The 3-Step Guide to Building an Emergency Fund

Guest Post by Jane Smith

Tax return season is upon us.  For some this is good news, but for many it means it's about time to dip into their savings to write the government a substantial check.  We'd all like to get huge refunds every year, but the reality is that many people pay $1,000 or more a year after their tax returns are filed.

And though it should be a fact of life by now, tax returns always seem to take us by surprise — and then leave us fretting over how to pay the taxes we owe.

Of course, taxes aren't the only expense that would have you digging in the couch cushions (metaphorically or literally) for some extra cash.  Medical bills, automotive maintenance or repairs, home repairs, and other kinds of catastrophic events, however unlikely, are always possible, which is why it is so imperative to have an emergency fund.

You've probably heard of an emergency fund before, and you probably think they're a great idea.  But, if you're like the majority of Americans, you don't have one, and you find yourself stretched dangerously thin whenever something unexpected happens.

There's no way to plan around emergencies, but there is a way to prepare for one, and if you've ever been through one you'll know that the first thing they affect is your wallet.

Knowing you should have an emergency fund and knowing how to start one, however, are two very different things.  Here's a brief guide to get you started, so you'll be ready for this year's tax return, or any other emergency this year:

1.  Calculate your monthly spending and then multiply by six.  This figure represents how much you should have in your emergency fund at all times.  Essentially, you want to have enough to cover any expense you'd normally make for six months without any additional income.  Imagine that you are injured or ill and are unable to work at all for a month or two.  Your bills wouldn't disappear just because you weren't making money, so you'd have to have an alternative way of paying them.  Having six months of income saved might seem excessive, but you know the old saying: Better safe than sorry.

2.  Devise your saving strategy.  There's no one way to correctly save money; as long as you're saving, it doesn't really matter how it happens.  You can put it in a shoe and still be making progress if that works for you.  However, if you have no idea where to begin consider making monthly deposits into a separate savings account that you never use (except in real emergencies of course).  Think of it like a direct deposit to your future self.  You'll thank yourself later, even if it seems unnecessary now.

3.  Use sparingly and responsibly.  Often times when people begin saving money they make withdrawals too frequently for things that really aren't emergencies.  Use discretion and common sense when deciding what qualifies as an emergency; take out only what you need; and be sure to replenish what you take out as soon as you can.

Author Bio:
Jane Smith from background check is a Houston based freelance writer and blogger. Questions and comments can be sent to: janesmth161 @ gmail.com

Best 5 Books on Debt

Guest Post by Laura Backes

Perusing the financial self-help isle at your local book store can be overwhelming. Not only because of the amount of books but the amount of debt that got you to that dreaded self-help isle. Debt is not a foreign concept, lots of Americans struggle with credit card debt but not to worry there are books that can help you, here are a few:

The Money Book for the Young, Fabulous & Broke by Suze Orman

Suze Orman is every college student’s nightmare; consider her as no nonsense financial professor teaching you lessons about post grad life. This book is to help the young professionals with a small salary and student debt. Don’t let the title fool you, this book can help those who are older as well.

Your Money or Your Life: Vicki Robin and Joe Dominguez

This self help guide not only teaches you how to get out of debt and face the real issues but it puts your life back in to your hands. In 9 steps, this book shows you how to take control and learn to live life with your money and not the other way around.

The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

The not so sensitive financial guru Dave Ramsey, helps you find the source of your debt problem, you. This book teaches you what to do and what no to do. Listen to him and you are bound to get out of debt and it may not be the easy road but remember slow and steady wins the race.

How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis

A breath of fresh air is what this book brings to the table. Based on the successful practices of national Debtors Anonymous program you are able to relate to the millions of other Americans suffering from the paycheck to paycheck living and the relentless debt collectors. An easy and simple read, a must buy immediately.

The Ten Commandments of Money by Liz Weston

This book is realizing that today’s economy isn’t the easiest, the costs are going up and you aren’t making enough. The ten financial commandments that Liz Weston goes over will help you set a budget and stick to it, look at your options for the future and how you can control your own debt crisis.

So become a book worm and start reading. You will learn a few things that will help and guide you to financial happiness. All of these books can be found at your local bookstore or online. Happy reading and happy saving!

Author Bio:
Laura Backes enjoys writing about all kinds of subjects and also topics related to internet service in my area.  You can reach her at: laurabackes8 @ gmail.com.

4 Smart Ways to Use Your Income Tax Return

Guest Post by Katheryn Rivas

It may be a little early in the year to be talking about income taxes and, no doubt, it's the last thing any of us want to think about at this point, but thinking ahead about these things is the first step in strong financial management. As tax return season slowly approaches, we have visions of wonderful ways to spend that money for our financial betterment. Some of us think about tucking that cash away under our mattress for a rainy day or putting it in the stock market to hopefully make a quick buck. While of these are both options, they are probably not the wisest ones. More of us dream of shopping sprees and home improvements with our tax refunds. However, there are many other ways you can utilize your tax refund that will be smarter and more productive for your financial health. Consider these four options this year. 

Add to Your Life Insurance

For many of us, putting our tax return towards our life insurance is the last thing we consider. However, adding to your life insurance from this money can be a very wise plan for certain people. If you own a home or have children, your life insurance coverage should be about eight to ten times your annual income. While this may sound extreme, it is an important thing to consider. Try using your tax return towards gaining the right amount of life insurance. This is a good way to invest in the important things like your family and loved ones. 

Lighten Your Debt

Obviously, using your tax return toward your debt is a smart option. If you are able to make it through the year without that chunk of money, you can probably put it toward something more productive than your spending account. Rather than continually paying the minimum amount on your credit card bill, try putting your tax return money toward that bill to pay a larger chunk of it off. Paying the minimum can cause big problems if you have a high interest rate. Those interest rates can sneak up on you and eventually cost you more money than you expect. 

Get an Energy Audit

A home energy audit can help you pinpoint where it is you are losing money in your home. This audit can be an expensive thing to get done, but it can end up saving you a significant amount in the long run. Put your tax refund money towards lowering your regular energy bills and improving your home's livability and resale value. 

Invest in Your Self in the Right Way

While many of us use our tax refunds to invest in ourselves in one way or another (new clothes, new furnishings, etc.), there are better ways to improve ourselves using that money. Try investing in your career by spending that money one furthering your education. You can take classes to get a higher degree or to obtain a specific certification that can put you in a new pay level at work. By investing in your education and career, you have the potential to earn more money later in your life and you will make yourself more valuable.

Author Bio:
Katheryn Rivas writes for online universities blog.  She welcomes your comments at her email Id: katherynrivas87@gmail.com.

Paying Medical Bills with Credit Cards, is it a Smart Choice?

Guest Post by Eliza Morgan

Those who really fear credit card debt are usually cautious when it comes to making future purchases. For example, if a couple knows they want a new TV for the living room, they'll usually save for a few months and then pay for a new TV with cash. But not everything can be so calculated, especially when it comes to your health.

Sometimes you get sick out of nowhere, and even if you're insured, getting billed for medical expenses is one of the easiest ways for someone to get into debt (or deeper debt). Think about it: one single trip to the emergency room can set you back $200 for someone with insurance. If this was an unexpected expense and you don’t have enough money in your account, what will you do? Charge it on your credit card. Depending on how quickly you can pay it back will determine how much interest you will accumulate. In fact, according to the most recent statistics, nearly 21 million Americans accrued credit card debt in 2008 due to using their cards to pay for medical bills. While health is important and unpredictable, there are some things you should consider first before using your credit card to seek temporary relief.


1. Negotiate with your Doctor/Hospital. First things first, it's always important that you speak up front that you may not be able to afford whatever procedure or test that the physician says you need. If it's an emergency situation the physician will go ahead and do the procedure, but they will be more willing to give you a discounted rate or work out some sort of payment plan (some charge interest; others do not). Either case, you are not obligated to pay any sort of out-of-pocket expenses up front so don’t be too tempted to put it on your credit card immediately. But if you discuss your financial situation from the beginning, the physician may be able to reduce your bill in some area, whether it's with the anesthesiologist if you've had surgery or with your medications.

2. Know who is more likely to Report to Credit Bureaus. If you put your medical bills on your credit card and then can't find a way to pay off your credit card bill, you will undoubtedly be contacted by a bill collector. From there, the appropriate crediting bureaus will be notified as well and your discrepancy will negatively be placed on your credit report and affect your credit score. While you do in fact want to pay off your medical bills at sometime, it's important to know that rarely do physicians and hospitals actually report to collection agencies (as opposed to credit card companies that do it almost immediately). In fact, various sources say that only.07% of medical businesses actually report their patients to bureaus. Most just write off any losses.

3. Get a Health Savings Account. Lastly, a great way to be better prepared for these kinds of unexpected medical expenses to acquire a health savings account (HSA). Most health insurance companies require a high deductible (about $1,500 for a single) to establish one through your plan but they can really be a life saver and help you be debt free. How it works: a portion of your paycheck (prior to taxes) is put into your HSA each month. You can build the money in your account tax free as well. You are then issued a debit card and can use that card strictly for paying for medical expenses, such as when paying off co-pays, medications, and remaining balances you may have on a surgery. It takes out the temptation of using a small portion of your savings for something other than medical uses. Your balance moves from year to year and works as an IRA after 65, so it can be invested.

Author Bio:
Eliza Morgan is a full time blogger. She specializes in writing about business credit cards. You can reach her at: elizamorgan856 at gmail dot com.

Ways to Avoid Credit Card Debt this Holiday Season

Guest Post by Amanda Tradwick

Some of us can spend thousands of dollars on gifts during the holiday season. Many of us turn to the convenience of our credit cards to finance these giving (shopping) sprees, causing us to impulse purchase and spend much more in the long run by paying high interest rates. Even more modest holiday shopping budgets can spiral out of control when they are compounded by excessive interest rates over the year, or more, they take to pay off. Here are a few tips to help you avoid using your credit cards this holiday season and accumulating more debt:

Make a List

Start out by making a list of everyone for whom you want to buy a gift. Include family, friends, work associates, church members and anyone else you can think of who you want to give a gift. If you find that the list has become too long, you can go back through and remove some people. Creating a complete picture of your gift list will help you budget better.

Set a Budget (and Stick to It!)

Now that you know who you want to buy for, start setting a price limit for each person to come up with an overall budget. This is easier than setting an overall budget and then dividing by the number of recipients because you aren't likely to want to spend the same amount on your officemate as you are on your mother. If you find that your overall budget ends up being too high once you've set individual limits, you can go back and make a few adjustments. Setting an overall budget -- and a per-person budget -- will help you to better select gifts once you begin.

Hit the Sales

Once you have your budget, maximize its potential by shopping sales and online promotions. There are a few times a year when many retailers are known to mark down their items, most notably the day after Thanksgiving and the Monday after Thanksgiving. Shopping during this time can save you a significant amount. The period after Thanksgiving and before Christmas is also a generally good time to shop.

Don't limit yourself to these sales times! Look for sales throughout the year -- even those right after Christmas if you're able to plan that far out for the next year. Also, take advantage of online sales and specials. Many retailers offer lower prices through their online stores, as well as free shipping and gifts with purchase. Check out all your options to get the lowest prices that you can.

Leave Your Credit Cards at Home

If you don't have your credit cards with you when you shop, you won't be tempted to use them to spend more than your budget, to purchase impulse items for which you had not planned, or to get "just a little something extra." Take cash with you, or use a debit card that is tied directly to your checking account and does not have a protective credit line. Once you're out of cash, you're done buying.

Make Gifts

The easiest way to save money on your gifts and to save yourself the burden of credit card debt is to make some of your gifts. Many friends and family would prefer to receive a gift that was made with a sincere spirit or that has some sentimental value. Framed photos, favorite baked goods or even heartfelt letters all make great gifts. Be creative and make it specific to the recipient.

Saving early, making a plan and doing some smart shopping can all help you to save money this holiday season and to avoid the burden of extra credit card debt. The earlier you plan (and save), the better off you will be and the brighter your holidays!

Author Bio:
Amanda Tradwick is a grant researcher and writer for CollegeGrants.org. She has a Bachelor's degrees from the University of Delaware, and has recently finished research on grants for married college students and student grants in north carolina.