About Me 0092: personal finance planning

The theory is simple: "If you don't have the money, don't charge it. Try to leave your credit card at home and only use it to pay bills," advises April Lewis, director of education for Consolidated Credit Counseling Services. Then immediately pay off your credit-card balance. As for old credit-card debt, sit down and commit to paper a plan for paying them off. Go for a quick hit, like paying off the smallest balance first, or decide to take on the highest rate card first. Get the job done.

Here's a second tip: Be proactive about managing your credit. Call up your lender and ask it to lower your interest rate. Usually, lenders will lower callers' rates by 2% to 3%, says Scott Gamm, founder of HelpSaveMyDollars.com. Also check your credit report. You can check your credit for free at annualcreditreport.com, for example. If you see mistakes, contact the credit agencies and get those mistakes corrected. If errors are dragging down your score, eliminating them can boost it to where it belongs and make you eligible for better rates.

2. Think automation

Free online banking tools can make it easier to manage your finances with less work. To help grow your savings, for example, you can schedule regular transfers from your checking account. Manisha Thakor, author of Get Financially Naked: How to Talk Money With Your Honey, suggests setting up the transfer of a set amount of money into your savings account every pay day.

Also automate recurring bill payments so you never miss a due date or pay a late fee, which sends money down the drain. Even without late fees, timely payments are key: 35% of your credit score is based on your ability to make payments on time. If you sign up for automatic payments, however, make sure to check your monthly bills for errors. One other caveat: "Make sure you have enough cushion in your checking account to avoid any overdrafts" before setting up auto-payments, money coach Lora Sasiela says.

National unemployment rose to 9.8 percent during November, equaling 15.1 million Americans out of work. While foreclosure rates have fallen in recent months, the number of people delinquent on their mortgages doesn't seem to be changing, instead it appears banks are becoming more lenient on late payers in an attempt to stem the flood of foreclosed properties on the market.

How does this affect Christmas?

Many American families are planning on having fewer gifts under the tree this year. But, what does that translate to in real dollars? Per this Gallup poll, Americans plan to spend an average of $715 on gifts for the 2010 holiday season.

For some of you this will seem like an outrageous amount of money and for others, this may not seem like enough. So for purposes of perspective, let's consider this based upon percentage of annual income. Per this article, the average American income is right around $44,000 per year. The median income is approximately $33,000 per year.

Average - $715/$44,000 = 1.6% of gross income spent on Christmas presents.

Median - $715/$33,000 = 2.2% of gross income on Christmas presents. How does this fit with your personal spending plans? Does it seem on track?

For further perspective, the woman's husband that I lent money to in Cambodia earns $4 US per day. What we typically spend on Christmas is nearly his entire annual salary.

Why do we spend so much?There are plenty of external pressures to spend more and more each year.

Per Wikipedia:

"Consumerism is a social and economic order that is based on the systematic creation and fostering of a desire to purchase goods or services in even greater amounts."

How are the pressures pushing consumerism?

Christmas ads starting in September.

Keeping up with the Jones's,

Outdoing an ex-spouse perhaps,

Status symbol of your success,
American cultural trend that how much I spend on you is a direct reflection of how much I care about you...

What are we trying to accomplish, really?

Are we spending for the sake of our children?

Per this NY Times article, parents' average contribution to their child's college costs vary between $3,500 and $18,000 depending on income bracket. Of those funds, $700 to $2,800 is borrowed by the parents. How about we cut Christmas expenditures in half and put it into college savings instead?

Continued on the next page

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PHP: <b>News</b> Archive - 2011

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Thursday, January 6, 2011

personal finance planning

How does this affect Christmas?

What are we trying to accomplish, really?

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