Financial Expert David Bach

Like most of us, Bonnie and Graham Messick aren't sure if they are living within their means. They want to make the most out of their new home investment and make sure that they are saving enough for their young daughter's college fund. Here are some financial solutions that will work for anyone trying to allocate a household budget.

Expert: David Bach, Financial Advisor and best-selling author - Meet David and our other design experts.

Some solutions:

• Use David's "finish rich inventory system" to find out if you are living within your means.
  
• Find all your financial documents and create a financial file system using these 13 file folders:
  
  1. Tax returns--keep 7 years' worth
     
  2. IRA, 401k, and other retirement accounts
     
  3. Social Security--use it to track your
     earnings
     
  4. Investment accounts
     
  5. Checking and banking accounts
     
  6. Household accounts, including the title to your house and any household improvement information
     
  7. Credit card debt file
     
  8. Liabilities including second mortgage, student loans and bank loans
     
  9. Insurance
     
  10. Family will or living trust
      
  11. Children accounts, 529 plan
      
  12. "Finish rich inventory planner"
      
  13. "Where does the money go?"--Your monthly tracking of how much you made, how much you spent
• Track your expenses for a couple of months to see where your money goes.
  
• Remember to pay yourself first, saving 10% of your income before taxes. If this is too hard at first, start with 1% the first month and bump it up another percentage point until you reach your goal.
  
• Invest additional money in your home by improving the master bedroom, master bathroom and kitchen.
  
• Saving for your children's education using information found at these websites:
  
  • www.finishrich.com
    
  • www.savingforcollege.com
• Alternative college savings programs:
  
  • www.upromise.com--It's like "frequent flier mileage" for college savings.
    
  • 529 Plan for college savings: you can put up to $250,000 in it and the moeny will grow tax-free. If the money is used for college it will not be taxed.