Tag Archives: Debt Management

Managing Debt Ahead of the Holiday Season

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Holiday music is starting to play on repeat in stores. Neighbors and friends will soon be lighting up their homes with festive decor. Shoppers are beginning to pick up gifts for everyone on their lists. The holiday season is almost here! And while this is an exciting time of the year, it can certainly be stressful on your wallet – especially if you have some lingering debt to pay off.

According to the National Retail Federation, the average person spent around $1,000 during the 2021 holiday season. And with inflation, it’s expected those prices will only go up. That’s why making sure your debt is under control before you start your shopping – will be key for many individuals. Here are our top recommendations for managing debt ahead of the holiday season.

Make and keep a holiday budget

Before you dive into those Black Friday and Cyber Monday deals, it’s best to understand your holiday budget. Not only do you need to consider what you’ll have to buy, but also what you can afford. This is how you can make a holiday budget based on your financial situation:

  • Determine your spending limit: Map out your regular expenses and see what you have left over. The goal is to stay within your means, so that means having a clear picture of your finances.
  • Create a list: Start by categorizing what you need to purchase (this includes gifts and wrapping, decorations, travel, food, etc.), and then build a list of who you need to get gifts for and what the items would be.
  • Research prices: Start looking online for how much these gifts should cost and then see where you can cut back.

Find ways to spend less

It’s easy to talk about finding all the good deals during the holiday season, but when the time comes – you might be tempted to get everything on your list as fast as you can. If you’re on a tight budget though, it will be worth it to put in the time and research. Retail experts say the pandemic has changed the way sales function during the holidays and the best deals won’t come just on Black Friday. Instead, they will happen on an item-by-item basis.

To catch these savings, we recommend downloading price-tracking apps like Honey and ShopSavvy so you don’t miss out. Other ways to save on holiday expenses are to shop at dollar stores for cards, gift wrap, and party supplies. If you plan to get anyone a gift card, you can find discounts on sites like Coingate, Raise, GiftCards.com, CardCash, and Gift Card Granny.

Debt repayment strategies

Before you start shopping, let’s make sure you’re addressing any unpaid debt you may have. The goal is to make sure you don’t put yourself further in debt when purchasing gifts for everyone on your list. Plus, you’ll want to have a plan for paying your holiday expenses off – rather than figuring it all out as you go. These strategies can help you pay off your debt faster.

  • Pay more than the minimum: Only paying the minimum on your credit card statement each month will make debt repayment take much longer. Plus, you’ll end up paying more in interest than what you initially borrowed.
  • Consolidate your debt: If you owe money on multiple credit cards, you should consider consolidating your debt into one credit card or loan with a lower interest rate.
  • The avalanche method: If you do have multiple cards with balances, try using the avalanche method – which focuses on paying off the card with the highest balance first.
  • The debt snowball method: This method will have you start by paying off the smallest debt first. Once paid in full, you would take those monthly payments and put them toward the next smallest outstanding debt.

At First Financial, we offer consolidation loans to streamline paying down debt so you can focus on one bill at a time.* Plus, you won’t have to worry about fees and interest rates from multiple credit cards! Apply online or stop by a branch location to learn more about our loan options. You may even want to consider transferring your other higher rate credit card balances, to one of our credit cards. We offer lower interest rates, plus cash back and rewards credit cards too!**

We wish you a fun, safe, and happy holiday season!

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*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. Personal Loan repayment terms range from 12 to 60 months, and minimum loan amount is $500. A First Financial Federal Credit Union membership is required to obtain a Personal Loan or Line of Credit, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

**APR varies up to 18% when you open your account based on your credit worthiness. This APR is for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan.

 

 

 

Ways to Avoid Spending Temptations

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Do you find yourself buying items you don’t really need, or that weren’t on your list before you went into the store? Avoiding the temptation to buy things is not always easy, especially since as consumers we are often surrounded by items to purchase. What’s the best way to stop spending money? Know what triggers your impulse to spend.

Here are also some more ways to avoid the temptation to spend money:

Think about logistics. Before you decide to purchase something, think logistically – how will you use it? If you’re buying something that you’ll probably only use one day a year, is it really worth it to spend the extra money on it? Or if you’re about to purchase something that you have no storage space for, it might be a better idea to walk right by it.

When possible, use cash. Using a credit card to make purchases makes it almost too easy – especially when it’s an impulse buy. When you can, budget ahead for your purchases and only carry the cash you need to purchase the items on your list. If you only have a set amount in your wallet, you’ll be unable to buy any extra temptations. If you want to spend less – be sure to leave the credit card at home.

If you wouldn’t buy it at full price, don’t buy it on sale either. Just because something is on sale or clearance, doesn’t mean it’s a great deal. Do you really need this item? Is it something you’ve wanted for a long time? If the purchase isn’t something you would have used or bought at full price, buying it on sale is still overpaying and spending money you didn’t need to (for an item you’ll probably never use).

Make a list and stick to it. Before you go into the store, make a list. Planning ahead with a shopping list allows you to know exactly what you need and how much to plan to spend. When you don’t make a list and continue to be tempted by items you see in the store and add them to your shopping cart, it can really blow your budget – to the tune of hundreds in some cases.

Put the 24-hour rule in place. If you see an item that you absolutely have to buy, make a mental note to come back to it 24 hours later. This gives you a full day to really think the purchase through and decide if you actually need the item, and if you truly have the money for it. Also, don’t purchase it on impulse and tell yourself you can always return the item. More than likely, you never will.

Think about the long-term. Before you decide to purchase something, think about how long you’ll keep it for and be realistic. How would you feel about spending hard earned money on something, only to throw it away a few weeks or months later because you truly never needed it? Before you go out and buy a new item, take note of what you may already have at home that can be repurposed. Purchasing something new that just sits in a closet, is a waste of both your time and money.

If you need help creating a financial plan to avoid spending temptations, check out our handy budgeting guide or stop into your local First Financial branch!

Article Source: Moneyning.com

Easy Ways to Improve Your Finances this Year

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Have you already forgotten about or blown all those new year’s resolutions that you set for yourself last month? If you have, don’t worry – it’s still early enough in the new year to set some additional financial goals and attain them. In the process, you may even save yourself some money! Keep reading to see how you can remain on a great financial path for 2022, even if you already took a small detour.

Refinance your mortgage. Mortgage rates are still low. Do the math, and check out your current mortgage rate. If it’s on the high side, you may want to consider refinancing to a lower rate and lower monthly payments. This will allow you some wiggle room in your budget to put in your savings account, pay toward other bills, or even apply more to your mortgage principal and pay your home loan down sooner.

Did you know First Financial has recently brought back our Dream Decade 10-Year Mortgage? If you’re considering refinancing to a shorter term, this may be the perfect solution for you!*

Pay down debt. If you racked up a lot of credit card debt recently, make this the year you vow to pay it off and finally be financially free. Getting out of debt takes a lot of discipline, but you can do it! An easy way to start is by creating a spreadsheet and listing out all your balances owed, interest rates, and minimum monthly payments. Then you’ll need to create a debt repayment plan for yourself, to decide which to tackle first (usually the one with the highest interest rate and you’ll need to make more than the minimum payment each month to get it under control). If you need some help with a debt repayment plan, check out our credit management and debt reduction guide.

Create a budget and stick to it. No matter how much you bring home, creating a spending budget can still be a challenge. However, sticking to a budget that you set for the new year can really pay off in the end. If you need help getting started, check out our useful budgeting worksheet.

Stop overspending. If you’re using the budget you created and learning to automate savings by having extra funds sent to a special savings account from your paychecks, it should be a little easier to stop overspending. Here’s an eye opening spending challenge to try: don’t spend even one penny on anything you haven’t budgeted for the week (this includes morning coffee stops, lunch out, even a lottery ticket purchase or a pack of gum). At the end of the week, see how much more is left in your bank account by not purchasing all those little extras that can really add up.

Plan ahead, but don’t forget to look back too. Do you have any big life events coming up (weddings, births, vacations, retirement) that could definitely affect your bottom line? If so, start thinking about them now and putting some money away. This is also a good time of year to review all your current accounts and ensure you have up to date beneficiaries listed. Besides planning ahead, it’s also a good idea to look back on the previous year and take note of what might have gone wrong financially. If you didn’t have enough in your emergency savings account (or if you don’t have an emergency savings at all), this should be the year you start one or add some extra funds to it.

As always, if you need help creating and sticking to a financial plan – don’t hesitate to setup an appointment at your local First Financial branch. We’re happy to help!

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. 

Article Sources:

https://www.cuinsight.com/4-personal-finance-resolutions-for-2022.html

https://www.cuinsight.com/4-ways-to-improve-your-financial-situation-in-2022.html

Tips for Recovering Your Finances After the Holidays

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If you overspent during the holidays this year, you’re not alone. According to a survey, 36% of consumers went into debt during the holidays, owing up to an average of $1,249. Regardless of how much you owe, there are steps you can take to help recover your finances after the holidays are over. Here’s what we recommend for building your finances back up after an expensive holiday season.

Assess Your Finances

The first thing you’ll want to do is assess your overall financial situation. This includes fully understanding your monthly budget and determining your short and long-term financial goals. Then create a spreadsheet of your expenses, debts, payment due dates, and interest rates. If you’re new to budgeting, our make a budget worksheet is a great place to start.

Cut Unnecessary Expenses

Once you’ve fully mapped out your budget, you should have a better understanding of where you spend your money most. You’ll likely notice there are expenses from products or services that you don’t need or even use. When paying off debt or building savings, it’s best to trim down your expenses as much as you can. For example, you can cancel any underused subscriptions that you might have forgotten about. You can also try cutting back on frivolous expenses like dining out, Starbucks coffee, or delivery services. If the purchase is for something non-essential, see if you can find a less expensive version or cut it from your budget entirely.

Evaluate Credit Card Usage

Take an inventory of all the credit cards you’re using and evaluate if they have any rewards or annual fees. If you’re using cards with high fees or you’re carrying debt across multiple accounts, consider consolidating your debt with a balance transfer to a low-rate credit card. This way you can pay down your balance without the extra interest. It’s also recommended you find room in your budget to pay more than the minimum monthly payment. This will not only help you pay down the debt faster but will help your credit score, too.

Start Planning For Next Year

It’s never too early to start planning for the year ahead. Start by putting away $50 a month toward holiday gifts for the end of the year. Before you know it, you’ll have enough funds to cover gifts for your family and friends. Make a list of the people you’re buying gifts for now, and potential ideas to see how much you’ll need to save up for. Some items will likely be cheaper to buy out of season, which will help with your overall holiday budget for next year.

Whether you need assistance with debt repayment, creating a budget, or even opening an account, First Financial can help! Visit one of our branch locations or contact us to speak with a representative today.

 

What to Do After Paying Off Debt

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Depending on the amount of debt you have, paying it off can feel like a huge accomplishment. If you use your credit card regularly, paying on the bill each month may not be an activity you think too much about. If your credit card debt is on the larger side, finally paying it off can feel like a big weight off your shoulders. Besides being an accomplishment, it’s also time to be proactive so going into debt doesn’t happen again. Here are some steps you should take after paying off a large debt.

Step back and take a look. Paying down on your debt each month is something to be proud of. It probably wasn’t easy, but you did it. In order to make this happen, you probably had a budget in place that maximized your debt payments in order to pay it off. Now that you no longer need to make payments on this bill, it’s time to look over your budget again and figure out what needs to be changed moving forward. Maybe you had to cut back in other areas while you were working on paying down that debt. Or maybe there’s a big ticket item you’ve been waiting to save up for. Now you can adjust your budget and you’ll probably find that you have a bit more wiggle room.

Save money. When sacrifices are made to become debt-free, your savings can often take a hit. If things weren’t too tight while you were working on paying down your debt, it might be a good idea to take that same amount of money – but now put it into your emergency savings account. If you have direct deposit, you can even take that monthly amount and set it to go right into your savings account so it’s automatic.

Set a goal. Whether you’re thinking about planning a future vacation or making a big home improvement that you’ve been putting off, using the money you’ve already budgeted for your previous debt payments is an easy way to save quickly. Consider opening up a separate savings account just for this goal, and keep transferring the money in until you have enough saved.

Stop going into debt. Don’t pay off one large debt and then start racking up more. Every time you log into your mobile banking app or check your account balance online, let it remind you to stay out of debt and how good it feels to pay it off. Stick to your budget and be disciplined!

 Article Source: John Pettit for CUInsight.com

3 Tips to Keep Debt Away

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Sometimes we build up debt due to emergencies or situations that are beyond our control. Sometimes we just buy too many things we don’t really need. Here are three things to think about when it comes to your finances and how you can avoid debt as much as possible.

Set financial goals: Goal-setting is very important when it comes to your money. Your budget should be an easily attainable financial goal for you. If you’re having trouble staying within a budget, it’s probably a good idea to take a closer look at it. When it comes to saving money, have a defined purpose. Every time you get paid, set up your direct deposit to put money into retirement and an emergency fund automatically. This way you won’t physically be transferring the money and convincing yourself that you can do without putting anything into savings this month. If there is a large purchase you want to make or a vacation you want to go on, open a savings account for that wish list.

Have more self-control: It’s easy to buy something impulsively (especially when it’s inexpensive), but those small purchases can really add up if you’re making them all the time. You need to start saying no to yourself and be really disciplined if you want to be free of debt. Having new things is great and exciting, but are those items worth going into debt over?

Ignore pay raises: If you budget your paycheck as if you’re making less than you do, it’ll be easier to save for the things you want in the future. Plus, you won’t have to put yourself in debt to get them. It may not always be easy to cut back, especially if you have a big family, but every little bit helps. And when pay raises come, redirect those additional funds to your savings account and forget all about them!

Article Source: John Pettit for CUInsight.com