In spite of credit cards having a bad rap, there are several benefits to credit cards that are worth understanding. Used properly, they are a valuable financial tool, an always-available emergency fund, and a source of rewards for consumers. Here are some of the benefits of credit cards.

Interest Free Financing: It’s common to think of credit cards as a very high-interest source of financing. However, for the 30%-40% of consumers that pay off their balance each month, the credit extended to cover purchases each month is an interest free loan since no interest accrues as long as the bill is paid on time. A goal of any credit card holder should be to pay off their balance completely each month.

Fraud Protection: In spite of the negatives associated with credit card debt, credit cards do an effective job of protecting their clients from fraud and identity theft. As long as the theft of a credit card or of your identity being used to obtain a new credit card in your name is reported in a timely manner, the card company will refund the charges. It’s important to monitor your monthly activity to make sure there are no charges that were made without your approval.

Credit Repair: Abusing credit cards is one of the quickest ways to sink your credit score, but showing a pattern of accumulating charges and paying them in full each month is a great way to improve your credit score. Lenders are looking for a pattern of consistency in payments and credit cards are one way to show that to potential sources of loans.

Rental Car Insurance: Almost all credit cards come with supplemental insurance coverage for rental cars. Most rental car companies offer consumers the right to purchase coverage for a daily fee. However, read the fine print in your credit card information and you’re likely to find that you’re covered just for carrying that particular card.

Reward Programs: This is a benefit that most people are aware of but many don’t take as much advantage of these programs as they could. Still, millions of consumers are able to cash in and receive airline tickets, electronic gadgets, hotel stays, and even cash back as they accumulate points by making purchases with their credit card. Some award programs are being eliminated as credit card issuers struggle in this economy, but many still exist and are worth the annual fee that they might charge to participate.

There are several methods of record keeping that will work if you have the discipline to stay up to date on your various financial accounts. Regardless of whether you use an old fashioned file cabinet or scan financial documents and keep your records on a hard drive, here’s a breakdown of the types of documents you should keep. Many financial service providers make records available on demand at anytime but keeping track on your own will keep you from having to go on a financial statement scavenger hunt when you need something.

Savings and Checking: These statements are received monthly and are important to review to make sure the bank’s records match your own. Take a few minutes to glance through your checkbook and make sure all the checks you have written have cleared. Watch for overdraft fees, interest rates, and other important information that can change from month to month.

Investment Accounts: Brokerage statements are received monthly if there is activity in the account and quarterly if there is no activity. These documents are important because more people aren’t tracking the performance of their investments day to day. It’s a good idea to keep track of what you own so that you can make timely adjustments if necessary. Keeping these statements will also help you to track down cost basis information when you need it.

Retirement Accounts:  Most 401K and IRA accounts send quarterly statements to their customers and these should be among the easiest to review each month. Take a quick look to make sure you’re maximizing the company match and that you’re staying diversified in your investment elections.

Tax Documents: These are among the most important records for you to keep. Tax returns should be kept for at least seven years and you should also keep forms like W-2’s, 1099’s, and other items that come in the mail in an envelope marked “Important Tax Documents Enclosed.”

Credit Card Statements: You should receive a credit card statement each month showing all of your card activity for that month. This is important because everything on that report has the potential to impact your credit score. Review these statements monthly to make sure you can account accurately for all credit card activity in your name.

Mortgage Statements: Your mortgage lender should send you a monthly invoice that breaks down the various elements of your monthly mortgage payments. Many homeowners include money for principal, interest, property taxes, and home insurance all in a single payment. Some of these items are tax deductible and some, such as the property tax amount, can change periodically. Take a quick look to make sure your monthly payment hasn’t changed.

The motive for seeking out personal loans for many is debt consolidation. While it may seem like the definition of insanity to borrow more in order to pay less, for many people who find themselves overloaded with high-interest credit card debt, or short on their rent, or over-extended on their auto loans, debt consolidation with a lower- interest personal loan is the way to go. Others simply find themselves with an unexpected expense such as a medical emergency, or job cut-back, or some other non-recurring overhead that they just don’t have the funds to pay for in a particular month. We could all use a little economic bailout these days, but unfortunately the opportunities for individuals are not as great as those for big corporations on Wall Street. People seeking their own private stimulus packages have several options in today’s economy.

Banks: If you have a good relationship with your banker you may be able to seek out a small personal loan at a low interest rate. More and more banks are willing to lend minor amounts and you can expect the interest rate to be around 10% with good credit.

Payday Advances: Storefronts offering a monthly advance can be a blessing to those in need of a couple of hundred dollars to get them through the month. Usually you just need to have proof of a job and a checking account. Expect to pay around $40.00 to borrow $250.00. Keep in mind these loans are usually based on a percentage of your pay check and all usually only for a term equal to the time your next paycheck is due.

Peer to Peer Lending: More and more sites are popping up on the web as a way to generate private, or peer-to-peer, personal loans. These sites operate as a model much like popular music-sharing or file-sharing sites. People write in who need to borrow money and connect with people who want to loan money. Needless to say, there is the potential for fraud on both sides with this kind of lending.

The new program is available now it extends to purchases made through April 30, 2010 as long as those sales close by June 30, 2010. Although there are some similarities in the new bill to the original program to help first time homebuyers, there are also some key differences that are important to understand for anyone in the market for real estate.

What’s the same?

First Time Homebuyer Rules: The definition of a first time homebuyer has been one of the key elements of the program and that definition has not changed. To qualify, a buyer must not have owned a home for at least the past three years. In addition, the incentive is not available for vacation homes or rental properties and the homebuyer must become a resident of the home to qualify.

The Terms: The amount of the tax credit for first time homebuyers has not changed. The maximum credit is $8000 and for homes purchased for less than $80,000, the maximum tax credit is 10% of the purchase price.

What’s changed?

Other Homeowners Now Qualify: The tax benefit for purchasing homes has been extended to more than just first time homeowners. Anyone who has lived in their primary residence for at least five of the past eight years can qualify for a tax credit of up to $6500. There are income limitations for people trying to qualify for the tax credit and according to current homeowner statistics, about 70% of current homeowners are currently qualified for the tax credit. This could provide a big incentive for people who have been considering moving while home prices are low.

Fraud Protection: The new legislation passed by lawmakers closed some of the loopholes that homebuyers had found in the original version of the program. Hundreds of millions of dollars worth of fraudulent claims have been filed. Many of the new homeowners that received tax credits were under the age of 18, with one proud new homeowner as young as four years old! Thousands of other taxpayers also claimed the tax credit in spite of the fact that they had purchased other homes within the past three years. More detailed documentation must now be collected to take advantage of the tax credit.

The job market is bleak for everyone, but workers in the later stages of their careers are at risk because the companies that are hiring are more likely to seek younger employees that cost less to hire and that have more potential to be long term assets to the company. Some laid off workers consider simply retiring a few years early, but most are not in a financial position to fund an extended retirement. Longevity risk is one of the most serious risks facing retirees and the thought of running out of money late in life is something no one wants to think about.

For people within five to ten years of their anticipated retirement date, here are some tips to reduce the chances of running out of money.

- Work Longer: This is an obvious choice if you’re able to find a job because the longer you can collect a paycheck, the longer you can delay collecting Social Security or tapping into your retirement savings. There are several websites that focus on employment opportunities for people over the age of 50. The last few working years should be spent making wise financial decisions and padding your nest egg as much as possible.

- Delay 401K Withdrawals: Sometimes people don’t have much of a choice about tapping into their retirement accounts, but this is something that should be delayed as much as possible for a few important reasons. First, if you withdraw funds before the age of 59 and a half, you’ll throw away 10% of the amount you withdraw in the form of an IRS penalty. In addition, you’ll pay income tax on every cent that you withdraw unless it comes from a Roth account or post-tax contributions. Finally, the more time you can give your money to grow, the better your chances are of being able to make ends meet during your retirement.

- Consider An Annuity: One of the investment vehicles designed to provide income during your retirement that you can’t outlive is an annuity. There are several benefits to investing in annuities, but the biggest is that at a certain point in life, you can turn on an income stream that is guaranteed by an insurance company to last as long as you do. There are a lot of moving parts and options for people investing in annuities and it’s important that you do your homework before investing, but an annuity is one of the few financial tools that can act like a pension and provide a paycheck every month for the rest of your life, however long it might be.

Everyone will benefit from a stronger economy but there are a few groups of people and businesses that stand to benefit most directly from the new legislation.

- Unemployed Workers: Unemployment benefits are a huge help to those who lose their jobs unexpectedly, but many find themselves running out of the allotted time to receive benefits and still without much in the way of prospects for employment. The new legislation will extend unemployment benefits for workers across the nation by 14 weeks, or just over three months. In addition, states with unemployment rates over 8.5% will give jobless workers an extra six weeks on top of those 14 that are being received nationwide.

This new legislation is a huge help to the thousands of people who have run out of benefits. Most states offer jobless benefits that last for six months, but more than 30% of unemployed Americans have been out of work for longer than six months. Congress has been debating this bill for almost 2 months and during that time 7,000 Americans have seen their jobless benefits expire each day. Now, these workers will be able to reapply and receive the extended benefits.

- Home Buyers: The legislation provides tax incentives to a couple of categories of home buyers. For first time buyers who have not yet taken advantage of the $8000 tax credit that was set to end on November 30, that tax credit will now extend to home purchases that close prior to June 30, 2010. In addition, homeowners that have owned a residence for more than 5 years and purchase a new home will be eligible for a $6500 tax credit. These changes should be good for the housing market as a whole and will also benefit homebuilders who have struggled to stay in business over the past few years.

- Businesses: As consumers have struggled financially, businesses have also suffered. A provision in the bill will provide tax relief to companies that have lost money over the past few years by allowing them to apply losses from the last two years to their tax returns of the past 5 years, earning an IRS refund that will be paid out in cash. The tax break will be offered to all businesses except those that received TARP funds from the government during previous bailouts. This change should provide a much-needed cash infusion to businesses and the hope is that some will use the inflow to grow their company and begin hiring again.

We often underestimate our needs when it comes to retirement because it’s difficult to imagine 30 years of no income aside from Social Security. Life expectancies are on the rise and funding 10, 15, or even 20 years of your life after your career is over is not going to be enough money in many cases. For people within ten years of retirement who are just starting to realize that they have a long way to go to prepare financially for their golden years, here are a few tips.

- Save Like You’ve Never Saved Before: If your retirement savings are not going to be enough, the best thing you can do is to begin saving now. This means that you may need to sacrifice things like travel, upgrades to your home, or funding your children’s education in order to take care of your own future needs. The best place to save is in your 401K if possible, especially if there is a match. This year, the IRS allows individuals to contribute up to $16,500 each year, and that’s before the company match. Even within a few years of retirement, the time value of money can be more powerful if you start saving earlier. If you invest these funds wisely and markets cooperate, you can build a small nest egg even in just a three or four year period.

- Adjust Your Target Retirement Date: This is a step that no one wants to think about, but the reality is that you greatly enhance your chances of financially surviving retirement if you’re willing to work a few extra years. There are a few key benefits to a decision like this. First, the income you continue to receive will allow your retirement savings to continue to grow untouched. Second, your retirement savings will continue to have an opportunity to grow. Finally, the longer you can delay receiving Social Security payments, the bigger those payments will be.

- Be Ready To Tap Into Your Biggest Asset: For most people nearing retirement, their most valuable asset is their home. As such, that home might be your best chance of having the retirement income you need. You may need to tap into your home equity for income, either through a traditional home equity loan or line of credit, or through a reverse mortgage that can provide monthly income and allow you to stay in your home. Some people also consider downsizing, selling their home to move into something smaller and living on the difference in monthly housing costs. Working a few more years before downsizing will also allow home prices to recover after falling in most parts of the country over the past few years.

- Unemployment: This has become the 800 pound gorilla among economic problems and October’s jobs report highlighted the unemployment problems even more. Economists had expected unemployment to increase to 9.9% after the monthly report, but the results were worse than expected and unemployment jumped to 10.2% during the month. The last time the US faced double-digit unemployment was in 1983. Jobs continue to disappear each month and we could be well into 2010 before job creation begins again. Compared to other developed economies, the US ranks right in the middle of the pack for unemployment.

- Poverty: The US is not generally thought of as a country with big poverty problems, but in a recent survey only two nations with developed economies, Turkey and Mexico, ranked worse in poverty statistics. More people are suffering the effects of poverty than in decades after the recession we’re just emerging from.

- Education: American students have tested worse than nation’s like Japan in many school subjects for years, but the divide between the education level of students in the US and those in other developed nations is getting wider. Americans scored especially low in math and science and families struggling to survive are likely to put less emphasis on education than usual.

- Health: Healthcare in the US is a controversial topic right now and regardless of the outcome of the health care debate, the US has a long way to go to be considered a healthy nation compared to other developed nations. Of 30 nation’s recently studied, the US scored 27^th in overall health. Obesity is a major concern, especially for younger generations. An unhealthy population makes it difficult to compete economically with other nations that have better health habits.

- Happiness: Think about it–how many people do you know that are actually happier than they were a couple of years ago? This recession has taken its toll on almost everyone and even though there are signs of recovery, people are still struggling mightily. Among the 30 nations surveyed, the US ranked #11 in life satisfaction. In other words, it could still be worse, but the US was also one of only 4 nations where life satisfaction is getting worse instead of better.

It is likely that the recession will be declared over sometime during the next few months but the pain caused by a sluggish economy will extend into 2010 and possibly beyond. In time, the economy will provide a rising tide for everyone to enjoy again, but the reality is that it could get worse before it gets better.

So instead of covering getting out of debt, these tips will help you to stay out of debt. If debt has not been a problem for you in the past, you probably possess many of these habits already but they should still serve as a good reminder.

- Eliminate Temptation: A wallet full of credit cards is an easy excuse to charge expenses. If payday is still a few days away but you see something you want now, those credit cards will make you feel like you can charge it and pay it off after you get paid. If you have the discipline to pay off the purchase in full at the end of the month, that’s great. But most debt problems begin with a little charge here and a little charge there, and those small charges soon turn from molehills into mountains. To avoid this, select one credit card that charges the lowest interest rate and destroy the rest of your cards.

- Monitor Your Credit: Almost everyone needs a loan from time to time and minimizing your borrowing costs is an essential step in avoiding debt. If you have poor credit, you’re likely to be asked to be higher rates for financing, hindering your ability to stay out of debt. Check your credit at least annually for errors and consider using a well-respected credit-monitoring service to alert you if anything out of the ordinary appears on your credit report.

- Shop with a List: Budgeting is a common theme in conversations about avoiding debt and one of the best ways to stay within your budget is to shop with a list. If you go to the mall, have a plan about what you want to buy and a dollar limit for your shopping trip. Use a list at the grocery store and avoid impulse purchases or buying items just because they’re on sale. Managing expenses is a huge element of the battle against debt.

- Don’t Fall for Marketing Gimmicks: The average American holds four credit cards and 1 in every 7 Americans have more than ten credit cards. Many of these cards end up in your wallet as a result of the offer to save 10% on the items you’re purchasing at a retail store. Credit card companies make millions of dollars on customers who had no intention of opening an account in the first place. A free T-shirt or beach towel is not a good reason to open a new credit card account!

Before refinancing, you should make sure that you feel confident that you’ll be in the home long enough to take advantage of the costs of refinancing–usually at least a few thousand dollars. Homes are not simply cash machines anymore that make refinancing an easy decision, but here are some good reasons to consider refinancing your mortgage loan.

- Lower Monthly Payments and Interest Expenses: One of the most common reasons to consider a refinance is to reduce the borrowing cost on the capital you borrowed from your mortgage lender. If your mortgage carries a 6% interest rate and you’re able to refinance to a 5% rate, you not only reduce your monthly payment but you reduce your overall interest expense for owning the house.

For example, a $200,000 mortgage with an interest rate of 6.3% would result in a total interest expense over the life of the loan of more than $231,000. Reducing the interest rate to 5% on the same loan amount would result in just over $186,000 in interest expenses, a savings of almost $50,000. If reducing overall interest expenses is important to you, you could also pay a slightly higher monthly payment in a 15 year fixed mortgage and reduce your total interest expense by more than $100,000 additional dollars.

- Lock in a Fixed Rate: There are still millions of homeowners with adjustable-rate mortgages that are counting down to substantial rate increases. A great reason to refinance is to lock in a rate that can’t jump higher when you’re not in a position to pay more each month. Many homeowners are in homes that have lost value, reducing equity positions and making refinancing more difficult, but if you’re in an adjustable rate loan and you plan to stay in the house for more than another year or two, refinancing would be a very good idea.

- To Improve Your Credit Position: Sometimes refinancing is necessary to obtain financing on something other than your home. If your debt ratios are too high and lenders are hesitant to make additional financing available to you, refinancing your mortgage loan can lower your monthly payment enough to make your debt-to-income ratio more attractive to lenders. This is something that you should be careful with because reducing one payment to take on another isn’t the right choice for everyone, but it’s worth considering if your options are limited.