It's time to light the candles, make a wish and celebrate saving money. This week is America Saves Week -- a nationwide celebration and campaign to encourage people to save money. Why save money? I had this question asked of me just last night, and it's a good question. To me saving money is about anticipating good things in the future:

• a special activity with my family,
• a larger purchase than I can afford with one paycheck,
• the ability to pay for expected "unexpected" expenses without having to use credit, and
• a time in my life when I won't be working everyday but still will have financial security (retirement).

The best strategy I know to save is to start NOW and to save REGULARLY. America Saves can help you do this. When you enroll (for FREE) you will set a saving goal; research shows that writing your goal will help you achieve it. Once you've enrolled you will receive a free newsletter and access to other encouragements to keep saving regularly. What do you have to lose? Give it a try! Enroll today.

Looking for tips on how to find money to save? Visit the Plan Well, Retire Well website and read the Start Saving section.

More savings tips can be found at the University of Illinois Extension's Getting Through Tough Financial Times website.

Start saving today and join me in celebrating America Saves Week.

In the next few days, a new law goes into effect that will change the way credit card companies handle your credit card account. The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 will go into effect on February 22, 2010. This new law will impact interest rate adjustments, disclosure requirements, and the issuing of credit to young consumers among other things. I was surprised to learn that many people either were unaware of the new law or didn't know very much about it. I have outlined some of the changes below:

1. Interest rates. Under this law, credit card companies cannot raise a customer's interest rate without providing 45 days notice. If a consumer's interest rate is increased due to late payment, after six months of on-time payments and not exceeding the credit limit, the consumer's rate must be reduced again.

2. Fees. Creditors will no longer be able to charge over-the-limit fees without the consumer's permission. Consumers have to opt-in to have these fees assessed. Otherwise, charges that are over-the-limit- will be rejected. Credit card companies will not be able to charge finance charges based on a double-cycle billing which refers to the practice of charging fees on the previous and current month's balance even if the previous month's balance was paid by the due date.

3. Due Dates. Bills must be mailed out no later than 21 days before the due date. Payments received by 5 p.m. on the due date must be counted as on-time.

4. Disclosure. Gone are the days of small, illegible print. Consumers must be provided full disclosure of the terms and conditions of obtaining credit. Additionally, creditors must notify consumers how long it would take to pay off a credit card balance if only the minimum payment is made as well as inform consumers of the total cost in principal and interest payments.

5. Protection. Young consumers, typically college students under the age of 21, will no longer be able to apply for credit unless they have an adult co-signer or can provide proof that they have the ability to repay the debt. Gift cards were thrown in the mix as well. Under this law, gift cards must remain active for at least five years after the purchase date.

These are some of the changes. If you were one of the many not familiar with this law, check out CreditCards.com for an easy to follow guide on the Credit Card Act or visit Bankrate.com for highlights on the benefits of the new CARD Act. Although laws are put in place to protect us, we all must protect ourselves as well. Don't charge more than you can afford to repay and use credit wisely. For tips on how to use credit wisely, visit our More for Your Money website.

Until we talk again...

What is it that determines whether converting to a Roth is a financially good decision? That's the $64,000 question, and in this case, that amount could literally be the value of the question. Roth conversion calculators abound on the internet, but before you use them, it might help if you understand the significance of the information you'll be asked to provide. And, there are some factors the calculators probably won't take into consideration.

I hope you'll find this information clear and easy to grasp. I appreciate the comment sent by Brenda from Virginia about Part 1 of this series: "Impressive and full of information. It will take a second read to digest all of it, but I plan on coming back!"

As you can see, this decision can be very complex. You may want or need professional advice. Check our Choosing a Financial Professional website for tips on choosing a financial planner or tax expert.

Still to come: My next post will present some scenarios and demonstrate how changing one factor, such as your future income tax rate, can impact whether converting or sticking with your Traditional IRA will come out ahead.

Converting from a traditional to a Roth IRA is a hot topic this year, for a couple of reasons. Two significant barriers - income and filing status - have been removed. And, tax rates will be changing in 2011, making 2010 tax rates look like a good deal. Over the next few days, I'm going to try to pull together all the pieces of information you might need to evaluate whether a Roth conversion makes sense for you. Today, we're going to start by learning the rules about conversions. Hold onto your hat, because some of these are more complicated than the news media has led you to believe.

Rules for Roth Conversions:

Beginning this year (2010), anyone can convert money from a traditional IRA, SEP IRA, or a SIMPLE IRA to a Roth IRA.

• Restrictions based on income or tax filing status have been removed.
• You can also convert money from an employer plan [401(k), 403(b), 457, and profit sharing plans] to a Roth IRA.
• Special rule for SIMPLE plans: In the first two years of participation in a SIMPLE plan, rollover to an account other than another SIMPLE plan is prohibited.

You will owe tax on the amount converted, at your marginal tax rate.

In 2010, you can choose whether to recognize the income and pay the tax in 2010, or whether to spread the income between your 2011 and 2012 tax years and pay the tax at the rates in effect in those years.

Unless new legislation is passed, tax rates will increase in 2011. The laws which reduced tax rates to their current level will expire, and most tax brackets will go up 3% or more.

If you have made non-deductible contributions to an IRA, those amounts will be converted tax-free. However, you cannot convert just the non-deductible contributions. You must add together the balances in all of your traditional IRA accounts (including SEP and SIMPLE IRAs), and calculate the proportion of that total that is from nondeductible contributions.

You can do a conversion at any age. Taxes will apply, but there are no early distribution penalties if you are not yet age 59 ½. If you have a required minimum distribution for the year of the conversion, you must still take that distribution: it cannot be converted.

Conversions can be un-done, or recharacterized, as late as the due date (including extensions) for the tax return for the year in which you did the conversion. So you could have until Oct. 15, 2011 to change your mind about a conversion done in 2010 and put the money back into a Traditional IRA.

Converted amounts on which you pay tax at conversion must be held in the Roth account for five years before distribution. Otherwise, those amounts may be subject to a 10% early distribution penalty. There are exceptions to the 10% penalty. Exceptions include being aged 59�½ or older, disabled, a beneficiary rather than the original account owner, and several others. You can find the details about exceptions to the early distribution penalty in Taking Distributions from Tax-Deferred Retirement Plans.

You may need to make estimated tax payments or increase your withholding for the years in which you will recognize the income from the conversion, to avoid penalties for underpaying your taxes.

There are no required minimum distributions from a Roth IRA for the original owner, or for a beneficiary spouse who re-titles the account in his/her own name. There are required minimum distributions for beneficiaries other than a spouse, and for a spouse who leaves the account in the name of the deceased.

The conversion can be done by

• trustee-to-trustee transfer,
• converting with the same trustee,
• or a rollover, meaning that you receive the funds and are responsible for depositing them in the new account within 60 days. With a rollover, the original custodian will be required to withhold 20% for taxes. If you want to convert the full balance of the traditional IRA, you will have to make up the difference with other funds.

Now that we've got the rules under our belts, we'll next tackle how to go about deciding whether converting is the right thing for you. So make sure to watch for my next post, which I plan to have up in a couple of days.

If you have questions about Roth conversions that you'd like to have answered, please click on my name below and send me an email. I'll try to address those in a future post.