Roth IRAs were created for middle-income tax payers who are active participants in employee-sponsored retirement plans along iwth younger taxpayers in lower brackets that prefer tax-free withdrawals over current tax savings. Basically, contributions to Roth IRAs are not tax-deductible but earnings grow tax deferred and can be withdrawn tax-free in retirement or put towards certain other assets at an earlier age. One major limit of the Roth IRA is that it adds a maximum income level while joint filers may contibute the lesser of $2,000 or 100% of their compensation (earned income) as long as their combined annual income is below $150,000. Allowable contributions above that are phased-out completely at $160,000. And for individuals, the $2,000 maximum allowable contribution begins to be phased-out at $95,000 and reaches zero at $110,000.

Debt collectors are professionals that are very skilled at the art of negotiation. Follow these tips and you may be able to come out ahead:

1. Learn your rights. Debt collectors are required to abide by the Fair Debt Collection Act put forth by the Federal Trade Commission. People that know their rights make debt collectors less likely to resort to aggressive tactics. You can get a free brochure online or by calling 617-542-9595.
   
   
2. Offer less than you can afford. Do not commit to anything that you cannot afford or do anything dangerous. Also, avoid sending postdated checks to a debt collector or agreeing to electronic payments that come directly out of your checking account. Assuming that debt collectors are good people is a mistake.
   
   
3. Keep your information private. Do not tell a debt collector personal information like where you work, where you bank, or your account numbers. Keep the conversation at a minimum and tell them only the information that they absolutely need to hear.
   
   
4. Tape any calls. Taping a phone call is the best way to keep debt collectors in line because they know they cannot use any aggressive tactics. To be on the safe side, tell the debt collectors that the call is being recorded.
   
   
5. Get it in writing. Everything you agree to should be available in writing - especially payment agreements. Send a letter to the debt collector outlining the payment agreement via certified mail and you'll receive a receipt when the letter is delivered. Also, write "Cashing this check constitutes payment in full" on each check that you send.

Promotions for cheap loans and easy credit are continuing strong despite a weak mortgage market and a horrible subprime meltdown. The difference is that lenders have moved on from the "Bad credit? No problem!" pitch and onto targeting those who have good credit and plenty of home equity. Since fewer homes are being sold, mortgage firms are now targeting those looking for a refinance. However, these pitches can be riddled with problems...

The typical pitch is that making refinancing a flexible tool that can reduce your bills by lowing interest rates and stretching out payments. The problem is that these low interest rates are often temporary and result in a vastly larger home mortgage to be paid off in the future. In fact, the move prompted The FTC to send warning letters to 200 lenders last month warning them that their ads were considered misleading. The other pitch is for those wishing to turn their home equity into cash. Using your home as an ATM can quickly become a problem when housing values declinem which makes it very difficult in the future to sell or refinance down the road.

And just how bad is it for lenders? Well, Countrywide reported that it made 44% fewer loans last month than it did in September 2006. The largest mortgage provider also had to lay off 12,000 people - or about 20% of its staff. In the end, these companies will likely do what they have to to make profit expectations so customers should continue to be wary.

Students are facing mounting problems with students loans and credit card debt, according to a state Public Interest Research Group. The research study found that 37 percent of public college graduates and 55 percent of private graduates face an "unmanageable debt burden" if they were to enter the field of social work. Meanwhile, 29 percent would have "unmanageable debt burden" that would keep them out of eaching with 47 percent of private graduates kept out. Rising tuitions are keeping students out of socially valuable careers.

Contrary to many public beliefs, education may end up costing more than its worth. The perception is that loan debt is good as long as it is going towards education because that trumps everything. The ends does not justify the means, however, when your earnings potential when you graduate is a mere $20,000 when you graduate with $100,000 in student loans. Worse, there is nothing that can be done once you have already graduated and have made this realization. The problem gets much worse as students begin rolling their credit card spending into student loans and starting over. In the end, it is important for everyone to consider what is really important before acting.

One of the best ways to save more money each month is to distinguish between wants and needs. Needs are simple to identify - they are items that you need to live such as shelter, food, clothing, and transportation. Wants are those things that enhance or improve life, but are not necessary to survive. Distinguishing between these two can be difficult sometimes. A car may be a need, but a $50,000 SUV is definitely a want. And is a designer label really worth an extra $30 for a shirt? Believing that a want is a need is the most basic recipe for financial diseaster.

The fact is that the more money we make, the more money we want to spend. This addictive cycle of materialism has led many people to this confusion between needs and wants. Another contributing factor is the fact that marketers are taught that success comes from selling to wants instead of needs. One tip that helps a lot of people is to not buy anything the first time they want it - instead see if the urge dies down the next day - meaning you really don't need it. If you still have the desire to buy it, then it might be a need.

Here are ten tips to save money:

1. Avoid Late Fees - Paying bills on time can save you a ton of money. Collecting late fees funds a variety of businesses, including credit card companies and movie rental companies. Give yourself a weekly allowance in cash in order to pay off your bills and stick with it - when you have no more money simply do not spend.
2. Go Out for Breakfast or Lunch - Dinner is the most expensive meal of the day and you can save a lot of money by going out for breakfast or lunch with friends instead.
3. Check for Old Models - When making major purchases, always ask the store clerk if they have last years model avialable or on sale. Often times, stores are trying to quickly move inventory and you can take advantage of the savings.
4. Quit Smoking - Smoking is a $1500 annual habit that is very hard to stop - but it definitely can be done. Think of not only how much it is costing you in terms of dollars but also in years of your life.
5. Cancel Your Mortgage Insurance - If you hvae 20% or more equity in your home and you are still paying private mortgage insurance (PMI), then call your mortgage company and cancel it. That alone will save you $40 a month!
6. Refinance Auto Payments - If you have an auto loan outstanding for more than a year, look into refinancing it and you could get it for much less.
7. Stop Drinking Soda - Soda is not only bad for you, but it is also a very costly habit to get into.
8. Buy Online - Buying products online on eBay or Amazon is often much cheaper than buying it in the stores - even if it takes a few extra days to get there.
9. Ask for Discounts - Even if you do not have a coupon for a certain service or product, ask for a discount and see if they will give it to you. It only takes one time to make this strategy pay off and it will happen more often than you think!
10. Use Less Detergent - Using only 2/3 of the usual scoop of detergent is often all that is needed for clothes and dishes. This can save you a lot of money in the long run.

The Federal Reserve is widely expected to cut interest rates again during its next meeting, but what does this mean for the average American? The move may end up helping people who owe money by easing interest rates on variable-rate credit cards and adjustable-rate mortgages. Those facing an ARM reset should still expected higher payments, but not as high as they may have been otherwise. Consumer loans and financing will also be somewhat cheaper - that is, those looking to finance credit card debt or take out home equity loans will be able to do so at lower costs.

Rate cuts are good for the economy because it makes debt much cheaper for companies. And companies able to borrow more are able to leverage themselves to better take advantage of growth opportunities. This sometimes equates to more investment and more hiring and therefore lower unemployment numbers.

So, why doesn't the government keep reducing rates if it's so good for everyone? Well, there is one downside to rate cuts: inflation. Essentially, higher inflation results in reduced purchasing power for those on fixed income; wages being insufficient for purchasing power; and problems with import/export businesses due to more expensive prices relative to the rest of the world.

People can get into seriously debt for a variety of reasons that are often not of any fault of their own. Here are the top ten ways in which people find themselves in debt:

1. Divorce - More than half of all Americans are divorced at one point or another and it can be very expensive. Between the lawyers, child support, alimony and other expenses anyone can quickly go broke.
2. Poor Money Management - People who do not adhere to a monthly spending plan may quickly find themselves in trouble quickly if things get out of hand - especially with the ease of getting credit.
3. Lost Job or Reduced Income - Perhaps the most common reason for debt troubles is a lost job or reduced income due to downsizing, layoffs, or other events at work. Obviously, if expenses remain the same and income drops there will be problems.
4. Gambling - Every time you step foot in a casino you are statistically likely to lose money, yet gambling continues to be a drug to many people hoping to win big. It can be addictive and hard to stop when credit is so easy to obtain.
5. Underemployment - Sometimes those who find new jobs after being laid off are simply making too little to support the lifestyle that they are accustomed to in the past. Again, when expenses are greater than income there will be problems.
6. Medical Expenses - Gaps in medical coverage, costly procedures and lapsed policies can be extremely costly. And when just about every doctor accepts credit cards, it is not hard to see why there would be problems.
7. Miscommunication - Keep an ongoing discussion in your family about money matters. Nothing is worse than one spouse not communicating problems before they compound and get even worse.
8. No Saving - Americans now have a negative savings rate for the first time since the stock market crash. Clearly this causes problems as there is no longer a failsafe.
9. Future Spending - Those counting on a cash windfall in the future should be careful to spend prudently until the cash is actually in hand. While credit cards make it easy to spend money you don't have, it's important to only spend what you can earn.
10. Financial Illiteracy - Some people just don't understand how money works and grows and simply prefer to live in the moment. Financial mistakes only get more expensive as time goes on, so it is important for these people to get educated and get in control.
    

Today's mortgage market is a difficult one and many people are facing foreclosures after failing to make payments on time. Many people don't realize that a bank foreclosure isn't necessarily the end of your housing troubles - the IRS may soon contact you regarding taxes you owe in connection with the property you no longer own!

Tax problems associated with foreclosures surface when the lender forgives some of your loan. The amount that is forgiven is usually considered cancellation of debt or discharge of debt. Unfortunately, this is considered COD income and is taxed at ordinary tax rates which can be as high as 35%. On top of that, foreclosures are treated as a normal sale. This means that if the sale of your house by the bank produces a gain in a nonrecourse mortgage, then it is a capital gain and you are responsible for the taxes.

So, while you may be able to get out of a large mortgage payment, you will still be paying taxes to the IRS. Granted these problems may not be giant for those who owe only $10k or $20k; however, if you have a $500,000 mortgage and the bank can only get $300,000 in a foreclosure sale, then you're talking about some real tax liability. The IRS rarely misses these types of transactions and will levy penalties and interest if they are not paid.

There is no doubt that a credit card crisis is hitting our nation with credit card companies pulling in over $90 billion in interest and $55 billion in late fees in 2006 alone. But what is driving this crisis? It is easy to place blame on the credit card companies and their unethical practices. However, it is uncontrolled consumer spending that gives these companies power over consumers. Our society has grown into a culture that spends more than it earns and the only way to do this is with debt.

Today's society is no longer trying to keep up with the neighbors but is instead trying to emulate the rich and famous. Advertising focuses on status symbols - a huge house, big screen TVs, fancy cars, and countless other things that many can simply not afford. Problems are compounding now that the housing market has turned and home equity loans are more difficult to land at favorable terms. Credit cards have become one of the only remaining solutions for consumers - and this fact is being clearly reflected in bank statistics released earlier.

Instead of lobbying for changes at credit card companies, perhaps people should take a closer look at their own spending. Those experiencing problems right now should seek help through a credit counseling or debt negotiation service that can help reduce debt and get you setup on a smart spending plan. In the end, it takes two to cause problems and it is best to take action yourself before waiting on credit card companies to reform their practices.

The Financial Times recently reported that poor quarterly results posted during the past two weeks by US banks suggest that credit problems are expanding to include home equity loans, car loans and credit card balances. US banks have raised reserves of loan losses by at least $6 billion in the second quarter, indicating a substantial rise in the number and types of debt affected.

"What started out merely as a subprime problem has expanded more broadly in the mortgage space and problems are getting worse at a faster pace than many had expected," Deutsche Bank analyst Michael Mayo told the Financial Times. "On top of this, there is an uptick in auto loan problems, which may or may not be seasonal, and there is more body language from the banks that the state of the consumer was somewhat less strong (than thought)."

Clearly, these new areas of consumer debt are of great concern as banks have increased their reserves in anticipation of defaults. Moreover, a difficult market for auto loans may end up hurting auto sales during the next couple of quarters just as GM was set to beat out Toyota in sales. Just how bad is it? Well, the percent of borrowers of prime auto loans that are more than 30 days delinquent on the debt has risen to more than 2.5 percent, according to JPMorgan.

"We expect the severity of auto financing losses to grow due to extended financing terms, increased loss per vehicle and a quicker move to repossessions," JP Morgan analysts Eric Selle and Atiba Edwards said in a report. "We believe the core assets of Ford Motor Credit and GMAC are sound and they have sufficient liquidity. However, we expect higher U.S. prime auto borrower defaults over the next 18 months to cause GMAC's and Ford Motor Credit's profits to decline and their leverage to rise."

In the end, consumer debt problems continue to compound amid large mortgage resets, fewer people borrowing against their home equity, and higher fuel and food costs. These factors have cummulatively reduced the liquidity of consumers and promises to be a continuing problem.

There has been a push recently from consumer advocacy groups, college administrators, and student organizations to limit or ban the marketing of credit cards to college students. However, many others say that the best approach is not banning marketing but rather increasing education. Many colleges are now making personal financial management a mandatory undergraduate course to familiarize students with the dangers of taking on too much credit.

The Motley Fool recently reported that combined consumer debt has reached $1.7 trillion in 2001 with Americans paying $50 billion in finance charges alone. Meanwhile, 46% of householders are carrying credit card debt that averages $5,100. And more people than ever before are falling behind and being forced to declare bankruptcy. Clearly, there is a problem and one of the best ways to combat it may be through mandatory education as opposed to regulation.

In the end, the decision to get a credit card lies with the individual. Credit card companies are relying on uneducated customers to take on debt that they cannot afford and they will spare no expense marketing. Banning them from college campuses will only divert the dollars to other forms of media that reach the same college audience. But through education we can prevent credit card companies from ever happening in any medium.