Penny-pinching works to help build savings to pay off debt

May 19, 2006|by LYNN F. LITTLE

Too many Americans are in denial when it comes to savings and debt. The overall savings rate across the country last year was negative 0.2 percent - that is, less than zero.

Altogether, Americans actually spent more than they earned last year. That's the first time the annual national savings rate was a negative number since the Great Depression.

You can save money and reduce debt at the same time. It takes discipline and a healthy dose of long-term thinking, but you can do it.

Start small. Setting aside even five or ten dollars a week can help. If you don't have a savings account, you might need a $100 or $200 minimum for a fee-free account, but ask banks, savings and loans, and credit unions if they offer free accounts with low or no minimums.


You can save in lots of ways. Pack your lunch instead of buying fast food. Eliminate premium features on your phone or cable service. Always buy the cheapest brand (usually the store brand) at the grocery store. Penny-pinching works when you take those small savings to gradually build up your nest egg.

At the same time, take a hard look at your spending. If you haven't already, put pen to paper and make a budget. How much do you earn? How much do you spend on housing, transportation, food, insurance, utilities?

Then, look at your credit cards. Financial advisers usually recommend paying as much as you can each month on the card with the highest interest, making the minimum payment on others. When the first card is paid off, switch higher payments to the next-highest interest rate card, and so on. Stop using your cards until all are paid off. PowerPay, a computer program developed by Utah State University, can help you understand the costs of credit and see the possibility of a more positive outcome by making power payments (rollover payments) visit to learn how you can get out of debt faster.

You can find other money-saving ideas in the publication "66 Ways to Save Money." You can find this publication on-line at

You also might find help through Maryland's version of the America Saves program, available throughout Maryland. For more information, visit

If you would like printed copies of "66 Ways to Save Money" and "Build Wealth, Not Debt," send a self-addressed, stamped business-size envelope (37 cents) to Maryland Cooperative Extension - Washington County office, 7303 Sharpsburg Pike, Boonsboro, MD 21713. Mark the envelope, "Save."

Lynn F. Little is a family and consumer sciences educator with Maryland Cooperative Extension in Washington County.

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