It’s that time of year. Don’t skip these essential tips to save money and live a wealthier financial life.
Here’s what you to need know – and what to do.
1. Refinance student loans
Refinance student loans and Parent PLUS Loans to take advantage of historic low rates. Student loan refinancing rates are ridiculously cheap now and start as low 1.9%. Student loan refinancing is best for anyone who wants to get a lower interest rate, lower monthly payment and pay off student loans faster. This student loan refinancing calculator shows you how much money you can save.
2. Pay off credit card debt
Consolidate credit card debt with a personal loan to pay off credit card debt faster. A personal loan is a loan from $1,000 to $100,000 that is typically repaid in one to seven years. With a personal loan, you combine your existing credit card debt into a single loan with a lower interest rate than your current credit card interest rate. Plus, unlike credit card debt, which has variable interest, your interest rate for a personal loan is fixed and will never change.
3. Contribute to a 529 plan
Fund your children’s education with a 529 plan. A 529, or qualified tuition plan, is a tax-advantaged investment vehicle for a dependent’s future education costs. All 50 states and the District of Columbia sponsor at least one 529 plan, in addition to certain colleges and universities that sponsor pre-paid tuition plans.
4. Maximize contributions to your 401k or IRA.
Now is an ideal time to maximize contributions to your 401k, IRA or other retirement plan. At a minimum, contribute enough funds to qualify for your employer match, if your employer will match contributions to your retirement plan at work.
5. Sell investments to minimize capital gains taxes.
If you owe capital gains taxes, review your investment portfolio and consider selling any poor performers. Tax loss harvesting can help you minimize or eliminate capital gains taxes.
6. Make an extra mortgage payment
If you have extra funds, you can always pay more than the minimum payment. Make an extra mortgage payment to reduce your principal balance and save interest.
7. Build an emergency fund
This is so important. Start to build an emergency fund with cash equal to at least six to nine months of expenses, if possible, to help you in case of unexpected circumstances like a medical bill or unemployment.
8. Create three financial goals for next year.
Saving money is certainly one goal to live a better financial life. Make sure to create three financial goals for next year. The earlier you start planning, the sooner you can start acting to achieve your goals.