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"Money is designed to be spent," said Anne Rutledge, owner of Money Counseling, a financial counseling service. That may seem like an odd comment from someone who's been helping women get their pocketbooks in order for the past 20 years-but it's something Rutledge believes, with a caveat: "The question is," she asked, "are you spending your money now or are you spending it tomorrow? Saving money is really future spending. You are choosing to set money aside so that you can spend it in the future." The clients Rutledge sees have often already spent-or overspent-theirs: She teaches budgeting, account balancing and savings skills to clients struggling with debt.

Gender spending
"Women, much more so than men, tend to have emotional responses to money," Rutledge said. "Many women use money almost like an addiction. They spend money to try and fulfill some other need and this creates a continual source of conflict in their lives," she explained.

Jody Anderson of Lutheran Social Service Financial Counseling, a nonprofit that's been helping consumers with money and debt for more than 40 years, agrees that women spend emotionally. In her experience, women often equate money with two things: love and security. Anderson sees lots of women spending money not only on themselves, but also on those they love. This is particularly true if we're mothers, she said. It's not just over-spending on younger kids; even if we have an empty nest, we may be helping our adult children feather theirs. "You will see single moms whose kids have left home, go out on a financial limb for their kids, long after the kids [should have been self-supporting]. It's how they acknowledge caring," Anderson explained.

Women and men spend "discretionary money" differently, Anderson said. While men with money issues often overspend on "big toys-things with wheels and motors," women dribble away their money on a variety of recurring expenses.

Rutledge sees this too. "Many of my clients don't allocate their money in ways that will please them later. They load up their lives with cell-phone bills, cable bills, credit-card bills, car payments and suddenly their monthly salary is gone and they haven't had any fun yet." And, she pointed out, they haven't saved any money either. Sooner or later, this will become a problem. Eventually the car will break down, the dog will need to go to the vet, co-workers will organize a Secret Santa gift exchange, or a child will need money for a school field trip. If there isn't a reserve stash of money somewhere, then credit cards arrive to save the day-or to dig the debt hole deeper.

Paying the piper
Those big bills from Visa are something many of us will be facing next month after the surge of holiday shopping is done. Since women can equate spending with love, holiday spending can be a quicksand trap for us. And it's a hard habit to break. "Most women are OK with something like making a change in their cable bill, versus changing what they spend at Christmas time," Anderson said.

And that spending has a huge impact on family finances. According to the Business and Professional Women's Foundation, 56 percent of women are in charge of the day-to-day finances of their families. The organization also says that 83 percent of all consumer purchases are made by women. So come January and the arrival of inflated credit-card bills, many women will be wondering how to get themselves and their families out of the financial hole they've dug. In many cases, the credit-card offers keep coming-many with the tempting combination of a period with no interest and the suggestion that you transfer your other card balances. Is it a good idea to take advantage of them? Anderson says it depends. If you can switch your debt to a lower-interest card and have the discipline to not charge it up again, this can be a viable option. Read the fine print: What are the card's fees and terms? How long is the monthly grace period, and how long does the no-interest offer last?

Sometimes you get credit card offers even when you can't make payments on the ones you have. Look at the terms you're offered-these higher-interest cards tend to charge high fees and low credit limits to offset the risk the lender takes in offering credit to someone who's more of a repayment risk. There truly is a credit card for just about everybody-but if you're offered one of these "sub prime" cards, there's almost no reason to say yes.

In fact, if you are offered one of these cards, it's a sign that you're having problems with credit and debt, and you may want to consider seeking help. There's lots of help available, but do your homework and choose wisely: Some so-called "credit counseling" firms that make big promises can land you in even bigger trouble. See "The money pros" section of this story for more on this.

Don't delay taking the first steps-checking out credit counselors and making an appointment-because you're afraid of what you might face. "Women feel a lot of guilt, a lot of shame about debt," Anderson said. "They ask, 'Am I the worst one?'

"They almost never are."

New year, new money

Want to start the new year on sound financial footing? Overwhelmed before you start? Here are six manageable steps you can take now:

by Kelly Westhoff

1. Know where it's going.
The first budgeting step, according to financial counselor Anne Rutledge, is to figure out where your money is currently being spent. "The women who are really struggling to make ends meet are the ones who know exactly where their money is going," she said. "They are tracking every cent. On the other hand, it's the women who have a little more money in the bank, the women who don't have to watch every penny, that are the ones that don't know where their money goes. They take $40 out of the cash machine and it just disappears."

There are several ways to track weekly spending habits. Some people carry an index card for a week and write down every transaction. "Other people," Rutledge said, "operate really well with cash. They take out $100 and tell themselves it has to last for a week." Visual and tactile learners tend to relate to the cash method because they can watch and feel the pile of money shrink. "Once you know where your money is going," Rutledge said, "then you can focus on identifying what gives you the most value." For some people, a daily trip to the coffee shop holds value, and that's fine, she stressed, but then look for another one of your spending habits to trim.

Ruth Hayden, a St. Paul financial consultant and author of four financial how-to books including "How To Turn Your Money Life Around: The Money Book for Women," said that simply filing financial paperwork can help many women feel like they are getting their money organized. Three-ring binders, expandable folders or portable filing boxes can all work. "An organized system of filing doesn't have to be complicated," Hayden said. "It just has to be clear."

2. Find ways to lower your recurring expenses.
Can you make do with fewer cell-phone minutes? Do you need both satellite TV and a Netflix account? Is your long-distance plan the best, have you shopped for car insurance lately? "The lower you can make your monthly commitments," Rutledge said, "the more money you'll have to divvy up for other things, like putting aside money for savings, for vacation or for Christmas gifts."

3. Save money on taxes.
If you have a flexible health savings account through your employer, spend it down by the end of your plan year or lose those funds. This might be a good time to buy a new pair of glasses or load up on contact lenses for the coming year. If you need to, you can stock up on nonprescription medications. Scrambling for ways to spend that cash? Hayden says it's a clear sign that you need to readjust your flex savings in the new year. "Being forced to spend money when you don't have anything to buy is never a good idea," she said. If you don't have a flex savings account, Hayden advises you to consider one for 2007.

4. Save for your retirement.
Hayden also suggested women who haven't started saving make a start in 2007, even if the savings are small. "The biggest mistake women make is not putting any money away for themselves. Women have college funds for their children before they start retirement funds for themselves," she said.

Working women who are contributing to a 401k or 403b investment plan and haven't hit their maximum should contact their mutual fund company in January and raise their funding amount. "This is really the easiest thing to do," Hayden said. "Just up your contribution by one percentage point. You won't even miss that money. Then call back in six months and up it again."

Women small-business owners should open a Simplified Employee Pension Plan, more commonly called a SEP-IRA, through a mutual fund company or with the help of a financial planner. This allows a small-business owner to contribute funds from her business account, not her personal account. "This type of account is ideal for a small-business owner," Hayden said, "as you deduct from your business' year-end taxable income, plus in the end you get to keep the money anyway."

Homemakers should invest in retirement accounts as well. "If a woman steps out of the working world to care for her children, then she isn't earning any money towards a 401k and she isn't contributing any funds towards her future social security checks either," Hayden noted. "She should set up a spousal IRA. She can contribute $4,000 a year or $5,000 if she's over 50. If she doesn't want to do that, there's nothing wrong with just investing in a mutual fund on her own."

5. Get professional help.
No matter what shape your finances are in, there's a professional who'd like to help you improve them. If the thought of mutual funds and IRAs is intimidating or new, find a certified financial planner. Hayden suggested women read planner profiles online, seek recommendations from friends, and speak to a handful of planners before deciding with which person they would like to invest. "There is nothing wrong with getting professional help," she said.

If your problem is making ends meet, there are a variety of options. See "The money pros" story to learn the difference between the kinds of money professionals-and to learn which you should steer clear of.

6. Set financial goals.
A financial planner is a great help in figuring out long-term goals like how much you need to retire, and even short-term goals like how much you should set aside for unexpected expenses, but what about saving for fun? It's easier to put a vacation on Visa, but ultimately more satisfying-not to mention smarter-to save the money in advance. Be specific: If you want to spend a long weekend on the north shore, or a week in Mexico, figure out what it will cost, and how you can save for it. If you have a family, get everyone involved; saving for a goal is a great way to teach kids about money. If you know that holiday spending is important to you, set a budget and stick to it, saving throughout the year so you don't end up with a debt hangover in January 2008.

The money pro$:

They're not all created equal
What kind of help do you need to make your money work for you? There are many different kinds of advice available, but to get started, determine whether you need a financial planner or a credit counselor.

Financial planners
There's no one-size-fits-all solution. The nonprofit agency that helped your sister restructure her credit-card debt is probably not the right source to help you decide what to do with your tidy end-of-the-year bonus-or help you figure out how much you should be saving for retirement. If you're more concerned about maximizing your assets, consider seeing a financial planner who charges an upfront fee or hourly rate for her services. Some will offer advice about investment vehicles, others will help you educate yourself to make the decisions. It's all about what you're most comfortable with.

Credit counselors
As consumer debt has mounted to all-time highs, helping us handle it has become a growth industry. Not all of those who offer help are as ethical as the women quoted in this article. If an organization offers to "help you get out of debt quickly," consider it a scam. Some of these services-even the nonprofit ones-operate using questionable tactics. If a company doesn't offer education about how to manage your money, it is probably not one you want to work with. Other red flags: charging large fees. If you pay the company monthly, it often pays itself first and then creditors. Among the worst: those who hold on to your money, letting your credit take a nosedive until the primary creditor has sold your account to a collection agency for pennies on the dollar. The collection agencies are then willing to settle the debt for less than you owe. But by this time, your credit is in tatters. And to add insult to injury, you'll have to pay taxes on the difference between what you originally owed and the amount the debt is settled for.

Most reputable agencies offer a low or no-cost initial consultation. They are also likely members of the National Foundation for Credit Counseling. For ongoing help, they generally put together a plan and charge you a small percentage of your monthly debt payment to administer it. They'll help you think about how to manage both your income and outflow differently. Common suggestions are checking out some overtime at work and, if you generally get a big tax refund check, changing your withholdings so your money is working to pay down your debt.

FFI
For general information about personal finances and credit:
The Minnesota Attorney General's office, www.ag.state.mn.us/ select "personal finance."
The National Center on Women and Aging, http://iasp.brandeis.edu/womenandaging/finances/CreditDebt.html
The Federal Trade Commission, www.ftc.gov/ftc/consumer.htm Select "credit."

Check out credit counselors:
Better Business Bureau, www.bbb.org/reports.asp Check out both "company reports" and "charity reports" since unscrupulous agencies sometimes masquerade as nonprofits.

MN State Dept. of Commerce, www.state.mn.us/portal/mn/jsp/home.do?agency=Commerce