Don’t Let Your First Home Purchase Haunt You!

Buying a house can be overwhelming, if not downright scary! The paperwork, spending all that money! Almost half of young adults with student loan debt say that debt is hindering them from buying a house, according to a survey by NeighborWorks America (Oct. 22).

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While student loan debt can be a concern for many, another new study shows that that for some it isn’t interfering with their home-buying plans at all. Four out of 10 millennials still plan to purchase a house within five years (Origination News Oct. 22).

If you’re looking to purchase your first home you should understand:

  • The difference between being prequalified and preapproved. Prequalification simply involves a rough calculation of the mortgage payment you can afford. Your credit union lender can help you with this. Preapproval means you’re essentially good to go. You formally apply for the mortgage and pay an application fee. The lender determines that you are eligible for a mortgage of a certain amount. It’s called preapproval, rather than approval because, before making a final commitment to you, your lender must verify your information regarding employment and salary;
  • The difference between a fixed-rate mortgage and an adjustable-rate mortgage. With a fixed-rate mortgage the interest rate stays the same throughout the life of the loan, typically 15, 20 or 30 years. Your monthly payment will remain the same during that time. With an adjustable-rate mortgage the interest starts at a lower level and then may go up or down at specified intervals. A lender at your credit union can suggest the best option for you;
  • The difference between an appraisal and inspection. An appraisal determines a property’s market value. An objective appraisal assures the lender that the property’s value is at least equal to the mortgage amount. Note that a real estate agent’s market valuation is not equivalent to a formal appraisal. A home inspection examines the condition of the house and its mechanicals. The purpose is to protect you, the buyer, from nasty surprises. Hire a professional inspector and ask for references;
  • Closing costs. No later than three days before closing, your lender will provide a statement showing you the final figure and a breakdown of all the costs (you got an estimate shortly after your loan was approved). Look over the statement to be sure all is in order. Usually, you’ll need to provide a cashier’s or certified check for the closing amount (plus the down payment) at the closing; and
  • Insurance needs. If you own a home, you have the potential to suffer property damage or liability loss. Ask your credit union lender and insurance agent about: homeowners’ insurance, private mortgage insurance, title insurance, mortgage life insurance, and flood insurance. Insurance needs will vary for each individual homeowner.

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

Card Fraud, ID Protection & ID Theft Prevention

This article originally appeared on 3Rivers Blog by Jim Johnson

Target, Michael’s, Home Depot, Goodwill, Jimmy Johns, Dairy Queen, Kmart.  In less than a year, cardholders all over the USA received the news that these major retailers/restaurants suffered a breach.  As a result, millions of cardholders have had to replace their debit and credit cards.

cfraud%20via%20nerdwallet_800_796Who are these criminals?  From what we’ve been told, they are a sophisticated group of criminals from overseas. They use high tech systems to steal data, manufacture new cards, and create havoc.

I wish I could say that fraud attacks will stop.  The experts are telling us that they won’t.  So, what’s a cardholder to do?  While 3Rivers cannot stop the fraud, we do have some things in place that will help you navigate these wild waters.

Fraud Blocks

When we see card disputes coming in, we see the trends and have the ability to completely “shut down” countries where we see fraudulent activity happening.  We publish the list of countries currently blocked.  You can find this list by clicking here.

We also find trends in specific states.  While we don’t completely block transactions in the states, we can tailor our fraud protection by dollar amounts and/or whether or not a transaction is PIN (personal identification number) or not.  You can find this list by clicking here.

Replacement Cards

Since the Target breach, we have added new software that allows us to replace affected cards in one order.  This allows us to get new cards to our members as fast as we can. This was recently deployed during the Home Depot breach.

New Tools in the Future – Coming in 2015

We (Ed Note: and many other credit unions) will be introducing EMV (“chip”) cards in 2015 for both credit and debit card.  This means your cards will have enhanced fraud protection. More on this next year.

Also in the coming year, we will be introducing “Instant Issue” cards.  What this means is that brand new cards will be issued either the same day or within a couple of days.  When fraud happens again, we will have the capability to issue replacement cards much faster and give you more peace of mind – within a few days.


Your local credit union works to make sure your financial information is secure when others are neglectful.  Tired of having to remain vilgilant when someone else doesnt protect your data like they should?  You can do more:

  • Share this information with friend and family, and encourage them to take action via StoptheDataBreaches.com campaign site.
  • Stay engaged with the campaign by following @CUNAadvocacy,@aSmarterChoice, #StoptheBreaches, as well as the CUNA Advocacy and aSmarterChoice Facebook pages.
  • Continue to stay abreast of new developments by checking the latest news, following the social media platforms above, and keeping in touch with your local credit union.  You can find one at asmarterchoice.org

It’s time to tell Congress we need to stop the data breaches and raise awareness about the impact databreaches have on credit unions and credit union members when financial information is stolen.

Does Your Phone Enable Impulse Buying?

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As Apple Pay starts to take off, are you at risk of increased impulse buying?

Many Americans struggle to control credit card debt because they are just swiping their impulse purchases. One landmark 2001 study showed that people who pay with credit cards, in some situations, are likely to spend twice as much as they would have if they were paying with cash, in part because the pain of actually handing over hard-earned money for the item is delayed (TheNew York Times Oct. 10). Multiple studies since then have confirmed that credit cards encourage people to spend more than they would if they were paying with cash.

With the new Apple Pay system, iPhone owners won’t even need to get out a credit card to buy something in the estimated 220,000 stores currently equipped to accept this payment method: Paying will be as simple as hovering their smartphone near contactless readers. If iPhone owners are shopping online or in an app, a single touch can buy anything they see.

Credit cards transformed the way consumers spend, and new mobile-payment platforms are poised to do the same. With phones being transformed into computers, GPS locators and now payment methods, companies will have unprecedented opportunities to encourage consumers to spend (Slate Oct. 9).

These payment platforms make sense for companies like Apple and Amazon that are offering them, because it gives them access to reams of consumer spending data. But for consumers, they could encourage unprecedented levels of overspending by widening the gulf separating shoppers and the physical act of spending money.

If anything you see in real life or encounter online can be purchased in a split second, saying no will be harder than ever. So if you’re excited about ditching your wallet and embracing a new smartphone-based payment platform, take precautions to avoid overspending:

  • Use technology. Exert impulse control with apps that help you stick to a budget and meet savings goals. Your credit union might offer its own money management app;
  • Check your balance. The reason paying with your phone is dangerous is because it takes the sting out of spending money, but a smartphone also makes seeing your balance easier than ever, too. Before making a purchase, take a second to log into your checking account and remind yourself that whatever you buy, you’ll eventually have to pay for; and
  • Commit to a waiting period before any major purchase. Saving and delaying a purchase cannot only help you make a better decision, but it often results in a more satisfying experience.

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

Take Control of Your Financial Fears

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What spooks U.S. consumers more than any “Walking Dead” marathon or Halloween ghoul is an ever-present sense of the financial inability to pay their monthly bills, according to a recent poll from the National Foundation for Credit Counseling (NFCC).

Ninety-two percent of the nearly 1,400 respondents said they had a fear of running out of money, led by 64% who fear they can’t pay each month’s bills. Retirement, unplanned expenses and children’s education were concerns for 15% or less of respondents.

“The focus on immediate needs, as opposed to future ones such as retirement, reflects the uncomfortable financial situation in which many Americans live month after month,” said Gail Cunningham, NFCC spokesperson. “Entering the holiday shopping season already struggling to meet existing debt obligations will only add more pressure on the family.”

NFCC suggests five steps to alleviate the financial fear:

  • Track spending. Find any financial leaks by tracking household spending and come together to determine what gets spent and what gets saved in the future. “The unity that results from this type of decision-making process will likely produce a greater level of success, as everyone will be pulling in the same direction,” said the NFCC;
  • Create a cash-flow calendar. Increase financial awareness by recording sources of income and bill-due dates. If there’s not enough money available to meet a debt obligation on its due date, call the company to see if the date can be moved. This will prevent overdrafts, late payments and fees;
  • Begin saving. When money is tight, saving isn’t a priority for many. Living on a cash basis can save up to 20% over previous spending on plastic. Put raises, bonuses, birthday money or other windfalls directly into savings, and aim for an emergency fund of one month’s salary;
  • Decrease debt. Revolving debt can be expensive with interest stacking on top of interest. Write down and total the existing debt and associated interest paid each month. “The totals may be shocking, but will hopefully spur action, as ignoring the problem will only make matters worse,” the counseling agency noted; and
  • Set goals. Make a list of short-term goals for the next 12 month and a separate list of long-term goals. Include dates and dollar amounts with each goal to decide which ones can be met realistically. “Goals that aren’t achievable only serve to discourage and potentially derail the entire plan,” the NFCC said.

“Fear and worry can impact more than a person’s finances. People owe it to themselves and their family to find solutions to financial concerns before they negatively impact other areas of their life,” noted Cunningham.

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

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There Is Help When Your Credit Goes Off Track

This is a guest post by FedChoice Federal Credit Union

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You may already know your credit union has more surcharge-free ATMs than the average bank and offers great rates on auto loans and CDs. But, did you know that there might also be someone on staff who can help you if your finances get off track? Since credit unions are owned by their members, it’s in everyone’s best interest to see that your financial goals are met. And, if things get off track, your credit union can help in a number of ways – credit report reviews, refinancing high-interest loans or if needed, you can be paired up with a Certified Financial Counselor (CFC).

Peter Gray has worked at FedChoice Federal Credit Union as an Assistant Financial Service Center Manager for over five years and has been serving members as a CFC for the last three years. Peter’s focus and dedication to helping members (and their finances) has them lining up to work with him! Ask a member about working with Peter and they will say the wait is well worth it to get their finances moving in the right direction again.

“Lately it seems that I’m working with at least one member every week and we’re either discussing credit or their financial goals,” says Peter. “I find these sessions to be very rewarding. For example, I have been working with one member for quite a while and we were able to improve his credit score. Then FedChoice was able to approve him for an auto loan! Things like that let me know I’m making a positive impact.”

One thing you need to be aware of is that the process can take some time, “The first may last a couple of hours, but I want to review the entire situation and make sure all of their questions are answered.” Peter starts the process by asking “What is your goal and what would you like to accomplish?” Working together, Peter and the member develop a plan that includes step-by-step strategies to help achieve their goals. Peter explained that “I understand what it means to make mistakes. Before I was a CFC, I went through a challenging credit situation myself and I’m willing to share that story. It builds trust and fosters an open and honest conversation. Honesty is important because – it’s how we’re going to turn things around!”

While going through credit challenges can be stressful for everyone involved, it’s also rewarding when you see changes taking place.  Peter said, “I’ve been in the same situation and it is something that you can overcome if you’re willing to invest the time, change your spending habits and put some money aside.”

Your credit union is here to help you along the way.  To find a local credit union you are eligible to join, click here or go to asmarterchoice.org

401(k) 101

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While the prevailing notion seems to be that people from my generation will never be able to retire, I figure it still doesn’t hurt to start looking into my 401(k) options. But I as I have so little experience in this area, I’ve needed to do some research to make sure that I understand everything that happens with my money when I invest in a retirement plan.

So for those of you who are about my age and also trying to learn about retirement accounts for the first time, here are some general ideas about how a 401(k) works:

1. You decide how much money you want to contribute to the 401(k) on a monthly basis. This amount automatically gets deducted from your paycheck and put into your account. Remember that there are contribution limits involved here. If your employer offers a match, try to contribute enough to the plan to get this match. Otherwise it’s like giving away free money.

2. Your company acts as what is known as the “plan sponsor.” There is then another company involved that actually does all the handling of your finances, which could be a mutual fund company or a brokerage firm.

3. You generally can choose how your money gets invested. Some people prefer to be more aggressive than others; it all depends on what your financial goals are and how quickly you’re looking to build up savings.

This is an extremely general overview, but it’s helped me to better understand what a 401(k) is and how it works. Tim from MoneyMix

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

How Much Do You Really Need to Retire?

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Article originally appeared on SIU Credit Union Blog by 

How do you know if you need to save more for your retirement, are right on target, or are going overboard?

The rule-of-thumb formula is to plan to live on 70% to 80% of your preretirement income during your retirement years, while increasing your replacement income annually at the inflation rate for 30 years.

This is a reasonable starting point.

But these assumptions can over or underestimate the true cost of your retirement. One size does not fit all. Your actual replacement income requirements will more realistically range from 54% to as much as 90% of your preretirement income

One important factor in determining your replacement rate is your proportion of pretax expenses (contributions to a 401(k), for example) to post-tax expenses (contributions to a Roth, mortgage payments, and so forth).

The more you put aside in pretax retirement accounts before you retire, the lower your replacement requirements.

To help you evaluate other factors that affect your replacement rate, consider:

  • Some of today’s expenses will decline or disappear when you retire, for example, Social Security and Medicare taxes, saving for retirement, and work-related expenses.
  • As you progress through retirement, even if you take into account the inflation rate for retirees (3.15% compared with a general inflation rate of 3%), your expenses will decrease in real terms at first and then increase toward the end. That’s because your consumption most likely will change over time.
  • The relative amount you’ll spend on insurance and retirement plans will decrease significantly as you age.
  • Your life expectancy might be a lot less, or more, than 30 years. You can use Social Security’s online calculator (found on ssa.gov) to estimate your life expectancy.
  • If you have a low preretirement income, for example, $20,000 a year, your replacement rate likely will be higher than that of someone who makes $100,000 a year.
  • The relative amount you will spend on health care could increase significantly as you age.
  • After age 65, you stand a good chance (70%) of requiring long-term care and help with basic daily activities, even if only temporarily.
  • Many households would benefit from claiming Social Security as late as possible. Keep in mind that, by delaying, you’ll get a higher inflation-adjusted benefit for life.

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

Savings Accounts and IRAs and 401(k)s! Oh My!

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This article was originally posted in Money Mix

When you’re just starting out in life, it’s difficult to imagine the day you’ll ever be able to retire. It seems so far off that it’s easy to put it out of your mind. Starting a retirement account just seems like a lot of work; why not sock what extra money you have away in a regular savings account and call it a day?

If you’re not making the effort to plan for your retirement in your 20s and 30s, you’re missing out on some valuable saving potential.

There’s a reason people contribute to 401(k) accounts and IRAs (individual retirement accounts), and that reason is compound interest. When you contribute to a retirement account, you’re not only saving the money you put in. You’re compounding, or earning more money, based on the money you put in and the money you’ve already contributed to the account.

Some investing experts describe compounding as a snowball effect: You start with the money you contribute and, over time, that amount grows exponentially based on the amount you continue to contribute and the savings that’s already there.

Here’s a real example from a financial professional at Fiduciary News:

Let’s say Person A saves in a regular taxable account, while Person B saves in a tax-deferred retirement account. Each saves $1,000 a year for 30 years. Both earn 8% on their savings. Person A will end up with about $89,500 after 30 years. Person B, however, will have about $132,000 after 30 years. The difference? The compounding effect of Person B’s retirement account resulted in about $42,500 more.

The best part about compounding: It’s easy to set it and forget it. Talk to your human resources manager or your financial adviser about making sure you’re saving at the right rate. Continue to contribute that amount, and you can sit back and watch that money grow. While it might be hard to see that money going into your retirement account instead of into your bank account, keep the concept of compounding in mind. Remember that your retirement money is earning even more money just by sitting in your retirement account, and you’re barely lifting a finger to make that happen. Chances are, you’ll start to come around to the idea of putting that 401(k) or IRA to good use.

Are you saving for retirement?

Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

National Save for Retirement Week Kick Off!

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The eight annual National Save for Retirement Week (NS4RW), started on Sunday, October 19th and runs through Saturday, October 25th, provides a great opportunity to reflect on your personal retirement goals and determine whether you’re on target to reach them.

National Save for Retirement Week is the first congressionally endorsed, national event formally calling on all employees to take full advantage of employer-sponsored retirement plans. It is also an effort to raise public awareness about the importance of saving for retirement.

It is important to begin saving today for retirement – or increase your contributions if you aren’t meeting your goals. Experts predict that retirees will need from 80 percent to 100 percent of their pre-retirement income to maintain their lifestyle after retirement. Yet, surveys show that most Americans remain unprepared for retirement.

Take advantage of National Save for Retirement Week by researching what your savings options are, using savings calculators and benefit assessment tools to determine what your retirement goals should be, and using tools like the America Saves pledge to stay on track. Not sure where to start? Here are a few tips and tools for you:

 Your local credit union personal finance professionals bring you this website and other tools to help you make the most of your money. To find a local credit union you are eligible to join click here or go to asmarterchoice.org

 

Credit Unions are a Smarter Choice!