*Remember that Cash is King. Limit how often you whip out your Visa V TICKER, or American Express AXP TICKER to just big purchases. I’m talking more than $100. Items that require delivery like furniture, a TV, items that should have insurance or have warranties, like appliances, gadgets, items that you order from the internet that are pending delivery. Why? Because too many of us (myself included) use credit cards to pay for everyday, small items, from food to coffee, newspapers, a pack of gum, what have you. It’s not only a red flag to banks that you need to literally take out a loan for a stick of gum (which results in a slashed credit line for you), it also causes you to overspend. I just helped a woman who thought she was spending $300 a week, but actually was spending $700 a week. And guess what? Nearly all her purchases were made using a credit card. That’s not a coincidence. You’ll be able to have a better handle on your spending when you use cold hard cash. It’s basic, I know. But, few of us practice this and to our own financial detriment.
*Stay Disciplined and Rebuild Your Savings. If you do end up liquidating your wife’s 401(k), pay off your credit card debt with it, but now without that debt hangover, you have more money to contribute to savings – and you should save more. Maybe it means increasing your 401k contributions over the next year to make up for your wife’s emptied account. Figure making up $30,000 is like contributing an extra $500 a month for the next five years to your 401(k), assuming you have flat growth in the account. If the market picks up, you can recover that loss in less time.
Farnoosh
Do you have a question for Farnoosh? If so, ask her here.
