ANCHOR: LAST WEEK, THE ANNUAL FORBES RANKING OF THE RICHEST PEOPLE IN AMERICA WAS RELEASED.

ANCHOR: WHILE IT MIGHT BE TOUGH TO GET YOUR NAME ON THAT LIST, IF YOU FOLLOW SOME SIMPLE STEPS, YOU COULD BE A MILLIONAIRE. WGN’S MONEY SAVING EXPERT ILYCE GLINK IS HERE TO SHOW US HOW.

ILYCE: GOOD MORNING. THERE ARE 6 BASIC RULES WHEN IT COMES TO SAVING MONEY. WHAT MOST PEOPLE DON’T UNDERSTAND IS HOW QUICKLY THE CASH STARTS PILING UP ONCE YOU MAKE THE DECISION TO SAVE.

MONEY RULE #1

SAVE 10% OF YOUR PAY IN ADDITION TO 401(K) 403(B) STASH CASH IN ROTH IRA, 529 PLAN, ACCOUNTS IF YOU’RE 40+, SAVE 30%

ILYCE: MONEY RULE NUMBER ONE IS TO SAVE AT LEAST 10 PERCENT OF YOUR PAY. THAT’S IN ADDITION TO MAXING OUT YOUR 401(K) AND 403(B) RETIREMENT PLANS. STASH YOUR CASH IN A ROTH IRA ACCOUNT, WHICH IS ALSO FEDERAL TAX FREE FOREVER, A 529 PLAN, THE BENEFITS OF WHICH WE DISCUSSED LAST WEEK, AND OTHER INVESTMENT ACCOUNTS. BUT HERE’S THE KICKER … IF YOU’RE OVER THE AGE OF 40, YOU SHOULD TRY TO SAVE 30 PERCENT OF YOUR GROSS ANNUAL INCOME IN ORDER TO CATCH UP.

MONEY RULE #2 DON’T OVERBUY RATES ARE LOW LENDERS SAY 3 TO 4 X INCOME 2 ½ X GROSS ANNUAL INCOME

ILYCE: MONEY RULE NUMBER TWO IS… DON’T OVERBUY. THAT IS, DON’T BUY MORE HOUSE THAN YOU CAN COMFORTABLE, EVEN EASILY AFFORD. EVEN THOUGH RATES ARE LOW AND LENDERS SAY YOU CAN SPEND 3 TO 4 TIMES YOUR ANNUAL INCOME, IF YOU WANT TO BE A MILLIONAIRE, YOU HAVE TO STAY FOCUSED. SPEND JUST TWO AND A HALF TIMES YOUR GROSS ANNUAL INCOME AND YOU’LL BE AMAZED AT HOW MUCH EXTRA YOU HAVE TO PLOW AWAY INTO SAVINGS.

MONEY RULE #3

KEEP YOUR CAR FOR 10 YEARS BUY USED BUY NEW/OLDER MODEL GET FINANCING AHEAD OF TIME GOOD CREDIT? 0% FINANCING

ILYCE : MONEY RULE NUMBER 3 IS TO KEEP THE CAR YOU HAVE FOR 10 YEARS. CARS ARE OUTRAGEOUSLY EXPENSIVE, AND IT’S GENERALLY CHEAPER TO KEEP YOUR OLD CAR RUNNING THAN TO BUY A NEW CAR. HOWEVER, WHEN THE TIME COMES TO BUY A CAR, CONSIDER BUYING USED. IF YOU HAVE TO BUY NEW, BUY AN OLDER MODEL – IT’S A GOOD TIME TO DO THAT NOW, SINCE DEALERS ARE JUST INTRODUCING THE 2004 MODELS. GET YOUR FINANCING AHEAD OF TIME AND, HERE’S ANOTHER REASON TO KEEP YOUR CREDIT IN SPARKLING CONDITION – 0 PERCENT FINANCING IS STILL AROUND – WITH REBATES AND POWERTRAIN WARRANTIES.

MONEY RULE #4

PAY OFF YOUR DEBT AS QUICKLY AS POSSIBLE HIGHEST, NON-DEDUCTIBLE DEBT FIRST PAY OFF CARDS AT END OF MONTH

ILYCE: MONEY RULE NUMBER 4 IS TO PAY OFF YOUR DEBT AS QUICKLY AS POSSIBLE. YOU’LL NEVER GET RICH AS LONG AS YOU’RE PAYING SOMEONE ELSE INTEREST. INSTEAD, PAY OFF YOUR HIGHEST NON-DEDUCTIBLE DEBT FIRST AND THEN KEEP ON GOING. ONCE YOU’RE DEBT-FREE, NEVER CHARGE ANYTHING UNLESS YOU CAN COMPLETELY PAY OFF THE CREDIT CARD AT THE END OF THE MONTH.

MONEY RULE #5

INVEST IN INDEX FUNDS TRACK INDEX LIKE S&P 500 CHEAP TO OWN BEAT MANAGED FUNDS 85% OF TIME VANILLA, NO-WORRY INVESTMENTS

ILYCE: MONEY RULE NUMBER 5 IS TO TAKE ALL THE CASH THAT YOU’VE SQUIRRELED AWAY AND INVEST IT IN INDEX FUNDS. INDEX FUNDS TRACK THE INDECIES THAT YOU HEAR ABOUT EVERY DAY, LIKE THE STANDARD AND POORS BIGGEST 500 COMPANIES IN THE U.S. INDEX FUNDS ARE CHEAP TO OWN AND BEST OF ALL, THEY BEAT MANAGED FUNDS 85 PERCENT OR MORE OF THE TIME. PLUS, THEY’RE PLAIN VANILLA, NO-WORRY INVESTMENTS THAT WON’T COST YOU TOO MUCH AT TAX TIME.

MONEY RULE #6

SPEND 1 HOUR/WEEK ON RETIREMENT BALANCING CHECKBOOK LOOKING AT INVESTMENTS WRITING FINANCIAL GOALS READING ABOUT MONEY

ILYCE: MY FINAL MONEY RULE IS TO SPEND AT LEAST ONE HOUR A WEEK ON YOUR RETIREMENT. THAT CAN INCLUDE BALANCING YOUR CHECKBOOK, LOOKING AT YOUR INVESTMENT STATEMENTS, WRITING DOWN YOUR FINANCIAL GOALS OR EVEN JUST READING A MAGAZINE ABOUT MONEY.

ILYCE: I’M GOING TO PUT UP A LIST OF MY FAVORITE MONEY AND RETIREMENT WEBSITES AT WGNTV.COM, SO YOU CAN SEE WHERE I GET A LOT OF MY INFORMATION SO YOU CAN GET GOING ON YOUR DREAM OF BEING A MILLIONAIRE. AND OF COURSE, YOU CAN FIND EVEN MORE LINKS AND INFORMATION AT MY OWN WEBSITE, WWW.THINKGLINK.COM

RESOURCE:

ILYCE’S FAVORITE WEBSITES

WWW.BANKRATE.COM

WWW.FIDELITY.COM

WWW.QUICKEN.COM

WWW.CNN.MONEY.COM

WWW.BLOOMBERG.COM

WWW.CNBC.COM

WWW.HOMEPATH.COM

ILYCE’S FAVORITE GOVERNMENT WEBSITES

HUD.gov (Dept. of Housing and Urban Development)

Census.gov (all numbers – you can call their PR people and request a CD-ROM)

OFHEO.gov (Office of Federal Housing Enterprise Oversight)

Cookcountyassessor.com (Cook County Tax Assessor’s Office)

Co.lake.il.us (Lake County Assessor’s Office)

FTC.gov (Federal Trade Commission)

UStreas.gov (U.S. Treasury – buy bonds direct)

IRS.gov (Internal Revenue Service)

FEMA.gov (Federal Emergency Management Administration)

SBA.gov (Small Business Administration)