Steve Jeppson and Alison Law: Resolve to save money
Published: Monday, January 31, 2011 at 6:01 a.m.
Last Modified: Friday, January 28, 2011 at 5:52 p.m.
The Gainesville Sun voters' top three resolutions are common: Weight loss. Exercise. Financial control. The most successful New Year's resolutions are the ones with a clear plan to follow.
Some 77 percent of Americans lived paycheck to paycheck in 2010, and 22 percent admit to missing regular payments. The stress can interrupt health and marriages, not to mention job performance. With more employers doing credit checks, it makes even more sense to resolve your financial issues.
We've got a few suggestions to help you stick with your debt resolution.
Know what you spend: Brenda Williams, FCS Agent with UF/IFAS Alachua County Extension Service, suggests you fold a sheet of paper in half, turn it a quarter turn, and then in half twice more (paper will be have eight sections). Write a day per week at the top of each section, and keep it in your pocket. Write down everything from credit and debit card charges to checks and cash. It's handy, and you'll be surprised where your disposable income goes: That bag of chips from the office vending machine every day adds up.
Make small changes first: Just as with eating, you can't stop spending, and extremes don't work for long.
Take a class: The Extension Service offers a new, under-used series from bankruptcy to estates and wills and money management.
Make a few promises: "I will always put X-amount of money into savings." Open a savings account in a credit union where you don't go regularly or arrange for payroll deduction to divert a small portion of each paycheck to a special savings account. Save, don't spend, any bonuses, raises, or unexpected money.
Cut up the plastic: Total the interest paid to credit card companies in one month. Now picture having that money back in your pocket.
If you really can't do without the plastic, then consider these steps.
Don't let your credit card balance exceed 40 percent of your credit card limit. Don't cancel cards with which you have a well-established history. This will do wonders for your credit score. A good rule of thumb for credit card balances is that you shouldn't exceed 3 months income. Get to a point where cards are paid in full every month, and think of what you can do with what you would have spent in interest.
Use cash and a budget. Studies prove that it is more painful to spend cash versus debit or credit card, says Pam Burns, a Gainesville CPA. Budget your expenses such as groceries, restaurants, household needs, then set aside the appropriate cash to spend. Don't spend what you don't have. It's easier to see if you carry cash instead of plastic.
Check the tag, and support local, or at least U.S. businesses. You'd be surprised at what you put back on the shelf if it's made in China.
Start a Spender's Anonymous club; invite your friends, and share tips and personal successes. Make keeping the old car, planting a garden, or taking your lunch to work something to brag about. For that matter, start a Resolutions club, and cover all three top resolutions. Take a walk, try a new low-calorie recipe, and share your tightwad stories.
America Saves Week starts February 20. You could be well on your way by then. It's never too late to keep a worthwhile resolution.
Steve Jeppson is a commercial services manager at Florida Credit Union. Alison Law is a local CPA and Florida Money Master Mentor.
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