The Advantage Advisor
Volume 3, Issue 1, 2008
Start fresh with your finances in 2008
The start of a new year is a good time to make a fresh start when it comes to your finances.
There are some simple things you can do to better maintain your money and reach your financial goals. Consider them financial resolutions.
The first step is to set a budget. Include all expenses in your budget such as mortgage or rent payments, utility bills, food, toiletries and debt payments. Make sure you plan for periodic expenses within your budget. Periodic expenses may include insurance payments, new tires for your car or taxes. For example, if your car insurance premium is $1,200 a year, plan to set aside $100 each month.
If you already have a budget, revisit it and see if adjustments need to be made for increased or decreased costs in certain areas.
Track your expenses to find out exactly where your money goes each month. If you notice an area where you are overspending, look for ways to cut your expenditures in that area. (See “Tips for Tracking Your Expenses.”)
If you haven’t already done so, make it a priority to pay off debt. You can’t pay off your debt if you continue to use credit. Make a rule that you won’t buy anything unless you can pay cash for it.
It’s also a good idea to check your credit report at the start of each year. Once a year you are entitled to a free copy of your credit report from all three reporting bureaus. You can get your report at www.annualcreditreport.com or by calling (877) 322-8228. Correct any errors you discover by notifying the credit bureau.
Balance your checkbook each month to make sure that your calculations are in line with the calculations of your bank.
Get into the habit of paying all of your bills on time including your mortgage and utilities. Late fees are costly and quickly derail your budget. Create a cash flow calendar that lists all of your expenses and their due dates to help you stick to your payment schedule. Plus, having a visual record can help you determine which paychecks will be earmarked for certain expenses.
Revisit your utility and insurance plans. Make sure you have the appropriate level of service or insurance coverage. For example, if you have a mobile phone calling plan with 500 minutes a month and you are using 700 minutes a month, you’re paying for those extra 200 minutes over and above your monthly fee. You may be able to save money by switching to a plan that offers more minutes for less money than you’re paying in overages.
Another way to save money in the New Year is to get into the habit of comparison shopping. But, you may have to let go of your loyalty to a particular brand if another brand offers the same quality product at a lower cost. Also, check the prices of items at three different stores to find out where you can get a particular product at the best price.
Finally, once you’ve established a budget and have looked at ways to reduce some of your expenditures, set aside some money for savings.
Decide how much money you can afford to put into savings on a weekly or monthly basis. Increase the amount you save if you are able to in the future.
Once you make these financial resolutions a regular habit, you’ll find it’s easier to track and manage your finances.
If you find the budgeting process overwhelming or if you would like some practical suggestions to help you reduce your debt and improve your money management habits, contact Advantage CCS. A certified credit counselor will guide you through a free credit counseling session to help you get back in control of your finances.
Tips for tracking your expenses
Remember the $20 that was in your wallet the other day? Ever wonder what happened to it?
Many times we spend money without even thinking about it. Being aware of all purchases is an important part of planning a solid budget.
Use the following tips to help track your daily spending.
- First get a notebook and make categories for all your expenses. (Ex. food, gas, clothing)
- Save receipts from every purchase — big or small — cash, credit or debit. Or if you prefer, take the notebook with you and record as you go.
- Set aside a certain place to gather these receipts.
- Log purchases in your notebook daily.
- Continue tracking for three months. Add up totals from each month and divide by three to get your average monthly spending for each category.
- Make cutbacks as necessary to help balance your budget.
Help available for heating bills
For many families, winter weather signals an all-too-familiar predicament: as the temperature plummets, utility bills pile up. When the cost of heating a home becomes overwhelming, it’s good to know that there’s somewhere to turn.
The following programs offer eligible families much-needed assistance:
In Pennsylvania, the Low-Income Home Energy Assistance Program (LIHEAP) provides families at or below 150% of the Federal Poverty Guidelines with money for heating. The program also distributes crisis grants of up to $300 for those in immediate danger of losing utility service.
The Low-Income Usage Reduction Program (LIURP) helps PA consumers cut back on energy costs by offering energy saving tips and installing technology that decreases household usage.
Pennsylvania’s Customer Assistance Referral and Evaluation Program (CARES) administers guidance for customers whose present circumstances prevent them from paying their utility bills. For individuals facing life-changing events such as divorce, unemployment, or medical emergencies, CARES serves as a source of direction and support.
Working with utility companies across the Mid-Atlantic region, the Dollar Energy Fund’s Hardship Program deposits grants of up to $500 directly into utility accounts with outstanding balances. The requirement that money be owed on accounts is waived for seniors age 62 and older.
Consumer Assistance Programs (CAPs) reduce the cost of heating while ensuring continued service. Programs vary by provider, but are generally based on household size, gross income, and average energy usage.
For those whose income may disqualify them from other programs, Budget Billing ensures that each month’s bill remains the same. Available at any time, the budget system is based on utility usage and may be adjusted by the provider up to four times a year.
- LIHEAP: (866) 857-7095
- Dollar Energy Fund: (800) 683-7036
- For all other programs: Contact your utility provider directly to see if you qualify.
Dear Debt Monkey
Q: Does closing inactive credit card accounts lower my FICO (credit) score?
A: Credit grantors look at the amount of available credit versus the amount of credit actually used.
If you close any account with a zero balance it will reduce the amount of available credit, therefore, it may lower your score.
Example: You have six credit card accounts with a total available credit limit of $10,000. Four of the accounts have balances totaling $5,500. The other two credit cards have no balance, and a combined credit limit of $3,000. That means you have used 55 percent of your credit line. Closing the zero balance credit cards reduces your total available credit limit to $7,000. Now you have used 78 percent of your total credit line.
Owing the same amount but having fewer open accounts may lower your credit score. Do not close unused credit cards as a strategy to raise your score. But, do not open new credit cards that you do not need just to increase your available credit. Credit grantors look at the date on which new accounts were established.
For more information contact: (888) 511-2227
The Advantage Challenge
ACCS is challenging you to ...
Start saving money for the holidays now.
To begin, consider what you spent last year. Don’t overlook expenses such as Thanksgiving and other holiday meals; the cost of alcohol, cookies, or other treats; trees, lights or other decorations; and don’t forget New Year’s Eve festivities.
Many local banks and credit unions offer holiday savings clubs.
Save faithfully every week or month and by the time the next holiday season is upon us, you could have enough cash to cover your expenses without the need to use credit.
“You are a life saver to the city of Pittsburgh!”