April is National Financial Literacy Month and it’s no wonder, American’s seem to be illiterate when it comes to their finances. Based on an analysis of Federal Reserve statistics and other government data, Nerdwallet reported that in December 2014 the average U.S. household owed $7,283 on their credit cards. On a greater scale, American consumers owed: 11.74 trillion dollars in total debt, 8.14 trillion dollars in mortgages, 882 billion dollars to credit cards, and 1.13 trillion dollars to student loans.
Credit card debt, the third largest source of debt, has actually decreased, unfortunately the decrease seems to be due to defaults rather than repayment. And if that’s not bad enough, the U.S. Department of Education reports that one-third of borrowers with federal student loans are late paying those loans.
So what’s a consumer to do? Budgeting is a good place to start. Back in May 2014 I posted a blog that can get you started. It’s called Money Worries? Organization is Key. Once you get organized and on a budget, you can begin to whittle down your debt.
Does your employer offer a 401(k) plan? Many employers offer matching contributions on a percentage of what you put into the plan. Make sure you take advantage of these offers. That’s free money people. Who doesn’t want free money?
Be mindful when you buy something, it’s not always the big purchases that’ll do you in. Benjamin Franklin once wrote: “Beware of small expenses, a small leak will sink a great ship.”
Take advantage of your spring cleaning. When you are cleaning out rooms and closets, look for items you haven’t used or clothing you haven’t worn in a while, stockpile them and then have a garage or an eBay sale. Get the kids involved too, there is certainly a market for their old toys, books and games. You might be amazed by how much money you can make by getting rid of items that are cluttering your home. You know what they say, one man’s junk is another man’s gem. And what doesn’t sell can always be donated to Goodwill or another charity. Remember to get a receipt if you want to itemize your donations for a money saving tax deduction. You might as well help others while you help yourself.
Decreasing what you spend on utilities is another way to find money to pay down your debt. This can be done a number of ways. Replacing your existing light bulbs with LED bulbs can really make a difference. They are more expensive initially, but will save you a lot of money over time. Are you changing the filters on your furnace? Is your dryer vent free of lint? Are the coils on your refrigerator cleaned regularly? Are you insulating your hot water heater? Keeping these major appliances clean and well maintained will help them run more efficiently and that will save you money.
Before going to the grocery store, make a meal plan and then a list. You might be surprised by how much money you can save by only purchasing what you need for the week. And whatever you do, don’t go grocery shopping hungry!
April may be Financial Literacy Month, but any month is a good month to learn about your finances. That’s why Money Management International has put together a website financialliteracymonth.com that offers 30 steps to financial wellness. You can start the steps on any day of any month.
Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.