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July 1, 2009 • Posted by Erica Adams

Can Saving Sink Us?

The savings rate increased dramatically in May to 6.9%, the highest it's been in more than fifteen years. That sparked a few questions from Paul La Monica at CNN Money, "Do you think consumers are saving too much and hurting the economy?" or "Should people continue to be frugal and save more?"

It's a slippery slope. Using our homes as ATM machines and living on plastic got us where we are today, no doubt. A few years ago, folks on average were spending $102 of every $100 they made. Now, on average, they're spending about $93. The old way wasn't working out. People made a collective change. There is one problem, though. Almost all of those new savers work for or own companies that have been depending on that extra $9. So are we doing more harm than good? Well, positive change can sometimes feel quite negative.   

In the article, La Monica writes, "This newfound sense of frugality is undeniably a good thing. If consumers are no longer willing to amass unhealthy piles of debt for things they can't afford, then we can hopefully avoid such severe recessions." But there's more to it than that. We don't have to abandon the car; we just need to put on the brakes. Saving isn't just for a rainy day - no matter how long this storm seems to be lasting. The silver lining: you CAN afford the things you want, you just need to shift how you go about paying for them.  

Setting saving goals for the things you want in life puts in place a solid plan for the future. It's not money borrowed from a bank or from a high-rate credit card company but cash earning you interest while you reach for that goal. And while instant gratification is difficult to move away from, and while it's even more difficult to watch businesses hurting, in the end, because of changing the "buy now, pay later" mindset, the entire economy and all who make it work will greatly benefit.

 

Tags: smartypig   •  saving   •  money   •  debt

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April 7, 2009 • Posted by Erica Adams

Charge-offs and Write-downs and Delinquency - Oh My!

 

Uncollected debt hit a record high, increasing 3% from February 2008 to February 2009. Write-downs increased 8.82%. Delinquency rates also rose above 6%. And aside from it all being grim news, what is even worse is that these numbers are expected to rise. In this piece from CNN, Moody's credit card index predicts, "... The overwhelming influence of the negative economic environment should continue driving delinquencies to record-high levels by mid-year." Pretty scary and disheartening, yes. But, more and more, our customers are telling us and the people they know that SmartyPig can help prevent these problems... permanently.

We understand that current economic times are more painful than ever, and many of us are nowhere near where we'd like to be financially. But we also know that two years ago, the average American spent $101 for every $100 he or she made, and today that same person is spending $95 and saving the other $5. That is tremendous progress; and it shows that there is no time like the present to begin creating good habits for the future. Saving money for bigger purchases instead of charging them and creating emergency funds for unexpected expenses are crucial elements in restoring financial stability across the country.

Credit lines are dwindling, available credit is shrinking and credit card companies are closing accounts in order to stabilize their bottom lines. Simply put: things will never be the same. It's time to start saving for purchases, saving for emergencies, or simply saving to start becoming a saver. Charging now and paying later has helped to tip over an already wobbly economy.

Jessica at pjmommy.com recently wrote that she and her husband use their credit cards for a majority of their purchases and they, luckily, are able to pay their entire bill each month. But after she found SmartyPig and she realized that saving for purchases is all the more rewarding once you've met your goal, charging to plastic just isn't all that great anymore. SmartyPig puts the fun back in your funds. And while you earn one of the highest APY's on the market, your money does the work for you. Setting up your account is simple, and once you've started saving for your goals, you'll wonder why you hassled with high interest rates and credit card payments in the first place.

 

 

Tags: smartypig   •  saving   •  money   •  creditcards   •  debt

1 Comment | |

February 24, 2009 • Posted by Erica Adams

No Such Thing as a Free Lunch

Credit card companies have situated themselves smack dab in the middle of college campuses across the country and have set the bait for uninformed, sometimes naive and ignorant students, fresh on the college scene. In a recent Newsweek article, author Kurt Soller examines the effects on credit card companies' invasion on college towns. Luring uninformed kids in with small incentives such as free sandwiches or coupons, they cast a line and, sadly, far too often reel 'em in. Within months some of those kids are up to their eyeballs in debt from trying to keep up with the crowd. The credit card companies offer "freedom." What a majority of students end up with is a form of debt jail. As the old saying goes, "There is no such thing as a free lunch."

According to Experian, of all college seniors, 96% have credit cards, and the average indebted young adult spends 25 cents of every dollar paying back debt. Factor in taxes from a first job, and it's going to take you some time to simply get out from under. A survey conducted by Transunion.com stated for the third quarter of 2008 that the average bankcard borrower debt increased nationally 1.57 percent to $5,710 from the previous quarter's $5,621, and 6.0 percent compared to the third quarter of 2007 ($5,387). And delinquency is on the rise as well. Nationally, the ratio of bankcard borrowers delinquent on one or more of their bankcards increased in the third quarter of 2008, up 4.8 percent over the previous quarter. And on a year-over-year basis the national delinquency incidence rate has risen 5.8 percent. Staggering, huh? Well, just think of the billions credit card companies are raking in on late fees as the cherry on top.

SmartyPig is a solution to this debt dilemma plaguing campuses and households alike. Paying exorbitant interest, and more often than not, making only a minimum monthly payment leads to years of heartache. By saving with SmartyPig for the things you want and need, you won't encounter the problems that come along with plastic. Creating goals and contributing to them each month ensures worry-free spending once you've met those goals. Save first, buy later. Some people have labeled it "Bank 2.0." We just think it's common sense for an upside economy.

 

Tags: smartypig   •  saving   •  money   •  credit cards   •  debt   •  delinquency

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December 5, 2008 • Posted by Erica Adams

Turn To SmartyPig

Our current economic situation is a nightmare. Depression, deflation, recession, crunch, crisis - whatever you call it, one thing is for certain: if we don't change the way we approach how we handle our finances, we're going to be upside down for years, if not decades to come. The decisions we make now, today, will not only affect our standard of living, but that of our children and grandchildren, as well. Simply put: Money isn't easy anymore. Plastic, home loans, lines of credit have all become hard-to-get tools for people who don't need them. The only way to get cash in days like these is if you have some.

Reading a post by Lynnae from BeingFrugal.net struck a chord with me. She's been saving for months for her holiday purchases using SmartyPig. She has all of her shopping done and is able to sit back and relax, not worrying about a bill-filled January. She knows she won't be a part of the holiday hangover crowd (paying off her credit card bills for the next year) because she owns everything she bought.

I also read a post from Krystal about her uncertainty of today's markets and what she should be doing with her money. She's using SmartyPig and set up a goal just to save. In her words, the simplicity, automation and the fact that her money can't be easily raided keep her from spending what she's saving. She's earning interest, watching her money grow and is able to share her progress with friends, family and readers of her blog.

They aren't the only ones. People everywhere are figuring out that the best way to buy something is to save up for it first. The savings rate has more than doubled from this time last year to 1.3% during the July-September quarter. Though still relatively low compared to other countries, it is expected to rise as more and more people begin to reverse the credit-card mindset of "buy now, pay later." And with SmartyPig's terrific interest rate (3.9%APY) and cash boosts, discerning savers are reaching out to us like never before. So join the saving trend! Create a goal! Today is the first day to start "saving" your life.

Tags: smartypig   •  saving   •  holidays   •  credit cards   •  debt

3 Comments | |

October 31, 2008 • Posted by Erica Adams

SmartyPig For Your Stocking

It's projected that consumer spending will be down - way down - over the holidays. With unemployment up and credit card companies decreasing lines of credit it's easy to understand why. There is uncertainty carried on the cool winds of autumn. Winter, many believe, will be crueler than ever. And while there are no bigger cheerleaders for a brighter tomorrow than the folks here at SmartyPig, let's face it. This is not the time for splurging.  

Of course, many, if not most of us will still purchase gifts this holiday season. Obviously, the holidays are a time for putting our troubles aside and focusing on the good things in life. But in these times, why not give a gift that can help give someone you know and love a leg up, a chance for a dream to come true or just a crash course in how to handle money? SmartyPig gift cards help you Give the Gift of Saving. If ever people needed a sound financial tool in their stocking it is now.

Know someone who needs to get on the right track? Have a family member who is in dire need of a vacation and just needs a nudge to start saving for it? Need to inspire and educate your employees about how to get to the light at the end of the tunnel - and a canned ham just won't do the trick? SmartyPig Gift Cards can be your saving grace. You give. They learn the basics of creating a goal, saving for it and earning interest, as well as a head start -instead of the fruitcake. Now that's a gift that will keep on giving and giving and giving. 

 

Tags: christmas   •  saving   •  holidays   •  debt   •  gifts

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