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6 Smart Money Moves to Make Before Dec. 31

If you’ve been putting off some big financial decisions, here’s why you shouldn’t wait any longer.

You’re in the thick of a busy school year, with the first semester wrapping up—and all of the paperwork that comes with it. But with the holidays and the end of the year just ahead, winter break presents great opportunities for several smart financial moves.

In fact, with experts predicting that interest rates could rise in the coming year, you should consider taking advantage of the current climate with one or more of the following steps:

1. Refinance your existing home.

Interest rates have stayed low: In September, the rate for a 30-year fixed loan was about 3.5 percent—even lower than the 4 percent we saw mid-2015. Remember, that’s about two-thirds of the interest we paid a decade ago.

That means it’s still a good time to refinance, and you don’t want to miss the boat should rates rise.

“Refinancing certainly makes sense if you have an adjustable rate,” says Joyce Morningstar, a senior wealth manager with Dynamic Wealth Advisors in Scottsdale, Ariz. “But even if you have a fixed rate, you can use calculators at and other sites to find out what you can save by refinancing. In general, you’ll benefit if your fixed rate is 1.5 percentage points above the current one.”

If you decide you want to pursue a refi, act quickly. “It takes 45 days to complete a refinancing,” Morningstar says, “so it’s wise to lock in on the current rate to protect against continued increases.”

The NEA Home Financing Program offers competitive rates, and NEA members will be eligible for a $500 reward card after refinancing a mortgage.

2. Buy a house.

Many educators stood on the sidelines during the housing-market crash and interest-rate decline. It’s understandable, especially for young and/or single educators who want to accumulate enough savings for a down payment.

Like interest rates, the housing market is headed upward. The median existing home price in August 2016 was $234,200, up from $228,700 in August 2015, according to the National Association of Realtors.

If you have available savings and want to make the transition from renting to owning, consider “hopping on the train” now before it leaves the station. It may be more prudent to start building home equity while values are going north instead of south.

How should you determine what you can afford to buy and how much to put down? Keep in mind that much of the devastating housing crisis of 2008 was driven by greed on the part of companies approving loans, but also by homeowners who bought far more house than they could afford.

The general ballpark calculation here: Restrict your monthly payment to no more than 35 percent of your take-home pay. More conservative personal-finance experts recommend limiting it to 25 percent. Your down payment will be dictated by your savings, but investing 20 percent upfront usually will eliminate costly private mortgage insurance (PMI) payments.

“It’s still a great idea to buy a house now because prices are still low compared with the historic highs,” says financial expert Deacon Hayes, who runs and has been featured on Fox News and in U.S. News and World Report. “In the post-housing crisis era, it’s challenging to get approved for a loan, too. So the more cash you have to put down, the better your chances of getting one.”

Check out the NEA Home Financing Program, which offers competitive rates, and NEA members are eligible to receive a $500 rewards card upon securing a new mortgage.

3. Trade in your old car.

If your set of wheels is constantly in the repair shop, it may be costing you more in the long run to keep it than to go ahead and unload it. With the wealth of sites such as, and, it’s easy to find a “lightly used” one that’ll fit your budget. NEA Member Benefits offers the NEA Auto Buying Program, which helps members save money—and even gives money back on select vehicles.

Loan rates are still a good bargain, so if you’ve been on the fence about replacing your ride for a while, it may be time to make the switch.

“Start with your credit union, because they offer lower interest rates,” says financial expert/credit counseling provider Harrine Freeman, author of How to Get Out of Debt: Get an “A” Credit Rating for Free. “Ask if they make special, low-interest offers if you use direct deposit. Regardless, if you have good credit, you should be able to get a car loan for 3 percent or less. Some are offering rates under 2 percent, but they won’t last forever.”

4. Pay off your credit card.

Credit card rates are tied to the prime interest rate, so watch out for increases here. If you have a balance and you have the cash, you should aim to pay off your debt.

You also should explore the option of transferring the balance to a card with a lower rate, as the national average rate for credit cards was just over 16 percent in September 2016.

“But some banks and credit unions still offer rates under 11 percent,” Freeman says. “If you have good credit, you can qualify for a lower rate with no annual fee. Transfer the balance to the cheaper card, pay it off, and then get in the habit of living on what you earn and borrowing less money.”

NEA Member Benefits offers several credit cards to NEA members.

5. Beef up your rainy-day fund.

With school boards constantly under pressure to keep budgets lean, you should always have a decent amount set aside for an emergency fund. The general rule of thumb is to have no less than three to six months of living expenses allocated solely for this purpose, parked in a no-risk bank savings account.

However, during the 2008 recession, many workers were unemployed for nine months or longer, according to the National Foundation for Credit Counseling, so the “three to six months” window simply may be a minimum to which you should keep adding. To extend your safety net beyond six months, the foundation suggests trying to save 10 percent from every paycheck. If possible, set up an automatic transfer for relatively pain-free savings.

Learn about online savings programs available to you as an NEA member.

6. Rebalance your portfolio.

You need to prepare for the economic headwinds, and the rise in interest rates doesn’t bode well for bond funds. “When rates go up, the value of bond funds go down,” says Morningstar, who blogs at “Now could be a good time to take a look at what you have.”

But there’s no need to panic, especially if you have no plans to cash out the investment anytime soon. It’s always advisable to keep the eggs in different baskets via a diversified portfolio, and bonds are a part of that.

“While forecasting is entertaining,” Morningstar says, “no one can ever really predict the future. The best strategy is to stay with a good mix of stocks and bonds that will grow over time.”

The NEA Retirement Program provides a large selection of investment choices as well as access to Morningstar research tools so you can diversify your retirement portfolio with confidence.

(Note: This article was updated in October 2015.)



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Get Guaranteed Savings on a new or used car through the NEA® Auto Buying Program.


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