During tough economic times, many people’s finances fall into shambles. Even if you’ve been a diligent money manager in the past, a downturn in the economy can wreak havoc on your bank account. At least, it can if you let it. You don’t have to sit back and watch your financial situation fall apart during a recession. There are plenty of small but effective ways to stay on the right track financially. A handful of the best tips are outlined below.
Refinance Your Mortgage
Although the economy is in rough shape, interest rates are at historic lows. If you haven’t looked into refinancing your mortgage, now is definitely the time. There are even government programs out there that provide incentives for doing so. The Home Affordable Modification Program, or HAMP, is one prime example. If you can demonstrate that you’re struggling to make your monthly mortgage payments, you may be eligible to refinance at a much lower interest rate with little or no money down.
Cut Energy Costs
When the money is flowing like water, it’s easy to be frivolous about energy costs. When the economy takes a nosedive, it pays to start being a little more careful. Turn off lights when they’re not needed. Unplug unused appliances. Have an energy audit performed on your home; you can use the report to make changes that will save you a lot of money. When old appliances bite the dust, invest in energy-efficient models. Switch to CFL bulbs too. These steps will shave a lot of money off of your monthly energy bills.
Look into New Car Insurance
As busy as life is, it’s easy to assume that you’re already paying a fair price for automobile insurance. In reality though, what you have could be a far cry from a cheap car insurance policy. Your current insurance company isn’t going to alert you when better deals roll around, which is why you need to be proactive about the situation. Get some online quotes to see what’s available. A much better deal may be out there.
Assess Your Tax Situation
Are you getting all the tax credits to which you are entitled? You might want to hire a tax pro with an LLM in taxation to look over your situation for you. Do you end up with a huge refund every year? You may have too many taxes withheld from your paychecks. Why let the government hold that money? It would do you a lot more good in your own savings account, so look into claiming more on your taxes as well.
If you try to save a specific dollar amount per month, you’re liable to miss the mark and give up entirely. A better and more practical solution is to set aside a percentage of your pay instead. If possible, put at least 10 percent of your take-home pay in a savings account. If your pay fluctuates, the amount you save will too, and that’s perfectly okay.
Don’t neglect your retirement accounts just because the economy is floundering. Keep contributing to them. In fact, you might even want to look into new investment opportunities. However, stick with low-risk options. In this type of economic climate, taking risks is definitely unwise.
Don’t Window Shop
You should avoid making unnecessary big-ticket purchases during tough economic times. Eliminate temptation by cancelling catalog subscriptions. Don’t go wandering around the mall either. Before making a purchase, decide whether it’s something you need or something you truly want. Wait a day or two. You’ll probably forget all about it.
The worst time to let personal finances fall by the wayside is during a bad economy. Keep these tips in mind to weather the storm with ease.
Anthony King a Financial and Insurance specialist who writes for CheapCarInsurance.net.