How to Invest Like Warren Buffett

Warren Buffett is perpetually one of the richest people in the world and almost universally considered to be the greatest stock picker the world has ever known.

While you might not ever be worth $50 billion, you can certainly learn a thing or two from "The Oracle" and greatly increase your wealth over the long-term.

Though Mr. Buffet has never officially written down his process for evaluating and choosing stocks, there is a lot that can be learned from his letters to his shareholders.

These rules are in line with those shareholder letters:

1. Rule #1: Don't lose money. Warren's basic philosophy is to purchase a stock for less than it's worth and then let the rest of the world finally figure it out, too. This is commonly referred to as value investing and has been the corner stone of his philosophy from the very beginning.

* In fact, the rest of the rules are really rules to find these companies.

2. The company must have strong profitability. Buffet prefers companies that are already profitable as opposed to companies that are likely to someday become profitable. There are several measures he utilizes to determine this. Some of these include Return on Equity (ROE), Return on Invested Capital (ROIC), and the profit margins.

* ROE - While no one knows for sure, the general consensus is that he wants to see an ROE of 15% or more.

* Profit Margins - In this case, we're talking about dividing net income by net sales. Obviously, the higher the better.

3. The company must have low debt. Too much debt is bad for everyone, including companies. In case you thought we skipped ROIC above, we're getting back to it now. Sometimes a company will appear to have a high ROE, but the number is actually artificially inflated. This can happen when the company is using debt to pay its bills. This is where ROIC comes into play.

* ROIC removes debt from the calculation by adding it back to the shareholder equity prior to completing the ROE calculation. You can simply divide the company's total liabilities by the shareholder equity. The higher the ratio is, the more a company is using debt to grow the company. Be careful.

* Companies with a lot of debt can be harmed when either interest rates rise or credit becomes harder to acquire.

4. The company must have competent management. Buffett has always placed a lot of emphasis on a company's management team. He favors intelligent, humble management that doesn't simply follow the crowd. He has stated that his company simply allocates capital; it does not provide management.

* He has traditionally stayed out of influencing a company's management, but he insists that good management be present. Ensure the companies you invest in are being run by a competent management team.

5. Comprehension. Buffet refuses to invest in a business that he doesn't understand. You will find that the businesses in which he invests are relatively simple. He largely avoids the technology companies, because as he has stated, he doesn't really understand that type of business. Only invest in what you are capable of understanding.

6. Be patient. It seems like Buffett has held some stocks since before the dawn of time. He has held many stocks for 5 years or more before the stock ever rose even 1%. Value investing takes time; you're going to have to be patient to see the returns. Don't be in a rush.

While we can't all be Warren Buffett, we can certainly follow his basic principles and improve our own investing results. Focus on under priced companies with a history of profitability, little debt, and a competent management team. And remember to be patient!

If you can do these things consistently, you'll be surprised at the amount of wealth you can gain!

Does Your Spending Reflect Your Priorities?

When most of your money goes toward providing what's most important to you, you tend to live a more fulfilled life and feel more satisfied with the way you spend your money. It's also easier to stick to your personal finance plan when its objectives are to get you what you really want out of life.

Because life priorities can differ drastically from person to person, it's important to be aware of your own personal values.

What do you really want from life? What kind of lifestyle do you seek? What are your life goals? Does your spending reflect those things?

Follow these steps to help determine if your finances are in alignment with your priorities:

1. List your priorities. You might notice different levels of priorities as you write yours down. Things like having a place to live and plenty of food to eat are your basic priorities.

* However, you'll most likely include some "necessary" priorities to ensure a strong future for yourself and your family members, like maintaining good health or providing your kids with a good education.

* Also, list things you love to do that seem more like "luxury" priorities, like reading, traveling or playing golf. These might be on a lower level of priority than your basic priorities, but, nevertheless, they're still important to you, so include these as well.

2. Now, write down how you spend most of your money. Where does it go? Although you may get annoyed that much of your money goes toward the mortgage or paying rent, the fact is that we all require a roof over our heads.

* You might consider the type, size and expense of your home and whether you've gone too far in terms of house expenses. If so, where you live and the mortgage/rent payments might require re-evaluation on your part.

* Maybe a good portion of your dollars goes to other necessary expenses like groceries and paying your utilities. But what else do you spend your money on?

* Do you play slot machines on Saturday for fun and end up losing money? Maybe you love to shop and use shopping as a pastime that ends up costing quite a bit. Perhaps you spend $20 a week on coffee and snacks or $30 a week having drinks with your friends.

* Thoughtfully consider where your money goes from week to week and write it down.

3. Finally, compare your lists. Take a look at your first list, the one with your priorities. Ponder each item; does every item accurately reflect what's important to you? Now examine your second list, the one showing where your money goes. Do the lists appear connected? Does your money go mostly toward your priorities?

* You might be shocked to learn that, even though you listed certain priorities like providing a good education for your children or having a comfortable home, you're spending $100 plus a week on eating out instead of starting an education fund.

* What if you listed reading as one of your priorities, yet you spend nearly $100 a month on cable television you don't watch much? Or if you do, it's the same 3 channels that you'd actually get on a basic cable plan costing less than $40 a month.

* In either case, you've got to ask yourself, "What are my true and real priorities" and "Why aren't I putting my money toward the things that matter most to me?"

Having great clarity in knowing your priorities and being conscious of how you spend your money will help you routinely place money toward what's most important to you. Then, you'll like the way you feel about your finances as funds become available for your favorite things.

Common Real Estate Investing Mistakes

Although real estate may seem like a sure bet for anyone, many investors make the same few mistakes. Eliminate these errors from your investing activities and you'll be well on your way to accumulating the wealth you desire.

Avoid These Mistakes

1. Poor research. Most of us do a lot of research when we plan our vacations or purchase a new television. If you were buying one that was worth 100k, you can bet you'd do even more research! Well, you should be doing that when you purchase a piece of real estate, too.

2. Inadequate financing. Real estate investors frequently like to wheel and deal, and their deals can have a lot of moving parts. Balloon payments, interest-only payments, owner financing, subject-to, and many others are commonplace.

* To make a deal happen, we can get carried away doing everything in our power. Getting a great price doesn't always justify the deal if the financing is inadequate. Are you really sure that you can unload the property or get other financing before that balloon payment comes due?

3. Trying to do everything yourself. Though every real estate investor attempts this at one time or another, you have little chance at success all by yourself. A great investor will have, at a minimum, a real estate agent, attorney, title company, inspector, handyman, and insurance agent - all on speed dial.

* You may not always need them, but they should already be in place, and you shouldn't hesitate to call them if you do want their services. Use your experts to your full advantage.

4. Paying too much. This one is certainly related to doing enough research. Real estate deals primarily sink or swim based on price. If you pay too much, not much can be done to rectify the situation.

* Beginning investors are more likely to mentally fudge the numbers a little bit to make a deal happen. But if the repairs run high, and the price they can sell for is lower than expected, then overpaying in the first place can be disastrous. Do your research and your math and stick to your numbers.

5. Not estimating expenses accurately. This is similar to paying too much. Many investors will look at repairs and think to themselves, "Everyone is saying it will take $20,000 to fix, but I'm sure I can get it done for $14,000." But what if it really takes $23,500? That's part of the reason getting the property at the right price is so important.

* The other aspect of this mistake is not accounting for all expenses. The costs of landscaping, lawn mowing, insurance, utilities, property taxes, and new appliances can really add up in a hurry. Be realistic with your repair planning and take careful notes of all your possible expenses.

Real estate investing is a relatively simple business, but mistakes can create massive challenges in a hurry.

Every seasoned investor has made all of these mistakes. The best investors just make them less often than everyone else. In any housing market, there are moneymaking opportunities, so don't let these mistakes slow you down!

Can You Afford to Miss Your Next Paycheck?

Living hand-to-mouth is never enjoyable. But when the economy is struggling, changing jobs isn't easy, and layoffs seem all too possible, living paycheck to paycheck can feel even scarier. What if your next paycheck didn't come as expected? How long could you get by without it?

Luckily, there are some simple things you can do to better your situation and reduce your financial risk.

Consider implementing these strategies to make your financial situation more secure:

1. Reduce your expenses. No one likes to cut back, but reducing expenses is a really fast way to have more money left over at the end of every month.

* Look at all the things you're spending money on that you don't really need. Do you eat out frequently? Do you have cable television? How many cars do you own?

* Really take some time and think about what you could do without. Maybe moving to a smaller house or apartment would make sense right now. After all, once you have some emergency money set aside, you can always move back to a bigger place.

2. Increase your income. You could do lots of things to earn extra money.

* Consider asking for a raise. It might seem like a bad time to ask your boss for more money, but good employees are always critical to a company's success. Don't underestimate your value.

* A part-time job is another option and, in some situations, this can be a good plan. Maybe you can find some work to do at home in the evenings.

* Even walking the neighbor's dogs, babysitting, mowing lawns or shovelling snow for your elderly neighbors could bring in some extra income on a regular basis.

3. Take responsibility. Although your current situation may very well be someone else's fault, blaming others isn't helpful. Even if your predicament isn't your fault, solving your financial challenges is still your responsibility. After all, who else is going to fix the situation for you?

* Responsibility isn't about fixating on the past or blaming yourself. Instead, it means taking back control of yourself and your situation. And while you can't have power over every little circumstance that pops up, you can always choose to respond effectively.

4. Decide that you and your family deserve better. Circumstances rarely change without a decision being made first. Commit to having to a better financial life, whatever it takes.

* At the end of the day, most people earn what they believe they deserve to earn. Almost undoubtedly, there are many people out there with less intelligence and fewer skills than you who are earning more money than you are. Why is this? Primarily because they believe they deserve to earn more.

* You wouldn't take a job that paid half as much as you're making now, because you believe you deserve to earn more. What if you thought in your heart that you deserved to earn another $25,000 a year? You can be pretty sure that you'd be out there finding a way to get it and you wouldn't stop until you did.

It can be a challenge to stop living paycheck to paycheck, but the solutions are relatively simple. Try implementing the practical tips above to enjoy greater financial security and experience a less stressful, more fulfilling life.

How to Raise Cash Quickly

Unexpected financial situations happen to even the most careful among us. When financial emergencies occur in your life, you may find yourself tempted to go for the easiest ways to raise cash. However, there are usually better ways.

If you can keep your wits about you, money can often be raised in ways that have minimal long-term consequences.

Follow these tips to help you calmly assess the situation and determine which option would be best for you.

Be Certain You Really Need Cash

You might not even need cash if your unexpected expense is relatively small. Maybe you have some gift cards to stores or restaurants that you've forgotten all about. Also, some credit cards have reward programs that frequently go unused. Some of these pay cash and others build points than can be redeemed for merchandise, gift cards, and more.

Quick Money Schemes to Avoid, if Possible

1. Family loans. Borrowing money from family and friends can be a positive or negative experience. Whether or not this is a good option for you really depends on your unique situation.

* Consider the likely outcome if you are unable to pay them back as agreed. In many instances, if such likelihood occurs, it can cause hard feelings for a long time.

2. Payday loans. Some of the worst ways to raise cash are loans that come with very high interest and fees. Payday loans are an easy way to raise money quickly, assuming you're employed. But when you consider the interest and fees associated with these loans, you could easily end up paying them back twice as much as they lent you - or even more!

3. Title loans. Loans that use your car title as collateral are not only very expensive, they are also quite risky. If you can't pay as agreed, you'll lose your vehicle.

4. Cash advances from credit cards. These advances are another expensive way to get your hands on some cash. While credit card purchases don't usually start accruing interest immediately, cash advances do.

Better Options

While still not your best option, you can withdraw money from your retirement account. Here's a loophole you can use to avoid taxes and penalties:

If you transfer your IRA into a new IRA account, you have the option of having the money sent directly to you, on the condition that you deposit the money into a new IRA account within 60 days. If you can replace the money in that time frame, you're getting an interest-free, penalty-free, and tax-free loan. You can only do this once each year.

If an IRA transfer isn't an option for you, you can also sell savings bonds that haven't yet matured. Also consider selling your stamp, coin, or jewelry collection. Keep in mind that if you're going to sell them quickly, you're unlikely to get a good price.

Your Best Choices

1. Sell some liquid investments. Selling items from your non-retirement portfolio is, for many people, the best way to raise some money. First, sell those items that have been stagnant and show no signs of doing anything in the near future.

2. Borrow from your 401k. However, there are penalties and taxes if you fail to pay the money back.

3. Take out a home equity loan. A home equity loan is a viable option for some; just keep in mind that you are putting your house at risk if you can't pay back the loan.

Planning Ahead

Having an emergency fund is critical to negating the effects of financial emergencies. Strive to save 3-6 months of expenses and leave the account alone unless you have an actual emergency. This is the most fundamental step you can take to ensure your financial security.

Avoid letting a challenging situation become even worse by making a hasty decision. First, decide if you really need cash. Maybe a non-cash alternative is available. If this doesn't work for your situation, do some planning before you decide how to proceed. Be sure to thoroughly investigate the fees and interest rates that are associated with your options.

Although unexpected expenses can bring with them tension and high emotions, remember that making a good choice now will result in fewer headaches later. Take as much time as you can to make the best decision for you.

All-Inclusive Vacations Can Save You Money

Most of us carefully plan our vacations to fit our paychecks. Somehow, though, in spite of all of our best intentions, vacations always seem to cost more than we expect. We go each time with a plan in hand, and each time, we come back wondering where all the money went.

Budgeting for the big things like travel and lodging is pretty straight forward. Smaller expenses are usually the cause of unplanned spending. Entertainment, food, and drinks are more difficult to plan well for, since these items can be rather spontaneous in nature.

But you can avoid the overspending and still feel like you're treating yourself well. One possible solution is an all-inclusive vacation. Let's have a look at this type of package, and make this the year when you come back with both happy memories and a few bucks in your wallet.

What's Included

All-inclusive vacations can really help you stay within your budget. You pay a fixed rate for all the essentials. As long as you don't spend money outside the resort, you're all set. If you prefer not to worry about money while vacationing, these types of packages can be ideal.

All-inclusive resorts are really the equivalent of an insurance policy. You pay a set amount in exchange for having access to everything you need, when you need it.

What's Not Included

However, you won't have the same level of freedom. Unless you want to pull out your wallet again, you'll have to confine your food, beverages, and entertainment to the resort. Also, if you decide you don't like the resort you've chosen, you're stuck with what you've got.

Vacationing the more traditional way, you can always check out and head down the street to another hotel if you're not pleased. Only you know how much that flexibility is worth to you.

Also, you've already paid for the package, even if you don't use it. Be sure you're going to get your money's worth. For example, if your idea of vacation is sitting on the beach all day and eating one meal a day, you're going to be paying for a lot more than you're using with an all-inclusive package. In this case, you might be better off with a traditional vacation.

Consider these ideas to minimize your potential risk when booking an all-inclusive resort:

1. Look for amenities that suit you. Consider what you want to eat. Do hotdogs and potato chips sound good to you? Maybe you want a vacation that includes gourmet food in a nice restaurant setting.

* Some less-expensive places will only provide water, soda, and a few more beverages. Do you want to have access to mixed drinks and fine wine? Many resorts will not include alcoholic beverages unless you pay extra.

* Do you enjoy the types of entertainment they offer?

* How is the customer service?

2. Consider the quality of the accommodations. Some resorts are bare bones, while others are extremely plush. Be sure you're getting the best combination of what you can afford and what you want.

3. Do your homework. Researching the quality of the resort is the most important task you can undertake before you book your vacation. In the Internet age, reviews and suggestions are easy to find. Low-quality establishments have a harder time hiding than ever before.

All in all, an all-inclusive package can be a great way to put a cap on your vacation spending. There are no surprises, and you can eat and drink without worrying about budget or about how much money you have left.

Vacations commonly result in overspending, but with an all-inclusive package, you can stay in charge of your finances even as you play. Start doing your research now; an all-inclusive vacation might be just the ticket this year.

7 Steps to Organizing Your Finances

You might not consider yourself to be an organized person, but your finances are the last place you want to be disorganized. Having too little cash at the end of the month is a challenge, but overdraft fees and late fees every month are an even bigger concern. By getting organized you dramatically cut down on the likelihood of these things happening.

Follow these steps and you'll be more organized that you ever thought you could be:

1. Look at your budget every month. Ensure that your budget is accurate. No two months are ever the same, so be sure your budget reflects reality for the upcoming month. For example, electricity bills can be much higher in the summer if you use air conditioning or in the winter if you have the heat turned up.

* If you don't have a budget, make one now! There are an unlimited number of resources available to make the job a lot easier. Budgets are critical. Your budget is your key to having your money work for you!

2. Utilize financial software. Some of the software available now can really help you to get organized, track your spending and bills, and help with budgeting. Many programs are free.

* You might actually find working with your money to be enjoyable when you can use a computer and specialized software. It's a whole different experience than laboring over your hand-written figures on paper.

3. Keep all your bills in one place. Avoid leaving some of them on the kitchen counter, some in the junk drawer, and some on the desk. Having one specific location for all your bills will ensure that nothing gets lost, and it'll also give you the best chance to ensure that everything gets paid on time.

* Store your bills close to where you normally sit and pay them. Keep them out in the open where you can see them regularly.

* When you're done paying them, retain any records you need and shred everything else to protect yourself from identity theft.

4. Pay your bills weekly. Each week, pay any bills that are due in the next couple of weeks. Choose a day and make a habit of paying your bills on that same day each week. Developing good habits is a big part of staying organized.

5. Make a checklist of your bills. This should include all your recurring bills. Then, when the bill arrives, you can note the day it arrived, the amount due, the date it's due, and the day you actually paid it. Any non-recurring bills can be added to the checklist when they arrive.

6. Communicate regularly with anyone who shares your account(s). Whoever pays the bills needs to know what the other person is doing with the account. Develop a system to ensure that the bill payer is kept in the loop at all times.

* Financial matters can be a source of stress in relationships, so work out an effective system before it becomes a challenge.

7. Have two accounts. Mishaps are a lot less likely to happen if you have one account that is only used to pay bills. Use a separate account for everything else.

Getting your finances well organized is a pretty simple task once you set up a system that works for you. Anytime you can eliminate financial clutter in your life, your mental chaos goes down and things seem to go more smoothly as well.

These seven tips will provide a great foundation for your organization effort. Regardless of how you've handled your finances in the past, you can put this plan into action today to make your future financial organizing easy and beneficial.

7 Ways to Protect Yourself from a Recession

Just the word, "recession," is scary for most of us, but you can put many of your fears to rest. By adopting these seven basic principles into your life, the pain of a recession can be largely minimized.

1. Live within your means. Living within your means every day is just another way of saying that you should never need any additional consumer debt. Once you begin creating debt in your life, more inevitably seems to follow. Gas prices may be high, but buy that gas with a credit card at 27% and you'll see just how expensive it can be.

* Taken to the extreme, if you have a two-income household, you may want to try to learn to live off just one income. Think of the retirement you could fund with the other income. And if one of you should lose your job, you'll already be living on one salary.

2. Have a second source of income (or a third or a fourth). A second income source is never a bad idea, even if you just put in a few hours here and there. Job security is practically nonexistent now, and an additional source of cash flow increases your financial security.

3. Keep a long-term perspective with investments. Expect that there will be periods of time when your investments will lose money. But you only truly lose money if you sell. The economy almost always improves over time, so you'll make back all your money and then some. In fact, a recession can be the perfect time to invest money.

* As you get closer to retirement age, move your money into more liquid and lower risk investments. Otherwise, you may not have enough time to recover from any market downturns before you require access to that money.

4. Consider your risk tolerance. All the financial gurus have tons of charts and graphs that tell you how much of your money should be invested where, based on your age. But if you aren't sleeping well because your portfolio is down 12%, you may need to adjust your asset allocation. You should feel secure in your investments, not be in a state of panic.

* Don't sell while the market is significantly down, but when things improve you can move some of your assets into bonds or more stable blue-chip stocks.

5. Diversify your portfolio. Keeping your money in different investments will lower your stress and your theoretical losses. You'll also be less likely to do something impulsive. You don't have to get carried away; something as simple as dividing your money between your home, savings account, bonds, and stocks is sufficient.

6. Maintain a good credit score. In a recession, qualifying for credit can be challenging enough already. If you want to purchase a house, get a new credit card, buy a new car, or in some places even rent an apartment, you need to maintain your credit scores. Pay your bills on time and keep your credit card balances as low as possible.

7. Keep an emergency fund. An emergency fund is an important part of any financial plan. There are many reasons for this. If someone loses a job, there is money available that won't result in an investment loss if used.

* You never know when the unexpected may happen. What if your car needs a new transmission? Do you really want to be forced to sell some stock that will realize a 25% loss? What if you need money immediately? Some assets can take time to liquidate. And you may need even more time before you can access the funds.

The best part about these suggestions is that they'll serve you well all the time, not just during a recession. Recessions are never easy, but if you make a few small lifestyle changes, you'll ease your burden and reduce financial stress. 

Wealth Isn't for the Wealthy - Wealth is for the Smart!

Do you believe that being predisposed with the ability to become wealthy is the only way to earn good money? Fortunately, the reality is that wealth belongs to those who are smart in the ways they go about claiming and creating it.

Being able to make money even without having that background from the onset is definitely attainable, as long as you put some thought and creativity into your wealth making opportunities. Making solid financial decisions and choosing sound investment options are simply the best ways to become wealthy once and for all.

Here are three simple, yet effective, tips you can apply to your life that can help to create the wealth you deserve:

1. Break down your big goal. "I want to be rich!" Just about everybody you can think of has said this at one point or another in his or her lives. Being wealthy is something that most of us dream about - however very few are able to achieve - because we look at it as a large, insurmountable goal. Remember:


• Looking at your desired achievement as an overwhelmingly huge goal makes it very difficult to obtain. In fact, it almost always amounts to a mere dream if we overlook setting smaller, attainable goals towards that major goal. And that's one of the keys for becoming wealthy.


• Break your financial goal into smaller, more achievable ones that you can set reasonable timeframes on. You'll be surprised to see how you progress towards your huge goal once you set smaller ones that are much easier to achieve.

2. Avoid using credit if you can't pay by cash. One of the simplest and most effective tips for building wealth is to avoid credit. And what that means essentially is avoiding credit if you see no way to repay it in the short term. Remember:


• If it isn't possible for you to have the cash to settle your credit card expenses each month, then avoid making purchases with the card.


• By choosing to purchase only what you can afford to purchase with cash, you can undoubtedly start to create wealth for yourself.

3. Live within your means. Sure, there will be things you see that you want to do, acquire, or simply accomplish. However:


• If it's not financially easy for you to do something or acquire something, then perhaps you should leave it alone for the time being.


• It's very likely that something you aren't able to do this month or this year will be more than possible in the near future.


• You should only focus on doing things and acquiring things that you are financially able to without feeling stressed in the pockets. The more often you practice that approach, the closer you'll be to having financial freedom.

Creating wealth requires very little money and quite a bit of financial "smarts." The more reasoning, thought, and common sense you put into your financial decisions, the sooner you'll find yourself becoming wealthy. Count yourself amongst the masters of wealth by applying some creative thinking.

Achieve your financial goals by taking it in stride and believe that you are predisposed to the same wealth as anyone else!

Top 6 Tax Strategies for Maximizing Your Returns

There are a variety of ways to ensure that you don't pay more than your own fair share of taxes. You can save year round as well as at the very last minute, but a little bit of planning really goes a long way when it comes to income taxes.

Use these strategies now and throughout the year to maximize your returns:

1. Reference your old returns. Revisiting your old tax return paperwork can help you see how you've saved and owed in the past. Use your old returns as a guide and strive to make improvements over last year so you can pocket more money this time around.


• What deductions have you taken in the past? Did you take the standard deduction or itemize? Can you take any of the same deductions this year or implement new ones to improve on your results of the past?


• What tax credits or tax shelters did you take advantage of last year and years prior? Can you do the same thing this year as well?


2. Choose investments wisely. Make the most out of your investment income by putting your money in tax-free or reduced-tax investment vehicles. Check to see if you qualify for any tax breaks on your investments. These can translate to tax savings where you didn't expect them.

• In the future, find out the tax ramifications of possible investments to help you choose what vehicles to invest in.


3. Take advantage of tax shelters. Saving toward financial goals like retirement can help you cut your taxes. 401(k) plans and traditional IRA accounts allow you to defer the taxes paid on this part of your income for as long as several decades until you retire. 


4. Be wise with your deductions. Determine if the standard deduction is better than itemizing your deductions or not. If you keep a record of your tax-deductible expenses, you may find that your itemized deductions add up to more than the standard deduction. Consider your options closely to get the best possible results.

• Depending on your expenses during the year, it may be better to itemize your deductions in some years while in other years the standard deduction gives you a higher deduction. So keep track of your expenses and determine the figure anew each year.


5. Take advantage of available tax credits. There are a myriad of tax credits for different purposes, such as raising a child, paying education expenses, buying a home, and many more. Research available tax credits ahead of time and determine which ones you can take advantage of. You can save a lot of money at tax time with these credits.


6. Plan ahead for next year. The more you plan ahead the better off you'll be when tax day comes. Get a jump on your taxes by giving yourself ample time to plan and prepare. You'll savor less stress and more tax savings as a result.


• Monitor your income, check your withholding, and ensure that you're doing everything in your power to lessen your tax burden throughout the year. Every step that you take ahead of time is going to be one less worry when tax time finally rolls around.

The key to maximizing your return is in advance planning and preparation. Keeping these tax strategies in mind throughout the year will help you prepare for a good tax day every year.

How to Become a Savvy Saver

During these difficult economic times, you may be wondering how you can save any money when you're barely coming up with enough money to pay the bills. It's important to be open to all kinds of ideas when it comes to saving money. If you're willing to try anything to save money, your confidence will soar.

Consider these ideas to help you set aside funds for savings and investments:

1. When it comes to saving, attitude is everything. What you think and feel about saving matters.

* If you feel incredibly overwhelmed or pressured about saving, chances are that you'll avoid doing it.

* However, if you embrace the concept of saving and get behind the idea that you're paying yourself for the future when you save, you'll be quite excited about saving every payday and demonstrating some real saving savvy.

* Avoid convincing yourself that you "can't save because there's just no money left after paying the bills." Instead, tell yourself you will save something every week.

* In general, it's best to focus on positives and an "I can do it" attitude for saving money.

2. Make a conscious decision to save money. Write this down and put it on a sticky note on your bathroom mirror: "I will save some money today." Then do it.

* Sometime each day, put some money aside for your savings, no matter how small the amount may be. Maybe you'll save your change or maybe you'll skip a cup of coffee or soda, but you will set something aside.

* Deposit your daily savings into an account each week.

3. If you must, start small. Even saving $5 or $10 per week is something. It signifies a commitment on your part to save.

* It shows that you believe saving is important and that you can, in fact, succeed at it.

* Starting small to work toward a larger goal shows you have saving savvy.

4. Set a minimum weekly savings goal and promise yourself to exceed it. If you're starting small, make an effort to exceed your minimum amount.

* So, if you establish a weekly minimum goal of $7, anything over that amount is "gravy."

* Read on to see where you can find some "gravy."

5. Use coupons every single week at the grocery store. You can find coupons in newspapers, grocery store flyers, and all over the internet.

* Your grocery receipt lists at the bottom how much you saved with coupons.

* Take that amount of cash out of your purse and place it in an envelope for the bank.

* Whether it's fifty cents or $4.50, it's money you saved.

* Place your grocery savings into the bank where it will do some real good.

* Now that is saving savvy.

6. Learn from others who demonstrate saving savvy. Interview friends or family members who show they know how to manage money. Do you have a sister who's an avid saver? A friend who always pays cash for his cars?

* Ask to sit down with them and gather some of their saving savvy tips.

* When did they start saving?

* Where did they learn about saving money?

* What tips for "beginners" do your saving savvy friends have to share with you?

* Keep your mind open and pen in hand. Write down their tips.

* Then, decide which tips will work for you and apply them in your life. 

Keep a positive attitude and make a personal commitment to save. Set a weekly minimum savings goal and learn from the savvy savers you know. Practicing savvy saving will lead you to a brighter future.

How to Build a Savings Plan for Your Children

One of the best ways you can provide for your children is to create a savings plan for them when they're young and contribute to it gradually. As your children grow, so, too, will their savings.

You may also consider investing for your child, provided that the investments are wise and promise a decent return over time.

Creating a savings and investment strategy can be beneficial for both you and your children so when they grow up they'll be in a solid financial situation during their college years.

Consider these options to build savings for your children:

1. Open a savings account. This is the most basic option available to you. Savings accounts don't have a high rate of return, but what they do offer is a safe place for you to put your child's money over time.

* When opening an account, read the fine print about fees and minimum deposits, so you can choose something that works for you.

* The savings accounts available to you may actually vary from bank to bank, so look at a few different options before you settle on the best savings account for your child.

2. Invest in a CD. A CD or Certificate of Deposit is a low risk, low return type of investment that typically locks your funds in place for a specific period of time. The term length you choose may impact the interest rate. You can choose the term length, such as 5 years or 10, 15, 20, and so on, depending on your needs.

3. Invest in a College Savings Plan. Also known as a 529 plan, this is a tax-advantaged plan designed to encourage saving for higher education expenses. Growth on these accounts from interest is tax-deferred, and, when needed, withdrawals may continue to be tax-free when applied to specific educational expenses.

* There are two different types of 529 college savings plans. The first is a prepaid tuition plan and the second is a savings plan. Each of these types have different basic mechanisms for use and are available in specific areas, so check with your state for what would work best for you.

* Prepaid tuition plans are available in 13 of the 50 states and allow for pre-purchase of the child's tuition based on the current rates. They pay out when the beneficiary enters into college.

* Savings plans base your account earnings on the market performance of whatever underlying investments there are, such as mutual funds, for example. These plans are administered by the state and available in 49 of the 50 states and Washington D.C.

4. Utilize a custodial account. This is a savings account or certificate account held in a minor's name. The dividends are registered under the social security number of the child, though your name will be listed as the custodian for the account.

* With this type of account, you can transfer funds to the minor while still managing the account. Once the funds are deposited, they become the property of the minor and can only be used to benefit the minor.

* When the minor reaches legal age, funds are turned over to him or her.

These are just some of the options available to you for preparing for your child's future. When you consider the costs associated with raising a child and sending him or her to college, it makes sense to put a plan into place as early as you possibly can.

3 Safe Investments with Moderate to High Returns

Investing can be a little scary for most people - especially if your expendable income is limited. As you know, all investments have an element of risk; however, it's wise to seek out those opportunities that will minimize your risk while earning decent returns.

The true key to making an investment safe is by investing in a time-tested "top dog" where the return on investment is moderate to high.

Consider these types of investments for your portfolio:

1. Bonds. Bonds are a safer investment than stocks. This is because a stock is an investment without a guaranteed return, while a bond is similar to a loan and has a promised return, plus interest.

• There is a difference between promised and guaranteed. No investment can be guaranteed but with bonds, you know what to expect. Look for investments with a low probability of default (the chance that the company would close its doors or file bankruptcy). 


• Bonds are generally paid back to you by the end of the year. However, the terms can be different for each agreement.

• The larger the bond, the larger the profit. But remember, you're always going to make more money on a higher interest bond. So, you may be better off investing your funds in one high interest bond rather than two lower interest bonds.

2. Stocks. As mentioned, stocks can be risky but, in order to earn a high return, some level of risk must be involved. You can minimize your risks by choosing one of the safer stocks (such as constantly thriving defensive stocks) to invest in.

• Companies, such as Pepsi (PEP), McDonalds (MCD), The Procter & Gamble Company (PG), Johnson & Johnson (JNJ) and Wal-Mart Stores Inc. (WMT) are some of the safer choices in the stock market. These companies also place a high value on shareholder satisfaction.

• Investing in defensive stocks, which are reliable and have proven their longevity and profitability, allows you a small blanket of security that you wouldn't get investing in the newest, hottest companies, which can tank at any moment.

• Keep in mind, when investing in stocks, there are no 100% safe choices, but you can minimize your risk by buying stocks of a time-tested and profitable company. Or spread out your risk by investing in profitable, long-standing mutual funds where your return is based on a portion of a whole portfolio of stocks.

• Stocks are a better choice for your long-term financial planning goals. If you're a cautious investor, look for a long-standing solid company to invest in.

3. Multi-family real estate. Now is a great time to invest in a multi-family dwelling. Due to the housing meltdown, there are many multi-family units priced to move quickly.

• A multi-family dwelling is a safer investment than a single-family home because you're able to retain more tenants. Therefore, if one tenant decides to leave at the end of their lease, you still have other tenants set up in other units that are still generating income.

• Multi-family dwellings are more profitable than single-family homes. For example, if you have three 2-bedroom units renting for $700 each per month, you're bringing in $2,100 per month. As opposed to the one, smaller income from just one tenant.

Developing an investment strategy takes patience and an honest assessment of your risk tolerance. Real estate investing has always been a popular investment. Owning a fully occupied multi-unit rental property guarantees a monthly return provided you budget for maintenance and other contingencies.

Bonds are safe, but they have the lowest return. However, a few hidden gems in the market offer high interest rates. Stocks offer a higher return but the return isn't guaranteed and you expose yourself to greater risk.

A smart strategy is to spread your risk and return through a diversified portfolio of investments, some with lower risk and others with moderate risk. Only go for high-risk investments if you have money to burn! This strategy will let you enjoy consistently positive returns throughout the years.