Your new clients, Deb and Terry Walker, have three goal priorities: 1) generate annual net cash flow surpluses, 2) save for their retirement and 3) improve their insurance coverage. Last year, they incurred a deficit by spending $3,500 more then they made. Holding all other factors constant (e.g., no change in health, no accidents, no change in interest rates), which of the following actions would improve cash flows by either increasing the inflows or decreasing the outflows?
Manage discretionary spending
Lower the deductibles on both auto and home insurance
Change the definition of disability, on Deb’s private disability policy, from “any occupation” to “own occupation”
Increase the elimination period with their long-term care policy
Sell semi-annual corporate bonds and buy semi-annual municipal bonds (assume no capital gain or loss on the sale; disregard income tax implications for purposes of this question)
Adopt a level payment strategy rather than a serial payment strategy on saving for a $2.5M retirement need (starting this year)
Accept a part-time job opportunity