Knowledge Center

Review your credit report.

You're entitled to receive one free credit report every 12 months from each of the three major credit bureaus: Equifax, Experian and TransUnion. If you’ve never examined your reports before, you can pull all three at AnnualCreditReport.com, which is the only government-approved site that provides reports for free. (We suggest that you only pull one every four months, so you can regularly check up on your credit throughout the year for free.)  In some cases, you may not find the error on all three credit reports, so inspect each report carefully to find out if this is the case. You only need to dispute the error with the bureau(s) reporting the incorrect information.In addition, if you have a credit line from a small company, such as a credit union, it’s important to keep in mind that it may not report to all three bureaus. Before you assume that a bureau is incorrectly reporting your credit line, check with your creditor to see which bureau it reports to.

Gather documentation supporting your dispute.

In order to successfully dispute an error with the credit bureaus, you’ll need proper documentation that supports your claim. For instance, if your credit card limit is being incorrectly reported, get proof that your limit is different than the one referenced on your report. Circle or highlight the error on your credit report(s), and make copies of your supporting documentation to send with your dispute letter.

Write your dispute letter.

Write a letter to the bureaus reporting the mistake on your credit report. Not a wordsmith? The FTC has a great sample dispute letter that you can use as a model.

Make copies of everything.

You don’t want to have to repeat the first three steps if the dispute gets lost in the mail, so make copies of the dispute letter you’ve written, the documents you’re using as proof and the page(s) of your credit report with the errors clearly marked. File these documents in a safe place, so you can easily find them later.

Send your letter and enclosures via certified mail.

Although the bureaus accept online disputes, experts recommend disputing errors via postal mail, so you have a paper trail if the problem persists or you need to show a record of your efforts in court. Send your letter, the marked-up credit report and your supporting documentation via certified mail, and request a return receipt, so you'll have a record that the credit bureau received the package.

Follow up in 30 days.

After the post office notifies you that the credit bureau has received your dispute, set up a calendar reminder to follow up with the bureau if you haven't heard back after 30 days. Credit bureaus are required by law to investigate your claim, and they will typically do so within that timeframe. The credit bureau should also forward all of the relevant data that you provide about the inaccuracy to the company or organization that provided the information, such as your credit card issuer or a mortgage lender. The information provider will then investigate, and report back to the credit bureau.If your dispute is successful, the company is required to notify all three credit bureaus, so that they can correct the information in your file. The credit bureau will then have to report the results back to you, and include a free copy of your credit report if there was a change made due to the investigation.

Take appropriate steps if the dispute is unsuccessful.

If your dispute doesn’t work, it may be due to one of the following reasons:

• It was considered “frivolous.” This term can vary by bureau, but in general, credit bureaus might label your dispute as frivolous if you dispute too many items in one letter, if you don’t have proof to support your claim, if you use hardship as the basis for your dispute or if you use the same reasons over and over again when trying to get credit report errors removed. If the credit bureau refuses to investigate for this reason, but you don’t consider it to be frivolous, you can try to dispute again.
• It wasn’t deemed to be erroneous. You can’t remove correct information from your credit report, even if you'd like to do so. You can, however, take steps to rebuild your credit, and subsequently boost your credit score.
• The credit bureau says that it’s not an error, but you have proof otherwise. If this is the case, you can either try to dispute it again or go directly to the furnisher of the line of credit to perform what is called a "direct dispute." For instance, if the error is a misreported credit limit, you'd submit a new dispute letter to the credit card issuer, using the same disputing process outlined above. Be sure to include your full name and the account number associated with the company in your letter.

Monitor your account for future errors.

Once your reports are finally free of errors, make sure that all of your work doesn’t go to waste! Continually monitor your reports to ensure that they remain error-free by obtaining one free report every four months.It's important to stay vigilant about disputing any incorrect information on your credit report because it can have an impact on your credit score and financial health. Good luck!

Gather your paperwork.

Here's a short list of what you need before you can begin your taxes:

• Your Social Security number, as well as those of your spouse and dependents
• Your bank account and routing numbers
• A list of taxes you've paid so far this year, including property taxes, state and local taxes and any estimated taxes that you've made
• Income tax forms, such as W-2s, 1099s, Schedule K-1s and any other records showing income
• IRA contribution or distribution information
• Payments you've made toward education, such as tuition or student loan interest paid
• Child-care costs detailed in canceled checks or invoices, as well as the child-care provider's name, address and tax ID or Social Security number
• Home mortgage interest paid and home improvement expenses
• Expenses related to a job search or moving
• A list of charitable donations
• Records of medical expenses

Decide if you need an accountant.

On the one hand, you could save money by not paying an accountant. But if you miss a crucial credit or deduction, you could end up paying thousands more than necessary.Some people can actually knock their taxes out in an afternoon with good tax-filing software, plus the help of a great resource like, say, our free Ace Your Taxes Bootcamp and helpful tax articles. Here are some situations in which you might consider getting an accountant:

• You're itemizing your deductions
• If you're part of a business partnership, own your own business, are self-employed or freelance
• You've undergone some big life changes in the past year (or plan to this year)—like having a child or selling a home
• You bought or sold a lot of investments in the past year
• You worked or lived abroad

Still unsure? Take our quiz to find out if you should have an accountant.If you're planning to use an accountant, call him or her as soon as possible to get a better rate and ensure that you can actually find an accountant who's not fully booked up. Once you find an accountant and drop your documents off with them, you're done with this checklist! But if you're doing your taxes yourself, read on.

Pick tax-filing software.

If you aren't using an accountant, we still recommend signing up for tax-filing software. Yes, it costs money, but much less than an accountant. And it really makes tax filing easier and more intuitive.Here are some popular tax-filing software options:

• CompleteTax
• H&R Block at Home
• TaxACT
• TaxSlayer
• TurboTax

Decide your filing status.

Your filing status is crucial to know because it determines which (and how many) tax breaks you can take. It's determined by your marital status, whether you have dependents and some other factors. These are the five types:

1. Single individual (unmarried with no dependents)
2. Married person filing jointly (married, filing taxes together)
3. Married person filing separately (married, but filing separate tax returns)
4. Head of household (unmarried, have cared for a dependent more than half the year and paid more than half the cost of maintaining a home)
5. Qualifying widow(er) with dependent child (used in the two years after your spouse dies, as long as you did not remarry and you have a dependent child)

If you're unsure which one applies to you, use our filing status flowchart.

Decide if you're itemizing your taxes.

Your final tax bill is largely determined by your deduction(s). A deduction subtracts from your income, so that you aren't taxed on your entire income, and hence get a smaller tax bill. Here's a simplified example: If you have an income of $60,000 and you have a deduction of $5,000, then you pay taxes on just $55,000 of income. If you were in the 15% tax bracket, that deduction of $5,000 could save you about $750.As a taxpayer, you have a choice between taking a standard deduction or listing all of your individual deductions and taking the sum total as your deduction. The latter option is called itemizing. It's more work and requires more math and documentation, but it could end up saving you a lot of money.The standard deduction for the 2012 tax year is $5,950 for individuals, $11,900 for married filing jointly or qualifying widowers with a dependent child, and $8,700 for those taking the head-of-household status. If your itemized deductions add up to more than your standard deduction, you should itemize.As a rule of thumb, if you are paying interest on a mortgage, you have medical expenses that are more than 7.5% of your income, you pay a lot in state and local taxes or you have a lot of self-employed or small business expenses, it would probably be a good idea to itemize.And, yup, we have a quiz that tells you whether you should itemize. 

Get all of your exemptions.

Exemptions work in a similar way to deductions by reducing the amount of taxable income. For each exemption that you take for 2012, you can deduct $3,800 from your gross income to arrive at your taxable income. If you fall in the 10% tax bracket, that could translate to $380 less in taxes.You are allowed to take exemptions for:

• Yourself (“personal” exemption)
• Your spouse
• Each dependent

So if you are married with three qualifying children, you can deduct $19,000 in exemptions ($3,800 x 5 = $19,000). Not bad, right? It’s a pretty easy portion of your forms to fill out, but—of course—there are some exceptions, like if you are divorced with kids. Read up on exemptions.

Get all of your credits.

Unlike deductions and exemptions, which lower the amount of income you are taxed on, credits directly reduce the amount of taxes you owe. So if you receive a $1,000 credit, that means you will pay $1,000 less in taxes.You could claim a credit if you:

• Have a low income
• Made energy-efficient improvements to your home
• Bought an electric, plug-in car
• Are paying for college for yourself, a child or a spouse
• You paid for care for your child

If any of these sound like they might apply to you, read more about these credits.

If you'll miss the deadline, ask for an extension.

The deadline for filing in 2013 for the 2012 tax year is April 15th. You can get extra time to file without filing for an extension if you are:

• Living outside the United States. Read more.
• Serving in a combat zone or a qualified hazardous duty area. Read more.

If those don't apply to you, then you can file for an extension, which will be automatically granted. But this extension only applies to the paperwork—you must still pay what you estimate that you owe. If you have time to file the paperwork, but don’t quite have the funds to pay, read this article for your options.Fill out as much of your 1040 as you can to estimate your taxes. You’ll use that figure to fill out Form 4868, which you can electronically file with your tax preparer or your tax software program, or send to the I.R.S. by mail. Then pay your estimated taxes using a credit or debit card. You can do this online or by phone, and you must pay at least $1.And make sure to file before October 15th, 2013, if you’ve gotten the extension!

Collect offers that other companies mail to you.

Credit card companies aren't as free and loose as they were before the 2008 recession when it comes to sending out card offers, but you could still get some good solicitations in the mail for cards with lower rates and 0% introductory offers. If you do, save them because they could help make your case later.

Know your rates.

Look for your APR on all of your credit card statements. It's not easy to find, but trust us, it's there. Write down:

• the name of each credit card
• your APR for every credit card
• how long you've been making on-time payments

The longer you've been with the credit card company, and making good on payments, the better.

Know your credit.

Your credit score helps to determine what kind of APR is possible for you. You can get a ballpark estimate for free without dinging your credit through CreditKarma.com. But if it's been more than three months since you've pulled a credit report, we suggest you do so now--if you have erroneous or bad marks on your credit report, calling to ask for a lower interest rate could call attention to the mistakes, and your credit card company could actually raise your interest rate.Here's how to get your credit report. Once you have access to it, promptly dispute any errors and have them taken care of before proceeding with any discussions about lowering your APR.

Check out the competition.

Head over to bankrate.com, creditcard.com, credit.com and lowcards.com to look at what kind of APR you could get from competing credit card companies. That credit score that you pulled above comes in handy here because you'll see offers that are only available to individuals with excellent credit.You can also find the average current credit card APR listed on the right-hand side of Bankrate.com. This will give you an idea of whether it's even reasonable to expect a lower interest rate. (Given that the average "low interest" credit card rate as of this writing is 11%, someone with an APR of 9% already has a great rate. Sorry, Charlie, that's what you get.)After collecting this info, along with any paper offers that you receive in the mail, come up with a target rate that you would like to get.

Make the call.

Flip your card over, and dial the number on the back. Ask for the "credit account specialist," which should help put you in touch with someone who has more power to help you.Be polite yet firm, and ask open-ended questions instead of any that can be easily answered with a "no." Case in point: "Do you think that you can lower my interest rate?"Use this script:"Hi, my name is _____. I've been a good customer of (current credit card company) for (number of years), and I make my payments on time, but my APR is too high. I have offers of (x) from (competing credit card company A), and (y) from (competing credit card company B). I've had a good experience with you, but I'm considering switching. I would like to have my APR lowered." [Note: Ramit Sethi has also gotten good reviews for the script included in his book, which is also available via this $1.99 iPhone app.]If they offer you just a point lower, but don't get you to your target rate, say, "Can you do any better?" If it's the best that they can do, move on to the next step.

Ask to speak with a supervisor.

If step 5 doesn't work, don't take it personally. Credit card companies make more money in interest if your APR is higher, so you need to work hard to convince the right person that you should have a lower interest rate.Politely ask to speak to "someone who could help me with this" or "your supervisor." If the representative says a supervisor isn't available or they can't transfer you, say, "I would like to have your name and your identification number, so I know who I'm speaking with." This communicates that you are not the kind of customer who gives up easily, and makes them feel accountable for giving you a satisfactory answer. (Also, if you have this information, you can call back later and report your dissatisfaction with how that particular representative handled your account.) Then ask again to speak with the supervisor, stating that you'd prefer to speak to that person now instead of calling back.Once you have the supervisor on the line, repeat the script in Step 5. If this still doesn't get you more than a point lower, move on to step 7.

Ask to speak to someone in the retention department.

The job of the retention department is to keep you as a customer. Remember: You have a lot of juicy offers in your hand right now, so you could bolt at any time if they can't help you. With this knowledge, they'll be incentivized to make you happy.So repeat the script in step 5. But the difference here is that you're not merely "considering" switching--you probably will switch, unless they give you a reason to stay.RELATED: 5 Surprising Things You Should Negotiate

Call back in a week.

If none of the above works, all is not lost. If you call back after a few days, you may get another representative who is better able to help you.

Transfer to another card.

If that still doesn't work, and you can get a better interest rate elsewhere, take it! If you can get a balance transfer to a card with a 0% introductory rate, that's ideal--but only if you can pay off your debt before the introductory rate expires because the interest rate could jump to a higher level than what you have now. If you're worried about paying it off within a set amount of time, you could also go for a credit card that will guarantee you a low rate "for the life of the balance transfer."Additionally, watch out for balance transfer fees. While some companies waive such fees, others charge anything from a flat fee (such as $75 per card transferred) to a percentage, like 3% of the amount you're moving. If you're going to pay off your credit card within a few months, the savings you'd reap from the lower APR might be lower than what you'd pay to make the transfer.Once you've determined that a transfer will save you money, and you know all of the terms of the transfer, go ahead and switch to a card with a lower interest rate that's clearly established in the contract. And make sure to read all of the fine print before signing. RELATED: 0% Credit Card Offers Gone Wrong: 5 Devastating Mistakes to Avoid

Consider a forbearance plan and/or a debt management plan (A.K.A. credit counseling).

This option is only for those who are genuinely having trouble making minimum payments, and who have a large amount of credit card debt and/or other consumer debt relative to their income. The debt management company will work with the credit card companies to help negotiate lower interest rates, so you can pay off your debt--and possibly streamline it into one monthly payment.But there are big downsides: Your credit card company could report that you're in this plan to the bureaus, lowering your credit score. And you might have to close your account while you pay it off. So don't lie and say that you're in financial distress when you aren't.If you are in serious financial trouble because of a job loss, divorce or high medical bills, it may be worth it to talk to someone at the National Foundation for Credit Counseling (NFCC.org). They have highly trained counselors who can guide you through your options.

Determine how much home you can afford.

As a general rule, try not to shop for a house that's more than 2.5 times your annual salary. So if you make $100,000 per year, that $275,000 house may not be the right fit for you.Next look at how much you have saved for a down payment, which is the portion of the cost of the home you aren't borrowing. Do you have 20% or more socked away for a house of your target price? (While most lenders only require that a borrower put down 3%, they prefer that an applicant borrow no more than 80% of the cost of the house--and that's a good idea for your finances, too.)If you can't pay that much, you may still qualify for a mortgage, but you might be considered a high-risk borrower, which means that you will probably pay a higher interest rate. Keep in mind that if the housing market dips, and your mortgage goes under water, the fact that you have so little equity in the house would give you little to no cushion to absorb any loss that you might incur if you had to move.Finally, when considering how much house you can afford, don't forget to factor in homeowner's association fees, property taxes and homeowner's insurance--all of which could turn a $2,000 mortgage into a $3,500 monthly expense. Overall, you'll want your mortgage payment, including taxes and insurance, to be no more than 28% of your income.Additionally, you can have a realtor give you the expected utilities for a home that you're interested in (these are sometimes made available by the current owner and posted by their realtor in the MLS system) or check county records online to see what property tax rates are in the area.

Check your credit score and credit report.

When you apply for a mortgage, your lender will need to see evidence that you're a reliable borrower. If you're planning to apply for a mortgage in the near future, you probably won't have time to improve your credit score or credit report, but you'll want to make sure that there aren't any errors. A score over 720 is considered strong; under 660 is looked upon as weak, which may mean that you'll have to pay a higher interest rate. (If you do have time to improve your credit score, use our checklist to help you.) You can review your score once a year from each of the three credit reporting agencies using Credit Karma. To get your credit report, use our checklist.

Assemble your financial documents and your down payment.

Be prepared to "undress" financially. The bank will look at your previous financial records, so you'll want to get them in order. Lenders almost always require applicants to:

• Verify income, which you can usually do by presenting recent pay stubs--or tax returns, if you're self-employed.
• Show how much cash money you have available to spend. Post-recession, lenders are extremely cautious about liquidity, so it's not unusual for a lender to require that you have several months' worth of mortgage payments in the bank. Your bank statements can serve as proof of your liquid assets.
• Disclose other assets you own (real estate, investment accounts, cars, etc.) and all of your debts, including personal loans, credit cards and student loans.

Consider whether you need a broker.

A mortgage broker's job is to act as an intermediary for you and a lender--a broker will help you figure out what types of mortgages you qualify for, and who offers them. A broker's chief advantage is insider knowledge of the industry, plus his relationship to lenders. If a broker brings a lender enough business, that lender might be inclined to help him (and you!) to the best of its abilities.However, since brokers are usually paid by lenders, the lender might increase your interest rate to accommodate that extra cost. A 2009 study found that buyers who work with a broker pay an average of $300 to $425 more in fees than borrowers who did not work with brokers. If you have the time and the patience to approach lenders yourself, working without a broker is usually the more affordable option.On the other hand, when you're looking at a $200,000 or $300,000 purchase, it might be worth it to hire a broker who can hunt down the best loan. For instance, brokers may know of specific loan programs that could help you, such as those targeted specifically to teachers, veterans or physicians.

Look for a lender with a reputation for good customer service and timely mortgage closings.

Closing your mortgage on time is imperative. If you've promised the seller that you'll move in by a certain date, and your mortgage hasn't closed, you may owe penalties--and you could end up without a place to live if you've already moved out of your current residence.For this reason, when you look for a lender, you'll want to inquire around. If you're already working with a realtor, ask for a recommendation. Also speak to friends and family who've bought homes recently for suggestions.The next step is to make calls directly to lenders and to your local bank. For both lenders and banks, make your calls in one fell swoop--rates change daily, so calling different lenders on different days may not give you an accurate idea of comparative rates.When you contact a lender, don't offer up your Social Security number--instead, give your credit score and income, and ask for a quote. This quote won't be exact, since the lender will revise it once they have more information. To make the comparison easier, ask for the rates on one specific type of mortgage, such as the common 30-year fixed. And keep in mind that major banks aren't the only institutions that can grant mortgages: Credit and labor unions sometimes also offer mortgages, and if you qualify, there are special arrangements for military veterans.Your local bank may also serve as a good resource for a mortgage loan: If you have excellent credit, the bank may lend you the money and hold the loan "in house," meaning that they will act as both broker and lender. The bank may also make the loan to you initially, and then sell your loan to a larger bank or mortgage lender. This is common, but remember that the terms of your original loan will still be in place--after all, a loan is a contract, and whoever buys the contract is still bound to honor it.And make sure to exhaust your options before choosing a lender. While it's favorable to find a lender that can offer a low interest rate, it's crucial to find a trustworthy lender with a good reputation: If you stumble across a lender with unbelievably good interest rates, they probably are just that--unbelievable.

Choose the mortgage that's right for you.

Mortgages aren't one-size-fits-all. The payment plans vary by interest rate and by duration--the most popular plans offer a fixed rate (the interest rate will always be the same) for 15, 20 or 30 years. The other option is an adjustable rate, which means that the interest rate will change each year. Loans can be fixed, adjustable or a combination of the two. (Read more about types of mortgages in our 101 story.)An adjustable rate mortgage, in which the interest rate changes at preset intervals to reflect the current market, may be ideal if:

• You are primarily looking for low interest rates in the short term
• You don't intend to stay in the home long enough for rates to rise (say, if you're planning to renovate and flip a house)

A fixed rate mortgage, in which you pay a fixed interest rate for the duration of the mortgage, may be ideal if:

• Interest rates are rising
• You're counting on a steady, predictable payment
• You plan to stay in the home for a long time

A combined mortgage, in which the rate is fixed for three, five or seven years before becoming adjustable, may be ideal if:

• You expect to sell the home before the rate becomes adjustable
• You plan to refinance or have your loan re-evaluated for a potentially better rate before the rate becomes adjustable

Get preapproved.

In preapproval, a reputable mortgage lender will agree to give you a mortgage loan for a specified amount, but you won't make a commitment to buy a specific property. Whether or not the preapproval will also "lock in" your rate--give you the same interest rate in your actual mortgage as in your preapproval letter--depends on the lender and whether rates are rising.If rates are rising, you may want to lock in your rate. If rates are going down or have been low and don't show much sign of movement, it may not matter. Many borrowers decide not to lock in their rate since they don't know how long it will take to find a home, and then have their offer accepted. If you want to lock in your rate for a longer than normal period (i.e. 60 days instead of 30 days), it may cost you more in points or in a slightly higher interest rate.You'll fill out a full mortgage application, which will ask you about your comprehensive financial history. You'll also usually pay an application fee, so don't take this step unless you're truly ready to start shopping for a home. In some cases, you won't even need to meet with your lender to submit the application--they'll let you send it via email.Preapproval used to be less common, but it's now expected that you'll get preapproved before you even start house-hunting. Not only does it improve your chances of getting the seller to take your offer seriously, but it will make the final mortgage process move more quickly once you've agreed to a price.There are two caveats: First, just because you are pre-approved for a certain amount of debt doesn't mean that you should necessarily borrow that much. It's a good rule of thumb to knock 20% off whatever the approved amount is, and use that as the ceiling for your potential loan.Second, pre-approval letters typically only last for 90 days, so it's not something that you want to do too early in the process. You can get the letter re-validated if your hunt takes longer than you anticipated, but remember that you're working against the clock. If you get your actual mortgage after the initial 90 days, your lender may require you to re-verify the information that you provided to confirm that your financial situation hasn't changed.

Ask for an estimate of closing costs.

Once you have signed a contract for the purchase of your home, ask the lender for a "good faith estimate" (you can review this here). Your lender will estimate how much money you'll need for closing costs, which are the extra charges and fees you'll be asked to pay when you finally become the owner of the house.Closing costs can include pointsPrepaid interest in the form of an upfront fee imposed by a lender (they work out to about 1% of the loan amount), taxes, title insuranceAn insurance policy that protects your ownership rights to the property should someone else try to claim ownership and try to buy, sell or otherwise profit from it., financing costsFees paid to the lender for the use of their money. and more (a commonly missed charge, for example, is "fuel adjustment" or the price for the heating fuel that's already in the house when you buy).When the final form is presented to you, your lender or broker is required to show you which numbers cannot change and which are subject to a 10% variation. You'll be required to pay all of the charges whether or not they vary, so start saving up as soon as possible. In some instances, a motivated seller will offer to pay your closing costs just to get the deal done. Although this may seem like a good thing, it may mean that they are less willing to budge on the sale price and you're really just amortizing the cost into your 30-year note.

Consider what you'll do if you get rejected.

So let's say that you've done your research, figured out how much you can afford, decided whether you need a broker, found a trustworthy lender, chosen the mortgage structure that's best for you and submitted your paperwork ... but the lender says, "not so fast!"Even if you've done everything right, it doesn't necessarily mean that you'll get the mortgage you want. It's not very common to get rejected outright--if you do, it's most likely because of a problem with your credit report, and you'll be entitled to review it.More commonly, you'll be approved for a smaller mortgage than the one you applied for, which means that you'll need to either rethink the house you had intended to buy and bid on something smaller or delay buying a house until you have more money--and need only a smaller mortgage to make up the difference. 

Get organized.

Your first step is to know exactly how many loans you have and their total. (Maybe you want to pour yourself a glass of wine first ... just a thought.) Head to nslds.ed.gov and look up all your loans. Put them all into a spreadsheet, with what kind of loan they are (Stafford, Perkins, PLUS for example), their interest rate, who you owe them to, the minimum payment and their amount. Learn about all the different types of student loans here.Put the private loans at the top (to be paid off first) and then sort the federal loans below from highest interest rate to lowest interest rate. Add up the total. If you need a day to let this sink in, that's fine. Come back tomorrow, because we'll give you strategies for reducing this number before you ever make a payment.In the meantime, make sure to connect all your student loans in the Money Center. This will show you how they affect your net worth, and also how quickly they're going down or up as you pay them off or accumulate interest.

Update your contact information.

Student loan communications are still largely conducted by mail, and under law you are responsible for keeping your address updated so you can receive all communications. If you put your parents' address as yours when taking out the loan, and now have a permanent address, make sure to list your updated address with all loan holders.

Consider consolidation.

If you have several loans, you could consolidate them into one loan. It sounds great--makes everything simpler, right? But there are several drawbacks:

• If you consolidate to a longer payback period, you will pay more interest over the life of the loan
• When federal loans are consolidated, the average of your loan interest rate is taken, rounded up to the nearest 1/8th of a percent. That means your interest rate will be higher overall than it was before.
• If one or more of your loans has benefits like interest subsidiesFor many federal loans, the government will pay the interest while you're in school, during the six-month grace period after you graduate or while you've deferred your loans. or cancellation programsSome loan payment programs allow you to discharge your remaining debt once you've made on-time payments for 10 or 25 years., you could lose those through consolidation.

So only consolidate if you are truly having trouble keeping up with all your different payments. If you do consolidate your federal loans, you'll choose your repayment plan when you do so; we go over the different types of repayment plans in Paying Student Loans 101. Learn more about federal loan consolidation here.Your private loans cannot be consolidated with your federal loans, but you may be able to consolidate the private loans together into one payment. This could be a good move if:

• Your credit has improved by 50 or more points since you took out the loan, which means you could get a lower interest rate.
• You have several different loans, and you're having trouble keeping track of your payments.
• You want to spread out repayment over a longer period of time, lowering your monthly payment (but accruing more interest over the life of the loan).

You could also consider taking out a home equity loan with a fixed interest rate to pay off your student loans, effectively locking in one interest rate. However, this is a gamble. If interest rates drop, you will be paying more than you would have otherwise.Unfortunately, very few private lenders allow you to consolidate your loans. That said, you can find a full list of private loan consolidators here.

Make a budget.

Now that you've faced the big number, it's time to figure out how much you can afford to pay each month toward your loans. Set up your budget in the Money Center. Keep in mind, at least 20% of your take-home pay should be going to Financial Priorities, which includes debt payment and saving for retirement. If your student loan payments are high (either because your minimums are high or because you're decided to increase your payments), though, you might find yourself with a higher percentage going to Priorities. See how much room you can make for your payments by cutting back on Lifestyle Choices, like eating and drinking out, shopping, gym memberships, cabs and more. You might also reevaluate whether you can afford your current rent when you factor in your student loans. Just don't cut back on retirement savings, especially if your job matches your contribution. Learn more about creating a budget here.

Calculate your payment timeline.

Now that you know what you can currently afford to pay (which has to be at least the minimum, but ideally more), use that number to calculate how long it will take to pay off your loans. Put the minimum payment toward all the loans except for the one you ranked highest, which will be your highest-interest rate private loan if you have more than one. Once you pay that loan off, you can focus on the student loan with the next highest rate. (Remember it's always important to prioritize paying private loans before federal.) Use this calculator for each loan, and input the pay-off time in your spreadsheet. As we go through the next steps, this repayment timeline will probably change, so continue on!

Choose the best repayment option.

You have six options for paying off your federal loans (seven if you count paying them off in a lump sum, though we're assuming this isn't an option for you). If you have private loans, the best payment plan is paying them off as fast as possible, especially if they have variable interest rates which could pop up. Plus, private lenders don't adhere to a set of standard repayment plans. But for federal loans, you can choose the best plan for you. We go into detail about repayment plans here, but overall, you need to know that the lower your monthly payments now, the more interest you'll pay over the life of the loan.

Find ways to increase your payments.

If you can increase your income, you can pay off your student loans faster and save yourself money in interest. If you've just graduated, make sure you negotiate your starting salary. If it's been almost or over a year since your last raise, gather up your accomplishments and prepare to ask for a raise. Read more about negotiating a raise here.But if a raise isn't possible, there are plenty of ways to increase your income, even if you have a full-time job. Try freelancing in a field related to your career or passion first (it's a résumé builder, after all). You can also try babysitting through Sittercity (you'll get paid more as a college grad than as a high school student), find odd jobs on Craigslist or TaskRabbit, participate in focus groups through Findfocusgroups.com, search for local mock jury or brand ambassador jobs, work for 1-800 call lines through West at Home and find retail and marketing gigs from the National Association of Retail Marketers. See more ways to make money on the side here.

Consider working in public service or education and/or moving to another city.

If you get a job in the public sector and make 120 loan payments (10 years of payments), the rest of your student loan could be discharged. If you work full-time as a teacher serving low-income students, you could have up to $17,500 of your loan paid off. Find out more here about these two options. Other options include joining the military, Americorps, the Peace Corps, Teach for America, social work, the National Health Service Corps, Equal Justice Works, or if you are an occupational or physical therapist, choosing an employer that offers loan forgiveness.If you're not tied to a place, you could get a boost from moving to a new area too, and not just because of a lower cost of living. As part of programs to boost population and bring in bright young workers, some areas offer incentives in the form of loan payments. For example, the city of Niagara Falls offers to pay up to $15,000 of your student loans if you move there. Kansas could entice you to Rural Opportunity Zones by waiving state income tax and paying off $3,000 per year of your debt, up to $15,000. Search for opportunities near you or in your state to start.

Ask your employer to pay off your debt.

If you work in a field that requires a specialized degree (health care especially), you could search for an employer offering to pay off student loans as part of the package, or ask your employer to put money toward your loan in exchange for paying you a lower salary. Employers are willing to do this because over the long run it costs them less in salary payments. But you must show you are committed to staying in your job for some time in order to prove it's worth their while--it's sort of like a signing bonus. If you are a new grad and interviewing at a small company that can't give you a high salary, bring this up during salary negotiations. If you are already an employee, talk to HR about the possibility in your next review, confirming that you're committed to the company.

Consider deferment or forbearance.

If you just cannot swing payments right now, and if you are at school part time, in the military, having trouble finding a job or going through economic hardship, you could qualify for deferment or forbearance, which allows you to stop making payments.For subsidized loans and federal Perkins loans, the government might pay your interest expense during this time. But for other loans, if you neglect to pay the interest while in deferment, it will accumulate and be added to your loan. By the time it's out of deferment, you will owe a lot more, which might leave you in an even worse situation. For these reasons, consider this option carefully before jumping in, and only if you truly cannot make your payments after finding sources of extra income and aggressively cutting your costs. If you're struggling to make payments, this post will help you.

Sign up for autopay.

Now that you know how much you want to pay, having your payments automatically deducted is just good sense. You'll never forget to make a payment, plus if you time it for right after you get a paycheck, you'll never even miss the money. The bonus is that all government and some private lenders charge a slightly lower interest rate--about .25 percentage points less--if you enroll.

Take the student loan tax deduction.

Don't leave this money on the table! If you are paying for a student loan and have an income under a certain threshold, you can deduct up to $2,500 in student loan interest from your taxes as of 2012. Learn more.

Choose a new bank.

Before you start this process, the most important thing is to choose a better bank. You have many more options than just that nationwide bank on the corner. You could switch to a credit union or online bank, both of which often have much more favorable terms than brick and mortar banks. Start your search at SavingsAccounts.com and Bankrate.com. Once you narrow down your choices to five options or less, write down and compare these factors for each bank:

• If the bank will charge maintenance fees for the account, and whether they kick in if you drop below a certain balance
• How convenient in-network ATMs are to your home, work and play (or if all ATM fees are refunded)
• Customer service ratings (MyBankTracker.com is a great place to start)
• The interest rate on your checking and/or savings account
• Interest rates on products you might want to use, like CDs, mortgages, car loans and personal loans

There's a lot more to consider when choosing a bank, so check out our list of what to look for in a new bank here. After you've chosen your new bank, continue with the steps below to make the transition.Time this will take: 1 day to 2 weeks

Transfer your automatic deposits and payments.

Ask your new bank for a "switch kit" which gives you all the information you need to move to the new bank, including instructions on changing automatic deposits and withdrawals.Next, check all your account activity in your old bank accounts, either in the My Money Center, online on your old bank's website or on statements going back several months. You're looking for any payments or deposits that are automatic or recurring. Make a list of everything that needs changing. Some things to look for include:

• Paycheck deposits, including freelance income direct deposits
• Social Security, disability, unemployment or other government income
• Monthly payments for music and movie services, charity donations, gym or other monthly memberships or newspaper subscriptions
• Transfers between your accounts, like deposits to your savings account from your checking account

Use the information in your switch kit to transfer these deposits and withdrawals to your new bank. For some things, like automatic charity or subscription payments, you just need to log into your new account and change your bank or debit card information.Time this will take: One to six weeks

Transfer some money to your new account.

You might be ready to zero out your account already, but hold off! This is where things get a little tricky. You need enough money in your new account to deal with any automatic transfers, deductions and payments you've switched. You also need enough money in your old account to handle any checks that haven't been cashed or payments you somehow missed.We suggest you look through your checkbook ledger or for invoices sent to you in the past few months, and make sure there are no outstanding payments you've made from your old account. If there are, a) make sure there's enough money left in your old account to cover them, plus a small cushion for contingencies and b) contact anyone who's been holding on to a check and ask them to go ahead to cash it. If drawing down your account also triggers maintenance fees that you didn't have before, that's another thing to consider.Once you're ready to transfer your money, you have a few options:

• Wire transfers. This is most the most convenient, but also the most expensive. Wire transfers from big banks can cost anywhere from $24 to $30. However, the money will deposit to your new account within a day. Use this option if you are transferring a large amount of money and will need access to it immediately.
• Electronic Transfers. This is similar to a wire transfer, but it costs less--either free or just a nominal fee of a few dollars. However, it will take one to three days to see the money show up in your account. Use this option if you are transferring a large amount of money and can do without the money for a few days.
• Certified checks. This is slightly less expensive than a wire transfer--no more than $10 per check. But you have to physically carry or mail the check to the new bank, and then it can take a week for it to clear. That means you won't have access to your money for that entire time. Because of this, we prefer some of the other methods here.
• Cash. This involves withdrawing cash and depositing it in your new account. While this is free as long as you use an in-network ATM or teller, and money posts quickly, it's also work-intensive. You can only draw a few hundred bucks at a time, and must physically carry it to a new bank. Also, it's dangerous. Fingers crossed you don't lose your wallet or get robbed! Use this option only if you are transferring less than a couple hundred dollars.

Time this will take: One day to one week

Get to know your new bank.

Pop into the My Money Center or your new bank's online activity ledger every day and make sure everything is running smoothly--deposits are showing up, payments are getting made, etc. Also notice if the lag time between the date of a deposit or transfer and the date when the funds are available to you is different at your new bank. If so, you may want to adjust some transaction dates. For example, if the timing is too tight between a regular deposit and a regular payment, set up the transfer earlier, or ask for a later monthly due date on that bill.Time to monitor activity: One monthTime to make adjustments: One day for each

Leave the old account open and check back.

If you close your former account and a transaction posts in it (your niece cashes her birthday check, you forget about an automatic deposit) then the account can automatically be reopened and go in the red (called a "zombie account"),  incurring overdraft fees without your knowing it until the bank happens to send a statement a month later. So leave a cash cushion in that old bank account, and check the My Money Center on a weekly basis (set a calendar alert for Monday morning, for example) and see if anything has changed. If an automatic deposit comes in or an auto-payment goes out, then set up that transaction with your new bank account. Wait until a whole month goes by without any account activity in your old account, you're sure all outstanding debts are paid, and all your recurring payments are posting in your new account, then you can move on to the next step ...Time this will take: One to two months

Close the account!

Now you can say with confidence that nothing will pop up and reopen the account. Head into your old bank and speak with a representative about closing the account. If you can't do this in person, you can also close the account over the phone or by mail. Withdraw the rest of the money from the account, get a check for the balance, have it wired to your new account or initiate an electronic transfer.Note that drawing your account down to $0 is not the same as closing it, so notify the old bank that you are closing the account, make sure to get a copy of the paperwork confirming you closed the account and save it for your records.

Understand why health insurance is important.

When you’re healthy, paying for health insurance might seem like a waste of money. But having health insurance safeguards your finances and your health. It gives you access to health care services and provides discounted rates for these services, so you’ll use them and prevent yourself from having serious health issues. Without coverage, your routine office visits, prescription medicines and especially your unexpected hospital stays could really drain your wallet.

Find out what plans are available to you.

Depending on your situation, you may have several options to consider. Lay them all out before you begin comparing the pros and cons. If you thinkIf you have a job … Your employer will probably offer some form of group health insuranceGroup health plans are benefit plans for employees run by an employer, organization or union., though you may or may not have a lot of choice in which kind of plan you can get.If you’re between jobs … Good news! You can temporarily extend the health insurance coverage you received from your previous employer. The bad news: This option, called COBRA (Consolidated Omnibus Budget Reconciliation Act), a series of federal health benefit provisions, is expensive. Another option is to buy an individual and family plan, or even short-term insurance, to cover the gap before you start another job. (If you're interested in buying either of these, you're in the right place! Keep following the steps.)If you’re a student … You have several options. Your parents can continue to cover you on their plan, you can purchase your university’s health plan, or you can buy your own individual planIndividual plans can cover an individual, couple or family and are purchased directly by the person seeking coverage..If you’re a recent grad … You can stay on your parents’ plan until you’re 26. Or, if you get a job, you can enroll in any group health insurance sponsored by your employer.If you have a partner or spouse … You can get your own health insurance or obtain coverage through your partner’s plan.If you’re starting a family soon … You can be covered under your partner or spouse’s plan, buy an individual or family plan or apply for a group health plan from your employer, union or other organization. (Again, if you want to buy your own, keep the following the steps to learn how!)If you’re low-income … Every state offers public programsPublic insurance plans, such as Medicare or Medicaid, are government-sponsored programs meant to cover people with low-income or disabilities. There are also programs that cover veterans, members of the military, federal and state government employees, and Native Americans. to help individuals or families who are struggling financially or cannot get approved for coverage, though the waiting lists can be very long.If you don’t fall into any of the above categories … You can buy your own health insurance plan online (which we'll show you how to do) or through an organization or a union.

Determine whether you are eligible for any of these plans now.

For some health insurance options, there may be a certain window of time when you can sign up, or a waiting period until you’re fully covered.You can apply to buy an individual plan anytime, though some have restrictions on certain benefits. Individual plans often have a waiting period (usually between 12 and 18 months) before they will cover prenatal care and delivery.When you start a new job, you have a certain number of days to sign on to your employer’s health insurance plan—it’s normally between 60 or 90 days. However, sometimes there is a waiting period before you are fully covered.Some employer-sponsored health coverage also has a specific time period during which you can sign up for a health insurance plan or make changes to your existing plan; this is often called open enrollment, and it typically happens in the fall. Read more about open enrollment here. Finally, if you’re between jobs, you can apply for short-term insurance or opt for coverage sponsored by COBRA, which lets you extend health insurance coverage from your previous job. You can choose to sign up for COBRA any time in the 60 days after you leave your job.

Know this health insurance lingo.

All health insurance companies require that you chip in for the cost of covered health care services; this is called “cost-sharing,” and it varies with different types of health plans. The following terms will help you figure out how much you’ll pay for a given health insurance policy.

• Premium: The amount you pay to the insurance company to maintain coverage, usually on a monthly basis.
• Co-payment (aka Co-pay): The specific amount you pay upfront for a specific type of service. For example, your health insurance plan may require you to pay a $10 co-payment for every office visit or prescription refill, and then will cover the rest.
• Deductible: The amount some plans require you to pay out of pocket before your insurance kicks in and covers other costs. It can be an annual deductible (i.e., you must spend $2,000 of your own money before your insurance covers anything) or service-specific, like a $500 deductible for every hospitalization.
• Co-insurance (such as an 80/20 plan): The portion you pay for each medical service before your plan pays for the rest. For example, a plan may require you to pay 20% co-insurance for covered health services, then the insurer pays the remaining 80%. That’s known as an 80/20 plan.
• Out-of-Pocket Maximum: The most that you will have to pay for health services in a year, often a combined cost for co-payments, co-insurance and deductibles. After you’ve paid that amount, your plan pays 100% of covered services for the remainder of the year.
• Health Savings Account: Some high-deductible health plans let you open a health savings account (HSA), into which you can contribute funds to pay for medical expenses. Any funds you put in this account cannot be taxed when you deposit them, and any money left in the account at the end of the year will “roll over” to the next year if you haven’t spent it. This is a great option for people who would like to save money while they’re working to cover their health care costs during retirement.
• Flexible Spending Account: Like an HSA, you can deposit funds into a flexible spending account (FSA) for medical expenses, and these funds will not be subject to payroll taxes. Unlike an HSA, though, flexible spending accounts do not allow money to “roll over” to the next year, so if you don’t use it, you’ll lose it.
• Health Reimbursement Account: Like HSAs and FSAs, a health reimbursement account (HRA) sets aside money specifically for health costs not covered by the company’s health insurance. However, the employer, not the employee, funds the account.

Learn the types of health insurance plans.

With the key terms you learned in the previous step, you’ll now be able to discern between the different kinds of health insurance policies.There are two main kinds of plans: 1. Those that let you visit any doctor, hospital or health care provider you want. These so-called fee-for-service or indemnity plans give you a tradeoff for your freedom of choice: They will only pay for a portion of the total charges. Most such plans have a deductible you must pay every year before the company will begin covering expenses, and many also require you to pay co-insurance.

• Characterized by annual deductibles and co-insurance, as well as out-of-pocket maximums; costs vary greatly depending on coverage

2. Those that give you an incentive to stick to certain doctors, hospitals and other health care providers. These so-called managed care plans have agreements with certain doctors, hospitals and other providers to provide medical services to plan members, so it’s usually much more expensive to stray from the health care providers in their network. There are three main types of managed care plans: PPO (Preferred Provider Organization) plans let you choose your health care providers, but they give you an incentive to visit the doctors or hospitals in their network by giving you a discount with those providers. Plans that are HSA-eligible (Health Savings Accounts-eligible) are an important sub-category; they are usually PPO plans designed to work with individual bank accounts, and are similar to 401(k) accounts because they let you save pre-tax dollars to pay for future medical expenses.

• Characterized by lower out-of-pocket costs, higher co-payments and higher cost of treatment outside the PPO network

HMO (Health Maintenance Organization) plans require you to stick with a certain list of doctors and won’t pay for any care outside of the list. They usually require you to select a primary care physician (PCP) to manage your care.

• Characterized by lower co-payments and fewer fees; any treatment outside the network, however, is rarely covered

POS (Point of Service) plans require you to choose a doctor from the network to monitor your health care, called a primary care physician (PCP). Only when your primary care physician makes referrals outside the network can you get coverage for out-of-network treatment.

• Characterized by low co-payments, low out-of-pocket costs and no deductibles for network care; high co-payments and deductibles for non-network care

Assess your needs.

To begin shopping for health insurance plans, figure out your particular needs by asking yourself the following questions. Your answers will help determine the kind of policy you should buy.How often do you visit the doctor? Are you on prescription medicines? If you’re young and healthy (read: unlikely to get ill) and if you’re trying to cut costs, you may decide to buy a fee-for-service/indemnity plan with “catastrophic coverage.” That means you’ll pay much less every month, but if you do need medical treatment, you’ll have to pay more out of pocket. For example, your premium might be $50 a month instead of $500, but you’ll have to pay $10,000 out of pocket, instead of $1,000, before the insurance company covers any costs. As you can see, it could turn out to be a risky bet.If you visit the doctor frequently for a chronic condition or regularly take prescription medicine, the opposite applies: you’ll probably want to pay a higher monthly premium to keep your co-payment and deductible low. In this case, you’ll probably want a form of managed care instead of a fee-for-service plan. You’ll have less choice of providers, but you’ll be able to keep costs down.Are you pregnant, or do you have children? If you are pregnant or planning to become pregnant soon, you’ll want to carefully examine plans’ maternity benefits. Individual plans often have a waiting period (usually 12-18 months) before they begin covering prenatal care and delivery. Group plans, which you can get through an employer or, in some states, your union or university, do not have the same restrictions, so if your employer, union or school offers a group plan, consider applying for one. Frequent doctors’ visits, as well as labor and delivery, can be very pricey; a plan that covers you 100% after a deductible, or an 80/20 plan, may be the best options. Both fee-for-service and managed health insurance plans offer maternity coverage, but they offer differing degrees of freedom. Fee-for-service insurance will let you pick your own medical doctor and hospital, but may limit the coverage for each health procedure. Managed plans will offer coverage for providers within the network, but will charge if you go outside the network. Don’t forget to find out how much it costs to add your baby to your plan.If you already have kids, don’t automatically decide on a family plan without comparing your other options. Family plan coverage varies wildly. It may be best to choose a plan that’s best for you and your child, and have your partner or spouse buy a different plan or accept a plan offered by an employer or organization. You probably will want a form of managed care, since fee-for-service plans traditionally do not cover preventative medicine, making check-ups, office visits and shots expensive for families.Do you have savings, or do you live paycheck to paycheck? If you haven’t built up savings, you’ll want a health plan with a low deductible or no deductible at all, such as a Point of Service plan. That way, if you have an accident, you won’t have to pay a large sum out of your own pocket. You might even consider applying for your state’s public health care plan. On the other hand, if you have savings and can afford a higher deductible, you might opt for a plan with lower monthly premiums.

Search for your options.

Compare all of your health insurance options to find the policy that best suits your lifestyle. Even if your employer offers health insurance, don’t assume it will cover your specific health care needs. If you realize it doesn’t, it’s worth checking to see if you could be getting more bang for your buck with a different plan.Go to eHealthInsurance.com and enter your age and ZIP code to get free quotes on different policies that may suit you, including individual and family plans, high-deductible health care plans and HSA-eligible plans.

Weigh the pros and cons of each plan by these criteria.

• Type of plan: Consider your needs and how much freedom in choosing providers you’d like, and decide whether an indemnity/fee-for-service plan or a type of managed care works better for you.

• Costs: Consider each plan’s premium, deductible, co-payments and co-insurance, and determine which plans are in your budget. Remember, a high-deductible plan is good if you want a low monthly premium and have savings, and vice versa.

• Health benefits: Buy the plan that offers the benefits that you need. Avoid expensive benefits, like prenatal care or prescription drugs, if they aren’t necessary.

• Physician: If you have a favorite doctor, figure out which plans she accepts and consider buying one. This could be important if you’re planning to start a family and you have an OB/GYN you really trust.

• Brand: Are there brand-name carriers that you prefer or want to avoid because of a bad past experience? Is there a prescription medicine you need that is covered by one plan but not another, or does one plan offer a lower co-payment for it than another? Pick the plan that best covers the brand of prescription medicine you prefer to take.

Apply for coverage.

Once you decide on a plan, you can apply for coverage a number of different ways, depending on who’s helping you get health insurance: through your employer’s HR department, a professional organization, a union, a government program or a website like eHealthInsurance.com. To apply, you’ll provide information about yourself—your age, location, your health history—as well as your family members. It can take anywhere from a few days to a few weeks before the insurance company notifies you of its decision.

Determine if you need to change your W-4 at all.

You only need to fill out a W-4 if:

• You or your spouse got or will get a new job
• You received a tax refund in April that was larger than $1,000 or had to pay additional taxes
• You got or will get married or divorced
• You have had a child since the last time you updated your W-4 or will have a child in the upcoming year
• You purchased or will purchase a home
• You got hit with the Alternative Minimum Tax (or if you think you will get hit with it because you got a raise; this tool from the IRS can help you figure that out)
• You got or will get a windfall, like prize winnings or a lot of income from investments

If none of these apply to you, you don’t need to fill out a W-4 at all! Look, we just saved you some work!

Get a W-4.

Get in touch with the human resources department or equivalent at your job and request a W-4 to fill out. You can also download it here. If it’s your first day, HR will hand one to you without you even needing to ask. So nice of them!

Understand allowances.

An allowance is what your employer uses to determine how much you will probably pay in taxes and hence how much to withhold. They are related to the exemptionsExemptions reduce the amount of income you will be taxed on. For instance, for the 2011 tax year, you could have deducted $3,700 from your gross income to arrive at your taxable income. you take on your taxes, but not the same, so don’t expect the number of allowances to equal the number of exemptions. The more allowances you have, the less money will be withheld from your paycheck.

Get familiar with your situation.

You want to find out your ideal number of allowances, but before you can use the withholding calculator in step 5, you need to know the answers to the following questions:

• Did you have zero tax liability last year—as in, you didn’t have anything withheld and you didn’t pay anything in April—and also expect to pay nothing this year as well? Your ideal number of allowances is 0. You indicate this on line 7 of your W-4.
• Does someone claim you as a dependent? Find out here if this applies to you.
• If you’re married, does your spouse make less than $1,500?
• Do you have a dependent? Find out if you have dependents (this isn’t just for your children).
• Are you filing as head of household? You need to be supporting a dependent to claim this. Find out your filing status.
• Will you pay $1,900 or more in qualified child care or dependent expenses? Find out the answer here.
• Will you claim the Child Tax Credit? Learn more.

Use the IRS withholding calculator.

The IRS withholding calculator will walk you through determining the number of allowances you should take.

Fill out your W-4.

If your finances are fairly simple, you can just use the first sheet, which is remarkably straightforward for a tax form. But there are some instances when you should use the worksheet on the second page to decide the number of allowances you will take:

• You plan to itemize your deductions next April. Find out here if you should itemize your deductions.
• You are married and you and your spouse both work and earn more than $1,500.
• You yourself have two jobs.

Decide if you want additional withholding.

When you decide how much to withhold from your taxes throughout the year, you want to choose an amount that will result in you neither receiving a refund nor owing a large additional amount in taxes come April. If you got hit with a tax bill when you filed this past year and you are being recommended the same withholding as last year, you can add in additional withholding so you don’t have a big tax bill again next year. Add in the additional withholding on line 6 of the form. Just divide the amount of your tax bill by the number of pay periods left in the year and write that down. For example, if you owed $3,000 in taxes last year and get paid twice a month, you’ll put $125 on line 6 ($3,000 divided by 24 pay periods).You should also ask to have additional withholding if you will fall into the AMT this year (see step 1), or you’ve gotten or will get a windfall in 2012 that will be taxed.

Sign the form and turn it in to your employer.

Just like it says!

Redo your budget to reflect the change in your paycheck.

Now that your withholding is different, you want to make sure you are prepared for the change in income, so pop into the My Money Center and rework the numbers in your budget so you continue to live below your means and save what you need for the future.

Come up with a rough budget.

Before you plan anything, you need to know how much you can spend. Remember that almost everything can be more expensive on a vacation, so you can’t assume a weeklong trip will cost as much as a week’s worth of living expenses. This is especially true if you’re going to an expensive city, like San Francisco or Paris. In addition to paying for travel to your destination, you’ll be paying for lodging, eating out, cocktails and all the activities you’ll want to enjoy, plus souvenir shopping.Perhaps you’ve already been saving for your big adventure. If so, congratulations! See how much you have in that savings account (not your emergency fund, please). If you don’t have savings yet, you’ll need to start putting money into a savings sub-account right away. If you’re not sure how much to set aside, don’t worry. We’ll help you figure it out in a few steps.

Decide whether you need a travel agent.

Did you know a travel agent can actually save you money? That’s because you won’t have to pay her for her services; wholesalers and hotels will. She’s just getting you the best price! You should consider getting a travel agent if you’re:

• traveling internationally
• traveling with a group
• not sure where you want to go yet

Read more about travel agents here to decide whether you need one.

Choose a target date.

When choosing a date, you’ll want to balance several factors:

• when it’s convenient for you to take off work (i.e., not March if you’re an accountant)
• your traveling companions’ schedules
• how many vacation days you have, and how many you need to reserve for other travel or the holidays

Choose a location.

Now comes the fun part: choosing your vacation spot! Consider all these factors:

• How you will get there and the cost: Research how much plane, train or bus tickets will cost around your target date, or the cost of gas to drive there. See if low-cost carriers like Air Tran and Southwest service that destination; if so, all fares—even from high-cost airlines—will typically be lower. Find out if airlines like Jet Blue are offering any deals to certain destinations. Also sign up for email alerts from sites like Travelzoo, Airfarewatchdog  and Yapta to see if there’s a deal for a place you’d like to visit.
• The cost of lodging and food there: Browse travel guides, websites like TripAdvisor, Lonely Planet and Budget Travel and ask other travelers on travel forums for an estimated daily budget. If you’re going to a foreign country, find out whether the exchange rate will automatically make everything more expensive—or less.
• What kind of activities you will do and their cost: Are the main attractions expensive, like shopping and going out (Vegas), or cheap, like hiking (Boulder)?
• Destinations that will be in their off-season (and therefore less expensive) during your target dates: Will it be miserable in the off-season (the Caribbean during hurricane season), or could you still have a good time (Rome in March)?
• New clothing or gear you may have to buy: For example, will you need hiking or snow gear? How much might that cost?
• Whether the country charges a fee for entry: For example, some South American countries charge U.S. citizens $100 or more just to get in.

Revisit your budget.

Save on airfare.

If you’re flying, this is likely to be one of the biggest—if not the biggest—expense. So spend some time on this!

• Search multiple discount sites: Use discount flight search engines like Kayak, CheapoAir, ITASoftware, cfares.com ($50 annual fee) and Vayama (for international flights only).
• Shop on Tuesday mornings: Fare sales are often launched Monday nights, so other airlines have matched their prices by Tuesday morning.
• Consider flying out and returning in the middle of the week: Flights on days like Wednesday tend to be cheaper than flights on, say, Sunday.
• Search how full your flight is: You can tell if your flight is full or empty by starting to buy tickets online and “choosing your seat.” That will show you how many seats are taken already.
• Use online tools: Kayak’s “Hacker” tool can help you find two one-way flights to make a round trip that saves money. Kayak also offers a fare chart so you can see ticket price trends, and Bing offers a price predictor tool to help you guess if fares are going up or down.
• If in doubt, book earlier: If Kayak and Bing can’t provide much guidance, it’s better to book in advance when more seats are available. Only bide your time if your flight isn’t too full and you know the price is a lot higher than it should be.
• Follow airlines: Some airlines promote one-hour sales on Facebook or Twitter only, so follow an airline for the best deals.
• Use tips tailored to the time of year you are flying: Each flying season has its own tricks for getting the best tickets. Read our guide here.
• Consider other options: New bus services like Bolt Bus offer affordable and comfortable connections between large cities. Also look into the train, which will usually take you from city center to city center and is largely free of the fees that come with air travel. Train prices are typically lower than airfare but higher than bus tickets.

Save on car rental.

After saving on airfare, don’t get fleeced on your rental car. Here’s how to save if you have to get a car:

• Watch out for hidden fees and taxes: When you see a great price, look further to make sure it’s not too good to be true. Possible hidden fees include: Collision Damage Waiver fees, airport surcharges, fuel charges, mileage fees, taxes, additional driver fees, underage-driver fees, out-of-state charges and equipment-rental fees for car seats or ski racks.
• Avoid renting from the airport: If possible, take a free shuttle to your hotel and rent from there.
• Decline rental insurance: The clerk might press this on you. But you are likely already covered by your own car insurance and/or credit card company—so check with them first.
• Play around with rental time: If you’re renting for six days, see how much it costs to rent for a week: A weekly rental rate could be lower than six individual days. Also, try different days if possible: Many companies offer specials at certain times of the week or year.

Book your lodging.

You can try to find good hotels through deal sites, such as Kayak or TravelZoo or with your frequent flyer card or credit card rewards, but you might consider less obvious options. Airbnb lets you rent homes and apartments, often for lower prices than hotel rates. Or swap homes for free with another traveler through a website such as VRBO, HomeAway or Home Exchange. The bonus with these types of lodgings is that you can cook some of your meals and store leftovers to save on food.

Decide whether you need travel insurance.

Travel insurance is there to cover you in case of last-minute cancellations, emergency medical care, lost or delayed baggage and other mishaps. Check with your credit card company first to see if they cover what you need. But you may need more coverage if you’re traveling internationally, especially to risky areas, or with children. Learn more here.

Know credit and debit card policies.

Speaking of credit and debit cards, do you know what their policies are? If not, you could rack up hundreds of dollars in fees in just a few days.If you’re traveling domestically, find out if your destination has in-network ATMs. If you’re traveling internationally, find out if your debit and ATM cards charge fees for using non-network ATMs. Also find out if your credit card charges fees for foreign transactions. If you have time before your trip and you anticipate traveling often, you might apply for a card that doesn’t charge any of these fees.Finally, even if you’re just traveling to another state, tell your credit card company in advance, so they don’t think your card has been stolen and block your card.

Know your cell phone plan.

Here’s another way in which fees could quickly pile up: cell phone charges! Make sure you’re familiar with your plan. Data, texting and calls are all more expensive in other countries, and even in the U.S. you can end up in the expensive roaming mode. One fix: turn off your data roaming and just use your phone sparingly. Or use some smartphone apps like Skype, Viber and Whatsapp that allow you to use an internet connection to make calls or text.

Budget for your activities.

You know overall how much you can spend, but without a clear daily plan you could go over. Look at how much money you have left after booking your travel and accommodations. Divide that by the number of days you’ll be traveling: this is how much you can spend per day on food, local transportation, activities and souvenirs. Do a quick calculation now to make sure that you have a comfortable cushion after your projected food, local transportation and activity costs.Lastly, come up with a system for keeping track of what you’ve spent. If you have access to a computer and the My Money Center to automatically track your expenses, great! If you don’t, bring a notebook with you, or give yourself a daily cash allowance to spend.

Pack Smartly.

Packing well is important for two reasons: First, you don’t want to forget anything and have to buy it when you arrive. Second, you want to avoid checked luggage fees if possible, and you definitely don’t want to incur overweight luggage fees.Start a packing list a few weeks in advance so you don’t forget anything the day of. Research all your activities and the weather at your destination so you’re prepared. Pack items that are versatile and can be easily remixed into new outfits. Wear your bulkiest items while traveling. Leave extra room in your luggage so you can bring home your souvenirs. Finally, to avoid being pick-pocketed, consider packing a money belt that goes under your clothes if you’re visiting a crowded, touristy destination. Or pack a purse with zippers and latches that you can easily carry toward the front of your body. Don’t wear backpacks or fanny packs. Finally, unless you’re traveling to Fashion Week, don’t pack flashy or expensive clothing and jewelry.For more smart packing tips, read this.

Have fun!

Here are some more tips for enjoying your adventure:

• Eat a big breakfast at the hotel to save on eating out.
• If you have some nice restaurants on your list, find out if the lunch menu is more affordable.
• If you’ll be using local public transportation a lot, buy passes by the day or week instead of individual rides.
• One cheap and fun way to soak in a destination is to find the nearest park, where you can hike, have a picnic and people watch.
• Guidebooks are great, but another way to have a memorable time is to befriend as many locals as you can—on the subway, in a café, in the boutiques—and ask them what they recommend you do while you visit.

Stop increasing your debt.

Simply making payments toward your debts isn't enough to pay them down—you also have to also begin living within your means. In order to stop increasing your debt—especially credit card debt and personal loans—you have to do two things. First, you need to figure out how much you need to live on per month. Run through our budgeting checklist to find out how much money you need to set aside for shelter, food and other living expenses. Now that you know how much you have to live on, your second step is to stick to set up a system that keeps you from spending more than this amount. Subscribe to one of the following:

1. A cash diet: You give yourself just as much as you can spend every week. This has the benefit of making every purchase more meaningful, as it is psychologically harder to part with cash than to swipe your card.
2. A“cashless” diet: Leave your credit cards at home and instead use your debit card for all purchases, making sure not to go over your weekly limit. This has the benefit of allowing you to track everything you spend, without racking up more debt. Make sure you don’t have “overdraft protection” on your debit card, which could let you overdraw your account and rack up fees.

Tally up all your debts.

If you haven’t yet, connect your accounts to the My Money Center to see how much debt you have. Most can be automatically tracked by connecting your accounts. Any that can’t, like taxes owed, can be added manually. Include these debts:

• Credit card debt
• Car loans
• Personal and payday loans
• Student loans
• Mortgages
• Small business loans
• Taxes owed to the IRS

Determine how much you can pay toward your debt every month.

Before you can begin to tackle your debt, you need to know how much is coming in and going out of your wallet. If you haven’t buckled down and created your budget yet, you must complete the budget checklist before you continue. Once you've budgeted for your monthly essentials, you'll know how much is left over to pay down your debts.

If you are feeling overwhelmed, consider credit counseling.

If you realize after completing your budget that the amount you can allocate to debt payments is not enough to meet your minimum monthly payments, it might be time to seek credit counseling. Call up the National Foundation for Credit Counseling and read our guide on finding a reputable credit counseling agency in order to avoid scams that will put you deeper in debt.

Research the interest rate for each debt and prioritize them.

If you can’t find the interest rate in your monthly statements, the document you received upon opening the card or in your online account, call up the lender to verify what it is. Rank your debts from highest interest rate to lowest interest rate, but always prioritize credit card debt over debt from loans, even if the credit card has lower interest rate. The interest on credit cards snowballs, whereas the debt on other loans is set at a fixed amount.

Call each of your lenders to negotiate down the interest rate.

We don’t want you paying unnecessary interest, which can really add up. So first see if you can bring that down by calling up each lender. Lenders want you to repay them, so if you’re more likely to pay them back at a lower interest rate, that’s an incentive for them to help you. If they turn you down the first time, keep calling back. The first person you talk to might not be able to help you, so ask to speak to a supervisor. If your finances have taken a dive recently and that’s why you are struggling with this debt, you might even qualify for a hardship program, which would lower your interest rate or your minimum monthly payments or both. If you’ve been getting offers from other companies, mention those offers in your conversation.

Calculate your payback time and total interest.

Use this calculator to calculate your payback time and total interest paid. Let’s say you have:

• $5,000 on your Visa with a 15% interest rate and $50 minimum
• $2,000 on your Mastercard with a 20% rate and $15 minimum
• $8,000 on a car loan with a 10% rate and $250 minimum

You have $500 in your monthly budget for paying it off. You’ll see that the calculator will have you paying the minimum on the Visa and car loan, because they have lower interest rates. All the extra will go to your highest interest rate card, the Mastercard, until it’s paid off, which will save you money on interest. If you stick to your plan, you’ll pay off all your debt in 18 months and pay $831 in interest. But we’re not done yet.

Search for balance transfer offers.

If you think you can pay your debt off in just a few months, or your current interest rates are less than 10%, this step probably isn’t worth your time and you can move on to step 10. That’s because cards often charge balance transfer fees, which could be more than the interest you will save. Otherwise, use Bankrate.com to search for credit cards that offer the opportunity to transfer to a card with a lower or 0% interest rate. Comparison shop, looking at these factors:

• Balance transfer fees: These fees are a percentage of the debt being transferred, which are typically around 3%.
• Introductory interest rates: These are usually 0% to entice you to transfer your debt.
• Regular interest rates: These are the interest rate you’ll get after the introductory period is over.
• Accrued interest: If you don’t think you can pay off your credit card before the introductory period ends, don’t sign up for a card that charges accrued interest. When the intro period ends, you’ll have to pay the regular interest rate on your entire transfer—not just what you have left to pay.

The higher your credit score, the easier it will be to find a balance transfer offer with especially good terms. You can also try this with other types of debt, such as student loans or personal loans, and you could consider refinancing your mortgage. As with a credit card balance transfer, make sure the fees you pay won't outweigh the interest you will save.

Transfer your balance(s).

Once you’ve found some promising balance transfer offers, call up the companies and ask:

• What is the balance transfer fee? That seems really high, can you bring it down? Is it capped? If not, can it be capped at a dollar amount, like $75?
• Do you have anything better to offer me?
• Will a better offer be coming up soon?
• When does this introductory interest rate end?
• What is the rate after the introductory period ends?
• Will you charge accrued interest if I don’t pay the entire balance before the introductory period is over?

Once you select a card, use it to its max. You may even be able to transfer balances from two cards. Let’s say you find a 0% balance transfer offer from Chase with a limit of $6,000, a 12-month introductory period, a post-introductory period interest rate of 16% and no accrued interest charges. You can put a total of $6,000 of your credit card debt on this card.Using the debt scenario we laid out above, you could move the entire $2,000 from your Mastercard (since it has the highest interest rate) and close to another $4,000 from your Visa to the Chase card to take full advantage of the low interest rate. (You won’t be able to move the full $4,000 because the balance transfer fee counts toward your $6,000 limit.)Remember that if you do this, the 0% interest card must then be your top repayment priority because you want to make sure you pay as much as you can—ideally all of it—before the rate expires and, in this case, jumps to 16%.Now that you have the 0% card, you can use this calculator again to see roughly when you’ll finish all your debt payments, but note that it will assume you are paying your 0% card last, since it has the lowest interest rate. Though you will actually pay this card off first, the calculator can still give you a rough timeline of your new debt plan.If you cannot transfer to a card with a lower interest rate, that’s OK. You can stick to your original plan. If you can’t handle your debts without transferring them to a 0% interest rate card, you might consider credit counseling, as mentioned in step 4.

Set up your payment plan.

Focus on paying off one credit card at a time. Pay the minimums on all your debts except the top debt, and then for the top debt, pay as much as you can. After you pay off the top debt, pay as much as you can toward the second-highest debt while paying the minimums on the others. Continue in this fashion until you’ve paid off all your debt, but keep in mind the end dates of the introductory periods on any cards to which you’ve transferred balances.

Free up more money in your budget.

To pay off your debt faster and save on interest, look at areas where you can cut back and come up with more money to put toward your debt. One way to do so is with the Cut Your Costs Bootcamp, which will help you cut expenses in every area of your life.

Look into earning more.

Don’t just go super-frugal. Also try to earn more, a tested and proven method of paying off debt. Use the Build Your Career Bootcamp to up your salary and/or use creative methods to bring in extra income, like selling your unwanted possessions on eBay, picking up jobs on Taskrabbit, and turning your hobby into a source of income.

Don’t neglect your retirement and emergency funds.

While paying off your debt is important, we would like to reiterate that you should not ignore your retirement or emergency fund in the pursuit of a $0 balance. If your employer offers a 401(k) matching plan, take full advantage, or open an IRA. Also send some money every pay period to your emergency fund, until you have the equivalent of at least six months of your paycheck in the bank. We don’t want you to put emergency expenses on a credit card!If you feel like you need to get a good handle on your overall financial life, sign up for our Take Control Bootcamp, which will walk you through handling your entire financial picture.

Finally, smile!

You’re on the road to becoming debt-free! As long as you stick to your budget and keep making your payments, you can get there by following the clear plan you created.

Examine your wasteful and expensive grocery habits.

We each have so-called "spending triggers," and these apply to buying food, too. Look through your fridge and pantry and take a minute to think about the groceries you bought in the last month, when they went to waste and when you paid more than you should have. Do you buy fresh veggies only to have them spoil before you use them? If so, consider buying frozen vegetables instead of fresh (storing them properly will make a big difference, too). Or are you always running out of staples like milk and eggs, causing you to run to the local corner store, which is twice as expensive? Make sure you put those staples on your weekly grocery list. Whatever your bad habits are, take a few minutes to brainstorm new habits that can prevent you from wasting food or money.

Plan your menu.

Before heading to the store, decide what you’re going to make for dinner each night for a week, and what you (and your family, if you have one) are going to eat for lunch (that means recipes, not prepared or processed meals). Choose recipes that use the same main ingredients, like chicken or rice, so you can do prep work once for the whole week to save time. Planning your meals in advance will also cut down on the trips you make for just one or two ingredients, saving you time and transportation costs. For a game plan with a full month of recipes, check out our Food for a Month series.

Try meatless Mondays (or meatless lunch).

Meat and fish can be one of the most expensive items on your list, and what you might not know is that you can get plenty of protein from a plethora of cheaper meat alternatives like beans, quinoa and more. As you plan your menu, look for healthy vegetarian recipes to replace some meat-centered meals. Meanwhile, when you do buy meat (assuming you aren’t a vegetarian), buy it when it’s discounted and throw it in the freezer for later.

Make a better list.

Now that you have your weekly menu, make a list of the ingredients you need for meals, plus staples and healthy snack options. Even if you're usually good at remembering everything, putting it in writing will ensure you don’t buy needless things just because they're on sale. Organize your list by category (produce, dairy, meats, pantry staples, etc.), so you’ll be in and out quickly, instead of doing laps around the store, which has been proven to make us buy more. For some of our favorite apps that help you make the smartest grocery list ever, read this.

Consider coupons.

Many frugal grocery shoppers swear by coupons, but in order to use them, you’ll need to be organized and prepared to make it work. Look at your shopping list and see if any of your needed items are on sale in the circulars of your chosen grocery store, on websites that collect coupons or in the mailers of your favorite brands. Remember to stick to your list—don’t buy something just because you have a coupon for it. (That would increase your grocery bill, defeating the purpose of this checklist!) Then, organize all your coupons by type of food for faster grocery shopping.

Consider cash.

If you have the tendency to overbuy at the grocery store, pay in cash instead. After you determine how much you can spend per month on food (a good starting point is $300 per person), divide that by the number of times you plan to shop each month. Bring that amount in cash with you each time. Another plus to paying in cash: studies have shown that not only do we spend less than when using credit, we're also less likely to buy junk food.Note: You may want to keep $20 in a different compartment of your wallet as a cushion, so you're not stuck at the register if your mental math doesn't quite add up.

Get rewarded with your card.

Sign up for loyalty cards at grocery stores you shop at frequently. Again, if an item’s not on your list, don’t buy it just because it’s discounted. You can get even more rewards on top of store discounts by shopping with a credit card that offers cash back or points. (However, if you’re trying to curb overspending at the grocery, then we still recommend cash for you.) If you spend $500 per month and have a cash-back card that gives you 3% on groceries, you'll get $180 back in a year—and you don't have to do anything to get it!

Find the best store.

Examine your shopping list. If you’re mostly getting in-season, locally grown produce, your nearest farmers’ market might be the cheapest option. If you’re mostly buying staples like eggs, milk and pasta, consider going to a store that sells in bulk, like Costco or BJ’s, for more savings. If you’re unsure which grocery store in your neighborhood is cheapest, look at their websites, if they have them, or remember to compare prices for a few of the staple items on your list next time you're there.

Have a snack before leaving.

It's conventional wisdom that's truly wise: Shopping on an empty stomach will make you more prone to impulse buys and purchases of junk and snack food. Rather than hitting the store while ravenous, have a nutritious snack before you go, so you can stick to your list without being distracted by your growling stomach!

Use a cart, not a handheld basket.

Though baskets hold fewer items than carts, shoppers actually buy more junk food when using a handheld basket. Researchers attribute this fact to the arm flexing necessary to hold the basket, the pain of which causes shoppers to seek out instant gratification in the form of easy, sugary snacks.

Shop the perimeter.

Grocery stores are designed so that the fresh foods, including produce, dairy, meat, fish and bakery items, are stocked along the walls. The inner aisles, by contrast, are stocked with processed foods. Sticking to the perimeter will help you avoid the unhealthier and more expensive processed foods.

Don’t buy what's at eye level.

A lot of thought is put into grocery store design. The most expensive versions of an item are put directly at eye level so it’s the first thing the customer sees—and puts in her cart. If you spot the item you need on a shelf, like tomato sauce, look on the lower and top shelves as well. Odds are you’ll find a less expensive version.

Buy generic.

Generic or store-brand items generally taste just as good as brand-name items—because they're made with the same ingredients. They just cost far less. For example, you can save between 25 and 50% buying generic breakfast cereal versus a name brand. Similarly, staples like flour, sugar, salt and spices are virtually identical to name brands because they're subject to the same government regulations. If you do notice a taste difference, you can always return to the more expensive version on your next trip. Find out which generic brands are the best.

Read the fine print on multiple deals.

In order to get shoppers to spend more, supermarkets advertise deals like “5 Cans for $5!” or “Buy 10 for $10.” John T. Gourville, a professor of marketing at Harvard Business School, says it’s about the power of suggestion, and that many people end up buying the amount the store recommends, when in reality you can usually get the same price per item without lugging home ten cans of baked beans.

Ignore store displays.

Be very skeptical of items on end-of-aisle displays. Once again, supermarkets are trying to trick you by suggesting that these items with their neon price stickers are a steal. Often, they’re no cheaper than other versions of the same item located elsewhere in the store.

When you get home, store your food properly to ensure it will last longer.

All your careful planning will be for naught if you don’t store your food properly. Check out our guide to food storage to distinguish your fruit basket from your whole-wheat flour storage, and follow it when you get home. But don’t store all of the produce yet—we’ll address that in the next step.

Cook your produce right after shopping.

If you’re the kind of person who always discovers your veggies rotting in your crisper, we have a trick you’ll love. After you’ve stored your meats, dry goods, dairy and eggs, start in on produce preparation. Wash and tear your leafy greens into a salad-ready bunch. Chop up and roast, steam or sauté your other vegetables, then store them all in meal-sized portions—in the fridge for the week or in the freezer for later. Voila: You’ve just made your own fresher and less-expensive convenience food. Now, your veggies will end up in your meals instead of wilted in the garbage.

Bring two forms of ID or your passport.

When you arrive on your first day, your employer will give you a form called an I-9, which verifies you are eligible to work in the United States. In order to complete it, you’ll need either a valid U.S. passport, or a state-issued driver’s license plus a Social Security card. If you don’t have one of these, you can find a full list of appropriate IDs here.

Fill out your W-4.

You’ll also be asked to fill out your W-4 on your first day. This determines how much in taxes will be withheld from each paycheck. If this is your first time ever filling out a W-4, don’t worry—your taxes are most likely very simple, and you can follow the instructions right on the sheet. However, if you’re at all unsure how many allowances to take, we provide a full explanation of how the W-4 works here.

Set up your paycheck for direct deposit.

On your first day, you’ll probably also receive a form that gives you the option of getting your paycheck deposited directly into your bank account, which will make your life much simpler. Some companies don’t even have a form—they just request you hand them a voided check. We think it’s best to put your first paycheck in your savings account (we’ll tell you how to get money into checking later), so you’ll need to know the routing number and account number for the bank that holds your savings. You can log in to your account or call your bank to find out. Some banks even provide a direct deposit form that you can print and hand in. Later on in the checklist, you’ll decide whether you’d like to have your whole paycheck go to savings permanently.

Digitally link your savings account to your checking account.

You won’t be transferring any money today—you won’t have your first paycheck for a couple of weeks at least. But linking your two accounts together now will ensure that when your first paycheck arrives, you’re ready to send yourself some spending money. To do so, log in to the account where your paycheck is being deposited, and find the option for “transfers.” In order to link your accounts, you’ll need your checking account's routing number and account number, both of which are found on a check for that account. Follow the instructions from the bank to complete the process, which might take a few days.

Review your employee handbook.

Now is the time to make sure you thoroughly understand your company policy on holidays, vacation, hours, overtime, the dress code and more. You’ll want to be familiar with how many days you can take at the beach, whether sandals are appropriate in the office and if you get free dinners for working late!

Set up your health care benefits and flex spending account.

This is an extremely important financial decision, as you won’t get another chance to change your preferences until open enrollment in the fall. Read this guide for setting up your health care benefits and flex spending account.

Sign up for your employer-sponsored retirement plan.

What if you had the choice of buying a summer dress for $75, or keeping that money, having someone else double it, and then watching it grow by 7% every year? We hope you’d take the latter choice. If your company offers a 401(k), 403(b) or SIMPLE IRAA SIMPLE IRA is an employer-sponsored retirement plan for small businesses, including self-employed individuals. It often offers a matching component. with matching benefits, then–hey, pay attention!—you’re about to get free money. Make sure you’re contributing at least the match percentage or you’re turning down that free money. For a complete guide to choosing your retirement accounts, read this.

Maximize your benefits.

Now it’s time to take a look at all the benefits your company offers. If it has a program that allows you to buy public transit passes with pre-tax dollars, signing up can save you hundreds of dollars of savings over a year. Or maybe your company offers discounts on museum visits or gym memberships, or the gym discount might come through your health insurance. Some companies match your tax-deductible charity donations each year up to a certain dollar amount. Read this complete guide to tax-free benefits, see what your company already offers and maybe even suggest a couple new benefits to human resources if you work in a small company.

Set up your workspace.

Now comes the fun part! It’s time to customize your workspace for maximum motivation and efficiency. To get inspired, read the four tips to improve your office space, or even try a little bit of practical feng shui for your desk. Your boss will notice that you’re set up and ready to work!

Get organized.

Next set up a personal organization and time management system that helps you to stay on top of your duties and makes sure you get the most of every hour. You might have to tweak it after a few days or a week as you get comfortable with your duties. It should enable you to:

• Organize and find information when you need it
• Prioritize your tasks so that you are always using your time most effectively
• Manage your time so that you have the flexibility to deal with crises but can progress steadily on longer-term work
• Get a bird’s eye view of entire projects, so you can plan each from start to finish
• Help you identify potential crises in advance
• Track your progress and results, so you can easily communicate them to coworkers, clients and superiors
• Learn from each week

Understand your first paycheck.

When your first paycheck arrives, look it over and understand it. You want to make sure it’s correct and that you know exactly where your money is going. While not every paycheck is laid out in exactly the same way, you should see each of the following on it:

• Salary: This is your income. Find the number representing your gross income during this pay period. Pull out a calculator, multiply that amount by the number of pay periods in a year, and you should have the official salary you were promised. If not, it’s time to call HR.
• Pre-tax items: Also known as deductions, these items get taken out of your paycheck before you pay taxes. The more deductions you have the less you pay in taxes. It can include things like contributions to your 401(k) or 403(b) plan, a flexible spending plan, health premiums and transit check. (The more of these you have, the better! See step number 8.)
• Taxes: Taxes are taken from your paycheck after deductions (or pre-tax items, above). Each line of your taxes is for a different type of tax, such as Social Security, Medicare, federal, state and local.
• Net Pay: This is the final value of what will be deposited in your account after pre-tax items, taxes and any other expenses (such as health insurance) have been deducted. Your net pay, not your gross income, is what you will use to build your budget! (Sorry.)

Reassess your budget in the budgeting tool.

Now that you know exactly how much will drop into your bank account every pay period, you can reassess your budget. Look at how much you get each month and then determine:

• How much you need to live on (this should equal about 80% of your paycheck)
• How much you can contribute monthly to your emergency fund, financial goals, etc. (this should equal 20%). If you would like to be walked through setting up a budget and are wondering where the 80% and the 20% guidelines are coming from, we have a checklist right here that will help you do that.

Decide how you will handle your paycheck.

Now that you know how much you’ll be contributing to your savings account every month, you’re ready to decide how to handle your direct deposit. There are two ways we suggest directing your paycheck:

1. Split it: Have your emergency fund contribution and other savings contributions (the 20% you determined above) directly deposited into savings, and the rest (the 80%) into your checking account for living expenses. The benefit of this method is that the money going into savings will be out of sight, making you less likely to spend it.
2. The other option is to send it all to your main savings account, the way it is currently set up. If you go for this option, in the next step, we will then create a transfer (of the 80%) to your checking account that essentially functions as an allowance for your bills and other spending money. While this method is good for putting savings first, if you think you might be tempted to give yourself a bigger allowance for your living expenses from time to time, then go for option 1.

Revise your direct deposit arrangement at work or set up an auto-transfer to your checking.

If you decide to split your paycheck so 20% is going into savings and the rest into checking, then go back to your human resources department and change your direct deposit arrangement. The easiest way to add your checking account to your direct deposit is to bring in a voided check, which will have both the routing and account numbers on it. If you are going to have your entire paycheck deposited into your emergency fund, pop into the bank accounts that you linked in step 4 and set up an auto-transfer for the 80% to your checking account. If you only get paid monthly, then set up two monthly auto-transfers so you get your money spread out in doses, or even a transfer every week! You’ll avoid the end-of-the-month panic when you spend everything too early.

Set up transfers to your other savings goals.

Remember that 20% of your income should go toward “financial priorities,” which are retirement, an emergency fund, debt payment and other savings goals. (However, this is only based on your take-home pay, so it excludes whatever you may be contributing toward, say, retirement through an employer-sponsored 401(k) or 403(b) before you receive your paycheck. That’s just bonus!) For example, let’s say your take-home pay is $2,000 a month in two paychecks of $1,000 each. You’ve determined you need $1,600 a month to live on, so for each paycheck, send $800 to your checking. Then, allocate $50 to your “New Car” savings account and leave $150 behind in your main savings account for your emergency fund.

Consider disability insurance.

Check and see if your employer offers short-term and long-term disability insurance as a benefit, and how good the policy is. Short-term disability is used in situations like maternity leave and if you’re recovering from surgery. Long-term disability would provide you with a portion of your income (usually around 60%) if you were ever seriously injured and out of work for months or years or became disabled. If you cannot get this coverage through your employer or it’s insufficient, it’s time to start looking. Ideally you want a long-term policy with “own-occupation” coverage. Otherwise you might get injured but be told that you won’t receive disability insurance because, even though you can’t work at your old job, you could still work in the fast food industry. Some employers will allow you to pay a little more in order to improve your coverage, so if you find that your employer’s disability coverage is lacking, ask HR. Learn more about this and other types of insurance here.

Understand why retirement is important.

You kind of, sort of think you know that you should start saving up for retirement ... someday.Well, the day you start is today. Contributing money toward your retirement will be one of your priorities from now until the day you leave the workforce. To find out why, check out our article, Saving for Retirement 101. Plus, learn what not to do when it comes to retirement in Top Retirement Mistakes to Avoid. Then we'll get you started.

Learn this lingo.

As you dive into retirement brochures and websites, you may come across a fair amount of retirement account lingo. Read over these terms so it’s not all gibberish to you.

• Qualified retirement plan: A retirement plan that the Internal Revenue Service has deemed eligible to receive tax benefits.  
• Tax-deferred accounts: Retirement accounts such as a 401(k) in which the account holder pays taxes later, when funds are withdrawn from the account.
• After-tax accounts: A retirement account, such as a Roth IRA, in which the contribution is made with money that has already been taxed.
• Pretax contribution: A retirement contribution made with money before taxes are taken out, usually to a tax-deferred account.
• Post-tax contribution: A retirement contribution made with money after taxes are taken out, usually to a Roth IRA, which will not charge the account holder tax when the money is withdrawn.
• Matching contribution: An amount of money an employer pledges to contribute to an employee’s retirement account as long as the employee makes a certain level contribution.
• Rollover: The transfer of money from one retirement account to another without having to pay taxes on the move.

Find out what retirement savings programs are available to you through your employer.

If you’re self-employed, skip down to step number eight. But if you have a full-time job, then definitely look into the retirement programs your employer offers, because such plans usually have tax benefits (though retirement accounts you set up on your own can also have tax benefits). The most common types of employer-sponsored retirement programs are:

• 401(k)s: A 401(k) is offered primarily by private companies and allows employees to have contributions to their retirement accounts taken out of their paychecks. The account holder does not pay taxes on the contributions herself, but pays taxes on the money distributed from the account.
• 403(b)s: A type of retirement account that is similar to a 401(k) but is available to public education institutions, non-profits and ministers.
• 457s: A 401(k)-like retirement account for governmental employers.
• Roth 401(k)s: This type of retirement account is like a regular 401(k) except for the way it is taxed. Unlike a regular 401(k), the contributions are taxed before the money is deposited into the account. However, that means that when the funds are distributed in retirement, the recipient does not have to pay any taxes! Though not as common as a traditional 401(k), the Roth 401(k) is becoming a more popular additional offering.
• 401(a)s: Also known as a “money purchase plan,” a 401(a) does not allow the employee to choose the amount he or she contributes to the plan. The company contributes to the plan on its own or mandates that all employees deduct a set percentage from their paychecks as a contribution.

Some employers, in addition to one of the above retirement plans, may offer pensions, in which the employer contributes money toward a pool of funds that are then distributed to employees when they retire. Pensions are becoming much less common, though, with only 13% of Fortune 500 companies offering them to newly hired workers in 2011. That’s down from 17% in 2010 and from 89% in 1985.

Find out whether your employer offers a matching program and, if so, how it works.

Sometimes, companies will add money into your retirement account to create incentive for you to save for retirement. Let’s say your company contributes 50% of what you contribute up to 6% of your salary. So, if you make $100,000 and you contribute 6% of your salary, then your company will chip in another 3%, and you’ll be socking away 9% of your salary each year, while actually only taking 6% out of your salary. Basically, you’ll be getting 3% for free! Let’s try another example: your company has an even more generous plan that matches you dollar for dollar up to 6%. That means that if you contribute 6% of your salary, you’ll actually get to save 12% of your salary every year even though only 6% is being taken out of your paycheck.Not all companies match, and this is by no means the only reason to be saving, but if your company does, it is a great incentive to get started.

Determine how much you need to live on.

You should contribute to retirement as least as much as you need to in order to take full advantage of your company’s match, and if you can contribute more, as much as what works for your budget. But it’s a bit tricky figuring out how much you can contribute toward retirement since it isn’t easy to predict how it will affect your paycheck. (Since the money comes out pre-tax, you can’t assume that contributing $200 to retirement every paycheck will just knock $200 off your current paycheck.) An easy backwards way to figure out how much you can contribute while still leaving you enough to live on is to follow this quick rule of thumb: tally up your essential monthly expenses—housing, daily transportation, utilities, groceries. Multiply that number times two: this is how much your take-home pay needs to be in order for you to have a properly balanced budget.

Determine how much your retirement contribution will be.

Play around with this calculator to see how much your paycheck will be based on various retirement contribution scenarios. In “results,” you want the net income number to equal your target balanced-budget number (twice your monthly essential expenses). If you don’t know how much of your paycheck to allocate toward various expenses, learn how to do your budget right here!

Sign up for your work retirement program and meet the minimum requirements necessary to receive a full match, if offered.

Now that you know how much you’ll need to live on per month and how your retirement contribution will affect your paycheck, sign up for your work retirement program, making the contribution you need to get the full match from your company and that still works for your monthly budget. For instance, if you'll get full matching from your company with a 5% contribution, but you have calculated that you can contribute 10% of your paycheck and still have a balanced budget, then by all means, contribute 10%. However, if you need to contribute 5% to get the full company match but find that you can only contribute 3% without jeopardizing your budget, we suggest you try to redo your budget, earn some side income or cut some expenses in order to be able to contribute 5%.

Choose a diversified investment portfolio.

Each retirement program offers different types of investments. You should base your choices on your own individual risk tolerance, which is a way of measuring how big a loss you are willing to risk for potential gains. Many retirement programs offer risk tolerance quizzes that will then recommend investments to you. If you want to test your own risk tolerance here, take our quiz.

With every raise, increase your retirement contribution until you’ve reached the maximum contribution.

The government mandates limits on contributions to certain types of retirement accounts. (The reason the government doesn’t let us contribute as much as we want is that the wealthy could then exploit 401(k)s by contributing exorbitant amounts of money to them in order to avoid taxes.) The limits vary every year. For 2012, the limit on contributions to employer-based accounts such as 401(k)s and 403(b)s is $17,000; for Roths and traditional IRAs, the limit depends on your income, tax filing status and age. (Read more at the IRS website.)If you’re not currently contributing the maximum, increase your retirement contribution with every raise. So, if you receive a 3% raise, increase your retirement contribution by 3%, continuing to live on the same budget. Also, if you want to speed up the increase in your contributions, then aim to boost your contribution by 1% every six months. Each time, also re-do your budget, finding a new expense to cut, or coming up with a new way to make side income so you don’t have to cut costs.

Choose an Individual Retirement Account (IRA).

IRAs are useful no matter your employment status (but you can only contribute to one if you have earned income--or are married to someone who does). If you’re self-employed or your employer doesn’t offer a retirement account, you’ll need to open your own. If you have an employer-based retirement account and you’ve reached the maximum contribution and want to save more for retirement, then you’ll need to open an IRA as well.These are the main types of IRAs:

• Traditional IRAs: This type of retirement account is similar to a 401(k) in how the account is taxed. In a traditional IRA, the money you contribute now will get you a tax deduction (up to a limit), plus, your money won’t be taxed as it grows. However, when you withdraw the money during retirement, the money will be taxed.
• Roth IRAs: A Roth IRA is different from a traditional IRA in that you pay taxes upfront at today’s tax rates. In return, you never have to pay taxes on your investment earnings. However, in order to contribute to a Roth IRA, your income has to be under a certain threshold, depending on your tax filing status. In 2012, if you file your taxes as single or head of household, your modified adjusted gross income has to be below $125,000 in order for you to contribute, and if you are married filing jointly, your combined income cannot be more than $183,000.
• Self-Employed Pension (SEP) IRAs: A SEP is an IRA commonly used by people who own their own business or are self-employed. The owner of this business may contribute to the SEP and take a tax deduction for contribution. Employees do not pay taxes on their SEP contributions, but they pay taxes when the money is paid out. People who have SEPs must also have traditional IRAs, into which the employer will deposit SEP contributions.
• Spousal IRAs: If you're not working but have a spouse who is, a Spousal IRA is a great fit for you. It can either be a traditional or Roth IRA, and your spouse can contribute to it as long as you file a joint tax return.

Use our flow chart below to see which type of IRA is right for you:

Set up your chosen account.

Use the guidelines in the I Want to Open an Investment Account checklist. Before setting it up, make sure you have created your budget so you have a clear idea of how much you can afford to put toward your IRA every month.If you have a retirement plan at work, you may not be able to get a tax deduction for contributions to a traditional IRA. However, you can still save more beyond what you are putting in your employer-based account and have the money grow tax-deferred, which means you won’t pay taxes on it until you use the money.

Calculate how much you need to save for retirement.

The biggest hurdle to saving for retirement is just starting. So, congrats on getting yourself set up. But now you must be wondering how much you need to put away. Now is the time to calculate that. Check out this calculator to see:

1. How much retirement will cost you.
2. How much you’re on track to have by the time you retire, based on your current contributions.
3. Whether you’re putting away enough, and if not, how much you need to contribute.

Schedule regular transfers from your bank account to your IRA or Roth IRA account.

Now that you know how much you need to be saving up every month, let’s see how we can get you there. If at the moment you can’t contribute the amount you’ll need in order to hit your retirement goals, start with whatever you can manage now with your budget.Set up your contributions so you fund your IRA throughout the year gradually with each paycheck, rather than trying to put away one big lump sum. These regular transfers you set up to fund your IRA are called Automatic Clearing House (ACH) debits.

Once you’ve maxed out your all of your qualified retirement accounts, consider opening a separate brokerage investment account.

If you’re now contributing the maximum to your employer-based account and to your IRA, you can always contribute more to an investment account. (But it's best to do this only if you have saved up an emergency fund and have no credit card debt.) Follow this checklist to learn how to open an investment account. Again, set up regular contributions to the account to fund it gradually.

If you’re far away from your goals, don’t panic! Redo your budget to free up some money so you can contribute a bit more.

Every little bit counts, so aim for smaller increases more frequently (like 1% every quarter) rather than a big increase “when you can afford it”—which is likely to be put off indefinitely until you realize you’ve been meaning to increase for five years and haven’t. If you’re looking for ways to free up some money, take our Cut Your Costs Bootcamp, or complete our budgeting checklist.

Review your accounts at least once a year.

Don’t just open these accounts and forget about them! Check in on your accounts once a year to see if your investments still make sense for your age (i.e., the years you have until retirement) or in case your risk tolerance has changed. If it has, it may be time to adjust the mix of investments in your portfolio. Also be sure to re-run your retirement income projections (Step 10) every few years to make sure you’re still on track.

Understand what a living will and health care proxy are and why they are important.

A living will, also known as an advance medical directive, is a document that outlines the medical decisions you want made in case you are unable to communicate them yourself. A health care proxy, a document that often accompanies a living will, names the person you want to make health care decisions for you (known as an agent) in case you are incapacitated. Essentially, the living will states what you want and the health care proxy states who you want to carry that out.While something like planning for retirement seems like a long-term project, writing a living will shouldn't because it could affect you and your family tomorrow. It’s not pleasant to think about, but a living will ensures that you’ll receive the treatment you want if you have an accident or suddenly fall ill. It could spare your family members the stress of deciding on treatment for you, or the costly court process of appointing a guardian if they are unable to agree. (Read more about the importance of living wills here.)

Figure out your preferences for medical treatment.

Consider these questions to help you decide:

• If your heart stopped beating, would you want CPR or defibrillation, which gives an electric shock to the heart?
• If you were unable to breathe on your own, would you want assistance from a breathing machine?
• If you were unable to eat or drink, would you want feeding tubes to supply your body with nutrition and fluids, and/or dialysis to remove waste from your blood and manage fluid levels?
• Would you want to donate your organs and tissue for transplantation or scientific study?

Because a living will raises questions that aren’t necessarily easy to answer, you may want talk to your doctor about these options and ask her any questions you may have. Also, if you practice a religion that has a particular stance on certain treatments, you could check with your local religious institution to see if they have sample living wills. Many offer forms that are tailored to their particular religious beliefs.

Appoint a health care proxy agent and inform him/her of your decision.

For your health care agent, choose someone you think will act honestly and maturely, with your interests at heart (not someone you feel obligated to ask). This can be a family member, friend or outside adviser who is able to make unbiased decisions. Once you decide, inform her of your decision and decide on a time to meet and discuss your living will before writing the official legal forms.

Decide whether you want to hire a licensed attorney or write your own will.

If you want to write your own, you can order both a living will and health care proxy (sometimes referred to as a health care power of attorney) from LegalZoom.com ($40- $50) or download the forms from your state’s website (costs range from free to around $40).If you decide to do it yourself:

1. Make sure you follow the laws of your state because the process for creating a living will and health care proxy varies from state to state. Some states require you to have two witnesses or a notary A notary is a state-appointed official licensed to perform legal acts, particularly witnessing signatures.  when you sign your living will. Others only need one witness or even none at all. Learn the regulations for living wills and proxies for your state here.
2. Search online for your state’s living will and proxy forms (search “[your state] + living will form”).
3. Fill out the forms and have them signed by the agent you’ve chosen, as well as any witnesses your state requires. Because of the ease of creating your own living will, most people should be fine with the do-it-yourself option. If would want to hire an attorney for any special concerns you have, it will likely cost between $150 and $500.

Fill out the forms, and have them signed by your chosen health care proxy.

If you’ve written your own living will, you should take it to a notary. Notarizing your documents means the notary will identify you, acknowledge that she saw your living will signed, and make a note of it in her records. It’s not required in all states, but it’s always a good idea to make your documents official.If you decide to hire an attorney, she will let you know if you need witnesses when you and your health care agent sign your documents and will get both notarized, if necessary.

Give a copy of your living will to your health care agent, attorney and family doctor, and keep one for yourself.

After you’ve given your living will to these three important people, file away your copy in a binder with the rest of your estate planning and insurance documents, and let your health care agent and family members know where you put it.

Review your living will every few years.

If you move to a different state, check to see if the requirements for living wills and health care proxies for your old state will still stand. If they are different, you’ll have to fill out new forms. You can see your state’s living will laws here. Also be sure to revisit your decisions as your perspective on life, your health or your family situation changes.

Determine if you’re ready to set up an investment account.

Investing is what you do after you’ve gotten all your other financial ducks in a row. If you answer yes to the following three questions, then you’re ready! If not, come back after you’ve taken care of these three tasks.a. Have you paid off all of your credit cards? If not, that debt will cost you more money than you would make by investing.b. Do you have at least six months of your net pay in an emergency fund? You always need pure cash on hand to help you out in case you lose your job, you receive a large unexpected medical bill, your car breaks down or another emergency comes up. The money you invest should be separate from this emergency fund. (Read more about saving here.)c. Do you have a retirement account and are you maxing it out? If your company matches your 401(k) contributions, make sure to get the full match before you divert any money to your own investment account, or else you’re missing out on free money!

Save up enough to seed the account.

Many brokerages require you to invest a minimum amount, ranging from $500 to $2,500, in order to open an account. Even if you choose a brokerage with no minimum, you’ll need enough to spread your risk in several different investments, which is called diversifying. You should diversify your investments across companies, industries, countries and types of financial instruments, which protects you if one company or industry tanks. $500 is a good starting point, as it’s enough to buy a couple shares in ten different mutual funds or ETFs Investment vehicles that bundle together stocks for easy diversification..You shouldn’t need nor have any plans to use this seed money for at least the next five years. Let’s say that after you invest $5,000, the stock market dips, shrinking your investment to $4,000. If you needed to pull your money out for an emergency, you wouldn’t have time to let it grow back, and you’d have to swallow the $1,000 loss. If you are considering using that money to go back to school or make a down payment on a home soon, stick it in a savings account instead.

Consider a discount brokerage.

There are two types of brokerages: discount and full-service. At a full-service brokerage, you’ll place trades with a person and pay someone to manage your investments for you. This is an expensive option, typically costing $150 per trade, and is best for people with sizeable assets to manage and very little time and interest in managing them.So don’t be turned off by the term “discount.” While these brokerages let you trade in a matter of seconds for a fee as low as $4 per trade, they also offer useful tools and research.Some discount brokerages include Scottrade, Fidelity, Charles Schwab, E*Trade and TD Ameritrade. They offer a range of services and charge different trading fees, and some even offer an initial bonus for opening an account. Just remember, you’re going to be with this brokerage for a while (you’re investing for the long term) so do your research carefully to find a brokerage you are comfortable with.When you compare brokerages, consider:

• Whether it charges a maintenance fee if your account value falls below a certain amount
• How much it charges for each trade
• The minimum to open an account
• What kind of tools and research it offers
• How easily you can get a representative on the phone
• The bonus for opening an account
• How easy the website is to navigate and use

One easy place to compare these features is through SmartMoney’s annual broker survey.  Once you choose a brokerage, it will walk you through the process of transferring money to the account.

Determine your risk profile.

In general, the sooner you’ll need the money you’re investing, the more conservative you should be. For example, if the money you’re investing is meant to help you buy a home in ten years, you will take on less risky investments than the ones you’d make for your retirement 30 years down the road. Lower-risk investments will grow more slowly but are less likely to drop drastically in value. But if you’re 26 and have no plans for your money for the foreseeable future, you could more comfortably buy reasonably risky investments, because over the long term they have the potential to grow faster—and if they don’t at first, you have the time to recoup your losses.This also has to do with how thick your investing skin is. Even if you are investing for the long term, if you know yourself well enough to foresee a mini panic every time the stock market drops, you’re best off going with low-risk, low-return investments. Determine your own risk comfort with our quiz. Your brokerage might even have a little quiz for you to fill out to determine your risk profile, which will spit out investment recommendations for you.

Choose your mutual funds and ETFs.

If you are dead set on buying the stock of your favorite company, we can’t stop you. But in general, LearnVest recommends buying mutual funds and ETFs. These are collections of stocks or bonds or other investments, so they make it a snap for you to diversify, automatically spreading your risk. They are also clearly labeled so you can easily build a complete portfolio. You can grab yourself an international fund, a fund that specializes in large companies, a fund that specializes in small companies, one that does tech stocks and even a fund that only invests in environmentally conscious companies! Almost anything you want is available. Many brokerages will recommend how you should split up your investments according to your risk profile and investment goals. You could also start with a basic book on investing, like this one, to determine your risk profile. To search for your investments, use Morningstar, a website that rates the quality of funds according to a five-star system. (Brokerage firms often link to it.) Finally, choose no-load funds, which means that those funds don’t charge a commission for trading them (other than the brokerage’s trading fee), which saves you money.

OPTIONAL: Set up automatic transfers.

This step isn’t required, but it’s a great way to increase your investments. If you have room to spare in your budget after saving for your short term financial goals and contributing to retirement, set up an automatic transfer every month or after every paycheck to build up the value of your portfolio over time. This helps your “dollar cost average,” which means you buy shares in the funds you want to own at all different prices, and you often pay a lower price per share on average. Remember, profit is based on the difference between what price you paid and what price you sell at, so the lower the price you pay the better. But only do so if you have a solid grasp on your budget. Read more here to learn how to set up your budget.

Review your statements quarterly.

After choosing your funds, you can pretty much set it and forget it for a few months. You don’t want to make yourself nervous by tracking the stock market because you’re investing for the long term, remember?Many people like to review their portfolio quarterly or semi-annually in order to return to their ideal asset allocation (a.k.a. balance everything out so you don’t find yourself with an overwhelming chunk in Chinese investments or consumer goods funds) or just make sure everything is running smoothly. Set yourself a calendar reminder to log in and see how everything is going at least twice a year.