Big Payoff, Tiny Effort

As much as I like to discover groundbreaking ways to save an extra twenty bucks here and there, during the final seconds of a purchase decision, I forget nine-tenths of the frugal knowledge I amassed over the years.

Despite all of the new life hacking and productivity tools invented recently, we’re busier than ever. Which is why I try to focus my energy on financial moves that pay dividends over and over again.

And you know what? I think you should too.

Here are five small actions that deliver big returns.

Contribute to Your 401(k) Account

Although I prefer to control my retirement contributions, I acknowledge the defined benefit pension plan served Americans well for decades. Why? Because pension plan retirement contributions happened independent of employees’ stupidity and frivolity.

Instead of choosing to sew a safety net to catch us when we’re old, grizzled, and feeble, we heave our dollars toward foolishness. Sadly, baby boomers will suffer from the failed 401(k) experiment during their most vulnerable, least productive years.

For now, the 401(k) and similar tax deferred investment vehicles are the best retirement tools we got. And it’s even better if your employer matches your contributions.

Pay Off Debt Early

I don’t believe in the fantastical concept of “good debt.” To me, debt is either bad or acceptable.

You see, renting other people’s money comes at a price. Frequently, that price is more than what you’ll earn on a savings account, certificate of deposit, corporate bond, or even a stock mutual fund.

It’s worth exploring the thought of paying off all debt. Admittedly, I have a hard time getting all up in your face over holding on to today’s low cost, fixed-rate mortgages and car loans. But paying off credit card debt is pretty much a no brainer.

Rollover Your 401k into an IRA (Individual Retirement Account)

I’m not gonna tell you this process is as simple as opening an online checking account.

It’s only  a slight pain in the tuckuss, and it’s well worth it.

During recent weeks, I’ve encountered several people who admitted to liquidating their 401(k) upon leaving an employer. To that I say, “NOOOO?!”

Do these people not understand the steep taxes, penalties (10% for early withdrawal), and loss in future gains such a decision creates? Apparently not.

Improve Your Credit Score

I indicated earlier that you should pay off debt. But I understand big ticket items like houses and cars are a bit challenging for many to simply write a check for.

If you’re gonna use someone’s money, you might as well position yourself for the best deal.

Bad credit could cost you more than the embarrassment of a denied loan application

Prevent Unwanted Pregnancies

This non-technical financial advice may seem obvious, but I can’t tell you how many women I’ve heard proclaim, “I’m not having any more kids!” And even though these women aren’t trying to get pregnant, they do nothing to prevent it.

“Prevention is the best medicine,” they say. It’s so easy.

Hormonal intrauterine devices (IUDs) and non-hormonal intrauterine devices last for 5 and 10 years, respectively. Contraceptives come in patches, pills, and rings. Then there are condoms: latex, lambskin, and polyurethane. When used correctly AND consistently, all are highly effective.