This Week in Your Wallet: April 10, 2012
Posted by Jean
Did you know that April is Financial Literacy Month? Personally, I think every month should be dedicated to bettering your knowledge about your finances, but if you’re feeling a little behind, this unofficial holiday is a great opportunity to start catching up.
In honor of Financial Literacy Month, I want to give you a little quiz. Don’t panic — I know you know the answers to all these questions. Ready? Here we go:
- Do you have a budget?
- Do you pay your bills on time?
- Do you carry credit card debt over from month to month?
I hope you answered yes, yes, and no, respectively. If you did, kudos! You get an A in my class. But if you answered no, no, and yes, you need to work on your grade — and you’re not alone. According to a new survey by the National Foundation for Credit Counseling (NFCC), 56 percent of U.S adults don’t have a budget, more than 77 million adults don’t pay their bills on time, and 39 percent of adults carry over credit card debt from month to month.
If you fall into one or more of those categories, I challenge you to change your habits this month. It may seem hard, but you can start by taking baby steps. If you have trouble paying bills on time, consider setting alerts on your digital calendars — or better yet, telling yourself they’re due a full week ahead of time. And if you’re having trouble with setting a budget or spending too much on your credit cards, I have this piece of advice for you: start by counting dollars like calories. (This is actually Money Rule #20.) You know how when you’re on a diet, you count every cookie, every chip? Do the same for everything you buy. This will help you find the “fat” in your spending, and in turn, will help you set limits for each category of your life. So you spent $200 at the grocery store last week, but $25 of that was on junk food? Limit yourself to $175 next week, and better yet, try paying for it with the cash. This will keep debt off your card, and seeing the dollars leave your grip will make you aware (however painfully) of exactly how much you’re spending.
For a more specific breakdown of how to set a budget, check out this article I wrote, here. And for the full results from the NFCC’s survey, you can go here.
Now, here are the other headlines for the week…
Smart phones help manage money
Speaking of financial literacy and good financial habits, a new Federal Reserve study shows that using a smart phone to check an account is actually helping people to better manage their money. Two-thirds of survey respondents reported using their phone to check their account balance before making a purchase, and 59 percent of respondents said they did NOT make a purchase based on the amount of money or available credit in said bank accounts. What great news!
Are fuel-efficient cars worth the cost?
We all wish gas prices would go down a little (okay, a LOT). But the so-called “pain at the pump” doesn’t seem to be subsiding any time soon, so in lieu of a gift from the gas gods, it looks like we’re just going to have to grimace and bear it. (Notice I didn’t say “grin.” That’s because I have a teenage driver at home now. Teenagers, in case you didn’t know, like to drive. A LOT.)
In fact, I wouldn’t blame you if you were considering buying a more fuel-efficient vehicle. They can be pricey, but they consume gas at a slower rate and eventually pay for themselves… right? Well, according to a recent New York Times article, the time it takes for these eco-friendly hybrids or electric cars to break even with the higher price tag is much longer than we think.
With the exception of the Toyota Prius, the Lincoln MKZ and the diesel-powered Volkswagen Jetta TDI, research shows that it takes most “fuel-economy” vehicles more than a decade to compensate for their high costs of ownership. That’s about four years longer than the six years the average person holds onto a car. For most fuel-efficient cars to pay for themselves in that time, gas would have to cost about $8 per gallon. Yikes!
The Times also created this awesome infographic, which shows you exactly how long it would take to break even on a long list of vehicles. One of the worst offenders? The Chevrolet Volt. It retails for just about $32,000 and saves you $446 per year for fuel. Given these numbers, it would take you a whopping 26.6 years to break even.
Maybe the best solution of all is to just start walking a little bit more… or carpooling!
Have a great week!
Jean