Continuing in a series which includes Part 1 and Part 2, here are some tips for personal money management in 2006, which will play well in any year:
Protect Your Home.
Even before the massive losses caused by Hurricanes Katrina and Rita, insurers were scaling back policies to make it harder for homeowners to receive payouts that would cover their true rebuild costs in the event of a total home loss.
Suze suggests determining how much it would cost to rebuild your entire home. Your homeowner’s policy should cover that amount in order to fully protect your home.
Get UnARMed.
This is a cute way of saying adjustable rate mortgages are going to hurt many people as interest rates on mortgages rise.
If you have an ARM or interest-only mortgage and plan to stay in your home for a while, make it your primary financial priority to convert to a fixed-rate mortgage. If you plan to move in the near future, consider a hybrid mortgage with a fixed rate that mirrors how long you’ll stay.
Dump ‘Universal Default’ Credit Cards.
I wrote about this phenomenon last month. If you miss a payment or are otherwise a bad debtor, it could affect more than just the lender in question. If you pay late a few times on your Visa, your MasterCard, even if it’s offered by an unrelated bank, can raise your rates in response. The best solution is to pay off your balance every month. Suze says:
A car payment that’s a day late can be enough to jack up a zero-percent intro rate to 15 percent, 20 percent, or more. In some cases, the default policy can even be triggered by an application for a new credit card or mortgage.
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