October serves as our annual reminder to get our finances in check. The pandemic is changing the way people think about money and things such as layoffs and furloughs are adding undeniable stress. When obstacles such as the upcoming election and ongoing pandemic insert themselves in the planning of your financial journey, collaborating with a financial planner will help you manage your financial goals more holistically. Here are 5 easy steps you can take to build security given the current conditions.
1. Contribute to or initiate emergency savings
The goal of an emergency fund is to have easily accessible cash; usually enough to cover three to six months’ worth of essential expenses (i.e. food, rent or mortgage, auto insurance, and groceries). Review your expenses to recognize areas where you can cut or eliminate costs. Examples are;
- Recurring charges – End subscriptions and memberships that are not necessary
- Entertainment – Cancel expensive cable tv and choose one of the streaming services such as Hulu, Amazon Prime, Netflix, or YouTube TV
- Travel – Travel locally or inexpensively to safe destinations
- On-line shopping – Unsubscribe to retailers who flood your inbox with tempting emails
2. Reconsider debt strategy
Carrying a high amount of debt is generally never advisable. Understandably, people are more concerned with meeting their minimum payments more than ever. Consider asking your lender about lowering the interest rates on your cards. Most credit card companies are offering assistance with lowering interest rates on cards. Balance transfer credit cards may also be an option to secure a lower or zero interest rate for a given time. Be sure to examine the fees involved. If you are trying to pay off credit cards make sure the payments fit your budget. Start with the higher interest cards first and then work to the next card.
3. Reevaluate your budget
Budgeting is an effective way to view your finances from a wide-angle lens. We’ve already discussed getting spending under control and expanding savings in a previous blog “tightening the belt”. Consider using a budgeting app on your phone. The more often you look the better chance you have to attain your goal.
4. Assess your risk tolerance
Meet with your financial planner to discuss the risk tolerance of your portfolio. Look at your long term investment goals to ensure you are on track for retirement. In such volatile times you may need to re-balance your portfolio more frequently than normal. For more on investing in a volatile market, check out our investment tips here.
5. Refinancing mortgages
The Federal Reserve has made many recent changes to stimulate the economy. That is great news for those of us with a mortgage. Mortgage rates are at an all-time low and may be a good time for you to consider a refinance. The FHFA announced the delay of a 0.5% fee on new re-financing until December 1st. This means homeowners can take advantage of the low rate environment more economically. Re-financing is currently taking between 45 and 90 days depending on the lender. Be sure to do your homework and shop rates on-line and beware of deals with hefty costs.
We are all in this together as we navigate these unprecedented times. We are here to help guide you through any financial challenges you face, making any changes to increase your financial security.
The content is developed from sources believed to be providing accurate information. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
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