You can save big by doing very little — and sometimes nothing
Digging for spare change in between your couch cushions can get tiresome very quickly. Instead, focus on ways you can maximize your savings without having to get off the couch in the first place. We know that may seem too good to be true. But, we would never steer you wrong because we want you to achieve financial growth.
5 Saving Strategies in Today’s Economy
Everyone knows that saving money isn’t nearly as much fun as spending money. But many people think saving money is harder to do than spending it. Actually, you can save money in just a few minutes, and sometimes, you can even do it automatically. That’s what we’ll talk about today.
While the pandemic taught us many lessons about our physical health, it also taught us lessons about our financial health. Before the pandemic, emergency savings seemed like something of a luxury. Now we know it’s a necessity. Do you have three months of living expenses saved up? More than half of American adults do not. And that’s a serious problem.
5 Simple Saving Strategies
So let’s dive right in and talk about saving money, even if you don’t think you have anything left at the end of the month to save. The first step is the most boring, but it’s the most important. And it’s not hard to do. Know what it is?
1. Create a household budget
No one likes to hear the words, “make a budget.” But it’s so easy to do it these days. If you don’t relish the idea of putting pen to paper, there are scads of websites, apps, and programs that handle the drudgery of budgeting. Many of them cost nothing and the ones that do cost only a few dollars. Here’s how they work.
One of the most popular budgeting tools is called Mint. Another is called Personal Capital. But a lot of banks and credit unions offer similar programs on their websites for their customers. Basically, you just type in your income and expenses, and these programs do the math for you. You can even project your savings if you eat one less takeout dinner, or if you refinance your mortgage. The software does the heavy lifting!
If that’s a little too techy for you, there’s a middle step. Websites like Tiller let you download customized spreadsheets that stay on your computer, and you can easily personalize them. Quicken has software that’s been around for decades and most of us are familiar with. Each solution has its pros and cons, but they all work. So, it’s really up to what makes you feel the most comfortable.
2. Save money at work
Why not get paid while you’re saving money? More than 9 in 10 Americans are paid through direct deposit, and almost all of them have access to a neat feature: You can direct some of that money AWAY from your checking account. You can send it DIRECTLY to a savings account you don’t normally see. Imagine if you send even $10 a week to a savings account. At the end of the year, you’ll have more than $500. And you literally spent a few minutes setting it up, then did nothing the rest of the year!
Direct deposit also works very well when you get a raise. Just divert that extra money into a savings account. You won’t be tempted to spend it because you never got used to having it, and you don’t constantly see it in your checking account. To set up multiple direct deposit streams, simply talk to your Human Resources or payroll department. They can walk you through this easy process.
Where you work might offer valuable services that can save you big. One of the most popular is a 401(k), which helps you save for retirement. What’s so special about a 401(k)? Many employers match a portion of your contribution to this retirement account.
According to government research, the average is 4.3 percent. That means for every dollar you sock away for later; you get 43 cents. Doesn’t sound like much, but when you consider a savings account is paying less than 1 percent in interest, that’s suddenly a lot. Also, the IRS gives you some money, too: By not taxing what you contribute. And since this is for your retirement, which is a long way’s off, those savings will build up over time.
Another big workplace benefit is called a Health Savings Account, or HSA. It does the same thing as a 401(k), except you set aside money for healthcare instead of retirement.
We could spend an entire webinar talking about these lucrative benefits, but we suggest you chat up your HR department. Believe it or not, they WANT you to take their money. Why? Because companies that offer these benefits know their employees will appreciate them. Those employees are more likely to stick around and work hard. So let your bosses help you save! Just talk to your HR department. They WANT to help.
3. Make a phone call
So we just mentioned talking to your HR department. You should also talk to the people you owe money to. Why? Because they might help you save, too! I know that sounds off, but it’s true.
If you’ve had a credit card for many years and you’ve been a good customer, you can call the number on the back of the card and get some concessions. For example, you might be able to shave down your interest rate if you mention another card has offered you less – and in five minutes online, you can surely find one, then mention the new card and lower rate to the representative. If you’ve never been late before, you can often get the first late fee removed as a gesture of good will. You can also move your due date, so it corresponds better with your paychecks, so you never get caught short and need to float that balance a little longer.
You can also call about any debt you’ve incurred for medical procedures. We’re not talking just hospital bills and doctor’s fees. Even dental work and lab fees can be negotiated. Medical providers are well accustomed to such negotiations. Just contact the billing department and politely inform them you can’t afford to pay the full bill right now, but you’re a responsible person. What breaks can you offer? Remember, be polite!
When NOT to pick up the phone
Avoiding scams is another webinar we offer, but here’s rule number one: Never do anything just because someone is calling you. One of the most popular scams is a phone call from the IRS saying you must pay back taxes RIGHT NOW or the police will be summoned. For starters, the IRS never calls you, they only send letters. And never mind that there hasn’t been a debtor’s prison in this country for two centuries. If you ever get angry phone calls demanding money, at least ask for a callback number. If they won’t give one, you know it’s a scam. And if they do, check the Internet to make sure it’s listed.
Now let’s talk for a moment about a topic no one likes: debt collectors. Who likes people calling them all the time and asking for them to pay bills they can’t afford to right now? Here’s the thing about debt collectors: They can’t just bother you any time of the day, and they’re not allowed to threaten you at any time. That’s important to know, and it’s important to let them know you know.
Federal Debt Collections Practices Act
There’s a federal law called the Fair Debt Collection Practices Act, or FDCPA. The FDCPA bans debt collectors from being abusive. For instance, it says they can’t call you before 8 in the morning and after 9 at night. They can’t call you at work if you tell them not to. They’re not even allowed to swear at you. If you’re getting harassing calls from debt collectors, just Google the letters F-D-C-P-A and you’ll get a list of your rights. Then tell those debt collectors you know about your rights – and how to report them to the federal authorities. That usually settles them down very quickly.
4. Try these proven debt-busting programs
OK, we’ve reviewed how to budget your money, how to save your money, and how to stretch your paycheck. But what about all the debts you already have? How can you get rid of that? If you owe so much you see no way out, know this: There are proven programs that can help. The problem is, they can get confusing. They even sound the same. So let’s quickly review debt consolidation, debt management, and debt settlement. Then we’ll tell you where to get more information.
A debt consolidation loan is simply a personal loan you use to pay off all your credit card bills with steep interest rates. You might be able to get a personal loan of between 36 and 60 months from your bank or credit union at 6 percent, then use the money to pay off your credit cards that are charging you 20 percent. Then you simply make one monthly payment on the personal loan. Usually, you get out of debt faster AND make a smaller monthly payment, which is the definition of a win-win. It’s not a perfect solution, though. If you have too much debt and bad credit, no one will give you the loan in the first place. In that case, you might want to try our next option…
A debt management program, or DMP for short, is basically an agreement between you and your credit card company. They’ll freeze your penalty fees and lower your interest rate if you agree to make regular payments. Those payments go through a credit counseling agency you partner with, and you make one payment that covers any credit cards you put under the DMP. So you pay less and save time, too. So what’s the catch? DMPs aren’t free. It costs money for staff to administer them. But that fee is rolled into your monthly payments, and it’s miniscule next to the savings you’ll reap. That’s probably why DMPs have been around for decades, and they’ve saved Americans millions of dollars. Sadly, you can’t just sign up for a DMP on your own. The credit card companies work exclusively with nonprofit credit counseling agencies.
Debt settlement is the next step up in both results and complexity. Debt settlement seems like the best option of them all. In a nutshell, you negotiate with your creditors and pay them only a fraction of what you owe. Why would your creditors agree to this? Because they don’t want you going broke and paying nothing. The national average over the past few years is 48 percent – which means most folks in debt settlement don’t pay back 52 percent of their debts. Sounds like a great deal, right? Sadly, it’s not always the case. Because debt settlement is now being advertised so widely, it’s worth spending a few moments reviewing the three major downsides.
First, some creditors will outright refuse to settle with you. And they don’t have to. Second, while a DMP doesn’t hurt your credit score long term and can actually help it, debt settlement will RUIN your credit score. You’ll have trouble getting a decent mortgage, auto loan, or even credit card. Finally, debt settlement has many ethical practitioners, but there are also many scams out there that you need to watch out for.
5. Get professional help
If you have crushing personal debt, we suggest you Google these three ideas. But how do you decide which is the best option for your situation? That’s where credit counseling comes in. It’s the best place to start, and it’s completely free.
When you call a certified credit counselor, you receive a free debt analysis. These counselors are trained to ask you the right questions and study your financial strengths and weaknesses. If a DMP is what you need, they can set you up. If another option is better, they’re required by law to recommend it to you. So how do you find a good credit counseling agency? It should be around for many years – decades, hopefully. It should have certified counselors, which means they take a standardized test to ensure they know what they’re talking about – and they have to retake it every two years. They should have the highest rating for the Better Business Bureau. And finally, they should have many excellent reviews from reputable review websites like Trust Pilot and Consumer Affairs…
Now, this is where my personal bias shows through. I work at Consolidated Credit, which has been around for three decades and helped millions of Americans. We have an A-plus rating with the Better Business Bureau and excellent reviews – which I encourage you to seek out. Don’t take my word for any of this.
If you have questions about anything you’ve heard here today, feel free to reach out to us. I know we moved briskly today, so we’re available anytime. Our mission is to help you achieve financial freedom, and these presentations are like the tiny spoon you get at an ice cream shop – it’s just a taste of everything we have to offer. So thank you!
Consolidated credit may be able to help you save money and get out of debt faster than you can on your own. Our licensed and trained credit counselors will provide you with that free budget analysis I mentioned earlier. We work with your creditors to lower your interest rates and eliminate fees. We consolidate your credit card debt into one low monthly payment. Simply give us a call, free call, free conversation at 1-800-210-3481. Speak with a certified credit counselor and you can start your path to getting out of debt today. Or you go to our website which is www. consolidatedcredit.org.