Municipal bonds have been considered one of the safer investments for years, and the added bonus of tax-free interest is hard to beat. The days of considering a municipal bond as safe is over though, as the use of the bond as a vehicle for public projects has radically changed, and it is no longer possible to know which ones are really safe any longer.

What has changed is what the bonds are being used for and the economic climate we continue to live in.

One recent example, if you haven’t heard of it, is Tison’s Landing.

This is a place where municipal bonds were issued to pay for a property developer to place the infrastructure of a planned community. They would put in the electricity, roads, etc., and theoretically, when the houses went up the residents would pay for the interest on the bonds.

In the beginning, the developer would pay the holders of the municipal bonds the interest until the homes went up and were occupied. The problem? No one bought the homes, and there is a piece of property ready for homes to be built with no one interested in buying them.

So if no one is building homes, what happened to the interest on the municipal bonds? Is the developer still paying it? No the developer isn’t. The holders of the municipal bonds, usually pension funds or mutual funds are the ones paying the interest, and many of them are getting rid of the bonds at up to 70 percent losses so they can use their capital in growth areas.

This is complex, but the bottom line is municipal bonds are no longer the places of safety they used to be, and because of the ongoing economic disaster, you can’t be sure which region or locality will suffer next, or even know how to research to find out if it’s vulnerable. There are too many variables and unknowns at this time to get the needed data to make an informed decision.

A growing number of financial advisers are recommending their clients to get out of municipal bonds. Many of them are being used to back up developments like the one mentioned in Florida above, and if any city is near bankruptcy, you’ll find yourself in a similar situation the mutual and pension funds are now in.

When taking into account the twin problems of putting away for savings and reducing debt, many times we’re faced with a choice of which one is or should be the priority.

Normally at this point of the conversation, people will immediately say they can’t do one or the other, because debt is taking every penny they have; making it impossible to build at least a fund up for safety in case of a financial emergency.

It’s the old catch-22 many people face, and yet, a lot of people have escaped this seeming trap they’ve fallen into, and so can you.

In this post we won’t deal with all the practicals, as we must deal with something else first, and that is making a decision on whether to pay down your debt or build up a savings.

Almost everyone can go through their finances and find places they can cut back on in order to release up some money to put away to build up at least a small nest egg.

The question becomes then, should that extra money be put into savings or paying down debt. I believe putting away for savings should be the first step; at least until you have enough for some minimal financial protection.

Paying down debt is a huge psychological boost, and a priority, but if you don’t have something put away, you’re one major, or even minor, event away from losing just about everything.

For the most part having a nest egg or savings account is for safety purposes for an unforeseen financial challenge which could lead to you struggling to manage your debts

If you’re paying down your debt but lose your job, you may have less debt, but you will have an entire different circumstance to deal with if you’re desperate and have absolutely nothing to fall back on.

This is the reason I think we should all have savings as a priority, while continuing to pay down debt at minimal levels until we do. At least get something put away first, and then work from there on the debt.

Once a fund is financed some, you can then possibly split the amount and slow down on the savings fund in order to start relieving yourself of some of your debt.

Try this and I think you’ll feel a lot better and prepared for what comes in life for you. If you have significant debt, it’ll take time to pay it down no matter what you do, so focusing on savings first should be the priority, with paying down debt right behind it.

Obviously if you have enough extra money a month to do both, that would be the best situation. But most don’t, and if you have to choose, I would suggest the savings first and the debt second.

Possibly one of the least products we shop around for is insurance in general. Many people think in their minds that one insurance policy from one company which covers the same thing will also cost the same. You are completely wrong if that’s what you think, and you cans save hundreds, and in some cases a thousand dollars or more on insurance when taking into account all the policies you have.

I remember when I took over FHA loan for a nice home years ago, that I didn’t check much into the insurance side of it, as I was very happy with the overall price, which was included in the monthly payment.

After several years I got the mortgage payment book in the mail for that particular year, and I was shocked as the price had gone up almost a hundred dollars a month.

Assuming it was on the mortgage side and simply an error, I called up the bank and found out it wasn’t the mortgage that had changed or an error, but the insurance company I inherited when I took over the FHA loan, which at the time I didn’t bother comparison shopping for insurance.

Anyway, I called around at that time as I wasn’t going to be hit with an added thousand dollars a year for the payment because of insurance.

So I had some people come out and check out the house and land, and I was surprised to find out not only was the insurance far less than the current offer for the same coverage, but also was less than the coverage I had been getting for several years before. Nice!.

In the end I ended up paying less than I had several years before the new policy had attempted to be put in place.

Bottom line, check every insurance policy you have and call around to find the lowest price you can get. Just be sure you’re comparing apples with apples and are talking about the same coverage, or find out if you’re over-insured, which many times can happen.

Another tip to consider is in relationship to deductables. Now I’ve always been one to take as high as a deductible I can. Now I can do this for my home and car because I know my lifestyle. I don’t live the type of lifestyle that is risky and prone to damaging my property or automobile. So while anything can happen, I’ve never had a problem with the higher deductible, and have saved a lot of money for taking it.

Once you do that over a couple of years, you can even save from the what you would have had to pay and have the deductible set aside just in case an unforeseen or unpreventable accident happens or storm comes that can do a lot of damage to your home.

Adding a few little and relatively inexpensive items to your home can also lower your deductible, such as improved home security measures and fire alarms, etc. These additions can take over 5 percent off your insurance cost and once in place can be used year after year without added expense.

And if you move, don’t assume your current insurance carrier or carriers will be the low price leaders in a new state. I’ve personally moved a number of time, and almost without exception the prices of the policies from companies in one state are less competitive in the new state I move to, and so I shop around again using the same methods mentioned above.

The bottom line is you can save a lot of money by the few simple steps mentioned above on insurance.

Again, the key and trick is to have the discipline and will to take that extra money and put it away for your future.

Many people will say the rich are different than the ordinary person, and they would be right, but not in the way you would think.

For the purpose of this article, I’m defining rich in terms of those that have a net worth of about $1 million.

Most of the time when people say the rich are different than the ordinary person, what they’re really doing is thinking in terms of the super rich - the multi-millionaires and above.

But for the ordinary professional who builds their wealth over time to reach a net worth of over $1 million, they are different than us by their strong discipline in financial matters, and practice things just a little differently than the rest of the population, which results in the building up of their wealth.

There are several aspects to what is the discipline among the wealthy which helps them reach their goals, but all of them are products of one thing: they spend just a few more minutes a day going over their finances.

You may not believe it’s as simple as that, but it is. Studies have shown that the average millionaire doesn’t live as differently from the rest of us as you may think, rather their financial discipline is simply a little higher than ours.

But when you add that discipline up over a period of years, it surpasses the average net worth of people not that different from them, who refused to defer their gratifications and ended up living from paycheck to paycheck, even when they make more money than the others.

With that in mind, here are several of the things that emerge from spending a little more time each day taking care of finances. Oh, and when I say several minutes, I’m literally talking maybe an extra 15 minutes a day to check things over and confirm what’s going on. That’s it!

Never buy in season

One of the major practical steps wealthy people take is they never buy products in season. When you buy in season you will not only never get a discount, but you’re usually going to pay more for the item than you normally would otherwise.

So if they want a fan for example, they go looking around near the end of summer when prices are knocked down significantly, and many times I’ve seen those prices cut 40 percent or more from the summer months.

The same with winter clothes or related items. The time to buy is right near the end of spring when people are thinking of gardening and fun in the sun. Again, prices are way low at that time.

Point is, they literally save hundreds, and probably thousands of dollars a year by buying out of season.

Never pay retail price

A similar but different area is the wealthy won’t pay retail price for anything. This is slightly different because there’s always deals to be had, and not all of them are relegated to out of season items.

No matter what though, only in certain circumstances will the rich pay retail.

Know which items to pay for quality for

While the wealthy definitely watch what they spend on, the other trait is they know when they should pay for quality, and one of those areas, interestingly, is shoes.

They want a good pair of shoes and are willing to pay top dollar for them. This is obvious for the comfort reasons, and when the soles of the shoes wear out, they will go to a cobbler to get them re-soled in order to keep the comfort (yes there still are cobblers out there and they cater to this clientele).

Know where all the money goes
 
As part of their spending a little extra time a day on their finances, the wealthy go through what they spend in order to get an ongoing grip on what their spending habits are.

They know it’s easy to get out of control quickly, and spending that little extra time going over receipts keeps them in check. We should do the same.

Frugality

We always hear the word frugality and think of living on washed and dried paper plates or recycled goods we would have no desire to use over again. But with the wealthy frugality is target so they get the best bang for their dollar, and they not only save money, but invest that saved money over a period of years and so generate their $1 million or more net worth.

What most people think of the wealthy are those that live extravagantly, but what they have is the trappings of wealth, and are one step away from poverty, bankruptcy or foreclosure.

In the end, you really don’t know who the wealthy are as I’m talking about them, as they won’t show it in the way some people like to; those you are deep in debt to live the lifestyle they’re showing off. Many of the not-so-wealthy of course do the same.

The bottom line is if we follow in the footsteps of these good financial examples, we can build up a similar net worth over our lives and have all that we would ever need, and in most cases – want.

If you have fairly predictable expenses for day-care or medical needs, there’s a tool you can use called medical and dependent-care flexible spending accounts (FSAs) which offer opportunities at minimum, hundreds of dollars in savings a year.

What’s especially great about these is they’re tax free while you are able to save $250 for each $1,000 you spend on care. that’s not all the benefits of its though. You can also save on your Social Security taxes because you don’t have to pay that when putting away this money either.

Are there any tricks or unintended consequences here which could hurt you financially? None at all, but you do need to manage it responsibly to protect yourself.

While that sounds scary what I just said, in reality all it means is you need to put money into the FSA somewhat conservatively because when the end of the year comes you don’t get back what’s left because of the benefits you get.

This should never be a problem with daycare, and for other medical expenses, you should be able to manage that fairly well from past expenditures on a yearly basis or if there are certain medical needs you have that have fixed costs.

The point is you shouldn’t try to game the system here, because if you put too much in it’s gone. Use it responsibly and you’ll save hundreds of dollars a year, and possibly from a thousand to two thousand, depending on what you pay out.

Why this is so great is you will have to pay these expenses anyway, so it just makes sense to pay for them through an FSA so you can take advantage of this great plan.

Eventually you’ll get a reimbursement check for your taxes. The key is to put it away for savings, which is the reason you use an FSA in the first place.

As always, don’t be tempted to take your windfalls and go spend them as soon as you get the check in hand.

If you want to occasionally reward yourself that’s a real must, just do it on a limited basis and occasionally. Keep the long term strategy in mind and know that if you commit to your savings plan and are responsible with it, there will come the time when you can buy almost anything you want for cash and never feel the weight of debt or spending what you really don’t have to spend.

An FSA is one great tool you can use to reach those savings goals.

After your regular bills and debts, like mortgages, student or car loans, the vast majority of people spend the most money on communications and media products and services.

That is of course a part of our everyday lives and in most cases necessary, but many times we buy more product or service than we need or use, and there are a number of ways to bundle or cut back on these to save a significant amount of money, which you can of course than use to build up your savings or use to invest.

Here are several tips on what you can do to cut back on your media, communication or electronic expenses:

Bundle your services

Amazingly, a lot of people either aren’t aware of or don’t bother with having their cable TV, Internet and phone services bundled.

It’s really simple, just call you your providers and ask if they bundle them together, and what type of savings you’ll get if you buy their services that way.

From there, just do some comparison shopping to find the best deal and service and make you decision and do it.

Depending on how much service you’re talking about, this can save a lot of money in and of itself.

Another great things is you save time and money through the convenience of paying for it all in one bill too.

Cable itself

Here’s one you can definitely save on when you think it through a little. This works well for someone who has a lot of extra premium channels and other services which you may never or rarely use.

Just take inventory of your lifestyle and see if the extra services are worth what you’re paying. If you don’t use them much, I’m sure having dozens of TV channels and the ability to watch TV or movies on the Internet is more than enough for even the most rabid TV or movie fan.

Magazines or newspapers

There are a lot of people that of course have already done this, but why pay for a magazine or newspaper when you can find everything you would ever need online, or secondarily on the TV if that’s your choice.

Sometimes a small town newspaper offers some value, but overall, magazines and newspapers carry the same stories you find on the Internet through a variety of devices. Why pay extra for print media?

Telephone and cable bills

Go through your telephone and cable bills and see what it is you’re paying for. There are so many extras you may have signed up for that you may have forgotten and never use them or have no need of them.

This could include music channels on cable or all those fancy extras on the phone you never use or care about; whether it’s a land-line or mobile phone.

For the mobile, just think texting and you could get rid of a lot of money spent you never need to.

Mobile Phones

Speaking of mobile phones, here’s a place that most people can really cut back on, depending on your lifestyle.

You may even have a couple of plans which are costing you a lot of money. If your primary purpose is for emergencies, don’t get hooked into all those plans with large monthly fees or minimum payments.

Again, go through it all and look at your actual practice and lifestyle. You may be surprised that you’re paying for services you never or rarely use, and usually they’re at hefty prices when added together.

Internet Access Speed

While many of us always want to think we have a need for speed in many things we do, in the case of the Internet, again, it depends on what you’re using it for.

If you’re a heavy user like me, and use it for video, and to a lesser degree – audio, then you may not have much choice as to what you pay. But if you use the Internet for mostly reading and communicating with others, you can easily get a plan for less and save a lot of money with less speed.

You could experiment a little with a slower cable Internet speed, as a number of people say they’ve lowered their Internet speed and really haven’t seen any change in the experience or performance while surfing online.

Conclusion

No one will be able to do all of the suggestions above, but just do a couple of them or think of other things you pay for in life which you rarely use or need, and you could come out with a nice amount of money saved you can than use to save or build your wealth.

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.

Before I even get into this, you need to understand that an emergency fund is a must for anyone. The reason this is so is there is no way to predict what the future will bring, and consequently, to cover unforeseen circumstances or events which could put you in financial trouble, you need to build up an emergency fund to protect yourself.

Now what is an emergency fund as to its overall purpose? While I already stated the obvious that you need financial protection, the practicals of it is your’re buying time. That’s the ultimate result of having an emergency fund put aside.

What time does is offer you the opportunity to go out and find a job if that’s what happened, or to think through what your next step should be.

If you haven’t bought time with an emergency fund, you’ve basically limited your options to moving in with your mom or dad, or to accept the first job offered to you in order to keep your current lifestyle going, or to even stay in the home or apartment you own or are renting.

No matter what you do in the financial realm or what your goals are, be sure to make an emergency fund the first step toward your financial health and ultimately to build your wealth.

If you don’t have an emergency fund build up, you’re forever paying out what should have been used to put away in savings to build for your future retirement or lifestyle choices.

The reason is there is always some type of smaller event coming up that you weren’t aware was going to happen, and these endlessly eat away at your capital if you aren’t committed to putting away to build your emergency fund as the foundation of the rest of your financial strategy.

When you come down to it, don’t delay in any way in building up your financial safety fund. This is why I always advocate paying yourself first in all your financial practices, as there will always be something available to spend on if you don’t get into that practice.

But to get into that way of life you must commit first to doing it and take the first step. That’s always the hardest thing to do. Once you begin developing these financial habits, it’s surprising how easy it is to do it, and there’s an increasing sense of accomplishment, satisfaction and ultimately – the feeling of being prepared for what life may bring your way.

Just commit to taking that first step and decide on what you will put away and at what interval to build your emergency fund. Stick with it and in not too long of a time you’ll have a solid foundation to work the rest of your financial strategy from.

There isn’t a money manager of financial adviser in the world worth their salt which doesn’t know and understand the greatest secret to successful savings in the world, which ultimately leads to discipline from the habit developed over a period of years.

One of the reasons this strategy isn’t employed by that many people is we wrongly apply a teaching that is correct in other areas of life but doesn’t work work when we apply it in the financial management area of our lives, as it’s one of the reasons we have problems in the first place.

Now the exception to that rule is when we have a debt addiction problem, and we have spending habits or emotional moods or swings which drive us to buy something time and time again which leads to a debt load which is crushing and ends up affecting all aspects of our lives until we deal with it. That’s a different problem though, and that must be handled first before anything else. If it isn’t, no matter what you do in cutting back on expenses and building up your savings, it’ll backfire, as you will be one mood or swing away from undoing several months of hard work, putting yourself in that endless cycle and maze you can’t get out until you take a stand – basically against yourself.

So what is that one thing that we’ve been taught all of our lives, and which is correct in almost every circumstance, but in the case of savings it’s not? It’s focusing on yourself first. In other words, it’s employing a form of what seems to be selfishness and irresponsibility if you don’t understand why you must do it.

What’s the simple practice I’m talking about. If you haven’t ever heard it before, or if you’ve heard it before but neglected it, don’t do it today: it’s paying yourself first! That’s it!

This is as powerful a financial strategy as you’ll ever use in your life, and those that practice this as soon as possible will be wildly successful in their finances in contrast to those that don’t practice this.

There are of course a lot of ways you can do this. For those with little discipline at all, you should have automatic deductions taken out of your check to put into a retirement plan. There are a lot of ways to do that, and this particular article isn’t for the purpose to getting too practical with all of this, but understanding the power of paying yourself first, no matter which methodology you use or the financial vehicle or vehicles you choose to use.

Paying yourself first takes care of all excuses and the discipline you need to hold on to your money. When you pay yourself first and put it into an investment or savings account of some sort, it’s there. It’s not going to go anywhere and you shouldn’t be able to get at it easily or without cost. For example, having penalties for withdrawing, etc.

So when you set aside money for savings and building wealth first, and you don’t have access to it without pain, then you will learn the other ways of saving money that can help you live how you want to live without feeling like you’re losing out on everything.

If you attempt to do the saving money thing first, without paying yourself first, what usually happens is you do in fact learn to cut costs on a variety of things, and then you go out and spend that savings on other stuff unrelated to building a financial safety net and ultimately great retirement.

In the case of your personal finances, this is the one place you need to take care of yourself first. If you don’t, you end up being part of the problem rather than a part of the solution.

It isn’t selfish in reality to pay yourself first, as taking care of yourself and your family is a way you can help everyone, as you’re not a burden on society and your family can count on being taken care of because you paid yourself or yourselves first.

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.