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Managing money like a pro

- Alan Lavine and Gail Liberman

If you ask the wealthy how they made their money, many will tell you that they started small. At least, that's what several told us when we interviewed them for our books, "Rags to Riches (Authors Choice)" and "More Rags to Riches (Authors Choice)."

Once you start getting more money into your pocket, you can increase the amount available to invest in mutual funds.

Here are a few simple ways to help you increase savings, reduce debts and get better organized:

  • Shop for the highest-yield savings account you can find. This is easy to do at www.bankrate.com. Also monitor local newspaper ads and check credit unions. The more frequently interest is compounded, or added to interest, the better. By shopping around, you can wind up with a nice cushion of extra cash.

  • Make savings investments at the beginning of the month instead of the end of the month. That way you earn an extra 30 days more interest. Over 20 years, that can add up to a few thousand extra dollars.

  • Sign up for an automatic payroll deposit plan at work. Your savings will accumulate faster than you realize. Make the deposits manually, and it's too easy to get lazy.

  • If you religiously pay off your credit card balances monthly, consider a cash-back credit card. Check credit card terms at www.bankrate.com, www.cardratings.com, www.indexcreditcards.com and www.cardtrak.com.

  • Get revenge on credit card issuers. Know what day your billing cycle ends and time major purchases for the following day. This way, you get as much as an extra 40 to 50 days to pay the bill in full. In the meantime, your cash can earn that much more.

  • Pay bills online near the end of the month. The longer the money stays in your account, the more interest you stand to earn.

  • Reinvest your common stock mutual fund dividends into new shares. You benefit from the compounded growth of your investment over the years. Reinvested dividends account for about 40 percent of the total return on the stock market, notes Standard & Poor's. The rest is due to stock price appreciation.

  • Consider boosting retirement savings account returns by investing in a bond fund and having your interest reinvested in stock funds. This tactic, often used by pension funds, is a low-risk way to invest in stocks.

  • Store receipts for returnable items in one place. We have been able to return items that broke after more than a year to stores for full refunds. This can spell huge savings--particularly on major ticket items. For electronics, we staple receipts to instruction manuals.

  • If at all possible, pay property taxes once annually rather than in installments. Do the same with insurance. Not only are the rates typically cheaper, but you also stand to earn additional interest.

  • Do you routinely get a tax refund? If so, consider increasing the number of deductions on your income taxes at www.irs.gov. The longer the money stays in your account rather than that of the IRS, the more money in your pocket.


    Spouses Gail Liberman and Alan Lavine are syndicated columnists. You can purchase Alan Lavine & Gail Liberman's latest book Quick Steps to Financial Stability (QUE Publishing 2006) online at www.moneycouple.com or at your local bookstore. E-mail them at MWliblav@aol.com.

    To read more columns, please visit the column archive.

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