Rethink your budget

Couple budgeting
Branislav Nenin / Shutterstock

Asking your loved ones for money can make family get-togethers extremely awkward, even over Zoom. A strained relationship can also have a financial cost, as your friends and family will be less keen to babysit or help you fix the front porch.

With a bit of scrimping and some smart shopping, you may be able to avoid that difficult conversation, or at least reduce the amount you need.

Start by creating a list or spreadsheet of all your monthly expenses and identifying any nonessential items you can cut out for the time being.

For example, cancel any subscription services that you don’t use regularly. You can always re-subscribe later, and you may even qualify for a free month or two when you sign back up.

Next, try to reduce the cost of your essentials. Check out a few different grocery stores in your neighborhood, as prices can vary a lot between supermarket chains.

The same strategy can be applied to other key expenses, like your car insurance. By comparing rates from multiple insurance companies online, you may be able to save more than $1,000 a year.

Simply add Capital One Shopping to your browser, and shop like normal. This free tool does the work for you.

Install Capital One Shopping

Trade in your high-interest credit cards

Credit cards
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Although you might be tempted to coast by on your credit cards until your financial situation turns around, credit card debt is a tough hole to climb out of — especially if you’re only making the minimum payments each month.

Unlike most personal loans, credit card interest rates can be painfully high: over 20% in some cases. To make matters worse, credit card interest compounds, which means that unless you pay off your balance in full each month, you’ll end up owing interest on your interest.

However, if your credit score is in decent shape, you may be able to trade in your high-interest credit card debt for a new loan at a much lower rate.

With a debt consolidation loan, you can pay off all of your current debt immediately. Then you’ll only be responsible for a single monthly payment at a more affordable interest rate.

Depending on how much interest you currently pay, consolidating your credit cards could save you thousands of dollars and help you become debt-free years sooner.

Refinance your mortgage

Refinance mortgage
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After hitting record lows 17 times in 2020, mortgage rates continue to sink lower and lower.

If you’re a homeowner and you haven’t recently refinanced your mortgage, you may be able to save hundreds of dollars a month by trading in your existing home loan for one of today’s bargain rates.

Similar to debt consolidation, you’ll need to have a solid credit score to qualify for a refi. It’s also recommended that you have at least 20% equity in your home.

As of last month, there is now a 0.5% fee for refinancing, although you may be able to avoid it if you follow our advice.

Just remember that different lenders offer different rates, so it’s a smart move to compare at least five offers before you commit to one. Shopping around for rates can make a $3,000 difference in how much you save over time, according to the government-sponsored mortgage agency Freddie Mac.

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Use a price-checker when you shop online

Price checking online purchases
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With lockdown measures still in effect, you’re likely doing most of your shopping online these days. That includes purchases big and small, essentials and luxuries.

And while big retailers like Amazon and Walmart make it possible to get everything you need in one order, that convenience will cost you.

Unless you take the time to price-check every item in your cart against other retailers, you’ll probably wind up spending a lot more than you need to when you click the “buy” button.

Fortunately, price-checking your order doesn’t have to be a time-consuming ordeal. You can download a free browser extension that will instantly compare prices on everything in your cart against thousands of other online stores.

It only takes a few seconds to install and could potentially trim down your online shopping bills by hundreds of dollars this year.

Call in a pro

Video-chatting with advisor
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If you’re still feeling tapped out, seek out some professional advice before you start raiding your retirement fund.

Under the CARES Act, Americans could make an early withdrawal of up to $100,000 from a 401(k) or traditional IRA without penalty. However, that provision expired on Dec. 30, and the new relief package does not include an extension.

That means that if you withdraw money from your retirement accounts before age 59 ½, you’ll be subject to a hefty 10% penalty in addition to the income tax you’d normally owe.

A certified financial planner may be able to help you get back on track without cracking into your nest egg. These experts will analyze your situation, look at your options and build you a personalized plan for the future.

Many banks provide complimentary financial planning services, so it’s worth looking into whether you’re eligible for a free consultation. If your bank doesn’t offer financial planning, check out our guide on how to find a good adviser.

It’s often cheaper to go with an online financial planning service, like Facet Wealth. Aside from the money you’ll save, you’ll be able to get advice over email or video chat any time you have a question, and you won’t have to worry about social distancing restrictions.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Shane Murphy

Shane Murphy

Reporter

Shane is a reporter for MoneyWise. He holds a bachelor’s degree in English Language & Literature from Western University and is a graduate of the Algonquin College Scriptwriting program.

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