KISS For Summer 2019
When I was a young trader, my employer sent a group of us to a crash course in options strategies. As we piled into the classroom, there was a chalkboard with one word written on it: “KISS”. The professor quickly pointed out that KISS stood for “Keep It Simple, Stupid” and it was a mantra that we should repeat if we wanted to be successful on Wall Street.
I have used this wise advice as a prompt for an annual “KISS for Your Money” column each summer. While I have written about some of these tips previously, they bear repeating, because they work!
Manage due dates/Establish auto pay on available accounts. This is a great strategy for you, your kids and your parents. The idea is to synchronize your payments for recurring bills, like mortgage/rent, insurance, utilities, credit cards and cell phones when you receive income. If you are paying down debt, establish automatic payments, even for a small amount, so your most important expenses get paid and you can avoid, or at least minimize, penalties and fees.
Fight hidden/wasted fees: Are you still using that old DVR? Is it necessary to pull cash from an out-of-network ATM? Did you make the amateur hour move of pre-paying for gas on a rental car? How much are you really using that music streaming service? Be aware that hidden and wasted fees are everywhere and can often amount to thousands of dollars each year.
According to Consumer Reports, “at least 85 percent of Americans have experienced a hidden or unexpected fee for a service in the past two years.” But don’t try to do this all at once. Instead, the folks at CR say it is better to pick one category (utilities, banking, cable/cell, credit card) each month and review what you are paying and whether or not it is worth it.
Consolidate accounts. When you review your banking fees, you may realize that you have a number of accounts at different institutions. By combining them, the resulting higher balance may help you avoid fees and potentially get better deals. As a bonus, this exercise will help streamline your financial life. The same rule applies to orphaned, old retirement or investment accounts that are looking for a home.
Combining accounts also makes it easier to monitor your entire portfolio, ensure that your money is properly diversified, and allow you to see whether you can dump old managed mutual funds, in favor of cheaper index funds. Once you combine, create an asset allocation plan, set it and forget it! Choose auto-rebalancing to keep the plan in check.
Boost retirement contributions. Most retirement plans have a way to automatically increase your contribution levels. These “auto-escalation” features can help you slowly, methodically and painlessly increase the amount you save for retirement each pay period. If you are saving on your own, you can automatically transfer money from your checking or savings account to a Roth or Traditional IRA.
Become familiar with the terms of your homeowner’s or rental insurance policies. I hear your groans, but the time to figure out what is in your policy is not in the aftermath of a severe event, but before it occurs. As a reminder, most standard homeowners’ policies cover structural and water damage only in limited circumstances, like when a falling tree knocks a hole in a roof or breaks a window, allowing rain to fall inside. Most policies do not cover damages that result from rising water, unless the homeowner lives in a designated flood zone and has purchased insurance through the federal government's National Flood Insurance Program.