Debt has become a fact of life for many. The recent financial crisis felt around the world has made many realize that debt is costing them more than they can ever imagine. It is putting a mortgage on their entire future. For example, many employers now run complete background checks on prospective employees. If they discover a bankruptcy or excessive debt, they might think twice about hiring the person, even if they are the best one for the job. 

In addition, banks and other mortgage lenders, and landlords you would be interested in renting property from, also do extensive financial background checks now. Therefore, if you are carrying any debt of any kind, be sure to start paying down your debt as quickly as possible. 

Be sure to check your credit report. If there are any errors, make sure you challenge the report as soon as possible and take steps to get it cleaned up. It is also a handy way to make sure that you have not been the victim of identity theft, which can cost people thousands through no fault of their own. You are entitled to a free copy of your report from each of the debt reporting agencies, so as a New Year's Resolution each year and to remind yourself, check your credit report and try to improve your score each year. 

The other key step to take is to pay off any outstanding debt as quickly as possible. Make sure you pay above the minimum and pay not only on time, but early. If you find yourself With any extra at the end of a month, and your debts are still high, put some into your Emergency Fund, but also make an extra payment to the credit card with the highest interest rate, rather than put all that money into savings. 

An emergency fund is extremely valuable protection for your financial future, but remember than any interest you might get on money accumulating in the savings account is going to be much lower than the amount of interest the credit card companies are going to charge you to carry the debts that you owe. 

This debt reduction and elimination plan often means that savings will put on hold. While that may have been recommended a short couple of years ago, most experts now agree that you must pay attention to both, paying down debt while still making sure you have a cushion in the form of an 

emergency fund. 

Financial expert Dave Ramsey recommends putting your debt payoff plan on hold until you've saved $1000 in cash. You should still continue to pay the minimum balances during this period so you don't incur any fees or ruin your credit score. However, keep putting money away each week until you reach that $1000 goal. Ideally, you'll have $1000 saved in six to eight weeks maximum is you are strict with yourself. It is good discipline, and real money you can use if there is an emergency at any time. Even a few hundred in savings in the bank as a cushion is better than nothing, after 

If you cannot make the minimum balances and save that much money, aim for $500 in savings. Then you can resume your debt reduction plan and slowly add more to your emergency savings account at the same tine. $1000? Because this is generally enough to cover most household emergencies. If your water heater breaks or you need a new set of tires for your car, $1000 will cover it. You won't have to go into a ton of debt or run up even more on your credit cards. 

However, Suze Orman recommends a more realistic emergency fund, one which will cover a full 6 months of household expenses, should the worst happen and you lose your job or become ill. For most people that would seem like an astronomical number, but check out your latest credit card 

statements before jumping to that conclusion. 

On the second page of the statement, you will see the total amount of interest and fees charged as a year to date figure. If you look at it and see more than $500, you've got a high interest rate card and chances are a high balance, and therefore a high debt to wages ratio, a perfect excuse for many card companies to send your card's interest rate soaring even higher. 

Now add up all those sums for all the cards you have. What could you have done with that money instead of give it to the credit card company? What about any overdraft fees on your account? If you don't sit on top of your finances, they will soon overwhelm you. That IS more money lost which 

could have gone into your emergency fund. 

Therefore, it pays to follow up on all your money at least once a week, to see where it is going and how well you are sticking to your budget. Often it does not require a lot of intelligence to keep track of your finances, just a lot of organization. 

If you don't have a budget, well, there is your place to start. Once you know how much you really have coming in and how much going out, you will then be able to plan your savings and especially your emergency fund. We have included a sample budget in an appendix at the very back of this 

article for easy reference at any time. Use it to start calculating your income versus your continuing monthly household expenses, so you can see what room you have, if any, to start saving for an emergency fund. 

If there is no room, then you are dealing with excessive debt, in which case, we will look at some strategies for this in the next section

Ways of Making Extra Money

It may seem like the end of the world to lose a job for many people, but the good news is that it is not necessary to have a full time job in order to earn income. There are plenty of ways to earn money without going the traditional route. If you have talents or skills, you can put those to use to earn income. There are several ways to put your household and your knowledge to work for you to either
add a new stream of income to your household, or replace lost income. Read on to find out more.

Sell your own items: This can be a combination of belongings that you have lying around the house or items that you make yourself. Do an inventory of your belongings. Chances are you will find many items that you no longer use or want. You can sell these items either on eBay, Craigslist, Amazon or
another similar venue. If you make handmade items such as stationery, knitted goods or similar crafts, you can sell these for profit and make that your source of income.

You can also donate them to charity, such as to the Salvation Army. You will be able to get a receipt and should adhere to their guidelines for pricing, but the amount of money can be deducted from your taxes, resulting in savings on unwanted items.

Write for money: This may seem like a job in itself, but it truly is not. You are free to write when you want to and on the topics that you like. Man websites hire freelance writers for content and there are some publishers out there who hire writers on a freelance basis with a lot of work available. You will need to pass a writing test and be sure that your work is original content. Payment is anywhere from a flat rate to revenue share on the website, with the more articles you have up online giving you more chance of earning more page views and thus more cash.

If you have a talent such as gardening or musical knowledge, use that to your advantage: Offer gardening services or musical lessons in your neighborhood and others close by. You can schedule the musical lessons at your house and offer gardening services at the customer’s home.

Tutoring services are always in demand: Parents who have trouble understanding their children’s
homework problems are likely to bring in a tutor. If you have a college education or advanced knowledge of subjects such as English and math, chances are someone will be looking for your skills.

Sell other people’s belongings: Oftentimes people are not skilled at selling their own items, so they hire someone else to do it. Payment is normally a percentage of the selling value of an item. You
can sell the items in any manner that is acceptable to the owner.

Freelancing: There are a number of freelancing websites that match people looking for short term projects with those who need them completed. Just be careful of excessive fees.

Consulting: If you have been working in high-level positions for a while, consider offering your services as a consultant to similar businesses. Just make sure there is no non-compete clause in your contract.

Leveraging Your Severance Money to Create Your Own Business: If you got a good severance package, put some of the money to use to start your own business. In this way any income you earn from freelancing and so on can be offset against any deductible expenses related to running the
business. This has legal and tax advantages, through separating your personal finances from your corporate ones and allowing you to take more deductions than a sole proprietorship would be permitted. An LLC, Limited Liability Company, is easy to set tip and inexpensive. Rules vary by state so be sure to follow the rules.

Become an Affiliate Online: An online affiliate sells products for large retailers and prominent companies in exchange for a commission. Many people who have a website, and even those who don’t, post specially coded links on sites they usually participate in, and if people click on the link and either give their email address or other personal information (pay per lead) or buy something (pay per sale), you can get a flat fee or percentage commission. See Joan Mullafly’s great title on how to get started as an affiliate even if you have no website for a step by step guide on how to get
started in this multibillion dollar industry. The best thing is, once you set up the links, they will keep earning for you around the clock, 365 days a year. If you are crunched for time as well as money, consider becoming an affiliate marketer.

If you brainstorm, you can come up with several different ways to make money without having an actual job. Whether you decide to go into business for yourself or put your talents to use in helping others, where there is a will, there is a way.

You may find that you have to use several different activities in order to make ends meet or to build your savings accounts, but it is possible with some imagination and effort.

Six months can be calculated in round figures. If you make $30,000 annually, then the goal will be to save $15,000. Based on your budget and financial standing, this can take a while to save. But remember, once you’ve already saved $1000 and you’re on your way to paying off debt if you
haven’t already, you will be able to accomplish this goal too.

With interest, over time the amount you are saving will grow. Add in financial gains like tax returns, bonuses at work and any other money you can save rather than spend as soon as you get it, and you’ll reach your emergency fund goal in no time.

It may seem like a bad time to talk about a raise with your boss, but this is another way to save money. Put any extra that you earn right into the emergency fund. What you are not used to, you will never miss.

Because you’re not going to need quick access to this savings account, you can put it into a money market fund or other account with higher interest rates. You can earn around 5% with many online banking money market funds, which can all add up over time. Online banking terms are a lot more flexible than they used to be, and there are CDs that will allow a limited number of withdrawals, such as one or two, without any penalty.

As I have said, automatic savings into an interest-bearing account can help it grow without you feeling the pain. Once you are out of debt, the money you were paying to the credit card companies in interest and fees can also swell this account.

Just remember not to close your credit card accounts once you pay them off. Your creditworthiness is determined in part by the extent of your line of credit. And once you do pay it off, do not be tempted by all of the great credit card offers you will be bombarded with.

The only kind of credit card you should carry should be one that gives you cash back on your purchases or gives you points towards something you and your family could really use, like a 529 college savings account for college savings, and for repaying existing college loans which qualify for the program (see my special report on that subject for more information).

Planning Your Financial Future

The one question you’re probably mulling over is, “How am I going to save all of this money in an emergency fund and also still save for retirement, college, and live day to day?”

The answer is to make a plan based on your needs and priorities. For instance, if your child is about to go to college in 3 or 4 years, that should be a bit higher on the list of priorities as compared with them planning to go in 10 to 15 years.

Some financial experts recommend saving in tiers. Focus on tier one, your household emergency savings account first. Secondly, save for the loss of a job or a major financial emergency, accruing 6 months worth of living expenses. Third, save for retirement. College savings, if you can manage it, is a last priority. As they say so often, “You can’t take out a loan for retirement.” We would add that you can’t get scholarships for retirement either.

The key to knowing how much you can save and how long it’s going to take you to reach your goals is to create a long term financial plan and budget accordingly. Your budget will tell you not only what to expect day to day, but also help you set aside money for all of your financial goals. It is all a question of priorities, and balancing them.

Again, a second job, freelance work, or starting a business of your own at home are all ways to improve your financial situation. See our small business titles for ways to start your own successful business even if you have very little cash to spare.

Beyond Your Emergency Savings - How To Be Prepared 

A financial emergency fund is about more than setting aside money. It’s also about protecting your money and your finances. Asset management is not something they teach in school or college, but it is certainly one of the keys to financial freedom and all it takes is a little time and effort.

Here’s a list of the documents you should have in place and the measures to take to protect you and your family’s financial future:

• Will and Testament
• Living Will/Medical Directive
• Trust
• Home Insurance
• Health Insurance
• Life Insurance
• Auto Insurance

Other documents to consider:

• Long term disability insurance
• Long term care insurance 

Insurance protects you and your family against emergency. It is one of the most responsible and
financially sound decisions you can make. If you don’t have insurance, consider visiting with an insurance representative for a package deal. If you are insured,consider consulting a financial advisor or insurance agent to make sure you’re properly insured and getting the best deal for your money.

Additionally, a will and testament and a medical directive will ensure your requests are met (though do check the laws in your state to be sure just how much impact they have). A trust ensures your wishes stay out of court and in the hands of your family.

Make sure you have a list of all your accounts and who the beneficiaries are to be. Your 401k, 529 college savings accounts, savings accounts, CDs and so on should all be accounted for and kept an eye on.

Other items which you might consider to be a good investment might not be. Similarly, items you might take for granted such as clothes and computers, are a serious investment that you should take more than a bit of passing thought. In the next section we will look at some of the best ways to make your money stretch even further than you think.

Can Less Be More? Avoiding Consumerism

In the quest for living a more simple, and economical life, it can be difficult to make the necessary changes. It’s tough to know where to start. It’s also tricky to know where you should scrimp and where it makes sense to splurge. Here are several key ways that less can be more.

#1 Buy your clothing and gear off season.
This practice takes a little preparation and forethought. However it’s a great way to save tons of money. Buy your swimsuit for next year during the winter months from a closeout website. You can get a suit that once cost $300 for $30. The same holds true for exercise equipment and even home goods. You can buy that patio table and chairs for a quarter of the cost when you buy it on closeout during the fall and winter months.

#2 Coordinate your wardrobe.
Clothes are about two primary things, form and function. You want to look good and feel comfortable. One great way to make your clothing budget stretch further is to buy quality basic items like black pants, white shirts and navy or brown blazers. These items can be mixed and matched with other less expensive additions for a wardrobe that looks expensive and extensive but really isn’t.

#3 Get your pantry organized.
A well-stocked pantry can make a busy evening mealtime easy. Generally, when the family has to be in four different places at once, we tend to order out or go through the drive though. That’s expensive. A well-stocked pantry can turn it around. A package of pasta, a can of sardines in tomato sauce or anchovies in oil, and voila, you have a ten minute gourmet meal that can be eaten right off the stove or heated up quickly and easily. Additionally, pantry items generally cost a tenth of what it’ll cost you to go through that drive through, and it’s healthier too.

#4 Get rid of the landline, unless you really need it.
Most families have a landline and a cell phone plan. The landline rarely serves a purpose any more. You can save $30 to $50 each month by simply getting rid of it. And you can get rid of the cell phone contract by purchasing an inexpensive pay as you go phone and a Google phone number. Simply forward your free Google calls, text and voice mail to your pay as you go phone. You can save hundreds annually by evaluating what you really need when it comes to phones and phone plans. An unlimited plan for the whole family, for example, can save you thousands of dollars a years. Avoid being nickeled and dimed to death by texting and other fees (more like 20 cents each the last time we looked!) Sit down with your phone bill and see what you are really spending. Then comparison shop to save.

#5 Get rid of your car or downsize.
It may sound extreme, but many people are paying hundreds of dollars each month for a new car and a car lease payment. Stop for a moment and consider what you could do with that extra $300 to $500 dollars each month. A lot, right? In fact, simply saving that money for your emergency fund or retirement would put you way ahead of your savings targets in no time.


However, if getting rid of a car entirely isn’t an option, consider down-scaling or reducing the number of cars in your household. A used car will take you the same places a new car will and it’ll save you thousands.

Finally, if you have more than one car, can you cut back? Can you sell a car? Cars eat up a budget fast, and down-scaling or eliminating them from your monthly budget is a great way to reduce financial stress.

#6 Cut down on cable.
Have you checked your bill lately? Chances are it costs a lot more than that ‘great’ deal you were offered last year.

Do you really need to have three thousand channels? See if there are ways to cut back and also explore other options such as the competition’s offerings, or ways to get a bundle or to un-bundle services you really don’t need after all. Ten dollars might not seem like a huge difference but when you add it to the other savings, it all adds up and is better than being ten dollars in debt.

Can you do more with less? Absolutely! These tips are only the beginning. Take a look at where you spend your hard-earned money and evaluate where you can cut back or modify your needs and still have all ou really need for a simple but good life.

Then put your savings into your emergency fund and once you hit your target, keep saving for your next goal, such as retirement or college for the kids, or even a great vacation one day.

Throughout this report we’ve discussed several types of savings to have in your emergency fund, and a tier based system, with savings allocated in order of importance to you and your family. We’ve also mentioned where to save your money depending on the savings type. In the next section, we will review your savings options.

Where To Save Money

Depending on how much you’re saving, how much access you need to the money, your tolerance for risk and how much interest you want to earn, there are a number of options to save your money.

These options include:

Interest bearing checking accounts:You can find access to this type of account online or with your local bank or credit union. Research bank fees and interest rates to find the best option for you. This is an ideal account type for a household emergency savings account of $1000 or less.

Money Market Accounts: These sometimes offer check-writing services and offer a higher interest rate than a standard checking or savings account. Some of them will even offer a debit/credit card for emergency access.

Money Market Funds: These are not FDIC insured but are generally safe investments. They tend to pay more than any type of bank account. There are no huge interest rates at the moment on these funds, but any interest is better than none, especially if you have paid down your debts.

CDs or Certificate of Deposit: These are Federally insured for up to $250,000 and have a good interest rate. However, you don’t usually have easy access to the money. They’re better used for long-term savings like saving for the potential loss of income. Many people build a CD ladder with the CDs falling due on a regular basis to take out the money if needed, without any penalty, or reinvest it if it is not needed. Time periods range from a year to five years, with the interest being highest on those of the longest duration of commitment. There is a new class of CD which will let you make a
withdrawal without penalty, so shop around carefully for the best deal for your circumstances.

What To Not Use To Pay For Financial Emergencies 

In an ideal world, we would all have a nice plump emergency fund and good savings for all of our needs, from retirement to college funds for the  kids.

Alas, this is not an ideal world, and especially in this economy, many people are feeling the pinch and struggling to make ends meet.

Therefore, an emergency can really propel them right over the edge into dire financial difficulties.

While it is tempting to do so, these are some of the ways you should  AVOID paying for any emergencies which might arise:

• Credit Cards 
• Home Equity Line of Credit 
• Second Mortgage 
• Tapping into your 401k or retirement plan 
• Postponing key monthly payments in order to try to deal with emergencies 

Your financial emergency fund should be established to help you avoid falling into the trap of borrowing from anyone in order to cover any  emergencies which might arise. You don't have to borrow from yourself  and mortgage your future, or borrow from creditors to stay on solid
financial ground.

All it takes is willpower and some time and effort for solid financial planning. Even if it means sacrificing cable TV for a month or two, isn't it better to bank that $70 to $100 a month and have the peace of mind of money in the bank rather than a whole bunch more channels that you
most likely never even watch?

Looking carefully at your monthly expenses to weed out memberships that you never use, expensive phone plans With extras you never use, and cutting back on convenience foods and take away and cooking at home yourself, and brown bagging lunch at least a couple of times a week, can add up to big savings. If even one of these steps helps you find a nice tidy sum to put in your emergency fund, just think what trying all of them can do to your bank balance.

Your home is your most important investment for you and your family. Yes, credit card debt is serious and it can ruin your credit rating, but there are ways to recover from it. Homelessness is less easy to rebound from. Likewise, not having enough money to live on during retirement can mean disaster later in life. Think short, middle and long term for all your financial needs not just the here and now, and you will soon be able to get a handle on your spending, and get into an even better habit of savings.

Conclusion

Financial emergencies happen. They're a fact of life. When you're prepared for them, you can focus on getting through the tough times in your life without dealing with the added stress of financial insecurity, which can in some cases be so drastic it can lead to bankruptcy. Bankruptcy is not an
easy way to escape the debts you owe. It is a black mark on your financial future that will have long-term implications for at least seven years, if not many years to come in the form of not being eligible for a mortgage, certain rental properties, and various job and career opportunities.

You owe it to yourself, to your family, and to your future to take a look at your financial plan right now. Create a plan to:

• Budget 
• Pay off debt 
• Save for minor emergencies 
• Save for major emergencies 
• Protect your finances 
• Save for retirement 
• Save for college for the kids 

Pay down your debt first. Then start saving. Use the three tiered approach, focusing on your goals in order of priority. Review your budget and meet your obligations to your savings plan even if it means making some short term sacrifices for long-term gains. Set the money to come out of your account with automatic withdrawals.

Use only bank cards or credit cards (preferably a single one for emergencies only) which gives you a low APR and/or cash back.

These few simple steps, and some time and effort will get you started on the road to a solid emergency fund and a more stable financial future. Start today and in only a few weeks, you'll be amazed at how much you have managed to save.

Take a second job, freelance, start your own home-based business, and watch your savings grow even more rapidly.

We hope this guide sets you on the road to building a solid emergency fund, and that you never have to use it. In the event that you do, at least you will know that no matter what disaster befalls you, it can always be worse: you might have no emergency fund at all to help you cope.

If you are living paycheck to paycheck at the minute and not really focusing on the future, remember, it is not a question of IF an emergency will occur, but WHEN. Arm yourself With the knowledge from this special report and take action TODAY, for a more secure financial future tomorrow.