Don’t Make Sacrifices — Spend Smart
It seems that all of us are having to make some changes to adjust to the shifting economy. But trying to save money shouldn't force you to sacrifice your way of life. That's why it's important to learn how to spend smart. Additionally, it's important to learn why your efforts to save aren't — as some might suggest — prolonging the recession. Finally, it's critical to learn the best way to save so that you have a personal safety net. Find out how you can adjust comfortably to the new economic climate.
Why Do I Need to Save?
While this question might seem silly to some, the United States had the lowest rates of personal savings when compared to 19 other major industrialized countries.† Savings as individuals and as a nation are critical to provide a safety net for unanticipated expenses and times of economic turmoil. Additionally, with decreasing access to credit, a focus on personal savings has become imperative. Savings can also help generate capital that can be invested, promoting economic growth and keeping interest rates low.
Doing Your Part:
We often hear that our efforts to save could, in fact, hurt the economy. While this may be the case if every American began hoarding all of his or her discretionary income, preventing this money from circulating back into the economy, simple steps to increase personal savings will undoubtedly boost the economy by providing stability and increased capital. In this current climate of depressed home values and shrinking credit lines, building up a strong savings can help provide you with a safety net should an unexpected expense arise. If everyone took steps to create these personal safety nets, the economy would benefit from the increased stability.
Saving Doesn't Have to Hurt:
Now that you know the importance of saving, you can rest easy; saving money doesn't have to mean giving up all of life's little pleasures. In fact, focusing on the little things may help you save MORE in the long run! How many times have you heard that cutting out your trip to the coffee shop could save you $60 a month? But, if you enjoy that daily cup of coffee, you could just as easily save that money by spending a weekend night in, watching a DVD instead of going to the movies, or consolidating grocery trips and sticking to a list. In many ways, those changes are much easier than sacrificing a coffee break — or whatever small indulgence makes you feel good — during your day.
Additionally, make your savings automatic and you're far less likely to feel the sting. If you are able to have part of every paycheck directly deposited into your savings account, you'll hardly notice the difference. Also, try to be frugal with what you otherwise might have considered "found" money. Your tax returns, for example, are a great source of money that can be saved for when it's needed. You worked hard for that money, and it's important to spend it wisely. Taking simple steps could save you big — literally — without having to sacrifice your way of life.
Tip of the Month: What the Stimulus Package Could Mean for You
With all of the news circulating around the economic stimulus package and housing plan, you might wonder how to get some of that money into your wallet. There are three ways that you may be able to take advantage. Find out how!
A lower mortgage rate:
While in recent times it has been nearly impossible to refinance unless your home had a certain amount of equity, times have changed. Now you may be eligible to refinance your home even if you owe more than what the house is worth. Qualification depends on a number of factors, but given the new economic conditions, it's worth learning more about and considering whether refinancing your home would be a good option for you and your family. Not everyone qualifies, so be sure to contact your lender for details.
Health Insurance Coverage:
As the number of layoffs appears to increase by day, the government has stepped in to temporarily help continue health care coverage for the unemployed. Before, you would have to pay to maintain your employer's healthcare, but now the government will subsidize up to 65% of your monthly premium for up to nine months. Eligible people include those who have lost a job since Sept. 1, 2008 and earn under a certain amount. While concerns over layoffs are still very real, this step by the government can help ease an otherwise overwhelming situation. If you think you may qualify, be sure to consult your former HR department with any questions you might have.
Time for an auto upgrade?
You might think that times of economic downturn aren't the best time to consider buying a new car, but due to the economic stimulus package — and aggressive pricing — that may not be the case! Depending on your adjusted gross income, you may be able to deduct the state, local and excise taxes you pay on any new car, SUV or motorcycle you purchase in 2009. What's more, auto manufacturers and their dealers are currently extending exceptional incentives and rebates to buyers. You could be saving thousands of dollars! Getting behind the wheel of a new car today may actually be a fiscally responsible choice — even in a struggling economy. Start your engines!
If you are considering refinancing your home or making a major purchase — such as a new car — it is important to know what's in your credit file as well as what kinds of rates you may be eligible for based on your FICO® Score. Existing credit monitoring subscribers can log into the Member Center to view their most recent report or to pull a new report (charges may apply depending on what product you subscribe to).
To keep up with changes in your score that could affect the rates you may receive, learn more about Score Watch™ today!
This Month’s Poll Question:
These days, it seems the economic climate dominates the daily news. We’d like to know how you think average Americans are being affected. Be sure to check back in next month's newsletter to learn how other newsletter readers responded.
Previous Poll Results:
Last month we asked if you had recently refinanced your home, or if you were planning to refinance soon. While 20% of poll responders have refinanced in the past year, another 26% plan to refinance in the next 3-6 months. 33% do not plan on refinancing in this upcoming year, and 16% have already paid off their mortgage. The remaining 5% aren’t homeowners.
From this poll, it seems that nearly half of readers plan to or have already taken advantage of the lower rates in the housing market. Remember, knowing your credit history and FICO® Score may help you negotiate with lenders whose standards are far tighter than before. Keep up with what your fellow readers think by checking the results in future issues of the Equifax Newsletter.
Interactive Tool: Equifax Savings Calculator
What will it take to help you reach your savings goals? This financial calculator helps you find out. Enter in your savings plan and view graphically your financial results. Click the report button to get more information about your plan, and what you can do to make sure that it is on track. Find out how long it will take you to reach your savings goal today!
Featured Products:
Score Watch™ — Only $9.95 a month
Score Watch makes it easy to set a target score, see interest rates you are likely to receive and watch your score trend over time. With your subscription to Score Watch,™ you'll receive:
- Two Score Power® reports at no additional charge every 12 months, plus discounts on additional Score Power reports
- Continuous score monitoring and notification when a change in your FICO® Score impacts the interest rate you are likely to receive
- Daily monitoring of your Equifax credit file with alerts of key changes (e-mail/wireless alerts)
Enjoy peace of mind and stay in the know for only $9.95 a month!
 |
 |
Your 3-in-1 Credit Report with FICO® Score — Only $39.95
Get the complete picture of your credit history from all three nationwide credit reporting agencies delivered in a single, easy-to-read report that can help you negotiate with lenders. With your 3-in-1 Credit Report with FICO® Score, you'll receive:
- Immediate online access to your user-friendly 3-in-1 Credit Report
- Line-by-line comparison of your credit history with Equifax, TransUnion and Experian
- Your FICO® Score, what your most current score means, comparison with national averages, and a graph of how lenders view you
Get the complete picture of your credit history and score for only $39.95!
|
|
Did You Know?: A Credit Card Survival Guide**
Good credit is a must-have, especially with today’s credit crunch, when looking to finance (or refinance) a home purchase. A high credit score will usually qualify you for better interest rates on both mortgages and credit cards. Learn some of the simple ways you can wield your plastic responsibly.
- Be on time, every time.
Make it a habit to pay your bills before the due date. Using options like online bill pay and pay-by-TXT can eliminate the need to submit your payment early via postal mail. - Pay down existing balances.
Working to lower existing debt looks better to creditors than getting a new credit card to pay it off. Plus, paying off one credit card with another does not decrease your debt; it just moves it to another account. - Do not open unnecessary credit cards.
If you have your hands full with your existing credit cards, adding to your credit card collection is not going to help, no matter how temping the incentive bonuses are. If anything, consider looking into getting a credit card with a lower interest rate. You can quickly compare interest rates using online credit card tables. However, be sure to read through each card's details and fees before choosing one. - Communicate with your credit card company.
If you cannot make your minimum payment, immediately contact your credit card company and explain your situation to them. This is a better option than skipping the payment altogether. Taking immediate action to try and work with your credit card company may help sustain your credit score, which could save you money in the future by qualifying you for the best interest rates on credit cards and home loans.
** © Copyright 2009, Informa Research Services, Inc. ("Informa"). While all attempts have been made to provide effective, verifiable information in this article, neither the author nor Informa assumes any responsibility for errors, inaccuracies, or omissions. You should always seek the guidance of a licensed professional before making any major financial decisions.
