The Dow is diving, credit is seized up, and industrial giants are lining up to ask Congress: “Brother, can you spare a dime?” But UALR Professor H. Andy Terry has come up with 10 hints to help individuals cope during times of economic unease.

Terry, a professor of finance in UALR’s College of Business, is a graduate of Hendrix College and earned his master’s and Ph.D. in finance from the University of Michigan.

Here are his suggestions:

1. Create and use a budget

“A budget can both help you increase savings and help you sleep at night,” Terry said. “This can be done by going through your checkbook for the last six months to a year and categorizing your expenses.”

Terry said the process will shed information and awareness of one’s spending habits.

2. Minimize the use of credit card debt.

And pay off monthly balances, not just the minimum payment. “Except for teaser rates, interest rates on credit cards tend to be higher because default rates are higher on credit card debt,” he said.

3. Negotiate price only on a new car.

Terry cautions against discussing financing or trade-in when buying a new car.

“Both financing and trade-ins complicate the process and move the advantage further to the dealer who knows more about the true value of cars than you,” he said. “Get the lowest price for the car first; then obtain the best possible financing. Do not trade in a used car, sell it yourself if you have the time.”

He said car dealers must earn profits on used cars just as they do new products.

“A trade-in gives the dealer two prices to play with. If you are going to trade, don’t bring it up until you have negotiated the lowest price for the new car first,” he said. “Use online sites such as Kelly’s Blue Book to obtain price information.”

4. Don’t delay saving for retirement.

“The sooner you save, the larger the nest egg,” he said. “When you invest money you earn interest on the interest.  This process is called compounding.”

Terry said the future value of an investment becomes increasingly larger the longer the investment period. “As an example, $1,000 invested at 7 percent per year will be worth $1,967 at the end of 10 years, but will be worth $7,612 at the end of 30 years.  The time period is three times as long but the investment is worth nearly four times as much.”

5. Put the house to work

Home owners whose property has enough equity should consider using a home equity loan rather than a personal loan where possible, Terry said.  The interest rate will usually be lower and interest on home equity loans is deductible for tax purposes, while interest on personal loans is not.

“If you have discipline, consider a home equity line of credit to replace credit card debt,” he said.  “The interest rate is lower and the interest is deductible for taxes.”

6. Contribute the maximum

As a general rule, always contribute the maximum to any employer matched retirement plan.  When saving outside an employer plan, use tax advantaged vehicles such as IRA’s first.  For children’s college, use 529 Plans in which the earnings are tax-free if used for qualified higher education expenses.  Such plans have other benefits as well.

7. Buy life insurance wisely.

“For the average person, rather than buying whole life insurance, which is a bundled product containing an insurance product and investment, buy term insurance and invest the difference,” he said.  “Whole life products have the highest sales commissions, and a consumer can save easily through an automatic draft plan with a bank or mutual fund.”

8. Don’t try to pick and choose investments.

Terry also warns about letting a broker or investment adviser pick individual stocks. “Instead, invest in a widely diversified equity portfolio which can practically be accomplished through a mutual fund.”

9. Look for “no-load” investments.

With respect to mutual funds, Terry said the average investor is better buying no-load, broad market index funds.

“No load mutual funds have no sales commissions and are purchased directly from the investment company,” he said.  “Brokers and planners will likely recommend load funds because these pay them commissions.”

10. Invest in the future – go to school.

Terry said a college education is a great investment. “In 2007, the average total dollar difference in lifetime earnings between a bachelor’s degree and a high school diploma was $796,640,” he said. “Discounting the annual difference for 40 years back to today at 4 percent, the difference is $394,193 in today’s dollars.”

The difference in total lifetime earnings between an advanced degree and a high school diploma is more than $1 million.

“The bottom line is spending $50,000 today on a bachelor’s degree will have nearly an eightfold return,” he said.

In good financial times or bad, surviving and thriving in a complex world requires strong financial planning skills, Terry said.

“It’s not just about balancing the checkbook; it’s about balancing the needs of today with goals for tomorrow. In today’s complex and interconnected world, the financially literate hold all the advantages,” he said. “They know how to make better consumer choices, how to reduce their risk of default or delinquency, how to improve their credit management, and how to build the financial security necessary to achieve their career and life goals.”