By: Ernie Neve
Despite what many people are saying about the economy, inflation, and the altogether uncertainty in some financial markets, there’s good news IF you know where to look. In fact, some of the “old school” methods that have worked for a long time are working pretty well today. Let’s take a look:
· Check out a HELOC – For a lot of homeowners, the idea of a HELOC – a Home Equity Line of Credit – took a big hit when the real estate boom busted ten years ago. With inflated values on homes and negative equity after the market reset, plenty of homeowners got burned, but a HELOC isn’t a bad thing. What you’ll have to have is the discipline to not waste the money you’re freeing up. Need to put a new transmission in your car? The HELOC can help – but don’t fritter away the money on consumable items. Everything it “helps” you with should be an item that is a “must have” or one that will contribute to wealth creation.
You need to consider it as a valuable tool for easing you and your family over rough spots OR for buying assets. Imagine investing $100,000 from the equity in your home to buy and “flip” a home you then sold for $225,000? See the difference?
A word of caution, though: With interest rates rising, the costs of your HELOC can be higher than in years’ past. What’s nice is that just because you have one doesn’t mean you have to use it.
· Max Out Your 401(k) – If you have a 401(k) at work, then you have a certain threshold of money that your employer will match. Sometimes it’s dollar for dollar, up to a point, sometimes it’s some fraction of that number. Take all that “free” money you can. If they’ll go up to 6%, then use up to that point, then you’re your investments elsewhere. Think in terms of a whole life policy that you’re overfunding, a Roth IRS, or even buying into stocks that are scheduled to split soon.
In EVERY instance, make sure your money is working for you, not just sitting around idly.
· Speaking of insurance, take time to sit down with your life insurance company’s representative and determine if you can use that money more wisely, too. Many times, you can convert a term policy to whole or universal life and when you do, there is a cash advantage to that. At a certain point, that policy will act as a savings account, allowing you to borrow from it and pay back as you need. A pleasant benefit of that practice? You can borrow the “overfunded” amount and STILL not touch the actual death benefit. Imagine living off your life insurance policy!
No matter what you do, as a grown up, you have to manage money – it won’t manage itself and if you let it, it will flutter away like a lonely sparrow. You guessed it, we can help with that, but you have to ask us!
Come by or schedule a time to meet with us and let’s see if there are some new “old” ways we can put more money in your pocket!