Overcoming Barriers to Saving

Did you read the new article from America Saves? Virginia Saves' own Lori Irwin was featured as a guest writer! Lori discussed the barriers to saving and gave four great resources to overcome these common problems. Check out the article and see these small changes can improve your financial situation!

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A Budget is not for Babies!

Most people do not have budget.
Budgets have really gotten a bad rap! The feelings that the word ‘budget’ evokes are usually negative and constraining. Budgets are usually associated with restricting the activities that are enjoyable. It does not have to be that way! Think instead, ‘spending plan’!
Income – expenses = Spending plan!
The calculations required is grade school math, therefore, everyone is qualified to make a spending plan.
The National Syndicated Radio Host Dave Ramsey recommends a zero based budget which means the income minus the expenses equals zero. He says to “spend every dollar on paper before the month begins.”
Budgets, AKA Spending Plans, can be written on paper, saved on a computer document or created in a computer software program. A great free online budgeting tool is available at http://www.mint.com/
It is important that all monthly expenses are covered by the income coming into the home. This will avoid the need to use credit card debt for basic living expenses. Credit should not be used to purchase items which you cannot afford!
If the expenses exceed the income, a deficit is present. The expenses must be reduced or income increased to balance the budget. If the income exceeds the expenses, this surplus allows additional savings or preparing for upcoming predictable expenses.
Predictable expenses are maintenance, holidays, bills or miscellaneous things that may not come due every month. A few examples would include Christmas, tires for the car, personal property taxes, and car insurance premiums. These expenses are not surprises but they can take the wallet by surprise!
Be prepared for these ‘budget busters’ by saving some money the expenses each month. Some things are not UNEXPECTED expenses is a Savvy Saver article that details a great method to be prepared for these kind of expenses.
Virginia Saves motto is ‘Start small, think big.’ Start small by creating a budget for you family this month! Think big. You may have to be creative to make all expenses to fit into that first budget.
Budgeting is the first step toward financial freedom! Will you take that step?

Savings Tips

  • Save your loose change.  Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
  • Keep track of your spending.  At least once a month, use credit card, checking, and other records to review what you've purchased.  Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account.
  • Never purchase expensive items on impulse.  Think over each expensive purchase for at least 24 hours.  Acting on this principle will mean you have far fewer regrets about impulse purchases, and far more money for emergency savings.
  • Use debit and credit cards prudently. To minimize interest charges, try to limit credit card purchases to those you can pay off in full at the end of the month. If you use a debit card, don't rely on an overdraft feature to spend money you don't have. With either approach, you'll have more money available for emergency savings.  
  • Are you looking for an effective way to establish a budget? Beginning on the first day of a new month, get a receipt for everything you purchase. Stack and review receipts at the end of the month, and you will clearly be able to see where your money is going.
  • It pays to practice preventative dental care, since a good cleaning routine helps prevent fillings, root canals, and dental crowns, which are expensive and no fun.
  • Most people don’t track what they spend and may not realize when expenses add up to more than their budget can handle. To keep track of what I spend, I put what I think I should spend for the month on transportation, food, entertainment, etc., into envelopes. This helps me avoid buying things I don’t need, and what’s left over goes into saving.
  • Take advantage of discounts and/or incentive programs provided through your employer. For example, the company I work for offers discounted rates for computers, fitness center memberships, movie tickets and passes to summer festivals. Check your corporate intranet or talk to your human resources representative. And don’t forget the best deal of all – investing in your 401(k)!
  • One way to establish a savings discipline is to “save” an amount equal to whatever is spent on nonessential indulgences. Put a matching amount in a cookie jar for expenditures for beer, wine, cigarettes, designer coffee, etc. If you can’t afford to save the matching amount, you can’t afford the $4 super almond low-fat latte.
  • Take the amount the item costs and divide it into your hourly wage. If it’s a $50 pair of shoes and you make $10 an hour, ask yourself, are those shoes really worth five long hours of work? It helps keep things in perspective.
  • Aim for short-term savings goals, such as setting aside $20 a week or month rather than long term savings goals, such as $200 over a year. People save more successfully when they keep the short-term goal in sight.
  • Save money by buying items online, in bulk. Some companies even offer free shipping on large orders. Clearance items are sometimes available, and good savings can be found on non-perishable groceries and diapers. This saves time and money!
  • Substitute coffee for expensive coffee drinks.  The $2 a day you could well save by buying a coffee rather than a cappucino or latte would allow you, over the course of a year, to completely fund a $500 emergency fund.
  • Bring lunch to work.  If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.
  • Eat out one fewer time each month.  If it costs you $25 to eat out, but only $5 to eat in, then the $20 you save each month allows you to almost completely fund a $500 emergency savings account
  • Shop for food with a list and stick to it.  People who do food shopping with a list, and buy little else, spend much less money than those who decide what to buy when they get to the food market.  The annual savings could easily be hundreds of dollars.
  • Ask your physician to consider prescribing generic drugs.  Generic drugs can cost several hundred dollars less to purchase annually  than brand-name drugs.
  • Find the lowest-cost place to purchase prescription drugs.  Make sure to check out not only your local pharmacist but also local supermarkets, area discount centers, and mail-order pharmacies
  • Purchase storebrand over-the-counter medications.  Storebrand medications often cost 20-40 percent less than nationally advertised brands.  The savings could easily exceed $100 a year.
  • Avoid bouncing checks or overdraft fees each month.  The $20-30 you save by not bouncing a check each month would save you enough money to nearly fully fund a $500 emergency savings account.
  • Reduce credit card debt by $1,000.  That $1,000 debt reduction will probably save you $150-200 a year, and much more if you're paying penalty rates of 20-30%. 
  • Make your monthly credit card payment on time.  The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings
  • Use only the ATMs of your bank or credit union.  Using the ATM of another financial institution once a week could well cost you $3 a withdrawal, or more than $150 over the course of a year.
  • Shop around for auto and homeowners' insurance:  Before renewing your existing policies each year, check out the rates of competing companies (see the website of your state insurance department).  Their annual premiums may well be several hundred dollars lower.
  • Raise the deductibles on auto and homeowners' insurance:  Being willing to pay $500-1,000 on a claim, rather than only $100-250, can reduce annual premiums by as much as several hundred dollars.
  • Assess your need for life insurance coverage.  If your children are now on their own, or if your spouse works, you may not need as much life insurance protection.  The annual premiums on a term life policy would typically fully fund an emergency savings account
  • Consider dropping credit insurance coverage on installment loans.  Many consumers don't need credit insurance because they have sufficient assets to protect themselves in the event of death, disability, or unemployment.  Terminating this coverage often reduces financing costs by three percentage points, a savings of about $1,000  on a four-year $20,000 installment loan.
  • Keep your car engine tuned and its tires inflated to their proper pressure.  Doing both can save you up to $100 a year in gas.
  • Shop around for gas.  Comparing prices at different stations and using the lowest-octane (recommended by the car owner's manual) can save you hundreds of dollars a year.
  • When driving, avoid fast start-ups and stops.  Over time, you will save hundreds of dollars on lower gas and maintenance costs.
  • Take fewer cab rides.  Using public transit instead of cabs can save you $5-10 per trip or more.  If you're a frequent cab user, the savings could complete ly fund your emergency savings account
  • Check all airlines for cheap fares.  Since no website lists all discount carriers, also check out the websites of discount carriers like Southwest and Jet Blue, possibly saving you hundreds of dollars.
  • Don't pay for space you don't need.  Americans have relatively large houses and apartments.  Think about more efficiently using space so you can purchase or rent less square footage.
    Live relatively near your workplace.  While this isn't always possible, driving 5,000 miles less a year can lower transportation costs by more than $1,000.
  • Refinance your mortgage to lower interest charges.  Consider refinancing your mortgage to lower the rate and term.  On a 15-year $100,000 fixed-rate mortgage, lowering the rate from 7% to 6.5% can save you more than $5,000 in interest charges over the life of the loan.  For each $100,000 you borrow at a 7% rate, you will pay over $75,000 less in interest on a 15-year than a 30-year fixed rate mortgage.  And, you will accumulate home equity more rapidly, thus increasing your ability to cover large emergency expenditures.
  • Choose home repair contractors wisely.  Favor contractors who have successfully performed work for people you know.  Insist on a written, fixed-price bid.  Don't make full payment until satisfactory completion of the work.
  • Ask your local electric or gas utility for a free or low-cost home energy audit.  The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year.  Keep in mind that a payback period of less than three years, or even five years, usually will save you lots of money in the long-term.
  • Weatherproof your home.  Caulk holes and cracks that let warm air escape in the winter and cold air escape in the summer.  Your local hardware store has materials, and quite possibly useful advice, about inexpensively stopping unwanted heat or cooling loss
  • Use window coverings to block or let in sunshine.  In summer, use these coverings to block sunlight, keeping your house cool.  In winter, open the coverings to let sunshine warm the house.  You could easily save more than $100 annually while being more comfortable.
  • Look for sales at discount outlets.  There are huge price differences between clothing on sale at discount stores and that sold regularly at many department and specialty stores, though keep in mind that prices at the latter are often deeply discounted.
  • Consider purchasing previously-used clothes from Good Will, second-hand stores, or school or church thrift sales.  With a little effort, you can find low-priced, high-quality used clothing items that can be worn for many years.
  • Assess clothing in terms of quality as well as price.  An inexpensive shirt or coat is a poor bargain if it wears out in less than a year.  Consider fabric, stitching, washability, and other quality related factors in your selection of clothes
  • Clean clothes inexpensively.  Wash and iron clothes yourself.  If you use a cleaner, compare prices at different establishments.  A 50 cent difference in cleaning a shirt, for example, can add up to $100 a year.   
  • Assess your communications costs.  As Internet and wireless use grows, many consumers are overpaying for unneeded communications capacity.  For example, if you have a cell phone and two phone lines -- one for your computer -- consider receiving personal calls on your cell phone so you can give up one of the phone lines.
  • Communicate by e-mail rather than by phone.  If you're on-line, e-mail communications are virtually free.  Even for subscribers, landline and wireless calls often carry per-minute charges.
  • Be aware of your cell phone costs and how to reduce them.  Cell phone use has dramatically increased communications expenditures in many households.  Understand peak calling periods, area coverage, roaming, and termination charges.  Make sure your calling plan matches the pattern of calls you typically make.
  • Research free or inexpensive entertainment in your community.  Use local newspapers and websites to learn about free or low-cost parks, museums, film showings, sports events, and other places which you and your family would enjoy.
  • Give up premium cable channels or better yet, cable all together.  It's a lot cheaper to rent one film a week than watch one on premium cable channels that may cost more than $500 a year.
  • Borrow books rather than purchasing them.  Borrowing books and reading magazines at your local library, rather than purchasing reading material, can save you hundreds of dollars a year.
  • Attend high school rather than college or pro sports events.  High school sports events rarely cost more than $5 and are often free, with hot dogs and sodas typically costing $1-2.  College and pro football and basketball games rarely cost less than $20, and their concessions are usually several times more expensive.

  • Plan gift-giving well in advance.  That will give you time to decide on the most thoughtful gifts, which usually are not the most expensive ones.  And if these gifts are products that must be purchased, you will have the opportunity to look for sales.
  • In families, discuss limits on spending for gifts.  These limits not only tend to reduce expenditures; they also be greatly appreciated by the least affluent family members.
  • Socialize at pot-luck meals rather than at restaurants.  Because one wants to be generous to friends and family, there may be huge cost savings here.
  • Consider writing letters instead of making frequent phone calls.  Thoughtful letters are usually far more highly valued than phone conversations, and they are often saved by recipients for future reading.

Free Credit Reports and More! March Newsletter from Virginia Saves.

Check out the Virginia Saves' March Newsletter! It is pack full of articles and information to help you win with money!

To receive this newsletter via email become a Virginia Saver today!

Home is where the financial lessons start

Remember, the little ones are learning how to manage money by your example. Children learn a whole lot from what they see modeled in everyday life. They see how family members spend, save, give money. They are forming their ideas about the value of money.

The last video in the series Financial Planning for Your Future is about the next generation.

Week six: Teach Your Children

Kids are very smart and it is never too early teaching them about money. Chores teach children they must get a good job to have money to support a family. A child may not like it when a toy cannot be bought, but that is a real life lesson. Teach children to purchase needs before wants! Scarcity is real. That means wants will always outnumber the bills in a wallet.

For more information, check out these sites:

Virginia Saves Parent Resources

Teaching Kids About Money

Virginia Saves hopes you have enjoyed this six part video series. Please feel free to leave a comment of contact us at virginiasaves@gmail.com

Retirement - Reinvent Yourself

The fifth video in the series of Financial Planning for Your Future gives new ideas about retirement. Here is a great perspective that may give hope to those close, and not so close, to retirement age.

Week three: Retirement- Reinvent yourself

That is not right! - What to do About Incorrect Items on a Credit Report

According to the Fair Credit Reporting Act of 2005 , you may obtain one credit report from all three Credit Bureaus every 12 months at www.annualcreditreport.com. You may also receive a credit report if the following applies to your situation:
·         Denied credit because of the information on credit report. Request a copy from the credit bureau within 60 day of being notified.
·         Unemployed and plan to apply for job within 60 days following the request for the report.
·         Receive public assistance.
·         Believe credit file contains errors due to fraud.
·         Victim of fraud. Contact all three agencies and request a “fraud alert” to be added to report.

If there is something incorrect reported on a credit report, submit a letter stating the problem to all three credit bureaus. A sample letter  can be found at www.myfico.com. The letter should be sent by certified mail, return receipt requested, to document the credit bureau received the dispute. Do not send original documents of receipts and keep a copy of everything sent to the credit bureaus
The credit bureaus will contact the creditor who submitted the item within 5 business days of receiving the complaint. The creditor has 30 day to respond to the inquiry or the disputed item will be removed. If the credit bureau agrees the information is inaccurate or incomplete, the credit report must be updated with the correction or remove the item. The credit bureau will notify the creditor the reported item has been modified or deleted. The credit bureau must send notice within five business days if the disputed item is reinserted because the creditor provided documentation to prove the accuracy of the report.
If the disputed item shows up again it is time for more letters. Send a letter to the original creditor disputing the item. Resend the letters to the credit bureaus as well. All correspondence must be sent by certified mail, return receipt requested.
Removing an incorrect item on a credit report can be time consuming and frustrating, but it is important to be persistent. Credit reports determine the interest rates for new credit, can affect insurance premiums rates and may be evaluated when applying for a job.
Once a problem is resolved, you may request the credit bureau notify all the past inquiries of the corrected report for the last two years. Past employers may receive the updated report for the last 6 months at your requests. Review the credit report again in three to six months.
The three credit bureaus address are:
PO Box 105069
Atlanta, GA 30349
(800) 525-6285


PO Box 6790
Fullerton, CA 92634
(800) 680-7289

For more information:

More Winning Pigs!

New River Valley Piggy Bank Pagent Winners!

The New River Valley Piggy Bank Pageant was a great success. There were over 100 entries! Check out the creative banks. A special thank you to the sponsors of the the New River Valley Piggy Bank Pageant!

Next year, several areas will coordinate efforts for a statewide Virginia Saves Piggy Bank Pageant. Look for details in early 2012.

And the Winners Are. . .

Virginia Saves is pleased to announce the 2nd Annual Piggy Bank Pageant Winners!
The goal of the Piggy Bank Pageant was to inspire children to create savings goals and to develop the habit of regular savings for their future by engaging in building their own savings bank. Children tend to be early adopters of social campaigns and can be a great influence on family behavior. Money has power because it gives people (older and younger) decision making opportunities. Teaching wise spending and saving has a great impact on your child’s financial future than investing.
BB&T donated savings bonds for Virginia Saves to award as prizes in the Piggy Bank Pageant. BB&T has been an active partner with Virginia Saves. BB&T created new accounts for our Virginia Savers. These special accounts will really grow dollars that are saved.
The Savings Bonds provided by BB&T will be presented to the winners of each category.
·         $100 Savings Bond for the 1st Place Winners
·         $75 Savings Bond for the 2nd Place Winners
·         $50 Savings Bonds for the 3rd Place Winners

A BIG thanks to BB&T for the prizes and their support of Virginia Saves! Eight winners will receive the Savings Bonds.

2nd-3rd Graders

Tied for 1st place: Myra 
Name of bank: Piggy
Why savings is important: ‘So you can get what you want.’
What are you saving for right now? DSI

Tied for 1st place: Brooke
Name of bank: Pepper
Why savings is important: “so you can buy a home.”
What are you saving for right now? A real dog

2nd place: Jacob 
Name of bank: Hotdog
Why savings is important: For College
What are you saving for right now? PSXL/College

3rd place: Erin 
Name of bank: Piggy

 4th-6th Graders

Tied for 1st place: McKenzie 
Name of bank: Pigy if a boy; Swirl if a girl
Why savings is important: “So you can go to college.”
What are you saving for right now? A horse

Tied for 1st place: Shenan 
Name of bank: SD Bank
Why savings is important: “Because if you need money, you have some.”
What are you saving for right now? Phone, electric scooter and a car

2nd Place: Paige
Name of bank: Meatloaf
Why savings is important: College, a car, a house
What are you saving for right now?  A car

3rd Place: Hilary
Name of bank: Miss Pink
Why savings is important: “You can save for something coming when you grow up.”
What are you saving for right now? A car

Congratulations Winners!! The entries could be any style or theme. You were very creative and have great savings goals!

Parents can find more at Parent Resources for more information about instilling smart money habits in children while they are still young. By the time teens take the Personal Finance Class in High School, they have already established their 'money values'. Use fun activities like the Piggy Bank Pageant to talk about money with children!

Virginia Saves will be coordinating efforts with other areas of our great Commonwealth to include a State wide Piggy Bank Pageant in 2012.

Rethinking Home Ownership

The fourth week in the series Financial Planning for Your Future address the American Dream, home ownership. Recently, that dream has turned into a nightmare for some families. Think through the cost completely before deciding to purchase a house. Watch this short video about renting vs. owning a home.

Week four: Rethinking Home Ownership

Home owners must budget for repairs, maintenance, and taxes. A revolving savings account may be a great idea to save for these irregular expenses.