Thank you for taking the time to find out how we can work together to persuade, motivate, and encourage military families to save money every month and promote automatic savings.
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- Feature the services you provide to your audience that help people build wealth.
- Share important savings messaging with your audience.
- Join the Department of Defense-wide effort to encourage servicemembers and their families to save.
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Being able to travel by car can help people earn more, spend less, and get better value in their housing. Cars, however, are relatively expensive to purchase and maintain. American households spend, on average, more than $8,000 dollars on car purchases and maintenance each year. Individuals can reduce this transportation expense by making wise purchase decisions.
Whether to Buy
Consider whether alternative transport -- mass transit, cabs, rental cars, or a leased car -- makes sense.
Mass Transit/Rental Alternatives:
Before buying a car, especially a second vehicle, consider whether alternative transport makes sense. Particularly in cities, these alternatives could include mass transit, cabs, and rental cars, or a combination of the three. Most important, estimate the cost of a car and the cost of any alternative. Then ask yourself the question, is the convenience of car ownership worth the price?
If you decide you want to always have a car available, consider leasing as an alternative to ownership. One reason that so many cars are leased is that monthly lease payments are often lower than monthly car payments. But remember that, at the end of the lease period, you won’t own the car. And buying it at the end of a lease may cost you more in total than purchasing it at the outset.
What to Buy
In deciding whether to purchase a new or used car, make certain to estimate the difference in total costs. Cars vary widely in cost. Annual household spending on automotive transportation ranges from hundreds of dollars to tens of thousands of dollars. The exact cost to you depends on factors such the type of car: its age, mileage, and condition; how you finance, insure, and service it; and how many cars you own and how far you drive them.
Which Car Model:
First, think about the types of models that meet your transportation needs and are affordable. Then search the internet and objective publications, such as Consumer Reports and Kelley Blue Book, for information about the features, performance, durability, and costs of the models which interest you. Finally, look over and test drive any of these models.
New or Used:
In deciding whether to purchase a new or used car, make certain to estimate the difference in total costs, not just purchase price, but also depreciation, gas mileage, insurance premiums, finance charges, and likely costs of maintenance and repair. Remember, new cars almost always are more reliable and have superior warranties to used cars but lose 20 to 40 percent of their value when driven off the lot.
How to Buy
At car dealers, the price of the cars and their optional features are almost always negotiable. In fact, most buyers do not pay the manufacturer’s suggested list price (or sticker price). Here’s how to get the best price:
- Before negotiating, learn the manufacturer’s wholesale price to the dealer, which will be somewhat less than the sticker price. This wholesale price can be found on the internet or purchased from services such as Consumer Reports. Another helpful website is Edmunds.com which can tell you what incentives and rebates are being offered in your area and the True Cost to Own a particular car.
- Negotiate price over the phone with several dealers. Because it is easier for you to end a phone conversation than walk out of a dealership, you are likely to get a better price. If the dealer won’t talk price with you over the phone, call another dealer.
- If reluctant to negotiate, consider seeking assistance from a car buying service. One nonprofit consumer group maintains a popular service, CarBargains, in which several dealers bid for your sale.
Purchasing a used car is risky in that you often cannot be certain of the condition of the car. Here’s a purchase strategy:
- Check the Kelly Blue Book price to learn what used cars in a certain condition usually sell for. Blue Book prices can usually be found in a library reference book or on the internet.
- Keep in mind that there are few effective used car warranties. Most cars are sold “as is,” and most of the rest carry a 50-50 warranty that obligates you to pay a portion of the repair costs.
- Try to find a mechanic who is willing to check the car before you purchase it. And see if the seller will make the sale conditional on the car passing inspection.
- Consider purchasing from family or friends who are more likely than dealers to tell you what they know about the condition of the car and not overcharge you.
How to Finance
Shop for a loan before buying a car.
- Decide the amount to be borrowed and the number of monthly payments. Remember that, in general, the greater your down payment (and lower the amount borrowed), the lower your loan rate. Also remember that the shorter the loan term, the less interest you will pay.
- Shop around, using the internet or Yellow Pages, for the least expensive loans. Regardless, make certain to call your bank or credit union for a rate quote before talking to a dealer about financing.
- If all lenders quote you a rate above the typical one, you are considered an above-average credit risk. If your credit report, and related scores, are accurate, then you should consider delaying the car purchase until you have successfully raised your credit score.
If you still want the dealer to finance your car, negotiate.
- The dealer may quote you a rate above the rate reflecting your credit risk (the “buy rate”). If this rate quote is above that quoted by your bank or credit union, it is probably “marked up.” Ask the dealer for your “buy rate.” If it is not provided, consider using another source to finance your car purchase.
- The Federal Equal Credit Opportunity Act prohibits discrimination in finance charges based on race, ethnicity, sex, or martial status. Make certain the rate you pay reflects your credit-worthiness, not one of these factors.
Finally, remember there is no 3-day right to cancel on car or car financing sales. Be sure you want the car and understand the terms before signing a contract. Do not drive the car off the lot until financing is final.
How to Save for a larger down payment
The larger your down payment, the lower your debt, interest rate, and interest owed. The most effective way to save a larger down payment is to set aside a portion of each paycheck. Ask your bank or credit union to regularly transfer a certain amount from your checking account to your savings account. If you need assistance finding money to save, check out our savings tips and strategies!
How can those who currently aren’t saving afford to save money? And how can those saving only a little save more?
Here are our top 10 tips for saving money when budgets are tight.
Cut Spending Painlessly
Tip 1: To find small savings that add up to big savings over time, keep a careful record of all (and we mean all) of your expenditures for a month. You may be surprised to learn how much you are spending on such things as a daily latte or restaurant meals.
Tip 2: For necessary purchases — such as food and transportation and insurance— comparison shop. Remember your Commissary and Exchange can offer you savings year-round. Utilize these savings opportunities as you would your other military benefits.
Tip 3: Restrain spending for birthdays and holidays, especially Christmas. A few well chosen gifts are likely to be more appreciated than a more costly pile of gifts chosen thoughtlessly in a shopping mall foray.
Reduce High-Cost Debt
Tip 4: Interest rates on credit card debts and other retail credit lines can easily run 25 percent. You can save hundreds, perhaps thousands, of dollars a year by paying off these high-cost debts. If you are located at a military installation you can get assistance at the Family Readiness Center for free. Personal Financial Managers and Counselors are there to help and can be a great asset in getting a debt repayment plan in order. Another resource is MilitaryOneSource (1-800-342-9647) they also offer free financial counseling.
- Learn more about how to get out of debt.
Save For Emergencies
Tip 5: Build an emergency fund to avoid having to take loans to pay for unexpected purchases. That fund is usually best kept in a savings account, despite the low interest rates such accounts pay right now. But do try to keep a high enough balance in the account to avoid monthly fees many on-base banks and credit unions participate in Military Saves Week and offer great savings options during the Week and throughout the year. To learn more on emergency savings, click here.
Tip 6: Set up an automatic transfer each pay period or month from your checking to your savings account or through an allotment. Even as little as $10 or$15 a month helps. After all, that’s $120 or $180 a year.
Tip 7: Put all your loose change in this savings account. For many people, that could add up to well over $100 a year.
Take Free Money and Save it
Tip 8: Low- and moderate-income workers qualify, each year, for an Earned Income Tax Credit that can put over $1,000, and often more than $2,000, in your pocket. The EITC Assistant tool provided by the IRS can help you determine if you qualify to claim the credit, or you can contact your local tax payer assistance center for in-person help. Then be sure to save at least half of this windfall.
Tip 9: Participate in a local Investment Development Account (IDA) program. In return for attending financial education sessions and agreeing to save for a home, education, or business, you typically receive $2 for every $1 you save through an IDA program. So, $25 that you save each month ends up as $900 at the end of a year.
Tip 10: Participate in the Thrift Savings Plan or Save at Work. While we encourage letting this money build up until retirement, it can be withdrawn, or borrowed on, to cope with serious emergencies.
Helping People Save - Ready.Save.Grow. is a U.S. Department of the Treasury initiative to help people save and take control of their future.
Setting money aside for the future is an important step toward reaching your long-term goals, whether that means saving for your child’s college education or preparing for a more comfortable retirement. Learn how convenient saving can be with Treasury securities.
Treasury savings options are:
- Affordable. You don’t need a lot of money to save with Treasury savings options. You can purchase a savings bond for just $25 and other Treasury securities starting at $100.
- Safe. You can safely buy and manage Treasury savings options online through the Treasury Department's secure TreasuryDirect web-based system.
- Convenient. You can buy Treasury securities online, 24/7—no more waiting in line. You also can purchase savings bonds or other Treasury securities automatically through payroll direct deposit.
Get Ready to Save and Grow your savings and gain control over your future.
Another great time to save with U.S. Savings Bonds is at Tax Time! U.S. Savings Bonds are one safe and easy way to do it.
There are a lot of great reasons to buy U.S. Savings Bonds at tax time.
- You do not need a lot to get started — start with as little as $50. Use just part of your tax refund to start saving.
- It is simple at tax time. Just select the amount you want saved from your income tax refund and you’ll receive your bond in the mail.
- Earn interest. Your money starts growing immediately.
- Bonds are safe. Bonds will never lose value and they are backed by the U.S. Government.
- No fees. There are no fees to buy or cash in your bond.
- Money for the future. You help your loved ones live their dreams when you buy bonds.
- Gift savings to your loved ones. Bonds can be purchased in someone else’s name – so you can help jumpstart the savings and dreams of the people you care about.
What are tax time bonds?
Tax Time Savings Bonds are Series I U.S. Savings Bonds. Issued and guaranteed by the U.S. Treasury Department, Tax Time Savings Bonds can be purchased directly on your tax form. You can cash in your bond after one year at most banks or credit unions, but the longer your keep it the more it will grow in value. Your bond will earn interest for up to 30 years. If you cash your bond within 5 years, you’ll lose the last three months of interest.
The current interest rate on Series I Savings Bonds is 3.1% through April 30, 2012, and will adjust for inflation every six months. Bonds offer competitive returns in comparison with other savings vehicles.*
Growth on your bonds is guaranteed! Bonds make saving safe, simple and secure.