The uncertainty of the state of the world is causing dread and anxiety for many. Especially if you crave control over your life, remember that you can control the future by taking steps now to make better financial decisions. With that, here are three things you should pay attention to in order to gain back some sense of control.
- Have cash on hand – Financial advisors recommend having six months to a year’s worth of living expenses in cash. By cash, I don’t mean stuffing your mattress, just money that is readily available in a checking or savings account. This is just a rule of thumb, and can be different from person to person. For instance, if you’re close to retirement you may want to have more cash on hand than the six to twelve month recommendation. If you don’t have cash on hand, you can take action today to build up to it. The first step is to go through your spending and create a budget. This helps review what your necessary and non-necessary expenses are.
- Keep saving – If you can afford it, keep contributing to your 401(k) and other investment accounts, even though the market is particularly volatile right now. Put emotion aside and realize that basically, stocks are on sale. And who doesn’t love getting things on sale?
- Refinance your mortgage – One nice side effect of our current economic environment is that interest rates are at historic lows. Now is a great opportunity to check your current mortgage rate and determine if refinancing is a viable option for you. You’ll have to pay closing costs on the refinance, but the savings in interest could be well worth it. For example, let’s say your current mortgage has 15 years left on the term with a 5% interest rate and was originally for the amount of $300,000. Hypothetically, right now, you are able to refinance for as low as 3.25% on a 15-year fixed rate mortgage. In this scenario, your monthly payment will go from $1703 a month down to $1444 a month, a savings of $259 a month. Over the course of the loan, you will save over $33,000 in interest alone.
Those are three simple steps that you can take today to help you feel like you’re more in control during this crazy time. If you need help with any of these steps, contact a financial advisor near you.
Information sourced from Modera Wealth Management in Boston
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