Investing - Choosing Individual Savings Accounts

ISAs replaced PEPs and TESSAs for new investments after April 1999 and are guaranteed to run for ten years. The annual limit for investment is £7,000 (£5,000 from April 2006). Income and capital gains in an ISA are tax free and dividends receive a 10% tax credit until 2004.

Investments can be in three components:

up to £3,000 (£1,000 from April 2006) in a cash component in banks, building societies, National Savings products (the taxable ones of course);
up to £1,000 in an insurance component single premium life assurance policies such as with profits bonds;
up to the full £7,000 (£5,000) in stocks and shares investment or unit trusts, preference shares, bonds and gilts or directly in equities (a self select ISA). There are no geographical limits as there were for PEPs.

There is a question mark over the value of the insurance component because insurance linked products pay income tax (albeit at a favourable rate), which cannot be recovered and no more tax is payable on investments outside an ISA except for higher rate taxpayers.

Shares arising from employee share option schemes can be transferred to a stocks and shares ISA without counting against the annual limit.

Although 18 is the starting age for ISAs, 16 and 17 year olds can invest up to £3,000 (£1,000 from 2006) in a cash ISA.

There are three kinds of ISA:

Maxi ISAs - up to the full £7,000 (£5,000) is invested with one provider, although it can still be broken down into two or three components.
Mini ISAs - you can have one, two or three providers, one for cash, one for insurance and one for stocks and shares (but you cannot forgo either the cash or insurance mini ISA to put £4,000 in stocks and shares).
TESSA only ISAs when a TESSA expires, the capital element (but not the interest) can be re invested in a cash or TESSA only ISA without counting towards the annual ISA limit.

You cannot invest in both a maxi ISA and a mini ISA in the same year.

Income can be left in or withdrawn but once taken out neither income or capital can be put back into that year's ISA.

CAT standards exist for ISAs (charges, access, terms) to protect inexperienced investors but providers do not have to follow them.

Are they good value?

There has been some debate about the value of PEPs, particularly for standard rate taxpayers, since not many People pay capital gains tax and the extra charges could be greater than the income tax savings. However, this dates back to the time when PEPs could only be invested in equities. The same questions arise in connection with ISAs.

Statistics of returns over a period are only available for the time when PEPs were limited to equities. They show that equity investment through a PEP achieved a higher return although it took a lengthy period for the difference to be significant.

Corporate bond ISAs and PEPs

Now that ISAs and PEPs can be invested in company fixed interest stocks and shares, producing more income than equities at least to start with (as well as incurring less risk), there will be a tendency, particularly in the case of higher rate taxpayers, to use ISAs and PEPs in this way.

Another reason is that the full amount of tax deducted at source from company fixed interest stocks can be recovered by the ISA manager instead of the limited recovery of tax deducted from dividends.

Choosing an ISA

Even when you have decided on the type of ISA you wish to invest in, there is still a wide choice. Here are some questions to ask the ISA provider:

What are the initial/exit and annual charges and are they charged to income or capital?
What are the dealing costs (if applicable)?
What is the charge for transfer to another provider?
Is there any charge for switching between the provider's own funds?
Are there charges for collecting dividends, getting company reports and attending AGMs?

It is possible to have a self select share ISA in which you choose which shares or units to invest in and you can trade in the usual way (this also applies to PEPs). There is no specified limit as to how long you can hold cash - the criterion is an intention to invest.

Putting all your annual share ISA money into one unit or investment trust, while economical, can be somewhat risky, especially in the case of an ISA mortgage, but you can spread the risk by choosing a different investment sector for each ISA year.

Fund supermarkets are worth considering for ISAs.

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The Gift That Keeps On Giving - A Money Market Savings Account

An absolutely safe way to store $100,000 of your Money in the bank, that pays a nice yield is in a Money Market

Savings Account, also known as a Money Market Deposit Account. They are insured up to $100,0000 (if

a retirement account, up to $250.000) by Federal Deposit Insurance Corporation if in a bank, and if in a Credit

Union by National Credit Union Share Insurance Fund. With a spouse you can also have a joint account also

insured.

With your Money Market Savings Account or Money Market Account, there is a minimum balance, but the money

market account pays about twice the interest rate that a Passbook Savings Account or a Statement Savings Account

pays. The rates are set by the bank or credit union to reflect the directions of overall interest rates and can change

on a daily basis although most banks change only weekly. The money market savings account has advantages

of liquidity, security, and accessibility. You don't have to worry about the vagaries of the stock market,

about price/earnings of different companies, about income statements, and balance sheets. No second guessing

is required - Should I have gone to large income producing stocks, or small-cap stock, or midsize-cap stocks,

should I invest internationally, or domestically? Or should just go gamble a lot of loot on Junk Bonds.

Unlike the other money making funds of stocks, bonds, or mutual funds which invest in stocks, bonds, commercial

paper, REITs ( Real Estate Investment Trusts) mortgages, Treasury Bills or Corporate Bonds, you can be assured

if you have the protection in knowing if you should need the money in the bank, it will be there. If you have more to

invest than the insured amount you can open up new accounts at other banks or credit unions. which are then

insured up to $100,000 or if a retirement account up to $250,000.

In fact, you may wish to consider a credit union. Credit unions are groups of people with some common bond

who form a cooperative. They may work at the same company or belong to the same branch of the military, or

take part as members of the same church or religious community. Since the members are the owners, the

profits come to them. Often Credit Unions offer beneficial compounding and a good rate of return on your

money, than other banking institutions. The more often interest is compounded, the faster the interest grows.

You may wish to consider using one of the large online banks and make deposits in you Money Market Savings

Account through cyberspace. You can find online banks advertised on various money and financial

websites.

After you build up a nice, safe nest egg, and if you have a tolerance for risk and you want your money to work

for you in more diversified ways; you may wish to put your money on Wall Street by starting some money

making funds, the most common of which are mutual funds. They are made up of all combinations of stocks,

treasury bills, commercial paper, junk bonds, Fannie Maes, etc., and you can choose between investing

in managed funds wihch usually have a large management fee or an index fund wich is indexed according

to the S&P or NASDAQ or some other index, which often perform well and have low management fees.

My name is August and I am a baby boomer. I've been retired for 4 years. I enjoy gardening, reading, and studying investments and finance. Please visit my website, Money Saving and Funds and my blog, Money Market Savings Account

Health Savings Accounts Put You in Control of Your Healthcare

As Health Savings Accounts grow in popularity, there is growing fear among those who want to nationalize healthcare that they will not be able to put the cat back in the bag. There are already over 3 million HSA owners, and by 2010, the Treasury Department estimates as many as 45 million Americans will be covered by HSA plans. They will have billions of dollars invested to cover future medical expenses, and by then it will be politically impossible to take that benefit away.

If you currently have a high-deductible health insurance plan, you can invest tax-free money in a Health Savings Account. You get to choose the type of investment - anything from savings accounts or money market funds, to a full brokerage house. If you invest wisely, you could have well over $500,000 in the account when you retire. You will be able to use that money to pay for your healthcare in whatever way you please, tax free. You can go to the best surgeons, or the least expensive doc-in-a-box. If you decide to treat a condition with acupuncture, homeopathy, or psychic healers, you can do that too. Whoever offers you the service you want with the best combination of quality and price should get your business. And since you are the one paying, it will be completely your choice. You have healthcare freedom.

If proponents of a single-payer system were to ever have their way, you would be at the mercy of a government bureaucrat when it comes to your healthcare. To see what this may look like, all one has to do is look at the state of health care in Canada, England, New Zealand, and the parts of Europe that have not yet abandoned single-payer systems.

Proponents of a single-payer system tend to point to Canada or England as countries that cover all their citizens with quality healthcare, while spending less money per person than the U.S. But if we look a little more closely, we see that these publicly financed health insurance systems are breaking down, the quality is low, and the costs can be quite high. Here's what Canadians have to deal with if they need medical care:

Long waits. Hundreds of Canadians go to Detroit and other U.S. cities every year for procedures like CAT scans, which they can obtain treatment in a matter of days. In Canada, the wait is typically six months. Currently 876,000 Canadians are on waiting lists for medical procedures.

Difficulty in getting life-enhancing procedures done. If a Canadian is having a heart attack, they will be treated right then. But if the surgery is considered "elective" (meaning that possible death is not eminent), the wait could be months or years. Average wait for cataract removal is 18 months. Average wait for a knee replacement is one year.

Increased risk of dieing. The average Canadian waits eight weeks to see a specialist, and another nine weeks before getting treated. This is even the case with conditions that are likely to get much worse if there is any delay in treatment. For example, the median time for a mastectomy is 14 weeks, enough time for the cancer to spread to other parts of the body. In fact, 28% of those diagnosed with breast cancer in Canada die from it, while the mortality ratio in the U.S. is only 25%.

Things don't look any better across the ocean. Each year the British National Health Service cancels 410,000 surgeries because of resource shortages. According to the London Sunday Times, there are currently over 1 million Brits awaiting elective surgery. Thomas Cook, a British travel agency, is even considering offering "sun-and-surgery" packaged trips to Indian hospitals for British citizens fed up with low standards and long waiting times for surgery.

The British and Canadian governments have the power to make healthcare "free", but they are unable to control its costs. So the costs become longer (and potentially fatal) delays, and fewer innovations.

It's not surprising when you think about what is happening. Universal health insurance systems always encourage over-consumption by patients, and such over-consumption always leads to financial crises. The result is inevitably broken promises about universal access and quality care. Because there are always limited resources, single-payer systems tend to overspend on primary care for the healthy, while denying more expensive specialist care to those with serious medical problems. This is because most people (voters) are healthy most of the time, and the sick and dieing are less likely to be able to organize into a political force.

What makes the United States such a great country is the "freedoms" we enjoy. Though our freedoms seem to be constantly under attack, there is still no nation in the world that has the freedom of the press, freedom of religion, freedom of association, or the free markets that we have in the United States. As anyone who understands even a smidgen of economics knows, free markets encourage competition and innovation, which lead to lower prices and better quality.

Though the U.S. system of health care can not really be considered a "free-market", it is certainly much more free than any single payer system. Some of the benefits we see as a result of our current healthcare system include:

- U.S. medicine produces the best outcomes for virtually every patient, from premature babies to elderly cancer patients.

- American companies are the chief source worldwide of new treatments and procedures which each year are used to save millions of lives.

- U.S. medical training and research facilities are the best in the world.

Though Canadians might have to wait a year or two for hip replacement surgery, they can get the same operation done on their dog in less than a week. This is because veterinarians are competing for that business, finding innovative ways to deliver service more quickly and less expensively. Another example is laser eye surgery, a procedure that is rarely covered by insurance, so laser eye surgeons must compete on the basis of cost and quality. While costs for most medical procedures have been going up every year, the cost for this procedure has dropped by 80% over the past decade.

Unfortunately, U.S. healthcare policies still tend to limit competition, restrict consumer's freedom to choose, and discourage consumers from shopping for value. Thus, there are too few choices and there has been little attention paid to price and quality of service. The answer is clearly not more government intervention, but instead letting competition and the power of the marketplace drive down prices and increase quality and access to care.

Health Savings Accounts are the Solution

There is increasing recognition that third-party health insurance payers are actually a major cause of escalating medical costs and the decline in the quality of service. The increasing adoption of HSA plans has already begun to cause greater transparency and competition in the medical marketplace. There are now physicians available by phone, medical kiosks setting up in malls, doctors that accept only cash (and who charge significantly less), and others competing directly for the consumer's healthcare dollar.

Don't be fooled by the politicians who advocate a single-payer system, claiming their only concern is the uninsured. If a single body (such as a government bureaucracy) controls healthcare, they control one seventh of the national economy. And everywhere in the world that central control of the economy has been tried, it has been a colossal failure.

As public policy reforms centered on individual choice continue to gain wider footholds, the result will be greater prosperity, greater choice, and a better value for all. The culture of dependence and entitlement will begin to fade, as millions of individuals demand further policy reforms that will reinstate the values of freedom and personal responsibility that helped establish this great nation.

As more consumers turn to health savings accounts, the market will respond. Innovative providers will begin to compete more on price and quality of service, and those that provide the best value will get wealthy doing so. And all consumers will benefit.

By Wiley Long - President, HSA for America - http://www.health--savings--accounts.com. HSA for America makes it easy to learn about and set up a Health Savings Account (HSA) that best meets your needs. Please link to this site when using this article.

How the Power of Prevention Can Help Your Health Savings Account Grow

A majority of medical expenditures in this country pay for treatment of chronic conditions that are mostly preventable. Unfortunately, most people don't take their health seriously until after they get sick. Simply by eating well and exercising, you can avoid the medical conditions and expenses that affect the majority of Americans, allowing the money in your Health Savings Account to continue growing tax-free.

Only You Can Prevent Heart Disease, Cancer, Diabetes...

Most of us go through our lives stuck in our lifestyle patterns, with no idea of the power we have to positively influence our own health. And so by the time we're in our 40's most of us are on at least one regular medication. By the time we're in our 60's over 85% of all Americans have at least one degenerative disease. And by the time we are in our 70's we're dead.

But in fact, a majority of the diseases people suffer from as they age are almost totally preventable.

- Cancer: Researchers from the National Cancer Institute believe that 80-95% of all cancer cases are due to environmental and lifestyle causes, and are thus preventable. Diet may be involved in at least half of all cancers, and one third of all cancers are linked to obesity.

- Dementia: Mark Houston, M.D., Medical Director at Hypertension and Vascular Biology Institute at Saint Thomas Hospital and Medical Center in Nashville, Tennessee, estimates that 95% of all dementia is preventable with a lifestyle approach.

- Heart disease: Numerous studies indicate that 90% - 99% of all heart disease may be preventable.

- Diabetes: One of the nation's most renowned health researchers, Harvard University's Walter Willet, has estimated that 92% of type-2 diabetes is preventable.

How to Eat

Probably the very most important factor that can positively affect the health of most people is changing the way they eat. There are many, mostly conflicting theories about what kind of diet is the healthiest. In my opinion, the only one that really makes sense is to eat according to the way we evolved to eat.

The idea of "Paleolithic Nutrition" was first published in the New England Journal of Medicine in 1985 in an article by Dr. S. Boyd Eaton. Since then it has been popularized by Loren Cordain, Ph.D., in his book, The Paleo Diet, and studied by nutritional scientists all over the world. The premise is simple: Our genes determine our nutritional needs.

For over 2.5 million years, humans evolved as hunter-gatherers, and the selective pressures of their lifestyle and diet determined the genes that we have today. Our genetic make-up is exquisitely tuned to function best on the foods that we evolved to eat.

A mere 500 generations ago the Agricultural Revolution brought sudden and dramatic change to our diets, and the changes are continuing to this day. But our genes haven't managed to keep pace with the change.

Today approximately 2/3 of the foods we eat were those never encountered by our hunter-gatherer ancestors. The result is high blood pressure, diabetes, heart disease, cancer, and a host of other ills that we should not have to suffer.

While most of us do not have access to large wild game and wild-harvested organic produce, the more closely we can mimic the foods that our ancestors ate the better health we will have. So simply base your meals around a lot of fruits and vegetables, along with some lean protein.

You could start by eating eggs and cantaloupe for breakfast. Lunch could consist of a large salad with grilled chicken. For dinner have some wild salmon, asparagus, and salad. Finish off the meal with a big bowl of fresh blueberries.

Exercise

Everyone knows that exercise is good for them, but who wants to spend an hour jogging everyday. (Some people do, but most don't have the time or desire to go out jogging for an hour every day). What does work to give you the maximum benefit for the least amount of time is exercise with intensity.

So if it's okay with your doctor, go out and exercise like you mean it. Run wind sprints, lift weights, and exert yourself. And get it done in 30 minutes or less. Combined with the right diet, this kind of exercise will get the most results for the least effort. You will gain more muscle and lose more fat than if you were going out for long slow jogs, and you'll feel great!

There are of course other factors that affect your health, including stress, sleep, clean air and water, and even genetics. But there's nothing you can do that will have more impact than eating a good diet and being active.

So be proactive, with both your money and your health. Take advantage of the incredible tax and wealth-building benefits of a Health Savings Account (HSA) by funding it fully every year. And take the right lifestyle measures to avoid the preventable diseases that affect most people as they age. Then in your retirement, you can enjoy the good health and accumulated wealth in your HSA that you so rightly deserve.

By Wiley Long - President, HSA for America (http://www.health--savings--accounts.com) - The nation's leading independent health insurance firm specializing in individual and family coverage that work with Health Savings Accounts.

Using a Health Savings Account to Buffer the Coming Medicare Insolvency

The Medicare Trust Fund will soon be out of money, and there will be no practical way for the government to continue to provide the level of benefits that current Medicare recipients receive. The result will be serious rations, waiting periods, and a reduction in benefits. If you wish to maintain your medical freedom, and have access to a high level of medical service, you must be prepared to pay for it yourself. The best strategy is to take good care of your health, and to build up medical retirement funds as large as possible by using Health Savings Accounts.

The Coming Medicare Insolvency

The total federal debt is now over $10 trillion. But if you also include the current unfunded liabilities of social security, Medicare, and other programs, the total federal debt is at least $54 trillion. This number has been confirmed in three separate studies - by the American Enterprise Institute, the National Center for Policy Analysis, and the Brookings Institution.

It is difficult to get a grasp of a number that big. That's $180,000 per person currently living in the United States. It is four times the U.S. Gross Domestic Product, the measure of the final value of all goods and services produced in this country in the course of a year.

As the program is currently structured it is unsustainable, and the fund is expected to be depleted by 2018. That is a mere 11 years from now. The shortfall in Social Security and Medicare revenues will continue to increase as the years go by - it will exceed $2 trillion by 2030. At that point, half of all tax dollars will have to go to Social Security and Medicare.

That clearly can't happen. Instead, the system will face massive cuts in benefits, probably in addition to large tax increases.

Who Will Pay Your Medical Expenses During Retirement?

So will Medicare be there for you? It depends on how old you are. Unless you are retiring in the next couple years, I certainly wouldn't count on it, particularly if you want to insure that you have access to high quality medical care during your retirement years.

Last year Fidelity Investments reported that the average couple retiring in 2006 would need $200,000 just to cover medical expenses during retirement. That estimate did not include the cost of over-the-counter medications, most dental services and, long-term care, if needed. And it did not include the charges that are currently paid by Medicare.

If we cannot depend on Medicare to be there for us, the only smart solution is to save as much money as possible. This will ensure that you can obtain the quality care you need. If you are not currently putting as much money as possible aside to pay for these expenses yourself, you are making a serious mistake.

What Is Your Solution?

As most readers already know, the very best tool for accumulating funds for future medical expenses is a Health Savings Account. An HSA is the only investment that provides a tax deduction when you deposit the money, yet never taxes the money if it is used to pay for qualified medical expenses.

Therefore, you should put as much money as possible into your Health Savings Account, and withdraw as little as possible. The contribution limit for 2007 is $2,850 for an individual, and $5,650 for families. Those over 55 can also contribute an $800 catch-up contribution. Making the maximum contribution each year will help you build a medical retirement fund that can be used to pay future medical expenses, tax-free.

Rather than withdrawing money from your account to pay for medical expenses as they occur, you should pay for medical expenses that are not covered by your health insurance, out of your own pocket. Save your receipts (for doctor visits, eye glasses, aspirin, etc), and leave your money in the account to grow tax-deferred. There is no time limit before you have to reimburse yourself, so you can make the most of this tax-free investment.

As soon as possible, you may also want to transfer some of the money into mutual funds. While some HSA administrators are paying interest rates as high as 5%, the only way you are going to really grow the account is to get a much higher return on your money. Many HSA administrators offer a discount brokerage option, so you can place your funds in virtually any stock or mutual fund.

For a family that contributes the maximum contribution each year, it is quite reasonable to assume an HSA account value well over $1 million after 25 or 30 years. Medicare may be broke, but at least you won't be.

"Medicare HSAs?"

The solution to the pending Medicare meltdown is very complicated, but it is clear that government-run medical programs don't work. The dismal results can be seen everywhere, from the former Soviet-bloc countries, to the broken down national healthcare systems of Canada and Europe. Medicare must be transformed into a program where seniors have an ownership interest in the money they are spending.

Replacing the government's obligation to provide benefits with a voucher that seniors could use to purchase health insurance from competing private insurers, and/or deposit into a "Medicare Health Savings Account," would bring market efficiencies and competition into the picture. This idea is endorsed by both the American Medical Association and the American Hospital Association.

Retirement HSAs may or may not ever come to fruition. But fortunately, HSA plans are available to those under age 65. If you do not yet have an HSA, get signed up for one now. You will lower your health insurance premiums, and can begin putting money aside for medical expenses you will almost inevitably incur during your older years.

By Wiley Long - President, HSA for America (http://www.health--savings--accounts.com) - The nation's leading independent health insurance firm specializing in HSA Plans that work with Health Savings Accounts.

Modern Debt Management Systems Can Produce Tremendous Savings

Consumer and personal debt is, perhaps, the number one problem facing most American families today. The reasons behind the tremendous surge in debt have been related to emerging socio-economic patterns suggesting that we've become a nation obsessed with lifestyles and consumerism.

America has always been a nation of consumers and the American people have always enjoyed one of the highest standards of living in the world. Something else has contributed to this national crisis.

What has changed in the last several decades is that we have developed very sophisticated technology to acquire debt. Debt acquisition is as close as your cell phone or personal computer and can be accomplished in a matter of seconds.

However, we have been slow in developing such sophisticated systems to manage that debt at the consumer level. We have been the victims of a technological gap between debt acquisition and debt reduction.

If you do not manage your debt, it will manage you. Or more precisely, your creditors will manage your debt for you and they will, of course, manage it in a way that is most favorable to them, not necessarily you.

At the consumer level, we tend to keep our debts separated, divided, and isolated in separate accounts, making it impractical, until recently, to strategically manage that debt.

Automated debt management systems have been in use by banks, insurance companies, and other institutions as needed to maintain cash reserve requirements but, until recently, have not been available at the consumer level due to the cost of developing and supporting these specialized cash flow management systems.

Many people in other parts of the world have had access to various debt reduction systems. In this country, however, it is a relatively new opportunity to systematically manage our personal and consumer debt. We now have access to affordable technology to manage our debt rather than allowing it to manage us.

First, let me explain what a modern debt management system is not.

It is not a set of instructions or a "How To..." book available from a variety of well intentioned sources which simply overstate the obvious; instructing us to "stop spending so much money", or "cut up our credit cards". It is not a "makeover" system which painfully rearranges our daily spending patterns.

It is not a static spreadsheet or plan for debt reduction which does not consider our day to day personal financial circumstances.

It does not involve the refinancing of existing debt or consolidating smaller short term debts into larger long term debts. It is not a self administered or pre-calculated repayment acceleration plan. It does not involve negotiating with your creditors or any means of debt reduction which avoids the repayment of legitimate debt on a dollar-for-dollar basis.

Just like the bank model, modern debt management systems are integrated with your daily and monthly financial transactions. They are dynamic. Modern debt management systems have the ability to analyze and manage all of your debt, including your mortgage debt, side by side in a single environment and make strategic adjustments based on your daily or monthly cash flow.

A modern debt management system is programmed for liquidity. Liquidity is to debt what water is to fire. If you have an abundance of liquidity, you could be out of debt in very short order. On the other hand, if you have a shortage of liquidity, it could take decades to get out of debt.

A modern debt management system focuses on ways to harness current liquidity and seeks to fully develop your potential future liquidity. It utilizes that liquidity to systematically eliminate debt. It can develop multiple sources of liquidity and utilize that liquidity as leverage against debt.

Because of the importance of liquidity, modern and effective debt management and debt reduction systems are fully integrated with your current monthly income and expense cash flows. That is not to say that increasing your income and/or reducing your expenses is a requisite. A good debt management system takes advantage of existing cash flow, not necessarily changing it.

A modern debt management system is relatively painless to follow and does not require significant changes to your established spending patterns. It can be set to aggressively pay down debt, to maintain a certain level of debt but reduce the carrying cost, or fund a retirement or college savings plan.

Today's sophisticated, versatile, and effective debt management systems are not inexpensive. However, in terms of future interest savings, they can make up the cost of the system in the first few months of use and, over time, produce interest savings in excess of the total amount of current and future debt.

An inexpensive or do-it-yourself system is probably not a good alternative. While you might be able to redirect some liquidity and do some good, you would not be able to recreate the integrated mathematical algorithms which drive a more sophisticated system producing the best possible results.

Any current financial plan worth its' weight in paper should address both sides of the balance sheet and include a modern debt management system.

David Haslett is Senior National Director of the Freedom Equity Group. To discover how modern debt management technology can help you pay off your mortgage and other debt, go to: http://www.fastestmortgagepayoffplan.com

Modern Debt Management Systems Can Produce Tremendous Savings

Consumer and personal debt is, perhaps, the number one problem facing most American families today. The reasons behind the tremendous surge in debt have been related to emerging socio-economic patterns suggesting that we've become a nation obsessed with lifestyles and consumerism.

America has always been a nation of consumers and the American people have always enjoyed one of the highest standards of living in the world. Something else has contributed to this national crisis.

What has changed in the last several decades is that we have developed very sophisticated technology to acquire debt. Debt acquisition is as close as your cell phone or personal computer and can be accomplished in a matter of seconds.

However, we have been slow in developing such sophisticated systems to manage that debt at the consumer level. We have been the victims of a technological gap between debt acquisition and debt reduction.

If you do not manage your debt, it will manage you. Or more precisely, your creditors will manage your debt for you and they will, of course, manage it in a way that is most favorable to them, not necessarily you.

At the consumer level, we tend to keep our debts separated, divided, and isolated in separate accounts, making it impractical, until recently, to strategically manage that debt.

Automated debt management systems have been in use by banks, insurance companies, and other institutions as needed to maintain cash reserve requirements but, until recently, have not been available at the consumer level due to the cost of developing and supporting these specialized cash flow management systems.

Many people in other parts of the world have had access to various debt reduction systems. In this country, however, it is a relatively new opportunity to systematically manage our personal and consumer debt. We now have access to affordable technology to manage our debt rather than allowing it to manage us.

First, let me explain what a modern debt management system is not.

It is not a set of instructions or a "How To..." book available from a variety of well intentioned sources which simply overstate the obvious; instructing us to "stop spending so much money", or "cut up our credit cards". It is not a "makeover" system which painfully rearranges our daily spending patterns.

It is not a static spreadsheet or plan for debt reduction which does not consider our day to day personal financial circumstances.

It does not involve the refinancing of existing debt or consolidating smaller short term debts into larger long term debts. It is not a self administered or pre-calculated repayment acceleration plan. It does not involve negotiating with your creditors or any means of debt reduction which avoids the repayment of legitimate debt on a dollar-for-dollar basis.

Just like the bank model, modern debt management systems are integrated with your daily and monthly financial transactions. They are dynamic. Modern debt management systems have the ability to analyze and manage all of your debt, including your mortgage debt, side by side in a single environment and make strategic adjustments based on your daily or monthly cash flow.

A modern debt management system is programmed for liquidity. Liquidity is to debt what water is to fire. If you have an abundance of liquidity, you could be out of debt in very short order. On the other hand, if you have a shortage of liquidity, it could take decades to get out of debt.

A modern debt management system focuses on ways to harness current liquidity and seeks to fully develop your potential future liquidity. It utilizes that liquidity to systematically eliminate debt. It can develop multiple sources of liquidity and utilize that liquidity as leverage against debt.

Because of the importance of liquidity, modern and effective debt management and debt reduction systems are fully integrated with your current monthly income and expense cash flows. That is not to say that increasing your income and/or reducing your expenses is a requisite. A good debt management system takes advantage of existing cash flow, not necessarily changing it.

A modern debt management system is relatively painless to follow and does not require significant changes to your established spending patterns. It can be set to aggressively pay down debt, to maintain a certain level of debt but reduce the carrying cost, or fund a retirement or college savings plan.

Today's sophisticated, versatile, and effective debt management systems are not inexpensive. However, in terms of future interest savings, they can make up the cost of the system in the first few months of use and, over time, produce interest savings in excess of the total amount of current and future debt.

An inexpensive or do-it-yourself system is probably not a good alternative. While you might be able to redirect some liquidity and do some good, you would not be able to recreate the integrated mathematical algorithms which drive a more sophisticated system producing the best possible results.

Any current financial plan worth its' weight in paper should address both sides of the balance sheet and include a modern debt management system.

David Haslett is Senior National Director of the Freedom Equity Group. To discover how modern debt management technology can help you pay off your mortgage and other debt, go to: http://www.fastestmortgagepayoffplan.com