7 simple solutions for managing your money

3. Invest the easy way

No time to monitor your investments? Simple solution: Put your money in index funds. Index funds are -- dare we say it? -- boring. But boring is beautiful for Erin and Jeffrey Hager, an Austin, Texas, couple in their 30s whose investment portfolio is filled with nothing but index funds. "We don't have time to look in the paper every morning to see what's going up and what's going down," says Erin.

Many investors would do well to follow the Hagers' example. Over a 10-year period, the Russell 3000 ($RUA.X), a broad-based stock index, has beaten 68% of all actively managed mutual funds. What's more, Standard & Poor's 500 index, ($INX) which is dominated by large companies, has surpassed 82% of all large-company funds.

You, too, stand a good chance of beating most actively managed funds if you stick with an indexing strategy. Instead of trying to outstrip the stock market, index funds aim to match it by mirroring one of a number of stock indexes that are used to gauge the market's performance. That means you don't have to worry that a successful fund manager will depart or lose his touch (as you might with a fund run by a star stock picker).

And index funds -- at least the good ones -- are cheap. Vanguard and Fidelity, whose index funds are among the least expensive, charge annual fees that generally range between 0.1% and 0.33%. That compares with more than 1% for most actively managed funds, plus a sales charge if you buy through a broker. What you save on expenses puts more money in your pocket.

Of course, you need to buy the right index funds.

• Start by putting 70% of your stock portfolio in Vanguard Total Stock Market fund (VTSMX), 800-635-1511, which tracks the entire U.S. stock market.

• Then invest 25% in Vanguard Total International (VGTSX), which covers the remainder of the globe.

• Add a good tax-exempt bond fund, such as Fidelity Spartan Intermediate Municipal Income (FLTMX), 800-544-8544, and you're done.

That's pretty much how the Hagers invest. Jeffrey is a radio personality with KAMX in Austin. "He'll probably have to retire earlier than most people because nobody wants to hear a 65-year-old deejay," says Erin, who stays home with the couple's daughter, Raleigh. "So we have to do this right."

4. Tame your paper tiger

Up to your neck in paperwork? Simple solution: Go online. About 35% of U.S. consumers pay their bills online, and Scott Love, a public-relations executive from Boston, is among them. Love often returned home to piles of bills after his frequent business trips, and he worried that his payments wouldn't arrive in time to avoid late-payment penalties. So when Love's bank, Citizens, offered free online bill-paying, he tried it. "If I can find a way to save time, I will," he says.

Now Love, a movie buff, can take the couple of hours a month he once spent at a dreary task and watch a new film. He has arranged for recurring bills, such as the car loan on his Nissan Pathfinder, to be paid automatically every month; other payments take just a few minutes to schedule. When he's on the road, Love logs on to keep up with his finances. "I hand-write about one check every three months," he says, "and that's maybe to somebody who comes to the door selling cookies."

The easiest way to pay your bills online is to use a safe, encrypted service -- offered by banks, credit unions, brokers and companies such as MSN, Quicken or Yahoo! -- that lets you pay as many of your bills as you can at one Web site. Often you can arrange for an e-mail reminder that a bill is due. The service can handle payments entirely electronically or it can generate a paper check, if necessary -- to pay the guy who mows your lawn, for example. If a payment is late, many bill-paying services will reimburse you for late fees up to a certain amount (sometimes as much as $50), as long as you've scheduled the payment within their guidelines.

To shed even more paperwork, you can arrange to receive bills and statements electronically. Sign up with e-billers on many services or at MyCheckFree.com.

Online bill-paying also helps Love keep his finances organized. "You have your records right there -- what you owe, past payments -- all on one site," he says.

Wells Fargo goes a step further: Its online-banking customers have access to My Spending Report, which they can use as a de facto budget. My Spending Report tracks online bill payments and Wells Fargo debit- and credit-card charges, and plugs them into one of 20 categories so that you can see how much you've spent on, say, groceries and restaurant meals.

And, of course, you can track your spending using Microsoft Money or Quicken.

Continued: Pay less for insurance; get more income

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