- Ask Us
- Fraud/Security for Deposits
Stay informed. Learn. Ask Questions. That's better!
- 9 Tips for Paying Off Your Credit Card Debt
9 Tips for Paying Off Your Credit Card Debt
Buried in credit card debt? You’re not alone. According to NerdWallet, in 2015 the average U.S. household with debt had $15,762 in credit card debt at an average 18% interest rate. Annual interest alone was $2,630, or more than $50 a week.
Here are nine tips on how to climb out. Remember, though, there are no magical solutions.
Stop spending more than you make
Tell yourself the truth. Analyze your bills to see where your money is going. Car payments, rent or mortgage, groceries and utilities are essentials; nearly everything else is subject to elimination or reduction. And don’t forget those $100 withdrawals from the ATM. Create a realistic budget and declare allegiance to it. Concentrate on the little things; just knocking off a $4 latte on the way to work can save $80 a month.
Keep paying on the cards
Failing to pay every month on every card just makes matters worse: The interest goes up and the debt goes up. Always pay at least the minimum listed on the bill. Not doing so may ruin your credit rating, making it harder to borrow money for essentials, such as a car, in the future.
Concentrate on paying off your smallest debt
The typical American has about four credit cards, so try pounding away at the one with the least debt. After you pay it in full, stop using it and apply the monthly payment to the next smallest bill. This “snowball effect” is a slow cure but leaves you with a feeling of accomplishment. This method, however, may cost you more in the long run, so read on.
Pay off the card with the highest interest
Pretty basic math here. Eliminating debt that costs you 28% is better than killing debt that costs you 18%. Try throwing your entire income tax refund or last month’s overtime pay at this bill. Then move on to the account with the next-highest interest rate.
Consolidate onto a lower-interest card
This can save you a ton in interest, especially if you eliminate all your other cards. Cards are available that will charge you 0% interest on the debt you have transferred. However, this rate goes up after a specified time, usually 12 to 18 months. In addition, the issuer usually charges a fee — 3% is typical — on the transferred debt. Still, this can be a great deal if you can substantially reduce your debt in a relatively short time.
Take out a personal loan
Many lenders, including credit unions and banks, offer unsecured personal loans, meaning you don’t have to use your home or car as collateral. However, everything depends on your credit score. Below 620, interest rates will be high, although perhaps still below the rates on the credit cards it will be replacing. It’s worth shopping for.
Try a home equity loan
This loan, tapping the difference between the sale value of your home and money you still owe on it, also is based on your credit rating, as are home equity lines of credit. In addition, you could lose your home if you default. Consider with caution.
Cut a deal with the credit card company
This might be a long shot, but if you have a good credit history with the company and clearly have just fallen on hard times, it might negotiate with you on a lower interest rate. Like any other company, it wants to retain good customers.
This is the nuclear option. Yes, Chapter 7 bankruptcy will eliminate all your credit card debt and leave your home protected from repossession. However, it will be nearly impossible to get a mortgage for five years, and the filing will haunt you for up to a decade if you hope to finance anything at a reasonable rate.
© Copyright 2018 NerdWallet, Inc. All Rights ReservedTags: Credit Cards
- 5 Tips for Getting the Most Out of Your Rewards Credit Card
5 Tips for Getting the Most Out of Your Rewards Credit Card
One of the best things about choosing to use a rewards credit card for your day-to-day spending is the points, miles or cash back you can earn every time you swipe. But it can be tricky. To make sure you’re getting the most out of your card, take a look at the tips below.
1. Pick a card that offers rewards you’ll actually use
It’s easy to get caught up in the excitement around a new card that’s just hit the market. But before you apply, consider whether the card comes with a rewards program that actually fits your lifestyle. Otherwise, you might get stuck with a bunch of points or miles that you’ll never redeem — something that happens to 1 in 5 consumers, according to NerdWallet’s research on reward cards.
Doing some digging upfront to find a card that will be valuable to you is the key to ensuring you’ll get the most out of your plastic.
2. Know your card’s rewards earning structure
By investing a little time in reading your card’s terms and conditions, you might find there are ways to score extra points on certain kinds of spending.
For example, it’s common for travel credit cards to award extra points or miles for every dollar spent on dining out. Consequently, using your travel card when you take your family out to dinner or pick up your morning coffee is a smart idea, because it will help you get to your next vacation faster. Knowledge is power, so get familiar with the ins and outs of how to maximize earning your rewards.
3. Budget carefully every month
If you’re carrying a balance on your card and justifying it with all the rewards you’re earning, here’s a wake-up call: You’re paying out much more than you’re bringing in. Most credit cards return only about 1% of your spending in rewards, and charge double-digit interest rates on unpaid balances.
To make the math work in your favor, stick to a budget so you don’t put more on your card than you can pay off each month.
4. Keep your account in good standing
One of the biggest mistakes you can make with a credit card is to fall behind on payments. Miss one and your account will no longer be in good standing and your ability to earn rewards could be jeopardized. Also, your credit score will suffer.
The solution? Pay your credit card bill on time each month, preferably in full but at least the minimum due. Online bill pay can make that process fast and easy.
5. Be smart about redeeming your rewards
Many rewards cards have multiple options when it comes time to redeem points or miles. For example, in some cases you’ll be able to choose between travel credits or merchandise.
However, it’s common for points or miles to vary substantially in value depending on how you cash them in. Before you go through with a rewards redemption, do the math to figure out which choice will give you the most bang per point. After all, there’s no sense in using your rewards on a vacuum when they would go further if redeemed for airfare.
Following these tips can help sweeten the treats a rewards card can provide while you navigate the tricky ins and outs of how it all works.
© Copyright 2018 NerdWallet, Inc. All Rights ReservedTags: Credit Cards
- Equifax Data Breach
On September 7, 2017, Equifax, one of the three major consumer credit reporting agencies, announced hackers had gained access to company data and personal information of approximately 143 million Americans has been compromised. The information includes Social Security numbers, birth dates, addresses and possibly driver’s license numbers. In addition, over 200,000 credit card numbers were accessed.
Equifax, stated the hackers gained access to certain files in the company’s system between mid-May to July of this year. Equifax learned of the breach on July 29, 2017.
We encourage everyone to take precautions in case you are one of the 143 million Americans who will be impacted by this breach. To find out if you are potentially impacted, please visit Equifax’s website: https://www.equifaxsecurity2017.com/potential-impact/ .
In light of this breach or any breach, the Federal Trade Commission recommends to:
Check your credit reports from Equifax, Experian, and TransUnion — for free — by visiting www.annualcreditreport.com. Accounts or activity that you don’t recognize could indicate identity theft. Visit www.IdentityTheft.gov to find out what to do.
Consider placing a credit freeze on your files. A credit freeze makes it harder for someone to open a new account in your name. Keep in mind that a credit freeze won’t prevent a thief from making charges to your existing accounts.
Monitor your existing credit card and bank accounts closely for charges you don’t recognize and if available, set up security alerts on your accounts.
If you decide against a credit freeze, consider placing a fraud alert on your files. A fraud alert warns creditors that you may be an identity theft victim and that they should verify that anyone seeking credit in your name really is you. https://www.consumer.ftc.gov/blog/2017/12/fraud-alert-freeze-or-lock-after-equifax-faqs?utm_source=govdelivery.
File your taxes early — as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.
- The Tax Benefits of Owning a Home
From building equity to giving you a chance to settle down and plant roots, homeownership comes with potential benefits that renting simply doesn't offer. Among them are several tax advantages worth knowing about.
Here's a quick look at how to make the most of those tax deductions.
Deducting mortgage interest
Unless you recently won the lottery, chances are good that you took out a mortgage to pay for your home. If that's the case, then you already know that this type of loan is a big commitment that often spans up to 30 years. But you may be able to deduct the interest you pay on a mortgage that doesn't exceed $1 million. That limit shrinks to $500,000 if you're married but filing taxes separately from your spouse.
As tax season approaches, your lender will send you a Form 1098, which states how much mortgage interest you've paid in the past year. Once you know that amount, you'll have to itemize your deduction using Form 1040's Schedule A. The amount of money you'll save depends on your taxable income. Generally speaking, the higher your earnings, the more money you can save.
Property taxes also qualify for deductions
Homeowners can also reduce their taxable income by deducting their property taxes. Your lender has probably set you up with an escrow account, which is used to pay for things such as homeowners insurance and property taxes. To figure out how much money to deduct, take a look at the escrow statement to see how much you paid in taxes. You'll generally be able to cut your taxable income by that amount.
Other deductions worth noting
Deducting mortgage interest and property taxes are the two biggest benefits when it comes to taxes. However, if you've taken out a home equity loan or line of credit, you may be able to deduct the interest up to $100,000, or $50,000 if you're married but filing separately. If you made upgrades to your home to curb energy use or related to medical care, those costs can also be deducted. That includes additions such as ramps, handrails and widened hallways.
Because financing and maintaining a house or apartment can put a real dent in your wallet, it's a good idea to take advantage of all the help you can get. Maximizing the tax breaks that homeowners qualify for is a great starting point.
To do so, be sure to keep an eye out for Form 1098, as well as the escrow statement. Although filling out and filing these documents may take some getting used to, you'll be a veteran in no time, and it may be well worth the effort.
© Copyright 2016 NerdWallet, Inc. All Rights ReservedTags: Taxes, Mortgage
- Debit or Credit Card: What's the Difference?
When it comes to making purchases, not all plastic acts the same.
Debit cards and credit cards both offer a convenient way to pay without cash or checks, and both are accepted in nearly all the same places. But that's where the similarities end.
The fundamental differences are where the money comes from, and what it can cost.
Debit cards typically pull funds from a checking account, while credit cards charge purchases using a line of credit. With a debit card, you're spending money from your own funds. Use a credit card and you're borrowing the money and eventually will have to pay it back to the card issuer, perhaps including interest.
Debit card pros
The biggest benefit of using a debit card to make purchases is that you're not creating debt and the interest it can accumulate. So if you're looking to stay (or become) debt-free, a debit card is probably the way to go.
Using a debit card also helps free you from the interest burden that can come with using credit card. Unless you're paying off the balance every month, whatever charges you make accrue interest. And that can end up costing you a lot.
Debit card cons
The biggest drawback to debit cards is the potential for spending more than you have in your account, which can result in overdraft fees. This can get expensive quickly. So it's important to keep track of your available funds and not spend what you don't have.
Disputed charges can be more difficult to resolve when a debit card is used instead of a credit card. You also can't improve your credit score by using a debit card.
Credit card pros
Many credit cards provide rewards when they're used, like points that can be cashed in for store discounts or travel benefits. You can also employ this type of plastic practically everywhere, including abroad.
Credit cards can also provide a financial backup in case of an emergency such as an unexpected job loss, hospitalization or car repair. Some consumers use them to pay bills, then pay off that balance every month. That can increase those rewards points, and using a credit card responsibly also helps boost your credit score. A better score can pay off in the long run by helping you qualify for lower interest rates on debt, including a mortgage or other loans and new credit card accounts.
Credit card cons
One of the biggest drawbacks of spending with a credit card is the interest on unpaid balances that can pile up if you don't pay it off each month. A high interest rate can drag you deeper and deeper into debt if you let the unpaid amount rise.
Credit cards also make it easy to spend money you don't have and become detached from your spending. If you're not careful, it's easy to fall into suffocating debt, start missing payments and damage your credit rating. That can make it harder to borrow money in the future.
If you miss a payment, you may be charged a late fee, and between that and interest on an unpaid balance, costs can add up quickly. Plus any missed payment can harm your credit.
So when you're trying to decide which plastic to swipe at the checkout counter, keep in mind the costs and benefits of both, and make the appropriate choice.
© Copyright 2016 NerdWallet, Inc. All Rights Reserved
Tags: debit card, credit card
- Manage Apple Pay
Change your default card
The first card that you add to Wallet is your default card. If you add more cards and want to change your default, use these steps.
Go to Settings > Wallet & Apple Pay on your iPhone or iPad. Tap Default Card, then choose a new card.
To change the default card for your iPhone, you can also open Wallet, touch and hold a card, then drag it to the front of your cards.
Tags: Apple Pay
Update your billing and contact information
You can update the information for a card that you use with your iPhone or iPad at any time.
- To change your billing information, go to Settings > Wallet & Apple Pay, tap a card, then tap what you want to update.
- To update your email address, phone number, and shipping address, go to Settings > Wallet & Apple Pay, then choose what you want to update.
While you can't change your card's number or expiration date, it should update automatically when you get the new card. If it doesn't, you might need to remove the card, then add it again.
Remove a card
If you need to, you can remove a card from your device. You can keep up to eight cards on a device. To remove a card that you use on your iPhone or iPad, go to Settings > Wallet & Apple Pay, tap the card that you want to remove, then tap Remove Card.
You can also remove a card directly from your device. On your iPhone or iPad, open Wallet, tap a card, tap , then tap Remove Card. On your Apple Watch, tap Wallet on the Home screen, tap a card, press it firmly, and tap Delete.
Source: Apple Support
- Using Apple Pay
Pay in stores
With your iPhone or Apple Watch, you can pay in stores that accept contactless payments. Just look for one of the below symbols at checkout.
To use your default card, rest your finger on Touch ID and hold your iPhone within an inch of the contactless reader until you see Done and a checkmark on the display.
To switch cards on your iPhone, hold your device near the reader without resting your finger on Touch ID. When your default card appears, tap it, then tap the one that you want to use. Rest your finger on Touch ID to pay.
On your Apple Watch, double-click the side button. When your default card appears, swipe left or right to switch cards. Hold your watch near the reader to pay.
Tags: Apple Pay
Pay within apps
With your iPhone, iPad, and Apple Watch you can use Apple Pay to pay within apps when you see Apple Pay as a payment option. Look for one of the above buttons in apps.
To pay with Apple Pay within an app:
- Tap the Buy with Apple Pay or Apple Pay button. Or choose Apple Pay as the payment method when checking out.
- Check your billing, shipping, and contact information to make sure that they're correct. If you want to pay with a different card, tap > next to your card.
- If you need to, enter your billing, shipping, and contact information on your iPhone or iPad. Apple Pay will store that information, so you won't need to enter it again.
- On your iPhone or iPad, place your finger on Touch ID. On your Apple Watch, double-click the side button. After your payment information sends successfully, you'll see Done and a checkmark on the screen.
- Get your iPhone Ready
In order to use Apple Pay, you need to have a compatible device and the right version of iOS. For in-store purchases, Apple Pay is compatible with the iPhone 6/6s, iPhone 6 Plus/6s Plus, and the iPhone SE, which are the only iPhones equipped with the requisite NFC radio antennae. Besides NFC compatibility, the other piece of the hardware puzzle is a Touch ID sensor, but—unfortunately—iPhone 5S owners are out of luck. For in-app purchases, Apple Pay works with the iPhone 6/6s, iPhone 6 Plus/6s Plus, and iPhone SE, as well as the iPad Pro, iPad Air 2, iPad mini 4, and iPad mini 3—again, thanks to the Touch ID sensor.
You’ll also need to update your iPhone to iOS 8.1 or newer, which will turn on your phone’s Apple Pay feature.
Once your iPhone is in order, you’ll need to link up a credit or debit card to use for payments. If you already have a card linked to your Apple ID for making iTunes and App Store purchases, you can opt to keep using that card with Apple Pay—you’ll just have to re-enter the card’s security code so Apple knows you’re legit. Take note: Some banks will add an extra layer of security to this step, asking you to enter a code they send to you via text, so that they too know you’re on the up-and-up.
You can also add different cards—just launch Wallet and tap the plus-sign in the top-right corner. You’ll then be prompted to add either a credit or debit card to use with Apple Pay or another pass to store in Wallet. Tap “Add Another Card,” then follow the entry fields on the next screen. You can speed this up by taking a picture of your card with your iPhone.
Whether you’re using the card already linked to your Apple ID or adding a new one, your iPhone will guide you through the setup process, which includes verifying your card, granting Apple Pay access, and then storing it in Wallet. Be sure to have your card handy so you can verify the card with its security code.
The card linked to your Apple ID will be listed as your default Apple Pay card, but you can always change that by going to Settings > Wallet & Apple Pay and updating your transaction default information—or do it in-app by selecting your default card, choosing the “information” button on the lower right-hand side of the screen, and changing the details from there.Tags: Apple Pay
- Refinance My Home
Refinancing can be an opportunity to lower your monthly payments, pay off your loan quicker, reduce your overall interest expense or even get cash out. But be sure to weigh the costs and benefits first.
Similar to when you first purchased your home, refinancing your mortgage comes with fees and closing costs that could add up to 1% or more of the new loan. Determining your break-even point—when your monthly savings will cover the cost of refinancing—can help you decide if it’s worth it. Find out more about your different loan options here.
Find your breakeven point.
To calculate your breakeven point based upon monthly payment savings, estimate your savings based on your new monthly payment after the refinance. Then divide the fees and costs of the refinance by your estimated monthly savings. Here’s an example:
Cost to refinance: $1,800
Bottom line, while reaching your break-even point may take some time, if you’re in it for the long haul, you may be able to achieve some serious savings by refinancing.
- Monthly savings $100 = Breakeven point of 18 months
- In this case, if you planned on staying in your home for more than 18 months, the cost of refinancing could be worth it. After reaching your breakeven point, your savings would total $1200 a year.
Other benefits to consider.
By refinancing your current loan at a lower interest rate, you may be able to realize interest savings over the lifetime of the loan. By consulting with a State Street Bank loan officer, you can explore the various options for refinancing and the possible benefits.
Take the next step.
Contact a lender to explore your loan options, ask questions, or get started on an application.
- Difference between secured and unsecured credit cards
There are two primary types of credit cards — secured and unsecured. Secured credit cards are backed by a cash deposit, generally equal to the card’s limit. This acts as collateral and removes the risk of nonpayment for the card issuer. Secured credit cards are great options for those who haven’t built a solid credit history yet.
Secured cards aren’t the same as prepaid cards. With a secured card, your cash deposit doesn’t run out as you spend, as it does with a prepaid card. You’ll make payments the same way as you would with an unsecured card, and you’ll pay interest if you don’t pay off your balance in full. Once you transition to an unsecured card or cancel your secured card, you’ll receive your deposit back, provided you’ve paid off the balance.
Unsecured credit cards aren’t backed by a cash deposit or any other collateral. You’ll get a credit limit based on your income level and credit history, so most likely your first card’s limit will be low.
Issuers take on more risk when they approve unsecured cards. Because of this, those without credit history generally need to start with a secured card, or get an unsecured card with a cosigner. Alternatively, you can ask to be added to a relative or friend’s credit account as an authorized user. As an authorized user, you’ll be able to use a credit card and will likely benefit from the primary cardholder’s good credit habits, but you won’t be legally obligated to pay the balance.Credit Cards
- What is EMV?
An EMV chip is a small microchip embedded in your credit card. Not all credit cards have EMV chips, but issuers will be strongly incentivized to issue cards with chips by October 2015, when a liability shift for fraudulent transactions will occur.
EMV chips have two major card verification methods (CVMs) — chip-and-signature and chip-and-PIN. Chip-and-signature cards, which are most popular in the U.S., use signatures to verify ownership for purchases. Chip-and-PIN cards are more popular in Europe, and use a four- to six-digit PIN for verification.
Chip-enabled cards are more secure than traditional magstripe cards. Instead of processing limited data that’s easy to duplicate, EMV chips transmit dozens of pieces of data between the card, the terminal and the acquiring bank’s host. In addition to the extra security, many overseas merchants won’t accept magstripe cards, so it’s a good idea to have a credit card with an EMV chip.
Using credit cards with EMV chips is a bit different, too. Instead of swiping, you’ll insert your card into the EMV terminal chip first and leave it in until your receipt starts printing. In the meantime, you’ll follow the prompts on the terminal screen, which will include instructions to sign, if necessary.
- What is a credit card?
A credit card looks just like a debit card. However, instead of having the funds removed directly from your checking account when you make a purchase, you’ll essentially take on a short-term loan. This loan may or may not accrue interest, depending on when you pay it off.
For the purchases made in any given billing cycle — which is around 30 days — you’ll have a small grace period before your payment is due. If you pay the balance in full by that date, you won’t have to pay interest. If you pay less than the entire balance by the due date, you’ll accrue interest on your average daily balance.Credit Cards
- Online Banking
Online banking refers to any banking transaction that can be conducted over the internet, generally through a bank’s website under a private profile, and with a desktop or laptop computer. These transactions include services traditionally offered at local branches without having to go to one. Online banking is generally defined as having the following characteristics:
- Financial transactions are conducted over the internet through a bank’s secure website.
- The bank may have physical branch locations or it may exist only online.
- The user must register with the financial institution online and create a login ID and password.
Customers can perform financial transactions while banking online, like paying bills or transferring money from one account to another. Other basic activities include:
- Viewing account balances at any time of day
- Viewing or printing statements
- Viewing images of checks
- Applying for loans or credit cards
In essence, a customer can do almost any activity online that he or she would be able to do in person when visiting a branch.Tags: Online Banking, How To
- Mobile Banking
Mobile banking allows you to perform many of the same activities as online banking using a smartphone or tablet instead of a desktop computer. However, simply accessing the bank’s website on a mobile device is not the only method of mobile banking. Mobile banking’s versatility includes:
- Logging into a bank’s mobile website
- Using a mobile banking app
- Text message (SMS) banking
While more banks are making their sites easier to use on mobile devices, mobile banking is more commonly associated with accessing your accounts through an app. Last year, mobile banking apps were used on 52% of smartphones in the US, according to a consumer and mobile financial services report by the Federal Reserve.
Apps can offer a wide range of services that are not limited to account access and include the following:
- Making mobile check deposits
- Transferring money
- Paying Bills
- Locating ATMs
Mobile and online banking provides convenience to customers who want to manage their finances while on-the-go; both options allow a person to conduct financial business from outside a banking facility. Customers interested in using either method of doing business should learn about both their bank’s mobile banking app and online banking website to better manage their finances.Tags: Mobile Banking
- 5 Easy Money Saving Tips
Although saving money can seem daunting, it doesn’t need to be overly complicated or time-consuming. A few simple changes might be all that’s needed to put money back in your wallet. Here are five money-saving tips that are easy to implement and can help now and in the future.
1. Use Energy Efficient Light Bulbs.
According to Energy.gov, LED light bulbs use at least 75 percent less energy than incandescent light bulbs. LED bulbs also last up to 25 times longer. The small upfront investment in replacing your light bulbs can pay for itself in the long run.
Some other great ways to save money on utility costs are to wash clothes with cold or warm water rather than hot, unplugging electronics when they’re not in use, and using a programmable or smart thermostat.
2. Cancel unnecessary services.
Another way to save money is to stop paying for services you don’t need or use.
If you’re paying for a gym membership but only make it to the gym a few times a month, consider saving money by working out at home instead.
Try lowering your monthly expenses by “cutting the cord.” You may be able to save by canceling your cable subscription and opting for getting entertainment from Netflix, Hulu, or another alternative source.
3. Negotiate whenever you can.
It’s common to negotiate when you’re buying a car, but negotiations aren’t just for the car lot. You can save by negotiating medical bills, insurance or mortgage rates, or your internet bill. Other big-ticket items that might be up for discussion include furniture or yard work contracts.
Some negotiations are hard won, but that’s not always the case. If you don’t want to cut the cord, lowering your cable bill might be as easy as calling and asking if there are any promotions. Consider asking the cable company if they will give you the introductory rate new customers receive. This tactic may also work with internet providers.
4. Avoid fees when traveling.
Many airlines, hotels, and rental car companies tack on extra fees, but there may be ways around them. One of the best money saving tips when traveling is to do a little research and plan ahead of time. It may leave you with more money to enjoy your trip.
Think about bringing your own snacks and a refillable water container rather than buying food or drinks at the airport or onboard the plane.
Some hotels charge for Wi-Fi, but you may be able to get free access by joining the hotel’s rewards program or booking the room directly from the hotel’s website.
Rental car agencies may charge more for vehicles rented at the airport. Compare prices with the agencies located nearby, but not within, the airport. You may find that with a short shuttle or taxi ride you can save money on the rental.
5. Buy in bulk.
Buying in bulk is an easy way to save on everyday household goods like paper towels and cleaning supplies, as well as non-perishable food products. Some grocery stores have bulk bins where you can load up on staples, and warehouse stores like Costco or Sam’s Club offer big potential savings. You’ll also help the environment by using less packaging.
If your home has limited space, or you don’t need such a large stockpile, shop with friends and split the purchase. Those without a vehicle can buy in bulk and have items shipped from warehouses’ online stores and e-commerce sites like Amazon or Jet.com.
Put your savings to work.
What could you do with all this extra money? If you might need the funds in the next few years, think about putting the money into a savings account. Consider setting up your account with a particular goal in mind, such as a vacation or rainy day fund, or learning how to budget your money better. The savings from these 5 simple tips may help you reach those goals even sooner.Tags:
- Budget Basics
Budget: It’s the word we love to hate. Most of us understand the importance of keeping a budget, but for a variety of reasons still haven’t found the time or energy to actually implement one. The purpose of a budget isn’t to create a complex and lengthy document, it’s to help control spending and maximize savings to ensure financial security. Keep in mind, there isn’t a one-size-fits-all budget; each individual and family is unique, and their budgets should be equally unique.
Get started on your budget by following these four guidelines.
1. Know What You Earn Vs. What You Spend
It doesn’t matter if you’re new to budgeting because all budgets start with knowing how much money you earn as opposed to how much money you spend. All budgets are designed for the same reason: so you can live within your means on a month-to-month basis. Think of budgeting this way – if you spend more than you earn, you may end up in debt, or have to dip into your savings. Spend less than your income and you get to save money. Put a few months of savings together as a result of your budgeting efforts, and you may end up with a little extra cash.
2. Create a “Zero-Based Budget” Plan
Once you have a better understanding of how your income stacks up to your expenses, it’s time to establish your budget. One simple method is called “zero-based budgeting” in which every dollar earned and spent is tracked for an entire month. Add up all your expenses including your rent or mortgage, food, cell phone bill, cable and internet, and compare them with your income for the month. The goal of the “zero-based budget” is to have zero dollars left over. Keep in mind that the purpose of creating any budget is to help you reach your financial goals.
3. Make Savings a Priority
At first, making savings a priority may be the most difficult part of budgeting. However, it will also make the biggest difference down the road. A simple habit of putting away money before spending ensures you won’t spend more than you earn, and allows you to contribute to retirement funds, rainy day funds, future vacations, car purchases and a variety of other things.
4. Be Flexible
Your budget isn’t going to be perfect. Unexpected expenses and emergencies happen to all of us, more frequently than we’d like. So don’t be unrealistic with your expectations. Understand that changes in your budget will happen, and they’ll happen frequently. The important thing is that you remain flexible and maintain your “zero-based budget”. For example, let’s say your car is having problems and you need to take it to the mechanic; you may need to cut back on your recreational expenses in order to cover the repairs.
This isn’t an exhaustive budgeting list, but it’s a good starting point. Remember that your budget is unique to you, so do what works best for you and your family. The most important thing is that you implement the budget; you won’t regret it.Tags:
- How to Get Physically and Financially Fit
Getting fit and saving money are two of the most frequently cited goals, no matter what time of year. But it doesn’t take making a resolution to get you motivated or help keep your spending in check. If you want to slim your waist while padding your savings account, we have four tips to get you started.
- Skip the gym and save the money. Instead of signing up for a gym and getting locked into an expensive monthly contract, look for fun ways to workout outside the gym. Runner’s World suggests 27 free or cheap fitness apps that can help you track and improve your running. If it’s too cold outside or running isn’t your thing, there are plenty of indoor exercises that require little or no equipment. Low on time? Try the scientifically-backed, seven-minute workout from the New York Times, which you can access via a web browser or smartphone app.
- Find inexpensive classes. If you enjoy working out alongside others in a class but want to avoid the costly fees, you have several options. Jump between classes with discount vouchers from daily deal sites like Groupon or Living Social. Ask the studio if they’ll trade you access to classes in exchange for working a few hours behind the counter or cleaning the facilities each month. You may be able to barter other services for studio time. Alternatively, look for free community center classes or other venues that offer sliding scale fees that vary depending on your income.
- Make money a motivator. Several apps and websites tie health to wealth in a motivational way. Pact lets users place a wager on how many times they will workout, track their meals, or eat fruits and vegetables each week. If you miss a day you have to pay up, but if you succeed for the entire week you earn a share of the money others paid. In a similar manner, you can put money on the line and bet that you’ll lose weight using DietBet or HealthyWage.
- Shop healthy and save. Regular exercise is part of getting and staying physically fit, but if you want to be healthy, maintaining a nutritious diet is important as well. Try to stay away from processed foods that are high in fats and sugars. One quick tip is to shop the outer ring of grocery stores, which is often where you find the fresh produce, dairy and meats. According to an analysis of 27 studies by the Harvard School of Public Health, a diet with lots of fruits, vegetables, nuts and fish can cost about $1.50 more a day than less-healthy diets. The initial investment may pay off — the cost of treating chronic diseases is much more than the cost of healthy food, according to Dariush Mozafarrian, senior author of the analysis.
Saving money and getting in shape can require desire, willpower and consistency. If you want to succeed, try some of these tips to work on both areas of your life at once. Keep with it and the long-term results may surprise you.Tags:
- First Time Home Owner Basics
For most of us, buying a first home is a dream come true. However, it can also be a lengthy process where potential — and sometimes very costly — pitfalls trap the unprepared buyer. This guide will help you get prepared.
Decide If the Time Is Right
How do you know if you’re ready? Making the leap from renter to homeowner is a big decision. For some, renting may be the right choice. Because the “down payment” is most often limited to first and last month deposit, renting can be viewed as cheaper and more flexible in the short-term. Monthly rent payments are also generally “all in” and usually cover all property taxes, homeowners’ association fees and maintenance costs. Plus, renting can offer flexibility should circumstances unexpectedly change.
For others, however, buying is the right move to make. They’ve reached the point where they feel confident about staying in one place for a while and are established in their jobs with a dependable income. Their debt obligations – such as car loans, student loans and credit card payments – are manageable, and they’re interested in exploring how the traditional benefits of homeownership, like favorable tax treatment* and equity appreciation, can enhance their long term financial prospects. If that sounds like you, this guide will help you assess your current situation and better prepare you for the home-buying process.
Renting vs. Buying
Before you buy your first home, there are important things to do and know. Consider which option is right for you.
Know how much you can afford
Depending on the amount you have saved for a down payment, your mortgage payment should typically be no more than 28% of your monthly income, and your total debt shouldn’t be more than 36%. Use our affordability calculator to find out what price range might be good for you.
Maximize your credit score
Generally, a better credit score will help you get a better interest rate on your mortgage. And even a small improvement in your score can have an impact on your monthly payment and save you thousands of dollars over the course of your loan. Learn more about how to improve your credit score.
Save for extra costs
Lastly, you’ll need to have some money tucked away for extra costs beyond your monthly mortgage payment. These costs include your down payment and closing costs. A down payment of 20% or more helps you avoid PMI (Private Mortgage Insurance) and lowers your monthly payment. And closing costs are typically 3% - 5% of the total home cost.
Weighing the Costs and Benefits
Home ownership brings a lot of added responsibilities. But it also has its advantages.
- Monthly mortgage payment
- Your down payment – as low as 3% of the sale price
- Closing costs –typically 3% to 5% of the loan
- Taxes & insurance
- Repairs & maintenance
- Homeowner association dues or assessments
While these costs will vary from home to home, you’ll want to know what they are before making a final purchase offer.
- Your home may appreciate in value over time
- You can increase your net worth by building equity through monthly principal reduction payments
- Your home is your own – you can do what you like with it to reflect your lifestyle
- You may save money at tax time by deducting mortgage interest and property taxes*
- A home offers stability, especially as your children grow up. It’s a place where you can live the life you want, and where you can create the memories of a lifetime.
Getting pre-approved by a mortgage lender shows real estate agents and sellers that you are a serious, qualified buyer. And being “qualified” has its benefits. In fact, being pre-approved indicates that you are a serious buyer and may even put you ahead of other applicants once you make an offer!
Pre-approval also has additional perks worth noting. For instance, it helps you determine how much house you can afford and how much money you can borrow. That way, your time won’t be wasted looking at out-of-reach properties.
Part of the pre-approval process includes filling out a loan application. To establish your employment history and financial capabilities, you must provide the lender with the following income documentation:
- Pay stubs for 2-3 months
- W-2 forms for the past 2 years
- Most recent 3 months’ bank statements
- All credit account and debt information
After the mortgage loan officer receives these documents, he or she will then pull your credit report, assess your financial capabilities, and inform you of how much money you can borrow towards your home.
Finding the Right Home
Once you’re pre-approved, you can start looking at houses! Now’s the time to contact a reputable real estate agent who can show you homes you can afford.
It’s important to find a real estate agent who will:
- Help provide background information on properties of interest to you
- Guide you through the buying process
- Make it easier to work with the seller
You might also consider hiring a real estate attorney to:
- Be your advocate during negotiations with the seller
- Review contracts and research liens and encumbrances
- Make sure there are no legal surprises ahead
Get a Home Appraisal & Title Search
Found a home you like? Once the seller accepts your offer, you may strongly consider hiring a certified home inspector who can verify there are no structural problems, code violations or other undisclosed concerns. When your contract is final, your lender will have the property appraised by an independent, third-party appraiser who will confirm the fair market value of the home. In addition, a title search will typically be conducted to:
- Discover any record claims on the property
- Make sure you can get a clear title to your new home
Closing the Sale
At last – you’re ready to finalize the sale! During the closing, you’ll meet with all parties involved in the sale to make it official by signing documents, receiving the deed and paying your closing costs, which may include:
- Attorney, broker, credit report and/or lender fees
- Title search and insurance
- Appraisal and inspection fees
- Points – a predetermined fee similar to prepaid interest
- Paid to the lender to receive a particular interest rate
- 1 point equals 1% of the loan amount
- Other costs depending on your particular loan
Property insurance: Also called homeowner's insurance, property insurance protects the homeowner from losses to the property, as well as potential liability from events that occur on the property and elsewhere. Lenders require homeowner's insurance coverage to protect the collateral that secures their loan. Some homeowner's insurance policies do not cover catastrophic events such as tornadoes, hurricanes or floods. These kinds of events generally require a separate insurance policy. Sometimes additional insurance may be required for your loan.
Property Taxes and Homeowner's Insurance: A typical monthly mortgage payment consists of amounts for loan principal, interest, taxes and homeowner's insurance. Taxes and insurance are usually paid from an escrow, or impound, account.
*Consult a Tax AccountantTags:
- Home Equity
If you own a home and are looking to borrow money, consider the benefits of a home equity loan or line of credit.
Home Equity loans and lines can be used to pay for a variety of things including home renovations, consolidating debt, college tuition, major purchases and more.
Consider the benefits.
A Home Equity loan or line of credit gives you cash that you can use any way you wish. You can:
- Borrow up to 89.9% of the fair market value of your home.
- Interest rates are typically lower than credit cards and other loans.
- The interest paid may be tax-deductible; consult a tax professional to assess your situation
Understand the risks.
Since a Home Equity loan uses your home as collateral, you also need to consider potential risks:
- You can lose your home for missing payments.
- The maximum amount borrowed is a portion of your home's value which is determined by the market so if the market takes a down turn you can owe more than your house is worth.
Take the next step.
To find out if a Home Equity loan or line of credit is right for your situation, contact one of our loan officers.Tags: