Articles of Interest
Credit Card Regret: It’s More Common Than You Think
- Frank Sinatra
If you’re the kind of person who prefers to play it safe, there’s a good chance that, like Ol’ Blue Eyes, your list of regrets is mercifully short. But if you’re the adventurous type who’s more likely to yell “YOLO!” than take the time to consider pros and cons, you may have made more unfortunate decisions than you care to admit. Either way, it’s safe to say we all have regrets. And if we’re being honest, some of them are probably related to finances.
Going into credit card debt is one of the most common financial regrets. According to a recent NerdWallet survey, “About 6 in 7 Americans (86%) who have or had credit card debt say they regret it.” With numbers that high, it’s safe to assume most of us would make different credit decisions if given a chance. Have you ever signed up for a new credit card and immediately wished you hadn’t? If so, the following reasons will probably ring a bell. If not, pay close attention. You can learn a lot from others’ mistakes.
Common Reasons for Credit Card Regret
If you’ve ever opened a new credit card account and felt that distinctive twinge that tells you it was a bad decision, there’s a pretty good chance you filled out that credit application for the wrong reason. Bad reasons come in a variety of forms. Here are a few of the most common:
You wanted that sign-up swag. – T-shirts. Koozies. Collapsible drink coolers. It doesn’t matter what it is; we love free stuff. Credit card companies know this, which is why they set up promotional tables on college campuses and inside sports arenas. Sure, free t-shirts are cool, but are they really worth opening a credit card that will charge you 26% interest on your purchases?
You can’t resist that one-time discount.
“Would you like to save 25% on today’s purchase by applying for store credit?” If you’ve ever shopped at a retail store, there’s a good chance you’ve heard this sales pitch at the check-out register. If you took advantage of the offer and suddenly wished you hadn’t, you’re not alone. According to a recent survey, almost 75% of Americans have at least one store credit card. Not surprisingly, nearly half of them regret it.
You’re in a financial pinch.
When your checking account is running low, it can be incredibly tempting to sign up for a credit card just to get some temporary relief. However, credit cards don’t remedy poor financial habits; they tend to make them worse. If you’ve ever signed up for a new credit card “just to cover things until payday,” this regret may feel all too familiar.
OK, you signed up for a credit card and regretted it. Now what?
Before we go any further, it’s important to remember one thing: Just because you have a credit card doesn’t mean you have to use it. Even if your regrettable card carries a 26% interest rate, 26% of $0.00 is still $0.00. However, if you’re worried you won’t be able to resist using your card, you might be tempted to close your account immediately. This could certainly help you avoid charges you can’t afford to repay, but there may be a better approach.
Available credit and length of credit history are two of the main components of your credit score. Having an open, active account you don’t use could actually help you. If you were given a $1,000 credit line with your new card and you don’t make any purchases, you have $1,000 of available credit. If you close the account, you have no available credit. In this case, maintaining the credit line may be beneficial for your credit rating.
As for the length of credit history, that part’s fairly self-explanatory. The longer you maintain a satisfactory account, the more favorably it reflects in your credit score. With this in mind, you might be better off just removing the card from your wallet (and your smartphone’s digital wallet too) instead of closing the account altogether.
Good credit is one of the building blocks of your overall financial health. If you’re trying to find financing options that are right for you, contact your credit union and ask to speak with one of their trained representatives. They’ll be able to help you review your financial situation and recommend the best products and programs for your needs. With their guidance and expertise, you stand a much better chance of managing your credit—and finances in general—with no regrets!
Save Money by Taking Your Spring Cleaning to the Next Level!
Now that March has gone out like a lamb (a waterlogged lamb in many parts of the country), Springtime is here, and that means it’s time for that beloved annual tradition—Spring Cleaning. In surveys conducted by the American Cleaning Institute , responses indicate that as many as 91% of Americans and 96% of Millennials engage in spring cleaning, so it seems safe to say we’re all in this together.
As you open the windows and begin your routine of washing, sweeping, dusting, and decluttering, the goal is to spruce up your home’s interior while eliminating things you no longer need. When done correctly, In spring cleaning can actually make you happier and healthier . So, it makes sense to be as thorough as possible. This year, while you’re busy cleaning your fixtures and furniture, it might be a good idea to update some common household items to more energy-efficient options. A more efficient home is an investment that can save you money all year long, and we’re pretty sure lower utility bills will boost your mood as well!
- Simple Ways to Make Your Home More Energy Efficient This Spring
- Energy-Saving Power Switch By completely cutting off all power when an electronic device isn’t in use, these plug-in adapters reduce the costly effects of “vampire energy.” While the term sounds scarier than it should, vampire energy refers to the power that still flows to a device even when it is turned off. These handy switches can be purchased online or in your local hardware store for $10 or less. And with prices that low, your return on investment can be quite substantial.
- Low-Flow Showerhead According to a research project conducted by the Alliance for Water Efficiency , the average American shower lasts for just over 8 minutes and uses approximately 17 gallons of water. The average flow rate works out to be roughly 2.1 gallons per minute (gpm). By switching to a low-flow shower head that reduces usage to 1.25 gpm, you can save an average of $32 per year per person. For a couple, that means $64 in savings each year—especially impressive considering that most low-flow showerheads can be purchased for $10-15.
- Smart Thermostat The Internet has revolutionized the way we communicate, shop, and even do our banking. Now, thanks to smart products like the Nest Thermostat , it appears that it has also changed the way we save on energy-related expenses. While the initial price of a Nest will set you back approximately $250, the average annual home energy savings of $150 per year means you’ll recoup your investment in less than two years. After that, the savings just continue to add up.
- Energy Audits Not sure where to begin? An energy audit can help! Depending on your location, energy audits can cost anywhere from $250 to $600. And while that might seem like a lot to pay up front, the potential savings can make it worth the investment. During a professional energy audit, efficiency experts utilize specialized tools to identify areas where your home may be using excessive energy, which, in turn, can help you pinpoint which improvements will make the biggest difference. To find an energy auditor and prepare for an audit, check out these helpful tips .
Throughout this article, we’ve talked about a few relatively low-cost ways to improve your home’s energy efficiency. But maybe you’re thinking a little bigger this spring. If you need a little more incentive to make big-ticket improvements like installing new windows, updating your HVAC system, or adding solar panels, federal tax incentives may provide just the push you’re looking for. Usually available in the form of rebates, these incentives are designed to encourage homeowners to update their home systems to be more energy-efficient and sustainable. If you’ve been thinking about making some major energy-saving upgrades around your house, don’t forget to see if they qualify for valuable government incentives. When it comes to saving energy and saving money, every little bit helps!
Should You Keep Separate Checking Accounts When You Get Married?
You found “The One.” You popped the question, and they said “Yes.” You both said, “I do.” Your honeymoon was incredible. Now, you’re back to reality and settling into your new life together. Suddenly, you’re faced with a wave of everyday decisions you hadn’t previously thought about. Who sleeps on which side of the bed? Which toothpaste should you buy? Whose parents will you visit at Thanksgiving? What about Christmas? Some decisions are trivial, but other dilemmas feel far more important. But then, when that first monthly bill shows up and you have to decide who pays it, you come face-to-face with one more crucial decision: Should you combine your finances and get a joint checking account?
For years, financial advisors and relationship gurus have sparred over the potential dangers and benefits of joining two individual bank accounts into one. The most challenging part of this debate is that both sides appear to make valid points, which can leave you and your spouse wondering what to do. Before we go any further, it’s important to remember that just as each person in a marriage is a unique individual, every relationship is different. And while it’s wise to seek counsel and take advice, you’ll ultimately need to figure out what works best for you. In the points to follow, we’ll set out to share a few perspectives that can help you determine the best way for you to build a financial foundation that works for your family.
The Case for Separate Checking Accounts
In an interview with CNBC?, David Back, co-founder of AE Wealth Management, advised, “You should have your own account, both of you. It’s absolutely critical, especially for women, that you keep money in an account that’s yours that you control.” Citing the fact that almost half of marriages end in divorce, Bach and other like-minded financial professionals point to the fact that not only do separate accounts allow each individual to maintain their own financial identity; they also make it easier to divide assets if the relationship dissolves. If both spouses agree, the practice of keeping separate accounts can also serve to reduce the number of disputes over spending decisions. By allowing each person to manage the finances they bring into the relationship, this approach depends on the mutual trust that each person is managing their money in a financially responsible manner. And in a marriage, that kind of trust is essential.
The Case for Joint Checking Accounts
While many agree with the practicality of married couples maintaining separate bank accounts, several studies at the University of California suggest a completely different approach. Though financial independence may be a key factor in maintaining a sense of autonomy, the UC study indicated that marital happiness might be easier to achieve if both partners agree to combine everything—including bank accounts. After reviewing the results of their studies, the school’s researchers shared the following observation, “It is important for couples to perceive their possessions and financial goals as shared, and our research identifies one practical way to facilitate this: merging bank accounts.” While happiness is a subject that extends beyond the bounds of traditional financial advice, it is worth noting that your financial practices as a couple can have a powerful impact on your relational success.
The Case for Compromise
As with most things in marriage, figuring out your finances will probably involve some give and take. While some couples can thrive with separate bank accounts, others will find far greater satisfaction by pooling their resources in a joint account. However, if you’re still not sold on either idea, there’s room for compromise. It’s entirely possible for couples to have separate personal spending accounts and maintain a joint account for shared expenses like rent, insurance, utilities, and such. While this strategy requires a little more leg work and the need for open, consistent communication, that’s not a bad thing. After all, whether it’s in relation to finances or just married life in general, fine-tuning your communication skills is always a great idea!
Check Your Finances Before Changing Jobs
Jobs are funny things. As soon as you get one, there’s a temptation to start thinking a different job could be better . Sometimes people find themselves stuck in a role that doesn’t fit their personality or skill set. Other times they love their job but believe a change would provide the opportunity to earn more money and in turn, more peace of mind. Whatever the reason, if you’ve been part of the workforce for more than a few months, you’ve probably spent more than a few minutes wondering if a new job might be the secret to a better life. And if that’s the case, statistics indicate you’re not the only one.
According to the US Department of Labor, the average American changes jobs 12 times during their career . So, if you haven’t tested the job market yet, the law of averages seems to indicate you will eventually. And while job transitions are relatively common these days, it’s still important to approach each change with careful consideration. Not only will the new role involve learning new skills, working with new people, and establishing a new routine, it will also require significant financial planning—at least in the transition period. So, how can you set yourself up for success while transitioning to a new endeavor? By making sure your finances are in order; that’s how.
5 Financial Tips to Remember When Considering a Job Change
- Check your savings. If you already have another job lined up, your savings may only need to tie you over until your new paychecks start rolling in. This might sound like a minor concern, but depending on the payroll schedule for your former company and your new employer, it’s entirely possible you could go a month or more between paychecks. If you’re leaving your job without another already lined up, you’ll need enough savings to cover expenses until you accept your next job offer. If you have the luxury of transitioning on your own time frame, aim to have six months’ worth of expenses in a savings account.
- Trim your expenses. Admittedly, cutting expenses is never a fun topic of conversation. However, operating on a leaner budget (at least for a little while) can make your career transition far less stressful. So, before accepting a new job offer, take time to review your monthly budget and see if there are any belt-tightening adjustments you can make. Cut back on morning lattes, meal prep at home instead of buying lunch at a restaurant every day, or binge a Netflix series instead of going to a movie at the theater. You’ll be surprised how quickly little savings add up—and those savings can help you bridge the financial gap between jobs.
- Review the compensation package. It’s natural to look at a job’s salary when trying to determine whether it’s a better opportunity. This is a good place to start, but there’s more to it than that. Does the prospective employer pay an hourly wage, salary, or combination of base plus commission? Do they cover a portion of employee insurance costs or do they pay the entire premium? Is the new employer’s PTO plan equivalent to the one you’d be giving up? Be sure to compare the entire compensation package instead of just comparing the annual salary.
- Account for relocation costs. If your new job will require you to relocate, it’s always a smart idea to look at the cost of living in your new location. A $10,000 per year raise is nice, but if you’re going to spend an additional $15,000 in housing expenses each year, the new job could cause you to fall behind financially. If you need help comparing living expenses, cost of living calculators can be extremely helpful. State income tax rates can be another location-dependent variable worth considering. Fortunately, there are online tools to help with these calculations as well.
- Don’t leave money behind. If your current employer offers 401K or other retirement savings accounts, be sure to make arrangements to take those funds with you. This might seem like a no-brainer, but the fact that orphaned 401K accounts total an estimated $1 trillion indicates it’s easier to overlook than you might think. When it comes to these employer-sponsored retirement plans, employees have three options when changing jobs: 1) roll over funds to a 401K plan with the new employer, 2) roll over the funds into an Individual Retirement Account (IRA), or 3) withdraw the funds. It’s worth noting, however, that withdrawing the money usually incurs a steep penalty. To determine the best approach for your money, it’s always best to consult with a financial advisor at your credit union.
If you’re currently contemplating a job offer or just dreaming about what it would take for you to make a change, spend a little time crunching the numbers. To make your comparisons a little easier, the career planning experts at The Balance Careers offer a variety of helpful resources on their site. Once you’ve completed a thorough assessment of your potential job offer, contact one of the financial representatives at Welcome Federal Credit Union. We can help you analyze your current finances, identify the best retirement rollover plans, and find ways to maximize your money in order to make your job change as smooth as possible.
5 Ways to Save for Summer in 5 Weeks
Summer vacation. During your elementary, middle, and high school years, those two magical words meant three months of freedom! No school, no waking up early, no early bedtimes. It was your annual reward for grinding through the previous nine months of academic pursuits. Yet somehow, summer always managed to fly by faster than it was supposed to!
Now that you're an adult, your summertime respite has probably shortened considerably. Instead of three months, you might get a week away—maybe two, if you're lucky. But just like when you were young, you always wish your time away could last just a little bit longer. It seems like no matter how old you get, summer vacation still holds a special kind of magic.
There's still time to save for summer vacation!
But even with all the sun-kissed nostalgia that makes summer vacation a lifelong treat, there's one thing that can ruin the fun faster than a thunderstorm at the swimming pool: vacation-related debt. Summertime memories are fun to recall, but it's not nearly as fun to receive monthly reminders that you're still paying the price for that fun—plus interest.
If you're like most people, summer usually sneaks up on you. You start the year with good intentions, but somewhere along the way you forget to set aside money to cover your vacation plans. With summer only a few weeks away, you might be wondering whether it's possible to save enough money to cover this year's vacation. We’re happy to report that it's absolutely possible! It will take some discipline, but you can do it. Here are five tips to help you get started.
Five Quick and Easy Ways to Save for Summer Vacation
- Create a savings plan.
Sometimes, the easiest way to save money is to identify the ways you're currently wasting it. By creating and following a sensible budget, you'll be able to pinpoint the areas where you're spending too much. For the next five weeks, do your best to eliminate frivolous expenses and only spend money on things that are essential. You'll be surprised how quickly your savings add up.
- Find fun for free.
Just because you're saving for summer doesn’t mean that you can't have fun in the meantime. But it does mean you might need to find some different activities. Movies, dining out, and entertainment can add up quickly. The average cost of dinner, drinks, and movie tickets for two comes in at around $100, so, imagine how fast you could pile up the savings if you decided to cook at home, stroll through a park, play some board games, or browse at a bookstore instead!
- Resist the convenience tax.
We're all busy. Sometimes it's just easier to pay for convenience. Whether it's drive-thru coffee on the way to work or take-out food for dinner, shelling out a few extra dollars can save precious minutes throughout the day. But if you're trying to save money for summer, you might want to pause these practices. When you consider that you can save $3 per day just by making your morning cup of coffee at home, the money-saving benefits of this step are ridiculously clear. (And don't worry, we're only talking about five weeks. You'll be back to that extra-hot-triple-skinny-no-foam-half-caff latte in no time.)
- Hang onto that tax refund.
If you're expecting a tax refund this year, well…you've probably filed your taxes already. That means either your refund has arrived already or it's on the way. As tempting as it can be to celebrate your sudden cash infusion with a big purchase, it might make more sense to hang onto that money and use it to pay for your upcoming summer vacation. Yes, that'll require a little discipline, but enjoying a fantastic, debt-free vacation is worth it!
- Cash in on your spare time.
OK, so maybe this tip isn't technically about saving—but it can be. If you figure out how to earn a little extra money, that gives you even more chances to save. (See? Told you it could be about savings.) Once you've maximized your creative saving methods, it never hurts to earn a little extra money. Side jobs are a great way to make quick cash, and thanks to apps like Nextdoor, Taskrabbit, and Gigwalk, finding work is easier than you think.
If you're saving for this summer, it's probably going to feel like an all-out sprint. But with a little advance planning, next year's summer savings won’t have to be quite so stressful. Here at Welcome Federal Credit Union, we offer convenient vacation savings accounts that let you automatically deposit a little money from your paychecks throughout the year and withdraw the funds just in time for your stress-free summer vacation. Call us or visit one of our branches in person to learn more about these specialized savings accounts.
Make Spring Cleaning Pay Off This Year!
People sure do like their stuff. Whether it's the latest tech gadgets or knick-knacks that have been passed down through generations, the things we own hold a special place in our hearts and homes. So, when our possessions pile up, as is their tendency, what's the logical thing to do? That's right—rent a self-storage unit. What? That’s not the answer you were expecting?
According to a report by Sparefoot, one out of every 11 Americans pays for storage space to keep their overflowing belongings. That's right, not only are people finding additional ways to store their things, they're paying good money to do it—$38 billion a year, to be exact. Spending money to stow away various items you don't need and will probably never use—seems silly doesn't it? We agree. In fact, we think springtime is the perfect season to do the exact opposite.
Clean house. Cash in.
Over the past few years, de-cluttering has seen a spike in popularity, thanks in large part to proponents like Joshua Becker and Marie Kondo. While experts like Kondo preach the soul-cleansing benefits of getting rid of anything that doesn't "spark joy," we recommend doing it for an entirely different reason. Cash. Cold, hard cash.
Don't get us wrong, we big fan of the physical and emotional perks that come from cleaning house, but we also believe that making a little extra money would make you feel pretty good too. If you're inspired but unsure where to start, we've compiled a helpful list of everyday items that carry solid resale value and the best ways to sell them.
Maybe you just upgraded to a new laptop, and you're wondering what to do with your old (but not that old) one. Perhaps you switched mobile phone carriers and didn't bother trading in your previous phone. Or maybe you're staring at a CD/DVD/video game collection that has gotten way out of hand. Before you throw your hands up and your electronics out, see if you can sell them online through services like:
Do you have a closet full of outfits you never wear? Have you changed your style but held onto all your old accessories? Did you purchase a new pair of shoes only to realize you already had an identical pair in your collection? Whether you're creating a capsule wardrobe or just freeing up some space in your dresser drawers, you'd be surprised how many people would be willing to buy your gently used items. Millions of people have made some extra money by selling clothes and accessories via apps like the following:
Let's face it; some things just don't fit in neat and tidy categories. But that doesn't mean they're worthless. There's an old saying that suggests "one person's trash is another person's treasure." That doesn't mean your stuff is trash, it just means that things you no longer use may be incredibly valuable to someone else. So, before you throw out that vintage nine iron, that dusty old vinyl collection, or your great aunt's set of decorative collector plates, try listing them for sale on the following sites:
Once you've completed your spring cleaning, minimized your possessions, and made a little money in the process, you might be wondering what to do with your newfound cash. Whatever you do, resist the urge to go right out and buy more stuff! That will just start the problem all over again. Instead, why not contact your credit union and ask them how to make your money work for you? Our team of financial specialists can help you assess your current financial situation and determine how to take smart steps towards a brighter financial future.
Let the Taxpayer Beware: Learn to Spot Six Common Tax Scams
Now that your W2s and miscellaneous tax documents have arrived, tax season is officially in full swing. While it’s easy to get lost in optimistic daydreams about your tax refund and all you’re planning to do with it, it’s important to remember that scam artists are probably dreaming about what they could do with your refund as well.
After reaching an all-time high of more than 700,000 cases in 2015, tax refund fraud has been declining thanks to significant enforcement efforts by federal, state, and private agencies. While these statistics are encouraging, they also highlight the ongoing need for caution and vigilance. So, before you file your 2018 taxes or pay someone to file for you, we want to remind you about six of the most common tax-related scams happening today.
This one is relatively easy to spot. Why’s that, you ask? Because the IRS doesn’t initiate communication with taxpayers via email. So, if you see an email from the IRS pop up in your inbox—even one that looks remarkably official, don’t bother opening it. For good measure, go ahead and mark it as spam before deleting it. Emails of this type have only one goal: to trick you into clicking a fraudulent hyperlink or responding with sensitive personal information.
In 2018, the IRS reported a new twist on traditional phishing scams. In the new approach, fraudsters hacked the systems of legitimate tax professionals, stole tax returns containing personal details, and then deposited funds directly into taxpayer bank accounts. After those deposits hit the bank, the criminals posed as the IRS or collection agencies and contacted account holders demanding a resolution to the error. The goal of these scams is not to simply regain the money deposited “in error,” but to get the victim to share account details that can be used to access the account at another time. If you find yourself with an unexpected deposit in your bank account, the IRS offers helpful instructions here.
Though they come via phone call, these scams are essentially the same as phishing emails. The difference lies in the fact that con artists can spoof IRS phone numbers in an attempt to convince unsuspecting people to answer the call. Once the phone call is underway, the person on the other end claims to be an IRS agent and tries to get the individual to confirm private account details in an attempt to “resolve the situation.” If they don’t get the results they’re hoping for, the fraudsters may even follow-up with phone calls where they impersonate law enforcement officials and threaten legal action. To avoid accidentally divulging personal details, it’s best to ignore these calls completely. Just as the IRS doesn’t initially contact taxpayers by email, they also don’t initiate official communication by phone either.
This type of scam takes place at the intersection of identity theft and financial fraud. Using a variety of tactics, criminals obtain taxpayer social security numbers and file fraudulent tax returns in their name—often claiming substantial refunds. Since this happens without the knowledge of the victim, it only comes to light when their legitimate tax return is rejected due to a previous return already filed under the same social security number. While the IRS is committed to resolving these issues when they happen, the process can be long and tedious. To safeguard yourself against tax refund theft, IRS officials recommend obtaining an Identity Protection PIN, also known as an IP PIN. Instructions for securing a PIN can be found on the official IRS website.
Shady Tax Prep Services
Since an estimated 79 million Americans use paid tax preparation services, there are considerable opportunities for dishonest preparers to abuse the system. One of the most common scams involves a preparer illegally inflating an individual’s refund and collecting a percentage of the taxpayer’s refund instead of a flat fee. Many times, the problem isn’t identified until after the refund has been issued and the preparer’s fee has been collected. In these scams, the preparer is long gone by the time that the problem is identified, and the taxpayer is responsible for handling the audit on their own. While the practice of a tax preparer charging a percentage of refund isn’t technically illegal, you’re better off avoiding this type of arrangement and opting for a flat-fee service instead.
Public Wi-Fi Scammers
It seems like this one should go without saying, but we all use a reminder from time to time. The public Wi-Fi at coffee shops, libraries, and bookstores can be great for hopping online to browse social media, but it’s terrible for filing your taxes. Not only can these unsecured networks be accessed by almost anyone, but dishonest scammers can also set up hot spots that look like the establishment’s Wi-Fi and intercept logins, passwords, and personal information. So, if you’re filing taxes electronically this year (and considering the fact that approximately 90% of taxpayers filed electronically in 2018, you probably are), do yourself a favor: file at home from your personal computer and your secure Internet connection.
As with most financial scams, these can be simple to sidestep as long as you know the signs to look for. If you observe questionable practices or have additional tax-related concerns, you can find helpful instructions here on the official IRS website.
If you are receiving a federal or state tax refund this year and want to make the most of your money, please contact us here at Welcome Federal Credit Union. Our financial specialists can help you assess your financial situation and show you all the beneficial programs and products available to you as a credit union member. Call, email, or stop by a branch today!
Mind the GAP: Understanding the Value of GAP Coverage
Picture the following scenario: After months of research and planning, you take the plunge and buy a new car. Once the financing is secured and your auto insurance is in place, you’re ready to hit the road. You’re so excited about your sparkling ride that you’re not even worried about the fact that most new cars depreciate by as much as 10% the moment you drive them off the lot—and up to 20% in the first year. That’s a financial fact, but you’re too busy enjoying that new car scent to get bogged down with details like that.
Now, imagine that after just a few weeks, you’re involved in an accident that badly damages, or worse yet, totals your car. (Don’t worry—unlike your car, you emerge from this imaginary situation without a scratch.) Fortunately, you did the responsible thing and secured good auto insurance. Once all the proper claims have been filed, you find out that insurance will only cover your car’s market value—which, due to the depreciation, is several thousand dollars less than the amount you owe on your auto loan. If only there were a type of loan protection that would help you make up that difference. Fortunately, there is. It’s called Guaranteed Asset Protection—GAP, for short.
What is GAP?
GAP coverage is an optional protection plan offered with auto loans or leases, and depending on the plan coverage limits, it effectively waives most of, if not all, the remaining balance on your loan. While your auto insurance plan’s comprehensive and collision policies cover your vehicle’s value in the event that it is totaled or stolen, GAP coverage is designed to ensure you don’t get stuck making payments on a car you no longer own.
How do I know if I need GAP coverage?
While the product makes good financial sense for some, not everybody needs to get a GAP policy. According to the financial experts at NerdWallet, there are a few basic guidelines that will help you decide whether GAP coverage is right for you. You should strongly consider adding a GAP policy to your auto loan if you:
- Made a small down payment on a new car, or none at all
- Agreed to a loan term longer than 48 months
- Drive a lot, which reduces a car’s value more quickly
- Lease your car
- Bought a car that depreciates faster than average
Where do you get GAP coverage?
While a variety of companies provide GAP coverage for consumers, it often makes the most sense to obtain the protection plan from the same financial institution that financed your vehicle purchase in the first place. In many cases, a credit union makes the most sense. If you already financed your vehicle through a dealership, keep in mind that many GAP programs are refundable up to a certain number of days. This means that should you decide to refinance your auto loan through a credit union, they may be able to help you get a refund on your original GAP plan and secure a new plan at a lower cost.
Not only are credit union GAP plans traditionally less expensive than those available through finance companies, they can also be added to your loan at any time (vehicle age and mileage limits apply). Securing coverage through the financial institution that services your loan reduces the need to coordinate communication between multiple parties. It also increases the likelihood that you can put the frustrating accident experience behind you sooner rather than later—and that peace of mind is priceless.
If you have questions about Guaranteed Asset Protection or want to know how to add it to your existing auto loan, contact a financial representative at Welcome Federal Credit Union. They can help you review your current financing situation and determine whether GAP coverage is right for you.
Valentine’s Day on a Budget: How to Find Love & Laughs for Less
When it comes to the topic of Valentine’s Day, public opinion seems to be split. Some people love everything about it. Hearts, roses, candy, flowers, Cupid—you name it, they’re here for it! On the other end of the spectrum, you’ll find Valentine Scrooges who consider February 14th a day like any other. They’re convinced the celebration and fanfare are nothing more than Hallmark-sponsored money grabs. To be fair, these positions are extreme.
If you’re like most people, you probably enjoy spending the romantic holiday with your special someone, but you prefer to celebrate without spending a ton of money. Good for you. There’s nothing more attractive than someone who plans a financially responsible Valentine’s date. OK, maybe a few things—but you get the point. If you’re looking to create an inexpensive, fun-loving Valentine’s experience you’ll remember for years to come, we have a few suggestions you might enjoy.
- Dress up and dine in.
- Dress down and hit the town.
- Dollar store gift challenge.
At first, this suggestion may seem like complete nonsense. Why would you go through the trouble of getting dressed up if you’re not going out in public? Because there’s a strange, yet undeniable appeal to doing something that doesn’t make sense to anyone else, that’s why. So, go ahead—go big. Glam it up. Suit and tie. Gown and heels. The more overdressed, the better. Whether you cook for yourself or order your favorite takeout, the food choice isn’t nearly as important as the fact that you’re both ridiculously overdressed for the occasion. And that’s the point.
Like the previous idea, this one involves an unexpected combination of date attire and meal selection—but with a completely different twist. Before the big date, you and your date head to the nearest thrift store (you can shop together or separately) and buy a complete outfit for the other person, spending no more than $10 in the process. The clothing selections can be as tacky and outrageous as you please—the tackier, the better. The only catch is that you both have to wear the outfits to dinner at a nice restaurant, no questions asked. If you play this one right, not only will you save money and enjoy your date, everyone around you will probably get a kick out of it as well.
You and your date can play this one a couple of different ways. The first approach involves heading to the closest dollar store and seeing who can find the single best/craziest/funniest/most ridiculous gift for the other person. The second option involves setting a spending limit and seeing who can rack up the most entertaining gift collection. (No need to go above $10. After all, it’s still a dollar store.) For a little additional fun, take some selfies with your newfound treasures, and share your pics on social media using the hashtag #DollarStoreScore. After your adventure, head out and grab some dessert. Since you did your Valentine shopping at the dollar store, you’ll have plenty left to cover a sweet treat or two.
Whether you use the tips above or come up with a clever idea of your own, being smart about your Valentine’s spending goes a long way towards ensuring your day is filled fun-loving memories instead of expensive mistakes. And when you’re wondering what to do with all your savings, don’t forget to stop by and see us – We’re happy to help you find ways to make that money work for you. And let’s be honest, long-term financial stability is sweeter than a $10 box of chocolates could ever be!
Are Meal Delivery Services Worth the Money?
With almost $5 billion in sales in 2017 alone, it’s safe to say meal delivery services are catching on. If you haven’t sampled the savory selections from companies like Blue Apron, Hello Fresh, or Home Chef already, you’ve probably seen more than a few of their sponsored ads pop up in your social media feeds. You may even know someone who uses the services for themselves. While these chef-designed, pre-packaged meals can be a phenomenal way to try new recipes, are they a solid choice for stretching your grocery budget?
According to a recent Morning Consult poll, 59% of survey respondents listed high costs as their main concerns. But with projections suggesting the meal-delivery industry could become a multi-billion dollar market by 2022, it seems like plenty of consumers are still willing to jump on the meal delivery bandwagon. The widespread appeal appears to be based on a variety of factors other than monetary savings.
Costs can be measured in more than money.
Meal delivery services enjoy the highest popularity among millennials and individuals earning more than $100,000 a year, particularly those living in cities. These results point to the fact that busy people appear to value time savings and food quality as much as, if not more than, financial savings.
There’s no denying that it takes time to plan your meals, create a grocery list, and actually shop for the food. By creating recipes and sending all the ingredients right to your door, companies like Blue Apron and Hello Fresh can save you the time you’d normally spend on planning and shopping. The busier you are, the more value this service becomes.
Quality of Ingredients
If saving money on your groceries is your main goal, it’s easy to reduce costs by buying low-quality food. Unfortunately, this strategy usually leaves you with an abundance of processed foods that lack nutrition and flavor. The most popular meal prep services rely on culinary chefs to design meals that combine high-quality ingredients to create a meal that’s healthy and delicious.
With the most popular 2-person meal plans starting at $60 per week for 3 meal kits, the cost averages $10 per meal. While you can certainly spend less shopping for yourself, these options are considerably less expensive than the average meal at a restaurant. So, if your busy schedule leaves you dining out on a regular basis, meal delivery services may provide financial savings after all.
What kind of savings do these services actually deliver?
There’s no denying the growing demand for meal delivery services like Purple Carrot, Green Chef, and Blue Apron. The fact that retail giants like Amazon and Walmart are scrambling to be part of the meal kit market only serves to confirm the rising popularity. As you try to decide whether one of these services is the right solution for you, the value depends on your expectations. If you’re looking to spend less than you would by planning your own meals and shopping for yourself, you’ll probably be disappointed. But if you view these services as a time-saving bridge between home-cooked meals and going out to eat at restaurants, the value is much easier to see.
Does a Side Hustle with Uber Really Pay Off?
You’ve done the hard work of creating a budget. You’ve cut frivolous expenses. You’ve crafted a financial plan that lets you tell your money where to go instead of wondering where it went. But even with a steady job and a sensible budget, you still find yourself living paycheck to paycheck. It looks like you’re going to have to find a way to earn some extra money, a side hustle.
With more than 44 million Americans working more than one job, the challenge is a familiar one. As job seekers search for flexible work opportunities, many businesses are busy exploring alternate ways to assemble a workforce of independent contractors.
With hundreds of thousands of individuals working under their respective banners, ridesharing services Uber and Lyft seem to have figured out how to recruit effectively. But as more and more people sign up to be drivers, are they seeing a worthwhile financial reward for their work? A recent study set out to answer that question.
Don’t overlook those operating costs.
Conducted by MIT’s Center for Energy and Environmental Policy Research, this study found that when operating costs were factored together with earnings, Uber and Lyft drivers earned an average of $3.37 per hour. In her article detailing the study, Mashable.com writer Monica Chin shared this explanation of how routine maintenance and travel-related costs can impact overall earnings:
“The study found that because of the high costs of insurance, fuel, and car maintenance, 74 percent of ride-share workers make below minimum wage in their respective states, and 30 percent actually lose money on their jobs. Drivers earn a median of 59 cents per mile driven, while incurring a median expense of 30 cents per mile. 40 percent of those costs were attributed to insurance, maintenance, and repairs, 40 percent to gas, and 20 percent to depreciation.”
Success isn’t automatic. But it’s possible.
As you can see from those statistics, there’s more to making money than just signing up to do the job. Success as an Uber or Lyft driver hinges on a combination of factors such as location, public transportation options, work availability, and smart personal business practices.
If you’ve been thinking about driving for Uber or Lyft, the future isn’t all doom and gloom. It’s possible to make money, potentially even a decent full-time income. The secret lies in approaching the opportunity with the mindset of a business owner instead of an employee. Creativity and efficiency are rewarded. Just showing up won’t cut it.
Online Savings: These Aren't Your Mother's Coupons
When they opened their virtual doors in 1994, Amazon.com was merely an upstart online bookstore. Since then, the company’s growth has been nothing short of legendary. After launching its wildly popular Amazon Prime membership program in 2005, the company has cemented its reputation as a leader in the e-commerce marketplace.
But for a company that generated almost $178 billion in revenue in 2017, it seems strange to consider that despite their eye-popping income, much of their success hinges on helping people save money, not just spend it.
All the coupons. None of the clipping.
While Amazon Prime allows members to enjoy exclusive offers and free two-day shipping, one of the company’s lesser-known features, Amazon Coupons, combines the benefits of old-school coupon clipping with the 24/7 convenience of online shopping.
Now, before you smirk at those memories of your mom or dad dutifully leafing through the Sunday paper to save a quarter on toothpaste or 50 cents on laundry detergent, it’s important to remember that today’s coupons are a big deal. How big? According to a recent NCH study, consumers redeemed more than 2.06 billion coupons for more than $3.1 billion (that’s billion, with a “B”) in savings.
While web-based purchases used to be primarily for hard-to-find specialty items, companies like Amazon make it easier than ever to buy everyday products online as well. Sure, you can find incredible savings on big-ticket items like electronics and home furnishings, but since you only purchase these items once every few years, the savings average out over time. Smaller discounts are available on grocery and cleaning supplies, but since you use these more often, the savings can really add up. Whether it’s a huge discount on a big-ticket item or steady savings on everyday items, keeping more of your hard-earned money is a good thing. Saving big is exciting. Saving small is smart.
Saving money is big business.
With more than 44% of all U.S. e-commerce sales in 2017, Amazon has certainly positioned itself as the leader of the online retailer pack. But they’re not the only game in town. There is a staggering array of online coupons and discount codes available. A quick Google search will reveal page after page of potential saving options.
In fact, the savings are so plentiful that companies like RetailMeNot and Coupons.com created their entire business models around compiling online promo codes and coupons in one easy-to-find location. With so many deals available, it’s always a good idea to search services like Amazon Coupons or Coupons.com before you shop online or head to the store.
Save big. Save small. Save often.
The Sunday newspaper may be a thing of the past and coupons may look different than they used to, but saving money remains an essential habit for building a strong financial foundation. And with the mind-boggling multitude of deals and promotions available through services like Amazon Coupons, RetailMeNot, Coupon.com, and others, it’s never been easier to save money on big purchases, small purchases, and every purchase in between.
Should You Be Using Your Home’s Equity?
Maybe you’ve heard of home equity loans and lines of credit, maybe you haven’t. There’s no need to hang your head if the terms are unfamiliar to you. It’s easy to get lost in all the terminology of the financial world.
But when the discussion turns to home equity, it’s important to know more than just the lingo – especially if you’re a homeowner. Whether you just purchased your first house (congratulations!) or you’ve been in your home for decades, it pays to understand the power of your equity.
What is equity? (And why does your home have it?)
With details ranging from fixed rates and loan terms to property appreciation and market value, home equity can be a complex topic. For the sake of conversation, we’ll stick with the basic premise that your home’s equity is the difference between what your home is worth and how much you still owe on it. As your home’s value goes up over time and your monthly payments chip away at your mortgage balance, your equity increases.
It can be reassuring to know that if you ever choose to sell your home, that equity would come back to you as profit. The beauty of home equity loans and lines of credit (HELOC) is that they let you leverage that equity without requiring you to sell your home. If your house is currently worth $250,000 and you have a principal balance of $150,000, you’re sitting on $100,000 in equity. Those funds may be comforting in theory, but they can also be an effective tool for your financial future.
Does it make sense to use your home’s equity?
Since it represents debt you’ve already paid off, you may be wondering why you would ever tap into your home’s equity in the first place. That’s a fair consideration, and it’s always a good idea to discuss the decision with a trusted financial advisor before proceeding. However, there are a few key benefits that make home equity loans and HELOCs a solid financial solution:
- Because they’re considered secured debt, home equity loans traditionally offer lower interest rates than credit cards and other consumer loans.
- A fixed-rate loan lets you lock in a low rate for the duration of the loan, protecting you against market fluctuations.
- If you don’t need the money in one lump sum, a home equity line of credit provides as-needed access to the funds and only requires you to pay interest on the amount you borrow.
After you secure a home equity loan or HELOC, you’re free to spend the money however you please, but some of the top uses for home equity funds include:
- Purchase a Vehicle
- Medical bills
- Wedding expenses
- Emergency fund
- Education costs
A word of caution
It’s important to remember that using equity as a quick fix without considering the budgetary impact is a dangerous proposition. Since you’re using your home as collateral, it’s important to honestly assess your financial situation before rushing into a decision.
GET YOUR FIX ON
Buying the House You Want in a Tight Market
If you haven’t purchased a home in the last few years, you may be surprised to find that buying a house isn’t as easy as it used to be. Gone are the days of cautiously comparing your top 5 choices and engaging in a prolonged volley of offers and counter-offers.
Demand is high, and supply is low.
According to a recent Kiplinger report, existing-home sales were down 3.2% in January 2018. The national inventory of listed homes was down 9.5% overall, continuing a downward trend that spans almost three years. While these statistics may sound discouraging at first, a tight housing market can actually be a good thing if you’re a prospective homebuyer who knows how to play the game.
Fortune favors the bold
Whether you’re shopping for your first home or relocating to a new area, it’s important to know exactly what you want in a house. Bedrooms, bathrooms, lot size, neighborhoods, schools – these are the details that drive the search process. But once you find a house, you need to be ready to move. When asked about how quickly an interested buyer should be ready to make an offer, a Realtor with Keller Williams responded, “In this market, buyers have to be prepared to make an offer immediately!”
When it comes to making a winning offer, speed isn’t the only factor. The strength of your offer plays an important role as well. Drawing on his experience, the Keller Williams Relator shared a few additional tips that will help you submit a strong offer that stands out from the rest. If you’re serious about finding your next home, the following pointers could help you land your new home sooner rather than later:
Pre-approval is key
In a tight housing market, it’s not uncommon for a seller to receive multiple offers. Since anyone can make an offer and then look for financing, you can dramatically improve your chances of acceptance by being pre-approved by a mortgage lender. Highlighting the importance of being prepared, the Keller Williams Realtor points out, “It is important to start with preapproval before looking so that when you walk into the house, you are ready to complete the offer and submit immediately.”
When you’re pre-approved for financing, you give the seller confidence that your offer is solid.
Find out what the seller wants
Every buyer has a list of what they’re looking for in a house, but few consider the fact that the seller has a list of their own. Some sellers are in a hurry, which makes a quick closing date important. Others have had previous contracts fall apart, so they’re in favor of shorter contingency periods. This is an area where it pays to have an experienced buyer’s agent on your side, one who can communicate with the seller’s agent to find out what really matters.
Surprisingly, it's not always money! Over the years, Keller Williams has seen the benefit of uncovering the one thing that’s most important to the seller. “Finding out what that one thing is could be the difference between getting the home or not. I have had sellers accept an offer for less money because it met more of their goals.”
Go big to go home
Everyone loves a bargain, but this may not be the time to hold out for one. While it may seem counterintuitive, Keller Williams suggests being prepared to offer full asking price – or more – on your first offer. “Sometimes you can make a great first impression and skip the multiple offers game with a great first offer! You don't want to spend time fighting for a home you love only to find out that you didn't win because the other offer beat you by $500.”
Additionally, he suggests submitting an offer with as few add-ons as possible. Removing conditions like seller-paid home warranties and seller paying for buyer closing costs can be a game changer.
It’s time to get started
If you’re already house hunting, you owe it to yourself to follow the advice listed above as quickly as possible. If you’re planning a home search in the future, preparing ahead of time is a great way to make the process as stress-free as possible. Either way, getting pre-approved is the first step, and Welcome Federal Credit Union is the perfect place to start.
A basic conversation about your housing goals and financial situation will help our loan specialists determine how much you can afford to pay for a house. Once those details are in place, they can help secure a pre-approval and position you to make the strongest offer possible when you find the home you want.
Should You Pay for Credit Repair Services? Probably Not.
Call it a coincidence. Call it savvy marketing. Whatever you call it, there always seems to be a spike in credit repair advertisements when end-of-year and holiday bills arrive. Maybe you’re staring wide-eyed at a balance that’s higher than you expected, wondering how you’re even going to keep up with the minimum payments. This kind of uncertainty can the stage for bad decisions. So, before you scramble and sign-up for credit repair services, take a deep breath and realize you have more control than you think.
Risk vs. Reward: Is credit repair worth the cost?
It's important to remember that some credit repair services are legitimate businesses, able to follow through on their claims. Unfortunately, the reputable companies reside in a corporate landscape littered with scam artists and opportunists. If you're willing to devote enough time and research, it's possible to separate the upstanding services from the scams, but as NerdWallet columnist Liz Weston points out, "If you’re able to do that kind of research, then you can certainly figure out credit repair and do it yourself."
While the trustworthy credit repair companies aren’t necessarily too good to be true, there’s a good chance they’re too costly to be worth it. When you consider that many of these services charge monthly fees ranging from $30-$100, the boost in your credit rating may not justify the ongoing expense.
Facing credit challenges? Welcome Credit Union can help.
Good credit isn’t the result of tricks and trade secrets. It’s established by applying solid financial habits over time. The same holds true for credit repair. While there may be some additional steps required to clean up your credit report, rebuilding good credit requires a consistent commitment to responsible money management.
Credit unions exist to ensure the financial success of their members. Educating people on proper credit management is part of that mission. If you’re drowning in debt and struggling to regain your financial footing, your credit union could be the lifeline you’re looking for. While they may not advertise it, many credit unions offer free credit counseling for their members. Discussing your current challenges with one of the credit union’s representatives can be the first step towards putting those struggles behind you.
Repairing damaged credit is no walk in the park. But with a little hard work and dedication and the guidance of your credit union’s financial professionals, you can be on the way to reclaiming the good credit you deserve.
Debt and Dating: Can Poor Financial Habits Keep You in the Friend Zone?
Dating is all about discovery. It can be fun to open up and share a few personal details with someone we’re attracted to. In turn, learning more about the other person is a great way to spark conversations that go beyond polite formalities. But while we’re more than happy to show our highlight reels, we all have those things we’d rather not talk about. You know, things like misspelled tattoos. Failed relationships. An affinity for Nickelback. High school, in general. But what about our financial habits?
Is it possible that the way you manage money could have an impact on your relationship prospects? It’s a fair question, and a recent survey of 2,000 millennials uncovered some interesting opinions about debt and its impact on a person’s dating potential.
Does debt matter? Yes. And no.
In short, significant debt is frowned upon, but according to survey responses, it’s not viewed as negatively as being a workaholic. That’s the dating game in a nutshell, isn’t it? Don’t work too little and don’t work too much. Apparently, sensible moderation is attractive. So, what do you do if you’re interested in someone but your finances aren’t as solid as you’d like?
Before you start fumbling for the right words to confess your mountain of debt, don’t get ahead of yourself. Less than 10% of people thought that this kind of information should be shared early on. More than 87% thought it best to wait until the relationship becomes exclusive or moves to the point of sharing household expenses. So, if you’ve just started seeing someone and have more debt than you’d care to admit—relax. You’ve got time.
To share or not to share, that is the question.
Maybe all this talk about debt and dating has you wondering whether you’d be willing to share your most intimate financial details with a potential partner. The survey designers wondered the same and posed an interesting question: Would you rather tell your partner about your large debt or a pre-existing STD? Not surprisingly, the majority of respondents said they’d rather spill the beans about bloated borrowing. But it’s worth noting that more than 39% said they’d find it easier to divulge their most personal medical details.
If almost 40% of people would rather reveal their personal medical history instead of discussing monetary struggles with a potential partner, it’s safe to say debt-related anxiety can impact us emotionally as well as financially. If there’s a takeaway from this survey, maybe it’s the fact that debt and relationships have something in common: Neither improves when ignored.
Three tips for navigating the debt discussion
- Understand your debt. Rather than lumping everything you owe into one negative category, it’s important to remember not all debt is bad. Home mortgages and student loans are traditionally viewed as desirable, while credit card debt and payday loans can be roadblocks to financial success. Knowing the details of your debt is essential to managing it effectively. (It can also help you sound smarter if, and when, the topic comes up on a date.)
- Eliminate bad debt ASAP. High-interest credit cards, auto loans, and title loans can throw you into a tailspin of making minimum payments that never pay down the principle balance. Whether you cut frivolous spending or pick up a side job, find ways to pay off the accounts with the highest rates first.
- Get a good wingman. When it comes to your finances, there’s no shame in admitting you need help. With debt management tools ranging from credit counseling to low-interest consolidation loans, credit unions can play a pivotal role in your financial success. And judging from thousands of survey responses, a solid financial foundation may improve more than just your credit rating.
Do You Have What It Takes to Be an Airbnb Host?
If you’re a homeowner in 2018, there’s a good chance you’ve kicked around the idea of renting out your house through Airbnb. Whether you travel for work or suffer from a perpetual case of wanderlust, you’ve probably thought about opening your house to Airbnb guests while you’re on the road. Maybe you don’t travel, but you’ve considered renting out a spare room to earn some extra money. Either way, you share the same enterprising spirit that helped Airbnb’s founders stumble across a simple idea that changed the way people travel.
Big business with humble beginnings
When a popular design conference led to a sellout of San Francisco hotels in the fall of 2007, Brian Chesky and Joe Gebbia decided to rent out their apartment to Bay Area visitors. After a positive hosting experience, Chesky and Gebbia saw the potential for success on a larger scale. In August of 2008, the roommates teamed up with Nate Blecharczyk and launched Airbnb.
Since then, the company has brokered more than 260 million guest arrivals and amassed more than 4 million listings across 191 countries. While the global scale of Airbnb’s success is impressive, the genius of their business model lies in the fact that it offers average homeowners an opportunity to participate in the $1.6 trillion travel industry.
Make your home work for you
If you travel throughout the year or have a spare guest room, listing your house on Airbnb can be an excellent way to leverage your investment, generate additional income, and accelerate your progress towards your financial goals. But before you get blinded by the prospects of teaming up with a business that reported approximately $1 billion in Q3 revenue, it’s wise to consider what it takes to be a successful Airbnb host.
Creating an inviting home atmosphere is important, but there’s more to it than that. As with any business venture, there are risks and rewards. Before listing your home with Airbnb, here are a few pros and cons to consider:
- Extra income. We can all agree this one belongs in the “pro” category.
- Cultural engagement. Since Airbnb offers global exposure, you have the potential to connect with people from diverse cultures around the world.
- Improved maintenance. When you routinely welcome others into your home, there’s a greater tendency to keep your house in order even when you don’t have guests.
- It’s a business. Operating a quality Airbnb property requires regular attention to business-related details like marketing, customer communication, insurance and property maintenance.
- Digital business still involves real people. If you’re not a people person, extended interactions with customers may prove frustrating.
- Risk of loss or damage. While you’re careful with your things, guests may not always be as considerate. When you rent your home, you assume the risk of accidental property damage and unexpected repairs. (This explains the aforementioned insurance.)
When it comes to business opportunities, it’s always a good idea to count the costs before launching your venture. However, if you’re a homeowner searching for an additional income stream to help you establish an emergency fund, pay off student loans, or set aside retirement savings, Airbnb may be the opportunity you’re looking for.
Financial Quick Fixes Come at a High Cost
Prohibited in 18 states, payday loan companies still manage to offer more than 20,000 locations across the United States, making them more common than McDonald’s restaurants. Banking on consumer desperation, these programs market their services to financially vulnerable customers.
When potential borrowers encounter an unexpected money crunch, the appeal of getting instant cash with minimal qualifications seems too good to pass up. If the borrower is employed and receiving regular paychecks, that’s usually all it takes to get a loan. However, these loans traditionally charge rates of 300% annual interest (APR) or higher, saddling the already-struggling borrower with an even heavier financial burden.
Even though a payday loan is designed to be paid off when the customer receives their next paycheck, the outrageous interest charges often make it incredibly difficult to pay off the full amount. Since the average payday loan payment consumes 25-50% of a borrower’s income, the threat of default is extremely high.
To avoid defaulting on the loan, many customers elect to pay only the interest charges and roll over the loan for another pay period. According to recent CFPB research, almost 4 out of 5 payday loan customers re-borrow within a month. What started as a temporary fix becomes an ongoing cycle of debt.
High-interest consumer loans; spending too much over time
While payday lending companies are traditionally limited to loans of $1,000 or less, there is no shortage of consumer lending companies willing to offer similarly unfavorable terms on higher loan amounts. Like payday lenders, these lenders commonly target individuals with less-than-perfect credit or little to no collateral. But rather than charging outrageous interest rates for short periods, they make their money by charging slightly-less-outrageous rates (59% instead of 300%) over longer periods of time, often 2-3 years.
Consider this example (shown in the graphic above): borrowing $2,100 at an interest rate of 59.39% for 36 months would result in a total payment of $4,644, more than double the original amount borrowed. You don’t need a financial advisor to explain why that’s a bad deal. Fortunately, these lenders aren’t the only game in town.
WFCU offers a convenient, cost-effective alternative
Because they’re structured as not-for-profit, member-owned financial cooperatives, credit unions can reinvest their earnings into programs that benefit their members – instead of paying dividends to shareholders like traditional banks. This distinction allows credit unions to approve personal loans with lower interest rates and higher flexibility than programs offered by payday lenders or banks
Financial Fitness Helps More Than Just Your Money
When you hear the word "fitness," what comes to mind? Gym memberships? Weights and treadmills? Lean, muscular athletes? Credit unions? If that last option seems out of place, it’s probably because your brain automatically equates fitness with optimum physical health. When you consider the global health and wellness industry generated more than $3.4 trillion last year, it’s easy to understand the tendency to think that way.
According to dictionary definitions, fitness refers to the ability to accomplish a specific task or purpose. With this perspective, it’s clear that physical fitness and financial fitness have some commonalities after all. Both types of fitness provide a wide range of personal benefits. Accomplishing goals in either area requires consistent effort, experienced guidance and efficient tools.
- Consistent Effort
Fad diets and miracle cures will never lead to lasting physical fitness. Taking definitive steps toward an established goal is the key. This principle applies to finances as well. From budgeting to saving to investing, following healthy financial habits on a consistent basis leads to long-term success.
- Experienced Guidance
Have you ever gone to a gym for the first time and wondered how to set your goals or structure a quality workout plan? If so, you know how valuable an experienced coach or trainer can be. That’s where Welcome comes in. With our team of experts, it’s easy to find a financial coach who can help you set goals and create a plan to accomplish them. And the best part? We don’t charge for it like the gym does.
- Effective Tools
When you’re working toward a physical goal, the right equipment can make all the difference. If you’re trying to increase your flexibility, a basic yoga mat should be enough. If you’re trying to improve your bench press, you’ll need a barbell and bench.
Depending on your financial situation, your needs might range from budgeting help and savings accounts to investment options. Welcome FCU offers the perfect blend of products and services to help you accomplish your goals.
On the surface, physical fitness and financial fitness may seem like separate subjects. But science has shown that being balanced and healthy in one area affects the other areas of your life. Thanks to this overlap effect, there are benefits to your physical well-being when you are financially healthy. Start enjoying the benefits.
Do Your Resolutions Need a Do-Over?
Believe it or not, it’s July already. You’ve already flipped the calendar page six times, and if you’re like more than 80% of the general public, it’s been a few months since your New Years’ resolutions crashed and burned. Have you taken the time to analyze why your good intentions didn’t pan out? Maybe they were too ambitious. Maybe they weren’t challenging enough. Whatever the reason (or excuse), your resolutions are over. Done. Finished. Or are they?
Failed goals aren’t ashes. They’re embers.
Is it possible to revive resolutions that haven’t shown signs of life in months? Absolutely. To stoke your motivational fire, you’ll need to revisit the reasons you set those goals in the first place. Take a close look at the things you want to accomplish, and then determine whether they’re still a realistic possibility. If so, recommit yourself. If not, adjust your expectations. But once you decide to have another go at it, work smarter not harder.
Find your momentum with micro-goals.
While it can be discouraging to examine missed goals or failure in general, author Erin Lowry addresses the topic of failed resolutions with refreshing candor on her Broke Millennial blog. Lowry shared, “Like most of us, I fail each year at my New Year’s resolutions. Then I realized I should apply one of my favorite money tactics to my resolutions. Micro-goals. I’m a big believer in setting a lofty goal and then working backward to chunk that goal down into manageable pieces.”
The beauty of micro-goals lies in their universal application. Financial Goals. Fitness ambitions. Relational hopes and dreams. Whatever the category, micro-goals can help you get back on track. The key to starting over is finding a way to gain momentum, and breaking your big goals into smaller goals can set yourself up for easy wins. Then, as you experience the sense of accomplishment that comes from completing each little task, you’ll find the inspiration to carry on toward your ultimate destination. Like the peaceful painter, Bob Ross, once said, “There’s nothing in the world that breeds success like success.”
Take another run at those financial goals.
Are you doubling back to pursue a financial resolution like paying off debt, building an emergency fund, or saving for retirement? Remember, you don’t have to do it alone. Welcome FCU can be an incredible partner in your pursuit of financial stability. From low-interest loans and high-interest savings accounts to financial counseling and investment advice, Welcome provides members with a wide array of solutions designed to help them win with money.
Not a Welcome FCU member? Your first micro-goal is an easy one: become a Welcome member as soon as possible!
How Can You Steer Clear of Financial Fraud?
With the rising popularity of online banking, mobile apps, and digital payment services like PayPal and Zelle, financial transactions are easier than ever. Bills can be paid online. Recurring payments can be automated. Funds can be transferred with just a click. The convenience of cashless commerce is welcome, but the reduction in physical exchanges can lull us to sleep when it comes to protecting ourselves against potential fraud
Financial fraud is nothing new. In fact, we probably hear the warnings so often that we hardly notice them anymore – and that can be a problem
In a Washington Post article detailing the vulnerability of credit card users, Kate Silver noted, “Last year, analytics firm FICO found there was a 10 percent increase in the United States in payment cards that were compromised at ATMs and merchant card readers – following a 70 percent rise in 2016.”
Statistics like these point to the fact that while security measures are improving, enterprising criminals are stepping up their games as well.
Keep a close eye on your cards
Much has been written about security advances within the financial industry, and rightfully so. EMV chip technology and digital wallet services like Apple Pay and Android Pay are dramatic improvements that go a long way toward foiling information theft. But with all the focus on innovation, old-school credit and debit card activity still leaves many of us at risk.
Card skimmers, hardly more than an urban myth in 2002, have evolved from clunky contraptions to barely perceptible devices that scan and record sensitive card data. If we’re not careful, mundane tasks like buying gas or getting money from an ATM can put our financial information at risk.
Safety can be simple
The good news, according to Silver, is that commonsense precautions can significantly increase financial protection. Shielding the keypad when entering a PIN, making ATM withdrawals on weekdays (when the machines are inspected daily) instead of weekends (when they’re not), and only using gas pumps with security cameras and security tape are just a few practical steps we can take to protect our financial data.
While these steps reduce the chances of theft happening in the first place, Welcome FCU is making impressive strides toward safeguarding our members if their information is compromised. With convenient tools like online banking and our mobile app on the Apple App Store and Google Play Store , we make it easy for members to monitor their account activity – an essential step for early detection of fraudulent activity.
Avoiding financial fraud doesn’t have to be difficult. Implementing personal precautions and teaming up with your friends at Welcome FCU are simple, yet effective ways to ensure maximum protection. Even if it requires us to take additional steps and exercise a little more caution than we’re used to, preventing fraud is always easier than recovering from it.
It Might Be Time to Adjust Your Home Buying Strategy
You’ve done your research, you’ve prepared your budget, and you’re ready to start your housing search. From the number of bedrooms and bathrooms to the optimum square footage and proximity to work – you know what you’re looking for. But did you know that if your search is too narrowly focused on what you want, you’re hurting your chances of finding the right house at the right price?
In a tight housing market, knowing what the seller wants can be a valuable secret to home-buying success.
Apply some high-stakes strategy.
Know what the seller wants. Sounds simple, right? The problem is that most sellers (likely at the advice of their listing agent) rarely tip their hand – at least not on purpose. Like a high-stakes poker game, the winner isn’t always the person holding the best cards. Sometimes a winning housing search requires you to look for a seller’s “tell” – subtle signs that suggest they’re eager to unload the property quickly.
In her Huffington Post article, reporter Ann Brennhoff shares tips for situational house hunting . Based on her suggestions, a discerning eye for detail can help you gauge a seller’s motivation by decoding domestic clues hidden in plain sight. Whether a young family has outgrown their starter home or a retired couple needs to downsize to a more manageable residence, the details of each situation may provide the insights you need to make a successful offer. But if you only focus on your personal checklist, you could walk right by without even noticing.
Flexibility can help you find hidden gems.
To carry the poker analogy a little further, finding a prime deal in a tight housing market can require you to play the cards you’re dealt. Having a list of preferences is fine, but it’s important to stay open to other options. For example: if you’re looking for a home in a popular suburban area but demanding a lot that includes several acres of land, you’re probably going to be disappointed. When it comes to house hunting goals, the old song lyrics ring true: “You’ve got to know when to hold ‘em and know when to fold ‘em.”
- Locking yourself into a restrictive search process often results in frustration, and frustration doesn’t lead to sound decision making. If you’re willing to expand your search horizons and embrace a spirit of adventure, you may wind up uncovering treasure in places you never expected. What are a few ways to start thinking outside the proverbial box?
- Discover the value of sweat equity. If you’re able to find a structurally sound house, foreclosed houses offer incredible upside for a smaller initial investment. But even if you don’t pursue a bank-owned property, you can adjust your search criteria to look for houses priced roughly 20% lower than your target. This adjustment increases the chances of finding a solid home that merely needs a little TLC. If you’re willing to invest the time and effort, you could be rewarded with significant equity for a fraction of the price.
- If you can’t be first, be patient . In a hot housing market, the demand is higher than the supply. The likelihood of you being the first person to make an offer on a property is pretty low. Instead of making a desperate, reactive offer that exceeds your budget, you may benefit from shifting your search to homes that have been on the market for an extended period. The longer a house sits for sale, the more flexible the seller tends to be. This willingness to negotiate can increase your chances of finding more house for your money or purchasing a home below market value.
- Help the odds be ever in your favor. When you approach your home search like an investor, you realize it’s a numbers game . Sure, you’ve heard fantastic stories of buyers falling in love with the first house they see and stumbling across an unbelievable deal in the process. Those scenarios are the exception, not the rule. If you want to increase your chances of finding a home that meets your needs at a price you can comfortably afford, the solution is simple. Look at more houses
Poker players who go all-in on every hand rarely win big. The champions play the long game. Successful homebuyers play by the same rules. If you’re willing to pay attention to sellers’ needs, adjust your search criteria, proceed with patience, and expand your search options, you will increase your odds of success dramatically.
Teach Your Kids to Make a Stand—a Lemonade Stand.
Long before Beyoncé transformed it into a cultural touchpoint, lemonade was the commodity of choice for childhood business ventures. Perhaps you had a lemonade stand of your own, or maybe you just knew someone who did. Either way, the memories of ice-cold refreshment probably ride on a warm wave of nostalgia. If your enterprise was especially successful, you might even hear a faint “cha-ching” as you reminisce.
Fast forward a decade or two, and now you find yourself juggling the demands of family, friends and career. Thanks to the latest technology, it’s easy to let your kids spend their weekends drifting along on a digital stream of Snapchat streaks and Fortnite marathons. You have a perfect opportunity to shake up your child’s routine with a little old school entrepreneurship. It’s time to bring back the lemonade stand.
Let your kids in on the fun.
When you were young, running a lemonade stand didn’t feel like a job – it felt like freedom. So, don’t worry that encouraging your children to work will somehow rob them of their weekend fun. The venture can be fun, and the lessons they learn from operating a small business can last a lifetime. What lessons? Glad you asked!
Believe it or not, this one comes pretty naturally to kids. If you ask them what they want to do with the money they earn, they’ll probably have at least one goal already in mind. It may be a video game, a bike, or new clothes, but whatever it is, their motivation won’t be hard to find. When they finally save up enough to buy what they want, the sense of accomplishment will be something you can build on for the rest of their life.
Operating a lemonade stand is an excellent way to help your children learn that it costs money to create something. After all, lemons and sugar aren’t free. Understanding economic concepts like cost of goods and profit margins will give your kids a valuable perspective with real-world applications. As they plan their drink prices, let them decide what to charge. Positive or negative, the lessons they learn from experience will help them with future planning.
Like many things in life, lemonade stands are super fun at the beginning! But after a few hours sitting in the sun, there’s a pretty good chance your little entrepreneur will want to close up shop. While it may be frustrating (for you and them), this scenario provides an excellent opportunity to teach them that you can't just walk away when you get bored. And let’s be honest, we can all use this reminder from time to time, can’t we?
Challenge your child to think about how to separate themselves from their competition (of course, this may be hypothetical competition since modern-day lemonade stands are few and far between). Depending on their age, your little one may focus on colorful sign design at first. This focus is understandable, since making the sign is half the fun. But beyond that, feel free to offer creative suggestions. Could they provide a sugar-free alternative? Maybe offer an iced coffee alternative to appeal to more customers? How about spreading the word with a social media post? Should they accept payment through Venmo or PayPal? Like a child’s imagination, the options are limitless. So is the fun!
At this point, you may feel like opening up a lemonade stand whether your kids are interested or not! Channel that excitement and energy into helping them see the fun-filled potential of the idea, and don’t be afraid to get in there and help them when they need it. The time spent together will be even more valuable than the money earned and the lessons learned.