Building a nest egg, even in a bad economy

Securing your family's financial future can be challenging, even in good times. But during a bad economy it can be tougher to send the kids to college, buy a house or plan for your retirement.

Many financial experts offer the same advice, urging people to invest in mutual funds and contribute as much as possible to 401K retirement accounts.

However, innovative thinkers recently have begun to advance other ways to build for your future.

"Much of what we're taught about finances from the financial media, retirement planners, and our families and friends amounts to not much more than destructive myths," says Garrett Gunderson, an entrepreneur and author of the new best-selling book, "Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity."

Such experts as Gunderson caution against 401Ks and institutional investments or funds requiring you to let other people manage your money over a long-term period, during which you can't access your cash without paying a penalty.

The most important thing to realize is that everyone's circumstances are different and no single plan will apply to everybody.

According to Gunderson, it is critical to build six months of liquidity or emergency expenses. This may mean stopping contributions to longer-term accounts until this goal is reached. An emergency account will be vital in the event of job loss, disability or increased expenses, and will prevent incurring credit card debt in such circumstances.

The next place to allocate money is to pay down high interest rate credit cards. But making sure you don't have high interest debt is just the beginning.

Figuring out how to grow your money is key.

"I recommend people only invest in things that align with their passions, purposes, and knowledge, or what I call 'Soul Purpose.' With this in mind, there are a few possibilities to help people understand that many more and safer options exist than standard mutual funds and qualified plans," stresses Gunderson.

He recommends investing in things that provide immediate cash flow, are collateralized, and that you can control -- and to which you can add value other than with cash. These could include:

* Invest in your own business if you have one.

* Join a network marketing opportunity you believe in and build a business.

* Find investments in an industry in which you have expertise. For example, a plumber could research companies providing plumbing equipment and invest in one offering cutting-edge equipment that the individual understands. Or he could create and sell such equipment himself.

* Choose life insurance with guaranteed cash values. You can get rid of term insurance and recover lost opportunity costs, and get a higher return than most money markets and CD's. These plans also have tax and liability advantages.

And there are many ways to afford a house or send the kids to college.

Some Federal Housing Administration loans require little down payment and can be negotiated to have the seller pay the down payment. Many sellers are willing to do so if they are having difficulty selling. Additionally, many great first-time home buyers programs still exist, such as Home Trust.

Student loans, meanwhile, are a very inexpensive way to fund college. Other innovative options include having parents buy a rental property near the college, says Gunderson, then pay the child to manage it and rent it to other students. This also can help pay back student loans through cash flow or appreciation.

* For more financial tips, read Gunderson's new book, "Killing Sacred Cows" or visit www.garrettbgunderson.com.