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Are You A Debt Digger?

Living above your means could be destroying your retirement dreams.

If you are between ages 45 and 64, chances are that you have twice as much debt as other Americans, with $6,000 of that owed on credit cards, according to New Jersey bankruptcy attorney Steven N. Taieb.

Single women in large cities tend to finance a greater portion of their lifestyle on credit, compared with single men or single women in small towns, according to Juliette Fairley, author of Money Rules and two other books with tips for young, single women.

Fairley, herself a single New Yorker, says that many single women find that keeping up appearances and a glamorous big-city lifestyle lead to maxed-out credit cards.

Credit card debt is just the tip of the iceberg. A decade-long refinancing boom coupled with lower down payments means that we hold less equity in our homes—just 56 percent on average.

Your debt percentage
You may have dug that hole, but now how do you dig yourself out of the debt hole?

Taieb, who is the author of The Debt Trap: How Your Life Choices Impact on Your Financial Future, says that if you spend more than 15 percent of your take-home pay on debt (not counting your mortgage), you have a problem, and offers several suggestions to break spending habits.

For starters, stop using credit cards now. Take them out of your wallet or purse, and switch to a debit card linked to your checking account.

Earmark any extra money, such as year-end bonuses or tax refunds, for debt repayment.

Shopping savings
Shop post-Christmas sales for electronics equipment, such as computers and calculators. But keep the credit cards at home.

You can find coupons for almost everything. Spending as little as possible on purchases involves both a coupon-collection and a coupon-redemption strategy. The trick is to gather free coupons from a variety of sources.

But what’s even more important is how you use them. While many of the coupons are issued to get shoppers to try new products, some manufacturers are distributing coupons to blunt the in-roads of private-label brands, which generally cost less than name brands. Penny-pinching food shoppers saved more than $5 billion with coupons last year.

You can put a little fun in your life with coupons, too. Look for a new Entertainment Book or Gourmet Dining Club booklet in the fall. For about $30, you get a coupon book that can save several hundred dollars at restaurants, movies, dry cleaners, and car washes. And in the past, the cost of these books has been discounted online after the first of the year.

Because coupons save you only a few dollars each time you shop, it’s easy to squander your savings. Decide upon a specific item to save for and put your savings into a jar on your dresser for that specific item.

Profitable reads
With snow still on the ground, it might be a good time to read for profit as well as pleasure. Consider the following books and publications:

Smart Couples Finish Rich by David Bach. Move ahead as a team. Broadway, $14.95.

Nice Girls Don’t Get the Corner Office by Lois P. Frankel. Unconscious mistakes women make that sabotage their careers. Warner Books, $19.95.

Rich Dad, Poor Dad by Robert T. Kiyosaki with Sharon L. Lechter. Teaches the importance of financial literacy at a young age. Warner Books, $15.95.

Loans and Grants From Uncle Sam. Explaining available federal loans and grants, options for paying them back, and locating lenders. Octameron Associates, 1900 Mount Vernon Avenue, Alexandria, VA 22301, $9.

Please Send Money! by Dara Duguay. It offers advice on how young people can avoid and manage money problems and control their financial destinies. Sourcebook, $17.

WEB ADVICE ON SAVING MONEY Stop making big money mistakes. or Printable coupons and coupon codes for Web sites that result in savings-off orders. Calculate the real cost of any purchase.

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