Tip #1: Open a Christmas Club Account 

Force yourself to save by regularly setting aside small amounts of money.  Starting now, if you saved $10/week until mid-November, you'd have over $150 for Christmas shopping!  Here's how one of our staff members started using a Christmas Club account:

"I've never been ready for Christmas before.  Every year in November I start panicking, looking for a second job, wondering how I'm going to be able to afford all that the holidays entails.  After struggling through Christmas once again, I swore I'd do things differently this next year.  So in January I went to my bank and opened a free Christmas Club account.

"Every time a paycheck gets deposited, $20 is automatically transferred from my checking account to my Christmas account.  For me, $20 is a lot of money!  But because it's done as soon as my paycheck is deposited, I really don't notice that I'm having to get by without that amount.

"I am a spender, not a saver.  So it's really a challenge for me to put money aside for later.  But because it's done automatically and in small amounts, it's been easier for me to prepare little by little over a longer period of time.  In fact, by the end of October, I'm going to have $440 in my Christmas account!

"Ordinarily, I'd be tempted to withdraw some money early because I might see something I 'need.'  But if I try to take money out before November, my bank will charge me $30 just for making an early withdrawal.  That penalty fee is like a little slap on the hand to keep me in line.  I'm not going to be willing to give up $30 like that, so I'm not going to be making any early withdrawals unless it's a true emergency!

"This year, as Christmas approaches, I haven't felt any of the fear or dread that I'm used to!  I don't have to worry about how I'm going to afford presents, parties, traveling, or any other holiday costs.  And once the new year arrives, I won't have to deal with holiday debt on my credit card.  Christmas 2013 is going to be incredible!"

For more information on participating in a Christmas Club, click here.


Poll Reveals Close to One in Five Consumers Comfortable Carrying Debt 

A recent National Foundation for Credit Counseling (NFCC) online poll revealed that close to one in five consumers, 18 percent, believe that carrying credit card debt over from month-to-month is a responsible way to manage his or her finances.

"This data suggests that not only are many Americans using credit cards to fund a lifestyle their income can't support, but they are comfortable doing so," said Gail Cunningham, spokesperson for the NFCC. 

Consumers need to be aware of the consequences associated with continually carrying credit card debt from month to month, some of which are below:

  • Interest on a credit card is typically calculated on an average daily balance.  For those who carry a balance over from the previous cycle, interest is not only charged on the unpaid balance, but on any new purchases added to the balance. 
  • With interested added onto the balance month after month, consumers end up paying interest on the interest.
  • Carrying a balance has the potential to negatively impact a person's debt to credit ratio, one of the main components of credit scores.
  • A higher balance decreases the amount of credit available for future purchases.

However, there can also be disadvantages to charging too little. At the other end of the spectrum, a similar number of respondents, 21 percent, indicated that they do not use credit cards.  While this approach to money management can avoid many financial pitfalls, it too has its problems:

  • Although it is possible to pay cash or use a debit card for daily expenses, these types of transactions are usually not reported to the credit bureau.  Most people need credit for major purchases such as a house or car, but without a thick and positive credit file, credit may be denied.
  • Without credit cards, people miss out on the convenience of being able to purchase items or pay for services when cash is not readily available.
  • Carrying cash is risky, as the money could be lost or stolen, whereas credit cards often offer consumer protection features including those against loss.
  • Credit cards provide a safety net for emergency situations.

The majority of poll respondents, 61 percent, believe that paying credit card debt in full each month is the only responsible way to manage personal finances. The benefits associated with this type of behavior far outweigh any disadvantages and include the following:

  • Timely bill payments and a low credit utilization ratio are typically the top weighted elements in credit scoring models. Therefore, this type of behavior could have a positive impact on an individual's credit scores.
  • The convenience of using credit can be enjoyed without paying any interest or penalties.
  • The entire line of credit remains available for future use.
  • Stress and worries of being over-extended are avoided.

People who repeatedly find themselves unable to satisfy their monthly debt obligations in full would be well-served by reaching out to an NFCC Member Agency, like CCCS of Chattanooga, for a one-on-one financial review with an NFCC Certified Financial Professional.

The actual poll question and answer results are below:

Which of the following best describes your attitude toward debt?

    1. I believe that carrying credit card debt over from month-to-month is a fact of life and is a responsible way to manage my finances = 18%
    2. I believe that paying credit card debt in full each month is the only responsible way to manage my finances = 61%
    3. I do not use credit cards = 21%

Note: The NFCC's July Financial Literacy Opinion Index was conducted via the homepage of the NFCC website www.DebtAdvice.org.

The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation's largest and longest serving national nonprofit credit counseling organization. The NFCC's mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services. NFCC Members annually help millions of consumers through more than 600 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC Member, call (800) 388-2227, (en Español (800) 682-9832) or visit www.nfcc.org.

Posted by Heather Osteen | Topic: Credit and Debt

10 Commandments of Home Buying

September 10th, 2018

We just love this post from Matthew Amster-Burton of Mint.com.  Whether you're in the process of buying a home or you're already a homeowner, you'll want to read the 10 Commandments of Home Buying. 

We're especially crazy about #9 - "Be Prepared to Settle Down."  Many of our clients realize that they could pay less with a monthly mortgage payment, than they would if renting.  They fail to consider, though, that if they move only a couple years after their purchase, they won't have saved enough to counterbalance the expense of buying and selling! 

What rules or guidelines do you follow when it comes to homeownership?  Leave your tips in the comments below!  And to read Amster-Burton's other commandments, click here.

Posted by Heather Osteen | Topic: Your Home

Chattanooga: 1-800-459-2227 | cccsfd@partnershipfca.com