A Guide to Holiday Shopping

Set a Holiday Budget - A recent survey found that 44% of Americans don't set holiday spending budgets and, of those that do, 12% expect to exceed it.

Establish your budget before you head to the stores; decide for whom you're going to buy and assign a dollar amount to each person. Keep the list you create with you when you shop and stick to it. A little planning beforehand will help you keep your financial wits about you.

Make sure there's still money in the bank for your savings after this holiday season.

General Money Saving TIps

Distinguish between Wants and Needs: You will save a ton of money if you don't mistake wants for needs. Needs are pretty simple to identify--those items that are necessary to sustain: Shelter, food, clothing, transportation. Wants are those things that enhance or possibly improve our family life. A car is a need. Unless necessary for your business, a $40,000 Sport Utility Vehicle is a want, even if a lot of people don't see it that way. Have you ever heard (or said) "I absolutely need...?" when the actual meaning was "I really want?" This is not to suggest that you shouldn't be able to have the things you want--only that to delude yourself into believing that a want is a need--and busting your budget in the process--is a recipe for financial disaster.

Is less better? Perhaps it was due to the booming economy, perhaps "keeping up with the Joneses", maybe its ego, but for many of us, we often seem to insist on the biggest and the best, no matter what the cost. When a $15,000 new car may be more than acceptable, we stretch the seams of our budget to afford a $25,000 vehicle. We buy $25 shirts with $35 designer labels attached. We opt for the $100 dinner at the trendy restaurant when a $20 meal would have been just as delicious. Think about where you are spending the family money--and how--to see if there couldn't be savings found with minor changes in habits.

Try before you Buy: This goes a long way in helping to avoid the silly purchases of things you rarely or never use. Before you buy something, especially items with big price tags, borrow one, rent one or try one out before you plunk down the cash. If you are bored with it, or determine that it truly is not something you need before you buy it (and you will be on a certain percentage of items) you will definitely be bored with it, or find it not that necessary, after! Example: You feel that you absolutely must have a new Jet-Ski, at a cost of $4500 (and that is before financing and taxes). You go to the lake, rent one, and 45 minutes into a one hour rental you are saying, "geez, this is a long hour." Saved: More than $4500 (perhaps a year of college fees for the kid!)

Manage Your Credit Wisely...

Just about everyone needs credit. Whether you're renting an apartment, purchasing or leasing an automobile, purchasing a cell phone, or making purchases online, managing your credit responsibly is a fundamental part of establishing a good credit history.

The following tips will help you get started with managing your credit responsibly:

• Make Your Payments On Time. Use your new credit card for purchases and be sure to pay the balance on time. Avoid missed or late payments to any creditor. Late or missed payments can negatively effect your credit rating.
• Know Your Credit Limit. A credit limit is not additional income. View your credit limit as a different way to spend the money you already have.
• Develop a Spending Plan. Before you use your credit card, you will want to make sure that you are able to pay off the balance on the items you plan to purchase. You can accomplish this by writing down all of your expenses and your income and adjust your spending accordingly.
• If Denied Credit, Ask Why. Ask any creditor that denies you credit to give you the reasons for denial. There could be multiple reasons for denial, such as credit history, employment or income. It is important to find out why you are denied. Frequent inquiries (applying for credit) on your credit report could potentially be viewed negatively by a creditor.
• Be Secure With Your Credit Card. Don't let anyone else borrow your credit card or in any way have access to your account information. You are responsible for any authorized use of your accounts. Don't give your card number to anyone over the phone or Internet unless you have initiated the transaction.
• Know What is On Your Credit Report. You can acquire your credit report at www.annualcreditreport.com. If you are denied credit, you can request a free copy of your credit report to see if there is inaccurate data on your file and have corrections made.

Check Your Credit Reports Regularly

When applying for a credit card, you may want to check your credit report before you apply. The last thing you need is for a credit report problem to slow the processing of your application, especially if it's not your fault. Once you acquire your credit report, you should review and validate the following information is correct:

• Your name, or names if you are or were married
• Social security number
• Date of birth
• Addresses of places you've lived
• Names of places you've worked
• Pending accounts and accounts that have been closed
• Nothing has been on the report longer than is allowed by law
• Bankruptcies must be taken off your credit history after 10 years
• Suits, judgments, tax liens, arrest records, and most other kinds of negative information must be dropped after seven years
• Records of delinquent payments or other problems (i.e., make sure they aren't mistakes)

Tips to Save Energy Today

Easy low-cost and no-cost ways to save energy.

• Set your thermostat comfortably low in the winter and comfortably high in the summer. Install a programmable thermostat that is compatible with your heating and cooling system.
  
  
• Use compact fluorescent light bulbs.
  
  
• Air dry dishes instead of using your dishwasher's drying cycle.
  
  
• Turn off your computer and monitor when not in use.
  
  
• Plug home electronics, such as TVs and DVD players, into power strips; turn the power strips off when the equipment is not in use (TVs and DVDs in standby mode still use several watts of power).
  
  
• Lower the thermostat on your hot water heater to 120° F.
  
  
• Take short showers instead of baths.
  
  
• Wash only full loads of dishes and clothes.
  

Heating and cooling

• To save energy, set your thermostat as low as is comfortable in the winter and as high as is comfortable in the summer. You save 3 percent on the day’s heating or cooling costs by setting your thermostat back one degree (higher for cooling, lower for heating) for that 24-hour period. Maintain those settings and you save 3 percent all season!
• Clean or replace heating and cooling filters once a month or as needed. If your filter is in a cardboard frame, it needs to be replaced monthly during the heating season. If your system doubles as a central air-conditioning system, also clean or replace the filter monthly while the cooling system is in use.
• Clean air registers, baseboard heaters, and radiators as needed. Make sure they're not blocked by furniture, carpeting, or drapes.
• Bleed trapped air from hot-water radiators once or twice a season. If in doubt about how to perform this task, call a professional.
• Use kitchen, bath, and other ventilating fans wisely. In just one hour, these fans can pull out a houseful of warmed or cooled air. Turn fans off as soon as they have done the job.
• During the heating season, keep the draperies and blinds on your south-facing windows open during the day to allow sunlight and heat to enter your home.
• Close drapes at night to help reduce heat loss.
• During the cooling season, keep the window coverings closed during the day to prevent the sun from heating your home.
• Make sure drapes don't block registers and air returns.
• Close off unoccupied rooms.
• Install individual room controls to heat and cool rooms only when you use them.
• Have your heating and cooling systems serviced once a year to ensure peak operational efficiency.

Laundering

• Wash with cold water whenever possible.
• Wash and dry full loads to maximize efficiency.
• Don't overload dryers. Overloaded dryers use more energy, cause clothes to wrinkle so they may need to be ironed, and wears out clothes more quickly.
• Use suds savers and front-loading washers for maximum efficiency.
• Always adjust the water level to fit load size. Overloaded washers don't clean clothes as effectively so they even may need to be rewashed.
• Clean the lint filter after each drying cycle to maintain dryer efficiency.

Energy-efficient lighting

• Use task lighting to target work and leisure activities. This lets you reduce your overall room lighting levels.
• Use energy-efficient compate fluorescent bulb—especially in fixtures that operate more than two hours a day. They cost more initially but use 75 percent less electricity and last about ten times longer than incandescent bulbs.
• Open shades and blinds to take advantage of natural light.
• Select bulbs carefully. Look for the highest lumens at the lowest wattage. Wattage is the power needed to make a bulb work. Lumens measure brightness.
• Long-life bulbs emit less light than standard incandescent bulbs of the same wattage. Use long-life bulbs only in hard-to-reach places.
• Keep light fixtures clean to gain the most illumination.

Refrigerating

• Test the tightness of the door seal on refrigerators and freezers. If the seal doesn't tightly hold a dollar bill when the door is closed, it's probably time to adjust or replace the gasket.
• Replace old refrigerators. A 1980s-era refrigerator will cost up to 75 percent more to operate than a new super-efficient model.
• For greatest efficency set refrigerators at 40º F. and freezers at 0º F.

Cooking

• Use your oven instead of your cook top to cut cooking costs. Surface units heat continuously, but an insulated oven normally heats one-third of the time it's in use.
• Don't peek. Cooking temperatures can drop as much as 50º every time the oven door is opened, causing the oven to reheat.
• Use the oven's self-cleaning cycle only for big cleaning jobs. Start the cycle while the oven is still hot from baking.
• Use small appliances such as crockpots, electric frying pans, toaster ovens, and microwave ovens to save when cooking.
  

If you know anymore energy saving tips, please let me know!

More Ways to save on Gas

Gasoline prices across the nation topped out at an average of $3 a gallon as April ended. That's the news from the Energy Information Agency, which tracks fuel costs across the country. The last time most motorists saw prices over $3 at the pump was August 2006.

These gasoline prices send many of us into panicked flashbacks of the fuel crunches in the summer of 1980 and the mid-1970s. Thankfully, we learned a few good habits back then. Many Americans traded in their eight-cylinder gas-guzzlers for pipsqueak cars with small engines and better mileage

Then came the boom of the late '90s, and, oh, how quickly we forgot. Though most of us still pump our own gas, we've fallen into bad habits again. We've embraced the gas-guzzling SUV and dawdle, idling, in drive-through lines.

But you can hold down the number of times you have to stand at the gas pump, aghast, watching the numbers spin. These 15 tips will help you cut fuel consumption:

Car maintenance
1. Keep the tires inflated properly. This one is simple and a potential lifesaver. Underinflated tires waste fuel and wear out the tire tread. Also, check tires regularly for alignment and balance.

2. A well-tuned engine burns less gas. Get regular tuneups and follow through with routine maintenance. The right parts and fresh oil keep your engine happy and less thirsty for gas.

3. Get the junk out of the trunk. A weighed-down car uses more fuel. For every extra 250 pounds your engine hauls, the car loses about one mile per gallon in fuel economy. Carry only the basic emergency equipment and items you really need.

Gas shopping
4. Buy the lowest grade (octane) of gasoline that is appropriate for your car. Check your owner's manual for this information. As long as your engine doesn't knock or ping, the fuel you're using is fine. You can save hundreds of dollars a year.

5. Pay cash at stations that charge extra for credit cards.

6. Don't top off the gas tank. Too much gas will just slosh or seep out. Why waste those extra pennies?

Driving
7. Drive intelligently; don't make fast starts or sudden stops. You're just overexerting your engine and burning extra fuel. Gradual acceleration also helps automatic transmissions run better. Engine-revving wastes fuel, too.

8. Lighten up on the accelerator. The faster you drive, the more gas you use. Speed limits have gone up around most of the nation, but you don't have to see your fuel consumption go up drastically as well. For example, driving at 55 mph rather than 65 mph can improve your fuel economy by two miles per gallon.

9. Avoid long warm-ups. Even on cold winter mornings, your car doesn't need more than a minute to get ready to go. Anything more and you're just burning up that expensive fuel.

10. Combine errands into one trip and plan your stops for the most efficient route. You'll save yourself time and money.

11. Do not rest your left foot on the brake. The slightest pressure could cause a drag that will demand additional gas use -- and wear out the brakes sooner.

Other good habits
12. Tighten up that gas cap. Make sure it's on securely. Buy a new one if your current cap doesn't fit snugly. Gas easily evaporates from the tank if it has an escape.

13. Buy a fuel-efficient car. When pricing cars, factor in long-term fuel costs. Keep in mind that sunroofs add to wind resistance, lowering the mileage per gallon.

14. Be smart with the air conditioning. On the highway, closed windows decrease air resistance, so run the air conditioner. But in stop-and-go traffic, shutting off the air conditioning and opening the windows can lighten your fuel use. Air conditioning can lower your fuel economy by 10 percent to 20 percent.

15. Remove snow tires in good weather. Deep tread and big tires use more fuel.

EIGHT FALL ENERGY SAVING TIPS

EIGHT FALL ENERGY SAVING TIPS

Tip # 1: Clean or replace your furnace filters once a month or as needed. Dirty filters can block warm air from the furnace and make it operate less efficiently, costing you money.

Tip # 2: Lower your thermostat 5 to 7 degrees at night. Your energy savings will increase as much as 3% - 5% for every degree the thermostat is below 68.

Tip # 3: If your water heater is older, you can wrap it with an insulation jacket. This will help your water heater retain heat and limit the amount of heat lost to the air.

Tip # 4: Weatherize your home by caulking and weather-stripping all exterior doors and windows.

Tip # 5: Keep your shades and curtains open during the day to let in sunlight. Close them at night to retain heat.

Tip # 6: Don't block your radiators or heating vents with furniture or drapes.

Tip # 7: Either insulate or increase the insulation in your basement, attic, and in your outside walls. This will keep heat in and cold air out.

Tip # 8: Use locks on your windows to make the seal tighter and eliminate drafts.

How much money should I keep in a savings account for emergencies?

How much money should I keep in a savings account for emergencies?

Answer:

Many financial professionals suggest that you put away three to six months' worth of living expenses for emergencies. If you lose your job, or become disabled and don't have adequate disability insurance, you'll need that money to pay your regular monthly expenses, such as mortgage payments, insurance premiums, groceries, and car payments, until you can find another job. Without such an emergency fund, a period of unemployment could put your assets at risk. Similarly, if your car breaks down or your spouse has a medical emergency, you'll want to have the necessary cash to pay the bills. You don't want to be faced with an immediate need for cash, only to discover that you don't have any.

You may have already set up an emergency fund. Did you put the cash in a five-year certificate of deposit (CD) or other long-term investment? In an emergency, you will need to get at those funds immediately. You can certainly pull your money out of the CD early, but you'll pay a penalty. It's better to keep some funds more liquid, in a traditional savings account, a money market deposit account, or a six-month CD, for example. That way, the cash will be readily available when you need it.

Finally, keep your emergency fund separate from your everyday accounts. You might even want to use a different bank. Unless you are extremely disciplined, you'll be tempted to spend those extra funds if you keep them in your checking account. Remember, if you can put off an expense until next week, it is probably not an emergency.

Should I buy or lease a car?

This topic, "Should I buy or lease a car," starts HUGE arguments among my mom and myself, and one of my closest friends and myself (because she leases her vehicle). Everyone has a different view on this subject, and there are pros and cons to leasing and buying a car. But after careful deliberation, and research, I decided to write this little tidbit to help you make a choice for yourself.

Should I buy or lease a car?

Answer:

There is no definitive answer--you must determine which option works best for you. Use these simple guidelines to help you decide. How long will you keep the car? Leases typically run two to four years. If you like the idea of driving a new car every few years, consider leasing. If you prefer to keep a car until you drive it into the ground, or like the idea of ownership because it gives you equity in the car, consider buying. How large of a monthly payment can you afford? When you buy a car, your payments are based on the total purchase price of that car. Compare this with leasing, where your payments are based on the car's expected decrease in value over the term of the lease (its depreciation). The lease payments may be low enough to put you behind the wheel of your dream car, without the need to worry about a down payment. Usually, you will only need to come up with your first payment and a security deposit to secure a lease.How will you treat the car? Analyze your driving habits. A typical lease will include 12,000 to 15,000 miles per year. If you exceed this amount, you may have to pay extra (e.g., $0.15 per mile) at the end of your lease. Therefore, if you travel great distances for work or intend to take any cross-country trips, buying may be the better option. Also, consider your surroundings. Most lease agreements allow only normal wear and tear. If you know you are tough on your car, or if you live in a neighborhood with only on-street parking, a lease may not be right for you. Remember, if you lease a car, you must pay for any nonwarranty repairs (e.g., a dent in the door), but those repairs benefit the leasing agency, not you. When you buy a car, it's yours to do with as you please--you decide if the dent in the door gets fixed.

Can I buy a house with no money down?

You've heard all the stories before about buying a home with "NO MONEY DOWN." Now is this something that can really be done? Here is my research on this subject...

Can I buy a house with no money down?

Answer:

Typically, lenders require a down payment of 20 percent of the home's purchase price. However, some special mortgage programs allow you to purchase a home with no down payment, such as Veterans Administration (VA) mortgages (if you are a qualified veteran) and no-down-payment or 100 percent financing mortgage programs. VA mortgage terms are generally favorable when compared with other types of mortgages. However, some variations in terms may exist from lender to lender. As for no-down-payment or 100 percent financing mortgage programs, you will generally pay higher interest rates and closing costs on these loans, and there may be additional qualification requirements.

Besides special mortgage programs, you may be able to qualify for a conventional mortgage with no money down if you purchase private mortgage insurance (PMI). Typically, monthly PMI premiums are $45 to $65 per $100,000 borrowed. The cost of PMI depends on several factors, such as the amount of your down payment, your type of mortgage, and whether you pay premiums on a monthly basis or in a lump sum at closing. PMI premiums can significantly increase your monthly housing cost. Without PMI, however, you may be unable to qualify for a mortgage if you have no down payment.

Ways to Cut Down on Household Expenses

Cutting down on household expenses can help you stick to your budget. Here are some ways to make every penny count:

• Save money on grocery bills by planning your meals ahead of time and using a grocery list
• Buy items in bulk at warehouse clubs and discount stores
• Save money on heating costs--lower the thermostat at night and while you're at work
• Save money on phone bills--shop around for a cheaper long-distance plan
• Avoid accumulating high-interest debt--cut up your credit cards and use cash instead

Strategies to Avoid High Gas Prices from Bringing You Down

1. I don't know about you guys, but it seems like every time I go to the gas pump, it cost more and more to fill up my tank... So after some thinking, and research, I came up with this:

Strategies to Avoid High Gas Prices from Bringing You Down

With gas prices hovering around $3 a gallon nationwide, here are six tips to help consumers keep costs down during the summer vacation season:

1. Shop around. Check out the competition.

When it comes to soaring gas prices, no one will do you any favors. While you might be a regular at Buddy's Self-Serve, Buddy could be taking advantage of his loyal patrons by charging 20 cents more a gallon than other stations in the area.

That adds up over time: filling your 15-gallon tank twice a week at Buddy's will cost you an extra $24 dollars a month. Shop around: To find the best deals for gas in your area, certain Web sites often have current gas prices posted. Some shopping centers offer discount gas with a set amount of purchases – it may be helpful to change where you usually shop if it will save you money on gas.

You should consider signing up for a credit card that offers a cash back bonus for gas purchases. Check out this website for the best deals on Gas Credit Cards CLICK HERE

2. Be a better driver.

As Mom would say, "Drive safely." According to the Department of Energy, aggressive driving -- rapid acceleration and excessive braking -- wastes gas. You can increase your gas mileage by as much as a third by driving safely.

Also, stick to the speed limit, not just for your safety but also for fuel-efficiency. The Department of Energy says that your gas mileage decreases rapidly at speeds above 60 mph. And use your cruise control: it helps you maintain a constant speed, which can also save gas.

3. Fix it up.

Driving the old clunker may save you money from buying a new car, but skipping the tune-up is costing you. The Department of Energy says that a simple tune-up on your car can improve your gas mileage by an average of 4.1 percent.

Fixing certain parts of the car can also improve your gas mileage dramatically. Repairing a faulty oxygen sensor can make an improvement of as much as 40 percent. Replacing clogged air filters, making sure tires are properly inflated and using the recommended grade of motor oil can also improve gas mileage by as much as 15 percent.

4. Get the right grade.

You may prefer premium coffee, ice cream, and caviar. But let's be honest, does your car need the royal treatment? AAA says the average gallon of premium-unleaded gas cost about 10 percent more than a gallon of regular.

The Federal Trade Commission is advising drivers to check their owner's guide because most cars don't need premium gasoline. According to AAA, less than 10 percent of cars sold in the U.S. need premium.

Drive your most sensible car. If it's a trip to the grocery store, don't take the pickup, take your compact car.

5. Pack light.

If you're hitting the road for your Spring Break or vacation, consider lightening your load. The FTC advises you to take all unnecessary weight out of the car. For those of you who call your car a closet, keep this in mind: an extra 100 pounds in the trunk reduces a typical car's fuel economy by 2 percent.

Don't place anything on top of the car. A luggage or a loaded roof rack creates wind resistance and can reduce your gas mileage by 5 percent. If you can, keep items inside the car.

And even though airlines are now charging travelers as much as $10 extra round trip for a surge in jet fuel costs, it could still be cheaper to fly. To calculate the price differences, price a flight to your destination and compare it to your estimated cost of driving.

The Best Online Budgeting Program

Find out how to get control of your personal budget

Mvelopes Personal is the leading online personal spending management system that allows you to easily view and control your finances anytime, anywhere. With online and mobile access, all your spending information is always at your fingertips.

Financial Quiz

And you thought your days of pop quizzes were long gone... Nope, especially when you read the blog of a girl with her Bachelor's Degree in Education.

Do you have a personal budget?
Have you thought about saving for the future?
Do you keep an emergency fund that covers at least three months of living expenses?
True or False: The type of car you drive affects how much you pay for car insurance.
Do you use your credit cards responsibly?

Rate Yourself... Use common sense, you know what the right answer is, but do you follow it?

Handling Market Volatility

Speaking as a, modern, girl, who listens to Bloomberg Radio religiously. I too, have questions about VOLATILITY. What the heck is it? Well, volatility is, in the easiest way I can explain it, a measurement of the change in price over a given time period.

Handling Market Volatility

Conventional wisdom says that what goes up, must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when it's your money at stake.

Though there's no foolproof way to handle the ups and downs of the stock market, the following common sense tips can help.

Don't put your eggs all in one basket

Diversifying your investment portfolio is one of the key ways you can handle market volatility. Because asset classes typically perform differently under different market conditions, spreading your assets across a variety of different investments such as stocks, bonds, and cash equivalents (e.g., money market funds, CDs, and other short-term instruments), has the potential to help manage your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, but diversification can't eliminate the possibility of market loss.

One way to diversify your portfolio is through asset allocation. Asset allocation involves identifying the asset classes that are appropriate for you and allocating a certain percentage of your investment dollars to each class (e.g., 70 percent to stocks, 20 percent to bonds, 10 percent to cash equivalents). An easy way to decide on an appropriate mix of investments is to use a worksheet or an interactive tool that suggests a model or sample allocation based on your investment objectives, risk tolerance level, and investment time horizon.

Focus on the forest, not on the trees

As the market goes up and down, it's easy to become too focused on day-to-day returns. Instead, keep your eyes on your long-term investing goals and your overall portfolio. Although only you can decide how much investment risk you can handle, if you still have years to invest, don't overestimate the effect of short-term price fluctuations on your portfolio.

Look before you leap

When the market goes down and investment losses pile up, you may be tempted to pull out of the stock market altogether and look for less volatile investments. The small returns that typically accompany low-risk investments may seem downright attractive when more risky investments are posting negative returns.

But before you leap into a different investment strategy, make sure you're doing it for the right reasons. How you choose to invest your money should be consistent with your goals and time horizon.

For instance, putting a larger percentage of your investment dollars into vehicles that offer safety of principal and liquidity (the opportunity to easily access your funds) may be the right strategy for you if your investment goals are short-term (e.g., you'll need the money soon to buy a house) or if you're growing close to reaching a long-term goal such as retirement. But if you still have years to invest, keep in mind that stocks have historically outperformed stable value investments over time, although past performance is no guarantee of future results. If you move most or all of your investment dollars into conservative investments, you've not only locked in any losses you might have, but you've also sacrificed the potential for higher returns.

Look for the silver lining

A down market, like every cloud, has a silver lining. The silver lining of a down market is the opportunity you have to buy shares of stock at lower prices.

One of the ways you can do this is by using dollar cost averaging. With dollar cost averaging, you don't try to "time the market" by buying shares at the moment when the price is lowest. In fact, you don't worry about price at all. Instead, you invest money at regular intervals over time. When the price is higher, your investment dollars buy fewer shares of stock, but when the price is lower, the same dollar amount will buy you more shares. Although dollar cost averaging can't guarantee you a profit or protect against a loss, a regular fixed dollar investment may result in a lower average price per share over time, assuming you invest through all types of markets. Please remember that since dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to make ongoing purchases.

Don't count your chickens before they hatch

As the market recovers from a down cycle, elation quickly sets in. If the upswing lasts long enough, it's easy to believe that investing in the stock market is a sure thing. But, of course, it never is. As many investors have learned the hard way, becoming overly optimistic about investing during the good times can be as detrimental as worrying too much during the bad times. The right approach during all kinds of markets is to be realistic. Have a plan, stick with it, and strike a comfortable balance between risk and return.

Don't stick your head in the sand

While focusing too much on short-term gains or losses is unwise, so is ignoring your investments. You should check up on your portfolio at least once a year, more frequently if the market is particularly volatile or when there have been significant changes in your life. You may need to rebalance your portfolio to bring it back in line with your investment goals and risk tolerance. If you need help, a financial professional can help you decide which investment options are right for you.

Common Investment Goals

Common Investment Goals

Go out into your yard and dig a big hole. Every month, throw $50 into it, but don't take any money out until you're ready to buy a house, send your child to college, or retire.

It sounds a little crazy, doesn't it? But that's what investing without setting clear-cut goals is like. If you're lucky, you may end up with enough money to meet your needs, but you have no way to know for sure.

How do you set investment goals?

Setting investment goals means sitting down and defining your dreams for the future. If you are married or in a long-term relationship, spend some time together discussing your joint and individual goals. You can do this on your own or with the help of a financial advisor. It's best to be as specific as possible. For instance, you know you want to retire, but when? You know you want to send your child to college, but to an Ivy League school or to the community college down the street?

You'll end up with a list of goals. Some of these goals will be long term (you have more than 15 years to plan), some will be short term (5 years or less to plan), and some will be intermediate (between 5 and 15 years to plan). You can then decide how much money you'll need to accumulate and which investments can best help you meet your goals.

Looking forward to retirement

After a hard day at the office, do you ask, "Is it time to retire yet?" Retirement may seem a long way off, but it's never too early to start planning--especially if you want retirement to be the good life you imagine.

Let's say that your goal is to retire at age 65 with $500,000 in your retirement fund. At age 25 you decide, with the help of an investment advisor, to begin contributing $250 per month to your tax-deferred 401(k) account. If your investment earns 6 percent per year, compounded monthly, you'll have more than $500,000 in your investment account when you retire.

But what would happen if you left things to chance instead? Let's say that you're not really worried about retirement, so you wait until you're 35 to begin investing. Assuming you contributed the same amount to your 401(k) and the rate of return on your investment dollars was the same, you would end up with only about half the amount you need.

Some other points to keep in mind as you're setting specific retirement investment goals:

• Determine how much money you'll need in retirement: Many experts say that you'll need about 75 to 85 percent of your current income to maintain your standard of living
• Plan for a long life: According to life expectancy charts, you can expect to live for 15 to 20 years past retirement, assuming you retire at age 65
• Think about how much time you have until retirement, then invest accordingly: For instance, if retirement is a long way off and you can handle some risk, you might choose to invest in stock or equity mutual funds that, though more volatile, offer a higher potential for long-term return than do more conservative investments
• Consider how inflation will affect your retirement savings: When determining how much you'll need to save for retirement, don't forget that the higher the cost of living, the lower your real rate of return on your investment dollars

Facing the truth about college savings

Perhaps you faced the ugly truth the day your child was born. Or maybe it hit you when your child started first grade: You only have so much time to save for college. In fact, for many people, saving for college is an intermediate-term goal--if you start saving when your child is in elementary school, you'll have 10 to 15 years to build your college fund. Of course, the earlier you start the better. The more time you have before you need the money, the greater chance you have to build a substantial college fund due to compounding. With a longer investment time frame and a tolerance for some risk, you might also be willing to put some of your money into investments that offer the potential for growth.

Consider these tips as well:

• Estimate how much it will cost to send your child to college and plan accordingly: Estimates of the average future cost of tuition at two-year and four-year public and private colleges and universities are widely available (or ask your financial advisor for information)
• Research financial aid packages that can help offset part of the cost of college: Although there's no guarantee your child will receive financial aid, at least you'll know what kind of help is available should you need it
• Look into state-sponsored tuition plans that put your money into investments tailored to your financial needs and time frame: For instance, most of your dollars may be allocated to growth investments initially, then later as your child approaches college, into more conservative investments to conserve principal
• Think about how you might resolve conflicts between goals: For instance, if you need to save for your child's education and your own retirement at the same time, how will you do it?

Investing for something big

At some point, you'll probably want to buy a home, a car, or the yacht that you've always wanted. Although they're hardly impulse items, large purchases are usually not something for which you plan far in advance--one to five years is a common time frame.

Because you don't have much time to invest, you'll have to budget your investment dollars wisely. Rather than choosing growth investments, you may want to put your money into less volatile, highly liquid investments that have some potential for growth, but that offer you quick and easy access to your money should you need it.

Understanding Your Credit Report

Understanding Your Credit Report

Your credit report contains information about your past and present credit transactions. It's used primarily by potential lenders to evaluate your creditworthiness. So if you're about to apply for credit, especially for something significant like a mortgage, you'll want to get and review a copy of your credit report.

You can see what they see: getting a copy of your credit report

Every consumer is entitled to a free credit report every 12 months from each of the three credit bureaus. To get your free annual report, you can contact each of the three credit bureaus individually, or you can contact one centralized source that has been created for this purpose. Besides the annual report, you are also entitled to a free report under the following circumstances:

• A company has taken adverse action against you, such as denying you credit, insurance, or employment (you must request a copy within 60 days of the adverse action)
• You're unemployed and plan to look for a job within the next 60 days
• You're on welfare
• Your report is inaccurate because of fraud, including identity theft

You can order your free annual report online at www.annualcreditreport.com, by calling 877-322-8228, or by completing an Annual Report Request Form and mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Alternatively, you can contact each of the three credit bureaus:

• Experian National Consumer Assistance Center, www.experian.com, P.O. Box 2104, Allen, TX 75013-2104, (888) 397-3742
• Trans Union LLC, Consumer Disclosure Center, www.transunion.com, 1000, Chester, PA 19022, (800) 916-8800
• Equifax, Inc., www.equifax.com, P.O. Box 740241, Atlanta, GA 30374, (800) 685-1111

If you make your request online, you should get access to your report immediately. If you request your report by phone or mail, you should receive it within 15 days.

What's it all about?

Your credit report usually starts off with your personal information: your name, address, Social Security number, telephone number, employer, past address and past employer, and (if applicable) your spouse's name. Check this information for accuracy; if any of it is wrong, correct it with the credit bureau that issued the report.

The bulk of the information in your credit report is account information. For each creditor, you'll find the lender's name, account number, and type of account; the opening date, high balance, present balance, loan terms, and your payment history; and the current status of the account. You'll also see status indicators that provide information about your payment performance over the past 12 to 24 months. They'll show whether the account is or has been past due, and if past due, they'll show how far (e.g., 30 days, 60 days). They'll also indicate charge-offs or repossessions. Because credit bureaus collect information from courthouse and registry records, you may find notations of bankruptcies, tax liens, judgments, or even criminal proceedings in your file.

At the end of your credit report, you'll find notations on who has requested your information in the past 24 months. When you apply for credit, the lender requests your credit report--that will show up as an inquiry. Other inquiries indicate that your name has been included in a creditor's prescreen program. If so, you'll probably get a credit card offer in the mail.

You may be surprised at how many accounts show up on your report. If you find inactive accounts (e.g., a retailer you no longer do business with), you should contact the credit card company, close the account, and ask for a letter confirming that the account was closed at the customer's request.

Basing the future on the past

What all this information means in terms of your creditworthiness depends on the lender's criteria. Generally speaking, a lender feels safer assuming that you can be trusted to make timely monthly payments against your debts in the future if you have always done so in the past. A history of late payments or bad debts will hurt you. Based on your track record, a new lender is likely to turn you down for credit or extend it to you at a higher interest rate if your credit report indicates that you are a poor risk.

Too many inquiries on your credit report in a short time can also make lenders suspicious. Loan officers may assume that you're being turned down repeatedly for credit or that you're up to something--going on a shopping spree, financing a bad habit, or borrowing to pay off other debts. Either way, the lenders may not want to take a chance on you.

Your credit report may also indicate that you have good credit, but not enough of it. For instance, if you're applying for a car loan, the lender may be reviewing your credit report to determine if you're capable of handling monthly payments over a period of years. The lender sees that you've always paid your charge cards on time, but your total balances due and monthly payments have been small. Because the lender can't predict from this information whether you'll be able to handle a regular car payment, your loan is approved only on the condition that you supply an acceptable cosigner.

Correcting errors on your credit report

Under federal and some state laws, you have a right to dispute incorrect or misleading information on your credit report. Typically, you'll receive with your report either a form to complete or a telephone number to call about the information that you wish to dispute. Once the credit bureau receives your request, it generally has 30 days to complete a reinvestigation by checking any item you dispute with the party that submitted it. One of four things should then happen:

• The credit bureau reinvestigates, the party submitting the information agrees it's incorrect, and the information is corrected
• The credit bureau reinvestigates, the party submitting the information maintains it's correct, and your credit report goes unchanged
• The credit bureau doesn't reinvestigate, and so the disputed information must be removed from your report
• The credit bureau reinvestigates, but the party submitting the information doesn't respond, and so the disputed information must be removed from your report

You should be provided with a report on the reinvestigation within five days of its conclusion. If the reinvestigation resulted in a change to your credit report, you should also get an updated copy.

You have the right to add to your credit report a statement of 100 words or less that explains your side of the story with respect to any disputed but unchanged information. A summary of your statement will go out with every copy of your credit report in the future, and you can have the statement sent to anyone who has gotten your credit report in the past six months. Unfortunately, though, this may not help you much--creditors often ignore or dismiss these statements.

How can I repair my poor credit?

Speaking from experience, I know how horrible it can be, if you have less than stellar credit. And since I consider myself a MODERN GIRL, I know how hard it is to get back on a budget, so you can improve your credit score.

How can I repair my poor credit?

Answer:

Your first step in repairing poor credit should be to obtain a copy of your credit report. The three major credit reporting agencies are Experian, Trans Union, and Equifax. You can obtain a copy of your report by contacting these agencies by phone, by mail, or through their websites. Check the report carefully for any errors and make sure that all the information contained in the report is correct.

Next, you can try mitigating the impact of any derogatory credit you may have on your credit report by adding positive account information to your credit file. Start by contacting creditors with whom you have a good credit relationship and give them permission to release your account information to credit reporting agencies. You should then contact the credit reporting agencies and provide them with the names and telephone numbers of the creditors with whom you have good credit. For a small fee, most credit reporting agencies will call your creditors and add the positive account information to your file.

Another option is to go directly to your creditors and try to clear your credit record. If your poor credit resulted from circumstances that were beyond your control (e.g., hospitalization, layoff), and you have reconciled your account since that time, you may be able to convince your creditors to upgrade your rating.

If you have bad debts that are current, you may be able to negotiate away poor credit by agreeing to pay off your debts over a period of time. Contact your creditors and propose a deal in which you will agree to a reasonable repayment schedule if they agree to upgrade your status with the credit bureau.

You can also add a statement to your credit report that tells your side of the story. You have the right to include a 100-word statement in your credit file. The statement should list any extenuating circumstances that could possibly mitigate the negative credit information in your credit report. Perhaps you were hospitalized for a period of time and were unable to pay your bills, or maybe you were laid off from your job. If your credit history shows that you typically pay your bills on time, this statement could help to explain an isolated instance or period of derogatory credit.

Finally, you can always choose to wait out your credit problems. With some minor exceptions, derogatory credit will be purged from your credit report within seven years. However, if you can show income stability and prompt payment patterns, your situation will improve within one to three years. Keep in mind that you should avoid incurring any more derogatory credit while you try to repair your poor credit. If you do incur derogatory credit, the seven-year clock resets and starts ticking again!

Piggybacking Credit

Piggybacking Credit

History

For years, credit lenders allowed users to “piggyback” on other consumers to boost their credit scores. This was a legitimate practice designed to help friends and relatives qualify for loans and get lower interest rates on debt obligations. By adding a person as an “authorized user” to your credit card, your good (or bad history) with that account could be imported into the other person’s credit files at the three bureaus. (There are three main nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. They monitor each individual’s credit worthiness.)

Current Practices

A new type of credit repair service operates under the same basic principle, but promises consumers the ability to rapidly boost credit scores, get loans from banks, and lower interest rates. The piggyback credit service allows people with poor credit scores to add themselves as authorized users of those with excellent credit who are paid to allow this “piggybacking.” However, this practice has lenders and the government concerned.

The practice of using “piggyback credit” can also put consumers into debt obligations beyond the means of their income. Building good credit takes time. Shortcuts such as piggyback credit can harm rather than benefit the users. Lenders worry that applicants who artificially boost their credit scores will have a greater risk of defaulting on their loans. Some even call it mortgage fraud. The practice has already caused widespread concern as, according to an Associated Press article, “Ninety percent of the largest U.S. banks base their loan decisions on FICO scores, which currently include authorized user accounts.” (FICO scores are a measure of credit risk and are the most used credit scores in the world.) FICO scores may not include authorized user accounts much longer.

Future Implications

The decision has been made to change the leading FICO credit-scoring formula to ignore all references to authorized user accounts. This change will occur in the upcoming months and years. Up to 41 million people could potentially see their scores affected by the change. Those who are authorized users on accounts with high credit scores might see their scores drop.

There are several legitimate ways to improve your credit scores. There are no quick fixes and be wary of any company or individual that purports to have that ability. You have the power to repair your credit. The best way is to show income stability and prompt payment patterns. Over time, this consistent behavior will improve your score.

Buying A Car!

Buying a Car

Maybe you've always pictured yourself driving a shiny red convertible. Or perhaps you've had a recent addition to the family and you're looking for the practicality of a minivan. Whatever the reason, you're in the market for a new car. Here are some tips to help make the car-buying process a bit easier.

Choosing a car

As you try to decide what type of car you want to buy, consider the following:

• If you already have a car, what do you like and dislike about it?
• Do you want a lot of passenger space?
• Do you want two doors or four?
• Do you prefer a standard or an automatic transmission?
• How much does prestige matter?
• What about better fuel economy?
• Is your heart set on purchasing a new car, or are you willing to settle for a well-maintained used one?
• How much can you afford to spend?

You'll also want to keep in mind such factors as resale value, maintenance, and insurance costs. It may be helpful to consult one of the many car-buying guides to help you choose a vehicle and give you information on pricing, reliability, and safety. Many are available on-line.

Once you have narrowed down your choices, you'll want to visit some dealerships and take those cars for a test-drive. When you get behind the wheel, ask yourself:

• Is there plenty of legroom and headroom?
• Is it easy to load passengers and cargo?
• Is the seat comfortable?
• Is the control panel visible and accessible?
• Is there enough trunk space?
• Does the car ride smoothly?
• Does the car have good acceleration and handling?

Determining your target price

Once you've settled on a car model, you should do some research on the invoice price, including the cost of any options that you want. That way, you can negotiate the price based on the approximate cost of the vehicle to the dealer, rather than try to bargain down from the sticker price. Keep in mind that the dealer's cost is often less than the invoice price because of factory-to-dealer incentives. That's why a good target price is approximately 3 percent above the invoice price, although this will vary depending on the car model.

Going to the dealership

Armed with your target price, you should be ready to begin shopping around for the best purchase price. Try to visit more than one dealership, since prices vary. At the dealership, you'll want to be sure to negotiate, keeping in mind the following tips:

• Don't set your sights on just one car model. Many manufacturers offer similar models, and one may be much more affordable than another.
• If you're trading in your old car, don't discuss the trade-in price until you have established a purchase price for the new car. You don't want to negate a good purchase deal by accepting far less than your trade-in vehicle is worth.
• If the dealer isn't willing to give you a deal that you're happy with, don't hesitate to take your business elsewhere.
• If you want to avoid negotiating over price, you may want to consider a dealer with a no-haggle policy.

Closing the deal

After you and the dealer have settled on a purchase price, you may need to sign some preliminary paperwork and give the dealer a deposit. If you need a loan to purchase the car, you'll also need to obtain financing. If you don't mind making financing arrangements ahead of time, many banks, credit unions, and auto clubs offer favorable interest rates on car loans.

At the dealership, you have a couple of financing options. First, you'll want to ask about special financing programs available through the car manufacturer. These are usually the best deals, offering low interest rates. Unfortunately, though, qualifying for these programs can be hard because special restrictions often apply (e.g., large down payment, limited payment terms).

You can also apply for a traditional car loan through the dealer, who makes additional money by arranging on-the-spot financing. But don't assume you're getting the best deal available. The interest rate on dealer-sponsored loans is usually higher than the interest rate that you would receive on your own.

Around this time, the dealer will try to sell you extras such as an extended warranty, service contract, or rustproofing. Watch out--these extras are expensive and often overpriced. If you're interested in purchasing them, be sure to negotiate a favorable price, or look into buying them elsewhere.

The dealer can also help you arrange proper insurance coverage of your car and make sure that the registration and plates are in order, or you can choose to do this yourself. In either case, once all the paperwork is signed, the dealer will hand you the keys, and the car will be yours!

Buying a Home

I am FAR away, from buying my own home, but hey, someday I want the American Dream too... So I have compiled my research on buying a home.

Buying a Home

There's no doubt about it--owning a home is an exciting prospect. After all, you've always dreamed of having a place that you could truly call your own. But buying a home can be stressful, especially when you're buying one for the first time. Fortunately, knowing what to expect can make it a lot easier.

How much can you afford?

According to a general rule of thumb, you can afford a house that costs two and a half times your annual salary. But determining how much you can afford to spend on a house is not quite so simple. Since most people finance their home purchases, buying a house usually means getting a mortgage. So, the amount you can afford to spend on a house is often tied to figuring out how large a mortgage you can afford. To figure this out, you'll need to take into account your gross monthly income, housing expenses, and any long-term debt. Try using one of the many real estate and personal finance websites to help you with the calculations.

Mortgage prequalification vs. preapproval

Once you have an idea of how much of a mortgage you can afford, you'll want to shop around and compare the mortgage rates and terms that various lenders offer. When you find the right lender, find out how you can prequalify or get preapproval for a loan. Prequalifying gives you the lender's estimate of how much you can borrow and in many cases can be done over the phone, usually at no cost. Prequalification does not guarantee that the lender will grant you a loan, but it can give you a rough idea of where you stand. If you're really serious about buying, however, you'll probably want to get preapproved for a loan. Preapproval is when the lender, after verifying your income and performing a credit check, lets you know exactly how much you can borrow. This involves completing an application, revealing your financial information, and paying a fee.

It's important to note that the mortgage you qualify for or are approved for is not always what you can actually afford. Before signing any loan paperwork, take an honest look at your lifestyle, standard of living, and spending habits to make sure that your mortgage payment won't be beyond your means.

Should you use a real estate agent or broker?

A knowledgeable real estate agent or buyer's broker can guide you through the process of buying a home and make the process much easier. This assistance can be especially helpful to a first-time home buyer. In particular, an agent or broker can:

• Help you determine your housing needs
• Show you properties and neighborhoods in your price range
• Suggest sources and techniques for financing
• Prepare and present an offer to purchase
• Act as an intermediary in negotiations
• Recommend professionals whose services you may need (e.g., lawyers, mortgage brokers, title professionals, inspectors)
• Provide insight into neighborhoods and market activity
• Disclose positive and negative aspects of properties you're considering

Keep in mind that if you enlist the services of an agent or broker, you'll want to find out how he or she is being compensated (i.e., flat fee or commission based on a percentage of the sale price). Many states require the agent or broker to disclose this information to you up front and in writing.

Choosing the right home

Before you begin looking at houses, decide in advance the features that you want your home to have. Knowing what you want ahead of time will make the search for your dream home much easier. Here are some things to consider:

• Price of home and potential for appreciation
• Location or neighborhood
• Quality of construction, age, and condition of the property
• Style of home and lot size
• Number of bedrooms and bathrooms
• Quality of local schools
• Crime level of the area
• Property taxes
• Proximity to shopping, schools, and work

Making the offer

Once you find a house, you'll want to make an offer. Most home sale offers and counteroffers are made through an intermediary, such as a real estate agent. All terms and conditions of the offer, no matter how minute, should be put in writing to avoid future problems. Typically, your attorney or real estate agent will prepare an offer to purchase for you to sign. You'll also include a nominal down payment, such as $500. If the seller accepts the offer to purchase, he or she will sign the contract, which will then become a binding agreement between you and the seller. For this reason, it's a good idea to have your attorney review any offer to purchase before you sign.

Other details

Once the seller has accepted your offer, you, your real estate agent, or the mortgage lender will get busy completing procedures and documents necessary to finalize the purchase. These include finalizing the mortgage loan, appraising the house, surveying the property, and getting homeowners insurance. Typically, you would have made your offer contingent upon the satisfactory completion of a home inspection, so now's the time to get this done as well.

The closing

The closing meeting, also known as a title closing or settlement, can be a tedious process--but when it's over, the house is yours! To make sure the closing goes smoothly, some or all of the following people should be present: the seller and/or the seller's attorney, your attorney, the closing agent (a real estate attorney or the representative of a title company or mortgage lender), and both your real estate agent and the seller's.

At the closing, you'll be required to sign the following paperwork:

• Promissory note: This spells out the amount and repayment terms of your mortgage loan.
• Mortgage: This gives the lender a lien against the property.
• Truth-in-lending disclosure: This tells you exactly how much you will pay over the life of your mortgage, including the total amount of interest you'll pay.
• HUD-1 settlement statement: This details the cash flows among the buyer, seller, lender, and other parties to the transaction. It also lists the amounts of all closing costs and who is responsible for paying these.

In addition, you'll need to provide proof that you have insured the property. You'll also be required to pay certain costs and fees associated with obtaining the mortgage and closing the real estate transaction. On average, these total between 3 and 7 percent of your mortgage amount, so be sure to bring along your checkbook.

Ways to Cut Down on Household Expenses

Cutting down on household expenses can help you stick to your budget. Here are some ways to make every penny count:

• Save money on grocery bills by planning your meals ahead of time and using a grocery list
• Buy items in bulk at warehouse clubs and discount stores
• Save money on heating costs--lower the thermostat at night and while you're at work
• Save money on phone bills--shop around for a cheaper long-distance plan
• Avoid accumulating high-interest debt--cut up your credit cards and use cash instead

Three Keys to Financial Success

Three keys to financial success are:

• Always spend less than you earn
• Avoid splurging
• Invest the rest

How Will I Ever Pay Off My Student Loans?

I will be graduating from college soon, and I cannot wait. However, I am not looking forward to paying the HUGE amount of student loans that have accumulated over the 5 years I have been in school. (Maybe I can put them off longer, I am planning on starting my Master's Degree, starting in January 2008!).

How will I ever pay off my student loans?

Answer:

As the cost of post-secondary education continues to increase and you take on further student loan indebtedness to pay for it, you may feel as if you are leaving the ivory tower with a mortgage on your back. You may be surprised to discover that some or all of your indebtedness can be forgiven if you are employed in certain public-service sectors, teach in teacher-shortage areas, or go into the Peace Corps.

If these choices aren't available to you, you must find a way to budget for your student loan payments. Review your household income and expenses. Can you reduce your spending on entertainment, luxuries, and discretionary items? If so, you can divert these saved funds toward monthly principal prepayment of your student loans, thus shortening the overall repayment term and saving on interest charges. You are always permitted to prepay the principal of student loans, partially or in full, without penalty.

Would consolidating your loans or refinancing your loans make the payment schedule easier? Check with your current lender to see what options you might have.

Are you in a position to take on a second, part-time job? The income from this job could be used to reduce your student loan indebtedness. Can you devote a tax refund, gift money, or inheritance to principal prepayment? Even infrequent payments of this sort will ultimately reduce your loan balance and save you both time (repaying the debt) and money (the interest on the debt).

GETTING STARTED: ESTABLISHING A FINANCIAL SAFETY NET

Establishing a financial safety net is one of the most important things you can do for yourself. And I know, I know, how hard it is to live on the income you already receive without saving a penny. But I have created a way to make "Establishing A Financial Safety Net" easier on all of us...

GETTING STARTED: ESTABLISHING A FINANCIAL SAFETY NET

In times of crisis, you don't want to be shaking pennies out of a piggy bank. Having a financial safety net in place can ensure that you're protected when a financial emergency arises. One way to accomplish this is by setting up a cash reserve, a pool of readily available funds that can help you meet emergency or highly urgent short-term needs.

How much is enough?

Most financial professionals suggest that you have three to six months' worth of living expenses in your cash reserve. The actual amount, however, should be based on your particular circumstances. Do you have a mortgage? Do you have short-term and long-term disability protection? Are you paying for your child's orthodontics? Are you making car payments? Other factors you need to consider include your job security, health, and income. The bottom line: Without an emergency fund, a period of crisis (e.g., unemployment, disability) could be financially devastating.

Building your cash reserve

If you haven't established a cash reserve, or if the one you have is inadequate, you can take several steps to eliminate the shortfall:

• Save aggressively: If available, use payroll deduction at work; budget your savings as part of regular household expenses
• Reduce your discretionary spending (e.g., eating out, movies, lottery tickets)
• Use current or liquid assets (those that are cash or are convertible to cash within a year)
• Use earnings from other investments (e.g., CDs, stocks, mutual funds)
• Check out other resources (e.g., do you have a cash value insurance policy that you can borrow from?)

A final note: Your credit line can be a secondary source of funds in a time of crisis. Borrowed money, however, has to be paid back (often at high interest rates). As a result, you shouldn't consider lenders as a primary source for your cash reserve.

Where to keep your cash reserve

You'll want to make sure that your cash reserve is readily available when you need it. However, an FDIC-insured, low-interest savings account isn't your only option. There are several excellent alternatives, each with unique advantages. For example, money market accounts and short-term CDs typically offer higher interest rates than savings accounts, with little (if any) increased risk.

It's important to note that certain fixed-term investment vehicles (i.e., those that pledge to return your principal plus interest on a given date), such as CDs and Treasury securities, impose a significant penalty for early withdrawals. So, if you're going to use fixed-term investments as part of your cash reserve, you'll want to be sure to ladder (stagger) their maturity dates over a short period of time (e.g., two to five months). This will ensure the availability of funds, without penalty, to meet sudden financial needs.

Review your cash reserve periodically

Your personal and financial circumstances change often--a new child comes along, an aging parent becomes more dependent, or a larger home brings increased expenses. Because your cash reserve is the first line of protection against financial devastation, you should review it annually to make sure that it fits your current needs.

Getting A Budget Started...

Find out how to get control of your personal budget

So I have FINALLY decided to start a blog about my MONEY! I figured if I am writing about it, especially online, that I will make fewer mistakes with it. And since this is my first entry, on this blog, I decided to start with the dreaded budget talk.

Establishing a Budget

Do you ever wonder where your money goes each month? Does it seem like you're never able to get ahead? If so, you may want to establish a budget to help you keep track of how you spend your money and help you reach your financial goals.

Examine your financial goals

Before you establish a budget, you should examine your financial goals. Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., your child's college education, retirement). Next, ask yourself: How important is it for me to achieve this goal? How much will I need to save? Armed with a clear picture of your goals, you can work toward establishing a budget that can help you reach them.

Identify your current monthly income and expenses

To develop a budget that is appropriate for your lifestyle, you'll need to identify your current monthly income and expenses. You can jot the information down with a pen and paper, or you can use one of the many software programs available that are designed specifically for this purpose.

Start by adding up all of your income. In addition to your regular salary and wages, be sure to include other types of income, such as dividends, interest, and child support. Next, add up all of your expenses. To see where you have a choice in your spending, it helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, transportation) and discretionary expenses (e.g., entertainment, vacations, hobbies). You'll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that you're not forgetting anything, it may help to look through canceled checks, credit card bills, and other receipts from the past year. Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute toward them regularly.

Evaluate your budget

Once you've added up all of your income and expenses, compare the two totals. To get ahead, you should be spending less than you earn. If this is the case, you're on the right track, and you need to look at how well you use your extra income. If you find yourself spending more than you earn, you'll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending. And remember, if you do find yourself coming up short, don't worry! All it will take is some determination and a little self-discipline, and you'll eventually get it right.

Monitor your budget

You'll need to monitor your budget periodically and make changes when necessary. But keep in mind that you don't have to keep track of every penny that you spend. In fact, the less record keeping you have to do, the easier it will be to stick to your budget. Above all, be flexible. Any budget that is too rigid is likely to fail. So be prepared for the unexpected (e.g., leaky roof, failed car transmission).

Tips to help you stay on track

• Involve the entire family: Agree on a budget up front and meet regularly to check your progress
• Stay disciplined: Try to make budgeting a part of your daily routine
• Start your new budget at a time when it will be easy to follow and stick with the plan (e.g., the beginning of the year, as opposed to right before the holidays)
• Find a budgeting system that fits your needs (e.g., budgeting software)
• Distinguish between expenses that are "wants" (e.g., designer shoes) and expenses that are "needs" (e.g., groceries)
• Build rewards into your budget (e.g., eat out every other week)
• Avoid using credit cards to pay for everyday expenses: It may seem like you're spending less, but your credit card debt will continue to increase