Tough times may be here, but you can still improve your finances
The year 2009 is already proving to be financially tough, but the regulatory agency that oversees stockbrokers and the markets has some tips to help you weather the storm.
The Financial Industry Regulatory Authority (FINRA) suggests your top priority should be paying down credit card debt. “Banks are increasing interest rates and late fees and reducing credit limits on credit cards,” it says. Paying down debt will save you interest and improve your credit score.
With credit harder to get, it recommends checking the accuracy of your credit report.
Call 1-877-322-8228 or go to: http://www.annualcreditreport.com.
If you don’t have one, create a rainy day fund. One in three Americans have no liquid savings, FINRA says. Try to put away the equivalent of at least one months’ salary, and preferably three to six months’ worth if possible.
Avoid raiding your 401k or stopping contributions. Now is the time to keep your 401k funded so that it can recover with the markets, it says.
Diversify your investments by spreading your money among different asset classes like stocks, bonds, and cash. This will reduce your overall risk and smooth your returns over time.
Avoid reacting to the market’s current downs and ups and instead invest for the long term, FINRA recommends:
“Instead of panicking or trying to time the market, focus on the long term,” it says. “Investing incrementally, in good times and bad, is a tried and true way of bearing up in a bear market.”
You should also take steps to protect yourself against identity theft. “Virtually any news item, positive or negative, can become a ‘hook’ for a new scam,” it says. “Phishing attacks surged in October 2008 by 103% following stock market drops.”