12 steps to become a millionaire

You don't have to own the company or be a CEO. Here's how to build a rich nest egg one paycheck at a time.

By Kiplinger's Personal Finance Magazine

A number of the people profiled in "Millionaires tell how they did it" made their millions as entrepreneurs. But working for the Man doesn't mean you have to be a wage slave or resort to buying lottery tickets to strike it rich. The trick is to maximize your income on the job (and know when to move on), make the most of your employee benefits and tax breaks and use that extra money to start investing.

1. Keep your eyes peeled for better ways to do your job. Streamline a procedure, shave costs, create a new profit center, become an expert on a specific topic, volunteer for a company committee -- anything that will make you stand out as a prime candidate for a promotion or a pay boost.

2. Don't be afraid to negotiate. In a study of master's degree graduates from her university, Carnegie Mellon economics professor Linda Babcock found that those who negotiated their first salary boosted their pay by 7.4% compared with those who didn't bargain.

3. Get your ducks in a row and your numbers on paper. If possible, quantify how much your efforts add to the company's bottom line. If that's not feasible, spotlight your value with comparable salaries for workers in your position from a Web site, such as Salary.com, or from a professional association.

4. Plot your strategy when it's time to move on. Create a professional-looking page on MySpace that tells prospective employers why you're an exceptional candidate, recommends John Challenger of the outplacement firm Challenger, Gray & Christmas. And don't neglect more conventional networking: Join a professional association or show up at school reunions toting business cards.

Milk your benefits

5. Contribute as much as you can to your 401(k) and other tax-deferred retirement plans. You'll not only build a bigger nest egg, but you'll also cut your tax bill. In the 25% federal tax bracket, every $1,000 you contribute to a 401(k) trims your taxes by $250. And you'll save on state income taxes, too.

6. Flex your tax-saving muscle. Contribute pretax dollars to a flexible spending account to pay for dependent care or out-of-pocket medical expenses. If you set aside $1,500 per year and you're in the 25% bracket, avoiding federal income and Social Security taxes means Uncle Sam will subsidize almost $500 of your expenses.

7. Review your tax withholding. If you're expecting a refund this spring, you're having too much tax withheld from your paycheck -- and making an interest-free loan to Uncle Sam. That's no way to become a millionaire. Put more money in your pocket by using Kiplinger's withholding calculator and then filling out a new Form W-4.

8. Stash savings in a Roth IRA if you're eligible. Withdrawals in retirement, including decades of compounded earnings, will be tax-free. This year, income-eligibility limits for a Roth increase to $114,000 for individuals and $166,000 for married couples.

Invest like crazy

9. Don't delay. The quicker you get a jump on putting money aside, the easier it will be to stuff a seven-figure cushion. If you start at age 25, for example, investing $286 per month will get you $1 million by age 65, assuming you earn 8% annually.

10. Invest automatically, either through your employer's retirement plan or by setting up a regular deposit to a mutual fund or broker. You'll never miss the money, and you'll avoid two big mistakes: buying too much when stock prices are high and not buying at all when prices fall.

11. Watch for fund fees. The more you pay, the tougher it is to earn an above-average return. The typical hedge fund, for example, takes 20% of any gains, a huge hurdle to overcome. A better bet: no-load mutual funds with expense ratios of 1% or less. If you trade individual stocks, watch those commissions.

12. Keep it simple. Be wary of get-rich-quick schemes or sales pitches for complex investments, such as oil-and-gas partnerships, that trade on the millionaire cachet to lure investors into buying high-fee products they don't understand. Most millionaire households accumulate their wealth over the long term by sticking to a regular investing plan in a balanced portfolio.

How to thrive in a weak economy

Financial experts offer 5 rules for protecting yourself and your money when times are tough. A strategy now could keep fear in check later.

By Bankrate.com

The news is grim. Home values are dropping, the subprime mortgage mess is spreading, the stock market's uncertain, and the economy seems to be heading into a recession.

No wonder plenty of us are worried.

Still, you can protect yourself. Here are some experts' top five strategies to do your best in this choppy economy.

No. 1: Don't panic

Stock-market gyrations can give even the hardiest investors a case of the jitters.

However, converting all your investments to cash is likely to do far more harm than good, says Joe Baker, a certified financial planner and president of Alcus Financial in Mount Pleasant, S.C.

"People are scared," he says. "They're asking, 'Is the economy crashing? Should I move my 401(k) to a money market?'"

Baker answers: "Please do not, unless you need the cash tomorrow. You'd be making a huge mistake."

Unless you need the money soon -- say, within two years -- it's best to remind yourself that good and bad times pass. Historically, the market's made up its losses fairly quickly.

Since 1945, there have been 11 recessions as defined by the National Bureau of Economic Research. The Standard & Poor's 500 Index ($INX) -- the index of widely held stocks used as a barometer for the overall market -- generally has hit bottom six months into the typical 10-month recession, according to Sam Stovall, chief investment strategist at Standard & Poor's.

After that point, the market typically starts to regain its footing. If you include the very worst meltdown, when the S&P 500 lost more than 45% of its value, it took 19 months for investors to recoup their losses. But exclude the huge losses, and you find that it's actually taken just eight months, on average, for the index to bounce back.

"The reason the market peaks before recessions start and troughs before they're finished is that investors are anticipators," says Stovall. "They're willing to become more optimistic once the bad news is out."

Stovall's advice to today's worrywarts is direct: "Don't freak out."

No. 2: Bulletproof your portfolio

Sure, we all know the warning about putting our eggs in one basket. But when it comes to investing, too few heed this advice.

One study by Hewitt Associates, for example, found that three of five workers participating in a 401(k) plan never rebalanced their portfolios between 2000 and 2004. Failing to rebalance causes your portfolio to skew over time, leaving you overloaded with one kind of asset while owning too little of something else.If you've neglected your assets, such imbalance could put you at greater risk.

Recent drops have left many investors in a position where they need more equities and less fixed-income. That may come as a shock to safety-hungry investors eager to stock up on fixed-income, cash and other "safe" assets.

"If your asset allocation was good for you six months ago, it should be good for you today," says Ellen Rinaldi, executive director of investment planning and research at Vanguard. "The fact that the market is volatile should remind you to be appropriately diversified."

Bear-market wisdom
Are we in a recession? Perhaps, but let's not get hung up on semantics, says MSN Money's Jim Jubak. The reality is that the economy is in a cyclical downturn that will take time to unwind.

Personal factors like age and risk tolerance -- not the current state of the economy -- should drive your investing. For example, workers in their 20s and 30s should have roughly 80% to 90% of their assets in equities, while people in their 60s approaching retirement may devote up to 50% of their assets to stocks.

"Use market declines as opportunities to add to holdings," says Stovall.

Some experts warn that it's a mistake to put your faith in gold, commodities or any other asset that seems popular now that the stock market is roiling.

"If you liked the market four months ago, it's at a 15% discount," says Brett Horowitz, a financial planner at Evensky & Katz. "It's a great time to buy. When you buy at a point when everything looks ugly, that's good. You're buying low. It's forward thinking."

No. 3: Don't let your home become a trap

Experts agree that tough economic times mean homeowners must figure out if they've got the best mortgage deal. Many people have adjustable-rate mortgages that are about to reset higher, causing payments to balloon.

It may be a good idea for these homeowners to refinance to a lower, fixed-rate mortgage that will give them more stability in their month-to-month finances.

Unfortunately, that's easier said than done right now.

The nation's credit crunch and subprime mortgage debacle mean access to loans is fast disappearing, or becoming prohibitively pricey, for borrowers with less-than-sterling credit.

"Interest rates are being more unevenly applied in the marketplace than they have been in recent years," says Keith Gumbinger, vice president of HSH Associates, which tracks mortgage trends nationwide.

If you have good credit and have a FICO score of at least 680, don't squander current opportunities to save.

Recently, mortgage rates have moved up and down like a yo-yo, but try to take advantage of the best rate you can find. Consider spending more on a fixed-rate loan and locking in a super deal rather than selecting an ARM that may cost far more when it resets, says Gumbinger.

Those with less-than-stellar credit have fewer options. That's especially true of borrowers who took out ARMs to pay for their homes.

"ARMs are strangling people. They are like a B-rated horror movie. If at all possible, get out of them," says Dee Lee, a financial planner and author of "Let's Talk Money."

Consumer groups may help those whose credit is making it difficult to reset. The Homeownership Preservation Foundation has a 24/7 hotline, (888) 995-4673, where you can reach counselors. The Homeowner Crisis Resource Center, (866) 557-2227, also has professionals who can help individuals facing foreclosure.

No. 4: Rework your résumé

When the threat of recession looms, it's smart to pay extra attention to your job.

"Corporations are in a wait-and-see mode when it comes to hiring," says John Challenger, chief executive at Chicago staffing firm Challenger, Gray & Christmas. "Employers are getting more cautious about opening new offices, adding staff."

Working hard can help protect your job, but it may not be enough. In addition, you should be strategic and figure out where you stand. Workers who cost employers money are most likely to be laid off. These include support staff in bureaucratic positions or workers in overstaffed departments.By contrast, employees who add to a company's revenues are more likely to be viewed as valuable assets. So, try to take on work that no one else can do, or volunteer to head up long-range projects vital to your employer.

Also take note of your boss's performance. If your one ally looks like he or she is at risk of getting bounced out, start forging additional alliances.

"Connect with higher-ups so if your boss leaves, you aren't stuck," Challenger says.

Meanwhile, start networking. It takes time to get a new job, especially if you're already several rungs up the career ladder. Entry-level employees in lower-paid positions need roughly two months to get re-employed. But higher-paid executives generally will spend five months on average to find another position.

No. 5: Reduce your debt and boost savings

It's even more important to get rid of bills and amass extra cash now that the economy is on shaky ground. That's because some assets, such as homes and stocks, that helped bail out Americans in the past few years have now plummeted in value.

Homeowners tapped $1.6 trillion in home equity from 2001 to 2006 to access cash, according to the watchdog group Demos. But that lifeline is frayed.

"You need an emergency fund," Lee says. "Three months is realistic. No frills such as meals out or vacations -- just basics."

Unfortunately, "more low- and moderate-income households don't have adequate savings," says Stephen Brobeck, executive director of Consumer Federation of America.

Time to refinance your mortgage?
CNBC's Diana Olick looks at the Federal Reserve's moves to relieve distressed mortgage holders, and whether they actually make it easier for homeowners to borrow money.

So start saving. "Most families can find $100 a month," Brobeck says.

This is also the time to eliminate plastic debt. Six out of 10 households don't pay off their entire credit bills from month to month, according to Demos.

Pay off your most expensive credit cards first. While credit card rates may fall, don't count on it, especially if you have a tarnished payment history. A shaky economy can give banks a reason to increase rates.

"Banks are writing in terms that say 'We can change our rates for economic conditions or financial conditions,'" says Linda Sherry, director of national priorities at Consumer Action. "If they're not making profits in other areas, they have to make up that income."

Those who make late payments shoulder any increase in rates.

"At any given time, 5% of the population is delinquent," said Robert Hammer, chief executive of R.K. Hammer, a bank card consulting company. "You'll generally have to pay on time for at least a year before you can start renegotiating lower rates."

However, if a job loss pushed you to fall behind on payments and you have found new employment, don't wait the year.

"Call the company and ask for relief," Hammer says. "You may get it."

This article was reported and written by Leslie Haggin Geary for Bankrate.com.

Published March 28, 2008

The best financial advice ever

Prince Charming isn't coming. Live like a college student. Never co-sign a loan. Money experts like David Bach and readers like you share the best nuggets of wisdom they have ever received.

By Liz Pulliam Weston

If you're doing well financially, chances are you had help.

Someone, somewhere along the way passed along a nugget of financial wisdom that you took to heart. Maybe you absorbed the messages over time from some role model, such as a parent or grandparent. Or perhaps you just heard the right thing at the right time from a friend, an adviser or even a total stranger.

If you're not doing well financially, maybe you're finally ready to hear some advice that could make all the difference.

With that in mind, I asked experts and readers alike to share the best financial advice they ever received. The results were varied and enlightening.

Advice on saving

"No matter how much or how little you make, always save a little bit."

This is a variation of "Pay yourself first" that Your Money poster "kesslergk" heard from a grandfather. It's a reminder that whatever money comes into your life, you can (and should) be setting aside some of it.

If you don't think you can, read "Too broke to save? Never."

"Save hard for the first 10 years of your married life."

This is the advice Your Money poster "Talk2Me2"received from her mother (although to apply it to more people, I might amend it to, "Save hard for the first 10 years of your adult life" or "Keep living like a broke college student for as long as you can").

"Saving hard means having to make a lot of the right choices," Talk2Me2 wrote. "We researched every purchase, learned how to do lots of things ourselves (car repair, hair cutting, sewing, cooking, home maintenance, etc.) and we could not only save money but we also used these skills to make money. When you are young, doing with less isn't a struggle because you aren't used to the luxuries yet. We also had more time to bargain shop.

It's a stash of cash, but how much do you need? Here are some guidelines and why this should take priority over other savings goals.

"Mom's advice certainly paid off. We still save money even when we don't try to because we are in the habit of trying to do things ourselves, doing without if we can't find it at the right price, researching, waiting to buy, etc. We made a game out of getting what we want for less money."

Advice on spending

"Know the difference between needs and wants."

Several posters also mentioned different versions of this advice, which is key to controlling your spending. When you can't distinguish between real needs and mere wants, you're constantly talking yourself into spending too much.

Poster "ARCHIEtheDRAGON" recalls his mother asking, "What do you need that for?" whenever he bought anything as a kid. Annoying? Maybe. But "now I hear her voice in my head whenever I am spending money. It keeps me from buying a lot of crap that I don't need."

"JennysMom" illustrated it this way: "You need food. You want prime rib. That example is perfect for the want vs. need debate in my head!"

Poster "Clara Bear" said she heard similar advice from her grandmother.

"Whenever I would complain about not having the newest coolest clothes or whatever when I was younger, my grandmother would always say, 'We have everything we need and most of what we want, too.' That would make me realize that even though we weren't the richest family in town, we really did have plenty. I still think about that today when I'm lusting over some ridiculously expensive item at the mall. It makes me remember that I have a place to live, plenty to eat and a great family as well as much of the stuff I want. I (usually) put the item back on the shelf and walk away satisfied with what I already have."

"Think of the true cost."

Anything you want to buy involves a number of costs. The price tag is just the start.

"I see something that would look great on my table," poster "Mamasita99" wrote. "I have to give up the cash for it that won't be able to work for me somewhere else. Then I have to think of all the time and energy I'll waste cleaning this item, keeping it out of my kids' hands, and packing it up and hauling it somewhere else when we move in a year. Most of the time, the true cost of the item is too high for me."

"Buy quality."

Sally Herigstad knows what it's like living on a tight budget. Before she became a certified public accountant and author, she was a stay-at-home mom who at one point fended off calls from collection agencies (an experience she recounts in her book, "Help! I Can't Pay My Bills: Surviving a Financial Crisis."

As Herigstad and her husband rebuilt their finances, though, she remembered her mother's advice to buy quality when it counts.

"My mom can stretch a dollar farther than anyone I know, but that doesn't mean she doesn't buy nice things. Mom taught us to buy high-quality things at stores that stand behind what they sell. That way, if anything wore out or quit working before its time, she knew she could take it back -- and she often did. You actually save money by buying things of higher quality that last than by getting cheap stuff you have to throw away in no time."

"If your outgo exceeds your income, your upkeep will be your downfall."

Poster "skywind" wrote that his grandfather often quoted this saying. It's another way of saying, "Live within your means," or, more elaborately, "Be careful of adding new expenses to the ones you've already got."

"So I'm always asking myself, am I putting out more than I'm taking in?" skywind wrote. "If I am, I know I need to turn that around, because it is unsustainable."

Advice on debt

"Don't pay interest on anything that loses value."

A bunch of posters cited variations on this theme of avoiding credit card debt and borrowing only to buy property or other assets that will appreciate.

Poster "dancinmama" was told by her parents "Never pay interest on anything but real estate." In 27 years, she and her husband have taken the advice to heart.

"We have never had a car loan or paid a penny of interest on credit cards. We have saved our money and invested our money. I have been a (stay-at-home mom) since 1986 so most of this time we did it on one income, under 6 figures, on the central coast of California (cost of living was not cheap). Our net worth is now in excess of $2 million."

Poster "Honey Bucket" and her fiancé are just starting out, but they're already living a variation on this advice, which is "save today for what you want tomorrow."

"We've both been saving for retirement, wedding and housing. The difference it will make is that we will be able to pay for things instead of borrowing or having (credit card) debt. Our lives together will be financially secure because of this!!!!"

"Don't co-sign a loan."

Co-signing puts your good credit in the hands of someone else -- who could trash it with a single late payment.

Poster "bookladyfdl" said her parents refused to co-sign a car loan for her after she graduated college, and today she's grateful.

"They lovingly explained that their credit report would show this loan, which could affect any loans they might need. They also explained to me that their rule of thumb was not to co-sign for any amounts they could not personally loan. If you can't afford to give it, you can't afford to pay the loan back, should you have to do so.

"This credo saved me early in my marriage. Without my knowledge, my husband agreed that we would co-sign on a loan his brother was taking out. The papers came and I discovered that we were co-signing on a large loan at 32% interest, and that the reason he was being forced to take it out was that his brother had defaulted on a credit card and this was the last step before court. . . . Out of love for his brother, my husband wanted to help out. However, I relied upon my parents' advice, put my foot down and refused to let either of us sign on the loan. Less than five years down the road, BIL and his new wife have a terrible financial situation, raiding 401(k) funds for car repairs, etc.

"If we'd have co-signed, I know we'd have been forced to pay off that loan to preserve our own credit. Not only would we not have been able to afford it, but it would have put an irreparable rift in family relations. Mom and Dad taught me that sometimes you have to take care of yourself and secure your future, even if it means friends or family members may have a more difficult time."

Advice on building wealth

"If you need more money, then go out and make more money."

There are limits to how far you can scrimp and save. Often the fastest way out of debt and into wealth is generating more income.

Poster "Avalon_2" learned this from parents whose educations stopped by the sixth grade.

"Neither (was) afraid of hard work and we never lacked for anything as I was growing up," Avalon_2 wrote. "They taught me that as long as there is health, anything else can be worked for. To them the word 'retirement' didn't exist. You work until you can't work anymore.

How to get a raise
Timing is everything. Here are some great tips on how to score more money at work.

"I've worked 2 and 3 jobs at a time and often while going to school. To this day, I have a hard time not doing more than one thing at a time."

"You pay in advance for capacity."

Dr. Lois Frankel, a career coach and author of the New York Times best seller "Nice Girls Don't Get the Corner Office," heard this bit of advice from a small-business adviser at the University of Southern California.

"As the owner of what was at the time a small business . . . this meant I had to invest more than just hard work in the business to make it grow. I was trying to keep my overhead down and was doing everything myself and driving myself crazy. So when I could least afford it, I invested in hiring an assistant. (The adviser) was right -- this freed me up to do more marketing and sales calls which in turn led to landing more contracts. I've never forgotten this piece of advice and each time I've followed it it's resulted in another growth period for my company, Corporate Coaching International."

(Frankel is also the author of "Nice Girls Don't Get Rich" and the soon-to-be-released "See Jane Lead.")

"Own your own business -- including the building it's in."

David Bach learned this lesson as a money manager for Morgan Stanley before becoming the author of the New York Times best sellers "Start Late, Finish Rich" and "The Automatic Millionaire."

"My wealthiest clients were clients who owned their own business. The most important financial decision they made (that really made them rich) was they bought the building their business was in. In almost every case the building was ultimately worth more than the business at the end of their career.

"Today I own the building (commercial condo) that my company FinishRich Media is in. My building has appreciated more in two years than I earned on my first four bestselling books in royalties."

"Don't gamble more than you can afford to lose."

My colleague, MSN investment writer Jim Jubak, explains:

"When I was a kid, our big extended family would gather on Christmas Eve for a big dinner of fish and my grandmother's pierogi, followed by drinking, followed by singing off-key with my Uncle Eddie, followed by more drinking. The evening always ended with the oldest kid, yours truly, settled around a card table battling three adults in a game of 25-cents a hand pinochle. I almost always came out a big winner -- $4 or so -- mainly because by that time in the evening I was the only one who could accurately count the pips on the cards. One year, having puzzled it over in my head, I asked my Aunt Millie the logical question: Why do you play cards with me every year when you know you're going to lose? Swirling her vodka in her glass, she said to me: Because I never gamble more than I can afford to lose. And then she pinched my cheek.

"Hated the pinch. Appreciated the advice.

"Wall Street has developed lots of way more sophisticated methods for controlling risk. But I think my Aunt's has one very real virtue -- it keeps you focused on the real aim of the game, which isn't making money for its own sake, but to have enough of the stuff to get you where you want to go. It's helped me get over losses in bear markets and in individual stocks. And reminded me that I can occasionally take a flier, as long as the game in itself is fun and I'm not gambling more than I can afford to lose."

"Prince Charming isn't coming."

Barbara Stanny came from a wealthy family (her father was the "R" of the H&R Block tax preparation chain) and never learned much about handling money. After her first husband lost a good portion of her fortune and left her with a tax bill of more than $1 million, Stanny asked her dad to lend her the money to pay the IRS. He said no.

"That was the best thing he could've done," Stanny said. Though he never said these exact words, the message was loud and clear: 'Prince Charming isn't coming. To truly achieve financial security, your only protection is you.' That moment was the turning point for me. I not only got smart enough to manage my own money (in less time than I ever imagined possible), but I've written three books empowering women to do the same.""Prince Charmings leave, Prince Charmings die, Prince Charmings aren't always such great money managers," said Stanny, whose books include "Prince Charming Isn't Coming," to be re-released May 2007, "Secrets of Six-Figure Women" and "Overcoming Underearning."

"Your job is to participate in financial decisions from a place of knowledge, not fear, ignorance or habit."

This advice isn't just for women, by the way. Anyone who's expecting a lottery ticket, stock picker or other outside force to bail them out is guilty of the Prince Charming syndrome. It's time to quit dreaming and start taking charge.

Liz Pulliam Weston's new book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Updated Dec. 21, 2007

Haircuts and car repairs on the cheap

You can be dollars ahead if you're willing to let some of the 11 million Americans in training for jobs work on your car or kitchen.

By Karen Aho

Question: How do you chop a $4,000 car repair bill down to $600?

Answer: Take out the labor charges.

But there's no such thing as free labor, right? Well, actually, there is. And we don't mean your own labor, or that of the nice uncle who will replace the brake pads for a 12-pack of beer.

At any one time, 11 million students in this country are preparing for jobs in auto repair, home construction, Web design, computer technology, horticulture, cosmetology . . . the list goes on. And in each class, whether it's at a high school, a community college or one of 1,400 vocational-technical centers, the instructional mantra is the same: to learn by doing.

By doing jobs for the public, students are exposed to real job dilemmas, real customers, each finicky and fickle brand. Just as important, the school gets reimbursed for materials. Wood, metal, paper, shampoo -- nothing has to go to waste.

Friends and faculty have been taking advantage of this unadvertised gold mine for as long as young people have been hammering out doghouses. But anyone can partake, as long as the work fits into the curriculum and the customer fits into the students' schedule.

So how much can you save? That depends on the price of the labor being cut. Auto-repair shops, for instance, typically charge between $65 and $120 per hour.

Even using a conservative rate, Dennis Neal figures he's saved more than $10,000 by taking his vehicles to Madison County Area Technology Center in Richmond, Ky. His last project -- a weeks-long, bumper-to-bumper troubleshoot of a 1979 Ford F-350 pickup -- barely nicked his wallet at $600 for parts. A garage would have cost more than $4,000. Oh, and he also had to pay a $15 school shop fee.

"They've helped me out a lot," he said. "They've saved me tons."

Money isn't everything

Neal, a retired U.S. Air Force jet mechanic, says he's compulsive about workmanship and prefers the school over some garages. The students have good tools, good training, a good work ethic and an attentive, honest instructor who "wouldn't let the truck out on the street if it wasn't ready for the road."

"In some ways we're better, because there are reputable shops and there aren't," said Art Coon, an auto-body teacher at the Wilco Area Career Center, in Romeoville, Ill. "Our students are taught the proper methods, where at some of the body shops they skip steps."

Treasure hunting in thrift stores
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At Wilco's body shop, students use only high-end coats and primers and can bang out a fender and repaint the adjacent panels for $100, a fifth the cost of a shop.

On the downside, it might take five days instead of two to get your vehicle back, and there's no free rental car. You could also get turned away altogether, if the shop is full or the students aren't studying your problem. And while instructors check each step, student shops don't guarantee their work and may ask you to sign a liability waiver (though no one, even a paramedic, expressed any qualms about safety).

Patience is required

In Oklahoma City, Tina Woodfork waited four months for her custom-built kitchen from Metro Technology Centers. Students often spend just a few hours a day in a skills class and work carefully, stopping for instruction.

The payoff for Woodfork's patience? Beautiful cabinets with raised panel doors and concealed hinges, an island and a counter for less than $1,000 -- the cost of the red oak the instructor bought at a contractor's discount. A professional would have had to charge $8,000 to $10,000 to cover labor, workers' compensation and insurance.

If you hire a student to build a Web site, keep in mind that he may call with frequent questions that an experienced designer would have anticipated early, or could tackle on his own.

"Customers might need a little more personal commitment to the project than they would going to a professional business," said Rodney Kozar, a multimedia instructor at the Auburn Career Center, near Cleveland, whose students create free slide shows and videos.

If these deals sound appealing, how about:

 A $5 haircut. Yes, some are still priced that low. BJ's Beauty and Barber College outside Seattle even gives free cuts to unemployed people and their families.

 Choice rib-eye beef for $7.99 a pound, about $3 less than market price. An agriculture school's meat lab might even flash freeze and shrink-wrap it. Some schools farm and sell fish.

 A three-course lunch for $4.75 at a culinary school. Or a five-course dinner for $25 at a five-star institute with a good bottle of wine at the distributor's price ($15 instead of $25-$40).

 Free tax preparation by accounting students, at evening clinics set up for low-income filers.

 A shed or doghouse built by carpentry students for a quarter the retail price.

 Computer repair from a budding techie. Let a student try to save your crashed system for $25 instead of several hundred dollars.

 Preschool classes for tens, instead of hundreds, of dollars a week, and with a high number of adults present.

 A pampering facial or an indulgent body wrap from a cosmetology school at half or a third the price of a salon.

 A dog grooming for $10 instead of $40.

 Flowers arranged at a wedding, for the price of the flowers only.

 Business cards, newsletters and posters printed by a graphics program at half the usual cost.

 A Web page for your nonprofit or small business in exchange for crediting the student on the site.

The pros and cons

It's possible to get custom-made work.

Neal, the auto customer, also brings designs to mechanical and welding students because they have a shop and because, outside, "the chance of finding a journeyman craftsman anymore is nil to none."

You'll find a friendly atmosphere.

If you want a private, quiet spa treatment, don't go to a beauty school, where students might work together in a large room. But if you enjoy eavesdropping, it can be a great place to pick up information. The same can be true at a culinary institute, where chefs-in-training may enthusiastically share their techniques.

The work available can vary.

A school's first priority is education. Your transmission rebuild might not align with the curriculum. Or you could luck out and become a class project. A Texas man got a 1947 Farmall A tractor restored to mint condition -- every bolt oiled -- by an agriculture mechanics class. He paid $4,700 in parts and the students put in 800 hours.

School services can be challenging to find.

Schools aren't out to compete with private businesses, and they don't advertise their services. To find technical schools in your area, check a U.S. Department of Education search engine or your state's department of education Web site for a listing (such as this one for Kentucky). You might luck out and find a section for consumer services on the school's Web site, such as this one at the Miami Valley Career Technical Center in Clayton, Ohio. If not, large schools usually have a public affairs office that can provide information. If that fails, simply call the school and ask for the department you need. Instructors (or students) can tell you what public services are available. Keep in mind that not only are students' hours limited, but many schools have spring and summer breaks.

Treasure hunting in thrift stores
If you're buying at retail stores you're wasting money. Follow Donna Freedman as she explores the local thrift store to find great deals you won't believe.

Remember to give back.

If you do get work done and walk away with a fat smile and a fat wallet, don't forget to express your gratitude with a donation. Students often use the money to take trips to skills contests. Consider giving back 10% of what you saved and feel good about being part of the educational process.

Published April 19, 2007