In the Money & Real Estate section of today's Chicago Tribune, Mary Ellen Podmolik puts forward five, what they call, Crazy Money Ideas for todays' investors. They are deemed "not for everyone, for they might work for some".
They suggest buying a vacation home as early as you possibly can. Quoting a financial planner, they suggest that if you can buy a vacation home in your 20s or 30s, if you're otherwise debt-free, the second home can be used as a forced-savings account... a kid-friendly vacation spot that your family can become used to visiting, and a potential retirement home somewhere down the line. If you're fortunate to be in a desirable area, you might also be able to rent it out in the time when you're not using it, to help pay for the mortage and expenses.
Of course, they also point out that if you lose your job, or expenses go up, or if you find yourself the beneficiary of having to repair something major.. (a roof, boiler)... it could easily eat into those potential profits.
Here's a controversial investment concept They suggest taking out term life insurance on your parents. How cold-blooded can you get... isn't this a little morbid or macabre?? Yes, your parents aren't going to live forever. And if they pass in their 80's or 90's, you'll be the beneficiary of a tax-free benefit somewhere in your 50's or 60's. This could be a tax efficient method of passing money along to your heirs.
Open an extra credit card account? Isn't this what most lenders are advising against? The Tribune article suggests that opening up extra credit card account, and paying off the balances each month, builds good credit history, and will come in handy if/when you decide to buy a home and need a mortgage.
The important part of this one is don't overdo it, and don't open more than an extra... not a couple dozen extras!
Overpay the IRS. Yes, okay, overpaying your payment to the IRS is effectively giving the IRS a tax-free loan... I've heard this most of my adult life. But the article suggests that getting that lovely refund check, for most people goes for paying off debts or go directly into savings. They say the average refund is about $3,000 these days.
Those who do not overpay, often end up sending extra to the IRS at the end of the year... and even though they've had extra in their paychecks each and every week.... they have not saved any of it.
Don't sweat the small stuff. Or at least don't insure the small stuff. Most consumers, they suggest, get insurance backward. We buy insurance for every little thing... for our cell phones, for our i-pods, but we don't have enough insurance for our cars, our liability insurance, our health and home insurance. Don't buy insurance for the little things that you can afford to replace on your own. In fact, feel free to increase your deductible to something affordable... $500... maybe $1,000 deductible.
Food for thought, no?