With less than 2 months till Christmas, its prime time to be writing up your Christmas gift list, doing some window-shopping, and scouring deals for Black Friday (3 weeks away!). But are you also getting your wallet ready for the holiday spending spirit? Budgeting and practicing within-your-means spending is going to be key to surviving through to New Years with your credit score intact and your finances out of debt.

Not to put a damper on the joy of the coming months, but realistically this holiday season could be a minefield of risks that could blindside your credit report and bank account. Racking up charges up to your credit limit could lower your score, extra fees on credit cards and the risk of overdraft charges on debit cards take chunks out of your savings, and just like with holiday pounds, you could gain debt faster than you can work it off. WiseBread posted an interesting blog about “frugality fatigue,” suggesting that after the recent years of tightened spending and penny-wise habits, people are looking to spend and return to the old ways of credit cards and overspending. An American Express survey of consumer attitudes found that 80% of consumers still intend to buy gifts this holiday season, with 36% planning to spend $100-$499, 28% to spend $500-$999, and a full 30% spending $1,000 or more.

Whether you plan to spend $100 or $1,000, the next two months of gift shopping, eating out, entertaining, and traveling could deplete your savings and hit your credit score harder than you are prepared for. Besides healthy credit and stable savings, there are many good reasons to be prudent with your holiday budget this year so you can start 2010 in good financial health. The following tips can help you save money and care for your credit without skimping on the holiday extravagance:

Protect your Credit

1. Plan ahead to minimize overspending – Before you even go to the mall or shop online, make a list of who you have to buy for and stick to it. It will help you stay on budget and on track, and minimize the possibility that you might start browsing and shopping for yourself. Also, remember as you shop not to overspend just because you might be charging credit. Rule of thumb: spend only what you can afford to pay off RIGHT NOW; shop like your credit card is a debit card and go straight home after shopping and pay off your credit card so you won’t be tempted to carry a balance and rack up interest charges.
2. Opt out of traditional credit cards – Pre-paid credit cards are a good alternative to credit cards because you don’t risk overspending on what you deposit, you can still build credit, and you won’t pay interest; the trade-off is you have to pay an annual fee. Or think about paying cash or using a secured card, both of which will not hurt your credit score.
3. Steer clear of store credit cards – Read the fine print of a store credit card or retail card and you may find that the membership benefits or special discounts you’d receive for opening the card isn’t worth the high interest rate and extra charges that comes with it. Store credit cards typically have a interest rate far higher—sometimes double the APR like Macy’s 23.99% APR or JC Penney’s 24% APR card—than a normal credit card. Also, store credit cards often stipulate that you must spend a certain amount through the year in order to qualify for discounts or benefits, have high late payment fees that increase with the balance, require a minimum purchase within a period of time to keep the benefits, and more. However, store credit cards are beneficial if you are sure to pay off your balance in full every month, that way you can get your 15% discount without risking paying a 25% interest rate. For information on specific cards pros and cons, check out Store Credit Cards: A Rip Off?

Shop smart, shop early

1. Save on shipping – More and more on-line retailers are extending offers of free shipping to get more customers clicking and buying. Look out for major retailers like Target, which launched its holiday free-shipping promotion on Nov 1, Walmart, which ships free to a nearby store, and more stores mentioned here to see where you can save. More tips:
   • Some online merchants time their free-shipping deals right before the week of Thanksgiving and Christmas to move inventory faster.
   • Websites like freeshipping.org and coupon sites like slickdeals.net and fatwallet.com list specific merchants with free or discounted shipping. Also, mark your calendar for Free Shipping Day, when participating merchants offer free shipping this Dec 17 and guaranteed delivery by Christmas Eve.
   • Amazon’s “Super Saver” shipping gives free shipping for most purchase orders over $25; if you are a few dollars short of $25, www.slickfillers.net lists items as low as $0.35 so you can fill in the few dollars or cents and get free shipping.
2. Get it while it’s hot and in stock – Ever heard of deal-of-the-day sites that only sell one product at a time, at a deeply discounted price, until it runs out and moves on to the next item? They are insanely popular all over the web and addictive to watch and track to see what the next item will be. Deal of the Day Tracker monitors most of these sites, which sell everything from discount duds to army knives and electronics, and shopping here could save tons of money on high-quality gifts and also practical items. Some sites, like Red Tag Crazy, can alert you via text message, e-mail, or instant message so you can know what is selling like hotcakes at 3 am.
3. Check your mail - Going through your junk or spam mail can pay off if you find some special offers from retailers’ emails. More and more retailers are sending customers special offers by e-mail or mail instead of mass advertisements of sales. Sign up for mailing lists or loyalty clubs at stores you want to spend at (for buying gifts for others, not for yourself!), and pay attention to email (you might have to wish out of your junk mail folder) that might hold big sales or coupon codes exclusive to customers on their mailing list.

At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!

Personal finance management tools aren’t new; sites like Moneystrands and Quicken Online have been around for years. These sites specialize in helping stressed-out consumers and overwhelmed spenders keep track of their money. Now, credit card issuers are countering bad publicity by becoming more and more consumer friendly in their approach, offering personal finance management tools to help customers manage their finances by emphasizing budgeting and saving rather than just credit card-charging.

This happens to be good timing in light of the entire credit card industry under tough scrutiny by both the government and the public in the last few months due to the increased interest rates, credit limit reductions, fee hikes, and more changes issuers have been scrambling to put in place before the reforms of the CARD Act go into effect in February 2010.

These controversial actions taken by the credit card issuers hasn’t made for a very good image of big names like Chase and Wells Fargo in consumers’ eyes. Getting back on the consumers’ side means showing customers that big credit card companies aren’t just out to squeeze money out of them. These personal finance management services, plus ending some of the more controversial changes in their terms and practices, are the credit card companies’ olive branch to consumers.

Check out what kind of financial management tools your issuer offers. Even if you are not a cardholder, some of the following sites are open to all consumers:

1. American Express Money Manager Tool – As a free benefit for American Express cardholders, the newly-launched Money Manager Tool helps you stay on top of your finances by giving you a complete view of all your accounts, credit cards, and loans in detail and have a big picture view of your money management. You can link all of your personal financial accounts in one place, and customize graphs and budgets so you can monitor your spending and budgeting the way you want to. While very similar to other personal finance management websites, the Money Manager tool is different in that it is exclusive to AmEx customers and also allows users to consolidate rewards statements for frequent flyer and hotel points. If you want all the perks of a typical money management site plus extra credit-card specific features like tracking your travel rewards points, this is a benefit AmEx customers should take advantage of.
2. Wells Fargo Smarter Credit– This website is open to all consumers, and has learning tools, articles, tips, and information aimed at helping consumers establish/rebuild credit, reduce debt, get more credit, and manage and protect credit. This site is useful because you can pick out the tools and tips most relevant to you according to where you are on the credit learning curve. Aside from some helpful articles and budgeting sheets, there is an interactive money management tool called My Spending Report with Budget Watch to help you track every purchase and set monthly budget goals, exclusive to Wells Fargo customers.
3. Discover’s Spend Analyzer – Another newly-debuted personal finance tool that offers online tracking and spending of purchases for Discover customers. Using the standard model of money management websites, you get the run-of-the-mill features of categorizing spending, comparing spending patterns over time, and sorting transactions by detail so you can manage how you use your Discover Card. However, this online tool only tracks spending of your Discover card, and not all of your financial accounts. But, a unique feature is the “Paydown Planner”, which helps create a plan for reducing your Discover card’s balance and get you out of debt, which is one of the most effective tools a credit card-specific financial management service can offer.
4. Chase Blueprint – This is a personal finance tool tied straight to select Chase cards that allows customers to determine how they want to apply payments across their statement balance. Check out my review of Chase Blueprint to see how it works and see if it’s the right kind of money management helper for you.
5. Capital One MoneyWi$e – A partnership between Consumer Action, an advocacy group, and Capital One created this personal finance resource website that offers helpful tools and articles specific to your money goals, whether that is educating your teen on credit or learning how to build wealth. It has an interesting click-through format that features people’s stories as well as interactive activities. Worth checking out since its open to all consumers.
6. Citibank – Citibank’s website features a “Planning” section that encompasses many categories that the other issuers’ personal finance resources don’t cover, such as Retirement Planning and Investment Planning. Click on the type of “Planning” you want, and you’ll receive a comprehensive list of articles, strategies, as well as tools and calculators to help you plan towards your goals. While there is no interactive money management tool, the information and calculators provided are very useful because they give you specific strategies and tools unique to your goals. The site is better suited for addressing specific financial goals rather than overall money management.

At Credit Karma Blog, what goes around comes around… Are these services helpful to you as a customer, and do you want to see your credit card issuer reach out with more tools, advice, and help like this? Comment back– we’d love to hear your reactions!

Headlines are unanimous: when it comes to the recession, we are… confused. “Recession over? Sure doesn’t feel like it“, scoffs MSNBC, while The Wall Street Journal breathes a sigh of relief thanks to “A Recovery At Last.” Skepticism and optimism on both sides of the media circus are pulling the public back and forth.

But how does the average consumer– YOU –feel about the state of our economy? Does it feel like we’re finally steering clear of recession, or are the signs of recovery everyone has been talking about been passing you by? Throw in your two cents and comment back on what you think!

Personal Finance News

• CNN Money gives some tips on free cash for your business.
• Here’s a fun (and useful!) post from The Simple Dollar: 14 ways a notebook in your pocket can save you money.
• Find your financial style — and its pitfalls, writes The Wall Street Journal.
• Moolanomy offers advice on what to do with a financial windfall.
• Need help teaching your kids about personal finance? Check out The Chicago Tribune’s Financial games: it can pay to play.
• 11 ways to save money on groceries blogs My Dollar Plan.

Credit Reports & Credit Scores News

• The San Francisco Chronicle clears up confusion on credit scores.
• What is in a credit report? asks Business Finance.
• Let’s end confusion over free credit reports writes The Dallas News.
• Financial Money Investment helps you understand where credit scores come from.
• MSN Money finds out how your credit score will affect your auto insurance in the article, “Bad credit is worse than bad driving“.
• How to improve your credit score tips from KCCI 9 News Channel.

Did you know that the U.S is about to hit its credit limit? Apparently we might be running into the government’s self-imposed $12.1 trillion dollar debt ceiling as soon as November if U.S Treasury sales keep up. Makes your current credit problems not too bad after all, huh? While Uncle Sam isn’t setting the best example right now, the following bloggers and journalists are the savvy people who can keep you on track with your financial know-how with this week’s best personal finance and credit blogs, articles, and advice.

Personal Finance News

• WiseBread shares 5 online tools to help you land a job.
• Best things to buy in the fall recommended by Generation X Finance.
• Wall Street Journal shows you how to barter for the services you need.
• 3 steps to financially preparing for disaster brought to you by Debtkid.
• Money Saving Mom blogs on stretching your dollars online with coupons and cashback.

Credit Report & Credit Score News

• Enough practice- make your credit score perfect! exclaims Doughroller.
• NewsChannel 5 reports on what to know about pre-employment credit checks.
• One simple way parents with good credit can help children build theirs from the Los Angeles Times.
• How to protect credit if canceling card, writes Press Democrat.
• Free From Broke highlights your credit score as another case for emergency savings.
• Reuters answers the question, what can consumers do to raise their credit scores?

If you own a credit card or read this blog regularly, you should be familiar with the restrictions and fees credit card companies have been imposing on cardholders in recent months. Cardholders have been complaining about jacked-up interest rates, sudden fees, lowered credit lines, closed accounts, and unfair penalties. These changes to the terms on your user agreements for credit cards may not necessarily be due to your poor credit management or late payments; another reason is that banks have been trying to increase the profitability of consumer accounts before the reforms of the Credit Cardholders’ Bill of Rights take effect in February 2010.

With the credit crunch and rising consumer defaults, banks are doing what they need to do to stay in business. Consumers need to look out for the fine print on any notice of changes to your credit card from your issuer, like the one that Bank of America customers received, and see what you can do to protect your credit and your credit score.

ATM surcharge and fees

The Cost: As high as $5 per transaction. Every time you go to use another bank’s ATM for quick cash, you are likely to get slapped with increased fees from both ends of the transaction—the ATM’s bank and your own bank. You have to pay an average surcharge of $2.22 to use another Bank’s ATM, up nearly 13% since last year according to Bankrate.com. Then there is the fee your own bank will charge you for using another bank’s ATM, which has risen to an average of $1.46 from last year’s $1.25.

How to Avoid it: You can only plan ahead and be prepared with cash, or you can switch banks. If you want to stick to your bank, the best way to avoid this fee is to estimate how much cash you need for the day and withdraw what you need from your own bank’s branch so won’t be desperate for cash and tempted to use any ATM. If you’re sick of surcharges and fees, opt for an online bank, such as ING Direct, Bank of the Internet, NetBank, and First Internet Bank, that will reimburse ATM surcharges up to amount per month. Charles Schwab Bank and E-Trade off unlimited rebates for ATM surcharges.

Annual Fees

The Cost: Anywhere from $29-99. Bank of America announced last week that they plan to tack on a $29 to $99 annual fee to an undisclosed amount of its credit accounts starting in February. If cardholders don’t voice too much of a protest, other banks may follow in BofA’s steps very soon.

How to Avoid it: BofA calls the annual fees an “experiment”, so complaining might get some results. If you have an excellent credit score in the mid 700s range, you are in luck. You can try and negotiate with your issuer and even mention that you will take your business elsewhere; chances are they will want to keep a reliable customer like you. If you have poor credit, you can close your account to dodge the fee, but your already-low credit score will take a hit. If the account happens to be your oldest credit card, you might want to consider paying the fee because your credit score will take a big drop with closing your oldest credit line.

Reduced Limits

The Cost: None, but you will have lowered credit limits and a potentially lowered credit score. About 20% of U.S cardholders between October 2008 and April 2009 saw their credit card limits slashed involuntarily, and in some cases, their accounts arbitrarily closed, according to a FICO study. However, 73% of the cardholders complained that they were penalized with no apparent credit problem. Lowered credit limits means higher credit utilization (a ratio of your current credit balances against your total available limits) which unfortunately also means an average of a 20 point drop on a credit score; that could be the difference between being approved or not approved for a loan.

How to Avoid it: You can fight back, or at least make the most of it. Try calling your bank and asking to have your credit limit increased, especially if you are in good credit standing. Otherwise, you can minimize the damage to your credit score by lowering your credit utilization accordingly and paying down your balances. Make sure you don’t go over your new credit limit or maintain a high credit utilization rate—your funds and credit score will shrink.

Overdraft fees

The Cost: As high as $35 per overdraft. If you make several purchases on an overdrawn account in a single day, banks often charge more for repeat overdrafts. That means that you don’t just pay an increased fee on overdrafts—you’d pay it several times over in a single day. Some issuers, including JPMorgan, Wells Fargo, and Bank of America, are planning to reform overdraft fees following criticism from Congress over the exorbitant practices.

How to Avoid it: Monitor spending on your debit card or stick to using a credit card. When you do get overdraft charges, especially if it was multiple charges in a short amount of time, call your issuer and try and pare it down to a single fee–sometimes issuers will do 4 overdraft fees in a single day while the customer doesn’t even realize they overdrew on their account. Avoid using this by using a credit card so you can’t overdraw your account–however, make sure you pay off your balance in full each month and don’t exceed your credit limit or else you’ll be paying fees all over again.

Interest rate hike

The Cost: As high as a 29.99% interest rate hike. Issuers have been squeezing in interest rate hikes for the last few months and will continue to do so in the upcoming months to profit as much from consumer accounts before the credit card reform legislation sets in. Rates rose by 20% just in early 2009, which is already taking a big financial toll on consumers who rely heavily on credit cards or with outstanding balances.

How to Avoid it: If you have good credit, try calling your issuer to have the interest rate dropped. Doing a balance transfer to another credit card with a lower interest rate is another option to ease your payment charges; make sure you don’t get hit with a transfer fee on the new card. However, the best, long-term way to avoid getting burned with these ever-increasing rates is to pay off the debt you have and to hold back on spending so you don’t carry a balance from month to month.

If you want to know more specifically the changes on credit cards each issuer is taking, check out Credit Card Changes by Issuer and Date for a good list of the fees that you might be unaware you are being charged. As banks look for ways to make a profit on plastic while they still can, these fees and hikes might be a red flag to ease up on your credit usage to avoid unnecessary charges all together.

Having extra money set aside can be a real lifesaver later on in life should you ever run into a financial emergency, want to put a down payment on a home, start your child’s college fund, or start your own business. Here are some saving and investing opportunities that will make the most of any amount of spare money, from your pocket change to your golden nest egg .

If you have a $100…
Saved up a few hundred? Open a high-yield online savings account that will allow you to earn the highest interest on your sitting money. Our top picks that do not require a minimum balance include Ally Bank’s online savings account with 1.70% yield, HSBC Direct’s 1.35% APY, and ING Direct’s Orange Savings with 1.30% APY. Or you can go to MoneyAisle to compare APY rates yourself.
Tip: Be on the lookout for any minimum deposits or minimum balances that some high-yield accounts require that may make you ineligible for stashing your money there.

If you have $1000…
If you don’t plan to touch your money for a period of time, a Certificate of Deposit (CD) might be a good place for your money’s safe-keeping. CDs offer a higher interest rate 1 to 2 percentage points higher than savings accounts. What’s the catch? For the term of your CD (anywhere from 9 months to a few years), you cannot withdraw or deposit additional money or you will pay a penalty. If you are confident you won’t be itching for your money, shop for CDs according to their life span, minimum deposit, and rate—1.75% APY on an 18 month CD at Citibank, 2.25% APY on a 24 month CD at American Express, or a 2.75% APY for a 3 year CD at Discover.
Tip: The 12 month 2.00% APY CD with Discover offers no-penalty access and no-fee early withdrawal, which is a good option in a time of job insecurity and recession.

If you have a $10,000…
Wall Street’s encouraging market rally maintaining over 10,000 points make now a promising opportunity to invest in stocks and potentially reap big rewards. Whether you are a first-timer or a trading veteran, $10,000 is a good investment towards a few top-notch stock funds or to diversify your stock portfolio. Online trading webistes like TD Ameritrade, TradeKing, Zecco, and ShareBuilder offer online convenience and low cost per trade that makes it easy to invest your money.
Tip: Good news for new traders: both TradeKing and ShareBuilder are offering a bonus to new accounts.

If you want to do a good deed…
An alternative place to put your savings is investing in a peer-to-peer loan or microloan. While this may not pad your bank account as much as the above options, the pay-off is that you this alternative to traditional banks helps other people and supports a good cause. Both Prosper and Lending Club allow you to choose who you want to help finance through small, personal loans. Kiva, a microloan lending platform, connects you to third-world entrepreneurs to help finance projects for impoverished communities.
Tip: P2P sites like Prosper and Lending Club offer great 7%-13% estimated returns for lenders.

Put that extra cash where it belongs
Finding the right place to save or invest extra cash will pay off later as interest rates continue to drop, jobs start to stabilize, stock markets keep surging, and your money will be financially fit for an economic boom.

If you’ve read your morning newspaper yet, you’ll see that the Dow’s still moving and shaking above the 10,000 mark. Now some are calling it good buzz for our economy, and others say its just a whole lot of steam. Wake up to your current financial situation in the midst of this economic turning point with some more financial food for thought.

Personal Finance

• Have you heard that bartering has become more popular amid recession? The Chicago Tribune reports.
• 10 surprising things you can turn into cash, suggests My Dollar Plan.
• MarketWatch wonders whether frugality is forever, and how that will affect our economy.
• Generation X Finance blogs on four fiscally-fit financial roadblocks.
• Learn how to save money on your household bills from Money Ning.
• Interested in how to get a loan to start a business? Kiplinger has some answers.
• Get some tips from Moolanomy’s, “Fall cleaning for you and your financials!“.
• Bible Money Matters blogs on what to do about out of control spending.

Credit Report & Credit Scores

• Underlining ‘free’ in ‘free credit report’; written by The Washington Post.
• Money Under 30 suggests eight steps to achieve credit nirvana.
• Getting a cell phone? Mind that other number: your credit score @ CreditCards.com.
• The Consumerist shares some legal uses of your credit report.
• Did you know that reduced limits could affect credit scores? The San Francisco Chronicle reports.

Choosing the right credit card can be daunting when credit card applications bombard you with unfamiliar terms like variable default rate, cash advance transaction fee, and more APRs than you can imagine. Shopping for your next credit card starts with identifying your spending habits and how often you plan to use your credit card. Are you looking to earn rewards, for an emergency card, or an everyday-use card? Then check out the terms and conditions, especially the ones that affect your particular credit usage. Knowing your credit card and your specific needs before you sign on the dotted line can help you hone in on the key terms that will benefit or cost you.

REWARDS SEEKER - If you are itching for your next vacation, a rewards credit card can get you on a flight to Hawaii sooner. Just make sure you read all the rules and restrictions of the rewards program to make sure your credit usage will qualify you for the flight mileage or travel packages that you want.

• Know what kind of rewards you can get to make sure you are able to redeem enough to make the card worth it for you. If you are a frequent flyer or stay at top-of-the-line hotels, then you can potentially earn lots of rewards from your card. The Starwood Preferred Guest Credit Card is a great choice for jetsetters because it offers one of the best hotel loyalty and airline miles program with the least restrictions. But, in order to take advantage of a bonus 15,000 points on your Starwood card, you would have to spend the equivalent of $15,000 within 6 months to get 3 free nights in selected hotels. If you can hit this spending threshold without going bankrupt, then this is the right kind of card for you.
• Look at the APR for purchases at the bottom of the application because rewards card tend to have higher variable APRs than other cards (you are getting hotel stays and airline flights out of it after all). A rewards card works best for people who don’t carry a monthly credit card balance, or else you might end up paying for the rewards you accumulate many times over in steep interest charges.
• Also, look out for an annual fee; you’ll get the most out of a rewards card by using it regularly enough to benefit from the rewards program that fee pays for.

FOR EMERGENCIES ONLY – You want a credit card handy to back you up for when you have a financial emergency or want to buy a big ticket item. For the times you need credit quick, watch out for any extra APRs or fees that could make you pay extra for credit card features you won’t be using often.

• Cash Advance APR is an important interest rate to check out on the application, especially if you’ll be tempted to use your credit card to withdraw cash often. The rate is often high for most cards and usually upwards of 20% or more, which means even a small $50 cash advance can rack up a $10 fee.
• If you want to use your credit card as a backup to your checking account for the times you overdraw your funds, check out the Overdraft Advance APR, which also tends to be upwards of 20%. Depending on the increments your credit will deposit into your checking, anywhere from $20 to $200, relying on your credit card to keep replenishing your debit can cost you fees and interest.
• Finally, be sure to pay off your balance so you won’t get stuck paying high interest on your occasional purchases. If you only use your card for emergencies or big ticket items, a 0% APR credit card like the Citi Platinum Select Card gives you a 0% APR for the first 6 months, which is like getting an interest-free loan on your balance.

EVERYDAY PLASTIC ADDICT- Your credit card is your best friend, and it goes everywhere with you and pays for everything. For regular plastic users like you, a cash back credit card will give you the most benefits from daily charges.

• Be responsible with frequent credit use and make sure you don’t spend more than you can afford to pay back. One glance at the default APR, which is often double the original APR at around 30% or more, will tell you how much you’ll be paying in interest if you don’t pay your monthly balance on-time and in full.
• Since you may be using this card more than your other credit cards, you might want to think about doing a balance transfer, which will transfer the balances of other cards to one card so you can pay off the balances more efficiently and at a potentially lower APR. Read the fine print on balance transfer APR plus an extra transaction fee for balance transfers. If your card has a lower APR and a 0% balance transfer APR, you can pay off the balance of other cards at a lower interest plus you don’t have to pay extra interest on the transfer.
• Finally, know your credit limit and make sure you don’t end up paying an over-the-credit-limit fee, also covered in the fine print, for all of your regular or impulse purchases that rack up.
• Credit card-addicted users like you benefit the most from a cash back credit card like the Chase Freedom Credit Card, which gives you $50 back on your first purchase and will let you earn more money as you spend. Most cash back credit cards offer around 1% cash back earning power on every purchase, plus a higher rate for everyday purchases, such as Chase’s 3% cash back in rotating categories like department stores, home improvement, and gas.

One last note on the fine print: Despite what the Pricing and Terms page will tell you about the rates, fees, and costs that you should know before you complete your credit card application, these conditions are subject to change according to the issuer and the Prime Rate. Check out the Credit Cardholder’s Bill of Rights for your rights as a cardholder and the new regulations, like a 45 day advance notice on interest hikes, that keep issuers in check.

Becoming a millionaire seems like an impossibility since the past decade’s get-rich bubbles in real estate, dotcoms, and stocks have burst and left most Americans worried about earning a regular salary, let alone millions.

Becoming rich won’t happen overnight, but it can happen over time. It takes good, consistent habits and before you know it, you’ll be a lot closer to millionaire status than you were before reading these 7 tips:

1. Finally get rid of your debt! Your credit card debt is a black hole of interest and never-ending, unpaid debt for all your hard-earned savings. The average American carries a $6,000 balance on their credit card and a typical credit card APR is 14.9%, so if you paid the minimum payment of $100 a month, it would take little over 9 years to pay off your balance. On top of that, you will have racked up $5,074 in interest charges! Start focusing your current cash flow on paying off your debt now so you can avoid potentially paying double your original debt in interest charges in the long run.
2. The old piggy-bank method, reinvented - Let’s take out the calculator again, but let’s focus on saving rather than debt reduction. If you saved $500 a month and put it in a savings account like Ally Bank’s high-yield 1.75% APY online savings account, in 10 years you will have $60,553.84 saved up! If you keep this up for the next 45 years, you’ll be sitting on a $270,000+ nest egg when you retire. Or you can opt for a CD with an even higher interest rate, like Discover’s 3 year CD with 2.75% APY, which will yield a whopping $430 in interest with an initial deposit of $5,000 by the end of the CD’s term.
3. Trade your credit card for a debit card, secured card, or cash - There is nothing evil about a credit card, as long as you know how to use it responsibly. For consumers overspending on credit or paying late or not at all, sticking to credit card alternatives like a debit card, secured card, and cash is the best way to avoid the debt and interest charges and keep up a healthy credit report. And seeing your spending directly shrinking your bank account might make you think twice about your purchases.
4. Shop around for loans – Not all loans are alike, and with a little bit of research and comparing, you can save a substantial amount of money by looking for a loan with the best terms and rates that fit your needs. If you are a student, use SimpleTuition to do all the loan searching and work for you. For any other type of loan—from opening up your first restaurant to paying off your car—check out Prosper and Lending Club for a person-to-person lending platform that has reduced rates for lenders (as opposed to going to a bank) and are perfect for short-term and smaller loans.
5. Invest! – On that note, you can also invest in the P2P platform of Prosper and Lending Club to get a high rate of return, ranging from 8-20%, while also helping out fellow consumers.
6. Cut a little, save a lot – Start making coffee at home and deposit the $4 you would’ve spent every weekday morning in a savings account, and within a year you will be $1,008 closer to becoming a millionaire. If you usually eat out for dinner and opt to go out 2 times a week and cook the other 3, that adds another $3120 a year to your savings. If you want to take this saving thing seriously and cut out your annual Tahoe ski trip and New Year’s Las Vegas trip, your “staycation” could save you another $3,500+ or more. With these three suggestions, you could savea possible $7,628 to deposit to your piggybank.
7. Sell on eBay! – Think you have nothing to sell, it’s too complicated, or it takes too much time? Millions of people buy and sell on eBay and millions of dollars are exchanged because it can be profitable and effective if you do it right. Check out this blog, “Sell it Now—how to make hundreds of dollars in 37 minutes,” and see how to make your mint-condition Beanie Babies collection can help make you a millionaire.

Start Today
Getting rich slowly may not be your ideal way to hit seven figures, but it’s certainly the most practical and realistic. Building your personal wealth is hinged on simple ideals of saving more, spending less, dealing with debt, and being financially responsible over a longer period of time.

There is a new trend developing due to the sagging housing economy where a homeowner who is underwater with their home, acquires a new bargain priced home and then walks away from the overvalued property. This practice, known as “Buying and Bailing,” has been a hot topic for homeowners looking for an escape route from paying a mortgage on a home that has lost significant value.

It sounds too good to be true; mortgage rates are still very low and you’ll be able to get a great deal on a home which is more affordable than your current home. More real estate and mortgage brokers are becoming familiar with the ins and outs of these transactions and are more than willing to coach you through this type of endeavor. However, accomplishing this in reality is difficult, you will need to be able to afford a new down payment as well as support both loans in order to qualify for the loan on the second home. Some consumers have set up a short sale, put the home in a spouse’s name or told the bank that they plan on renting out the first home as work around to help qualify for the second loan.

This type of exit strategy will only work in markets where the home values have dropped considerably. At first glance this may appear as a miracle from above, but consumers need to understand the repercussions of a buy and bail. Specifically, their credit score will be battered once they start missing mortgage payments which will ultimately end in foreclosure. Once they have a foreclosure on their credit report they won’t be able to get a Fannie Mae loan for up to four years. Additionally, anything requiring a credit check like insurance, new credit cards, employment screening will present your past misdeeds and likely affect pricing of other financial products or even cost you a job.

No one really knows how much this will affect consumers’ credit as this is the first time homeowners have made this type of risky and possibly illegal maneuver. One thing is for sure, consumers attempting a buy and bail will always have a looming uncertainty around if a lender or worse the police may come after them. At minimum, lenders can put a lien on the new property; as well as sue for fraud if you misrepresented yourself on your loan application. Many are rolling the dice that most lenders are severely understaffed and hoping their situation may get lost in the shuffle and never be addressed.

Predictably, lenders are calling this practice unethical, deceptive and fraudulent. They are quickly looking at ways to close this loophole to reduce future risks in their portfolios. For many it’s comical to hear the lenders call something “deceptive” when only a few years ago, they were creating variable rate mortgages with complex minimum payments and negative amortization, as well as 100% financing programs that contributed to the housing collapse. Regardless, lenders are now adopting stricter underwriting conditions when evaluating new purchase loans for borrowers with existing home mortgages including producing an executed lease agreement or requiring documented income to verify the consumer will be able to support both mortgages. Both of these are precautions to help weed out Buy and Bailer’s before they take ownership of that second property.

Buying and Bailing may be a way out for those who have the means to pull off such a complicated transaction and simply get lucky that lenders are understaffed and unable to properly follow up, but it requires a perfect storm of having the funds on hand, adequate employment/income to satisfy the underwriting, and a family member or spouse that can assist in securing the second home by being the primary applicant. Realistically, while this option does provide a viable, albeit difficult escape route for some, it’s very questionable of its legal and the long term ramifications are unknown at best.