SafeAmerica Credit Union

Take inventory

• By Kevin Alvarez

Coping with Inflation

Inflation continues to put pressure on household budgets. From groceries to gas, record-breaking inflation means the purchasing power of your money is decreasing each month. Below you will find guidance on how to best navigate a time with high inflation.

1. Take Inventory of your full financial picture. Has your household income changed? have you adjusted your budget for rising groceries, transportation, or other expenses? Check your existing budget to see where you stand and where your money is going. If you don't have a budget, it can help to create a simple spending plan or roadmap of monthly expenses. A good place to start is to use resources like a budgeting worksheet track your monthly income against current expenses.

2. Continue to build an emergency fund to tap into when unexpected circumstances arise like a medical expense or costly home repair. An emergency fund helps reduce the chance of taking on debt to cover an unplanned expense. It might be tempting to pause monthly savings as rising prices take a bigger bite out of your monthly budget, but resist the urge. Put savings on auto pilot with each paycheck. Even a small amount will add up over time.

3. Prioritize monthly spending in a time of rising prices. Rethink certain monthly expenses such as subscription or streaming services. According to researchers, the average household has 4.5 streaming services and spends an average of $55 on them per month. This may not seem like much, yet $55 a month adds up to more than $600 per year. If you’re trying to cut expenses in the face of higher prices, ditching underused subscriptions can be a good place to start. As essentials get more expensive, figure out your new baseline. Limit credit card use and curb discretionary spending (dining out, entertainment). GreenPath’s Aligning Priorities workbook can help you make these decisions.

4. Monitor debt, especially as interest rates rise. Paying off high-interest credit card debt saves you money in interest, improves your credit score, and frees up room in your budget. Choose a debt payoff strategy that works for your situation. Consider GreenPath’s Debt Management Plan which helps you pay off unsecured debt in 3 to 5years. GreenPath can work with many creditors to bring your ac-counts current, lower interest rates, and eliminate fees.

5. Shop smart. Research the best sales, coupons, and specials, especially on products that are low in inventory. Check dollar stores for deals on household items and stock up on those items where possible. Bulk retailers or wholesale clubs might be a good way to stock up on items in large quantities for a lower per-use cost. Strategically plan your higher-cost purchases. Swap out brand-name items for generic as much as possible.

6. Keep tabs on your credit history. In times of rising prices, it pays to keep tabs on credit history, which is used to calculate your credit scores. The three digit number of your credit score helps determine whether lenders approve you for new credit and what interest rates they offer. Annualcreditreport.com is a trusted “one-stop-shop” to check your reports from Experian, Equifax, and TransUnion – the three industry-standard credit bureaus. You can also work with GreenPath to review your credit history.

7. Get independent guidance from a nonprofit financial counseling agency like GreenPath. Counselors look at your entire financial picture to help you ease financial stress and uncertainty, through access to clear information and a personalized action plan.

Information brought to you by our partner, GreenPath Financial Wellness

GreenPath Financial Wellness

• By Kevin Alvarez

Get Ready For A Credit Card Spring Cleaning

Take an inventory of your consumer credit cards. Pull out seldom-used credit cards tucked away in the recesses of your purse or wallet or stashed in the bottom of your junk drawer. Destroy any cards you no longer use.

For those cards that you do use, try not having the plastic at your fingertips. This prevents you from increasing your debt.

1. Take Inventory

Take an inventory of your consumer credit cards. Pull out seldom-used credit cards tucked away in the recesses of your purse or wallet or stashed in the bottom of your junk drawer. Destroy any cards you no longer use.

For those cards that you do use, try not having the plastic at your fingertips. This prevents you from increasing your debt.

2. Review Your Credit Reports

One in three Americans has never checked their credit report, according to a Bankrate study.

The information in your credit reports is used to calculate your credit scores — those three-digit numbers that help determine whether lenders approve you for new credit and what interest rates they offer you. In some states, employers can request access to your credit reports during the job interview process, because your credit history is seen as a reflection of your overall reliability.

Annualcreditreport.com now allows weekly updates of all 3 bureaus. If something’s inaccurate, there are ways to reach out to credit bureaus for resolution. It’s a “one-stop” to check your reports from Experian  Equifax, and TransUnion – the three industry-standard credit bureaus.

3. Take A Deep Dive Into Credit Scoring Categories

After you’ve reviewed your credit reports for accuracy, it’s a good idea to learn how your information and activity are used for credit scoring.

To understand how your credit score is calculated, know that each credit bureau has its own methods of scoring. They generally follow a similar calculation that weighs usage and activity in the following ways:

  • Payment history (35%): A history of your credit usage allows lenders to grade your level of risk and dependability. It accounts for the largest chunk of your credit score (35%), so it’s important to pay your bill on time and avoid risky behavior.
  • Amounts owed (30%): Also known as credit utilization, this category compares your overall debts owed — e.g., credit card balances, mortgages, auto loans, etc. — and compares them to your credit limit.
  • Credit length (15%): A lengthy credit history is a sign of responsibility. This category looks at the age of your oldest credit account and the average age of all your credit accounts.
  • New credit (10%): This category is a balancing act of action and restraint. While it’s important to open new revolving and installment accounts to keep your report active, too many credit inquiries can lower your scores.
  • Credit mix (10%): The credit bureaus value experience, so they like to see a mix of different kinds of debt — credit cards, installment loans, mortgages, etc.

4. Address Your Debts

Nearly half of all Americans carry credit card balances from month to month. With a healthy history, your credit card provider may be willing to lower the APR on your balance, making it easier to tackle the principal amount. Contact customer service and ask about their policies.

Another idea is to better track and manage monthly spending in favor of debt reduction. For example, consider canceling your expensive cable service in exchange for a streaming service. If utility bills are high, ask for a free energy audit of your home to identify money-wasters. Freeing up extra monthly income can help you take control of your debts and improve your credit score in the process. A spending plan worksheet can be of great help.

5. Safeguard Your Identity

We regularly hear about data breaches that impact consumers. Be sure you are doing all you can to monitor and manage your online safety, from better password management to signing up for Equifax’s free credit monitoring service to safeguard your information.

Store your social security number, online passwords and other identification in secure locations or protected password management file. While you can’t always control who sees your information, you can take a proactive stance when it comes to identity theft.

The Benefits of Credit Card Spring Cleaning

A credit card spring cleaning is a good chance to understand maintenance you might need to get things in order and improve the performance of your overall financial situation. You might also look into a debt management plan for additional options.

Our partners at GreenPath Financial Wellness offer free financial counseling and education to support you in meeting your financial goals. Their professional, caring financial coaches will work with you to assess your situation, explain the options or solutions available, and help you create a spending plan to meet your goals.

Greenpath Financial Wellness