Invest in yourself

Learn how to protect your future and manage your money with expert advice.

Four Basic Ways 401(k) Plans Work
There are four ways money can go into a plan, and only one of them comes out of your pocket! It's free money, in that sense. Take maximum advantage of it.

1.	The employee makes pre-tax contributions.
2.	The employer makes basic contributions.
3.	The employer matches your contributions.
4.	The employer makes a profit-sharing contribution.

Three Great Things About 401(k) Plans

	You pay no taxes on contributions.
	You pay no taxes on profits.
	Employers essentially give you "free money."

Drawbacks of 401(k) Plans
Once you make a contribution, Ric says to kiss that money goodbye until you reach retirement.

	Once you put money into the plan, it must stay there. You cannot make withdrawals.
	Borrowing is bad. If you take any money out prior to retirement, you will be charged taxes as well as a ten percent penalty.
	401(k) plans can be confusing, and employees often don't know what to do with their invested money when they leave a company.

Repair Kit for Damaged Credit

FINANCIAL FREEDOM

By Suze Orman

Your credit score is an incredibly important part of your financial life. All your creditors will look at your score to determine whether you're eligible for credit and, if so, at what interest rate. The higher your credit score, the lower the interest rates you pay on credit cards, car loans and mortgages. Even landlords, cell phone companies and some employers look at your credit score, because if you can't be good with money, you might not be a good tenant or employee. So you want to do everything you can to make sure your score is as high as possible. Some tips:

Pay on Time.
Your track record paying all your bills, not just your credit card, is the single biggest factor in your credit score. It accounts for 35% of your score. So don't be late. If you only send in the minimum amount due on your credit card bill, send it in on time, even if that means you have to pay to overnight it.

Keep Your Balance Low.
The amount you owe on your credit cards as a percentage of your outstanding credit limit—known as your debt to credit limit ratio—accounts for 30% of your score. The best way to keep this percentage low is to make sure you don't run up a big balance. Another option is to call your card company and ask for your credit limit to be raised. For example, if you have a $5,000 balance and a $10,000 limit, you are at the 50% level. But if your credit limit is boosted to $15,000, your ratio is reduced to 33%. Be very careful here, my friends, and don't ever use that extra credit.

Build a Strong History.
How long you have had an account determines 15% of your score. The longer the history, the more confident a lender can be about your financial behavior. For this reason, don't cancel any unused cards, because their history will be wiped from your record. So, let's say you no longer use a card you took out 10 years ago, because you got a better deal elsewhere. That's fine; just stick the card somewhere safe and sound, but don't cancel it outright. Even though you aren't using the card, you still want to use the history.

Don't Be a Credit–holic.
Potential lenders hate to see you applying for a lot of credit; it makes them think you're going to get in way over your head with debt. Your pattern of opening new accounts, or applying for new accounts, determines 10% of your grade. One important caveat: If you confine your mortgage shopping to a two-week period, all those applications (and lender requests for your credit score) will be bundled together and count as only one request on your record.

Watch Your Mix.
You don't want to have a ton of open credit lines or loans. Your mix of credit cards, retail cards and installment loans accounts for the final 10% of your score.

FINANCIAL FREEDOM

FINANCIAL FREEDOM
Play Your Cards Right
by Suze Orman

Thanks to recent congressional pressure, some credit card issuers have become a little more consumer-friendly. Citigroup, the world's largest card company, has quit using "universal default," which permitted it to raise users' interest rates even if they slipped up on payments to other creditors. Chase has decided to stop using "two-cycle billing," a practice that enabled the company to charge interest even for periods in which cardholders didn't carry a balance. But don't think for a minute that creditors have become altruistic. They can still make plenty of money off your account if you aren't paying attention. Here's how a little effort can help:

Request a lower interest rate. If you've been a reliable client with a solid credit profile, there's no reason to settle for a card with a rate of 15 percent or more. Call customer service and be polite but firm: "Given my strong credit history and the fact that I pay my bills on time, I think the interest rate on my card should be reduced to 8 percent. If you can't do that, I intend to take my business to a lower-rate card and cancel this account." (You can shop for a better deal at Bankrate.com, but don't actually cancel the card. It's best to get the balance down to zero by transferring it to a new card or paying it off. Then don't use the card again.)

Pay on time. According to a study by the Government Accountability Office, 35 percent of cardholders paid at least one late fee in 2005 and the average cost was $34, compared with $13 a decade earlier. This is too expensive a slipup to make. Even if you can't cover the bill in full, send in the minimum payment by the due date.

Eliminate your highest-rate balance first. To deal with multiple credit card balances, always pay the minimum due on each, and add more than the minimum onto the one with the highest interest rate. Concentrate on getting rid of the debt on that card, then move on to the card with the next highest interest rate, and so on, until you're in the clear.