America Saves Blog
Tips, advice, and the latest news from the savings world.
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.
June 26, 2012
By Preston Cochrane, President and CEO, AAA Fair Credit Foundation & Utah Saves
This article is part one of a five part series concerning the costs of having a baby.
Part I: Knowing the Price
Whether you’re already pregnant, thinking about having a baby, undergoing fertility treatments, or considering adopting, the best thing you can do to prepare for this life-changing event is to start a baby budget, and save as much money as possible. Even if all you can save is $50 a month, it’s important to do what you can. It’s not so much the amount that’s important but the consistent action that matters. Once your baby arrives, your world as you know it will be turned upside down.
A report released in June 2012 by the U.S. Department of Agriculture found that a middle-income family with a child born last year can expect to spend about $235,000 in child-related expenses (food, shelter, and other necessities) from birth through age 17. That’s a 3.5 percent increase from 2010, and a 23% hike from 1960 (when the USDA first issued the report).
There are thousands of baby products on the market, most of which you can do without. First, focus on the basics of what you and your baby can’t go without, and then narrow down how much you have left over to spend on the nice-to-have items. When figuring out all the things you will need to purchase before the baby arrives, it’s best to have a planning session with your spouse and an experienced parent or support group. This will be extremely helpful to work as a team and determine what essential items you need before the baby is born.
June 25, 2012
By Katie Bryan, America Saves communications manager
Almost anyone can afford to own a home with proper preparation. Develop a savings plan to build up money for a down payment at purchase, for moving expenses, and for post-purchase emergency expenditures such as needed home repairs. Remember, the larger your down payment, the lower your home loan payment.
1. Prepare Yourself for Homeownership Financially
America Saves can help you develop a plan with regular monthly deposits in a bank or credit union account. At the same time, reduce your credit card debt and other debts in order to increase your ability to afford a house. Lowering these debts will increase your credit score and your chances of getting a lower-interest loan.
2. Get Qualified for a Home Loan Before you Look for a House, Condo, or Co-op
That will give you some idea of whether you can afford to purchase a home and, if you can, at what price. Make certain you contact at least three lenders, including your primary financial institution. This will help ensure that you get the least expensive loan for which you can qualify. Be especially skeptical of uninvited loan offers you receive through the mail, by telephone, or at your doorstep.
After being with my boyfriend for five years we started to talk about marriage. Eventually, the conversation moved to the topic of rings. As we know, rings come in all shapes, sizes, and price ranges and I knew I wanted a nice ring. I don’t have many family heirlooms and I was excited about buying something to pass along to future generations. I know that traditionally the man saves for the ring, but I wanted to help save for this large purchase. I didn’t want my future husband to go into debt over the ring, as “his” debt would be “our” debt soon enough. So we sat down and agreed on a budget and a length of time to save for.
I really enjoyed saving towards what we ended up calling “the secret savings fund.” Saving for the purchase together taught me a lot about our savings habits and proved that we could save successfully. We opened a separate savings account and deposited money into it each month. As we got closer to our goal I got more excited about the possibility of a proposal.
June 21, 2012
By Kelley Long, is a Chicago-based financial coach and member of the National CPA Financial Literacy Commission
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There are many resources available that discuss how to save for big goals like retirement, a new car, a home, etc. But what about saving for something more immediate like a computer or piece of furniture? The same principles apply, only the end game is much closer.
Having something specific in mind is the first step to achieving any goal. Remember the SMART rule, which says that to increase the chance you'll achieve a goal it must be:
For example, let's say you've finally found the perfect dining room set to replace the hand-me-down one you've tolerated through your children's growing-up years. You've imagined how lovely the holidays will be with this new furniture in place, but you don't have the cash to buy it today. Rather than using a credit card, try this process to get those table and chairs in time for Thanksgiving dinner: