How to secure your money

The roller-coaster stock market and fragile economy may have you more than a little concerned about your financial future. Brett Arends, author of Storm Proof Your Money, says you'll sleep better at night if you take these three steps:

Break out of debt. Lowering your debt burden is “far and away the smartest financial move you can make,” Arends says. That's because every dollar you pay in interest is a dollar you're not able to save or invest. If you have a high credit card balance and usually get a large tax refund, adjust your withholding, he says. You'll avoid overpaying the IRS during the year and will free up cash to pay down your credit cards.

Adjust your thinking. Focus on emergency lifelines, not just emergency cash. With many banks paying less than 1% on savings and inflation around 2%, Arends eschews conventional financial-planning advice to keep three to six months' worth of living expenses in the bank. Instead, he says, put some of your emergency cash in safe government bonds and higher-yielding blue-chip stocks with solid dividends.

Raise your deductibles. “Insurance should protect you against catastrophic risks, not against every bump and scrape in life,” Arends says. Boost your car insurance deductible by $500, he says, and you could cut your annual premium by $350. And if you don't file a claim, the $350 is found money.