Your 2017 Money Guide: 3 big moves to earn more, pay less, cut debt and grow wealth


You're a grown-up and you know what you should be doing, but there's a reason saving more and spending less money is among the most popular New Year's resolutions to make — and then break.

It's hard to get motivated. And it's easy to get paralyzed by worry about all the unknowns — like how the new administration might affect your wallet.

You just need some help: a little inspiration, if not quite prognostication.

Because while it's hard to know exactly what will happen to your bank account — or those of everyone else in the the broader financial world — this year, you can still zero in on what's likely, and how to make the best of it.

Indeed, financial experts argue that it will pay off better in the long term if you don't let the uncertainty spook you. Seriously.

"I think going into 2017 feels a bit more volatile than another year," said Indianapolis financial planner Alexander Joyce of ReJoyce Financial. "From the public's view, there is still some uncertainty, but once [Donald Trump] is in office it should settle down."

That's why your best bet is making a plan, said Mark Avallone, a financial planner with Maryland-based Potomac Wealth Advisors and author of Countdown to Financial Freedom. Write out a financial blueprint, he said: It doesn't even have to be elaborate or designed by a professional — just something you can look at

"Then take actions that are consistent with that plan," he said. 

If your hope, for example, is to buy a home, you shouldn't let your worries talk you out of it, he said. Mortgage rates are going up, yes, but they are still close to record lows.

And if your goal is simply to get richer? Then there's nothing better to do than bump up your monthly savings rate — and potentially bump some spare cash into the stock market, where (smart) risk is rewarded.

"Don't change course because of a few headlines or who is in the White House," Avallone said.

Here are three big ways to end the year richer than when you started.

Take home more money from your job

Literally earning more money is (duh) the best way to have more in the new year, which is why it's as good a time as ever talk about a raise at work.

Or to start looking further afield at more lucrative careers — no matter your education level.

But remember that there is more than one way to skin the proverbial cat, and your benefits are also part of your total compensation.

In fact, by going over your benefits with a fine-toothed comb, you can potentially end up taking home more money from your employer.

Some employees offer a "cash in lieu" of health care option, for example. If you don't take part in the employer-offered health plan — because, say, you are on another group insurance plan, like a spouse's — you can actually receive a fixed amount of money to opt out of the company's health plan.

The IRS guidance on how exactly "cash in lieu" might work through your employer is in flux and kind of complicated (there's even a specific IRS rule that says your boss can't tell you how to spend your money). Your best bet is to talk to your benefits manager, who can break down what options exist at your workplace.

Another way to scoop out more money from your employer — especially if you don't have a spouse?

Consider swapping out your retirement account, particularly if you don't get a company match; 401(k)s aren't all created equal — nor are they your only option — and higher expenses can eat away at your savings.

"Take a look at the fine print on your 401(k) or your employee benefits plans," said Joyce. "Look at the fees, the diversification it offers. Ask yourself if it might be more cost-efficient to work with a financial planner on your own."

Joyce said he suggested this for a client of his and found that by contributing to her company-sponsored 401(k), the woman was eligible to pull out the company's contribution on an annual basis and put it into her own traditional IRA — with better returns, aka more savings.

Doing a full benefits review lets you see if you have that kind of opportunity, said Joyce, so get combing.

Before you pull the trigger, you can also check to see how well your 401(k) compares against others on review site BrightScope.

Thrive amid rising interest rates

You may have heard interest rates are going up up up: For only the second time in 10 years, the Federal Reserve raised its benchmark rate.  

This is a big deal because higher interest causes things you want to buy using credit — houses, cars, loans — to cost more. 

Interest costs are still relatively low in historical terms, but "rates are expected to go up if the growth agenda by the Trump administration is enacted," Avallone said.

Specifically, president-elect Trump's economic agenda of infrastructure spending, corporate tax reform and deregulation will cause rates to rise more, at least if the proposals come to pass, he said. 

Still, he said, that doesn't mean you should let the tail wag the dog. 

If you are looking, but aren't quite ready to buy real estate, for example, don't just rush in for fear of high interest rates.

At the same time, Avallone said, if you know you want to buy and have found some good dream home options, it may make sense to act sooner rather than later.

Unfortunately, an increase in rates, while good for savers, doesn't put much bounce in your interest checking or cash savings account — at least not for a few months.

"The reality is banks raise the rate for depositors slower than the rates for borrowers," said Avallone. "With yields so low, it will be much further along in the interest rate cycle that cash deposits will earn something that makes a difference."

In the meantime, just start shopping around for the best possible bank account. The excuses are dwindling for banks to pay less than 1% interest on savings: good news for you.

Indeed, another positive way to look at rising interest rates is it's an added incentive — a bit of fire under your seat — to slay your debts.

You definitely need to prioritize paying down your credit card debt: Post-holidays is a great time to consolidate your cards.

Just don't fall victim to overhaul syndrome, said Lynnette Khalfani-Cox, a personal finance author and adviser.

"Don't take on massive, unrealistic money goals," she said.

Create easy wins at first, Khalfani-Cox said. If you need the emotional boost of a quick success, you're probably more snowball than avalanche debt slayer (even though the avalanche strategy will cost you less in the long run). It's okay — just be honest with yourself.

Small actions are better than no actions.

Get an accountability partner, Khalfani-Cox said. It could be a real person — your significant other, a friend or a parent — or it could be an app.

Invest your age — not your parents' — to grow wealth

Investing is a conundrum for millennials, said Avallone. 

"They grew up with the twin crashes — the dot-com bust and the recession — so they don't believe in the power of stock market investing," he said. "Given their time horizon, you would think they would be more agreeable to investing into a riskier environment."

By "time horizon," he means the comparatively longer time millennials have before retirement — which means they should be investing aggressively. 

But for many reasons, they aren't.

"I get it," said Joyce, who is 30. "We're very skeptical. It isn't a fear, it's real. I know what the stock market can do, it can make you wealthy." But when you look at older people, he said, including friends' parents as well as his own, it's easy to get scared at how badly a market shock can affect retirement.

No matter: The single best way to grow wealth over the long term is to invest in stocks — particularly through a diversified, low-fee portfolio. History shows that that's far better than stuffing cash under your mattress when you're talking on the scale of decades rather than single years or days.

So get informed about how investing works.

A lot of robo-advisers and index funds will take a set-it-and-forget-it approach, with a broad-based portfolio that is managed over the long term. These are typically expected to perform better than active management (in which a manager actively chooses different stocks, bonds or other assets) over long periods of time because of lower fees and how they can add up.

But there are other options, especially if you're willing to use side cash (i.e., not your retirement savings) to bet on more active investment vehicles and attempt to get a shorter-term boost.

Scott Schneider, whose firm Zacks Advantage is a robo-adviser with an active management component, argues his blended approach is among the best suited to the moment.

"The active management actually has a reason to exist because of the Trump administration and the uncertainty it causes," he said.

Schneider said, for example, that he expects bank stocks to thrive with a high interest rate and the potential for deregulation of the financial industry.

And with the new interest rate increase — and potentially more on the horizon — Schneider's firm has been moving money into Treasury Inflation-Protected Securities, or TIPS, which help hedge against the risk that inflation will grow faster than returns on other fixed-income assets.

No matter where you choose to invest, even just starting small can pay off.

"If you keep putting in a little bit over time," Schneider said, "it can have a big effect on your savings and wealth."

Reward yourself along the way — by setting aside a little cash each month — and you'll end up richer by the end of 2017.

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