If you are the super sensible type of college grad who spent all of your time at school working hard to stay afloat, you might well have come out with your diploma as well as a nice pot of savings – or at least not too much debt.

If on the other hand you didn’t (like 99% of your peers, myself included) then congrats, you have just arrived at that point in life where you need to repair and rebuild and start your journey to financial stability.

Step 1: What Are Your Key Goals?

When you have lots of debt and little income you have 2 overriding goals; so these are what we will focus on:

1. To pay off your debts, so that you can begin saving.
2. To repair your credit rating, ready for when you need it.

So before we get started, your first task is to write down all your debts – this won’t be fun, but you need to know your starting point. So make a list of who you owe, how much and what it’s costing you (ie, interest rate).

Step 2: Paying It Off

You need to prioritise which debts are paid off first. In general store cards, then credit cards and overdrafts, loans etc come last.

Paying off the high cost debt will save you the most money, money which can then be used to pay off more debt. As soon as a card is paid off you can destroy it and cancel the account.

High Risk Strategy: If you can take a relatively low interest loan to pay off all of your cards this might be a good idea, it will save you money and give you a much more manageable repayment. Be careful though, if you end up taking out new cards you will just get further into debt. Only take this option if you are sure you can trust yourself and if the numbers add up. [Editor's Note: Definitely high risk and not generally suggested -- be careful!]

Use Your Credit Cards

Long term credit card debt is bad for your credit rating, so pay these off first. Once you have paid them off though, using your cards occasionally will help to improve your credit rating. Again, this is risky and should only be done if you trust yourself to pay off your balance in full every month.

If you can’t use a card responsibly just get rid of it, slip ups will cost you, and you can’t afford that right now.

Be Vigilant

For the time being you are going to be constantly close to your limit, because all of your income will be working hard to pay off debt. It is important to watch your finances closely and be careful to avoid dipping into your overdraft (or at least going past the limit). Set aside 10 minutes every other day to review your progress so that you always know where you are.

Step 3: Getting Them Paid Off

If you have multiple debts, keep an eye on the balances. Sometimes it is worth paying off a smaller debt as soon as you can, even if it is not a high interest one. This isn’t optimal financially, but being able to cross off a debt is great for your motivation.

In the long term you just need discipline; it can be very hard, but as long as you can see progress being made you should be able to stay motivated and keep at it.

This article about becoming financially smart was brought to you by Ricky from CurrencyConverter.co.uk, home of the currency converter widget!

I was driving home from work yesterday when I heard an advertisement from a company that offers financial advice. They were selling their services on the promise of a truly personalized approach. Their message made it clear that they would ask you what your definition of financial freedom is and then use it help you to reach your goals. I thought this was an interesting approach. Here’s why:

Most so-called financial advisers sell themselves as investment advisers or portfolio managers. Most advisers often forget that there’s more to your financial life than just investing and so I was surprised to hear this company market themselves as dream-makers (my term, not theirs). Their asking you what financial independence means to you, shows that they are interested (of course I’m makings a few assumptions here) in helping you achieve all of your financial goals, not necessarily just those related to investing.

After hearing the commercial I got to thinking about what financial freedom means to me and I wanted to ask you, my readers, a little bit about what it means to you as well.

To me, financial independence is being completely debt-free (which means no mortgage), having an emergency fund set aside, maxing out my retirement accounts every year and being in a position to travel and fulfill my philanthropy goals. These goals are most certainly achievable (and measurable as well), but will take plenty of discipline, time and hard work to get there.

Here is my question for you, my amazing readers. If you were meeting with the previously mentioned financial advisory company what would you tell them when they ask you what financial independence means to you?

Like so many of my personal finance blogging peers, I believe that anyone can excel at managing their personal finances; I believe that anyone can become financially independent. Most people just need a little bit of advice and an occasional hand to hold. While I can’t necessarily hold your hand (hard to do over the internet) I am able to offer up advice on occasion. Today I’d like to offer 355 money saving tips that you can use to turn your financial life around, or continue on the path of saving money that many of you are already on.

These tips can be found on three different personal finance blogs: The Simple Dollar, The Dough Roller and The Frugal Law Student. I’m going to quote for you some of my favorite tips, the rest you can check out from these respective PF blogs.

5. Make your own gifts instead of buying stuff from the store. You can make food mixes, candles, bread, cookies, soap, and all kinds of other things at home quite easily and inexpensively. These make spectacular gifts for others because they involve your homemade touch, plus quite often they’re consumable, meaning they don’t wind up filling someone’s closet with junk. Even better – include a personal handwritten note with the gift. This will make it even more special than anything you could possibly buy down at the mall, plus it saves you money.

45. Master the ten second rule. Whenever you pick up an item in order to add it to your cart or to take it to the checkout, stop for ten seconds and ask yourself whyyou’re buying it and whether you actually need it or not. If you can’t find a good answer, put the item back. This keeps me from making impulse buys on a regular basis.

100. Never give up. Whenever the struggle against debt feels like it’s too much, go read a personal finance blog and remember that there are a lot of people out there fighting the same fight. Read around through the archives and learn some new things – and perhaps get inspired to keep going, no matter what.

For more money saving tips from The Simple Dollar check out Little Steps: 100 Great Tips For Saving Money For Those Just Getting Started.

Don’t pay interest on credit cards. This is obvious, but I soon as you fail to pay off the credit card in full, the high interest payments start to eat away at your monthly budget. If the temptation to spend more than you can pay on a credit card is to great, get rid of the credit card…

Check the insulation in your home. Extra insulation can easily pay for itself in one or two years, and it helps save the environment, too.

For more money saving tips from The Dough Roller check out 75 Painless Money-Saving Tips.

Don’t buy into trends. Keep a wardrobe of classic pieces, so you don’t have to update your clothes every year.

Eat right and exercise daily. You’ll reduce health costs.

Don’t buy extended warranties. Eighty percent are never used, and they’re a major profit item for the vendor. That’s why they push you so hard to buy them!

For more money saving tips from the Frugal Law Student check out 180 Money Saving Tips to turn your Financial Life Around 180 Degrees.

We will clean your credit up, no matter how bad it is. Bankruptcies, bad loans, judgments and liens – we can remove it all.

You’ve probably heard lines similar to this before. Maybe you heard it on the radio, maybe you saw a commercial on television, or maybe you saw an ad online or in the newspaper. Either way you were likely listening to half-truths or possibly even full-fledged lies. The truth is that these so-called credit repairing companies probably won’t repair your credit much (if any) and will likely charge hundreds to thousands of dollars for just about nothing.

Here’s the truth about credit repair. It’s not easy and it takes time and discipline. If you want your credit repaired then you should consider yourself the responsible party – after all, you were the one who messed it up in the first place, so why shouldn’t you be the one who has to work on fixing it? Let me tell you how.

Get Yourself A Copy of Your Credit Report

Go to annualcreditreport.com and get yourself a copy of your credit report from one of the three credit reporting agencies (or all of them if you want) for free. In the increasingly electronic age that we’re living in I’d recommend checking your credit report as often as possible so you can avoid disasters such as identity theft and incorrect reporting. If you stagger the reports you get from annualcreditreport.com then you can check your report every four months.

Make Sure You Know What’s On Your Credit Report

You didn’t think that you were done after getting a copy of your credit report did you? Now that you’ve gotten yourself a copy of your credit report it’s time to study it. What’s on it? Make sure that everything listed is something that you recognize. For example if there is a home loan on your credit report but you don’t own a home (and never have for that matter) then there’s something seriously wrong. So be sure to comb through your report and make sure nothing looks out of the ordinary.

Get Your Spending Under Control and Pay Down Your Debt

You will likely never improve your credit score unless you can manage to get your spending habits under control and start to pay down your debt – especially credit card debt. Once you start to pay down any high debt levels you might have you will start to see your credit score increase.

A two-fold parting question for you: how is your credit and have you had any experience with credit repair agencies? I’d love some feedback on the matter.

Ann R. writes:

I have a 5 year fixed rate mortgage loan that will be maturing April 1, 2009. The current balance is $20,500 and the rate is 6.75%.

I am no longer living in the property and have been renting it for the past three years (same tenants) and I resigned from my job in November ’08 to attend grad school full time. Now that the loan is maturing I need to request an extension on the maturity date or refinance.

Since I don’t live in the property or no longer have a full-time job I am running into problems requesting either option from my mortgage lender.

Would a viable option be to put the balance on my credit cards spread over two cards (currently no credit card debt)? One card has a credit line of 13K with a fixed 3.25% rate until the amount is paid off and the other card has a 20K credit line with an option for a 2.99% rate until Oct. 09 then the rate goes to 9.99%. Please let me know if this is a good option or if I should do something else.

Thank you.

What do you recommend Ann should do? Has anyone else been in a similar situation? Leave your comments here and I’ll be sure to make sure Ann gets a chance to read not only my advice, but the advice of you (my readers) as well.

My response to Ann is below…

I’ve tossed around a few hypothetical numbers for you Ann, and while you may have some difficulties securing any of these options (due to your employment situation) you should be able to find lenders who are willing to work with you. So let me show you what I’ve come up with.

I know you’ve been having difficulty getting a lender to approve you for a new mortgage, and things are especially tight out there right now, but have you checked at any local credit unions or savings and loans? Being smaller institutions they should be more willing to work with you.

With that being said let me show you what I’ve done here. I plugged in three different scenarios, each based on a loan amount of $20,500 and a repayment time of 120 months (or 10 years).

Keep in mind that each of the interest rates that I plugged in for the three different scenarios are just estimates. As for the Credit Card scenario rate, I calculated this with $13,000 on that 3.25% card and the remainder ($7,500) on the 9.99% card (this creates a weighted average of 5.72%).

Now for the problem with these numbers. The biggest problem is that if you were to put $20,500 on credit cards your payment would be a LOT higher than what I calculated it to be. This is both good and bad. Assuming your rate stayed at this super low 5.72% you could pay off your loan in less than 10 years, but your payments would start at around $615 (based on a 3% minimum payment) and it would take almost three years to get your payments down to around $250 dollars.

My guess is that payments in the $600 range might be a little high for a part-time grad student. Your best bet would be to get your mortgage refinanced, but I also thought you might check around at your local credit unions to see if they offer a home-equity product that’s structured more like a mortgage. It should be easier to qualify for (even with your part-time income) as long as your credit is good. On top of that any interest paid should be tax-deductible. For an example of this type of home equity product check out this link to the Master Mortgage at Desert Schools FCU.

Good luck with getting this refinanced Ann! To all of my readers, don’t forget to leave your comments at the end of this post!

Many of you know that I’m currently attending Arizona State University where I’m working on a Global Business/Financial Management Degree. Well I’m coming to the end of the line at ASU, as I am on track to graduate in May. I’m getting pretty excited to graduate and I’m hoping that I’ll be able to find a finance-related job once that day comes, but in the meantime I’ve been studying advice that’s been given to recent graduates. Most of the advice is money-related (although I do read as much as I can on job hunting) as you might have guessed.

I came across a particularly interesting article the other day at Investopedia which lists 5 financial mistakes that many recent college graduates make.

I’m going to list the 5 mistakes for you but I want to turn them around from mistakes to good financial tips. I know that making mistakes are the only way to learn some lessons, but sometimes it’s enough just to read some great tips and advice. I hope that by listing these 5 Must Read Tips for New Graduates that you will all be smart and dedicated enough to learn from them and apply them in your own personal life. So without further ado…

Tip #1: Don’t Just Plan to Save – Actually Save

Let’s face it, recent graduates always have big plans. Nobody goes to school for four years (or longer) to get a degree without having made plans for what they will do with their life after school. Travel the world? Check. Make a six-figure income? Check. We’re dreamers and our dreams usually involve money and often lots of it.

While there’s nothing inherently wrong with desiring money it’s important to remember that in the real world dreams don’t mean much, unless you make them mean something. If you want to have a lot of money you have to teach yourself to save money. If you never learn to save you’ll likely never be wealthy, no matter how much you make a year.

Tip #2: Money (Poorly) Spent is Money Lost

Sometimes it seems like it’s in human nature to be wasteful. We get a great job and an even better paycheck and suddenly we find ourselves wanting needing things that we couldn’t afford before we got said paycheck. While I’m all for enjoying life it’s still a good idea to think a little before spending money, especially large amounts of it. Check out what Investopedia had to say on the matter:

In the real world, assets either appreciate or depreciate. The purchase of a car is the purchase of a depreciating asset; it diminishes in value as soon as it leaves the lot. The same is true for furniture, clothing and expansive television screens.

Tip #3: If You Don’t Control Your Debt, It Will Control You

Here’s some advice to further the last tip that I’ll start off with a question: If you spend uncontrollably what is likely to end up happening? The answer? You’ll likely find that you’ve spent more than you make and your debt levels will start to increase. This is not to say that you shouldn’t take on any debt, but rather the type of debt that often comes from uncontrolled spending.

If you increase your levels of bad debt (credit cards or other unsecured) then you’ll find your net worth quickly decrease and your cash flow decrease as well. While a lower net worth is bad news in the long run a low or negative cash flow can be especially dangerous to your financial health. Eventually if you don’t control the amount of debt that you’ve taken on you’ll find that it is controlling you – and that is a situation you never want to find yourself in.

Tip #4: Build Yourself a Positive Credit Rating

In the U.S. credit is everything. Without a positive credit rating you’ll have a difficult time buying a house, your insurance rates will be higher and you’ll find yourself with exorbitant interest rates on any loans that you do qualify for. As I’ve pointed out in a previous post your credit score literally defines who you are to most financial institutions. Therefore in order to carve out a favorable image of your credit-self you’ll need to build yourself a positive credit rating.

If you’re interested in how you can increase your credit rating then don’t forget to click on the link above. You’ll find a wealth of information on how your credit score is calculated and what it can have an affect on.

Tip #5: You’re Going To Eventually Die – Make Sure You’re Prepared

They say only two things in life are certain: taxes and death. The cold hard fact is that you’re going to eventually die – we all are – and it’s best to prepare early for the inevitable, because you never know when that day is going to come. It’s important to prepare for your death, not only by getting life insurance (in order to support any of your family that depended on your income) but also by preparing a will or trust in order to pass on your assets to those closest to you (and take care of funeral expenses, etc.).

I’ll be honest with you here – I’ve not done all of the above tips. I’ve followed most of them but I’ve made mistakes as well. I really like the above advice and I completely believe that if new and recent graduates were to follow them religiously they would find themselves in a very happy place. Good luck out there.

The start of a new year, new month or even a new day is a great time to look forward to what you want to accomplish. Do you remember the phrase “Carpe Diem” from that horribly depressing movie, Dead Poet’s Society? It means “seize the day.” There really is no better day than today to decide on who you want to be or, financially speaking, what you’d like to do.

Look Back Before Looking Too Far Forward

Before you get too far ahead of yourself on your looking forward don’t forget to look back. If you want to change your spending habits then you’ll need to be aware of where you messed up and on the flip-side where you did well. With that being said, what did you accomplish yesterday, last month or last year? How did you do financially? Take a good look at how you’ve done with your money in the past and try to identify any areas of weakness and strength.

How Have Your Saving and Spending Habits Been in the Past?

Did you save more than you planned, or did you end up with more debt than you had at the beginning of the year? Maybe you went on holiday and overspent or, on the other hand, spent less than you had budgeted for. No matter how horribly (or how well) you’ve done with money management in the past it’s never too late to learn from your mistakes and what you’ve done right.

Now Look To The Future

Now that you’ve identified areas where you’ve had difficulty in the past it’s time to take a look at how you can do better with these problem areas in the future. First take a look at your regular monthly income and expenses and pay special attention to any areas of weakness. For example if you consistently overspend on eating out try to compensate for that in your budget by either budgeting a higher amount for eating out or forcing yourself to eat in more often. By doing this you’ll be able to regain control over problem areas in your budget.

Try To Anticipate Unexpected Expenses, and Budget For Them

Don’t forget to take into consideration any unexpected expenses that you could run into throughout the year – and especially don’t forget the little things that no one really thinks of such as birthdays and anniversaries. If your car is pretty old don’t forget to plan for possible repairs or if you anticipate buying a new tv or other expensive items don’t forget to budget for that as well.

How have you done with budgeting in the past? Do you have any experiences you’d like to share? I hope that you were able to pick up on a few things. Good luck out there and… Carpe Diem.

It’s my favorite time of the year once again. I’m out of school until next semester and right now all I have to worry about is going to work and making money. I still have a job and I don’t have to worry about losing it either so to be completely honest with you, my life is going pretty well.

While things are going well for me, I am not naive enough to believe that everyone else in the World is having a merry holiday season. I know things are rough out there for a lot of people, and while I’m counting my blessings that right now I’m not facing a lot of difficulties I’m still concerned for others’ well-being.

I’m especially concerned that people are getting themselves into unnecessary debt this Christmas season, just to pay for the most extravagant presents they can think of for their kids or their significant others. While it’s nice to give and receive the best presents it’s really not practical to give what you can’t afford to give. Don’t get yourself into debt that you’ll be paying off until next Christmas just to pay for this one.

With that being said I’d like to ask you a question, and be honest with me here.

With any luck the answers are going to come back with very little to no debt taken on this year, but I’m worried that I won’t get the results I’d really like to see. Nevertheless I hope that you all have a Merry Christmas and if you’re not there already make sure you get started on creating a debt-free life for yourself!

Today we’ll be featuring a guest post from Simit Patel, a contributing analyst at InformedTrades.com

As the recent economic turbulence has shown us, we live in a global economy. And thus, if you want to astutely manage your finances, you need to know about how global factors can affect your wealth.

And if you hold US dollars, there’s one factor that you should be particularly wary of: China.

The US government is currently running record levels of debt, and with government spending continuing to rise given the bailouts, entitlements, and foreign policies that have been promised, the debt will likely rise — especially when we remember that the tax base is diminishing due to rising unemployment. And right now, one of the biggest lenders to the United States is China. To put it in consumer terms, China is like the bank that gave the US a credit card to finance its expenditures.

Of course, how much longer China, as well as other buyers of US Treasury bonds, continue to buy US debt is increasingly becoming an issue — particularly as the global economy is contracting, thus making lenders more wary of lending. Accordingly, China and the rest of the world may not be buying US debt — just at the time when the US government is looking to increase its expenditures.

So the question: is the US on the verge of maxing out its credit card?

Well, one way the US government can attract more lenders is to raise its interest rates. Currently rates are moving in the opposite direction; the Federal Reserve, the organization that establishes the monetary policy of the US dollar, is moving interest rates to near zero in an attempt to encourage borrowing and spending as a means of stimulating the economy. However, if the US has trouble securing more debt, it may need to raise rates — i.e. the amount it is willing to pay for the privilege of borrowing — to attract the debt. This does, however, introduce greater problems down the road, as it will increase the overall debt burden on the
US government and its taxpayers.

Alternatively, if the US government is not able to secure more debt — if, to put it in consumer terms, it’s credit card is maxed out — it will need to print more money to pay off its debts. This will result in currency devaluation. Personally, this is the scenario I am more concerned about.

If more money is printed and the currency is devalued — meaning it will cost more to buy the same goods and services — how can you protect yourself? Well, just as we now need to monitor the global economy for signs of problems, we can look to the global economy for solutions as well. Foreign currencies and precious metals — particularly gold and silver — have historically served as ways to protect against currency devaluation. For individuals looking to preserve and grow their wealth, diversifying globally may be a path worth embarking upon.

Simit Patel is a currency trader and contributing analyst at InformedTrades.com, a site that offers free courses on trading the world’s financial markets.

As a personal finance blogger I find it interesting to read other personal finance blogs not only to learn from these individuals but also to see how they perceive money and the world around them. You can always find links to some of my favorite finance blogs in my blogroll, but today I want to talk a little bit about a fantastic personal finance blog that has been around for a while now: MoneyNing.

I bring up MoneyNing for two reasons. The first reason is that David knows his stuff and he is committed to sharing with his readers what he’s learned from his own financial life. The second reason is that I’m actually being featured on his blog today with a guest post that I wrote about my journey to prosperity.

A Journey To Prosperity

For today’s post I’d like to expound a little bit more on the goals that I’ve set for myself on my journey to prosperity. Before you continue reading here you definitely ought to check out Debit and Credits Plan to Prosperity over at MoneyNing (clicking the link will open in a new window) and then come on back for some further clarification.

Ok. Did you read it? What did you think? Please if you have any comments related specifically to that article leave them over at MoneyNing. Otherwise let me help you understand a little bit more about my financial goals.

Being Rich Requires Thinking Rich

Like I mentioned over at MoneyNing I think that being prosperous is so much more than just being lucky. It requires hard work and dedication to achieve wealth. As an example let’s take a look at the worlds richest man, Warren Buffett. This is a man who has worked hard and smart every single day of his life. His wealth didn’t come easy to him, but because he was willing to learn and willing to work hard he’s been able to achieve extraordinary things. Being extraordinary doesn’t just come from hard work though, it requires some level of goal setting and follow-through. Think of it this way: If you want to be rich then you need to learn how to be rich.

I’ve set several goals for myself. Let me share them with you now, along with how I plan to achieve them:

• Be in a position to retire by the age of 55

I will contribute as much as possible to my 401k retirement plan. Currently this number is 10% of my income.
I will make smart financial decisions such as only buying a house that I can easily afford.

• Build my personal net worth to $1 million plus dollars

I will keep my liabilities (debt) to a minimum by buying only what I can afford.
I will make smart investment decisions to grow my net worth at a minimum of 10% a year.
I will continue to save money out of my paychecks beyond what I’m saving for retirement.

• Avoid debt as much as possible

I will not use my credit cards for everyday purchases unless I have the cash set aside to pay them off immediately.
I will not make foolish decisions and purchase things that I can’t afford with cash and that I don’t really need.
When I make large purchases (such as a house or car) I will compare my options and borrow as little as possible.

Those are the goals that I’ve set for myself; my roadmap to prosperity, if you will. Do you have a plan to achieve prosperity? I want you all to sit down and think about what you really want out of life and how you can achieve it. It might require some cutting back at first but in the long-run you’ll thank me, but more importantly you’ll thank yourself.