Save Money

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  Investing

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Ideas for saving Money

• Put money into your company's 401K to the maximum your employer matches.
• Put $3,000 each year into a Roth IRA.
• Raise your 401K deposit to the maximum amount allowed.
• Save for a rainy day.
• Save for your child's college in a 529 plan.

Saving for Retirement

Regardless of where you choose how to save money - cash, stocks, bonds, real estate, or a combination of places - the key to saving for retirement is to make your money work for you. It does this through the power of compounding. Compounding investment earnings is what can make even small investments become larger given enough time.

You're probably already familiar with the principle of compounding. Money you put into a savings account earns interest. Then you earn interest on the money you originally saved, plus on the interest you've accumulated. As the size of your savings account grows, you earn interest on a bigger and bigger pool of money.

The value of $1,000 compounded at various rates of return overtime is as follows:

Years	4%	6%	8%	10%
10	$1,481	$1,791	$ 2,159	$ 2,594
20	$2,191	$ 3,207	$ 4,661	$ 6,728
30	$3,243	$5,743	$10,063	$17,449

The chart provides an example of how an investment grows at different annual rates of return over different time periods. Notice how the amount of gain gets bigger each 10 year period. That's because money is being earned on a bigger and bigger pool of money.

Also notice that when you double your rate of return from 4 percent to 8 percent, the end result after 30 years is over three times what you would have accumulated with a 4 percent return. That's the power of compounding!

The real power of compounding comes with time. The earlier you start saving, the more your money can work for you. Look at it another way. For every 10 years you delay before starting to save for retirement, you will need to save three times as much each month to catch up. That's why no matter how young you are, the sooner you begin saving for retirement, the better.

Money Guide

Start on your first $1 million at age 16,
It's easier than you think to become a millionaire. The magic combo?
Getting an early start saving money and having the discipline not to raid the piggy bank.
Here's a simple recipe to become a millionaire:

• Work four summers, starting at age 16
• Save the income in a Roth IRA account
• Invest it in a simple, low-cost equity portfolio
• Simmer slowly for 47 years
• Serve ungarnished (and untaxed) at age 67

The good news is that money grows faster than fat. Calories don't have the benefit of compound annual growth.
You can put this money to other good use, like saving money for college, it doesn't take rocket science to learn how to save money, the important thing is to start early.

Many people fail to diet because the end goal seems so far away. So it is with saving money and investing:
Most people fail because it is nearly inconceivable that a few dollars a day or a well-timed gift can be turned into that magical sum.

Credit reports

• You can now see your actual credit score, a number from 300 to 850, that tells you whether you're a good risk.
• To improve your credit score quickly, pay your bills on time and pay down the total amount you owe.
• There are three major credit bureaus who issue credit reports to lenders - Equifax, Experian, and TransUnion - and they don't share information. So even if you correct an error on one credit report, you will have to do the same on the other two.
• You have the right under federal law to challenge items on your credit report. The credit bureau then has 30 days to decide whether that item should be removed.
• If a credit bureau refuses to correct a mistake, you can sue them.
• Get copies of all three credit reports six months before you apply for a home loan. An error on your credit report can take months to clear up. If your time is ticking away on a home closing and you can't get approved for a loan, you're going to lose the house.

• Experian
  
• TransUnion
  
• Equifax
  

Loans, Exemptions and Mortgage Services

• Mortgages typically have many different owners over the years and many different servicing bureaus, so it's not difficult for a mixup to occur over your loan balance. To protect yourself, run an amoritization schedule and check the loan balance reported by your lender against it.
• Keep a copy of every check you ever write for your home mortgage loan.
• If you call a mortgage servicing bureau about your loan, make sure you get the full name of the person with whom you speak.
• If you find yourself in a dispute with a lender about a payment or another issue, don't send correspondence to the same address you send your payment.
• Keep an eye on how much money your bank collects to cover your annual property taxes and insurance. Lenders are allowed to collect your annual escrow needs plus one-sixth of this figure, but many over collect.
• One of the smartest things someone can do with a mortgage is to prepay on the loan. All you need to do is contact your lender and ask for its prepayment procedure. Then, once a year, check the loan balance the lender sends you to make sure the additional payments have been applied properly.
• Fee-based plans that charge $300 to $500 for administering a prepayment system are a bad idea; you can do it better and cheaper by yourself.
• If you reach 20 percent equity in your home, you can save a substantial amount of money by asking your lender to drop private mortgage insurance.
• Avoid paying private mortgage insurance by taking an 80 percent first mortgage and a 10 or 15 percent second mortgage. Update!

Paying off Credit Card Debt

There are several steps you should take to get out of credit card debt. Paying off several thousand dollars or more in credit card debt takes time, so you must discipline yourself.

• If you have several cards, your first goal is to pay off the card with the highest interest rate. This process is called laddering.
• Pay more money toward that credit card and slightly less toward the other card, and eventually you can rip it up. Then you move onto the next card, and so on, and so on...
• One proven way to pay more toward the most expensive card - and to get rid of it faster - is to make a separate payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your online payment that day. Making a payment every 14 days equals one extra month's payment you've made at the end of the year. Work these payments around your statement cycle to avoid paying lates fees.

Here's an example: Say you owe $3,500 on a credit card and you are only able to pay the $70 minimum payment, it would take more than 30 years to pay it off. But if you split it up and paid $35 on May 14th and $35 on the May 28 due date, and you kept making a $35 payment every 2 weeks, you will pay off the card in less than 7 years.

For help during the process, contact the Consumer Credit Counseling Service at 1-800-388-2227.