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With the markets gyrating erratically … the economy rapidly deteriorating … and housing markets imploding all around us, it’s hard to feel much control over our nation’s financial destiny right now.
However, there is plenty you can do to improve your individual situation, no matter what the big picture looks like.
As I’ve said in past Money and Markets columns, I think a little self-restraint and some personal responsibility go a long way. And I also believe that little things add up over time, whether you’re talking about steady dividend payments or minor tweaks to your budget.
So today, I want to give you …
Five Little Ways to Make Big
Improvements in Your Personal Finances
#1. Sign up for a rewards credit card — By no means am I advocating racking up debt on a shiny new card. Rather, I’m suggesting you buy only what you can afford, and pay for it all with one card that actually gives you something back (cash, airline miles, whatever).
As long as you promptly settle up the entire owed balance on every due date, you’re effectively getting something for nothing!
Plus, you receive a nice monthly inventory of all your expenditures, which is great for honing your budget. If your statements come electronically, you might even be able to dump them right into any financial management software you use.
One word of warning, though: Make sure the card you choose doesn’t carry hefty fees. You might consider paying a low annual fee if you’ll be receiving outsized benefits overall. But you should also know that there are rewards cards out there that don’t have annual fees at all.
According to a recent Consumer Reports survey, American Express’ “Blue Cash” card was one of the overall best cash-back rewards cards. So you might consider using that as a benchmark when you do your research.
#2. Consolidate your accounts — While we’re on the subject of credit cards, ask yourself how many you have right now …
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| Consider consolidating your charge accounts into one or two rewards cards … |
Then factor in all your savings accounts, checking accounts, and brokerage accounts …
Now, tally up any retirement plans you have with old employers …
Add in any other miscellaneous accounts …
If you’re starting to count on your toes, it’s time to see which ones you can consolidate!
Reason: The easier it is for you to see all of your assets, the easier it will be for you to manage those assets. In addition, many financial institutions will give you better fee structures and other perks for doing a greater amount of business with them.
If you’re fortunate enough to have savings that exceed FDIC protection (currently $100K per account) you’ll want to spread your assets around enough to get the insurance benefit. But beyond such practical concerns, I think the more consolidation you have, the better.
#3. Pull credit reports to check for errors and fraudulent activity — Because of the Fair Credit Reporting Act, every American is now entitled to a free report from the three nationwide consumer reporting agencies (Equifax, Experian, and Transunion) every 12 months. Yet a lot of people are not taking advantage of this offer.
You can choose to pull all three reports at one time, or space them out throughout the year so you get a frequent look into your records.
Whatever way you choose to do it, look for errors, incorrect addresses, or any suspicious activity. If you have questions or corrections, don’t hesitate to contact the agency. After all, your credit score affects the interest rates you pay on all kinds of loans.
To get your reports, visit www.annualcreditreport.com or call 1-877-322-8228. You can also request them by mail at: Annual Credit Report Service, P.O. Box 105281, Atlanta, GA 30348-5281.
#4. Enroll in whatever retirement plans are available to you — If you’re still working, and your employer offers a 401(k) plan — or any other similar sponsored retirement plan — you should absolutely enroll assuming you qualify. The tax benefit alone makes participating worthwhile.
Moreover, if your employer matches some (or all!) of your contributions, I encourage you to put in enough to get the full match. This is essentially free money … don’t pass it up!
I also encourage you to open up an IRA if you qualify. Again, as I explained a few months ago, there are myriad tax benefits to doing so.
#5. Take advantage of DRIPS — I devoted a lot of space to the benefits of Dividend Reinvestment Plans earlier in June, so I don’t want to be redundant. But I just had to use this opportunity as a gentle reminder to take full advantage of these plans if you don’t need the current income from your stocks. Enrolling is easy and the power of compounding can produce tremendous results!
Bottom line: Together these five small steps would take a few hours to complete. But they’re the kind of moves that could pay you rich rewards for many years to come.
Best wishes,
Nilus
About Money and Markets
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates
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