Friday, January 23, 2004

5 gifts for yourself in the new year

For many the holiday season is a busy, stressful time of searching for the perfect gift and worrying about getting everything done. After all is said and done, what is often left is holiday debt to repay and a different kind of stress and worry.

“Consumers give generously during the holiday season and sometimes overdo a good thing,” said Suzanne Boas, president of Consumer Credit Counseling Service. “CCCS advises consumers to take some time at the start of the New Year to give themselves a few gifts to improve their financial lives.”

CCCS suggests consumers give themselves the following five gifts that truly last:

• Know how much you owe. A common mistake is not keeping track of debt. The thinking is that as long as you can keep up with the payments, everything is fine. However, if circumstances change due to a layoff or other unexpected event, you could find yourself unable to make payments and in immediate financial stress. Dig out those bills and add them up.

• Create a spending plan. The easiest way to take control of your money is to set out a plan for how you will spend it. This is not glamorous and can be something of a task, but it gives you the power to decide where your money goes. The plan should be flexible and include monthly expenses such as mortgage or rent, utilities, food, transportation, entertainment, clothing, etc. Make sure your expenses are not more than your income. If they are, go back to the plan and make adjustments.

• Pay off credit card debt. American credit card holders carry an average of approximately $8,000 in revolving balances. The interest paid on those balances can be as high as $1,680 a year. Just think of what you could do with an extra $140 a month in your budget! Stop charging additional purchases today and pay off your credit card debt as quickly as possible. You will be surprised at how good it feels to know you do not have to use today’s earnings to pay for yesterday’s, last month's or last year’s purchases.

• Build a savings cushion. Once you have paid off your credit card balances, you should begin to build a savings cushion for emergency or unexpected expenses or if you lose your job. Your goal is three to six months of living expenses put aside in a savings account. With this cushion in place, when the refrigerator stops working, your car’s transmission gives out or your mother-in-law moves in, you will not have to put those unexpected expenses on a credit card.

• Develop a strategy for your financial future. Even if you plan to work until you die, we all know what happens to the best-laid plans. You may not be able to work as long as you would like or you may want to retire early. Either way, it is important to begin planning for retirement. Determine when you would prefer to retire, how much money you will need to live the lifestyle of your choice and what you need to do now to get there. Establish a retirement fund and contribute to it on a regular basis.

Consumer Credit Counseling Service is a nonprofit, community service agency dedicated to empowering consumers to achieve a lifetime of economic freedom. A United Way partner, CCCS provides free, confidential budget counseling, community and personal money management education, debt management programs, and comprehensive housing counseling.

CCCS is accredited by the Council on Accreditation of Services for Families and Children and is a member of the Better Business Bureau. Governed by a community-based board of directors, CCCS is funded by creditors, clients and grants from foundations, business and government agencies. Service is available in English, Spanish and American Sign Language. CCCS offers around the-clock help by phone at 866-330-CCCS or at its Web sites, www.cccsinc.org or www.cccsenespanol.org.