Money management basics still the same

No doubt about it, some of the rules are changing. Still, most of the basics of intelligent money management will remain just as they have always been. For example, one of the things you can be certain of is that there will always be someone out there inventing new schemes to spend, invest, borrow or lose your money. That's why you should keep the overall safety of your assets as a primary financial objective. While the economy takes time to sort itself out, you need to shore up your defenses against possible financial disaster. If you're concerned about the safety of your assets, here are a half-dozen defensive steps you can take now:

1. If you find yourself in need of cash, resist the temptation to borrow excessively against the equity in your home.

Despite these advantages, you shouldn't borrow too much against your home. Since your house serves as collateral for a home equity loan, you could lose it if times get tough and you are unable to keep up with the loan payments.

You need to be especially careful with interest-only home equity loans in which you pay the interest in installments and then pay off the entire principal at the end of the loan term. This arrangement can make the monthly payments more affordable, but it may leave you with an impossibly large balloon payment at the end of the loan.

2. Stay out of the clutches of the credit card monster.

Credit card debt is dragging millions of Americans into a bottomless financial abyss. With the interest rate on unpaid balances as high as 12 percent and climbing, making the minimum payment on your statement each month is the first step toward a lifetime of unmanageable debt.

Financial counselors recommend that you limit yourself to two credit cards and that you charge only what you can pay in full each month. Carrying a pocketful of credit cards can create the illusion that you have more money than you actually have.

If you need to borrow money for a large purchase, almost any other lender will be a wiser choice than a credit card purchase.

3. Beware of get-rich-quick schemes.

From investment schemes to scholarship scams, and from marketing pyramids to credit repair doctors, scam artists are forever coming up with new ways to bilk consumers out of their money. We can only expect this sort of activity to pick up during this time of economic instability.

Perhaps the most important rule of all in this high-tech environment is to never give your Social Security number, credit card number or financial institution account information to any unsolicited telephone caller no matter how legitimate the call may appear.

For important consumer information about scams, check out the Federal Trade Commission's Web site at http://www.ftc.gov/.

4. Know your investment limitations.

The word "invest" is derived from the Latin term "investire" - to commit for a long period with the thought of future benefit. Impatient and inexperienced investors looking to make fast money sometimes turn to investments they don't really understand. This is an almost certain road to losing much of their hardearned money. Before you commit your money to any investment, evaluate it in terms of your investment knowledge, risk tolerance, financial objectives and the current investment climate. It is generally best to leave sophisticated investment vehicles, such as futures, options and junk bonds to experienced investors.