5 Behaviors of Highly Effective Savers

Today's blog is a guest blog from the team at Debt.Org. Special thanks to the writer, Alanna Ritchie.

Managing personal finances successfully requires more than understanding numbers and having good accounting skills. In order for debt management solutions to be effective in helping you get out of debt and stay that way, they must be supported by changes in behavior.

Adopting five behaviors of highly effective savers can help to ensure that once you gain control over your debt and finances, you'll be able to keep that control in the long-term. Try incorporating these behaviors into the way you operate your personal finances, as well as your life in general, and you'll be sure to see positive results:

Set Incremental Goals

Setting a huge, generalized goal may end up overwhelming you, rather than moving you forward. Take that big goal – to get out of debt, perhaps – and break it into smaller, very specific steps with a workable, realistic time schedule. For example, when preparing for an upcoming big expense, set a weekly goal for saving for it.

Be a Good Record Keeper

Keeping track of what comes in and what goes out assists you in understanding the effects of your financial choices. When you are working to regain control of your finances, being a good record keeper will show you the positive results of your efforts, supplying even more motivation to keep up the good work.

3.       Own Your Situation and Your Choices

If creditors are pressing you or your credit card interest rates have skyrocketed, the bottom line is that such things are a natural consequence of your past behavior. Accept it, own it and deal with it, rather than being angry at the people calling or your credit card company. It will reduce the stress in your life and help you to be more focused on what has to be done. Maybe think of joining a credit union. They normally have fewer fees, lower interest rates on loans, more services and higher dividends on deposits than banks.

4.       Prioritize Properly

Place long-term well-being over instant gratification. Expand your vision beyond what you want in the moment to what you hope for and really need in the future by putting money in savings before you spend any for pleasure. Apply this concept to credit card use. Make financial choices—like putting money in savings or making a credit card purchase only if you know you will be able to handle payments—with the future in 

mind.

5.       Evaluate and Adjust as Needed

Effective savers are good at evaluating their own behaviors and situations and making the necessary improvements. They strive to be honest about their weaknesses and work hard to improve them. That is because they keep their goals and the big picture clearly in mind.

When you make these behaviors a part of how you manage your life and your finances, you'll be able to make the most out of the opportunity that debt settlement or other debt-related solutions offer you. All the work you do to eliminate debt will be wasted if you don't supplement the effort by developing behaviors that will keep you from returning to that position again.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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Our next Free Financial Education Workshop is this Wednesday. Credit Myths and Repair will explain the top ten myths of managing credit. We will address balances, payments, collections, and judgments.  The workshop is fun and informative. You will learn more about credit than you had ever imagined!

Credit Myths and Repair

6:30 PM - Wednesday, August 28th. 

5615 Chesbro Ave, San Jose CA 95123

To RSVP, please contact gmeyer@meriwest.com or call 408-365-6328

Managing Holiday Credit Card Debt

Imagine yourself at a department store. You are approaching the check out. How are you going to pay for this purchase? Are you using your debit card because you planned your holiday spending? Or are you using your credit cards because your only plan is to spend and eventually pay it back?

When it comes down to holiday spending, we have a choice.

Choice #1: We can go into the holidays financially blind and spend to our heart’s content and put our heads in the sand and deal with it in the New Year. This is the way a lot of people approach the holidays and they pay for it monetarily and emotionally. Not only that, but their credit scores take a hit as their credit card balances rise. Their monthly costs go up because the minimum payments on their cards increase due to larger balances. This reduces their spending power until they pay off some of that holiday debt!

Choice #2: Go into the holidays with a spending plan that let’s you buy thoughtful gifts for your family and friends but does not allow you to break the bank. That is really the best course of action. A plan is always better than winging it and winging it with money is never a good idea. To make this action effective, you have to save before the holidays come. Set up an automatic transfer from your checking to a savings account.

Next year in January, you may want to open a “Christmas or Holiday Club” account for your holiday savings if your bank or credit union still offers that. The old club accounts had money automatically transferred from your checking account and was cashed in before the holidays and paid out to the accountholder to pay for gifts. Lacking a “Christmas Club” type of account? Open a savings especially for your holiday spending and set up an automatic transfer from your checking account each month. The automatic transfer happens without any action on your part. Just remember to enter it in your check register or monitor your online banking so you don’t overdraw your checking. When the holidays are here, draw the funds from your savings and spend it to your heart’s content.

If you must use credit to pay for your gift giving, let’s consider some things that might save us some money. Let’s assume you plan to pay this newly incurred balance off in six months. How much do you plan to spend on gifts? That’s the starting point. Take that amount and divide it by six and add that to your current monthly payment on that card. Can you afford that payment monthly for the next six months? Then you may have the right amount to spend on gifts. Is it too high? You need to adjust your spending plan, not your time horizon for pay off! Remember, extending the pay off time for any balance adds more interest to your debt. Paying interest is like renting money. Who benefits when you pay interest? Certainly not me or you. The bank does! If this sounds like a good idea, you use way too much credit and need an intervention!

But, if you really like making that monthly payment and the cost is no object for you, then you might be more inclined to take Choice #1.

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Our next financial education workshop will be “Real World Budgets for Teens” and will be presented at our Chesbro Main Office on January 16^th at 6:30pm. Real World Budgets takes a teen and their parents thru a post college simulation of managing money, a job, and the payments that come with independence. I hope you can join us.

Please RSVP with Greg Meyer at gmeyer@meriwest.com or 408-365-6328.

Click here for a list of all of our financial education offerings.

Check us out on Facebook! WWW.Facebook.com/MeriwestCreditUnion