Things to do:

• Pay your bills on time. Your track record for making timely payments accounts for about 1/3 of your FICO score.
• If you are having trouble making ends meet, contact your creditors.
• Use different types of credit. Having a blend of revolving credit, like credit cards, and installment loans can help boost your score.
• Once a year you can get a free credit report from www.annualcreditreport.com. Here you can check for any mistakes and dispute them.

Things not to do:

• Don’t max out your credit. Keep your balances low relative to your credit limit.
• Confine loan shopping to a few weeks so that credit inquiries won’t weigh on your score.
• Don’t open credit card accounts that you don’t need. Your FICO score usually drops a few points for every new account opened.
• Don’t close old credit card accounts with a good payment history. If you lower your total available credit, it can have a negative impact on your score.
• Don’t open multiple accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

According to myFICO.com, a FICO score is calculated based on your rating in 5 categories. Payment history accounts for 35%, amounts owed 30%, length of credit history 15%, new credit 10%, and types of credit used 10%.

The median FICO score in the U.S. is 723. If you follow the tips above and use credit wisely, it can save you a lot of money and stress in the future.

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• Owning many different stocks: If you have the bulk of your money in company stock, and your company tanks, you could easily lose a large chunk of your savings. If you have a diversified portfolio you take away much of that risk. One way to own many different stocks is through mutual funds, index funds, and exchange traded funds.
• Own stocks in different sectors: Energy companies have been doing great lately, but financials and home builders have been hurting. If you were heavily invested in the wrong sector recently you would have likely seen your savings shrink. Owning stock in multiple sectors will cut down on your risk of big losses.
• Own the world: Given strong economic growth in countries like India and China, investing solely in U.S. stocks no longer makes sense. Many emerging market countries will have higher returns than we will see here in the states. International index funds are a good way to start diversifying geographically.
• Buy companies of all sizes and types: Value, small-cap, large-cap and growth stocks are examples of asset classes. Each category will have their up years, and down years.
• Invest outside the market: Fixed-income investments such as bond funds can be a great stabilizer. Just how much fixed income you need though will depend on your age and circumstances.

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Lately I have been fixing various things around the house, and making any improvements I can think of. New paint, landscaping, new flooring, bathroom and kitchen upgrades are kind of a given when it comes to getting top dollar for your home. In doing some research for cheap, but effective home improvement tips, I landed on THIS PAGE, which details some recession-proof home improvements.

As flipping has stalled, and many would-be sellers are sitting out the market, they’re turning to green changes as a way to reduce their energy bills and improve their quality of life. The 10 recession-proof changes they recommend are:

• Cork Floors: Cork is quickly becoming an alternative to pricier tile and wood-plank flooring. Low-density cork is an effective insulator, plus it doesn’t rot when exposed to water (think wine bottles), nor does it absorb dust.
• Bamboo Countertops: Compressed to the thickness needed for a countertop, bamboo is significantly harder and more dense than woods such as maple–often used for cutting boards–which makes it last.
• LED Lighting: LED lighting systems use less energy than standard bulbs, which translates into a lower electric bill. LED lights are more expensive than conventional light bulbs, but can pay for themselves over time.
• Garage Doors: Luxury carriage-door models and revamped pavement leading up to them can boost your home’s curb value; this is especially important if your garage is one of your home’s dominant features.
• EnergyStar Windows: You’ll definitely pay a bit more for an EnergyStar certified window, but you’ll get a 10% rebate from Uncle Sam. You’ll also enjoy hundreds per year in saved heating costs.
• Water-Saving Toilets: Based on the American Institute of Architects’ 2008 research, homeowner demand for water-saving toilets has grown.
• Water Heater: Conventional heaters warm water continuously. Some models heat water on demand, a more energy-efficient system that in some households might pay for itself in a year.
• Radiant Heat: The U.S. Department of Energy estimates that radiant heating is 20% more efficient than conventional heating systems.
• Landscaping: Besides the aesthetic and health benefits of a garden and yard, it’s often the first thing buyers see when they’re looking at a home. The National Association of Realtors estimates that 70% of home buyers start the buying process online, and if your front yard pushes people away before they even come to visit the house, you’re in trouble in this kind of market.
• Doorless Showers: Also called walk-in showers, this is a design trend that likely isn’t the function of a down economy, but is mentioned again and again by builders and architects as something consumers want. They are popular among boomers as they get older, and are a design element that can also be found in high-end urban apartment complexes.

I think for certain situations these could be some great upgrades to look into. Obviously they won’t work for all homeowners in all markets, but “going green” is a trend that looks to only get bigger.

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• Domestic Equity (30 percent) - Stocks in U.S. based companies listed on U.S. exchanges.
• Emerging Market Equity (5 percent) - Stocks from emerging markets across the globe. Brazil, Russia, India, China, etc.
• Foreign Developed Equity (15 percent) - Stocks listed on major foreign markets in developed countries, such as the UK, Germany, France, and Japan.
• REITs or Real Estate Investment Trusts (20 percent) - Stocks of companies that invest directly in real estate through ownership of property.
• U.S. Treasury Notes and Bonds (15 percent) - These are fixed-interest U.S. government debt securities that mature in more than one year. Notes and bonds pay interest semi-annually. The income is only taxed at the federal level.
• TIPs or U.S. Treasury Inflation-Protection Securities (15 percent) - These are special types of Treasury notes that offer protection from inflation, as measured by the Consumer Price Index. They pay interest every six months and the principal when the security matures.

Some words of wisdom from the man himself.

On investing in scary economic times…

“The human tendency in this kind of environment is to do something — to make a change,” he says.

Stocks seem risky, especially since they’ve been falling. Swensen says most people he talks to get nervous and want to sell stocks.

“And that’s exactly the wrong reaction,” he says. “Buying high and selling low is not a way to make money. It’s not hard, right? It’s very simple: You want to do the opposite.”

On paying for financial advice…

Investment services provide pretty mediocre advice, and it’s just not worth giving them a percentage of your life savings.

“That’s the wrong path,” Swensen says. “And the reason it’s the wrong path is it’s a very, very expensive path.”

On index funds vs. mutual funds…

Fees are also the big reason you should buy index funds instead of classic mutual funds. Index funds, which track market segments like the S&P 500, are a lot cheaper.

Swensen says the vast majority of professional mutual fund managers fail to beat those indexes.

And finally, on rebalancing your portfolio…

Swensen says people should rebalance their retirement accounts at least quarterly — four times a year. He says the technique is a disciplined way to buy low and sell high over time. It also keeps your risk profile where you want it to be.

Something you should keep in mind though, is that rebalancing can create tax liabilities. One way to avoid that is to do rebalancing only in the tax-deferred portion of a portfolio. New contributions may also be used as rebalancing tools, so that investors sell fewer existing investments.

If you go HERE, you can read the full article and listen to the segment. It goes into detail about his rebalancing techniques, how he has managed Yale’s endowment, and gives some investment ideas. If you have some time I would definitely check it out.

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• Be flexible. The more flexible your schedule, the more opportunities you’ll have to save. You’ll be able to take advantage of airline ticket sales and the cheapest days to travel. It’s usually a better deal to travel during the week than over the weekend.
• Find deals. Saving money on airfare and hotels can be as simple as looking around at a few travel sites. Hotwire, Travelocity, Expedia, Orbitz, are a few places to start looking for deals.
• Plan your transportation. Transportation costs can vary depending on where you go. In places that have great public transportation, take advantage of it. In other places it might make sense to rent a car rather that take cabs/buses/shuttles.
• Eat smart. Dining out can drain a budget quickly. Instead, try eating before you head out and take snacks with you.
• Negotiate. Travel with the idea that it never hurts to ask for a little more. You can always ask for upgrades, whether it’s a hotel or transportation.
• Buy smart. Tourist areas sell everything you need… at a high markup. If you are going to travel, make sure to buy your sunscreen, film, sunglasses, and everything else you may need ahead of time.
• Avoid tourist traps. By going to places that are off the beaten path, you can have a great time and avoid the higher costs of tourist areas.

If you follow these tips, and don’t get too into a vacation mindset, you should be able to have a great time without blowing your entire bankroll.

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The lessons she mentions in the article are:

• Know your priorities. Learning early on how to prioritize and to sort our needs from our wants.
• Debt is a vampire. Learning quickly how debt can steal your money. Making the minimum payments but never making much headway.
• Have a cushion to fall back on. Life is full of unexpected expenses. If something comes up when you’re living paycheck to paycheck, even a small expense can mess up your finances in a hurry.
  
• Set goals and tune out peer pressure. See your situation clearly and don’t compare yourself to others.
  
• Small sacrifices add up to big rewards. Whether it’s saving to buy something, or putting away a little money at a time to invest, small changes can add up to big savings.
  
• The size of my bank account doesn’t matter. 

Too many people have the wrong mindset about money. It’s not about how much money you make, but rather what you do with it that will decide your financial future. That’s why I think these are lessons everybody should learn.

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The disadvantages of taking a hardship withdrawal:

• Taxes. If you are under 59 1/2, you will have to pay income taxes on the money you take out. You will also have to pay a 10 percent early withdrawal fee.
• Interest. If you take money out of your 401(k) early, you won’t be able to take advantage of the compound interest on that money. Taking out a small amount now can mean forfeiting huge amounts when you are ready to retire.
• Future Deposits. Most employers will not allow you to make fresh 401k contributions for six months after taking the withdrawal. This further limits your ability to build a retirement nest egg.

You should see if your plan offers a 401k loan as an alternative to taking a financial hardship withdrawal. Plan loans are not subject to taxes or penalties, and you can continue to contribute to the plan while you repay the loan. If you end up leaving your employer before the loan is repaid, you have to pay back the remaining balance otherwise it will be considered a withdrawal and subject to taxes and penalties.

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Some of the interesting things they found out were:

• 7.6% of American households, or 8.4 million households are middle-class millionaires

• The average middle-class millionaire works 70 hours per week

• Middle-class millionaires are five times more likely than the average worker to say they are always available for work

• 89% believes that anyone can attain wealth through hard work

• 62% believes that networking, or knowing many people, is the key to financial success

• Nine out of 10 middle-class millionaires say they made a bad career or business move, but almost three-fourths say that was crucial to their business success

• They are five times more likely than the average middle-class person to continue on in the same business course in spite an earlier failure

• 65% of middle-class millionaires characterize their approach to negotiating as “doing whatever you need to do to win”

• They say they need a net worth of $24 million to feel wealthy, and $13.4 million to be considered rich.

They also found that half of middle-class millionaires believe a child’s academic achievements reflect one’s success as a parent. Seventy-five percent of this group chose their home because of its school system. And only 14% of them trust the government.

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A bit from the article:

Dozens of new high-rise condo projects are going up downtown. At the same time, foreclosures have doubled, sales have slowed to a trickle, and prices are dropping.

These conditions have attracted a new type of opportunistic buyer to Miami — the “vulture investor.”

Peter Zalewski, who runs a Web site and consulting company called Condo Vultures, says the term doesn’t have a negative connotation.

“Vultures don’t kill, they clean up,” he says.

These “vulture investors” are able to come in and pick up properties at a steep discount because…

Within a 10-block radius, 22,000 new condo units are under construction, Zalewski says. In many cases, he says units were sold to speculators — people who put down $60,000 and $80,000 deposits with the intention of reselling the properties. With prices dropping, those are the sellers Zalewski targets as the most vulnerable.

Veteran Miami developers aren’t sweating the market, as they’ve seen similar downturns in the past. If you look at things over a long period of time it will generally even out. Many speculators who didn’t do enough research or have much of a plan are the ones getting hurt. This is happening all over the country, but especially in places like Miami, Las Vegas, Phoenix, and other previously hot markets.

I must say, these “vulture investors” seem more like value investors. Warren Buffett-esqe, only with condos rather than stocks.

I found the segment/article HERE.

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• It’s a large IPO - Typically large IPOs don’t rocket higher the moment they start trading. So investors won’t need an exclusive brokerage account to get a deal on shares ahead of time, as with most IPOs.
• Best of breed - It’s a chance to buy stock in a company that is one of the world’s most recognized brands. It has more cards in circulation that any other credit card company, and processes far more transactions.
• Good pricing - Investors should get a decent price because Visa’s owners are launching this massive initial public offering in a weak market.
• Great business model - It makes money by processing transactions rather than lending money. The use of credit cards is becoming more and more common, and looks to be a growing trend in the future. More transactions = more revenue.

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