Personal Loans Deferred in Favor of Cash Savings
Savings prove more reliable than credit
Consumers who had to rely on personal loans to make ends meet throughout 2009 are making strict financial resolutions for 2010. Nancy Sycamore of Plainfield, Washington said, “We thought three month’s worth of savings would last us…that was the suggested savings amount by numerous experts. When we went down to a one-income house, our savings quickly diminished.” Saving more money is a high priority among Americans now that 2010 is here. The recession taught many consumers a few lessons when it comes to credit. First of all, credit isn’t the savior it was thought to be. Credit card companies were quick to shut their doors to even good clients, when the recession was at its most difficult. Secondly, good old-fashioned cash proved to be the most reliable form of funding in a tricky market.
Finding ways to save in 2010
Everyone knows that savings is a high priority, but what are some ways to save? The best thing about saving these days is that it can be done automatically. For example, directly depositing funds from a paycheck into an interest-bearing savings account can make saving effortless. June Schroeder, financial planner with Liberty Financial Group, said, “Any bonuses or raises should be carefully managed. A good rule of thumb is to put at least half of any extra money directly into savings.” Also, any rebate checks or coupon discounts should go to savings as well.
Ways to bulk up savings
There are a few ways to bulk up savings. For anyone who wants to commit to their New Year’s resolution of having bigger cash reserves, here are a few helpful hints:
- Research financial plans. It is never a good idea to become lax with where money is going, but for someone wanting to increase their savings, it’s crucial. Consumers should study their 401k and credit card accounts. They should know exactly how much their debt is costing and have a viable plan when it comes to minimizing it. They also should research insurance policies for any lapses in coverage and revamp the contract if necessary. Any personal loans should be studied to find out if credit rates can be renegotiated and if the loan is truly necessary. Many consumers do research on existing credit accounts and realize that they can get along relatively easily without them.
- Be aware of new credit card rules. In February of 2010, the second phase of the Credit Card Act begins. By law, the days payments are due have to occur the same time each month. This is great news for the millions of borrowers who struggle with paying their bills on time. The number one thing a consumer can do to better their credit is pay on time, every time. Bringing up credit scores can open the door for lower interest rates and that can save money.
- Research monthly budgets. It’s always a good idea to periodically study a budget. Financial Planner Mary Middleton said, “Things change. The markets change. A budget that worked a year ago may not be most efficient now.” A good rule of thumb is to look at the biggest expense areas in a budget and find ways to minimize them. For example, if a mortgage payment is the biggest bill, a consumer can try refinancing for a lower rate or if credit card payments are too high, consolidation may be an option.
In today’s post-recessionary market it is more important than ever to save money. Older generations were right when they said: “Cash is king.” Millions of Americans are mired in debt from credit cards, personal loans, mortgage loans and automobile loans. With some careful planning and immediate action, the goal of saving money for 2010 can be achieved.