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  • Archive for the ‘Debt’ Category

    Putting America Saves Week Into Action– Step 2: Paying off high-interest debt

    Tuesday, February 25th, 2014

    ASWGraphicBefore I begin talking about what I did to deal with debt, I wanted to share an inspiring story with you about one of my co-worker’s friends. We’ll call her Sarah.

    Sarah was a single mother whose first marriage ended very poorly. She received no financial help from her ex-husband, so she began to accumulate credit cards, and thus debt. It certainly was not ideal. When she met her current husband, he also had some financial concerns. He was carrying an interest-only mortgage on his house, which he had bought from his first wife. In Sarah’s own words, “it was a financial mess.”

    Sarah and her second husband made it a priority to get debt-free. They converted his mortgage to a conventional one so they could refinance it and begin making payments on the principle. They focused on paying off higher interest loans first, used annual bonuses to pay off credit cards, and paid more frequently (every two weeks). Now, five years later, they are debt-free and down to one credit card, on which they make sure they pay three or four times the minimum payment every month. Sarah and her husband also contribute the maximum amounts to their 401(K)s to get the corporate match. She says that the big thing that helped was agreeing to a policy of not using a credit card unless it was an emergency (like unexpected car or house repairs). Focusing on getting her debt under control has made her and her family’s finances more secure for today and for the future.

    My story is different from Sarah’s, but it still involves taking a closer look at how I manage my credit and debt.  Today, I took a look at my credit cards. I personally am a fan of company or store cards – Macy’s, Target, etc. While shopping, these offer some great ways to save. The downside: many company specific credit cards have high interest rates. Some are 24%. I always pay more than the minimum, which is a BIG WISER basic, but I usually pay attention to the total amount on the card, not the interest rate when deciding how much to allocate to each card.

    piggy bankIn honor of America Saves Week, I took a second look at my interest rates, and then I put my cards in order based on interest rates from highest to lowest. I wrote this list down and saved it to my computer. Now, each month when I go to pay my cards, I can apportion my money based on the interest rates of my cards.

    I also took a second look at the “offers” that come with these company cards. If they have such huge interest rates, am I really saving that much along the way?  Target, for example, offers 5% discount at the counter, but then a 22.9% APR will cost me in the long run if I am unable to pay off the total amount each month. Instead of canceling it, I am inspired by Sarah’s idea of implementing a self-regulating policy. I will only use my company credit cards if I am able to pay the entire amount of my purchase. Basically, if I do not have money in my bank account to cover it, I won’t use the credit card. This way I can pay with my credit card and get the discount, but I will not have to worry about the awful interest rate when the bill comes due. I will also think twice about opening up any additional credit cards, since the more credit I have available, the more likely I may be to use it.

    The truth is most of us have some type of debt that we need to pay off. While each story is different, we can all work towards a better outcome like Sarah. Your story may be different, but you can still take the same steps to fight your debt.

    What is the highest rate of interest you’ve seen on a credit card? How do you curb the temptation to charge a “splurge” purchase to your credit card that you don’t have the money to pay off right away? Let me know in the comments!

     

    A Little Help on the Road to Financial Independence

    Monday, July 2nd, 2012

    On this 4th of July, when we celebrate America, we also know that many Americans are struggling to get by in this difficult economy.  The good news is that numerous city and state governments and also the federal government are trying to help. Here are a few programs that might help you, your friends or your family, to save money, stay in your home, pay down debt, and move towards a more secure, independent financial future.

    Mortgages: A number of federal programs are helping people who are struggling to make mortgage payments. The America Built to Last program is a federal program helping service members and responsible homeowners pay down their mortgages. The Making Home Affordable Program is another federal program that aims to help homeowners get mortgage relief and avoid foreclosure. The deadline to apply has just been extended to December 31, 2013. To talk to a federally-approved housing counselor who can help you understand your options, prepare your application, and work with your mortgage company, call 888-995-HOPE (4673) or for the hearing impaired, call 877-304-9709 TTY. Local and state governments also have mortgage assistance programs.

    Bills & Expenses:  State and local governments and organizations can help in many ways, from medical bill assistance to free legal advice. The National Council on Aging’s Benefits Check Up website can help you find state and local resources for covering health care, prescription, and food costs for yourself or for other older members of your family. The Low Income Home Energy Assistance Program (LIHEAP) is a federal program that can assist you in paying your home energy bills. It is important to stay cool in the summer and warm in the winter, and LIHEAP can help you stay safe and healthy in your home.

    Legal Advice: The Legal Services Corporation (LSC) is a non-profit that was established in 1974 with the goal of promoting equal access to justice in America and to provide high quality civil legal assistance to low-income persons. Nearly 75% of their clientele are women.  Today LSC is the single largest source of funding for civil legal assistance to low-income Americans, and deals most frequently in cases involving Family Law, Housing & Foreclosures, Consumer Issues, and Income Maintenance.

    Jobs: The Hire Heros Act and Veteran Retraining Assistance Program are federal programs that specifically help the veterans of our country find jobs. For recent grads who are struggling to pay down student debt, some cities are creating special incentives that can help you. In an effort to attract new brain power and reverse trends of declining resident populations, some cities are offering to pay off the student loan debt for people who come to live and work in their city, as a way of enticing new, young residents to their communities.

    A New Year to Invest in Your Financial Future

    Wednesday, January 19th, 2011

    The New Year presents us all with an opportunity to reevaluate our priorities and make some new year’s resolutions. Sometimes we have a habit of creating really extravagant goals for ourselves each year, hoping that this year will be the year to change it all. But by the time the New Year ball drops again, we often feel disappointed that we didn’t accomplish all we had in mind. This year, let’s resolve to make some financial resolutions that will stick!

    WISER’s mission is to help you create achievable savings and investing practices that can be maintained for a lifetime. To help you create your own unique, financially savvy path towards retirement, we have put together resolutions—one for each month—that are realistic and attainable. Take this opportunity to start fresh in 2011 with new goals for your financial future. Then when the ball drops on this year, you will be on your way to a more secure retirement. From all of us at WISER we wish you a happy financial new year in 2011!

    12 Helpful Tips for Each Month of 2011: Click here to print out your own copy for the fridge or your desk to remind you year round!

    1. January – Resolve your budget.
    Even if you feel like you are swimming in debt or living paycheck to paycheck, the first step to taking control is knowing how much money is coming in and where it is going. Our budget worksheets can help track where your money is going and help you establish some firm financial goals. Simply taking the time to calculate the numbers and having them right in front of you can be empowering and help motivate you to get (and stay!) on track.

    2. February – Invest in your financial relationships.

    This month, take time to sit down with your partner, spouse, significant other, (or even just yourself) and review all of your finances – look at what you spend each month, make sure you are both aware of each other’s employee-sponsored or other retirement plans and assets, review your insurance needs, and create an organized file with your important documents. Try not to let it become an overwhelming conversation, but make it your goal as a Valentine’s day gift to yourself and your loved ones to have a financial discussion about the future.

    3. March – Prepare for Tax Season.

    A quick way to immediately start saving before your tax refund burns a hole in your pocket is to have your tax refund automatically put into a savings bond. Visit the IRS website for great information that can help you fill out your tax forms so that you can instantly start saving with government bonds.

    4. April – Start a “Rainy-day” fund.

    April showers bring May flowers, and this month is a great opportunity to start a “rainy-day” fund. Many experts recommend having about six months’ worth of expenses in a savings account to cover sudden unemployment or other emergencies. Of course it will take some time to build up to this amount, but resolve this April to start stashing away some money each month, even if it’s just a small amount, for that rainy day.

    5. May – Show Mom you really care.

    May is a time to celebrate our mothers and all the other women in our lives who have done so much for us over the years. A great way we can show our mothers and other older relatives our appreciation is to make sure they will have the financial assistance they need in retirement. Take time this month to have a conversation with your parents or others who may depend on you down the road about their caregiving needs and retirement plans. Helping them now will also help you in the long run. Visit the National Alliance for Caregiving for great resources on this topic.

    6. June – Take a vacation from your finances by paying yourself automatically.
    Put yourself at the top of your “payee” list. Regular automatic deductions from your paycheck or bank account into a savings, investing or retirement account will keep you on track toward your short and long-term financial goals. Commit to save as much as you can each month, but if you don’t feel like you have a lot to save, start small. Find a way to save even just $25 a month towards your retirement goals.

    7. July – Kick the summer doldrums by taking a long-term view.
    Summer months give us the opportunity to slow things down and appreciate the long days of summer. This is good time to think long-term about your retirement needs.  Take some time this month to play around with a retirement calculator and start to get a sense of what you will realistically need. Don’t let this task overwhelm you, but instead try plugging in different scenarios and allow yourself to plan for the future. A good calculator we recommend can be found at www.360FinancialLiteracy.org, specifically the Retirement Planner Calculator.

    8. August – Feeling the heat of debt?

    Let’s admit it; most of us have some pesky debt that is hanging over our heads. Take this month to face the heat and organize your debt. Resolve to stop adding to your debt and start making some headway on paying it off. Check out WISER’s Debt Warning Signs Fact Sheet to see where you fall when it comes to financial debt, and what you can do to start getting out of it.

    9. September – It’s back to school time, so educate yourself.
    If you are not already investing your money and feel overwhelmed by the thought of things like stocks, bonds, and mutual funds, then commit this month to educating yourself on these topics.  Read at least one book or informational booklet that covers the basics of investing.  You do not need to be an expert in finances to successfully plan and save for retirement; a little knowledge of the basics can go a long way. WISER’s booklet, “What Everyone Needs to Know About Money and Retirement” is a great place to start.

    10. October – Trick or Treat? Understand Financial Scams.

    Sometimes it’s hard to tell whether or not something is a great financial opportunity or just too good to be true. Use October as the time to educate yourself about financial scams and abuse that unfortunately happen more often then we’d like to think. WISER’s Too Good to Be True Checklist can help you spot a financial scam, and our Elder Financial Abuse Brief can also help you look out for those you love. Then share this information with a friend or family member to help protect them too!

    11. November – If you have benefits at work, give thanks! And learn how to maximize your options.

    For many companies and organizations, November is benefits enrollment season where you can sign up or make adjustments to your benefits. Take this month to learn more about your individual benefits and how you can make the most of them.  To help you think about this, check out WISER’s brochure “20 Ways to Take Advantage of Your Company Benefits Plan”.  If your company does not offer a benefits plan, take this time to research what you can do on your own, like opening an IRA (Individual Retirement Account).

    12. December – Celebrate your financial success.

    As the year comes to an end, celebrate all that you have accomplished this past year. Look back on all of the financial strides you have made and commit yourself to keeping up those goals and improving upon your success next year. If for some reason you were unable to meet your financial goals, then take this month to recommit to your financial future and to making each month count in 2012. One month at a time can make all the difference when it comes to saving for retirement.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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