America Saves Blog
Tips, advice, and the latest news from the savings world.
July 5, 2012
By Dylan Tansy, America Saves Intern
Last week, TIME released an article detailing 7 commonly believed myths concerning credit. They point out the even though everybody knows the importance of earning “good credit” in order to obtain lower interest home mortgages, car loans, and credit cards, recent surveys have indicated that many Americans simply do not understand what goes into their credit scores or how to maintain a good credit rating. Some, wrongfully, think it’s necessary to hold a balance on their credit card to get a higher score or simply don’t know the impact of checking their credit. Even people who consider themselves financially savvy or who do a fine job managing their own household budgets can be misinformed. Consider the myths that TIME points out:
- Myth - Checking your credit information hurts your score. Many people believe that because checking your credit scores appears on your credit reports that it somehow has a negative impact. While an inquiry from an outside lender may drop you a few points, checking your own scores actually has a positive effect. Obtaining a credit report is a maintenance activity that should be done about once a year, and allows you to ensure no agency has incorrect information that will be a hassle to deal with when it comes time to obtain a loan. The three credit bureaus do not have identical information and mistakes do happen so check your credit reports regularly. You can obtain a free year credit report at www.annualcreditreport.com/
Have a safe and enjoyable Independence Day!
July 2, 2012
This article is part two of a five part series concerning the costs of having a baby.
Have you considered how you'll manage on the reduced income caused by time off for the pregnancy and birth? Be sure to factor in any potential loss of income if you and/or your spouse take unpaid leave. Even if you don't have disability insurance, your employer may be required to grant you time off under the Family Medical Leave Act (FMLA), but they're not required to pay you during that time – check to see what type of leave you may qualify for. If you take unpaid leave, calculate your regular expenses during that period (i.e. mortgage, utilities, insurance, groceries, etc.) and determine how you will meet those expenses.
One Income vs. Two
One of the most difficult decisions for new parents to make, is whether to have one parent stay at home full-time. This decision is often made based on financial considerations rather than emotional and developmental considerations. Here are some questions that might help guide your decision:
- Are both jobs paying off? A job is more than just income - it also includes expenses. There's gas and other transportation related expenses. You may eat out much more when working. You will need to pay for childcare while you are both at work.. Add up all of these work-related expenses to figure out how much you would really lose by staying home. It may not be as big a loss as you originally thought.
- Can you afford not to work? Subtract your income and work-related expenses from your budget. If that produces a deficit, see if you can eliminate or reduce any expenses but keep your savings as high as possible. If you need to start cutting back, it's best to start slowly. Keep trimming expenses and eventually, you may have cut enough to quit your job. Even if you can't, you will have learned to live more simply and have increased your savings in the process.
- What are the emotional costs? Some parents can't wait to get back to work after maternity or paternity leave. As beautiful and enjoyable as the parent-child relationship is, it can get stifling. Parents often yearn for the company and conversation of another adult, the satisfaction of working and the structure of a regular day at the office. If you decide to be a stay-at-home parent, make sure you receive the stimulation you need by getting out of the house once in a while, spending time with friends, or arranging a trusted babysitter so that you can spend some time taking care of only yourself.
On the other hand, many parents feel guilty leaving their child at daycare and have a hard time going back to work. They fear that they aren't good parents. But happy parents make the best parents. So working and coming home to spend happy, quality time with your child may be a better option than scrimping to spend 24 stressed hours a day with your child.
Looking for more savings advice? Here are some more articles you may enjoy:
June 28, 2012
By Katie Bryan, America Saves communication manager
A recent article revealed that the average couple spent $27,000 on their wedding in 2011. No matter how much your wedding will cost there are two important steps in keeping your costs to a minimum. Like planning for any large purchase it’s good to
Create a Wedding Budget and a Savings Timeline.
Setting a date and making sure you have enough time to save for your wedding are important first steps once you get engaged. You may want to pick a date and venue as soon as possible but take some time to figure out what kind of wedding you want to have and how much you want to spend. Be sure to give yourself time to save enough money for whatever kind of wedding you want.
Soon after you have had some conversations about what kind of wedding you want to have (local vs. destination, small vs. big, day vs. evening) sit down and take a look at the numbers. It’s hard when you start with an “ideal” vision in your head and then realize the cost is out of your budget. So before you make too many plans, sit down with your future partner and talk about how much you want to spend on the event. You may find it helpful to write out a range of the costs associated with all the different elements of your wedding. It’s amazing how quickly all the little items add up.
June 27, 2012
By Lila Quintiliani AFC, Military Saves Assistant Coordinator
Have you ever found yourself in the grocery store a day or two before pay day with a full basket of groceries but a low balance in your bank account? So you pull out your credit card to pay, hoping that by the time you get your next statement, you’ll have the money to pay, or at least pay the minimum? Do you routinely pay only the minimums on your credit cards? Do you take cash advances to pay your rent or your auto insurance?
If so, then you are not alone. A recent survey by the nonprofit group Demos showed that 45% of families with annual incomes under $50,000 are relying on their credit cards to pay for basic needs such as rent, utilities, insurance and food. And while the average credit card balance is down, from $9,887 in 2008 to $7,145 in 2012, this dip may be because many Americans have had their access to credit reduced or even taken away.
It’s true that paying with plastic is convenient. I can’t tell you how grateful I was that pay at the pump gas stations existed when I had two babies in car seats and a deployed husband. It’s also true that some credit cards have nifty rewards programs. I was able to buy my mom a plane ticket so that she could see a sick relative because of the points I accrued with our card. BUT if you are not treating your credit card more as a “charge card” and paying off the full balance every month, then you are starting down a slippery slope.