2020 will be remembered as the year of a global pandemic that appeared again after 100 years, causing thousands of deaths globally and leaving many people in debt and jobless.
We know many of you are in a tough financial situation and that’s why we want to give you a list of smart money moves to make in 2021.
- Refinance your mortgage: As a result of the pandemic, the Federal Reserve decided to lower the Fed Funds rate to 0.25%. This means that mortgage interest rates are at historical lows and homebuyers can now borrow at lower interest rates. The 15-year mortgage rate fell from 4% to 2.3% and considering the fact that the average mortgage in the US is $370K, refinancing saves homeowners $6,290 annually.
- Move your credit card Your balance is how much you still owe your credit card provider for things you've charged...: Credit card companies often offer 0% APR for balance transfer during the first 12 months to attract new customers. When you have a credit card balance, your credit card company usually charges an APR (annual percentage rate) that ranges from 14%-24% depending on your credit score and the specific credit card. Suppose you have a credit card balance of $6,000 USD and the APR on your credit card is 16%, if you keep that balance for a year you would pay $960 USD in interest. You can save that money by moving the balance on your credit card to one with 0% APR. Compare Credit Cards
- Apply for unemployment benefits: Many independent contractors, part-time and full-time workers are unemployed. You may qualify for unemployment insurance relief, for more information please visit the Department of Labor.
- Prepare a budget: It is important to understand your income flows and plan your expenses With a budget plan, you can save yourself from getting into unnecessary debt when the economy revives. Avoid a negative surprise in April when you file taxes, estimate your taxes and start provisioning for the payment. Remember that unemployment benefits are taxable at a federal level and state level!
- Learn a new skill: If you find yourself unemployed at home, try learning a new skill online or selling a product/service online. The pandemic made many companies decide to work from home and even though they might not be hiring full-time employees they still need to hire online contractors to do their job.
- Borrow from your 401(k): We do not recommend pulling funds from your retirement account, but this option is a better alternative than getting money from a payday. In case it’s strictly necessary, you can pull out money from this account to cover your basic living expenses.
- Talk to your landlord: Rent usually takes 35% of the income. If your lease is about to expire, we would encourage you to renegotiate your lease with your landlord. They understand that occupancy rates have gone down in big cities as a result of work-from-home and they would rather lower your lease than have their place empty!
We hope these tips will help you save money!