From the Editor’s Desk

Andrea Norris-McKnight

 

Don’t Break the Savings Habit

Hello My After 50 Friend!

Last week we discussed rising credit card interest rates and the need to stop charging if you’re carrying a balance. This week I’d like to talk a bit about savings.

When the budget gets tight, one of the first financial habits we break is putting money away regularly into savings. According to the Bureau of Economic Analysis, the personal savings rate (personal saving as a percentage of disposable personal income) dropped to 3.1% in September. This time last year, it was 7.3%. So we’re saving less than half of what we were last year.

And for many people, it can’t be helped. When prices go up and the budget continues to tighten, something has to give — which is often savings.

Many financial experts say that building an emergency fund is critical right now. They are right, but how do you build an emergency fund when you can barely afford to feed your family? The thought of saving one, three or six months of expenses probably feels overwhelming.

You start small.

If you are in the habit of saving regularly, don’t break the habit. It can be that much harder to start again. Even if you have to reduce your savings to only $5 or $10 a week to keep the habit going, try to continue saving something.

And if you haven’t yet developed a habit of saving regularly? Yes, this might be a tough time to start, but you, too, can start small. Here are two articles that may help:

Here’s to a comfortable retirement,
Andrea

When Getting Out of Debt Shouldn’t Be Your Primary Concern

Hello My After 50 Friend!

If you’re carrying a credit card debt balance and can barely afford your minimum payments, a lot of the credit card payoff advice you read may seem easier said than done. This is especially true as budgets remain tight and paying down debt feels impossible. If recent surveys are accurate, about 55% of us are carrying a credit card balance.

These surveys typically don’t show how people got into debt in the first place. Sure, for some people, it is poor money management and overspending. But for many folks, credit card use became necessary this year. About 49% of those carrying a credit card balance have had to start using credit cards to cover essential living expenses as costs continue to climb. These folks aren’t going into debt buying nonessentials. They are using their cards to feed their families and cover utilities and other basics.

Unfortunately, if you’re part of the 55% of Americans carrying a credit card balance, that debt is about to get more expensive. The Federal Reserve raised the short-term borrowing rate another 0.75 points. In the next few weeks, your credit card interest rate will likely increase as a result, along with your minimum payment. You’ll pay more interest, making it even harder to stop sinking further into debt. Of course, this comes right before the holidays when many folks tend to take on new debt anyway. So some of us are at the top of a very slippery debt slope.

A popular piece of advice is to transfer your current debt balance to a balance transfer credit card with a 0% APR transfer offer. Good advice, but depending on your credit score and current debt burden, this might not be an option available to you. And even if you can do a balance transfer, the relief will only be temporary if you continue charging.

If you’re adding more to your monthly debt burden than you are paying down, the best thing you can do right now is to try and stop using your credit cards — another piece of advice that is often easier said than done. These articles may help you cut some of your expenses, so even if you can’t stop charging completely, you can at least charge less:

When the budget gets exceptionally tight, the thought of getting out of debt can be overwhelming. Forget about getting out of debt. Just focus on not adding any additional credit card debt. Keep chipping away at expenses or looking for small ways to make a little extra cash until you can afford to cover your living expenses without adding to your credit card debt balance. Then you can start worrying about how to dig your way out of debt.

If your credit card minimum payment has already outgrown your budget, it might be time to consider professional help. This article can walk you through whether you might qualify for credit counseling: Am I a Good Candidate for Credit Counseling?

Here’s to a comfortable retirement,
Andrea

Don’t Discount Old Money-Saving Ideas

Hello My After 50 Friend!

I recently came across an article on The Motley Fool’s The Ascent site. The article is now a few months old, but it lists four tips from Dave Ramsey on how to save on groceries during inflation. The four tips can certainly help you save, but they are nothing new. Here are the four tips (or you can read the full article here):

  • Identify low-cost grocery stores.
  • Look for foods that are cheap and filling.
  • Only buy items you need.
  • Go big on coupons.

My point in sharing the article is not that Dave Ramsey needs to come up with some new ideas. My point is that when it comes to saving money, most of the old ideas not only still work. They work very well. Occasionally I get an email from a reader looking for “new” ways to save on groceries — that clipping coupons or meal planning using grocery sales ads is dated information now that most people no longer get the newspaper. But these “outdated” tools will still save you money. You just might need to look online to find them.

I no longer cut paper coupons or print them out. But I do check the digital coupons every week and “clip” them with the click of a mouse or a tap on my phone and easily save $5 to $10 each time I go to the store just by entering my phone number when I check out. I also pop open the store’s app and quickly run down the list of BOGOs and other sale items before planning my meals for the week saving me another $20+.

If you’ve never familiarized yourself with your local grocers’ apps or websites, I suggest you jump online and check them out. You might be surprised at how easy many are to use for making shopping lists, clipping coupons and saving money. If you want to learn how a grocery app can help you stick to your grocery budget or how you can save with digital coupons, read How a Grocery App Can Keep Your Food Budget in Check and Stack Your Way to Free Groceries. These articles are not new, but they can help save you money.

On a different note, I saw on the Consumer Reports website that October is an excellent time to get a good deal on a programmable thermostat. If you still have a non-programmable thermostat, whether digital or analog, you might want to consider getting one, depending on your heating/cooling system. They don’t work well with all systems (you can find out more about that here). And if you’re considering one, you might want to read How to Install a Programmable Thermostat for Lower Energy Bills.

Adjusting your thermostat throughout the day to reduce energy bills is not a new idea. And you can certainly do it manually. But a programmable thermostat can make implementing this old money-saving idea easier.

Here’s to a comfortable retirement,
Andrea

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