Archive for the ‘Saving Strategies’ Category

Thou Shalt Save!
October 13, 2009

Jon Hanson is a new guest blogger for It’s Your Money.

Uncle Sam wants you! To have an IRA! Proposed in President Obama’s 2010 budget is a provision for automatic enrollment of employees in IRA’s for employers that do not offer traditional 401K plans.

The good:

  • It encourages savings, and even though you can opt out,few will. Jennifer Monnin of Nationwide Insurance, at an October 2008 National Savings Forum I attended in D. C. for America Saves, says 95 percent of Nationwide employees do not opt out of their auto 401K.
  • Cutting edge employers could add educational opportunities to the program and increase employee loyalty and stability. Employees with a financial plan and goals are less stressed and more productive.
  • Employers with less than 10 employees would be exempt and employees that earn under $5,000 a year would not be counted, according to Stephen Miller of SHRM.

The bad:

  • The matching contribution by the government is simply forced redistribution of taxpayers’ money. I would like to see the match be voluntary and by the employer.
  • If you do not initiate the savings, will you learn anything?
  • It could be a burden on employers: more burden, less jobs.

The New York Times offered this explanation of the government matching funds, “For households that earn under $65,000, the federal government will match savings up to $1,000 a year with a 50 percent tax credit. So if you saved $500, you would get $250 dropped directly into your I.R.A. This tax credit is refundable, which means you would get it regardless of how much you pay in federal taxes each year. The credit would phase out between $65,000 and $85,000 of household income or half of that if you are single.”

It takes legislation to bring it to reality: Read more: Automatic IRA Act of 2007 not final versions (S. �1141 �& H.R �2167). Other: CFED, Brookings, Heritage

Jon Hanson is the author Good Debt, Bad Debt and Gooddebt.com

A Best Bet Self-Improvement Book “… bracing, snappily written.”
– People Magazine

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6 Ways to Save for the Holidays
October 12, 2009

During the holidays, it is so easy to get caught up in the spirit of the season and to overspend. So, here are my top 6 tips for planning ahead to stretch your dollar this season.

  1. Start Saving Now. How many paydays do you have until the week before Christmas? How much will you be able to save out of each one? Add that up to determine your cash budget. If you already have planned ahead with a Christmas account, good for you! Add that to your cash budget. This total represents what you can afford to spend without going into debt.

Resolve Not To Use Credit. How many times have you started a new year with debt from the holidays? Now is the time to steel yourself against impulse purchases, guilt gifts, and gifts for yourself. Make 2010 the year you don’t carry debt forward.

Make a gift plan (budget). How much will you allocate to each family member or friend? Divide up your funds so that you know exactly how much you can afford for each person. You may really want to buy your brother that new Blu Ray player, but can you afford it? Or should you be looking for something less expensive? Thinking through these purchases will really force you to stick to your budget.

Shop Smart. The key is to either shop early or shop last minute to get the best deals. If you can start early, you have the luxury of time, and can shop online. Google for coupons, and look for free shipping. Make sure to cross items off of your list as you find them.

Make Personal Gifts.  Typically less pricey than buying something, but it is appreciated just as much.

Make A New Gift Giving Tradition. This might be the year that you propose the adults in your family draw one name to buy for. Don’t be shy to suggest new ways to celebrate the holidays with your family. Now is the time to make these plans, though, before everyone else starts their shopping.

I promise that if you act now, you will spend less money and lose less sleep over the holidays.

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What Will Happen When Frugal Isn’t Cool Anymore?
October 6, 2009

Lately, it seems that everywhere I turn, financial institutions and other organizations are boasting about the increase in the national savings rate. Personal spending is down sharply from 2007, while the national savings rate, which dipped below zero a few years ago, went above six per cent earlier this year, finds James Surowiecki of The New Yorker.

Up until October 2008, the U.S. was at a negative savings rate, which basically meant that, as a country, we spent more than we saved. With the availability of credit, and a strong economy, it was easy to adopt a “buy now, pay later” way of thinking. “There’s so much marketing pressure to spend and buy and have instant gratification. And if you can’t buy it now, put it on your credit card,” says Nancy Register, of the Consumer Federation of America.

In a recent blog post, Thomas J.Fox discussed the “Demise of Affluenza”. He cited a recent Consumer Reports survey that dubbed the new savings behavior intelligent thrift. With the unemployment rate rising, people have had to base their spending on needs rather than wants. Frugal is cool, only because there isn’t another choice. So, is the new savings rate truly indicative of changed behavior? Or, is this a fear mentality?

Once the economy improves, will this thrifty behavior continue? Or will many people simply return to their old ways of spending? History tells us that after 9/11 and the Great Depression, Americans went on a spending spree. Will this be the case for us? Or will the hard earned lessons of the past year pave the way for continued thriftiness?

For the sake of you, me, all Americans (and our nation) … I hope this time financial sensibility sticks around for good.

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Tips for Fall Savings
September 24, 2009

This week marked the first day of fall. It’s hard to believe that we’re already at that time of year, and that cold weather is right around the corner for most of us. In Kansas, we still have 70 degree days and thoughts of sleet and snow seem a million miles away. However, this is the perfect time to use that final warm weather to do some easy things around the house to save money.

Do you have a programmable thermostat? This is one of the best ways to save on your heating and cooling costs. Why pay for air conditioning on a cool day? Check with your local utility company, but KCPL offers a free programmable thermostat, valued at $300 if you sign up for their Energy Optimizer program. It’s all free, and the program claims to save homeowners 20% of their utility costs. Click here to learn about the KCPL program.

While you are at it, lower your thermostat 5 to 7 degrees at night. Your energy savings will increase as much as 3% – 5% for every degree the thermostat is below 68. This is easy to do with mild days and cool nights.

Clean or replace your furnace filters once a month or as needed.  Dirty filters can block warm air from the furnace and make it operate less efficiently, costing you money. Check online for cheap filters delivered direct to you. Check out websites like Furnace Filters Outlet which offer free shipping.

Weatherize your home by caulking and weather-stripping all exterior doors and windows. There are some inexpensive caulking tools at your local hardware store that are perfect for novices.

Another easy fix is to lock your windows to make the seal tighter and to eliminate drafts.

If you are really feeling the DIY spirit, wrap your water heater with an insulation jacket.  This will help the appliance retain heat by limiting the amount of heat lost to the air.

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Successful Saving Starts with Making It a Priority
August 26, 2009

At a financial education workshop conducted by a member of the Essential Knowledge team, our representative met Shonda, a young woman who said she couldn’t ever save money.

Every time she saved an amount, said Shonda, she ended up having to spend that money on bills. She was certain that she would never be able to save anything for the future. She believed it, too. She had a whole list of reasons to support her belief. Even though she was sitting in a presentation titled “saving strategies,” she was there to prove it wasn’t possible. Our team hears this perspective often.

Spenders usually have great excuses. I even find myself believing them at first.  These arguments can be very convincing.

** I will save more when I get my debt paid off.

** I will start saving when I have money left over at the end of the month.

** I don’t make enough money.

Will there ever be extra money left over? Are you really motivated to pay off your debt to start saving?  For almost everyone there is always something that needs to be purchased or fixed. Putting saving at the end of the list means you might as well leave it off the list completely. It just becomes one of those wishes and dreams that you hope to get around to doing one day.

So what makes a successful saver?  Someone who has stopped putting energy into why saving can’t work and is focused on how to make it happen.

Successful savers know that saving must be a priority. Consider Lyndsey, who comes from a family of spenders. Her husband, on the other hand, comes from a family of strong savers. They went through our financial education program and discussed their shared saving goals. Now, when she feels like indulging in retail therapy, she reminds herself of their plans.

Save the excuses. That’s the best way to become a great saver. Stop justifying bad behavior, and make a change. Excuses interfere with our ability to accomplish any goal in life, including saving. Even before you go through the act of putting money into a savings account, you must decide that your desire to build your savings is stronger than your desire to spend.

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