Managing monthly cash flow to maximize the availability of “cash-on-hand” is a key component to financial security and your peace-of-mind. There are a number of “hacks”, or little insider tricks, that many people don’t realize about how to manage the money in your pocket, so it is working at peak efficiency for you.
Here are my Ten Top Financial Tricks to stretch your dollars:
- Payment Plans: Use no-interest payment plans and charge cards for larger purchases to spread out payments—but remember to set up automatic monthly payments to pay off the full amount inside the interest-free timeframe.
- Medical Bills: When medical bills are piling up, negotiate a monthly interest free payment plan with the hospital, doctors, or even a collection agency—but don’t miss payments, thus avoiding credit problems.
- Vehicle Lease: Consider leasing a vehicle purchase for a lower monthly payment over 42-48 months—maintain bumper-to-bumper coverage and then swap out every 3 years for a new one.
- Senior Discounts: Take advantage of senior discounts and membership benefits. Many restaurants, grocery stores, hotels, retail stores, and various forms or entertainment will give special discounts to people 65+ and/or with an AARP or AAA membership card.
- Term Insurance: Insurance is not an investment, but it is an asset, and it provides valuable financial protection for your family. If you buy term insurance, you will get the maximum death benefit for the minimum monthly premium payments.
- Life Settlements: Because life insurance is an asset with re-sale value, policy owners should always look at a life settlement for a policy before allowing it to lapse or surrender! They can sell their policy for a lump-sum payment and no more premiums—BONUS life settlements are a common way to pay for health and long-term care costs!
- Reverse Mortgage: A reverse mortgage line of credit can be established for a homeowner 62 and older, and then only draw down what you need when you need it. There are no monthly payments while you live in the house, but interest does accrue on any money used and it must be paid back in full when the home is vacated (typically via selling the property).
- Social Security: People can start taking their Social Security benefit at age 62, but the younger you start, the less you will get as a monthly benefit, and you will lock in that rate for the rest of your life. Every year the monthly benefit increases until age 70, when you plateau at the highest monthly benefit amount. So do all you can to wait until age 70 to attain your maximum monthly benefit for life.
- Medicare: Pay careful attention to the annual open enrollment period, which runs October 15-December 7, when people select the type of Medicare coverage they want for the next year. Remember, Medicare is not a “one-size-fits-all,” and you need to pay close attention to what you (and your spouse) pick for coverage to make sure you don’t make any costly mistakes.
- Pre-Tax Money: Any money you can keep before paying taxes is your most valuable money. Always maximize your pre-tax dollar contributions into a 401(k) and HSA/MSA. Do all you can to keep your money working for you, instead of giving it to the government.
BONUS TRICK - Refinance Mortgage: Mortgage rates are at all-time lows. If a homeowner can reduce their interest rate through a refinance, they should. Remember, closing costs will be rolled into the financing and the better someone’s credit, the lower the rate they can access. Take a 30-year fixed rate and then start making an additional payment every month towards principal.
This provides for a lower monthly commitment but allows for flexibly to increase payments and decrease the time it takes to pay off the loan and less money that will be paid towards interest.
Smart money isn’t just about what you earn—it’s also about what you keep in your pocket. Using these 10 Financial Tricks will help keep your pockets a little fatter.
Chris Orestis is a nationally recognized senior care advocate and expert in retirement, long-term care and specialty senior living funding solutions. The author of two books, numerous published papers and articles, and a frequent industry speaker; he is the innovator that brought the LTC Life Settlement into the market over a decade ago.
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