Chicago Bankruptcy Attorneys Say Americans Spend More But Earn Less
Americans spent more - but earned less - in January, say Chicago bankruptcy attorneys.
Personal spending was up 0.5 percent in the first month of 2010, according to The Commerce Department. That would seem to bode well for economic recovery, except that incomes in January rose by just 0.1 percent, much less than what economists had predicted - and the worst rate in four months.
There's good and bad news. First, the bad. As a result of more spending and less money, the savings rate has dropped. Last year Americans saved 4.3 of our incomes - the highest rate in over 10 years - but in January we only saved 3.3 percent. We might be spending more now, but without raises (and in some cases, jobs) we could eventually run out of steam, stifling economic recovery. But here's the happy news. Our savings rate is still a huge improvement over the negative rate we had before the Great Recession. And hopefully we can keep it up by slowing our spending to match our incomes.
I know it's not easy, especially when the recession - and the threat of layoffs and foreclosure - drags on. But there are ways to make saving money a little easier.
First, look for and cut hidden costs, like the gym membership for the fitness club you never seem to visit or the subscription to a magazine you never read. Scan your credit card and bank statements for signs of monthly fees or automatic renewals for services you may not even remember signing up for. It's pretty painless to cut out stuff you don't even use.
Next, look at how you can make your necessary expenses cheaper. For instance, challenge yourself to swap out half the name brands you buy at the grocery store for generics. Or ask your doctor about switching to a generic brand prescription. Try to drive the speed limit and get regular oil changes to keep your car burning fuel more efficiently - and to decrease the need for expensive repairs. Try to bring your lunch and coffee from home and cook your own dinner at night - it's cheaper and healthier than eating out.
Of course, sometimes the hardest part isn't identifying where to save - it's getting into the habit of stowing away the money. Fortunately, automatic payments make it easier than ever to stick with a budget. Consider scheduling a certain portion of your paycheck to be deposited into your savings account each payday. You won't even have to think about it. Saving doesn't have to be a chore. But if you've made the cuts, stuck to a budget and tried automatic saving and your finances are still in trouble, it sounds like debt is derailing you. Bankruptcy can give you a realistic way to control your debt and get your financial life back on track. Find out how for free with a complimentary personal debt consultation from a Chicago bankruptcy attorney.