While the sting of 2008 is 8 years ago but still smarts as if it were just yesterday, I find it clear that there are many of you out there that have not taken advantage of it yet... and soon, the party will be over. No, I'm not calling 2008 a party by any means, but the years after that brought us basically flat interest rates. Let's look at the advantages of the "post 2008 debacle."
Interest rates on credit cards went from mostly 15-20% to an average of 5%. This meant that each payment you made had more of it going to principal than interest, thus reducing and hopefully eliminating your entire loan. If you've been paying the minimum, the credit card companies love you... you've been keeping your loan intact with them. Have you been paying off your loan, and reducing your overall debt? Remember: paying off a card is one less bill to pay out... not to mention that you could be putting your “payment” into savings instead of to the credit card company. Let's talk mortgages- you still can get a 15- year mortgage at less than 4%. Have you done a full analysis of your mortgage to see if you could knock off a few years of payments, lower your payments, or possibly both? I've done calculations for dozens of clients in the past few years... have you done yours? This is a golden opportunity you probably won't see again in our lifetime... grab it if you can.
Let's talk retirement contributions- IRA, Roth, 401(k), Tax Sheltered Annuity or just general savings. If you were diligent and did cut down your debt, did you up your savings? When you get a raise, do you raise your retirement contribution? Rule of thumb... if you get a 3% raise, raise your contributions by 3%. If you have a car loan or lease, the car companies are ready and willing to deal- both for a new car as well as a payoff. Don't be afraid to negotiate. If you don't ask, you won't get, they say. It's true- everything in life is negotiable. If you can get close to a 0% loan, why pay it all up in advance? Keep it in your savings account. You may not get much interest, but it will be available to you should you find yourself in a short term bind to make a loan to yourself. 2008 is long behind us, and even the black cloud it brought also brought sunny skies... you just have to look up and look around
