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Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

You’re probably not thinking about tax season right now, but fall is a great time to revisit your tax planning strategies. Here are a few tips to make the most of your money before December 31 creeps up on you.

1. Stock up on health supplies. If you participate in a company-sponsored flexible spending account (FSA) for tax-free health expenses, start thinking about ways to avoid leaving money on the table. Stumped about what to get with your dough? Glasses or contacts, cold medicine, first-aid kits, ice packs for treating injuries, and heart-rate monitors all qualify. Drugstore.com even stocks a FSA store full of qualifying goodies. But do it fast: Starting in 2011, you won’t be able to run up a drugstore bill with your FSA dollars. The new health-care law prohibits spending FSA money on anything you don’t have a prescription for (with insulin as the exception).
2. Make your home more energy efficient. Holiday weekends (like the one three days from now) are a great time to buy new appliances at a steep discount. And through the end of the year, you can qualify for a 30 percent credit (up to $1,500) on approved doors, windows, and roofs as well as high-efficiency furnaces, water heaters, stoves, and heating and air conditioning units installed in your primary residence.
3. Save tax dollars when you refinance your home. If you’ve taken advantage of low mortgage rates this year to refinance your home, don’t forget that you can deduct all unamortized points on an old refinancing as well as points on the new loan.
4. Identify charities you want to support. Charitable donations are deductible through December 31 for the current tax year, but pouring money into worthy coffers can be a low priority at year end when you’re busy playing Santa. Make your annual donations now before your wallet starts feeling pinched by the holidays.
5. Begin to max out your retirement savings. If you qualify for an IRA or Roth IRA and haven’t begun making contributions for 2010 yet, start by socking away a little right now. The contribution limit is $5,000 if you’re under age 50, and you have until April 15, 2011 to get it all in there. So put away $625 a month for the next eight months to max the fund out — it will hurt a lot less than trying to come up with $5,000 on Tax Day.

When things get really tight, it’s important to know what your options are to get you through a bumpy ride. This week, we help you make a plan for how to make the best of a tight financial situation.

1. Use your car as collateral. Many banks and credit unions will let you refinance a paid-off vehicle with a used car loan (assuming the car is worth enough). With interest rates under 3 percent at a lot of financial institutions, it essentially gives you a personal loan at a discounted rate. This could be your ticket to pulling cash out of a car you own outright without having to sell it.
2. Know your best short-term loan options. Bouncing a check can be much more expensive than a short-term option like a payday loan, through which you can get an advance on your next paycheck for a fee as low as $15. Just be sure to pay it back as soon as you can.
3. Negotiate your medical bills. According to a 2005 poll, two-thirds of people who asked their doctor or hospital for a discount were able to negotiate a lower medical bill or even get the cost of some services waived. If you don’t have insurance, try to pay for your care up front to save 10 percent or more. And check this website run by the Pharmaceutical Research and Manufacturers of America (PhRMA) for assistance in getting discounted or even free prescriptions.
4. Stretch your grocery bills. Foods like lentils, rice, ground beef, and canned goods go a long way for pennies per serving. And waste not, want not by using meat and veggie scraps in making hearty soups and stews. (Between roasting it, shredding the leftovers, and boiling the carcass for stock, a whole chicken can make several meals for less than a dollar per serving.)
5. Learn to barter. You don’t always have to spend big to get a service you need if you can make use of the skills in your social circle. Barter with a mechanic friend by swapping babysitting services for an oil change, or save on clothing repair bills by offering to run errands for a friend who’s handy with a needle and thread.

To lure back-to-school shoppers into the mall, many states are offering a sales-tax holiday this weekend, saving consumers money on big-ticket purchases like computers, software, books, apparel, and footwear. Last year, the practice was called into question by certain lawmakers whose districts couldn’t afford to forego the revenue generated by sales taxes. But in 16 states, the tax holiday is back on for 2010.

Here are the five best deals, perhaps even worth traveling for if you have a lot of shopping to do:

1. South Carolina, August 6-8. There is no limit on how much can be spent tax-free on clothing, accessories, shoes, computers, school supplies, software and computer hardware (like printers and scanners), bed linens, and bathroom furnishings.
2. Louisiana, August 6-7. All purchases categorized as “tangible personal property” under $2,500 in value are tax exempt. The only exception is the vehicle licensing tax, if you’ve recently bought a new-to-you car.
3. North Carolina, August 6-8. Items that are tax exempt include computers up to $3,500, school instructional materials up to $350, computer supplies and software up to $250, apparel and footwear up to $100, school supplies up to $100, and sports equipment up to $50.
4. Missouri, August 6-8. Save all sales tax on computers up to $3,500, software up to $350, clothing and footwear up to $100, and school supplies up to $50.
5. New Mexico, August 6-8. Computers up to $1,000, computer accessories up to $500, clothing up to $100, and school supplies up to $100 all qualify for the tax holiday.

Your state not on this list? Check Bankrate for the full list of tax holidays this month.

The secret to wealth building isn’t necessarily stock-market prescience or a brilliant business idea. Everyone starts somewhere, and it’s often just a small decision that snowballs to big rewards. Take one of the following tips and maybe decades from now you’ll remember the day you decided to invest in yourself.

1. Set up automatic transfers to save without the sting. No emergency fund? Not for long. Link a savings account to your checking and set it to automatically deposit $20 every payday. If you get paid every two weeks, in less than two years you’ll have saved $1,000 virtually painlessly (even more if it’s an interest-bearing account). Just remember: No touching!
2. Round up each debt payment. Say today you get a $5,000 car loan at 5 percent, payable over 36 months. Your monthly payment will be $149.85, and you’ll be debt-free in June 2013. Now suppose you round that check up to $200 per month: You’ll get rid of that loan by September 2012 and save more than $100 in interest charges in the process.
3. Get a better interest rate on savings. If your savings account pays peanuts on your money, consider moving it to an online bank. Switching banks over a 1 percent difference in APY may seem like more trouble than it’s worth, but on a $10,000 balance, that ends up being $100 more in your pocket at the end of a year.
4. Trim your housing expenses. If you live in a tri-state area like Washington, D.C., or New York City, you have your pick of which state to live in — which can save you money on a monthly basis if you’re savvy about it. Compare the tax and cost-of-living benefits and drawbacks of each area before you settle down somewhere with a skyrocketing COL.
5. Increase your W-4 allowances. Get a big tax refund this year? Wouldn’t you prefer a fatter paycheck now, rather than waiting until next spring to collect your money back from the government? That’s what we thought. Increase your federal allowances on the W-4 on file at your company and you can put that money to work for you pronto.

If you have a major purchase on the horizon — be it electronics, home furnishings, or a vehicle — now is the time to start considering your options to keep costs low and value high.

1. Know the best time to buy. July is when prices on home wares and furniture reach their annual lowest, as stores mark down goods to attract wedding gift-givers. Shop for a new car at the end of the model year for the best discounts — or at the end of the month, when salespeople are most motivated to make their quotas. A little research can mean big savings.
2. Mull it over. Take your time before you spend big to avoid buyer’s remorse. If your garage already looks like an REI, maybe you don’t need that paddleboard as much as you think you do.
3. Comparison shop to save on taxes. It was news to us that Amazon stocks the full range of laptops and other consumer electronics by all the major brands, from HP to Apple. That could mean more than $100 in savings if you buy online versus going to the mall, where you’d have to pay state sales taxes.
4. Put it on a rewards credit card (with caveats). Getting 1 or 2 percent cash back on a major purchase seems like a no-brainer — unless you’re expecting to carry a balance. Then the interest rate will exceed any rewards you’ve received. In that case, consider paying with cash or negotiating zero percent financing at the store you’re buying from.
5. Determine the value of a warranty. Back to cars again: The conventional wisdom says “always buy used,” because of the steep depreciation value on new cars. But when you buy a new automobile, you benefit from the full warranty — something you may pay a few extra thousand for when considering a certified used vehicle. Crunch your own numbers to see what it’s worth to you.

The article follows the Pemberton family in St. Petersburg, Fla., who have stopped paying their mortgage so they can put their money to more fun use, such as trips to a casino and joyrides in an airboat:

“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”

Because of the glut of homes in default in Florida, foreclosure proceedings last an average of 518 days. The Pembertons have yet to be evicted — meaning they will continue to live there rent-free until the bank collects its due.

The people interviewed for the article make the case that the banks should pay the price for the naïve decision to grant them mortgages in the first place, but the justification seems to originate from an ethics-free zone.

And it’s a short-sighted game, to say the least. Once the bank gets around to completing its paperwork, not only will these borrowers lose their homes, but their FICO scores will plummet by up to 280 points. And the foreclosure will stay on their credit reports for 7 years —almost as long as a bankruptcy.

Considering what their credit history means for their future job, housing, and credit prospects, these homeowners need to reconsider whether scamming the bank is worth it in the long run.

The benefits of using the site are many (and not just for financial Peeping Toms). For starters, the anonymity takes away the taboo of talking about money, leading to a vibrant tips section. Got questions? The community has answers. You can instantly compare your net worth to others with similar education levels or salaries, and also by state, industry, or age range. (Though take this with a grain of salt: You’re stacking yourself against a self-selective group of people who are really into personal finance, so it’s not the same as comparing your numbers to the nation at large.)

Contrary to what you might assume, the website is not just full of financial whizzes whose stocks are going gangbusters; there are plenty of users who are very much in the red and are using the site to climb out of debt. And on the other end of the spectrum, it’s easy enough to find a cadre of candid self-made millionaires who are willing to share how they got to where they are today.

Some people have been updating their profiles for years. I only just started this week, but I can already see myself becoming a regular. (And if nothing else, it’s an educational way to kill a Friday afternoon.)

If you’re a parent yourself, there are a lot of ways you can put your kids on the path to financial success while they’re still young. Here’s a sampling of ideas:

• Put their allowance on plastic. Teaching them early about how debit and credit cards work will serve them well as adults when it’s their own money they’re spending. Obopay has a product perfect for this.
• Prioritize retirement over college. You can take out a loan for college, but you can’t take out one for retirement. Even if you want to give your child the world by paying for his or her education, make sure you max out your retirement plan before you start making contributions to Junior’s college fund. By getting an early start on retirement saving, you can free up more money down the road for education expenses.
• Live by example. This is the most important one: A University of Arizona study last year found that kids learn their spending habits from mom and dad — not from books or school. Use that influence wisely.

But if you’re saddled with a huge car payment, struggling to pay your rent or mortgage, or throwing money away on high-interest debt, then those savings don’t seem to matter as much to your bottom line.

In other words, if you can’t make ends meet month after month, clipping coupons isn’t going to be enough to bridge that gap.

The solution? Find ways to slash your biggest expenses first — before cutting back on smaller budgetary line items. Here are a few tips to get you started:

• Maximize your tax deductions throughout the year to avoid scrambling to remember them all when it’s time to file your annual return. Keep files on all your charitable donations, deductible interest on student loans, medical care, and other qualifying expenses.
• Aim to spend no more than 30 percent of your income on housing, whether that’s rent or mortgage (and don’t forget to factor in property tax and insurance). If you can spend less on housing and still live in a safe area, do it.
• A rule of thumb: If you have to take out a car loan you can’t pay back in under three years, you can’t afford your ride.
• Most savings accounts right now are paying around 1 percent APR in interest. If you have credit card balances or student loans to pay off, you’re likely paying more than 1 percent on that debt, so your emergency fund is actually costing you money in the long run. Make a dent in it today.

Forget fine-tuning — overhaul your budget to see the biggest savings.

This year, vampire patriarch Carlisle Cullen from the Twilight book series tops the list with an estimated net worth of $34.5 billion. It helps that he’s had 370 years to build up his bank account, but Forbes chalks up Dr. Cullen’s theoretical success to very, very, very long-term investments.

Even if you aren’t immortal, you can borrow some of his wealth-building strategies to watch your own money grow, like these tips:

• Live frugally. Despite an arguable need for one, the family does not own a private jet, preferring instead to fly commercial. And while they have collected several expensive sports cars, the bulk of their flashiest gas-guzzling vehicles spend most of their time in the garage while the family galavants in a much less conspicuous Volvo.
• Avoid the trap of being house rich and cash poor. The Cullen family home is valued at $3 million — less than .009% of the family’s holdings. While it would be difficult for most people to find suitable housing on that kind of budget, buying less house than you can afford is a great way to free up money for other uses.
• Plan ahead. Not all families are lucky enough to have a daughter who can see into the future. But developing a solid investment plan can help your own money accumulate faster than if you stuff it in a mattress. Remember: Few people get rich by accident.
• Look long term. The Cullens use their unending lifespan to let compound interest on their investments work its magic. However, even if you have only 30 years until retirement, that’s enough time in the stock market to see some serious gains.