By Laura Katauskas
Pay yourself first to create savings and remember there is always something you can cut—
sage advice for those looking to create a new budget for the new year.
The Community Service Council of Northern Will County (CSC) recently presented a program on budgeting and credit for White Oak Library District patrons as part of the library’s New Year, New You series.
CSC Executive Director Robert Kalnicky said it is all about training your brain to save.
“You have to stop making excuses as to why you can’t save,” said Kalnicky. “You also have to be honest with yourself–do you need the $5 Starbucks? It is mind-blowing how $3 and $5 items here and there can wreck your budget.”
One way to start is to be mindful of your spending; start tracking how much you spend each day in a journal for at least two weeks—see exactly where your money is going and use cash—using a debit card is too easy, says Kalnicky. “It somehow becomes more meaningful when you see the money leaving your wallet.”
He also suggests paying yourself first to create a savings account, just as you would any other bill and to do it on pay day when you won’t miss it. “No amount is too small to start,” he said. “Do a budget, pare down and pay yourself first.”
Without setting a savings goal, most end up with unaccounted money which usually ends up being spent.
“You have to stay disciplined by setting a targeted savings goal and do not touch it–you have to see the big picture,” said Kalnicky. “Sometimes, out of sight, out of mind works best. Open a savings account at a bank separate from where you normally bank–it makes it harder for you to touch your savings that way.”
He reiterated that the key to a successful savings plan is sticking to it even during the tough times. Pick “your” number and never let your balance go below that–setting up alerts through your bank to help you keep track. It is also never a good idea to spend all you money at once on all your bills and have nothing to fall back on, he said.
Kalnicky also cautioned those trying to save to avoid temptations and remember long-term goals.
“Your savings account may be building and it looks pretty good, so you splurge on a trip. Next thing you know, you’re back to where you started,” said Kalnicky. “At the end of the day, it is up to you to meet your goals and build that cushion where you feel comfortable.”
A general rule of thumb is not to exhaust your savings on items that will take you more than three months to recover the full amount. Try to live within a budget that is half of your earnings so if you’re wages were ever cut, you would not be over extended.
Credit also has a cost to it and and the more credit you have extended can have a snowball effect, explains Kalnicky. A credit report tells lenders who you are financially; how much debt you have, whether or not you make payments on time and also shows any judgements against you. Everyone is entitled to one free credit report each year from Transunion, Equifax, and Experian, the three credit reporting agencies, lenders use to check your score.
To ensure accuracy of your information, obtain a copy of your credit report from each credit bureau and check it. If there are any errors, and often times, there are, have them corrected in writing. How often your credit report is checked, also affects your credit score. You do not want to keep applying for credit because it inadvertently lowers your score, whether or not you are extended that credit.
The best way to build your credit is to apply for credit at a retail store or apply for a small loan; pay your bills on time; and keep your debt levels low. Kalnicky explains creditors look at what percentage of credit you are using–you should only be using 30 to 35 percent of what is available to you. It is not a good idea to max anything out or to close anything.
“It’s all a balancing act,” said Kalnicky. “Creditors look at the length of time you have held a particular credit card and been in good standing and how much credit you have in relation to how much debt you have. So if you are looking to close any accounts, the newer accounts would be the better option.”
Kalnicky said part of the mission of the CSC is to assist people in achieving their goals and encourages residents of the Will County area to utilize its services and take advantage of programs available. He said the agency will be providing additional community outreach in the coming months and plans to partner again with the White Oak Library and Fountaindale Library Districts for Money Smart Week in April. For more information about the agency, call 815-886-5000 or visit www.thecsc.org.
The CSC was founded in 1973 as a social service agency serving residents of Bolingbrook, Romeoville and surrounding communities. CSC was incorporated as a 501(c)3 non-profit agency in 1978. The agency is certified by HUD to provide housing counseling by agency housing counselors, at no cost, primarily in the areas of mortgage default and rental evictions. Services for clinical counseling are provided by licensed professional counselors on an affordable fee schedule. Staff is experienced in a full range of counseling, such as marital, depression, divorce, parent-child relations, blended marriage concerns, and other problems.The agency also offers Anger Management groups for both adults and teens. Licensed CADC counselors conduct DUI evaluations and drug assessments. The agency also has a court approved Domestic Violence program.