AICCCA Press Release

AICCCA Advises Consumers Learn Five Basic Financial Principles During Financial Literacy Month

Fairfax, VA - March 15, 2010 — April is Financial Literacy month and the Association of Independent Consumer Credit Counseling Agencies encourages consumers to get back to the basics.

"Even those who consider themselves literate in financial matters could benefit from a refresher on basic financial principles that, when followed properly, lead to successful financial lives," said Dave Jones, president, AICCCA. "Consumers who are experiencing financial difficulties may need to review the basics to determine the changes they could make to better their financial futures."

AICCCA provides five basic financial principles:

1. Identify the difference between wants and needs. Many of us were taught this as children when our parents pointed out that although we needed jeans, the designer brand that cost twice as much was something we wanted. As adults, we need to be able to know the difference as well as find a balance between funding what we need and buying what we want only when it is affordable.



2. Develop a realistic spending plan to live within your means. All income levels benefit from having a plan in place for how income will be spent. Many people view budgeting their money to live within their means as having to sacrifice, but the opposite is typically the case. With a plan you are making decisions of where to spend and avoiding unwanted debt that can result from overspending using credit.



3. Understand the true cost of borrowing. Whether you are borrowing to purchase a home, vehicle or a new living room sofa, you are doing so for a price. Be sure you understand how much you will be paying in interest charges for any loan. Many people do not realize they are paying thousands of dollars in interest on their revolving credit accounts.



4. Recognize the importance of saving. Your financial life will have bumps and unexpected turns just like the rest of life. To avoid any lasting damage from a financial curve ball, you need to have money in savings to cover unexpected expenses and/or events. You will recover from an unexpected layoff, major car repair or appliance replacement much quicker if you have accumulated six to 12 months of living expenses in savings. In addition, include saving for retirement, college education and seasonal and planned large purchases.



5. Use credit wisely. Extending income using credit cards is a major mistake that many people make. As a general rule, do not purchase consumable items using credit and purchase major items only if you have a plan in place to pay off the balance in 90 days or less.