Lifehack Credit Card

Seven Under-the-Radar Financial Hacks Everyone Should Know About  June 30, 2015 – 08:06 am

Seven Under-the-Radar Financial Hacks Everyone Should Know AboutJust before the Enron scandal broke, the company's CEO immediately put his money into annuities—in his wife's name. Why? Because those assets are creditor-protected, so they can't be seized (in this case, by the government). This is just one example of many illustrating how extremely wealthy people get the most from their money—and most of them do it legally. Much of their success comes from knowing where to find loopholes in the financial system. While we'd never recommend any illegal or dishonest money moves (seriously, don't break the law!), there are a handful of legal personal finance hacks that are available to all of us.

Borrow Against Your Home's Equity

Seven Under-the-Radar Financial Hacks Everyone Should Know AboutThis hack is for homeowners, but it's good for everyone to know about should you ever decide to buy a home.

How It Works: Instead of having the bank front you the money you need through a personal loan, you borrow against your home's equity. (As a reminder, equity is the difference between the total of your mortgage and the appraised value of your home.) The benefit here is two-fold: Since you've already been approved for a mortgage, the process will be less involved for this loan. You'll need to get your home appraised, but your lender should be able to walk you through the process. Second, interest payments on home equity loans are typically tax-deductible, unlike interest on personal loans.

Lenders probably won't give you an amount equivalent to the entire equity—you'll get more like 75%, at most. But if you have equity of 0, 000, that's , 000 you may be able to borrow. This is a great option if A. you're planning to stay in your home for a while and B. your home is worth more than what you paid for it.Seven Under-the-Radar Financial Hacks Everyone Should Know About If your home is worth less than your mortgage, you have little equity or you'll be moving soon, this hack is not for you. And a word of caution: If you go this route, you must be vigilant about making timely payments on your loan—since you're borrowing against your home, you could lose it if you fall behind on those payments.

Pay Down Debt Using a Zero Interest Credit Card

For this hack, you need either a respectable credit score in order to apply for a new card or an existing credit card with zero interest.

How It Works: The most insidious part of carrying a large balance on your card is the interest that you're paying on that balance, which can be as much as 20%. With this hack, you're making a balance transfer to another card to avoid paying that interest. This maneuver only works with cards that don't charge interest. Luckily, many credit cards offer an initial promotion of 0% interest for up to 18 months when you open a new card.Seven Under-the-Radar Financial Hacks Everyone Should Know About If you're carrying considerable debt that you intend to pay off within the 0% period, you can do a balance transfer (essentially, you're paying off the interest-bearing card using the new card, so your balance appears on a new bill) to pay down your debt without interest.

There is a charge for the balance transfer—usually around 3% of the amount that you're transferring—so if you have a very small balance on your card, this might not be the hack for you. The idea is that your would-have-been interest payments cost more than the balance transfer fees. You can figure out how much money you'll save with this maneuver by using a credit card balance calculator. Note that your credit score will get dinged when you open a new card because you're changing your utilization rate, but in the grand scheme of things, this ding doesn't compare to the full-on wreck that is major credit card debt.

Use a Roth IRA to Save For College

This hack is useful if you're saving for a child's college tuition because it gets around the limited use of 529 accounts. That said, Roth IRAs do come with income limitations: You can contribute to a Roth IRA to the limit if your adjusted gross income is less than $112, 000 filing alone, and $178, 000 if you're married, filing jointly, so consult your tax advisor before giving this idea a try.


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