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7 Smart money steps to take today

Kim Grundy is a mom, writer, expert laundry folder and sandwich maker, not necessarily in that order. Raised in Oklahoma, she is now a West Coast gal and lives in California with her husband and two sons, along with one dog, two fish (oo...

Money smarts

Being financially fit means you are spending wisely, saving wisely and investing wisely. Are you ready to take charge of your finances this year? Financial experts reveal 7 smart money steps to take today.

Woman managing finances

In this tough economic climate it is more important than ever to be smart about your hard-earned money. Find out what steps you should be taking to ensure a financially sound future.

1Pay yourself

Establishing a savings account is the top piece of advice most experts recommend in this "cash is king" economic climate. "You are the CEO of your household, and the only way to really build wealth is to force your savings before you pay out expenses," says CEO of Oxygen Financial Ten Jenkin. "Without implementing this important philosophy, you will likely be in the masses of people that cannot explain why they live paycheck to paycheck," he says.

2


The magic credit score number

"More than ever, your credit score is going to carry big weight in your financial life." says Jenkin, who writes the blog yoursmartmoneymoves.com. "Make sure to go to www.myfico.com and pay to get your overall score. Clean up any items that you don't believe are correct, and focus on taking the right steps to get your credit score to be 720 or more."

3Buy a used car

Jenkin says that many cars in 2011 will be repossessed or coming off short-term leases, and getting a used car that is 2 or 3 years old with low mileage will give you the feel of a new car without the price tag. "New cars can depreciate in value by up to 50% in the first two years of ownership. That is no way to spend your money," he says.

4Live on less than you make

Andrea Travillian of Smart Step, Inc. says the only way to save and put yourself on solid ground is to make sure you are living on less than you make. "Start by creating a budget so that you know if you are living on less or not. Then, depending on the answer, either start cutting expenses based on what you found in your budget or move to the next level if you are living on less," says Travillian, who says to create an emergency fund and then start investing.

5Crunch the numbers

USAA certified financial planner June Walbert says to see the wisdom of paying off debt by running the numbers. "Calculate how much interest you would pay, and over what period of time, if you made smaller payments versus the largest ones you can swing," she says.

"For instance, if you charged $680 to a credit card, it would take four and a half years to pay off the balance, making the minimum monthly payment. Plus, you would pay more than 40 percent of the original purchase total - or nearly $280 - just in finance charges. Understanding how much of your hard-earned money can be saved through on-time and larger payments can be motivation to keep track of future finances."

6Get a game plan for paying off debt

"Rack and stack your bills by putting together a game plan to pay off the highest interest bearing bill first while paying minimums on others," says Walbert. "Once the first one is zeroed out, attack the second bill while continuing to pay the minimum on others on time every time. The key is discipline, commitment and consistency. Keep the end goal in mind - financial freedom."

7Consider consolidating debts

"Look at consolidating debts onto your mortgage right away," says Helen Georgaklis, founder of the 99 Series, including 99 Things Women Wish They Knew Before Hitting Retirement

"People often have the mentality that their home will be paid off by retirement, they will have their pension from the government or private pensions and that all will work out. WAKE UP!" she says. "If anyone tells you that you should pay off your mortgage and not start saving money today, they need their head examined. By consolidating your debts onto your mortgage, you reduce your monthly output and save the money you would normally have been spending on monthly payments. Your house is NOT enough if you're thinking about it as a 'savings.'"

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