Keep emergency cash in the right place - Basically you want something that pays some decent interest but you can access fairly quickly. Parade magazine reports that for the next year the federal government will most likely offer guarantees on many money market funds – investments provided by large mutual-fund companies that offer a return typically higher than passbook savings. Investors usually receive a checkbook so they can begin withdrawing funds immediately. Bank certificates of deposit are another options. These are insured by the government as long as they don’t exceed $250,000 per depositor. You can’t access you money right away without paying a penalty, but CDs generally earn more than a passbook savings or checking account.

Stay in the market – Unless you are five or fewer years from retirement, keep investing in your 401K. According to InvesTech Research, the average bear market lasts about 15 months. This sell-off is already a year old. Remember the old rule “Buy low and sell high.” Financial adviser Ric Edelman is quoted as saying “When the Dow hit 14,000 institutional investors started selling but consumers didn’t start selling until it hit 10,000.” He advises watching the smart money for cues. Also – DIVERSIFY – putting you money in lots of different ivestments reduces the risk that one sector will wreck your portfolio.

Guarantee your income - According to the Insurance Information Institute, 43% of 40-year-olds will have a disability lasting 90 days or more by the time they retire. In many states, all it takes is three months of missed payments to lose your home, so workers must protect their ability to earn income. The easiest way to do this is to opt into disability insurance during your company’s benefits-enrollment period. If you work for yourself, you may buy coverage on your own from life,health, or auto agents. Also consider an income protection plan. The one I am most familiar with is called Paycheck Guardian . This program pays cash in addition to what you would get from state unemployment benefits if you are laid off.

Keep your home – According to Parade magazine, if you’ve missed a payment on your mortgage, you may be eligible for Hope for Homeowners, a government program that lets you swap your mortgage for a more affordable fixed rate loan.

Pay down debt – The average American household carries $9,900 of debt on cards with a typical rate of 14%. Paying it off is like giving yourself a 14% return. Charge only 30% of your limit to keep from hurting your credit rating.

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This is advice I wished I had taken when I was facing the debt monster. It comes from an article by one of the business columnists in our local paper. She is quoting from a post titled “Where to Put Your Money Right Now” by Mark Cuban a technology entrepreneur. The plan is pretty simple. Basically, the post advices pay off your debt now and forget about investing.

Here is the formula – If you have less than $250,000 saved and invested for your retirement and you are carrying a balance on your credit cards, you are in a losing situation. Why? Because credit card fees and interest rates are so high, you lose more money paying down interest charges than you make on your investments. Here is how you get started defeating the debt monster.

1. Write down a list of all money you owe and the interest rate that you are paying on that amount. For example MasterCard $1,000.00 interest rate 18%. Include everything on the list: credit cards, loans from family and friends, mortgage, car payments, student loans, payday lenders, pawnshops, rental companies for furniture, and appliances. Then rewrite the list putting all the debts in order from smallest to largest. When the amounts are similar, put the one with the higher interest rate above the other.

2. If you have money-market funds, take the money out and pay down your credit card debt. Wipe out the smallest balances first and work your way up to the bigger debts. I did have a friend that did this and it really did work for her. If you still have debt go to step 3.

3. Make a list of every stock, bond, fund, whatever you own, and mark what your cost is, the current market price, the current dividend yield on your cost basis, if any, and whether it is in a 401K, fund or brokerage account.

You are supposed to sell anything yielding less than what you are paying in interest rates on your debt and has a current price that is less than what you paid for it. Cuban says “when you call your broker to get the prices, you do not let them give you a bunch of BS about why you shouldn’t. YOU SELL IT!

4. Then you sell the stocks and bonds you have made money on, beginning with the stock/bonds that you have made you the least amount of money on.

And you sell and sell and sell until you’ve got enough money to erase all your debts. Then, cut up all your credit cards, and replace them with one debit card so you can only spend the money you have.

5. Once your credit card is paid off, then you go to your debt list and pick out the next-highest interest rate and start the process all over again until all your debt except your mortgage is paid off.

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