Credit report freeze

A security freeze lets you stop anyone from getting credit in your names.

It locks, or freezes, access to your credit report and credit score. Without this information, a business will not issue new credit to anyone under your names.

When you want to get new credit, you may use a PIN to unlock access to the credit file.

However, not all states give us this important weapon to prevent identity theft!

Cashing-in on credit card 0% transfers

Wsj.com also had an article on how to cash-in on the 0% offers from credit cards.

The strategy involves applying for one or more credit cards that charge 0% interest on balance transfers, then put these borrowed funds in high-yield online savings accounts, which often pay 5% or more.

However, card companies are taking steps to make it tougher.

Some card issuers have reduced their offers of interest-free balance transfers to six months from 12 months or have tacked on bigger fees to transfer balances.

Previously, such fees were often waived or limited to 3% of balances, with a cap of $50 to $75. But recently, Bank of America and Chase eliminated their transfer-fee caps on more of their offers, while Citibank raised its maximum fee on some offers to $250.


Liz Pulliam Weston had an article on people make money on low-rate credit cards balance transfers.

However, she warned that chasing these 'free' cash may dent your good credit score.

Credit card transfer arbitrage

1) A good place to invest the money
2) Offer of 0% or very low interest rate on the borrowed money
3) Borrowed money not treated as "cash advance"
4) No or very low fees on balance transfers
5) After transfer, don't use the cards for any other purpose

My experience

Since last year, I have done a few of these 0% balance transfers. I put the money from transfers into T-bill to earn 4% to 5% of interests.

So far, I made over $1,000 on the interests.

Universal default clause - However, if I miss one payment to any credit card and all these 0% rate offers would end.

The hard parts for me are:

- To remember and make all those minimum payments before they are due.
- To remember when all the 0% rates offers would expire - call to confirm with credit card companies.
- To manage the process from T-bill to bank, and then to credit cards.

Higher yield strategies for your money

From Money magazine

TIMELINE: 1 year or less
OBJECTIVE: Best yield while taking NO risk
STRATEGY:

• Bank CD
• Bank money market account
• Money market fund
• Treasury bill

TIMELINE: 5 to 10 years
OBJECTIVE: Beat short-term yields while taking NO BIG risk
STRATEGY:

• 50% - Bank CD ... Bank money market account ... Money market fund ... Treasury bill
• 25% - Bond market index fund;
• 25% - High-yield or junk bond fund

TIMELINE: 10 to 20 years
OBJECTIVE: Diversification 101
STRATEGY:

• 20% - Bond funds;
• 30% - Growth funds;
• 50% - Equity-income fund

TIMELINE: Rest of your life
OBJECTIVE: Current income while beat the inflation
STRATEGY:

• 35% - Bond market index fund;
• 20% - High-yield or junk bond fund;
• 45% - High-yielding stock funds

Financial red flags

By Liz Pulliam Weston
Watch out these red flags ... if you're ignoring them, you may be heading for financial disaster.

1) You have no savings.
You must have some kind of financial cushion to cover unpredictable expenses

2) You have no discretionary income.
You're unable to save since your fixed expenses eat up most or all of your income.

3) You're surprised by your bank balance or credit card statements.

4) You're carrying large credit card debt.
According the Federal Reserve - only one household in 14 carry more than $10,000 in credit card debt.

5) You don't know what kind of mortgage you have or when the payment resets.

6) You're underinsured - health or life

7) Your business (or rental property) is losing money.

8) You're borrowing from one lender to pay another.
This includes using cash from one credit card to pay another.

9) You've missed payments on any loan.

10) You've taken out a payday loan.

Get your passport soon

The Bush administration announced 20 June 2007 that it will delay new passport requirements for Americans who enter the country by land or sea from Canada, Mexico and the Caribbean.

The rules were supposed to take effect next January, but the administration says passports will not be required until later in 2008. Instead, beginning Jan. 31, 2008, Americans will have to show a government-issued photo ID and a birth certificate, or other proof of citizenship, when they cross the border.

Still, how long will you wait for a passport?

Normally, the wait time is six weeks. Now, count on ten weeks.

If you're in a time crunch, pay for expedited service from the State Department -- an extra $60 on top of the standard $97 application or $67 renewal fee. Then add overnight delivery charges -- both ways -- to one of the government's processing centers.

If you're leaving within two weeks, call 877-487-2778 for an appointment at one of 15 regional passport offices. Be prepared to show your tickets or itinerary. Your congressional office may be able to help. Or you can hire a professional expediter -- find one at http://www.napvs.org/. For fees ranging from about $80 to $200 (on top of the other charges), they'll rush your passport through.

How to dowgrade the computer

At present, many new entry-level desktops and notebooks are pre-loaded with Windows Vista and 512 MB of memeory.

However, to run Vista satisfactory requires at least 1 GB of memory.

You should downgrade the computer to run Windows XP which minimum requirement for memory is only 256 MB.

Household net worth by age

Source: Federal Reserve Board's 2004 Survey of Consumer Finances

Age	Median	Top 25%	Top 10%
20-29	$7,900	$36,000	$119,300
30-39	$44,200	$128,100	$317,800
40-49	$117,800	$338,100	$719,800
50-59	$182,300	$563,800	$1,187,600
60-69	$209,200	$647,200	$1,429,500

Federal Reserve will do another survey this year (2007). Stay tune ...

How much student loan debt is reasonable

By Liz Pulliam Weston

If you're a student, you should generally limit your debt so that your loan payments after you graduate don't eat up more than 10% of your expected monthly income.

If you're a parent, try to keep all your loan payments -- for mortgages, cars, credit cards and education -- to 35% or less of your gross monthly income.

By Janet Bodnar

To get an idea of how much debt is reasonable, start with the Student Loan Advisor calculator at http://www.finaid.com/.

You plug in their field of study, expected graduation date and loan interest rate.

The calculator gives them the maximum loan amount they can safely handle, assuming they want to limit their monthly payments to between 10% and 15% of their income.

Examples

Say your future brother-in-law plans to major in education. As a teacher, he can anticipate a starting salary of $35,100, according to the calculator. To limit his payment to 10% of his income, he could borrow about $25,500 at a 6.8% interest rate (the rate on new government-sponsored Stafford loans) with a ten-year repayment schedule.

If he's planning to be a chemical engineer, with a projected starting salary of $60,300, he can borrow $43,700, given the same assumptions

Avoid these 7 money mistakes

The Simple Dollar has wriiten a blog entry on this article. The Simple Dollar explained much better than this Smartmoney article.

Source: By Nicole Bullock and Janet Paskin of Smartmoney magazine

#1 Saving with the right hand and spending with the left

SYMPTOMS:
- Keeping a savings account that pays 5% interest while carrying credit card balances at 15%;
- thinking a tax refund equals mad money;
- obsessing over the price of a new car, but failing to monitor the weekly grocery bill.

#2 Playing it too safe

SYMPTOMS:
- Quick to sell winning stocks but slow to sell losing ones;
- putting too much cash in money-market funds and not enough in stocks;
- reluctance to trade away what you already have, even for something more valuable.

#3 Looking into a cloudy crystal ball

SYMPTOMS:
- Putting too much of your savings in your company's stock;
- having very low insurance deductibles;
- thinking small-cap stocks will rise forever.

#4 Living in the moment

SYMPTOMS:
- Failing to enroll in a 401(k) plan;
- not coming up with a monthly budget;
- waiting until the last minute to make your IRA contribution.

#5 Throwing good money after bad

SYMPTOMS:
- Hanging on to a lagging mutual fund because you paid an upfront sales charge;
- making repairs that cost more than your car is worth;
- making decisions about how to spend time or money based on how much time and money you've already spent.

#6 Letting your ego get in the way

SYMPTOMS:
- Frequent trading;
- concentrating picks among a handful of "surefire winners";
- thinking you're an above-average driver.

#7 Following the crowd

SYMPTOMS:
- Buying ethanol stocks because everyone says they're the next big thing;
- dumping your stock fund after a steep market decline;
- taking stock tips from family and friends.

Low-priced laptops

By Jeff Bertloucci of Kiplinger

If you could spend $450 to $600, you will have a reliable portable computer with a decent-size screen that you can access the Web wirelessly, burn CDs or DVDs, and play movies.

These low-priced laptops from major companies, such as Dell, Gateway, Hewlett-Packard and Toshiba, are built as well as systems that are more expensive. One reason that they're less expensive: the cheaper models use less powerful processor than their $1,200 counterparts.

Still, the processor has plenty of power for everyday tasks, such as word processing and Web surfing. But forget about editing videos or running the latest 3D games -- not enough horsepower!

Most come with just 512 megabytes of memory, which means you will be running Windows Vista Home Basic, the simplest version of Microsoft's new operating system.

You'll be able to listen to streaming audio from your favorite Internet radio station, but the hard drive will likely be too small for storing movies or TV shows.

Best buys

HP's Compaq Presario V6000T ($609; www.shopping.hp.com).

Its specs are pretty good. The Intel Pentium Dual-Core T2080(1.73GHz/1MB) processor is fast and powerful. The 80GB hard drive is spacious enough to store music and photographs. The 15.4-inch widescreen display is big and bright, and the built-in wireless networking is fine for most homes.

Weighing in at less than 6 pounds, the V6000T is light enough to move from room to room (and to lug around the airport for a short while). Its six-cell lithium-ion battery lasts up to two hours, and the CD writer is good for burning audio discs (it can plays CDs & DVDs and burns only CDs).

HP also offers the Compaq Presario C500T (lower price - $449; www.shopping.hp.com), which uses a different processor - Intel Celeron M440 (1.86GHz/1MB). Overall, these two laptops should perform comparably.

The Dell Inspiron 1501 ($549; www.dell.com) is similar to HP's low-end Presarios. Its processor is AMD Mobile Sempron 3500+ (1.8GHz/512KB). Weighing a little more than 6 pounds, its sleek look, crisp widescreen display and Wi-Fi capability make it a good buy. The 60GB hard disk is small, but you can upgrade to 80GB for an extra $35.


One last thing

Don't expect a multiyear warranty or on-site service with these laptops. The Presario and Inspiron models come with one-year, mail-in service plans, which means you'll have to pack up your notebook and ship it back to the manufacturer if something goes really wrong.

How to borrow for college

Sources: Liz Pulliam Weston and Sandra Block

Unlike most other unsecured debt, you can't erase your student loans (federal or private) in bankruptcy court!

Private collection agencies pursue student borrowers hard with special debt-collection weapons (that are not available to collection agencies of other kind of debts) .

There is no statute of limitations on unpaid student-loan debt, and collectors have become increasingly skilled at tracking down defaulters even decades later.

Borrowing tips

1. Don't take on too much debt.

2. When borrowing for college, opt for government-guaranteed student loans before you turn to private loans.

Because private loans aren't guaranteed by the government, interest rates and fees are usually higher than for federal Stafford loans. The maximum that dependent undergraduates can borrow under the federal program is $23,000. So some students with high college costs have to use private loans. But others are taking out private loans before they've taken full advantage of the federal program.

3. If you've already graduated, consolidate your loans before 1 July 2007.

If you're already starting to pay off your loans, you can lock in a 5.375% rate for the life of the loan. Graduates who consolidate during their grace period — the six months before you have to start making monthly payments — can lock in a rate as low as 4.75%.

The 6.8% fixed rate that takes effect July 1 applies to new loans. Loans taken out before then will still have a variable rate that's adjusted every July 1. That variable rate is expected to top 6% on 1 July 2007. Consolidating your loans will let you avoid that increase.

If you're still in school and have loans outstanding, talk to your lender about "in-school" consolidation. That would let you lock in a rate on money you've already borrowed. However, you must consolidate before 1 July 2007. The new law will bar in-school consolidation after that date.

4. Don't compound your problems by running up credit card debt.

The average undergraduate has a credit card balance of $2,169. Only 21% of students paid off their balances each month. Many students use credit cards to pay for books, supplies and class fees. But keep in mind: The average interest rate for a standard, variable-rate card is 13.7%. And overdue payments can cause those rates to soar.

When to take social Security benefits?

By Jeanne Sahadi, CNNMoney.com senior writer


Break-even age

Age 62 is the first year when you can opt to take Social Security benefits - but at a reduced level.
If you retire early, you permanently reduce your benefit. On the other hand, you also collect benefits for a longer period of time than if you waited until full retirement age.

Taking a smaller benefit early can pay off if you don't live past what's called your "break-even" age - the point at which the cumulative value of your early retirement benefits is trumped by the money you would have been paid had you waited until full retirement age.

Example

Say you want to retire at 62 and would draw a Social Security benefit of $1,125 a month. That's 25 percent less than the $1,500 you would collect if you waited until age 66.

By age 77 and 11 months (let's call it 78) you'd have collected roughly $216,000 in total benefits, whether you opted for early benefits ($1,125 x 192 months from ages 62 until 78) or full retirement age benefits ($1,500 x 144 months from ages 66 until 78). (Here's the Social Security Administration's break-even calculator, which can do the math for you up to this point.)

But your break-even age is actually later when you factor in the investment value of your early benefits. Even if you don't invest those early benefits directly, taking them might mean you can leave other savings to keep growing. That could add three to five years to your break-even point.

So in the example above, if you think you'll live past 81, it may pay to wait until full retirement age to start collecting.


More factors to consider

Your finances and your health: Waiting until full retirement age or later isn't an option if you're unable to work.

Nor is it a smart move to wait if you don't have substantial savings to live on in the meanwhile.

Your tax situation: If your annual income in retirement from all sources exceeds $25,000 ($32,000 for joint filers) you will owe income taxes on 50% of your social security benefits. You'll owe taxes on 85% of your benefits if your income exceeds $44,000 ($54,000 for joint filers).

More and more people will be subject to the tax since the income thresholds are not adjusted for inflation, unlike your Social Security benefits, which are.

Your benefits may be reduced even further because Medicare premiums, which are paid out of your Social Security check, have been rising faster than inflation.

Your plans to work in retirement: If you take a job that pays more than $12,960 in retirement while collecting benefits, your benefits will be reduced by $1 for every $2 earned above that threshold unless you are past your full retirement age.

On the bright side, after you reach full retirement age, you will get an increase in your Social Security check to reflect the amount of benefits withheld while you were working.

Plus, no matter how much you earn after full retirement age, you will not have any benefits withheld.

How long you've been in the workforce: Social Security benefits are calculated based on your 35 highest earning years.

2007 Social Security benefits

For earners who average	Benefits at age 65	% of pre-retirement income
$16,700	$9,400	54%
$37,200	$15,570	40%
$58,900	$20,610	34%
$87,800	$24,000	28%

Source:The National Academy of Social Insurance based on data from Social Security Board of Trustees

What to do if you have $2,500

Source: Act One BY EMILY MEEHAN

Advice from several financial planners

Set up an IRA (Roth or traditional)

-- T. Rowe Price Retirement 2045 Fund or
-- Schwab Total Stock Market Index Fund

Put something aside for rainy days

An emergency reserve
-- Keep $1,000 in a CD that matures in 6 months,
-- $1,000 in another CD that matures in 12 months, and
-- put $500 in a savings account

ETFs, ETFs, ETFs

The goal: 10%-type returns with lower volatility than the stock market.

For stocks:
-- 30% Vanguard Total Market and
-- 30% State Street Developed and Emerging Market.

For bonds:
-- 20% iShares 3-7 year Treasury.

For commodities and real estate:
-- 10% PowerShares DB G10 Currency Harvest Fund and
-- 10% State Street International REIT

Be somewhat aggressive

-- Vanguard Star Fund ??

Take the bond route

-- $2,000 on T. Rowe Price Spectrum Income Fund
-- put the other $500 in a money market fund

Reviewing your tax return may pay off later

Source: Reviewing Return Now Could Pay Off Next Year By ANDREA COOMBES

Start with the line 7 of Form 1040: Wages, salaries, tips.

Do you have access to a workplace 401(k) or flexible-spending account? This is one of the more obvious places to maximize tax savings.

Flexible-spending accounts let employees pay for dependent care and health-care costs with pretax dollars.

Some taxpayers forgo their workplace flex-spending account, and instead take the credit for dependent and child-care expenses on Form 1040's line 48. Please note that taxpayers with an adjusted gross income above $43,000 can take the credit on only 20% of such expenses, up to $3,000 for one qualified dependent, and $6,000 for two or more.

Lines 8 and 9:

High dollar amounts here should prompt you to look at your investments.

If you're reporting a lot of interest income, you might consider investing in municipal bonds to reduce your taxable interest income. But if you're subject to the alternative minimum tax, remember that some tax-exempt interest -- mainly interest from private-activity municipal bonds -- is subject to the AMT.

Line 13:

If you carried any capital losses over, you could use those losses to offset the gain from a winning stock, though you shouldn't sell an investment mainly for tax purposes.

Line 32:

If you had an IRA deduction, you should consider whether you'd be better off contributing to a Roth IRA if you're eligible. That would mean you're giving up your IRA deduction in the year you make your contribution, but your distributions from that Roth IRA would be completely tax-free.

Line 40:

Many people who take the standard deduction would save money by itemizing. There's a quick calculation to get a sense of what's right for you: Add up what you paid in state income taxes, real-estate taxes and mortgage interest. If the total is more than the standard deduction, you know what you should do next year.

Schedule A:

Check this form to ensure you maximize your possible deductions in the year ahead. For instance, there are new rules for the charitable-contribution deduction. You can only get a deduction for clothing and household items if they're in good used condition or better; and, starting this year 2007, you can only get a deduction for cash contributions if you have a canceled check or a receipt.

Line 44:

This line is for your total tax due. If you included tax on your child's unearned income, generally paid at the parent's tax rate, you made a huge mistake. You should report your child's unearned income on his or her own return - first $850 of unearned income is tax free, second $850 is taxed at lowest rate.

Line 45:

The degree to which you can get out of the AMT if you owed it in 2006 will depend on what got you into that parallel tax system. If it's high state taxes, and you live in a high-tax state like California, New York, then maybe there's not a lot you can do about it.

But if you were pushed into AMT by, say, exercising stock options, and you've got more to exercise, you might want to spread out the exercise so you don't have a big AMT hit in one year.

If your entry into the AMT was aided by interest income from private-activity municipal bonds (the interest from which isn't tax-exempt under the AMT), consider shifting the types of investments you invest in.

Line 47:

If your mutual-fund holdings include international stocks, you can likely claim the foreign-tax credit. There's also an itemized deduction for foreign taxes paid, but it often makes more sense to take the credit. If your foreign taxes are less than $300 ($600 for a married couple filing jointly), you don't need to do anything other than enter the amount on this line.

Line 48:

See above Line 7.

Line 50:

Even if you paid tuition or other education expenses in 2006, income phaseouts on education credits might have forced you to leave this line blank.

Note that you could select the deduction for tuition and fees instead.

If your income is close to the phase-out limit (for single filers in 2007, the phaseout starts at AGI of $47,000, and the credits are eliminated after $57,000; $94,000 to $114,000 for joint filers) and you have some control over when you receive income, consider delaying income to the following year to take advantage of these credits, which can cut your tax bill by as much as $2,000. Also, high-income parents may be able to let their dependent student claim an education credit to reduce his or her own tax bill, if the parents waive the dependency exemption.

Line 51:

If your income is under the limit, you may claim this credit even if you contributed to only Roth IRA.

Line 52:

If you left Line 52 blank, now's the time to consider making some energy-efficient home improvements so you can claim a credit on your next tax return.

Line 77 is for your estimated tax penalty.

If you entered a big amount on the previous line ("amount you owe"), then you might have owed a penalty here. To avoid that penalty next time, pay 100% of the tax you owed last year; 110% for certain high earners. If you file a W-4, try the withholding calculator at www.irs.gov.

529 loophole

Source: Understanding the new financial aid treatment of 529 plans by Joe Hurley, founder, Savingforcollege.com

529 plans let the parents to put money aside for educational expenses of their and their dependents. In general, they can withdraw the money (contirbution and gains) tax-free to pay for educational expenses.

529 loophole

A new law passed back in February 2006 had removed student-owned 529 plans and Coverdell education savings accounts from the expected family contribution (EFC) in the federal financial aid formula.

We now have the interpretation from US Department of Education.

A 529 account or Coverdell ESA is considered an asset of the account owner; however, 529 accounts or Coverdell ESAs owned by a dependent student are excluded from the FAFSA. Most undergraduates are dependents for FAFSA purpose.

This is exceptional treatment, as student assets are generally assessed at a 20% rate (2007-08 school year) in determining the EFC.

Example:

John and Jill have been saving for their son Billy's future college expenses by purchasing mutual funds in Billy's name under the Uniform Transfers to Minors Act (UTMA). They've saved some income taxes by having the investment earnings reported on Billy's tax returns through the years.

But Billy will be enrolling in college this fall 2007 and those investments are now going to be assessed at a 20% rate in determining Billy's eligibility for federal aids.

Under the new law, John and Jill can dramatically improve Billy's aid eligibility by liquidating his current investments and moving the money into a 529 plan with Billy as both owner and beneficiary.

Provided the assets are moved to the 529 prior to filing the FAFSA, they will be removed completely from consideration.

Here is where things currently stand:

--The financial-aid changes were effective starting the 2006-07 school year.

--The law as written permits dependent students owning 529 plans and ESAs to exclude those assets from the FAFSA.

--Starting the 2007-08 school year, the asset inclusion factor for student-owned assets is lower to 20% (from 35%).

--Moving money from a student-owned or UGMA/UTMA investment into a 529 plan requires that the investment first be liquidated. Capital gains may be triggered causing income tax and a possible decrease in financial aid due to the income inclusion factor. Careful planning is necessary.

--Don't be too quick to shift your parent-owned investment assets, including your own 529 accounts, to a 529 account under your child's ownership. (If the student is a minor, most 529 plans will require an adult custodian on the account - UTMA 529 account.) The potential financial aid benefit is small, as parent assets are assessed on a sliding scale that tops out at only 5.64% and the transfer is irrevocable. If Congress decides to re-work the laws, it will be too late to take your money back from your child.

--There's been no change with respect to grandparent-owned 529s naming the student as beneficiary; they are not reportable on the FAFSA. However, the U.S. Department of Education has yet to clarify whether a distribution from a grandparent-owned 529 plan to pay for the student's college expenses is reportable as student income.

--Schools may distribute their own scholarships and grants under non-federal formulas. The changes described above will not necessarily affect school-based grants. In fact, an increase in a student's federal aid may cause some schools to offer less school-based aid.

Money advice for new college graduates

Source: More Advice Graduates Don’t Want to Hear By DAMON DARLIN of nytimes.com

Saving while young is critical - the power of compounding. If you start saving now, it will build to a larger nest egg by the time you are 65 than if you wait to start at 45.

Put $250 a month for 40 years in a IRA or a 401(k) and you will receive about $500,000, assuming a 6% return. Start at age 45 and you would have to put in $1,078 a month to generate the same amount by age 65.

But there is another compelling reason to get into the habit of saving. People who save a lot get used to a frugal life while working, so less money is needed in retirement.

If you are only making $40,000, a not-untypical starting salary for a college-educated professional in a big city, the weekly gross of $769 works down to $561 in take-home pay after income taxes and payroll taxes for Social Security and Medicaid.

Were you to divert 10 percent of your salary to a 401(k) plan, the bottom line becomes $509.

In other words, a regular habit of savings costs you only $52 a week.

You could easily frittered that away last week on things that you cannot even recall this week. Could you save another $50 a week? If you do, you are nearly set for life.

More advice

Never pay a real estate agent a 6% commission.

Buy used things, except maybe used tires.

Get on the do-not-call list and other do-not-solicit lists so you can’t be tempted.

Watch infomercials for their entertainment value only.

Know what your credit reports say, get them free on to http://www.annualcreditreport.com/.

Consolidate your cable, phone and Internet service to get the best deal.

Resist the lunacy of buying premium products like $2,000-a-pound chocolates.

Lose weight. Carrying extra pounds costs tens of thousands of dollars over a lifetime.

Do not use your home as a piggy bank if home prices are flat or going down or if interest rates are rising.

Enroll in a 401(k) at work immediately.

Postpone buying high-tech products like PCs, digital cameras and high-definition TVs for as long as possible. And then buy them during the selling season - such as the Black Friday - they often are on sale.

And, make your own coffee.

Easy ways to save money

Source: Tweaks That Help Fatten Your Wallet BY JONATHAN CLEMENTS

Easy money savings ... More earnings on your short-term money with little risks or efforts.

I think that some advice are good advice and some are not.

1. Losing Balance.

Suppose you have $10,000 in your checking account earning zero interest. You might shift $8,000 to EmigrantDirect, HSBC Direct or one of the other high-yield online savings accounts, where you can find yields around 5%. This simple maneuver could garner you $400 over the next 12 months.

Great advice!

2. Taking Credit.

Let's say you have $5,000 of credit-card debt incurring 14% interest. By using $5,000 from your checking account to pay off that debt, you would save $700 a year.

Great advice!

3. Heading Home.

Shrinking your checking account may leave you uneasy, because you view it as your emergency reserve. But you can always open a home-equity line of credit, which you can then tap if you find yourself in a financial pinch.

Great advice!

4. Losing Interest.

You also could save a bundle by refinancing your mortgage. If you have a 30-year loan costing 7%, you could slash monthly payments by refinancing at 6% or less.

Or, think about making extra principal payments instead. Suppose you have $10,000 in a savings account earning 3%. If you use that cash to pay down your 7% mortgage, you will be better off by $400 over the next year.

Something to think about. It requires some efforts.

5. Taking Shelter.

Many folks hold bonds and other conservative investments in their taxable account because they like having low-risk investments they can easily unload if they need cash. Meanwhile, they stash stocks in their retirement account. This seems logical, because stocks are designed for long-term growth and retirement is often years away.

But what seems logical isn't always right. Let's say your taxable account holds $100,000 of municipal bonds yielding 4%, while your retirement account contains $100,000 of stocks.

If you swapped the stocks into your taxable account and moved your bonds to your retirement account, you should improve your portfolio's return. A big reason: Instead of owning 4% munis, you could use your retirement account to buy taxable bonds that might yield 5.5%. The extra 1.5 percentage points of yield would add $1,500 to your portfolio over the next year.

What if you suddenly need $10,000? If you don't want to tap your home-equity line of credit, you could sell $10,000 of the stocks in your taxable account. To maintain your stock exposure, you would then move $10,000 from bonds to stocks within your retirement account.

This advice is too sophisticated - risky to put money which for emergency reserve into stocks or stock funds! And the retirement money should be asset-allocated.

6. Trimming Taxes.

When you held munis in your taxable account, you weren't paying any federal income taxes on the interest and possibly no state income taxes, either. By contrast, the stocks you now hold in your taxable account could be generating hefty tax bills.

To avoid those hefty bills, favor low-cost stock index funds. That way, any taxable distributions you receive should be mostly qualified dividends and long-term capital gains, which are taxed at a maximum 15%.

Again sophisticated advice - to put money that may be needed in short-term into stocks or stock funds!

7. Boosting Yield.

As you shift your bond money to your retirement accounts, think carefully about which fixed-income investments you buy.

To improve your yield, favor no-load bond funds with rock-bottom annual expenses. Mr. Roth also suggests hunting the Internet for high-yielding certificates of deposit. These CDs offer handsome rates and your account should be protected by the Federal Deposit Insurance Corp.

Great advice as retirement money should be asset-allocated.

8. Insuring for Less.

To cut insurance costs, consider raising the deductibles on your homeowner's insurance. "Companies have been dropping customers if they have lots of claims, so people aren't filing claims," says Ross Levin, a financial planner with Accredited Investors in Edina, Minn. "You might as well raise your deductibles."

While you're at it, see if you can trim your life-insurance costs. "It's a good time to be shopping for term insurance," Mr. Levin says. "If you shop online, you can get great rates, especially if you're in good health and you've never smoked."

Great advice to save on the housing expenses.

9. Snatching the Match.

Don't overlook possibly the most attractive money saving: the employer's matching on your 401(k) contributions. In a common arrangement, an employer will kick in 50 cents for every $1 you invest, up to 6% of your pay. That's like an instant 50% return on your money.

On top of that, you will get investment gains, tax-deferred growth and an immediate tax deduction.

Great advice to save for the long-term!

Kiddie tax for 2008

Source: wsj.com

Under current law, investment income above a certain level (generally $1,700 for 2007) for a child 17 years old or younger typically is subject to the parents' tax rates, assuming the parents' rates are higher than the child's.

That is still the law for this year 2007. Before the law was changed last year, the kiddie tax applied only to children younger than 14.

Under the new law, the age limit will increase (starting next year 2008) to children who are 18 or younger, or under 24 if the child is a full-time student.

However, note that it only applies to children whose earned income does not exceed one-half of the amount of their support.

How to manage your portfolio

Source: Seeking Solid Middle Ground by Tomoeh Murakami Tse, Washington Post staff writer

First, you should figure out what your target asset allocation should be. What should be the % of stocks and fixed incomes.

Rebalancing

Is there anything new that would cause me to change my asset allocation?

Do my financial circumstances really fit what's happening in my personal life?

Why

Rebalancing helps you control your risk; it's not a way to make more money; it's a way to protect what you have.

Rebalancing is a simple enough concept -- selling the stars and buying the lesser performers.

It allows investors to implement a famous but difficult investment strategy: buy low, sell high.

How

You should check on a portfolio once a year; and fight the urge to look at your accounts more often than that..

Rebalance your portfolio if a particular asset class is off by more than 10% movement is a good trigger, with more room if necessary to let winners run their course.

If you rebalanced every time the market moved 5% on its way up, you would have rebalanced 18 times during stocks' recent four-year recovery.