A reverse mortgage may be the answer they seek. A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live in your house. It basically converts your equity into cash, with no repayment required until the borrower no longer uses the home as his or her principal residence.

One version of this product is the Federal Housing Authority’s Home Equity Conversion Mortgage (HECM) which allows borrowers 62 and over to withdraw some of the equity in their home, providing a much needed financial boost to their income. However, the home must be a single family home or a one-to-four unit home where the borrower actually lives. Additionally, a HUD-approved condominium or manufactured home that meets FHA guidelines may also be eligible.

There are no restrictions on personal income, but the amount you can borrow does depend on your age, the current interest rate, the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally speaking, the more valuable your home is, the older you are, the lower the interest rate will be and the more you can borrow.

Seniors can use the money as they see fit, for example, for emergencies or medical expenses, to make home improvements, or to pay off debt. Homeowners will still be responsible, however, for the taxes and insurance associated with the property.

One requirement to receiving a HECM is that the borrower meets with a HUD-approved housing counselor who has passed a special HECM exam prior to obtaining the loan. This is a protection to the consumer, as the terms and options associated with a reverse mortgage can be complicated. For instance, consumers need to fully understand that the up-front costs can be quite steep, and that money received from a reverse mortgage can be counted as income or an asset that restricts eligibility to some government programs. A reverse mortgage may not be your best option, and the counselor’s role is to review all the options available to you.

Reverse mortgages are the perfect solution for some people, but not all. At your counseling session, feel free to keep asking questions until you completely understand the reverse mortgage product. And, be sure to inquire if there might be a better option for you. If your financial need is short-term, there may be community programs that can help.

Time is money’s best friend, and by beginning to save and invest at an early age, you can expect fantastic returns. As a matter of fact, if you begin investing $200 per month at age 25, and continue to do so until age 65, assuming the historical stock market return of eight percent, you will have a nest-egg worth $650,000.

Add in retirement savings at work. A 401(k) retirement vehicle uses pre-tax dollars, often matched by the employer, to form the employee’s retirement portfolio. Fully maximizing contributions is the goal, but let’s stay conservative with a $200 total monthly contribution ($100 from the employee and $100 from the employer), and apply the same assumptions as above to equal another $650,000 at age 65.

To find the money to begin saving and investing, consider the following tips from the NFCC. Remember, small changes add up to big savings. Select the ones that you can implement long-term, and you’ll be on your way to the millionaire zone.

• The very best way to save money is to have it deducted from your paycheck. You can’t spend what you don’t have.
• Get organized. Know where your money is going by tracking every cent you spend.
• When you receive any windfall money (raise, bonus, gift, etc.) pretend it never happened. Instead, increase your retirement contribution.
• Review your W-4 at work, making sure the correct number of withholding allowances is selected. The average federal income tax refund has been averaging well over $2,000 in recent years. That means the consumer could have had an extra $200 in his pocket each month all year long. There’s no reason to give Uncle Sam an interest-free loan.
• Examine every spending category, and cut 10 percent from each. You can’t reduce your fixed expenses such as rent or mortgage, car payment, etc, but you can painlessly cut 10 percent from the other categories such as groceries, clothing, gasoline, gifts, utilities, etc.
• Pay cash for everything. Paying with cash makes us think before we spend. Paying with plastic intentionally distances us from our spending.
• Only spend paper money. At the end of each day, put all of your change into a jar. After a month, you’ll have between $30 and $50 in your jar.
• Commit to saving $5 each workday. The incentive to pare a little money out of each day’s spending is that you can look forward to living on your normal budget over the weekend. If you’re married, each person only has to carve $2.50 out of his or her daily routine to find $100 extra each month.
• Drinking water when eating out is estimated to save 20 percent off the total bill.
• If you are paying for a storage building, go through those items and sell what you no longer need. Then, do the same at home. You’ll make money off of the items you don’t use, and you’ll save on the cost of storage.
• Never make a late payment. The average credit card holder has seven credit cards. Late fees are in the $40 range. Paying late on each card once each year means you’ve thrown almost $300 out the window needlessly.
• Eliminate all unnecessary banking expenses. Look for a free checking and sign up for free online bill paying. Never use an ATM that charges you. This can be accomplished by banking with an institution with many branches in areas near where you live or work.
• Review your cell phone plan to make sure it fits your calling pattern, and that you aren’t paying for features you don’t use. If you have a run-away cell phone bill each month, control your spending by purchasing only prepaid cell phone plans.
• Consider doing away with your land phone. At the very least, review your long distance plan. If you also have a cell phone with national long distance, you may be duplicating the need.
• Research bundling of services such as land phone, cell phone, cable TV, and Internet. The company benefits by having all of your business, and you benefit through the savings they pass on to you.
• Cut back on your cable package. Even the most basic packages have plenty of channels to watch.

1.Track your expenses.

 To find money available for savings, first determine where you are currently spending your money. You can’t know where you’re going until you know where you are. Tracking expenses will provide the answers. Write down every cent you spend. At the end of the month, take a look at where your hard-earned cash really goes. You just might be surprised.

2.Create a budget.

 Budget is not a four-letter word. A well-designed spending plan considers all sources of income, living expenses, debt obligations and savings. Be sure to incorporate all three expense categories: fixed expenses (e.g., mortgage, auto loans and rent), variable expenses (e.g., credit cards, groceries, entertainment, clothes and gasoline) and periodic expenses (e.g., property taxes, home repair, and car maintenance). Whether it’s saving for retirement, education or a vacation, the old adage remains true: pay yourself first. You can’t spend money you don’t have, so set aside your allotted savings right off the top.

3.Customize your budget to fit your lifestyle.

 When constructing your budget, be realistic when looking for opportunities to save money. People are more successful when they cut back, as opposed to cutting out. Don’t be too strict, or you won’t stick with your plan. Know, however, that small changes over time can indeed add up. For instance, instead of eating lunch out every day, brown bag it two days per week. Take a look at your cable package and cell phone plan to determine if you have the right fit for your lifestyle. Evaluate the necessity of having a land phone. Savings opportunities are available in each spending category.

4.Involve the entire family.

A joint effort yields a greater result. And, make it fun. See who can save the most each month, and have a special prize for them. Agree upon a savings goal that everyone can work toward (summer vacation, new car, etc.). Celebrate each success along the way. Before you know it, saving will be as much fun as spending.

5.Find the right savings vehicle(s) for you.

 There are many ways to optimize your savings. Consider splitting money between accounts that are liquid (such as a money market account) versus those intended for more long-term savings (such as certificates of deposit). Explore liquid money market accounts online, as these accounts can offer higher interest rates. Consider using automatic deposit, transfer, payment and withdrawal of money whenever possible to keep money out of your hands and in a safe place. Know that sometimes easy access to saved money is needed for emergencies, so don’t put all of your savings into vehicles where you’d be penalized for withdrawal.

6.Pretend it never happened.

When you get a raise, birthday money, bonus or tax refund, quickly put this extra income toward your retirement plan or savings account. The longer the extra money is in your possession the easier it is to spend it. If you were anticipating using this extra money to buy something special, instead consider using the money to pay down credit card debt, give yourself a small treat, and deposit what’s left over into your rainy-day fund.

7.Take advantage of your employer’s retirement benefits.

 Gone are the days when Americans could rely on traditional defined benefit plans. Saving for retirement now rests more with individual Americans than ever. Regardless of your age, it is important to take an aggressive approach to saving. Contact your human resources department (HR) and research money-saving options, whether it’s through a traditional defined benefit plan that pays a set dollar amount each year of retirement or a defined contribution plan such as a 401(k) plan that allows contributions to be made with before-tax dollars. Also, ask HR if the company matches a portion of your contributions or allows catch-up payments. Changing jobs? Take your money with you – roll it over into an IRA or the new employer’s plan.

Many consumers are on the ropes financially. This situation is perhaps hardest for those who feel as though they’ve done everything right. After all, the experts told us to:

• buy a home, as it’s a great wealth-building tool;
• invest in our retirement account, setting aside money for the days we can no longer work; and
• open credit card accounts in order to build a solid credit rating.

Now, after having followed the advice, these same consumers discover that:

• even if we’re able to afford the mortgage payment, our home is worth less than we paid for it;
• the value of our retirement investments has dwindled; and
• lines of credit are being lowered while the interest rate on our credit card is being raised.

There is one missing bit of advice, however, and if consumers had embraced it as they did the others, we wouldn’t be feeling so much financial pain today. The one area we failed to include is savings.

The 2008 National Foundation for Credit Counseling (NFCC) Financial Literacy Survey co-sponsored by MSN Money revealed that a majority of people do not have a sufficient emergency fund, defined as three to six months income saved. Further, more than one-third, or roughly 76 million adults, say they do not have any non-retirement savings. Although a majority is currently saving for their retirement, more than one-quarter are not.

The problem is that when money is tight, it’s very hard to think about saving, but it is critical that consumers find a way to build a rainy day fund, and then address the larger issue of saving three to six months income.

The NFCC suggests the following ways to begin saving:

• Start small. The point is to get started. Put 10 percent of take-home from each paycheck into an interest-bearing account. At the end of a year, you’ll have a little more than one month’s salary as your emergency money, and it’s likely that you’ll never miss the money from your paycheck.
• Have the designated amount automatically deposited into your savings account. You can’t spend what you don’t have, so remove temptation by deducting the money before you receive it.
• Shop around for the best rate. If your local financial institutions are not offering good interest rates on savings accounts, search online. Many sites provide you with rate comparisons and minimum deposits for online banks, with such banks often offering higher rates. You’ll want your emergency fund money in an FDIC insured liquid account, though, so avoid making any long-term commitment such as a Certificate of Deposit, as you will be penalized for early withdrawal.
• Commit to leaving the money in the savings account. Many people regularly deposit money into savings only to pull it right back out. Define what constitutes an emergency, and don’t touch the money unless it meets the definition. Also, don’t keep your money in a checking account, as that makes it too easy to access.
• Set a goal. Since you’re just getting started, make your initial goal very attainable. However, the simple act of setting a goal gives you something to shoot for. Once you reach that amount, see if you can dig a little deeper and keep going.
• Examine all spending categories. If you could carve $10 out of 15 different spending categories, you’d have $150 each month to go into your savings account. That means that in 12 months you’d have built up a cushion of $1800 which should see you through most short-term emergencies.
• Include all family members. A joint effort yields a greater result. You can make a game out of saving and have a prize for the person who saves the most each week. Or, set a family goal and reward everyone with a pizza party or another event that will serve as motivation to keep going.
• Save for specific needs. Once you have your emergency fund in place, you may want to begin saving for upcoming needs such as a car, house or debt reduction. Some people even have different accounts for each purpose so they can see how close they’re getting to obtaining the item.
• Pretend it never happened. When you get a raise or a monetary gift, put it straight into savings. After all, you were living just fine before you had that money, so you’ll do just fine without it. If you get an income tax refund, consider this lump sum as the seed money to begin your three to six month’s income savings account.

Even in this tough economic environment, consumers still spent money during the holidays. This is the ideal time to plan for the holidays of 2009. Total all expenses associated with this holiday season. Include anything you spent money on such as gift wrap, travel, entertaining, etc. Then divide the total by 10 and pay yourself that amount each month from January through October. Next November you can begin shopping and pay with cash, giving you the gift of a debt-free holiday

If you’re eager to save money this year, reviewing plan copays and out-of-pocket expenses — besides premiums — is crucial. Making a savvy choice can save you thousands of dollars per year. But you’ll need to advocate for yourself because every plan is different, and costs may rise.

In 2012, six of the top plans in the Medicare Part D market are raising premiums, according to a recent analysis from health policy firm Avalere Health LLC based in Washington, D.C. The drug plan unit of one large player, UnitedHealth Group, is raising 2012 premiums an average of 14 percent.

There’s good news, though.

“Medicare Part D plans are becoming simpler and more cost-effective,” says Steve Weisman, a senior lecturer of law, taxation and financial planning at Bentley University in Waltham, Mass. “Lots of companies have been weeded out.”

Start your search online

For 2012 plans, which start Jan. 1, the open enrollment period runs from Oct. 15 to Dec. 7, 2011. During this period, you can join, switch or drop your plan. And everyone with Medicare coverage can sign up for Part D.

To find a plan, search Medicare.gov. The interactive Medicare Plan Finder helps you compare deductibles and copays for your prescriptions under various plan scenarios. Input your own list of drugs into the Formulary Finder to make custom comparisons.

After checking the Medicare.gov site, don’t forget to reverify that your drugs will be covered, says Lita Epstein, author of “The Pocket Idiot’s Guide to Medicare Part D.” Sometimes there are mistakes on the site, she says, and changing your plan later isn’t easy.

Walgreens and other drugstore chains can also search plans if you can’t do your own, says Epstein. Also, turn to pharmacists you trust, but avoid insurance brokers who may be pushing their own plans, she says.

Before making a final decision, heed these money-saving hints.

Compare total annual drug costs.

 Totaling premiums, deductibles and out-of-pocket expenses are the best way to compare Medicare Part D costs, says Epstein. The exception is Medicare Advantage Plans, which are similar to health maintenance plans, in which drug costs are usually already folded into the plan. “Make sure you compare apples with apples,” she says.

At least 30 to 40 Medicare Part D options exist for consumers nearly everywhere, says Epstein. Before using the Medicare online tools, list every drug you’re taking, including milligrams or dosage, for 30 days. Then narrow your choices to three plans, and compare them side by side, says Cindy Holtzman, founder of the advocacy firm Medical Refund Service in Marietta, Ga.

Know your formulary.

Costs for drug formularies, which are lists of prescription drugs preferred by your health plan, can change every year. Brand-name drugs may have tiered cost sharing, and others may not be covered at all. Costs for expensive drugs can vary widely from plan to plan.

Some plans require you to have prior physician authorizations for a particular drug, says Weisman.

Avoid hitting the doughnut hole.

 The doughnut hole, which is a gap in Part D drug coverage, is getting smaller every year. In 2020, it will disappear. However, when you hit the doughnut hole in 2012, you’ll pay 50 percent of the cost of brand-name formulary drugs after spending $2,930 until you reach the out-of-pocket threshold of $4,700 in 2012.

“You’ll hit the doughnut hole if you’re on three or four brand-name drugs,” says Epstein. By moving to generics you can avoid it, she says. Another option: wholesale clubs that let you use their pharmacy even if you’re not a member. Drugs can cost much less.

Watch for plan cost increases.

 Premiums, deductibles or drug cost tiers can spike. So, look at plans every year, says Epstein. “There may be lots of changes, such as medications that are no longer covered,” she says.

Waiting past age 65 can cost you.

You can sign up for Medicare Part D three months before your 65th birthday. But if you wait, you’ll be penalized with a 1 percent fee added onto your premium for every month you delayed enrollment. You may owe this penalty if, after your initial enrollment period is over, you go for 63 days or more without Part D coverage or prescription drug coverage that is at least as good as Medicare’s. Your initial enrollment period ends three months after you turn 65.

“Even if you don’t think you’ll need Medicare Part D, sign up,” says Epstein. Cheap plans are better than nothing, and you can always switch during open enrollment.