9 Personal Finance Hacks to Take Advantage Of

 
Most people who look into personal finance eventually realize that success with finances typically comes down to two things: knowledge and action.

There are a ton of personal finance hacks to take advantage of, but unless you know about them and take action, you miss out.

Think about the stories you hear about high net worth individuals using tax “loopholes” to avoid paying taxes. At the end of the day they are playing within the (complicated) rules that make up our tax code. There’s nothing illegal about it, they just have the right information and they take action.

Just because you aren’t a multi-millionaire doesn’t mean there aren’t personal finance hacks you can take advantage of to get ahead financially. Today I have 9 personal finance hacks that may benefit your financial life.

1) Refinance your debt to a lower interest rate

 
Americans have a lot of debt.

There is so much focus on debt being “bad” that we oftentimes forget to consider the interest rate on debt.

For example, I have a 30-year mortgage that is fixed at 3.35%. I got it when rates were essentially rock-bottom, and I’m locked in. You won’t see me paying anything extra towards this debt because it’s at an interest rate that is so low that investing makes much more sense. The odds are very good that my investment returns will be higher than 3.35%.

While that’s a positive story, there are many more examples where people are paying way too high of an interest rate on their debt. One example from my own life is private student loans. My wife and I had some Wells Fargo private student loans from undergrad that had interest rates in the 9.0% to 11.0% range. Refinancing these at a lower rate was an easy win that instantly started saving us money.

If you run the numbers it becomes obvious that you can save hundreds, thousands, or even tens of thousands of dollars by refinancing debt at a lower interest rate.

Credit card and private student loan debt are prime targets. For credit card debt you can refinance at a lower interest rate through a personal loan. Another option with credit card debt is moving the debt onto a 0% APR transfer card, which essentially gives you anywhere from 12-18 months of 0% interest for balances transferred. If you do this I encourage you to be serious about paying off the debt, as sometimes what happens is people let the balance sit instead of putting extra payments towards it. Once the 12-18 months is up you can refinance whatever is left, if anything, into a personal loan.

Private student loans are straightforward: you can refinance over and over. If you are offered a lower interest rate on your private student loan, it makes sense to refinance. I’ve worked out a deal with Credible so that readers receive a cash bonus who use my link and refinance their student loans. You will get a $300 cash bonus if you refinance less than $100k and a $750 cash bonus if you refinance more than $100k. The great thing about Credible is they give you rate quotes from more than five companies, not just one. You can also get a rate quote from SoFi, but there is no cash bonus if you use them to refinance your student loans.

Federal student loans are more complicated. Because refinancing creates a brand new private student loan, you have to be very confident that you are making the right choice and that you understand all the implications of turning your federal student loan into a private one. Federal student loans come with certain benefits such as opportunities for loan forgiveness and income-driven repayment options. You’ll lose those benefits if you refinance. The reason why I say it makes sense to refinance private student loans is because they already don’t have these benefits. For more information, I go in-depth on when you should and shouldn’t refinance federal student loans.

2) Take Advantage of a Health Savings Account (HSA)

 
There are few things that you can avoid paying taxes on altogether. Medical costs are one of those things.

Health Savings Accounts (HSAs) allow you to put money into an account tax free and take it out tax free if it’s used for qualified medical costs. Additionally, once your account reaches a certain threshold (i.e. $2,000), you can transfer funds into the investment portion of the account. To top off all the tax advantages, there are no taxes on the gains in your investment account if the funds are used for qualified medical costs.

With high deductible health plans becoming more common each year, more and more people are eligible for HSAs (you must have a HDHP to deposit into one). For 2020 the IRS has set contribution limits for HSAs to $3,550 for an individual or $7,100 for a family. For some maxing out their HSA would be a stretch, for others it will be more realistic.

As the cost of health care continues to rise at a rapid (unsustainable?) rate, so has the need for a secondary emergency fund dedicated towards regular and unexpected health care costs. An HSA can serve that purpose.

You can read all about HSAs in our Health Savings Account Guide.

3) Save Thousands in Travel Costs by Travel Hacking

 
If you aren’t already taking advantage of credit card rewards for free and discounted flights, hotels, and other travel costs, you are missing out on potentially hundreds or even thousands in savings. My wife and I have been using credit card rewards for years to help cover the cost of travel. We’ve taken many flights that were free by using travel and points credit cards, and have saved at least $2,000 off of hotel stays.

Here’s an introduction to credit card rewards as well as a guide to Chase Ultimate Rewards, which I think is the best travel rewards program out there (and one I have taken full advantage of over the years!).

For specific cards, check out my go-to cash back and travel rewards credit cards (updated monthly).

4) Get Cash Back on Every. Single. Purchase.

 
There are a number of popular cash back websites. How they work is you first go through their website and click a link to a place you plan on shopping or making a purchase. When you make a purchase, you get cash back. It can range from 1% all the way up to 10%+, and the cash back percentage they offer for specific stores can change regularly.

Thankfully there are sites that aggregate all this information so you can always go through the shopping portal that offers the highest cash back. I describe my super quick process for getting the most cash back here. (Hint: I put things in my shopping cart and then go through the shopping portal before checking out). It takes me literally 30-60 seconds using my approach, and it gets me the top cash back on every single purchase.

I don’t stop at cash back portals, though, I “double-dip” on cash back. I shared some examples in this post, including an example where I received 13% cash back by double-dipping.

5) Check Your Savings Account – It Made Us an Extra $500+ a Year

 
Millions of Americans make banks out to be villians because they make billions in profits. But are you directly contributing to those profits? If you keep their savings in a low-yield savings account, your bank is profiting off you. The average APY of a savings accounts is 0.06%. The rate can be as low as 0.01%(!). If you are getting something similar to these rates, as millions are, you are basically you are getting nothing for your money.

I will admit I was guilty of this.

Until recently, I had a rock-bottom interest rate on my savings account. In fact, I think it was 0.01%. It’s not like we didn’t have any cash in it, either, since we had built up our emergency fund a few years back. So we had thousands parked in a savings account that gave us almost nothing in return.

It only makes sense to park your money in a savings account with a high yield.

As I outlined in my post switching banks made us $500+ a year. By switching from my TCF savings account that paid 0.01% APY to a CIT Bank savings account that paid 2.30% APY, I essentially gave myself a $500+ year bump in cash flow. Interest rates have gone down since then as the Fed made rate cuts, but we are still getting close to 2.00% (and you can too).

Even if you have minimal or no savings right now you probably have a goal of building an emergency fund. Banks make enough money, don’t do them a favor by building and keeping your emergency fund in a savings account with a rock-bottom interest rate.

6) Take Full Advantage of Any Employer Benefits

 
Benefits that employers offer can vary quite a bit. Regardless of how many benefits you get, you are leaving money on the table if you don’t take advantage of the ones available to you.

Some examples of employer benefits that you should be taking advantage of are:

• 401(k) or 403(b) match

• Health Savings Account (HSA) match

• Employee Stock Purchase Program (ESPP)

Some of these perks you simply can’t beat. With an employer match on a 40(k) or 403(b), you are literally getting a 100% return right off the bat by your employer matching your contribution. In a similar sense many Employee Stock Purchase Programs give you “guaranteed gains” if you sell the stock right away (at my 9-5 employer the minimum you will get is 15%).

Sometimes there are other perks that don’t have as direct a financial gain but can improve your financial life. A gym on-site at an employer, free courses/education, and paid-time off are some examples. In fact I was on PTO from my 9-5 when I wrote this post!

7) Use Salary Research to Negotiate a Higher Salary

 
I have numerous examples where people I know did salary research and used that data to help negotiate a raise.

If you aren’t familiar with salary data, there are a number of websites like glassdoor and PayScale that have crowd-sourced salary data. For example you can see what range of salaries a financial analyst makes in the Minneapolis metro area, and you can even see data for that position company-by-company. Here’s a more detailed explanation of how exactly to find and compare salary data.

The benefit here is two-fold. First, it can give you the confidence to have the tough salary conversation with your manager. Having data to back up your request can be the tipping point between not rocking the boat and putting that meeting on your manager’s calendar. Second, you can see where your company stands. There’s a chance that your company is much lower-paying, on average, than other companies in the area. Even if you do negotiate that raise you may want to think about exploring opportunities at another company.

Simply looking at the data is a huge first step because it can spur you on to greater action. And let’s not minimize what an extra $5k-$10k a year (this year and every year going forward) can have on your long-term financial goals.

8) Strategically Repay Your Student Loans

 
When my wife finished grad school my first instinct was to refinance her student loans and repay them as quickly as possible.

Thankfully we didn’t do that.

My wife is a therapist and there is a 90%+ chance she will work for a nonprofit or the government in her career. That means she is eligible for Public Service Loan Forgiveness, or PSLF. After 120 qualified monthly payments any remaining federal student loans will be forgiven, tax-free. There are strategies for maximizing PSLF, meaning we could see a benefit of potentially $100k+ from a net worth perspective, if we navigate PSLF correctly.

Even if you aren’t eligible for PSLF it makes sense to consider how to best strategically repay your student loan debt. It can mean refinancing and paying it down aggressively or going for income-driven loan forgiveness at 20-25 years.

In our student loan spreadsheet we have calculators and other information that can help you get started with thinking of your student loans from a strategic perspective. Download your free copy here.

9) Automatically Tracking Your Net Worth

 
With most people having a variety of savings, investment, and other accounts, there is typically little motivation to sit down and manually calculate your net worth (though some of us spreadsheet nerds thrive on this!).

Thankfully there is a free service called Personal Capital that automatically tracks your net worth. It does take some initial setup time as you link your various accounts, but once you have everything set up you can just log in and see an up-to-the-minute view of your net worth.

Check out some of our favorite personal finance resources:

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Make extra money: 15 ways to make money from your computer

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