Wednesday, October 29, 2014

Fall Into Tax Planning!


The leaves are changing. The nights are getting longer. There's a cool breeze blowing and apples are falling off the trees. Everyone knows what that means: it's tax planning time!

Remember, no one can offer you accurate tax advice without a careful review of your finances. If you have questions about filing your taxes, you should speak to a tax planning professional. For most people, though, a little bit of knowledge is enough to get started paying less to Uncle Sam and keeping more in your retirement fund.

While most people don't start thinking about their taxes until February or even April, the best time to make changes is this year. If you haven't thought about your taxes since you paid them in the spring, you're still in good shape. For most tax matters, changes made by December 31st are assumed to be in effect for the whole year. Let's look at four areas of tax planning you should aim to tackle as quickly as you can.

1.) Make any necessary changes to your retirement accounts

If there's anything that is further off than tax planning, it's retirement planning. Still, one of the most compelling reasons for making contributions to your retirement is preferential tax treatment. For starters, you should be contributing the maximum to either a Roth or a Traditional IRA.

From there, it gets a little trickier. If your income dropped this year, say, because you or your spouse lost your job or had a significant reduction in hours, you might not get much benefit out of the tax deduction that is presented by a Traditional IRA. You can take this opportunity to switch a portion of your Traditional IRA to a Roth IRA. Essentially, you're "paying" the tax on a portion of your IRA in a year when it won't cost you as much, then switching it into a tax-free growth account.

You also need to make sure you're contributing to your employer's 401(k) program. Those contributions are also made pre-tax, so you can deduct your portion of the matching funds from your tax burden. If you haven't been contributing, see if you can make "catch-up" contributions to take advantage of the preferential tax treatment.

Regardless of how you save, you could be rewarded for it. New this year is the Saver's Tax Credit, which offers a sliding scale of tax breaks based on your income and how much you save. Investing in an approved retirement vehicle like a 401(k) or IRA can let you deduct as much as 40% of your contribution from your tax bill.

2.) Spend your "use-it-or-lose-it" funds

Many employers offer plans like Flexible Spending Accounts (FSA). These programs also offer preferential tax treatment, but many of them empty out at year-end whether you've used the funds or not. These programs are a great way to save for unplanned medical problems, but if you were lucky enough to avoid those costs, you'll need to spend that money before it goes away.

There are a few common tricks you can use to spend the money without wasting it. Obviously, if you've been putting off a minor medical procedure (a mole removal, an eye exam, new contacts) that's the easiest place to spend. Otherwise, you may need to get creative. A few staple goods are FSA eligible. Over-the-counter painkillers, first aid kits and supplies, and some disaster preparedness supplies are generally eligible for reimbursement. Consider getting first aid kits as Christmas gifts for young children or donating them to community programs.

3.) Plan your charitable contributions

If you're going to donate to a charity, you can give in a way that maximizes your tax benefit. One of the easiest ways to do that is to give stock. Not-for-profit organizations don't have to pay the capital gains tax, so they can sell it for the full amount. This means you get to take credit for the full value of the gift. This is also true if you plan to give real property (houses, buildings, land, etc.) or use another complex giving strategy to maximize the value of your contribution.

However you give, make sure you keep detailed records about your gifts. You want both a receipt from the organization and another form of proof, like a copy of a check or a bank record. Not-for-profit organizations are almost always overworked and understaffed, so counting on their bookkeeping can sometimes be an exercise in frustration. Keep your own records just to be sure.

4.) Investigate early tuition payment

You or your child may have a big tuition bill coming due in a few months. If you wait to pay that until February or March when it comes due, you may miss out on a chance to cash in on the American Opportunity credit. The plan replaces the Hope credit and allows for a $2,500 deduction and as much as a $1,000 credit for eligible expenses for four years of undergraduate study.

If you are a student filing for the first time and don't have much of an income, paying your Spring tuition now could result in a $1,000 check right around the time spring break rolls around. Because the American Opportunity credit is a highly-charged political issue, it's entirely possible it will be repealed next year, so you may miss out on the possibility to claim it if you wait.
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If you're thinking about your tax future and need help, Destinations Credit Union is right beside you. Our team of dedicated representatives is standing by to help you start saving for retirement or saving money for education.  Call or stop by Destinations Credit Union today!

SOURCES:

Thursday, October 23, 2014

Three Famous Scary Stories And What They Teach About Smart Money Management

It's that time of year again! The nights get longer. Haunting winds rattle
shutters and swaying trees cast spooky shadows in the moonlight. It's time to tell ghost stories!

These stories scare us, but they can also show us something. Let's see what three of the most popular ghost stories can show us about financial responsibility for a spook-tacular Halloween!

1) The Ghost in the Attic
The story
It starts a little differently each time. Maybe there's a bump in the night. A squeaky floorboard creaks and groans even when no one is walking near it. More and more squeaks and bumps that no one can explain keep happening. The cabinets open and close by themselves. Loud noises come from nowhere in the middle of the night. Everyone is terrified and no one can sleep. Blood starts dripping from walls as screams come from the vents and doors slam. This house is haunted.

It turns out there's some history to the house. A gruesome murder took place there. It was built on an ancient Native American burial ground. The attic was home to an abandoned child who was forced to live there because of his hideous deformity. The only way to get back to normal is to give these angry spirits what they need.

The reality
If your house has creaking floorboards, or your heating and cooling system goes bump in the night, you might be headed for a far more serious problem than ghosts. Unexplained noises in the house could be signs of serious structural problems. Knocks in the walls can be a plumbing issue about to break loose. Uneven construction can really make cabinets open by themselves and doors slam uncontrollably. Like in the story, many of these problems come out of your house's history. It might have been built on an old mine site or just built in a hurry.

Left untreated, these little problems can create big trouble. Squeaky floorboards can break, pipes can rupture, and foundation problems can ruin your home. If you're counting on homeowner's insurance to pay for these accidents, think again. Homeowners' insurance policies broadly don't cover "construction defects," which means you'll be stuck holding the bill.

Consider getting out in front of these problems. You can use your home equityline of credit to repair your foundation, fix structural problems in your home, and perform other necessary upgrades. Don't let the specter of uncertainty ruin your ghoulish good time!

2) Vampire Infestation
The Story

Up a winding mountain pass deep in the Transylvanian high country sits an ancient mansion. The simple folk who live in the valley will not go near it, nor will they even speak a word about it, for fear of attracting the dark attention of the master of the house. The man is never seen and the house might be assumed empty if it were not for the ominous cackling that echoes through the farms and pastures that surround the mountain.

 Legend tells that the man in the mansion is an unholy abomination who subsists on the blood of the innocent. Young children have been found by the road leading up to the mansion, their flesh cold and clammy as though the life itself has been drained out of them. Travelers who arrive at the village scoff at the tale of Dracula's Mansion, but those who journey up to it are never seen again.

The Reality
While you don't have any vampires in your life (probably), you do have something you never see that's sucking the life out of your financial success. Outstanding debt is a seldom-seen figure that casts an ominous shadow over your household finances. Make no mistake: The beast is feeding on your innocent salary and putting your whole household in its sight. The average household has $17,000 or more in debt and faces an average minimum payment of $423 per month.

If you want to drive a stake through the heart of this monster, consider a debt consolidation loan. These loans can repair your credit, lower your monthly payment and free you from the control of the heartless creature. Best of all, you won't need to deal with the smell of garlic!

3) Zombie Apocalypse
The Story

The streets are quiet. There are no cars or pedestrians. An overcast sky casts flickering shadows on the desolate streets. The ordinary noises of a city are starkly absent. The only clearly audible sound is the slow chomping of the walking dead who are feasting on the bodies of recent victims.

Cowering in basements and perched on rooftops, human survivors band together. Their goal is simple: stay alive for one more day. Long past the point where rescue helicopters stop flying, these brave souls will go their own way and resist being part of the zombie horde.

The Reality
Zombies are a cautionary example of what happens to us when we consume just for the sake of consumption. A zombie is a sad creature who lacks the capacity to plan or see further than the next meal. We've all been there - splurging on a candy bar in the checkout lane, not because we were hungry, but because we wanted it and it was there.

The best way to zombie-proof yourself is to make a realistic budget and sticking to it. Make a plan for your income that includes saving and investing. Be sure to include space for planned indulgences - like discount Halloween candy on November 1.

SOURCES:

http://www.free-online-calculator-use.com/credit-card-minimum-payment-calculator.html

Monday, October 20, 2014

Internet Hygiene - The Best Computer Time Investment You Can Make


Wash your hands after you use the bathroom. Cover your mouth when you sneeze. Brush your teeth daily. These are all basic elements of personal hygiene. We practice them, in part, to minimize the amount of gross stuff that our bodies do, but we also practice them to help protect us from disease.

You might think "Internet hygiene" means wiping down keyboards after you use them and not spilling things on your computer. While these are good habits, there's another range of behaviors that security experts call "Internet hygiene," and it can be the difference between a safe and effective Internet and a world of hackers, bots, and identity thieves.

For most people, the beginning and end of cyber-security is a piece of anti-virus software. Imagining that there is nothing on their computer worth stealing, most users don't take their online security very seriously. Increasingly, that's the attitude hackers are counting on people exhibiting.

One such recent cyber attack, a malicious worm called Game Over Zeus, infected around 10,000 computers. The worm allowed hackers to remotely control infected computers, using them to launch attacks on major websites. In addition, users frequently found their personal files encrypted. A window created by the worm would inform them that, unless they paid a ransom that sometimes was as much as a few thousand dollars, they would lose access to the contents of their hard drive forever.

How did such a vicious worm spread so quickly? Hackers have gotten better about choosing their targets. It's easy to find out-of-date software and exploit known structural weaknesses in it to gain control of a computer. From there, it's a trivial task to create emails that look like they come from the owner of that computer, which makes it easier to infect that person's friends and family members' computers.

Security expert Tom Kellerman compares the state of a compromised computer to a neighbor who always leaves the front door to an apartment complex unlocked. Not only can thieves break into the neighbor's apartment, but they can use their expanded building access to more easily break into other units. If you aren't maintaining the security protocols on your computer and being vigilant about what links you click, you aren't just putting your own security at risk. You're creating a more dangerous Internet for your friends, co-workers, and family, too.

The lesson of Game Over Zeus is pretty simple. Computer viruses spread a lot like human viruses. They infect people who don't practice good hygiene, then spread to their friends and family. If you wouldn't sneeze on your hand before pushing buttons on an elevator, don't practice unsafe internet behaviors.

How can you practice good Internet hygiene? You don't need to be a tech guru to keep your PC safe. Security experts consistently recommend you take at least these five steps.

1.) Download an anti-virus software program, like AVG or McAfee, and keep it up-to-date. Schedule updates for it to run when your computer is on, and don't interrupt the process. Do the same thing with an anti-malware program, like MalwareBytes. Tens of thousands of new malicious programs are being created every day. If you're not regularly updating your security software, you might as well not have it.

2.) Run scans of both anti-virus and anti-malware software on a weekly basis. Just like people with strong immune systems can get sick, even if you have a Mac computer, you can still be infected with malicious programs. If you're on the Internet, you're at risk.

3.) Do it right away. If your computer gives you a message that it needs to download or install critical updates, do it the first time you see the warning. It's annoying to stop what you're doing and restart your computer, but it's better than having your computer compromised. When IT professionals call something a "critical update," it usually means it fixes a known software exploit. Make sure the message that pops up is from a trusted source, however. There are malware programs around that use fake "critical update" popups to infiltrate your computer.

4.) Don't click links that take you to sites you don't recognize, even if they're emailed to you by a friend or family member. These emails are frequently generated by bots to keep malicious software spreading. You clicking that link might make you yet another disease vector.

5.) Don't download, install or run any software you don't recognize. For these bots to keep spreading, at some point human beings have to authorize them. If you're installing software you think might be dangerous, you're putting your computer and the computers of everyone you know in jeopardy.

This might seem like a lot of work, but it's the price of doing business and living in a digital age. With the convenience of a world of information at your fingertips comes the responsibility to maintain the health of that system. Do your part - install and update security software, and be constantly on guard for threats!

SOURCES:

   

Friday, October 17, 2014

Card Security Breaches: Why They Occur And Who's To Blame

It seems like there's another financial disaster at every turn lately. Target's card databases get hacked. Heartbleed puts your passwords at risk. Home Depot's credit card numbers are compromised. JP Morgan Chase's credit information is breached. Shellshock threatens the integrity of the Internet. It's enough to make you long for the days of the corner store keeping credit on a sheet of graph paper.

To better understand how these things happen, let's first take a look at the steps involved in a financial transaction. Then, we'll see where vulnerabilities exist. Finally, we'll check out a few strategies you can use to keep yourself safe.

When you swipe your debit or credit card at a terminal, the only thing you see is an approval screen. Behind the scenes, the process from the moment you swipe a card to leaving the store with your purchases is complicated. And you want it to be that way. A less complicated process would remove many layers of security.

First, there's an "authentication" process. The point-of-sale terminal in which you swipe your card reads the card's information from the magnetic strip, encrypts it, and sends it to a payment processing center. This facility streamlines the data into a format your issuing company can understand and sends it along. Your card network company - Visa, Mastercard, Discover, etc. - validates the legitimacy of the information. You may be prompted for some information, most commonly your billing ZIP code. This is done to help authenticate the card.

Second, there's the reconciliation process. This is usually done at the end of the day for most retailers. The retailer sends all the day's receipts to a payment processor, which then sends them to the issuing institution - the credit union, bank, or credit card company. That institution debits its member or customer accounts for the amount of the transaction, then sends that money to the payment processor, which sends it to the retailer.

This is an explanation of how things work in a very simplified example, but it gives you an idea of the complexity that's involved in the process of paying with a card. While it's a lot of steps, it's the best system that the brightest minds in the financial industry could develop. Unfortunately, each step also introduces a layer of vulnerability.

The encryption protocol for card authentication can be busted (that was, in part, what Heartbleed was about). The retailer's receipt records they use for reconciliation can be hacked (like what happened to Target and Home Depot). The bank can have their register of accounts hacked (like JP Morgan did). So many layers of complexity create more possibilities for hackers to compromise sensitive information.

You might notice that there's only one step in the process that involves Destinations Credit Union or its computer systems. That comes at the very end of the process, when customer records are debited for purchases. In the latter example, the only victim of that theft was a big Wall Street bank. In such cases, the kind of hacking hardware and know-how that is required to orchestrate such an attack are expensive. Because credit unions are smaller and less centralized, they're much less likely to be targeted by this kind of attack.

That's not to say Destinations Credit Union doesn't take cybersecurity seriously. We keep up-to-date with the latest in computer hardware and software to make sure our members are secure against illegal access. We also have to adapt to a world where everyone else doesn't follow those same values. That means we have to adjust our security protocols to cover for the failings of other parts of that big, messy system.

We're all in this together. The convenience of the modern economy makes things better for everybody. If you go on vacation, you don't have to fuss with traveler's checks or currency exchange troubles. You can take your debit card or credit card and spend just the same. Electronic record keeping helps financial institutions keep costs down and we all benefit from a growing economy. If we want to keep getting these benefits, we all need to put the work in to make sure our networks are secure. Here are five small tips to make your little corner of the Internet more secure.                                                 
  1. Install updates for your computer, tablet, and mobile phone regularly.
  2. Don't open suspicious e-mails or questionable links.
  3. Don't install software you don't recognize.
  4. Monitor your financial statements closely to check for unauthorized activities.
  5. Get an anti-virus program and run it regularly.                      
            If you follow these five steps, you can help make the Internet a safer place for people to share things they love and buy things they need. You can help make sure the big system of merchants, processors, and institutions keeps chugging along while providing benefits to everyone.