If you think your child is going to be a private school student, perhaps the I529 plan would be better suited . Although the colleges that participate in these plans are still small in number, the benefits can be huge. The I529 plan focuses on savings for private schools.

For example, a deposit into a I529 plan of $10,000 would be calculated in the following manner: the tuition that that was charged in the calendar year the deposit was made would be the amount used for the tuition when the child attends. If your child for instance, planned on attending a private school in 2022, the college would apply the $10,000 you deposit as a percentage against whatever the tuition was in 2006. It covers only tuition and fees although (regular 529 plans also cover room, board and books). These plans are best when used with other savings such as a regular 529 plan and are probably best used once your child seems like they are a candidate for an upper-crust education.

You should also consider the benefit of Series I US Savings Bonds. You can still save for college using them. If you do use them for college, they are free of federal income taxes and more importantly, the money isnıt locked-up in a specific account.

Roth 401(k) Not all companies offer a Roth in their retirement plans, but for those that do, this is a tax treat.

The average employee doesnıt make the full contribution allowed by law (the law allows up to $15,000 a year but the average employee who contributes to these plans and who makes the average income of $45,000 only puts away 7% of thier income for retirement). This amounts to about $3,000 per year saved per employee.

If that contribution were made to a Roth 401(k), they would only need to make a $2250 contribution to beat the after-tax implications of a regular 401(k). But most folks donıt bother with the math, which in this case is good. So, if the employee were to make a $3,000 contribution to a Roth, they would be actually saving an additional $750 over those with a traditional 401(k). Another hidden plus for these savers requires companies who match to make those matching contributions to a traditional 401(k) plan. This gives the employee an account that could pay taxes on your gains in your Roth.

(Just to clarify the differences further: Roth contributions are made after taxes and thegains from the account are taxed at withdrawal. Traditional 401(k) plans have contributions made before taxes with the tax bill paid when the employee retures and begins taking distributions.)

Free credit reports This is a great thing provided you go to only one website and type in the name correctly. The site: www.annualcreditreport.com has over one hundred imitators with misspelled URLs. This little decption cn create numerous problems. You can also call toll free at 877-322-8228.

While all of the major credit reporting agencies offer free reports, they require you to sign up for monitoring services. Get your report for free and examine it carefully. Over 25% of the reports contain errors that could affect your credit score. Once again, meticulous records are the key to clearing up any reporting problems.

And now for the Tricks, financial missteps that may have seemed to be a good move at the time but have since (or will) prove to be not so good in the future.

Adjustable Rate Mortgages As more people are faced with the decision of Sell, Stay, or Bust, there are some simple things to consider if you have reached a point where your new house payment ­ courtesy of your increased adjustable rate mortgage is worth the effort.

Regardless of how much your house is worth on the market, if your cost of housing has increased to 75% of your income or more, it may be time to call it quits. While the down side is no more house, the upside is no more house payment.

If your housing costs have risen but you think you can ride the rate hikes out, consider examining your budget for holes that can be plugged in the short-term. Unfortunately, my best guess is that rates (the one your mortgage company uses to adjust your payments) wonıt begin to fall for another nine months or so. So buckle down and stay on a tight budget.

Or you could refinance your mortgage, which would probably increase the amount of the loan. This is because, in all likelihood, you would be borrowing all of the closing costs and the points. The upside is a new fixed payment; the downside, no chance that your house payment might fall when the economy improves. This last one only works if you have made all of your payments on time.

Converting a traditional IRA to a Roth IRA Because of several Acts signed by the President this past fall (the Tax Increase Prevention and Reconciliation Act and the Pension Protection Act), people saving for their retirement using a traditional IRA, which allows you to deduct the contribution to the account from your taxes, will be allowed to convert those plans to a non-deductible Roth IRA in 2010. The questions are whether the idea of deferred taxes are worth the effort. The short answer is no ­ unless you have a very small traditional IRA account.

You will be required to pay the taxes ona coverted IRA but these can be spread out over several years. It is best to leave those accounts alone, open a new Roth IRA and let the taxable gains on your traditional plan pay for the gains on your Roth IRA,

Term Life insurance While the rule of thumb for buying life insurance is "ten times your salary", this is often an imprecise way of calculating whether your surviving spouse and family have enough money to be comfortable.

Women are usually best at calculating just how much it costs to survive on a day-to-day basis. Men often think that they can survive just fine. But neither think of the insurance as a risk management tool.

It is true, the younger you start your policy, the cheaper it is and larger the coverage. Too much insurance and you run the risk of taking money from your retirement savings. Couples should pay no more than the cost of two dinners in a restaurant when determining the cost of a monthly premium on a policy. The policy should cover the mortgage, your childrenıs college education and provide an average annual income for your surviving spouse until the kids reach college age.

Gen Y Investors Financial companies are targeting the Gen Y investor (age 18 to 27 years) in the hopes that they can get them to start saving for retirement at an early age. Gen Y investors, what few there actually are, amount to a very small percentage of the retirement savings market.

To lure these investors in, companies are marketing services that may not be helpful to them in the short-term. With many of members of this age group concerned with living expenses, college loans and the weekend, convincing them to save for a distant future should be limited to their employerıs 401(k) or Roth 401(k) plan. In many cases, saving at least 3-5% of their income will get them a healthy start without impacting their lifestyle. Parents are the best ones to encourage this kind of savings but the government, using the Pension Protection Act has stepped in to help as well.