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DO YOU KNOW THE RULES OF FINANCIAL LIFE?

Life is always easier when you know the rules, even if you sometimes break them.

And when it comes to money and finance, there are many rules to know. Some are based on financial planning principles and the average American family, others on religious precepts and actuarial tables.

Here's a quick reference guide:

How much you should spend on your mortgage, including taxes and insurance? Not more than 25 percent to 28 percent of gross monthly salary, according to the Mortgage Bankers Association of America. People do take, and pay off, mortgages that are bigger than that. But lenders say once you go beyond these guidelines, it starts to impede the ability to repay.

How much debt should you carry altogether? A mortgage, home equity loan, car loan, student loans and the rest should not exceed 33 percent to 36 percent of monthly gross income. Even that is a high percentage to pay in debt.

How much of a monthly balance should you carry on your credit cards? Trick question; the rule here is zero. Starting in 1991, none of the interest charges paid on credit cards is deductible, so there's no reason to carry credit debt. Pay it off and clear it every month.

How much you should save? Conventional wisdom once was that you needed emergency savings worth six months' salary. But that was before unemployment insurance and working spouses helped mitigate many emergencies. Now, many planners say a three-month emergency fund is sufficient. For years now, Americans have saved about 4 percent of gross incomes each year, on average. That's not great, but is a minimum.

How much life insurance you should carry? The National Insurance Consumer Organization says workers in families with young children should carry life insurance equal to five times their annual salaries. That's on top of the one year's salary policy that many companies offer as an employee benefit.

What about disability insurance? Washington financial planner Susan Freed says you can figure your monthly disability insurance benefit by subtracting all other sources of income (spouse's salary, investment income, etc.) from your minimum fixed monthly income. And remember that the benefit will go further than your salary would since it's not taxable as long as you paid the premiums yourself.

When should you refinance your mortgage? According to the Mortgage Bankers Association, there are two things to consider: mortgage rates and how long you will stay in your home. Look to refinance when prevailing mortgage rates have fallen 2 full percentage points from the rate you currently have. That includes enough of a margin to pay new costs associated with refinancing, an association spokeswoman says. It will then take three years or so to get ahead of the refinancing costs, so don't refinance unless you plan to stay put at least three years.

When to invest tax free? If you are in the 33 percent tax bracket, or next year's 31 percent bracket, consider it. In the 28 percent bracket, take a case-by-case approach. Figure comparable returns like this: Subtract your tax rate from 1 and divide the remainder into the expected tax-free yield to get the comparable taxable yield.

For example, if you're in the 28 percent bracket, looking at a tax-free investment paying 7.3 percent, divide 7.3 by 0.72 (which is 1 minus 0.28), and get 10.14 percent. Unless you know where to get 10.14 percent on your money, the 7.3 percent investment would be a good deal.

How much should be spent on food, clothing and transportation? According to the Labor Department, the average household spent $3,748 for food in 1988, the last year for which figures are available. That's 14 percent of total expenditures and works out to about $1,441 a person, based on an average of 2.6 people per house. For clothing, the national average was 5.7 percent of expenditures, or $573 a person, and for transportation, including automobile purchases, the average was 20 percent, or $1,959 a person.

What about giving? Many people who make well under the national averages give 10 percent of their incomes to charity. The Private Sector Council, a Washington-based trade group of charitable organizations, urges Americans to give 5 percent of their money or their time to a good cause.

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