"Something always comes up."
"I'm always living from paycheck to
paycheck."
"Things are just too tight to save any
money."
Sound familiar?
Those are some of the things people told us when we asked them to discuss everyone's favorite topic: money.
It turned out that most people think they have too much debt and too little savings. That's why we wrote this
information for you.
Here, you'll find useful tips on how to get out of debt, save money and, above all, start changing your life so
you control your money. Not the other way around.
Sure, you aren't going to solve your money problems in just a few pages. It's hard work to change old habits.
And it takes time. The idea is to make improvements gradually, one step at a time--the same way you got to
where you are now.
Like anything else, it all starts with a decision to simply do something. We hope this information helps you
make that decision.
If that question comes up in your home every week or so, we can help you answer it.
But you'll have to do a little work.
You see, before you can get ahead financially, you have to know where you've been.
And the only way you can do that is by taking the time to find out exactly what your
spending habits are. Once you've done that, it's easy to see where all the money is
going.
Get out your checkbook and a sheet of paper. Write down a few basic categoriesù
things like mortgage or rent, groceries, clothing and utilities. Then go through your
checkbook for the last three months and fill in the categories, adding more categories if
you need them. Include a "miscellaneous" category for those things that don't fit
anywhere else. After you're done, divide the total by three, and you have a pretty good
idea how much you're spending on each category every monthùat least how much
you're spending by check. Now you're ready to go on to the next step.
It's amazing how much money is spent on those little things throughout the day. A cup
of coffee here, a magazine there--before long you've spent $10. (If $10 doesn't seem
like much, multiply it by 365 days a year and you're looking at a Hawaiian vacation.) So
here's what you do. Get a pocket calendar with enough space on each day to jot down
those little cash outlays. You might be surprised at just how much you're spending that
you could be saving.
Used wisely, credit can be an extremely useful financial tool. But it can also be your
worst enemy.
According to financial experts, most Americans are in debt to the point where a major
financial emergency could put them over the edge.
Getting out of debt is the first step to financial survival. These tips and the attached worksheet
can help you decide if you're in dangerous territory.
You know you're in debt trouble if youà
- Have debt payments that exceed 33%-40% of your gross income.
- Pay only the minimum due on accounts.
- Use one credit card to make payments on the other ones.
- Notice your loan balances are staying about the same--or are creeping upward from month
to month.
- Put off one bill to pay another.
- Ae past due with basic living expenses, such as rent and utilities.
- Apply for additional credit cards because you've reached your limit on the ones you currently
carry.
- Take advances on paychecks or depend on extra income, such as overtime.
- Use credit or tap your savings to cover everyday living expenses.
- Worry about your debts.
If two or more of these statements describe
your situation, it's time to do something about your
debt.
Source: Consumer Credit Counseling Service of Seattle
Here are some suggestions that can help you prevent credit problems.
- Pay more than the minimum monthly payment on revolving credit accounts.
- Limit your credit card use, and reduce the number of cards you carry.
- Carefully weigh pre-approved credit offers you get in the mail.
- Use instalment loans or low-interest creditlines for purchases you plan to pay off over several
months or years.
- Don't put off getting help if you're in over your head.
- Turn to professional credit counseling services for assistance.
The cost of living the American dream was recently determined to be $60,000 a year.
But ask someone making $60,000 a year if they have enough, and what do you
suppose they'll say?
It seems that no matter how much money people make, they always want more. And
that makes them unhappy with what they have. But the real trick isn't to spend more.
It's to save more.
That's because the financial security that comes from having money in the bank makes
the rest of life that much more enjoyable. (Imagine how you'd feel without money
worries.)
Saving money is hard. Even people who work at a bank have trouble saving. It's just
human nature to want things now, not sometime in the future.
With that in mind, we've put together the following suggestions on ways to start saving.
Remember, if you can cut back just over $3 a day, you'll have $100 a month to put into
savings. And if that $100 then earns 3% interest compounded monthly (annual
percentage yield = 3.04%), in 10 years you'll have over $14,000. In 15 years, that $3 a
day will be worth almost $23,000. It's easy to see that this is one habit worth getting into.
Short of winning the lottery (which you have to admit has pretty steep odds), these are the only two
ways to get extra cash to put into savings. Here are tips on how to do both.
- Ask your doctor to prescribe generic prescription drugs.
- Shop salesùbut never buy what you don't need.
- Bring your lunch instead of going out.
- Use private label merchandise (aspirin is aspirin).
- Call long-distance at night or on weekends (better yet, write).
- Increase the deductible on your auto insurance to $500 or even $1,000.
- Buy in bulk (for sources, look in the phone book under Co-ops).
- Ride the bus or carpool.
- Make fewer shopping trips.
- Never shop for groceries when you're hungry.
- Buy only from lists you prepare in advance (this goes for everything from food to clothing).
- Never pass up a garage sale (unless they make you spend extraùthen always pass them
up).
- Pool babysitting and transportation with neighbors.
- Swap skills: paint my garage and I'll do your weeding.
- Rent videos or borrow them from the library instead of going to the movies.
- Maintain your car so you can avoid unnecessary repairs and keep it longer before trading it
in.
- Eat more meals at home, and make more of them meatless.
- Make your own gifts (or perform a personal service instead of buying something).
- Think in terms of repairing, not replacing.
- Use self-service gas stations (unless you live in Oregon!) and pay cash; you can save as much as 5 to 10 cents a gallon.
- Get a second job at night or on weekends.
- Sign up with a temporary-help agency.
- Look for freelance work in your field.
- Think of what you're good at and advertise your services in the neighborhoodùtyping,
carpentry, accounting, day care, catering.
- Start a small business at home.
- Take an adult-education or trade-school course that will help you qualify for a higher-paying
job.
- Look into overtime work at your job.
- Rent out a spare room to a student.
- Have a garage, attic or basement sale.
- Look for a job with better employee benefits; getting health insurance that pays most of your
doctor bills is like getting a raise.
Once you've started finding more money to save in your day-to-day life, you can become more
disciplined in the way you save. Here are some sure-fire ways to make your savings grow.
- Pay yourself first. Put a savings deposit slip on top of the bills that are due and make out the first
check to yourself.
- Save automatically. Even easier than writing a check, most banks will transfer the amount you specify
from your checking account to your savings account for you each month.
- Stash extra cash. When you get a bonus or raise, make it a point to save at least 20% of it, after taxes.
Then you can reward yourself by spending some of it without guilt.
- Check your withholding. While it's nice to get a big tax refund check every year, you're really just
making an interest-free loan to Uncle Sam. Make sure you have no more than necessary deducted from
your paycheck for taxes. If you have more coming to you, save itùand earn interest on the money
yourself.
- Have an emergency cash reserve. Save an amount equal to three months of incomeùand don't touch
it.
- Save regularly. The amount you save isn't as important as developing the savings habit. But you
should aim to save 10% of your income.
- Establish an Individual Retirement Account (IRA). Even if your contributions aren't fully tax
deductibleùand they still are for many peopleùyour savings grow tax deferred.
Money doesn't grow on trees, but it does grow.
The best thing about a regular savings plan is watching the effect of interest on your
savings. These examples are based on an annual interest rate of 3% (annual
percentage yield = 3.04%).
Amount per month 12 months 24 months 36 months 48 months
$25 $304.93 $619.14 $942.91 $1276.51
$50 609.87 1238.29 1885.83 2553.03
$75 914.80 1857.43 2828.75 3829.55
$100 1219.74 2476.58 3771.66 5106.07
This chart is based on 3% interest, compounded monthly (APY=3.04%), on deposits made the same day
each month. This is an example only and may not reflect current products or rates offered at U.S. Bank.
At U.S. Bank, you'll find helpful professionals who know a lot about money. And you can
use that knowledge to your advantage.
If you'd like to talk to us about your finances, we can help you find a number of ways to
use your accounts to save money.
Some of the ways we can help are right on this page. And once we know more about
your individual situation and goals, we can provide even more suggestions.
- Turn interest into a deduction. If you need a loan and own a home, consider a home equity
loan or line of credit; the interest may be tax deductible.
- Lower your house payments. Depending on your mortgage, refinancing may save you
hundreds of dollars a month by lowering your interest rate.
- Get a creditline--just in case. If an emergency hits that you can't cover with
savings, it's nice to know you can access money quickly. Some creditlines can be tied to
the equity in your home, so the interest may be tax deductible.
- Look for money in your checking account. By getting a checking account that pays interest,
you can earn extra money each month.
- Protect yourself from overdrafts. One little mistake in your checkbook can cost you big in
overdraft fees. Avoid them by getting a checking account with overdraft protection.
- Save automatically. Have your bank transfer money from your checking account to your
savings account every month.
- Attack unnecessary service fees. You may be able to save a few dollars a month by making
sure you are in the right account for your particular needs.
- Cut your credit card interest. Credit cards are getting more competitive all the time, so you
may be able to get a card with a lower interest rate than you're paying now.
Why does U.S. Bank care so much about your finances? Simple. A financially healthy
nation is good for everyone--citizens and banks alike. And the more you know
about finances, the more you'll appreciate everything U.S. Bank has to offer you.
The important thing is that you get to the point where you feel financially secure. It's a
good feeling. And we're here to help you every step of the way.
Here are some tips to help you on your way to a future with less debt and more savings.
- Set realistic goals. You wouldn't run a marathon after a week of jogging. The same goes for
money. By setting goals you can realistically attain, you have a much better chance of
succeeding in the long term.
- Start slowly. Saving an extra $5 a day puts an extra $1,825 in your pocket at the end of the
year--not including interest.
- Don't get discouraged. If you set realistic goals and start slowly, you're less likely to lose
heart. But if you do, remember that your finances will get better the same way they got
worse--one small step at a time.
If you're serious about taking control of your money, here are some books that might
help.
Making the Most of Your Money, Jane Bryant Quinn
Your Money or Your Life, Joe Dominguez and Vicki Robin
The Only Investment Guide You'll Ever Need, Andrew Tobias
The Only Other Investment Guide You'll Ever Need, Andrew Tobias
Sylvia Porter's Your Finances in the 1990s, Sylvia Porter
Smart Money Moves for the '90s, Editors of Money Magazine
U.S. Bank of California
U.S. Bank of Idaho, National Association
U.S. Bank of Nevada
United States National Bank of Oregon
U.S. Bank of Washington, National Association
Member FDIC
An Equal Opportunity Lender
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Feedback or questions about this site or U.S. Bank? Send e-mail to: Tom Parsons
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For More Information Contact the Student Loan Center at 800/242-1200