Wouldn’t it be great to eliminate high-interest debt, identify investments that earn solid returns, say goodbye to wasteful spending habits, save more out of every paycheck, get a better deal on your mortgage, and generally have access to more disposable income? The good news is that you don’t have to be a CPA or financial planner to achieve all those goals. It just takes a few hours of planning and preparation, along with a liberal dose of self-discipline, to get the job done.
Of course, everyone’s financial situation is unique, so there’s no one-plan-fits-all strategy. But there are eight workable approaches for creating a smart money lifestyle and getting more enjoyment from life, no matter how much you earn, what you do, or where you live. Here are suggestions for putting the plan into action.
1. Eliminate Weak Investments
Put your personal budget and investment portfolio under a microscope and try to locate dead spots. They’re basically any waste, like expenses you can reduce or eliminate with a little effort. But those dead spots also include investments that are earning paltry returns. It’s rather commonplace for people to discover that the mutual fund they regularly contribute to is earning nothing, or perhaps even losing value.
You have two choices here. One, close the account and cash it out. Two, take the cash from a weak portfolio and invest it somewhere else. The choice is yours. Just be sure to evaluate new investing options carefully so you don’t get stuck back in the same situation you’re attempting to get out of. Eliminating weak investments can help you learn how to build strong habits and stick to them by focusing only on those investments that make sense for your portfolio and not wasting time and energy on the irrelevant ones.
2. Sell Unnecessary Life Insurance
If you’ve ever had the nagging feeling that you either have too much life insurance or don’t need any at all, there’s a wise option. It’s selling your policy through a process called a life settlement. You can use the proceeds for anything you want. Contrary to a popular myth, the purpose of selling need not be for an emergency, though many people do cash out their policies for that very reason. Starting out by going to this site, it’s simple to use a life settlement calculator to find out what the cash value of your policy might be and whether you meet the basic requirements to sell it. Many people are surprised at just how quick the process is and how much they can get from the sale.
3. Choose Credit Cards Wisely
There’s no universal rule for credit card use. That’s because we all have different needs, income levels, and spending habits. But, consider aiming to hold just two open credit accounts. Additionally, aim for low-interest cards that come with rewards points. Too often, financial advisors speak of consumer credit as if it’s totally evil. The truth is that credit can be your friend if you use it wisely and pay off all balances at the end of each billing cycle.
4. Stop Wasting Cash on Car Payments
There are some very helpful, commonsense rules about vehicle ownership that can propel you into the smart money lifestyle in short order. First, avoid buying new cars. Instead, shop for models that are one or two years old. Second, make as large of a down payment as possible in order to keep borrowing to a minimum. Finally, if you purchase a car or truck that’s more than two years old, consider paying a bit extra for an extended bumper to bumper warranty.
5. Monetize Your Stuff
You often hear website owners speak about monetizing their sites. Fortunately, you can also monetize all that stuff stored in your garage, basement, and attic. Remember, it’s not junk if someone is willing to give you cash for it. Often, homeowners are shocked at how much they can earn by offering all their unwanted items for sale at online auction or direct sale sites. For larger items that are impossible to ship, consider holding a garage sale or posting them on sales pages of community for sale websites. A hint is that slightly used baby items and clothing are among the hottest online and in-person sellers.
6. Refinance Your Mortgage
If you’re a homeowner who has a mortgage that’s several years old, it’s possible that a refi can bag you some serious cash. One reason is that most who live in their homes for a while experience a bump in their credit scores. In most cases, it’s possible to translate those better scores, and the built-up equity, into a much better contract than when you originally bought the house. One word of caution is to shop for a refinancing specialist. Not all real estate professionals know the ins and outs of the process. Ask your banker, do some online research, and query friends for referrals. If you can connect with an excellent refi pro, chances are you can get a more favorable interest rate and lower payments.
7. Put Savings on Autopilot
No matter how disciplined you are, be sure to automate the savings process. That means signing up for a payroll savings plan if your employer offers one. If they don’t, speak with your bank about doing an auto deduct whenever your account receives a direct deposit paycheck. Set either a precise amount, like $350, or a percentage of income. Most banks are happy to set up these kinds of arrangements and let you stash the money into a separate account, money market fund, or certificate of deposit. Don’t forget to use the auto deduct for income, bonuses, side jobs, inheritance, and any money that comes to you.
8. Increase Health Coverage
At least once per year, review your health insurance policy. Remember, smart money isn’t about becoming a miser or cutting every expense to the bone. Medical coverage is usually a very good deal, and represents one of the most efficient ways of protecting your financial lifestyle. Consider opting for moderate deductibles, lower co-insurance rates, and lower out-of-pocket totals. It might cost you more in terms of monthly premiums, but in nearly every case, those higher premiums are money well spent. Smart money, not more money, because more money is no good unless you’re alive and healthy enough to spend it.