1. Put a Fraud Alert on Your Credit Report

Before you do anything else, put a fraud alert on your credit. There are three credit bureaus, Equifax, Experian and TransUnion. If you notify one of these bureaus that you may be a victim of identity theft, it is required to contact the other two for you. However, to be on the safe side, go ahead and make the call to all three. Ask to speak to the fraud department. They will place an alert on your file that requires creditors to call you before extending credit. Fraud alerts can be renewed after the 90-day expiration, although there are extended fraud alerts of seven years for individuals who know for certain that they have had their identities stolen.

2. Get Your Credit Scores

Get copies of your credit report from each of the credit bureaus. Once you have put a fraud alert on your account, you are entitled to a free copy of your credit report, which you will want to look over with a fine-toothed comb. This will tell you exactly what the thief has done in your name. Contact both the credit bureaus and the creditors in writing to notify them that you did not make these charges and that you want them to be removed from your report.

You can also get your free credit reports from AnnualCreditReport.com.

3. File a Police Report

Contact the police. This step is crucial as it makes it clear to the creditors that you are taking the theft seriously. However, it can be complex to get the overworked police — even the fraud unit — to make a report, so be prepared to be persistent.

4. Use FTC Tools

Complete the identity theft affidavit that the Federal Trade Commission has developed. This document summarizes the theft and gives you something concrete to send to creditors and businesses outlining what has happened.

5. Contact Defrauded Creditors

Notify the creditors that you want the fraudulent accounts closed. You will start by calling each and every creditor the thief used and asking for the accounts to be closed. You will then need to follow up with a letter, along with the police report and the FTC affidavit. You will also want to contact all of your legitimate account-holders to change account numbers, passwords and PINs.

6. Consider a Credit Freeze

If a month has passed since you made all of these contacts and someone is still opening fraudulent accounts, you may need to get a credit freeze. A freeze keeps creditors from being able to see your report, which means that they will not issue any credit in your name. This is an extreme measure, as it also keeps you from getting any legitimate credit, but it will stop the thief. Victims of identity theft can request a credit freeze for free.

Unfortunately, if you have been the victim of identity theft, you may end up having a long road ahead of you. But don’t let your fears and emotions keep you from acting. After taking the above steps, be sure to learn how to avoid identity theft in the future. You don’t want to be a victim twice!

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How to Roll Over Your 401k

Here are 4 steps to rolling over your old 401(k):

1. Identify your retirement account options and make an educated decision.

You have two choices when rolling over your 401(k).

1. You can roll it into your new employer’s 401(k) plan or
2. You can roll it into a new IRA.

There are benefits to both of these options. If your old 401(k) has a small amount of money, it may be in your best interest to roll it into a new employer managed 401(k) plan. With a larger amount of money, rolling into an IRA is a wiser option because it allows for more diversification of your funds.

If you have decided to roll you 401(k) into a non-employer fund, you will need to choose who to invest your money with. Now is the time to research brokerage firms and mutual fund companies.

Regardless of which option you choose, be sure you have educated yourself completely.

2. Contact the provider of your old 401(k).

Once you’ve made the decision of where your money will go it is time to contact the previous provider of the old 401(k).

• Verify with them that there are no limitations on your ability to rollover the funds.
• Verify that they know you are leaving the company.
• Request the forms you will need to begin the process.
• Ask about the information they will need from your new plan.

3. Check with your new provider to verify your next step.

Whether you have decided to roll into your new employer’s 401(k) plan, roll into a brokerage firm IRA or into a mutual fund IRA, you need to know what specific steps the new account provider needs you to take. Contact your new provider, let them know of your plan to rollover your funds and then verify the steps that you need to complete the process. The process will likely be similar regardless of which account you choose, but verify the proper steps before moving forward.

Typically, what you have have to do on this end includes:

• Set up the account and make sure it is ready to receive the fund from your old plan.
• Get all the new plan information you need to include in the transfer application.

4. Be thorough and be diligent with all forms.

Once you have the forms you need, be sure to fill them out completely and correctly. Be sure the form says that the funds are being rolled directly into a new account. You do not want to withdraw the funds in your name and then re-deposit them on your own. If you do this, your old plan administrator will withhold 20% of your money for tax purpose. You will also have 60 days to deposit the money into a qualified account. A failure to re-deposit the full amount (yes, you have to add the 20% out of your pocket) will result in taxes and penalties.

It is much easier to have the old provider transfer the funds to yor new provider. This is called a trustee-to-trustee transfer.

Copy all forms to keep for your records and either fax or mail them to your new provider. If mailing them, delivery confirmation may be something you want to pay for at the post office. This way you know when the forms have arrived.

Follow-up within the time frame that the new provider has given you. If they say it will be completed within 14 business days, then check in with them on the 14th day for a status update. You will want to make sure that all funds have reached their new destination. Remain diligent until the old account is closed and all funds have appeared in the new account. Be sure to keep tabs on your old 401k’s account balance during the process as well.

Congratulations! You have made wise decisions for your future. Continue depositing money into your new 401(k) or IRA with every paycheck. Make sure your money is invested and diversified. A diversified portfolio is an excellent way to ensure a solid financial future.

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The result was that we never had to worry about the income drop that comes when you quit your day job to start a business from home. Others, though, don’t have that luxury. Before you quit your day job, you need to carefully consider your financial situation, and ask a few questions.

Are You Ready to Quit Your Day Job?

Here are five things to consider before quitting your day job to work from home:

1. Can you reasonably support yourself while you start your business?

A successful home business doesn’t happen overnight. Before you quit your day job, you need to have a financial support system in place.

• Does your life partner have a job that can provide for your needs?
• Do you have a large enough emergency fund to help supply your requirements?
• Can you cut your spending so that your money stretches?

If you can support yourself while you work to get the business off the ground, it might be a good time to quit your day job.

2. Is it possible to start your business without quitting?

Perhaps you can start your side business without quitting your job. If you can spend two or three hours in the evening working on your business (instead of watching TV), perhaps you can get some revenue coming in. Then, you can address the issue of quitting later, when your home business is more established.

3. What is your benefits situation?

If your life partner has the benefits, then your quitting won’t make a big difference. However, if your day job has been providing the benefits, you need to come up with a viable plan. Health insurance is costly, and you need to be ready to deal with that reality. Before you quit, come up with a plan for providing benefits for your family.

4. Is your home equipped for a home office?

Make sure you have a workspace available to you. It doesn’t have to be a big space, but it should have what you need. Make sure you have the Internet connection you need, as well as the office supplies that will make your home office work. You want to set up for success before you quit your day job. A properly designed space can improve your productivity.

5. Can you — and your family — handle the emotional issues?

Realize that new stresses will come with working from home. Your kids will have to be able to understand that just because you’re home doesn’t mean you can play all the time. Your life partner will have to be willing to sacrifice some of the time spent with you. Additionally, you need to make sure that you are emotionally ready to deal with the isolation that can come with working from home, as well as ensure that you are sufficiently self-motivated.

If you feel you are emotionally ready, and if your finances can handle it, quitting your day job can be a good choice.

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The current market has led to an increase in the number of short sales performed, and, consequently, the interest in short sales has likewise increased. While a short sale can provide opportunities for buyers and sellers, it’s important to realize that not all short sales go through. Whether you are looking to buy, or hoping to sell, here are some things you need to understand about short sales:

The Bank is In Charge

Before you get excited about a short sale, it’s vital that you understand that the bank is in charge of the transaction. As the lender — and the party that stands to lose the most from a short sale — the bank decides whether or not the short sale goes through. It’s important to remember that the mortgage lender likely has more true ownership in your home than you do. And, since it’s the bank’s money at risk, the bank decides whether or not to allow the short sale.

More Than One Lender May Be Involved

This approval process includes lenders that have provided you with a second mortgage as well. If there are more banks with a claim on the home, then the likelihood of being approved for a short sale goes down. It’s true that other lien holders have less of a claim than a primary mortgage lender, but there is still veto power. If a lender thinks that there won’t be much left over, the short sale may not be approved.

You Could Be Wasting Your Time for Nothing

In order for a seller to receive approval for a short sale, he or she must prove that the house won’t likely sell at a price that pays off the mortgage, and that there is financial hardship involved. Potential buyers should find out whether a home listed as a “short sale” already has approval from the bank before proceeding. If the homeowner hasn’t received approval — or even submitted a package — you could be wasting your time hoping the short sale goes through later.

Before you go down this roard, realize that the entire process could take several months to complete.

Sellers Need to Show They Can’t Afford the Mortgage

Normally, if a seller decides to sell a home for less than what is owed, he or she is required to make up the difference. If the bank approves a short sale, though, the remaining amount owed is forgiven (remember that the IRS views this as income, and the seller will need to pay taxes on it). Before the seller is approved, though, there are some hoops to jump through. Normally, in order for a bank to agree to a short sale, the following conditions have to be met:

• The home isn’t selling at the current price that would pay off the mortgage. Many banks like to see that the home has been on the market for at least 90 days at a higher price before agreeing to a short sale.
• Financial hardship means that the mortgage payments can’t continue to be made on the home. This can include loss of hours, or loss of a job. If the seller can’t make the mortgage payment, it might be worth it for the bank to allow a short sale.
• The seller’s assets are insufficient to pay off the remainder. The bank also wants a look at accessible and liquid assets. If the seller has a savings large enough to pay off the difference, the lender can demand that, rather than allow a short sale.
• Private mortgage insurance won’t provide a big enough reimbursement. It’s true that foreclosure can be a pain for the bank, but private mortgage insurance can ease the pain. The bank will likely weigh the costs associated with each option, and whether an insurance payout can make foreclosure desirable.

Because there is so much involved, many short sales never go through. It’s hard to close on short sales because the bank has to be willing to lose the money. However, in some cases, the short sale does turn out to work well. If the bank doesn’t want to deal with the short sale, it’s possible that it can be approved. Sellers, though, need to be upfront with the bank, and get approval before trying to sell their home under those circumstances. Buyers should discover the situation early on to avoid an unpleasant surprise later.

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What is less clear, however, is whether or not a rewards credit card with an annual fee is worth it. After all, why should you pay to use a credit card when there are plenty of free options available? Depending on your habits, though, a credit card with an annual fee just might be worth it.

3 Factors to Consider

What are the Perks?

Most free rewards credit cards are pretty basic. You earn between 1% and 3% cash back. If you’re lucky, you might earn 5% cash back on certain spending categories. Or, you earn one point for each dollar you spend, with occasional promotions that allow you to earn more. Most of these cards come with standard perks:

• rental car insurance,
• fraud liability protection,
• 24-customer service,
• extended warranty on purchases, and
• a few other items.

Rewards credit cards that charge fees, however, might come with more perks. You might get access to a concierge service, or to trip cancellation insurance. Additionally, many rewards cards that come with fees also allow you to earn points faster. You might get extra points on travel, or you might get 3% to 5% cash back on all your purchases. If you can earn more rewards, and get more perks that you are likely to use, paying an annual fee might be worth it.

Do You Use the Rewards Enough to Offset the Fee?

Of course, in order to make a credit card with an annual fee worth the cost, it’s important that you use the rewards regularly. Assess how often you will use the card, and whether the rewards program works for you. If you travel a great deal, a rewards card with a $90 fee might be worth it. If there are extra rewards for travel, and plenty of travel perks and insurance, you can enjoy peace of mind — while earning free travel — with a high-end card. If you are able to redeem rewards for two free airline tickets each year, the $90 fee is worth it. Especially if you are unable to earn the same rewards with a card that doesn’t have an annual fee.

Whether it’s cash back or travel rewards, the program needs to be compatible with your lifestyle. Look at whether or not you will use the rewards, as well as whether it will be possible for you to quickly earn rewards that are valuable enough to cover the cost of the fee. It might actually make sense for you to pay the annual fee if the rewards program is truly superior to what you can get with a fee-free credit card.

Earning More Rewards

Supercharge your ability to make sure the card pays for itself by planning your spending in a way that allows you to boost your ability to earn rewards. Create a budget that helps you live within your means. You don’t want to spend more than you normally would. Use your credit card to cover as many expenses as possible. Buy groceries, gas, and pay bills with the credit card. Make sure you stick to your budget, though.

Once you get the statement, you can use the money that’s been sitting in your bank account and earning interest all month to pay off the balance. That way, you will build up the rewards points or cash back without paying interest. Once you start paying interest, any benefit you get from the rewards program is likely to be nullified.

If you have a plan, and if you really will use the rewards, it might be worth it to get a credit card that charges an annual fee.

Do you have a credit card with an annual fee? What made you decide to use it?

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For the most part, though, we think of social media sites (especially Facebook) as a way to interact with friends and relatives, and as places to share our thoughts, and images of us living the good life. We might even think of it as a way to sell ourselves to others when we’re networking and looking for jobs. Very rarely, though, as we post an off-hand status update or a picture of the fun we’re having, do we think about how it’s impacting our job prospects.

Hiring Managers are Looking at Social Media

The truth, though, is that hiring managers are looking at social media — especially Facebook — in an effort to determine whether or not they will hire you. According to an article from AOL Jobs, 40% of hiring managers use social media to make determinations about jobs. Of those 40%, of hiring managers, 1/3 of them say that they have rejected applicants on what they found:

Nearly a third of hiring managers who currently research candidates via social media said they have found problems that resulted in them rejecting the candidate.

For the past couple of years, we’ve been told that it’s important to use social media in the job search. Job hunting with the help of Facebook is even starting to be quite popular. But, as you reach out to your network to find out what’s available to you, and to look for employment, don’t forget that employers are probably looking for you on Facebook and on other social media.

Indeed, it’s worth going through your social media profiles. Do you look professional? Are you disparaging a former employer in your status updates? Have you been showing off your participation in illegal activities? According to the AOL article, some of the items that can lose you job include the following postings on Facebook and other social media:

• Provocative photos and comments
• Drinking and drug use
• Evidence of poor communication skills
• Bad-mouthing a former employer
• Discriminatory comments expressed in a status update
• Evidence that qualifications have been exaggerated or lied about

Of course, the flip side is that your social media profile can exhibit your professionalism, enthusiasm, solid qualifications, and generally positive outlook. Your social media profile can be a way to let potential employers that you would be a good hire — and not an Internet risk. But you have to be careful about what you post, and what you make public, if you don’t want your social media profile to be used against you as you search for a job.

Social Media Background Checks

It’s also worth noting that there are companies that do the heavy lifting for employers looking to hire. The way has been cleared for social media background checks offered by companies like Social Intelligence. These companies scour the web for information about in the social realm. Of course, the information is stuff that’s only publicly available — but you might be surprised at what is publicly available.

Facebook information that you haven’t made private, tweets, and other information is available. But it doesn’t stop there: Comments you’ve made on others’ blog posts might also be gathered. These companies compile reports that are supposed to remove information about your race, religion, gender, sexual orientation, age, other characteristics that aren’t supposed to be used in hiring decisions. However, if a company doesn’t do a social media background check, and just Googles you, you don’t know what criteria is being used.

Of course, the existence of these types of social media background checks emphasizes that you do have to be careful about what you put out there. It would be nice to say that your personal life is private, and separate from what you do at work or in public. However, the Internet has blurred those lines. As long as your prospective employer isn’t asking for your Facebook login information, there isn’t much you can do to stop a hiring manager from Googling you, and checking what you’ve been up to.

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How Much Should You Save for Emergencies?

Rather than making a recommendation based on a flat amount, like $1,000, or so many months’ living expenses, I think it’s more practical to look at what it is an emergency fund should be expected to cover before determining how large it should be.

What is an “Emergency” as it Relates to an Emergency Fund?

There’s no way to estimate how much money should be in an emergency fund without first defining exactly what constitutes an emergency worthy of tapping the fund. But let’s begin by focusing in on what it isn’t.

The World English Dictionary defines an emergency as “an unforeseen or sudden occurrence, especially of a danger demanding immediate remedy or action.”

Note the use of the words “unforeseen or sudden”; an emergency isn’t a routine or fully expected situation, like a shortfall in a monthly budget, routine car maintenance, or even replacing the roof on your house. All of those are fully predictable and require proper budgeting, but none are an emergency and shouldn’t be covered out of an emergency fund. If the fund isn’t held as a separate account with a clearly defined special purpose, it can easily degenerate into just another checking or savings account.

With that in mind, what emergencies should we be preparing our emergency fund to cover? Here’s the short list (and it should be short!):

• Job loss or income disruption
• Medical emergencies
• Auto accidents or theft of vehicle
• Damage to your home
• An untimely, heavyweight car repair, like a valve job or replacing the transmission. Normally this would be something that should be budgeted for elsewhere, but since major car repairs have an uncanny knack for hitting at the same time as other emergencies — especially a job loss when you can’t afford to replace the car — it can easily rise to the level of an emergency.

Each of these are true emergency events that won’t fit neatly under an arbitrary allocation like three months living expenses, but would put you under a load of debt if you are unprepared.

Stocking Your Emergency Fund for True Emergencies

Now that we’ve defined what an emergency is and what it isn’t, let’s take a look at how to prepare for them with a fund. We’ll use an estimate for each category, then total them at the end to get an idea as to how large the fund should be.

Job loss or income disruption. This is where we can apply the “so many months living expenses” rule. How many months that will be will depend on personal circumstances such as how quickly a job in your field can be replaced, what other sources of income the household has, or even the size of investment assets that can be tapped in an extended emergency. At a minimum, this portion should represent at least one month’s living expenses to allow time for unemployment benefits to take effect. For our purposes, we’ll assume this to be $3,000 per month, and we’ll go for two months, or $6,000 as a bare minimum. (Your personal situation may dictate needing 12 months of expenses saved up. Each situation is unique.)

Medical emergencies. You should have an amount in your emergency fund sufficient to cover the deductible portion of your health insurance. We’ll assume a $2,000 individual deductible, and include it in the emergency fund.

Auto accidents or theft of vehicle. Just as with health insurance, you should have an amount in your emergency fund to cover the deductible on your auto insurance policy. We’ll use $1,000.

Serious damage to your home. Again, the deductible on your homeowners insurance policy should be added to the fund. We’ll use $1,000.

Heavyweight car repairs. Get prices on what it will cost to perform the most expensive repairs, like a transmission replacement. If it won’t be needed in a time of emergency, you’ll have the money available for other purposes. If it is needed, you’ll be ready. Let’s assume $2,500.

Now let’s total it all up:

• Job loss, two months living expenses: $6,000
• Medical emergencies: $2,000
• Auto accidents or theft of vehicle: $1,000
• Damage to your home: $1,000
• Untimely, heavyweight car repair: $2,500

Total for emergency fund: $12,500

As you can see, the emergency fund calculation we’ve used here doesn’t fit neatly under any rules of thumb — we’re matching funds with probable emergencies.

Avoiding Duplication

This is of course a more detailed method of calculating the size of your emergency fund, and part of the reason is so that the fund isn’t any larger than it needs to be. Once true emergencies have been identified and prepared for, any additional money should be in investments that provide greater returns or utilized to pay down debt.

It isn’t necessary, desirable — or even possible — to cover every emergency outcome. For example, health insurance policies typically include an annual individual deductible and a family deductible — usually equal to two or more individual deductibles. You may want to cover multiple deductibles, but what are the chances that two or more members of the same household will experience high medical costs at roughly the same time?

The same is true of auto insurance deductibles — if you have two or more cars, there’s probably no need to prepare for accidents or theft of more than one car, especially if all drivers in the household have good driving records.

Even if either event did happen, your fund has allocations for multiple emergencies, some of which won’t happen in conjunction with others, so funds will be available just in case. In addition, greater concentration of funds in income producing investments can provide a second level of funding in a worst case scenario. In the end, while there are multiple reasons to have an emergency fund, the main purpose is to give you time to deal with what ever comes your way.

How do you determine how much you should have in your emergency fund?

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Your Network

Mentor Connections

In some cases, your network offers you a variety of mentors to work with. The right mentor can show you how to make smarter money decisions, or encourage you in your career strategy. You can learn about qualifying for different jobs and raises, as well as learn about tips and techniques for better money management. You can even find an investing mentor to help you make better decisions about growing your portfolio.

A good mentor is someone who has been where you are, or has experience in getting where you want to eventually be. You don’t even need to confine yourself to a single mentor. Mentors for different areas of your life can be very helpful in allowing you to grow and learn — and improve your net worth.

Career Opportunities

Your network probably has knowledge of different career opportunities, as well as knowledge of who is hiring. This can be helpful knowledge as you look for ways to increase your income and grow your wealth. If you are looking for a new job, you can let your network know, and someone might be able to point you in the right direction — or even provide you with an “in.” Being able to advance in your career is an important to increasing your net worth. Your career network can help you accomplish these goals.

Business Partnerships

Sometimes, your network can provide you with business opportunities. Your network might include people who might want to start a business with you, or form a partnership with a business you already own. You can receive referrals for other opportunities from your business network. For instance, someone in your network might not need a consultant, but he or she might have contacts who do. As a result, your network provides you with opportunities to grow your business and expand your net worth.

You can also find buyers for your company, if you want to sell, through your network. Or you can look for opportunities to acquire more business assets through the contacts you have. Your network can be a valuable tool for using your business more effectively.

Giving Back to Your Network

It’s important to remember, though, that networking isn’t just about receiving from your contacts. You should also remember that being part of a network means that you give something back. You might be asked to mentor one of your contacts, or provide helpful advice. You might give an opportunity to do business with someone in your network, or recommend him or her for a job. Make sure you are as free with your help to others as others are free with their help to you.

It’s important to remember that your deeds have a way of coming back to you. Eventually, if you aren’t helping anyone, but you expect others to help you all the time, people will notice and decide to leave your network. When you expect help from your network, you need to be prepared to help others in return.

The Bottom Line

Your network can be an excellent source of information and opportunities to grow your net worth. Cultivate a strong network, and you will find help when you need it — and receive the satisfaction of knowing you are helping others as well.

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5 Tips to Get Out of Debt Fast

Never Pay Only the Minimum

You can get into serious trouble by making only the minimum payments. By doing so, you are guaranteeing yourself more debt. Balance on your credit cards cost you money every single day, whether you use them or not (from the interest adding up). The rate at which you incur interest depends on the type of card you signed up for. It usually ranges from 10%-20% annually.

It may be convenient to make this small payment, but this practice wasn’t designed with your best interest in mind. The minimum payment plays to the procrastinator inside all of us and it’s there to bait you into putting off your balance for another month — that one month, turns into two, and so on. These companies make billions of dollars every year this way.

Keeping consumers in debt to make a profit is ethically questionable, but this is why credit cards are so lucrative. So, the first step to reducing your debt, is resolve to never again make only the minimum credit card payment.

Find Out Your True Cost of Living

People enjoy living beyond their means. Having money and spending it frivolously can be a lot of fun. But squandering cash that you don’t have, when you need to make a rent payment is not a good way to live. When you supplement your income with credit cards, it can be hard to know exactly what you can or can’t afford. If you are living a rappers lifestyle on a secretary’s budget, it’s time to sit down and do some math.

Put your accounting hat on and write all of your expenses down on paper with a number 2 pencil. Make one column with your after-tax income and another column with all of your expenses. List everything including: housing, utilities, food, entertainment, travel, cell phone, etc. — don’t skip anything! See if you are generating a negative cash flow for the month. If you are, you need to decide which expenses are essential, and which ones can be cut. Be realistic with what you can afford, and be aggressive with the things you decide to cut out.

Pay Your Highest Interest Debt First

Find your most expensive debt (most likely credit card debt) and axe it. Make a list of all your debts ranked from highest to lowest interest, and tackle them one by one. Search the couch cushions, bust open your piggy bank, do whatever you have to do to find extra cash, and pay down that #1 highest interest debt first. Take a percentage of your monthly disposable income (like 10%) and drop it all down on this one particular debt. Do this every month until it dwindles, and eventually goes away.

It may seem daunting when you are facing a large balance, but if you commit to it, things will get better… It might take some time, but once you have conquered the #1 debt, you can switch to the next worst offender. Leave the mortgage and student loan debt alone for now (still make your payments, of course), because these are likely nunder 10% and you want to focus on the highest interest debt first. Plus, certain debts like mortgage debt and student loans are ok, because they can even help you create wealth in the long run if used properly. Real estate “usually” appreciates in value over time, and education can help you earn more.

Cut Back and Sell Things to Generate Money

Most people aren’t really conscious about every little dime they spend month after month. But recurring expenses can really drain your bank account dry — e.g., things like premium cable channels, gym memberships, and expensive cell plans, .

When times are tough, it’s time to trim the fat. Come up with a list of expenses that you can switch to a cheaper plan, or cut out completely. If you don’t watch HBO often, cancel it. If you don’t play golf, sell your clubs. If there are things around the house that you don’t need, you can have an estate sale to generate extra funds. Use the profits of the estate sale ONLY to pay down your highest interest debt. Items just sitting around collecting dust can all be turned into cash. Something that is trash to you might fetch a few dollars that can drop your balance down another notch.

Another thing you might want to consider is a part time job. Many people might grimace at this thought, but a night job like pizza delivery is a very low stress job that pays pretty decently. I recently talked to a debt blogger who was delivering pizzas at night to help pay down his debt, and I’ve also done this when I was younger. It’s just a few extra hours, a few times a week, but it can make a world of difference if you are struggling.

Ask for a Lower Interest Rate on Your Card

Your credit card company earns a lot from a high interest debtor like you, and they will not want to lose you as a customer. Dial up customer service and say you are considering doing a balance transfer to a rival’s lower interest card. You don’t really want to go through the hassle of doing this, so say you would rather just work with them. Quote them a specific interest rate off another company’s card (maybe a few % less than your current rate) and ask them if they will give you a lower rate. You can do a balance transfer to another card, and they know it, so hopefully they will play ball.

I recently read that over 50% of customers who called to ask for a lower rate, got one instantly. It may be an uncomfortable call, but getting a lower rate will be a huge help to your deflating wallet. It is possible that they might say NO, but for 3 minutes of your time, it’s very much worth it. The lower interest rate can keep you from losing the momentum you’ve got going. Your balance won’t snowball so quickly and it will become much more manageable.

The alternative to paying down your debt is not so pleasant. You can even find yourself in financial mess involving lawsuits, income garnishment, or even a lien on your home. That is a road you want to avoid going down at all costs. It may seem tough at times, but there is a way out. You need to embrace this new debt free lifestyle. It is much more stress free, and totally liberating if you accept it. You might not have as many material possessions, but living without debt will make you feel like a giant weight is off your shoulders.

Photo by alancleaver2000.

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Keeping & Growing Income

The first thing to focus on is keeping and growing your income. Obviously, this is a concern for many people today considering the high unemployment in America. If you’re wanting to improve your financial situation, you must re-establish your income even if it means taking a less-than-ideal job. If you have a job still, do what you can to keep it — and if you’re in the minority with an opportunity for a raise or other opportunities, take advantage them!

Next, I believe it’s worthwhile to pursue additional income opportunities to create income outside your “main job.” This has been a main focus of my blogging for a couple years now — finding ways to make extra money to improve one’s financial situation. So, do put in the time and effot to build extra income opportunities for yourself.

Letting Your Income Work

Now, letting your income work for you is what almost all Americans struggle to do. What do I mean by this? I mean letting your income actually building your wealth. Instead, most Americans inhibit their income and put obstacles in front of it and prevent it from building wealth.

For example, the biggest obstacle is debt. By tacking on insane levels of debt, we fail to let our income build wealth. How? Well, big chunks of our income immediately go towards paying interest on our debt rather than building wealth via savings and investments. Basically, we latch on to ourselves burdens that force larger and larger portions of our income to be diverted to others instead to ourselves.

Even for those of us without debt, we still put things in the way of our incomes such as lifestyle and consumer spending. Even if we’re paying cash for our lifestyle, we’re still preventing our income from building wealth. Let me give you a real example — how about what we spend on food, specifically, eating out? By having the habit of eating out frequently, we automatically funnel a portion of our income into restaurants all in the name of a short term craving. While eating out is great, keeping the frequency to a reasonable level is a smart way to allow your income to work for you more and more.

Conclusion

Learning to invest and learning about credit and so forth is great stuff to learn, but don’t lose sight of the fact that your income is your greatest asset. Maintain it, maximize it, and let it work for you. Divert as much of your income as possible into assets and wealth building instruments — namely, investments and savings. Make incremental improvements in this area and you’ll see your financial situation improve drastically.

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