The national debt limit has been raised four times during the last five years. The increased debt ceiling is now at an incredible $9 trillion, with the current national debt just under $8.7 trillion.

Like many cash-strapped Americans who have terrible credit and who max out their credit cards, the federal government has hit its limit for borrowing funds to keep operating. If the limit isn't [continuously] raised, the government will eventually run out of borrowing authority, risking a national economic shutdown in a worst case scenario.

But is this problem being addressed? Well, when President George W. Bush initially took office, the national debt was at $5.6 trillion. Since then, big budget surpluses have collapsed into huge deficits, and the debt has shot up nearly fifty percent. While this may not be entirely due to his actions, there appears to be no end in sight to government spending. While the government encourages Americans to save, they continue to print and spend more and more money.

One of the critical question that you must ask yourself when you retire is whether to take a lump sum or annuity plan for your pension. Annuities are financial instruments that make payments to you on a regular basis for the rest of your life, while a lump sum is simply one full payment made now. Whether its the lottery or retirement income, most people choose the lump sum because they believe it offers them the best deal, but this may not be the case!

The biggest factor to take into consideration is your lifespan. Annuities die along with you and your spouse and leave nothing for your heirs, while lump sum payments rolled into an IRA or other retirement vehicle lets your heirs keep the money after you die. Consequently, the general rule is: the longer you live the more valuable an annuity is and visa-versa. Statistics show that a 65-year-old man has a roughly 50-50 chance of living to age 85 and a 25 percent chance of living to 91, while a 65-year-old woman has a 50 percent chance of living to age 88 and a 25% chance of making it to 93.

When evaluating these options, it is important to calculate your retirement needs after social security income and any other income. If you rely on your pension for the majority of your retirement income, then a lump sum may be the best option, as it gives you much needed money upfront. However, if this just accounts for a small portion of your income, the chances are it will pay off to take the annuity over the lump sum as it will typically amount to more in the long run. Finally, another common alternative is to take the lump sum payment and purchase a separate annuity with a higher yield, which gives you the best of both worlds. Combined, these are all very important factors to consider when making decision on your pension payout.

If you are expecting a sizeable income tax refund, you'd think you'd want to file your return as soon as possible to collect the money that the government withheld from you all year, right? On-line filing has made it even quicker and easier for you to receive your refund.

However, avoid being rushed to file too early for the tax season. Due to a lot of changes in the tax laws, banks, brokers, and mutual funds sometimes cannot provide accurate information to you by their end of January deadline. A number of financial institutions will likely be forced to send you revised 1099 forms in February, March, or even as late as April.

It doesn't hurt if you decide to delay filing until March because the initial 1099 form you receive may not be accurate. If you file too early and then get a revised 1099, you may need to file an amended tax return to claim an additional refund or to pay tax that you subsequently owe. In short, take your time filing your taxes this season - it'll only help you in the end.

According to a survey conducted by the U.S. Department of Justice, identity theft affects about three percent of all households in the U.S., totaling an estimated 3.6 million families in the U.S each year. To put that in terms of money, identity theft costs an estimated $6.4 billion per year.

Identity theft occurs when someone uses your personal information such as your name, Social Security number, credit card number or other identifying information, without your permission to commit fraud or other crimes. Consumers whose identities have been stolen can spend months and years clearing up their good name and credit, not to mention the expenses that may be involved.

To protect yourself from identity theft, you should protect your social security number, your credit/debit cards, and your financial documents:

Social Security Number: Remove your SS number from your driver’s license and insurance cards, just as you should not put your social security number on your checks nor carry a copy in your wallet. If you have to provide your number for anything, offer only the last four digits and request that your number be taken off any loan applications.

Credit Cards/Debit Cards: Carry your credit/debit cards separately from your wallet. It is a good idea to keep a secured copy of all account numbers (and pin numbers), but never carry them with you. As well, sign all new cards you receive. Never leave your credit cards unattended and be alert for "peering eyes" when making purchases; do not leave ATM receipts behind and protect all accounts with a password. Check your account activity regularly and monitor it for accuracy and any discrepancies.

Financial Documents: Shred all of your personal information whenever possible and do not carry extra cards or identifying documents with you.

Credit-card issuers relentlessly tempt you with new offers, even as they keep changing the terms of the cards you carry. However, you know you don't need five credit cards, all with different "rewards." While it's always good to have a backup for an emergency, sticking to one card will minimize the number of bills you pay and maximize your card rewards.

Invest in a credit card with low rates that will last. You'll find it easier to chip away at a balance if your interest rate is well below today's 14.1% average. A 0%-balance-transfer teaser is tempting, but you can owe fees as high as 4% of the balance. And if you can't pay it off within six or twelve months, you'll be left with the hassle of chasing the next offer. Skip the promotions and opt for a low ongoing rate.

If you pay off your balance in full and are good about not having balances with your card(s), then you should look for a card with rewards. However, make sure you utilize your spending power to the fullest. If you earn miles when you rarely fly or if you split between two or three cards, you will not get the most out of your rewards and cards.

Maybe you're not the savvy-investor type, but you have an interest in investing for some extra cash. It's easy and care-free; you can manage your own portfolio with ease by following these two steps:

Pick a mix: You'll need to figure out how you will divvy up your money between stocks and bonds, after deciding how much money you have, or want, to work with. You can use online tools to fine-tune a mix for your age and appetite for risk. However, there is an easy rule of thumb if you'd like to stick to the simplest decisions: to decide how much you should devote to stocks is to subtract your age from 120. So if you're 40, put 80% of your long-term savings in stocks and 20% in bonds. If nothing else, this simple formula ensures that you'll own an ample amount of stock when you're young and can take more risks. Every year, subtract your age from 120 again and adjust the mix as needed.

Buy index funds: For an investment that doesn't require constant care, the clear choice is an index fund. With a single fund, you can own virtually the entire stock or bond market. No index fund will ever top the charts, but history suggests that over the long run they'll earn a better than average return. You can build a perfectly adequate portfolio with just two funds: a total stock market index fund and a total bond market index fund.

Credit cards are becoming ever so popular in today's society. Even kids have their own credit cards, or at least access to their parents'. Credit cards are a growing trend among a growing industry.

The reason so many credit cards are available to anyone and everyone nowadays is for the primary reason that they are an asset to your bank. Credit cards are sold to you via a banker, who then sells your debt of the credit card to a Wall Street firm. From there, Wall Street makes big money off of your purchases by issuing you high monthly interest rates. As for your initial banker, they are left looking for more customers just like a fisherman looking for fish. This is also the reason there are so many fish (or people who use numerous credit cards) in the world.

The power of the US dollar has been long depreciating over the last few decades. This is a prime example of the dillema that we encounter everyday as we work hard for our money that doesn't seem to be working hard for us. In simple terms, if you earned $50,000 in 1996, you would have to earn $100,000 right now just to stay even. However, many people aren't earning more even though prices are rising, so they make up the difference by using their credit cards for everyday purchases.

People are taking on the tasks of taking on extra work (or a second job) to earn more money. And when they earn more money, they move into higher tax brackets. Today, the alternative minimum tax (AMT) -- first levied in 1970 as a tax against the rich -- is penalizing the middle class. In many ways, the AMT is a form of double taxation. Many working people are now making more money but taking home less because they pay a higher percentage of taxes. Credit cards are a simple solution to quick money when we need, or want, it most. However, they are also a quick jump to greater debt and/or financial troubles.

We've all seen them - ads from tax preparation services about "instant refunds." This year, we are seeing the new "pay stub loan" being introduced to us, which offers more convenience than ever before, but at an incredibly high price.

These tax programs thrive because of those who are in such a hurry to get their money. To get our money even faster, many of us will once again turn to the promise of quick money solutions - in the form of short term loans at ungodly rates. The worst part is that if your preparer at Jackson Hewitt or H&R Block overestimates your refund, you end up even deeper in debt to them. The money lost on high fees and interest negates much, if not all, of the benefit of these quick cash loans.

However, we must not overlook other, much more efficient and less expensive, options that are available. The IRS website has a section of free filing alternatives which prove to be good options for many of us which will allow filers to have their money within a couple weeks. The Campaign for Working Families also offers some great solution for qualified taxpayers.

If you don't absolutely need instant money, don't go for the instant debt that comes with the instant refund.

Easy access to credit cards is a large reason for such a large increase for personal debt in the United States. Card issuers relish the chance to reel in those who'll continuously charge beyond their means at eighteen or twenty percent, and steer clear of people who they know will be able to pay their balance on time. Debt is a growing issue, and a complex one at that. Not all of debt is bad, however. When used intelligently, debt can be of tremendous assistance in building wealth.

One of the secrets, therefore, to being smart with your money is to differentiate between good debt and bad debt. While the differences often seem logical, it is a logic that apparently is missed by many Americans. "When you buy something that goes down in value immediately, that's bad debt," says David Bach, CEO of Finish Rich Inc. "If it has no potential to increase in value, that's bad debt."

Good debt is investment debt that creates value. Such investment debts can be found in student loans, real estate loans, home mortgages and business loans. Taking on debts that are tax-deductible and debts that produce more wealth in the long run are also valuable debts to consider.

Bad debt comes into play with the purchase of disposable items or durable goods when using high-interest credit cards and not paying the balance in full. Most people do not pay off the balance in whole before the due date, and this is where they find themselves in trouble. You are charged interest every month that you make a partial payment on your credit account. The disposable or durable item, purchased with credit cards, store credit cards, or through loans such as auto loans, continues to lose value, and the amount you paid for it continues to increase.

With such an incredible problem with prices in the realty department, how does one know what to do, or where to go? As housing values are depreciating and it's getting harder and harder to sell houses, it is now suggested that condominiums may be the best option.

Condos offer flexibility in your living, short or long-term, along with ease of caring for the property and having to worry about rebuilding, remodeling, etc. As a condo owner or renter, it is a much more fluent act in the recent realty hits to have access to a condo. Whether you may consider buying a condo for a second home or to take part in a small realty hobby for a great investment, or if you are a student or single renter renting a condo, it only makes the most sense. Condo sellers react to market changes and act quicker than owners of single family homes, who tend to hang onto property in the face of lower prices.

Single-family house owners act like buy-and-hold value stock investors, riding out market peaks and valleys. They sell when they go through a life change such as raising a family, retiring, or moving for a new job. Condo owners act more like growth stock investors, who bet on the hottest companies and trade in and out of stocks much more often, reacting to what they perceive is happening in the market.

In looking back over the historical data of when the national housing market peaked, July 2005 topped the charts. It was the first month in four years that condo price appreciation was less than that of existing single-family houses. Condos are the more simple, more convenient, and more economically smart and fluid option in which to take a look at in the US housing market.

There are several new savings opportunities this tax season, as well as some traps to watch out for. Here's a list of five things to look out for:

1. Lawmakers brought back the option to deduct your state and local sales taxes instead of your state and local income taxes. This allows you to estimate your sales taxes, which is based on your exemptions and income. But if you bought a car, boat or motorcycle in 2006, you should find that receipt because you can add the sales taxes you paid on it to the IRS number!

2. This year it'll be tougher to take a charitable deduction for old junk you gave away after Aug. 17, 2006. New rules say that clothing and household goods must be in "good used condition or better" to qualify. Make sure you keep a list of your donations, and it is also a good idea to have a photo on hand of your donated items for a better record.

3. If you paid someone to watch your children, under the age of thirteen, so that you could work or study, you may be able to take the child-and dependent-care credit. It's worth as much as $1,050 for one child or $2,100 for two (based on your income). Day camps also can be accounted for - you just need the address and tax identification number of the day-care provider or camp.

4. If you made your home more energy-efficient in 2006 (by adding insulation, replacing drafty windows, or buying a furnace, for example), then you may qualify for a new tax credit worth as much as $500 (or $200 for windows). If you bought a new hybrid car, you're entitled to a credit of $250 to $2,600, depending on the model and the sale date. To read more about which improvements qualify, go to http://www.ase.org/taxcredits.

5. Congress extended the tuition deduction, which lets you write off as much as $4,000, a $1,120 savings in the twenty-eight percent bracket. The top adjusted gross income to qualify is $160,000 for married couples. However, you will need to present the 2006 tuition bills.

Credit cards give you a lot of purchasing power, but they do not give you free money. Here are a few myths about credit cards:

Myth #1: The more cards you have, the more affluent you must be.
Truth: A wallet full of credit cards means you may be on your way to serious debt, and not rich or impressive with your money as you'd like people to think as you pull out fifteen credit cards to pay.

Myth #2: You should have as many cards as possible in case of emergencies.
Truth: Having too many credit cards is liable to create the "credit emergency" of too much debt. Be credit smart by limiting yourself to only one or two credit cards, in which you should also keep low balances. You should have plenty of credit available for unexpected events; if you do need additional assistance, you can always request an increase in your credit limit.

Myth #3: More credit cards equal a better credit rating.
Truth: Too many credit cards create the potential for overspending and can actually lower your credit rating. You only need one credit card (paid as agreed) to establish good credit.

When it comes to credit, "less is more." Use your credit card(s) on an as-needed basis only. Do not just spend because you can.

Tax season is quickly approaching as W-2s begin to appear in our mailboxes. One major questions that arises during tax time is whether or not to itemize. The answer to this question depends on how much money you spent on certain expenses last year. The expenses covered under this umbrella include mortgage interest, medical care, taxes, charitable contributions, casualty losses, and other miscellaneous deductions. If the total amount spent in these categories exceeds the standard deduction, then itemizing your taxes could save you money!

For 2006, the standard deductions are:
Single $5,150
Married Filing Jointly $10,300
Head of Household $7,550
Married Filing Separately $5,150

The IRS also offers several other tips for those considering itemizing their taxes:

1. Some taxpayers have different standard deductions. The standard deduction is more for taxpayers age 65 or older and for those who are blind. It is generally less for those who can be claimed as a dependent on some other taxpayer’s return.

2. Limited itemized deductions. Your itemized deductions may be limited if your adjusted gross income is more than $150,500 or $75,250 for Married Filing Separately. This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.

3. Stipulations for Married Filing Separately. When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize and cannot claim the standard deduction.

4. Some taxpayers are not eligible for the standard deduction. They include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months.

5. Forms to use. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

All in all, this decision could save you a lot of money come tax time, especially if you made any large purchases that fall under these categories. So remember to add up your bills - it could save you a lot of money!

The best way to save money on entertainment is to consider all options and forms of entertainment and to compile the where's and how's. For example, if you are going to a movie or to rent one, you should first first visiting your local library(s). Libraries are amazing resources for free videos/DVD's, music CD's, magazines, newspapers, and of course books. Libraries try to keep up with the newest in entertainment - the newest releases of music and movies that they are capable of. Another tip is to simply ask family and friends to borrow music and movies. Why pay to rent a movie when you can borrow it from your neighbor for free?

For other forms of entertainment, such as music concerts, check local papers for concert series. There are constantly concerts going on in various cities around the US, most free, that offer a great atmosphere and social arena. Concerts, whether all-year or seasonal, are becoming a large part of most communities, large and small. Whether you're around home or on vacation, check around for daily and weekly activities and events in the area, which may offer parades, fireworks, concerts, comedy acts, markets, and cultural festivals. These are great ways to change up the everyday routine for kids and adults alike, and they are generally free, or for just a small fee.

Some people prefer the form of gambling as their main entertainment. If this is the case, it is also one of the worst contributors to debt. Gambling is a risky hobby, very risky. If you do want to participate in gambling, make sure to set a limit before you go and to only bring that amount of money to ensure that you do not change your monetary limit and spend more. Remember that if you win, you are very lucky and your luck may end soon, so quit IF you're ahead. The odds are always against you, so gamble wisely with your set financial limit (of money to spend, whether you win or lose); also, it is wise to set a limit in case you would be so lucky to win. If your limit is $100 of winnings, then stick to your limit and do not continue to gamble after attaining your goal. The art of gambling takes a lot of will power.

If you are into sports and recreational activities as entertainment, such as downhill skiing, boating, or rock climbing, etc., always set a budget. Your budget may be for only day trip or weekend getaway, or it may be a monthly or yearly budget. You know your needs for participating in such activities, and as we all know, sporting and recreational hobbies can be very costly, so set your limits carefully. Make sure to include all of the money you may need for equipment, travel, gas (if applicable), lodging, and any tickets/passes necessary.Make sure to give yourself some lenience in the necessary funding by allowing additional funding for any additional costs that may arise. With budgets, always be disciplined to stick to them, never giving into yourself if you run out of money.

As for amusement and theme parks and museums, make sure to check into their specials and deals before going. Most museums all around the world offer some free days to visitors, if not one free day every week of the year. Also, it is generally a good idea to avoid "packages," such as paying for five museums or for all ten water parks when you may only be going to one or two. Most amusement and theme parks, zoos, museums, and the like offer days throughout the years that offer great discounts to children and families, with special events and such.

It is possible to participate in all sorts of activities if you plan ahead and budget carefully. Participating in entertaining events won't always be free, but with some common sense and planning, it is definitely very possible to cut costs down dramatically. Combined, these tips can help you cut your costs and save more money.

It is important to not only save money for ourselves, but to be good financial role models for children around us. Whether you have your own kids or not, kids are all around us - neighbors, students, and family - and it is important to implement saving techniques right from the start.

Kids may not have a job, but they always seem to find a means for "income," by means of pet-sitting, babysitting, mowing the neighbor's lawn, birthday presents, etc.; for this reason, you must implement standards and rules to control their spending and saving. Many recommend having children save fifty to seventy-five percent of their money, keeping the rest to spend on their own. It is also important to allow children to have their own savings and checking accounts right from the start, and encourage them to save for larger future purchases like cars or a college education.

If the child wants something that would qualify for a bigger expense on their part, do not give into them and bend their savings limits. Have them set aside their "spending" portion into a checking account until they have enough to make that big purchase. It is important to implement solid saving techniques. Also, it is a good idea to have kids keep a current list of things that they need or want. From there, have them place the prices alongside the item(s), and then rank the items by priority/desire. Have them make purchases based on the price and their ranking/priority. This will help them to keep to spending money on things they really want or need, and not to be wasteful in their spending.

Birthdays and gifts also offer great opportunities for children to learn about saving. If a child receives twenty dollars from a grandparent for their birthday, have them save fifteen dollars of that, and allow them to only spend five. If they want something that is ten dollars, do not allow them that extra five dollars if it exceeds the limit (income percentage) you set, which should be standard for any amount of money. This is where discipline comes into play. The child should learn to put aside the five dollars and save it until they receive more money and earn ten dollars of spending money.

Children who learn about the importance of saving at an early age are less likely to experience problems later in life. By employing the techniques mentioned in this article, you can help you child on their way to financial freedom at a young age.

While almost everyone loves to travel, it happens to be one of the most expensive past-times. It is, however, possible to travel often and to travel on a low budget - the trick is knowing how to travel on the cheap.

The first thing to remember is to rarely, if ever, travel through a travel agent. Not only do you pay full prices for airfare, hotels/resorts, etc., but you also have to pay agency fees. The best way to begin your travels is to research and do all of the bookings yourself. Travel websites offer very cheap, discounted prices for hotels, airfare, excursions, and other areas of your trip. Check various websites, and do research and price comparisons on the internet. There are always weekly deals and specials on most sites, and it doesn't hurt to apply to the free weekly/monthly e-mails where internet travel sites give you warnings of sales and specials to come.

It is also very helpful to be flexible with your travel dates. The more flexibility you have of when and where to travel, the better the prices you will find. Searching exact dates and exact locations will almost always result in higher prices.

When you do reach your travel destination, it is important to continue to keep your budget low. When you eat out, try eating at not the nicest restaurants with an expensive and elegant menu, but rather the local "mom 'n pop" places with inexpensive food. These places are often of great quality and include a true touch of local flare. Moreover, if you are traveling on day trips, try packing a lunch or stopping in the local grocery store to grab food. Finally, if you are not in an all-inclusive resort and you do have to pay for alcohol, watch your spending closely and keep true to a daily budget.

With trip excursions, plan ahead of time by researching and budgeting for them. Activities and excursions, such as sky diving, sailing, scuba diving, horseback riding, mountaineering, etc. are all quite expensive. However, they can be less expensive if you plan ahead and make reservations with exact prices and guidelines prior to your trip departure.

Last but not least, travel memorabilia is not a necessity to having a good trip. If you do buy a t-shirt or a few post cards, that is fine, but keep your tourist purchases minimized. Steer away from buying all of your family and friends the same t-shirt. The best shopping you will find is in the local markets where you can bargain for lower prices on home-crafted items, which are often far more specialized than any item bought in a gift shop.

Combined, searching around for cheap hotels and airfare while keeping a flexible schedule, along with maintaining a tight budget while on vacation, can help you travel cheaper and perhaps even more frequently.

The place in which you live can significantly impact your financial situation. The cost of living differences, even just within the U.S., vary greatly. Some of the most expensive cities in the U.S. are San Francisco, Washington D.C., Chicago, Los Angeles, Seattle, and New York City. Currently, NYC is the most expensive city in the United States (ranked 12th worldwide), while Pittsburgh is the least expensive city in the U.S.

Over the last few years, U.S. cities have dropped in their worldwide rankings because of the depreciation of the dollar against European, Canadian and Asian-Pacific currencies. Consequently, on an international note, Tokyo, Moscow, and London rank the top three most expensive cities in the world, primarily due to these exchange rates. The three least expensive cities of the world can be found in Asuncion, Paraguay; Montevideo, Uruguay; and Santo Domingo, Dominican Republic.

The cost of living calculations themselves are found by calculating a sum of groceries, one month of rent, and other living expenses such as utilities, entertainment, and transportation - all standard estimates for average comparison in various cities. The local currencies also greatly affect the cost of living. Financial problems can arise when you live in a more expensive city, but do not make "living wages" that are sufficient for that city/area. If you are considering making a major move, make sure that your job provides enough money to cover the living expenses in that area - it matters!

To save money on food, you need to take into account not only your grocery bills, but also your habits of eating out. The largest expenses you have are, first and foremost, eating out. Whether you're grabbing a meal to go through the drive-through or are going out to a nice dinner at your favorite restaurant, you will incur large expenses for food that quickly build up. Limit the amount you eat out, and choose wisely when you do. Set spending limits before you go out to a restaurant just as you should set limits on how often you eat fast-food meals. Yes, fast food is relatively "cheap," but with that mindset, many people eat fast food often and their budgets diminish fast.

The best way to spend your money on food is the traditional means of cooking at-home. To better your budget on groceries, shop more often and buy less. For example, you will save money on food if you shop once or twice a week versus shopping once or twice a month. The reason for this is that many people try to buy too much food to last too long of a period, allowing for food to be wasted over that time if not eaten.

It is also important to have some discipline when in the grocery store. Do not grocery shop with a hungry stomach and do follow a shopping list tightly. Do not just walk around freely and buy whatever appeals to you. Buy only what you need at that time, and maybe one additional item acting as a splurge for yourself. If you do not follow a tight grocery list each time, you are bound to buy many more items that you don't need or even want. Make sure to buy fruits, vegetables, and meats sparingly, so you do not let them go to waste; not only will you waste the food, but you will also have wasted money.

When applying for credit cards, it's important to shop around. Fees, charges, interest rates and benefits can vary drastically among credit card issuers. And, in some cases, credit cards might seem like great deals until you read the fine print and disclosures. It's important to pay close attention to the fine details of each credit card. Here are some important details to keep in mind:

Annual percentage rate (APR): The APR is a measure of the cost of credit, expressed as a yearly interest rate. The lower the APR, the better for you. Be sure to check the fine print to see if your offer has a time limit. Your APR could be much higher after the initial limited offer expires.

Grace period: This is the length of time between the date of the credit card purchase and the date the company starts charging you interest. Some companies have eliminated grace periods, which means you could start paying interest literally from the minute you make a purchase. The longer the grace period, the better the deal is for consumers.

Annual fees: Many credit card issuers charge an annual fee for giving you credit, typically $15 to $55. However, there are many other cards that have no annual fees, but with a trade-off in other areas.

Application or approval fees: This is a one-time fee that is immediately charged to your card upon approval. Most credit cards these days don't charge application fees, but it isn't unheard of to see these fees go as high as $250.

Transaction fees and other charges: Most creditors charge a fee if you don't make a payment on time. Other common credit card fees include those for cash advances and going beyond the credit limit. Moreover, some credit cards charge a flat fee every month, whether you use your card or not.

Each credit card varies, but it is up to you which best fits you and your credit abilities and needs. Do not be lured into getting credit cards based on ten or twenty percent discounts for signing up for one at a department store or for signing up if you get a free T-Shirt or an extra 1,000 frequent flier miles. And make sure you only invest in a credit card(s) if you have a job and/or a regular income and are capable of paying off your credit cards in a timely manner without getting hit hard by interest rates.

1. Reduced Income, Same Expenses
When you have a gap in your average income, you need to control your expenses more than ever. It is necessary to keep the same ratio to allow for the cost of living between your income and expenses. If your income decreases, so should your expenses. Whether you have to cut-out expenses entirely, or minimalize them, you must control the expenses so they don't outweigh your income. The same is true for the same income, but increased expenses. If you receive the same income, but have more expenses now (due to hospital bills, medications, etc.), you need to maintain the ratio of spending that allows your income to match your expenses. A lot of unnecessary expenses must be minimalized or cut entirely, sacrifices must be made to maintain at least an equal income to expenses ratio, or higher, for your income to earn savings.

2. Poor Money Management
This is self-explanatory. Compulsive spending habits, uncontrolled spending, overuse of credit cards, or lack of communication of monetary funds between a spouse, family member, etc., lead to improper money management. Once you dig yourself into a hole, which doesn't take a lot of time or effort, it's much harder to get yourself out. Balance your accounts regularly, talk with your spouse or other who you share finances with, and make sure you aren't spending money you don't have that may have already been spent. Most importantly, don't just spend money because you have it.

3. Underemployment/Unemployment
This may be out of your control. At the same time, it may not be. If you aren't getting enough hours at a job that you need, or if you don't have a job, it is your responsibility to either get more hours, or to find another job [in addition]. We are all capable of working many hours in a week. If you are only working ten hours a week, you obviously will not be earning enough for living wages. Although your hours at a job, or even if you have a job, may not be entirely up to you, it is up to you to get more hours or more jobs to help find that extra income to support yourself and your family.

4. Medical Expenses
We all know that today's medical expenses are ridiculous. Search different insurance policies/carriers for the best prices and coverage plans. You will have to do some work to find better deals. If you're going to be paying such high insurance premiums, you may as well get the most out of your money and plan. Talk with your doctor(s) about the use of generic drugs, which are cheaper. Research different pharmacies for prescription prices, for there really is a huge difference in prices for the same drugs depending on the store(s) you buy them at. You may not be able to control the high prices, in general, of prescriptions and health care, but you have the ability to do your research for the best prices and plans.

5. Improper Saving Habits - Too Little or None at All
For many people who have little or no savings, they live off of check to check. This makes it difficult to acquire savings, or the habits to save money. If you have an extra five dollars at the end of paying bills after you receive a check, you may say it's only five dollars. Why not treat yourself to a cup of coffee or to a few drinks? Well, that is five dollars that you don't need to spend and that you can put into a savings account, or into some private fund to save. Five dollars each check will build up over time. Another issue with savings accounts is that people use them like checking accounts. Savings accounts should be kept alone. Place money into them without the ability to take out every other week. Leave that money for checking accounts. Place money into a savings fund and honor it by not touching it for a long time. Let it be, use it for when you need it most and let it build with time.

The first step in developing a budget is determining your net worth - that is, your total value/worth at any given moment. There are three criteria for determining your net worth: (1) all of the items of value (and their values) that you own; (2) your debt, or loans, that you owe to others; and (3) the total amount after you subtract your liabilities/debts from your assets (your valued items, etc).

The equation for determining your net worth is simply:
ITEMS OF VALUE - AMOUNTS OWED = NET WORTH

Assets are arranged by their influence of liquidity, or how probable it is to convert them into cash without losing much in the process. The most liquid assets are cash, checking/savings accounts, and stocks/investments in money markets. Your house will likely be your most valuable asset, while smaller assets should also be accounted for, such as vehicles, clothes, personal items, furniture, etc. These items are generally not sold for the worth you would like or that they may even be worth, but they still may acquire some additional money if you do so choose to sell. Add all of these assets, and you will have an approximate of your asset values/total.

Liabilities are the less enjoyed subject of this discussion. Debt and loans always suggest that you are losing money, not earning money. Always assess your liabilities by listing your most current debts first. Include all bills you owe, such as telephone, cable, utilities, car insurance, etc. Then assess your debts to credit cards and loans after. Home mortgages are generally the largest debts for people. And always include outstanding balances when accounting liabilities, not just the initial costs.

It is important to determine your net worth in order to best determine your overall financial standing and to monitor it over a long period of time. Ideally, you should shoot for a growing net worth, of positive value, versus a decreasing net worth over time, or any negative net worth. Net worths do change on a daily basis, so it is important to look at them as a guidance for longer periods of time, and not to account for their daily values. For example, it may be a good idea to determine your net worth on an annual basis for best comparisons over each year.