Growing Savings, Income and Investments Now
Henry K. Hebeler
You know things are tough when even our local Kent, WA, courts are offering to let people pay their fines using a “flexible payment plan.” People are searching both for ways to save in this environment as well as to find prudent ways to invest their money.
· Decide how much you should be saving as the first step. (Web sites can help with this.)
· Establish a lower family budget that satisfies your savings goal and stay within it.
· Arrange for automatic savings deposits from your paychecks.
· Sell things you don’t really need on the Net or elsewhere.
· Downsize your home or rent. Renting provides mobility to get jobs elsewhere in the country.
· Move in with relatives or friends.
· Grow your own vegetables.
· Buy items with cash, not with loans.
· Rule out cars, cell phones or IPods for children--or even for yourselves.
· Make do with old computers, and software. Use no downloads requiring payments.
· May be able to get lower cost TV, internet and telephone services.
· Turn down the thermostat and wear sweaters.
· Consider refinancing your mortgage if interest rates now significantly lower.
· Older people may not need life insurance or long-term-care insurance.
Increase your income:
· Rent out a room in your house.
· Get a second career. Perhaps teach, start delivery service, tutor, etc.
· See about part or full time employment for an unemployed spouse.
· Encourage teenagers to work on weekends and pay for some of their own expenses.
· Reduce personal debts. When debt interest rates are higher than the return you can get from investments, paying debt off early is usually the best investment you can make.
· Consider Savings I bonds for the entire family. They are available from local banks and treasurydirect.gov.
· Invest in certificates of deposits (CDs). (Available from many sources. See bankrate.com)
· Buy Treasury Inflation Protected Securities (TIPS) in self directed IRAs or from treasurydirect.gov.
· Take advantage of tax deductions, Roth IRAs and 401(k)s and tax-exempt bonds if you are in a higher income bracket.
· Use FDIC insured accounts for immediate cash needs.
· Buy bonds, not bond funds. (Increasing interest rates will destroy bond fund principal.)
· Change to mutual funds with low upfront costs, low management fees and no kickbacks to advisors.
· Use financial advisors with low fees and no commissions.
Good health is the best medical and long-term-care insurance you can buy.
I recently was operated on by one of the most famous orthopedic surgeons. Not noted for his bedside manners, he gave both my wife and me a lecture on eating lots of dark green vegetables and fish, but no red meat or desserts. Then he gave me a number of pages describing exercises I should do. So--
· Eat only healthy foods
· Exercise and keep weight under control.