Developing a Saving "Game Plan"

Eunice Diaz, a teacher in Colorado Springs, had been noticing a pattern. Despite the fact that she and her husband were “making good money,” they were spending their entire earnings and “were still struggling at the end of the month.”

So, when Diaz saw an America Saves article about “paying yourself first,” she decided to make some changes in her approach to money management. Diaz went online and, through the America Saves website, found Colorado Saves. 

After signing up as a Saver and talking with staff, Diaz got started saving by purchasing a certificate of deposit that carried a penalty for early withdrawals. As someone who had tried to save only to raid the account to pay for non-emergencies, it was exactly the sort of product she needed. 

Diaz also entered and won a Colorado Saves contest to receive the services of a financial planner for one year, for free. “I think I put in the best plea for help,” Diaz joked.

Working with a financial planner from Money Management International, a non-profit partner of Colorado Saves, the couple started off by assessing their financial situation. The financial planner helped show the couple that “we didn’t have a game plan,” said Diaz. “If we kept spending the way we had been, we would be poor, we would never have savings.” 

The Diaz’s were over $30,000 in debt, the majority of which stemmed from the purchase of a vacation timeshare that they now admit was a “big mistake.” They began a classic debt reduction strategy, putting all their financial efforts into paying down the highest-interest debt while making minimum payments on lower-interest debts, and are well on their way to paying off that first debt.

Diaz was also given the task of creating a monthly budget. After tracking their spending to see where the money was going, they realized that, “The reason we were struggling was our lifestyle. We liked to go out with friends, go to the movies, play pool. We would spend all the money we wanted,” she said.

Now, she and her husband are learning how to have fun and spend less, by renting movies and cutting back on dinners out. “I’m not going to lie, it’s difficult to stick to it,” she said. “I don’t want to sacrifice my whole life and be the only one at home while everyone else is out. So we compromise.” 

The couple has also made major strides toward their top long-term goal, to retire comfortably. They’ve opened a Roth IRA and 401(k)s, both of which they add to through automatic deposits. Diaz also saves into an additional retirement savings plan offered through the school district she works for. 

Diaz’s advice for other savers is to think about savings “not in terms of how much you make, but how much you keep” for yourself, adding that “sometimes that means putting off what you could have today, to make sure you have something later on.”

Savings Strategies: Coping With Consumer Debt

As unemployment and underemployment rates rise, millions of Americans have lost income and are having greater difficulty making consumer debt payments.  Moreover, tens of millions of Americans are worried about losing income and being unable to make these payments.  Here are tips for coping with debt.

Avoid Debt When Possible

Most importantly, think twice before adding debt. 

For regular expenses, either use your credit card as a charge card, paying off new balances in full every month, or use some other form of payment such as debit card, check, or cash. Remember that credit card debt tends to be expensive, especially for cardholders paying late payment fees and penalty interest rates, which can be as high as 35% 

For larger purchases financed with an installment loan, keep the amount borrowed as low as possible by buying a less expensive product or even delaying purchase of the product.  And remember to shop for a loan before making the purchase, making certain to call your bank or credit union, not just using store financing.

Think twice before refinancing consumer debt with a home equity or second mortgage loan.  While mortgage debt is usually less expensive than credit card debt, most of those who try to pay off their debts this way end up piling up large new credit card debt and end up even worse off. Instead, pay off existing debt, especially credit card and other high-cost loans, as quickly as possible.

Savings Tips: A Quarter Saved … Is A Quarter Earned

Buy classic clothes that will stay in style.
Joshua Abel, Holyoke, MA

It pays to practice preventative dental care, since a good cleaning routine helps prevent fillings, root canals, and dental crowns, which are expensive and no fun. 
Susanne Waits-Harris, Shelton, WA

News from Local Campaigns

In Ohio, Akron Saves held its first Roll Your Change Week this past winter. One credit union, Towpath FCU, took in over $260,000 in coin deposits with 800 new accounts opened. Prior to the event, the Akron Beacon Journal publicized Towpath's participation and incentives offered to depositors, which helped to raise awareness of the opportunity among existing and new members alike.

Colorado Saves is continuing to offer a full year’s worth of free financial planning to select Savers. Learn more by visiting www.ColoradoSaves.org and clicking on the “Lunch and Learn” series. 

During the recent tax season, DC Saves along with partners and volunteers enrolled more than 300 new Savers at free tax preparation sites throughout the city. The campaign also kicked off a series of Financial Planning Clinics in June, where savers can meet one-on-one and free of charge with certified financial planner professionals to create basic, personalized financial plans.

Kansas City Saves hosted a financial fair at a local mall this past spring, featuring financial education presentations and experts who offered free, personalized financial advice. Over 10,000 people were on hand for the event, and many signed up as Savers with the campaign. Meanwhile, the campaign staff is planning four events to be held in conjunction with the local YMCA this summer. 

More than 40,000 people in Wisconsin’s Northwoods area were reached through television, print media, and 31 banks and credit unions during Northwoods Saves Week. More than 550 new savings accounts were opened at participating banks and credit unions during the month of February, with total deposits of over $450,000. Northwoods Saves plans to continue its campaign by promoting weekly Wednesday and Monday radio broadcasts. 

In Virginia, Peninsula Saves is planning an education roundtable in August. The day is designed to train current partners and recruit new ones for the campaign. “We're promising a terrific day for all who attend," said Johanna Hahn, campaign coordinator. 

Utah Saves partnered with Utah Housing Coalition to host the first Utah Credit and Savings Help Expo (CA$H Expo). Utah State Treasurer Richard Ellis helped promote the event by holding a press conference.  The Expo included 45 classes on consumer, financial, and housing issues. It also featured several speakers, including a consumer journalist from the local CBS affiliate. Utah Saves plans to take the Expo across the state this fall.