Looking for financial success but not sure where you should start? There are so many loopholes and hacks out there that you’ve probably never heard of - and may never will if you don’t do your research. Of course, we would never, ever suggest any type of illegal or morally unethical money tip. There are, though, plenty of tricks of the trade that are entirely within the lanes of the law. The following money hacks are useful, low-profile and, of course, legal.
1. Sign up for a Rewards Card
Do you use your debit card for your daily spending? You could be getting major rewards for swapping it out for a credit card - or by simply using your debit card as a credit card instead. It’s as simple as saying “credit” when the cashier asks if you want to use credit or debit. Find out if you can get cash back when you use your debit card as a credit card - many banks do this because they get money from the credit card company every time you swipe.
2. Save for College With a Roth IRA
If you’re saving for a kid’s college tuition, you’ll notice that 529 accounts have limitations - for some families, their 529 account savings counts as an asset, which can reduce the odds of getting financial aid. For families that are worried about this, it’s better to save via a Roth IRA. You’ll be able to contribute to the Roth IRA to the limit so long as your adjusted gross incomes is under $112,000 as a single parent or $178,000 if you’re married and filing jointly. Remember to not take the interest out of your Roth IRA, just the principal. Otherwise, you’ll pay penalty fees.
3. Ask Your Parents to Open a 529 for a Future Student
If you’re saving for college, but you’re not saving for your own kid, this is a great option. Some people like to start a college fund for their niece, nephew, grandchild or godchild. The FAFSA forms don’t ask about assets other than those of the student’s parents. That means that when a college is determining whether or not to give financial aid, they won’t take those other 529 accounts into consideration. The grandparents (or aunt, uncle or close family friend) don’t necessarily have to contribute to the savings account - the parents can still do that.
4. Pay Your Insurance Yearly
If you’re going to be paying insurance for the next year, make it a point to pay off the premium all at once. Most people make monthly insurance payments, but in the long run, you’re spending a lot of money that you don’t have to. By paying in one lump sum, you get a major discount because the insurance companies know that your payment is fulfilled for the next 12 months. Monthly payments are a courtesy - one that comes with an additional 9% included. Plan ahead to pay off your insurance policies all at once and rest easy throughout the rest of the year.
5. Use a 0% Interest Credit Card to Pay Debt
If you’re lucky enough to still have a good credit score despite your debt, apply for a credit card with zero interest. Then, transfer the balance from that credit card with a high interest rate to the 0% interest card. You’ll avoid paying the interest on the first card! There really aren’t any cards that will never charge interest, but you can certainly find ones that don’t charge interest for the first year or so. Just make sure that you can pay off the balance within that 0% interest time frame. Also, keep in mind that you’ll probably be charged for the actual transfer of the balance, which is generally around 3% of the total amount you’re transferring. If you have a small balance, this isn’t a good idea - a higher balance means that the interest fees you’re going to save on are more than the fee you’ll pay to transfer the balance. Lastly, when you open a credit card, your credit score might be affected - however, it usually isn’t worse than the damage you could do to your credit score by not paying off serious debt.
6. Create Auto-Drafts for Investments
Managing your own investment accounts? You’ve probably noticed that you pay a fee every time you make a trade or carry out another transaction. However, most companies will waive the fee if you signup for auto-draft, meaning you’ll automatically contribute the same amount of money every month. Why do they waive the fee? Because you’ve guaranteed that you’re going to pay instead of paying every once in a blue moon. Your best bet is to speak with your financial planner first and then talk to your broker about setting up auto-pay and getting rid of fees.
