More from Money

Jonathan Clements

WANT TO MAKE YOUR dollars work harder? Here are 11 of my favorite strategies. In each case, you can find additional information by clicking through to HumbleDollar’s online money guide.

1. Fund a Roth IRA—and let it double as your emergency fund. Ideally, you want to leave your Roth untouched, so you milk as much tax-free growth from the account as possible. But if you need to repair the car or replace the roof, you could withdraw your regular annual Roth contributions, and there wouldn’t be any income taxes or tax penalties owed.

2. Refinance a small mortgage with a home-equity line of credit. Got a high-interest home loan? If you refinance a loan balance below $100,000 with another fixed- or adjustable-rate mortgage, the gain from the lower monthly payment may never offset the upfront costs involved. But if you pay off your current mortgage with a home-equity line of credit that charges a lower rate, there would be few—if any—upfront costs. Keep in mind that, unlike a traditional fixed-rate mortgage, credit lines leave you vulnerable to rising interest rates.

3. Delay claiming Social Security until age 70, especially if you’re married. The spouse with the higher lifetime earnings should be the one to delay. That way, you can ensure a larger benefit for yourself and a larger survivor benefit for your spouse, assuming you die first. This strategy makes sense for pretty much any couple, unless both of you are in bad health or you have young children.

4. If your employer’s 401(k) plan offers a matching contribution with immediate vesting, fund the account, even if you know layoffs are imminent—and even if you’ll have to tap the account if you lose your job. To be sure, drawing down your retirement account will likely trigger a tax penalty. But the penalty will probably be less than the money you made from the matching contribution, so you’ll come out ahead financially.

5. Increase your taxable income if you find yourself in a low-tax year. Let’s say you just retired or you have spent much of the past year out of work, so you have relatively little taxable income. You might sell stocks with large unrealized capital gains or convert part of your traditional IRA to a Roth, knowing this extra income will be taxed at a low rate.

6. Make the most of credit cards that pay cash back or other rewards. For instance, it can be worth carrying two or three credit cards that offer rotating categories that pay 5% cash back. Then, for any particular purchase, endeavor to use the card that’s currently offering the biggest rebate.

7. Double your money with EE savings bonds. Despite the tiny interest rate on EEs bought today, you’re guaranteed a 100% gain—provided you hold your bonds for 20 years. Stocks should do better than that. Still, EEs might make sense for more conservative investors.

8. Rebalance your portfolio. Set target percentages for different investment categories, and thereafter occasionally buy and sell to bring your portfolio back into line with these targets. If you regularly rebalance between stocks and bonds, you should improve your portfolio’s risk-adjusted return. Meanwhile, if you regularly rebalance among different stock market sectors, you should boost your absolute return.

9. If you’re in the 15% or lower federal income tax bracket, exploit one of the great financial freebies—the 0% long-term capital gains rate. Have a stock you’re looking to unload? This could be your chance.

10. Persuade your beneficiaries to opt for the “stretch IRA” strategy, so they squeeze a lifetime of tax-favored growth from the retirement accounts you bequeath. There’s a good chance Congress will eventually outlaw this strategy—but, until it does, you should encourage your heirs to take advantage.

11. Got stocks or funds that you’re happy to hold for the rest of your life? Do just that—and the embedded capital gains tax bill will disappear upon your death, thanks to the step-up in cost basis.

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