Anybody under age 70 ½ who is earning an income can open an IRA. You can choose between a traditional IRA and a Roth IRA. Which one you choose depends on your income and the tax bracket you predict you’ll fall into in retirement.

Roth vs. Traditional

If your adjusted gross income is less than $116,000 and you expect that you’ll be taxed at a higher rate when you retire, you should think about opening a Roth IRA. Money you invest in a Roth IRA is not tax deductible now, but the funds you withdraw in retirement will be tax-free.

If you think you’ll pay less taxes in retirement, then think about a traditional IRA. The contributions you make are tax deducible now, but you’ll pay taxes when you take the money out in retirement.

The maximum you can contribute to either a Roth IRA or traditional IRA is $5,000 this year for everybody 50 and younger.

Where to Open an Account

Don’t delay opening an account just because you’re not sure where to start, or where to invest. You can open an IRA almost anywhere that offers banking or investments, but online brokers are a great place to open an IRA. Many don’t have minimum required account balances or opening depoists on IRA accounts, and you can start buying investments for between $5 and $15 a trade, depending on the broker.

• Start now: Compare recommended discount brokers for starting your IRA

For newbie investors, exchange traded funds (ETFS) and no-load mutual funds provide an easy way to start a diversified portfolio at lost cost and with just a few trades. To get started, research funds for free with Morningstar.

• Read more: 23 things beginners must know about saving for retirement

Related posts:

1. You Need a Roth IRA
2. Roth IRA or Traditional IRA: What Do You Do?
3. Don't Forget April IRA Contributions

That’s because the CARD Act takes effect this winter and will restrict credit card companies’ ability to raise interest rates on existing customers. If you thought credit card companies were committing usury in the past with APRs of eighteen, or twenty percent; you ain’t seen nothing yet. Cardholders are seeing their rates go as high as 29.9 percent; there’s even a story of man who received a credit card offer at 79.9 percent APR!

How do you know if your card is raising your interest rate? What can you do about it?

How Credit Cards Raise APRs

In general, your credit card company must notify you of any changes to your account, including interest rate increases, by mail (or electronically if you have consented to receive legal disclosures online). Unless you pay late. Most cards’ terms and conditions include a clause that allows them to raise your interest rate if you pay late or go over your credit limit; no notification required.

Manage your cards well? You’re not immune to rate hikes.

My wife just received a notification from Citi that her interest rate will jump to 23.9 percent in December. That’s on a card with a $15,000 credit limit that does not have a balance and has always been paid in full. (We use the card for joint expenses each month and pay it in full).

She received a letter yesterday detailing the change. Unlike other rate increases I have seen, however, this notice had an interesting clause. If my wife were to transfer a balance of $3,000 or more to the card (plus a fee), Citi would actually lower her rate to 9.9 percent on the balance transfer and all future purchases until 2011. Obviously, Citi is just trying to make some money off this account. Since we always pay the balance in full and the card has no annual fee, they never get a dime from us in interest.

Just be sure to watch the mail.

A lot of these credit card rate increase notices look like junk mail. But if you miss them, you may miss your opportunity to opt-out of the rate increases.

How to Opt-Out of Rate Increases

When your credit card company raises your interest rate arbitrarily (i.e., not because you paid late), they must give you the opportunity to opt-out. Usually, you must contact the card’s customer service to opt-out. If you opt-out:

• You can pay off the existing card balance at your current (lower) interest rate.
• When the debt is paid off, or when the card expires, the credit card will be closed.

If you don’t opt-out by the specified deadline, your rate will go up and you won’t be able to do anything about it after the fact. So if you’re carrying a balance and your credit card company notifies you of an extreme rate increase, you should probably opt-out (unless you can pay off the balance in-full immediately). This is the time to forget about whatever effect closing your credit card has on your credit and just get far, far away from this nasty interest rate.

What to Do Next

If you’re not carrying a balance on the card that raised your interest rate, there’s little point to opting-out. As long as you don’t take on debt on that card, who cares about the APR? You might, however, be so outraged with the card company that you want to stop doing business with them. Or, you might want to preserve a lower APR “just in case” you need to revolve a balance on the card in the future.

Try negotiating.

In the past, customers with excellent payment histories could often be successful just calling up their credit card company and saying “Hey, I can get a 13 percent APR with Card ABC or Card XYZ, why should I stay with your card at 20 percent? What can you do for me?”

This strategy is certainly still worth a shot, although you can expect to have a harder time getting concessions from card companies. For one, they know that it’s harder for customers to switch to a new card (due to tightened credit requirements). Second, the card companies need the money. (Not that I expect you to have a lot of sympathy). But with sky-high default rates and the new laws limiting sneaky fees and interest rates that used to make credit card companies lots of cash, they’re trying to figure out how to make money on a totally new playing field. For now, that means charging even their best customers ridiculous interest rates.

Or, get a new card.

If you have really good credit and little or no credit card debt, you’re in luck, because you can probably apply and get approved for a new credit card at a much lower APR than on existing cards you have. (Most cards are offering new customers APRs ranging from 12 to 18 percent; not great, but better than 24 or 29 percent). Your best bet is to apply with companies that are actively seeking new creditworthy applicants, like Chase and Discover. Chase’s Freedom card has been a perennial favorite of card-critics for its simple rewards program, and the new Chase Slate card provides a lower rate, albeit no rewards, for customers who want the flexibility of paying some purchases over time.

• Compare and apply: See my list of recommended credit cards.

What about you? Have your credit card interest rates gone up? How high? What have you done about it? Please share your story in a comment.

Related posts:

1. Beware Credit Card Rate Jackings (Increases)
2. Summary of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009
3. For the Lowest Credit Card Interest Rates, Look to Small Banks

But like most people I know, that’s about the extent of the time and energy I’ve invested in understanding my student loans and student loan debt.

The fact is, we’re borrowing more and more to go to school. The Wall Street Journal reports that the amount of money students borrow has long been on the rise:

New numbers from the U.S. Education Department show that federal student-loan disbursements—the total amount borrowed by students and received by schools—in the 2008-09 academic year grew about 25% over the previous year, to $75.1 billion…Today, two-thirds of college students borrow to pay for college, and their average debt load is $23,186 by the time they graduate…

With the cost of higher education soaring and the pressures our society places to become as educated as possible, this number will surely continue to grow. That’s a problem, but I’ll leave the debate about how much is too much student loan debt for another time.

The fact is many of us have student loan debt. And how we tackle that debt is one of the first big financial decisions we make once we’re on our own.

1. Understand the Difference Between Private, Subsidized, and Unsubsidized Loans

Student loans come in a variety of “flavors”. Federally-guaranteed student loans are backed by the U.S. Government and, as a result, have low interest rates and are available to most students regardless of credit history. The most common federal loan programs are Stafford loans, Perkins loans, and PLUS loans (for parents).

• Subsidized federal student loans are available to students meeting income requirements and do not charge income while you are still in school or during grace periods.
• Unsubsidized federal loans are available to more borrowers but charge interest as soon as they are disbursed.
• Private student loans are not federally-guaranteed, require good credit, have higher interest rates, and charge interest as soon as they are disbursed.

2. Grace Periods and Deferment

Federal Stafford loans have a six month grace period; Perkins loans have a nine month grace period. That means you aren’t required to start paying them back until six or nine months after you graduate or cease being a full-time student. If your loans are subsidized, you won’t pay any interest on the balance during that time. If the loans are unsubsidized, however, interest will accrue, so it’s a good idea to make payments anyway.

If you are having trouble finding a job or are not working, you may be able to contact your student lender and defer your loan. Just remember that if you have an unsubsidized loan, interest will be accumulating.

3. Student Loans Must Be Paid!

The consequences for defaulting on a federal student loans are more severe than failing to repay other debts (e.g., a credit card). If you fail to repay a student loan, not only will you ruin your credit, the government can seize your federal tax refund, garnish your wages, sue you, and cut off federal benefits like social security. Finally, federal student loans cannot be discharged in bankruptcy; so even if you hit rock bottom, you will still have to pay up for your education!

4. Student Loan Interest is Tax Deductible

On a more positive not, if you earn less than $70,000 a year, you can deduct up to $2,500 of student loan interest on your federal tax return, even if you don’t itemize your deductions. Each year, you should receive form 1098-E from your student loan lenders, detailing how much interest you paid (and can deduct).

5. Student Loans May be Forgiven

If you enter a career that serves the public in high-need areas (such as teaching or delivering healthcare in rural, low-income regions), you may qualify for programs that will forgive a portion of your federal student loan debt. Consider, however, that you may have to work in the qualifying field for several years before qualifying and that the amount of the loan forgiven may be taxable as income. Check with your school or professional organization for information about loan forgiveness programs. Additionally, federal student loans are canceled if you die, meaning your spouse and children won’t be burdened by them.

6. Some Consider Student Loans “Good Debt”, If There Is Such a Thing

You may read about “good debt” and “bad debt”. Basically, some credit experts classify mortgages and student loans as “good debt” because they’re investments in your future, while consumer debt like credit cards is considered “bad debt” because there is little value attached to the debt. This distinction may come into play when you apply for new credit, for example. A lender will look more favorably on somebody with $200,000 in student loan debt from medical school than on somebody with $20,000 in credit card debt. The doctor has ten times the debt, but still looks better to future creditors than the guy with credit card debt.

• What about consolidation? Read more about student loan consolidation.

The other reasons student loans are sometimes called “good debt” is because they tend to have very reasonable interest rates and that interest may be tax deductible. At the end of the day, however, student debt is debt. When people ask whether you should pay down student loan debt early, I say: Only after you’ve paid down all your other non-mortgage debt, have an emergency fund, and are saving at least 15 percent of your income for retirement.

Related posts:

1. What is the Difference Between a Subsidized and Unsubsidized Stafford Loan?
2. Student Loan Consolidation Made Easy
3. Student Loans Drying Up: What You Must Know About Borrowing This Fall

And then you get a mailing or a phone call. Consolidate all those student loans into one low payment! Student loan consolidation sure is tempting. But is it wise?

What is Student Loan Consolidation?

Student loan consolidation is taking one or more student loans and repackaging them into one loan with one fixed interest rate and one payment. There are consolidation options available for both federal student loans (Stafford, Perkins, and PLUS loans), as well as private student loans.

Most student loan consolidation programs are completely legitimate and may, in fact, make it easier to manage your student loan debt. That said, many consolidation programs market benefits that are misleading. Before consolidating student loans, make sure you have all the facts.

The Benefits of Consolidation

Consolidation can allow you to make one payment for all of your student loans. That’s far easier than making several payments and remembering different due dates. Not only will you save time and frustration, you’ll be less likely to accidentally miss a payment and incur fees and/or a negative mark on your credit report. Note: If you have both federal and private loans, don’t consolidate them together; you’ll likely end up paying a higher interest rate on your federal loans than necessary.

Student loan consolidation can lower your monthly payment. If you’re struggling to make your student loan payments, consolidating can lower you monthly payment. But watch out! Lowering your payment means extending your repayment period from 10 years to 15, 20, or even 30 years. The longer you take to repay the loans, the more interest you’ll pay, although you can always start to pay down your loan balance faster when you’re earning more.

Consolidation gets you a fixed interest rate. Most student loan consolidation programs move loans with a variable interest rate into a loan with a fixed interest rate. If you still have variable-rate student loans, this may save you money over time if interest rates get higher. Note, however, that all federal loans disbursed after July 2006 and all Perkins loans already have fixed interest rates, somewhat negating this benefit.

No credit check for federal consolidation. There are no credit requirements for federal student loan consolidation.

Consolidation Pitfalls

Don’t consolidate until after you graduate. It’s wise to wait until after graduating to consolidate your student loans. Of course, you want to make sure you include all your loans in the program. But you also want to make sure you don’t give up one of the biggest perks of subsidized federal loans—interest does not accumulate while you are in school or during your grace period.

Be careful with Perkins loans. Perkins loans have unique benefits like a fixed five percent interest rate, nine-month grace period, and a forgiveness program for qualifying teachers and Peace Corps volunteers. If you consolidate, you may lose some of these benefits.

Don’t trust every offer. Your best bet is to pursue consolidation through one of your existing loan service providers or a company recommended by your financial aid office. If you have Direct loans, visit http://www.loanconsolidation.ed.gov/.

Be wary of consolidating loans jointly. Two benefits of federal student loans are:

• You can defer them if you become unemployed and
• they are canceled if you die.

If you and your spouse consolidate both of your student loans and one of you becomes unemployed, you won’t qualify for deferment (you’d both need to be out of work). Similarly, if one of you were to die, the other spouse is still required to repay the loan.

• Read More: Six Things To Know About Your Student Loans

What about you? If you have consolidated student loans or considered consolidation and chose not to, please share your experience in a comment. What would you recommend?

Related posts:

1. Student Loan Consolidation Made Easy
2. Understanding Student Loan Grace Periods, Deferment, and Forbearance
3. Six Things to Know About Your Student Loans

The Senate voted 98-0 Wednesday to extend and expand the tax credit and the House could vote on the bill as early as today. If passed, the $8,000 tax credit would remain in effect for first-time home buyers — or anyone who hasn’t owned a home in the last three years.

• Going to Buy? Get Mortgage Pre-Approval Online

Buyers who have owned their current homes at least five years would also now be eligible for tax credits of up to $6,500. To claim the credit, both groups of buyers would have to sign purchase agreements before April 30, 2010 and close before June 30. The tax credit would be extended until June 30, 2011 for servicemen and women serving overseas for at least 90 days.

The actual credit amount home buyers are eligible for is ten percent of their home purchase price up to a maximum of $8,000 for first-time home buyers and $6,500 for buyers who already own homes.

Who is Eligible for the Tax Credit?

To qualify for either credit, you must be purchasing a primary residence of less than $800,000 and cannot be purchasing the property from a direct relative.

You are eligible for the first-time home buyer tax credit if you:

• Have never owned a home
• Have not owned your primary residence for the last least three years

You are eligible for the $6,500 home buyer tax credit if you have lived in a home you own for five consecutive years out of the last eight years. Unfortunately, it does look like these new provisions still exclude some buyers from the credit. Buyers who have owned a home within the last three years, but did not own it for at least five years, cannot take the new credit.

Income Limits

The amount of the tax credit you can claim will be phased out for single taxpayers who earn more than $125,000 and joint taxpayers who earn more than $225,000.

• Read More: How to Claim the $8,000 Home Buyer Tax Credit

Related posts:

1. $15,000 Home Buyer Tax Credit?
2. $8,000 First-Time Home Buyer Tax Credit

I hear this all the time. When it comes to money, many of my peers (at least the ones not completely afraid of their finances) are concerned with upgrading their cars and homes, developing their career, and finding a partner or getting married. These are all good things to do, but something’s missing. We often hear about the same few financial steps for twentysomethings:

• Learn to budget
• Build credit
• Get out of debt
• Save an emergency fund
• Buy a home

Don’t get me wrong. These are important steps! I write about them all the time. But there are other financial habits that we twentysomethings don’t hear about as often:

• Plan for retirement
• Start investing
• Set financial goals
• Give to charity
• Get insurance

It’s not surprising we don’t pay much attention to these “forgotten” financial habits. (Perhaps they’re not forgotten; we just have yet to learn them.) After all, we’re not earning much yet and haven’t had time to accumulate wealth. That makes it seem a little silly to think about things like investing, insurance and—gasp—actually giving some money away!

But how we manage money in our first decade of independence will sculpt our lifelong financial habits. That’s why the sooner we start developing these good ones, the less we’ll have to think about making them as we age (and these habits become ever more important).

Plan for Retirement

This one is a no-brainer. Retirement savings accounts provide great tax benefits. Social Security will not be enough for our generation (if it’s around at all). And even small amounts saved in your twenties can grow to hundreds of thousands over 30 to 40 years. Save for retirement! Read last week’s article 23 things beginners absolutely must know about saving for retirement to learn more.

Start Investing

Yes, saving for retirement is investing. But money-savvy folks realize that investing isn’t just for retirement. A few good investments can help you reach other financial goals faster (like buying a home, starting a business, or sending your kids to college). That’s why it’s never to early to learn how to make smart investments and develop the habit of putting a few dollars a month aside to invest (independent of your savings and retirement contributions).

Set Financial Goals

Obviously, you don’t need a boatload in the bank to start jotting down a financial plan for yourself. Yet for some reason I don’t think most of us do this. Having a written financial plan helps us identify where we want to go, what it will take to get there, and how we can get started. If nothing else, I recommend everybody (at whatever age) have a five-year financial plan.

Give to Charity

Regardless of what consumer products marketers try to tell us, most of us living and working in developed countries are earning far more than we need to meet our basic needs (food, shelter, medicine, etc.) It’s selfish not to give at least a small portion of what we earn to help the greater good.

Maybe you’re not comfortable giving away ten percent of your income while you’re chipping away at debt or trying to move out from a cramped apartment; but get in the habit of cutting a few small checks to charity every year. As they say, it’s the act of giving—not the amount you give—that counts the most.

Get Insurance

You need to have health insurance! Getting health insurance coverage is one of the most important things you can do for yourself financially.

• Read more: What Every Young Person Needs to Know About Healthcare

But don’t stop there. Insurance is designed to protect our assets from unfortunate events. Crash your car? Insurance pays for the damage. House burn down? Insurance pays to rebuild. Make a habit of understanding how insurance works—and asking whether you have enough of it. As your bank account grows, so should your auto and home insurance limits.

Single twentysomethings don’t need life insurance, but if you get married (or even live together and split expenses), you need to consider it. Term life insurance is dirt cheap for healthy young people and can provide a vital safety net for a surviving spouse should the unthinkable happen.

If you’re well on your way to mastering the financial basics, start to make these “forgotten” financial habits a part of your money plan. The sooner you do, the more time (and money) you’ll have to do other things as you go along.

Related posts:

1. Budgeting In Your Twenties
2. Do You Need Health Insurance in Your Twenties?
3. How to Create a Five-Year Financial Plan

Happy Halloween!

• Three methods to pay off more than one debt. (Poorer Than You)
• A financial “foul up” by Matt Jabs, who describes how he’s upside down and paying the price. (My Next Buck)
• Some good advice for when you are ready to make decisions about home ownership. (Green Panda Treehouse)
• A few frugality tips for pet owners. (Living Almost Large)
• Why working while you’re a student may be harder than you think. (Studenonmics)
• The shockingly low rate of retirement savings by Americans. Don’t become a part of this trend! (20somethingfinance)

Finally a big thank you to the hosts of this week’s Carnival of Twentysomething Finances and Carnival of Personal Finance (where my post on signs you may be at risk for identity theft was an editor’s pick!)

Related posts:

1. Like This Site? Check Out YPBlogs.com
2. Weekly Links: Working
3. Weekly Links: Retirement and Investing

I recently read an article on The New York Times, four money talks to have before marriage, and a response at Get Rich Slowly. I agree that this is critical, but not just for couples considering marriage. A lot of us youngins shack up long before we marry, if we marry at all. So I think these articles need to be re-framed as money talks to have before living together.

What Should You Talk About?

The Times article illustrates four topics couples need to cover, and I can’t think of much to add. They are:

• Ancestry. What did your parents teach you about money? What are your financial predispositions?
• Credit. How do your credit scores compare? What does this say about how you have managed money in the past? How will this impact your ability to reach future financial goals?
• Control. Who handles what bills, how much can each partner spend independently?
• Affluence. What are your financial goals?

Why Have the Talk?

For married couples, the reasons to talk about money are more or less obvious: Your finances are now legally combined and financial problems are the leading cause of divorce.

But if you’re not married, why bother talking about money?

At the very least, if you’re living with somebody, you’re sharing a big chunk of your monthly expenses (housing payments, utilities, groceries, etc.) Do you know what you would do if one of you lost his or her job? Could you still pay the rent?

And although you may be less likely to merge finances than married couples, how you each handle money independently will still impact your common financial goals.

For example: Do you hope to take a vacation this year? Are you both saving for a trip, or will one of you go into credit card debt to make it happen? Do you hope to upgrade your apartment or buy a home? What will it take to move up?

How to Have the Talk

As much as Jay Monee is trying to change public perception to the contrary, I think most would still agree that personal finance is decidedly not sexy. (A million in hundred dollar bills showered on a hotel room bed? Sexy. Comparing credit scores? Definitely not.)

To ease the discomfort of talking about finances:

• Plan a time to talk about money. Carve out an hour or two and sit down over coffee or wine. Whatever you do, don’t spring the subject of your partner’s spending habits at the end of an otherwise romantic dinner.
• Prepare for the talk. With your discussion scheduled, you should each pull your credit scores, write out your latest monthly budget, estimate your net worth (assets and debts), and jot down your financial goals.
• Be understanding and open. As you start to talk about money, listen to your partner’s side. For this to work, there are going to be compromises. Shopaholics can usually learn to tame some spending, but spendthrifts can learn to live a little, too.
• Write it down. Finally, take notes. Write down any financial changes you want to make along with your joint financial goals.
• Keep it going. Talking about money should be an ongoing dialogue, not just a one-time down-and-dirty negotiation. The more you talk about money, the more comfortable it will become, and the easier you and your loved one can find common ground and begin achieving financial goals together.

What about you? What are the most important financial topics you discuss with your partner? Has it been difficult to have these talks? How have you made it easier?

Related posts:

1. We’re Getting Married (In a Week!) How Will Our Finances Change?
2. Is it Okay to Get Married With Debt?
3. How to Create a Five-Year Financial Plan

Retirement Saving Basics

1. Don’t be intimidated. All the numbers and acronyms are confusing, but this stuff isn’t as scary as it seems.

2. Start now (you’re never too young). A 22-year old earning $40,000 who starts putting 10 percent into a 401(k) and gets a three percent employer-matching contribution could have a nest egg of $1.7 million at age 65. And that’s not accounting for any raises or increased contributions over time. If you wait until you turn 32 to begin saving, however, the same contributions will only grow to about $780k. A fun goal is to try to save as much as you earn in a year before you turn 30.

• Cool Link: Calculate how fast your 401(k) will grow.

3. Social Security won’t be enough. It’s a fact: Social Security benefit requirements will exceed contributions sometime around 2037. That’s long before most of us twentysomethings will retire. Chances are we’ll still see some kind of government-provided income when we retire, but it won’t be enough to live on. You must take charge of your own retirement!

4. The 401(k) is your friend. A 401(k) is a way to save for retirement through payroll deductions at work. The money you put in now is tax-free; you’ll pay taxes when you take the money out.

5. IRAs too. An IRA is an individual retirement account. You can start one of these anytime at almost any bank or investment company. A “traditional” IRA works like a 401(k) in that you can deduct the money you put in on your federal taxes, but will pay taxes when you take it out. A “Roth” IRA is the opposite; you don’t get a tax break for your contributions, but when you retire, all of your withdrawals are tax-free. (Hint: Roth IRAs are a great idea for young savers).

6. There are limits. The IRS sets the maximum amount you can contribute in tax-advantaged retirement accounts every year. In 2009, savers under 50 can put up to $15,500 in a 401(k). The IRA contribution limit is $5,000 for savers under 50.

7. But you can do both! If you contribute to a 401(k) plan at work, you can still open an IRA. That means in 2009, you can stash away up to $20,500 for retirement. A good strategy? Contribute to your 401(k) up to the maximum your employer matches, then max out a Roth IRA. If you have more to save, make more 401(k) contributions.

8. 401(k) contributions reduce your taxes! 401(k) contributions reduce your taxable income. If you’re in the 25 percent tax bracket and put $100 to your 401(k), you’ll save $25 in taxes. Your 401(k) account grows by the entire $100, but your paycheck only decreases $75.

9. 401(k) plans don’t have income limits. Although many tax-advantaged investments (including IRAs) have income limits, 401(k)s do not. That means that you can continue saving no matter how much you earn.

Matching and Vesting

10. Many employers “match” 401(k) contributions. If your employer has a 401(k) match program, they’ll help you save for retirement. The most common match is 50 percent up to a maximum employee contribution of six percent. That means if you save six percent of your annual salary, your employer will match half of it (three percent).

11. Not taking advantage of a match is like giving up “free money”. If somebody told you they’d put $5 into your savings account for every $10 you put in, you’d be stupid not to do it, right? That’s essentially what an employer match does, so if you don’t take advantage of it, you’re basically turning down “free” money!

12. Maximize your match. Many employers calculate their maximum match by calendar year (ask HR to be sure). That means if you haven’t been contributing to your 401(k) yet this year; you can contribute a much bigger amount for all the remaining pay periods to get more employer-matching funds.

13. Most employer-matched contributes are vested. This means that you have to work for your employer for a set number of years before all of that money is yours to keep. For example, if matched contributions are subject to a five-year vesting schedule, you’ll get to keep 20% of your employer’s matching contributions for every year you work there. All of the money appears on your 401(k) statement as soon as it’s invested, but if you leave early, the unvested amount will appear as a “forfeiture” when you withdraw or rollover your money. If you’re close to becoming fully-vested and are considering leaving your job, it might be wise to consider sticking it out a few more months.

Rollovers and Withdrawals

14. Don’t cash out! The government created retirement accounts with tax savings to encourage us to save for retirement,. That means if we withdraw the money before age 59 1/2, we’ll not only owe federal and state taxes on the amount we take out, but also a ten percent penalty. Ouch! So once the money’s invested, let it grow. Don’t withdraw it!

15. With IRAs, there are exceptions to the 10 percent penalty. There are very specific rules about IRA withdrawals. In most cases, if you withdraw your money before age 59 1/2, you must pay federal taxes and the 10 percent early-withdrawal penalties, but there are some exceptions. Two of note to younger savers: You may be able to withdraw money from an IRA penalty-free for qualifying higher education expenses and up to $10,000 to purchase your first home.

16. 401(k)s are tied to employers. When you leave a job, your 401(k) stays put until you decide what to do with it. The smart thing to do is to either roll it over to your new employer’s 401(k) or rollover to an IRA that you create anywhere you want. Simply ask your former employer’s HR person for the forms to initiate the rollover. You have some time, but don’t wait forever. Your employer or 401(k) may automatically give you cash dispersal if you don’t rollover your old 401(k) in a certain time period. This is especially true if you have a small balance. Unfortunately, you’ll pay taxes and that 10 percent penalty, so don’t let this happen!

Choosing Your Investments

17. Keep it simple. You don’t need to know much about investing to start saving for retirement. In fact, it’s best that you just ignore what the stock market is doing. The important thing is that you make the contributions. Most 401(k) plans offer what are called “target-date” mutual funds based upon the year you predict you’ll retire. These funds automatically adjust their investments over time; they start out aggressive and become more conservative as their target date approaches.

18. You can be aggressive while you’re young. If you won’t retire for 30 or 40 years, you can take big risks with your investments because you won’t need to access your money for a long time and you have plenty of time to take advantage of long-term growth. Allocate your investments in mostly domestic and international stocks.

19. Ask for help. Your employer can put you in touch with a representative from your 401(k) company who will be happy to help you choose investments at no charge. Take advantage of it.

• Cool Link: How does your employer’s 401(k) plan stack up?

20. Look for no-load mutual funds. If you open an IRA or rollover an old 401(k), you’ll have virtually unlimited investment choices. There are big differences in how much different funds charge, although determining mutual fund fees can be complicated. Look for no-load mutual funds, which will eat less of your returns.

21. Consider ETFs. Exchange-traded funds (ETFs) are a great simple way to invest and can be bought or sold anytime just like a singular stock. I’m a particular fan of index ETFs, which track entire markets with one fund. With ETFs, you can invest in the entire S&P 500, Dow Jones Industrial Average, and even commodity markets with just one investment.

22. Do some research. You don’t have to become a financial junkie, but the more you know about how investments work and which ones are best for you, the smarter decisions you can make. I use a free account with Morningstar to quickly research mutual funds.

Finally

23. Just do it! The most important thing is that you save for retirement. Something. Anything. Just start putting away today. Get help if you need it. Learn as you go. Just start saving!

• Get an IRA: Open an IRA online now

Related posts:

1. What to Do If Your Employer Cuts Its 401(k) Match Benefit
2. The 401(k) Retirement Plan: An Introduction
3. How Much Should Be in Your 401(k) at 30?

That’s where enlisting a buyer’s agent can be a wise move.

What Real Estate Agents Do

Historically, real estate agents work for sellers, not buyers. Agents list sellers’ properties, market the listings, and really sell the homes. When they’re successfully, the earn a commission based upon a percentage of the sale price. The more the buyer pays, the more the agent earns. Agents will do everything that’s legal to sell homes. It’s their job.

For novice home buyers unfamiliar with real estate laws and the numerous problems properties may have, a buyer’s agent can help shed light on the actual pros and cons of different homes.

A buyer’s agent may also help you negotiate a lower price, but watch out—buyer’s agents usually split the commission with the seller’s agent, so they have an interest in a higher selling price too. Like the seller’s agent, your buyer’s agent is going to want to see you buy a home; his or her paycheck depends on it.

Finding a Buyer’s Agent

If you decide you want a buyer’s agent to help you navigate your first home buying experience, start asking friends for referrals to agents they’ve worked with and trust. If that doesn’t work, call up local real estate companies and ask to schedule brief “interviews” with prospective buyer’s agents. Ask prospective agents how much experience they have working as buyer’s agents and working with the kinds of properties you’re interested in.

Whatever you do, make sure you choose an agent that you like and trust.

When my wife bought her first condo a few years back, she jumped into the market without a buyer’s agent. Soon, a seller’s agent for a property that didn’t interest her latched on and got my wife to use him as her buyer’s agent. The agent did a lackluster job, but probably collected a sweet commission check for it anyway. My wife was probably better off with him as her buyer’s agent, but could have been even better served had she hand-selected the agent she worked with.

On the hunt for a new home? Check out 10 Tips for Hassle Free House Hunting and don’t forget to get mortgage pre-approval before you start your search.

Related posts:

1. 10 Tips for Hassle Free House Hunting
2. A Buyer's Market…Or Not
3. $6,500 Home Buyer Tax Credit