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How to Boost Your Finances

In the final installment of "The Early Show"'s "Five Ways To Boost" series, financial contributor Ray Martin and Farnoosh Torabi, author of "You're So Money: Live Rich Even When You're Not," showed how you can boost your finances, including getting some quick cash into your pocket.

Martin said if your income took a hit last year, you're probably in line for an even larger tax refund.

So, if you want to get some cash in your bank account quickly, get your tax return prepared and filed by next week.

"If you do as I say, you could receive your tax refund by as early as Valentine's Day," he said. "In the next few days you should have all of the required tax forms you'll need to file your 2009 tax returns. Prepare your tax returns online, file them by using eFile and select direct deposit for your tax refund. You'll get your tax refund cash in as little as ten days. That's much faster than the four weeks you'll wait when filing by paper and requesting a check in the mail."

Martin added that the average American's tax refund is about $2,700.

"If you get the $2,700 refund in two weeks, and then immediately use it to pay towards or off a credit card debt, and the credit card is charging you 20 percent interest you save $450 in interest on the debt over the rest of the year," he said. "But wait there's more -- the fact that you are getting a refund is not good. You are paying too much to the government. Withhold less from your paycheck."

Martin said to increase cash in your house you first need to measure and manage your money.

He explained, "The only way to really get a sense of where your spend your money and then make moves to keep more of it is to measure where it is going. And you know the saying: 'If you don't measure it you can't manage it!'"

Martin suggested starting an Excel spreadsheet for your family or by downloading one of the free budget worksheets on the Internet. Type "budget worksheets free" into Google, he said, and you'll get 191,000 results. Also, check out online expenses tracking websites Wesabe.com and Mint.com.

"You can connect these to your online bank/credit/debit accounts to automatically download your spending transactions, and then the websites prepare reports and charts to show you where your money is going and what you can do to better manage your expenses," he said. "If you can measure it, you can manage it."

Martin said you can also use Quicken to enter actual expenses and create reports to measure and manage your spending.

Martin said when he's heard from people who start tracking their expenses, they start saving $500 to $1,000 a month.

The biggest savings, Martin said, can come from getting a handle on out-of-control grocery costs through better meal planning and buying in bulk and on sale). You can also save a bundle by cutting communication costs by consolidating cell phone accounts, using a family plan and cutting out the land line.

Martin said, "The point here is this: Don't ignore the little expenses, because those little expenses really add up."

Another way to cut spending is to cut back on your insurance costs. Martin suggested placing an expensive cash value insurance policy with a low-cost term policy that provides more coverage for a lower premium. Use the cash from the policy, he said, to build up your emergency cash. Increase your deductibles for your auto and home insurance (to $500 and $1,000 respectively).

"Low deductibles are the most expensive insurance and most profitable for insurance companies," he said. "Buy these policies through the same insurance company. This can save you 10 to 15 percent or more."

Torabi added that an unemployed person or a person who isn't using their car as much can reduce their car insurance payments with a phone call. She said several contracts can be renegotiated.

"Chances are you're not using your car as much, so a great way to make extra money is to call up your car insurance company and ask for a discount," she said. "If you start driving less because you're working from home now, or taking public transportation more often, bought a safer car, or you've taken the keys away from your teenager, it's worth calling up your car insurance company and letting them know that."

She explained that changes how the insurance company underwrites your policy. To them, she said, you're technically not as high-risk of a client, so you shouldn't have to pay as much as before.

The average cost for auto insurance in this country is roughly $800. If you can shave off even just 15 percent because you are using your car less, that's potentially $120 savings with one phone call.

In addition, you can save money on prescription drugs by taking advantage of mail-order prescription drug programs.

Torabi said companies, such as Express-Scripts, Caremark and Wal-Mart offer to send prescriptions in the mail, but few of us take them up on their offer. In 2006, she said, less than 7 percent of prescription drugs were purchased via mail order, according to the National Association of Chain Drug Stores. A mail-order pharmacy can fill a prescription for about 50 percent less than the drugstore. Depending on the drug, you can save a lot of money, Torabi said. She added you should check with your health care provider to make sure you're eligible.

If you don't do mail order, you can also consider opting for the generic prescription version of your drug. According to Plan for Your Health, a public education program from Aetna and the Financial Planning Association, you can save $1,000 a year on generic prescriptions.

Another way to boost your finances is to monetize your skills, Torabi said.

"This is great for someone who has a job, or someone who is looking for a job," she said. "If they can't find traditional jobs for income, they should monetize their skills to boost their finances. It requires a little humility, but it's just what you have to do these days."

She suggested the Web site Elance.com for hourly freelance work. Torabi said child care and tutoring can add revenue. Tutoring, in particular, she said, is a huge revenue stream.

"My friend part-time teaches English as a second language and earns 40 bucks an hour (in addition to a full-time job working at a magazine)," she said. "On the light end, say if you have a couple clients meeting twice a week each, you can earn more than $150 dollars a week. Tutoring for entrance exams, second languages and vocal or instrument lessons are all in-demand services right now that can be a great extra revenue streams for young adults."

She suggested listing your services on Care.com and Sitters.com to find last-minute jobs. At Care.com, she said, you can let them know you are able to work at the last minute, and they'll put you on their Care-on-Call roster. On both sites, once you sign up and are approved you can start receiving job requests within 24 hours. See how much you can earn babysitting in your town by visiting Care.com/calculator.

For young adults who are just getting in to the workforce, Torabi said you have a good way to turn business expenses into a dollars or credit.

"For those who are employed and have to assume some business expenses that you will get reimbursed for at the end of the month, the smart thing to do is take out a credit card that has reward points tied to it or a card that gives you cash back," she said. "You use this card and your job pays you back to cover your expenses but you get to keep the points. So if you travel for work or drive a lot for work then you get the rewards since the card is on their name. This works well if you have good credit, are responsible, pay your card on time. This is a great way to get a bonus and get cash!"



To read an excerpt of "You're So MOney," click here.