4. Give money away
If you are fortunate enough to have money to give away, low interest rates make it easier to be generous and charitable, says Alexey Bulankov, a financial adviser and CFP with McCarthy Asset Management Inc. of Redwood Shores, Calif.
"This environment of low rates and poor economic conditions, combined with a massive intergenerational wealth transfer and looming estate, gift and income tax hikes create a once-in-a-lifetime opportunity to give, borrow, move money, be charitable and create a legacy," Bulankov says.
Look into strategies such as a charitable lead annuity trust, or CLAT, which combines philanthropic with wealth-shifting goals by allowing the grantor to put money into a trust that pays out to a charity during the life of the grantor. At the end of the grantor's life, the remainder is passed to beneficiaries. CLATs work well in a low-interest-rate environment. If the performance of the investments exceeds the "Section 7520" interest rates -- used to value certain charitable interests in trusts and published monthly by the Internal Revenue Service -- then the excess earnings at the end of the term pass to the beneficiaries tax-free, Bulankov says.
"The lower the 7520 rate, the larger the potential gift to the family or heirs," he says.
5. Review investments
While you don't want to spend money in a down economy on investments that are not giving you much in return, you may want to look into ways you can diversify your portfolio and spread the risk, Cecere says.
Talk to your financial adviser about alternatives to savings accounts and money market funds, asking for options that earn better returns on your savings. Also, be wary of buying investment vehicles such as bonds when interest rates are low.
6. Lock in student loan rates
Federal student loan rates are usually low, but even they have taken a slight dip in this low-interest environment. If you have more than one student loan outstanding, check with your federal student loan provider on how to consolidate and lock in at a lower interest rate, Cecere says. (Use MSN Money's calculator to find out how long it'll take you to pay off your student loans.)
7. Pay off credit card debt
While mortgage and car loans have favorable interest rates, the same is not true for borrowing money on your credit card. Work on reducing or eliminating this debt. If you have a choice of putting money into a savings account or paying off debt, pay off the high-interest credit card debt first because financial institutions are paying very little interest in savings accounts. (How long will it take you to pay off your credit cards? Find out with MSN Money's calculator.)
You also may want to negotiate lower interest rates with credit card companies, particularly if you have a good track record with paying on time, Cecere says.
VIDEO ON MSN MONEY
I will offer a bit of advice, you've heard it before from many sources. DON'T live beyond your means, PAY off your debt, LIVE in the real world. Would I like ti have an iPad 3, a 4g LTE phone, etc, but I do not need them, so I do without.
In Move #2, we are encouraged to switch from a 30 year mortgage to a 15 year mortgage, even though rates are at historic lows.
In Move #3, we are encouraged to "stretch out your financing dollar for as long a term as possible, especially since inflation can't be postponed forever".
Hmm. Did different people write #s 2 and 3?
Today, while giving info over the phone for a refinance through Wells Fargo, at 3.87%, things were going fine, but when the broker went to type in the final info, the rate had leapt up to 4.+%. Apparently, during the phone call the rate went up 3/4 %. Bye, bye Wells F. I have 81% equity in the home and an exellent credit rating. I should be one of those upside down mortage holders who bought more than I could afford, and then the bank would be helping me.
So much for having great credit and making wise decisions. Now I get to bail out all the flakes.
Hell, why not go with 100% down and invest for your future retirement; enjoy the weekends and holidays too at a bargain price!
If you look around you can easily find homes for less than $100K.
Please don't bother becoming a landlord if you are just going to view your tenants as your "cash cow" and not people to whom you are responsible for upkeep and problem solving, unless you plan to hire that part out to someone who will do it well.
@RockCandy96 - To qualify for the best rates, you may owe no more than 80% of the appraised value of your home. Since your home appraised at 78k, you may owe no more than 62.4k to get that nice 3.5% rate. Do you have $8,600 + closing costs tucked away in a savings account? If not, do you have any way to raise it? (An extra car to sell, the ability to borrow at 0% for a year or two from a credit card, etc.) How about taking a second mortgage for the $8,600 + closing costs? Talk to your lender about that (rates, fees, etc.)
You're close to being able to make it work. Think big picture. What can you do to close the gap? Good luck!
Good Luck negotiating with Credit Card companies. Twice, in the past week I was told No. I have two major cards, both have higher rates, double my credit union card. I called them both. I have good credit scores, I pay at least my minimum every month and am never late. I deserve better that 18 or 19% cards.
I even informed them of my credit history and my history with them. The feds should do something about these high rate robbers.
Your local credit union is a great resource. I refi'd with no cost to me, lowered my interest rate and term. A home run. Most will let you open an account for as little as $5.00 to be eligible to apply...
Goodbye Bank of America....Hello Philadelphia federal credit union!
Me and my husband wanted to refinance our 30 year mortgage at a 6.5% interest rate to a 15 year mortgage and a 3.5-4.5% interest rate. Turns out, even though we are not underwater, we are not far enough ahead to qualify. How does that make sense?? We owe $71k and house is worth $78k...Was told we can only refinance if the house was worth over 90K...
My home loan had a balance of 105,000 and I had a equity line of credit which was adjustable but has been sitting a 3.25 percent for the last couple years. Balance on that loan was about 55k. I really wanted to get rid of that Heloc loan! My home loan rate was initially a 20 year loan at 5.375 percent with like 11 years left on it. I just refied and combined the loans to a 15 yr loan at 3.375 percent which I feel really good about now.
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