With 2008 well under way and our Christmas spending hitting home, now is the time to start thinking about improving our finances, so that we can look at starting the New Year on a more positive financial note. Below are some of the top ways in which you can improve your finances for 2008.

1. Streamline your outgoings

It is amazing just how much money we all waste each year, often without even realizing. If you go through your regular outgoings with a fine tooth comb you could well come across things such as unused subscriptions and useless memberships for services that you no longer really use, and you can cancel these and put the money to better use.

2. Cut back on non-necessities

Of course, we all love to splash out from time to time, but many of us tend to live a champagne lifestyle on beer money. Go through your monthly outgoings and try and make cutbacks wherever possible on non-necessities such as going out and spending on clothes. By spending a few extra nights in - perhaps cooking dinner at home for friends instead of going out for meals - and avoiding the temptation of too much retail therapy you could save a small fortune.

3. Take advantage of the sales

Although this may seem as though it is contradicting the above, you can be really thrifty by taking advantage of the sales. Watch out for them, as many shops have sales at different times of the year, and not just january. This doesn’t mean you should go out and spend on anything that looks like the price has been knocked down even if you don’t really want or need it. However, try and determine whether you will need things such as clothes for work or for the kids in the coming months, and get them during the sales when you can often get twice as much for your money.

4. Improve your financial management

If you are the type of person that hates to look at their bank balance and does nothing to monitor income and outgoings then now is the time to make a change. Keep a track on everything that goes in and out of your account, and check your balance regularly. This will help you to avoid everything from becoming the victim of fraud or theft to accruing costly bank charges for exceeding overdraft limits.

5. Review your debts

Most of us have a number of debts in one form or another, whether it is credit cards, stores cards, or loans. Take a look at how much you owe and see whether you could save yourself hassle and money each month by consolidating your debts - or in the case of just credit card debts by transferring them onto a 0% balance transfer card.

Most couples name each other as beneficiaries on their life insurance policies. At a minimum you will need to change your beneficiary designations on all policies, regardless of size. You may need to adjust the amount of coverage, particularly if you were the nonworking spouse and you now plan to work to support yourself and your family. Factors to consider include replacing your income, paying off debt, and leavingenough to care for your family if you die.

Health insurance usually comes with employment, and again, nonworking spouses will be most at risk in a divorce, since they will no longer be considered dependents covered under the employed spouse’s group insurance. If you work and your employer offers health insurance, the divorce is considered a qualifying event, and you can switch to your employer’s coverage without waiting for an open enrollment period. Call the insurance carrier for your spouse’s policy and request a certificate of insurance. This proves that you were insured until the qualifying event, so you can’t be excluded or charged a higher premium for pre-existing conditions.

If you are not employed, the same qualifying event definition makes you eligible for coverage under COBRA, a federal that allows you to continue the coverage for a certain time period under specific conditions. COBRA can be an expensive option, because you pay the full premium yourself, and is temporary at best. Certain professional groups and other associations also offer group insurance for which you may be eligible. You can also purchase individual health insurance privately, although the rates are typically much higher than a group policy with comparable benefits.

Each year, 12 percent of adult Americans suffer a long-term disability. For every seven employed Americans, one will have a period of disability five years or longer before age 65. A 35-year-old has a 50 percent chance of a disability lasting longer than three months before age 65. With two incomes, you have something of a safety net if you are unable to work because of a short- or long-term disability. Going it alone, you may want to consider disability coverage either through your employer or privately, especially if you have no emergency reserve funds or other income to fall back on.

Your homeowners insurance covers your house and its contents. If you decide to move to an apartment, you may need renter’s insurance to cover your possessions. Check limits for jewelry and other high valuables, such as antiques and collectibles, and purchase riders to cover them if necessary.

Risks play as important a part in forming your financial picture as do your assets and liabilities. With all the products and carriers in the market, the choices can be overwhelming. A financial or insurance professional can help you weigh your options and determine the best course of action during and after your divorce.

The only sure way for someone to skip the sometimes ridiculously high fees associated with credit cards is to pay their bill before it’s due, each and every month. In 1998, cardholders paid about $4.8 billion in penalty fees- which seems like a lot until you consider the fees of 2005- a whopping $12 billion. This leads to the conclusion that people are not paying their credit card bills on time and are not avoiding the penalties associated with late payments!

You’ll want to take a close look at your card member agreement. Some credit card companies are now recording receipt of payments received in envelopes other than the pre-printed envelopes up to 5 days after they receive them! In addition, where as just a few years ago you could be counted as “on time” if your payment was postmarked by the due date, now the majority of companies require that the payment must arrive before noon on the day it is due to be counted as on time. As if that wasn’t stringent enough, there are even many card issuers who have decided to shorten the billing periods from 31 days to 20 days!

Late penalties on credit cards are anywhere from $15 to $39. If the late fee puts you over your maximum limits, you’ll also get slammed with an over limit fee. Going over your maximum amount can also cause the card issuer to increase your interest rate as much as 24%.

Here’s a penalty you probably didn’t know about: if you are late on any of your creditors, a credit card lender could raise your interest rate. So even if you pay your credit card bill on time religiously, if you are late once with one of your other lenders, your credit card lender has the right to raise your interest rate! The institute for Consumer Financial Education in San Diego reports that about 40% of car issuers raise rates if they find their cardholders are late on other accounts.

How about companies that charge you a fee for having a card without a balance on it? Wells Fargo’s prime rate card will charge you $2 a month in minimum finance charges if you do not have a balance on the card!

Wonder what they do with all the fees they collect? Banks will explain the fees are there in order to cover their costs. It’s difficult to think they need these “hidden” fees when the regular and more well known charges like interest charges are bringing in over $80 billion each year, and an additional $31 billion a year is collected in cash-advance fees, balance transfer fees, annual fees and merchant fees!

Can you prevent yourself from having to pay these “hidden” fees if you use credit cards? Some of them. Try writing your check for at least your minimum amount due (more whenever possible) the very same day you receive the credit card bill. Put it in the mail the next day and you’ll never have a late payment. Even better than doing that would be to pay your bills online automatically each month, so there’s no way to forget to mail it.

You can also save considerably by choosing the right card for your spending needs and payment habits. Check for the best card on creditorweb.com, where there are hundreds of cards to choose from and information available on each to help you make the best selection. Make sure to keep an eye on changing terms of your card- if the interest rate increases or they begin charging an annual fee - transfer the balance to a better card.

As many Americans plan for retirement and turn to alternative sources of post work income, one that may come to mind is a reverse mortgage. The concept of a reverse mortgage is rather simple: someone pays you, based on the value of your home. There are many options available as to how you wish to receive this money. You may choose to take monthly payments, take a lump sum, or receive a line of credit.  

When you purchased your home you probably had to make mortgage payments. As you did, you gradually decreased the amount of debt owed and gradually increased the amount of equity in your home. Reverse mortgages are the opposite. As time goes by, you gradually receive more and more money from the lending company. Thus, your debt increases and your equity decreases.

The purpose of a reverse mortgage is to have an added source of income, especially if you plan on selling your home near the end of your life or after you die. It allows you to receive the equity from your home and enjoy it in retirement.

The amount you receive in the reverse mortgage is based on the value of your home, current interest rates, and your current age. Once you’ve received the amount your home has been determined to be worth, less any fees charged by the lender, you then owe that amount to the lender.

You can pay that back any way you wish, but in many cases, the idea is to sell your home and repay the debt. Often, this is done by an estate after a person passes away and still has debt. As long as you’re permanently living in your home, you don’t have to pay the lender back.

Reverse mortgages do have a lot of details and can get complicated, which is why it’s best to ask a financial professional for advice before looking into them much further. While they may have a lot of technical details, they don’t have many requirements. In general, you must be 62 years of age or older, and own your own home. Those are the two basic requirements of a reverse mortgage.

Beyond that, there are a few other basic things to keep in mind.

Reverse mortgages do have upfront costs, just like a regular mortgage. They also have monthly service fees. However, all of the money you receive from the lender is tax-free. To get a better estimate of how much a reverse mortgage would pay you, it’s wise to meet with a financial professional.

Unfortunately, reverse mortgages aren’t for everyone. Reverse mortgages can provide a valuable resource to individuals when the circumstances are right, but there are many considerations to be taken before choosing one, including: fees, restrictions, estate planning considerations, need for income, other assets, health considerations, insurance coverage, and so on.  

Often times a reverse mortgage is a last resort for income for many individuals and many individuals decide that reverse mortgages aren’t for them. And in some situations, for instance, if you want the house to stay in your family for many generations, then it may not be for you.

There truly is no place like home and the reverse mortgage reminds us of that. It’s one of the few places on earth that can be filled with so many memories. So if a reverse mortgage sounds right for you, contact a financial professional today and discuss your options for proving the old adage right, “there’s no place like home.”

How Much Home?
The first things you need to consider before pursuing your first home purchase is what you’ll be able to afford. You need to find out what your total monthly housing expenses will be.  A mortgage calculator is a great way to determine what you can afford on a monthly basis. But you’ll want to consider the additional costs associated with home ownership. You’ll need to include property taxes, home insurance, and miscellaneous closing costs. These can add considerably to your monthly outlay.

Property taxes can be determined by checking with your local government, as these vary greatly from state to state. Getting a home insurance quote is a simple way to determine those costs, and save as well. Closing costs vary, but they can often be negotiated with your lender. Be sure to account for Private Mortgage Insurance if you plan on making a down payment less than the standard 20 percent. The important thing here is to get an idea of what your total expenses will be. Most experts will recommend that your total monthly housing costs not exceed 28 percent of your gross income.

First Time Home Buyer Loans
When shopping for a home loan you’ll want to consider the government funded first time home owner programs. These often offer lower interest rates and lower down payment requirements, when compared with conventional mortgage loans.

Fannie Mae and Freddie Mac
Both government-sponsored organizations, Fannie Mae and Freddie Mac offer first time home buyer mortgage programs. They don’t lend directly to the public; rather they guarantee the underlying mortgage loans through approved lenders. Without these organizations, many first time home owners would be out of luck.

Fannie and Freddie are especially popular for their first time home buyer low down payment programs. These loans can be had for as little as a 3 percent down. Though in Fannie Mae’s case, a larger down payment of 5% allows for loan approval on smaller salaries. Loan limits have temporarily increased to as high as $729,000 in high-cost areas from $417,000.

FHA & HUD
The Federal Housing Administration (FHA) insures loans for certain approved lenders. There are a number of programs, but they typically offer low down payment loans, lower closing costs, and easier credit qualifying when compared to traditional mortgages. Much like Fannie Mae they do have their limits, however. You can check the current limits based on your area by going to the FHA limit page.

If you have credit issues a FHA loan may be just what you’re looking for. Amazingly, you may be approved for a FHA home loan even if you’ve had major financial issues in the past.

• Lower credit scores qualify when compared to conventional mortgages.
• Bankruptcy or foreclosure isn’t a cause for discrimination with the FHA.

You may qualify with either, assuming you’ve maintained good credit for two to three years after the occurrence.

Housing and Urban Development (HUD) offers many programs and grants. First time home buyer grants and programs can be found on HUD’s website by searching your region. Before applying for a particular program make sure you qualify and understand the guidelines. Some states may require repayment upon future sale of the home, for example.

If you have a good credit rating and income you may qualify for a more attractive conventional type loan. Be sure to do your homework and compare all your options. An Adjustable Rate Mortgage (ARM) for example, may offer lower monthly payments initially, but there are certain risks that need to be considered. Unfortunately, for some, the recent housing downturn is currently exposing these risks.

Home buyers who are applying for home loans are best served to do so with a good credit rating, and first time home buyers are no exception. Borrowers with higher credit scores pose less risk to lenders, and are rewarded with lower interest rate loans as a result. Your credit score will have a considerable impact on how much you’ll have to pay. Checking your credit report for issues or mistakes is a prudent step in the home buying process. Credit repair can only be completed if you’re aware of any issues on your credit report. You can check and address any issues rather easily by getting a free credit report online.

First Time Home Buyer Tax Credit
The newly passed Housing and Economic Recovery Act of 2008 was signed into law by President Bush on July 30, 2008. One of the underlying items within the act is a temporary $7,500 tax credit for first time home buyers. This may sound like an exciting opportunity for some, though it is not free of restriction. A few things to consider when determining whether the first time home buyer tax credit is right for you:

Eligibility

Effective Dates

Income Restrictions

Payback Provisions

Penalty Free IRA Withdrawal
Thanks to the Taxpayer Relief Act of 1997 you can withdrawal Individual Retirement Account (IRA) funds penalty free when used for a first time home purchase/expenses. Typically, early IRA withdrawal will incur a penalty of 10 percent when withdrawn prior to age 59 ½. First time home Buyers can forego these penalties when buying their first home. You can withdrawal up to $10,000 without penalty. This $10,000 limit is a lifetime limit, and can only be used once. It’s important to keep in mind that you will be required to pay taxes on traditional IRA withdrawals. Due to the tax-free nature of Roth IRA’s, withdrawals from these accounts are free from tax and penalty.  Early withdrawal rules for the Roth IRA differ from their traditional counterparts in that the Roth account must be held for 5 years.

You don’t necessarily have to be buying your first home to take advantage of the penalty free withdrawal. The IRS defines first time home buyers as those who haven’t owned a principle residence in the past 2 years. Moreover, this can be utilized for you, your spouse, your children, your grandchildren or even your parents.

It’s all Worth It
Becoming a first time home buyer may seem a bit intimidating these days. Utilizing the tools available to you along with some strategic planning can help you get there.  It’s all worth it, of course, as there’s nothing like being a first time home owner.

1. Say good bye to outdated clothing. Say good bye to outdated clothing. Hold a fire sale. Do some serious cleaning and get rid of everything you don’t need or no longer want. CDs and DVDs are a good place to start. If you only use MP3s, list all your CDs on Amazon. It’s easy to set up an account and decide on prices based on what others are selling the item for. DVDs can often go as well as we tend to watch most movies only once. Then clear out your closet. Say good bye to that skinny dress that would only fit a 12-year-old, adios to those corduroy pants that were oh so cool in the 90s, and don’t hang onto the orange sneakers that looked stylin’ but will never match anything. Take your clothes to a nearby used clothing retailer and get paid in cash. If you have a piece of furniture or antique that’s of little use to you, list it on eBay or craigslist. You can also sell event tickets that you don’t need or want on craigslist.

2. Sell refreshments at your sale to pump up your profits. Sell refreshments at your sale to pump up your profits. Hold a garage sale and promote it as a “Holiday Green” event. This will encourage reusing old items and helping the Earth while also lining your pockets. If it’s cold where you live, hold the sale in your basement. Post flyers and signs in your neighborhood and at local stores with bulletin boards. If you live in an apartment, post flyers by the mailboxes. Sell homemade cookies and hot chocolate at your sale for extra money. You can get the ingredients for these at Sam’s Club, Aldi, or your local discount store. Use the leftover cookies for holiday gifts (make sure they’re not sneezed on/picked over though).

3. The holidays are a great time for petsitting as many people go out of town. The holidays are a great time for petsitting as many people go out of town. Be helpful. Offer your services to friends, family, and neighbors. Put up flyers for petsitting, babysitting, and cleaning. You can charge anywhere from $10 to $20 an hour for cleaning or babysitting and around $15 to $35 a day for petsitting. You can also put an ad for your services on craigslist or respond to ads on there.

4. Check out online revenue sources. Create a profile on Elance and Guru and post your eHow articles and other writing/design work. Bid on jobs and expect to bid on a few before you get a hit. You can make from $50 to thousands of dollars on these sites, depending on the amount of work for each job. Also sign up for a free Google AdSense account at www.adsense.com and get paid for putting ads on your blog or Web site. Another great way to make money online is to get paid to watch commercials. Sign up at www.youdata.com and get paid for each video you watch. This is an easy way to earn extra spending money.

5. Save your pennies. Pay for everything with cash and you will not only save on high credit card interest rates, but your loose change can add up fast. Empty your wallet every night and put the change in a piggy bank or jar. When it’s full, take it to the nearest grocery store or Wal-Mart with a Coinstar machine and watch your change turn into dollars.

There is an old saying that talks about stupidity. It goes something like “the definition of stupidity is doing the same thing over and over again, expecting a different result”. For example, people don’t keep turning on a cold water tap expecting hot water to pour out. So why would you keep doing the same thing with your debt? If it isn’t going away you need to do something differently.

Ignoring the debt isn’t going to make it go away. Blaming others for your mistakes is of no help, but hoping something will change is even worse.

You have to effect change in your life and not wait for it to happen. At the end of the day you have to want to get out of debt to make that change to your financial situation.

As a little 8 year old I can remember that burning desire for a bicycle one summer, my parents were poor so I had to figure out a way to get it on my own. I must have shoveled 50 driveways that winter in the freezing cold (and it snowed heavy that winter) at $5 a driveway to make the money. But I did it because I had the image of that bicycle burned into my minds eye.

I don’t care if you owe $75,000, if you want out of debt bad enough, sit yourself down and figure out a way. Don’t blame anyone else for your problems; take a good hard look in the mirror. The person looking back at you got you into debt, and believe it or not can actually get you out of it.

During my career I have seen winners and losers deal with all types of debt. I can tell you without a doubt the reason why people get out of debt is because they don’t blame others, are serious about it, and do something to fix it. The main reason the losers are stuck with their debt is because they aren’t serious about resolving it.

Brian Tracy, a motivational speaker, once stated that “you only have options if you can save money. If you are in debt, you have no options.” What he means is you cannot quit your job, open a business, treat yourself to a luxury or even take a vacation. Being in debt severely limits your options in life. Once you find your reason for becoming debt free and plan it out, nothing can stop you.

There are a lot of great articles on getting debt help, some can do it all on their own and others may need help. Bankruptcy, Debt Settlement, and Credit Counseling are all viable plans. I personally believe (and have proven) that debt settlement does the least amount of damage to your credit and is the fastest and most cost effective way to debt freedom. Do your homework and start doing something about it.

About The Author: Richard G. Cooper is Founder & CEO at Total Debt Freedom Inc. Canada’s most respected debt settlement company. Total Debt Freedom offers debt settlement plans that can save you 50-70% of what you owe and get you debt free in 1 - 3 years. http://www.totaldebtfreedom.ca

So where do you draw the line between taking from one to give to the other? And how do you plan successfully to find a proper balance that benefits both you and your children? That problem is highlighted by the question of whether or not you should withdraw from an IRA to help pay for college tuition. The general consensus seems to be: not if you can help it

Generally you want to have a successful enough college savings program that you don’t have to worry about finding alternative sources of money for tuition. But with sky-rocketing credit hour prices and housing costs on the rise, it’s a more difficult proposition than it was even a decade ago.

But while prices have been increasing, so have opportunities to save. Savings Accounts, Prepaid Savings Accounts, and Coverdell Accounts are just a few of the easy ways to save for college.

One advantage of an IRA withdrawal is that the money can be used for any qualifying educational expense. But, the disadvantages are obvious. You’re taking away from future retirement savings and you’re reducing the amount of earning power you previously held. You’re also faced with the fact that IRA annual contribution limits ($4,000 for 2007 and $5,000 for 2008) can make it hard to restore your previous savings level. But that doesn’t mean there aren’t ways to catch up. Currently, for people over 50, the law allows you to make extra contributions of up to $1,000 a year. While this isn’t much, it can at least help restore some of your withdrawal.

However, just as college savings opportunities have increased, so have retirement savings opportunities. Part of a comprehensive retirement plan includes investing in various types of retirement plans, including 401(k’s and private savings. In addition, your entire retirement shouldn’t be too heavily anchored in one savings vehicle, IRA or otherwise

No matter what you do, it’s usually wise to seek input from a financial professional. Withdrawing from an IRA to pay for college has a lot of unseen consequences that can harm your retirement plan and make  your golden years a bit leaner. One of your best bets is to plan carefully for college as soon as possible  for your children or grandchildren so you’re not forced to decide between retirement or college.

Do you know what rights you have regarding fraudulent purchases on a credit card in your name?  How about your rights if you purchased an item with a credit card, but never received the products you ordered?

If these problems have not happened to you yet, you are lucky.  These are common situations credit card users face every day, and it can help you to know before something like this happens to you what your rights are, and what your responsibilities are in the matter.

When You Are Not Satisfied With Purchase

One of the benefits of using a credit card to make purchases is the additional protection they provide if you make a purchase that you are unsatisfied with.  For example, maybe you used a credit card to pay the contractors who were hired to repair your shower leak, but there is still water on the bathroom floor.  Obviously, you are not satisfied with the work they completed, and you don’t want to pay for it.  The problem is, you charged it on a credit card and now the bill has come!

Your first step is to contact the contractor, or the merchant you made your purchase from.  Most of the time, the merchant is more than happy to replace a broken item, perform the service again or refund the purchase back to your credit card.  If you make a phone call, document it and follow up with a letter to cover your tracks in the event the merchant doesn’t follow through.

If for some reason the merchant decides they are not going to do anything to correct the situation, you should immediately contact your credit card company and report the information.  Don’t wait to report the problem on a later date- most credit card companies require you to report a problem as soon as you see it on the statement in order to benefit from any of the protection they provide.

Charges You Didn’t Make

Did you know that federal law is involved in helping limit credit cardholder’s responsibilities for charges on credit cards that they did not make themselves?  The Fair Credit Billing Act actually limits your responsibility to just $50 for any charges you did not authorize.  If you open your credit card bill and find charges not made by you, there is a process you should follow to get it resolved as quickly and painlessly as possible.

Firstly, call the credit card company and explain the charges that were not made by you.  They will give you instructions as to what to do next.

Then, you should take the time to find and review all of your recent credit card statements in case there were other charges that you may have missed. 

The credit card company will most likely ask you to sign a form to confirm that you were not the one who made the charges in dispute.  Don’t use the card while you are disputing charges.

Once you finally get a resolution and get the charges removed, be sure to order your credit report from all of the major credit bureaus in order to make sure that the record has been updated there- because chances are the time it takes to resolve fraudulent charges will have caused late payments on that credit card that may have been reported.