January Resolve: Maintain A Budget With A Focus towards Savings
BUDGETING in 2026
Maintain a budget with a focus on savings
A Look Back at Debt & Savings
I have been forced to rethink our budget and our approach to money. When we carried debt, the usual offenders popped up in the budget. The installment plan to pay off the stove. Car payments. Set aside for car insurance. Dealing with co-pays and Rx costs. The medical debt plan(s). The mortgage. But as we moved out of debt, reducing the number of bills, I had to readjust our approach to budgeting.
Our budget looked like most families: Mortgage with Escrow, Utilities, Car payments, Auto Insurance, Misc. Medical, Misc. Debt, and for us, a general Catch All amount which was generally what was left over after all the bills were paid. In the catch all category I had to buy gas, groceries, shoes, paper, paint, clothes, and everything else that I thought the family needed or just wanted.
Things radically changed for us when our house was paid off. It had been at the end of a busy, committed year dedicated to reducing debt, much of which was medical debt. But most importantly, I looked at why we were spending so much on so much stuff. It meant changing some really bad habits and committing to new habits, specifically changing the focus to savings.
But there was one good habit I always had. I always tried to pay ahead when we could. We paid extra towards the mortgage principal and rounded up the car payments. We even made extra payments, a thirteenth monthly payment based on bi weekly paychecks which gave us a thirteenth month of income. Instead of 12 monthly checks or 24 twice monthly paychecks, we had 26 paychecks every two weeks, giving us that 13th month.
But there was also the unexpected expense which became regular debt when we entered payment plans. Medical debt was a fixed price as was an installment plan for an appliance replacement and a major home repair. But looking at the interest rate and fees I became acutely aware of the amount of interest we were paying. I used snowball approaches to debt when I could.
Savings was where I failed
The debt was always there because I had failed in one very important area, savings. I needed to plan our savings differently by making it foremost in my mind. Savings had to become the first I thing I paid. Further, anything above my basic income needs had to be committed to savings.
Retirement Savings
Retirement and savings were on automatic deduction so I really didn't think about that unless there was a month we couldn't make ends meet. But I was making some serious mistakes about savings. I had followed the ubiquitous advice to automate our savings and retirement. It worked nicely enough for maxing out retirement contributions with matching employer contributions. But yet I didn't bother to readjust our investing options under the plan.
I also ignored an aspect of our specific retirement plan, taking a loan against our contributions. By utilizing a low interest loan against our retirement, we could borrow at less than the bank's standard rate and more than two and a half times less than medical payment plans and credit card rates. When we converted debt to this type of loan, we saved hundreds monthly and thousands yearly. We also avoided monthly fees these companies surreptitiously tacked on, but hidden in the small print when you sign up for a payment plan.
Basic Savings
Automated savings was the worst thing I could do to save because I didn't explore the options available to the small saver. When we had needed the 20% mortgage down payment, the savings bonds I had been taught to buy as a child were all cashed in. But I never went back to savings bonds or anything outside a simple bank savings account and a standard automated savings withdrawal each pay period. Further, the savings account was linked to our checking account which made random withdrawals too easy. Importantly, I overlooked how to better invest our savings. Each quarter the bank paid a pittance of interest so small it seemed there was no incentive to keep much in the savings account.
I ALSO FAILED to adjust the savings deposits when there were raises and COLAs and bonuses. Nor was the saving amount raised when there was Over-Time. Instead, we fell into the trap of lifestyle inflation.(3) Whenever there was extra money in the form of bonuses or OT, it was spent. When there were permanent raises, we just spent more. Sometimes the amount of our needs did rise, especially in medical costs. But usually we spent just because it was there. While our retirement contributions were pegged to income based on set percentages, the allotted savings deposits never rose.
Create a strategy
Realizing this error in our savings strategy changed the way I budgeted. For the first time in late 2024, I sat down and weighed what we owed, how long the debt was for, and I determined what we needed for our base income. Establishing this amount was the key to pulling us out of the hole and getting out from under. Determining one's set budget amount is one of the best ways to tackle savings and pay down debt. If you would like to read more about this year of extreme debt payoffs, read my previous post. For now let's look at the way I decided to budget with a focus on savings.
Determine your base income
No matter how much your take home pay is,
only use what you must.
Save the rest.
To determine our base income I established One Rule, asked Two Questions, and set a Main Goal.
The One Rule: Set aside 20% of your base pay as a budgeted item
Question One: What do you owe each month?
Question Two: How much is necessary to meet your real needs?
Main Goal: Save the rest.
List what you owe. What is needed to survive each month?
For example:
-Housing
-Utilities
-Debt
-Auto
-Insurance
-Medical
-Groceries
Go into detail in these areas. Water, power, phone, etc.
Come up with an amount for each category.
Come to a final figure and determine how much 20% would be above this total to set your base 20% base savings contribution. If your bills including groceries and misc comes to $1,000 then your savings would be $200. Your base income / base pay is $1,200.00. You need $1,200.00 to live. You need this amount (including the 20% savings) to get by every month. Savings becomes a bill, the first bill you pay out of every check. Anything you earn above this amount will not be spent; it will also be saved.
If you find that your income does not meet your needs, then you must undertake a radical change in your life. When my daughter was forced to move after her rent went up by $500 a month, she switched jobs. That meant moving and sharing a space for four months until she could find a place she could afford on her own.
She then went on to find a better job and can now save more. Instead of buying a new car with her extra income, she still has her 2007 model despite pay raises and bonuses. It helps that her home is two blocks from her workplace. She plans to keep the car running until she can save for another car plus the increased insurance rates. At the heart of her strategy is to always maintain a savings base equal to half her salary. Sticking to this meant she chose to relocate rather than pay the outrageous $500 rent hike several years ago.
When my son's health failed, his medical costs grew, and he could not get a full time job with benefits. He had to live with us. During this time, he paid his car payment every three weeks instead of every month and threw money at his student loan. Now his car is paid off, his student debt is gone, and he found a better paying job with benefits and full time status and PTO.
He is saving now in hopes of moving in with his fiancée this summer. But the place they are moving to is twice the distance to work and a much older home so he will continue to make sacrifices based on his salary. He will live below his means so they can have savings and some security. He will also save in the event they need to work on their home.
Set a budget centered on maximum savings
After determining the amount you need to live off of, the One Rule to save 20%, expands after you establish your base income.
(1) Every time you get paid, set aside 20% of your base income in savings. Treat it like a bill. Set it aside in savings. Do not automate it. Make it part of your bill paying process to reinforce your commitment to savings. This also means that when you must reassess your budget that this 20% savings bill is the first thing you list on your budget.
(2) Any time you make more than your base income, put it into savings. By determining that you will only live off your base income, anything above that amount goes into savings. But I make $4000 a month and only need $3200 to live off of? You want me to save more than the $640.00 I will set aside as 20%?? YES, Put the extra $800.00 into savings. If it is $8, $80, or $800 above the amount you need to live, put it in savings. You will not regret it, especially after you save enough to establish and then meet savings goals.
(3) At the end of each pay period, any extra money left in your checking account goes into your savings account. (4)
(4) Any OT goes into savings. Any bonuses go into savings. Calculate this on your take home / net pay, not the pre-tax / gross income.
(5) Raises go into savings. Again, this is based on net oncome. Unless your bills surge in the form of a rent increase, do not spend the raise. Do not think it is time to buy a new car or move unless you need to move for a new job. Save the extra money.
The primary focus of your budget should be to Save First and Save as much as possible. We are living in a time of economic crises. Rents are rising. Insurance premiums are up and medical benefits are falling as deductibles rise. Cars cost more along with ever rising inflation, tariffs, insurance, and repair costs. Groceries are sky high. All of these reasons are why you have to set saving as your priority.
SET SAVINGS GOALS
After you get into the habit of (1) saving the 20% base, (2) saving any leftover money from the previous paycheck, and (3) saving income that surpasses your base income, then set some savings goals.
When should I set savings goals? As soon as your savings account reaches more than one paycheck. But you will keep that amount in your savings. You will begin to allocate future savings so that every cent has a purpose.
Ask yourself these questions when setting savings goals:
(1) Can I use the savings to eliminate debt? Or can I reduce my minimum payments by paying off a chunk of the debt? Using savings to pay off debt is one of the best ways to increase your savings. One less bill each month means redirecting money to savings and paying off any other debt.
(2) Can I reset my necessary spending? You may find it easier to save if you better manage the bills you have.
We have a set electric power payment based on a budget billing plan. The power company saw that we used X dollars last year and determined that our future year's monthly payments would be based on that total divided by 12 for the months in the year ahead. Entering into one of these plans helps avoid the fluctuations of sky high summer and winter bills which may double and strangle your budget.
To help me keep my power usage in check so I don't splurge, I check the daily usage meter available online. I also set up alerts to notify me when the power bill is expected to be above the budgeted amount. While I may not have to pay that extra amount, it will count towards the revised budget bill amount they set next year. We dropped our electricity bill by $4 per month from the previous year. I suspect when our son moves out the rates will plummet as he now runs two D&D games a week and stays online over multiple platforms throughout the week.
A friend of mine received notice his rent was rising significantly. He had been there more than 5 years so he went to management and asked if he could get a break on his rent increase. They said no but he did get them to agree to replace his carpeting, well worn after 5 long years. Even if you may not get the desired outcome it never hurts to ask.
My daughter's rental lease was set to renew at $180 more per month. She reached out and asked them to reconsider as she has been there three years and had no repairs outside of replacing a small 40 gallon hot water tank that was 30 years old. She also reminded them she accepted the apartment without the wood floor upgrade, something which would cost them a lot to replace if she moved now. Her new lease is now $50 a month more instead.
More important, because she lives on less than her paycheck, she can afford the increase. But I know her and she'll just try to get OT to make up the difference. Sometimes it isn't a matter on resetting your bills but trying to find a way to earn a little more. Her former roommate took on Door Dash to supplement his income. Some people sell on Facebook Marketplace. Do what you need to do to make ends meet including going to a food pantry or cutting back more. Tighten your spending until you pay down some debt.
(3) Can I reset my discretionary spending? We waste a lot in money and there are usually some obvious places to save, save, save. During the pandemic, I started cutting my guys hair. I still do that. Nail polish, make up, and fancy hair stuff are something I gave up years ago. Yet there are people who think this is a necessity. If it is, then try doing it on your own.
Shop second hand when you can. Swap, barter, and free cycle for new-to-you things. My home is mostly furnished through second hand finds. Even groceries can be cut back and substitutions can be made. Let others know that if they have donations, ask you first. Right now my daughter is purging some things and they are going to her brother's move this summer.
I have written extensively on saving on grocery costs. Despite undertaking many cost saving measures and swaps over the past year, I have committed to a low-spend grocery month for January, 2026. Whether it is substituting likes such as beans for meat or shopping sales, there are options to save on groceries you probably aren't trying.
(4) Decide where your extra savings goes.
For us, after the 20% baseline savings, every cent leftover from the previous paycheck goes into a special savings category which I think of as our mad money fund. Where it goes, I don't know until I see a home for it. Once I explain our savings categories, you will see this is actually a reasonable option because of the strict savings strategy we adopted.
Every cent above the base income went towards our debt pay down last year. My husband has a good union job so he got a 1,200 raise last year. The after tax amount went to debt reduction. He also gets overtime for every minute over 8 hours in a day and over 40 hours in a week. On holidays when he is forced to work his payrate rises to 1.5 times regular salary. Every net dollar went towards debt. Never let anyone tell you unions are bad. He gets 5 weeks of vacation, 10 national paid holidays, and earns 13 days of sick leave each year. He also has a ton of benefits, additional job protections, and a grievance system for filing complaints.
Now that our debt has been reduced to our one remaining, a car for me (1). I used savings to put 35% down. And since buying my car in November, I have made six payments despite the first payment being due less than a week ago at the end of December.
I began paying as soon as I acquired the debt, making the first payment a day after I drove my new Sonata (2) off the lot. From the first paycheck after the car purchase, I budgeted a half payment every two weeks. Four half payments were budgeted since the purchase and those made two additional payments. Plus paying it every two weeks reduces the amount of interest paid over the life of the loan. Further, with our 13 month pay year based on bi-weekly paychecks, this automatically sets us up for an extra payment a year. (5)
In addition I also redeemed a credit card bonus for cash back and made another payment. Check the details of your credit card to see what special perks are available to you. Often you can transfer cash back to your checking account. An additional two payments came from taking OT and holiday pay along with money over our basic income, plus a savings cut to our insurance rate, and I put all that towards the debt in a month and a half.
ESTABLISH CATEGORIES FOR YOUR SAVINGS
What are you saving for?
One place most Americans fail to save is for emergencies which may last 1, 3, 6 months or more. When Trump and the Republicans shut down government for 43 days in 2025, government workers went without pay. Some were forced to go to work, paying for gas and childcare from funds they did not have or using savings and credit cards to survive. Others could not make their mortgage payment or buy groceries. Food banks were overwhelmed as government workers were joined by SNAP recipients whose benefits had been cancelled along with tens of thousands more who have lost jobs or could no longer afford the rising cost of living in Trump's failing economy.
In addition to saving to pay off debt or setting aside money for emergencies, other traditional savings categories may include birthday and holiday spending, vacation, a car, and a house down payment. But in this economic downturn, too many people are struggling to pay for a car repair or afford a rent increase.
In addition to establishing a six month emergency savings fund, savings for potential future expenses is one goal that we have established. I have budget line items for extra medical expenses and future auto repair and maintenance. In addition, I save for future expenses I know we will owe. Every paycheck I set aside money for pest control which only happens every quarter and lawn care which it is only 9-10 months each year. We own nearly 5 acres in a rural area and these have become necessities as we aged. Yet I pay the same amount into savings for these future expenses every paycheck as if they were a monthly bill. We used the lawn fund to have a dead tree felled last year. Unexpected expenses arise and as home owners we have seen a lot in our 22 years here and 8 years on an adjacent property. We save for potential problems.
Since we paid off our home, we also set aside money for things the mortgage escrow account paid for. Every paycheck I set aside money for the home insurance and property taxes. I pay this out of our checking account and directly into savings. It sits there until the bill comes due on a yearly basis. I also factor in anticipated increases based on past rises. We do the same thing for our Auto Insurance. Paying it in one single amount every six month term avoids the monthly fees most companies charge. Our insurer also gives a discount for paying it in full upon receipt.
MAXIMIZE SAVINGS WHEN YOU BUDGET
Utilities are necessities and cost more than ever. We pay for water, electricity, and our combined phone & internet. But there are ways to cut back on some expenses.
Besides basic utilities, there is the occasional dump fee for approved green bags with a $0.75 bag fee to encourage recycling. We also compost so that saves a little too and the critters seem to adore our leavings. We love our trash pandas!
The cell phones are for emergency use with a once yearly fee which averages less than about $10 per month. If you want to reach us in our topographic dead zone sitting astride a hillside, then email or call the landline. I figure living with emergency use only cell phones saves us over $100.00 a month easily. The phone company gave us a free modem and a combined services discount. Our monthly fee is what my daughter pays for just internet because her area has utility crossover restrictions.
After the car payment and the utilities we save 55% of take home pay. Wow! That Seems Impressive, but hear me out. I save our 20% base savings which I calculate not on the base pay but rather on the entire take-home pay amount. It's a little extra I think we can afford. Then I set aside an additional amount equal to around 35% of base pay. For us, every dollar and cent (not saved as part of the 20%) above the base income goes to paying off the car loan.
What is left after savings and bills is a nebulous amount which goes towards groceries, gas, shoes, paint supplies, guitar string, detergent, TP, whatever. This is an area that I would like to get a better grasp of and set some limits on. It is more than our utilities and car payment so I think this is the next area I want to tackle. I am starting with the grocery portion this month.
So after the 20% base savings, I save 35% for Future Spending. There are two types of future savings. First are the bills I know we have coming due in the future. These include auto insurance, home insurance, and property taxes along with pest control, and lawn services. Second are the potential future bills. This is a way to save for potential problems such as Extra Medical Costs, Auto Repair and Maintenance. Next are Emergency Funds, Investments, and Special Savings, that mad money leftover from the prior check.
I created this method of Save First Budgeting because
(1) I wanted to create a good habit of savings.
(2) I wanted to always be on top of the amount I was saving and the amount I was spending.
(3) Actively saving creates a reserve that allows me to earn interest from savings and weigh how to best earn money.
SAVING TO EARN MONEY
& CREATE GOOD SAVINGS HABITS
To help our family save, we have several types of savings accounts. One type is a regular savings account. This account is where we put money that may be accessed more often. The other type is a money market checking account. The MMA is for funds seldom accessed. These are in addition to regular checking accounts. We also have FDIC insured bank Certificates of Deposit which are not accessible for extended periods of time ranging from one month to 5 years.
Each account holds savings for different budgeted items.
The Regular Savings Account is for our base savings, the set 20% we take out of every paycheck. It is also for Special Savings, Lawn & Pest Control, Auto Repair & Maintenance, and Medical: Extra. The Special savings may be for a day trip or a new appliance. It's the mad money. The savings account has a very low minimum deposit amount to avoid fees but comes with restrictions for free withdrawals. It also has a pretty low interest rate which is paid quarterly.
The Money Market Account has a better interest rate and acts like a checking account. There are a limited number of free withdrawals and a higher minimum deposit to avoid a monthly service charge. It also pays interest every month based on a tiered average daily balance. The MMA is for biannual and annual bills like Home Insurance, Car Insurance, Property Taxes, Long Term Investment, and also a Special Set-Aside Category. The special category includes the hefty minimum deposit to avoid a monthly fee and also gift money, six months of emergency funds, and special circumstance money. We also deposit money into the MMA that we know may be moving quickly but which will increase the interest payout. The recent insurance check sat in the MMA until we wrote a MMA check for L's replacement car. While it was in the account, it raised our average daily balance so that we got an extra $4 in interest paid that month over the average interest payout.
The next area we keep savings close by is through Certificates of Deposit. Bank CDs are FDIC insured unlike those sold at brokerages and insurance agencies. Our bank offers special in-house interest rates for customers and those bringing new money into the bank. The special rates are unpublished and inquiries have to be made in person. There are some stipulations for these such as odd term lengths of five and eleven months. But the special rates are in line with the online offers from larger banks and investment firms. In the spirit of It's A Wonderful Life, I'd rather our money loaned to the local community. Additionally CDs over 6 months in term add interest every month so you can see the interest grow every 30 days. It is a really good feeling to see your balances grow several times each month even if it is a few dollars or more.
When I discovered CDs could be purchased for as little as a $500 minimum deposit, I adapted our savings strategy. As our savings grows, I reassess our needs. I may transfer money from one area if the money is unused for intended purposes. Recently our auto Repair & Maintenance Fund reached a benchmark so I moved $1,000.00 into two small CDS at staggered terms.
We have CD ladders established which mean that any given month we have at least one CD reaching maturity at one of our banks. Adding multiple small CDs at the $500 level ensures that if we need money, there are many options. Plus I keep abreast of the special rates so when we renew, convert, or cash out a CD I can reassess how we might best use the money.
Another option are the short term CDs. When I reach the $500 minimum I can transfer money that we may be holding onto for a 6 or 12 month period from the savings or MMA account Instead of getting the savings or MMA rate of interest, I can get a short term CD which pays several times more than the MMA. Sometimes I don't have enough time to spare for a 5 month higher rate CD before the taxes are due or the insurance premium must be paid but I may have enough for a 1, 2, or 3 month CD. It may be lower than the special rate CDs but still better than other savings options.
Retirement Savings
In addition to savings in our budget we set aside pre-tax deposits for retirement. These are set for automatic withdrawal from the paycheck. At one point I didn't even bother checking the statements. Now I check the retirement accounts every month. I am allowed to switch how we save in over a dozen funds. These have monthly, quarterly, and annual updates with past years of performance since the fund was added to the retirement plan. While a 3.9% return is lovely for bonds, some stock funds have hit 11% and 14% monthly and quarterly earnings. The risk is greater so I focus only new investment in riskier trades with 85% in safer funds. A friend in California lost a ton in his retirement by sinking money into a single fund that bottomed out in the Housing Crisis. There are risks so I play it safe and try to keep an eye on that 15% spread out in riskier funds.
When I do our quarterly financial review, I always include the retirement account even if it is an asset only touched for an emergency loan or when we can completely retire. It helps me reaffirm the savings mindset that is at the forefront of our budget.
Final Thoughts
It took us well over a year to get out of debt only to find ourselves taking on a car loan, one of the worst things in terms of value. Drive the car off the lot and immediately it depreciates by thousands of dollars. Unfortunately assuming debt is sometimes necessary. Most people outside major cities in the US need personal transportation. But assuming debt comes with careful deliberation and reading the fine print (5). While we could have cashed in a CD to buy the car, we were making more than twice the interest rate we paid for the loan. However I did put down 35% from savings to ensure it was an expense that fit our budget and allowed us to continue our strict savings regimen.
Retirement Savings is an area where it is sometimes better to leave it alone and just let the amount deposited be pegged to a percentage of income instead of following it closely. Every fund varies with fees so read the details. Retirement savings can benefit greatly if your employer provides matching funds. There are also tax breaks based on what type of retirement fund you maintain but there are also tax penalties for early withdrawals. Start the habit of retirement saving early so that it continues to be one of those things which must always be untouchable, not subject to compromise.
When I sat down with our bills and our income in 2023, I realized how much money we were wasting. It wasn't just fees and interest. We were spending on a ton on unnecessary things, nearly 30% of take home pay. This continues to be an area I want to corral, contain, and limit by documenting it better. As much as we have curtailed spending, there are still areas for improvement like that nebulous number left over to pay for groceries, gas, etc.
But I was able to save because I started to rigorously save and save with a purpose and set goals. First, I saved to get us out of debt. Then I saved for immediate bills, long term bills, and then with other goals in mind. By establishing a budget dedicated to saving, I developed a savings mindset. Before I pay the utilities or the car payment, I pay into our savings account. Each paycheck I pay multiple times for individual line item categories. I know X will pay for the car insurance in 6 months, and Y will pay for emergency medical costs which arise. Every dollar is given a purpose and it goes into savings.
It is important to reassess your budget regularly. Rent and taxes increase. Raises and bonuses come along. Needs arise. At least once a month, I am forced to make a change. Sometimes it's simply cashing in or converting a CD. Sometimes, joy upon joy, I realize we met a savings goal or a reached a category's thresh hold and money needs to be moved into a higher yield account. And every month I get to add interest to the balance sheet, sometimes several times in a month.
For me the most important part of budgeting was changing my mindset. We spent because the money was there. We fell into lifestyle inflation (3), the misconception that if you earn more, you must spend more. That is so wrong. The goal should be to save more and live on as little as you need. We live in a debt driven, consumer focused society, that promotes spending and debt as a god given, pro-Capitalist, American right. But we also spent to feel happy or just to own something. We replaced things for experiences. We exchanged hours working for precious free time. Until I realized what mattered most was not acquiring stuff and more stuff, I missed out on some good free stuff, including free time.
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(1) When your savings builds up, you have more options available when a need arises. I was able to finance a new Sonata with 35% down and a really low loan rate based, in part, on our excellent credit. Initially I thought we would get a CD secured loan at the bank but it required cashing in a high yield CD. The bank pegs the loan rate to a standard long term CD rate.
Desperate for our business, the dealership and Hyundai Capital beat the bank rate of 2%. We kept the CD intact with its higher interest rate just days before the fed cut the lending rate. I reconciled having the new debt by knowing the CD we had kept was more than we owed on the car. If L lost his job tomorrow, we could cash in that CD and pay off the car immediately. Plus we were earning more on that CD than twice the loan's interest rate. Nonetheless, I want this paid off as soon as possible without sacrificing our interest earnings.**
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(2) Reconsider what you purchase. I had a 1999 Camry bought in 2001. I loved that car and wish I could have another but I refuse to pay over $30,000 for any car. For now, that is still an option. I chose the Sonata because it was similar to the Camry but in the low 20s. The Toyota price tag was well over $40K. I checked Consumer Reports and discovered the Sonata had positive ratings and a very good warranty. I also looked at online sites for reviews.
In the past we only bought used cars until the pandemic upended things. I bought a used Prius with less than 60K for less than $10K for cash at the beginning of the pandemic. Afterwards, with the supply chain slow down, the price difference between a decent used car and a new car with full warranty is less than $10,000.00. Used car prices on reliable models with low mileage (under 60K) start at $16K. New cars starting at $21K, so I default to new. Besides, used cars have loan rates three to five times higher than new cars which still offer 0.5-2% financing on select models. I also bought a 2025 when the 2026 models had flooded the dealer lots. I bought new for $5,000 less because of an older production date. The warranty was still the same and it had less than 50 miles on it. Why pay more? I don't need a Camry based on desire or a Mercedes based on envy. I need a reliable, warrantied car that I like and which serves my needs.
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(3) I established my savings rules after I discovered the concept Lifestyle Creep or lifestyle inflation, where spending gradually increases as income rises, turning former luxuries into new necessities and potentially derailing financial goals like saving for retirement or a home.
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(4) I suggest keeping a baseline balance in your checking account because we all make mistakes and an overdraft can be a very expensive error. I suggest setting a base amount based on your income. If you make 900.00 a check, then put 1,000.00 in your checking account and let that be your base, the new zero. I find even numbers are easier to work with. When the pay period is over, take the money left over from your last check- not including this base of $1,000 -and put that into savings. Zero out your checking account to this baseline every pay period. You won't have any inadvertent overdrafts this way and if your pay check is ever late, you have a cushion of one pay check to fall back on.
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(5) Remember to look for the hidden fees. They should also give you a contract which states the dollar and cent amount of interest you pay over the life of the loan. Get a loan that allows you to pay off the loan early without penalty.
