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Save or Borrow MoneyWe’ll all agree: it’s not fiscally great out there. The Government declared an end to the Great Recession: obviously, they don’t get out much. They stated that unemployment is “moving down” to 8.3%- they “forget” part time workers and those who have gone through their full 99 weeks of unemployment. How’s this for a lesson?

To Pay New York Pension Fund, Cities Borrow From It First

Cities and counties throughout New York are using an unusual arrangement through which they can manage their rising pension bills by borrowing from the very same pension fund to which they owe money. It is estimated that local governments will borrow $750 million this year to finance their pension contributions. “The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.” The growing desire to borrow is a sign of the degree to which municipalities are struggling to meet pension obligations given a combination of budgetary constraints, low interest rates and years of sub-par returns.

I may be well skilled in the art of finance, but you don’t have to be a rocket scientist (and I apologize to our two clients who actually are!) to know that borrowing to get out of debt is like digging a hole deeper to create a way out: the chances are slim and very dangerous that it will work out. Believe it or not though, the above strategy may actually work in a few situations:

Mortgage refinancing- If you have not reviewed your mortgage in the past 6 months, I vitally urge you to do so. I’ve written in the past on my two goals of refinancing: lower your monthly and annual costs, and lower the time it takes to pay off your mortgage. If you have 11 years left, find a company to issue you a ten year. Definitely go from a 30 to a 15, and shop, shop, shop! While it may be easier refinancing with the same company, using another company may be in your best interest and worth the additional work. It’s borrowing, but it’s fiscally resourceful.

Car Insurance- You may not know it, but there is a car insurance price war going on. I just personally, with very little effort, reduced my own car insurance bill a whopping 56%: and my insurance is with a top insurer- the same insurer I’ve been with for 30+ years. In short, the public (just like you and I) is fed up with the high cost of…well …everything, and looking at all places to cut expenses. The insurers are finally buckling to the pressure of high rates, and if you fall into certain categories, have a clean driving record, are accident free for 3 years, you may qualify for lowered rates. Give your Property and Casualty agent a call…you usually don’t get what you don’t ask for.

Credit Card Interest Rates- I’ve written on this many times in the past. Oftentimes the interest rates will creep up on your MasterCard or Visa without you knowing. Be sure to check your latest statement to see what you are paying if you have extended credit, and don’t be shy about calling the company to get a better rate. The best policy is a debt free policy, so if you can get them paid off, do so. If not, switch them to another card with a lower rate. Again, it’s borrowing to pay a debt, but it’s done in a responsible way.

There are lots of ways to cut your expenses. Feel free to hit the comment bar and share with our readers your ideas- this is a time to help each other out!

 

Happiness Quote of the Day

We tend to forget that happiness doesn’t come as a result of getting something we don’t have, but rather of recognizing and appreciating what we do have.

Frederick Koenig

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