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This Week In Your Wallet: Prime Time And Planning For The Future 

Jean Chatzky  |  July 16, 2019

We’re now in the home stretch of Amazon Prime Day frenzy — AKA the Black Friday of summer — and there’s about 12 more hours of bargain shopping to be had. If you weren’t already a Prime member, this week’s deals may have inspired you to sign up (for $119 for the year, which includes some year-round discounts and free shipping on many items) but members should beware their spending habits. While non-Prime members spend about $700 on Amazon every year, Prime users cash out an average of $1,700 annually, according to data from Consumer Intelligence Research Partners. While these numbers aren’t necessarily correlative — there’s no proof that simply having a Prime membership inspires you to spend more — consumers would be wise to remember that “free shipping” doesn’t mean “free.” Our brains do funny things when we’re presented with a deal and we feel like we have to carpe the diem. So, readers, take this as your reminder to step away from the app/keyboard/iPad and ask yourself, “Do I really need this?” If the answer is yes, embrace your Prime membership wholeheartedly and the discounts it affords — just as long as you’re not buying these things on Amazon

Credit Card Woes 

Be honest with yourself for a second — how much credit card debt are you carrying? If you don’t know the exact number offhand, it’s time to put the newsletter down, login to your accounts and find out. When you don’t have a complete picture of where your finances stand, it’s more likely that you’ll fall behind on important payments, and right now credit card delinquencies are on the rise, along with credit card balances, according to the Federal Reserve Bank of New York. It’s a dangerous pattern that could spell big trouble for many borrowers who are shouldering larger debts than they can comfortably pay. And while a missed payment may seem like a casual “oops” at first, that delinquency can stay on your credit report for up to seven years, potentially impacting some important life milestones you’d like to reach. Thankfully, if you find you’ve dug yourself into a hole with credit card debt, there are an assortment of shovels you can choose from to get yourself back on solid ground. First, look to your savings account. If you have money that’s there earning around 3% interest, you’d be better off using it use it to pay off that debt that you’re paying 18% (or more) on. Or, if you have a credit card with a high-interest rate, you can look to do a balance transfer to a card with a 0% introductory APR. That way your full monthly payment can go towards reducing your overall balance — not just paying down interest. You might also want to consider reputable credit counseling organizations that can help you roll your debts into one lump sum, negotiate a better interest rate, and get on a set schedule to pay things off — just watch out for credit repair organizations, which are always scams.

Securing Our Futures 

Social Security has had Americans’ backs for nearly 100 years, but many of us have concerns about the longevity of the program — just 8% of Americans think the government should do nothing to fix Social Security and that the program will be “perfectly affordable” in the future, according to the latest Aegon Retirement Readiness Survey. Meanwhile, 32% said the government should take action to increase funding. While it’s true that the Social Security Administration announced in 2017 that they were facing a shortage, even if the well does run dry, we won’t start running out of cash reserves until 2034, and assuming Congress took no action at that point, Social Security would still be able to pay 80% of promised benefits until 2090. By far the more pressing problem we face here is the number of Americans — 33% — who expect Social Security to be their main source of income in retirement. For most people, that just won’t be enough — the most any retiree can earn from SSI today is $2,861 a month, according to AARP. So while Social Security can certainly be part of your plan once you stop working, it shouldn’t be your only plan. As you plan your retirement, make sure you have a full understanding of how you can make the most of Social Security, and check out these online tools that make saving easier and more painless than ever before. 

Buying A Car? Get Ready To Pay More 

Unless you live in a major metropolitan area with access to reliable public transportation, a car is often an essential part of life. But these days consumers are paying more for their vehicles than ever before — today’s average financing cost stands at $32,824, up from an average of $26,940 in 2013, according to data from Edmunds. That’s an increase of nearly $6,000, or almost 22%. Not only that, buyers are stretching their payments across an average of almost six years, resulting in more interest paid over the life of their loans. And, unfortunately, our tastes seem to have gotten more expensive — more buyers are opting for pricier SUVs and pickup trucks instead of lower-cost sedans and small cars, which can account for a price jump of more than $20,000 per vehicle. If you’re in the market for your next ride, take a look at HerMoney’s guide on buying vs. leasing, and keep in mind that a lightly used (perhaps pre-certified) ride will get you to your destination just as safely and just as quickly while someone else foots the bill for a large part of the depreciation. 

Have a great week, 

Jean

Own your money, own your life. Subscribe to HerMoney to get the latest money news and tips!


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