Tips for Debt Management

You know that you need to save money and these steps can help you accomplish your 2008 goals.

1. What are you earning?
Look around for banks with the highest interest for your checking and savings accounts. Go to to see the latest numbers. Why let your money grow with a small interest when there are banks paying around 4%? Some bank require $1000 or more to open an account but Capital One has a minimum of $1.

2. 401(k) vs. Roth IRA
While saving all your spare cash is a plus, putting it all into your 410(k) account is not as smart as you think. Stashing away extra cash in a 410(k) until you meet your employer’s match is ok, but after that you should store any extra money into a Roth IRA account. Earnings and withdrawals are tax free and the largest Roth IRA contribution is $5000 in 2008. Basically $1000 from your 401(k) is not worth as much as $1000 from your Roth IRA account because you will be spending taxes on it.

3. Retirement Fund vs. Kid’s College Fund
It’s hard to not save money for your children’s college fund, but you only get one shot at retirement and you can’t take out loans for that. Your children will be able to earn scholarships and apply for loans. Basically, don’t skimp on retirement for your kid’s higher education. If you are putting money into a 529 plan be careful. You’ll pay taxes on any withdrawals made that are not for education.

4. Money Budgeting Software
Almost all computers nowadays include either Quicken or Microsoft Money so some of you have no excuse not to take advantage of these. I know the setup is a headache, but stop being lazy and put aside a weekend afternoon and tackle it. These programs can help you keep your financial life in order.

5. Fixing Your Credit
Mortgage companies are in trouble since they gave loans to people who cannot pay them back. This means it is going to be increasingly harder to get a new mortgage. In order to increase your credit score you must pay your bills on time. Monthly bill paying is a good chunk of your score. You can also try these tips: pay off your debt, keep old credit cards to lengthen your credit history, and fix errors on your credit report.

Put these moves into action and you can accomplish your 2008 financial goals!