Debt Expert's Do's and Don'ts

Robert Pagliarini is the author of "The Six-Day Financial Makeover," and the president of Pacifica Wealth Advisors Inc. "20/20" enlisted Pagliarini to help Matt and Suzie Peterson dig their way out of debt. Here are some of his financial do's and don'ts when it comes to managing your money.

Do's

1. Create Your "DreamBoard." It's easy to get bogged down and depressed about what we've done in the past. But to achieve a better life, we've got to forget about yesterday and figure out what we want to achieve tomorrow. Once the why is strong enough, the how becomes a lot easier.

2. Save Half Your Age. Take your age, divide it by two, and that is how much of your income you should be saving. For example, if you're 20 years old and just starting your first job, you should save 10 percent of your salary. If you're 44 years-old, you should save 22 percent. Benefits? When you're younger and aren't making much, reaching the target savings rate is easier. When you're older, you're not only saving a greater percentage, but you are presumably making more money and are saving a greater dollar amount.

3. Know your Investment Personality. Before you invest a penny, it's important to know if you're a Hands-Off Investor, an Involved Investor or a Consumed Investor. This is mentioned in my book but investors do not have to buy the book to determine which type they are -- they can take a free quiz on the book's Web site. If you're a hands-off investor, the best investment for you is a Lifecycle fund. These kinds of funds are ideal because they provide instant diversification and become more conservative as you get closer to reaching your goal.

Don'ts

1. Don't Buy Liabilities Disguised as Investments. The Peterson family bought an "investment" rental house, thinking it was a wise financial move, but it ended up costing them $1,600 a month. They bought a $100,000 timeshare thinking it was an investment, but it ended up costing them thousands of dollars a month.

2. Don't Settle for the Stated Interest Rate on Your Credit Card. As we discovered with the Petersons, credit card interest rates are negotiable. All it takes is a phone call to the card, a little persistence, and chances are you can lower your credit card interest rate.

3. Don't Use So-Called Convenience Checks. Convenience checks are a convenient way to buy things you can't afford and a convenient way to dig yourself into a pit of debt. Also, don't take cash advances from your credit cards.

4. Don't Underestimate the Value of Saving. Never underestimate the potential of saving even small amounts of money. With just time and typical investments, a few dollars saved consistently can turn into a large investment account. Regardless of how little you can save, just get started!

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