Finance, Goals, Money Management, Saving

Rebuilding toward a Brighter Future with Emergency Savings

By: Consumer Financial Protection Bureau (CFPB)

This year, for many Americans who experienced financial challenges as a result of the coronavirus pandemic, preparedness means taking small steps toward rebuilding and resilience.

If you are ready to think about your bigger financial picture for the first time in months, what’s the first step?

Consider – or start – your emergency saving fund. As you build it over time, it will help cover unexpected expenses that may come, whether that be a natural disaster, unexpected illness, car trouble, or other financial downfalls. It can become an important means for avoiding unwanted debt and help you more quickly realize your dreams. In short, it can become a strong foundation for your financial future.

There are different strategies to get your savings started. These strategies cover a range of situations, including if you have a limited ability to save or if your pay tends to fluctuate. It may be that you could use all of these strategies, but if you have a limited ability to save, managing your cash flow or putting away a portion of your tax refund are the easiest ways to get started.

Strategy #1: Create a savings habit

Building savings of any size is easier when you’re able to consistently put money away. It’s one of the fastest ways to see it grow. If you’re not in a regular practice of saving, there are a few key principles to creating and sticking to a savings habit:

  • Set a goal. Having a specific goal for your savings can help you stay motivated. Establishing your emergency fund may be that achievable goal that helps you stay on track, especially when you’re initially getting started. Use our savings planning tool to calculate how long it’ll take you to reach your goal, based on how much and how often you’re able to put money away.
  • Create a system for making consistent contributions. There are a number of different ways to save, and as you’ll read below, setting up automatic recurring transfers is often one of the easiest. It may also be that you put a specific amount of cash aside each day, week, or payday period. Aim to make it a specific amount, and if you can occasionally afford to do more, you’ll watch your savings grow even faster.
  • Regularly monitor your progress. Find a way to regularly check your savings. Whether it’s an automatic notification of your account balance or writing down a running total of your contributions, finding a way to watch your progress can offer gratification and encouragement to keep going.
  • Celebrate your successes. If you’re sticking with your savings habit, don’t miss the opportunity to recognize what you’ve accomplished. Find a few ways that you can treat yourself, and if you’ve reached your goal, set your next one.

Who is this helpful for: Anyone, but particularly those with consistent income. If you know you have a regular paycheck or money consistently coming in, you can create a habit to put some of that money towards an emergency savings fund.

Strategy #2: Manage your cash flow

Your cash flow is essentially the timing of when your money is coming in (your income) and going out (your expenses and spending). If the timing is off, you can find yourself running short at the end of the week or month, but if you’re actively tracking it, you’ll start to see opportunities to adjust your spending and savings.

For example, you may be able to work with your creditors (like your landlord, utility companies, or credit card companies) to adjust the due dates for your bills, or you can use the weeks when you have more money available to move a little extra into savings.

Who is this helpful for: Anyone. This is one important first step in managing your money, regardless of whether you’re living paycheck to paycheck or have a tendency to spend more than your budget allows.

Strategy #3: Take advantage of one-time opportunities to save

There may also be certain times during the year when you get an influx of money. For many Americans, a tax refund can be one of the largest checks they receive all year. There may be other times of the year, like a holiday or birthday, that you receive a cash gift.

While it’s tempting to spend it, saving all or a portion of that money could help you quickly set up your emergency fund.

Who is this helpful for: Anyone but particularly those with irregular income. If you receive a large check from a tax refund or for some other reason, it’s always good to consider putting all or a portion of it away into savings.

Strategy #4: Make your saving automatic

Saving automatically is one of the easiest ways to make your savings consistent so you start to see it build over time. One common way to do this is to set up recurring transfers through your bank or credit union so money is moved automatically from your checking account to your savings account. You get to decide how much and how often, but once you have it set up, you’ll be making consistent contributions to your savings.

It’s a good idea to be mindful of your balances, however, so you don’t incur overdraft fees if there’s not enough money in your checking account at the time of the automatic transaction. To help you stay mindful, consider setting up automatic notifications or calendar reminders to check your balance.

Who is this helpful for: Anyone, but particularly those with consistent income. Again, you can determine how much and how often to have money transferred between accounts, but you want to make sure you have money coming in. If your situation changes or your income changes, you can always adjust it.

Strategy #5: Save through work

Another way to save automatically is through your employer. In addition to employer-based contributions for retirement, you may have an option to split your paycheck between your checking and savings accounts. If you receive your paycheck through direct deposit, check with your employer to see if it’s possible to divide it between two accounts. If you’re tempted to spend your paycheck when you get it, this is an easy way to put money aside without having to think twice.

Who is this helpful for: Those with consistent income. Again, if you’re getting a check from your employer on a regular basis, pay yourself first by putting a portion of it automatically into savings.

It might seem impossible to save enough to get you and your family through something like a furlough, job loss, or reduced hours. But any amount can make a difference and it’s never too late to start. The more you can save, the better you can weather the worst, and the faster you can recover when it is over.

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Budgeting, Debt, Money Management, Saving

4 Steps to Spend Your Stimulus Check and Tax Refund Wisely

By: America Saves

Most Americans don’t have an emergency fund. While we’re all experiencing this pandemic very differently — some having only minor inconveniences and others finding themselves without a job or having to close their business — those without a savings cushion are vulnerable to feeling the ramifications of COVID-19 for a very long time.

With stimulus checks and tax refunds on the way, there will be tough financial decisions to make once received. Here are active steps you can take, along with things to consider to help you develop a solid spending plan.

  1. Make a list of all expenses

Write out every single expense that you have, including essentials like food and utilities. Be sure to go through your checking and savings account history to make sure you don’t have any “vampire” expenses, like monthly subscriptions that you may have forgotten about and no longer need.

  1. Talk to all creditors and lenders

The CARES Act puts into effect two mortgage relief provisions: protection from foreclosure, and a right to forbearance (pausing or making partial payments) for those experiencing loss of income due to COVID-19. However, the provisions are not automatic and are only for federal loans, so you MUST talk to your lender.

If a creditor/lender offers you a payment plan or other relief, make sure you get it in writing and take note of the names and dates of the customer service representatives with whom you speak.

Thankfully, some utility companies have announced they won’t cut off services if they aren’t being paid. Be sure you know all of your utility and service providers’ stance on this, so there are no surprises. You don’t want to make any assumptions.

If you cannot afford your DMP payments, contact your creditors directly to request for deferment on your credit cards. This will prevent your account from falling (further) past due and help to maintain your credit score. Creditors are making payment exceptions on a case by case basis. If you are granted a deferment from your creditors, please contact your CCC representative so that they can adjust your DMP payments.

  1. Prioritize expenses

Expenses relating to food, shelter, and medicine should come first. This would include mortgage, rent, utilities, groceries, diapers, and medications. It also includes medical insurance premiums and homeowners/renter’s insurance.

If you need childcare to work, that is another essential expense. Next in line are auto-related expenses, including transportation, gas, insurance premiums, and car payments.

Loans that are secured by collateral (for example, mortgages and auto loans) are generally considered more important than those without collateral, like consumer credit card debt. For example, if you don’t pay your mortgage, a bank can foreclose on your property; if you don’t pay your car loan, the bank can seize your car. While not paying your credit card bills will negatively affect your credit score, credit card companies will not come into your house and take your personal possessions.

Federal student loans are currently not accruing interest until September 30, 2020, and can be put into forbearance so that no payments are due. If you have a private or institutional loan, you will have to contact the lender for other options.

If you struggle to make the minimum payment on your credit card, call CCC at 800-557-1985 option 5 to add the account to the program for a total consolidation of your outstanding debts.

Expenses for “elective” items, like gym memberships, streaming services, and other subscriptions, come last. Before simply canceling a contract, make sure to contact the vendor – canceling may come with a hefty penalty, but you may be able to temporarily “pause” the service.

  1. Pay your debts in the order of priority.

Now that you know all your expenses, have prioritized them, and know your payment options with creditors and lenders, it’s time to make the payments in order of priority.

It’s important to note that many are still or will be receiving their tax refunds, too. If you receive a refund, you can apply the same process to that extra income.

Remember, there is no prepayment penalty on your Debt Management Program! Contact your CCC representative to apply your stimulus check and/or tax refund toward your balances and pay off your debts.

If you are still unsure or are overwhelmed with where to start, use our decision tree for guidance on what to do with your stimulus check and/or tax refund.

 
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Debt, Money Management, National Debt

Ask Chuck: The Bible, Money, and Love

By Chuck Bentley, Crown Financial Ministries

Dear Chuck,

I’m growing weary of our society’s overuse (and misuse) of the word love. I hear and see it in advertising, on social media, and in conversations. If the first and greatest commandment is to love the Lord our God, it appears we’ve confused our priorities. It appears we love money more than Him or His word.  

Love is in the Air 

Dear Love is in the Air, 

Thank you for the great question. I chose to answer your question so I could talk about love and money on Valentine’s Day. Did you know, Americans will spend an estimated $50 billion dollars on Valentine’s Day gifts and activities to show their love to a special loved one. My wife prefers that I save the money for chocolate or flowers on this day and show love throughout the year. 

Love and Money

You have identified a significant problem. When love becomes misunderstood or misdirected, we all suffer. Staggering debt levels, lack of savings, and rising stress suggest we have a spending problem and a heart problem. Even recently, experts have declared that when consumption turns into consumerism, it becomes a social disease

The enemy has convinced people that things will bring happiness. Yet, throughout Scripture, God warns us not to be led astray. He tells us:

  • Love God and others
  • Pursue love
  • Guard ourselves
  • Don’t love the world
  • Don’t love money
  • Life does not consist in the abundance of possessions

Just this week, the Wall Street Journal released information that hints at Americans’ disobedience and confused priorities. Credit card debt rose to record highs during the last quarter of 2019. Spurred by a seemingly strong economy and job market, spending increased dramatically. Unfortunately, the number of delinquent payments rose too. Consider this statistic cited in the article:

“Total credit card balances increased by $46 billion to $930 billion, well above the previous peak seen before the 2008 financial crisis, according to data released by the Federal Reserve Bank of New York on Tuesday.”

Debt brings stress and bondage. People are unable to live as God designed when they are strapped with debt. In today’s world that includes credit card debt, student loan debt, car loans, mortgages, personal and payday loans. It prevents many from saving money to be used as God directs. Bankrate’s recent poll shows that only 41% of Americans could cover a $1,000 emergency with savings. 

The Apostle Paul wrote: “You will be enriched in every way to be generous in every way, which through us will produce thanksgiving to God.” (2 Corinthians 9:11 ESV)

There’s only one reason God supplies a surplus of wealth to a Christian: so that he or she will have enough to provide for the needs of others. True wealth comes with the responsibility of giving. God promises blessings to all who freely give and His curse on those who hoard, steal, covet, or idolize.

Giving is the foundation of a life lived in selfless devotion to others. It fulfills the second greatest commandment, to love our neighbor as ourselves. Preoccupation with things of this world gets us sidetracked. We lose sight of our final destination and the purpose for which God has us here. 

Billions of dollars dedicated to credit card spending confirm that we have confused our wants and needs. We have forgotten our neighbor and the Lord’s statement: “It is more blessed to give than to receive” (Acts 20:35 ESV)

When asked about the greatest commandment, Jesus answered: “..you shall love the Lord your God with all your heart and with all your soul and with all your mind and with all your strength.” (Mark 12: 30 ESV)

Divided hearts have divided priorities and those are evident in the way we handle money. That is why He teaches us in Hebrews 13:5 “Keep your lives free from the love of money and be content with what you have because God has said, ‘Never will I leave you; never will I forsake you.’” (NIV) Here is a simple test to know if you love God or money. How do you react when you lose money? Are you in a panic, upset or even angry? Remember, our hope is in God, not the money that he provides. Money will leave us; He will not.

Save Your Way Out of Debt

One way to reduce stress is through automatic saving. The Eli app is a tool that can improve your financial health so you can experience greater levels of freedom in your life. Check out the new Eli app to begin an automatic savings program to reduce your stress and increase your freedom to love God and others as you faithfully pay off your debt. 

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Budgeting, Credit Cards, Finance, Money Management

Ask Chuck: Breaking the Cycle of Overspending

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

My husband is tired of my overspending. I struggle living on the budget he’s made because I make quick purchases rather than planning ahead. Then I feel guilty defending my decisions when the bills arrive. How can I get out of this cycle?

Spontaneous Spender

Dear Spontaneous, 

First, be thankful you have a husband who cares enough to make a budget. If only more people would do so! Next, let’s deal with the cause for the spontaneous spending so you can escape the cycle you are in.

Money and Emotions 

Money affects our emotions and our emotions affect our use of money. Experts understand this and market to your emotions – merchants from grocery stores, furniture marts, car dealerships, and online advertisers. They all target your feelings toward shopping. Learning to separate your identity from the things you buy will keep you from spending money to feel good. The term “retail therapy” implies that some people spend money to bolster their mood. It is a very real urge. I have experienced it myself and watched others do it as well. 

I had a friend who was competing for a big promotion in his company. Over multiple interviews and several months of consideration of all candidates, management selected someone else over my friend. The very day that he learned he was not selected, he went out and purchased a brand new, expensive car. The problem was he could not afford the car without the promotion but he had been dreaming of it for so long that he bought it anyway. In his own words, he told me that it was “retail therapy”.  

God’s Word makes it clear that we enter the world naked and we leave naked…and naked has no pockets. Since we can’t take any purchases with us when we die, we should become emotionally neutral towards our spending choices.

Avoid Spending Triggers

Certain emotional triggers can cause people to spend money. A few of the most common include:

  • Alcohol or hunger: lower inhibitions cause people to buy and regret later.
  • Anger or sorrow: spend to gain control, feel happy, find short-term gratification.
  • Loneliness: spending medicates briefly. But, materialism and loneliness are a self-reinforcing cycle.
  • Insecurity: try to keep up with the Joneses.
  • Self-focused: raises or tax refunds justify splurges or rewards.
  • Overwhelmed: spend on fast food, maid services, laundry, yard work.
  • Fear: causes hoarding or poor investments.
  • Guilt: spending to alleviate the pain inflicted on others.

Can you relate to any of these?

People justify spending when they are emotional because spending momentarily feels good. But, decisions based on feelings often create financial problems that further complicate life.

We cannot buy happiness. Spending and accumulating more money may not increase our well-being and can actually have a negative effect. But, wisely managing money, as a steward of God, is fulfilling.

Solutions to Your Urges and Splurges 

  • Create a budget and set goals.
  • Don’t go where you know you might spend money.
  • Resolve to make no impulsive purchases. Wait 24 hours if tempted.
  • Limit exposure to advertising and social media.
  • Delete or unsubscribe from sites where you waste time and face temptation.
  • Replace unnecessary time on the computer or cell phone with productive use of time.
  • Exercise or spend time with friends for lasting comfort.
  • Be accountable to your spouse or mentor.
  • Learn basic financial principles.
  • Avoid making big decisions when extremely emotional.

If you have true needs, take them before the Lord. The Apostle Paul teaches:

do not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God. And the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus. (Philippians 4:6-7 ESV)

Check Your Emotions

When did you last thank God for who He is and what He has done for you? Are you seeking satisfaction from people or things rather than the only One who can truly satisfy?

Thankfulness delays our need for instant gratification. Meditating on what God has provided can calm our emotions and prevent budget-wrecking purchases. Couple that with generosity and a heart of compassion, and our contentment can soar, bringing positive thoughts to light. 

Set your mind on things above, not on things that are on the earth. (Colossians 3:2 ESV)

In so doing, you will find that your heart becomes satisfied with the riches of Christ that is of much greater value than the things of this world.

A Final Tip

Consider some of Crown’s resources to help you and your husband get on the same page. My wife and I wrote a book together on this very topic. You can find it here and access numerous free resources on the Crown website. Thanks again for writing.

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Budgeting, Credit, Credit Cards, Credit Score, Debt, Money Management, Saving, Student Loans

Top 9 Money Mistakes People Make

By Jim Garnett, The Debt Doctor

After counseling average Americans about their financial problems for many years, I noticed early on that there is a common set of money mistakes people usually make.

Money Mistake #1: Being comfortable with debt.

Why would anyone choose to be a slave if he could choose to be free? One answer is because, over a period of time, one seems to develop a “slave mentality.” They have never known freedom and have gotten used to being slaves.

There is a very real sense that being in debt makes us slaves. The wise King Solomon wrote, “The rich rule over the poor, and the borrower is slave of the lender” (Proverbs 22:7 NRSV). Many in our society have been in debt so long, they have cultivated a “debt mentality.” Because they have never known financial freedom, they grow accustomed to being in debt and accept it as “the normal way of life.”

But just imagine what it would be like to be out of debt and not have a mortgage payment or car payment each month? Just think what you could do with all that money. Out of debt, you would not need as much money to live, and you would be free to use this money which was once tied up in debt payments for whatever you wanted.

Just think of being in your 30’s or early 40’s and being able to have discretionary monies of $2,000 to $3,000 a month. You could put a sizable amount away toward car replacement, house repair, or future education needs. And imagine what it would be like to be able to write checks to your church or charities that are sizable in amount.

Being debt-free would allow you the freedom to grow wealth quickly and give substantially.

It is high time we stop treating debt like an old family friend that has moved in to stay with us forever! We need to kick him out and send him on his way! There is no reason to remain enslaved to debt when we can be free.

Money Mistake #2: Not knowing what we spend each month.

The only part of the budget process that many people know is the “what I make” part. Most people are totally in the dark about the “what I spend” part. This money mistake is one of the main reasons why 40% of Americans spend more than they make each month. Sadly, most of that 40% are unaware that they do.

How can this be? Because by using credit cards each month, an illusion is created that makes us think we are doing fine financially. After all, the bills are getting paid on time. This may be true, but if the credit cards were put in a drawer and not used for two months, the bills would not, nor could not, be paid on time. Without the constant use of credit, we would see that we are running out of money before we run out of the month.

Being smart with our money, no matter what amount that might be, includes knowing how much we spend in relation to how much we make. Using credit hides that fact from our eyes. Once we determine what we are spending, we can bring our spending in line with our earnings by either spending less or making more.

To get to a destination, we must know where we presently are. That’s why the first step in money management is always to know what we spend.

Money Mistake #3: Behaving like credit cards are money.

Many people say they know that credit cards are not money, but their actions betray their words.

A college sophomore once told me, “No matter how broke I am, I always have money in my pocket with my two credit cards.” Like many, he was confusing the “buying power” of his cards with money.

But when we use a credit card, we are not spending money but borrowing money in as much the same manner as when we take out a loan at a bank. The buying power of our credit card originates from borrowing money from a creditor – we call that borrowed money “credit.” If that credit is not repaid within a certain amount of time, a high-interest rate is added to the debt.

I am convinced that if we actually viewed our credit cards as the ability to borrow money – money that must be repaid – we would greatly restrain ourselves in their use.

Money Mistake #4: Being satisfied with only making minimum monthly payments.

Interest.com calculates that paying off a $2,000 credit card balance with an 18% interest rate at a minimum payment of 2% would take 288 months or 24 years to pay off. So, if at age 30 you closed the card and just paid on it at monthly minimums, you would be 39 years old when you finally pay it off! But note, you would not have paid just $2,000 but $6,396.40 because of the added interest charges. I don’t know about you, but I work far too hard for my money to spend it like that.

Money Mistake #5: Borrowing to “pay off” debt. 

Borrowing to pay off debt normally backfires! It has similar results to digging a hole in our front yard so we can fill in the hole in our backyard.

This “money mistake” yields some pretty disastrous results:

  • Our borrowing does not actually “pay off” debt – it merely moves the debt to a different location. Now we have a second mortgage on our home or a loan against our 401(k).
  • The debt we pay off by borrowing usually reappears within 3 years. This occurs because our borrowing makes it unnecessary to change our spending habits.
  • Borrowing against our home equity turns an unsecured debt into a secured debt. That’s why the interest rate is now less – the bank would rather loan against our house than loan against our name because it is less risky.
  • Borrowing against our 401(k) often has a 10% penalty if we are not 59.5 years old, plus the monies we borrow are taxed as income. At times, 40% of the monies taken from a 401(k) loan will “disappear” in penalty and taxes.
  • If we move again, our house produces very little profit because we have increased the mortgage balance, plus there is little to put down for a down payment on our new home.
  • When we are old enough to retire, we often cannot because our home is not paid off. We still have house payments to make because we borrowed against it to “pay off” debt.

Borrowing to pay off debt does not decrease our debt, and often we are worse off than we were before.

Money Mistake #6: Co-signing a loan.

It’s great to help somebody get a loan, but it’s critical to understand the risks before doing so. There’s a reason the lender wants a cosigner: The lender isn’t confident that the primary borrower can repay in full and on time. If a professional lender isn’t comfortable with the borrower, you’d better have a good reason for taking the risk. Lenders have access to data and extensive experience working with borrowers.

The co-signer promises to repay the other person’s debt if, for any reason, he does not. The liability assumed is for 100% of the debt, thus, if $5,000 is the total amount borrowed, the co-signer is responsible for the entire $5,000 if the other person defaults.

Also, the co-signer’s credit score can be affected if the primary signer makes late payments or misses payments on the loan. Currently, 75% of student loan co-signers end up making payments on the student loan.

Money Mistake #7: Having no emergency savings.

A recent survey asked people if they could get $2,000 for an emergency. The results revealed that 55% of the respondents said they could get the money within 30 days, but 92% of those people said they would need to borrow the money from family, friends, bank loans, or credit cards.

Another survey revealed that 28% of the 1,000 people surveyed have absolutely nothing in savings. In other words, many people are simply not prepared for emergencies.

Money Mistake #8: Creating debt for tax benefits or to establish credit.

Debt for Tax Benefits. It is good to claim every deduction that you can on your taxes, but it is often not good to spend money in order to get a tax deduction. An example would be the deduction one is allowed to take for interest paid on a mortgage loan. If I paid $10,000 of interest and was in a 25% tax bracket, I would receive a tax deduction of $2,500. If I absolutely had to pay the interest, I would surely deduct it. But if I had the choice of paying my home off and having no interest to pay, that would be my choice by far. I would rather have the $10,000 non-spent money in my hand than receive a $2,500 tax deduction. I may pay more tax, but on the other hand, if I gave monies to charities, I would receive the same deduction. Remember, you often have to spend your money to receive tax deductions. If you are not careful, you can “tax deduct yourself into the poor house.”

Debt for Establishing Credit. One of my clients followed the advice of her financial counselor and bought a house in order to build up her credit score! In order to establish credit, you simply need to pay your bills on time. You do not need to maintain debt to do this. You can establish your credit just as well by paying your credit card balance in full each month.

Money Mistake #9: Thinking that good credit is the most important thing in life.

Good credit is important, but it is not the most important thing in life. The main benefit of having good credit is being able to go into debt with good terms. But what if we decide we are not going to go any further into debt and work out a plan to get out of debt and stay out of debt? Then the benefits of good credit are not nearly as important to us.

To me, the benefits of living debt-free are much more important than the benefits of having good credit. It is true that most people who live debt-free also have good credit, but it was not their good credit that allowed them to become debt-free. It was their living within their means and discontinuing the use of credit to create any further debt.

Mind you, I am certainly not advocating that one should have bad credit. I am simply stating that getting out of debt and staying out of debt is much more important than having good credit.

The benefit of observing and sharing these money mistakes is that they allow us to learn from the mistakes of others.

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Activities, Kids & Money, Money Management, Saving

Six Fun Ways to Save as a Family

By: America Saves

Meeting financial goals as a family can be challenging. But inspiring your family to help and contribute to a financial goal doesn’t have to be a painful process, especially when the result is an exciting vacation, a car, or college savings. Here are some ideas on how to save as a family for all those items and bucket-list experiences:

1. Gamify It!

In my family, we often make a game of who contributes to a joint family pot for that month’s fun activity. A game of Monopoly can turn into a real contest, as anyone who loses is asked to contribute a small amount to that month or week’s activity of choice (such as a meal out, or movie). Of course, contributions should be proportional to earnings – teens might contribute $5 from their part-time job or allowance, while adults would be expected to contribute much more. Still, the spirit of the game is focused on sharing and enjoying together – and because everyone has a stake, we enjoy it all so much more.

2. Making Money Can Be Fun

Every year around the holidays, my entire extended family likes to take a vacation somewhere warm, so we start planning and saving a year in advance. By each contributing to the holiday vacation fund, our money goes much farther, and we’re often able to visit really cool places we might’ve not otherwise afford. Of course, if we can easily afford to contribute our share, we do so, but when money is tight, we find fun ways to raise cash for our share of the contributions. Last year, for example, some of my cousins hosted a bake sale. Others sold items they’d knitted, art piece they’d produced, and so forth. All of the proceeds went straight into the family vacation fund.

3. Sell, Sell, Sell!

A family garage sale can be an enjoyable and rewarding way to raise extra cash for shared activities or purchases. If your family wants a new flat-screen TV, game console, or other pieces of technology or furniture, why not start by selling what you already have and don’t need? A traditional garage sale is one good way to raise cash, as is selling unused items online (this tends to be the better option for selling electronics and gadgets).

4. Match It!

Often, children’s only way to save is to use their holiday or birthday gift money. It can be challenging for kids to save money they so badly want to spend and enjoy immediately, so it’s important to offer incentives for doing so. One idea is to match dollar for dollar every bit of money they save from their gifts. That ensures kids get the immediate gratification of knowing their saved gift money is being doubled, but also enables them to feel empowered by having chosen to save and contribute to family goals.

5. The Envelope Method

When saving for multiple goals, the envelope method is an excellent way of keeping all the monies separate for their intended uses. Simply mark each envelope with a stated goal, and contribute regularly to each until the goal amount is met. For small children, it can be rewarding to contribute to smaller family goals, such as ice cream or a movie rental. A $10 or $15 goal can mean a $1 or $2 monthly contribution from their allowance. This helps children learn the value of saving, and builds confidence in their ability to do so.

6. Your Credit Union Can Help

Your local credit union can be an excellent resource for helping your family save together. From traditional savings accounts or CDs to holiday savings accounts, your credit union can help you select a financial product that can help your family in reaching its shared goals faster. For larger goals, in particular, a shared family account can be an excellent resource for keeping your family on track to realizing your financial wishes.

Family can be great accountability partners when it comes to saving! Make a savings goal, and choose a reward to celebrate once you accomplish it. Create a fun tracker so everyone can see your progress! 

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Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Money Management, Personal Goals, Saving

Credit Cards: Considering Credit History

Considering Your Credit cONSUMER-cREDIT

Do you have credit card accounts that you don’t use? Are you thinking about closing these unused accounts to clean off the slate? Read this article to learn more about the effects of closed accounts on your credit history.

A Fair Isaac representative reported that closing accounts does not directly hurt one’s credit score, regardless of whether it was closed by the cardholder or the credit grantor. That’s the good news. The other side of the story, and there is always another side, is that closing accounts indirectly affects your credit history and therefore, your credit score.

Closing Credit Card Accounts

Closing unused credit card accounts can increase one’s credit utilization ratio. Credit utilization is a measurement of the difference between one’s available credit and the amount being used. This figure is calculated by taking the sum of your credit card balances and dividing that by the sum credit card limits. One’s credit utilization ratio directly affects credit scoring. Simply put, the higher one’s credit utilization ratio the lower his or her credit score.

How does this come into play with regards to cancelling unused credit cards? The unused credit cards have low utilization since the entire credit limit is available. This offsets the higher utilization that one’s other credit cards may have. Thus, it reduces one’s overall credit utilization ratio boosting his or her credit score.

Putting that into perspective, let’s say you have a credit card with a $5,000 credit limit and another card with the same. That’s $10,000 of total credit limit. Now let’s say you spend $2,500 on one card and some minor purchases on the other, which you have paid off. Your total balance, or debt, is $2,500, which equates to a credit utilization of 25%. If you were to close the card with no balance, your overall credit limit would decrease to $5,000, which would in turn increase your credit utilization ratio to 50%.

Considering Credit History

Closing credit card accounts can also lower one’s credit score by reducing the credit history age. Credit age is essentially that. How old are your accounts? In the credit scoring world, the older the better. Age is one representation of stability. Since older is better when it comes to credit card accounts and credit scoring, if you’re thinking of closing old unused accounts, think again. These accounts can actually help your credit score. Keep in mind, however, the FICO score does take into account both closed and open accounts, and closed accounts can remain on a credit history report for up to a decade.

Setting all that aside, if keeping credit card accounts open leaves an open door to more spending – close them! Better to be financially free of debt and its negative impact on your finances, which we all know can lead to increased stress. And, who needs that!?

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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    Christian Credit Counselors, Credit, Credit Cards, Credit Counseling, Debit & Your Credit Score, Debt, Debt Settlement, Finance, Goals, Investing, Money Management, Personal Goals, Saving

    Financial Planning: A Dose of Truth and Grace

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    Planning for a Financial Planner

    So you’re considering a financial plan! Perhaps your finances have told you that you need one. Planning with purpose for your financial future is a noble task. Sure many good things come to us in unexpected surprises, but planning for a good future, especially when it comes to finances, is a wise strategy indeed! You’re reading this article because financial planning interests or excites you, and just doing so is taking the first step.

     

    Financial planning is a well marked plan to thrive financially, and I don’t know anyone who doesn’t want a secure, successful financial portfolio. It’s never too late to start making changes and never too late to pursue financial freedom. The key is: start where you are. Don’t dwell on where you have been or the mistakes and poor choices that you may have made. Everyday is a fresh start to the life you want to live, to the best you yet!

    Your Dreams, Desires, and Goals

    You have dreams, desires and goals. Everyone does. But, not everyone lives in such a way as to see them come to pass. Why do some succeed where others fail? Why do some thrive while others seem to strive after the wind? Not all of life’s answers come sugarcoated and some pills are hard to swallow. But, taking in wisdom, advice and eating humble pie is good for us all. With humility comes honor, and sometimes taking a long, hard look at ourselves is truly a humbling endeavor.

    Finances are a major test and testimony of our maturity and level of personal responsibility. It’s important in the process of self-discovery to admit the truth about your behaviors and choices and the effects they have had on both your life and the lives of those you influence, whether for good or for bad. Be sure to give yourself a healthy measure of both truth and grace. As imperfect people, who make not so perfect choices, grace is something we all need.

    Consider Your Financial Peace

    Start today by considering who you are, who you want to be. Consider what your financial situation looks like and what you want it to look like. Consider what it will take to get you there. Look at the situation objectively. Keep negative thoughts and emotions at bay. You are strategizing, planning, preparing and leading. It takes a strong mind and a strong spirit to be a good leader. The first person you lead is always yourself. And the truth is, if you can’t lead yourself, you really can’t lead others, not well, anyway.Financial grace is not a credit card with no limits and no consequences. If you charge, you owe. Same goes in life.

    Your material choices have consequences, both positive and negative. Grace goes the extra mile, however. It says, “Yes, you are where you are, but…you don’t have to stay there, and you certainly don’t have to return.” Grace gives us the opportunity to make a change, to make the change we desire. It helps us to feel empowered to walk out the lifestyle we want for ourselves and to make the daily choices that both get us and keep us there. Mary Poppins should have said a spoonful of grace helps the medicine go down.

    Planning Short and Long Term Goals

    As you begin to plan, look at both short and long term goals. Write out the steps it will take to accomplish them. With your basic plan in hand, your road map, determine if further help is needed to bring clarity or to implement your newly devised strategy. Share your newfound view with others and invite them to partner with you where appropriate. Your close family and friends are key players in the game called “your life.” And, be proud of who you are because no matter where you’ve been, what you have or have not done, you are this day, an overcomer.

    Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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      Payday Loans: Borrower Beware

      Considering Payday Loans

      Strapped for cash? Thinking of getting a payday loan? Think again! Payday-Loan

      It may be tempting to get a payday advance to hold you over for a week or two until your next paycheck. What could be the harm? The industry claims they’re providing needed credit to consumers who aren’t able to qualify for conventional loans. The industry claims they are helping those hurting for cash. However, many financially wise see these businesses as predatory. They could even be comparable to old-fashioned usury, luring the borrower further down debts beaten path – dead ending at a financial crisis.

      Understanding Payday Loans

      Payday lending, or cash advance, is a practice of using a post-dated check or electronic account information as collateral for a short-term loan. Borrowers simply need identification, a bank account and income from a job or benefits, such as Social Security or disability.

      Loans aren’t dependent upon the borrower’s credit history. By design, this loan process keeps borrowers in debt. No matter the claim, these businesses are not there to help people out of a bad financial situation. Generally, these lenders don’t accept partial payments. When you can’t pay it off on time and in full, you have to renew the loan.The interest and fees add up quick and become shackles, keeping you in the cycle of debt. According to the Center for Responsible Lending, 90% of payday loans go to repeat borrowers—five or more loans per year. They’ve also reported that these lenders receive $4.2 billion in fees from Americans each year.

      The Ins and Outs of Payday Loans

      Let’s say you need a $400 loan and plan to pay it back with your next paycheck. You are required to give a post-dated check for $460 and receive in return the $400 cash. The lender agrees to hold the check until your next payday. Then, when the loan is due, the borrower has the option to redeem the check by paying $460 in cash, or renew the loan, known as flipping. Flipping involves paying off the $460 by taking out a new $400 loan, or allowing the lender to cash the original check. The finance fee of the initial loan is, in this case, $60, or 390% APR! If the borrower decides to renew the loan three times, which is what most do, the finance charge will end up being $240 – just to borrow $400!!

      You can see from this example why this practice is very dangerous and controversial. Critics argue that the lenders are exploiting those who are already desperate because of their current financial crisis. Borrowers get trapped in a cycle of debt. Payday lenders depend on this, and they love the repeat borrower. Because of the controversy, fifteen states have made payday lending illegal.

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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        Debt Collectors: Know Your Rights Against Wrong Practices

        Doomsday Debt Collectors debt1

        Debt collectors may be within their right to pursue repayment, but you should know how to protect yourself against doomsday debt collectors and their extreme tactics.

        Fair Debt Collection Practices Act

        First, you should be aware that there are laws in place that govern the practice of debt collection. The Fair Debt Collection Practices Act was written for your protection and is enforced by the Federal Trade Commission, our national consumer protection agency. This Act covers a variety of debts, including personal and household, but not business debt. Examples of covered debts are: home, auto, medical, and credit card debt.

        The Facts about Debt Collectors

        • May not use abusive or deceptive tactics
        • Must send the debtor a validation notice within 5 days of initiating contact
        • Written validation notice must include: amount owed, the creditor to whom money is owed, and what to do if the debtor says they don’t owe
        • Must contact during reasonable hours (Ex. not earlier than 8 a.m. or later than 9 p.m.)
        • May not attempt contact at a person’s work (with a written or oral statement)
        • May contact third parties for a person’s contact info (often limited to one time)
        • Must contact your attorney, if you are being legally represented
        • May not discuss the details of the debt with those outside of the debtor, debtor’s spouse or representing attorney
        • Must stop contacting the debtor upon receipt of a written notice by debtor indicating the debt is not owed or seeking proof (within 30 days from date of validation notice)
        • May continue to contact the debtor once proof of debt has been provided

        Putting a stop to Debt Collection

        Your first conversation with a collector should be an attempt at resolution. Determine whether you owe the debt. Depending on the outcome of that initial conversation, decide how you will proceed. If you want to stop a collector from contacting you, provide it in writing. Be sure to make a copy of everything you send and mail the document by certified mail with a return receipt. From that point, the debt collector may tell you that there will be no further contact, or they may indicate their next step. If a creditor still wants to collect from you at this point, they may pursue legal action by filing a lawsuit.

        In the event that you are sued by a debt collector, respond or have your lawyer respond by the date indicated in the lawsuit to stay within your rights.

        Reporting Debt Collection Misconduct

        Notify the Federal Trade Commission and the Consumer Financial Protection Bureau of a debt collector who doesn’t operate within the bounds of the law. Additionally, inform your state Attorney General’s Office, and inquire about the state laws that differ from the Fair Debt Collection Practices Act, as well as, your rights.

        Christian Credit Counselors is a non-profit organization that was created to help individuals and families regain control of their finances through the use of educational tools, credit counseling and other resources. For more resources, visit www.christiancreditcounselors.org.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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