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6 Tips for Financial Planning in your 40s - July 30, 2015 by admin

If you’re in your 40s, you could be considered either a late baby boomer or a member of Generation X. Either way, you’re at a time in your life when you’re putting youth aside and should be doing some financial planning for your future and your family’s future.

A dilemma faced by people in their 40s is that they typically need to be saving for college tuition for their kids and putting money into a retirement account while simultaneously buying a house or saving for a down payment. Financial experts can help you sort out where your savings should be going in your 40s.

“Not having a financial plan is actually just having a really bad plan,” says Alexa von Tobel, founder and CEO of LearnVest.com in New York. “Every financial plan is specific to the individual, but you should look at your income and set priorities for paying off debt and saving for different needs.”

These financial planning tips are meant to help 40-somethings find balance in their hectic lives of spending and debt.

Roy Laux, president of Synergy Financial Services in McKeesport, Pennsylvania, says the first step in any financial planning is to establish an emergency fund.

“You should have three to six months of your normal income in an account that’s safe and liquid,” Laux says. “You should also have in that account savings for planned expenses. For instance, if you know you need to replace your furnace in a few years, you should be setting aside money for that in your savings account.”

Ronya Corey, a wealth management adviser with Merrill Lynch Wealth Management in Washington, D.C., says that two-income households may be safe enough with three months of expenses saved, while a single person might need six months of reserves.

“There’s no right or wrong answer about how much cash to have, but you need to be prepared in case your roof needs replacing or if you lose your job,” Corey says.

If you have credit card debt, student loan debt or medical bills, your next priority should be to reduce and eventually eliminate that debt so that your income can be channeled into saving and investing for the future.

“If you have credit card debt, you need to work on paying that down as quickly as you can,” Corey says. “If you have student loan debt, then you should first look to see if it’s tax-deductible based on your tax bracket. If not, then you should pay that off as soon as possible, too.”

In addition to financial planning, Corey says you should check the interest rates on your credit cards and student loans to see if you can find lower rates.

“If you have a lot of debt, you should be using all available funds to pay it off,” Corey says. “If you have a little bit of debt and you have, for example, $2,000 per month for savings, you should use one-third to pay down your debt, and then use the rest for retirement savings.”

“In your 40s, you should at least be saving as much in your 401(k) as your employer matches,” Laux says. “Even if you weren’t making any profit on that investment, your money doubles just because of the employer match.”

Corey says since every employer has a different retirement plan, you should find out how much you can contribute, and maximize your contributions up to that limit.

“Find out how your pretax contribution will impact your cash flow because you may be able to contribute more than you think,” Corey says.

People in their 40s can contribute up to $18,000 in a tax-deferred 401(k) in 2015.

“Hopefully, the employer-sponsored retirement plan has someone who can explain the investment options within the plan,” Laux says. “In particular, people need to understand why it may be better to be a little more aggressive with their investments at 42 than at 62.”

In addition to saving for retirement at work, Merrill Lynch’s Corey recommends making the maximum allowable contributions to a traditional individual retirement account or a Roth IRA, depending on your income.

“The amount you can contribute to a Roth or a traditional IRA went up to $5,500 in 2013 for people in their 40s,” Corey says. “The difference between them is that with a Roth IRA, you pay taxes now on your contributions, but you avoid a potentially higher tax later. If you think tax rates are going up, like I do, then a Roth IRA may make more sense.”

Traditional IRA contributions are not limited by income, but Roth IRAs are only available to married couples with an adjusted gross income of up to $183,000 and single filers with an adjusted gross income up to $116,000 in 2015.

“At 40, retirement seems very far away, but it is so important to contribute the maximum you can to retirement savings,” says Corey. “If you’ll be living on $80,000 per year when you’re retired, you’ll need $2 million in assets. I wouldn’t include Social Security benefits in your planning if you’re in your 40s, either because it may not be available or it will be means-tested.”

If you’re in your 40s and have kids, you may have already started saving for their college tuition, depending on their age. The best advice from financial advisers is to start saving as early as possible after your kids are born, even if you can save only a small amount. Hopefully, you can increase the amount you save for college as your income rises.

You can begin a 529 college savings plan to reduce the amount you or your kids may have to borrow to attend college. Many state universities also offer a prepaid tuition plan that allows you to lock in tuition at current rates.

Laux says that families need to have a rational conversation about ways to minimize college expenses, such as choosing a state school over a private college, doing military service or spending the first two years at a community college followed by two years at a four-year university.

“One of the best things to do is to start saving as early as possible for college,” Laux says. “If you’re in your 40s and your kids are near college age and you haven’t saved much for retirement, it’s not necessarily wise or appropriate to pay for all of their college expenses.”

Laux says one option is to have your kids pay some of their own costs by working during their college years.

“It’s important for people in their 40s to do an insurance-needs analysis,” Corey says. “Often, people in this age group need a lot of life insurance because they have young kids and day care costs that could be higher if one spouse passed away. It’s hard for a lot of people to have saved enough to take care of their family without life insurance if someone passes away.”

Corey says term life insurance, especially for a healthy person in his or her 40s, is relatively inexpensive.

“Most people think they are appropriately covered with their insurance policies, but they find out after a disaster that they’re not,” von Tobel says. “You should check your health insurance, your home insurance, your auto insurance and your life insurance policies to make sure you have the right coverage. An umbrella insurance policy that adds a layer of protection over your auto and home insurance is also a good idea, particularly if you have assets over $1 million.”

Laux says 40-somethings also should check on their disability insurance to be sure they have coverage and to estimate whether they need additional insurance. Most companies provide only up to 60 percent of your income if you are disabled, he says.

H/T Source: BankRate.com

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7 Simple Ways to Improve your Credit Score - July 20, 2015 by WWFCU

Need to boost your credit score?

Unfortunately, a credit score isn’t like a race car, where you can rev the engine and almost instantly feel the result.

Credit scores are more like your driving record: They take into account years of past behavior, not just your present actions.

In addition to making the right moves, you also have to be consistent. A few easy steps can push your score in the right direction.

Here are seven simple ways to improve your credit score.

Watch those credit card balances


One of the major factors in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.

The optimum: 30 percent or lower.

To boost your score, “pay down your balances, and keep those balances low,” says Pamela Banks, senior policy counsel for Consumers Union.

What you might not know: Even if you pay balances in full every month, you still could have a higher utilization ratio than you’d expect. That’s because some issuers use the balance on your statement as the one reported to the bureau. Even if you’re paying balances in full every month, your credit score will still consider your monthly balances.

One strategy: See if the credit card issuer will accept multiple payments throughout the month.

Eliminate ‘nuisance balances’


“A good way to improve your score is to eliminate nuisance balances,” says John Ulzheimer, a nationally recognized credit expert formerly of FICO and Equifax. Those are the small balances you have on a number of credit cards.

The reason this strategy can help your score: One of the items your score considers is just how many of your cards have balances, says Ulzheimer.

So, charging $50 on one card and $30 on another, instead of using the same card (preferably one with a good interest rate), can hurt your score, he says.

The solution to improve your credit score: Gather up all those credit cards on which you have small balances and pay them off, Ulzheimer says. Then select one or two go-to cards that you can use for everything.

“That way, you’re not polluting your credit report with a lot of balances,” he says.

Leave (good) old debt on your report


Some people erroneously believe that old debt on their credit report is bad, says Ulzheimer. The minute they get their home or car paid off, they’re on the phone trying to get it removed from their credit report, he says.

Negative items are bad for your score, and most of them will disappear from your report after seven years. However, “arguing to get old accounts off your credit report just because they’re paid is a bad idea,” he says.

Good debt — debt that you’ve handled well and paid as agreed — is good for your credit. The longer your history of good debt is, the better it is for your score.

One of the ways to improve your credit score: Leave old debt and good accounts on as long as possible, says Ulzheimer. This is also a good reason not to close old accounts where you’ve had a solid repayment record.

Trying to get rid of old good debt is “like making straight A’s in high school and trying to expunge the record 20 years later,” Ulzheimer says. “You never want that stuff to come off your history.”

Use your calendar


If you’re shopping for a home, car or student loan, it pays to do your rate shopping within a short time span.

Every time you apply for credit, it can cause a small dip in your score that lasts a year. That’s because if someone is making multiple applications for credit, it usually means he or she wants to use more credit.

However, with three kinds of loans — mortgage, auto and more recently, student loans — scoring formulas allow for the fact that you’ll make multiple applications but take out only one loan.

The FICO score, a score commonly used by lenders, ignores any such inquiries made in the 30 days prior to scoring. If it finds some that are older than 30 days, it will count those made within a typical shopping period as just one inquiry.

The length of that shopping period depends on the credit score used.

If lenders are using the newest forms of scoring software, then you have 45 days, says Ulzheimer. With older forms, you need to keep it to 14 days.

Older forms of the software won’t count multiple student loan inquiries as one, no matter how close together you make applications, he says.

“The takeaway is don’t dillydally,” Ulzheimer says.

Always pay bills on time


If you’re planning a big purchase (like a home or a car), you might be scrambling to assemble one big chunk of cash.

While you’re juggling bills, you don’t want to start sending bills late. Even if you’re sitting on a pile of savings, a drop in your score could scuttle that dream deal.

One of the biggest ingredients in a good credit score is simply month after month of plain-vanilla, on-time payments.

“Credit scores are determined by what’s in your credit report,” says Linda Sherry, director of national priorities for Consumer Action. If you’re bad about paying your bills — or paying them on time — it damages your credit and hurts your score, she says.

That can even extend to items that aren’t normally associated with credit reporting, such as library books, she says. That’s because even if the original “creditor,” such as the library, doesn’t report to the bureaus, they may eventually call in a collections agency for an unpaid bill. That agency could very well list the item on your credit report.

Saving money for a big purchase is smart. Just don’t slight the regular bills — or pay them late — to do it.

Don’t hint at risk


Sometimes one of the best ways to improve your credit score is to not do something that could sink it.

Two of the biggies are missing payments and suddenly paying less (or charging more) than you normally do, says Dave Jones, retired president of the Association of Independent Consumer Credit Counseling Agencies.

Other changes that could scare your card issuer but not necessarily dent your credit score: taking out cash advances or even using your cards at businesses that could indicate current or future money stress, such as a pawnshop or a divorce attorney, he says.

“You just don’t want to do anything that would indicate risk,” says Jones.

Don’t obsess


You should be laser-focused on your score when you know you’ll soon need credit. In the interim, take care of your bills and use credit responsibly. Your score will reflect these smart spending behaviors.

Are you getting ready to make a big purchase, such as a home or car? At least a few months in advance, spring for a copy of your credit scores, Sherry says.

While the score you can buy may not be the exact same one your lender uses, it will grade you on many of the same criteria and give you a good indication of how well you’re managing your credit, she says. It will provide you with specific ways to improve your credit score — in the form of several codes or factors that kept your score from being higher.

If you are denied credit (or don’t qualify for the lender’s best rate), the lender has to show you the credit score it used, thanks to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Another smart move: Regularly keep up with your credit report, says Sherry.

You’re entitled to one of each of your three credit bureau reports (Equifax, Experian and TransUnion) for free every 12 months through AnnualCreditReport.com.

Smart consumer tip: Stagger them, Sherry says. Send for one every four months, and you can monitor your credit for free.

H/T Source: BankRate.com

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5 Tips to Get the Best Deal on a Car Loan - July 20, 2015 by WWFCU

More Americans are struggling to make their car payments on time. The numbers, while still low, are definitely on the rise.

According to the latest State of the Automotive Finance Market report from Experian Automotive:

  • 60-day loan delinquencies in the second quarter of 2014 increased by 7 percent (from 0.58 to 0.62 percent) from the previous year.
  • The rate of auto repossessions in the second quarter took a significant jump, up more than 70 percent (to 0.62 percent) from a year earlier.

“The rosy glow of perfect payment performance in the automotive space is beginning to tarnish,” said Melinda Zabritski, senior director of auto finance at Experian Automotive.

The increase in payment problems was expected as the number of loans to subprime borrowers has grown since the Great Recession, Zabritski said.

Her advice to car buyers is simple: “When you buy a car, make sure it’s something you can afford, something that truly meets your budget. That way you won’t end up as one of these delinquency statistics.”

To get the best car loan deal, you need to do your homework. Here are five things you should do:

1. Check your credit reports.

Get a report from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. Use the website annualcreditreport.com, which was set up by the federal government for this purpose.

“You want to check all three because you don’t know which one the lender will use and you want to give yourself time to fix any mistakes,” said Gerri Detweiler, director of consumer education for Credit.com. “I found a mistake when I went to buy a car a few years ago, and if I hadn’t straightened it out, it would have cost me a lot of money.”

Detweiler suggests that you also check your credit score. The interest rates you’ll be offered—if you can get a loan at all—will be based on your score.

You can get your credit score for free from a number of sites, such as Credit.com, CreditKarma and CreditSesame. Some credit card issuers also provide it. This will not be the exact same score the lender uses, but it will give you a good idea of where you stand.

2. Shop around for the best rate.

You shop around to get a good deal on your new vehicle, so why wouldn’t you shop around for the loan to pay for it? Most people don’t. They go to the dealer without doing any homework.

“That just means you have a target painted on your back,” said Liz Weston, personal finance columnist and author of the book, “Deal with Your Debt.” “Bad things are going to happen to you when you haven’t done your research and you don’t have your loan lined up before you start shopping for a car.”

Eight out of 10 car buyers finance at the dealership, according to the nonprofit Center for Responsible Lending. Maybe it’s the convenience or the lure of ads that offer incredibly low-interest rates. Just remember, those super-low rates are only for customers with excellent credit scores.

Credit unions and community banks are the best place to start. They typically offer the best rates on car loans.

“A lot of people just assume they’re getting the best rate and terms from the dealer, and that’s the last assumption you should make,” Weston said. “You can apply for that loan, have it all set up, and then pull the plug at the last minute, if the dealer’s offer is better.”

3. Choose the shortest loan you can afford.

As cars have become more expensive, car loans have gotten longer. You can now finance that new set of wheels for seven, eight or possibly nine years. The longer term reduces the monthly payment, but it will also drive up your total cost.

“You definitely pay more in the long run because these long loans typically have high-interest rates,” cautioned Mike Quincy with Consumer Reports Autos. “Try to limit your car loan to about 48 months. That’s the optimal amount of time you should pay for your car.”

Yes, that means a higher monthly payment, but you’ll get out of debt faster.

The Federal Trade Commission has a worksheet that helps you compare financing offers with different terms.

4. Beware of the yo-yo finance scam.

You sign all the paperwork, get the keys to your shiny new car and drive it home, assuming the deal is done. A few days or weeks later, someone from the dealership calls and says they were unable to get the financing approved at the agreed-upon price.

You must return the car to the dealership, they say, or negotiate a new loan at a higher interest rate. If you don’t, you could lose your deposit and trade-in, and you may even be charged a rental fee for the time you had the vehicle. Faced with this situation, most people cave.

How can they do this?

“Most dealers don’t consider the sale final until the money is in their account, and that could be anywhere from a few hours to a couple of days,” said Chris Kulka, senior vice president at the Center For Responsible Lending.

Chances are this was disclosed somewhere in all the paperwork you signed in the dealer’s financing office.

“The only way to protect yourself is to either get your financing elsewhere or tell the dealer that you’re not going to take the car until the financing is deemed final,” Kulka said.

5. Don’t get hung-up on the monthly payment.

A lot of people assume that if they can afford the monthly payment, they got a good deal on the car.

“That’s a huge mistake,” said Jack Gillis, author of “The Car Book 2014.”

Buying a new car typically involves three negotiations. There’s the price of the vehicle, the value of your trade-in and the financing. And they need to be kept separate.

“If you just look at the monthly payment, you’ll have no idea what you’re being charged for the car, you won’t really know what you’re getting for your old vehicle and you won’t know what the interest rate really is,” Gillis warned. “The artificially low monthly payment will disguise the fact that you’re paying more than you should for the car and financing and getting less than you could for your trade-in.”

The salesperson will probably ask how much you can afford to pay each month—they’re trained to do that. Gillis says there’s no need to answer.

Keep in mind: If you are pre-approved for the loan before you head to the dealership, you can concentrate on haggling for the lowest price for the car and highest amount for your trade-in without the added pressure of negotiating the interest rate and other details of your loan.

H/T Source: CNBC LLC.

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20 Tips for a Successful Business-Loan Application - July 8, 2015 by admin

When you apply for a business loan the lender will almost always present you with a loan application form to fill out. But there are numerous other factors that will determine whether you are successful, so make sure you pay attention to the following tips. Believe it or not it’s also a great way to check the financial health of your business.

Prepare Yourself

1. Understand Risk
Understanding risk allows you to better understand your Lender. While the Lender is in the business of accepting risk, they are also in the business of minimizing risk. Therefore, in everything you do with your loan application from here on; remember to present a case which minimizes the lender’s risk. They will love you for it!

2. Be Up to Date
Lenders really like applicants who have all their paperwork up to date. This means make sure your BAS is done (and paid); your financial statements and income tax returns are completed (and lodged) for the last 3 financial years; you have paid all your taxes and employee super payments; and you can show your last 6 months bank statements (and if appropriate existing loan statements) without any returned payments or defaults.

3. Know What You Want
Know how much you want to borrow and what you want to do with it. If you are contributing towards it, make sure your funds are in an account which can be shown to the lender. Be prepared to evidence your loan application with a quote, invoice or contract.

4. Know What You’re Worth
It doesn’t matter if you are worth a little or a lot. The important point here is to be truthful and not to exaggerate your assets as you may get caught out and this will ultimately erode your credibility. List all your assets (the things you own), on one side of a piece of paper. These will include your home and any other property; investments such as shares; cash in the bank; what your business is worth; cars and trucks; and personal effects such as jewelry, furniture and other belongings (use the insured value if you’re not sure what they’re worth). List all your liabilities (the things you owe), on the other side of the same paper. These will include your mortgage(s); car and truck loans; any personal loans and credit card debts. After you have added both sides, calculate the difference between the 2 totals and this is what you’re worth.

5. Understand your Profit
The Profit figure a Lender will look at is different to the Taxable Income and even different again to the Profit figure in the financial statements. A Lender will take your Profit from the financial statements (not from the tax return), and add-back interest; depreciation; amortization and income tax. It’s important to disclose this adjusted Profit figure to your Lender for the last 3 financial years.

6. Check your Credit File
Being prepared avoids unpleasant surprises.Therefore it’s better for you to check your credit file from Veda Advantage (who holds your credit data) and see if there are any unfavorable marks against you or your business.

7. Have a Business Plan
A business loan is easier when you can show that you have a clear direction of what you do and what you want to do all of which is written out in a logical manner.

8. Prepare Profit & Loss and Cashflow Forecasts
It is important to have both of these to reflect your future plans as outlined in your Business Plan. This prediction should be done monthly for the next 12 months into the future.

9. Internet Searches
Lenders use the Internet to carry out a search on applicants. Make sure you are aware of any adverse literature about you on the net beforehand and make sure it can be explained.

Carefully Consider the Loan Application Form

10. The 5 Main Areas of any Form

Every loan application will have the following five sections:-

a) What are you worth?
b) How much do you make?
c) How much do you want?
d) Contact Information
e) How are you going to pay it back?

11. Contact Information
Make sure you write the full correct name and ABN (ACN if applicable) and the current registered office as well as the full details of the nearest relative not living with you.

If you have more than one entity and especially if you are using a trust to operate your business, always add a diagram explaining all of the entities, their roles and who are the Directors and Shareholders (and Trustees). The trick is to make it as easy as possible for the Lender.

12. How Are You Going to Pay it Back?
When a Lender wants to know how they are going to get their money back, they call it their exit strategy – and you should give them 3 exit strategies. The first is almost always through the repayment schedule of principal and interest. The second and third may include the sale of some of the businesses assets or through the collection of debts and or the sale of a property or Guarantor’s assets as examples.

13. Answer Queries Quickly
Every application will have a set of queries raised by the Lender – this is normal. It is important that you answer the Lender’s questions as soon as possible. If it is going to take you more than 24 hours to answer a question, call them and let them know why.

14. Additional Information
While most loan application forms don’t allow for it, it is a good idea to attach the Business Plan to the application as it provides for a more professional view of the business.

15. Statutory Forms
Every loan application has a statutory set of clauses to sign. Make sure that the correct person and/or officer signs the form; especially the formal loan application and the authority to conduct credit checks.

Understand How a Lender Reads an Application Form

16. Analyse How Much Debt You Have
In this case a Lender compares what you own to the total amount of money you owe. They do this by dividing the total assets by the total liabilities. For example, if the total of all the things you own (assets) amount to $500,000 and all of the money you owe (liabilities) is $275,000 – the calculation is $500,000 divided by $275,000 which is 1.8 (this means you have 1.8 times more assets than liabilities). The result they look for is 1.5 or higher and anything towards 2.0 is considered good. Different Lenders have different rules.

17. Interest Cover
This analysis refers to how much Profit (based on the calculation in point 5) there is to pay for all of the interest including the interest arising from the new loan application. This calculation is achieved by dividing the (adjusted) Profit by the new interest expense. For example, if the adjusted Profit was $200,000 pa and your interest before the new loan was $80,000 pa and the interest on the new loan was going to be $35,000 per annum – the calculation is $200,000 divided by ($80,000 + $35,000) which is 1.7. The lowest acceptable result is usually 1.5 but anything around 1.75 or higher makes your application all that much easier. Again different lenders have different rules.

Find the Right Lender

18. Research
A successful loan application sometimes is as simple as finding the right lender. Don’t lodge a loan application until you have interviewed a Lender’s commercial manager and are confident that your business loan application fits within their lending guidelines. It is not unusual to interview 3 or 4 Lenders before finding the right one. Make sure you interview both Banks and Non-Banks.

19. Commercial Brokers
Don’t be afraid of using a Commercial Broker, as they are in the business of looking for Commercial Loans every day and work on a success fee which is good for them and you. You will have to pay them a fee but this can be offset against a possible savings in interest rates. Make sure they are referred to you and like Lenders, that you interview them.

20. Keep Your New Loan On Track
One of the best ways to make sure you get a new business loan is by making sure you properly complied with your old business loan. Pay your interest and repayments on time; comply with your loan obligations by providing accounts and /tax returns on time and work on building your relationship with the lender.

H/T Source: EasyBizFinance.com

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Beginner’s Guide to Managing your Money - June 29, 2015 by admin

Setting up a budget

If you want to get on top of your finances, a budget is a really good way to start. It’s just a record of money you have coming in (from things like your salary or wages, pensions or benefits) andpayments that you make (such as your rent or mortgage, insurance and Council Tax as well as living expenses and regular and irregular spending).

A great way to work out your budget is with our online budget planner. This allows you to record all of your incomings and outgoings. It then analyses and adds up your figures and gives a breakdown of where your spending goes each month across the following broad categories:

  • Household bills
  • Living costs
  • Financial products
  • Family and friends
  • Travel
  • Leisure

You have the option to save your budget planner results and return to update them at any time.

Alternatively you can set a budget up using a spreadsheet on your computer or just write it all down on a piece of paper. Your bank or building society may also give you access to an online budgeting tool which takes information directly from your transactions.

Checking where your money goes

If you’re spending more each month than you are getting as income, the next step is to look more closely at where your money is going and where you can cut back. Even small amounts – for things such as magazines, sandwiches at lunchtime or takeaways – can add up.

Keep a spending diary

Keeping a spending diary is an effective way of seeing exactly what you spend your money on. Try making a note of what you spend for at least a month (including even small purchases). If you can do it for even longer, you’ll get a fuller picture of what you spend your money on.

Once you have a clear picture of where your spending is going use our tips and tools below to see how you can make savings.

Paying off loans and credit cards

If you have loans or owe money on credit cards it usually makes sense to pay off the debt that charges the highest rate of interest first – it’s the fastest way to clear your debts. Knowing this is useful if you have several different debts charging different rates of interest, such as:

  • Store cards, which normally charge the highest rates of interest
  • Credit cards
  • Personal loans from the bank, which normally charge a lower rate of interest than credit or store cards

It is important to make sure you don’t break the terms of any of your agreements. So even if you’re focusing on paying down another debt, you must pay at least the minimum on any credit cards and your monthly required payments on any loan agreements.

If you’re overwhelmed by your debts

Often, the hardest part of paying off your debts is taking the first step. It’s easy to feel overwhelmed if you know you’re struggling financially. It’s tempting to bury your head in the sand and ignore your bank statements and demands for payment, but it won’t make the problem any better and could make it worse.

So, take a deep breath and open any letters you’ve been ignoring. Once you’ve done this, at least you’ll know what you have to deal with and you can work out what you need to do next.

Getting help if debt problems become serious

If you’ve already missed credit card or loan payments or if you’re behind with so-called ‘priority debts’ such as your rent or mortgage, energy bills, Council Tax, child support or court fines, take advice from a debt advice charity straight away.

Set a savings goal

Some people find it hard to get motivated about saving, but it’s often much easier if you set a goal. That way, rather than thinking about the money you are setting aside each month, you can focus on what you will be able to do once you’ve reached your goal.

Your first step is to have some emergency savings – money to fall back on if you have an emergency, such as a heating boiler breakdown or if you couldn’t work for a while. Try and get three months’ worth of expenses in an easy or instant access account. Don’t worry if you can’t save this straight away, but keep it as a target to aim for.

Once you’ve set aside your emergency fund, possible savings goals to consider might include:

  • Taking a holiday without having to worry about the bills when you get back
  • Having some extra money to draw on while you’re on maternity or paternity leave
  • Buying a car without taking out a loan

Save regularly

The easiest way to save is to pay some money into a savings account every month. It’s worth setting up a standing order if you can, so the money goes straight from your bank account without you having to do anything.

It’s a good idea to:

  • Pay the money into your savings account as soon as you get paid, rather than at the end of the month
  • Increase the amount you save if you get a pay rise or any of your outgoings (such as your mortgage or insurance costs) fall
  • Check that you are getting a competitive rate of return on your savings
  • As your savings start to grow, you should:
  • Take stock
  • Make an investment plan based on your goals and timeframes
  • Find the best home for your money in the longer term

H/T Source: MoneyAdviceService.org.uk

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4 Core Life Insurance Tips - June 26, 2015 by admin

Buying life insurance for the first time can be overwhelming. You’ll run into a lot of terms that you may not understand at first. The good news is those terms are not very difficult to figure out once you do a little research. These tips are designed to help you create an organized approach toward investigating life insurance so that you can find the policy you need without the hassle.

Know Why You Need Life Insurance

Life insurance is a serious investment that shouldn’t be made on the spur of the moment. Don’t buy a policy just because someone says you should. Many people hear ads about life insurance so many times that they begin to feel an instinctive concern about needing life insurance. The truth is, however, not everyone needs life insurance.

The purpose of life insurance is to provide financial support for your dependents if you are no longer around to do it yourself. If you don’t have any dependents, you probably don’t need to spend money on life insurance. If you are contributing significantly to the financial well-being of someone in your life, you think about protect from any financial gaps that might occur if you no longer able to provide the same support. The key is to understand why you need life insurance before you begin shopping for a policy.

Understand the Type of Policy You Need

There are two basic types of life insurance policies: life and whole life. Term life insurance policies last for a specified period of time. Term life is less expensive than whole life because it usually expires before the benefits are used.

Whole life insurance lasts from the day you the policy until the day you die, no matter. A whole life policy is more expensive because the coverage could last a few years or several decades. Whole life policies can be borrowed against at a high interest rate, while term life policies.

Know When to Choose Term

If you are in a situation your dependents will not rely on you financially forever, your best bet is probably a term life policy. For example, many parents choose term life policies that are in effect until their children move out and become financially independent. Once kids are, there is no reason to continue paying for life insurance. Your beneficiaries will rely on your contributions.

Know How Much to Buy

Understanding the potential needs of your beneficiaries can also help you decide how much insurance you should have. Don’t follow any “rule of thumb” guidelines you may read. Your needs are specific to you. Your decision will depend on the math.

How much money do your dependents need each year and for how long? Because your children are likely different ages, that number is different for each beneficiary. Calculate the needs of each dependent annually, multiple times the number of years support is needed and then add those numbers together so all dependents have what they need.

H/T Source: Forbes.com

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Tips on Homeowners Insurance - June 15, 2015 by admin

1. You’re a statistic.

To an insurer, you’re not a person; you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including your occupation, who you are, what you own, and how you live.

2. Know your home’s value.

Before you choose a policy, it is essential to establish your home’s replacement cost. A local builder can provide the best estimate.

3. Insurers differ.

As with anything else you buy, what seems to be the same product can be priced differently by different companies. You can save money by comparison shopping.

4. Don’t just look at price.

A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.

5. Go beyond the basics.

A basic homeowners policy may not promise to entirely replace your home.

6. Demand discounts. Insurers provide discounts to reward behavior that reduces risk.

Americans waste money every year because they forget to ask for them!

7. At claims time, your insurer isn’t necessarily your friend.

Your idea of fair compensation may not match that of your insurer. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.

8. Prepare before you have to file a claim.

Keep your policy updated, and reread it before you file a claim so there are no surprises.

Why home insurance costs so much

Insurers will not only judge you on your record, but on your demographic as well.

It boils down to one word: risk.

To an insurance company, you are a collection of risks. Your sex, your age, your marital status, and what neighborhood you live in all contribute to an insurer’s prediction of whether you’ll file a claim.

If, for example, you are a homeowner who lives in a coastal area prone to storms, or a rural region far from fire stations, you are judged to be a higher risk because people in such situations have tended to file more — and their claims usually are more expensive.

The good news is that all insurers don’t price the same risks identically. While insurers are highly regulated in many states, they still operate as competitive businesses, focusing on certain markets and avoiding others. What’s more, some operate their businesses more efficiently than others, passing on the savings to consumers.

That means you may be able to save hundreds of dollars a year by shopping regularly, even if your insurer rewards long-time customers. A great quote from a new carrier may trump the loyalty card.

In the following sections, we’ll look at some sensible ways to find the best coverage, whether you live in a mansion or studio apartment.

Properly value your home

Know how much homeowners insurance to buy.

First, you need to determine the cost of rebuilding your home.

Insure your home for its replacement cost — that is, the amount it would cost to rebuild it if it were totally destroyed. That means determining the average local building cost in your region, and applying it to your home’s size, style, and quality of construction.

Your best resource for this is a builder. For a flat fee, you may be able to have a local contractor go through your home and provide an estimate. Try to find someone who builds individual, custom homes that don’t benefit from the economies of scale that tract homes offer.

If you want the same antique moldings, stone fireplace, and plaster-and-lathe walls as before, make sure the builder takes that into account. Otherwise, the estimate may reflect less costly modern materials.

You could also invite an insurance or real estate agent to your home. An agent who visits your home can eyeball the construction quality and point out any special features.

If you deal with a direct marketer (a company with no local agents), you can better ensure proper coverage by accurately reporting your home’s details — built-ins, antique wood, glasswork, upscale kitchen appliances, marble bath tile, etc.

Getting the proper home insurance coverage

Here are some tips to help you make the right choices about homeowners insurance.

Just as there are different home styles, insurers offer a menu of different policies. For the majority of single-family homeowners, the most appropriate policy is the HO-3, sometimes called the special policy (in Texas, for some reason, it’s known as the HO-B). It insures all major perils, except flood, earthquake, war, and nuclear accident.

You’ll need deep coverage, up to and including 100% of your home’s replacement cost. By insuring at, say, 90%, you’re making the reasonable bet that your home won’t ever be a complete loss. That may be a reasonable bet bit if you want to play it safe, insure at 100%.

Insurers generally cover a home’s contents up to between 50% and 75% of the home’s value. Make a list of your home’s contents for a more exact estimate of your needs. That also provides a written record that’s useful when you file a claim. The industry-sponsored Insurance Information Institute provides useful instructions on how to put together an inventory.

You’ll also have to pick a deductible, which is the amount you pay yourself before the insurance kicks in. The higher you go, the more you’ll save.

Buy the guarantees

Traditional guaranteed replacement cost coverage promises to pay whatever it takes to rebuild your home, even if it costs more than the original limits you purchased. That’s crucial in the event that labor and building costs balloon after a major disaster. In many states, large insurers now cap the guarantee at 120% to 125% of purchased limits.

Your safest bet is to seek a company with no cap. However, if you’ve properly valued your home’s replacement cost, the caps shouldn’t scare you. It’s unlikely that building and labor costs will go up to more than 120% of your home’s insured value.

If it’s not built into your policy, ask for replacement cost coverage for your home’s contents. Without it, you’ll end up with just the depreciated value of any object that’s damaged or stolen.

Get these types of important coverage, too:

Inflation guard

This option annually increases your premium at the rate of local building-cost inflation.

Ordinance-and-law coverage

This rider, which covers the costs of bringing your home into compliance with current building codes, is a must if your home is more than a few years old.

Limit your liability

Your homeowners policy protects against lawsuits for accidents that happen on your property. It also covers you if your dog bites someone.

You might also consider umbrella liability coverage, which is additional coverage over and above your regular homeowners liability limits.

Consider these options:


Your homeowners policy also provides for living expenses if you’re displaced; replacement of structures such as garages and sheds; and limited medical coverage for someone injured on your property. Don’t buy more than the minimum offered. Depending on your situation, however, several other types of coverage may be worthwhile:


Floods aren’t covered by ordinary homeowners insurance. Flood insurance is available through the Federal Emergency Management Agency. In California, you may need earthquake coverage; check with the California Earthquake Authority.

–Home business coverage

Business property worth more than $2,500 isn’t covered by a homeowners policy, so buy a separate policy — also known as a rider — to fill the gap. Business liability coverage must be purchased separately, too.

–Riders for valuables

A standard policy provides only minimal coverage for antiques, collectibles, furs, silver, jewels, cameras, computers, musical instruments, and firearms. For these, you need separate coverage.

H/T Source: Money.CNN.com

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Home Banking – Banking Services From Our Home - June 8, 2015 by admin

Home banking refers to a facility in which you can have a virtual banking branch where you can supervise and be in control of your funds. You can enjoy this service round the clock, on every day of week absolutely free. The major advantage of this is that you do not have to even move out of your home to avail this service.

What Services Are Available?

Let us talk of some services that you can get from home banking Wayne. You can know your balance and available balance anytime you wish. This difference depends on what type of account you have. For example, if you have a savings account or money market account, then the minimum necessary balance in the account is the difference.

This also lets you get the details of the transactions made during a particular time. Not only can you transfer the money between the accounts but you also can schedule the transfers. You can also get the details of transactions made in the past.

Some other information that you get at your fingertips with the help of home banking is a chance to stop payment for any particular check, credit score viewing, recorder check and viewing mortgage balance. To start using home banking services first you have to set up your account. Signing up process includes setting security measures also.

Importance Of Security Measures

One may wonder why all this stress is given on the security measures. The answer to this question is that although the possibility of theft is very rare yet there are people with mean intentions that may try to dishonestly gain from you if you are not alert enough. That is why the process is made difficult enough and discourages the malicious people to break into it.

However, to make the task easier for you there is an option called remember this computer. If you select this option computer will not ask the same security question every time you login. It will remember the answers but in any case it doesn’t remember your account number, random code and access code. You have to enter this information every time you use home banking service.

However, the security cookie used by the computer for remembering this information survives only for a definite period. After its expiry, you need to re- feed this information into the computer. However, keep in mind that you should use this option only on your personal computer where no other person has an access. Never use it if others also use the same computer as yours.

H/T Source: EzineArticles.com

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When (And When Not) To Refinance Your Mortgage - June 3, 2015 by admin

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many common reasons why homeowners refinance: The opportunity to obtain a lower interest rate; the chance to shorten the term of their mortgage; the desire to convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa; the opportunity to tap a home’s equity in order to finance a large purchase; and the desire to consolidate debt. Some of these motivations have benefits and pitfalls. And because refinancing can cost between 3% and 6% of the loan’s principal and – like taking out the original mortgage – requires appraisal, title search and application fees, it’s important for a homeowner to determine whether his or her reason for refinancing offers true benefit.

Securing a Lower Interest Rate
One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb was that it was worth the money to refinance if you could reduce your interest rate by at least 2%. Today, many lenders say 1% savings is enough of an incentive to refinance.

Reducing your interest rate not only helps you save money, but it increases the rate at which you build equity in your home, and it can decrease the size of your monthly payment. For example, a 30-year fixed-rate mortgage with an interest rate of 9% on a $100,000 home has a principal and interest payment of $804.62. That same loan at 6% reduces your payment to $599.55.

Shortening the Loan’s Term
When interest rates fall, homeowners often have the opportunity to refinance an existing loan for another loan that, without much change in the monthly payment, has a shorter term. For that 30-year fixed-rate mortgage on a $100,000 home, refinancing from 9% to $5.5% cuts the term in half to 15 years, with only a slight change in the monthly payment from $804.62 to $817.08.

Converting Between Adjustable-Rate and Fixed-Rate Mortgages
While ARMs start out offering lower rates than fixed-rate mortgages, periodic adjustments often result in rate increases that are higher than the rate available through a fixed-rate mortgage. When this occurs, converting to a fixed-rate mortgage results in a lower interest rate as well as eliminates concern over future interest rate hikes.

Conversely, converting from a fixed-rate loan to an ARM can also be a sound financial strategy, particularly in a falling interest rate environment. If rates continue to fall, the periodic rate adjustments on an ARM result in decreasing rates and smaller monthly mortgage payments, eliminating the need to refinance every time rates drop. Converting to an ARM may be a good idea especially for homeowners who don’t plan to stay in their home for more than a few years. If interest rates are falling, these homeowners can reduce their loan’s interest rate and monthly payment, but they won’t have to worry about interest rates rising in the future.

Tapping Equity and Consolidating Debt

While the previously mentioned reasons to refinance are all financially sound, mortgage refinancing can be a slippery slope to never-ending debt. It’s important to keep this in mind when considering refinancing for the purpose of tapping into home equity or consolidating debt.

Homeowners often access the equity in their homes to cover big expenses, such as the costs of home remodeling or a child’s college education. These homeowners may justify such refinancing by pointing out that remodeling adds value to the home or that the interest rate on the mortgage loan is less than the rate on money borrowed from another source. Another justification is that the interest on mortgages is tax deductible. While these arguments may be true, increasing the number of years that you owe on your mortgage is rarely a smart financial decision, nor is spending a dollar on interest to get a 30-cent tax deduction.

Many homeowners refinance in order to consolidate their debt. At face value, replacing high-interest debt with a low-interest mortgage is a good idea. Unfortunately, refinancing does not bring with it an automatic dose of financial prudence. In reality, a large percentage of people who once generated high-interest debt on credit cards, cars and other purchases will simply do it again after the mortgage refinancing gives them the available credit to do so. This creates an instant quadruple loss composed of wasted fees on the refinancing, lost equity in the house, additional years of increased interest payments on the new mortgage and the return of high-interest debt once the credit cards are maxed out again – the possible result is an endless perpetuation of the debt cycle and eventual bankruptcy.

The Bottom Line
Refinancing can be a great financial move if it reduces your mortgage payment, shortens the term of your loan or helps you build equity more quickly. When used carefully, it can also be a valuable tool in getting your debt under control. Before you refinance take a careful look at your financial situation, and ask yourself: How long do I plan to continue living in the house? And how much money will I save by refinancing?

Again, keep in mind that refinancing generally costs between 3 and 6% of the loan’s principal. It takes years to recoup that cost with the savings generated by a lower interest rate or a shorter term. So, if you are not planning to stay in the home for more than a few years, the cost of refinancing may negate any of the potential savings. It also pays to remember that a savvy homeowner is always looking for ways to reduce debt, build equity, save money and eliminate that mortgage payment. Taking cash out of your equity when you refinance doesn’t help you achieve any of those goals.

H/T Source: Investopedia, LLC.

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What Is a Share Pledge Loan? - May 26, 2015 by admin

A share pledge loan is a type of personal loan available only from a credit union. For an individual with a credit union banking relationship, this type of loan can be a low-cost way to borrow some money. Different credit unions will apply different terms to share pledge loans.

Credit Union Accounts

  • Credit unions use different terminology from banks to describe accounts and deposits in accounts. An account with a credit union is called a share account. When someone joins a credit union by depositing money in an account, he has ownership rights with the credit union. A credit union account is described as a share account earning dividends, but the account functions in the same manner as a bank account with a cash balance earning interest.

Share Pledge Loan

  • A share pledge loan is a loan provided by the credit union secured by money in a share account. The amount of the loan is limited to the amount of money on deposit in the account. If a credit union member has $25,000 in her share account, she could receive a share pledge loan for up to $25,000. If the loan is taken, the funds in the share account are frozen until the loan is repaid.

Pledge Loan Features

  • A share pledge loan will have an attractive interest rate. The rate is often set at a margin above the interest rate being earned on the share account. For example, the share account is earning 2 percent and the share pledge loan margin is 3 percent. The interest on the share pledge loan would be 5 percent. A share pledge loan will have fixed monthly payments of principal and interest to pay the loan off in a fixed amount of time.


  • Since the loan is secured by deposits in the credit union, credit qualification for a share pledge loan is usually easy and this type of loan can be used to rebuild a credit history. As the loan balance is paid down, the amount of money frozen in the share account will be reduced to match the outstanding loan balance. The limitation on share pledge loans is the credit union member must already have the money to back up the loan.

H/T Source: eHow.com

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