Friday, May 29, 2015


4 Home Improvement Projects With High Long-Term Return


 

When you're making improvements to your home, you're not just making your life better in the short term. You're also making an investment in your future. Ideally,  the increase in the value of your home will exceed the cost of the improvement.

 

However, it seldom works out like that. The most efficient home improvements don't pay for themselves immediately. The first item on this list has an ROI of 98%. That means you get back 98% of the money you put into it. To look at it another way, you lose 2% of your initial investment.

 

It takes years for the appreciation in your home to recoup the expense of an improvement. If you're looking for an investment, putting your money in a share certificate or other long-term investment option will net you more. When you're making home improvements, though, you're looking for ways to improve your quality of life while being as thrifty as possible.

 

Calculating ROI can be difficult because the data is based on national averages. For instance, in drought-afflicted parts of the country, water-efficient fixtures, rainwater collection facilities and low-water landscaping will pay long-term dividends. In places with lots of solar exposure and high utility costs, solar panels will make your home more cost-efficient and attractive to buyers. No one will pay more for a well air-conditioned house in Alaska! Keeping that in mind, finding out what works for your market therefore depends a lot on trends and local conditions.

 

There is some good news if you're looking for more universal approaches for getting the best increase in value for your home improvement dollar. There are a few simple rules to follow. Seek relatively low-cost improvements that require little to no maintenance. They should immediately distinguish your house from similar homes and, ideally, they also improve the energy efficiency of your home.

 

Here are four home remodel projects that can improve the resale value of your home. They're excellent uses for your home equity line of credit (HELOC) and you may be able to save money by doing part or all of them yourself! By the way, consult your tax advisor to determine if those improvements apply for tax deductions.

 

1.) Replace the front door

 

There's an old adage in real estate that suggests the features get tours, but the front porch gets sales. People make decisions on home-buying all the time by starting with a gut reaction and finding reasons to support it later.

 

Why not start your home remodeling project with the first thing you interact with on your house: the front door. Upgrading an old, poorly-fitting front door with a newer energy-efficient model is a cheap, quick project that can instantly improve your home's efficiency and aesthetic appeal. Best of all, hanging a door can be done in an afternoon!

 

With an average price of just over $1,200, including labor, an energy-efficient front door has an ROI of 98%! It's also a chance to be creative. A new front door can add a splash of color and window placements can break up a monotonous front profile.

 

2.) Minor kitchen remodels

 

Replacing major appliances and installing new flooring is a difficult, time-consuming, and expensive task. Being without a kitchen for weeks on end can be a nightmare and the number of professionals needed to install new lighting and other features is mind-boggling. The national average for spending here is $57,000, and the ROI for major kitchen remodeling isn't great, at only 68%.

 

Minor kitchen upgrades, like new cabinets, counter-tops, and energy-efficient cook-tops, are comparatively inexpensive. The average spend here is just under $20,000 with an estimated return on investment at an impressive 80%. Just like with the front door, the changes are mostly aesthetic. People perceive a more modern-looking kitchen as being a better fit than a more "retro" look.

 

This is also a chance to customize a place where you spend a remarkable amount of time. Having a kitchen laid out just the way you like it can make it easier and more enjoyable to cook. This will encourage you to eat more meals in, and energy-efficient appliances can lower your electric bills for the life of the home.

 

3.) Wooden decks

 

Outdoor space is one of the hallmarks of the current iteration of the American dream. Where else can a family sit and enjoy a frosty lemonade on a hot summer day? Watch the kids play in the yard while tending the grill on a beautiful wooden deck!

 

Wooden deck additions were unpopular for years, as consumers see them as luxuries. During a recession, remodeling dollars tend to focus on needs, like kitchen and bedroom updates. Now that the economy is improving, more people are looking at decks as valuable extensions for their living space.

 

The average cost, based upon a 16 foot by 20 foot wooden deck, is $10,000. The average return on investment is just over 80%. This is because of the perception of expanded living space at a reasonable price. Adding a deck costs about $35 per square foot, while a square foot of inside space costs an average of $85! Decks are a great way to increase the play space for a modest cost.

 

Bear in mind that just like the air conditioning in Alaska, a deck in a climate where the climate in inhospitable outdoors for much of the year will not have as much value as one in more temperate climes.

 

4.) Convert an attic space into a bedroom

 

For most houses, the attic is an afterthought. It's a place where unused craft projects and abandoned hobbies go to die. Consider turning that dead space into living space with a remodeling project!

 

Turning an existing attic space into a spare bedroom or office, complete with its own bathroom, can be done for a slightly steeper price. Nationally, the average cost is just over $50,000. That includes constructing a room, extending utilities to it and adjusting the exterior of the house to accommodate the new space.

 

This remodel provides a 77% return on investment in resale value, with the potential for more. If you have adult children or relatives visiting from out of town, an attic room can be a wonderful guest room. You could also rent it out for additional income!

 

Tuesday, May 26, 2015

Property Taxes    

Q: Help! We just paid off our IRS tax bill and it wiped out our savings. Now, we got a letter from the county saying our property taxes are due! Is there anything we can do to save money on this bill?

A: Around this time of year, it seems like we get taxed coming and going. We get a bill for our income, then another for our house, then another for our car! There’s no end! In reality, these taxes are being levied by different levels of government and property taxes play an important part in funding schools, public transportation and other important civic goods.
That said, there’s no reason not to try minimizing your liability. If you can pay less, you should. The amount of your property taxes is determined by the value of your home, as determined by an assessor. The assessor looks at nearby houses, as well as improvements and features of your home, to determine what your property is worth.

Since assessments are scheduled affairs, you’ll have a chance to prepare yourself before your house is assessed. If you want to cut your property tax bill, try these four tricks:

1.) Follow the assessor
You don’t have to allow an assessor access to your home, but it’s always a good idea. If they don’t see the inside of the home, assessors usually make the least charitable assumptions. They’ll assume you have the newest possible appliances and fixtures in your home. You should let them in and follow them around your house.

While you’re doing so, be sure they take note of any flaws, damage or needed repairs. These can reduce the assessed value of your house. If you’re not there pointing those out, they may never see them. They’ll focus on the wonderful parts of your house and make the assessment based on that.
Additionally, following around the assessor and talking to him may encourage him to hurry the inspection. The assessor may miss new fixtures or overlook value-adding features of your house. By following them, you subconsciously rush them. This can also set you up well for an appeal (but more on that later).

2.) Check for breaks
Many localities have complicated property tax laws. They may allow for a standard deduction from your property tax bill. This is a portion of the value of your home that you’re not responsible for in terms of taxes.

Other localities may offer specific tax benefits to seniors, veterans, and people with disabilities. Breaks may also be available for renewable energy projects, energy efficient appliances and features, and other green improvements. Because these breaks vary by region, they’re usually not well-publicized. You may have to do some research to find out more.

3.) Limit your curb appeal
If you’re not selling your house soon, you may want to hold off on landscaping until after the assessment. Assessors are just as influenced by first impressions and aesthetics as everyone else. A beautiful front yard sets the tone for an expensive house. That’s exactly what you want for a potential buyer, but the opposite of what you want to show an assessor.

You shouldn’t try to wreck your yard or do anything to compromise the value of your property. Such tactics will likely draw the attention of nosy neighbors and others who might consider your tasteless display a violation of zoning laws. Instead, just try holding off on major exterior improvements.
Minor tricks, like opening windows on one half of the facade to mess with the symmetry, can be effective in marring the assessor’s impression of the house. You might also hold off on resealing driveways and cleaning vinyl siding until after the assessment. These little tricks can nudge your property value down a bit.

4.) Appeal your assessment
If you’re really unhappy with your tax bill, you can appeal the decision of the assessor. To do this, you’ll need to research quite a bit. Finding your property card at the county courthouse is the first step.

Your property card lists details about your home, like square footage, number of bathrooms and so on. Identifying errors on this card can be an easy way to set up your appeal. You can also find out how quickly your property is appreciating in value, according to the assessor’s opinions. This will allow you to compare how quickly your property is increasing in value compared to others in your area.

You’ll also want to research comparable sales in your area. Find houses of similar size that have sold in the last year, and find the home value assessed to your neighbors. Property cards are public records, and in many areas are available online. This information can help you make the claim that the assessor has unfairly valued your home.

To start your appeal, you’ll likely need to visit the county courthouse and speak with a records clerk. They can direct you to the necessary forms. Be sure you’ve made copies of all supporting evidence and prepare your argument in advance. The first step will likely be an informal appeal, where you speak with a representative from the assessor’s office. If that fails, there are several other appeal levels available.

Property taxes can be a pain, but they’re one of the costs of home ownership. Know that you’re protecting the value of your home by investing in good schools and safe streets. Best of luck with the tax man!

Friday, May 22, 2015

Finding The Perfect Financial Advisor In 5 Easy Steps


 

Navigating the world of investing is incredibly difficult. It can be dangerous and confusing. Bad information and deceptive practices are everywhere. The only way to get through it is with the advice of a trusted advisor.

A good financial advisor will earn her fees a million times over, but a bad one can charge you for the privilege of squandering your money. How can you tell the difference? These five factors can help you sort out the good from the bad in terms of financial advice.

1.) Firm size
It’s always tempting to rely on advertising to identify providers of potential services. This approach tends to land you the service providers who have the most to spend, who usually turn out to be the biggest. Sometimes, that’s OK. When you’re choosing a financial advisor, though, that’s not the best approach.

Big-time financial advisors are trying to get as many clients as possible, usually because they have a one-size-fits-all approach to investing. They may offer a limited range of strategies to meet most retirement needs. This approach can create two problems.

First, there are unique aspects to everyone’s financial situation. If you have a separate pension, you might be able to pursue a more aggressive investment strategy. If you have a special needs child who will require significant care, you might need to be more conservative. These are not aspects of your life a big financial advisor firm is likely to consider carefully.

Second, your financial situation may change dramatically. A sudden windfall or an unexpected pregnancy can necessitate a change in strategy. In those instances, you don’t want to be fighting for attention with a hundred other clients. You want a financial advisor who can spend time with you, assessing your individual needs and making recommendations tailored to your life. You can only find that at a small-to-mid sized institution.

2.) Find the right certifications
There’s a veritable alphabet soup of qualified financial experts. Between CPAs, ChFCs and CFPs, there’s a world of difference in licensing and experience required. Which one you should look for depends on what you need.

If you’re looking for someone to advise every aspect of your financial life, you should look for a Certified Financial Planner (CFP). This certification requires years of training and a board-standardized exam on the ins and outs of the financial world. The slightly easier to obtain Chartered Financial Consultant (ChFC) license uses the same curriculum, but does not require an exam.
If you’re just looking for investment help, you should look for a Registered Investment Advisor (RIA). Because these professionals provide financial advice and charge fees for it, they are held to the highest ethical standards. These are the experts of choice for most people who need retirement assistance.

If it’s tax help you need, a Certified Public Accountant (CPA) is the person to consult. They can help you minimize your tax exposure. Unless you have a very high income or a small business, hiring a CPA may be overkill.

3.) Watch their payment method
Years of thrifty living may have turned you off the word “fee.” In most contexts, it’s a dirty word, a sign that you’re going to be charged money for something. In the context of a financial planner, though, “fee” is an important word.

There are three kinds of financial planner payment structures. There are no-fee advisors who get paid a commission for each transaction they complete on your behalf. There are fee-based advisors who charge a fee but also get paid through other means. Then there are fee-only advisors who are exclusively paid from the fees they charge to clients.

While a fee-only advisor sounds expensive, it may be your best option. Other fee structures many involve a bonus paid to the advisor for selling particular kinds of products. They may have a financial incentive to recommend services that are not in your best interest. This can put your needs behind those of the advisor, which is never a position you want with someone managing your money.

4.) See how they talk to you
In an initial meeting, a good financial advisor will do much more asking than telling. They’ll want to know everything about your situation. Do you have debt? Have you started saving? When do you want to retire? These questions help to shape a retirement strategy around your needs.

If they instead start talking about products first, watch out. That could be a sign of an advisor who is more interested in selling high-commission products than in serving your financial needs. If they’re trying to sell you something besides their own advice, it’s probably a bum deal.

5.) See what process they use
Some financial advisors will want to ask you questions and use your answers to formulate a plan. They’ll expect you to defer to their expertise about the quality of this plan. You can refuse to t
ake their advice, but they don’t really want you to intervene too heavily in these decisions.

Other advisors will want to present you with a range of options and involve you in a collaborative process about your financial future. You’ll retain ultimate authority over decision-making. This kind of advisor can be preferable if you’re interested in actively managing some or all of your investments.
Which style of advisor you prefer is largely a matter of personal preference. To get an idea of what style a potential advisor is using, don’t be afraid to ask for references. Talk to current customers about what they like and don’t like about the advice they’re getting. This is a great way to get a feel for the kind of advice you’re going to get.

Tuesday, May 12, 2015

Mobile Banking – 4 Ways To Stay On Top Of Your Finances While On The Go


Most people have a checklist they go through before they leave the house. Is the stove turned off? Are the doors locked? Do I have my wallet, my keys and my cellphone? The only thing that has changed about that process in the last few years has been the addition of that last item on the list.
Today, 91% of Americans have cellphones and 61% of them have smartphones. This is a remarkable change from even two years ago. More than half of the people you see every day are carrying a computer that dwarfs the most powerful computing technology that was available a decade ago. It’s also connected to all of the world’s information, literally at our fingertips. What do we use it for? Drawing moustaches on our selfies and tossing wingless birds at shoddily made pig housing.
If you’d like to use your smartphone for more sophisticated purposes, plus add a ton of convenience and peace of mind to your life, consider mobile banking. With a couple of taps, you can access a whole suite of financial information. Let’s look at four scenarios where mobile banking can save you some time … and even some money.

1.) Say goodbye to security woes
Despite all of the data breaches that have been in the public eye over the past few years, no one has figured out how to compromise mobile devices as a platform. Security leaks have affected PCs, Macs and point of sale terminals, but no widespread security vulnerability has compromised mobile banking. Despite the fear, mobile banking is actually a fundamentally secure platform.

The first reason for this is the plurality of platforms. You and your neighbor may not be able to share cellphone chargers, much less apps or other experiences. This diversity makes it difficult for a single vulnerability to affect many users. Since there’s less possibility of large scale attacks, hackers have very little incentive to dedicate time toward trying to compromise mobile platforms.

The second reason for this is the tight control placed on mobile devices. Because these devices have to send regular usage information back to your mobile provider, they tend to be far less prone to modification. There’s just not as much you can do to an iPhone or an Android as you can to a PC. While some users might override those protections, such modifications are not widespread enough to justify attempted infiltration.

Mobile banking is secure and safe. Data transmitted from your cellphone to your provider is heavily encrypted. If you lose your phone, it can be remotely deactivated and passwords usually aren’t stored on the device.

2.) You can check your balance any time
Rather than waiting for your statement every month or booting up that slow PC for checking your account balances online, you can view transactions while waiting for a bus or in line at a restaurant. You can stay vigilant against illegal account access any time you’ve got your phone and a spare few seconds.
The convenience of mobile banking can also keep you from making costly mistakes. If you know funds may be running tight, check your account balance while in the checkout line to make sure you can cover the cost of your purchases. You can see if your monthly rent check has been withdrawn from your account to avoid the costly fees associated with overdrafting. It’s easier than ever to keep track of your finances.
You can also help to pr
event errors with mobile banking. Accidental overpayment, duplicate payments and other errors are a regrettable reality of the modern high-speed economy. By regularly checking your account statement, you can catch these pesky problems before they turn into big issues.

3.) It’s where you’ll find the next big thing
Mobile payments and mobile check depositing are becoming more widely available and are already being used in many places. As technology gets better, these functions will become cheaper, faster and even more widespread. Getting involved in mobile banking on the ground floor will help you stay up to speed with this rapidly evolving world.

Imagine getting turn-by-turn walking directions to your nearest ATM. You could get alerts when new houses are listed for sale along your daily commute. You might pay for your breakfast by signing a receipt on your phone.  These and other changes are coming and they are only the beginning. If mobile banking doesn’t do something you need, wait six months. Someone will probably find an app for that.

4.) 24-hour-a-day instant access
Do you ever wake up in the middle of the night in a panic because you can’t remember if you paid your electric bill? Ever have a tiny freakout on the bus because you suspect someone may have accessed your account? Are money worries preventing you from enjoying your vacation? If you have these concerns and are nowhere near your computer, you could just suffer through them.
As an alternative, though, you could use a mobile app to check your balance and transaction history. See if your monthly bills have cleared. Make sure your balance is safe. You can do all of this any time you’ve got your phone, day or night.

Mobile banking won’t replace traditional, face-to-face interaction. There will always be a place in the credit union service standards for the human interaction. What mobile banking apps offer is a wonderful supplement to those high-quality services. Space-age convenience, top-level security, and blissful peace of mind are all available from your pocket, anywhere in the world.

Monday, May 11, 2015


Financial Self Defense 

Four Steps To Checking Your Credit Report

 

If there were a song about keeping yourself safe from financial scams, the refrain to that song would be "Check your credit report!" But practically speaking, what does that mean? How can that one piece of advice keep you safe from so much?

 

Though it sounds like an advanced financial maneuver, checking your credit report is easier than balancing your checkbook. All you have to do is get it, read it, report errors and stay on it. Let's look at each step in detail:

 
1.) Get your credit report
 
There are three different credit reporting agencies: Equifax, TransUnion, and Experian. They share data, but each makes its own report. You're entitled to one free report from each agency every year. If you know you've got a major purchase, like a car or house, coming up in the next year, you'll want to check all three bureaus before you start shopping. This way, you can catch inaccuracies before lenders see your information and score. Otherwise, it makes sense to stagger them and view one report every four months. This puts the shortest amount of time between checks.

You can get your credit report for free at annualcreditreport.com. This is the only website approved by the Federal Trade Commission (FTC) for this purpose. Take care to avoid "imposter" websites operated by scammers. They may use similar-sounding website names or common misspellings in an attempt to trick you and get your personal information.

 
There are other situations under which you can get a free copy of your credit report. If you are denied credit, you can request a copy of the information that was used to make that determination provided you do so within 60 days. If you have been the victim of certain kinds of fraud, the service will also provide you with a free copy of your credit report in order to help you make it right. These checks will never hurt your credit score.

 
If you've requested your report online, it should be available immediately. You may need to answer a few questions to verify your identity. The service may ask if you shared an address with anyone else or about previous streets you've lived on. Once you answer these questions, you'll get your credit report.

 2.) Go over your report
 
With your credit report now in your hands, it's time to look it over. There are three things you'll want to look for. You want to find accounts that are open in your name and you want to see if there's any collection activity. You'll also want to take a look at the number and frequency of inquiries.

There are slight differences in the three reports, but each has a list of accounts. They may be broken down by type (mortgage, installment, revolving, and other) or listed by date. You'll want to look through each one to make sure you recognize them. This can be a tricky task, as every store credit card you open and every installment loan you make is listed. If there are any accounts you don't recognize, you'll want to make a note of them and potentially contact the credit reporting agency. Look particularly for accounts going to PO Boxes or listed with addresses in other states.

"Negative items" include bankruptcies, accounts in collection or accounts reporting as past due. Such activity is another good place to check for fraud. If someone else opened an account in your name, they likely won't be paying the bills. You'll also want to look for inaccuracies that may be hurting your credit score. If there's an account listed here that was discharged in bankruptcy, for example, you'll want to make note of that, too.

The list of inquiries shows you the number of times someone has checked your credit. No one can do this without your permission, so if there are more inquiries than you remember, it could be a sign someone has stolen your identity. It might be worthwhile to put a freeze on an ability to open new accounts until you've gotten everything resolved.

 
3.) Report inaccuracies

Each reporting agency maintains a separate error reporting process, so you'll have to report each error to the agency that made it. For basic errors, like address, name, or personal information, the agency can make those corrections with minimal trouble. For more serious errors, you'll need to send a dispute letter.

 
The FTC has a template for a dispute letter available on its website. You can use that or you can draft your own. Either way, you'll need to clearly identify the accounts or items you're disputing. Where possible, use partial account numbers or other numerical information. You'll also need to explain why you consider the item an error. Attach copies, but not originals, of documents that support your claim. Examples include police reports for stolen or lost wallets, bankruptcy orders that discharged a debt or letters from a lender indicating that an account was opened fraudulently.
 
Send your letter via certified mail. This costs a little more than a stamp, but you'll get proof of receipt. This is important because the agency has 30 days to make a determination about your dispute. They'll send your dispute to the information provider (the company that told the agency about the account or negative item).

 
If the reporting agency finds your claim to be correct, you can request that they send copies of the updated report to anyone who received your credit report in the last six months, and to any employer who pulled your credit report over the last two years. They're also required to send you an updated copy with any new information in it.

 
4.) Stay on it

 Checking your credit report periodically is the only way to keep yourself safe from identity theft and other modern crimes. If you need assistance, CORE Credit Union is here to help. [Our credit monitoring services will keep a vigilant watch on your credit history to check for new accounts and other suspicious activity. Call, click, or stop by CORE Credit Union today to find out how we can make your life easier!

Friday, May 8, 2015

IRAs: Maximizing tax deductions with proper planning


What is an IRA?
An IRA (Individual Retirement Account) is a trust or custodial account with which the taxpayer directs income toward investments that can grow tax-deferred. There are various kinds of IRAs, including the traditional IRA, the Roth IRA, SIMPLE IRA and SEP IRA. Contributions to the traditional IRA may be tax-deductible depending upon the taxpayer’s income, tax-filing status and other factors. Withdrawals from the IRA at retirement are taxed as income.

What is a Roth IRA?
The Roth IRA is named after Sen. William V. Roth, Jr.  It was introduced as part of the Taxpayer Relief Act of 1997. It is structured so the assets in the Roth IRA become after-tax assets, which may create tax-free retirement income for you and maybe for your beneficiaries.  All transactions within the IRA have no tax impact, and withdrawals are usually tax-free.

 What are the guidelines for IRA contributions?
An IRA can only be funded with cash or cash equivalents. It is prohibited to attempt to transfer any other type of asset into the IRA. Doing so will disqualify the taxpayer from any beneficial tax treatment. Rollovers, transfers, and conversions between IRAs and other retirement arrangements can include any asset.

 Are there limits for IRA contributions?
IRA contribution tax deductions are based upon your income and your eligibility to participate in a workplace retirement plan. Your total contributions to either a traditional IRA or Roth IRA cannot exceed the lesser of your earned income for the year or the annual maximum amount. The maximum IRA contribution limit varies by year.

For 2014, the maximum for an IRA contribution is $5,500 for those under age 50, and $6,500 for those over age 50. In the year 2015, the limits for IRA contributions are the same.

You also must be under age 70 1/2 to contribute to a traditional IRA. (Roth IRAs, by contrast, have no age restrictions.)

How do I calculate my earned income requirements?
Only people who have earned income can contribute to an IRA. Earned income consists of wages as reported on a W-2, tips, self-employment income from a business or farm, and alimony. Other taxable but unearned income, such as dividends and interest income, do not count toward this eligibility requirement.

When is the deadline for contributing to my IRA?
The cut-off date for contributing to a traditional IRA and potentially receiving a tax deduction is not until the filing deadline of your tax return. Typically, that means you have until April 15 of the year following the year in which you will receive a tax deduction. Contributions to IRAs can be considered retroactive to the previous tax year.

Where do I claim my tax deduction?
You can report your tax-deductible IRA contribution directly on Form 1040 or Form 1040A. You don’t need to itemize to report this deduction.

My funds are currently in my employer’s 401 (k) plan. Will it cost me to transfer funds to my IRA?
With a direct rollover from an employer-sponsored plan to your IRA, the distribution check is payable directly to your new trustee or custodian.  This will help you to avoid mandatory tax withholding.

When can I withdraw funds from my IRA?
Although money can be distributed from an IRA at any time, there may be penalties for withdrawing funds under certain circumstances. Once the owner reaches age 59 ½, the money can typically be withdrawn from the IRA penalty-free as taxable income.

Traditional IRA owners must begin taking distributions of at least the calculated minimum amounts by April 1 of the year after reaching age 70 ½, or they will incur penalties. 

Thursday, May 7, 2015

Zombie Debt- What It Is And How To Fight It


 
Q: My spouse and I filed for bankruptcy several years ago, hoping to start fresh. We’ve been living within our means and haven’t had so much as a late payment. Yet, when we applied for a home equity loan, we got turned down! The financier said our debt utilization ratio was too high, but we haven’t even opened a credit card since the bankruptcy! What gives?

A: You’re the victim of “zombie debt.” Just like in the movies, your debt has risen from the grave, and can be remarkably hard to shed. You don’t need to bunker up with a lifetime supply of canned goods, but you do need to take steps to protect yourself. Let’s take a look at what zombie debt means and what you can do to protect yourself.

Collecting debts is a fairly expensive process. Companies have to pay for personnel, phone lines, electricity and space for debt collectors to work. In most cases, debt collections are resolved simply and quickly. If it takes more than a few months, companies are likely to “charge off” the debt. These debts still have value and are bought by debt scavengers for pennies on the dollar.

Because they bought the debt so cheaply, scavengers can profit by getting people to pay small quantities over time. Their biggest hassle is getting the debtor’s attention. To do so, they’ve got a number of tools at their disposal. They can send threatening letters or make intimidating phone calls, or, worst of all, put the debt on your credit report.

If you moved or changed your phone number after your bankruptcy, the first time you hear about the collection effort may well be when you are turned down for a loan. If this happens, there are steps you may need to take to clear up your credit. You can fix this problem by following these 3 simple steps.

1.) Validate the debt

Your credit report will have the name of the agency that holds the debt. You need to write that firm a letter requesting that they show proof of the debt and their legal authority to collect it. Such a letter should also insist that they only contact you in writing. You have this authority under the Fair Debt Collection Practice Act.

The act also provides that agencies which don’t validate the debt remove it from your report within 30 days. Sending the validation letter starts this process. That’s why it’s important to send the letter via certified mail. This creates a firm paper trail that shows when the letter was received.

If you are contacted by phone, provide the caller with no confirmation or information. Request the address of the company that holds the debt and tell them to expect a certified letter of validation. If you receive any letters from the company, keep and record the date you received them.

2,) Determine if the debt is legitimate

Even if the company responds to the validation request, you may not be responsible for the debt. The statute of limitations on the debt may have expired. The debt may have been discharged in bankruptcy, but the creditor may not have been notified of that disclosure.

The statute of limitations varies by state and by type of debt, but is usually no more than 6 years. After that time, you are under no obligation to pay the debt. This time period starts when the last “activity” occurs on the debt. This is why collection agents will try to get you to make a payment of any kind. This restarts that time limit and increases the likelihood that the full debt will be collected.
If you’ve filed bankruptcy, your creditor may have sold the debt prior to the issuance of the order. The new owner of the debt may not have been notified of your bankruptcy. In this instance, getting a copy of the decree and sending it to the creditor will be enough to get the debt cleared from your report.

3.) Dispute your credit report

If the debt still appears after you’ve followed these steps, your credit report is truly in error. You can start a formal dispute process to have the information removed from your report. You can start it online, by mail or over the phone. Be sure to note in your three-bureau credit report which reporting agency has recorded the information in error. If the error exists on multiple reports, file a dispute with each of them independently.

Equifax, Transunion and Experian have similar dispute resolution processes. Each will want to know what information is inaccurate. Include any proof you may have to expedite the process. They are required by federal law to decide your case within 30 days, but the deadline extends to 45 days if additional proof is required after your complaint.

Once the firms remove your request, the debt can finally be put back into the ground, where it belongs. Killing “zombie” debt is difficult, but it can be done. Keep calm, keep documenting and keep improving your credit.

Wednesday, May 6, 2015

Social Security Changes: What You Need To Know

 
About 46 million retired people and their dependents receive Social Security, and the average benefit is around $1,300. If you’re reading this, odds are good you either know someone who gets this benefit or are someone who does. What you may not know is that this benefit may be subject to change this year.
Most experts agree that the Social Security program is in long-term trouble. By 2033, the program will only be able to fund about 75% of its current obligations. By 2083, that level drops to 72%. With these breakdowns in funding looming, changes had to happen. Imagine a current retiree on a fixed income being asked to give up 23% of her monthly check. That would mean poverty and destitution for millions of elderly people.

Significant overhauls of the program are coming but involve a lot of complicated political maneuvering. In legislative circles, Social Security is known as the “third rail.” In subway language, the third rail is the one in the middle that carries all the electricity. If you touch it, you die.
In the mean time, a variety of smaller reforms have been implemented, designed to ensure the short-term survival of the program. In 2015, there are three significant changes to Social Security benefits. Note that most of these changes only apply to future beneficiaries and current recipients will continue to receive a benefit similar to the one they’re currently receiving.

If you’re worried about how your chances of collecting change, take a look at these three upcoming changes:

1.) Mail-in benefit statements
If your age ends in “5” or “0” in 2015, expect a letter from the Social Security Administration this year. The statement will explain how much you’ve paid in and what kind of benefit you can expect to receive. The benefit will be estimated based upon several retirement age options, starting with age 65.
The administration suspended mailed statements last year, but restored them for 2015 to allay fears about the short-term survivability of the program. Obviously, the numbers listed in the statement are estimates, but they should provide a helpful guide for those approaching retirement. They expect to send out 48 million statements in 2015.

If you’re already receiving Social Security, you’ll receive an annual statement unless you’ve already opted to receive online-only statements. That recipient statement will include the cost of living adjustment for the year, the monthly benefit and any survivor benefit your spouse will receive.

2.) Higher Social Security taxes

One of the biggest problems facing Social Security as a program is a shortage of revenue. The way income is taxed for the program is riddled with exceptions and exemptions. The Social Security Administration can’t encourage people to die sooner, but it can collect more revenue to make up for longer life spans.

Previously, employees were taxed on the first $117,000 of income. This year, that amount will be $118,500. To make up for the slightly increased ceiling, the maximum benefit will also increase. For people who wait until age 66 to take Social Security, there will be no maximum to their benefits. Also new this year, people who wait until 66 will receive an additional return on benefits they deferred during their 65th year.

3.) Windfall Elimination Provision

The biggest change facing Social Security is the attempt to correct “double pensioners.” People who work government jobs (as well as some kinds of non-government jobs whose salaries are carefully regulated) are enrolled in separate retirement programs outside Social Security. These individuals did not have FICA (the tax that pays for Social Security) deducted from their paycheck. They instead paid into a different retirement system.

Previously, such employees received the same spousal benefits as those who paid into Social Security. They also received additional Social Security benefits if they held a FICA-paying position at another time in their lives. This windfall elimination is the subject of a 1985 regulation that takes effect this year.

This change doesn’t affect members of the Armed Forces, whose checks have included FICA deductions since 1957. It also doesn’t affect state or federal employees who have FICA deductions from their paychecks. If you’re unsure, check your paycheck stub for a line labeled “FICA taxes.”
Those who didn’t pay in will have their direct benefits reduced by a proportion of their government pension. They will also have any spousal or widower benefits they would have received reduced by a similar amount. These so-called “double-dipping” eliminations will save Social Security $3.4 billion, helping to ensure the program’s longevity.

If you’re concerned about the availability of Social Security for your retirement, it’s never too late to take control of it yourself. Many savings vehicles are available, from savings accounts and certificates to IRAs. To find out what options work best for you, call, click, or stop by CORE Credit Union today. Our representatives can walk you through all the options and help you get to the retirement of your dreams.
 

Tuesday, May 5, 2015


Four Ways To Repay Your Student Loans With Help From CORE Credit Union!

 

Graduation day seemed like it would never come. As a freshman, you saw seniors swaggering about like they owned the place. Then, just a few short years later, there you are. You've crammed for your last final, written your last paper and said tearful goodbyes to your friends. For many graduating seniors, though, leaving college isn't "real" for quite some time.

For many college students, the reality of moving on from college doesn't set in when they throw a mortarboard. It comes a few months later, when they get their first billing statement for their student loans. Seeing a balance of $30,000 can make the gravity of adult life hit home in a very real way.

It's easy to put making the minimum payment on auto-pilot and to treat your student loan bill like your cellphone bill or rent payment. It gets sorted into the pile of bills to pay and never gets a second thought. However, you might be leaving money on the table by using the loan company's bill pay service.

CORE Credit Union can help you pay back your loan in more ways than you might realize, and save you money in the process. Here are four convenient ways you can pay for your education and get greater flexibility. You might be able to get some extra rewards out of the deal, too!

1.) A savings account for college students

You can't start paying off your student loans while you're in college. But that doesn't mean you have to sit and wait to get buried under an avalanche of debt. You can take proactive steps while you're in school to make your life easier.

Your student work or part-time job might not make a dent in astronomical tuition costs, but it can still help you get out of debt faster. Setting up automatic savings account transfers will force you to put away a little bit each month. You can use that once you're out of school to make a big first payment. It'll really take the sting out of the debt load.

 
Make sure to put this money into an account you won't be tempted to use for other things. The $100 or $200 you put away every month could rapidly disappear through dinners out and concert tickets. Automating savings is a way to keep yourself disciplined and on target.


2.) Automatic bill pay
 
Your student loan provider is a business, and they're out to make money. All aspects of their operations, from the materials they send you when you start borrowing to the bills they send you each month, are marketing materials. They're designed to maximize profit. For lenders, that means keeping you paying the minimum amount for as long as possible.

That's why their bills make it as easy as possible to pay the minimum and require extra work to pay more than that. They want you to pay the "amount due" every month. It's more profitable for them that way.

You can get the advantage back by setting up automatic bill pay. When you do, you can designate an amount of your choosing to be paid to the lender every month. You can pay your bill back at your own pace and save some money on overall interest while you're at it! As a bonus, you can often get around nuisances like "technology fees" with automatic bill payment.

 3.) Pay with a CORE Credit Union credit card

One of the benefits of a student loan is the bump you get on your credit score by paying it regularly. Lenders see your management of student loan debt as evidence of responsible borrowing, making them more likely to trust you in the future. If you want to maximize the benefit to your credit score, you can use a credit card from CORE Credit Union to make your student loan payments.

This advice deserves some qualification. Many lenders don't accept credit card payments, and many others charge handling fees. A 1% transaction fee for using a credit card should be seen as a 1% increase in interest. Also, credit cards can be an easy way to get into trouble. Don't use them if you don't have an emergency fund to fall back on. Credit card interest rates are frequently much higher than student loan interest rates and missing a credit card payment is just as detrimental as missing a student loan payment!

 Still, if you're careful about it, you can build your credit score twice for the same loan. Both your student loan and your credit card will show as paid each month, which will make you look twice as responsible for paying one bill. You might even be able to earn a few rewards points as icing on the cake.

 4.) Consolidate and refinance

 College is about the journey, not the destination. If your journey was a longer one than usual, you may have debt from several places. You may have used your credit card to finance your living expenses or taken out unsubsidized loans from private lenders. These variable interest rate loans can really hurt you financially.

It might be time to consider refinancing. You can take a personal loan for all your outstanding debt and consolidate it into one monthly payment. You can lower your interest rate and simplify your financial life at the same time.

This process can also include one-on-one time with a trained financial professional at CORE Credit Union. You can gain advice on budgeting and make a roadmap to a truly debt-free future. To see if consolidation is right for you, call, click, or stop by CORE Credit Union today!

Monday, May 4, 2015

How common — and how dangerous — is living hand-to-mouth?

 
            If the news describes someone as living paycheck to paycheck, you might have a pretty good idea of what their life looks like. You might imagine them struggling to get by just to cover all of their bills. You might picture them as constantly juggling those bills and relying on revolving credit card debt. Yet, a new report out of Princeton University suggests that this may not be an accurate vision of this group of people.

            The report describes the habits of a group it calls the “wealthy hand-to-mouth.” 25 million of the 38 million Americans who live hand-to-mouth, that’s a staggering 65 percent, have a median income of $41,000, which is close to the national average of $43,000. This group includes a fair number of people in your community. You might even see a little of your own habits here.

            These individuals tend to be somewhat older, with a peak age of 40. Their spending habits tend to expand in accord with their income levels. For instance, if they get a raise, they increase their discretionary spending. They might eat more meals out or take on another monthly payment. If they get a windfall, like a tax return or an inheritance, they splurge on a big-ticket item. They pay all their bills on time and don’t carry a tremendous debt load. They likely own a home and are building equity by paying down a mortgage. These folks are also more likely to be investing in a retirement account, like a 401(k) or IRA.

            Make no mistake: these are important savings strategies. What they don’t offer, though, is flexibility. In a volatile labor market, anyone can lose their job at any time. Illnesses and accidents can strike without warning and lead to huge bills. Even inclement weather could result in home or car damage, requiring extensive repairs. If an emergency happens to someone in this group, they may be in for serious trouble.

            The money in their home and retirement account is inaccessible. They might curtail their spending, but that won’t help if they need a large quantity of money in short order. They will have three options: sell their home, cash in retirement accounts, or take on significant debt. None of these options offer much hope of a brighter future. One foul stroke of luck is all it would take to move them from “wealthy hand-to-mouth” to just plain struggling.

            These kinds of misfortunes happen to everyone sooner or later. That’s why the factor most strongly correlated with financial security is regular savings. A “rainy day” fund separates a short-term financial problem from a life-changing tragedy. The “wealthy hand-to-mouth” think retirement funds and home equity will ensure their financial security. The tumultuous early 2000s showed us, though, that making it to that point is no sure thing.

            Credit union members have a variety of tools that are available to them to help provide this measure of security. Among the most popular is the vacation club account. This is an interest-bearing savings account that allows for unlimited deposits and discourages frequent withdrawals. Consider the money you put into this account to be a way of paying yourself. You pay your bills, your house note, and your other obligations on time. Putting money into your savings account is paying off the future trouble you don’t want to deal with when it happens. You can set up direct withdrawals from your paycheck or put in a specific amount each month. You and your partner could also put any unexpected windfalls, like bonuses or refunds, into this account.

            If a disaster strikes, and you need the money, it’s there. You won’t need to worry about selling your house, cashing in your retirement fund, or taking on expensive debts. A vacation club account is an inexpensive form of self-insurance. If nothing bad happens and you don’t use the money before you retire, it’ll still be there. You can use it to take your dream vacation, to buy an RV or a vacation house, or just to throw one heck of a retirement party. All the money you’ve saved will be gaining interest, and it will be a wonderful supplement to your retirement fund.

            Your parents or grandparents may have kept their rainy day fund in a jar on top of the refrigerator. You don’t have to be that low tech. You can protect your financial future, insure against accidents, and gain some peace of mind along the way. Head to your local credit union and ask about opening a vacation club account today!

Friday, May 1, 2015

Still not saving? You’re not alone!


 
We like to think of ourselves as learning animals. We take our lived experiences, extract valuable lessons from them, and use that information to improve our daily lives. This is how we get better at doing things over time.

            However, a recent survey from Bankrate.com shows that we haven’t yet learned the lessons of the Great Recession. While Americans paid down their debt in the months since the recovery, a shocking 26 percent of Americans still report having no emergency fund. Another 24 percent have less than three months of living expenses saved. Only 23 percent of survey respondents have the recommended 6 months of living expenses saved.

            It’s not for lack of caring. The same survey reveals that 60 percent of Americans don’t feel comfortable with their current savings position. We all know we need to save more, but we still don’t actually do it. Why is that?

            Many experts say the problem is there’s just not enough money left at the end of the month for savings. This is true no matter how much you make; fewer than half of people with incomes more than $75,000 have that six-month cushion. Rebecca Kennedy, the founder of Kennedy Financial Planning in Denver, says that after utilities, rent and other expenses, there’s no money left over for savings.

            Not having an emergency fund is like walking a tightrope without a net. No one likes to think about it, but what you would do tomorrow if you lost your job, wrecked your car or had to miss work due to illness? In 2008, the answer provided by many would have involved tapping into a home equity line of credit. But, when house prices began falling and interest rates rose, these people had to rely on expensive debt to finance their lifestyles. That forced them to postpone retirement, miss vacations, or compromise on educational plans for their children.

            You can avoid this problem. It may seem impossible to create an emergency fund, but there are always ways to squeeze a few extra dollars out of each month. Consider these seven ideas:

 1.) Start small. If you save $5 a week for four years, you’ve got an emergency fund of just over $1,000. That’s a great start to a rainy day fund, and you can do it by giving up one vending machine soda a day. Many people stash every $5 bill they get in a coffee can or store all their loose change. You might also consider a 52-week plan where you save $1 the first week, $2 the second, and so on. These incremental steps can make a big difference in the long term – at the end of a year, you’ll have saved almost $1,400.

 2.) Take on a second job. It’s never fun to leave one job and head to another. Remember, though, that you’ll have to work fewer hours to build a savings than you would have to work to pay down debt. Don’t limit your search to part-time jobs. Consider freelancing, taking surveys, babysitting or selling something via home parties. You don’t need to finance another lifestyle. You just need to make enough to start a savings fund.

 3.) Pay yourself first. Think about your savings as another bill. This mode of thinking prevents you from treating the money as discretionary and frittering it away on impulse buys and luxuries. Make your savings as important as your house note, car payment, and utility bills.

 4.) Automate it. Consider setting up a Club Account or a savings account with direct deposit. This step ensures you’ll remember to take the savings out of your budget each month. You’ll also be earning a little bit of interest on your savings to help you on your way. These savings products have the flexibility to allow for immediate withdrawals if you need it, but are limited by law in how many withdrawals they allow. This means your money is there when you need it, but far enough away that you won’t be tempted to spend it.

 5.) Put luxury in the back seat. Whether it’s a fancy coffee drink, a pack of cigarettes, a fast food meal, or the latest cell phone, things we don’t need will consume much of our income. You don’t need to give up your vices all together. In fact, financial expert Candice Elliot compares these choices to dieting. Repeated denials can drain our will-power, leading us to snap back harder. The answer may be to cut back on our consumption instead. Go without your Starbucks on Friday or wait 6 months for the price to drop on a gadget. Put the difference into your savings account.

 6.) Look at recurring expenses. If you’re honestly spending everything you get on your monthly bills, it may be time to look at them. Consider cutting your TV services or switching to a pre-paid cell phone plan. Simply giving up a premium movie channel for a year could save you as much as $240. Now that Game of Thrones is over for the season, do you even need it? These don’t have to be long-term choices. Your goal should be to make temporary sacrifices to ensure yourself against future loss.

 7) Don’t spend it. Your emergency fund should only be used for actual emergencies. Ask three questions before you take even a dollar out of your emergency fund. Is the thing I’m paying for absolutely necessary? Is there nothing I can cut back on this month to pay for it? Do I have to pay for it right now? Unless the answer to all of these questions is yes, leave the money where it is.