The Dos and Doníts of Protecting Your Finances

The Dos and Doníts of Protecting Your Finances bb3 Dec 1, 2011

By Staff Writer State Farm™ Employee

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A challenging economy brings about plenty of uncertainties, but you may be better able to weather a storm if you have certain financial safeguards in place. Here are some suggestions that may help you maintain a solid financial footing.

  • Do pay off debt.  As challenging as it may be, make debt reduction one of your top prioritiesóparticularly credit card balances with high interest rates.

  • Do consider refinancing your home. While mortgage interest rates are still low, you may want to lock into a fixed rate loan.

  • Do look for ways to scale back. Consider moving to a smaller, more affordable home or apartment. At the same time, sell possessions that you no longer useósuch as an exercise bike or collections of items that no longer interest youóand save the money.

  • Do try to live on one salary. If you and your partner are both employed, strive to live on one income and put some or all of the rest in savings. Be sure some of that money is deposited into accounts that are accessible for emergencies.

  • Do negotiate. Ask for lower rates on credit cards and for discounts on merchandise. If there are sign-up fees for a particular service, see if that fee can be waived. In lean times, some retailers will agree, just to keep you as a customer.

  • Do pay cash for purchases. Spend only what you have in hand right now; put off purchases that require you to add to a credit card balance.

  • Do enrich your salary potential. Learn new skills, take on some different responsibilities at work or even start a small part-time business. In a downturn, the expertise you bring to a position may help make you invaluable to your companyóor give you options should you be downsized.

  • Donít raid your retirement account. Youíll typically pay a 10 percent federal income-tax penalty for removing the funds early, and youíll shortchange your future.

  • Donít let insurance lapse. Keep your home, disability, life, and car insurance coverage current. If something happens to you during a down time, youíll need that protection.

  • Donít co-sign a loan. Itís risky unless youíre sure you can shoulder the entire burden yourself. Even if the co-signer is trustworthy, thereís no guarantee he or she wonít default.

  • Donít take on additional debt. Thoroughly evaluate any outlay that results in debt. A student loan for your child may be a reasonable debtóbut a big credit card expense is not.
The information in this article was obtained from various sources. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. The information is not intended to replace the advice of a qualified professional. Nor is it intended to effect coverage under any policy. State Farm makes no guarantees of results from use of this information. We assume no liability in connection with the information nor the suggestions made.

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