Grow wealth, not debt

Debt in America is at an all-time high. Debt happens when the money we earn is less than what we use. America Saves Week — which was this past week — was designed to address this issue. “Start small, think big” was the motto for America Saves Week.

People often remark that they barely have enough money to pay for their expenses. According to a recent survey by Bankrate.com, 76 percent of all Americans live paycheck to paycheck. Additionally, they have less than six months of expenses in savings. A CashNetUSA survey reports 22 percent of those surveyed had less than $100 in savings and 46 percent had less than $800. Savings can help us reach a goal, such as going to college or on vacation. Money in savings is also a safety net if a job disappears, the car breaks down or unexpected medical bills occur.

It is possible to save even if money is tight.

Find small amounts to save. Saving $10 a week will add up to $520 over the course of a year. Consider giving up a purchase each day and saving that money. It might be a soda ($450 a year), latte ($1,387) or lunch one day a week ($520). Cutting out any one of these expenses and putting the equivalent amount in a savings account will jump-start your savings.

Compare prices. Make sure when you spend money that you’re getting the best deal. Prices vary depending on where you pick up your items, so select wisely. If shopping for a new television, the price might vary from $50 to $100. Buy the cheaper one and put the rest of the money in your savings account. Don’t overlook recurring expenses such as your monthly cable or phone bill. A periodic review may save you money. Multiply that savings by 12 months in the year. This can really pump up your savings account.

Reduce debt, particularly high-interest debt. Let’s say you have $5,000 on a credit card with an interest rate of 11 percent. Making a monthly payment of $200, it will take 29 months to pay off, and $700 of what is paid will be interest. If the interest rate is 28 percent, that same debt will take 39 months to pay off and will cost almost $2,600 in interest charges. This interest rate seems high, but if one payment is missed, the interest rate on an 11 percent card can easily rise to the 28 percent level. Pay off the highest interest rate accounts in your financial world and bank the savings.

Save for emergencies. The average emergency costs a family about $2,000. Whether it is a car repair, a health emergency or a house repair, these unforeseen events are what cause many of us to resort to credit cards. Save $200 a month and before the end of the year, you’ll be ready if an emergency hits.

Curb impulse spending. Whether it is those darling boots or a new comforter for the bed, those impulse buys add up. For an average consumer, 40 percent of the things purchased are bought on impulse. That can amount to big money over your lifetime. On a trip to the grocery store, go directly to what is on your list, then leave the store. Don’t be distracted by the cakes, deli items or the flowers. If you don’t need something, don’t go to the store. Buy what you need and nothing else.

This week, examine ways you can save a few dollars. By continuing this practice throughout the year, you will find yourself closer to your savings goals.

Julie Cascio is a home economist in the Cooperative Extension Service’s Mat-Su District.