How to Build Savings While in Debt for America Saves Week #ASW2020

March 21, 2020CreditBy toptierfinancial

In honor of America Saves Week, one of the themes this week was to save for the unexpected and build an emergency fund. Here at the NFCC, we really encourage building an emergency savings fund so that individuals have some cushion to prevent them from going further in debt when unexpected expenses pop up.

This week we had a Facebook Live event and answered several questions around the topic of saving while in debt. Below are the quick answers. For more in depth answers please check out the video linked below.

How much should you have in an emergency fund?

Ideally, you should save three to six months’ worth of take-home pay.

How can you save without hindering paying off your debt?

By having a plan. Be sure to always pay yourself first. Have a set amount that goes directly to your savings and then budget for your debt payments.

How does paying off your debt help with your savings?

Paying off debt helps you save in two ways. It saves you money because you are not paying as much interest each time you decrease the amount you owe. Also, once your debt is paid off you should put all of the money you had budgeted for debt into savings so that your strategy after paying off debt is to save, save, save.

Where should people keep the money? What types of accounts offer the best interest rates?

Money for emergency savings should be kept somewhere easily accessible so that if an emergency arises, you can get the money quickly. If you are building a savings for a home down payment, a car or just for retirement, consider other savings options with higher interest rates such as a money market account or a certificate of deposit account.

Should people be putting money in retirement savings while they are in debt?

Yes, if possible, people should not delay saving for retirement while they are paying off debt. The longer you can contribute to retirement, the more time the money has to compound interest and grow.

How can nonprofit credit counseling help people with a budget and building up their savings?

A nonprofit credit counselor can help you come up with a plan that works for you, to pay off debt and reach your savings goals. Each session is uniquely tailored to the specific needs of the individual.

What is America Saves?

America Saves is campaign managed by the nonprofit Consumer Federation of America that is focused on motivating, encouraging and supporting low- to moderate-income households in their goals to save money, reduce debt, and build wealth.

You can check out the live event to learn more by watching the video below! If you have any topics you’d like for us to cover in coming up #FinancialFacts chats, comment on the video with those ideas!

 

The post How to Build Savings While in Debt for America Saves Week #ASW2020 appeared first on NFCC.

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The Debt Relief Industry is the Wild West, NFCC featured on “What’s Working in Washington” Podcast

February 9, 2020CreditBy toptierfinancial

Our own Bruce McClary, VP of Marketing and Rebecca Steele, CEO joined Richard Levick on the ‘What’s Working in Washington’ podcast to talk about about consumer debt and the increasing problems consumers are facing when trying to find help. Consumer unsecured debt continues to rise and is currently sitting at $1.5 Trillion. 

Rebecca Steeles says, “The first step is always the hardest to take, but it’s important to move past the shame and take it!” In earlier days, there was a sense of shame in taking on debt and people avoided it, now it’s so common, everyone has it and feels it’s ok and it’s more important to buy things to show people you love them, like for example the holidays. Statistics show that the average consumer racked up $1300 on their credit cards just for the holiday season. While one in ten are still carrying debt from the 2018 holiday season! If you make minimum payments on this with an average of 18% interest, it will take six years to pay it off. 

On top of taking on debt, American consumers also report not having at least $400 to cover an emergency, which in turn leads them to going further into debt if an emergency arises. People on average have five major credit cards. It’s hard to get out of debt once you are in it. When people are desperate they need to know where to turn because it’s not just one creditor, it’s on average at least five and when they aren’t able to take care of it themselves, predators come out from all directions. 

Here more about the dangers of the “wild wild west” of the debt relief industry at the links below, what we mean by predatory, and what consumers should do instead at the links below: 

Part 1: The Problem with Consumer Debt and the Debt Relief Landscape

Part 2: Where to Turn for Free Help for Your Debt

Nonprofit credit counseling can help you figure out the right option for you and how to navigate the landscape of debt relief options. It gives you a safe space to deal with your debt, with a nonjudgmental ear. They are going to help you with a budget, do a thorough review of your complete financial picture and provide a plan customized to you. Credit counseling is typically free. They are there to advocate for you and ensure that you are better prepared to get out and stay out of debt.

“We are not working for the banks, we are working for the consumer,” said Rebecca Steele, “a lot of banks are working with us and we can work with them on your behalf.”

For the full transcript click here.  

The post The Debt Relief Industry is the Wild West, NFCC featured on “What’s Working in Washington” Podcast appeared first on NFCC.

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