A good accountant, however, can be worth his or her weight in gold- literally. Here are some important tips on choosing the right accountant and getting the most out of the relationship:

1) Choose a qualified accountant. The word accountant is not standardized or protected. Anyone can call themselves an accountant and it can be difficult to assess an accountant’s credentials. A Certified Public Accountant in the US or a Chartered Accountant in Canada and the UK, however, must undergo certain levels of education and examination to be able to use those titles. Selecting a designated accountant will give you comfort about the level of expertise your advisor has.

2) Interview accountants before you choose one. Your accountant can be a critical foundation in the strong financial house that you are building for yourself and your family and he or she should be a good fit. That means not only that your accountant should understand your needs but should be able to communicate in a straightforward, non-jargon way that you can understand. You will be discussing potentially sensitive personal financial information with your accountant so it’s important that you feel comfortable with him.

3) Tell your accountant everything. We’re not always comfortable with every financial decision we have made over the years, especially when we have to explain it to our accountant. It’s important, however, that your accountant has the full picture of your finances in order to advise you effectively. So, for example, if you withdrew ten thousand dollars out of your retirement fund last year, or you ran up a new credit card to its limit, be assured that your accountant won’t judge you and will be able to make better recommendations with this knowledge. Also, make certain that your accountant is aware of your spouse’s financial situation even if your spouse is having taxes prepared elsewhere. You and your spouse’s finances are intertwined legally and your accountant needs to have the whole story to advise you correctly.

Your accountant can help you protect your assets and build your financial dreams. Spending time upfront to choose the right one and build the relationship will help your bottom line.

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But what do you do if this is the very first time that you are investing? You may be just graduating from university or trying to put away some money for your children’s college tuition. How can you ensure that you make good decisions in this shaky economy?

1) Find the right advisor. An effective investment advisor knows the current state of the market and can help you understand the risks and rewards of each of its sectors. Choose an advisor who does not earn income based on how much or what types of investments you buy. Your investment advisor should also be experienced. This recessionary financial market is no time for you to try out a wet-behind-the-ears advisor.

2) Don’t invest all your money at the same time. With the uncertainty in the markets today, it is wise to invest small amounts at a time and keep some cash back to protect your capital. The market can turn up or down at a moment’s notice and investing at intervals reduces your risk of following the market down.

3) Invest in different market sectors. This is the same advice as the age old “don’t put all your eggs in one basket”. It is especially important in the current market to diversify. That way, if any one market sector tanks, you have assets working in other sectors to make up for it.

Investing for the first time can be scary at any time, but even more nerve-wracking with the roller coaster market of 2009. Getting the right advisor on board and taking your time to place your investments can help you make the best of today’s investment arena and position yourself for growth in the future.

However, this difficult employment market may be the perfect time to seek out a better job and the best way to do that is with a career coach. When the job market is contracting, it is the positions that require knowledge and skill that will remain the longest. Upgrading your education and skills can not only bring in a bigger paycheck but can solidify your position in the market and make you more attractive to potential employers.

It can be difficult to know what you need to upgrade and how to market yourself to potential new employers. That’s where career coaches come into play. A career coach’s job is to obtain a clear understanding of your strengths, weaknesses, and aspirations as it relates to the employment field. A career coach can help you fill in the gaps in your skills in your chosen profession and can lead you to leveraging your existing skills in a new direction. For example, if you have done general office work- filing, responding to email, and organizing for a small veterinary office, a career coach may help you realize that those skills are in great demand in the government sector, where wages can be substantially higher.

Another benefit of hiring a career coach is that his or her finger is on the pulse of human resource management in the real world. A career coach knows what experience levels and skills employers are asking for in each industry and where you can spend your limited time improving your skills to meet those requirements. This is a far more efficient way to build your educational portfolio than taking the splatter gun approach and signing up for a bunch of courses that you hope will help.

Using a career coach to obtain a better job can be one of the best investments in your financial future. Increasing your income by even $5,000 a year can mean the difference between having financial freedom and living paycheck to paycheck. And it can mean being a desired commodity in a shaky job market.

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But is mortgage insurance really worth the cost? In order to make that assessment, it’s important to understand what it really is. Mortgage insurance is a form of life insurance. Unlike life insurance, however, whose proceeds can be used for any purpose, mortgage insurance only pays down the balance left outstanding on the mortgage at the time of death. There is no flexibility to use the proceeds for any other financial obligations.

A mortgage may be one of your largest financial debts and would likely be paid off with the proceeds of a life insurance policy anyway. There are a few differences between life insurance and mortgage insurance that make the former a better choice for insuring your mortgage.

1) Life insurance premiums are often less expensive than mortgage insurance premiums for the same amount of coverage. The reason for this is that life insurance applications go though a rigorous underwriting process that weeds out bad insurance risks so that those who are in good health will get a low rate. Mortgage insurance, on the other hand, often doesn’t go through the underwriting process or goes through a much less thorough one. This means that the premiums have to cover even bad insurance risks. This raises the premiums for everyone.

2) Mortgage insurance premiums don’t decrease as the mortgage balance decreases so it becomes relatively more expensive over time. For example, if your mortgage is $200,000 when you first apply for your mortgage insurance policy, your premium might be $50 per month. You will pay the same $50 per month even as you begin to pay down your mortgage. A policy that would have paid $200,000 at inception might only pay the remaining $40,000 balance if you die ten years into the policy. A life insurance policy, on the other hand, always pays the face amount of the policy.

3) You can not choose which mortgage insurance company you deal with. Mortgage insurance is tied to the mortgage lender you choose. In some cases, they provide the insurance themselves. In others, they have relationships with insurance companies and you have to deal only with those companies.

When arranging your insurance needs, in almost all cases, life insurance is superior to mortgage insurance to protect your assets effectively. As always, discuss the options with your independent financial advisor.

But is now a good time to buy a first home or to upgrade from your existing one? The answer is “it depends”. It may be a very long time before real estate once again becomes a solid investment strategy. The days of steady housing price increases we have seen over the last decade may even be over forever.

It’s important to separate out your investment goals from your need for shelter. The latter you will need no matter what form it takes: a house, an apartment or even a tent in the woods. Evaluating whether buying a house meets your need for shelter is a simple task of comparing it to the alternatives. How does the monthly mortgage payment compare to rental payments you would have to make on a leased property? What happens to rates when you have to renew the mortgage? What is the condition of the house (i.e. could it result in thousands of dollars in repairs)? What other expenses would you incur that you wouldn’t have to with renting?  

Deciding whether buying a house now makes sense from an investment perspective is a very different value proposition. If the house would be your largest investment, the current market makes it a potentially risky investment right now, especially if you need the money for retirement or other purposes in the next ten years. While most experts agree that the housing market will turn around in the future, there is no universal agreement on when that will happen. It may be next month, next year or not until 2030. If your investment time horizon is long enough, the combination of low mortgage rates and low housing prices may make the investment attractive, but, as always, consult your independent investment advisor before making such a large investment decision.

So, is now the right time to buy a house? The answer to that will be as individual as each person’s financial goals. It is, however, a perfect time to re-evaluate those goals and to determine if buying a new house fits.

Unemployment not only means the loss of a steady income but also the end of group health insurance. That can put a family at risk until a new job picks up the slack. COBRA health benefits can help in this situation.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. The Act was originally drafted in 1986 and has been recently updated as part of the presidential stimulus bill. COBRA provides for a continuation of health benefits for employees and independent contractors in certain situations.

All employers who have 20 or more employees are required to maintain group health insurance benefits for terminated employees for a standard period of 18 months. The catch for the employee is that he or she now has to pay the premium that was once paid by the employer. That can still be a substantial amount of money monthly but it is often less expensive than paying private individual health insurance premiums.

If the employee is or becomes disabled, COBRA health benefits can be extended for up to an additional 18 months. COBRA may also be available for families of a deceased employee.

Under the new stimulus bill, if you were let go from your position between September 2008 and December 2009, you may be eligible to pay only 35% of the premium for COBRA benefits for up to nine months after which time, you pay the full premium. Employers can choose to continue to pay a portion of the health insurance premiums for terminated employees but they are not obligated to.

While COBRA health benefits can be expensive while you are seeking a new job, it is a better solution than losing group benefits altogether and having to purchase more expensive individual insurance. It can make the transition between jobs less risky and financially dangerous.

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One of the most popular types of life insurance is term life. Term life is straight life insurance without any of the bells and whistles. Whole life, on the other hand, usually carries an investment portion which grows in value and can be cashed out over time. Term life pays the face value of the policy at the time of death of the insured.

Term life insurance has both positives and negatives in comparison to whole life. On the positive side, the premiums are usually significantly lower than whole life premiums because there is no investment portion. Many individuals with term life insurance find that having a separate investment account allows them to have more control over both their insurance and investments.

The major downside of term life is that it has a limited life or “term”. It must be renewed at intervals, usually every 5 or 10 years. As you are older at every renewal date and may have increasing health issues, the renewal rates are generally progressively higher. Whole life policies last for just that- the whole life of the insured without having to re-qualify.

The amount of term life insurance you need depends on your circumstances and your family’s financial goals. Think about what income your spouse would have to replace if you died. How many liabilities do you have right now including your mortgage, credit cards and car loans? Would it make your spouse’s life easier to have those obligations paid off on your death? You also may choose to include college funds in your term insurance face value but a better option is to set up an education fund separately an contribute to it regularly.

Term life insurance makes sense for many families who need an economical way to protect themselves financially against the risk of death. Speak with your independent financial adviser about the type and amount of insurance that’s right for your situation.

But how big does this emergency fund really need to be? Some financial planners suggest three months salary is a good general rule. If you would ask Suze Orman, (yes I do watch her show especially the “Can You Afford It” segment) she will say 6-8 months or even one year if you can afford is more advantageous. However, the right answer for you will depend on your circumstances and the risks that you are trying to cover. Some of the risks that people put aside savings for can be covered less expensively with insurance.

Take home repair for example. If your air conditioner or furnace were to quit for good, the expense of buying a new one might damage your current cash flow.

Medical expenses present a similar situation. If a $5,000 trip to the emergency room would put you in serious financial jeopardy, adjusting your health insurance plan to lower your deductible would make more sense than socking the $5,000 away in an emergency fund.

Insuring against a job loss is something that an emergency fund makes sense for. How much you need depends on your monthly expenses and how long you predict you will be out of a job. Because of the current employment situation in the country, many are finding that it takes longer to find a new job and therefore, you would need more savings put aside to get you through the lean times. Three to six months’ salary is a long term savings goal that will get most unemployed individuals by until they become re-employed.

Even if that amount seems daunting to you, set aside some money every paycheck for your emergency fund. Having two weeks of savings is better than having none. Knowing that you have some money for a rainy day will give you peace of mind in an uncertain economy. SAVE – SAVE – SAVE!

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The Dogs of the Dow is an investing strategy first promoted 35 years ago by Michael O’Higgins, a fund manager who now runs his own firm. The strategy calls for choosing the 10 stocks in the Dow 30 index that have the highest dividend yields at the end of the year. You hold these stocks until the end of the following year when you re-balance your portfolio based on the new Dogs. A dividend yield is calculated by dividing the dividend by the stock’s price. Therefore, the stocks with the highest dividend yields have the lowest stock prices and may be ready for a jump.

Because all of the stocks in the Dow 30 are large cap, stable companies, the Dogs of the Dow strategy states that the companies chosen are likely to be solid in bad times and rise quickly in price in good ones. 2009’s Dogs are: Alcoa, AT&T, Bank of America, DuPont, General Electric, JPMorgan Chase, Kraft, Merck, Pfizer, and Verizon.

The Dogs didn’t fare so well in 2008. The Dow fell around 32%, the S&P 500 dropped 37% and the Dogs tumbled 38%. Overall, however, since 1972, the Dogs have outperformed both indices.

The current markets, though, are markedly different from any we have seen in the past 35 years. All companies are hurting as the word “depression” continues to be tossed about. Many companies that have weathered every downturn in the past hundred years are foundering. Dividends are being cut as cash and liquidity dry up and a dividend-based strategy may no longer make sense. Companies that pay dividends despite the need to conserve cash may prove to be risky investments, regardless of their long history of stability.

While the simplicity of the Dogs of the Dow strategy appeals to investors who do not want to be monitoring and adjusting their portfolios on a regular basis, the current market meltdown may make this strategy obsolete. The best strategy is to review each stock’s fundamentals and make your picks based on solid balance sheets and liquidity.

Let me know what you all think of this strategy.

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However, there are several questions you need to ask yourself before making the decision:

• How much do you have in your savings right now?
• How much money do you owe?
• How much interest are you paying for your debts?
• How much are you earning every month?
• How secure is your source of income?

Essentially, people who are not worried about losing their current source of income in the near future should focus on debt repayment. They should start paying off the debts with the highest interest such as credit cards before moving to secured debts. In addition, if the amount of debt you owe is easily payable within one or two months, don’t put it off because it is just a waste of interest money. The main point is, you should plan debt repayments thoroughly and carefully.

While debt repayment will take priority in most instances, it is also essential not to neglect your savings. Having a financial safety net can be very helpful and even life-saving during emergency situations. Savings are particularly important for individuals who weren’t able to set-up an emergency fund. However, it possible, it is best to save while paying off your debts at the same time.

Whatever you decide, the main thing right now is to avoid getting deeper into debt. Borrowing more hinders you from financial freedom. Nobody wants to be indebted throughout his entire lifetime but there is a high chance that it will if you don’t take the necessary steps now.

Technorati Tags: debt consolidation, paying off debt, Saving Money