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Resources for Tough Times

Money Management


Tips for saving money

• Pay yourself first.
• Ask your employer to make automatic payroll deductions and deposit these amounts in your savings account.
• Save windfall income, such as a Christmas bonus.
• Collect loose change and deposit it in the bank.
• Be frugal.
• Break spending habits.
• Save lunch money; bring lunch from home.
• Save sale money.
• Have a “buy nothing week.”
• Comparison shop.
• Read newspapers and circulars for sales in grocery stores.
• Exchange information about sales, discounts, and other money-saving tips with family and friends.
• Use coupons and discounts.
• Take advantage of outlet stores, shop off-season, and buy clothes that will last.• Don’t buy more than you need.

How to establish a savings plan

Saving money and maintaining a spending plan is hard work. But it’s worth it. Saving and sticking to your spending plan can help you become financially secure and meet your goals and priorities.

First, focus on saving. A savings plan is another way to change your spending habits. Plan to save every month, even if it’s only $30 (about $1 a day). At this rate, you will have saved $360 the first year; $1,080 after three years. If you add interest, you’d save even more.

Next, determine which categories you’ll cut from your spending plan to make up your projected savings. For example, you can save $30 per month by cutting entertainment by $20 and clothing by $10. Challenge yourself to meet your goals by always looking for ways to reduce your expenses.

 
[Content provided by “Your Credit, Your Home, Your Future”
distributed by Freddie Mac.]

Tips for successful budgeting

Whether you are suddenly faced with a new financial challenge, or simply trying to save money, these tips can help you achieve your goals. Begin by creating a realistic budget plan.

• Know what bills are due and when.
• A checking account will provide an easy way to pay bills and a way to help you keep track of what you spend.
• Ask the electric and gas companies if you can get on their budget plan or average payment plan.
• Know how you spend your money. Get in the habit of keeping receipts. Categorize your expenses and look for ways you can economize.
• Plan for large, periodic expenses. Make a budget calendar showing the approximate amount of these expenses and when they’re due.
• Budget for regular maintenance and unexpected repairs.
• Stick to a regular savings plan. Many financial advisors suggest saving 5% of your take-home pay.
• Always keep an emergency fund on hand. You need to have a nest egg.
• Plan ahead for major purchases rather than making impulsive decisions.
• Put together a seasonal inspection checklist for your home and car to prevent costly repairs in the future.
• Buy do-it-yourself repair books and videos for minor home repairs.

Save on household expenses. Do your own repairs. • Be conscious of utilities usage. Dim or turn off lights, conserve hot water, turn off air conditioning in cooler months. • Limit long-distance phone calls. • Plan meals. • Shop at garage sales.

Save on food expenses. Pack your lunch(es). • Cut down on eating out. • Consider generic or house-brand foods. • Use coupons. • Save and eat leftovers. • Shop only once a week. • Plan menus, make a grocery list.

Save on transportation expenses. Use public transport. • Carpool. • Get rid of one car, keep the smaller car. • Consider moving closer to work. • Do your own repairs.

Save on recreation and entertainment expenses. Seek out family-oriented, inexpensive activities. • Use public parks and picnic areas. • Give up smoking and drinking. • Take vacations at home.

Save on personal expenses. Select reasonably priced cosmetics and toiletries. • Cut your children’s hair. • Groom your pet.

Save on miscellaneous expenses.
Have legal aid evaluate alimony payments. • Determine whether your family really benefits from two incomes.

If you are having problems with credit or budgeting, get credit counseling. You can reach the Consumer Credit Counseling Service at 1 (800) 251-2227.

Tips for managing your credit

Demonstrate your stability. You can demonstrate stability through your employment history, your income history, the length of time you’ve lived at your current address, owning a home, establishing and maintaining a savings account.

Know what’s in your credit report. You should know what’s in your credit report so you can be sure that all your identifying information and accounts are correct. Review your credit reports from each of the three crediting reporting agencies at least once a year to make sure they are accurate. You can ask each of these credit reporting agencies for a free copy of your credit report once every 12 months. Your credit report may vary from one company to another.
Equifax  1 (800) 685-1111
Experian 1 (888) 397-3742
TransUnion 1 (800) 888-4213

If you’ve been denied credit, you can get your report for free by following instructions in the written notice you received when your credit was denied. Also, because of changes in the federal Fair Credit Reporting Act (FCRA), consumers throughout the U. S. can ask for a free copy of their credit report once every 12 months from each of the credit reporting agencies (see above). For more information, log onto www.annualcreditreport.com or call 1 (877) 322-8228.

Pay your bills on time. How you’ve paid your bills in the past is usually the best indicator of how you’ll pay in the future. Be sure to pay at least the minimum amount required by the date it is due on your account statement or invoice. You can always pay more, but you should never pay less than the minimum. Being late on a payment is a negative mark on your credit report, even if you make up the payments later or provide extenuating circumstances, such as job loss. Also, if you’re late making payments, you may be charged a penalty fee.

Tips for using credit cards wisely

• Don’t use a credit card for a purchase unless the amount is within your monthly spending limit.
• Limit yourself to two or three cards.
• Pay off the balance in full each month.
• If you can’t pay the entire balance, always pay more than the minimum payment required.
• For large purchases, plan to pay off the amount in three monthly installments.
• Do not consider the credit card an emergency fund.
• Save money for trips and use the card only for convenience and safety.
Resources on saving, budgeting, and investing

The Alliance for Investor Education provides resources for saving and investing in the new year. Visit their site and review the section entitled “Resolve to Save and Invest in 2008” for links to helpful information.

America Saves Week is a new effort aimed at reaching institutions and individuals to increase awareness that people need to save money, reduce debt, and build wealth. For more information, visit www.americasaves.org.

Help with your taxes

The Prosperity Campaign connects working individuals with existing economic benefits programs available to them such as Earned Income Tax Credit (EITC) and Childcare Tax Credit. EITC, for example, provides up to $4,700 per year per family, lifting millions of children and their parents beyond the federal poverty level. The program was first launched in 2002.

For more help, or to file electronically for free:
• Go to www.irs.gov.
• Call the IRS hotline at 1 (866) 234-2942.
• Visit one of the following organizations in your area: IRS Taxpayer Assistance Centers, Tax Counseling for the Elderly (TCE) sites, Low Income Taxpayer Clinics (LITC), or local Volunteer Income Tax Assistance (VITA) sites.

 
[Content provided by Department of the Treasury,
Internal Revenue Service]