How the Average American Spends Their Money

AmercianMoneyChartWant to save money? First you have to know how you spend it. This chart shows a breakdown of how the average American spends their money according to the U.S. Department of Labor. This 2013 study showed the average American taking home about $51,000 a year and the percentages on this chart were how they spent it. You may or may not make $51,000, but chances are your spending percentages are similar.

It is important to look at exactly where your money goes because you may not always realize where it is all going. I think most of us at least occasionally think to ourselves, “I just got paid! Where did all my money go?” It is important to recognize how you spend your money, so you can hopefully spend less and save more.

Transportation

Transportation is a big category on this chart. The average American spent $9,004 on transportation in 2013. That can include insurance, gas money, car payments and repairs. That being said, sometimes upgrading to a newer vehicle can save you money on transportation costs. If you find that you have an old vehicle that you are constantly having to repair, it might be costing you more in the long run. Gas mileage is also something to consider. Cars from 10 years ago have significantly lower gas mileage and upgrading could save you a lot of money as far as gas goes. Also, you might decide choosing a hybrid car or an electric vehicle is a good idea to cut those gas payments even more.

Food

Food and Entertainment are two more categories where you can save; Food is the third largest category in the chart, and that makes sense because we need food to survive. However, many Americans go out to eat quite frequently and going out to eat can cost a lot more than buying food at the grocery store. You should consider going out to eat less and saving that money for something else you really want.

Entertainment

Entertainment is the same way. Going to the movies may be fun, but it can cost a lot of money. If you wait for the movie to come out on Redbox or Netflix, it can be significantly cheaper. Also, going out for drinks with friends can be a popular form of entertainment, but it might be a better idea to have your friends over; the drinks will be cheaper and you will have a comfortable place to hang out.

To save your money for the things you really want, you first have to know how you spend it. By looking at how the average American spends, you may be able to find ways to cut your own spending. Take some time to think about the ways that you could save!

Should I Refinance My Auto Loan?

best way to pay for a carYou might have had your auto loan for a while, which may have you wondering whether or not you should refinance. Below are a few situations in which refinancing may be a good option for you.

Your Credit Score Has Improved

If you started your auto loan with a poor credit score, and since then, you have been making regular, on-time payments, you credit score may have improved. With an improved credit score, you may be eligible for a lower interest rate which could save you hundreds of dollars.

Interest Rates Have Dropped

If interest rates have dropped more than a couple points since you purchased your vehicle, you may want to refinance in order to make those lower interest rates your own. Even a percentage point or two can end up making a huge difference to your bank account.

Your Personal Finance Situation Has Changed

On the other end of the spectrum, you may need to reduce your payments and extend your loan term. If you have gone through an unexpected financial setback, it is better to reduce your payments than not be able to make them at all.

There are several situations in which refinancing may be a good option. You will want to consider your options and do a little research to find out if it is the path for you!

Setting Financial Goals for Saving Money

I want a million dollars! You probably do too. Sadly, wanting to be rich isn’t enough. In order to get where we want to be financially, we will have to set some goals. Now, goal-setting might not sound like that much fun, but taking a vacation to Jamaica does, and by setting some financial goals you could get there.

jamaica

Establishing Financial Goals

First, you have to know where you need and want to be financially, but to build a good goal, it has to be specific, realistic and measurable.

Let’s start with specific. “I want to be rich” is not a good goal because it lacks the specificity you need to achieve it. “I want to have the money to go on a vacation to Jamaica” is better because it is more specific, but this goal could be improved further by having a specific dollar amount. If you know exactly what you are saving for it makes it easier to keep yourself accountable for doing so.

The next step is making a goal realistic. This can have to do with the amount or the time limit of the goal, but you will want to make sure it is something you can achieve with your current income and spending habits. Don’t assume you will be able to stop spending all your money and start saving it.budgeting

Measurable is the last part of a good goal. This step is important because it gives you a timeline to know if you are achieving your goal. If you want to buy a new car in the next couple of months and want to save money for a down payment, give yourself a specific deadline. Tell yourself you have six months to save for a down payment; then you can figure out how much you have to save every week to get where you need to be.

Categorizing Financial Goals

Now that you have your goals, it is important to put them in categories to set yourself up for success. By categorizing your goals, you can decide which ones need immediate attention and which ones can be accomplished more slowly.

First, you should decide if your goal is a need or a want. The vacation to Jamaica is a want, but the new car is probably a need. This tells you that you should probably put saving for the car before saving for Jamaica.

The next thing to look at is whether your goal is short term or long term. Buying a car may be short term because your current car keeps breaking down, so you know you will have to save money more quickly for that goal. Jamaica may be a long term goal for you. For instance, you might want to visit within the next 5 years. This gives you more time to put away money, so you can save money each month, but you can do it in smaller amounts.car

Attaining Financial Goals

Once you have spent some time planning your goals and categorizing them, it comes down to seeing them through. The easiest way to make sure you save is to give yourself specific deadlines. Tell yourself you will save $20 every week or $100 every month depending on the goal and the time frame. The key with this is stick to it! Put money in your savings every time you say you will, and before you know it, you will have the savings you need and want.

Online Finance Tools to Give you Confidence in your Personal Finances

There is so much technology out there. Why don’t we use it to improve ourselves? This is a list of 4 apps or online finance tools that can get you where you want to be financially.

  • Mint or YNAB (You Need a Budget):

Both of these tools are budgeting apps. These apps show you how much money you have and how much you can afford to spend on different things. They help you customize a budget that fits exactly with you payments, expenses and savings goals. They both have different ways of going about budgeting, but they both have a great deal of positive feedback, so check out which one works best for you.mint

  • BillGuard:

BillGuard is a personal finance security company. It is available as a mobile and website application; it scans your credit and debit card transactions to let you know if there is anything suspicious. This technology alerts you to possible scams as well as fraudulent charges, hidden fees and billing errors.

  • HelloWallet Emergency Savings Calculator:

This is a good tool to find out how much you should have in your emergency savings fund. The typical amount people suggest in emergency savings is six months of your salary, but that is not the same for everyone. HelloWallet developed an emergency savings methodology to solve this problem. You just have to answer a few questions about your finances and they will give you a great estimate on what you should have put away in the event of an emergency.

  • FileThis:

Stay on top of all your bills, accounts and information with FileThis. This website allows you to store all of your documents and online statements in one secure place. It also allows you to create bill reminders so you can stay on top of your payments. You can link this account with all of your other financial accounts and have one place with a complete overview of your finances and bills. It is a nice way to have things all in one neat location, and not shoved in the filing cabinet you never open!

filethis

The technology is out there to help you succeed financially, and now is the time to use it!

Can I Buy a Car After Bankruptcy?

auto loan after bankruptcy

You may be wondering whether or not you can buy a car after bankruptcy. Most of the time the answer is yes. After filing bankruptcy and discharging debts, you may have enough income to pay for a vehicle. If not, you will need a loan to purchase your vehicle.

Financing a Car After Bankruptcy

Loans are something to be careful with because you will probably be able to get a loan after having previously filed bankruptcy, but you may have to pay an extremely high interest rate on that loan. The good thing about getting a loan is that it can help you reestablish your credit and help you improve your credit score. However, it is important to shop around with various lenders to get a loan with an interest rate that you can afford to pay.

When Should I Get a Car After Bankruptcy?

You will want to wait to buy a car until after you have received your bankruptcy discharge. Then, the longer you wait afterward, the lower your interest rate will be. However, if you really need to buy a car, you should still be able to find a loan with a little bit of research.

If you filed for Chapter 7, you will get your Notice of Discharge at least 90 days after your 341 meeting of creditors. If you filed for Chapter 13, the process is a lot longer; the process can take between three to five years, so if you need to buy a car during that time, you will need to get permission from the bankruptcy court.

Ultimately, you will want to weigh your options and make the decision that is best for you and your financial situation.

Budgeting to Rebuild Your Credit

If you want to improve your credit score, budgeting is something that can really help you build up and maintain a good credit score. Having a good credit score is important because it will save you money throughout your lifetime.

When starting a budget, the first thing to consider is where all of your money goes. First, you should figure out exactly how much money you have coming in. Then you will want to figure out about what your payments are for each month. Payments can include your rent or mortgage, utilities, or credit card payments. You also will want to look at the other living expenses you have every month like groceries.

Once you know how much you spend each month, you will know how much you have leftover. Then you will want to create some financial goals. Perhaps you want to put a certain amount of money in your savings account every month or you want to pay off your student loans a couple years early. As you think of these goals, you will need to ask yourself how you will get there, and then develop a step-by-step plan to get yourself exactly where you want to be.

budgeting
The most important thing to note when budgeting is to be specific. Always know exactly how much money you have and how much you need to spend on bills, debts or loans, so you can make sure you have enough money to spend on them. Then you can allow yourself to spend money on luxuries if you have that money leftover.
Don’t get scared away by the idea of budgeting! Stay organized and you will be able to stay on top of all of your payments.

Is it Possible to Lease a Car with Bad Credit?

lease vs buyLeasing a car may be a good option for you if you don’t have the best credit score, but you should carefully weigh your options before you jump into a lease. Check out the benefits and drawbacks to a car lease with bad credit below!

There are several benefits to leasing a car over buying one. The first is with a lease you will have lower payments than if you were buying a car. This can make it more manageable to make payments on that car. Another benefit of leasing is you often don’t have to worry as much about maintenance costs. This is because most leased vehicles are under the manufacturer’s warranty. It can also be a good option to lease a car because if you make all your payments on your lease it will help you improve your credit score.

There are some drawbacks to leasing a car with bad credit. The issues you may run into are having more difficulty getting approved and having a higher interest rate. If you have a poor credit history, a dealer is going to be more wary about letting you lease. This means they may have to pay a higher down payment and have a higher interest rate to make you less of a risk in the dealer’s mind.

Before you sign any documents, weigh your buying or leasing options and make sure you choose a deal that fits with your life and allows you to make the payments you need to on your vehicle!

Protecting Against Identity Theft

Identity theft is when a person steals your personal information such as bank account information, credit cards, etcetera and uses it to make purchases or even take out loans. Identity theft can lead to you losing money and it can also severely damage your credit score, so it is important that you do your best to protect yourself against identity theft. Here are some tips:

Do not give out personal information – Don’t respond to unsolicited requests for personal information such as social security numbers, bank account numbers, your name, or your birthdate.

Protect your personal information – Store personal information in a safe place at home. This goes for you social security information, bank account information and even online passwords to your different accounts.

Check your accounts and bank statements frequently – Pay attention to what you do and do not purchase and check your account to make sure no one is purchasing things with your account.

Shred – This is for all personal information that you are going to throw away! Don’t just throw away bank statements, credit card applications, and bills, shred them before you throw them.

Check your credit report – This can also tip you off if something is off with one of your accounts. Check your credit score consistently to catch things early.

Verify your mailing address – An identity thief will often fill out a form to change your address so you don’t receive fraudulent credit notices. Be sure to watch out for this by verifying your mailing address with the post office.

What is Cross-Collateralization?

When the collateral for one loan is also used as the collateral for another loan, that practice is called cross-collateralization. For example, both home and auto loans can be used as cross-collateral for each other when borrowed from the same lender.

When receiving an auto loan from a credit union as opposed to a bank, cross-collateralization could be presented as one of your options. However, it is important to know the facts about cross-collateralization before you jump into it!

By utilizing cross-collateralization, risk associated with the lending is reduced. However, if you finance your auto loan through a credit union, the vehicle associated with that loan can be used to secure other types of debt, including a credit card of a personal loan. The credit union can also prevent the resale of your vehicle because it could be collateral for other loans.

In the event that you fail to pay off a credit card or some other payment with that same credit union, your car could be repossessed. The consequences of cross-collateralization can be severe, but the can also sometimes be hidden. It is important to read the fine print before you jump into a loan!

How to Decide What Your Down Payment Will Be

These days dealerships try to suck you in by offering extremely low down payments on new or preowned vehicles. This seems like a great deal, but do you have the credit for it? And is it really something you can afford?

Conventional wisdom says people should put down a 20 percent down payment, but the average down payment is probably only like 10 percent.

Why do people put down such small down payments? It probably comes down to what they can afford or what they think they can’t afford. However, lower down payments just mean that you have to pay more later.

A 20 percent down payment may seem like a lot, but putting down a larger down payment can really help you in the long run. Realistically, you may not be able to afford 20 percent, but try to find a balance with what you can afford and how much you want your loan payments to be.

Don’t just step into a financing situation without proper research and information. Find a car and financing options that fit with your life and your needs. For more information about auto financing and loans check out the information that Ohio Approval has to offer. To find out more call Ohio Approval at 1-866-611-2474!

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