Money Magazine has a feature this month about finding extra money or “hidden assets” as they call it. I’m not going to do a whole series on these suggestions, but I will simply summarize and add a few thoughts.
1. Cash in old savings bonds. If they’ve matured, you have money that’s not earning any interest. Cash them in and put the money in a high-yield internet savings account or something more risky if you’re so inclined. Search treasurydirect.com because you may not know that you have bonds in your name… yes, it is possible.
2. Boost your savings rate. I often talk, like I did one paragraph earlier, about getting out of low-paying brick-and-mortar bank accounts and into the world of online banks where you can earn significantly more on your cash. Money talks more about making the most out of your brokerage’s sweep accounts, where uninvested cash sits. Most brokerage have higher-performing, low-risk money market funds that provide a much better alternative for a sweep account.
3. Stop paying for unneeded life insurance. Money Magazine suggests arranging for your premium to come out of your dividends. This may be practical for some whose insurance needs are lower than they once were. Also, avoid sales pitches when you go to talk to your insurer.
4. Consolidate your retirement accounts. Too many accounts can be confusing and expensive. Simplify!
5. Prune your credit cards. Simplify! Get rid of unused cards. Consolidate cards. Close accounts (but leave your oldest credit card open for evidence of credit history).
6. Unload unused gift cards. Money suggests using CardAvenue for swapping an unneeded gift card for one more useful. Beware, many gift cards lose value over time or even expire.
7. Finally sell that lousy investment. It’s easy to get emotionally attached. “Take a look at every dud investment you own and ask yourself why you still own it. You are not allowed to factor the purchase price and the long-ago value into your answer.” If you take a loss when you sell, you can deduct it from your tax return to a point.
That’s what Money Magazine had to offer, but there are many other places to “find” money. Here are two I can think of off the top of my head.
8. You can “find” money just by creating an automatic withdrawal from your checking account to an obscure checking account immediately after your paycheck is deposited. You’ll never know the money’s not available like normal, and down the road, you’ll find you have a sizable chunk of extra cash.
9. Check your state’s unclaimed funds website. Here is New Jersey’s. I searched for my last name and determined the state has some money due to my father, which was likely sent to an old address. I keep forgetting to let him know…
Feel free to add any suggestions!
When I was 25, I was working for a small non-profit, working myself into the ground. It was a love/hate relationship. I wasn’t buying newspapers. Well, I bought some in the store occasionally, but not the entire operation for nearly $10 million.
Jared Kushner, the 25-year-old son of a wealthy New Jersey developer who was sentenced to prison last year, has bought The New York Observer…
Kushner’s father was involved in scandals surrounding former New Jersey Governer James McGreevey.
The Obserserver’s circulation is only 50,000, so maybe there’s room for growth. From the article, it doesn’t really sound like the younger Kushner has the experience to make any radical changes, but who knows.
Thanks to everyone who submitted an article to the latest Carnival of Debt Reduction. For those interested in participating or hosting, see the guidelines and schedule.
Most of the submissions I received had simply no relation to debt reduction. I did not include those entries in the Carnival. If you’re submitting spam, skip it. If you’re submitting articles about other pesonal finance topics not related to debt reduction, there are other Carnivals.
Continue reading for this week’s debt reduction-related submissions.
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I’m still enjoying Money Magazine’s “Last 401(k) Guide You’ll Ever Need.” So far, I’ve addressed the first three tips offered by the magainze, save early and often, spread your money around, and limit company stock. Here’s the fourth tip for maintaining a strong retirement investinment portfolio.
Check in Once a Year
Take a date you’ll remember every year, perhaps your birthday as the magazine suggests, and evaluate your portfolio. Look at your contribution instructions to make sure you are allocating your money in a way that makes sense for your situation, looking at risk profiles. If you’re invested in a target retirement fund, this risk adjustment is done for you, but you should make sure this is still what you want.
If certain investments have performed well, consider rebalancing — selling (tax-free) part of the investments that have done well and buying investments that have performed poorly. It sounds strange to buy poor-performing funds, but you’re selling “high” and buying “low,” and that’s good for long term investing.
Benefits consultant Hewitt Associates found that in 2005 many 401(k) investors loaded up on emerging markets funds, which had been delivering double-digit returns. But in May of this year, foreign markets tanked, and panicked investors found themselves selling with 20% losses.
I’ve experienced this. In 2005, people everywhere were talking about emerging market funds because they had performed so well up to that point. My international equity fund is balanced more towards established markets, but it hasn’t performed well lately. I’m fine with that; in the buying stage, as the fund goes down a little, I’m getting a better price that will hopefully pay off for me well into the future.
The article suggests looking at asset allocation and risk profile once a year to make adjustments. This is what I do now, but I used to do this once every quarter. In fact, my 401(k) was configured to automatically rebalance once a quarter so it was no effort on my part. Since there are no tax consequences to moving funds around within a 401(k), and I would think transaction fees would be very rare, I think it’s safe to do this every quarter if you desire. I’m more comfortable with a yearly rebalancing.
Here’s a question for those who have managed to read this far into the article. Do you rebalance your portfolio? If so, how often, and is it an automatic process? Leave a comment if you like.
If your savings account isn’t providing you 5.0% or more at this point, you can consider it old and busted. A few banks have raised their interest rates on “online” savings accounts lately, so take a look at the latest chart. Emigrant Direct moved to 5.15% today, but you may have problems accessing their new website. Aside from a slow response, I’ve been able to log in today.
OneUnited is at the top of the list, but you may want to read about Single Ma’s experience. To sum it up:
As I told the person who referred me to the bank, I hope the company succeeds, but I would never consider being a customer again and I’ll share my experience with everyone I know.
Consider yourself warned.
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