In a down market, especially when many investment portfolio values have been slashed by 30 or 40 percent over the course of a year, it’s become painfully apparent that a large part of those losses comes in the form of the fees you pay to invest your money. Over a period of several decades, from first investment to retirement, investment costs can eat up tens and even hundreds of thousands of dollars, destroying the real rate of return of a mutual fund.

For example, an initial investment of $50,000 over a period of 25 years at 8% would grow to $342,423. However, if the gains are 6% annually due to management costs and related fees, that number drops to $214,593 – a difference of $127,830. Even a difference of one percent can be huge over time – in 35 years, receiving 8% annual on $50,000 yields 739,267; compare this to the 533,829 from a 7% return on the same money.

For the average investor, most investment fees fall into one of three categories: mutual fund expenses, investment advisor fees and brokerage commissions, the per-transaction trading fees for buying and selling individual stocks. Mutual funds have some of the highest expenses, with exchange-traded funds (ETFs) usually somewhat lower.

But even ETF fees are not immune to change. According to Richard A. Ferri, CFA at Portfolio Solutions, LLC, “During the 1990s, new issue ETF fees averaged about 0.25%. Over the past few years new issue ETF fees were closer to 0.60% and this year the fee is closer to 0.80%. In addition, some of the more complex ETFs issued a few years ago capped their fees below the stated prospectus level. Those caps are starting to expire and fees are rising.”

Still, since they cost significantly less than mutual funds with high commissions (loads), low-cost index funds and ETFs are the better way for investors to get the same exposure to the financial markets without losing as much of their money in fees, said Ferri.

To maximize your savings and return on investment, Clint Gharib, Vice President of Investments at Turner Wealth Management, LLC, also recommends that you work with an independent, fee-based advisor. “Independent registered advisors provide access to a much wider range of investment products and services with no proprietary products to promote. An investment advisor must act in a fiduciary capacity on behalf of their clients, therefore providing a higher standard of disclosure than in a traditional securities brokerage environment. Because the financial representative gets a flat annual fee based on the amount of assets rather than a commission, transactions themselves do not benefit an advisor,” said Gharib.

Ferri agrees, saying, “Fire that high cost advisor. Advisors’ fees are the last bastion of gluttony in the investment business. They are simply too high. The advisors that charge 1% or more to manage a portfolio insist that they ‘add value’ through their investment selection. There is no academic evidence suggesting that paying high advisor fees provides any benefit over using a low cost advisor. In fact, high fees hurt your bottom line on a dollar for dollar basis.”

Jeff Nabers, CEO of Nabers Group and founder of the IRA Association of America, takes his investment theory a step further than simply trying to lower investment fees for Wall Street portfolios.

“The real cost of investing is poor investment performance due to lack of understanding and awareness that IRAs and 401ks do not have to be invested in Wall Street products,” said Nabers. While investors think they are diversifying by buying a variety of stocks and funds, history shows that when the stock market goes down, all sectors of the market go down. The better option, he explains, is to get off Wall Street and thus actually diversify your investments.

Nabers, who is currently writing a book titled Unlimited Investing with a Self-Directed IRA LLC or Solo 401k: Break Free From Wall Street to Build Real Wealth with Alternative Investments, considers Wall Street somewhat of a casino when it comes to investments. In contrast, there are many other, better ways to invest money for retirement; for example, real estate, precious metals and small businesses.

Real estate prospectors of the past few years who bought based on the hope that their properties would increase in value and they could sell for a profit give real estate investing a bad name. The difference between them and successful real estate investors is in the verb, said Nabers. Profitable real estate investments are the product not of hoping, but of planning. Let’s say you want a minimum 10% annual return on investment (ROI) for your real estate purchase. You would look at properties, from apartment buildings to duplexes to single-family units, and make real calculations of what the properties will earn or cash-flow each year, based on area rents, factoring in taxes, mortgage payments, property management fees and the like.

After analyzing a number of properties, you would know which could provide the ROI you desire and plan your investment accordingly. That’s the difference – planning, not hoping. Stocks used to be the same way, where people bought them based on the dividends they produced and not simply for capital gains.

Investments that qualify for retirement plans are nearly limitless, said Nabers, naming just life insurance, collectibles and self dealing as things that are not allowed. The sooner investors look outside the small box of Wall Street and actually diversify with sound, researched investments, the more they will avoid the high cost of investing found in fees and poor portfolio performance.

Looking for a fresh approach to investing? As an investor, be wise about your money. Avoid high-cost mutual funds and expensive investment advisors, choosing low-fee ETFs and fee-based services instead. On top of that, consider moving some or most of your money off of Wall Street and into carefully researched alternative investments.

(Jonny Goldstein)

When David Allen wrote Getting Things Done back in 2001, no one predicted it would rise to #52 on the Amazon best seller list and spark an entire productivity subculture.

Like many productivity gurus, Allen recommends prioritizing tasks and eliminating distractions through to-do lists, calendars, and turning off e-mail notifications. But Allen’s theories differ in a few key areas. Unlike Covey’s “Begin with the end in mind,” Allen advocates dealing with today so you can stop worrying long enough to think about tomorrow.

So what happens when GTD meets personal finance?

Here’s four key GTD concepts, and how they can be applied to your money management:

1. Clear your head by capturing anything and everything that has your attention
   Allen observes that in the information age, the majority of work has to be defined before it can be done. You can’t do anything until you know what you’re trying to do.
   Application: Get everything related to money out of your head and onto a piece of paper.
   No matter whether you’re a financial ninja or a novice, simply writing down all the stuff you’ve been meaning to plan–like financing your kid’s education–will make it FAR easier to tackle. Don’t worry about planning anything, just get it out of your head onto paper.
   
   
2. Operate from the ground up
   GTD methodology says you will only be free to think long-term when you have successfully organized today’s urgent priorities.
   Application: Track how you spend your money.
   Determining long-term financial goals without knowing where your money is currently spent leads to cognitive dissonance. Tracking need not be obsessive. You don’t need to budget every last expense in order to realize your savings goal. As with other tasks, GTD suggests you should focus on a few key areas where you can have an impact, perhaps you can cut back on eating out, or spend less on iTunes each month.
3. Define projects into outcomes and concrete next steps
   Allen says 90% of to-do lists are projects, not actual to-do’s. Break all of your projects into actual to-do’s.
   Application: Look at your page of financial projects and break them into actionable to-do’s.
   A project like “taxes” will probably include tasks like “gather forms”, “pick tax software”, “enter information in tax software”, and “file taxes.” Once you’ve broken these financial projects into actual to-do’s, you can add them to your calendar and general to-do list.
4. Have as few inboxes as possible–but not fewer.
   Focusing all your incoming information into just a few buckets keeps things simple. Fewer inboxes means your brain can focus on thinking rather than remembering.
   Application: Streamline your financial accounts.
   Close unnecessary financial accounts or leave them at the minimum balance. (Exception: Closing unused credit cards may impact your FICO score.) Use dedicated accounts for savings , checking, and Roth IRA or 401K.
5. Build a trusted system so you don’t have to rethink things
   The brain is a phenomenal planner, yet incredibly forgetful. And we’re hyper-aware of that–even while writing this blog post, I worried whether I planned enough time to do my taxes.
   Application: Automate financial reminders whenever possible.
   Mint.com can send you an e-mail a week before your bills are due. (I’ve integrated my recurring financial to-do’s into my regular to-do system–I use Remember The Milk configured for GTD.) Since you can use the Mint dashboard to view all your bank accounts in near real-time, consider switching all your accounts to electronic statements–better for the environment too.
   
6. Do a regular review to “clear the decks” and keep your brain clear
   No matter how smoothly your system functions, your brain will still collect stuff. It’s just like cobwebs–every so often they need to be cleaned out.
   Application: Do a regular financial brain dump. Review your accounts regularly.
   Some folks like to review how they spent their money every week. Others prefer a monthly review, so you’ll need to find your own rhythm. This is also a good time to acknowledge failures and celebrate successes.
   

More resources:

The Getting Finances Done blog has two great posts on GTD + Personal Finance: Part 1, Part 2.

Having lived through the depression, our grandparents and great-grandparents formed a lack of trust in banks and turned to burying cash in the backyard or hiding it under the mattress. Our current economic downturn doesn’t yet call for such drastic measures but there are things we can learn from those who went through this challenging era and prospered.

Food: Grow a Garden

Source: BW/Color

Growing at least some of your own food can save a lot of money and provide the satisfaction that comes from eating local, really local. Consider starting a community garden such as the Depression-era community relief gardens, or the World War II Victory Gardens. For step-by-step instructions on growing your own relief garden at home, check here, and apply those same basic ideas to any project that you can implement on someone’s vacant lot (with permission) and organize some friends, family and neighbors. If you are more interested in developing a community garden, here is an in-depth overview.

Entertainment: Enjoying the Simple Things

Source: BW/Color

Not everything about the Depression was actually depressing. In hard times, we can sometimes find a lot of pleasure in remembering to enjoy the simple things in life. During the 1930s, games like Monopoly became popular because they gave people hope and allowed them to dream of a better life. Remember some of the board games from your childhood, and plan a low-tech outing with friends and family. It will also help you remember that you don’t absolutely NEED every single gadget that hits the store shelves, and on top of that it will be a bit cheaper than spending the day at Disneyland.

Transportation: How Many SUVs Does Your Family Need?

Source: BW/Color

Hitchhiking was prevalent in the Great Depression, and this is one area that can at least offer some creativity, although Mint absolutely does not recommend that you sell your car and get to work each day by holding up a thumb next to the freeway, nor should you become a hobohemian and hop trains to get around. However, since owning a car is more of a luxury than a necessity, we can learn from the community aspect and form carpools, walk to the store if it’s only a mile away, and if you are lucky enough to have a half-decent public transportation system, Google Maps now shows your time and cost to drive relative to taking a bus or walking. Consider moving closer to where you work and walk or ride a bike instead. Like Dave Ramsey, author of Total Money Makeover, says: “If you are willing to live like no one else now, you can live like no one else later.” Essentially, by defying convention, even for a relatively short amount of time, you can save a hefty sum of money.

Housing: Downsize or Rent a Room

Source: BW/Color

We all have different situations, and this is one of the most pressing issues facing our nation and the world right now. You might be just out of college and trying to make it on your own, or you might be paying for your child’s college now, but there are definitely lessons to be learned from the Depression. In some cases, it may be beneficial to sacrifice a bit of privacy in the short-term in order to get back on track financially. Rent an extra bedroom to a friend, have your child move back home if you are struggling to send him or her rent money every month, or downsize your home. You don’t have to necessarily make a gut-wrenching decision overnight, but do yourself a favor and at least check out some listings on Craigslist for rentals, or have a real estate agent email you listings in a cheaper price range. If a great deal pops up that piques your interest, you can at least bat around the idea with your family. If you are single, just go for it!

Jobs/Entrepreneurship: Nothing Left to Lose?

Source: BW/Color

Due to the extensive public works projects in the 1930s, there was at least a bit of relief for the unemployed masses. People simply took any work they could, and often worked 12 hour days. If you are looking for employment, you might consider looking for a position that is slightly below your ideal salary, but that seems to have the most potential for advancement. If you are entrepreneurial, and perhaps have already fallen behind on bills, one positive thing about the current economic climate is that you are starting over at a time when many other people are also faced with starting from scratch financially, and perhaps you may even be in a position where you literally have nothing left to lose, which can be a great time for personal innovation and taking the risk to start in a new industry or implement an idea that’s always been in the back of your mind. It’s time for boot-strapping!

Credit: Redefining What You Can Afford and Need

Source: BW/Color

If you have credit available, you might be tempted to use it before the bank cuts the credit line. Don’t do it. Going into debt will only hurt you in the long run. Instead, remember the words of your grandmother and heed this simple, age-old advice – “if you can’t afford to pay cash, you can’t afford it.”

Money Management/Budgeting: Simplify Your System

Source: BW/Color

When you simply have no money, it is easy to keep spending under control because it is impossible to spend. In many cases, one spouse saved money in the cupboard and even hid it from the other spouse. There is a good trick to be found here that requires a lot of discipline. If, for example, you are getting hit with overdraft fees, you need to establish a barrier that you absolutely will not dip below (even if it means paying a bill late). Take the cue from the 1930s and use cash rather than debit for your petty purchases, especially when you are close to zero in your account. This will help avoid paying $36 for that pack of gum if an unexpected payment goes through your account and causes an overdraft fee.

For our grandparents and great-grandparents who lived through the 1930s, many months surely consisted of living in survival mode, and there were much fewer recurring expenses and bills to be paid, so it was possible in a lot of cases to keep track of spending without even necessarily writing it down. Today, we have several types of accounts, in many cases at different institutions, with new types of debt and monthly payments to keep track of, so take a look at Mint’s free software today and start tracking your spending automatically to find areas where you can save money.

If you’ve been contributing to a 401k and socking away money for retirement, you probably think you have enough. But you’d better brace yourself for the shocking truth. Unless you’ve taken into account how old you were when you started on your retirement plan, you most likely don’t.

The bottom line is that most people don’t really know how much they’ll need for retirement and without knowing that how can you be sure you’re on the right track to get there? Consider that the average American works hard and plays hard, but reaches age 65 with a median 401k balance of $110,000. Is this enough?

That depends. You’re going to need a bigger nest egg than you probably think – 10/10/4 is a handy principle you should learn.

What is 10/10/4 and how can it help?

In short you need to save at least 10% of your income for retirement. You need to have a nest egg lump sum which is 10 times your annual earnings upon retirement. Finally, you should withdraw up to 4% of your next egg in retirement to avoid outliving your money.

Put simply, 10/10/4 is a strategy that takes into account which leg of the journey toward retirement you are on and provides appropriate recommendations along the way. It’s easy to remember and can be put into practice at any time.

Rule #1

If you are in your 20’s now is the best time to start contributing to your eventual retirement. The first “10″ in 10/10/4 refers to the idea of contributing 10% per year to your 401k or IRA.

At age 25, only saving 10% of your income per year into a 401k or IRA, is required to replace 70% of your pre-retirement income, and at age 20 it’s only 8%. Note this includes any company matching, so if your employer matches 2% for example, you would only need to save 8% per year. At age 20 or 25, time is on your side.

If you did start saving at age 20 or 25, go out and celebrate, you are on the right path already. You can enjoy 90% of your income today and save 10% for tomorrow – this will take some sacrifice, but it’s doable.

However, most of us did not do that early enough.

Missing this “window” is all too common. After many years go by, you will eventually wake up and look around, and see time is the real problem. The closer you get to retirement, the harder it gets to save for it.

For example, if you start saving for retirement at age 35, you would have to save 17% of your income to achieve the same goal, a daunting task. At age 45, the percentage of your income you would have to save is 31%, which, for most of us is essentially impossible.

All of these questions assume you start at a set age and continue to save at a set rate. But in reality, life is much more complicated.

For example, what if you start saving at age 25, then move to another job; stop saving for a few years and then start again? In other words, what if your savings are not linear?

There is no calculator we have ever found that will model this real world possibility of skipping years, or playing catch-up very fast without making the estimation process extremely cumbersome.

This is where the second “10″ comes in. This means that if you missed rule #1, and your life got complicated, then you must save enough to reach rule #2, which is often much harder than starting early.

Rule #2

Rule #2 says that, by the time you are 65, you will need 10x your income immediately prior to retirement to retire at the level you want. Therefore, say you plan a lifestyle of living in the south, on a beach, but with health care coverage, some travel and a few hobbies. You’ve calculated that will require $100,000 in yearly income.

Therefore, you will need 10x that income, or $1,000,000 at age 65. The second “10″ gives you the proper perspective.

Even if you get your target income down to $80,000 before taxes, you will still need $800,000 at age 65, significantly more than $110,000.

Rule #3

Okay, now you are ready for the third and final level of 10/10/4, so what is the “4″? The “4″ means 4% is all you can take out – especially in the early years of retirement and still have confidence that your money will last throughout retirement. If you plan to take out more in the early years, you could have a big problem in volatile market times such as those we are experiencing now.

The issue is the fluctuations in the stock and bond markets are a natural occurrence. Therefore if you retire at age 65, and have 60% in equity and 40% in bonds (a moderate investment allocation), you might still have 30 more years to live and no job because there are not a lot of jobs of jobs available for a 65 year old. Yes, the problem is that we live too long after age 65 – health care advances have been too successful.

The related problem is the wide range of normal volatility in these stock and bond markets and the fact that you may end up retiring in some very difficult times for returns, such as 2000, 2001, 2007, or 2008. If the markets are in decline right at the time you retire, it is going to be much more difficult than anticipated to make ends meet.

The experts look at all the probable outcomes and the models show that a 4% withdrawal rate in the early years is the maximum rate that will preserve capital with normal volatility, until you have been retired for 5-10 years. That means that if times are really rough in the first few years that you retire, and your target was $1,000,000, you might really have to live on 4%, or $40,000 per year until you get through the bad years. That is the realty for many people who have retired recently.

Think of 10/10/4 as 3 windows into your life plan. If you are fortunate enough to have succeeded in hitting the first “10″ (saving 10% of our income and you started in your 20’s) and the second “10″ (on track to hit 10 times your income goal at age 65), then to be sure of a secure retirement work on this third and final goal, “4″.

There are practical ways to live for a few years on 4% of your retirement balance if times are tough in the early years of your retirement. You may want to work part time if needed by obtaining a skill that does have a market at age 65. Perhaps you can turn a hobby such as photography or playing a musical instrument to your financial advantage? Or build an extra cushion in your balance for these contingent years if you retire and then experience some bad stock and bond market performance in your first few years.

10/10/4 is a tool you can use at any age and it will serve you well. If you are in your 20’s sign up for 10% in your 401k or IRA and think of the 90% you get to enjoy today. Live 90% today and 10% tomorrow. You will have to make a few sacrifices but you can do it.

If you are in your 30’s or 40’s you are starting to see the problem. If you do not see progress toward the 10x goal, usually because you started too late, or skipped some years, then you will have to save much more now to catch up.

That’s why it’s so important to make sure you aren’t leaving money on the table. If you’re in your first job, make sure you are enrolled in your employer’s 401k plan. If you’ve just changed jobs, don’t leave money sitting in your previous employer’s 401k account. Instead, move it into an IRA rollover account where you have more control over fees and more investment choices.

Start today because your future depends on it.

Managing your money shouldn’t get in the way of living your life. That’s why personal finance apps are such a natural fit for the iPhone. They let you track your stocks, convert currencies, calculate how much you owe, and track expenses—all on the go. The more full-featured among them even let you manage multiple accounts and transfer money between them. The best apps are those that take advantage of the iPhone’s finger-friendly interface or unique features such as location-awareness. For example, GPS or WiFi can be helpful in finding the way to the nearest ATM. Most of these apps are free or available for a nominal charge so there’s little to lose by trying them. Here’s a look at 10 that count.

Bloomberg Mobile (Free)

Bloomberg

Wall Street Traders swear by the Bloomberg Terminal to analyze real-time financial market data, place trades, and get news and price quotes. Bloomberg Mobile isn’t quite the same thing but it is a beautifully designed app that provides up-to-the-minute news, stock quotes, company descriptions, and price chart and market trend analysis. The My Stocks feature is a more detailed replacement for Apple’s stock Stocks app. And Bloomberg Mobile takes full advantage of the iPhone’s position sensor by providing larger charts when you rotate the phone to a horizontal position.

Mobile Banking (Free)

Bank of America

Bank of America’s iPhone app, Mobile Banking is little more than a wrapper around its existing mobile site (which isn’t optimized for the iPhone) but if this is your bank you’ll still find it useful. You can use it to check available balances, pay bills, and transfer funds on-the-go 24/7. Its best feature is its ability to find the nearest ATM and Banking Center locations using the GPS in the iPhone, something that isn’t possible with the mobile site. BofA’s Online Banking Guarantee is its assurance that you won’t be responsible for any unauthorized transactions and it uses advanced encryption technology to prevent unauthorized access to your accounts and to protect your online identity.

PayPal (Free)

PayPal

In Japan many have thrown away their wallets in favor of paying for everything from train tickets to beer from a vending machine with their mobile phones. We’re not quite there yet but the PayPal app provides a tantalizing glimpse at this future. It provides complete access to your PayPal account allowing you to check your balances and send money to your friends and family, all from your iPhone. It supports 16 currencies and is secured by your existing PIN or password. It’s a good start but I’d like to see it go further. Missing is any way of displaying your transaction history and I’d also like to see it use the notification indicator on the app icon to show when money has arrived in your account.

Loan Shark ($4.99)

FoggyNoggin Software

Designed to help you navigate the often treacherous waters of financial lending, Loan Shark provides a number of features that let you calculate and compare loans from different vendors. You can calculate any component of a loan, including payment, interest rate or loan amount, see the full Amortization Table for the loan’s lifespan and play with “what-if” scenarios that let you determine the effect of making extra, higher, or lower payments. Loan Shark can help you determine how long it will take to pay off that credit card, determine how close you are to paying off your mortgage, and compare the cost of different loans, among many other uses. Kudos to FoggyNoggin Software for an easy-to-use and good looking interface that works well on a mobile device.

Bonus feature: Lets you locate nearby banks using the iPhone’s location-awareness

Tipulator (99 cents)

Tap Tap Tap

Tipulator stands out in a crowded field of tip calculators (it’s often said that the true test of how successful a new platform will be is how quickly a tip calculator appears for it) by marrying cute graphics with easy-to-use number dials. You can probably split the check without it but you won’t have as much fun doing it. And for 1/3 the price of your last latte, you owe it to yourself to at least try it.

Tiptap (Free)

Made With Bananas

More traditional but no less useful is the free Tiptap which is one of the most straightforward tip calculators I’ve seen. Featuring a large custom keypad and a large picker wheel, it’s extremely finger friendly, a plus when when your dining companions are tapping on their wallets and waiting for you to tell them how much they owe. You can choose to enable rounding, splitting, or tax support and Tiptap works with multiple currencies and multiple languages (English, French, Spanish, Italian, Dutch, German, Swedish and Japanese).

PocketMoney ($9.99)

Catamount Software

This venerable mobile checkbook first appeared 14 years ago on the Apple Newton and has since been available on Palm and Windows Mobile devices. Long time PDA users transitioning to the iPhone and former Quicken users alike will welcome its powerful approach to tracking your finances. PocketMoney can track an unlimited number of accounts, can auto-complete transactions based on payee, and will generate expense reports and pie charts. PocketMoney can import database files from the Palm version and also Quicken Interchange Format (QIF). You can even sync these files over a WiFi network using a free desktop app.

SplashMoney ($9.99)

SplashData

SplashMoney is another mobile checkbook that is well known from its implementation on Palm and Windows Mobile. SplashMoney allows you to track different account types: checking, savings, credit card, cash, asset, liability, money market and line of credit. You can create a budget and track and analyze your spending with customizable reports and charts. SplashMoney bests PocketMoney by connecting wirelessly to many online US banks using the same DirectConnect service as Quicken and Microsoft Money. In order to sync with the desktop, you’ll need to purchase the desktop version of SplashMoney separately.

Day Bank ($3.99)

Quantum Quinn

Day Bank is a pocket-sized check register that has been built specifically for the iPhone with a number of features that take advantage of the phone’s capabilities. Unlike the others included here, Day Bank seems particularly suited for entering transactions on the go and tracking your cash spending. Transaction entry is particularly speedy and the app uses the iPhone’s camera to capture images of receipts or purchased items. I like the ability to easily filter the view by day, week, and month. Day Bank isn’t as full featured as its competitors and currently can’t serve as your primary money manager due to its inability to reconcile transactions but it is improving rapidly and in its next version will support transaction geo-tagging, the ability to rename categories, QIF, CSV, & XML export, WiFi backup and restore and more.

Pennies ($2.99)

Design By A Knife

Pennies is a slick expense tracker with an interface that looks like it could have come straight from Apple. It doesn’t pretend to be a full-featured money manager like SplashMoney or PocketMoney but what it does do it does exceedingly well. It lets you quickly establish a monthly budget and record and track your daily expenses against it. Large finger friendly buttons and fun features such as a fuel gauge that indicates how much money is left in your budget make Pennies a joy to use. If you still rely on cash for your daily purchases and only want to make sure you are meeting your budget goals, Pennies is a good choice.

With all of the recent doom and gloom in the financial markets, it’s easy to get discouraged about your own financial situation. But here’s some good news for a change. While personal finance may seem complicated, it really boils down to 4 good habits that can make the difference between going broke or building up your net worth each month.

1. Save money
2. Avoid debt
3. Invest
4. Don’t lose it

Just as with achieving a balanced diet or maintaining a regular exercise regimen, getting your financial house in order is easier said than done. What’s that they say about the best laid plans? A 12 step program can get you on the road to financial recovery.

Save money

1.    Know what you spend

The first step to growing your money is knowing your money.  Just by seeing that you spent $432 one month dining out with your friends, or that you went to Starbucks 37 times, you’ll change your spending habits for the better.

2.    Stick to a budget

Most of us really only have 1-2 “problem” areas.  Maybe it’s shopping, maybe its electronics.  Once you know how much you typically spend, create a budget 15-25% lower.  If you try to cut too hard too fast, you’ll never be able to stick to it.

3.    Find a checking account that pays interest

“Free” checking isn’t exactly free.  Sure you get free checks and no account fees, but most checking accounts pay no interest – zero, nothing.  Meanwhile, the banks are loaning your money out in the form of mortgages or business loans at 7-8% interest.  That’s how banks work.  If you don’t have a checking account that pays interest, you’re being ripped off. Consider switching your account to one of the many that allow your money to work for you such as an E*Trade Max-Rate Checking Account (2.9% APY on accounts over $5K) or an HSBC Online Payment Account (2.25% APY, open an account with as little as $1).

4.    Find a savings account that pays 3%+ interest

The average US savings account only pays about 0.5% interest.  With inflation at 2-3%, you’re actually losing purchasing power each year.  Find a high-yield savings account, money market fund, or CD that pays more such as E*Trade Max-Rate Savings (3.3% APY, open with as little as $1).

Avoid debt

5.    Know your credit score and correct your credit report

Your credit score determines the interest rate lenders will charge on your credit cards, mortgage, student loan, or car loan.  That means any mistakes in your credit report can cost you tens of thousands of dollars over your lifetime.  Unfortunately, 79% of all credit reports have an error, and 25% have an error serious enough to deny you access to credit. Take charge of your credit score at FreeCreditReport ($12.95/month for credit score and monitoring) or myFico (all three FICO scores and credit reports).

6.    Eliminate late fees

About 35% of your credit score is determined by on-time payment.  If you’re late on a credit card payment, it could cost you much, much more than the $29 late fee – if you let it go more than 60 days, it can affect your credit score and cost you thousands.

7.    Don’t pay credit card finance charges

The average American carries $8,500 in credit card debt.  At a minimum payment of $100 a month, it takes 6.7 years, and $4,257 in extra finance charges before you’re in the clear.  If you carry a balance, one way to get some temporary relief is through a balance transfer. The best way out of this quagmire is to pay down your highest interest card first, or look for a balance transfer card such as the Citi® Diamond Preferred® Card (0% Balance Transfer APR for up to 12 months, no annual fee, 3% transfer fee) or the Chase Platinum Visa® Card (0% Balance Transfer APR for up to 12 months, no annual fee, 3% transfer fee but no more than $99).

8.    Get a credit card that pays you

Visa and MasterCard typically charge retailers 2-3% of each purchase you make.  As a consumer, you can get a cut of those fees in the form of cash back rewards.  Don’t settle for a card that pays less than 1%. A typical household can get as much as $300 a year back just for buying what it was going to buy anyway. Examples of cash back cards include the Chase Freedom℠ Visa Signature® Card (3% cash back on gas and groceries) and Blue Cash® from American Express (up to 5% on gas, restaurants, and drugstores).

Invest

9.    Contribute to an IRA or 401k

Invest $100 a month in a tax-deferred account like an IRA or 401k, and at a growth rate of 10%, in 30 years you’d have $380k.  In a regular taxable account (assuming 20% annual taxes), you’d only have $229k.  That’s a $151k difference. Companies such as Fidelity and E*Trade offer such accounts.

10.    Start investing and keep investing

Two simple steps can put you ahead of 99% of your peers.  First, have your employer automatically deduct $200-$300 a month from your paycheck to a brokerage or mutual fund account.  Second, grow that money in an index fund like the S&P 500.  By having the money automatically deducted, you won’t be as tempted to spend it.  If $200 a month in the S&P behaves as it has in the past 20 years, two decades from now you would have around $170k in savings. Open a Scottrade Brokerage Account ($7.00 stock trades, $500 minimum deposit) or an E*Trade Financial Brokerage Account ($12.99 stock trades, $1,000 minimum deposit).

Don’t lose it

11.    Create an Emergency Fund

An emergency fund helps protect you against all of life’s ups and downs, whether they be car repairs, job loss, or a leaky roof.  If you’re young, single and have no mortgage, strive for about 3 months expenses, or ballpark around $10,000.  If you have a house, kids, or both, strive for 6 months expenses, or around $20,000 – $30,000 for the average family. Be sure to keep your emergency fund in a high-yield savings account so that it continues to grow.

12.    Protect yourself with insurance

The right insurance depends greatly on your age and whether you have a family.  If you’re in your 20’s, you need renter’s insurance – it’s typically around $150 a year and covers theft and fire.  If you have a family, you need life insurance, health insurance, and disability insurance. Compare rates at InsWeb.com or Insurance.com.

The other day I was listening to a financial podcast where a female caller asked the host how to get out of debt. He responded by asking her how many jobs she and her husband were working and if the total hours worked added up to 60 hours a week. It wasn’t an insult. It was pragmatic advice on how to truly get ahead.

The commentator suggested that they both take a second job each for six months and put all money from the second job towards paying off debt. Fear has gripped the minds of many, and the headlines aren’t helping us at all as we see a new “expert” tell us each day that things are going to get even worse, and much worse than the last guy said they would be.

So, let’s put aside the newspaper and look at some real people who were so radical and inspirational that, in some cases, even Hollywood took notice. Not all heroes have their lives written about in books or turned into blockbuster movies, so we have included some everyday champions, and would love to hear who your heroes are in the comments. We will publish the best examples in an upcoming reader’s choice article, so let us know about your own story or someone you’ve known or been inspired by.

Chris Gardner shows us the importance of self-discipline and perseverance even in the face of worsening conditions. Shame or embarrassment often accompany financial hardship, and can cause paralysis and apathy, where even something as simple as picking up a phone to pursue a sale becomes an impossible task. The big problem here is that a month spent in the dumps mentally can cause things to worsen almost exponentially. So, Gardner shows us who we can be in the face of adversity. But how did he do it?

First, he had someone (or something) that he cared about more than himself–his son–who was completely dependent on him. A child who cannot fend for himself is often the source of motivation for exceptional action, and in this case he didn’t even have time to flinch or think much of his own wants because he had to simply meet basic survival needs. As he had already poured their life savings into buying a portable bone density scanner franchise, he kept making sales appointments after being repeatedly rejected. When his last machine was stolen, he seemingly had nowhere to turn. After taking a free internship at Dean Witter Reynolds, he set out with such a strong drive to survive that it is almost impossible to imagine anyone tackling any business with his discipline without succeeding. If you have seen the movie based on his life “Pursuit of Happyness,” surely you remember the diligence displayed in his cold-calling – he didn’t even put the phone down to hang up so that he could dial the next call immediately.

Mint Tip: Your income is the engine of your finances. If you own your own business or are in a sales role, give yourself a small attainable goal to implement today. It could be as simple as calling everyone on your list whose name starts with the letter A.  If you are out of work and discouraged, do as Gardner did and try to find an internship at a company with a lot of growth potential. Don’t be afraid to take a temp job. You never know when your future might already be staring you in the face.

2. Elon Bomani

Elon Bomani found herself penniless and
living in a homeless shelter with a small child after her husband emptied her checking account and they divorced. Luckily, she had perfect credit and was able to obtain $100,000 worth of credit cards to start her own businesses and purchase a home with zero down.

Now, certainly taking out $100,000 in debt and buying a home with 100% financing as she did might not sound like an ideal solution. The lesson comes from learning how she first eliminated miscellaneous debt and later turned that debt to her advantage.

Bomani never was a spendthrift (which is how she managed to have such good credit in the first place) and instead of using credit to buy extravagant items for herself, she used it to invest and grow wealth. There’s no question she took a risk and even though now might not seem like the best time to start a new business, her example shows that sometimes a little discomfort might be just what you need to get out from under. It’s never too late to reeducate yourself.

3. Li Ka-shing

Li Ka-shing is the epitome of the self-made man. His family fled China during the Japanese invasion of 1940 and went to live with his wealthy uncle in Hong Kong. His father passed away shortly after the move and a few short years later, he was forced to drop out of school to take responsibility for the family at age 15. Working at a plastic factory for 16 hours a day he acquired the knowledge necessary to start his own factory and eventually became one of the largest suppliers of plastic flowers in the world. The wealth earned from the plastic factory allowed him to take advantage of a decline in property values in the 1960s and begin purchasing land.

He named his company Cheung Kong after the Yangtze River to reflect his belief in the value of synergy. He is now a billionaire and ranks #11 on the Forbes Billionaires List. So, again, we have an example of how the shake-up of the family unit calls people to a level of self-sacrifice they otherwise wouldn’t have achieved. In a recent commencement speech he offered some of the wisdom of his experiences:

“So what is the secret I want to share? It is something I call the hubris index, an internal and on-going process of weighing and measuring the size and affect of our ego. The hubris index governs not only our attitude, but also our behavior. Are we excessively proud and boastful? Do we fail to listen to people that tell us we’re wrong? Do we refuse to get feedback about the outcome of our acts and decisions? And are we lax in planning in advance for possible problems, consequences, and corrective measures? The humble heart,” says the wise man, is the beginning of all knowledge. It is the pathway to enlightenment, spiritual growth, service, and a life lived with joy.”

I have found myself in hard times with a resistance to take on a job that I thought was beneath me, and stubbornly stayed on a path that wasn’t working. In those times, it is difficult to look at someone else’s success and tempting to think of them as lucky or more blessed, but remember these words from one of the richest men in the world – “No, I wasn’t lucky. I worked hard to achieve the goals I set for myself.”

Mint Tip: You have to start somewhere. One of Kay-shing’s key steps on his path to wealth was having enough cash on hand to purchase his own factory when lease expenses went up, which led directly to his impressive real-estate investment portfolio. In your case, this could translate to cutting some fat from your monthly expenses and setting aside the difference in savings each month. If your plan is to buy a home in the next few years, make sure your credit is in good shape. Go to either freecreditreport.com or transunion.com to get the three bureau reports with credit scores. In addition, you can go to listclassaction.com if you are a US Resident to receive six months of free credit monitoring.

4. Deann Alsaker

It’s sometimes hard to relate to the story of a billionaire because it seems so out-of-reach. But those billionaires all started from a quest for survival. Just like Deann Alsaker. Alsaker’s husband worked at a garbage company and noticed that people were throwing out perfectly good clothing. Instead of sending that clothing to a landfill, she saw an opportunity to recycle those items and turn a small profit. She also found a community program called Family Assets for Independence Minnesota (FAIM) to help lower income residents of Minnesota save money for a home, school, or business.

Tragically, her business was completely destroyed by a fire in 2004. Looking back, she told the Star Tribune, “The fire was a real blow, but you learn what you need to do to keep going, and then you do it.”

For someone like Alsaker that was just a momentary setup. Not only did she recoup her losses but she rose from the ashes to become a major contributor to a number of charitable causes—from providing rags for bedding at animal shelters to supplying clothing to developing nations. In 2006, Deann was awarded the Nothing Ventured, Nothing Gained Award by WomenVenture in St. Paul, Minnesota for her perseverance and entrepreneurship.

5. Bill Clinton

While watching Bill Clinton’s speech at the Democratic National Convention, I remembered how much his childhood shaped who he is today. His father was killed in a car accident before he was born. And his mother made the difficult choice to leave her children with their grandparents while she studied to be a nurse.

His grandparents sold goods to people of all races and from all walks of life, and demonstrated concepts of public service to Clinton. In an interview with CBS News, he described his stepfather, Roger Clinton, as an abusive father who was also an alcoholic. “I think the fact that I was born without a father, and that I spent a lifetime trying to put together a picture of one also had a lot to do with how I turned out,” he said.  “Good and not so good. But I think on balance, more good than bad.”

He pursued his passion and took to memorizing the words of people who inspired him such as John F. Kennedy and Martin Luther King. Much like Elon Bomani and many others who have overcome adversity to succeed, his intense devotion to furthering his knowledge gave him a foundation of wisdom to draw from. He also worked hard to obtain scholarships at every level of his education. He is admittedly far from perfect, but he is a strong example of the classic American Dream in which a man or woman from a broken home can rise to the most powerful position of leadership in the world through perseverance and commitment.

Mint Tip: When you are just trying to put food on the table, the cost of education can seem out of reach. Consider doing as Clinton did and take advantage of resources that can help you find scholarships such as www.fastweb.com. If the process of researching and applying for them seems overwhelming, give yourself a small, attainable goal such as “today I am going to apply for one scholarship no matter what. Don’t worry about finding the perfect one, just help yourself with a small action step, which helps you get started on the item that you have procrastinated on or avoided for months or even years.

Many of you probably have a similar story of a parent, grandparent, friend or neighbor, and we would love to hear what they have done to be extraordinary and make a better life for their children. You might not think that your story is comparable but whatever the step was that got the ball rolling in the right direction, a month without cable, downsizing to a smaller house, or sharing one family car instead of three–please share your story with your fellow readers, and you just might trigger something in their imagination that puts them on a similar escape trajectory.

Just as Mint’s software streamlines the management of your personal finances, our content delivers a fresh perspective that gives you the actionable advice you need to make the right choices about how to spend and save your money.

We understand that the challenges you face are different from your parent’s generation and your expectations about how you live, work, and play are different too. If you’re just getting started in managing your money, look to Mint.com for how-to information on everything from planning a budget vacation to improving your credit rating. We’ll continue to provide you with money saving tips on all of the things you do, whether that’s buying concert tickets or going on a surfing trip to South Africa. We’ll also be covering topics that you won’t find on other personal finance sites. For now, those will remain our little secret.

And we can’t do it without you. Our hope is that the Mint blog becomes a two-way forum for your thoughts, hopes and aspirations around the money you work so hard for every day. We encourage you to reinvest—not just in stocks or mutual funds but also in your relationship with your money. Just like in your personal relationships, a small investment can pay huge dividends. As we like to say around here, “money is for living,” and that philosophy is at the heart of every blog post we write.

Let us know what kinds of articles you’d like to see on Mint, either by leaving a comment here or writing me directly at lee@mint.com. A penny for your thoughts?

Lee

Tell your friends you’re going backpacking in Southeast Asia and they may smirk at the suggestion you’re getting in touch with your spiritual side. But there’s another kind of inner peace you may discover, the kind that can only come from saving money while still having the time of your life.

Southeast Asia is beautiful, culturally rich and a place where its easy to live off of $20 or less a day. You won’t even feel guilty eating greasy street food–the cheapest way to dine–because you’ll burn off all the calories on the trail. Go now and you’ll avoid the crowds that come in peak season but still benefit from the cooler weather.

Your biggest expense will be the airfare—getting there can be pricey, but Cathay Pacific’s All Asia Pass gives you 21 days to fly to four destinations and starts at $1,199. Here are some of the hot spots included—and why they belong on your itinerary.

Mae Hong Son

This northwestern Thai mountain region draws fewer tourists than Chiang Mai and Chiang Rai, but it still has everything a backpacker would need. You’ll find basic necessities like ATM machines and Internet cafes in the town of Mae Hong Son. Make this town or Pai your home base, but head to hill tribe villages for unforgettable culture and Thai food cooked fresh over an open fire. Hire a guide who can arrange your meals and campsites, or check into a Pai  hotel for less than $30 a night and go on day hikes.

Currency: baht

Peak season: November to April

Ho Chi Minh City

Hostels can cost as little as $10 a night in the city’s backpacker ghetto, Ngu Lao. Spend a day trekking the Cu Chi Tunnels, a piece of Vietnam War history outside Ho Chi Minh City (formerly Saigon), before getting out and going north along the Ho Chi Minh Trail. Hop-on, hop-off buses cost about $20 to take you all the way to Hanoi. The one place you’ll want to make sure to get off the bus is Dalat valley. See coffee and silk being made, and take in waterfall views.

Currency: dong

Peak season: November to March

Phnom Penh

This Cambodian city draws a slew of tourists gawking at French colonial architecture and learning grim Khmer Rouge history on the Killing Fields just outside the city. The real attraction is Angkor Wat (near Siem Reap); a spectacularly preserved temple that was first built as a Khmer castle in the 12th century and has served as religious center for both Hindus and Buddhists. The less spiritual among you may recognize the temple as the site used in the 2001 movie, Tomb Raider. Siem Reap is backpacker-friendly with a number of inexpensive restaurants, Internet cafes, and places to burn CDs of your trip photos. Hostels in both Phnom Penh and Siem Reap cost $10 and up a night, while buses between the two are $5–10.

Currency: riel (US dollars are widely accepted in cities)

Peak season: October to June

Bangkok

Southeast Asia’s own Sin City is the ideal place to celebrate the end of your long trek. The Guardian ranked The Dome Bangkok’s best bar, and it’s true that the swank rooftop lounge is a good way to indulge. On the other end of the spectrum, you can kick back with a beer in the aptly named Cheap Charlie’s, a shack surrounded by massage parlors (I’m not here to judge). Rest your head at Bangkok Centre Sukumvit 25, touted as the world’s largest budget accommodation ($9 a night in a dorm-style room), close to all transportation and equipped with WiFi.

Currency: baht

Peak season: April to August

Now that you have climbed Buddhist temple stairs, stood on the killing fields and partied in Bangkok, you can spread the word to all those smirky friends that backpacking in Southeast Asia isn’t just for college kids trying to find themselves. Or you may want to keep the information to yourself so it will still be affordable next time you go.

One of Lee’s highest priorities is to listen to your feedback on what is/is not working for you in our current approach to the blog. Feel free to share any real-time feedback now, via a comment, if you’re in that mood.

I’d also like to thank Silicon Valley Blogger, who has done a stellar job acting as Mint’s blog mistress for the past several months, helping me keep the conversation and content flowing on an iterim basis. SVB’s own blog, The Digerati Life, is always thought provoking and I encourage you to check it out and subscribe to The Digerati Life through this link.

We’re rapidly growing the Mint team in other areas as well. Please check out our job postings for Community Manager and multiple Product and Engineering roles.

Donna