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• By Lisa

America Saves Week – Save By Reducing Debt

One of the greatest contributors to financial stress is debt. If you're having a tough time financially, it can feel isolating, but the truth is 80 percent of Americans have consumer debt. The only way to relieve financial stress is to make a plan and work your way through it. But to make that plan, you'll need to understand the type of debt you have, your best-case scenario to pay down your debt, and how to leverage your knowledge so that you can maintain or increase your credit score. When you reduce your debt, you save in the long run — on late fees, interest, and a higher credit score, which will lower interest rates.

Get A Clear View Of Your Finances

You thought we'd say budget first, didn't you? While creating a spending and savings plan (our preferred term over "budget") is essential, the true value in having a plan is clarity. When you know your exact income and expenses, you can better steward the discretionary income left over after your bills are paid. It will become easier for you to decide how much to spend, if you can put more toward debt, what goes into savings, and whether to begin making investments. Your spending and savings plan will also highlight areas that need attention.

For example, is your grocery allocation adequate? Are all of your subscriptions and recurring monthly expenses still necessary, or can any be canceled? Knowing where all of your money is coming from and going to helps you build financial confidence and shows you where you can afford to reduce your debt and begin building wealth.

If you need support with making a spending and savings plan, we've created a straightforward tool that will help!

Work With What You Have

When you're paying down your debt, one conscious decision to adopt is to stop adding to your debt. This step may seem intuitive, but there are circumstances where the urge to just "charge it" may arise.

Many "Buy Now, Pay Later" options are becoming increasingly popular. Though it may feel like it is not, options like Klarna, Afterpay, and Affirm are debt and should be treated as such.

As you work to pay off your credit cards, here's a word of advice: do not close your credit cards!

Closing your credit card accounts may reduce your credit score, as the "age" of your credit factors into your FICO score. By keeping your card open with a $0 balance, you'll have a longer credit history and a larger amount of available credit. The only time you may want to consider canceling a card is if it has pricey annual fees.

Increase Your Income

If you can, consider increasing your income temporarily, allowing you to put more money towards your debt. This will allow you to pay down your debt faster! There are so many options to get a quick cash injection or additional income in today's economy. Some ideas include selling items around your home you no longer use, purging your closet on sites like thredUp, leveraging a talent or skill you have, like tutoring or singing, to offer as a service, or taking advantage of the booming gig economy.

Paying It Off For Good Starts With A Decision

There are many strategies to use when working toward paying off your debt. The most popular strategies include the snowball method or the avalanche method. By deciding which method you want to use beforehand, you will reap the benefits of paying it off faster.

Snowball Method

"Snowballing" your debt is a type of accelerated debt repayment plan. First, list all of your debts from the smallest balance to the largest balance. Next, make the minimum payment on all your debt except the smallest one. With your smallest debt, you will put as much money as you can toward the balance. Once the smallest debt is paid, take the amount you were putting towards that debt and apply it to the next smallest. With this method, interest rates are not the focus.

Avalanche Method

With the "avalanche" method, you will still make the minimum payments on every source of debt, but you apply the remaining funds toward the debt with the highest interest rate. By paying off the debt with the highest interest rate first, you reduce the overall amount of interest you pay.

Making extra payments allows you to pay off your loan(s) more quickly when paying toward installment loans, like your car payment. Just be sure to specify that any additional funds outside of your monthly payment go toward the principal. Before you begin making extra payments to installment loans, check the terms of your loan to determine whether additional fees or prepayment penalties may apply.

Regardless of how you decide to reduce your debt, let America Saves be your savings accountability partner! Take the America Saves Pledge and choose “reduce debt” as your savings goal. We'll support you by sending email and text reminders, resources, and tips to keep you on track towards paying down your debt.

Make the Pledge

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We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

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• By Lisa

America Saves Week – Save to Retire

Retirement is one of those endeavors that fall into the “someday” category. When living your day-to-day life as a person in their 20s, 30s, and even your 40s and those everyday expenses pop up, it’s more difficult to save for something that is seemingly so far away. But as we all know — life comes at you fast. A 2020 survey by Charles Schwab of currently employed 401(k) plan participants found that saving enough for retirement continues to be a leading source of significant financial stress for all generations.

While studies show that 71 percent of Americans are adequately prepared for retirement, much of that includes receiving Social Security benefits under the current law. With Social Security payouts only scheduled to be paid at the full benefit amount through 2035, Millennials and Gen Z have to approach retirement from a different perspective — one that is diverse and doesn’t rely on Social Security benefits, if you can help it. The good news is that starting early allows you to reach your retirement goals more easily.

In today’s economy, we can’t overlook the fact that there are some people who are not making a fair living wage, making it difficult to save. But for those of us with the ability to save it’s important to understand that it’s never too late to start saving for retirement. Your future self will thank you!

1. Get In The "Retirement Ready" Mindset

The first step is getting in the right mindset, meaning-making your new savings goal a priority. We encourage you to “Start Small, Think Big” and take advantage of retirement solutions available to you like your employer's 401K or 403 B plan or IRA options you can open on your own.

If you’re starting your retirement savings journey early, you have time on your side! However, if you’re closer to retirement age, then prepare to be a bit more aggressive in order to achieve your retirement goal. Research how to make catch-up contributions to your retirement savings, ultimately jump-starting a stalled plan.

The good news is this: it’s never too late! It is important to remember that saving anything is better than saving nothing. Even increasing your retirement savings by one percent can make a huge difference in the long run.

IRA OPtions with Safeamerica Credit Union

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We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

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2. Define What Retirement Will Look Like For You

Your retirement years will be as individual as you are! Have you visualized how you’d like your retirement to look and feel? Think about where you want to settle down. Will you stay put and have sweet tea and lemonade on the front porch most days or do you intend to travel far and wide? Most importantly, how much “annual income” will you need to achieve this envisioned lifestyle? Asking yourself these questions will help determine a rough estimate of how much to start saving now.

Someone who plans to travel and or have an active lifestyle when they retire may need to save more than someone who has a home that is paid off with no grand plans of world travel.

You will also need to consider exactly when you want to retire. This will help determine how much you should be saving annually. In the modern age, people pre-retire, half-retire or even never leave the workforce at all.

3. Calculate How Much You'll need To Save

Once you have an idea of what type of retirement you want to have, estimate the annual retirement income needed. You want to ensure you are saving for the future you want. Most Americans are not putting enough money into their retirement fund every year in order to afford the life they want for themselves in the future.

What each person needs will vary widely based on a number of factors, including your current age, the age at which you plan to retire, if your partner or spouse has an income, your spending habits, and different sources of retirement income. There are also circumstances beyond your control, like how long you can expect to live based on family history.

While there is no hard and fast rule to determine how much to save by a specific age, many personal finance experts recommend having saved an amount equal to your annual salary by age 30, three times by age 40, and five times by age 50. While this can be overwhelming if you haven’t hit those milestones in your retirement savings yet, one small step you can take is to increase your contribution rate with each pay raise. Remember, building a savings habit and taking control of your finances, like you’re doing now, is worth celebrating.

4. Take The America Saves Pledge

Now that you have a better idea of what exactly you’re saving for and how much, it’s time to consider how you’ll achieve your dream retirement. The America Saves Pledge is a tool that helps you make a simple plan to meet your savings goal while offering you long-term accountability and support along the way. Take the America Saves Pledge and visit AmericaSaves.org for tips, resources, and support on your journey towards retirement. Remember: savers who make a plan are twice as likely to save successfully!

5. Do Your Homework

Consider what type of accounts to deposit your retirement savings into. Your employer may offer a retirement plan such as a 401K, 403B, or SEP-IRA and match your contributions up to a certain percentage. The most important consideration here is to take advantage of any employer benefits such as matching your contributions up to a certain percentage. Find out if your employer offers a match and contribute at least enough to maximize that benefit.

Individual Retirement Arrangements (IRAs) are also an option, and you can open one anytime through financial institutions or financial services providers. There are several different IRAs including the most common: Roth and Traditional. Roth IRAs can be withdrawn at anytime without penalty and are tax-free. Traditional IRAs may be tax-deductible and your earnings grow tax-deferred until you start making withdrawals. You’ll need to determine which is best for you — or maybe a combination of both. The IRS has put together a great comparison tool to understand the differences between the two accounts and decide which may be better for you.

6. Prioritize Making Your Contributions Automatically

Now that you can visualize the type of retirement you want, have determined approximately how much you’re saving for, and have a plan and support in place, the best thing you can do is to set it and forget it! Set up automatic payments and contributions either through your employer or from a financial institution to stay on track.

The point of retirement savings is to keep it invested for the long term. This means avoiding dipping into your retirement fund for emergencies. Instead, create an emergency savings fund that you are also contributing to consistently.

Research by the Employee Benefit Research Institute shows that it typically takes 13 years or more of contributions to an account before you begin to reach a level of savings that is enough to fund a number of years of retirement as a supplement to Social Security. So don’t become discouraged if you feel you do not have enough savings in your retirement fund just yet.

Whatever path you choose to take toward retirement, the biggest step to take is being consistent. Retirement savings is a long-term commitment, but today’s work will pay off in the long run, literally. Take the America Saves Pledge and let us help you reach your goals, no matter what they are. Your future self will thank you!

 

Make the Pledge

By accessing this link, you will be leaving SafeAmerica's website and entering a website hosted by another party.

Although SafeAmerica has approved this as a reliable partner site, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of the bank's website. The other party is solely responsible for the content of its website.

We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

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• By Lisa

America Saves Week – Save for the Unexpected

The Coronavirus pandemic has made saving a priority for most Americans, especially those most vulnerable with low to moderate earnings. In fact, a recent study by Edelman Financial Engines, in conjunction with America Saves and the Bipartisan Policy Center, found that:

  • 40% of working Americans report they had difficulty paying for a personal expense in 2020.
  • 1 in 3 working Americans say they would run out of savings on hand in 1 month or less if their income suddenly stopped.
  • Nearly 1 in 2 working Americans (45%) would have difficulty paying for a $400 emergency expense, meaning they say they would not cover it with savings or put it on their credit card and pay it off at the next statement; 11% say they would be unable to come up with the money.

While saving provides us with a much-needed financial cushion, it also helps ease the emotional burden of worrying about what’s around the corner.

Save for Opportunities

Day Two of America Saves Week encourages us to save for the unexpected. While saving for emergencies is always a much discussed topic in personal finances, here’s something that’s not as widely discussed: saving for opportunities.

If you are in the position to save, you’re not only saving for an unexpected car repair, medical bill, or appliance breaking down — you’re also saving for the last minute dinner invite with friends and family, the concert for your favorite artist, or the ability to grab a birthday gift for your child’s classmate.

Today we want you to consider reframing saving for the “dreaded emergency,” and recognize that you’re also saving for fun and positive opportunities! Doesn’t it feel better to contribute to an OPPORTUNITY FUND vs. an EMERGENCY FUND?

If you haven’t, we encourage you to take the America Saves Pledge. After making your new savings plan, you’ll receive support, reminders, and tips from America Saves that will help keep you on track towards achieving your goal.

Make the Pledge

By accessing this link, you will be leaving SafeAmerica's website and entering a website hosted by another party.

Although SafeAmerica has approved this as a reliable partner site, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of the bank's website. The other party is solely responsible for the content of its website.

We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

Continue

• By Lisa

America Saves Week – Building Financial Resilience – February 21 – 25, 2022

Join us for America Saves Week from February 21st to the 25th as we share tools and resources that inspire members and their families to save successfully and achieve better financial stability. Each day during America Saves Week focuses on a new theme regarding Building Financial Resilience and provides you with tips and tools to help you accomplish your financial goals. Be sure to follow us on social media to view new tips each day.

America Saves Week Daily Themes:

  • Monday, February 21, 2022 | Save Automatically
  • Tuesday, February 22, 2022 | Save For The Unexpected
  • Wednesday, February 23, 2022 | Save To Retire
  • Thursday, February 24, 2022 | Save By Reducing Debt
  •  Friday, February 24, 2022 | Save As A Family

Why You Should Participate in America Saves Week

By participating in America Saves Week, we can help you navigate through different areas of your finances that better position you for success. By the end of the week, you’ll learn about short term and long term savings goals (such as emergency funds and retirement), the best strategies for saving successfully (making a plan and saving automatically), and how to have healthy conversations and instill positive financial behaviors with your family.

About America Saves

America Saves is a non-profit organization that uses principles of behavioral economics and social marketing to motivate, encourage and support everyday Americans to save money, reduce debt, build wealth and create better financial habits. America Saves is an initiative of the Consumer Federation of America (CFA), a non-profit, pro-consumer organization of over 270 consumer education, advocacy, and cooperative members dedicated to advancing consumer interest.

America Saves encourages individuals and families to take the America Saves pledge, a tool that empowers you to commit to save successfully with a plan. Thousands of non-profit, government, and corporate organizations partner with America Saves through local, regional, statewide, and national campaigns both year-round and during America Saves Week. Learn more about America Saves Week.

Take The Pledge

Those with a savings plan are twice as likely to save successfully. Taking the America Saves Pledge is a pledge to yourself to start a savings journey and America Saves is here to encourage you along the way.  Take the first step toward creating a better financial future. Make a plan, set a goal, and pledge to yourself to start saving, today. Complete the Pledge and America Saves will send you short email and text reminders, resources and tips to keep you on track towards your savings goal. Become part of an entire community of savers. Get started now!

Take the Pledge

By accessing this link, you will be leaving SafeAmerica's website and entering a website hosted by another party.

Although SafeAmerica has approved this as a reliable partner site, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of the bank's website. The other party is solely responsible for the content of its website.

We encourage you to read and evaluate the privacy and security policies on the site you are entering, which may be different than those of the bank.

Continue

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