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12-02-2006, 10:28 AM
1. Switch to High-Yield Savings

Current situation: $1,000 in a savings account at the National Bank of Kansas City, which earns 0.5% annually. In a year, you'd earn about $5 in interest.

Getting ahead: Put that cash in an account at HSBC Direct, where it will earn 5.05%. In a year, you'd earn about $50 in interest.

You don't need to have a lot in the bank to make every dollar work hard for you. All it takes is a high-yield Internet savings account. These accounts yield as much as 5% annually -- a whopping five times the average rate of a traditional savings account at bricks-and-mortar banks. (Comparatively, a one-year CD -- a less flexible option -- is earning 4.88%, according to Bankrate.com. Taxable money-market funds are earning 4.73%, according to imoneynet.com, a Web site that tracks the industry.)

For the uninitiated, Internet savings accounts link to your pre-existing checking account. You can link accounts from different banks, too. Just open the account online or by mail, and then log in to set up transfers.

Here's a list of no-fee, high-yield accounts that require an initial deposit of just $1.

http://www.smartmoney.com/top5/index.cfm?story=20061116

2. Pay Yourself First

Current situation: You put a little cash in a savings account whenever you have some left over -- which isn't often.

Getting ahead: Paying yourself first, you sock away just $10 from each weekly paycheck. At the end of the year, you've saved $520. (Stash it in a high-yield, 5.05% account like we suggest in Point 1, and you'll have $532.)

No matter what your income, it's all too easy at the end of the month to wonder where your paycheck went. That makes it tough to save, and tougher still to dig out should a flat tire, sudden bout of the flu or other emergency generate a few more bills. To get ahead, you've got to learn to pay yourself first, says Rob Oliver, president of Oliver Financial Planning in Ann Arbor, Mich. "You're not only making money for today," he says. It's important to think long term.

Ideally, you should aim to save 10% to 15% of your income, says Oliver, although any savings at all is a step in the right direction. To make sure you really do it, set up automatic contributions or transfers within your online accounts, just as you would to pay bills. "You're not even going to miss that money," he says.

3. Secure Lower Interest Rates

Current situation: With a credit score of 620-659, you qualify for an interest rate of 7.202% on a 30-year, $300,000 mortgage, according to Fair Isaac Corp., which developed calculations used to analyze credit scores. With those figures, your monthly payment would be $2,037. Over the life of your mortgage, you'd pay $433,237 in interest.

Getting ahead: Improve your credit score by just a few points to fall in the 660-699 range, and you'll qualify for the lower rate of 6.392%. You'll save $162 on your monthly mortgage payment and $58,256 in interest over the life of the loan.

"There's a direct correlation between your credit score and your interest rates," says Steven Katz, a spokesman for TrueCredit.com, the consumer education site for credit bureau TransUnion. Scores range from 300 to 850; the higher the better -- and the lower your interest rate. Improving your score comes down to being a good borrower, says Katz. Stay well within your credit limit, and keep on top of your bill. "If you can only make the minimum payment, that's OK, but make that minimum payment on time," he says. Here are more credit report tips and ways to improve your score.

http://www.smartmoney.com/nowwhat/index.cfm?story=20020826

http://www.smartmoney.com/dealoftheday/index.cfm?story=20051024


But polishing your score isn't enough. To see the results reflected in your outstanding balances, you'll need to talk to your various lenders. Just asking for a better interest rate can be enough -- that tactic works for 56% of consumers, according to a 2002 study by Public Interest Research Groups, a network of state-based consumer advocacy organizations.

Of course, it doesn't hurt to do a little homework before you pick up the phone. "Prepare by having options," says Scott Bilker, founder of Debtsmart.com, a consumer Web site focusing on credit cards. "When you have leverage, you get results." Have on hand your credit score, as well as a few credit-card offers you receive in the mail, Bilker suggests. Pointing out your other credit opportunities can often yield results.

4. Take the Full 401(k) Company Match

Current situation: You earn about $3,500 per month, and take home $2,625 after taxes. You're not contributing anything to a 401(k).

Getting ahead: Contribute just 3% of your pretax paycheck, taking advantage of your employer's full match. Each month you'll put away $210 toward retirement and cut your tax bill by $26 -- all for only $79 out of your take-home pay.

With credit card debt, car-loan payments, grocery bills and a stack of other monthly obligations, it's understandably unappealing to have another chunk taken out of your take-home pay. But passing up your employer's 401(k) plan is a big mistake, cautions Gary Schatsky, a fee-only CFP in New York. (Shockingly, it's one 35% of consumers who have access to a 401(k) plan are guilty of, according to the Profit Sharing/401(k) Council of America.)

It's hard to beat the tax-deferred savings of these accounts, especially if your employer is offering free money in the form of a matched contribution. "Passing on it is tantamount to saying 'no' to a raise," says Schatsky. Bonus: Because 401(k) contributions are taken out of your paycheck before taxes, you'll simultaneously save on your tax bill, while reducing the hit on your take-home pay.

5. Get a Raise

Current situation: You're making $40,000 a year.

Getting ahead: Asking for a 5% raise is well within reach -- which means you'd be pulling in an extra $2,000.

The biggest deterrent to getting a raise is your own expectations, says Jack Chapman, author of 'Negotiating Your Salary: How to Make $1,000 a Minute.' "Most people don't have any belief that any significant raise is possible," he says. "But it is."

Whether you're earning an hourly wage or a salary, it's up to you to prove to your boss that you've earned a raise. No need to wait for a formal review -- you can do the asking at any time. "Make sure you know you've earned it," says Chapman. "Then make sure your boss knows that you've earned it." Start by acting and dressing for the position you want. "The people who get $10 an hour are typically producing $10 an hour," he says.

Jot down things you've done that have set you apart from other workers or helped the company's bottom line. Research what others in your position are pulling in. Try Salary.com, which can tell you what workers in your region with comparable experience are earning. Then set up a meeting with the boss to discuss your job track. (Here are more tips on sealing the deal.)