Take our credit counseling tips to avoid becoming house poor.

Evaluate Your Cash Flow

Budgeting is an effective tool for managing your personal finances. Our debt counselors can’t emphasize that enough. Even if it looks like you can afford a house on paper (like when you get approved for a mortgage), don’t automatically be convinced.

A common house-buying guideline is to not spend more than 28% of your gross monthly income on housing costs and 36% on total debts. But before calculating the percentages, take a step back to look at your annual income, expenses, and budget. Once you figure out how much you’ll have left for a down payment after your daily expenses (i.e. food, gas, retirement contributions), use this calculator to see how much house you can afford. Another tip – making a larger down payment will decrease your monthly mortgage bill, if you’re able to do so. This helps you avoid becoming house-poor, because you’ll free up more money.

Understand the Cumulative Cost of Homeownership

There’s much more to the cost of a house than the down payment and monthly mortgage payment. Here’s a comprehensive list of costs involved in homeownership:

• Property taxes
• Homeowner association dues
• Maintenance costs
• Down payment and closing costs

Once you calculate the total costs, you’ll have a much more comprehensive picture of what you can afford. Being educated on all expenses prevents any surprises down the road and helps you avoid becoming house poor. The unknown costs are what tends to trip up homebuyers the most.

Don’t Forget Other Areas of Your Budget

Now that you know what you’re able to spend on a new house, think about how it affects your other expenses or financial goals. Even if you can afford a house’s mortgage payments, will it negatively affect your ability to pay other bills? Being overly anxious about how you’ll pay your other bills after paying the mortgage is a big sign of being house-poor. That’s why it’s key to calculate how much leftover you’ll have for other monthly expenses (i.e., groceries and gas, or contributing to retirement).

Plan for unexpected expenses or emergencies as well – if they happen, and you don’t have enough money to pay for it, you might go into debt paying it off. That’s why it’s better to avoid buying a house on the high end of your budget. You might risk not having enough money left over to set aside for a rainy day. Without a sufficient savings account to cover an ER bill or broken appliance, you might have to rely on credit or take out a loan.

Buying a home is a personal choice, and we hope you this post helps you prepare for buying the right one! Whether you’re getting a mortgage or paying cash, remember the general principles of spending within your means and accounting for all costs.  This will help you avoid becoming house poor. Happy house-hunting!

If you struggle to pay off debt, ACCC may be able to help. Sign up for a free credit counseling session with us today. 

These money lessons for high schoolers will serve them well for life.

Spend less than you earn:

As basic as this sounds, it’s one of the most crucial principles for personal finance. If you don’t keep track of your spending, you could be in the red by the end of the month! To prevent this, start by creating a budget. Account for all your monthly expenses, such as toiletries, school supplies, food, or rent and utilities if you decide to live off campus. If your budget allows, you can also leave a little room for fun things like going out or shopping. Treating yourself now and then can help you stick to your budget. More importantly, staying on budget helps you avoid credit card debt!

Automatically save a portion of your income:

With most banks, you can set up automatic transfers from your checking account to your savings account. By saving money automatically, you won’t be as tempted to spend it all. Instead, you can use the savings to build an emergency fund. This will help you be financially prepared for emergencies, such as a medical or family-related one. It’s better than being stressed and scrambling for cash when life throws you a surprise. In fact, these aren’t just money lessons for high schoolers. Our credit counseling belief is that everyone should save money and have an emergency fund!

Understand how to build credit and manage credit cards:

Building credit now will help you in the future. After you graduate college and start the next phase of your life, you’ll need good credit for many goals, like renting an apartment or getting a car loan. Start building credit by getting a secured credit card. These cards function like real credit cards, but with a few differences. Your credit limit is usually whatever the initial deposit was, which can be anywhere from $200 to $1,000. Put small purchases on it and pay it off in full every month. This is how you start building good credit history.

Start thinking about saving for retirement:

It might seem odd to start thinking of retirement if you’re just a teenager. But although retirement may seem far off, saving early is the best thing to do. Unfortunately, many Americans are not financially prepared for retirement. Thus, being proactive is critical. Even if you’re just working a summer or weekend job, you can start contributing to a Roth IRA! This account is available to anyone with earned income. You might not be able to put away much at first, but it’s still a great start! The money you contribute will grow over time and benefit from compound interest. This is when your interest earns interest! Saving for retirement may not seem like the most “fun” use of your money, but trust us – your future self will thank you!

Understand how debt works:

If you’re applying to colleges, you may have to start thinking about student loans. Although debt is fairly common, it’s not something to be taken lightly. Unfortunately, debt is something that many Americans struggle to manage. Take the time to learn about debt before considering student loans or other forms of borrowing.  Make sure that you fully understand the terms and repayment obligations associated with loans. If you choose to use credit cards, do so responsibly and pay off the monthly balances to avoid accumulating excessive credit card debt.

These 5 money lessons are a strong start to learning financial literacy, but it doesn’t end there. To become financially empowered, keep learning about the best ways to manage your finances. Start taking control of your financial future today!

If you struggle to pay off debt, ACCC can help. Schedule a free credit counseling session today! 

Our debt counselors know how to handle credit card debt.

1. Create a budget: Start by creating a comprehensive budget to understand your income and expenses. Review your bills, statements, and receipts from a given month to track where your money is going.

2. Analyze and reduce spending: Once you have a budget in place, identify areas where you can reduce expenses and save money to allocate towards your credit card payments. These could be things like premium streaming services, going out to eat, or shopping for fun. Freeing up as much money as possible for debt is crucial.

3. Choose a repayment method: Two common strategies for credit card debt repayment are the Debt Avalanche and the Debt Snowball methods. Check out the infographic below to see how these methods work.

4. Contact your creditors: Reach out to your creditors and discuss potential options to make paying off your debt more manageable. Some creditors may be willing to temporarily reduce your interest rate or waive certain fees. It’s worth contacting them to explore any potential assistance they can provide.

5. Seek counseling: If you’re still struggling to make progress with your credit card debt, consider professional help. Research reputable credit counseling agencies and reach out to them for assistance. A reliable agency will offer free budget analysis and credit counseling, presenting you with suitable options to pay off your credit card debt. Watch the video below to learn more about finding a reputable credit counseling agency.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

One common misconception about frugality is that it means you’re being “cheap.” While being money-conscious is commendable, it can be hard to stick to it when you’re seeing your friends and family spend more extravagantly. Remember that there’s no one-size-fits-all approach to achieving financial freedom. How you choose to spend your time and money is your own business. However, if you need some support to stay frugal, here are some helpful tips.

1. Keep your end goal in mind.

It may require adjusting your spending or passing up certain plans to stay within your budget. There might be things you can’t justify spending money on at the moment. That’s perfectly fine. Whenever doubts arise, remind yourself of your ultimate objective, whether it’s paying off debt or another goal. Consider placing reminders around your home to stay focused.

2. Find easier ways to save.

Instead of completely cutting out categories like entertainment, adjust your expectations. If you used to enjoy dinner and a movie, you don’t have to give up going out entirely to save money. Rather, you could go for discounted nights like bargain Tuesdays. Embrace the experience and save a few bucks. Plus, the restaurant and theater will probably be less crowded than on weekends.

3. Be adaptable.

It’s true that planning is important to stay frugal. But sometimes life happens, and you might overspend by a few dollars. Don’t beat yourself up over it! Allowing a little flexibility in your budget can increase the likelihood of long-term adherence. It reduces the chances of feeling discouraged or frustrated to the point of giving up entirely.

4. Maintain balance.

Yes, staying frugal is important, especially when tackling debt. However, don’t let frugality consume your life completely. While it’s crucial to plan and stick to your budget, try not to make it the sole topic of conversation with family and friends.

Regardless of your current financial situation, embracing a frugal lifestyle is an excellent habit to cultivate. Stay focused and committed to your goals, and remember that your journey is unique to you.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today! 

Learn how to improve your credit score with ACCC.

How to Improve Your Credit Score

While there isn’t a step-by-step process to instantly raise your score, there are several financial actions you can take to contribute to its improvement. Each of these tasks focuses on enhancing a specific aspect of your credit that influences the scoring process. While there is no overnight fix, consistent effort toward these objectives will yield long-term benefits.

Methods for Score Improvement

Pay Down Debts: One significant factor that determines your score is your credit utilization ratio—the ratio between your outstanding debt and your total available credit. By reducing or eliminating debt, you improve your ratio and boost your score.

Limit Credit Card Usage: Reducing debt will get even harder if you continue accumulating it on different cards. If it’s possible, switch to a cash budget to gain control over your spending and prevent new debt.

Avoid Opening New Credit Cards: While it may seem like an easy way to improve your credit utilization ratio, applying for new credit negatively impacts your score each time.

Keep Old Cards Open: While paying off cards, it may seem tempting to close them – but doing so harms your credit utilization ratio. Instead, simply refrain from using those cards while you continue with your debt reduction plan. This is particularly wise since older credit card accounts reflect positively on your credit report.

Be a Responsible Borrower: Maintaining timely debt payments is crucial not only for your credit score but also for various aspects of your life. Your credit history follows you and significantly impacts your financial well-being. Ensure that you make payments on time and stay current on all your accounts. Effective budgeting will help you stay on top of your debt repayment. If you find yourself struggling despite your budgeting efforts, it may be time to explore debt management options.

Most of these methods are simply good personal financial practices to practice in general – but if you’re trying to raise your credit score, they become especially crucial. If you plan to purchase a home, buy a car, or take out a loan for any reason this year, stay committed to raising your score and getting the best possible interest rates.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Helping your teens set financial goals is easier with ACCC’s tips!

Empowering Teens through Financial Goal-Setting

Encouraging teens to set financial goals is an excellent way to develop their financial skills. If this is your teen’s first or second job, they may have never engaged in any financial planning before. While they may not have significant bills to pay yet, it’s important to consider future expenses such as a car or college, or even covering the costs of a class trip abroad. Even if they simply want some extra spending money, setting goals can help them extend the longevity of their earnings.

To initiate the conversation, guide your teenager through the following questions:

• What do you want to achieve with your money?
• How much will you need to reach your goals?
• Are these SMART goals? (Specific, Measurable, Achievable, Realistic, Timely)

Once you have an idea of their financial goals, it may be necessary to help them align their expectations with reality, and that’s perfectly fine! Financial planning is not an innate skill, and if they are not accustomed to earning their own money, budgeting, and saving, they will require your guidance to establish a solid foundation.

Initiating Budgeting to Support Financial Goals

Now that you and your teen have established financial goals for their summer earnings, it’s time to create a budget. The budget doesn’t need to be as intricate as your household’s; its purpose is to track the income and expenses, including savings. If your teen has multiple savings goals, create separate categories in the budget to monitor progress toward each one.

Teenagers may initially downplay the importance of budgeting, and have different reasons why they believe it’s unnecessary. However, without documenting their spending on paper or through online tools, it will be challenging to effectively achieve any financial goals. To get started, visit ACCC’s Budgeting section for helpful templates and guidance.

A summer job offers an excellent opportunity for teenagers to earn income and learn the significance of setting financial goals. Make the most of this teachable moment by setting aside time with your teen a few times a month to review their progress (as much as they are willing to share). Cultivating positive and responsible financial habits now will benefit them for years to come. Helping your teens set financial goals is a priceless lesson. Don’t fret if they fall short of certain goals; it provides a perfect opportunity to learn valuable lessons without facing significant financial troubles.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Boosting your credit score makes achieving other financial goals easier.

What is a Credit Score?

A credit score evaluates your creditworthiness and greatly impacts your ability to make significant financial purchases, such as buying a car or a house. Moreover, a low credit score can result in higher finance charges and interest rates for major transactions. Watch this video for a more precise explanation of credit scores.

Why Boost Your Credit Score

Improved Credit Card Offers

With a good credit score, you are more likely to secure credit cards with the best rewards. Credit cards can be beneficial for your financial history as long as you utilize them responsibly and avoid consistently carrying revolving debt. Handling credit card debt in a timely manner and paying it off completely is key to boosting your credit score.

Homeownership Purchasing

A house often involves getting a mortgage, which is contingent on your credit score. If you have a poor credit history, it is unlikely that a bank will approve your loan application. Lenders also use credit scores to assess the level of credit risk you pose. A lower credit score signifies a higher credit risk – this results in a higher interest rate on the loan compared to someone with a good credit score. If you are a first-time homebuyer, focus on improving your credit score to get better interest rates.

Renting a Home or Apartment

When applying to rent a home or apartment, your credit score plays a crucial role. A good credit score increases the likelihood of your application being favored over the competition (though you will pay the same rent). Additionally, your credit score can influence the amount of the security deposit you need to pay. Furthermore, being in good credit standing can give you better bargaining power regarding other lease terms.

Favorable Interest Rates

Higher credit scores open doors to larger credit amounts at lower interest rates. Lenders are more inclined to offer significant credit to responsible borrowers with high credit scores, as they perceive them as less risky. The belief is that individuals with higher credit scores are more likely to handle their debts responsibly. Banks and lending institutions feel more secure and confident working with individuals who have a demonstrated history of prudent financial practices.

Remember, your credit score is a vital aspect of your financial journey. Boosting your credit score can prepare you for a brighter financial future.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Prevent credit card debt by hosting a budget-friendly barbeque.

Savor Budget-Friendly Barbeque Fare

• Before heading to the grocery store, always check your fridge to avoid unnecessary purchases. Additionally, look for coupons or other ways to save at the store.
• Get creative with the food! Consider stuffing burgers with cheese, avocado, or bacon before grilling them. Another idea is to set up a make-your-own-burger/hot dog bar. Prepare a batch of  hamburgers and hotdogs and provide a variety of inexpensive toppings like chopped onions, pickles, peppers, tomatoes, jalapenos, cheese, and various sauces such as salsa, barbecue sauce, and aioli.
• Don’t overspend on store-bought marinades and sauces. You’ll be pleasantly surprised by how easy and economical it is to make your own, utilizing ingredients you likely already have in your pantry.
• Serve seasonal produce. Fruits, vegetables, and fish are typically more affordable when they are in season. Explore your local farmer’s market or keep an eye out for sales at the grocery store.
• Prepare your own fruit and veggie trays. Instead of splurging on pre-made convenience trays from the store, why not create your own? This way, you’ll save money and have the freedom to customize the trays according to your preferences.
• Consider organizing a potluck. Assign different dishes to your guests—perhaps have those with last names starting with A-L bring appetizers and M-Z bring desserts. This way, you’ll have an abundance of food without straining your budget.

What About Beverage Options?

• For larger parties, think about your college days and opt for a keg, especially if most of your guests are beer drinkers. Kegs can significantly reduce costs and add a lively touch to the event.
• Alternatively, make it a BYOB (Bring Your Own Beverage) affair. While you may feel inclined to provide some alcohol as the host, most people have their preferences. Allowing guests to bring their own drinks of choice will help you cut down on alcohol expenses and save a significant amount of money for your summer BBQ.

Other Tips

• Send invites by email or on Facebook, instead of buying paper invitations and paying for postage
• Use any leftover disposable cups, plates and utensils from any past parties
• Or if you don’t have any leftover parties supplies, check out the dollar store for cheap options

Use these tips to save on party supplies and stay on top of your finances!

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today. 

Follow ACCC’s tips to improve your finances.

Build Spending Barriers to Save More

Discipline is key when it comes to saving money. Establishing rules can help you manage your finances. Consider implementing spending limitations to curb unnecessary splurges. For example, instead of eating out every Friday, opt for every other Friday. If you find it hard to choose between two pairs of shoes, resist the urge to purchase either. When unexpected expenses arise, prioritize them over non-essential purchases. By setting these boundaries, you can develop healthier spending habits and build your savings.

Create Your Payment Schedules to Stay on Track

Take advantage of the tools available to manage your finances efficiently. With online and mobile banking, you can easily set up reminders and track your transactions. Automate bill payments, investment contributions, and savings plans to ensure they are executed consistently. By using these features, you can establish a solid payment schedule and develop a routine that promotes better financial management. By leveraging these tools, you can enhance your financial planning capabilities and potentially improve your credit standing. Because of that, your overall finances will be in better shape.

Make Your Work Lunches

Buying lunch from the nearby deli is convenient – but those expenses can quickly add up. The more you spend on lunches, the less you have available to allocate towards debt management. Instead, consider the financial and health benefits of cooking your meals at home. Start by planning your meals for the week, dedicating time for grocery shopping, and preparing your lunches. Not only will this save you money, but it will also promote healthier eating habits.

Take Advantage of Every Saving Option Available

Start contributing to your employer-sponsored 401(k) plan as early as possible. Many employers offer matching contributions – which is like doubling your money for free! Even if you’re currently focused on paying off credit card debt, take every opportunity to build wealth for your retirement. By taking advantage of these savings options, you can lay the foundation for a secure financial future. So don’t forget to save for retirement, even if you’re working on other financial goals!

Stick With the Basic Good Money Habits

Establishing good money habits begins with the basics. Create a budget to gain a clear understanding of your income and expenses. Aim to save a portion of your income every month, and prioritize it as a non-negotiable expense. Strive to pay off your credit cards in full to avoid interest charges. Practice mindful spending by buying only what you need and avoiding impulse purchases. Stay on track with your financial goals by regularly reviewing and adjusting your budget accordingly. By sticking to these basic habits, you can improve your financial management and avoid falling into debt.

In conclusion, improving your financial management habits requires a commitment to change. But you can do it! In summary, practice good habits – by building spending barriers, establishing payment schedules, preparing your own meals, maximizing savings options, and sticking to basic money habits, you can accelerate your progress towards financial stability. Remember, small changes can yield significant improvements over time. Stay focused on your goals, and make financial management a priority. With perseverance and determination, you can achieve greater financial well-being and enjoy a more secure future.

If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.