Credit cards have gotten a bad rap recently – in today’s economic climate, horror stories of high interest rates and sketchy lending practices have convinced many consumers to stop charging and just pay cash. Like most stories in the news, there is some truth in these claims – after all, when you use a credit card, you are responsible for paying the money back, plus any finance charges associated with your purchases. All those fees can add up to a pretty hefty credit card bill if you’re not careful.

So, why use credit cards? Isn’t it smarter and safer to use your debit card?

Well, yes and no.

When it comes to making a choice between using your debit card and your credit card, the answer isn’t always black-and-white. In the “credit vs. debit” debate, it seems that the answer lies somewhere in the middle – used responsibly, both cards have distinct advantages and disadvantages, depending on the type of purchase you’re making and how you track your spending.

Not sure which is right for you? Here are some of the main differences between the two:

Security

Credit Cards: In many cases, credit cards offer a higher level of protection if your card is lost or stolen. Credit cards are protected by federal laws, so if your card is stolen, you won’t end up paying for purchases you didn’t make; most credit card companies cap customer liability at around $50 (of course, it’s a good idea to check with your credit card company and find out exactly what their policy is). And, because your credit card isn’t tied to your bank account, you’re not out any money while charges are under investigation.

Debit Cards: Debit cards don’t come with as many federal protections as credit cards when it comes to purchases you didn’t make. With debit transactions, the burden is on you to prove that your card was stolen and that you didn’t spend, say, $600 on stereo equipment. Plus, your debit card is tied to your bank account: If it falls into the wrong hands, your bank account may be drained in a matter of days, leaving you high and dry while your case is being investigated. Protection for debit cards can vary a lot – it’s a good idea to call your bank and find out exactly how much security you have.

Costs

Credit Cards: Here’s where credit cards can get you in trouble if you’re not careful. Sure, it’s easy to buy now and pay later, but if you pay too much later, you could end up paying some hefty interest on your purchases. After all, credit purchases are basically loans – when you swipe your card, you’re promising to pay that money back. If you always pay your balance in full, and on time, you won’t pay any interest or finance fees. But, if you let too much debt pile up, you’re looking at hundreds – even thousands – of dollars in interest. So, that $50 pair of shoes you just had to have may end up costing you $100.

Debit Cards: Debit cards are linked directly to your bank account. So, if you don’t have the money, you can’t spend it. That means that if you put $100 on your debit card at the grocery store, that’s all you pay. Period. However, it’s critical that you keep track of your bank account balance before you start spending: Even if you don’t have the money in your checking account, your bank may approve the transaction anyway, leaving you with some hefty overdraft fees in the process.

Rewards

Credit Cards: Most credit card companies offer extra incentives to their customers, like airline miles or cash back on certain types of purchases. Additionally, your credit card company may offer things like extended warranties on big-ticket items, or insurance on things like car rentals or airline tickets.

Debit Cards: As more and more consumers reach for their debit cards, banks have stepped up – now, many debit cards come with bonuses to help you get the most from your debit purchases. For example, Bank of America offers “Keep the Change,” which rounds all debit transactions to the nearest dollar and deposits the difference into your savings account. And, Chase features “Leisure Rewards” – debit card users earn reward points for debit purchases and can redeem them for gift cards and merchandise.

Credit Score

Credit Cards: When you use your credit card, your activity is monitored by credit reporting agencies. So, your spending habits, payment history, and even the amount of credit cards you have all affect your credit rating. The good news is, if you use your credit card responsibly, your credit score will show it – it will be easier to get approved for a home mortgage loan or a car note. But keep in mind that if you don’t pay on time or spend too much money, your credit score will show that, too – you may find it hard to buy your dream home down the road.

Debit Cards: Unlike credit purchases, debit transactions don’t affect your credit score. So, while your credit rating won’t suffer if you accidentally overdraft, it also won’t benefit from responsible spending. If you’re only using your debit card, you aren’t building credit.

The Verdict

In the debate between credit cards and debit cards, there’s no clear winner. Credit cards aren’t inherently evil (when used responsibly), and, depending on your financial goals, debit cards don’t always help you in the long run.

So, credit or debit? The choice is yours. The important thing to remember is that, when used with care, both cards have their advantages.

Copyright © 2009 Reality Media Inc.

In today’s economy, we’re all trying to make our hard-earned dollars work harder. Whether it’s saving a few dollars at the grocery checkout or finding cheap (or free) entertainment, there are lots of ways to live comfortably for less.

Not sure where to start? Here are five things you can do right now to cut down on your expenses:

1. Cut Your Grocery Bill Down to Size. Some people still believe that when it comes to food shopping, you only have two options: Buy cheap junk food or fork over half your paycheck for healthier options. Fortunately, that’s not the case: With a little work on your part, you can find money-saving deals on good (and good for you) food. Start by clipping coupons (the cost of a Sunday paper is well worth the savings you’ll find inside) and reading the grocery store flyers you get in the mail. The one good thing about today’s economic climate is that many grocery stores are competing to have the lowest prices – take advantage of the deals and shop at the store that offers double coupon savings or great buy-one-get-one-free deals. But remember to stick to things that are actually on your grocery list: You don’t save if you buy stuff you don’t need.

2. Buy Used. “Pre-owned” isn’t just for cars anymore. From clothing to furniture to electronics, chances are you can find what you need without blowing your budget. Cruise thrift stores or secondhand stores, and don’t forget to check out websites like Craigslist or Freecycle to find cheap or free items instead of paying full price at a big department store. And, don’t forget to get the word out to friends and family if you need something – your Aunt Gertrude might just have a coffee table that she’s dying to get rid of, and your best friend may have an extra inkjet printer that he wants to unload. You don’t know unless you ask.

3. Start a Book Exchange. Or a DVD Exchange. Or a video game exchange. Entertainment can be expensive. But, whatever you’re into, you probably know some people who share your interests. Books, movies, and games are great ways to have fun at home, but they’re not always cheap. Instead of paying full price for entertainment, try lending and borrowing from friends instead. Trade that great new novel you just read for a DVD you haven’t seen yet. The best part? Your friends don’t charge late fees. It’s a great way to keep yourself and your family entertained – without spending a fortune. And, speaking of entertainment . . .

4. Cancel Your Cable Service. Seriously. This one may be a little scary at first, but the price tag that comes with even the most basic cable package can be scarier. Don’t get me wrong – TV can be a great source of family entertainment, but cable service in some areas can run upwards of $100 a month. Instead of paying for your favorite shows, rent series from your local video store, or watch them online instead – networks like NBC and ABC offer many of their shows on their websites, free of charge. And, if the thought of losing your cable is just too much to bear, think about downgrading your service – get rid of movie and premium channels you don’t watch, and you could save hundreds a year.

5. Lose Your Land Line. If you’re like most people today, you have a cell phone and a home phone – and two bills to go with them. Many cell phone providers offer great deals on things like free or cheap long distance and free calls to people in your network. Consider cutting off your land line, and you’ll probably save about $50 to $100 a month. Put the money into a savings account, and watch it grow.

With a few minor adjustments, you can keep more cash in your pocket, without feeling the pinch. And remember, a frugal lifestyle doesn’t mean “cheap” – it means spending (and saving) – your money wisely.

Copyright © 2009 Reality Media Inc.

Lose weight. Stop biting your fingernails. Read more books. Learn to knit.

If you’re like most people, you’re planning to ring in 2009 by making a slew of lifestyle changes. The great thing about a new year is that it gives you a fresh start. Maybe you didn’t use that home gym as much as you wanted to in 2008, or maybe you didn’t stick to that low-carb diet. A new year is a great opportunity to get back on track.

This year, as you gear up to say hello to 2009, don’t forget about your finances. Spend a little time getting up-close-and-personal with your checkbook and make a plan to curb your spending and fatten up your savings account.

Don’t know where to start? Read on for seven tips for a financially healthy 2009:

1. Avoid the mall. Seriously. As 2008 draws to a close, your favorite retailers will be running end-of-year clearance sales on everything from major appliances to winter coats. Unless you absolutely must have a new refrigerator, pass on the sales and put your extra money into your savings account instead.

2. Cut the cards. Got credit card debt? There’s no time like the start of a new year to change your spending habits and start putting a dent in your debt. Make a resolution to start paying off your credit cards. And, more importantly, make a resolution to stop using your cards, period. If you don’t have the cash to cover it, don’t buy it, or take the money out of your emergency fund instead. Don’t have an emergency fund? Read on for tip #3.

3. Start an emergency fund. A good way to make sure that you don’t have to rack up loads of credit card debt is to start socking money away for those unplanned emergencies. A good rule of thumb for most people is to have about three months’ salary in a separate account. But, don’t let that figure intimidate you: Decide what you can realistically put away, and go from there. If you start in January, you’ll be surprised how quickly your money will add up.

4. Curb your impulses. From fancy coffee to fashion magazines, DVD rentals to fast food – everybody has a few inexpensive vices. But, these little luxuries can add up to a big drain on your wallet. 2009 is a great time to cut down on impulse purchases. Got a twice-a-day latte habit? Kick it down to twice a week. Addicted to convenience foods? Make a lunch at home and brown bag it. You’ll be surprised at how much you’ll save.

5. Be a savvy shopper. Even the most financially savvy people in the world still have to go grocery shopping. But, there are dozens of ways to shop smarter in 2009 and stretch your dollar when stocking up on the necessities. Clip coupons and watch store circulars for double (or even triple) coupon events. Consider switching to store-brand items whenever possible. In most cases, they’re just as good as the national brand and can save you some serious money. Also, get in the habit of making a list before you go out – it’ll help you stay focused and buy only what you need.

6. Check your credit. From helping you secure a home mortgage to, in some cases, landing a new job, your credit report is used in countless ways. All consumers are eligible for a free annual credit report from the three major credit bureaus: Experian, TransUnion, and Equifax. Start the new year off right – request a copy from each and read them carefully. Not only does this give you the chance to dispute errors, taking the time to check up on your credit can also alert you to fraudulent activities, like accounts you didn’t open or charges you didn’t make.

And finally, my most important tip for 2009:

7. Write a budget. And stick to it. Writing a budget isn’t nearly as scary as it sounds. And, a budget is a great way to make sure that your finances stay on track in 2009. It’s pretty easy: Start with your total monthly household income, then deduct your bills (like your rent or mortgage, utilities, car payments, etc.) and expenses (like gas and food). After that, decide how much you want to put in your savings account and how much will go to your emergency fund. And, don’t forget to leave yourself a little fun money for the occasional restaurant meal or night at the movies. And remember to be flexible: If you find yourself a little strapped for cash after you’ve worked out your budget, don’t ditch it altogether – make adjustments until you hit on a budget you can live with.

Making a few simple adjustments to your spending and saving habits can go a long way. Follow these tips and you’ll be on the way to a financially secure new year.

Good luck and have a happy, healthy 2009!

Copyright © 2008 Reality Media Inc.

If you’re like many folks, the approach of this year’s holiday season has you feeling less than jolly. As the economy continues to flounder and the media predicts dismal retail sales, you may find it harder than ever to channel your inner Santa.

Sure, things aren’t perfect. But, before you pack up your holiday cheer and say “bah humbug” to the month of December, read on for a list of savings tips to make your holiday season merry and bright – without breaking the bank.

1. Set a budget. And check it twice. During the holidays, it’s easier than ever to blow big bucks on early-bird sales, rollback specials, and limited-time offers. There’s nothing wrong with a good deal. But, if you’re not careful, holiday bargain-hunting can be a major drain on your wallet. This year, keep your spending in check by setting a budget before you ever set foot in a shopping mall. To get started, decide how much you can spend on gifts for your friends and family (and, don’t forget coworkers or hostess gifts). After that, decide how much you’ll spend on each person, and track your expenses. Remember: Once your holiday gift budget is gone, it’s gone.

2. Craft with caution. Sure, handmade gifts and cards sound like a frugal alternative to store-bought gadgets. But, before you get carried away, stop and do a reality check: Will a DIY Christmas actually save you money? Crafting supplies aren’t cheap; for some items on your list, it may be more cost-effective to look for a ready-made bargain. Do some comparison shopping before you commit to a crafty Christmas.

3. Pay cash. Don’t use holiday shopping as an excuse to run up your credit card bills. There’s nothing festive about high-interest debt. Before you hit the stores, make sure you’ve got cash. If you really don’t think you can control your spending urges, leave the plastic at home.

4. Trim your shopping list. The holidays are all about giving, but that shouldn’t equate to overextending your finances to make sure you find the perfect gift for your cousin’s husband’s college roommate. Take a serious look at your gift list and see where you can cut spending. If you’ve got a large family, consider starting a new tradition: Instead of buying for everyone, draw names and do a gift exchange instead. Or, agree to make this holiday a “kids-only” event and bypass gifts for the adults entirely.

5. Fly smarter. If you plan on heading home for the holidays this year, it’s a good idea to make your travel arrangements as early as possible to avoid getting hit with last-minute price hikes. Additionally, a little flexibility can go a long way – if you can avoid hopping a plane on heavy holiday travel days (like the Wednesday before Thanksgiving, the day before Christmas Eve, or the day after Christmas), you can score some big holiday travel savings. The cheapest days to travel? Thanksgiving Day and Christmas Day.

6. Shop online. Save some cash (and your sanity) by avoiding the malls this holiday season. Many online retailers offer extra deals this time of year, like free shipping or complimentary gift wrapping. It’s a great way to take some of the stress out of finding that perfect gift.

7. Lay it away. Been a while since you’ve heard that? To offset this year’s predicted holiday shopping slump, many big retailers have resurrected their layaway programs. Because layaway allows you to set aside your holiday purchases and pay for them over time, it takes some of the sting out of larger items. Plus, the flexible payments are a great alternative to credit cards. Just remember to read the store’s policy carefully to make sure your treasures don’t end up back on the shelf.

8. Get a part-time job. With the holiday season just around the corner, many retailers are looking for part-time employees to help ease the shopping rush. If you’ve got extra time in your schedule, consider picking up a few hours a week at your favorite store; use the money you earn to help pay for gifts. The best part? Most stores offer employee discounts – another great way to cut costs.

9. Go generic. Thanksgiving dinner. Christmas dinner. The office party. The New Year’s Eve bash. During the holiday season, gifts aren’t the only things that can drain your bank account. Big family dinners can get pretty pricy, especially if you’re the one hosting the event. Cut your grocery bill by opting for generic ingredients instead of more expensive brand-name items. Or, make this year’s dinner a potluck and encourage guests to bring their favorite holiday fare.

Cutting a few costs and keeping an eye on your budget can help you get back into the holiday spirit. And remember: No matter what your financial situation this year, the holiday season is a time for enjoying time with your friends and family, not about dollars and cents.

Copyright © 2008 Reality Media Inc.

I think The Beatles said it best: “I read the news today, oh boy . . .”

“Oh boy” is right: Every talking head on TV is preaching economic gloom and doom and every day brings word of a new big company teetering on the brink of financial crisis. It’s scary stuff, to be sure – but, it’s important to remember that, despite opinions to the contrary, the sky is not falling. And, it’s even more important to keep a level head when it comes to your finances.

Take a deep breath, sit back, and read on for ten things you can do today to keep your money (and your peace of mind) intact:

1. Check up on your bank’s stability. What’s a four-letter word for financial security? FDIC. If your bank is protected by the FDIC, you can rest assured knowing that your money is safe, even in worst-case scenarios. If it’s not? Move it. Now. And remember: The FDIC insures up to $100,000 per person, which is sufficient for many Americans. But, if you’ve got a little more than that, see the next tip . . .

2. Spread your money around. If you’ve got more than $100,000, it’s a good idea to put your money into more than one bank to make sure you’re fully protected by the FDIC. That way, all of your funds are safe and sound – and drawing interest.

3. Pinch your pennies. Now is as good a time as any to start exercising a little more financial responsibility. Take a long, hard look at your spending habits and find a few places to cut costs: Dine at home instead of going to restaurants, drop that unused gym membership, or cut back on your entertainment budget. Save wherever you can, and use the extra money to pad your savings account.

4. Don’t pull your money out of the bank. Remember tip #1? As long as your bank is protected by the FDIC, your money is safe where it is. Keep calm and resist the urge to stuff your life savings into your mattress (which is NOT, by the way, insured by the FDIC).

5. Tune out and turn off. If you’re feeling stressed about the shape of today’s economy, do yourself a favor: Stop watching the news for a while. Go for a walk outside, read a book, or do something fun with your kids – watching hyped-up 24-hour coverage of the financial crisis of the day can be hazardous to your mental health.

6. Diversify. If you’ve got an investment portfolio, your first impulse at a time like this may be to sell, sell, sell while you still can. But, this knee-jerk reaction can be an unnecessary – and costly – mistake. A well-diversified portfolio is one of the best protections you can have against an unstable market; it’s best to stay the course and wait for the market to come back on its own. If you’ve already got a diversified portfolio, good for you, you’re one step ahead of the game. If you don’t talk to your financial advisor about how you can safeguard your investments.

7. Pay down your debt. In times of economic uncertainty, many credit card companies respond by jacking up your interest rates and whittling down your credit limit (especially if you’ve got a sketchy credit history), leaving you in a financial bind. If you have debt, make every effort to pay it off as soon as possible to avoid taking a serious hit in the wallet.

8. Consider getting a second job. One of the scariest things about a shaky economy is the prospect of being “downsized” right out of a job. If you feel a little uneasy about your job security, getting a part-time job may help out if times get really tough. Use your talents to widen your safety net: Are you a creative type? Offer freelance services, like illustration or writing. A sales whiz? Get a part-time position in retail. That extra money may be a lifesaver in a worst-case scenario.

9. Beef up your emergency fund. Or, start one. In any economy, it’s a good idea to have a few months’ salary stocked away for an emergency. In an uncertain economy, it’s essential. Cut expenses, use the money from that second job, or just take a bigger chunk out of your paycheck – it may sting a little, but it will be worth it if you need it.

And, finally:

10. Stay calm. This is crucial. Yes, things are scary right now; a bit of worry is to be expected. But, worrying too much can lead to clouded judgment and poor decision-making. Don’t do anything rash, stay on top of your financial situation, and calm down. You’ll be glad you did.

A clear head and a firm grasp on your own financial situation is the best protection in an uncertain economy. Keep your cool, and keep your money in the bank. And remember: Despite all of the bleak reports about the economy, many analysts say that it can only get better from here. Now that’s good news.

Copyright © 2008 Reality Media Inc.

Smoking . . . biting your fingernails . . . talking on your cell phone in traffic . . . misusing balance transfers?

When you think of bad habits, your money may not be the first thing that comes to mind. But, your spending and saving patterns can be just as unhealthy and hard to alter as your addiction to Ben and Jerry’s or your compulsion to text your best friend during rush hour. And, just like quitting smoking or going on a serious diet, taking control of your finances requires dedication and hard work.

If you find yourself setting a budget one week only to blow it all on a weekend shopping spree the next, it may be time to take stock of your financial habits and find out which ones need to be kicked for good:

Bad Habit #1: Abusing Balance Transfers

In theory, transferring your high-interest credit card debt to a new account with a low-to-nonexistent introductory rate is a great way to reduce the amount you owe and pay off your balance more quickly. But, in reality, a balance transfer can sometimes lead to more debt. If you use a balance transfer, make sure that you keep your original goal in mind: Getting rid of debt. Don’t let the low interest rate on your new card tempt you into a spending spree, and make sure you read the fine print on the terms of the new agreement.

Think about it: A credit card got you into this mess. Do you really trust another one to bail you out? A better – and safer – way to reduce your debt is to get a part-time job and use the paychecks to whittle away what you owe. Or, tighten your budget a little until you get your balance under control. And, once you pay off your credit card, stop using it. End of story.

Bad Habit #2: Not Setting a Budget

This is one of the worst – and most common – bad money habits. If you’re not setting a budget, you probably have no idea where your money is going. Taking the time to set a budget is one of the smartest ways to get a handle on exactly how you’re spending your money and where you can afford to tighten your belt a little.

It’s simple, really. Start with the total you make per month, subtract your living expenses like mortgage or rent, food, and utilities. And, don’t forget to budget for gas or transportation. After that, decide on an amount to put into savings and leave yourself a small allowance for entertainment and other “fun” expenses. But remember: To be successful, you have to stick to your budget once you set it. No excuses.

Bad Habit #3: Ignoring Your Credit Report

The information on your credit report is used in countless ways – from getting a good rate on a home mortgage to securing a new job. And, with identity theft becoming more and more common, it’s critical to scan your report for any errors.

According to federal law, you are eligible for a free credit report each year from the three major credit bureaus: Experian, TransUnion, and Equifax. It’s a good idea to request a copy from each and review it thoroughly. Not only does this give you the chance to dispute errors, taking the time to check up on your credit can also alert you to fraudulent activities, like an identity thief opening a credit card in your name.

Bad Habit #4: Not Starting an Emergency Fund

When it comes to setting up an emergency fund, it’s easy to procrastinate. After all, the prospect of setting aside three to six months of income can be pretty intimidating, especially if you’re starting from the ground up. But, we all have to start somewhere. Figure out how much you can save per month, and set that amount aside in an account that’s for emergencies only. And remember: Your emergency fund is separate from your savings account, so set aside enough in your budget to stock your savings and save for emergencies.

Your emergency fund should be enough to allow you to pay your basic living expenses – like housing, utilities, and groceries – for several months in a worst-case scenario. If you’re laid off or are unable to work because of an illness or injury, your emergency fund can help you make ends meet until you get back on your feet again. And, it’s important to remember that your emergency fund is for true emergencies: Don’t be tempted to blow the money you’ve saved. A new TV is not an emergency.

Bad Habit #5: Paying the Minimum

The key to financial independence is living debt-free – and you can’t do that if you’re simply paying the minimum balance on any existing credit cards. Minimum payments may seem like a more affordable way to pay large debts, but this strategy only benefits one person: Your credit card company. Carrying a large month-to-month balance means that you’ll be shelling out more in interest over the long haul.

Kick this habit by paying off your entire credit card balance every month. If you’ve racked up a pretty large amount in debt, sit down with your budget and figure out just how much you can afford to pay every month, and stick to that amount until your debt is paid off. You may have to skimp on things like going out to dinner, but you’ll feel great when you’re finally debt free.

Breaking these bad financial habits will take some hard work on your part – anyone who’s ever started a diet understands this. But, once you learn to change the way you think about your money, you’ll be on the road to financial independence and debt-free living.

Copyright © 2008 Reality Media Inc.

The kids are out of school. The temperature is rising. Flip-flops are your new footwear of choice. Summer has arrived, and, for millions of Americans, that means one thing: vacation. With gas prices going through the roof and air fares trailing close behind, you may find yourself wondering if your hopes of getting away from it all will ever get off the ground.

Travelers, take heart – even in a less-than-perfect economy, you can have that dream vacation without an accompanying financial nightmare. Here are 10 tips to help you plan an affordable getaway for the whole family:

1. Be flexible. If you’re fortunate enough to have a little wiggle room in your travel schedule, play around with different departure and arrival dates. Many airlines and hotels offer lower rates depending on the month or even the day of the week – which can add up to big savings for you.

2. Do a little comparison shopping. From hotel rooms to airfare, don’t take the first good rate you come across. Once you’ve found a bargain, do some research using price aggregator websites like Travelocity or Orbitz – you may find an even bigger bargain if you do your homework.

3. Look for hotel freebies. Many mid-priced hotels offer great, family-friendly deals, like complimentary breakfast or even free or reduced rates for children. Think about it: If you’ve got two kids, feeding them breakfast could cost around $20 a day – that means a savings of $100 a week in meals alone! Check out several hotel websites to find some money-saving incentives, and you’ll save a bundle.

4. Pass on the rental car insurance. For the most part, rental car insurance exists for one reason: To generate a healthy profit for car rental companies. Before you go away, give your own insurance agent a call: In the unlikely event of a vacation fender-bender, your insurance will probably cover the damages. Use the money you save to pay for gas, which brings us to our next tip. . .

5. Use the buddy system. GasBuddy.com, that is. GasBuddy is a site that searches for the lowest gas prices in a given city or ZIP code – a must when you’re traveling in an unfamiliar city, especially if your destination is known for tourism.

6. Clip coupons. Or download them, or pick them up from the hotel lobby. Pay a visit to your destination’s tourism office, or visit your hotel’s front desk – you can pick up some sweet deals on everything from theme park admission to dinner at a decent restaurant.

7. Avoid ATM fees. A dollar here, two dollars there – ATM fees are deceptively innocent, but, when added up over a week or so, they can pack a hefty punch. Try to get as much cash as you need before you leave for your trip. If you must visit a cash machine while you’re away, steer clear of ATMs at theme parks or in major tourist spots – chances are, you’ll end up paying double, or even triple the average fee.

8. Buy direct. Although the Internet is a virtual treasure trove of travel bargains, some of your best vacation deals may come directly from the hotel or airline itself. While it’s always a good idea to search online price comparison sites, it’s an even better idea to compare those rates to the ones offered directly from the airline or hotel. And, when booking a hotel room, don’t be shy about asking for a better rate: The worst that can happen is someone says “no,” but, you might be surprised to find that most hotels are willing to haggle a bit.

9. Consider a package deal. When you purchase a travel package, you lose a degree of flexibility in where you stay and for how long. But, in most cases, you’ll more than make up for the lack of choices with reduced rates on airline tickets, hotel rooms, and local attractions. Package deals are great for families who want to visit popular theme parks without dipping into the kids’ college funds to do so.

10. Pay cash. Don’t take a vacation from financial responsibility. There’s nothing wrong with bringing home a souvenir or two, but your credit card bill shouldn’t be your biggest reminder of your summer getaway. Be realistic about your vacation spending: If you want one dinner at a four-star restaurant, that’s okay, but try to balance a pricy night out with cheap eats the next day.

Whether you’re hitting the beach or off to do some big-city sightseeing, here’s to a wonderful, relaxing family vacation! With a little planning and a lot of travel savvy, your family can afford that vacation you’ve been dreaming of.

Solid Advice for a Shaky Economy

Recession. It’s a scary word that makes even the most fiscally responsible among us cast a nervous eye on our bank accounts. Even scarier, not everyone can even agree whether our economy is in a temporary slump or an all-out free fall. But, recession or not, you can take steps to ensure that you and your family are secure in a weak economy.

And, remember to stay calm. The worst thing you can do is make hasty, fear-based decisions. Take a deep breath and think rationally. It’s important to realize that, with a little preparation, you can be ready if and when a recession hits. You can’t control the economy, but you can control how you react to news of an impending recession.

Step One: Sharpen your Job Search Skills

One of the most frightening things about a recession is the possibility of losing your income when your company decides to cut costs. Nobody wants to think about being out of work, but there are things you can do right now to make sure that you won’t be completely caught off guard:

• Revise your résumé. If you’ve been out of the job market for a while, now is the time to give your résumé a makeover. Review it and add new, relevant work experience, skills, awards, and anything else that will make you stand out from the crowd if you need to start looking for a new job.

• Know your options. It doesn’t hurt to start looking at alternatives – spend a little time skimming through the want ads in your local paper, and check out job search websites like Monster.com or Careerbuilder.com. Find out who is hiring people to do what you do. If you see something that sounds intriguing, go ahead and apply. You never know – you may find your dream job. And, remember that some industries are more stable than others: Healthcare and education, for example, are not as dependant on the economy as the construction industry. Get creative and think about how your skills might transfer to a different field.

• Start networking. Consider joining a business networking group to expand your list of contacts – they say that when it comes to landing a job, it’s often all about who you know. Connections can come in handy if you’re faced with an unexpected layoff. Networking sites like LinkedIn.com and even FaceBook.com are great ways to stay connected to coworkers and business partners.

Remember to keep saving money, even if your job is secure: In a recession, raises and bonuses tend to be less than they are in a more stable economy.

Step Two: Beef up Your Emergency Fund

Experts recommend that you should have some extra cash saved up for emergencies like an injury or the unexpected loss of a job. Your emergency fund should allow you to cover your mortgage, bills, groceries, and other living expenses for 3-5 months. If you already have emergency savings, keep adding to it. If you don’t, start now:

• Pay yourself first. Even if you’re on a tight budget, make an effort to put something into savings every payday. Make some adjustments to your spending, like giving up restaurant meals or cutting your entertainment budget, and start funneling more of your income into savings.

• Think Interest. Put your emergency savings into an interest-bearing savings account or a money market account so you’ll earn some money on it while you save. But, make sure you don’t invest your emergency funds into anything that makes you pay a penalty for withdrawal, like an IRA – the whole point of having emergency savings is to have money when you need it.

• Restrict your access. If you aren’t careful, you may end up spending your emergency fund as fast as you put it away. To avoid using your emergency savings, consider putting the money into a separate account at a different bank. And, don’t carry an ATM or debit card that’s linked to that account.

Step Three: Don’t Spend That Stimulus Check

Even though Uncle Sam is sending us a little extra this year, that doesn’t mean you have to rush out and spend it. Instead of rushing to the mall and buying that flat-screen TV you’ve been eyeing, take a minute to think about other, more responsible ways you could use the money:

• Save it and forget it. It’s money you didn’t have before, so it should be pretty easy to pretend you never got it in the first place. Deposit it into your savings account or use it to pad your emergency fund. But, do it quickly – the longer you have that check, the more likely you are to spend it on something frivolous.

• Pay off debt. If you’ve got a car loan, a student loan, or credit card bills hanging over your head, this is a perfect opportunity to take a big bite out of your debt.

Step Four: Identify Sources of Extra Cash

Whether you want to add to your emergency fund or just pad your savings account, there are several things you can do to put a little extra cash in your pocket:

• Sell your stuff. Scour your storage spaces, purge your closets, and ransack your attic. If you haven’t worn it, used it, or thought about it in a decade, it’s time to let go. Have a garage sale, sell it on eBay, or take out a classified ad – put the extra money into your savings or your emergency fund.

• Get a second job or work overtime. What better way to impress the boss than to stay late or come in early to knock out a few projects? Not only will you show some initiative, you’ll also add to your bottom line. If you don’t get overtime, consider a part-time job on evenings or weekends – a little extra income never hurts.

You can’t prevent a recession, but you can prepare for one by making smarter financial choices. In any economy, learning to spend less, save more, and cut costs can pave the way to financial stability and peace of mind.

Copyright © 2008 Reality Media Inc.

(And how to avoid them)

They lurk menacingly in the checkout line at the grocery store; they beckon you with their near-irresistible calls of “super-sizing” or “limited time offers.”  Some are easy to spot from a distance, while others blend quietly into the background, pouncing at the last possible minute.   They’re money wasters, and they’re everywhere – sucking the cash out of your wallet and draining the funds from your debit card. 

How do you safeguard your hard-earned dollars from the menace of upgrades, fees, and just plain silly purchases?  With a little knowledge, you can protect yourself (and your bank account) from the most common money wasters out there:

1.      Impulse purchases.  The mother of all money wasters, impulse purchases are particularly dangerous because they seem so small and harmless . . . until you add them all up.  A magazine here, a DVD there; that pair of novelty sunglasses that you just had to have – all of these “little things” can wreak havoc on anyone’s bank account.  Resist the temptation.  In most cases, these “must haves” will be quickly forgotten. 

2.      Waste.  It’s pretty simple, really:  If you buy it, use it.  End of story.  Have leftovers for dinner, and bring home a doggie bag if you go out to eat.  Use all of your shampoo before rushing out to buy more.  And beware of bulk purchases:  A 10-gallon drum of mayonnaise for $30 may sound like a bargain, but unless you have a very large family (or a very serious love for mayonnaise) you’ll probably end up throwing most of it away.

3.      Fees and charges.  From credit cards to cell phones, fees and charges can chip away at your savings.  And, they’re not always easy to spot.  Read your monthly statements carefully, and don’t be afraid to ask questions or challenge a fee that seems unreasonable.  You can do your part by making sure that you stay on top of your bills:  Always pay on time, and don’t go over your limits on costly things like text messaging.

4.      Fast food.  Like most of us, you probably have a hectic schedule.  Hitting the drive-thru or ordering takeout on your lunch hour may seem like the solution, but it’s not cheap.  Take a little extra time to make a lunch for yourself, or take leftovers from last night’s dinner.  It’s easier on your wallet – and healthier.

5.      Product warranties.  Many big-box stores make their money selling you “product protection plans” or extended warranties.  Some of these plans can cost almost as much as the product itself and most people never use them.  Don’t let yourself be talked into paying for something you probably don’t need. 

6.      New Cars.  Sure, they smell nice – but you can save a ton of money by purchasing a car that’s one or two years old.  And, since the price is lower, you may even get a break on your insurance.  A reliable, used car is a smart investment.  If you really miss that intoxicating new car aroma, buy some air freshener.  You’ll still have plenty of money left over to put into your savings account.

7.      Credit Card Interest.  Credit card debt is a huge money waster, and the interest is a killer.  Pay off all of your existing credit card debt, and you could save thousands in the long run.  You may have to tighten your belt a little, but the joy of being debt-free will be worth it in the end.  Credit cards are acceptable for emergencies, but it’s critical that you pay the balance before your debt gets out of hand.

8.      Unused memberships.  You started 2008 with a mission:  you joined a gym with an Olympic-sized swimming pool, the latest equipment, a fancy snack bar, and a fancier price tag.  Getting in shape is an admirable goal, but you shouldn’t have to pay through the nose to tighten your abs.  Unless you’re a dedicated gym rat, try some workout videos, a jog through the park, or check out the fitness programs at your local community center instead. 

9.      Brand names.  A trip to the grocery store can be expensive, especially when you’re shelling out extra money to buy brand-name products.  Most store brands are just as good and cost a lot less.  Do you really need designer toilet paper?  Buying the generic version can save you a lot of money in the long run.

10.  Not saving.  This sounds like a no-brainer, but it’s true:  Most of us waste money simply because we don’t set funds aside in a savings account.  Start small – even $50 a paycheck can add up over a year.  And if your money’s in savings, chances are you won’t waste it things you don’t need.

The key to building wealth is making smart decisions about how to spend (and not spend) your money.  Avoid these common money wasters, and you’ll be one step closer to a financially stable future.