5 Last-Minute Ways To Maximize Your Tax Deductions
By Tim Parker

Make Sure Your College Degree is Worth Your Investment
By Financial Education from American Century Investments

With the increasing costs of attending college and the decreasing number of job opportunities in certain careers, students and their families need to make sure their decision doesn't end up putting their economic future in jeopardy. The key to making a college degree worth the investment is settling on a career choice that will provide the wage level you are seeking, and then finding a college with a tuition rate that makes the most financial sense.

For Emily, a top student from a mid-sized Midwestern community, going to college on the East Coast was her dream since middle school. She wanted to study dance in hopes of joining a national ballet company in New York. However, after researching the costs of attending her chosen out-of-state university - along with housing and related expenses - and determining her potential earning power upon graduation, Emily realized that the amount of debt she would owe could take her years to repay and have a weighty affect on her lifestyle.

According to a study by the Georgetown University Center on Education, getting a college degree in any major is worthwhile. Depending on the chosen degree, the lifetime earnings advantage range from just over $1 million for engineering majors to $241,000 for education majors. And while both of these numbers seem impressive to a 17- or 18-year-old high school student, if you factor in the cost of getting that degree, the resulting debt could seriously erode the financial gain.

Finding balance between what you pay for your education and what you'll earn once you graduate

According to the latest statistics from the College Board, the average cost of tuition and fees for a public four-year college is $7,605 per year for in-state students and $11,900 for out-of-state students. Private, nonprofit four-year colleges average $27,293. This doesn't include the cost of books, housing, food or any other expenses. The U.S. Department of Labor Occupational Outlook Handbook provides current data on the education requirements, working conditions and earnings power of hundreds of different career choices each year. This handbook is a valuable resource in understanding employment and wage potential.

After doing her research, Emily learned that she could expect to earn somewhere between $7.28 and $12.22 an hour as a dancer - plus room and board if she was on tour - which was much less than she had hoped. She also learned that the employment outlook for dancers is expected to grow slowly and that competition for jobs is intense. Given that the four-year tuition cost to attend her chosen university was nearing $100,000, she decided to rethink her plan and pursue a degree in school administration at her nearby state university.

As a residual benefit of her research, Emily continued to pursue her love of ballet as an instructor at a local dance studio. This provided her good on-the-job teacher training and enough money to help pay her college expenses and lower the debt she faced upon graduation. 

Identity theft prevention tips for the holiday season

The holidays present a wealth of opportunity for identity thieves. The hectic holiday season can potentially expose our personal information to theft in both high-tech ways like phishing scams, and in traditional ones, such as a stolen wallet or mail theft.

Fortunately, there are proactive steps you can take now, that will help minimize your exposure to identity theft. While these tips are useful year round, they're especially important during the holiday season:

• When holiday shopping, only carry essential documents with you. Only take your driver's license and the credit card or cards you intend to use that day. Do not carry your Social Security card, birth certificate or passport, and consider leaving at home other types of cards that may have identifying information on them, like wholesale club cards or library cards.
  
• The holidays mean plenty of extra trash. Shred everything that contains personal, identifying information before throwing it out.
  
• Keep a close eye on your credit card bills. This is especially important during the holidays, when close attention can help you catch any charges you don't recognize on your statement. An added bonus - you'll also be more aware of how much you're spending and be better prepared to stay within your holiday spending budget.
  
• Monitor your credit. Consider enrolling in a credit monitoring service that will alert you via email to changes in your credit report. This way you will know quickly if someone else has tried to open a new credit account in your name.
  
• When shopping online, only do business with websites that have security measures in place to protect you. Before you provide any personal or payment information, look for a URL that begins with https (not http) and a lock emblem on the page, typically next to the address bar.
  
• Before you surf the "Net" on Cyber Monday, consider changing your account passwords and keep a list of them in a secure place. Passwords and PIN numbers should be a random mix of letters, numbers and special characters, which makes it harder for identity thieves to guess.

Preventing identity theft is important year round, and especially during the holidays. By taking steps to protect yourself, you can help ensure your holidays remain bright - and secure.

The major credit reporting agencies are:

Equifax -- P.O. Box 105873, Atlanta, Ga. 30348-5873 -- Telephone: 1-800-997-2493

Experian Information Solutions (Formerly TRW) -- P.O. Box 949, Allen, Texas, 75013-0949 -- Telephone: 1-800-397-3742

TransUnion -- P.O. Box 390, Springfield, Penn. 19064-0390 -- Telephone: 1-800-916-8800.

If you have been victimized, file a police report. You will need it when disputing charges with various creditors. Also remember to write letters to have erroneous and fraudulent items removed from your credit report.

Unclaimed Money and How to Find it 

There's almost $33 billion in unclaimed money from old payroll checks, utility refunds, trust distributions, stocks, banking or checking accounts, certificates of deposit and the contents of safe deposit boxes, according to estimates by the National Association of Unclaimed Property Administrators.

Property is considered abandoned if there has been no activity on it for more than three years, according to Steve Larson of NAUPA. Such money is turned over to the state of your last known address, and the state holds the money in its coffers until you or your heirs claim it. There is no time limit to claim most abandoned property. In fact, years from now, your great-great grandchildren could claim it.

To find your hidden money, go to http://www.missingmoney.com/, an official database for the NAUPA that has records from most state unclaimed property programs. You can also link to your individual state unclaimed property program. Here are a few more tips.

1. Miscellaneous Money
If you are searching for things such as forgotten apartment security deposits, uncashed overtime checks, lost insurance refunds or abandoned safe deposit boxes, your first stop is the states. The National Association of Unclaimed Property Administrators (NAUPA) has set up a free website at www.unclaimed.org that will link you to the appropriate department in your state that holds the funds.

2. Missing Money
If you would like to search several states at once, you can do so at another free, though commercially run site called www.missingmoney.com. When you first search, you are prompted to enter your home state. Be sure to search again and this time choose "all states and provinces" on the drop down menu. One last thing: it's not actually ALL states. On the site's home page you can view a map of which states are and are not included. If you have lived in states that do not participate in this site, be sure to go back to Unclaimed.org and search those sites individually.

3. Unclaimed Savings Bonds
It's easy for savings bonds to go unclaimed because they take 30 to 40 years to mature. That's why the Treasury Department has set up a simple search website, available HERE, where you can find forgotten bonds by typing in your social security number. Certain bonds are not listed online and require a hand search. You can read about them at the same Treasury link.

4. Federal Tax Refunds
Everybody looks forward to getting an income tax refund check, but if yours didn't arrive, what do you do? The IRS now provides a "Where's my Refund?" feature on its website. You can look up your missing check by entering the amount you are owed, plus your social security number.

5. Lost Life Insurance Policies
The proceeds of lost life insurance policies may turn up in your state search. If not, and you suspect you are the beneficiary of a loved one's lost life insurance policy, you can hire a company called MIB Solutions to search for you. MIB is a private company that houses life insurance application information for much of the industry. It costs $75 to search. Go to www.policylocator.com for more information.

6. Failed Accounts in a Bank
If you didn't collect your money when your bank went under, chances are your account was insured by the Federal Deposit Insurance Corporation (FDIC). The good news, in that case, is that the FDIC is holding your money, and you can find it HERE.

7. Failed Account in a Credit Union
If your money was in a credit union as it failed, visit the National Credit Union Administration (NCUA) HERE to track down your money.

8. Misplaced Pensions
If your company still exists, or has been bought out, you need to approach the company directly. If you are owed a pension from a company that went under, there is a federal agency, the Pension Benefit Guaranty Corporation (PBGC) that safeguards private pensions. You can track down your pension HERE on the PBGC website.

9. Retirement Money
The Employee Benefits Security Administration (EBSA), is the federal agency charged with making sure retirement money is reunited with its rightful owners. The EBSA sometimes even sues to seize retirement money. You can utilize the agency's services by clicking HERE.

10. Lost 401(k)s
Sometimes when people leave a job, they leave behind a 401(k) as well. If the company goes out of business, that only compounds the confusion. Fortunately, companies that administer 401(k) plans have teamed up to create a search engine you can use to track down your 401(k).

By Lisa Bertagnoli | CreditCards.com

What can you do if your credit card information is stolen because some third-party company got hacked?

It's an important question to ask, especially given how frequently credit card data breaches make headlines. The latest: In August, Citi and Bank of America reportedly closed some customers' credit and debit card accounts, respectively, because of data security failures involving retailers. This was just a few months after Citi announced that its database had been hacked, giving thieves access to thousands of Citi cardholder's records and leading to nearly $3 million in losses.

A June report issued by Javelin Strategy & Research scored 23 credit card issuers on their ability to protect customers from identity theft. The top five: Bank of America, Discover, U.S. Bank, USAA and Capital One. The three lowest scores belonged to: State Farm Bank, which had the lowest score of the group; Associated Bank and SunTrust.

The report notes that in 2010, identity theft losses totaled $37 billion. That number will keep growing. "Card-not-present fraud is now higher than card-present fraud," says Philip Blank, managing director, security, risk and fraud for Pleasanton, Calif.-based Javelin.

Credit card holders shouldn't feel powerless if their information gets hacked. "Consumers have shown they want to play an active role in their own protection," Blank says. Indeed, experts outline nine steps consumers can, and should, take to protect themselves now and in the event of a future breach.

1. Make sure there's really been a breach. "When you get the scary communication, make sure it's legitimate," says Steven Weisman, a Boston-based attorney and author of "The Truth About Avoiding Scams." "People get phony security notifications and that can turn into identity theft," he says. His advice: Don't trust email, the U.S. mail or even a phone call. Call your bank yourself to confirm a breach.

2. Find out exactly what information was stolen. "There's a big difference between a credit card and checking account," says Jeremy Miller, director of operations for Kroll's Fraud Solutions, a division of Kroll Inc., a Nashville-based security company. With a credit card account, consumers are responsible (in most states) for only $50 of unauthorized charges. However, most banks will forgive that, particularly if the breach is their fault. "But a checking account is different -- you might get your account cleaned out," Miller says.

3. Find out what your bank will do. In late June, thieves breached CitiGroup's database, accessing 360,000 records and stealing a total of $2.7 million from 3,600 credit card holders. The bank agreed to compensate the cardholders. Other banks may offer a free credit monitoring service that alerts customers about activity over a certain dollar amount. Use them, advises Ed Bellis, CEO of HoneyApps, a Chicago-based data security firm. "The best thing consumers can do is have alerts and triggers on their credit card and bank statements," he says. Such alerts will tip you off to fraudulent activity before it spins into major trouble. Keep in mind that the free alert offer will expire; find out when so you don't end up paying an automatic monthly fee.

4. Cancel your cards. If the bank didn't do so automatically after the breach, do it yourself. Cancel your credit cards and debit cards that were issued by the institution that suffered the breach. Be sure to notify companies that have your card on file for automatic monthly fees, say for website hosting or a newspaper subscription, that your card was cancelled.

5. Reset your passwords, and make them challenging. Weisman says that "123456" and "password" are the most common passwords: Easy for good guys to remember, easy for bad guys to steal with. Avoid choosing easily findable information, such as your birthday or street address. Choose something more obscure, and make the password a mix of letters and numbers. For extra security, create a different password for each account. Just make sure to write them down and store them in a safe place, such as a home lockbox.

6. Monitor credit card statements closely. Bellis says thieves love to test the viability of accounts with a small purchase, say a 99-cent iTunes download. Review every statement -- each purchase, each charge -- to make sure you or a household member with access to your card made that purchase. If you see an unauthorized charge, report it to the card issuer immediately.

7. Pull your credit reports. Federal law requires the three main credit bureaus -- TransUnion, Equifax and Experian -- to give you a free credit report if your account information has been stolen. Review each report carefully for errors or fraudulent activity; if you find any, go to the reporting institution and fix them. If there's a chance your Social Security number has been stolen, put a security freeze on your files. At minimum, issue a fraud alert, suggests Sheila Adkins, spokeswoman for the Council of Better Business Bureaus, Arlington, Va.

8. Beware of email asking for personal, financial or account information. "Legitimate companies you rely on for your online shopping, financial needs and college tests will not request this information -- they already have it," Adkins says. If you want to communicate with an online company, find its website and use that website's contact information.

9. Tighten up your own security. This won't keep your data safe if someone hacks into some other company's database, but it's a smart move anyway. Update your home computer's security. Don't click on links sent by strangers; such links can contain invisible malware that will monitor your computers' keystrokes and thus steal passwords. If you bank online, dedicate a browser to online banking, and use it for nothing else. "You have to have data and information discipline," says Daniel Mohan, president and chief operating officer of ID Watchdog, a Denver-based data monitoring, detection and resolution firm.

"Information sits out there in those databases," Mohan warns. "Hackers know it and keep digging for gold."

5 Things you need to know about life insurance
by Kilinger's Personal Finance Magazine

Social Security tax lowered 2 percent

401k(s)

1. A 401(k) offers three compelling benefits.

A 401(k) represents a way to reduce your taxable income since contributions come out of your pay before taxes are withheld; many plans include a matching contribution from your employer; and the money you save benefits from tax-deferred growth, which lets your money compound more quickly than it would if it were taxed yearly.

2. The federal limit on annual pre-tax 401(k) contributions is on the rise.

In 2010, the maximum contribution is $16,500, or $22,000 if you're 50 or older.

3. Matching contributions are "free money."

If you can't afford to max out your 401(k), contribute at least enough to get the matching contribution, a.k.a.. free money. The typical match is 50 cents on the dollar up to 6% of your salary.

4. Taking money out of a 401(k) before retirement is expensive.

Loans must be repaid with after-tax money plus interest. And, with few exceptions, if you withdraw money before age 59-1/2 you must pay income taxes plus a 10% penalty. What's more, lost time for compounding will substantially shrink your nest egg.

5. When setting up your 401(k) investments, figure out what your mix of stocks and bonds should be.

Two factors influence this decision: your time horizon until retirement and your risk tolerance.

6. You're limited to the investments your employer chooses for your 401(k) plan.

If you don't like many of the selections, keep your choices simple by investing, for example, in a broad-based index fund. Don't boycott the plan altogether. If you do, you lose out on tax-advantaged compounding and a matching contribution.

7. When you change jobs, you'll often have three choices: leave your 401(k) money where it is, roll it into an IRA or another 401(k), or cash out.

If your account balance is less than $5,000, your employer may insist you take it out of the plan, but cashing out is like shooting yourself in the foot financially. Even small amounts can grow large with time and tax-deferred compounding. You'd be better off rolling the money into another retirement account.

8. When you do roll money into an IRA or 401(k), make it a "trustee-to-trustee" transfer.

That is, have the check made out to the custodian of your new account, not you. Otherwise, you risk possible penalties if you fail to execute the rollover properly.

9. IRS rule 72(t) provides one way to take early 401(k) withdrawals without penalty.

You must take a fixed amount of money out for five years or until you reach 59-1/2, whichever is longer. The annual withdrawal amount is based on your life expectancy.

10. Some employers let you leave money in your 401(k) account when you retire.

Find out what rules, if any, the employer imposes on when and how you must start taking distributions. If there are none, you may leave the money untouched until you're 70-1/2. That's the age when Uncle Sam insists all retirees begin withdrawing money from traditional IRAs and 401(k)s.

Ten Tips For Homeowners Insurance Shoppers
By Mitch Swanda

Owning a home has long been a cornerstone of the American dream. But buying a home also means you'll need to purchase homeowners insurance. Homeowners insurance is an important aspect of owning a home. Without a good homeowners insurance policy, any expenses necessary to repair damage done to the home or property will be left as the responsibility of the homeowner.

Insurance premiums are determined by a number of factors, many of which are under your control. Making a few smart decisions will give you the coverage you need and could save you hundreds of dollars each year.

Consider the following tips, which can go a long way toward protecting your home and your peace of mind.

Get the facts. When you find a house, gather as much information as you can to determine its potential insurance costs. The age of electrical, plumbing and other systems within the home, as well as construction materials used to build the house, can affect your premiums.

Be aware of geography. Regardless of the homebuilding materials used, where you live can have a significant effect on your insurance premiums and coverage availability. Homeowners likely will pay more for insurance in areas flood zone areas.

Know how much is enough. Studies from construction-cost estimator Marshall & Swift/Boeckh suggest that more than 60 percent of homeowners in the United States are underinsured, primarily because they don't insure their homes to "replacement value." Replacement value is what it would cost today to rebuild a home from the foundation up. Replacement value can differ substantially from market value, which represents what a willing buyer would pay for a home.

Since the cost of building materials has risen in recent years, it may cost more than market value to rebuild an older home. And if you've remodeled or renovated your house, your insurance coverage should be updated to reflect the home's likely increase in replacement cost. Of course, increasing your insurance coverage will raise your monthly premiums, but it could save thousands of dollars in the long run if a major claim is necessary.

Extended coverage. While a standard homeowners policy will cover the structure of your home and some of your personal belongings, it may not provide full coverage for high-value possessions, such as coin collections and jewelry. If you have specific items for which the value exceeds your policy limits, you may elect to add a "Extended Coverage" to your coverage.

Protect your financial assets. Repairing or replacing your property is only part of the homeowners insurance equation. Your policy can go much farther to protect your financial well-being through liability coverage.

As an example, if a visitor to your home falls and is seriously injured, the visitor's insurance company could hold you responsible for thousands of dollars in medical bills.. Increased liability coverage is especially important for homeowners with potential safety hazards, such as a swimming pool.

Consider your comfort level. As you establish your homeowners insurance coverage, you're able to choose your deductible level, which is the amount you will pay out of your pocket when you have a claim. Opting for a higher deductible, such as $1,000 instead of $500, can lower your monthly premiums significantly. Conversely, you may be more comfortable paying a higher premium each month for greater peace of mind should disaster strike. The choice is yours to make. Your insurance company can provide a variety of premium/deductible scenarios that will best suit your needs.

Save money through safety. You may be able to save on insurance premiums by looking into safety and prevention features that often merit a discount. Consider purchasing monitored security alarms, and take precautions such as installing deadbolt locks, both of which can ward away thieves and prevent a costly (not to mention frightening) break-in. Easily accessible fire extinguishers are another good addition to the home, reducing the risk of severe flame and smoke damage.

Embrace preventive maintenance. Remember that a homeowners insurance policy is designed to repair or replace your property in the event of an unexpected major loss, and individuals who repeatedly file claims for minor problems may face higher premiums and could jeopardize their insurability. Conducting preventive maintenance on your home and repairing small problems quickly can help avert more substantial losses down the road. A number of providers offer home warranty coverages more suitable for maintenance needs involving appliances, plumbing or the like.

Keep your records current. If the unthinkable should occur and you have to file a major insurance claim, having up-to-date records of your home's contents and structural condition can be invaluable during the claims process. First, if you've made any significant renovations to the home itself after moving in, be sure to inform your insurance company, since it may affect the replacement cost of the home.

Next, take an inventory of your belongings, including how much you paid for each item and its current value. Make a record of your possessions, with pictures or a video camera, and store the records outside of your home so they are less likely to be destroyed in a disaster. The record can help you determine your coverage needs, and it also can serve as your proof of ownership if a loss occurs, helping the insurance company to estimate your payment.

Pick a good partner. Doing business with an insurance company you trust is important. Before purchasing insurance, review the company's complaints record and rankings on customer satisfaction and financial security. Industry analyst companies such as J.D. Power or A.M. Best Company are unbiased sources of information. Or ask for a referral from friends and family.

Re-examine Your Banking Needs

Check your existing bank account and see if it's still right for you. Because of the passage of the credit card act and financial reform bill, bank fee revenues have taken a hit. The credit card act alone will cost banks an estimated $50 billion in revenue.

Banks have been trying to make up for those lost revenues by increasing other fees. Some are eliminating free checking, or imposing several requirements -- including a higher minimum balance, or direct deposit -- in order to keep the account fee-free.

Chase Bank won't charge you a monthly fee on their basic checking account if you make five debit transactions or have one direct deposit of at least $500 a month. If you don't meet those requirements, you'll be assessed a $6-a-month fee.

Bank of America has an e-checking account and customers can avoid the monthly fee if they conduct all their transactions online. Their MyAccess checking account has a monthly fee of $8.95 unless you make direct deposits or maintain a balance of $1,500.

Here's what you should do. First, go to your bank and ask them to tell you all the fees that are associated with your account. Second, determine what services you need and whether they're worth the fee. Go to bankrate.com to compare fees and switch balances if your current bank is no longer right for you.

Commonly Overlooked Tax Write-Offs

Tax deductions, or write-offs, could mean the difference between a healthy refund and paying money to the government. That’s why it’s important to be aware of any available deductions.

1. Charitable Donations
Donations don’t have to be cash in order to get a tax break. As long as the charity gives you a receipt, you can claim donated items, like clothing or household goods. You can also deduct donations you make by check or credit card.

2. Mortgage Points
Whether you pay points on an existing mortgage or you refinanced your loan, you can deduct a portion of the amount you pay each month for mortgage points. You can continue to deduct the points on an annual basis, according to IRS policy, until you have deducted the full amount of the points, with each point equal to 1 percent of the loan value.

3. Education Costs
There are valuable credits, which are better than deductions because they offset your tax liability on a dollar-for-dollar basis, in the education agenda. One possibility is the American Opportunity Credit. The IRS also offers an above-the-line deduction up to $4,000 for individuals who make less than $65,000 annually.

4. Health Insurance Premiums
With insurance companies clamping down on what they cover, the IRS allows taxpayers to itemize any expenses on health care as long as the total exceeds 7.5 percent of adjusted gross income. People often think they haven’t spent this much on healthcare, but they typically forget to factor in the amount they pay out of pocket for health insurance premiums.

5. Green Credits
Do you have a hybrid car? Have you made energy efficient improvements to your house? You may qualify for a dollar-for-dollar write off up to $1,500. Expenses you can claim include energy efficient roofs, water heaters, skylights, or insulation.

6. Investment Costs
Often, people think about investments and adding the amount of interest they earn to their income for the year. However, you can deduct investment expenses, such as brokerage fees.

7. Retirement Credit
Younger individuals have the opportunity to reduce their tax bill by setting a portion of their income into retirement plans. Depending on the plan you pick, you don’t have to pay taxes on the part you invest.

8. Casualty Benefits
People living in a disaster area, as declared by the President, often get tax benefits to help compensate for losses occurring because of calamity. For example, people who lost homes and property due to Hurricane Katrina were able to write off some of their tax bill due to the tragedy.

9. Sales Tax
Federal taxes aren’t the only place where you can get deductions. Your state may offer certain deductions separate from Federal ones. In some areas, you may be able to deduct any sales tax you paid from your tax bill.

10. Unpaid Debt
If you made a personal loan to a friend or relative and never saw a penny, you may be able to deduct part of the loan from your taxes.

More OVERLOOKED TAX WRITE OFFS can be found in Faye Miran's Newsletter 1st QTR 2011- mailed out this week Feb 14, 2011. For a PDF copy of the newsletter, email request to faye@trustedmortgageloans.com

*Check with a tax professional each year to see what new deductions or changes the IRS has made before you file your return.

Investing Basics
Four Keys to Financial Independence

Is there a shortcut to financial independence? Anyone can accumulate wealth, but it requires time, discipline and determination.

Examine who exactly is going to take care of you financially in the future. Think about all the people you can possibly rely on, and then ask yourself if you are absolutely sure you could depend on them.

The answer to "Who can you count on?" is "you." It doesn't matter what happens to social security or how long someone lives, if a person develops a plan and is absolutely determined to stick to that plan over time, then he or she can become financially independent.

Here are four principles to consider to accumulate wealth.

Start investing as early a possible.

The earlier you begin investing, the greater the likelihood of you accumulating wealth. Why? It takes significantly less money to accomplish what you want when you have more time working for you. Even if you can only invest a small amount, that money can grow over time.

Reach for the highest rate of return you believe you can safely receive on your money over time.

When you look for a place to invest your money, look for the highest rate of return you can safely achieve with your investment. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Save on a regular basis.

An easy way to accumulate wealth is to save and invest on a regular basis. The more frequently you save, the faster your balance will grow. Investing on a regular basis also helps smooth out the highs and lows associated with a fluctuating market.

Begin investing with the largest possible sum you can afford.

If you are serious about accumulating wealth, consider your first investment among the most important. By starting with a large initial investment, you will have more money working for you over a longer period of time.

Often times, people pursue all the trappings of the good life before they have really established themselves. However, delaying gratification now in order to achieve financial independence in the future has many advantages. Think about these questions:

• If you have to be poor, would you rather be poor now or at retirement?
• Do you want to try to control your own destiny rather than be controlled by circumstances?
• Can you commit yourself to putting order into your life so you can accomplish your goals?

You can become financially independent - but you need determination to achieve your goals.

 Financial Tip: The Rule of 72

You can easily see how the rate of return can impact your investments by applying the "Rule of 72." This is a simplified way to show how long your money takes to double at a fixed annual interest rate.

Dividing 72 by the following percentages shows the time needed:

If you want to know how long it will take to double your money, take the number 72 and divide that number by the interest rate you are getting. So if you deposit $3,000 into an account with a 2% interest rate, 72 ÷ 2 is 36. So in 36 years you will have $6,000.

If you have an interest rate of 12%, you will make $6,000 in six years. The higher the interest, the quicker it is.

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Ready to Retire? Know Your Numbers!

No matter what phase of life you're in, keeping track of certain numbers can be crucial to achieving financial independence. For starters, get to know your assets and your liabilities. This will give you an idea of your net worth.

Calculating Your Net Worth
When you add up all of your assets (what you own), then subtract all of your liabilities (what you owe), the resulting number will give you an idea of your current net worth. Here's what each of these categories includes:

Assets - Your home is typically your biggest asset, but this category also includes cars, vacation properties, rental homes, and any valuable personal items like jewelry, antiques and artwork. Assets also include all of your investments (IRA, 401(k), stocks/equities and/or bonds), your savings accounts and any cash you have on hand.

Even though you may have a mortgage on your home, you probably own some equity in the home. A quick way to determine how much equity you have in your home is to estimate a realistic sales price and then subtract the amount of the mortgage from that price.

Liabilities - This number includes all your debt, such as your home mortgage, a second mortgage or home equity line of credit. It also includes any credit card debt you've incurred, student loans, college tuition for your children and any other personal loans you might have.

Your current net worth will change over time. Calculating it gives you a benchmark to help determine your financial well-being.

Beyond Your Net Worth: Planning for Retirement
As you plan for retirement take a close look at your balance sheet - specifically. your income and expenses.

Income - Your income today includes your current salary and wages, and any other source of money you receive such as a pension or annuity, alimony, child support, investment income and/or the sale from any investments such as stocks or bonds. As you plan for retirement, you'll want to estimate any future income. Ask yourself how long into the future you plan to work and what your income might be in your later years? Consider what your Social Security income is likely to be for both you and your spouse

While it may be tempting to include anticipated inheritances in your calculation, the safest thing to do is base your estimates on only what you can control. Since the future of Social Security is uncertain, many financial advisors will go so far as to make two recommendations - one that includes Social Security and one that doesn't.

Expenses - Unfortunately there are many unknowns when it comes to your expenses in retirement. The biggest are how long you'll live and if you'll remain healthy. But that doesn't mean you should avoid planning for this stage of life. Ask yourself how you hope to live in retirement:

• Do you intend to remain in your current home or will you downsize?
• Do you wish to maintain a similar lifestyle?
• Do you have plans to travel extensively?
• Are you going to provide financial support to your kids or grandchildren?
• Will you make changes to your charitable giving?

Thinking about how your income and your expenses will change in the coming years can help you get a start on a successful retirement plan.

Better Credit Score Saves Money
Can You Hit a Perfect Credit Score?

Credit scores are statistical calculations used to determine a person's creditworthiness. The most common credit score is the FICO score, named after software developer Fair Isaac and Corporation. FICO scores are typically provided to lenders by the three major credit reporting agencies -- Experian, TransUnion and Equifax -- to help lenders assess their risk in loaning money to individuals.

A person's credit score, which may differ by reporting agency, affects both his and her ability to qualify for different types of credit and to receive favorable interest rates. Based on national averages in December 2010, a homeowner applying for a $200,000, 30-year fixed mortgage with a credit score between 760 and 850, for example, may receive a 4.353% APR, resulting in monthly payments of $996. The same loan for a person with a lower credit score between 620 and 639 would result in a 5.942% APR, or $1,192 per month. Over the life of the loan, the person with the higher credit score would save approximately $70,000 in interest. While many people strive to achieve the highest credit score possible, few will earn that elusive perfect score -- the 850.

Keeping Score

Credit scores range from 300 to 850. According to MyFICO.com, approximately 13% of FICO credit scores exceed 800, and only 1% of consumers achieve a perfect score of 850. In general, the higher the score, the lower the risk to any potential lenders. Five factors are included and weighted in calculating a person's credit score:

1. 35 percent -- Payment history

2. 30 percent -- Credit utilization

3. 15 percent -- Length of credit history

4. 10 percent -- New credit

5. 10 percent -- Types of credit used

The One Percent

While many people have excellent credit scores, what are 1% of Americans doing differently than the other 99%? Since a perfect score is so difficult to earn, those who do achieve it are often actively and consciously trying to do so. Whether you are gunning for a spot in the top or simply trying to improve your credit rating score, these tips can help.

• Pay bills on time -- Even one late payment can hugely impact a person's credit score. Paying every bill on time -- from credit cards, mortgages and medical bills -- is important to maintaining or achieving a high score. A perfect credit score will typically show no late payments in the last seven years.

• Use only a fraction of your available credit -- In general, the less credit you are using, the better. The ideal number to aim for is to use only 10-20% or less of your available credit each month. Thirty-percent of your credit score is based on credit use -- the ratio of your debt to your credit limit. The higher the number, the lower the credit score. People with perfect scores usually have a low utilization rate of less than 10%.

• Review your credit report -- Looking at your own credit report will not negatively impact your credit score. Consumers are entitled to at least one free credit report each year from one of the three major credit bureaus, and should review the report for any errors such as incorrect credit limits or delinquencies.

• Manage your credit card quiver -- Too many credit cards can make you appear desperate for credit. As such, it is better to have only a few credit cards, with the bulk of spending placed on one card since you can be penalized for having multiple large balances. Many issuers now automatically close inactive credit cards, so be sure to make small charges every few months on the lesser-used card(s) to keep the account open; otherwise, request that the account be closed.

• Diversify your credit -- Having multiple types of credit is a plus when it comes to your credit score. A consumer who has a variety of debt types may be considered financially responsible (assuming the payments are being made on time). Credit cards, mortgages, automobile loans and retail accounts can increase your credit score -- to a point. Too many accounts may reduce your score. A good number to aim for is six: this is the number of accounts that perfect credit holders typically have.

• Wait for it -- It takes time to build credit and to get a perfect credit score. Ten years of positive account history is generally needed to score above 800; people with a perfect score opened their first account 20 years earlier.

Is 850 Worth the Effort?

Is getting a perfect credit score worth the effort? In general, no. Consumers with perfect scores probably will not have access to better loan rates than those with scores in the upper 700s to low 800s. In fact, when it comes to mortgage rates, the best APR rates are awarded to those in the 760 to 850 range, so there may be little financial reward for reaching 850. That said, like going for an Olympic Gold medal, or earning a 2400 on the SATs -- some people simply want that perfect score.

The Bottom Line

Can you score a perfect 850? For most people, the answer is probably not. Those who do earn an 850 are committed to the cause, actively evaluating and controlling all aspects of their finances. A credit score in the high 700s is likely to land consumers the same advantages as a perfect score, but 1% of Americans will succeed in reaching the perfect 850.

Skyrocketing Problem of Student Debt

Average cost of at a private four-year college is more than $39,000 per year, according to The College Board.* That's an increase of 40 percent in the past 10 years. As a result, it's no wonder more and more students are graduating from college buried under mountains of debt.

Student debt is taking a serious toll on college graduates. Many students entering college in recent years applied for and received loans from a variety of sources with no long-term plan on how to pay them back. In 2008, more than two-thirds of students graduating from four-year colleges and universities had loans. These loans leave graduates with an average debt of $23,200. Ten percent had student loan debt of $40,000 or more.** Those loans are now coming due with many students scratching their head as to how they will pay.

Given the current economy, many are graduating without immediate job prospects, so the weight of their student loans is a serious burden. In 2009, a record number of recent grads moved back home with Mom and Dad in order to make ends meet and many found themselves working two jobs.

If you have a student heading to college, you can hopefully avoid a similar scenario. The most important step you can take is to start saving early, ideally as soon as you start a family. Consider investing a lump sum amount when your child is born and not touching it until college. That money - invested at an annual rate of return of 5 percent - could more than double in value when your child reaches college age. Another approach is to start with a smaller initial investment, then add to it on a regular basis. Remember, there are no guarantees that your investment may grow and you could lose money over time.

Once you determine how much you can invest and how often you can add to that investment, only then will you be better prepared to choose an investment plan. There are many tax-advantaged investment plans for college, including state-sponsored 529 Plans.

What if your student is heading to college soon and you find yourself without the savings on hand to cover tuition, what do you do? There are a variety of resources to turn to for guidance including The College Board. Also, check with your student's school and ask about grants and scholarships. These provide merit based funding without the obligation of paying it back provided your student meets certain expectations - such as successfully completing a course of study. These dollars earned can help ease the financial burden of college and avoid the need to turn to student loans.

Tips for high school seniors:

Have a student heading to college soon? Sit down as a family to address a variety of issues including:

• Take your education seriously - Solid grades -and high standardized test scores - can mean a wider choice of schools (and a range of tuition costs and possible funding sources) for your student.
• Public or private - A public four-year in-state school will likely cost about half of the expense of a private four-year college.
• Junior college vs. four-year school - Attending a local two-year school, and later transferring to a four-year college, can lead to considerable savings.
• Apply early - High school seniors should start early applying for scholarships and admission to low cost schools. Begin by completing the free application for student aid (FAFSA). This should be done as soon as possible after January 1 of the year your child will be attending college.

Tips for college graduates:

Are you or your recently graduated student dealing with significant student loans? The Project on Student Debt suggests the following tips for recent graduates:

• Know your loans - Know the status of your loans, including what the balance is and who controls your loans.
• Know your grace period - Understand how long you have after leaving school before your first payment is due.
• Pick the right payment option - If your existing payment terms are difficult, talk with your lender about alternative repayment plans and/or deferments.
• Stay in touch with your lender - Ignoring your student loans has serious consequences.
• Pay off the most expensive loans first - Focus on paying down the loan that has the highest interest rate.
• Consider consolidating - Combining multiple loans could mean a single monthly payment with one fixed interest rate.
• Loan forgiveness - If you work in certain fields, there's a chance your loan may be forgiven after a certain period of time in which you've made qualifying payments.

*The College Board is a not-for-profit membership association whose mission is to connect students to college success and opportunity.
**Statistics gathered by Project on Student Debt

Your Energy Bill Breakdown

Energy doesn't come cheap.

According to Maria Vargas, spokesperson for EnergyStar, a division of the Environmental Protection Agency (EPA), energy bills can differ depending on the size and location on your home, but the average household spends $2,200 a year. The good news is these costs can be cut dramatically.

Energy Star, a program started in 1992 to help reduce greenhouse gas emissions and lower energy costs for consumers, offers suggestions for how to reduce your annual electric costs by a third. In other words, you can save about $700 a year on electricity. Last year, Vargas points out, Americans saved about $17 billion on energy bills and reduced green house gas emissions by nearly the equivalent of 30 million cars.

Using data compiled by EnergyStar, MainStreet breaks down your energy bill and identifies the biggest wasters to help you save money (and reduce greenhouse gas emissions!) this winter.

HVAC Systems

"If you really want to cut back on your energy use, you need to focus on heating and cooling your home," Vargas says. That's because these two categories combined account for 46% of your overall electric bill. While most homeowners can't afford a complete overhaul of their homes' heating, ventilating and air-conditioning (HVAC) systems, some changes can increase energy efficiency and include:

• Installing a programmable thermostat, which lets you set temperatures for specific times of day. These devices can save about $180 each year on energy costs.

• Change air filters regularly. The harder your HVAC unit has to work, the more energy it eats away. Filters should really be changed out monthly, especially during the summer and winter months when the HVAC unit has a heavy workload. If you find this tedious, EnergyStar suggests changing filters a minimum of every three months.

• Seal your heating and cooling ducts, especially those running through the attic, crawlspace, unheated basement or garage, as that improves the efficiency of your HVAC unit by as much as 20%.

Water Heater

According to EnergyStar, your water heating system accounts for 14% of your energy bill. Monetarily speaking, the average household spends $400-$600 per year on water heating. To reduce this expense, lower standby losses, such as heat that escapes the water heater and seeps into the surrounding basement area, as well as the amount of hot water you use in your home.

When set too high, or at 140 degrees Fahrenheit, your water heater can waste anywhere from $36 to $61 annually in standby heat losses, and more than $400 thanks to overall consumption. Lower that expense by bringing the heater's thermostat to 120 degrees Fahrenheit or below.

Lights Out

In EnergyStar's breakdown, lighting accounts for 12% of bill, but it also represents one of the easiest fixes. In fact, by simply replacing five of your standard incandescent light bulbs with compact fluorescent light bulbs, you can save $70 a year.

Hot Stuff

Appliances only account for 13% of electric bills, so naturally, most people don't upgrade to an energy efficient toaster. Still, if you are committed to reducing the amount of energy you use, you need to focus on larger appliances that use a heat coil, such as a refrigerator or washer and dryer. To do that, make sure that your fridge's filters are cleaned regularly, and consider using only cold water to wash laundry loads. That can save $30 to $40 each year.

But don't be too stingy, Vargas says. Replacing a major appliance, like a refrigerator that is 10 to 15 years old, may help you save in the long term as new technology is constantly subject to federal standards that adjust every year.

Energy Vampires

Any appliance or device that sucks up energy when it's plugged in, despite being turned off, is one of these money-draining culprits. According to EnergyStar, this includes most electronic devices, especially those that use some sort of display, like a television, laptop or DVD player.

Slaying energy vampires won't lower your energy bill significantly — electronics only account for about 4% of the total cost — but it's important to keep them in mind, as they consume 75% of the electricity used to power home electronics and appliances.

Powering Down

The best way to eliminate this phantom menace is not only to turn energy vampires off, but unplug them. This may be easier said than done, but unplugging a laptop in between uses isn't particularly problematic. However, doing so with your television would require you to wait for the cable to reboot every time you wanted to watch a program.

As an alternative, EnergyStar suggests plugging your television and/or DVD player into a power strip and then turning that off when your television is in stand-by mode. Put your computers on sleep mode, or manually turn off the monitor inbetween visits, as opposed to utilizing a screen saver, which, contrary to popular belief, does not reduce energy output. Also, make sure you unplug a battery charger of adapter as it continues to draw energy even when the product no longer needs it.

Put Stand By on Stand by

The final 11% of your electric bill comprises devices that don't exactly fit into any particular category. This includes dehumidifiers, external power adapters and video game consoles, which are all considered energy vampires.

An Xbox 360, for example, if left on the draws approximately 1,000 kWh/yr. The PS3 draws 1,300 kWh/yr. According to EnergyStar, these values drop dramatically when users routinely turn the device off after use, lowering annual energy levels down to 110 and 120 kWh/yr, respectively. Since it costs about 12 cents per kWh/yr in the average residential home in the U.S., it costs $120 if to leave your Xbox plugged in for the entire year.

To lower these costs, unplug the devices when you are not playing and only resort to stand-by mode as, well, a stand-by. Energy Star estimates that stand-by power accounts for more than 100 billion kilowatt hours (kWh) of annual U.S. electricity consumption, and $11 billion in annual energy costs.

It's Not Too Late to Save:
Holding Down Holiday Expenses

It happens to the best of us. The holiday season sweeps us up and with it we spread joy to the world. Part of the delight often includes buying gifts, celebration parties and family dinners. It's fun while it lasts. But when January arrives, the joy can turn to anguish when the credit card statements come in.

We spent too much. How could it be?

It's easy to get caught up in the holiday hype and over-extend ourselves. But it's just as easy to have a very happy and memorable holiday season without the needless expense. Here are a few creative ways to cut expenses without cutting out the holiday cheer.

Start with a Plan: Make a plan for all your holiday expenses and then stick to it. The better your plan, the less likely you'll be to get caught up in the "more is better" cycle. If your budget is tighter than its been in the past, why not talk to your children and explain why this holiday season might be different? This is an opportunity to share how living within your means is required to achieve financial independence.

Draw Names: Do you have to buy for every niece, nephew, cousin and in-law? Drawing names is a great way to limit your expense.

Think Outside the Gift Box: Instead of giving material gifts, why not make a donation to a family member's favorite charity? After making the donation, give a card to the intended recipient letting them know of your support.

Also, consider volunteering at a soup kitchen, food pantry or another charity as a gift from the family. This gift has the potential to make a huge impact on others in need and could quite possibly start a whole new family tradition.

Be Creative: Food gifts can be inexpensive and easy. Nicely wrapped homemade cookies, popcorn balls and candies make a tasty holiday gift.

What about your hidden talents? Are you handy around the house? Give a gift certificate for "handyman services." Know an elderly person with physical limitations? Give a card with a note offering to clean their house. Sharing your talent can be a wonderful gift.

Pay Cash: Nothing curbs impulse buying like a wallet without credit cards. By adopting a cash-only policy there's no risk of spending more than what you have in your wallet.

With a little planning before you start shopping, you won't have to spend a fortune and deal with the aftermath of an expensive holiday.

Home-Improvement Tax Credits
by Mara Lemos Stein

The main thing: Act fast.

You may be looking for ways to cut your energy bills. The good news is that the U.S. offers tax credits for many energy-saving home improvements. The bad news: You have to act fast -- some of those credits are expiring on Dec. 31.

What improvements are covered by the expiring credits?

Homeowners can get a tax credit for installing certain wood or pellet stoves; energy-efficient furnaces, water heaters and air-conditioning systems; insulated roofs, windows and doors; and wall and ceiling insulation. The tax credit covers 30% of the purchase costs, up to $1,500. (For a full list, check the Energy Star website at www.energystar.gov.)

Is the installation cost covered?

The cost of putting in heating and air-conditioning systems, water heaters and biomass stoves is, but installing new windows, doors, roofs and insulation isn't.

Can I use the tax credits for improvements in a vacation home?

Sorry, no. The improvements qualify for an existing home that is your primary residence, even if it is a houseboat or mobile home. But rentals, vacation homes and new construction aren't eligible.

With time short, what improvements make the most sense?

Upgrading your heating and cooling, which can be as much as 50% of the average home's energy bill. If your furnace or boiler is more than 10 years old, this may be the ideal time to replace it. All improvements must be in place and equipment in service by Dec. 31 to qualify for the tax credits.

What improvements can be done relatively cheaply?

Adding insulation. If you choose to insulate just the area where your family spends most of their waking hours, for instance, the cost will be low but your family will be much more comfortable. And often insulation is a do-it-yourself project, so you save on labor costs.

Am I going to have trouble finding a contractor on short notice?

Not only are contractors available, but many of them are using the expiring tax credits as a marketing tool, according to the National Association of the Remodeling Industry. You can find qualified contractors at the association's website, www.nari.org. Many of the contractors have the equipment and materials ready to go, and you'll be helping workers in an industry badly hit by the recession.

Will a new dishwasher get me some tax credits?

Appliances don't qualify, but appliances carrying the Energy Star seal will help reduce your energy bill. Also, many states and local utilities are offering direct rebates -- no need to wait for tax returns -- on some appliances. Check www.energysavers.gov to see details of programs in your state.

Might the program be reinstated for future tax years?

Legislation has been introduced to extend the tax credits, but experts say it is unlikely Congress will pass it before the end of the year.

Will I be able to handle this on my tax return without having to call on an expert?

The form is simple. Just make sure you save the manufacturer's certificate that states the equipment or service is eligible under the program. If not available with the product, the certificates can also be found on the websites of the manufacturers.

I'm subject to the alternative minimum tax. Will I still be able to qualify for this tax credit?

These credits can be used to offset the AMT, says Gary R. Price, tax partner with Sensiba San Filippo LLP, an accounting firm in the San Francisco Bay area.

Are there any tax incentives for rooftop solar-power systems?

Yes, and they are far more generous. Federal tax credits for solar-energy, small residential wind turbines and geothermal pump systems cover 30% of all costs -- installation included -- with no upper limit. These are good on both primary homes and vacation homes, new construction or otherwise. And they don't expire until 2016.

The Gift of Your Presence

5 Ways to Minimize Your Credit Card Pain

Confused by the CARD Act? Here are the top five ways to maximize its protections and minimize your credit card pain:


1. Understand the consequences of "opting out" of the rate increase.

Under the law, if you opt out of the changes in terms and close the card, the card company can require you to pay off the balance in five years, or they can double the previous minimum monthly payment. If you can't handle those consequences, be prepared to roll the debt over to another card -- just watch out for balance-transfer fees. Also understand that if you close the card, it may affect your credit score because it reduces the overall amount of credit you have available.


2. Know the four conditions that will cause an interest-rate hike on your existing balance.

They're pretty simple. The card company can boost the rate with no advance notice if: a) you have a variable interest rate tied to an index and the index rises; b) you opened the card with a teaser rate and it expires (which would be stated in your original agreement); c) you're in a workout agreement and you haven't made your payments as agreed; and d) you're more than 60 days late with a payment. (Late payers can earn back their previous rate if they make minimum payments on time for six months.) You won't get 45 days notice on any of these provisions.


3. Pay more than the minimum -- especially if you have a card with balances at different rates.

Let's say you opened a card that offered zero percent interest for six months, and continued charging on the card after the teaser expired and the rate rose to 14 percent. If you only make the minimum payment, the card company can apply that amount to the zero percent portion of your balance -- while the portion at 14 percent continues to snowball. The law does require that any amount you pay over the minimum be applied to the balance with the highest annual percentage rate.


4. Pay attention to the new box that shows how long it will take to pay off your debt if you only make the minimum payment -- it may shock you into action.

The CARD Act requires issuers to display that pay-off information on your bill. In 2009, nearly one in three Americans reported that they had only paid the minimum on their credit card bill sometime in the previous 12 months, according to a report by the FINRA Investor Education Foundation. The figure was 41 percent among cardholders age 18 to 29.

"A lot of people think the math is wrong. They don't realize it will take two decades to pay (the balance) off if they only pay the minimum". "That box was a clear win out of the CARD Act."


5. If you push the limit, be prepared for rejection.

The new law bans card companies from assessing a fee for going over your credit limit unless you specifically opt-in; if you don't, the card will be rejected by the vendor. If you're someone who uses a personal card for business, the opt-in may be worth the fee. "We've actually surveyed on this, and apparently embarrassment has a price," says Ulzheimer. About half of consumers "do not want to have the waiter come back to the table and say, 'I'm sorry your card has been declined.'"


Finally, read every notice that comes in the mail from your card company, even if it looks like junk.  Credit card companies send standalone letters stamped "notification of important changes to your account."  It's important to read them.

Your home as a great tax write off
by Faye Miran, Guest Column - Ventura Star

Your Card Has Been Declined, Just as You Wanted
By Ron Lieber
 
Coming soon: credit and debit cards that cut you off when you disregard your own monthly budget.

In the next couple of days, MasterCard is expected to announce that Citigroup will be the first company in the United States to issue MasterCards with special features intended to protect consumers not only from thieves but also from themselves.

The service, called inControl and already in use by some Barclaycard holders in Britain, is a sort of financial chastity belt that offers the potential to prevent a variety of budget sins and other money traps.

Worried about your restaurant habit? If your bank adopts MasterCard’s service, you could tell it to have your debit or credit card reject any restaurant purchase above whatever monthly cap you set.

Sick of your credit card number falling into the hands of thieves? Tell your card issuer to never allow charges originating from the fraud-prone countries that end in “stan” or “ia.” (Don’t worry: You can instruct your bank to make an exception for Australia during the few weeks that you’ll be honeymooning in Sydney.)

Or, if you don’t want to get too fancy, you could simply make sure your bank never lets you spend more than you have in your checking account by having your credit card shut off once you’ve reached the limit you set that corresponds to your monthly disposable income.

At the moment, Visa doesn’t offer anything quite like this, though the company and the banks that issue its cards do offer alerts when you’ve reached certain spending thresholds. Discover and American Express don’t have any such features on their consumer cards either.

Citi customers will have to wait a bit to use the new MasterCard service. And when introduction begins in a few months, it will include only alerts for credit card customers; letting people set their own spending limits will presumably come later. MasterCard says other banks will add inControl as well, though it won’t say which ones just yet.

Still, this is the sort of service that makes you slap your forehead and wonder why it didn’t exist before. It has the potential to solve the core problem with budgeting: it’s easy to make a spreadsheet and track what you spend, but it’s awfully hard to stick to the plan.

Changing behavior, in the end, is the biggest challenge. And now MasterCard seems to have made it possible for your bank to become a partner in your self-improvement instead of an enabler of your misdeeds.

The inControl system, at its most basic level, is intended to let people do two things: be warned about charges on their cards and block the wrong kinds of transactions.

Alerts can be sent when a purchase is made with a credit or debit card in particular geographical areas or at certain dollar levels. Also, if you use your card only for in-person purchases and never use it online or for recurring charges, you could arrange for an alert every time your card is used when you’re not present at the merchant ringing up your purchase. That way, if fraud is afoot you can call the company right away to cancel the charge.

If the alerts start to get annoying, you can alter them or turn them off at any time through your bank’s Web site or over the phone.

Third parties like Mint.com already offer such alerts, like when you’ve surpassed your monthly grocery budget. But Mint must log in to your bank’s site to retrieve updates, and it does that only every 24 hours unless you log in separately. The inControl alerts happen in real time. Besides, for Mint’s service to work, you need to give it the username and password for your bank account, something that makes a lot of people skittish.

The real leap with inControl, however, is being able to turn off certain forms of spending altogether. Dining out is the one I sometimes have trouble keeping in check, but for you it might be your iTunes habit or something else. While inControl now sorts companies into merchant groups that you can set budgets for or ban altogether, MasterCard said that if it had enough demand for company-specific caps it would add those, too.

“The personalization of consumer products has reached far deeper than it ever has before,” said Ed McLaughlin of MasterCard, whose title is chief emerging payments officer. He added that he was well aware that financial services companies had lagged on this front for some time and that inControl was created to help banks catch up.

MasterCard hopes that banks will use inControl to help consumers restrain other people’s spending, too. Your college-age child could be issued a card linked to your account with a limit the size of whatever monthly allowance you’ve agreed on (and maybe an automatic rejection for any charges at a bar or liquor store). That way, you keep any rewards for your child’s spending — and still keep an eye on where the money is going.

Employees can get the same treatment. A baby sitter, for instance, could get a card billed to you that doesn’t work on the Internet or outside of your state. People with cards for their small businesses could limit their employees’ use to weekdays or to construction supply stores. (Many commercial cards from MasterCard and others already work like this.)

So what could stop inControl-enabled cards and copycat products from showing up in millions of wallets? Plenty.

If consumers en masse got religion and placed a cap on their spending, credit card companies wouldn’t collect very much interest. So what incentive do these same companies have in helping people with their willpower?

When I asked Mr. McLaughlin how he would respond to card issuers who asked this question, he fell silent for several seconds. Then, he said he would compliment their office décor. Why? “I think anyone knows that having a superior offering wins out in the long run,” he said. “To get that office, they would have to know that.”

Actually, there are several reasons for banks to sign up. Once consumers start setting limits, alerts and warnings for a particular credit or debit card, they’ll have a lot more reason to use that card every day, lest they lose the consolidated snapshot of their spending. Thus, the bank makes more money from fees merchants pay to accept the cards.

Also, for a bank like Citi that’s still trying to win back its reputation, offering a service that helps consumers control spending can’t be bad for its image.

That said, the service isn’t foolproof. Even after you’ve hit your monthly limit, you will be able to turn your card back on via telephone (and eventually via a mobile app). And nothing’s stopping people from dipping into their wallets for cash or raiding the nearest A.T.M.

Presumably, however, having a credit or debit card reject a purchase in real time will send enough of a message to put a psychological damper on any additional spending in that category for a while.

There are execution risks here too. Setting up a self-service Web dashboard for people to spin the dials and pull the levers on their cards is tricky. When things get buggy, they’ll flood the phone lines, which is expensive for a bank.

Also, the merchant codes need to be correct for MasterCard to recognize purchases and sort them into the right categories. Anyone with a rewards card that earns more in some stores than others knows that these systems can make mistakes, and that stores like Wal-Mart and Target don’t change their codes according to what categories of products you buy there.

Why not forget about cards and use cash, or just put the cards away after the online statement hits a certain number each month? This is certainly possible, but then you’re losing the ability to track all of your expenses easily through your monthly bills or through sites like Mint. Or, you’d be giving up cash back or rewards points.

So adopting inControl won’t be easy, and banks like Citi might take a year or two to fully integrate all the bells and whistles. Try to be patient and not pester them.

I’m convinced, however, that the ability to cut yourself off from certain kinds of spending will become a standard card feature sooner rather than later.

After all, now that this possibility is real, whether banks offer it or not will become a litmus test for sincerity. If they want to argue with a straight face that they’re in business to help their customers make prudent financial decisions, how could they not let people cap or block certain kinds of spending in any way they want?