In a couple of reports recently released from the U.S. Small Business Administration, the findings were over 50 million people working in the American workforce don’t have any type of employer-sponsored retirement plans, and of those offered them, over 50 percent don’t bother enrolling in them.

Now this is look upon as a big deal by the government study, but for those of us looking to increase out savings and build up a retirement fund, the importance isn’t what particular vehicle we use to build it up, but rather that we have plan in place we consistently contribute to.

First of all, let’s very briefly not that while the numbers above may be accurate in general, they don’t necessarily reflect the reality of the situation. Many government studies like this don’t delve deeply into what is happening, and can give a distorted view of things. For example, many people included in the study have a spouse which is building up their retirement through their workplace, and so the other spouse doesn’t use their particular fund, nor care about doing it. That skews the numbers, and changes a lot of the ominous feelings associated with it.

Another factor could be many people are saving on their own and investing some in a way that they aren’t attracted to a retirement plan offered in the workplace. I’m like that, but then I know a lot about investing and savings, and have the discipline to do it.

What I want to get at in this article is no matter what savings or investment vehicle we use to build our retirement fund or our cash on hand in case of emergencies, we must take charge of that strategy and own it. Nobody cares whether you’re prepared or not, and if we don’t take charge of our finances, nobody will.

Even if you do have an employee retirement plan you have entered into, you must make decisions on how you want you capital dispersed in it, in the sense of the level of risk you’re willing to take and other factors related to it. Do your homework even here, don’t just let someone else make the decision for you.

A basic rule of thumb is the younger you are the more risk you can take. While the older you get the more the term safety should be part of your practical investment strategy.

If you’re the type that has no discipline whatsoever in finances, then if you’re offered a chance at a retirement contribution through work, that would probably be the best way for you to do it.

What I’m saying is it’s not necessary to have that to build up your retirement fund, especially if you’re not offered it through your job or you don’t want to participate in it.
 
Again, it’s more important to have a plan you’re consistent in contributing to than what that plan is.

Many people say they aren’t able to afford giving to a retirement plan. Okay, if that’s you, just take a few dollars a month and start in a money market or savings account at your bank. Just don’t do nothing, as it creates habits that are hard to break even when you do generate more income.

Something is better than nothing no matter how small the beginning is. This especially true in building a retirement savings fund. If you don’t take charge of your financial future, there is no one else out there that will bother to take the time to do it.

You may want to forgo going to a local business for your payday loan needs, as some major banks are now offering that as one of their latest services, and it would be worthwhile to see if they provide lower rates to meet your needs.

Wells Fargo, Fifth Third and US Bank are among three banks now offering the services, although what it costs to use the services at the banks isn’t clear for Wells Fargo and US Bank, at Fifth Third they do have things in place to check out.

For example, at Fifth Third, you can borrow up to $500 if you’ve had a checking account at the bank for at least six months. A fee of 10 percent is the cost of obtaining the loan, which is automatically paid off when you deposit your next paycheck in the account via direct deposit.

Even though the annual percentage rate is still a stiff 120 percent in the case of Fifth Third, it is far less than the costs associated with other providers of payday loans.

A couple of things to consider when taking account using a payday loan service ever, no matter if it’s from a much lower cost program or not, is what is leading you to need the payday loan in the first place.

As the needs can change from person to person, we won’t get into that, but each individual needs to know why they must pay such a high interest rate to get their hard-earned money cashed.

If you can’t change the reasons over the short term, you could start to gradually build up a savings fund so you can cheaply access your money at times like this without the added expenses.

Another option is to use the lowest interest credit card you have (assuming you have one), as even that will be cheaper than a payday loan at the lowest cost provider.

The point isn’t to feel guilty on why you need the payday loan, especially if it’s the only option available for you, but while you’re using them and looking for the best deal, it would be wise to build up your savings so you never have to do it again.

Even if you can only put a little away each check, you are working toward a solution to a problem that will remain long term if you don’t get rid of interest rates hitting you at even the lowest levels of 120 percent or more.

Here’s a savings tip that will change the way you save and has the potential to really help you build wealth and enjoy peace of mind while doing it.

So how does it benefit you to pay yourself rather than your debt? Think in terms of any type of debt the majority of people – and probably you – have. There’s usually a school loan involved if you’re younger, credit cards, mortgage and car loans, as the major debt most of us will experience.

Now if you’re in the place where you’re debt is out of control to the point of being unable to service it, that’s a different issue all together and must be dealt with differently than we’re talking about here.

Let’s assume you’re able to pay your debt and survive, but you have little to put away for savings or investment when you’re through for the month.

One fantastic thing you can do is celebrate when you get one of those debt loads paid off. Now here’s the secret though. Rather than using that money to pay down other debt, start to sock it away in savings or an investment vehicle of some sort on a monthly basis.

Think of it! Rather than paying an institution you owe, you’re paying yourself what used to be paid to the institution holding your debt.

Not only is that psychologically exhilarating, but it puts real money in the bank or whatever you’re investing in, and it won’t take long before it becomes a nice sum.

The idea of not only paying down debt, but now no longer having that debt and instead putting it away for your future is something just can’t be beat in personal finances and money management. It’s turning the tables on your lender and making yourself the payee.

Again, this works when you’re still able to pay off your debt without suffering the inability to pay your bills. If your debt is so out of control that you struggle to live, obviously that’s the priority to deal with.

But assuming you’re doing okay but just want to quicken the timeline of building wealth, take that money previously used to pay down your debt and invest it rather than spend it.

This works great because you see double the results in the first month. Say you have a $100 payment each month. You not only don’t have to pay that any longer, but you have an extra hundred to sock away for the future.

While we’ve been talking a lot about debt and the numerous ways it helps our lives to eliminate it, one of things we do need to understand is it’s a different purpose to eliminate debt and to look for great deals at low prices.

Some may think this is obvious, but I’m talking about doing things for the purpose of releasing money in order to build up wealth. Paying down debt, while important, and it can indeed help you set aside more money for wealth building once you lower it though a number of strategies, like transferring debt from a high interest credit card to a low interest card. That’s an immediate release of funds. The problem is, most people really addicted to debt need to focus on paying down that debt before they think in terms of trying to build up their wealth.

Having said that, I do think it’s good to take symbolic steps which can help you psychologically and at least put a little bit of money away, even if you have a heavy debt load. But overall, when you cut back on debt load and expenditures, it’s best to take that savings and tackle your debt before anything else.

Now the reason I lump this together with finding good deals, is many people are looking to cut back on monthly expenses for the purpose of putting away money for themselves.

This is a different purpose and a different practice, and you can see the results instantaneously as you take money saved and apply it toward building a financial moat and preparing for your retirement.

I mention this because I’ve communicated with people that sometimes confuse these two purposes of deal with our financial circumstances, when they are completely different issues, mentalities and financial challenges to work through.

When it comes down to it, lowering and paying off debt is to get you out of bondage to the lender, while looking for and getting good deals is for the purposes of lowering monthly expenses, building up financial protection and putting away for the future.

With one you’re releasing funds to deal with the past, and with the other you’re putting away funds to prepare for your future.

Debt is dealing with major financial surgery, and must be approached that way, while looking for deals is saving money through a thousand cuts. Each has its place, but we need to be sure not to confuse them, as they are completely different financial issues we’re dealing with, and it’s essential to understand one from the other when working through the financial morass we call life.

When someone puts away money into savings, the first purpose in doing it should be to build up a safety net for a minimum period of six months. In our current economic climate that could be extended to twelve months if you’re able to swing it.

Building up a personal cash reserve for at least a six-month period means you could continue living like you are and take care of all reflects the money you’re currently making at your existing job. So whatever you’re making on the job monthly now, you should multiply by six and have a goal of having at least that in your cash reserve.

Most of us know about or have heard something like this before, so we won’t get into that part of it. What I want to do is help you understand that reasons behind that financial safety net and not to move off of it no matter what happens.

I’ve been talking about investing in low interest rate and potentially high inflationary periods of time recently, and that can have the type of negative effect on someone in regard to their cash reserves if they attempt to battle those factors to the neglect of the purpose behind having a financial safety net under you.

The first thing to remember is your financial safety net is just for that and nothing else. No matter what happens, your purpose is to have a minimum of six months cash on hand available to take you through that time without suffering any losses. Nothing should move you off of that, even things like interest rates and inflation.

Now it doesn’t hurt to understand these pressures and know how to combat them, as long as it doesn’t cut into your saved capital.

So what you don’t want to do is start moving out of your comfort zone or the safety factor of your backup fund in order to beat inflation or get a better yield, if it has risk associated with it that could lose you money, or possibly cost you more through fees to change it to another account type which may give you a better return, but cost you as much to make the change.

If inflation does rear its ugly head in a big way, sure we must be mindful of that, as it could cut into the funds we have set aside to protect ourselves in difficult times. So what at one time was money set aside for six months could fairly quickly only pay for five months of living if inflation really takes off; which it probably will over the next couple of years.

At the same time though, the low interest rate environment should also stop, as it’s thought they should start rising sometime near the end of 2010, assuming the job market changes, which the Federal Reserve says will be largely the determining factor in keeping rates low if it doesn’t improve.

If inflation rises along with interest rates, you should be able to hold pretty steady for your safety fund, as they will grow together, hopefully close enough so you won’t have to try to increase your risk factor to keep up with it. Resist that temptation.

It would also be better to go over your financial obligations and habits in order to find places you can cut back if the cost of living goes up, as your primary financial goal should be to have enough put away in case of emergency. Everything else is build out from that foundation.

The bottom line is you must understand why you have a safety net in the first place, and even if outside factors like inflation cut into the buying power of that fund, you can either add more money to it to make up for that, or simply have a little less time to buy if things get bad unexpectedly for you. The worst thing to do would be to take steps which could threaten your protective nest egg.

A financial safety net is just that, and no outside force should do anything to make you start to take money out of it, other than for the purpose it exists: you lose your job and need to buy time to find a new source of income. That’s the purpose of putting money away: to buy time, and nothing else.

Now a little earlier in the article I mentioned something about the economic times we live in. Not only am I talking about the job market and inflationary pressures, neither am I talking about the pathetic returns we’re getting on our money. Rather, I’m talking about an even more increasing practice of businesses in outsourcing, hiring on a temporary basis, and moving to a more part-time culture.

With that in mind, it’s more important than ever to build up a cash reserve fund for yourself, as this will usually mean times of feast or famine for you, and developing the practice of putting away money when you have it is the best financial discipline you can have going forward.

Remember, a financial safety net exists for financial safety. Don’t do anything to tap into it unless it meets the needs you build it up for in the first place.

A variable interest rate CD is different from the fixed rate CD in that it is tied into the movement of current interest rates – whether up or down – while the fixed CD interest rate remains the same throughout the duration of the term. So with a fixed rate CD you know what you’ll make over the term of the CD, while with a variable rate CD you won’t.

The strength of a fixed CD is its safety and predictability, while its weakness is if interest rates go up, you don’t get to participate in the better situation; thus the reason for the creation of a variable-rate CD by financial institutions to address that situation.

With a variable-rate CD, if interest rates rise, your interest rate on the CD will rise with it, and if it falls, your interest rate on the CD will fall as well, giving some downside risk. For example, if you have a fixed rate CD and interest rates fall, you will still be able to collect the higher interest rate from the CD.

What this means is we must be aware of the interest rate environment we are currently in to determine the best type of CD to buy. In our current interest rate environment the U.S. government is holding interest rates down in an attempt to stimulate exports and hopefully stimulate the creation of more jobs, or at minimum, keep them from falling even further in the manufacturing sector.

Consequently, the current low interest rates mean that have nowhere to go but up, yet there’s a lot of questions as to the political will to allow that to happen. The thing that must be considered at this time then is when interest rates will be allowed to go up; that ‘s what determines your decision on the type of CD to buy.

If you believer after looking over the overall situation that interest rates will be raised by the Federal Reserve sometime soon, a variable rate CD could be a great way to invest for your safe money. You would probably get similar rates to a fixed CD, yet with upside potential. All of this depends on what bank or financial institution you do business with or buy the CD from, so all that has to be included in your decision-making process and where the interest rates will stand when the variable-rate CD is bought.

In a rising interest rate environment, when comparing a variable-rate CD versus a fixed rate CD, the variable-rate CD will do better.

Finally, check with the institution you plan on buying a variable-rate CD from as to how the interest rates are determined or measured. Banks tie the interest rates of the CD into different instruments, so you want to know what they are. Some, for instance, may track an interest index, while others may tie the interest rates to a U.S. Treasury Note. Either way, you should ask what is the determining factor in the movement of interest rates as it relates to your variable-rate CD.

With the economic crisis not going to abate any time soon, and all of us working on paying down our debt, saving more and cutting back on spending, a growing number of banks are wisely implementing new credit card services built for customers to help pay down, avoid interest fees and better manage their personal finances.

There are a wide range of services, and it would be good for you to check if your bank has implemented one for their customers as part of their service package to you.

What most of these will usually entail, is some way to put a automatic payment plan in place for the credit cards of choice for you, where you can have them paid off on a monthly basis in a way that will keep you from incurring interest fees; an important step toward managing your personal finances. Here’s one from JP Chase Morgan called Chase Blueprints you can look at if you do business with them, or as an example of what a plan like this would look like in general.

With the types of busy lives we live, and listening to a lot of people complain about interest fees and other late fees related to their banking, getting into these types of financial management services are a great way to take the onus off of your memory and busy life you live. Why get socked with late fees and interest fees when you can sign up for programs like this and take all the pressure off yourself and just leave it in the hands of those running the program?

If your bank doesn’t have this type of service yet, ask them if there are plans in the works for one, and if so, how long will it take to get it going. If your bank doens’t have one, and has no plans to put one in place, it could be well worth you time and energy to look for a bank that does offer this type of service.

There is just too much money to safe and peace of mind that comes with a program of this type to ignore it and go on doing business as usual. Now that banks are offering this opportunity, why pass on it and continue to pay far more money than you need to for your various accounts?

While there is no investment without risk, a money market fund comes about as close as you can to meeting that criteria.

What is a money market fund?

A money market fund is nothing more or less than a mutual fund, which most of you reading this will understand. The difference in what the mutual fund invests in.

In the case of a money market fund, the law requires that it invests in securities that are low risk; things like certificates of deposit, short-term bonds, commercial paper and government securities.

As the money market fund does that, the goal is to keep the net asset value of the fund at $1 a share. Very seldom historically has it fell below that level at any money market fund.

Because money market funds invest in low-risk securities, the interest or dividends paid out are low, so are best used in certain situations where that type of pay out is conducive to existing living circumstances and conditions.

For example, in our current economic crisis it could be a good way to retain capital. Sometime we get into these type of difficult economic times, and we need to be defensive rather than offensive in our investment decisions. This is where money market funds can meet that particular need.

Temporary Guarantee Program
 
Under the Temporary Guarantee Program for Money Market Funds administered by the the U.S. Department of the Treasury, the Treasury Department guarantees the share price of participating money market mutual funds.

Here’s the guidelines stated by the SEC for those money market funds that would qualify:

As part of the program, all money market funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940 and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate. 

What are strategies to use money market fund?

So when would be good times to use a money market fund as part of your investment strategy?

If you think of investing as a marathon instead of a sprint, you would see that there are stages you start off on, and adjust to accordingly as age and circumstances change.

One example would be when you’re younger, middle aged and approaching retirement. When you get closer to retirement, conserving capital is more important than growing capital, so things like a money market fund are used by many in those conditions.

But age isn’t always a factor either for using a money market fund.

Let’s use a case of building up a ’529 College Savings Plan.’ Similar to someone starting off in their investment strategy, you use more aggressive investment vehicles to build up your 529 College Savings Plan at the beginning, but as the time for college approaches, again, it’s conserving capital that is more important than building capital, so again, this is a place you could use a money market fund to fulfil that need.

The secret is to apply it to temporary or overall life circumstances. The beginning of an investment cycle should be aggressive, and as it gradually moves toward its end, think of using a money market fund manage your capital the final stages.

Not everyone is quick to rush out an buy the latest software or gadget to handle their own personal finances. These people just might have the right idea. Spending a ton of money you don’t necessarily have in the first place just to manage your own money may not be the best way to remain frugal or financially smart. So for those who are not tech-savvy or who can not afford to get the technology claiming to make financial management as easy as 1-2-3, here are some was to keep track of your cash while saving some of it at the same time.

Put It In Writing
One of the most common and useful pieces of advice concerning personal finance is tracking your spending. Typically, it is advised that you keep a pocket-sized notebook on hand at all times to make tracking more efficient. Since you are already using a notebook and a pencil to deal with your finances, take it a bit further when you are ready to create a new budget and purchase an inexpensive notebook or ledger that you can use to write down all of your bills, due dares, expenses, and other financial obligations each month. You can also keep a page to re-write all of you expense spending and get a clearer picture of how much you are spending each month and where you can make some cuts. A more traditional pen-to-paper method can help you keep it simple and inexpensive, but most importantly it will allow you to keep tabs on your cash.

Retain Your Receipts
If you can get in the habit of consistently asking for receipts, even if you pay cash, you will have a better history of what you are spending until you can sit and write it down. Receipts will help you keep track of the date you made the purchase, what the purchase entailed, and the total cost of the purchase. It can also help you to mark on each receipt what category the expense falls under so when it comes time to go over your budget, you’ll know how much spending you are doing for all different categories such as entertainment, bills, food, and the like. The key to making this an effective method of saving money is to keep all of your receipts in a designated location, regularly writing down the information contained on the receipts, and of course, remembering to ask for a receipt each time you spend money. Otherwise, this method can quickly become overwhelming and ineffective.

Utilize Statements
This may not be an effective method for all types of expense tracking but if you are prone to using your credit card for all your spending, you can take the monthly statements and notate them with individual categories. You can total each statements and have a good idea of what you are spending on each category. This will make it easier to make the difficult decisions of what to cut out spending-wise to save your budget. This will help you to also create a new budget if you haven’t yet started one.

Desperation is where many are finding themselves because of the inability to make their mortgage payments.  This situation is not limited to the USA. Global economic unrest has caused other nations like the UK to hear the cries of those burdened by financial duress as evidenced by this report:  UK Mortgage Crisis

Anyone in this situation around the world would welcome the following advice:

Speak Up.  Initial reaction from one found in this situation often is to retreat and close down all communications.  This is a recipe for disaster.  Should you find yourself in this predicament, your first step towards getting help should be to pick up the phone and make a call.  It should be of comfort knowing that mortgage companies have already anticipated these difficult times and are in position to help.  Losing your home would be the outcome of inaction, but also the mortgage company stands to lose money.  Given this reality, they are more than ready to work with you in order to help you keep your home.

Take Action.  In addition to contacting your mortgage company, you need to institute other activities as well.  Telling your family of the serious situation in which you find yourselves is a first step.  There is no reason to impose emotional stress of the prospect of losing your home into an already volatile financial crisis.  Start the conversation with a frank discussion of the facts and then resolve to work together to prevent the loss of the home.  Part-time work might be needed in order to bring in extra money to meet expenses.  Most of us have extra items lying around the house that can be sold and the cash used towards paying the mortgage and other bills.  Creativity in bringing in extra income will result in surprising gains.

Lower Expenses.  Debt Consolidation programs exist to help you meet your unsecured debt obligations.  Searching out the most reputable company to perform this function can be a chore.  There are many companies who would like to take you as customer, only to deliver on less than they promise.  Care must be taken in choosing such a plan.

Lowering expenses is just a part of an overall effort to bring your income and expenses into balance.  Most households can find unnecessary expenses with little effort.  Look for those which do not affect your ability to survive, but just add to your quality of life.  Things like the cable TV bill or an extra unnecessary cell phone are good places to start your search.  In fact, you will miss these little extras very little while seeing your overall financial picture improve greatly each month.

Taking a realistic view of your finances and making changes to help be able to meet your monthly mortgage payment will pay off if you are diligent.  Nothing replaces hard work and determination and you will be amazed at the amount of results you will begin to see from your efforts.