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Financial Security Strategies
Aug. 29th, 2006 08:30 pmWhat are your favorite security or preparedness strategies? Here are some of mine:
* Have a full-time job. Don't quit it until I have another one lined up. (I also work someplace that almost never lays anyone off--they have hiring freezes instead. However, I think I have enough saved now that I don't need this form of security.) (My job also comes with a pension plan with forced participation.)
* Contribute the maximum to a Roth IRA. This protects some of my money from future taxation. I also have the money automatically added each month so I get the maximum time to grow it and I don't forget it.
* Buy a house and pay it off. This protects me from some increases in housing prices (although taxes and insurance still rise). It does also put me at risk of having to live somewhere icky because it's harder to move than when you're renting.
* Budget money monthly for car expenses. This way, when car insurance, inspections, etc. come due and when repairs are needed, I have the money. By saving up ahead of time, I don't have to pay interest or installment fees--I can just pay for these things up front.
* Budget money monthly for housing expenses. Same thing. Some of this is done automatically, manditorily by my mortgage company who charges the same amount monthly and saves up to pay my taxes and insurance. But some extra allows me to be able to afford to fix things.
* Buy things that are durable. I try to buy reliable cars, I looked for a house with a solid foundation, and when I replace things, I don't just get the cheapest thing possible. For example, when I replaced my roof, I got 20-year shingles instead of 15-year shingles. I just replaced my tires with higher-quality tires. I try to get appliances that last a long time. I try really hard not to be swayed by just looks, but try also to pay attention to what something will look like in the future and how much maintenance will be required. I don't do this with watches (which I used to lose before they broke) or clothing, though.
* Buy things that use less energy than their alternatives. When energy star appliances are available I buy them. I try to get cars with good gas mileage (although I didn't do so great this last time). This strategy is more about reducing my poisoning of the atmosphere than financial security, but I thought I'd mention it. It's also another example of paying more now, when I can afford it, and thus giving myself the option to live on less in the future when my finances might be different.
* Have lots of my money in stocks and even some in inflation-protected I-bonds (from the olden days when they were good), to protect me against inflation.
* Have insurance - homeowner's insurance (required by my lender, but I'll continue to have it after I pay off my house). This protects me from devastating damage. Flood insurance, which you have to get separately. Long-term disability insurance. (I have enough vacation and sick leave to serve as short-term disability insurance.) Liability insurance on my car (required by law anyway). I don't have collision insurance on my car, though, because it's not a good deal. My car is so old, the company will just say it's totaled for even the smallest damage. No life insurance--I have no dependents and my savings will easily cover burial expenses, etc.
* Have quarters and dollar bills stashed in my house. This protects when I'm an idiot and don't go to the bank or when we need to get some water out of machines.
* Have my paycheck directly deposited. My company is faster at depositing my check than I would be and I don't have to worry about losing my check or trying to find time to get to the bank or not having access if I'm home sick that week, etc.
* Pay my bills as soon as I get them. I know people who have bad credit because even though they have the money, they have trouble paying the bills on time. I don't want that trouble. And everyone and their dog snoops into your credit record (creditors but also insurance sales people, landlords, prospective employers, and who knows who else). I love that I can set up payment online for my credit cards as soon as I get the bill, but specify that the payment go through at a later date so I get to keep my money for an extra two weeks. I'm probably earning only a few cents on that money, but I still like it.
* Never lend money I can't afford to lose. And get more assertive about asking for money that people owe me. This way I can get it quicker without having to be unreasonable. I don't like being a nag, but I now consider any nagging I do to be the other person's fault, not mine.
* Spend less on things I care less about so I can have more for things I care more about.
Winging skills are good, too:
* Job skills - I have secretary skills--it's easy to get secretary work. If I were really desperate, I could probably get a teaching job now. I think it's also helpful to have skills (and connections) for part time work. I can get more test scoring jobs if I needed to and can tutor. I've also done transcription for social scientists. I also know a little more about writing for publication, though I've never done it.
* Credit cards - I have more than one credit card, from more than one credit card company, so that if one gets locked up or something, I still have access to credit. I have high limits in case something big comes up. Most places say all your emergency money should be in a money market account or something, and they also say you should have three to nine months of expenses in your emergency savings. I'd rather have most of that in stocks. I try to keep $500 in my savings account and $1000 in my money market account. If that's not enough, I have credit cards and stocks.
* Inventory - I have a lot of stuff. If I couldn't afford to buy more clothes for a while, for example, that would be okay. If I can't get out to go shopping, I have plenty of food and laundry detergent, etc. in the house. I have enough books and music and movies to keep me entertained for free for a very long time.
* Frugality skills - I can cook and can repair textiles and have other money-saving skills.
* Moving - I'm not afraid to move. I don't want to, but if my town gets icky, or there's an awesome job elsewhere, or there's some other very good reason to move, I'm not going to be one of those people who simply can't imagine doing so.
Other things I would like to do:
* Look into hurricane shutters. There's also some kind of bracket that attaches your roof more solidly to your walls that's also good for wind storms. I'd also like to look into flooding preparation. My circuit breaker box is already four feet above the floor, so that's supposed to be good.
* Sometimes I think I would like one of those things you stick on your steering wheel to lock it in place. Then the car is harder to steal, plus you can use it to hit someone over the head with if necessary. Seems like it would be a hassle, though, every time I wanted to drive.
* Save way more money! Magically!
* Have a full-time job. Don't quit it until I have another one lined up. (I also work someplace that almost never lays anyone off--they have hiring freezes instead. However, I think I have enough saved now that I don't need this form of security.) (My job also comes with a pension plan with forced participation.)
* Contribute the maximum to a Roth IRA. This protects some of my money from future taxation. I also have the money automatically added each month so I get the maximum time to grow it and I don't forget it.
* Buy a house and pay it off. This protects me from some increases in housing prices (although taxes and insurance still rise). It does also put me at risk of having to live somewhere icky because it's harder to move than when you're renting.
* Budget money monthly for car expenses. This way, when car insurance, inspections, etc. come due and when repairs are needed, I have the money. By saving up ahead of time, I don't have to pay interest or installment fees--I can just pay for these things up front.
* Budget money monthly for housing expenses. Same thing. Some of this is done automatically, manditorily by my mortgage company who charges the same amount monthly and saves up to pay my taxes and insurance. But some extra allows me to be able to afford to fix things.
* Buy things that are durable. I try to buy reliable cars, I looked for a house with a solid foundation, and when I replace things, I don't just get the cheapest thing possible. For example, when I replaced my roof, I got 20-year shingles instead of 15-year shingles. I just replaced my tires with higher-quality tires. I try to get appliances that last a long time. I try really hard not to be swayed by just looks, but try also to pay attention to what something will look like in the future and how much maintenance will be required. I don't do this with watches (which I used to lose before they broke) or clothing, though.
* Buy things that use less energy than their alternatives. When energy star appliances are available I buy them. I try to get cars with good gas mileage (although I didn't do so great this last time). This strategy is more about reducing my poisoning of the atmosphere than financial security, but I thought I'd mention it. It's also another example of paying more now, when I can afford it, and thus giving myself the option to live on less in the future when my finances might be different.
* Have lots of my money in stocks and even some in inflation-protected I-bonds (from the olden days when they were good), to protect me against inflation.
* Have insurance - homeowner's insurance (required by my lender, but I'll continue to have it after I pay off my house). This protects me from devastating damage. Flood insurance, which you have to get separately. Long-term disability insurance. (I have enough vacation and sick leave to serve as short-term disability insurance.) Liability insurance on my car (required by law anyway). I don't have collision insurance on my car, though, because it's not a good deal. My car is so old, the company will just say it's totaled for even the smallest damage. No life insurance--I have no dependents and my savings will easily cover burial expenses, etc.
* Have quarters and dollar bills stashed in my house. This protects when I'm an idiot and don't go to the bank or when we need to get some water out of machines.
* Have my paycheck directly deposited. My company is faster at depositing my check than I would be and I don't have to worry about losing my check or trying to find time to get to the bank or not having access if I'm home sick that week, etc.
* Pay my bills as soon as I get them. I know people who have bad credit because even though they have the money, they have trouble paying the bills on time. I don't want that trouble. And everyone and their dog snoops into your credit record (creditors but also insurance sales people, landlords, prospective employers, and who knows who else). I love that I can set up payment online for my credit cards as soon as I get the bill, but specify that the payment go through at a later date so I get to keep my money for an extra two weeks. I'm probably earning only a few cents on that money, but I still like it.
* Never lend money I can't afford to lose. And get more assertive about asking for money that people owe me. This way I can get it quicker without having to be unreasonable. I don't like being a nag, but I now consider any nagging I do to be the other person's fault, not mine.
* Spend less on things I care less about so I can have more for things I care more about.
Winging skills are good, too:
* Job skills - I have secretary skills--it's easy to get secretary work. If I were really desperate, I could probably get a teaching job now. I think it's also helpful to have skills (and connections) for part time work. I can get more test scoring jobs if I needed to and can tutor. I've also done transcription for social scientists. I also know a little more about writing for publication, though I've never done it.
* Credit cards - I have more than one credit card, from more than one credit card company, so that if one gets locked up or something, I still have access to credit. I have high limits in case something big comes up. Most places say all your emergency money should be in a money market account or something, and they also say you should have three to nine months of expenses in your emergency savings. I'd rather have most of that in stocks. I try to keep $500 in my savings account and $1000 in my money market account. If that's not enough, I have credit cards and stocks.
* Inventory - I have a lot of stuff. If I couldn't afford to buy more clothes for a while, for example, that would be okay. If I can't get out to go shopping, I have plenty of food and laundry detergent, etc. in the house. I have enough books and music and movies to keep me entertained for free for a very long time.
* Frugality skills - I can cook and can repair textiles and have other money-saving skills.
* Moving - I'm not afraid to move. I don't want to, but if my town gets icky, or there's an awesome job elsewhere, or there's some other very good reason to move, I'm not going to be one of those people who simply can't imagine doing so.
Other things I would like to do:
* Look into hurricane shutters. There's also some kind of bracket that attaches your roof more solidly to your walls that's also good for wind storms. I'd also like to look into flooding preparation. My circuit breaker box is already four feet above the floor, so that's supposed to be good.
* Sometimes I think I would like one of those things you stick on your steering wheel to lock it in place. Then the car is harder to steal, plus you can use it to hit someone over the head with if necessary. Seems like it would be a hassle, though, every time I wanted to drive.
* Save way more money! Magically!