Alert
Close

Last chance – give now. Before 2014 ends, help struggling seniors. Donate

Highlights

Close

Introducing RealPad by AARP
You and Your Town Contest-You could win an AARP RealPad
AARP-iPad-ePub-app
AARP Auto Buying Program

Jobs You Might Like

Most POPULAR

Viewed

Back to Basics

6 Smart Moves to Make in a Scary Economy

Think long, think strategically to tame your debt and restore financial security

En español | Want to know how hard the recession whacked us? Take a look at these newly released numbers from the Federal Reserve: From 2007 to 2010, the wealth of the average American family plunged by 40 percent, taking it down to the levels of the early 1990s.

Sign up for the AARP Money Newsletter.

That's frightening news for everyone, but particularly for people who are knocking on the door of retirement or have already edged through. How are you supposed to recover from that?

The answer: By thinking strategically. Here are six key steps to get you back on track toward financial peace of mind.

1. Develop a road map.  People with financial plans are much more likely to feel prepared, even in tumultuous times. They're more likely to feel that their dreams and goals are secure.  And, oh yes, they do actually save significantly more.

That's why Nathan Bachrach, CEO of Cincinnati-based Financial Network Group, calls this the first move. He suggests working with a fee-based financial adviser to develop a plan, but also notes you can craft one on your own as long as you use realistic assumptions.  

The most important one: Plan on a conservative 6 percent a year return on your money over the long term. Don't assume you'll earn the 12 percent a year on your money that you got during the market's heyday.  

2. Consider refinancing your debts. We're living in the lowest interest rate environment in history; you might as well cash in-and not just for your house. 

Currently, 48-month loans for used cars are averaging 4.67 percent, according to Bankrate.com. If you're paying more than that, refinancing your loan is a simple, cheap and smart transaction. Transfer credit card debt to a zero percent card so that you can make headway paying it down.  

Bill Hardekopf, CEO of lowcards.com, suggests the Slate card from Chase, which offers zero percent interest for 15 months, no annual fee, and no transfer fee if you transfer your balances within the first 30 days of opening the account. He also likes the Citi Simplicity Card, which offers zero percent for 18 months. There's a 3 percent balance transfer fee but no annual fee.  

And even if you refinanced your mortgage a year or two ago, you may want to do it again, particularly if you can lock into a 15-year fixed loan at just over 3 percent. Just be sure you'll be in the house long enough to recoup the costs of doing the deal. (Divide the total cost by your monthly savings — that's the number of months you need to stay in the house to make it work.)

Next: Paying off your debts. »

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Related Video

Tell Us WhatYou Think

Please leave your comment below.

Jobs You Might Like

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

UPS Store membership discount aarp benefits

Members save 15% on eligible products/services, 5% on UPS shipping at The UPS Store®.

membership adt

Small business owners save 20% on new installation of any new ADT security system.

Mujer en la parte de afuera de so negocio

Free quotes for members from the AARP® Small Business Insurance Program.

Member Benefits

Renew today! Members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points

Advance your skills. Transform your career.

Explore your learning possibilities.