Here are some productive ideas for how to use your Christmas bonus:

• Pay off debts
• Build an emergency fund
• Start a child’s college fund
• Pay down on your mortgage
• Contribute to your Roth IRA (up to the max)

Next time you get a bonus or unexpected income, have a plan for how you will use the money. You’ll avoid the “morning after” regrets and put the money to good use!

Maxed Out focuses on banks and financial institutions that lend money to people who are less than credit worthy, knowing they can’t or won’t pay their bills. These credit card companies and banks make the majority of their profits off the late charges, over the limit fees and high interest they charge to people who are behind on their payments.

The documentary uncovers the shady (and possibly illegal) practices of some of the nation’s largest banks, as they prey on the young and the poor. From giving credit cards to college kids with no income, to ruthless collection agencies that use scare tactics to get people to pay on their past due debts before putting food on the table, Maxed Out is a moving film that will have you seriously questioning our casual use of debt in this country.

Maxed Out is a moving and informative documentary that will make you think about the banking industry (and government) is a completely different way.

Retailers rely on impulse purchases (trust me, I own and run online stores).They use all sorts of tactics to get you to purchase today instead of waiting and really thinking about whether it’s a good decision.

One simple decision has saved me hundreds, maybe thousands of dollars…

Never spend more than $100 on a purchase without first doing these three things…

Sleep on It

If it’s something you really need, you’ll still need it tomorrow. If it’s something you really want, you’ll still want it badly in the morning. But you may wake up and realize that it sounded like a much better deal when you were standing in the store than it does now.

Talk to Your Spouse

If you’re married, discuss the purchase with your spouse. My wife and I don’t spend over $100 without first discussing the purchase with each other. If your family household income is less than $50,000 a year, reduce it to $50. If it’s more than $200,000 a year, you can increase it to $200 or more.

If you’re not married, you can talk to a friend, parent or financial advisor. Find someone who will talk to you frankly. Ask them about purchase decisions. Listen to them, they should tell you honestly whether you’re making an impulse purchase or not.

Research the Product Online

This is absolutely required. Search for the item online and compare prices. Read reviews. Look at alternatives. You may be surprised to find out that great deal you saw in a retail store isn’t such a great deal afterall.

I was just in a local office supply store today and saw a Garmin Nuvi GPS on sale. It retailed for $199 and was on sale for $175, a pretty good deal. But when I looked it up on Amazon.com’s mobile site on my iPhone they had it for sale for $150 with free shipping and no sales tax. I would have paid almost $40 more for that impulse purchase had I bought it in the store.

There are two schools of thought when it comes to paying off your debt. One says that you should start with the account with the highest interest rate, then move to the next nighest interest rate and the next until you’ve paid everything off. The other says that you should pay off the smallest balance first, moving to the next smallest, etc. Which is the best?

Which is Better?

Basic 7th grade math says that you should pay off the highest interest rate loans first, moving to the next highest interest rate loans. All things being equal, this method will pay off the balance of all loans fastest, and with the least amount of interest being paid.

But as Dave Ramsey says, if we were <em>that</em> good at math we wouldn’t have credit card debt! The truth is that most people try this method and fail. They start making payments and after a few months, feel like they’re not getting anywhere (I know I’ve been there!)

Then after a few months of not seeing much progress they start to slip a little and eventually give up and go back to their old spending habits. It’s no different from breaking any other habit or addiction… you see it with people trying to quit smoking too.

The key according to some financial advisors (including Dave Ramsey) is to pay off the lowest <strong>balance</strong> first, regardless of interest rate. It’s the reassurance of a quick win, they say, that makes you want to keep persevering. Most people have a credit card, loan or other debt that is under $1000. Paying the debt off quickly gives you the motivation to move to the next, and with that much more money per month, the next smallest is easier to payoff.

As each larger debt gets paid off, it’s easier to tackle the next larger one. After freeing up several hundred dollars in payments to smaller debts, a $5,000 loan might not look that hard to pay off.

Which Should You Choose?

Which method you choose is up to you. You may have the perseverence to pay off the highest interest rate debt first, but history and the success of the credit card industry has proven that wrong for the majority.

I will say that from personal experience, it is definitely more encouraging to pay off several small debts in a row rather than chipping away at larger ones. That said, once you’ve gotten a few smaller debts knocked out, I don’t think there is anything wrong with tackling some of the high interest debts.

Do what you are comfortable with and remember, you can always switch it up if it’s not working for you!

He has a popular radio show and several bestselling books and travels around the country giving speeches and seminars teaching people how to get out of debt.

We just picked up tickets to his Total Money Makeover event in Atlanta September 13. There are also events coming up in Birmingham, Tulsa, Houston, and more. If you can’t make it to a live event, check out his radio show which you can listen to live on the Internet.

One thing we’ve done as a family is set monthly personal spending budgets, and we get our money in cash at the first of the month. $100 for my wife and I, and $25 each for the kids. The money can be used for anything… eating out, buying something, going to the movies, anything.

We started with a very small amount so that we could see how fast we spent. We’ll increase the amount gradually, as we learn how to control our spending and pay off our credit cards.

The first month of the experiment, I remember asking my wife on the 5th how much money she had left for the month. None! As the months have gone by (we’re on month 3 now) we’ve gotten much better at managing our “extra” cash and as a result, we’re more conscious of other purchases and their financial impact as well.

Give it a try, and I guarantee it will make you think about your spending habits more (and hopefully cause you to spend less).

Mint allows you to see your current financial snapshot, your “net worth” at a glance. Mint automatically categorizes purchases, and remembers your changes. If you re-categorize a particular store, it will give you the option to also change past transactions and set a new default.

Mint is totally free - they make money by selling advertising. They have all your financial data, so they sell advertising to credit card companies, banks, and other complimentary services. They don’t reveal any of your personal financial information, but do match up certain offers with your finances. For instance, if you’re currently paying 10% interest on a credit card, Mint might suggest a 4.9% offer from another credit card company. Or if you’ve got a standard saving’s account at your bank, Mint may suggest a high-interest savings account such as ING.

I have been using Mint as more or less a reporting tool for several months. It keeps getting better and better at categorizing our expenses, and it’s really amazing to look at where we’re spending our money each month.

Mint is free, so give it a try and see what you think.

My truck got closer and I screamed “Stop!” but it was too late. My wife backed her Honda Pilot right into my Chevrolet Avalanche. And put big dents in both of them.

After a few minutes of cooling off we proceeded to the lake and had a great Fourth. On Saturday, we called the insurance company and realized that we had to pay two $500 deductibles, one for each vehicle.

It cost us $1000 for a simple accident.

It sucks. It makes me furious, because I work so hard for my money and my wife does too. $1000 is a lot of money for us, but fortunately we have it.

I would say I can’t imagine what it would be like without an emergency fund that would cover an accident or emergency like this, but I do know exactly what it’s like. For so long, we lived paycheck to paycheck. Every little emergency seemed like a red-alert crisis. The only options we had were borrow from family/friends or put it on a credit card.

Neither of those options sound good. They both lead to MORE stress, in an already stressful situation.

Build up an emergency fund of $500 - $1,000 for those inevitable small emergencies that are bound to occur. Having the money to cover it won’t make it hurt any less, but it will lessen the emotional impact and give you peace of mind to know that at least financially it’s taken care of.

Emergencies happen. Below are just some of the small emergencies that can really create a problem for many of us:

• Wreck or Mechanical Problem with your Car or Truck
• Emergency room visit
• Unexpected home repairs
• Unexpected tax bill

Have you ever noticed that when you don’t have any money, everything is an emergency? If your family household income is around $30,000 or less, put away at least $500. If your household income is more than $30,000, put away at least $1,000. Before you get out of debt, and before you buy anything else that’s not a necessity (not including bills of course).

Prepare yourself so when something happens (and it will) you’ll at least have the peace of mind that it’s paid for.

The higher stress of having debt also made it harder to concentrate and accomplish goals, the study said. These findings are not really hard to believe, but should be a wake-up call to us Americans. Our fast-paced lifestyle of living above our means is affecting more than our bank accounts.

Millions of Americans borrow money every year, and I’d estimate the vast majority of them don’t understand how compounded interest works. Interest can be a powerful tool to earn money (as with investments) or a dangerous financial handicap.

So how much is that $1,000 purchase going to cost you?

$1,000 on a credit card with 23% interest would have a minimum monthly payment of about $20/month (2% of the balance). If you paid $20/month consistently (note that the minimum payment would go down as your balance did) until it was paid off, it would take you almost 13 years to pay it off and would cost you $3,347!

Yes, you can make more than the minimum payment, but the average family has over $8000 in credit card debt. With a minimum payment of $160 (2%) that $8000 in debt would cost $26,783 when paid off!

This isn’t about whether or not you should borrow money, but I hope you can see how dramatic these simple examples show the power of interest.

Just imagine if you always paid the minimum payment, which would go down slightly every month. You would take longer to pay off the debt, costing you even more in interest!

You may look at the examples above and think that you’re better off because your interest rate is lower or because you pay slightly more than the minimum payment. That may be true, but you are still paying huge amounts of interest over the course of the debt.

Considering most credit card purchases we make are probably impulse buys, those impulse purchases end up costing us an arm and a leg. Remember the interest next time you’re thinking of swiping that plastic.