What a crazy time in our history!  Our economy is in turmoil.  We have soldiers at war.  For the first time since 1776 a non-white man has been elected as president.  Gas is affordable.  Tiger Woods and GM end their endorsement partnership to pinch pennies.

Many corporations are scrambling to find ways to keep the doors open.  One of the first reactions is to cut personnel.  Save on costs.  What is your gut reaction to weather this storm?

Mine is to cut costs and not get involved in new ventures.  I scrubbed my household budget to examine where I can save some extra change.  Just four years ago, I did the exact same thing as my wife and I were saving for our first home.  At that time we found over $700 a month.  There I said this wouldn’t happen again…

Never say never.  My latest scrubbing uncovered $200 each month.  Sure this was not as bad, but the point is that I was making a conscious effort and still got up to this point again.  Even those of you who think you have no room to grow…look again with an open mind and B.E. H.O.N.E.S.T.

Bills; Essentials-Housing, Outfits, Num-Nums; and Extras-Savings, Throwaway.  Quick translation.  Break down budget into needs and wants.  Needs are bills, housing, clothing and food.  Wants are savings accounts and luxuries like travel and entertainment.  I cover making a budget a little more in another post.

My goal here is to get you into penny-pinching mode.  Really dig to see where you can save a couple of bucks each day/week/month/year.  One blogger commented, “Buy the paper towels that come in smaller sheets (the 1-2-3 sheet).  Most often you only need a small one but take a whole sheet.”  What a simple cost-cutting idea!

Over the past five years I found a collective $900 each month by pinching pennies.  How much can you find?  Instead of getting into debt over your head, get free from it.  I used my extra money to buy a home and save for my future wants and needs.

Give me some money saving ideas.  What will you do with the extra $$$$?

This economic slow down is very scary for everyone.  Daily we are hearing about companies going under and watching our portfolios dwindle.  Those with the spare cash have an extremely unique opportunity, though.

Why do people go to Wal-Mart or dollar stores?  To buy things more cheaply than in other places.  This is a very smart shopping policy.  If you went in to your favorite clothing store and saw jeans for $0.50 when they are normally $75.00, would you panic and sell all the clothes in your closet?  Heck, no!  You would clear the racks.

Why do we all panic now when our stocks prices are falling?  This is like the ultimate holiday sale.  Sure, if you are close to retirement age or were planning on using that money for another purpose in the short term it is a real bummer.  One thing to keep in mind for the future is when you are within a few years of needing the money you have invested, put it into something solid like savings bonds or CDs.

There are actually people dumping the stock they have and placing even less into the automatic investing plans they have.  I understand it is really scary and there is no perceivable bottom to this drop in the market, but history has proven the market will rebound.  In fact, on average it has risen 13% a year over the last century.  Remember the Great Depression, Savings and Loan issues in the 80’s, etc.?  Still the average has been this high.

My advice is to find a solid company like General Electric (GE) or Coca-Cola (KO) and invest in them.  Both pay dividends and have not been hit extremely hard with the recession.  It is likely their numbers will once again drop a little lower but in a three to five years I bet they go up again.

My personal stock pick for the month is GE.  Their yields are sitting at 6.36.  This means whatever I invest today, and allow the dividends to re-invest, will double every eleven years.  Imagine investing even more over the next decade.

Have you ever had a stranger go out of his way to do something nice for you?  Maybe he ran ahead of you to hold the door for you because your hands were full.  Even better, have you ever gone out of your way to help another?  How did you feel?

If you are the owner of a business or simply a human being, this posting is for you.  When we give freely of our resources we receive ten-fold as a return.  Here is a background story.  I used to teach martial arts to five to eighteen year olds when I was in high school.  My best friend and I ran the school for four years.  As Black Belts, we were never to be questioned but we both had the same mentality in a strict rank structure.

Our policy was to treat every student with the same respect that we demanded.  We would go out of our way to make sure that this happened.  Neither of us were trying to get attention, it is how we were raised.  In fact, we never got a single penny because of this attitude.  However, we got so much more.

Ten years later Chris and I occasionally come into contact with one of our students or a family member.  The reception is always similar.  We often hear about the impact we had on the student.  It is an unbelievably good feeling to hear this.  Such a small investment has paid dividends in our lives.

When we give our time, skills or finances to others, we always get rewarded.  Those rewards are rarely a fringe benefit or financial gain.  Sometimes you will not even get a thank you.  The other person may never even notice, such as putting your neighbor’s mail in their mailbox instead of routing it back to the post office.

Our gifts and rewards come in the form of personal achievement.  When you know in your heart you are giving freely of yourself, you will feel great about yourself.  Take a moment to give.  By investing in others you are really investing in yourself.

What if everything we thought had value was really worthless?  This is a question that my pastor asked this week in church.  Don’t worry, I am not going to get religious on you.  I am going to explore this question and give you some practical applications to better your finances, though.

Pastor Greg Surratt gave the example of a flat-panel plasma TV costing only a few dollars while a pack of underwear was $1,000.  We would buy the television that we did not need and ignore what we really needed.  This made me question if I ever have done this in my finances…I did.

I recall in the not-so-distant past, putting a trip on my credit card because I knew about future cash in my pocket.  I chased my wife out to Los Angeles while she was on business and made it a vacation for us also.  The whole trip went onto our credit card because I counted my chickens before they hatched.  Thankfully, they hatched, and the trip was paid off as planned.

Have you ever done this?  Acted on a hope?  We like to charge things or take financial leaps of faith all the time and often on things that don’t matter.  We must first, not spend money we don’t have.  Then evaluate what the best use for our money will be.  To do this we must think about where we place our value.  Do we focus on being entertained?  Do we focus on our family’s financial futures?

What is the most important thing in the world to you?  Your family or seeing Hollywood?  As much as I hate to admit it, the trip was not needed.  We could have waited for the money to come in and use it responsibly.  I could have put that cash towards paying off my car.  Once paid off, I could reward myself with a vacation I could afford.

More often than not, we are going to use our money for things that are not needed and ignore the things that are.  The only way around this is by evaluating our values.  What is most valuable to you?

Every time I check the news, I get bombarded with analysts that are terrified about the economy.  There are one thousand Chicken Littles running around sparking fear.  Let’s get them back into the hen house.

For starters, no one is certain about what will happen to the economy, and that is scary. Change and the unknown are very scary, and that is why suspense movies make you jump out of your seat. Currently, we are in one of these movies without a script.

Why should we not be afraid? The economy moves in natural cycles. The “Roaring Twenties” was capitalizing on the stock market. People were making fortunes off of their portfolios. Then the market crashed, and all those that were over-leveraged were left with nothing. The ripple effect carried throughout the masses, and the panic further hurt those doing well and businesses collapsed. This in turn resulted in lost jobs and ultimately the Great Depression.

Then the US auto and steel industry was insanely powerful. Millions of jobs and vast economic booms were experienced. Foreign competitors kicked our complacent butts and that industry collapsed again crushing the populace. Now there is something similar happening with oil prices and the housing industry which were booming in the recent past.

Again we got over-leveraged. Greedy companies were passing out credit as if it were in the “take-a-penny” tray. We were greedy and took the credit and bought useless things that we could not afford. Mortgage companies gave us loans that forced us way out of our means. The companies experienced a boom in sales. The GDP was up and everyone was officially winning.

Until…the rise in oil prices. Now, our paycheck to paycheck strategy was collapsing. The banks started suffering and wanted their money to pay for their expenses. Interest rates were raised on the adjustable rate loans, and people began losing their homes.  They got over-leveraged.

Why shouldn’t we be afraid? Every single financial crisis in our history has been overcome, and each time we have come back even stronger.

What are you doing to protect your fiancial futures? What advice can you give our readers?

How many AIG executives, Merrill Lynch financial managers, and Lehman Brothers bankers are likely to buy an apartment on Park Avenue or a house in the Hamptons this year? The answer: not enough. Anyone on Wall Street or even Main Street knows that the financial sector in the United States has never been uglier. Executives saw their net worth eviscerated and even completely obliterated.

But the woes of Wall Street will cause a ripple effect on most American consumers. This is not only because the $700 billion bail-out will cause the dollar’s value to decrease and taxes to rise, the pain can also be felt in their ability to borrow. Credit card companies and financial institutions that deal with auto loans are also vulnerable to market constrictions. Insurance companies, which have remained strong despite Wall Street woes, will be hurt if the economy takes another beating.

The pain will spread from the banks to their back office IT operations, lawyers, accountants, and professional employees who depend on financial companies for work. From CEOs to the janitors, people who are employed by the financial, real estate, and insurance sectors will have limited spending potential.

If this scenario is not bad enough, the fact that most jobs are centered on certain towns make the situation worse. Bankers usually live in one community while the IT professionals live in another. Manhattan is the hub of all this turmoil, but its fallout is already being felt in different parts of the country. Economists are predicting that the value of Manhattan real estate will sink from layoffs and shrinking bonuses in Wall Street. It is estimated that Wall Street accounts for 12% of all jobs in New York and around a quarter of salaries.

The Wall Street problems will make themselves felt in the lives of every American and the $700 billion bailout is just the beginning of it. While economists believe that this bailout will have a positive impact over the short term, it is frightening to find out what its long term consequences are.

Don’t you love it when you get that order of French fries and find an onion ring in the container? What about getting an extra soda from the vending machine? Free things tend to make your day or at least make the moment. Why not keep the spirit alive in your investment strategy?

My friend Chris Hubinsky and I recently formed an investing company called H&L Ventures, Ltd. Our goal for the first few years is to build a strong portfolio with a solid base. We want a structure that will last for years and solidify our financial futures. We are employing a dividend grabbing strategy that I will call the Check, Please! Strategy or CPS.

The CPS focuses on buying stocks from secure companies that pay dividends numerous times each year. Many of the big corporations pay dividends quarterly. These dividends are free bonuses to the shareholders (you) that can be rolled right back into your investment. More often than not, the dividends are between 10-50 cents per share. “This Joe Lawrence guy is a moron!” you must be saying to yourself.

You would be right on many occasions, but not here. Let me show you some numbers. If you bought $300 worth of General Electric (GE) back on January 6, 2006, you would own 8.45 shares (I went to 2006 to use real numbers). GE paid $.25 per share dividends throughout 2006. After the first quarter you would have made $2.11. Again, not much but work with me here.

Allow the dividends to be reinvested (most brokers do this automatically, like Sharebuilder.com) and you will have .06 of a share. Your new total shares are 8.51. Keep this up until today, and you now made $24.74 in dividends and own 9.18 shares. That is $25 for free in two and a half years. Sure, it is not a retirement check, but give it a few more years and that number will continue to grow.

H&L Ventures uses Sharebuilder.com because it allows for fractional stock purchases and only $4 fees per trade. To learn more check out Quality Over Quantity.

Remember getting that first credit card? It would be used strictly for emergencies. None of those ever really popped up, and you got a letter in the mail last month saying that you credit limit just doubled. All of a sudden temptations start to resemble emergencies.

Getting a pair of shoes, going out to dinner, going to a concert or buying a CD all of a sudden become easier and easier. This is free money! I can buy anything I want, without waiting and only have a small monthly payment. Perfect.

It is perfect until you run some numbers. That dinner you ate last year and charged has been paid for many times over. A balance of $1,000 at 18% would take 153 months to pay off, if you made the minimum payments, and you would have paid $1,115.41 in interest alone. That is enough money to buy everything that you charged twice. (Money for Tomorrow)

Credit cards sound pretty dumb now, don’t they? The solution is a savings account. If you open a savings account and start saving, you will no longer need a credit card. Simply put $20-$50 a pay period into your savings account the day you get paid. You probably will not even notice it gone. This will give you anywhere between $480 and $1,200 after a year.

An amount this small is not going to rocket you to early retirement, but it will replace your credit cards (aka the devil). Each year this amount is going to rise, just like your credit limit. You can put in more money if you choose to increase your balance at a faster pace.

How does a savings account replace my credit cards? Good question. Many people have what they call an “emergency” savings account. An account to be used for emergencies, just like that credit card you got in the mail. The difference is the interest actually works in your favor as opposed to being against you. Many of these accounts even have debit cards for convenience.

Create your own emergency account and cut up your credit cards!

We all have heard it is smart to invest in the stock market. The problem is so few of us actually know much about it. That is why I decided to write this to tell you how to spend the extra $100 you wrestled from the couch cushions this month.

First off, I want to prove my opening statement. From the early 1900’s to today the market has averaged a 13% annual increase. Similar statistics show the dollar bill has lost 95% of its spending power. To put that into different terms: In 1919 one share of Coca-Cola cost $40. If you decided to take $40 and bury it in the yard, the spending power of that cash would be $2. Instead if you took that cash and bought one share of Coca-Cola, today it would be worth over $5 million, if you reinvested the dividends. Hmmm…tough decision.

With that out of the way, onto the application. Some people buy shares of certain stocks because their online broker requires them to. Example: you want to invest in Amazon and it is trading at $74.15 a share. You have $100 to invest. Your company will only allow you to buy a whole share costing $74.15 plus a $9.99 fee. That leaves you with $15.86 left over doing nothing for you. In time you will build up enough extra cash this way to buy another whole stock…in time.

The problem with this is that you are not investing to your full potential when you buy whole shares of stock. In an ideal world you could buy “fractional” stocks. Example: that same $100 would buy you 1.213 shares of Amazon. That extra .213 of a share is working for you and not rotting away in an account somewhere. Obviously, this is the best way.

Sharebuilder.com is the only online trading company I know of that will allow you to buy fractional stocks. On top of that, if you set up an automatic investing plan, trades are only $4 opposed to the standard $9.99! Finally, a company that cares about us.

Stop reading this right now. Go and set up an account. Invest a dollar amount, NOT a set number of whole shares each month. GO!!

Time and time again, financial experts recommend that we invest in index funds. But despite their carefully reasoned arguments, index funds and ETFs only account for 17% of equity assets. Despite being the cheaper, better performing solution, most investors don’t seem to buy into the pro-index arguments on a visceral level.

And while John Bogle, Peter Lynch, and Warren Buffett may have failed to make people index believers, I thought I’d take a crack at fixing the problem with what I jokingly call “Checkout Line Bingo.”

Everyone has played Checkout Line Bingo. You glance across the lines, trying to factor in the speed of the checker, the number of people in line, the items in their cart, and whether or not they look like they’ll slow things down by writing a check or disputing a price scan.

And if you’re like me, you usually lose. I hate playing Checkout Line Bingo. It’s one of those things where I know I just can’t win.

Investing is like picking a checkout line–it is a zero sum game. The checkers can only check out so many people per hour, and which line you pick doesn’t affect the overall number, just as choosing which fund or stock you buy doesn’t affect the overall market (for every buyer, there is a seller; for every killing, someone gets killed).

If it were an option, I’d much rather there be a single checkout line where the first person in line gets to go to the next open register (a la your local bank branch, or checking in at the airport). That’s the equivalent of index investing–you’re not going to magically cut to the front of the line, but you’re not going to get stuck behind someone asking for a price check on stuffed olives.

What’s more, making investment choices is far tougher than picking a checkout line. Rather than 5-10 choices, you have thousands of funds and stocks to choose from. And rather than competing with your fellow shoppers to see who checks out first, you’re going up against legions of professional money managers who spend every minute of every day trying to squeeze out the best possible return…and charging you hefty management fees.

Plus, if you pick the wrong checkout line, the worst that can happen is that your Haagen-Daaz melts. If you pick the wrong fund or stock for your retirement savings, you may end up with a one-way ticket to a cardboard box under the nearest overpass.

So when you’re feeling bored with index funds, and are tempted to go for “sexy” funds or stocks, think about whether you really want to play Checkout Line Bingo with your life savings.