Move 4. Home buying: Get back into the ring
Old strategy: Sit tight, because it could take years for the market to fully recover. In fact, there was little else you could do while housing was in a standing eight count.
Best move now: Act immediately. Use today's low prices and mortgage rates to take advantage of the still-strong rental market.
Why: Housing prices continued to sink at the end of last year, but most economists think home values will hit bottom in 2012. One sign: The inventory of homes on the market fell 9% in 2011 to the lowest level since March 2005.
Moody's Economy.com predicts that by 2015, average prices will rise 14%. "There's going to be a limited time frame for people to get a bargain in this market," says Daren Blomquist of data firm RealtyTrac.
But while buyers are coming off the sidelines, plenty of families are still content to rent or may not have adequate savings, income, or credit to qualify for rock-bottom mortgages. That, plus a tight supply of apartments, should keep vacancies low and rents high, says Brad Doremus, a senior analyst for Reis, a real estate research firm.
How to land this punch: Target investment properties in a nearby neighborhood that you're familiar with, preferably one near an employment center like a university. Make sure the rent will cover not just your loan payments, taxes, and fees, but also a 20% cushion for repairs and vacancies. And don't overpay.
Investors, who can typically close deals faster than other buyers because they often bring more cash to the deal and don't have to sell existing homes, tend to offer 10% to 20% below list price, according to Campbell/Inside Mortgage Finance.
If you're a few years away from calling it a career, consider purchasing your retirement home now -- and rent it out until you're ready to quit. Some of the most attractive retirement destinations are proving to be strong rental markets now.
Austin, for example, which made MONEY's Best Places to Retire list in 2011, boasts a favorable 4.9% vacancy rate, and rents rose 3.2% last year. While mortgages on investment properties are more expensive than loans on principal homes, you can still get a good rate -- expect to pay around half a point higher than a primary-home mortgage as long as you put 20% down and have a solid credit score.
Move 5. Your career: Think inside the box
Old strategy: Cast as wide a net as possible. In a lousy job market, you had no choice but to do whatever it took to find work.
Best move now: Look within your existing network. The challenge is no longer just keeping a job, it's preventing your career -- and wages -- from stagnating.
Why: Though the job market is finally showing signs of steady, if modest, improvement, companies aren't yet ready to start hiring en masse. There are still too many uncertainties in the global economy -- think Europe.
However, employers do need to fill full-time slots, and they're looking inward. "Nowadays, firms are thinking more in terms of career development and how to build the skill sets that they need internally," says Catherine Hartmann, a principal at the human resources consulting firm Mercer.
How to land this punch: If you survived the recession, you're probably managing a heavier workload with a downsized staff. Use that as leverage in negotiations for pay raises and promotions, Hartmann says. Evaluate your worth by analyzing your performance during such trying times.
"The people companies trust and value most are current employees. You want to tap into that," says Tory Johnson, CEO of recruiting firm Women for Hire.
Next, start talking. Identify colleagues in leadership positions and other key players at work and let them know that you want to be on their radar for future openings. Schedule an informal chat with an internal recruiter about your desire to move around.
Finally, don't turn away outside entreaties. Working in your favor is the fact that highly skilled workers -- whose salaries have barely budged in real terms since before the financial crisis -- are starting to get feelers from competitors, says Ryan Hunt, a career adviser at CareerBuilder. So "companies will have to do more to keep their best workers," he says.
Move 6. Your insurance: Shore up your safety net
Old strategy: At a time when incomes and net worth were plummeting, households pared back on insurance -- an unsafe move.
Best move now: Make sure you have a safety net to protect against all types of risks.
Why: In the midst of the financial storm, cutting some of your insurance costs may have seemed like a necessary evil. The number of households with life insurance hit a 50-year low in 2010, according to research firm LIMRA, as families tightened their belts.
But ripping open your safety net in response to an economic crisis may have left you and your family vulnerable to unexpected life events -- like illness, premature death, or even a natural disaster.
So just as you would review how your retirement funds are invested, you need to reevaluate your insurance coverage to make sure it's not out of sync with your post-recession status. The last thing you'd want is to survive the financial crisis only to be upended by a different type of emergency.
How to land this punch: For life insurance, the goal is to make sure your spouse and kids have enough money to live comfortably and pay major expenses like college. Roughly speaking, that's anywhere from five to 10 times your annual salary.
Stopped paying your premium or lost your employer's group coverage? Then start shopping. A 10-year $500,000 term life policy from TIAA-CREF would cost a healthy 55-year-old man about $1,000 a year, a 50-year-old woman just $515 a year. Use the calculator at lifehappens.org to analyze your needs, and get quotes at Accuquote.com or Insureme.com. If you have coverage but haven't reviewed the terms lately, see whether you can get a better price.
"We've often been able to reinsure a person who had an older policy, say, 20 years old, for less money," says Alexandria, Va., financial planner Kelly Campbell.
Households that cut back on homeowners and auto coverage need to make sure they didn't go too far, says Larry Ginsburg, an Oakland financial planner.
Can't afford to fully restore your coverage? Raise your deductible to $1,000, he says. Also, don't assume that your homeowners coverage amount should decline just because your home value has. The rule of thumb is to insure the amount it would cost to repair or rebuild your home, and that's a factor of local construction and materials costs, not market value.
Move 7. Your budget: Take a breather from cutting back
Old strategy: Slash your spending and boost your emergency fund by several months. Both moves were smart in scary times.
Best move now: You can stop cutting back now, as long as you commit to capping your spending for several years.
Why: After four years of being hunkered down in crisis mode, you can relax, within reason. The reality is, you can't chop your spending forever -- in fact, such severe austerity may eventually lead to binging. Already households are starting to ease up, as the savings rate fell from about 7% in May 2009 to 4% at the end of 2011. Of course, you don't want to see this trend continue forever either. It's time to strike a balance, says Los Angeles financial planner Justin Krane.
How to land this punch: If you're a retiree, a surprisingly effective way to cap your spending is to maintain your intended savings withdrawal rate -- just forgo making the annual inflation adjustments for the next few years, says Georgia planner Lee Baker.
A conservative approach to tapping your retirement accounts is to withdraw 4% of your nest egg in the first year, but to boost that initial amount in subsequent years to keep pace with inflation. Skipping inflation adjustments, though, can help mend a damaged portfolio.
T. Rowe Price found that if you retired in 2000 with $500,000 and used the 4% rule, your strategy at the end of 2010 would have had only a 29% chance of surviving a 30-year retirement. Had you taken no inflation adjustments in the three years after each of the past two bear markets, though, your chances of success would have shot up to 69%.
Workers can try something similar. Over the next several years you're likely to start collecting raises again. Yet you've proved that you can live on your current spending. So let's say you make $100,000 and "spend" 80% of that (including taxes). Well, if you get hikes of 3% a year for the next five years, your salary would climb to $116,000. Rather than spending 80% of that, though, stick to the original $80,000 budget, plus the additional amount you pay in taxes.
That won't be nearly as hard as cutting your spending was at the onset of the financial crisis. Then again, the times aren't as tough either. And small moves like this will surely help you go the distance.
Do you know a Money Hero? MONEY magazine is celebrating people, both famous and unsung, who have done extraordinary work to improve others' financial well-being. To nominate your Money Hero, email firstname.lastname@example.org.
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