America Saves Week in April is a great time to prioritize saving. Here are some steps to take to get started:

Review your current finances

To truly be in control and able to handle your competing priorities, start by getting a clear view of your current financial situation. It’s important to look at what you have coming in, what is going out, and what your goals are for the future. Gather your pay stubs and bank statements, then use the America Saves’ spending and savings plan tool (downloadable in Excel format) to help decide what savings opportunities are possible for your current situation. Pay special attention to:

• What are your fixed vs. variable expenses?
  • Fixed expenses are costs that largely remain constant, such as your monthly rent or mortgage. Variable expenses, on the other hand, are costs that may vary or be unpredictable, such as groceries or a car repair.
• How much of a balance is on your credit card(s)?
• What is your social activities expense?
• How do your monthly expenses compare to your monthly income?

Getting a clear view of your situation will help you determine what other steps to take in order to save.

Set realistic goals

Once you know what you have available to save, it’s time to set some realistic goals. What do you want to save for? It may be an emergency fund, retirement, a vacation, a new home, or putting the kids through college – whatever it may be, make a written list of your financial goals. Studies show that savers with a written plan are 2x more likely to succeed. Write out your goals in a realistic format.

Goals should be SMART:

• S – Specific: What are you saving for?
• M – Measurable: How much do you want to save?
• A – Achievable: Is this possible?
• R – Relevant: Does this really matter to me?
• T – Time-Oriented: When would I like to achieve this goal?

An example of a SMART goal could be: I want to save $500 over the next year to create an emergency fund.

Save automatically

The easiest way to save is automatically. At Wolf River Community Bank, we make it easy to do this with our Smart Move Savings Program. Each debit card purchase is rounded up to the nearest dollar and the change is automatically deposited into your savings account. Want to get started? Request Smart Move Savings for your account.

Review recurring charges

Do you even know all of your recurring subscriptions? Go to your settings in each app store and look at your bank and card statements to review what you have signed up for. Then, make a list of each, note the cost per month, and how you pay for them. To save money, you can:

• Cancel unwanted subscriptions
• Review subscriptions within your subscriptions (i.e. is Paramount+ within your Amazon Prime account)
• Set a calendar reminder to cancel before a free trial ends
• Negotiate with providers
• Find free alternatives or bundle them for lower costs (i.e. Disney+, Hulu & ESPN)

Research other providers

• Review your insurance coverage and shop around. Your needs may have changed since your last renewal, which could result in savings. Many companies also offer discounts for “bundling” your home and auto or other policies.
• Price check grocery stores. Maybe it’s cheaper to buy your meat at one store and your produce from another.
• Explore TV, phone and internet providers. Can you bundle these or move to streaming instead of cable?

Earn extra money

Oftentimes it’s hard to save with your current income and expenses. Try alternative ways to make extra money, such as:

• Sell your old items
• Become a sitter, delivery driver, transcriber, online tutor or mystery shopper
• Sell your photos through stock photo sites
• Donate plasma
• Rent out your home
• Do tasks for neighbors like lawn mowing or shoveling
• Advertise on your car through a site like Wrapify
• Join a focus group, test products or participate in research studies or surveys

Pay down debt

Just like having a plan for saving is important, so is having a plan to pay down your debt. Recent reports show that individuals have increased their use of credit cards due to ongoing inflation and rising costs of basic necessities like housing, food, and transportation. Here’s some ways you can help pay down your debt:

• Make all payments on time and pay more than the minimum on credit cards.
  Payment history is the largest factor that determines your credit score. It accounts for 35%. Therefore, making payments on time is the most effective way to increase your credit score and build a good credit file.  Missing a payment or two can happen in times of financial difficulty and can add to any financial stress you may already be experiencing. However, no other strategy to improve your credit score will work if you are missing payments or paying late.  Late and missed payments start reporting to the credit bureaus once they are over 30 days past due and can stay on your credit report for 7 years. (That’s a long time for a bump in the road to follow you) To minimize the damage late and missed payments can do to your score, reach out to your lender or creditor, and make arrangements to pay as soon as possible. Some will offer payment plans that will stop late fees or higher interest rates from hitting your account. Addressing them can also give you some peace of mind, knowing that you are handling them the best you can for your current situation. Saver Tip: You can also ask the creditor if they will consider removing the late payment from your credit reports. They are often willing to do so for customers who have been in good standing in the past (and if they ask nicely 😉).

• Stop using credit until you get on track, but don’t close your credit cards.
  Closing your credit card accounts may reduce your credit score, as the “age” of your credit factors into your FICO score. By keeping your card open with a $0 balance, you’ll have a longer credit history and a larger amount of available credit. The only time you may want to consider canceling a card is if it has pricey annual fees.

• Pay off debt using the Snowball Method or Avalanche Method.
  
• Address Debt Collections, Charge Off Accounts, and Errors
  An account in collections, a charged-off status, or reporting incorrectly can do some real damage to your credit score, so it’s best to address them as soon as you can. There are a few ways to do that and how to handle it will depend on several things like what type of debt it is, how old the debt is, and who is attempting to collect it. It’s typically best to start with the entity reporting first and request debt verification to ensure that it is your debt and reporting correctly. You can then decide whether to work out a plan to settle the account or dispute it. Stopping negative reporting each month can make a significant impact on your credit score. Saver Tip: Check out the Consumer Financial Protection Bureau’s tips on debt collection here. There you will find articles, reports, and form letters that can be used to help you in the process.

• Maintain low overall credit utilization
  Which means that you need to keep a low balance at all times. The credit equation wants you to maintain low credit balances – especially the FICO 8 scoring model. The balances you carry on credit lines account for 30% of your credit score and are the 2nd largest contributing factor.   A general rule of thumb is to maintain a balance below 30% of your overall available credit. Carrying any balance will affect your score, but anything over 30% is when the amount it affects begins to increase.  Paying down balances is one of the best (and quickest) ways to increase your credit score. The key is having the lowest possible balance each month when your creditor reports to the credit bureaus. You can find this date in two places – on your credit report and your billing statement. On the credit report, the date will show as “date updated” or “last reported”, on your billing statement it will be your statement closing date. Make a plan to pay down the balance as much as possible right before this date each month. Saver Tip: You can also request a credit limit increase to lower your overall utilization. However, be cautious – increased credit limits can lead to more spending (and more stress) so only choose this option if you can ignore the temptation.  

• Check your credit report and know your credit score
  Coming soon: Wolf River Community Bank will offer a free credit tool to help!
  

Watch how Amelia reduced her debt:

If you have any questions about saving, Wolf River Community Bank is here to help. Contact us at 920-779-7000.