4 Financial Improvements to Make During Quarantine
As we all adjust to the realities of the COVID-19 pandemic, we find ourselves with a lot more time at home due to the Stay at Home order. Our commute times are now a simple walk down the stairs, many of the social gatherings that filled up our weekends are cancelled, and that means more time available to each of us.
It’s easy to find another show to stream online, but one would be wise to use this time to make improvements to their financial life by taking the following steps:
1. Increase your Savings
For those that have retirement plans through their employer, now would be an excellent time to increase your contribution if you are not already maxing this out. For some, the adjustment of staying at home means fewer expenses and this could present the opportunity to save more in their retirement account or investment accounts. In addition, adding to an emergency savings account is also a prudent step.
2. Get a Credit Report
A credit report will reveal all the open credit lines in your name, and you may find some of the items on the report surprising. If you opened a credit card to get an extra 20% off a large purchase at a department store and never closed it, chances are it still exists. Even if the credit card is buried in a drawer never to see the light of day, it has an effect on your overall score and may expose you to credit card fraud. If you find some of these open credit lines that are unnecessary, you can close out the accounts and likely improve your credit score.
3. Consider Refinancing a Mortgage
During the outbreak of COVID-19, one of the actions the Federal Reserve took was to lower interest rates to all-time lows. This presents an opportunity to refinance a mortgage to a lower interest rate. Of course, refinancing a mortgage will reset the term so this must be considered in the process. For some, this could drastically lower the interest expense over the life of the loan.
4. Review your Stock and Bond Mix and Cash in your Account
At BDF, we are busy using this market pullback to rebalance portfolios. In simple terms, this means selling bonds and investing in stocks. This discipline is difficult in the moment, but as we’ve written recently, the math shows this to be beneficial in the long run. If you’re managing your own portfolio, pay close attention to cash that may have accumulated in the account if you do not regularly review it. Now is an excellent time to review these accounts and look for opportunities.
At BDF, we are here to help you with all these issues and more. We hope you and your family stay safe and healthy during this time.
Dave Deschamps is a Wealth Manager and the leader of the Widows Practice Group at BDF. Dave enjoys bringing clarity and understanding to the big picture questions while filtering out a lot of the distractions. Drawing on over a decade of experience as a CERTIFIED FINANCIAL PLANNER™ professional, he’s able to help clients balance the financial implications along with the emotional considerations when making important decisions. Dave joined BDF in September 2017 after spending the previous 10 years with a financial planning firm in the Chicagoland area. He earned his B.A. in Business Administration from Calvin College in Grand Rapids, MI.