Avoid This Tennis Star's Financial Advice

Roger Federer, the richest tennis player of all time, said last week that a "big mattress" could be his salvation from the current world financial meltdown.

Just two days after topping the all-time tennis rich list with a staggering 43.29 million dollars in career prize money, the 27-year-old Swiss revealed at the Madrid Masters that he keeps a close eye on the turbulence in the world money markets.

"It's not been whole lot of fun for anyone," said the multi-millionaire who puts faith in conservative money management.

"I've followed closely to know what's going on. It seems like the markets may come back a bit now, but I think it will take a while for things to calm down. Anyway, I have a big mattress," he joked. The turbulence in the markets admittedly is enough to make investors want to take their money out of the market and stuff it in their mattress, piggy bank, or in jelly jars buried in the side yard. Any one of those steps would be stupid. "Going to cash" is one thing — a strategy some people are using to insulate themselves against the short-term volatility of the stock market. Just as important, money in the mattress faces its own set of risks. The bailout bill Congress just passed contained a provision to increase the FDIC guarantee of deposits in your bank up to $250,000. Simply keeping your dollars in an interest bearing savings account would be a smarter choice. We may be facing difficult decisions financially. Do not make things worse by poor choices with the money you do have available.

Down Economy? Take Action!

Last week’s government rescue plan cost $700 billion. The number of job cuts in September were almost 160,000 and growing. The Dow is like a roller coaster.
These numbers indicate one thing: Now's the time to do everything you can to protect your finances. You need to take action now on a budget and to eliminate debt.
"Watch every dime coming into your house, because tomorrow it could be a nickel," warns Catherine Williams, vice president of financial literacy for Money Management International, which oversees nonprofit credit counseling agencies. There is no better way to do this than to stick to a budget.
The basic premise of a budget is simple: Make sure expenses do not exceed income. But you also need to find a way to save some cash. This is very important.
According to Money Management International's Consumer Credit Counseling Services: your budget should follow these guidelines:
Housing (20-35%)
Food (15-30%)
Transportation (6-20%)
Medical (2-8%)
Insurance (4-6%)
Utilities (4-7%)
Clothing (3-10%)
Personal Care (2-4%)
Misc. Items (1-4%)
Personal Debt (20% maximum)
Savings (10% minimum)
While investing money is a good ides, many are scared by what they see happening to the stock market. If that is the case, consider the nearly unbeatable return you can get

While I would not recommend that you ever use a credit card, not everyone agrees. If you do use plastic, attach your high-interest-rate credit cards with a vengeance by seeking out the cheapest rates you can find, look to a credit union. They tend to offer more favorable rates than big-name banks. You may also want to consider calling your card issuer and tell them you have received better rate offers. Lenders would rather lose a little money by lowering your rate than have you move your entire balance and future business to another company.

Money In Your Mattress Is Not A Good Investment Strategy

The headlines are scary. Big-name financial institutions are failing, and even the safest of investment havens — the kind where losses are supposed to be inconceivable — have been the subject of ugly news. It's enough to make investors want to take their money out of the market and stuff it in their mattress, piggy bank, or in jelly jars buried in the side yard. Any one of those steps would be stupid. "Going to cash" is one thing — a strategy some people are using to insulate themselves against the short-term volatility of the stock market. "Taking your cash" is something entirely different, and judging from what people are saying, it's happening now in a misguided effort to get what "Frank the bus driver" described to me as "the ultimate protection." Putting money in a piggy bank, under normal circumstances, hardly rates as an "investment," but the people who are pulling the proceeds of big investment accounts are making a decision that could have a long-lasting impact on their finances. Moreover, they're not stuffing the mattress to save for a rainy day but instead are acting as if the apocalypse has arrived and they want a big horde of greenbacks in their bomb shelter. Emotions — most often fear and greed — rule investment decisions, and pulling the money out of all financial institutions, or even most safe havens like money-market funds, is clearly a case of running scared. Yes, some money-market mutual funds recently broke the buck — their commercial paper is deemed worthless or they were closed after they suffered a significant run on assets. It's heavy stuff, in part because safety-conscious investors feel violated, like someone broke into their piggy bank. But now is not the time to jump out of the speeding car. You won’t like the landing on the side of the pavement.


Putting your money in the mattress faces its own set of risks — everything from theft to fire to loss of purchasing power by not even attempting to keep pace with inflation. It may feel good while you do it, but it's not the right move for the long haul, even in these troubled times. That doesn't mean someone who is nervous now needs to be fully invested, or that they should not go to cash if that's what makes them comfortable with part or all of their money. It means that it's silly to suffer the loss of 2 percent or 3 percent — the amount you might get from a money-market fund or a bank deposit account — to avoid the chance of taking a loss that is not likely to be even that big. Giving up isn't much of a strategy right now, and knee-jerk reactions to go to safety aren't that smart, if you have done your homework and have taken steps to make sure you are safe.For investors wanting to go a step further, consider Treasury-only money funds; stick with the biggest fund companies, which have always bailed their money funds out of any troubled paper; or move into banks to gain the protection of the Federal Deposit Insurance Corp. Just don't bring the cash home, where it faces far more risks than it does in the market.

Stop Making Visa and Master Card Rich

Visa Inc. and MasterCard Inc. are trying to derail legislation sought by retailers that would create a US government tribunal to set fees that the credit card companies’ member banks charge merchants. The fees yield an estimated $42 billion in revenue annually. You and I ultimately pay those fees! Congress probably will not pass the bill this year as sponsors build wider support for it. What can you do? Pay for your purchases with cash or checks instead of credit and debit cards. It is no secret that retailers who accept credit and debit cards are charged a fee for every debit and credit card transaction. This fee can be as low as a few cents or up to close to 6 percent. Retailers have this fee figured in on the selling price of their products. I have seen some stores post a cash or credit price on their products. This seems to be popular at gas stations. It would be great if we could all save a few percent when we check out at the store. Next time you fill up, pay with a wad of twenty-dollar bills.