Advantage Newsletter - April 2010

Establish a rainy day or emergency fund. This type of fund is a savings fund that is separate from any other savings accounts you have and it should only be touched if the situation is dire. The standard rule is to save three to six months of living expenses. It is important to create a fund and to be financially prepared in case of an emergency or unexpected event.

Pay down credit card debt. This can help you save money in the long run. Bringing down the balance of just one high interest credit card will save you money because you will end up paying less in interest.

Put money towards your retirement account. There are many options for setting money aside for your retirement years. Consider starting an IRA. One advantage of an IRA is that you have more control over your investment options than you do with a traditional 401(k). Opening and contributing to a Roth IRA is currently restricted to those with an adjusted income limit (AGI) of $120,000 for individuals and $176,000 for couples. As of the beginning of this year, the $100,000 income test for converting a traditional IRA to a Roth IRA no longer applies. Conversions that occur in 2010 will be able to have half of the taxable converted amount taxed in 2011 and the other half taxed in 2012.

Add the money to your mortgage payment. Depending upon your individual circumstance, this may be a better option than putting the money into a savings account. Paying more towards your principal balance can help you save a substantial amount over the term of your mortgage.

Get a home energy audit. A home energy audit can help you assess how much energy your home uses and what measures you can take to improve efficiency. An audit can cost anywhere from $25 to several hundred dollars but the findings can lead you to make your home more efficient and ultimately save you money. You can perform a simple energy audit yourself or have a professional energy auditor perform a more thorough audit.