt. It's just not
a good idea to tap home equity. It is important to note
that credit card companies can't foreclose on your house
if you run into financial trouble, but home equity loans
and cash-out refinancings are debts that are secured by
your home. Do you want to risk losing it over the stuff
you bought with your credit cards? |
|
| If
you want to refinance your mortgage, do it now: It
looks like mortgage rates are heading up after moving
in the opposite direction for most of 2001. If you have
considered refinancing but have put it off, it's time
to take action now. Fill out a Quick
Quote form to see how much you would save each
month by refinancing, and how long it would take to recoup
the costs of getting a new loan. |
|
| Pummel
your PMI: Home buyers who make a down payment of less
than 20 percent are usually stuck having to pay private
mortgage insurance, or PMI. They can cancel PMI once the
loan balance is less than 80 percent of the house's value.
If you pay PMI, and you've been paying on time for a few
years, you might be able to get rid of that extra amount
added to your monthly mortgage payment. |
|
| Keep
your eye on the prize: According to polls commissioned
by mortgage brokers, mortgage shoppers tend to look only
for the lowest rate and scarcely pay attention to fees.
Don't make that mistake. Sometimes you're better off paying
a slightly higher interest rate, if the lender charges
much lower closing costs. Shop all three parts of a loan
-- rate, points and fees -- before choosing your lender.
|
|
| Fix
your FICO: If you plan to buy a house or refinance
your mortgage, find out far in advance what your credit
reports say. Don't be surprised if they contain errors
that will lower your credit score, also called the FICO
score (for Fair, Isaac & Co., the company that came up
with the scoring formula). The sooner you order your credit
reports, the more time you'll have to correct any mistakes. |
|
| Don't
let inflation wipe out fixed-income returns -- check out
Series I bonds: I bonds have a built-in hedge against
inflation. They pay a fixed rate of interest plus an inflation
premium. When inflation is low, I bonds are a bad bet.
But if inflation starts to rise, keep an eye on I bonds.
You could lock in a rate that's much better than a CD. |
|
| Convert
to a Roth IRA for a tax-free retirement: A Roth IRA
is a great way to have your retirement nest egg grow tax-free.
Unlike a traditional IRA, where annual contributions are
often tax-deductible and contributions and gains are taxed
when withdrawn, contributions to a Roth are taxed, but
the earnings grow tax-free. You can convert a traditional
IRA to a Roth and watch it grow tax-free. The hitch is
you'll have to pay the taxes on the traditional IRA by
April 15. The best time to do a Roth conversion is when
stock and mutual funds prices are low. |
|
| CD
laddering can ease the pain of low interest rates:
Laddering CDs is a simple way to maximize yields. By purchasing
CDs of different maturities and rolling them over as they
mature, you spread out the risk of buying when interest
rates are low. Depending on the maturities you select,
your CD portfolio can be set up so you're never more than,
say, three months, six months or a year from a CD coming
due. |
|
| Guard
your personal information -- OPT OUT: Financial institutions,
insurance companies, even utilities and other companies
that collect personal information about consumers have
mailed a billion privacy notices to customers. The notices
gave customers the ability to opt out of having their
personal information shared or sold under some circumstances.
The law that forced the mailings is less than perfect.
Many of the notices were tough to understand and made
it difficult to respond. Nevertheless, opting out is still
your best bet to make sure fewer eyes see data, such as
your Social Security number and your creditworthiness. |
|
| Don't
wait to build a stash of emergency cash: Putting money
aside for emergencies isn't easy, but building a fund
is critical to your financial health. Having spare cash
can keep you from going deep into debt if you lose your
job, if the roof needs to be replaced or worse. |
|
| Cut
monthly banking fees: The number of free checking
accounts is at an all-time high, according to recent surveys.
Free means no monthly service charge or per-item fees
regardless of balance. Get one for yourself and start
saving today. |
|
| Pay
no ATM fees: It's your money, so why spend it to get
to it? Here's how to avoid ATM surcharges: switch to a
bank with a larger ATM network; use only your bank's ATM;
ask for cash back with debit purchases at the grocery
store; withdraw larger amounts to minimize ATM usage;
or visit the teller! |
|
| Join
a credit union and let the savings begin: Credit unions
offer great savings to their members. Beside personal
service and reasonable fees, members find low rates on
everything from credit cards to auto loans to mortgages.
Joining one is easier than ever. You might be eligible
and not even know. It's not just where you work that matters.
Where you live, who you know and your personal interests
also figure in. |
|
| Shop
for cars while zero-percent deals last: Several major
auto manufacturers are offering interest-free loans on
a number of 2002 models into January. A zero-percent financing
rate on an auto loan is quite a deal. But don't overlook
cash rebates. If a rebate is hefty enough, there's a chance
you could save more money by snatching up the cash and
financing your loan through a bank or credit union. Be
sure to crunch the numbers. |
|
| Be
your own used car salesman: You make the most cash
on a used car sale when you sell the vehicle yourself.
You could pocket an extra $1,000 to $2,000, depending
on the type of car, its age and how well it has been maintained.
So if you've got an extra car or truck, go ahead and sell
it on your own. A private sale is also a good backup strategy
for a new-car buyer who doesn't like a dealer's offer
on a trade-in. |
|
|
Refinance
an auto loan: Looking for a way to free up more
cash in your budget? Try refinancing your auto loan.
With interest rates on a decidedly downward spiral,
it's a good time to be shopping for a new and improved
auto loan. The money you save can really add up, even
if you only push the interest rate on your loan down
a percentage point or two.
|
|
| Transfer
balances to a low-rate credit card: Teaser rates can't
get any lower than this. Some issuers, such as First USA
and Discover, are offering card deals with zero-percent
introductory rates. You won't be charged a penny of interest
on transferred balances or new purchases for six months.
So go ahead and transfer a balance or two. Pay off as
much debt as possible during the card's introductory period. |
|
| Close
off unused credit lines: Simplify your life and lighten
your wallet by closing off any unused credit card accounts.
The aim is to get down to one or two credit cards and
stay there. Ask the issuer to note in any statement to
a credit bureau that the account was closed at the customer's
request. |
|
| Retire
card debt: It's time to get rid of credit card debt
once and for all. The first step is to stop charging.
Pay with cash or debit cards instead. When paying off
card balances, zero in on one card at a time. Pay $25,
$50, $100 or whatever you can spare on top of the minimum
payment until the balance is gone. Then move on to the
next card. |
|
| Freeze
your minimum payment: You can cut interest and pay
off your balance quicker just by freezing your minimum
payment. If your current minimum payment is $150, then
commit yourself to paying $150 or more each month until
your card balance is paid off. Your card company will
drop your minimum payment requirement as you chip away
your balance. Ignore it. Stick with your frozen minimum
payment, and watch your debt melt away. |
