Monday, February 20, 2017

Personal Loans: The Swiss Army Knife Of Personal Finance


There's that old saying, "There's no such thing as a free lunch." Turns out, it's not just lunches that aren't free. Pretty much everything costs money, and it's often more than you'd expect it to be.

You can easily plan and save for some expenses, while some come up out of nowhere. For those things, you need to borrow, and a great way to borrow is with a personal loan. Consider these uses for a personal loan. If you have one of these events coming up, you may want to consider a personal loan to finance them. 

1.) Weddings 

Love knows no season. When the time is right to get married, it doesn't matter if a few more months of saving would make a difference. Timing is everything! If you or your child is dedicated to hosting a spring wedding, it's just not possible to pay for it with a Christmas bonus.

The average wedding costs just over $30,000, which makes it too much for a single credit card, and the interest you'd pay would make it incredibly more expensive. Even single vendor costs, like event space or catering, may require separate financing. A personal loan will net you a better repayment plan and a better interest rate.

You may even be able to bring the price of those transactions down. Rather than putting a deposit down with a credit card, you can offer to pay more of the total cost up front in exchange for a reduced bill. Caterers, tailors and other small business owners are likely to appreciate the simplification of their cash flow. They can pay their employees and purchase supplies without going into debt themselves. They may be willing to pass those savings on to you. 

2.) Adoption 

Adopting a child is a fantastic way to show your love to the next generation. It can also be very expensive due to screenings and fees that stand between you and your child. Realistically, costs could be as high as $50,000 to adopt a child in the US, and even more to adopt an infant from overseas.

Obtaining financing for this process can be very difficult. Unlike traditional big expenses, there's no collateral. No one can repossess your child if you fall behind on your loans. Traditional sources of financing are out the window.

Fortunately, a personal loan can make this process a reality. Because the terms tend to be short, you can have your loan paid off long before you start thinking about college costs for your new bundle of joy! 

3.) Short-term house sales 

The success of shows like "Love it or List it" and other fast-paced remodeling displays has inspired a new generation of people to pick up properties, fix them up and sell them for a profit. For those who are handy and love remodeling, it can be a dream hobby. It can even turn into a full-time job! There's just one problem: capital.

When you buy a house to sell again, it's likely that you're borrowing as much as you can to pay for the property. That doesn't leave much left over for new fixtures, paint, or repairs. Some of that can be done cheaply enough, but much of it will require capital. Since you don't have much equity in the property, borrowing against it isn't a real possibility.

A personal loan can be the answer. With affordable rates and flexible repayment terms, a personal loan can help you finance those value-boosting improvements. Best of all, when you sell the house, you can repay the personal loan early without a penalty! 

4.) Launching a small business 

They say all you need to make it is a great idea. That's about half right. What you really need is a great idea and enough money to get it off the ground. Even the most thrifty of business owners will still face start-up costs in materials, license fees and equipment purchases. While these costs may not be much, it will be a while before your business turns enough profit to recoup these expenses.

A personal loan can broaden your timeline to profitability. Rather than being pressured to start turning a profit immediately, you can take your time and develop the business. Since your debt servicing is a fixed cost throughout the course of the loan, it's easy to plan for repayment. You can give your business the boost it needs to get firmly established, setting you up for future prosperity. 

5.) Extra education expenses 

Depending on your personal financial situation, your student loans may be insufficient to cover the actual whole cost of your education. Sure, you can get loans to cover tuition, but what about books or a computer to handle schoolwork? If you're going back to school later in life, many traditional funding opportunities may not be open to you.

In these instances, taking out a personal loan to cover the extra costs of your education can be a life-saver. Instead of paying for those costs out of pocket or with a credit card, you can pay for them up front with a loan you can budget for going forward. Many parts of life as a student are unpredictable; it's nice to have one constant month-to-month. 

YOUR TURN: What would you do with a few extra thousand dollars? Would you fix up a car? Take a dream vacation? Cover an unexpected bill? Let us know how you'd use a personal loan!

Friday, February 17, 2017

Best Times to Buy 2017


When you're mulling over a major purchase, the right price can often tip the scales. If you're patient, willing to research and time your buys just right, you can save quite a bit of green. Here are the best things to buy during each month for the rest of the year
 
February: Prepare for winter
Now's a great time to take stock of your existing cold weather gear. If you've got a coat that's seen its final winter, now's a great time to replace it. Retailers are looking to clear out the last of the season's merchandise to make room for spring clothes, so you can snag a deal on thermal clothes. You can also find a bargain on heaters and humidifiers to make your house more comfortable.
March: Get in shape
If you're looking to reboot your New Year's weight loss resolution, March is a great time to pick up exercise equipment at a discount. Treadmills and ellipticals are past their peak buying time, so retailers are looking to get rid of them. Sports equipment, like golf clubs and athletic wear, are also facing deep discounts.
April: Tech out!
Japanese manufacturers' fiscal year ends in March, so they're typically ready to roll out new product lines. If you're OK with being a year behind the latest and greatest, you can pick up a fully functional digital camera, laptop computer or big-screen TV in April. Tax refund-themed sales may also make it cheaper to upgrade your technological goods.
May: Around the house
Now that the weather's getting nicer, many home improvement shops will begin running sales on tools and other supplies. It's also graduation time, which means dorm-stocking essentials will get some discounts. Check out basic pots, pans and cooking appliances in May.
June: Think thrifty
Everyone's gotten a chance to get their spring cleaning done. That means thrift stores are stuffed with donated second-hand goods. Be on the lookout for bargains of all sorts, but especially for used furniture and clothes.
July: School supplies
The end of July marks back-to-school time, which means this is the month retailers start to gear up for school shopping. Look for promotions, like tax-free days, if you're in the market for a computer or peripheral. Otherwise, you can stock up on pens, paper and other standard office essentials.
August: Beat the heat
If you've managed through the heat of the summer with a busted AC, August may provide some much-needed relief. Major appliance retailers are looking to shift their inventories from cooling to heating. Look for discounts on window AC units, dehumidifiers and other cool appliances.
September: Big-ticket
The new models of most major appliances start to roll out in October and November, making September an excellent time to grab last year's model. If you need a new dishwasher or refrigerator, try to hold out until September. Also, new Apple accessories, like iPads and iPhones, typically come out in November or December, so September can be a great chance to upgrade your device, too.
October: Cars and cruises
The new model year begins for cars toward the end of summer, so there are a lot of leftovers from the previous year that need to go. Dealers are desperate to move inventory, so you can get a good price on the current year's models. October is also a quiet season for cruise lines, so many of them run specials and sales during the month.
November: Game on
Christmas season is in high gear, and major retailers are competing for gamer bucks. Expect to see the best bundles with the hottest games for the lowest prices in November. Whether you're trying to surprise a gamer in your life or just get the newest games for yourself, November is the time to buy.
December: Cheers!
In a paradox of economics, champagne demand is very high, so the price goes down. Champagne companies are competing for the New Year's crowd. If you've got a major event coming up, like a wedding or anniversary, December can be a great time to stock up on bubbly.
Your Turn: What's your best deal-nabbing tip? How do you find the lowest prices for the best stuff? Share your bargain hunting wisdom with us in the comments!

Tuesday, February 14, 2017

On Valentine's Day, we take time to remember those we love.  But, this Valentine's Day, I'd like you to take some time to show yourself a little love.
There are many ways to do that - taking time for yourself, indulging in a little splurge, being with friends or family, or spending time on your favorite pastime. One way that you may not have considered is by securing your financial future.

Poor control over your finances can affect your emotional well-being.  A study by Quicken found that 52% of the American workforce lives in fear that they will not be able to retire by the age of 65. 33% lose sleep over their financial situation and 20% hide their debt out of embarrassment.

So, this Valentines Day, show yourself a little love by making a commitment to get your financial life under control.  Destinations offers many ways to help you find the financial solutions you need.

  • Free unlimited financial counseling is available by phone through our partnership with Accel.  
  • We can take a look at your loans from other financial institutions/dealerships and see if there is a way to lower your interest rate and/or payments.
  • You can save systematically through payroll deduction or automatic transfers from your accounts.
  • Use loan products designed to help you improve your credit, such as our Expressway to Success and Second Chance MasterCard.
The road to a secure financial future requires some time, commitment and may involve sacrificing some things now for security later.

Posted by:
Carol Szaroleta
Destinations Credit Union

Friday, February 10, 2017

Beware The Boom: Diversify Your Portfolio To Protect From The Bust



There's always a "next big thing" in investing. In the early 2000s, it was Enron. In 2008, it was real estate. Seeing outlandish returns from high-performing sectors can lead investors to chase the herd and pour most of their capital into a narrow segment of the economy. It hasn't worked out well in the past.
The most important protection you can provide for your portfolio is a diverse range of assets. While this seems straightforward, it can be difficult to put into practice. Let's look at four ways you can diversify your holdings that may not be so obvious.
1.) A whole-market fund
Among the most popular investments is the whole-market exchange traded fund. These securities represent, roughly, a share of the entirety of a particular index. Rather than picking individual securities, you invest in a mutual fund that balances its holdings to capture the performance of an entire listing, like the S&P 500 or the Dow Jones Industrial Index.
These funds tend to be insulated from the gains and losses of specific companies. After all, if one company in a sector goes down, there's more market share left over for its competitors. While that insulation doesn't allow investors to reap all the rewards of an outlier security that's performing well, it also protects investors from catastrophic loss of value. Think of it this way: The kind of economic disaster it would take to wipe out the 500 largest companies in the world would have much broader ramifications than your retirement portfolio, and even cash stuffed in your mattress would likely be worthless at that point.
Whole-market funds do well, historically, averaging around 6% growth a year. Some years will be up, and others down. However, over time, the trend line points upward. Whole-market funds are an easy way to diversify a portfolio.
2.) Diversify kinds of holdings
While a whole-market fund is a fairly diverse investment strategy, there are ways to balance the volatility of the stock market. Investing in a blend of asset classes, including bonds, provides security against the tumultuous nature of the stock market. Generally speaking, bonds are safer than stocks but offer less opportunity for growth. When stocks suffer, bonds tend to increase in value. So, holding a percentage of your assets in bonds will help protect you against the bumps in the stock market road.
What percentage of your assets should be in bonds is a difficult question to answer. It depends upon, among other factors, your age, how close you are to retirement, and your individual tolerance for risks. As a rough guideline, 100 minus your age is a good starting point. Your exact ratio will vary based upon your income and your estimated retirement age.
Like with stocks, it's safer to invest in funds that buy lots of little pieces of bonds than to buy individual bonds yourself. Individual bonds can lose value because investors doubt the ability of the investor to pay it off. Diversifying your bond holdings provides a maximum of security.
3.) Diversify your income
If you lost your job, how would it impact your retirement plans? Most lIkely, you'd have to postpone retirement for a few years, depending upon how quickly you could find new work in your industry. What if you lost your job because of an industry-wide contraction, though? It might hurt more than your present income.
This doesn't mean you should get a second job in an unrelated industry. Rather, be careful not to rely too much on stock in your employer's company. If your company experiences tough times, it might have to reduce staff AND its stock price would fall. If you're holding most of your assets in company stock, that could put you in a difficult position.
By all means, take advantage of matching funds and employee purchase plans. Be cautious when doing so, though, and be sure to keep your overall portfolio in line with your individual risk tolerance. You may like your employer, but that's no reason to trust a single company with everything.
4.) Diversify your accounts
Even the perfect blend of stocks and bonds is still very susceptible to the ups and downs of the market. Suppose you have a sudden need for the money you're saving for retirement. Perhaps you've experienced an emergency medical expense or other personal catastrophe. If all of your holdings are in an investment account, you might be forced to sell at a loss.
That's why saving in a variety of places is important. Invest in your retirement account, but don't neglect certificate accounts for mid- to long-term savings, and your share account for a rainy day fund. When your money is spread over a number of places, you can always have access to at least a portion of it when you need it.
Think of your savings like a garden. If you plant just one kind of seed, you're out of luck if it doesn't take. When you plant many different kinds of seeds, you have better chances to harvest fresh vegetables. The same is true of your investments. Putting your money in only one place is a risky strategy. Try to ensure all your bases are covered.
YOUR TURN: How do you protect your assets from the bumps and bruises of the economy? What diversification strategies do you use to keep yourself safe?

Wednesday, February 8, 2017

President Trump And The New Tax Code


Whatever your stance on our new president, he's certainly promised to shake things up. One of his major points on the campaign trail was an overhaul of the tax code. What will this look like for individual taxpayers? 

1.) Nothing this year 

If you're hoping to see changes to your tax burden this year, don't hold your breath. The taxes you're required to file before April are for 2016. That means the rules and regulations that govern them are already established. It's possible there may be some clarifications and minor modifications at the periphery of the tax code issued this year, but the bulk of the tax law for your upcoming return is pretty well set.

This includes the individual mandate of the Affordable Care Act (ACA). You will need to provide documentation of your health insurance for all 12 months of 2016, unless you're otherwise exempt from the mandate. Regardless of what the future holds for the ACA, it's the law of the land for 2016.

One of the issues to keep an eye on is the extension of tax deductions for mortgage insurance premiums. They were tax deductible for 2015, but Congress has not yet renewed the break for 2016. If you pay mortgage insurance, it's worth keeping an eye on what could be a significant change to your taxes. 

2.) Simplified brackets for 2017 

The tax code works by establishing a percentage of each threshold of money to be taxed. So, if you make $20,000 a year as a single person, under the current tax plan the first $9,750 is taxed at 10%, then the remaining $10,250 is taxed at 15%. Of course, thanks to deductions, it's slightly more complicated than that, but this is how the system works at its core. Trump plans to keep the basis of this system in place, but make significant revisions to it.

One of the pillars of the Trump tax plan is a reduction in the number of tax brackets. Under the current tax code, there are seven different tax rates for different income levels. Under the proposed Trump policy, there will be only three. For both couples and individuals with incomes over $415,000, this will reflect a significant reduction in their tax burden.

To make up for this loss of revenue, two brackets will see an increase. The first $9,750 ($18,550 for married couples) will be taxed at 12% instead of 10%, and amounts between $112,500 and $190,150 ($225,000 and $231,450 for married couples) will be taxed at 33% instead of 28%. This may result in a higher tax liability for middle-income Americans. 

3.) Deduction changes 

To make up for this greater tax liability, the Trump plan makes significant changes to the way deductions work. For starters, the standard deduction, the one most people take, will increase to $15,000 for individuals and $30,000 for couples filing jointly. That means that, for most people, the first $15,000 you earn will be tax-free.

For those who itemize their deductions, life gets a little more complicated. First, deductions are capped at $100,000, which may be a blow to small business owners with lots of deductible business expenses. Second, deductions will phase out for high income earners. If your income is over $261,000 as an individual ($313,800 for couples), you'll only be allowed to deduct a percentage of your itemized deductions from your income.

There's also no more "head of household" filing status, so individuals with more than two dependents will need to reconsider their filing status. Couples with more than two children will no longer be able to claim exemptions for them, but will be able to deduct a greater portion of their child care expenses from their income.

There are other parts of the Trump plan, including a repeal of the estate tax and an end to the so-called marriage penalty that affects high-income married couples. Of course, all of these changes will have to pass Congress before they take effect, and Speaker of the House Paul Ryan has other ideas about how to reform the tax code. It's likely that some, but not all, of these changes will be made for 2017, as the democratic process forces leaders to compromise for the greater good. Keep an eye on the goings-on in Washington as you file your taxes this year! 

Your Turn: Be king for a day. What changes do you want to see happen in the tax code? Let us know how to fix the system in the comments, and check out what other people are saying!

Sunday, February 5, 2017

How To Respond To 'Can You Hear Me?'


"Can you hear me now?" is the once-popular tagline of Verizon commercials, but it's also the headline of a new scam. Scammers making robocalls will ask some innocuous question. Once the targeted person says "yes," a recording is made of the response and it is used to sign up the target for unwanted, expensive services. It's a scheme that's been targeted at businesses before, but it has now shifted targeting to individual consumers across the country. 

Scheme variants

Robocallers have gotten increasingly sophisticated over the years. They're doing everything in their power to mimic real sales calls. A pleasant-sounding voice might ask an innocuous question, like "Can you hear me?" or "Are you a homeowner?" The objective is to get you to say "Yes." That's all the scammer needs.
The scammer may then send you an invoice for a service. They may also bill your phone number directly, or attempt to make a charge using your credit card. When you call to contest the charges, the scammer will use your recorded "yes" to intimidate you into paying.
Even if the scammer doesn't successfully bill you, your "yes" can still be hurtful. Answering the phone and talking demonstrates that your number is a viable target for telemarketing. The scammer may bundle your information with other victims and sell it to other potential scammers.
How to avoid it
The easiest way to avoid being a target in this scam is not to answer your phone if an unknown number calls. For many people, though, that's not an option. If you're job hunting, freelancing or even selling things on Craigslist, unknown numbers represent opportunities. Not answering your phone could mean missing out on the job of your dreams.
Until you can figure out if you're talking to a real person, it's best to avoid giving straightforward answers. If someone asks if you can hear them, say "I can hear you just fine." If they ask a personal question, ask them why they want to know. Both of these responses will throw a robocall or a call center employee off script, giving you an opportunity to see if it's a real person calling with a real opportunity or a scammer wasting your time.
It's also worth repeating that you should never give out personal information over the phone. Often, phone scammers will claim to be a representative of some government entity as an attempt to scare you into turning over your information. Don't believe them. Unless you initiate the call, government officials don't do business over the phone.
You can also register your number on the federal Do Not Call registry at www.donotcall.gov. That way, if scammers do call, you can report the number to the FTC. These complaints help the FTC to find and shut down people illegally using the phone system, and hopefully putting an end to these scams once and for all.
If you've been targeted...
There's no way for a scammer to use a recording of your voice to do any serious damage, according to researchers at snopes.com. It's more likely that the scammer will try to intimidate you into paying by claiming that the voice recording is authorization of charges. Know your rights: Unless you've given someone your payment information and explicitly authorized them to charge you, you're not responsible for paying those bills. Don't be intimidated into giving up payment information because of threatening language. These scammers can't actually do anything to you.
It's still a good idea to keep a careful eye on your account statements and phone bills, just in case. Most phone providers have what's called "bill-through" service, where third-party charges will be placed on your phone bill. It's how some apps work, but it's also how an alarming number of scams work.
Through a practice called "cramming," third parties can pile unauthorized charges on your phone bill. By keeping the charges small and the names innocuous, third parties can rack in millions across the country for services that consumers don't want and didn't agree to purchase. While illegal, it's still a widespread problem because voice authorization can make it more difficult to dispute the charges.
Make sure you understand exactly the purpose of each item on your phone bill. If there's anything you don't recognize, call your phone provider immediately. Disputing charges early is the best way to get them off your bill and keep that money in your pocket.
Your Turn: What's your best practice for identifying robocallers? Share your tips and tricks in the comments!