When it comes to safeguarding the environment, hybrid cars (vehicles that combine gasoline engines and rechargeable batteries) do have a positive impact. But how does owning one affect your wallet? While it may be too soon to tell, it seems that being green may cost more money than you'd expect.

Higher prices
The sticker prices for new hybrids average several thousand dollars higher than those for comparable cars with conventional engines. As a result, your initial out-of-pocket cost to purchase a hybrid can be significantly higher than for a conventional car. If you finance the purchase, that can translate into higher monthly loan payments or longer-term loans.

Tax credits offset the cost ... for now
The federal government offers a tax credit (up to $3,400) for purchasing a new hybrid vehicle; the amount of the credit you receive depends on the car's make and model. While this credit can at least partially offset a hybrid vehicle's higher purchase price, timing is everything: Once a car maker sells 60,000 hybrids (of any model), the credit for all that manufacturer's vehicles begins to phase out. At least one manufacturer (Toyota) has already exceeded the 60,000 mark.

The credit won't reduce your tax liability below zero and, if you're eligible for other credits, must be taken last in line. If the amount of the credit exceeds your tax liability, the difference generally can't be carried over to another year. And the credit won't reduce your alternative minimum tax (AMT) liability, if you're subject to it.

Saving at the pump
One of the biggest selling points for hybrid cars is their fuel economy--more miles per gallon, which means you'll save a bundle at the pump, right? Well, not always. It depends on how and where you drive. While you'll get good gas mileage, real-world Environmental Protection Agency (EPA) results indicate that hybrids don't always get the significantly better numbers claimed by manufacturers, especially if you're a low-mileage, short-trip urban driver. And fuel savings are a function of gas prices: The higher the price per gallon, the more (and the faster) you'll save. At lower gas prices, it takes longer to recoup your higher investment in the car.

Maintenance costs
Since maintaining a hybrid is essentially the same as maintaining a conventional car, these costs aren't a significant variable in the savings equation. However, hybrid car batteries can cost $1,000 to $3,000 or more. While they're covered by generous warranties (up to eight years), if you keep the car beyond the warranty, you might have to replace an expensive part.

Resale value
An important consideration in the cost-effectiveness equation is the resale value of the vehicle you purchase; if the car holds its value, it'll cost you less in the long term. Because hybrids are relatively new, the jury is still out in terms of whether they'll deliver greater relative resale values than their conventional counterparts. If they do, owning a hybrid may offer significant savings. However, hybrid technology is still improving, and this may adversely affect the resale value of the current models: Will a buyer want a used hybrid when new model hybrids may be more fuel efficient?

In the end, it's about more than money
As each of us motors from point to point, every gallon of gasoline consumed sends 19 pounds of carbon dioxide into the atmosphere, and carbon dioxide is linked to global warming.

In the final analysis, a hybrid car purchase isn't all about the dollars potentially saved. In fact, we have countless clients who own hybrid cars, and the least important consideration in their car-buying journey was cost. They ask us, "What's the sticker price of a clean environment?". Hybrid ownership is a badge of honor, a call to action for saving our Earth's natural resources. They are proud of their courage to make a difference.

As a result of their thoughtful purchases, our hybrid-driving friends may not be saving a ton of money, but they are steadily saving tons of greenhouse gases. They proudly take that fact to the bank.

Most people know that restaurants will give away a scoop of ice cream or a slice of pie to a birthday girl. But a free oil change from the local mechanic? Free movie rentals? A round of golf? Now we're talking!

It's Good to be You
Head on over to Slickdeals.net, one of our favorite sites for great shopping discounts, and you will find an entire bulletin board dedicated to free stuff you can only get on your special day. Hey, we're for anything that keeps more dollars in your bank account.

As America's housing market continues to crumble, clients regularly ask us, "Should I buy a home now?" And we give the same response...it depends.

Consider Your Time Horizon
How long do you plan to live in this house? One year? Twenty years? If you are planning to stick around for more than 7 years, then we suggest you ignore the short-term market bumps and just purchase the property. You are not in this to make a quick buck or to roll the dice on a fast market turnaround. Additionally, fixed rate mortgages are still historically low, and you may even have an opportunity to purchase a home at (or even below) its fair market value.

On the other hand, if you plan on living in this property for a year or two, with fingers crossed that the real estate jackpot is eighteen months away, then now is not a good time for you. Home prices continue to plummet and many experts agree there's no end in sight. Besides, your house is not a casino; it's not meant to satisfy your gambling streak and to entertain your ambitions of fame and fortune.

Indicators Indicate an Indication
As we've been writing about for a while now , the U.S. housing slump is real, and it's here to stay for a while. Just today, Standard & Poor's announced a drop in first quarter home prices from a year ago...the first year-over-year price drop in more than 15 years. S&P index committee chairman David Blitzer sums it up: "We still don't see anything that looks like a clear bottom. We're still headed down."

For golfers looking to improve their game, it can be useful to watch Tiger Woods. In the same way, investors can learn from the market's great money masters. Though you may not have their experience or resources, you can study the philosophies they used to develop your own investing approach.

Think like an owner, not like a renter
This philosophy is as commonsense as the investor who is famous for following it: Warren Buffett. Any list of successful investors includes the chairman of Berkshire Hathaway, and he's typically at the top of the list. The "Oracle of Omaha" is well-known for his down-to-earth approach to sizing up investments.

Buffett invests in businesses, not stocks, and prefers those with consistent earning power and little or no debt. He also looks at whether a company has an outstanding management team. Buffett attaches little importance to the market's day-to-day fluctuations; he has been quoted as saying that he wouldn't care if the market shut down completely for several years. However, he does pay attention to what he pays for a stock; as a value investor, he may watch a company for years before deciding to buy. And when he buys, he plans to hang on to his investment for a long time.

Don't forget that markets can be irrational
Like Buffett, George Soros feels markets can be irrational. However, rather than dismissing their ups and downs, the founder of the legendary Quantum Fund made his reputation by exploiting macroeconomic movements. He once made more than $1 billion overnight when his hedge fund speculated on the devaluation of the British pound (he no longer actively manages the fund).

Soros believes in capitalizing on investing bubbles that occur when investors feed off one another's emotions. He is known for making big bets on global investments, attempting to profit from both upward and downward market movements. Such a strategy can be tricky for an individual investor to follow. However, even a buy-and-hold investor should remember that market events may have as much to do with investor psychology as with fundamentals. Whether or not you apply Soros's philosophy in the same way he does, that can be a valuable lesson to remember.

Use what you know; know what you buy
During his 13-year tenure at Fidelity Investments' Magellan Fund, Peter Lynch was one of the most successful mutual fund portfolio managers in history. He subsequently wrote two best-selling books for individual investors.

If you want to follow Lynch's approach, stay on the alert for investing ideas drawn from your own experiences. His "buy what you know" mantra asks you to examine your job, acquaintances, shopping habits, hobbies, and geographic location. Because of your in-depth understanding of these close-to-home subjects, you may be able to spot emerging companies before they attract attention from Wall Street. However, simply identifying a company you feel has great potential is only the first step. As with the other great investors, Lynch did thorough research into a company's fundamentals to decide whether it was a good investment.

Lynch is a believer in finding unknown companies with the potential to become what he called "ten-baggers" (companies that grow to 10 times their original price), preferably businesses that are fairly easy to understand.

Make sure the reward is worth the risk
Perhaps the best-known bond fund manager in the country, PIMCO's Bill Gross makes sure that if he takes greater risk--for example, by buying longer-term or emerging-market bonds--the return he expects is high enough to justify that additional risk. If it isn't, he says, stick with lower returns from a more reliable investment. Because bonds have historically returned less than stocks and therefore suffer more from high inflation, he also focuses on maximizing real return (an investment's return after inflation is taken into account).

Choose a sound strategy and stick to it
Even though all these investors seem to have different approaches, in practice they're more similar than they might appear. Each of their investing decisions has specific, well-thought-out reasons behind it. They rely on their own strategic thinking rather than blindly following market trends. And they understand their chosen investing disciplines well enough to apply them through good times and bad.

You Are Not Alone
By working with a qualified financial advisor, you can find the strategy that matches your financial goals, time horizon, risk tolerance, and investing style.

If you are in your 20s or 30s, chances are you have tried to hire a financial advisor but were turned down because you didn't meet the "minimum asset threshold"...in other words, you didn't have $1 million to invest. So then you wonder, as a meager young professional, how can you get affordable, quality advice?

Enter the Fee-Only Planner
Amanda over at Young and Broke writes about a recent article in the Wall Street Journal which details the financial industry's recent shift towards working with clients in their 20s and 30s.

From the Wall Street Journal:

"Many people in this age group, launching careers and starting families, are looking for a wide range of financial advice. Among other things, they need help investing in their first 401(k) plans, saving for a house, understanding insurance needs and managing debt and budgets. For savers with modest assets...a fee-only planner is generally the best match. These planners only sell their time...and don't pitch products tied to a particular company...it minimizes the potential conflicts."

What Should You Do?
First, recognize that your concerns about a 401k, Roth IRA, Credit Card debt, and Emergency Savings are very common. Nearly all young professionals go through a period of anxiety and self-doubt as these critical financial components are established and funded.

Finding the Best Advisor
A good financial advisor will sit down with you for a free introductory meeting in order to learn more about your goals and objectives. If you are unable to find an advisor who will help you (and your meager assets), then search for a Fee-Only planner who is affiliated with the National Association of Personal Financial Planners (NAPFA). Many work on an hourly basis and pledge a fiduciary duty to clients. NAPFA advisors are held to the highest ethical standards in the financial planning industry.

A central investing principle states that your portfolio's asset allocation should depend upon your time horizon, which is the length of time remaining until you will need to cash in your portfolio's assets. But how exactly you distribute your money between stocks, bonds, and cash? And how do risk tolerance and time frame affect your portfolio over time? And what if you want to totally avoid the hassle of ongoing rebalancing for your individual stocks, bonds, and mutual funds?

Set It and Forget It
A lifecycle fund--sometimes called a target fund--attempts to tailor your investing strategy to your time frame for a particular goal, such as retirement.

Let's say you plan to retire in 2040. You might choose a fund with a target maturity date of 2040. Between now and then, the fund will gradually shift its asset allocation between stocks, bonds, and cash. The closer the target date, the more conservatively (less stocks, more bonds) the fund would invest. A lifecycle fund with a target maturity date of 2040 would be likely to have a higher percentage of its assets in stocks than a fund targeted at 2010.

Advantages of Lifecycle Funds
Asset allocation is critical to your long-term returns, but if the idea of regularly rebalancing your retirement portfolio prompts an anxiety attack, then a lifecycle fund can help you simplify the process. The automatic asset allocation of a lifecycle fund may give you a better chance of achieving a long-term goal than if you tried to go it alone without investing experience or good financial advice. (Note: Diversification alone does not guarantee a profit or insure against a loss.)

Disadvantages of Lifecycle Funds
If you have other investments outside of the lifecycle fund, you may need help from a financial professional to achieve an appropriate overall asset allocation for your portfolio. Additionally, a lifecycle fund does not consider your individual financial situation, including tax concerns.

Don't Be Fooled By Look-Alikes
Just because a lifecycle fund targets a particular time frame doesn't mean your choice is a slam dunk. Even if they have the same target maturity date, lifecycle funds from various companies may have different approaches to achieving their goals. Most take a "fund of funds" approach, investing in an assortment of stock or bond funds from the same fund family. However, the number of funds used can vary widely.

An aggressive allocation for one portfolio with a 2040 target date may have a significantly greater percentage of stocks than another. Another important difference among funds is the way asset allocations are shifted over time, particularly after the target date has been reached. Some reach their most conservative allocation at the target date and then keep those percentages static. Others continue to become more conservative after the target date is reached.

You Can Do It!
With lifecycle funds, it's particularly important to take a long-term perspective. You do not want to jump in and out of the fund in response to daily market changes. Lifecycle funds' objectives are long-term, and your short-term selling typically undercuts the overall strategy.

Check your assumptions
Just because a lifecycle fund has a certain target date doesn't mean it's necessarily the right choice for you. People are living longer, and you may need a more aggressive allocation to provide a sufficient nest egg. A qualified financial professional can help you estimate your needs and gauge what strategy is most likely to work best for you.

Do you ever wonder why supermarkets have "loyalty" card programs? You know, the little card you swipe to receive advertised specials. Your grocer's corporate office is actually compiling a comprehensive profile based upon your shopping habits. But what exactly are they doing with this profile?

You Read My Mind
Yesterday I received an email from Safeway, a popular grocery chain here in Northern California. Usually their emails don't catch my attention, but this one showed a list of items currently on sale...and every item listed was one that I purchase on a regular basis.

But how could Safeway know all this information about me?

I looked closer at the disclaimer at the bottom of the email...

The Profitable Business of Customer Information
Supermarkets are in a fight for survival; they have razor-thin profit margins and are constantly seeking methods to cut costs and increase revenues. As a result, stores are seeking alternative measures to generate income. Selling their customers' data is merely another revenue stream.

You've Got What They Want
Advertisers, retailers, and even insurance companies have a vested interest in your shopping cart. As reported by WorldDailyNet, if you regularly buy adult diapers, for example, you may be tagged as someone who has a bladder-control problem. Experts argue that this information could then be sold to the highest insurance bidder. As a result, your insurance premiums could be adjusted upward to absorb this increased health risk.

Consumers Against Supermarket Privacy Invasion And Numbering (CASPIAN) argues that the entire concept of "rewarding" certain shoppers is wrong in its entirety. They go on to say that these loyalty programs are nothing more than "coercion and strong-arm tactics". In other words, they say: "If you resist you'll pay a price".

The Future of Loyalty
Despite the consumer-group outrage, it doesn't appear that loyalty cards are going away anytime soon. In fact, it appears quite the opposite. Drug stores, electronics retailers, airlines, office supply stores, hotels, car rental companies, and even banks have joined the party. They all want your name, address, and to find patterns within your seemingly-random shopping habits.

Join the Dialog
A public relations battle is underway, and consumer groups can certainly use more grass roots involvement. If you are interested in learning about the worst corporate offenders, as well as information on how to participate, you can "Join the Fight" with CASPIAN.

You pull into the gas station, reach into your wallet, swipe your plastic, then squeeze the handle. And you flinch...$3.30 per gallon!? That can't be right. When did this happen?

As consumer outrage continues to grow, journalists, pundits, and political cartoonists are piling on. Sometimes you have to step back and release a little steam. We don't want you blowing mental gaskets. So here are our favorite satirical pokes at the nation's current gasoline crunch:

Open the newspaper or turn on the TV, and you're bound to see a recurring stock market theme: DOW SETS NEW RECORD! S&P AT ALL-TIME HIGH! So you ask yourself, "What the heck is going on?" Here's the scoop...analysts, commentators, and equity investors are beside themselves with euphoria as the U.S. stock market continues its climb to uncharted altitudes, and this market is creating a lot of wealth for those who are along for the ride.

Keep it in Context
Even though the U.S. stock market is rising to record levels, these statistics are not the end-all-be-all measures of our nation's financial status. Let's not forget the other (currently less favorable) economic indicators and their effects on our economy:

• Consumers are saddled with enormous levels of revolving debt
  
• Real wage growth is stagnant
• Personal savings rates are at 70-year lows
• Home-foreclosure rates are accelerating
  
• Gasoline prices are at 25-year highs
• Our nation is bogged down in a costly, unpopular war
• Health care & college tuition costs are easily outpacing inflation

This all adds up to a perfect storm of reduced consumer spending. In other words, the amount of disposable income the average American has available to spend on products and services is quickly declining beyond expectations...just ask Wal-Mart and Gap Inc.

Some might dismiss these consumer statistics as insignificant, particularly since corporate profits remain strong. But let's not forget that consumer spending accounts for two-thirds of our nation's Gross Domestic Product (or GDP). GDP is one of the ways we measure the size of the U.S. economy. So when consumer spending slows, guess what? You got it...the U.S. economy contracts. This contraction is an indicator of negative economic growth, also known as recession.

Now before you go running outside to see if the sky is falling, please note that we are not predicting a massive downturn in U.S. stock market stability. We are, however, suggesting that the national economic picture may not be as rosy as pundits, commentators, and Wall Street experts would have you to believe.

Stay Focused...and Cautious
As investing sage Warren Buffett once said: "Be fearful when others are greedy and greedy when others are fearful." With investors now seeing dollars signs everywhere, market greed is spreading like wildfire. Buffett's wise words urge you to remain prudent and to go forward with your eyes wide open, particularly as the ever-hungry market mavens continue to beat the drums of higher...higher...higher.

Where Does the Market Typically Go After a New High?
Mark Arbeter, Chief Technical Strategist at Standard & Poor's chimes in on this point:

"If history can serve as a guide...we will likely see sub-par price performance in the first month following the setting of a new high, and then find above-average price appreciation in the three and six months after. In addition, the next market top usually occurred around three years after the setting of a record high."

Once again, do not take Mr. Arbeter's words as the gospel. He may be right...he may be wrong. But nobody--and we mean nobody--knows at what levels our stock market will be one, three, or ten months from now...and if they did, trust us, they wouldn't tell you or anybody else!

So What Do You Do Now?
Carry on business as if it's just another day. Continue your regular contributions to a 401k plan. Continue buying shares of an index mutual fund within your Roth IRA. Continue practicing intelligent spending habits.

There is no reason to lose your head and begin taking unnecessary risk when you've already developed a plan to succeed. Be patient, and be smart.

I am consistently asked "Damon, how do I become a millionaire?" I used to answer with "Get a high-paying job and save wisely". And let's be honest, these elements are vital to the financial freedom of millions. But as I thought more about the question, and learned more about financial markets, I then came to the conclusion that wise investments brought wealth (See: Google's stock price). But now, on the brink of opening our first financial-planning office, and after speaking with audiences around the country, I now firmly believe that the answer to the question is simply...Passion.

Okay. Now let's be real. Passion alone will not necessarily attain one's dreams of wealth and financial independence. Many people are passionate about many things (i.e. Designer shoes, Paris Hilton's love life, and the 1972 Miami Dolphins) but this doesn't necessarily spell success.

Opportunities for personal growth exist for most Americans, but they will not all succeed. Other key traits that we constantly observe with our wealthier clients include determination, insight, and a strong belief in oneself. SmartMoney.com recently wrote about an interesting group of people it calls The $5 Million Club, and the key traits listed above can be found in every profile.

So, try this. For a moment, forget about money. Just think about what makes your desires burn? What would you love to spend the rest of your days doing if you weren’t pre-occupied with a pay check? Would you want to:

• Play the concert piano?
• Sail the open seas?
• Volunteer at the local community center?
• Teach our nation's youth?

From our observations, problems arise when individuals reverse this cycle and instead choose to focus on money. This order is unnatural and pre-mature, particularly since money can create such an insatiable appetite for more. What if instead of focusing on money, you instead decided to pursue your dreams?

Imagine the personal happiness and success you will achieve when you actually love what you do.

So now, when people ask me, "Damon, how do I become a millionaire?", I respond with one word: Passion. Passion is how you let go of the fear and greed, and ultimately, how you become “wealthy”. The funny thing is, that with passion, you will gain so much joy from the people, places, and events along the way, that you feel wealthy whether you have a million bucks or not. And that’s a beautiful thing.

One of the most common questions we get is, "How much money will I need for retirement?" This is a difficult question to answer because calculating your retirement needs involves making assumptions about the return you'll earn on your portfolio. Typically, rates of return are based on historical average returns for various types of investments. It's also necessary to estimate how long you'll need income after you retire. Whether you are on track to meet your goals depends in part on the accuracy of all these assumptions.

Question your assumptions
It might be time to revisit your retirement calculations. "Past performance is no guarantee of future results" has always been true, but we usually begun our questioning by deciding whether stocks will match the returns they have had in the past. It's not unusual to see forecasts for long-term stock returns that are 3 percentage points lower than the 8% to 10% figure often used to plan portfolios. That may not sound like much, but even a 1% difference can be very costly over time. For example, getting a 4% real return on $100,000 over 20 years would earn you roughly $50,000 less than a 5% return.

Review your asset allocation
If returns for each asset class in your portfolio turn out to be lower than you've projected, you may need more in your retirement kitty to give you the income you've been planning on after retirement. To try to increase the nest egg available to you at retirement, you may want to reconsider your overall asset allocation.

Remember, diversification doesn't ensure a profit or guarantee against a loss; what it does do is give you more options for balancing risk and potential rewards.

Consider your income needs projections
People are living longer than they used to, which means your nest egg might also need to last longer. Decide if your spending estimates for retirement are realistic. Reducing the annual percentage of your savings you plan to withdraw to use as income after you retire will increase your nest egg's longevity. (However, remember that if your savings are in a traditional IRA or employer-sponsored retirement plan, you'll be required to take minimum distributions each year once you turn 70.)

Another way to address your projected income needs is to consider investments that can provide a lifetime income stream.

Pay attention to expenses and taxes
If investment returns sag, costs and taxes will have greater impact. Pay attention to the tax efficiency of your investments as well as their returns. If you actively trade stocks, be aware of trading costs. With mutual funds, understand the breakpoints that can help minimize sales charges the more you invest; also, check out a fund's expense ratios and fees.

If you're about to graduate, or even considering changing jobs, then you're not alone. In fact, few people today stay with one employer until retirement. You may be looking to make more money or simply seeking greater career opportunities. Or, you may be forced to look for new employment if your company restructures. Whatever the reason, you'll eventually be faced with an important decision: When you receive an offer, should you take it? You can find the job that's right for you by following a few sensible steps.

How does the salary offer stack up?
What if the salary you've been offered is less than you expected? First, find out how frequently you can expect performance reviews and/or pay increases. Expect the company to increase your salary at least annually. To fully evaluate the salary being offered, compare it with the average pay of other professionals working in the same field. You can do this by talking to others who hold similar jobs, calling a recruiter (i.e., a headhunter), doing research at your local library or on the Internet (Salary.com has a nifty Salary Wizard). The Bureau of Labor Statistics is also a good source for this information, although it may not be as up-to-date as other resources.

Bonuses and other benefits
Next, ask about bonuses, commissions, and profit-sharing plans that can increase your total income. Find out what benefits the company offers and how much of the cost you'll bear as an employee. Do not overlook the value of good employee benefits! They can add the equivalent of thousands of dollars to your base pay. Ask to look over the benefits package available to new employees. Also, find out what opportunities exist for you to move up in the company. This includes determining what the company's goals are and the type of employee that the company values.

Personal and professional consequences
Will you be better off financially if you take the job? Will you work a lot of overtime, and is the scheduling somewhat flexible? Must you travel extensively? Consider the related costs of taking the job, including the cost of transportation, new clothes, a cell phone, increased day-care expenses, and the cost of your partner leaving his/her job if you are required to relocate. Also, take a look at the company's work environment. You may be getting a good salary and great benefits, but you may still be unhappy if the work environment doesn't suit you.

Try to meet your future co-workers and see if there's a personality match. You'll be spending a lot close time with these folks...make sure your 40+ hours on the job will be survivable. It may also be helpful to learn a little something about the company's key executives and to read a copy of the organization's mission statement.

Deciding whether to accept the job offer
You've spent a lot of time and energy researching and evaluating a potential job, but the hardest part is yet to come: Now that you have received a job offer, you must decide whether to accept it. Review the information you've gathered. Think back to the interview, paying close attention to your feelings and intuition about the company, the position, and the people you came in contact with. Consider not only the salary and benefits you've been offered, but also the future opportunities you might expect with the company. How strong is the company financially, and is it part of a growing industry? Decide if you would be happy and excited working there. If you're having trouble making a decision, make a list of the pros and cons. It may soon become clear whether the positives outweigh the negatives, or vice versa.

Negotiating a better offer
Sometimes you really want the job you've been offered, but you find the salary, benefits, or hours unfavorable. In this case, it's time to negotiate. You may be reluctant to negotiate because you fear that the company will take back the job offer. But if you truly want the job (and simply find the offer unacceptable) you should absolutely negotiate for a better offer. Don't just walk away from a great opportunity without trying. The first step in negotiating is to tell your potential employer specifically what it is that you want. State the amount of money you want or the exact hours you wish to work. Make it clear that if the company accepts your terms, you are willing and able to accept its offer immediately.

What happens next? It's possible that the company will accept your counteroffer. Or, the company may reject it, because either company policy does not allow negotiation or the company is unwilling to move from its original offer. The company may make you a second offer, typically a compromise between its first offer and your counteroffer. In either case, the ball is back in your court. If you still can't decide whether to take the job, ask for a day or two to think about it. Take your time. Accepting a new job can be a major career move.

Ever since you could walk & talk, you've heard the same advice from your parents, "Stay out of debt!" And each of us has taken this "wisdom" to the farthest degree and apply this concept to every dollar owed to all lenders.

Debt, Debt, Go Away!
The problem is that there are actually two kinds of debt: good and bad. Generally, bad debt includes credit cards, new-car loans, and personal loans. On the other hand, good debt covers student loans, used-car loans, and home mortgages.

Good debt, or as we call it here "Sailing Debt", is actually an investment in your education, career, and family. Without the presence of Sailing Debt--and the resources that it provides--you would be severely set back in the pursuit of your needs.

The Prepay Dilemma
You probably think it's always a good idea to pay off debt early if you have the resources to do so. However, this is not always best. Good debt often has repayment terms or interest rates so low, that you can use the "pay off" money in other ways to generate a better return.

Disadvantages of Paying Off Mortgage Early
Negative factors to consider include:

• Prepaying your loans means your funds are not available for other purposes. Although you are building equity, you are reducing your liquidity. If an unexpected investment opportunity were to come up or you suddenly had a financial emergency, you might not have the cash available to deal with the situation. Additionally, an investment opportunity could earn you more than the amount of interest you save by prepaying.

• In some instances, a lender may charge a prepayment penalty. In such cases, you must calculate whether the amount you save via prepaying the loan will exceed the penalty amount. Prepayment penalties can also be "hidden" in the method of interest calculation. A special consideration in mortgage-loan contracts (called the Rule of 78s) allows lenders to charge more interest in the early stages of a loan. This interest is not refunded if you repay the loan early.

• Prepayment does not change your obligation to make regular monthly payments. If you send in double payments for three months, you are still required to make a regular payment the next month. Be careful not to prepay so much that you can't afford your regular monthly payment.
• If you prepay your home mortgage, you can lose a valuable tax deduction.

But Also a Major Advantage
Real estate loans are amortized, and, as a result, much more of your monthly payment is applied toward interest on the loan at the beginning of the loan's term, while the bulk of the principal on the loan is paid toward the end. Paying off the loan early (either using a lump-sum payment or paying a little extra every month) will quickly decrease the principal balance owed on the loan, build up "equity" more quickly, and shorten the term of the loan. The result is that you'll save a great deal on the amount of interest you ultimately pay on the loan...this interest saved could equal tens of thousands of dollars!

How Do I Decide What to Do?
At the end of the day, the decision ultimately depends upon your own temperament, risk tolerance, and debt-comfort-level. If you're losing sleep at night because you owe money to a lender, then you may be better off paying down your mortgage early. On the other hand, if you don't mind maintaining a mortgage for years down the road, then you may want to consider alternative options with the extra cash in the bank to make some other moves.

A qualified financial planner can assist you in simulating the various outcomes and scenarios that are available for your unique situation.

Some of the most common questions that we continue to receive relate to your selection of stock brokers, insurance companies, and savings accounts. Today we'll tackle the last point...how exactly do you find the best place to stash your savings? In two words: Go online.

Selecting the best place for your short-term money
Over at Money, Matter, and More Musings, Golbguru has an informative post detailing what he looks for in a savings account:

• Easy synchronization with other bank accounts
• High interest rates
• No fees
• FDIC insured

But what is "FDIC Insured"? And how much interest is acceptable?
If you feel as though you're still kind of lost with the terminology and concepts, then you need a to check out Bankrate.com, one of the most trusted financial sites on the Web. They provide consumer tips, definitions of terms, and even real-time rates for savings accounts, credit cards, and mortgage loans.

Mama used to say
Of course, slick marketing pages and fancy websites are one thing...but word-of-mouth from trusted people is usually the most effective form of endorsement. So be sure to ask your friends and family members about their experiences with various banks and credit unions. You may be shocked to learn just how easy it is to earn an impressive 5% interest rate on the dollars that are currently asleep in your checking account.

CNN/Money is reporting on the enormous "foreclosure bargain-hunting" going on these days. As the massive number of former homeowners continues to grow, many companies are making hay off of an unfortunate national trend.

Auction houses such as Hudson & Marshall and Williams & Williams are currently selling thousands of foreclosed properties--for pennies on the dollar--in nearly every state.

Of course, these regional auction houses will be outdone by the big boys. Where ever there's a national treasure hunt taking place, the Big Search sharks are never far behind. Yahoo and Google (thanks, Jonathan) are circling the sinking homeowner(ship), each recently unveiling shiny new foreclosure search engines. We'll bet you the home-equity value of an interest-only-ARM (which by the way is zero) that MSN and Ask.com aren't far behind.

Credit cards can be used to pay for nearly everything these days--groceries, a state-of-the-art home entertainment system, even an income tax bill to Uncle Sam. And gone are the days when you charged everything to the sole credit card in your wallet. Now there's likely to be a bunch of cards jockeying for position--everything from traditional credit cards, travel & entertainment cards, merchant cards...and let's not forget the ever-increasing array of reward cards, which promise airline miles, cash rebates, merchant discounts, even contributions to a 529 college savings plan.

But this convenience comes at a price. Unless the full balance is paid each month, the credit card issuer can legally assess double-digit interest on the entire monthly balance--even the paid portion. According to the American Bankers Association, a nonprofit banking trade association, the number of consumers who are past due on their credit card bills hit a record high in the fourth quarter of last year. And the Federal Reserve recently reported that consumers increased their credit card spending in the early months of 2007.

Wading through credit card gimmicks can be tricky. For example, when a credit card issuer states that you have been "pre-approved" for a card, it doesn't mean that a credit card will arrive in the mail automatically. Instead, it only means that the issuer thinks you are a credit-worthy candidate. The credit card will arrive in the mail only after the issuer has satisfactorily reviewed the information in your credit application.

For a more in-depth analysis of various credit card offers, we highly recommend several blogs to you from around the Web. Some of our advisors' favorite blogs are: MyMoneyBlog, The Simple Dollar, Young and Broke, Get Rich Slowly, and Generation X Finance.

Keep in mind, these external blogs are a wonderful resource to get your financial mind churning. As with any information, we encourage you to seek additional sources of information. Remember, nobody cares as much about your money as you do.

Go out into your yard and dig a big hole. Every month, throw $50 into it, but don't take any money out until you're ready to buy a house, send your child to college, or retire.

It sounds a little crazy, doesn't it? But that's what investing without setting goals is like. If you're lucky, you may end up with enough money to meet your needs, but you have no way to know for sure.

How do you set investment goals?
Sit down, and define your dreams for the future. If you are married or in a long-term relationship, spend some time together discussing your joint and individual goals. You can do this on your own or with the help of a financial advisor. For this exercise to be most effective, you should be as specific as possible. For instance, you know you want to retire, but when? You know you want to send your child to college, but to an Ivy League school or to the community college down the street?

You'll end up with a list of goals. Some of these goals will be long term (more than 15 years), some will be short term (5 years or less), and some will be intermediate (between 5 and 15 years to plan). You can then decide how much money you'll need to accumulate and which investments can best help you meet your goals.

Looking forward to retirement
Retirement may seem a long way off, but it's never too early to start planning--especially if you want retirement to be the good life you imagine.

Here are some points to keep in mind as you set specific retirement investment goals:

• Determine how much money you'll need in retirement: We generally advise that you'll need about 75 to 85 percent of your current income to maintain your standard of living
• Plan for a long life: According to life expectancy charts, you can expect to live for 15 to 20 years past retirement, assuming you retire at age 65
• Think about how much time you have until retirement, then invest accordingly: For instance, if retirement is a long way off and you can handle some risk, we recommend investing in stock or equity mutual funds which, although more volatile, offer a higher potential for long-term return than do more conservative investments
• Consider how inflation will affect your retirement savings: When determining how much you'll need to save for retirement, don't forget that the higher the cost of living, the lower your real rate of return on your investment dollars

Facing the truth about college savings
Perhaps you faced the ugly truth the day your child was born. Or maybe it hit you when your child started first grade: You only have so much time to save for college. In fact, for many people, saving for college is an intermediate-term goal--if you start saving when your child is in elementary school, you'll have 10 to 15 years to build your college fund. Once again, the earlier you start the better. The more time you have before you need the money, the greater chance you have to build a substantial college fund due to compounding. With a longer investment time frame and a tolerance for some risk, you might also be willing to put some of your money into investments that offer a higher potential for growth.

Your financial advisor and you should also seriously consider these points as well:

• Estimates of the average future cost of tuition at two-year and four-year public and private colleges and universities are widely available. Note: Your financial advisor should be able to estimate the present value (today's cost) of your child's future education, based upon projected inflation rates and expected rates of returns for your college-fund investments)
  
• Research financial aid packages that can help offset part of the cost of college: Although there's no guarantee your child will receive financial aid, at least you'll know what kind of help is available in case you need it
• Look into state-sponsored tuition plans that put your money into investments tailored to your financial needs and time frame: For instance, most of your dollars may be allocated to growth investments initially, then later as your child approaches college, into more conservative investments to conserve principal
• Think about how you might resolve conflicts between goals: For instance, if you need to save for your child's education and your own retirement at the same time, how will you do it?

Investing for something big
At some point, you'll probably want to buy a home, a car, or the 30-foot fishing boat that you've always wanted. Although they're hardly impulse items, large purchases are usually not something for which you plan far in advance--one to five years is a common time frame.

Because you don't have much time to invest, you'll have to budget your investment dollars wisely. Rather than choosing growth investments, you may want to put your money into less volatile, highly liquid investments that have some potential for growth, but that offer you quick and easy access to your money should you need it.

Speaking of investing for growth, one of our favorite bloggers, J.D. over at Get Rich Slowly, has a wonderful analysis of what he calls the "Three Enemies of Growth". His article is certainly worth a read for anyone interested in overcoming the most common obstacles for savers and investors.

At some point in your life, you'll probably be faced with the question of whether you need life insurance. Life insurance is a way to protect your loved ones financially after you die (and your income stops). The answer to whether you need life insurance depends on your personal and financial circumstances.

Should you buy life insurance?
You should probably consider buying life insurance if any one of the following is true:

• You are married and your spouse depends on your income
• You have children
• You have an aging parent or disabled relative who depends on you for support
• Your retirement savings and pension won't be enough for your spouse to live on
• You have a large estate and expect to owe estate taxes
• You own a business, especially if you have a partner
• You have a substantial joint financial obligation such as a personal loan for which another person would be legally responsible after your death

In all of these cases, the proceeds from an insurance policy can help your loved ones continue to manage financially during the difficult weeks, months, and years after your death. The proceeds can also be used to meet funeral and other final expenses, which can run into thousands of dollars.

If you're still unsure about whether you should buy life insurance, a good question to ask yourself is: If I died today with no life insurance, would my family need to make substantial financial sacrifices and give up the lifestyle to which they've become accustomed in order to meet their financial obligations (e.g., car payments, mortgage, college tuition)?

If you need life insurance, don't delay
Once you decide you need life insurance, don't put off buying it. Although no one wants to think about and plan for his or her own death, you don't want to make the mistake of waiting until it's too late.

Periodically review your coverage
Once you purchase a life insurance policy, make sure to periodically review your coverage--especially when you have a significant life event (e.g., birth of a child, death of a family member)--and make sure that it adequately meets your insurance needs. The most common mistake that people make is to be under-insured. For example, if a portion of your life insurance proceeds are to be earmarked for your child's college education, the more children you have, the more life insurance you'll need. But it's also possible to be over-insured, and that's a mistake, too--the extra money you spend on premiums could be used for other things. If you need help reviewing your coverage, contact your insurance agent or broker.

What about life insurance for my child?
As described above, life insurance is intended to provide a safety net for the policyholder's dependents. In other words, you must ask yourself, "Is anyone dependent upon my child for their financial well being?" Probably not. And although some companies (insurance agencies, no doubt) will tell you differently, there is no financial basis for purchasing a life insurance policy for a healthy child. The money you would otherwise spend on premiums are better served in a college fund such as a 529 Plan or Coverdell Savings Account.

Similarly, don't let the insurance agent convince you that your newborn baby deserves a policy of his/her own either. The same principle applies here. In the unfortunate event that something does happen to your infant, it will not materially affect any dependents of the child (because there are none). So once again, baby life insurance is not a prudent financial move.

Below are summaries of some basic principles you should understand when evaluating an investment opportunity or making an investment decision. Rest assured, this is not rocket science. In fact, you'll see that the most important principle on which to base your investment education is simply good common sense.You've decided to start investing. If you've had little or no experience, you're probably apprehensive about how to begin. Even after you've found a trusted financial advisor, it's wise to educate yourself, so you can evaluate his or her advice and ask good questions. The better you understand the advice you get, the more comfortable you will be with the course you've chosen.

Don't be intimidated by jargon
Don't worry if you can't understand the experts in the financial media right away. Much of what they say is jargon that is actually less complicated than it sounds. You'll learn it soon enough, and there is no reason to wait to invest until you know everything.

IRAs hold investments--they aren't investments themselves
One of the most common questions we answer is rooted in a key source of confusion that throws many new investors off: If you have an individual retirement account (IRA), a 401(k), or any other retirement plan, you should recognize the distinction between that account or plan itself and the actual investments you own within that account or plan. Your IRA or 401(k) is just a tax-advantaged container that holds your investments. Many consumers are often become confused when this distinction is not emphasized (i.e. You cannot buy $1000 worth of an IRA; you can buy $1000 worth of a mutual fund that you hold within an IRA).

Understand stocks, mutual funds, and bonds
Almost every portfolio contains these kinds of assets.

If you buy stock (or a stock mutual fund), you are literally buying pieces of companies from an existing owner who wants to sell. You become an owner, or shareholder, of the company. As such, you take a stake in the company's future. If the company prospers, there's no limit to how much your share can increase in value. If the company fails, you can lose every dollar of your investment.

If you buy bonds, you're lending money to the company (or governmental body) that issued the bonds. You become a creditor, not an owner, of the bond issuer. The bond is your IOU. As a lender, your return is limited to the interest rate and terms under which the bond was issued. You can still lose the amount of the loan (your investment) if the company or governmental body fails, but the risk of loss to creditors (bondholders) is generally less than the risk for owners (shareholders). This is because, to stay in business, a company must maintain as good a credit rating as possible, so creditors will usually pay on time if there is any way at all to do so. In addition, the law favors bondholders over shareholders in the event of bankruptcy.

FYI -- Stocks (and stock mutual funds) are referred to as "equity investments", while bonds (and mutual funds containing bonds) are often called "investments in debt".

Diversify--don't put all your eggs in one basket
This is the most important of all investment principles, as well as the most familiar and sensible.

Consider using several different classes of investments for your portfolio. Examples of investment classes include stocks, bonds, mutual funds, art, and precious metals. Investment classes often rise and fall at different rates and times. Ideally, in a diversified portfolio of investments, if some are losing value during a particular period, others will be gaining value at the same time. The gainers help offset the losers, and the total risk of loss is minimized. The goal is to find the right balance of different assets for your portfolio. This process is called asset allocation.

Recognize the trade-off between the risk and return of an investment
For present purposes, we define risk as the possibility of losing your money, or that your investments will produce lower returns than expected. Return, of course, is your reward for making the investment. Return can be measured by an increase in the value of your initial investment principal and/or by cash payments directly to you during the life of the investment. There is a direct relationship between investment risk and return.

Between the extremes, every investor aims to find a level of risk--and corresponding expected return--that he or she feels comfortable with.

Investing for growth vs. Investing for income
As an investor, you face an immediate choice: Do you want growth in the value of your original investment over time, or is your goal to produce predictable, spendable current income--or a little of both?

There is no right or wrong answer to the "growth or income" question. Your decision should depend on your individual circumstances and needs (e.g., your need, if any, for income today, or your need to accumulate a college fund, not to be tapped for 15 years).

The power of compounding
A simple example of compounding occurs with a bank certificate of deposit that is allowed to roll over each time it matures. Interest earned in one period becomes part of the investment itself, earning interest in subsequent periods. In the early years of an investment, the benefit of compounding on overall return is not exciting. As the years go by, however, a "rolling snowball" effect seems to operate, and the compounding's long-term boost to investment return becomes dramatic.

The Section 529 plan and Coverdell Education Savings Account (ESA) are two of the most popular ways to save for college. But which savings option is right for you?

Definitions
A Coverdell ESA is a tax-advantaged savings vehicle that lets you save money for the qualified education expenses of a named beneficiary, such as a child or grandchild. Qualified education expenses include college expenses and certain elementary and secondary school expenses.

529 plans are tax-advantaged savings vehicles that let you save money for the college expenses of a named beneficiary, such as a child or grandchild. There are two types of 529 plans--college savings plans and prepaid tuition plans. A college savings plan lets you save money in an individual investment account. A prepaid tuition plan pools your contributions with those of other investors and allows you to prepay the cost of college at today's prices for use in the future.

Contribution limits and restrictions
The annual contribution limit for Coverdell ESAs is $2,000 per beneficiary. That's considerably less than you can contribute to most 529 plans (most plans have lifetime contribution limits of at least $250,000 total). So the more money you have to invest, the more attractive a 529 plan becomes. Just make sure you're familiar with all the contribution rules before you invest in a 529 plan. In addition to the lifetime contribution limit, some plans impose annual maximums and/or minimums. Another potential drawback of the Coverdell ESA is that you may not be able to contribute if you earn over a certain amount for the year.

The age of the beneficiary also limits the use of a Coverdell ESA. You can't start a Coverdell ESA after the beneficiary reaches age 18. The exception is if the beneficiary is a child who has special needs. This typically means that you can't keep adding to the kitty once your child's in college, since most children are at least 18 when they start college. Additionally, a Coverdell ESA that you have properly established cannot continue after the beneficiary reaches age 30 (unless the beneficiary has special needs). By contrast, the federal government imposes no age restrictions on 529 plans. However, a minority of states impose such restrictions of their own (usually only on 529 prepaid tuition plans), so make sure to check with your plan administrator.

Income tax treatment
The tax treatment of Coverdell ESAs and 529 plans is generally similar. At the federal level, there is no deduction for contributions made to a Coverdell ESA or a 529 plan (though states may offer one). And withdrawals from both a Coverdell ESA and a 529 plan that are used to pay the beneficiary's qualified education expenses (called qualified withdrawals) are free from income tax at the federal level. At the state level, whether the withdrawal is income tax free or deductible from income depends on the state you live in.

Withdrawals from a 529 plan or a Coverdell ESA that are used for purposes other than the beneficiary's qualified education expenses (called nonqualified withdrawals) aren't treated as favorably. First, you'll pay income tax on the earnings portion of the withdrawal. For 529 plans, the person who receives the distribution (typically the account owner) pays the tax, while for Coverdell ESAs, the beneficiary generally pays the tax. Second, you'll pay a 10 percent federal penalty on the earnings portion. Plus, depending on the state you live in, you may also owe an additional state penalty on the earnings portion.

Control of the account
As the account owner of a 529 account, you decide when withdrawals will be made and for what purpose. You're also free to change the designated beneficiary, and as long as the new beneficiary fits the definition of a qualified family member of the previous beneficiary, you won't be penalized for making the change. As a parent or guardian, you generally have these same rights with a Coverdell ESA, but the exact degree of control may depend on the trustee's policies.

In terms of investment control, though, Coverdell ESAs have the edge. You can set up a Coverdell ESA with any number of banks, mutual fund companies, and other institutions. And you can customize your portfolio, choosing investments on your own. You're also typically free to move money among a company's investments or to transfer your Coverdell ESA from one trustee to another as often as you like. Finally, you can take a withdrawal from your Coverdell ESA and roll it over to a Coverdell ESA with a different trustee. The new account can be for the same beneficiary or for a new one within the same family. You can only do one rollover per year, though, and you must complete the rollover within 60 days to avoid tax and penalty.

By contrast, you lack such investment freedom with a 529 plan, though the trend is for college savings plans to offer more investment choices and flexibility. If you're lucky, at the time you join a college savings plan you'll get to choose one or more investment portfolios offered by the plan, which typically consist of mutual funds tailored to different investment styles. Otherwise, your contributions will automatically go into a single investment portfolio based solely on your child's age. In either case, though, you don't get to choose the underlying mutual funds held in an investment portfolio--the plan's professional money managers make those decisions. And you can't move money from fund to fund within the portfolio that you have.

Once you've invested money in a portfolio, you have limited opportunities to change investment options if you're unhappy with the portfolio's investment performance. Depending on a plan's individual rules, some plans may let you direct future contributions to a different portfolio. As for your existing contributions, some plans may let you change the investment option once each calendar year without changing the beneficiary, or they may let you change the investment option anytime you do change the beneficiary.

But there's one option that's mandated by federal law and not subject to a plan's discretion. You can change the investment option on your existing contributions without penalty by doing a rollover to another 529 plan (college savings plan or prepaid tuition plan) without changing the beneficiary. However, you're limited to one such rollover every 12 months. If you want to do more than one rollover in a 12-month period, you'll need to change the beneficiary to avoid a penalty and taxes.

Financial aid considerations
The federal financial aid treatment of Coverdell ESAs and 529 college savings plans is identical. Each is considered an asset of the parent if the parent is the account owner (which is a more favorable result than if the account were classified as a student asset). Also, distributions (withdrawals) from either a Coverdell ESA or a college savings plan that are used to pay the beneficiary's qualified education expenses aren't classified as either parent or student income, which means that some or all of the money is not counted again when it's withdrawn.

Note: The financial aid treatment of 529 plans and Coverdell ESAs is complex and subject to change. You should consult a financial planner experienced in financial aid issues for more information.

Can you have both?
Yes. You can open both a Coverdell ESA and a 529 account for the same beneficiary. And you can contribute to both types of plans in the same year for the same beneficiary. However, if withdrawals are made from a Coverdell ESA and a 529 account in the same year for the same beneficiary, you'll need to allocate the qualified education expenses you're covering between the two accounts. For more information, consult an experienced tax professional.

Contribution limits and restrictions
The annual contribution limit for Coverdell ESAs is $2,000 per beneficiary. That's considerably less than you can contribute to most 529 plans (most plans have lifetime contribution limits of at least $250,000 total). So the more money you have to invest, the more attractive a 529 plan becomes. Just make sure you're familiar with all the contribution rules before you invest in a 529 plan. In addition to the lifetime contribution limit, some plans impose annual maximums and/or minimums.

Another potential drawback of the Coverdell ESA is that you may not be able to contribute if you earn over a certain amount for the year. Again, you should seek counsel from a qualified financial planner for more information.

If you've recently finished college, chances are you're paying off student loans. So what happens with your student loans now that they've entered repayment status? Will they have a significant impact on your credit history and credit score?

It's payback time
When you left school, you enjoyed a grace period of six to nine months before you had to begin repaying your student loans. But they were there all along, sleeping like an 800-pound gorilla in the corner of the room. Once the grace period was over, the gorilla woke up. How is he now affecting your ability to get other credit?

One way to find out is to pull a copy of your credit report. There are three major credit reporting agencies, or credit bureaus--Experian, Equifax, and Trans Union--and you should get a copy of your credit report from each one. Keep in mind, though, that while institutions making student loans are required to report the date of disbursement, balance due, and current status of your loans to a credit bureau, they're not currently required to report the information to all three, although many do.

If you're repaying your student loans on time, then the gorilla is behaving nicely, and is actually helping you establish a good credit history. But if you're seriously delinquent or in default on your loans, the gorilla will turn into King Kong, terrorizing the neighborhood and seriously undermining your efforts to get other credit.

What's your credit score?
Your credit report contains information about any credit you have, including credit cards, car loans, and student loans. The credit bureau (or any prospective creditor) may use this information to generate a credit score, which statistically compares information about you to the credit performance of a base sample of consumers with similar profiles. The higher your credit score, the more likely you are to be a good credit risk, and the better your chances of obtaining credit at a favorable interest rate.

Many different factors are used to determine your credit score. Some of these factors carry more weight than others. Significant weight is given to factors describing:

• Your payment history, including whether you've paid your obligations on time, and how long any delinquencies have lasted
• Your outstanding debt, including the amounts you owe on your accounts, the different types of accounts you have (e.g., credit cards, installment loans), and how close your balances are to the account limits
• Your credit history, including how long you've had credit, how long specific accounts have been open, and how long it has been since you've used each account
• New credit, including how many inquires or applications for credit you've made, and how recently you've made them

Student loans and your credit score
Always make your student loan payments on time. Otherwise, your credit score will be negatively affected. To improve your credit score, it's also important to make sure that any positive repayment history is correctly reported by all three credit bureaus, especially if your credit history is sparse. If you find that your student loans aren't being reported correctly to all three major credit bureaus, ask your lender to do so.

But even when it's there for all to see, a large student loan debt may impact a factor prospective creditors scrutinize closely: your debt-to-income ratio. A large student loan debt may especially hurt your chances of getting new credit if you're in a low-paying job, and a prospective creditor feels your budget is stretched too thin to make room for the payments any new credit will require.

Moreover, if your principal balances haven't changed much (and they don't in the early years of loans with long repayment terms) or if they're getting larger (because you've taken a forbearance on your student loans and the accruing interest is adding to your outstanding balance), it may look to a prospective lender like you're not making much progress on paying down the debt you already have.

Getting the monkey off your back
Like many people, you may have put off buying a house or a car because you're overburdened with student loan debt. So what can you do to improve your situation? Here are some suggestions to consider:

• If you have several student loans, consider consolidating them through a student loan consolidation program. This won't reduce your total debt, but a larger loan may offer a longer repayment term or a better interest rate. While you'll pay more total interest over the course of a longer term, you'll also lower your monthly payment, which in turn will lower your debt-to-income ratio.
• If you're struggling to repay your student loans and are considering asking for a forbearance, ask your lender instead to allow you to make interest-only payments. Your principal balance may not go down, but it won't go up, either.
• Ask your lender about a graduated repayment option. In this arrangement, the term of your student loan remains the same, but your payments are smaller in the beginning years and larger in the later years. Lowering your payments in the early years may improve your debt-to-income ratio, and larger payments later may not adversely affect you if your income increases as well.
• If you're really strapped, explore extended or income-sensitive repayment options. Extended repayment options extend the term you have to repay your loans. Over the longer term, you'll pay a greater amount of interest, but your monthly payments will be smaller, thus improving your debt-to-income ratio. Income-sensitive plans tie your monthly payment to your level of income; the lower your income, the lower your payment. This also may improve your debt-to-income ratio.
• If you're in default on your student loans, do not ignore them--they aren't going to go away. Student loans generally cannot be discharged even in bankruptcy. Ask your lender about loan rehabilitation programs; successful completion of such programs can remove default status notations on your credit reports.

Hello World

We know. You're sick and tired of the 9 to 5 grind. You want to escape the commute...escape the water cooler...escape the status meetings. There's got to be a better way right? There's got to be a way for you to build your own business.

The advantages of working at home include:

• No commute
• You save money
• Tax benefits
• Family benefits
• Launching pad for your business

Imagine rolling out of bed on a cold winter day, and with your hair still disheveled, sliding on your slippers. You get a cup of steaming hot chocolate loaded with marshmallows and stroll into your office, which is located next to your bedroom. Sounds enticing--doesn't it? Well, for many people this is work. And this is one of its advantages.

By working at home you save on commuting expenses and more. Since you already pay the mortgage or rent, you'll have no additional charges for office space. You may even be able to deduct the home expenses associated with the section of your house used as an office. Additionally, you get to spend more time at home with family. And last, but not least, working at home can be a good way to measure the viability of your new business.

What are the disadvantages of working at home?

Working at home does have its disadvantages, however. They include:

• Home distractions
• Work distractions
• Motivational problems
• Lack of interaction with others

If you work at home, you can be easily distracted. If people know you're home they will call you. And don't think that your two-year-old will be able to read the "do not disturb" sign on your door, let alone know what those words mean. If that's not enough, think of how seductive your leather sofa will look in the morning, especially when your favorite talk show or soap is airing. Recall those days when you couldn't motivate yourself to jump in the car and drive to work. Imagine how much harder it will be if your office is next to your bedroom. It might, however, be just the opposite for you. Maybe you're the type who keeps thinking about work. In that case, you might constantly venture into the office when you're bored, or when you want to develop an idea that's popped into your head. Another problem exists for those gregarious folk. If you like mixing with others, you might find work at home awfully lonely. There will also be times when the walls of your home remind you of work. Whether working at home is right for you ultimately depends upon your preferences and personality.

Favorable tax treatment
If you work from your home, you may receive favorable tax treatment--if, of course, you follow the rules. The portion of your home used for business must be used "regularly and exclusively" for business purposes. Your home office must also be the principal place that you conduct your trade or business, or a place where you regularly meet with clients, customers, or patients. If you meet all of the requirements, you can deduct that portion of your home expenses that would be deductible if incurred in a trade or business and that is allocated to the section of your home dedicated to your business.

For example, if your home covers 4,000 square feet, and your home office occupies 1,000 square feet, you may be able to deduct 25 percent of your home expenses (1,000 / 4,000 = 0.25 or 25 percent).

Caution: The tax implications of a home office are complicated. Further, a home office may affect the tax treatment of the sale of your home.

Other considerations
In addition to the aforementioned advantages, disadvantages, and tax implications, there are some things you should know and do.

Check local zoning regulations
Some cities have zoning regulations that prohibit or limit home businesses. Check to see if your locality does.

Don't quit your job yet
If you're working now, don't quit too soon. Wait to see if your home business can support you.

Be professional
Have a fax machine, a separate phone line, and quality bond paper. Remember, if you're not a big business, you can still look like one.

Keep thorough records
You can probably take a deduction for the portion of your home expense dedicated to your business. However, you must be sure to keep thorough records of all your expenses and transactions. Make sure you don't commingle funds. Use company checks to pay for business expenses, for example.

Think about benefits
If you're not covered under someone else's plan, you'll need health insurance. You can call your local chamber of commerce for information on affordable coverage. In addition to health insurance, you'll need to consider retirement plans: simplified employee pension plans (SEPs),individual retirement accounts (IRAs), or Keogh plans.

Write your business plan
Next, you should begin preparation for your business plan. The business plan is the blueprint of your business. This blueprint will guide the future of the business as well as serve as a means to measure its success.

Grow your business
To do this, you'll need to actively seek out potential customers and introduce them to your business. Get to know who buys your product or uses your service. What do they have in common? How can you find others with similar needs? Test out your marketing ideas on friends and family, and don't be afraid to leave the house and hit the pavement. Yes, you are the salesperson as well as the owner, manager, and marketer. Finally, focus on your strengths. Do what you do best and hire others to do the rest.