10 ways to get your financial house in order: want to seize control of your finances, once and for all? Here are some powerful steps to get you there.

IT WAS ABOUT A YEAR AGO THAT LEO Clark decided he finally had enough. The Los Angeles-based actor woke up, looked at his sleeping wife, Mary Anne, and then at his son, L.J., who was 6 months old. Facing mounting debt, he decided to change his financial life then and there.

"I said, 'The buck stops here,'" says Clark, who was a professional basketball player in Europe before turning to modeling and acting. "I didn't want my son to face the same financial struggles I did growing up. So I began to set goals, I got aggressive about knocking out debt, I read book after book on money management. I was fed up."

It's only been a year since that moment, but score one for Clark and his wife. The couple has erased $32,000 in debt, slashed their spending by $1,500 a month, and cut up some of their credit cards. Now with the end of debt in sight, they're planning to sit down with their financial planner and begin investing for the long term, with retirement funds and a college savings plan for L.J. All because Clark swore that morning to change his financial habits forever.

Clark's story is far from unique. In an age of outsourcing, stagnating wages, and debt-loving consumers, many Americans are seeing the prospect of true financial security recede into the distance. In 2006, the national savings rate was in negative territory for the second year in a row, and people have been living large off their home equity just as the housing market is starting to crater. It's a recipe for financial disaster.

"As a culture, we've lost touch with financial reality," says Glinda Bridgforth, a Detroit-based money coach and founder of consulting firm Bridgforth Financial. "We live beyond our means, we try to keep up with the Joneses, and we just don't think about the reality check of the long term."

That's why we've assembled 10 ways to get your financial house in order, right here and right now. They range from common-sense moves like starting to save early and decreasing your spending, to investing strategies like diversifying and reducing your fees, to proactive steps such as improving your health and boosting your insurance coverage.

These are critical steps because money isn't just a number on a bank statement, it represents larger issues of security and quality of life for you and your family, as Clark discovered. Coupled with your own determination, these 10 pointers will put you on the proper path to true financial security.

1. ATTACK YOUR SPENDING

When it comes to saving, Michelle Cover and her husband, Champana Bernard, are very serious. The two employees of Virginia's Fairfax County--she's an adoption social worker, he's a quality assurance consultant--have two children, ages 7 and 2, and wanted to set the table for a more prosperous future. So when they sat down with their financial planner, Rita Cheng of Ameriprise Financial Services in Bethesda, Maryland, and got serious about saving, they decided to focus mercilessly on their spending habits. "We cut back on eating out and we didn't go on extra trips anymore," says Cover. "Just being mindful of how we spend our money has saved us up to $1,000 a month."

Though painful, such saving can uncover buckets of money you didn't even know you had. Financial author David Bach calls it the "latte factor." A few bucks a day, like the cost of a daily latte, might not seem like much, but put aside and compounded over decades, it can actually represent many thousands of dollars. "Don't underestimate the little things and how they can add up," says Bridgforth, author of Girl, Get Your Credit Straight! (Broadway; $19.95). "You have to know where your money goes before you can make any real plans to change."

To rein in spending, follow these tips from the experts: For a month, write down every last penny you fork over, so you can figure out where the leak is. Then cut out those items you want, as opposed to truly need. Also, pay cash for almost everything, because using credit cards is so painless that it's easy to rack up huge bills.

2. SLASH FEES

When you're investing $5,000 or $10,000 in a mutual fund, generally the last thing you're thinking about is the "expense ratio." That's the seemingly innocuous fee that the fund culls off the top for its services. But don't just breeze over that small stat, because it's actually a terrific predictor of your fund's future performance.

After all, that small charge is taken out of your eventual returns. "In investing, there are only a few knowns, and fees are one of them," says Del Stafford, a principal with mutual-fund giant The Vanguard Group. "Clearly, the lower the fees you're able to obtain, the more returns you're able to generate."

A rule of thumb: If you're being charged more than the U.S. large-cap equity fund average of around 1.2%, it's time to rethink your choice. Especially if it's an index fund, which means it's just tracking a sector or the broader market and doesn't involve the research and expense of a stock-picking investment team. Expect a larger expense ratio if your fund is actively managed and if it contains foreign stocks.

Also, consider exchange-traded funds, or ETFs, which are similar to mutual funds but almost always have lower expense ratios. A final no-brainer: Avoid "load" mutual funds, which charge you a hefty sum just for the privilege of investing with them. There is such an array of quality no-bad options these days--from respected fund shops like Fidelity, Vanguard, and T. Rowe Price, among others--that you can save yourself thousands of dollars right off the bat.

3. START YESTERDAY

Clark is hardly an old-timer by anyone's calculations. But he's already kicking himself about what could have been. "If I knew at 21 what I know now," he says. "My wife and I look at each other and say, if we had started saving back then, we could have been multimillionaires by now."

That's because of the power of compound interest. Here's a chilling example from Vanguard: If Dawn starts at 25 and chips in $2,000 a year until age 35--then stops forever--she'll end up with almost $315,000 by age 65, assuming a return of 8% a year after expenses. But if Dave starts at 35 and contributes the same $2,000 a year, all the way to retirement, he ends up with less than $245,000--even though he's actually put in far more.

Hardly fair, maybe, but that's how important a head start is. "Start early, please," urges Clark. "Just trust me."

4. DIVERSIFY, DIVERSIFY, DIVERSIFY

Unless you can somehow divine the future, you should probably hedge your bets and spread your wealth among numerous asset classes. That way, if one area tanks--the stock market, bonds, or real estate--you won't be wiped out, and the other sectors will mitigate your losses.

It's called diversification, and for most people their preferred mix of investments changes as they get older. Younger investors are content with a healthy percentage of higher-risk equities, because they have such a long-term horizon and can weather any temporary storms. Those closer to retirement tend to lean more toward safer bonds or cash.

Even within a stock portfolio, you should periodically review your holdings to make sure that you're well diversified with a potpourri of large-cap, mid-cap, and small-cap companies, and foreign as well as domestic assets. "Diversification is the cornerstone of any good portfolio," says Lee Baker, head of financial advisers Apex Financial Services and president of the Financial Planning Association of Georgia. "Asset classes never perform in lockstep with one another, so the closer you can get to your target rate of return with the less risk, the better."

5. COVER YOURSELF

Let's say you've done everything right: prepped your retirement accounts, stocked your kid's 529 college-savings plan, built up an emergency fund. Then it's all gone, in an instant.

That's what can happen if you haven't secured sufficient insurance coverage in every aspect of your life, including life, home, and auto. By safeguarding what you have, playing defense becomes your best offense. A few rules of thumb: Secure 10 times your annual salary in life insurance if possible, to give your family a worry-free future. And consider disability coverage, enough to replace 60% to 70% of your income. "Most people out there don't understand the value of their ability to earn a living," advises Baker, who says it's the single area where most Americans fall short. For more information on what amount of coverage is right for you, do your due diligence by visiting the Insurance Information Institute's Website (www.iii.org), where you can research the basics and link up with the right insurer in your home state.

Cover and Bernard weren't about to fall into the trap of thinking that nothing could ever happen to them. As a result, they have term life policies of $350,000 each, took out additional life insurance through their employers, and even secured their own disability policies. "It makes us feel a whole lot better," says Cover. "So if something ever happens, we'll have enough coverage to handle it all."

6. AVOID THE BANDWAGON

Think back only a few years, and you remember a classic investing bandwagon: tech stocks! Only fools weren't investing! They're making everyone rich!

Of course, they quickly made many investors very poor, when the market imploded in 2000. Such is the danger of "chasing" returns, or betting on sectors that have already outperformed the market for an extended time period. It can be hard to resist the lure of a hot sector. But if your ultimate investing goal is to buy low and sell high, out-of-favor sectors offer the most promise, not the ones that have been soaring for a long time.

Current sectors that some have accused of reaching bubbleesque proportions are emerging markets, energy, and real estate investment trusts (REITs), all of which have charged ahead for years at double-digit returns. "Whatever is the big investing idea today, it'll be something else next week" says Baker. "Just because it was hot yesterday doesn't mean it's the right thing to do now."

7. STAY FIT

Have you noticed that more and more corporations are starting wellness programs to encourage things like physical fitness and healthy eating? Sorry to say, but it's probably not because they care a whole lot about you. It's because it's going to save them money ... a lot of it. Being proactive and instilling positive changes now, as opposed to paying for costly medical issues down the road, just makes sense for company health plans.

The same principle applies to you personally. In America's confusing and dysfunctional healthcare environment, the best thing you can do to stave off medical bills in the future is to look after yourself right now. Otherwise, you might face a condition like diabetes, which now affects 11% of African American men and more than 13% of African American women. That could not only destroy your quality of life but erode your career potential and throw your financial plans off track.

"Being healthy is a huge part of our long-term plan," says Clark, whose fitness regimen as an athlete has extended into his post-basketball life as well. "I work out four days a week. I watch what I put into my body. It not only keeps you healthy, it gives you the energy you need for other things in life."

8. GET TO KNOW UNCLE SAM 

It's not seditious to say there's no reason to pay the IRS any more than you have to. In fact, you should take every legitimate avenue possible to reduce your taxable income every April 15.

First, take advantage of all tax-sheltered vehicles available to you. That means 401(k)s, traditional IRAs, and even 529 college-savings plans, many of which offer tax incentives for in-state residents. Flexible-spending accounts also fall under this umbrella, because they allow you to use pretax cash to pay for non-covered medical expenses.

Next, be aware of every deduction available to you as a taxpayer, including recent changes and additions. For instance, parents with children in college and self-supporting students can now claim $4,000 in higher-education tuition and fees. Or if you've made energy-saving changes to your home, you get a 10% tax credit up to $500.

On the investment side, remember you can claim investment losses up to $3,000 in any given year. And if you're donating stock to charity, know that you can claim its full value on the day of your contribution--not just what you bought it at originally. "For a tax-efficient portfolio, consider low investment turnover, index funds with low capital-gains distributions, and perhaps taxfree municipal bonds in your brokerage account," says Vanguard's Stafford.

9. KEEP IT SIMPLE

Here's a dirty little secret of the investment business: Indexed mutual funds clobber actively managed funds. Your odds are far better if you just plunk your money in a simple fund that tracks the entire stock market. No mess, no worry.

It might not be the sexiest investment style, but it delivers. In the last 10 years, more than half of actively-managed funds have lagged the S&P 500. The reason is fairly intuitive: If managers are siphoning off a percentage for their own work then the majority will necessarily underperform the market.

Another way to simplify: So-called "target date" funds, which are geared toward a projected retirement. They not only give investors a diverse blend of investments in a single fund but automatically shift your investments into safer holdings as you age. So instead of fretting over the relative performance of 10 or 20 different investments, you can do one-stop shopping in a single fund.

10. CALL IN THE CAVALRY

Time to face up to your limitations: You can't be expected to follow the market as closely as a wealth manager, whose job it is to make you money. So consider delegating, and let a financial adviser do the heavy lifting. Find an accredited professional on the Website of the Financial Planning Association, www.fpanet.org. Or if you're concerned about paying commissions, you can opt for a fee-only planner. You can look for such a planner on the Website of The National Association of Personal Financial Advisors, www.napfa.org.

An adviser can design a road map to get you where you want to be. It was only sitting down with their financial planner that lit a fire under Cover and Bernard. "Our planner calculated how much we would have in 20 years if we did increase our saving, and how much if we didn't," remembers Cover. "The difference was more than $300,000. It was shocking."