Now, in Spending Basics, you'll get to analyze some of your spending routines. Specifically, you'll be looking at the basics of buying a home, purchasing a car, and the way you use a piece of plastic called a credit card to buy nearly everything else.

The article will help you review how you can save for a down payment, help you review your mortgage options and explain the tax advantages of owning a home. We'll look at buying a used card vs. a new car, and help you see why holding on to credit card debt can cost you far more than the average 18% interest rate you'll pay every month.

Owning a Home

It's been called the American Dream. The chance to own your own "piece of the rock," to put down roots, to invest in your future.

Because owning a home isn't just about finding enough money to make the purchase. In this country, at least, buying a home signals success and stability - not to mention a chance to save on your taxes.

There's no guarantee, however, that everyone needs to own a home. Granted, our first discussion on whether you should rent or own will discuss the financial pros and cons of both, and whether you can afford to own a home. But what about other factors? Are you committed to maintaining a home, investing not only the time but also the additional money that this requires? Are you someone who enjoys getting a roof fixed when it leaks, or would you rather call your building's superintendent to take care of the problem? Would you prefer to spend your weekends patching and painting plaster, or would you rather be windsurfing? And what about the outside of the house? That lawn that looked so country-clubesque when you purchased it has suddenly developed those pesky dandelions and crab grass. Ready for a summer of lawn repair and reseeding, or would you rather be hitting the golf course?

What we're trying to say is this: A house has a lot of hidden costs - in terms of both time and money. And before you buy, you should consider these factors:

• Location, location, location. This popular realtor's mantra will affect everything from your neighborhood zoning laws to the resale value of your house. Consider every location factor imaginable when you buy a home -- your distance from shopping and entertainment locations, schools, places of worship, recreation facilities, community centers, open spaces. As odd as it sounds, don't just think about the factors that are attractive to you; consider factors that would make your house attractive to the next buyer, too.

• Size, upkeep, repairs. Think about: You don't hear the term "Money Pit" used for anything other than a house, do you? Before you buy, make sure you can afford the time and money that it will cost to keep up a house. Choose the kind of home and the price that fits your lifestyle. A three-story, five bedroom Victorian with floor-to-ceiling drafty windows, no garage, old heater and no bathroom on the first floor may be the perfect first home for energetic homeowners. But a retired couple may prefer a one-story, two-bedroom condominium with an enclosed garage and a nearby Fitness Center.

• How long you intend to stay. According to national real estate statistics, the average American household tends to move once every six to eight years. Analyze your career and personal objectives before you buy a home. What you see in your future may influence your home buying decisions.

Buying a Car

It's one of the most expensive purchases you'll ever make. And when it comes to buying a car, there is an array of options to consider that go beyond deciding what model, make and color. Do you want a new car? A used car? Are you going to buy, or lease? How much insurance should you have?

Before we review these options, let's discuss the one thing everyone wants when buying a car: a fair deal. And while a "fair deal" means different things to different people, here are some of its most common characteristics:

• You pay approximately the "going rate" for your car. This amount is typically less than the "sticker" or "MSRP" price, but more than the "dealer invoice price".

• The dealer pays you approximately the "wholesale book" price for your trade-in. This is less than you'll see the car advertised for in the newspaper, and is typically less than you would get if you sold the car privately. On the other hand, the dealer is taking most of the risk of the sale. BlueBook.com is one source to estimate the market value of your trade. Valuing trade-ins is not an exact science. Depending on wear and tear and local market conditions, your individual vehicle may be worth more or less than the wholesale book price.

• You feel like you got value for your money - the experience of owning and driving the car is worth what you are paying for it.

• The dealership makes a reasonable profit.

To help ensure that you get a fair deal, consider these tips before and during car shopping:

• 1) Before you decide on what car you want to buy, determine what car you can afford to buy. The calculator, How much car can I afford? will help you determine a price range.

• 2) Arrange your financing in advance; pre-qualify for a loan. You'll be comfortable about what you are spending on a car and about the monthly payment. This will also prevent overspending or impulse buying.

• 3) Remember to check with your insurance agent to get an estimate of any changes in the cost of your auto insurance so you can factor that amount in your budget.

• 4) Know what features you want or need the most. Take time to write them down before going car shopping and write down the maximum amount that you can afford to spend. Budget for the purchase before you shop.

• 5) Know what the model you are shopping for should cost. Check prices among several dealers who handle your type of car; visit the manufacturers' web sites; and visit independent web sites for reviews and comparisons.

• 6) Know what your trade-in is worth. And before you start shopping, verify the balance on any existing car loan on your trade. The trade value of your vehicle will be reduced by the amount the dealer needs to spend to pay-off your current loan.

• 7) Negotiate one thing at a time. Keep in mind your list of needs and wants.

• 8) Be flexible and be patient. You do not have to buy a car on the first day you are shopping or at the first dealership you visit. Be prepared to leave a dealership if you do not feel comfortable with the price and features you are being offered or if you know you are looking at cars above your spending limit.

• 9) Get the final offer in writing, signed by an authorized representative of the dealership.

Using Credit Cards

It's only 3.5 inches long and 2.25 inches wide. But a credit card is a plastic Jekyll and Hyde if there ever was one.

One day, it's your best friend - allowing you the freedom to make important purchases and take advantage of what amounts to an interest free loan, provided you pay the balance in full each month.

But if you start whipping out that plastic for purchases you really can't afford and pay back only the minimum amount that's due each month, a credit card will become your worst enemy - a black hole of debt that costs you an average of 17 percent in interest that's not even tax deductible.

According to the National Foundation for Credit Counseling, the credit card black hole of debt is bigger than ever. In 1990, the average American household with at least one credit card carried a balance of nearly $3,000. Today, that same family carries a credit card balance of $7,500. That adds up to nearly $65 billion in credit card interest payments every year!

And despite our warnings that short-term debt should never 20 percent of your monthly income, the Federal Reserve Board says that the average consumer owes more than that every month.

Are you one of the lucky plastic users who pay off their balance each month? If so, you might want to review which credit card would be best for you in Finding the right credit card - lower fees, better rates.

Or are you a plasticholic, lost in the black hole of credit card debt? You may be if you answer, "Yes" to these questions:

• You pay only the minimum required payment each month and never pay off your card in full.

• You owe more than 20 percent of your income for short-term debt.

• Each month, you charge more on your credit card than you pay off.

• Your credit balance rarely decreases.

• You sometimes pay late fees for not paying your bill on time.

• You now use your credit card to pay for everyday expenses like groceries, gas, and dry cleaning.

To begin to manage your credit card debt, follow these steps:

• 1) Cut your expenses. Review your budget and expenses. See what can be eliminated, and start using the difference to pay off your credit card debt.

• 2) Stop using your credit cards. Pay for everything in cash or with a bank debit card. The best way to keep you from buying something is to not have any money in your wallet or bank account to pay for it.

• 3) In working to pay off your credit cards, first pay off the ones with the highest interest rates. Don't forget to pay your bill on time every month, or you may be hit with expensive late fees that only add to your debt. And if you are late with a payment, you may see your interest rate climb even higher.

• 4) Transfer your balances to a credit card with a lower interest rate, but be careful! Read that all important fine print and watch for "transfer fees" that may be accessed for your total transfer amount; calculate what the exchange may cost you up front; it may not be worth it. And don't be fooled by lower "introductory offers" that promise a low interest rate; most last for only a short time and you may be faced eventually with higher rates than you had been paying.

• 5) If your credit card debt is so large you feel that you'll never pay it off, consider taking out a home equity loan if you own your own home. The interest is usually tax-deductible if you itemize on your tax returns, and it's usually lower than credit card rates. Don't make the mistake, however, of rolling your credit card debt into a home equity loan - and then continuing to build up debt on your credit cards! Get rid of those cards, once and for all.

This article was originally created for TheArtBiz.com. It appears on NYFA Interactive courtesy of the Abigail Rebecca Cohen Library.