Further Ways to Save Money

I’ve recently been providing tips on how to save money. But there are so many ways to do this it’s easy to become overwhelmed—and discouraged. Because we can’t solve all our problems at once we often just give up. My suggestion is–find four or five tips that appeal to you and then make a commitment to apply them—just them–within, say, the next week. Don’t worry about other suggestions at first—just stick to the ones you’ve chosen. I think you’ll find these choices easy to do. At the end of the week, consider what you’ve accomplished. I guarantee you’ll feel great, and motivated to make further commitments. That is the way to make real progress toward getting control of your finances. Here are some “doable” savings strategies you can start today:

My all-time favorite: Open a saving account at a local credit union. I’m a big fan of credit unions since they’re normally locally based and make a habit of building relationships with their customers. Once you’ve got the account open, fund it with a voluntary deduction from your paycheck—it doesn’t have to be a lot, say 30 or 40 dollars—but make it automatic, from every check. In no time you’ll have saved some serious money. This can be that rainy day fund you can use to avoid going into debt in the event of a financial emergency. If you find it too hard not to dip into the savings, another suggestion is to reduce your withholding exemptions to have more taxes deducted from your paycheck. You’ll get the savings back—in full–after tax time the following year.

Second, look around for a truly free checking account. Having the wrong checking account can take hundreds of hard-earned dollars out of your pocket every year. The average interest-bearing checking account charges a monthly service fee of almost $15 and requires maintaining a large minimum balance. Instead, look for an account that charges no monthly service fees or per-transaction fees and doesn’t require a minimum balance. This may take some searching, but those accounts are there. Sometimes they may require signing up for direct deposit of your paycheck, which is not a bad idea. And that free checking just might be with the credit union where you established your savings account.

Third, if you’ve got a fairly large balance on your credit card, call up your credit card company and request a rate reduction. If you pay your bill on time every month, they may be willing to negotiate. If the telephone rep isn’t able to help you, respectfully but firmly ask to speak with a supervisor. If they won’t go for it, investigate a 0% balance transfer onto another card. The key here, though, is to stop buying on credit until your financial situation is healthy.

Fourth, closely inspect your monthly credit card statements to see if you’re paying for any for any unused services—credit protection plans, internet games, on-line magazines, even that unused gym membership. If you are, call and cancel them. Also, be on the lookout for services you’ve subscribed to at a higher level than you’re now using—such as Netflix. I’ll bet you’ll find savings of at least 20 or 30 dollars a month.

A fifth tip for this week: Reevaluate your insurance coverage. Switching to Geico (or any other insurance company) may or may not save you money, but it’s definitely worth looking into. Make an effort to bundle your insurance needs: both your car and your homeowners or renters coverage. Even if you have been with one insurance company for years, use online comparison tools and shop around to find the most competitive rates. If you find a better quote, call your present carrier and see if they can beat it in order to retain you as a customer. If they don’t value you enough to give you a better deal, you have no need to show them any loyalty—saving money is just too important. And while you’re at it, if you’ve got children, consider getting some quotes on term life insurance—even $100,000 of coverage can be very cheap.

Again, just try these five moves within the next week. Don’t just think about it—take action! They are certainly doable. And you’ll see that even these small steps can give you the confidence to try additional savings moves in future weeks. Folks, gaining power over your finances is a series of these small steps. I’m here to encourage you to take those small steps, and to create those good habits, that can make changes in your life.

If you have questions about ways to save or how to avoid common financial traps, or if you’re in trouble financially, visit my website, cypresscoastlaw.com, where you can access my full library of Financial Focus shows, or call me at 424-1764, that’s 424-1764. Initial consultations are always free.

So please join me every Friday on KRML in the 7:00 am and 4:00 pm hours for your Friday Financial Tip. This is Salinas Bankruptcy lawyer Cypress Coast Law saying go have a great day.


Renegotiate your Debt

It never hurts to call around to each of your creditors and attempt to have your interest rate lowered. Be familiar with your recent use of your card to show that you’re a valuable customer-someone your creditor doesn’t want to lose. Set aside some quiet time to call. If you’re unsuccessful with the telephone rep, respectfully but firmly ask to speak with a supervisor. I’ll bet you’ll have at least one or two successes on your first try.

Folks, gaining power over your finances is a series of these small steps. But those first small steps can lead to feelings of frustration and hopelessness-a feeling that the problem is so big that nothing can be done. And because we can’t solve the whole problem at once, we often discourage ourselves from even trying. I’m here to encourage you to take those small steps, and to create those good habits, that can make changes in your life.


A Bankruptcy Lawyer's Guide...To Avoiding Bankruptcy

In my thirty-plus years as a bankruptcy lawyer, one surprising fact has become apparent: A majority of my clients did not get into financial difficulty “on purpose.” Rather, they found themselves with impossible debt loads almost by accident—essentially by being unconscious of their own unwise financial habits. Sadly there is no comprehensive education available to citizens about how to handle money matters and avoid such harmful habits.

This state of affairs is not surprising when we realize that debt is the most heavily advertised product on the planet. The answer, of course, is debtor financial education. Knowing more about how debt can ensnare the unwary will lead to more responsible spending, less resort to debt—and fewer bankruptcies.

Here are some suggestions for good financial health you can apply to your own life.

Believe it or not, your first step, and one of your most powerful moves, is to put your credit cards in a drawer. Don’t carry them around; use only cash and your debit card. While you can always take the card out in an emergency, the unconscious use of credit cards is a major reason folks lose control of their finances. Avoid credit cards like (forgive me) the plague.

Once the cards are out of the way you can address your spending. It is common for clients I see to simply not know where their money goes. With no financial “compass” to guide them it’s an easy next step to getting into debt difficulty. But getting present to one’s finances is a huge step toward getting control. What is “getting present”? Simply put: Pulling out your bank records for the last three months and actually sorting out by category every dollar you’ve actually spent. Just seeing where your cash goes leads to wiser spending.

Next, map out your credit card bills. List them with all the balances, interest rates, minimum payments, and due dates. Since your cards are already locked a drawer you’re now going to develop a plan for paying them down. Start with setting automatic payments from your bank account so you’ll never miss another payment. Then concentrate on the card with either the highest interest rate or the lowest balance. Make paying down the cards one of your highest priorities.

Next tip: Develop an emergency fund. Regardless your income, everyone should have a savings plan and, for it to work, it should be automatic. I recommend setting up a savings account with a local credit union and then fund it with an automatic deduction from your paycheck. It doesn’t have to be a lot—say $25 per payday. The secret is to save consistently. Having a cushion built up the next time there is a money crisis means avoiding having to go into debt.

A last tip that applies to all efforts to get control of your finances: Be on the same page as your partner. Whether you’re married or just in a committed relationship, competing interests are suicide. This applies to all facets of your financial lives. Have a real heart-to-heart, and don’t keep secrets—put everything on the table.      

These are just a few of the many steps it takes to build financial wisdom. But the first steps can lead to discouragement—a feeling that the problem is so big that nothing can be done. I’m here to encourage you to take those small steps and to create those good habits that can make changes in your life. If you apply yourself you will see changes in just a matter of weeks. Best of luck!


Financial Myths

In my bankruptcy practice I’m often amazed at the number of credit myths that many folks carry around. Distinguishing between what’s reality and what’s nonsense is not straightforward—so folks will often not ask questions at the risk of appearing foolish or uninformed. So let me deal with some of these myths today.

  1. One credit report is enough. Simply, wrong. The three major reporting agencies—Experian, TransUnion, and Equifax, each use slightly different criteria in assessing your credit history that can result in a spread of 50 or even 100 points. Also, an error may appear on one report and not another. If you’re checking your credit, always use a service that checks all three agencies.
  2. Self-checking my credit hurts my credit score. Not true. When you check your own score this is a “soft” inquiry that has no effect on your score. An inquiry when you apply for credit is called a “hard” inquiry that can temporarily affect your score.
  3. Debit and Credit Cards Affect Credit Scores Equally. Not even close. With a credit card you are in effect borrowing from a lender, who you will repay with interest. A debit card on the other hand withdraws your own money from your account—there is no credit transaction and thus no risk to a lender.   Debit cards therefore do not affect your credit score.
  4. Paying the Minimum Balance is Sufficient. A minimum payment on a credit card will usually result in it being paid off in 20 years or more. Plus, a history of just minimum payments is not good for your score. If your cash is limited and you’re prioritizing payments, a good rule is to be sure to make the minimum payment on every account other than the one with the highest interest or lowest balance, and then concentrate on paying that one off.
  5. You only owe half of a co-signed debt. When you co-sign for another you are promising that in the event of default you will be liable for the entire balance. If your friend loses their job, the creditor is going to come after you for the whole amount. If you’re both working they may come after both of you, but if your friend is unemployed, or absent, that leaves only you.
  6. I Don’t Make Enough to Save. Also incorrect. Saving is the core of every financial plan. Every single person who has an income should have some form of savings—whether it’s dropping leftover change in a jar or having an automatic deduction from your paycheck into a savings account. If you don’t save, you won’t have money when emergencies come up, and you won’t have money when it comes time to retire. Plus, saving is a habit—once you have it, it becomes easier until it’s second nature.
  7. Library Fines Don’t Count. Oh yes they do. If you owe money and don’t pay your creditor—whether the gas or water company, the library, or the homeowners association—they can and will refer you to a collection agency, which will quickly report your non-payment.
  8. I Can Start Over With a New Credit Identity. Folks, there’s only one way to create a new credit identity and that’s to commit fraud. Such techniques often involve falsely obtaining a new Social Security number or even using one that’s been stolen, which constitutes identity theft. This can result in a criminal prosecution or, at the very least, smear your credit reputation for years.

Folks, I’m hoping you stay away from these harmful myths. If you find yourself in debt trouble always seek out the advice of a financial professional or experienced bankruptcy attorney. The only foolish question about your financial wellbeing is the one that doesn’t get asked.