7 Ways to Save Over $7,000, Episode #59
When it comes to financial planning, there’s often a fair amount of “low-hanging fruit” in terms of easy ways to save money. In this episode, we discuss seven of these items. Whether it’s parking your cash in a high-yield savings account, shopping around home & auto insurance, harvesting losses in a taxable account, revisiting your life & disability insurance relative to your needs, evaluating your health insurance options versus your usage, rebalancing your investments, or optimizing your credit card benefits, by implementing a few simple tweaks and strategies the cost savings can really add up.
Outline of this episode
- High-yield savings account [1:31]
- Tax-loss harvesting [5:23]
- Re-shopping home and auto insurance [7:50]
- Reviewing health insurance options [9:57]
- Assessing needs for life and disability insurance [13:10]
- Rebalancing investments [17:01]
- Maximizing credit card benefits [19:00]
- The recap [22:27]
Close your Amazon account or start here to save in other ways!
Most people could easily save $7k by closing their Amazon account but you may want to consider some of the options we put together instead! Like opening a high-yield savings account to earn more interest on your cash than traditional banks offer. By doing this, you can earn more than 3% interest on your cash, which is "free money" for minimal work involved.
You could also potentially do tax-loss harvesting if you have a taxable investment account, which involves selling an investment that is temporarily worth less than what you paid for it to capture the tax benefit while also reinvesting the proceeds into a similar investment. There are rules you'll need to be aware of, so you'll want to consult with a tax or financial professional before implementing.
Shopping for insurance savings
Another way you could save money is by shopping your home and auto insurance coverage through multiple insurance companies. In doing this, you'll create a competitive situation and might be able to save on annual premiums for the same (or potentially better) insurance coverage. There's no cost to use an independent insurance agent, so we typically recommend working with one to help facilitate the process and minimize the amount of work on your end.
Continuing with insurance savings, consider reviewing your health insurance options each year during open enrollment. You'll want to go through the process of comparing your projected or expected healthcare needs to the costs of your coverage and the other health insurance plan options. When you do this, be sure to factor in other potential benefits of a cheaper health insurance plan like any employer health savings account (HSA) contributions, the tax benefits of your own HSA contributions, or flexible spending accounts.
And lastly, while looking at insurance it's good to review your need for life and disability insurance relative to the annual premiums. With life insurance, it's worth considering a laddered approach where you buy various policies with different terms to match up with the declining need for coverage over time. For disability insurance, it follows the same logic, where as you move closer to financial independence, you may be able to drop some or all of your disability insurance coverage to save on annual premiums.
Rebalancing and rewards
Moving away from insurance, the next option to look at is periodically rebalancing your investments. While we prefer a discipline tolerance band approach of setting certain predetermined thresholds for when to rebalance, and then reviewing the accounts every two weeks, any disciplined form of rebalancing will be beneficial in the long term, and studies have shown this to have a positive impact on investment returns.
The last item we have for consideration is to maximize and optimize the benefits of credit cards by understanding the initial upfront bonus, the ongoing rewards, annual fees, and the options for how to redeem your points or rewards.
Resources & People Mentioned
- Episode #19: The “Other 20%” of Successful Investing
- Download our guide: The Toolkit for Optimizing Your Finances as an Employed Physician
- Download our guide: The Financial Checkup
Connect With Trent and Andrew
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