Archive for Savings

My Savings Has Been Wiped Clean; How Can I Replenish It?

Broken piggy bank with coins everywhere

Q: The last few months have been really tough on my finances, and I’ve been forced to use my savings for getting by. My emergency fund and savings account are basically zero. Now that my financial situation is starting to improve, I’d like to start building these up again, but it’s all so overwhelming. Where do I begin?

A: Watching savings that took you years to build up disappear in just a few months can be disheartening, but it’s important to remember that you’ve made the right choice. Using emergency funds to survive prolonged unemployment, an unexpected large expense or a medical emergency is the best way to make it through a financial hardship. If your savings are depleted, though, you’ll want to start rebuilding as soon as possible to ensure you have the funds to cover a future financial challenge without falling deeply into debt.

Here’s how to start your rebuilding plan:

Set a goal

Before getting started on saving up money, it’s a good idea to establish a tangible goal. What’s your magic number? You can try to recover the value of the savings lost, or start smaller, with a more attainable goal. Bear in mind that experts recommend having funds to cover three to six months’ worth of living expenses set aside in an emergency fund or savings account.

Review your budget and trim your spending

A good place to start finding those extra dollars for savings is by carefully reviewing your spending for ways to cut back. Look for expenses that can make a difference in a monthly budget without dramatically affecting your quality of life. Think about subscriptions or services that are rarely used, a dining-out budget that can be scaled back and expensive recreational activities that can be swapped with freebies. There’s no need to live like you’re broke, but stripping your budget of some extras can give you the boost of cash you need each month to build up your savings again.

Find a side hustle

Another great way to land extra funds is through a side job. There are many ways to pad a wallet without a major investment of time. Some options include taking surveys on sites like Survey Junkie and Swagbucks and doing gig work for companies like Uber, DoorDash and Rover.

Sell your old treasures

If you’ve spent part of the COVID-19 lockdown giving your house a deep cleaning, you may have unearthed some forgotten treasures that can turn into easy moneymakers. You can sell old clothing on ThredUp, unwanted jewelry on Worthy.com, make good money off your unwanted furniture through Chairish, sell or trade unused sports equipment on Swap Me Sports and sell kids clothing and toys on Kid to Kid. Use the cash you earn from these sales to jumpstart your new nest egg.

Make a plan

Once you have a goal in place for building your savings, and you’ve maximized the possible monthly contributions toward savings each month, it’s time to create a plan. Map out a timeline of how long it’ll take to reach your goal when putting away as much as possible each month. Remember: the more aggressively you save now, the sooner you’ll reach your goal.

Start saving

It’s time to put the plan into action!

The best way to ensure regular savings happens each month is to make it automatic. You can set up an automatic monthly transfer from your Section 705 Checking Account to your Section 705 Savings Account on a designated day of the month. You may want to have the transfer go through several days after you receive your monthly salary, or it might work out better to put a smaller amount of money into savings each week. Give us a call at 337-232-8450 to discuss your options.

Put unexpected windfalls into savings

To speed up the process of rebuilding depleted savings, you may want to resolve to put unexpected windfalls into an emergency fund or savings account. This can include tax refunds, a work bonus and gift money. If another round of Coronavirus stimulus checks is approved, consider using these funds for your savings as well. Earmarking future windfalls for savings can shorten the amount of time spent cutting corners in a budget and taking on extra jobs to build up a savings account.

Rebuilding an emergency fund and savings account from the bottom up isn’t easy. It takes commitment, hard work and the ability to keep a long-term goal in mind; however, the security that comes from knowing you have a safety cushion to fall back on in case of a financial setback will make this goal worth the effort many times over.

Resources:

https://www.policygenius.com/blog/money-milestones-how-to-rebuild-a-depleted-emergency-savings-fund/
https://www.fool.com/the-ascent/banks/articles/rebuilding-emergency-fund-after-coronavirus/
https://www.moneymanagement.org/credit-counseling/resources/how-to-rebuild-your-personal-savings-account

7 New Year’s Resolutions For A Richer 2017

New Year, New You!

fireworks

Photo Credit: http://ow.ly/44VN30j5jgg

The New Year is a great time of renewal. That makes it a good time to make bold, decisive changes in your life. Leave behind the baggage that was 2016 and start fresh with a blank slate in 2017. If you’re looking for some resolutions to improve your personal finances, we’re pleased to offer seven ways to make 2017 the year of the dollar!

 

1.) Track your spending

Determine where your money goes. Carefully record every dollar you spend for a month; apps like Mint can make this process automatic. Keeping track of where your money ends up may ultimately encourage you to spend more judiciously.
 

2.) Make a budget

70% of Americans live financially spontaneous lives, without planned spending. This is a circular problem: If your budget doesn’t include setting aside money for long-term expenses and savings, you’ll end up spending everything on unplanned things and events. Stop the cycle by creating a budget that modifies your spending to be more in line with your priorities.
 

3.) Get out of debt

The biggest stumbling block to financial security and saving towards long-term goals is debt. Make the move towards debt reduction this year by adding an extra $50 or $100 to your credit card payments. Alternatively, focus all your payment resources on the highest-interest debt until it’s paid off, then move on to the next highest.
 

4.) Start an emergency fund

The best way to avoid going into debt is to have some money available to handle the occasional, yet inevitable, emergency. Set a specific goal, like adding $10 per month to a savings account. At the end of the year, you’ll have more than $100 available in case something goes wrong.
 

5.) Start a retirement account

When you have a retirement account, your monthly statements serve as reminders to think about and plan for your retirement. The challenge, though, is taking that first step. Don’t get hung-up on perfection; any kind of retirement account is better than none. If your job offers a 401(k) matching program, sign up to get at least the full matching funds amount – it’s free money. Do a bit of research, then open the account that seems like the best idea.
 

6.) Automate your savings

Fighting that impulse to spend what you’ve earmarked for savings is a constant struggle; it’s easiest to take the decision out of your hands. Change your direct deposit to put some of your paycheck directly into a savings account, where you won’t even think about spend it impulsively.
 

7.) Get educated

Knowledge is power, and that’s especially true in the world of personal finance. There’s loads of information out there; resolve to read one personal-finance article a week. This will give you great ideas for improving your financial situation.

Happy New Year from all of us at Section 705 Federal Credit Union. We hope you have a safe, happy, and prosperous 2017!

For more tips and tricks like this, connect with us on Facebook, Twitter, Instagram, or YouTube!

SOURCES:

What Do I Do With My Refund?

moneyWe don’t normally like to tell you how to spend your money.  Our members tend to be very good at that, often finding creative ways to turn the hours they’ve spent at the office into new ways to enjoy their lives.  More often, we tell you how to not spend your money by letting you know about our fantastic savings options that can produce dividends in varying amounts of time, or we’ll often tell you about ways to use your good credit for getting a loan that can make your life better or save you money in the long run.  

At tax time, however, we thought we’d take a different direction.  If you’ve got a windfall coming from the IRS and don’t want to watch it disappear as you spend an extra $50 or $100 here or there, we’ve got some plans that can turn your refund into lifelong memories, earn you money in the long run or both, all while spending time doing what you want to do.  

We’re working with a hypothetical assumption that you have around $1,000 coming, because it can be an awkward amount of money.  It’s not enough to pay off a big chunk of debt or fund the purchase of a life-changing item like a house or new car, but it’s too much to ignore.  $1,000 is a lot of money to spend, but not a lot to have.

Tackle one home improvement project

We’ve all got a list of things we’d like to do around the house.  Maybe you’d like a deck for grilling once the winter lets up, or you’d like a more welcoming front entryway to your home, or you’d like to drag the kitchen into the twenty-first century.  Talk to your spouse, your kids or whoever might enjoy what you’re planning to build.  See what they have to say and what their interest levels might be in helping you out.  Once you come up with a plan, watch some YouTube videos to make sure it’s something you can handle, and then mark your calendar.  Set times to work, and make it a family project.  By the time you’ve finished, you’ll have improved the value of your home, spent time building something tangible with your family, and you won’t have to suffer through a summer without your deck.  

If you can’t think of a fun project your kids might enjoy, what about building a wood-fired outdoor pizza oven?  They’re simple enough to assemble, the kids will definitely enjoy it, and most home kitchens are ill-suited to making really good pizza.  

Once that project is done, you can always go back for more.  If everyone had a great time, take a look at what’s next on your list and tackle that.  Once your ambition to improve your home outpaces your refund, come see us about a home equity loan or line of credit and we’ll help you turn your house into the home of your dreams.

Take a parents’ weekend

Getting an evening away from the kids can be difficult, and a weekend might seem impossible, but it doesn’t have to be that way.  You’re holding a refund check from the IRS and it might be enough to ship the kids off to grandma and grandpa’s house, or pay for a couple of nights at a hotel in a nearby city.  If you haven’t tried it yet, AirBNB has made it easier than ever to find a great rate on a place to stay, even at the last minute.  Guys: you get bonus points if you take her somewhere for Valentine’s Day; dinner and a show might be lame at home, but in another city it can be romantic.  When was the last time she got to wear her favorite dress or jewelry?

A parents’ weekend is a great way to invest in your future, even if it doesn’t seem like it at first.  Study after study says that Americans don’t vacation as much as the rest of the world, and that those who do tend to be more productive.  Watch how much more smoothly everything goes at work when you get back.  

If you’re looking for an inexpensive getaway, try New Orleans.  It’s got haunted tours, antiquing and brass bands during the day, while still offering you world-class restaurants (Commander’s Palace is a must for upscale restaurants, Mother’s Po Boys for downscale, and try the chargrilled oysters at Acme for a taste you can’t get at home that is priced right in the middle) and Bourbon Street at night.  Mardi Gras is just around the corner, but you can save a bundle by heading down afterward.  Maybe while the kids are on spring break?

Encourage a gifted child

Many families find that they’d rather splurge on the kids than on themselves.  If that’s the case, why not use your tax refund to invest in your child’s future?  Purchase an instrument, a trainer or a tutor for a child who’s shown an interest in a special activity.  The college admissions process has gotten incredibly competitive since you went through it, and the leadership and talent demonstrated through extracurriculars could mean the difference between getting into that prestigious East Coast school or having to stay home at football state university.  Beyond admissions, talents your child can demonstrate will also help him or her get scholarships, making the investment you put in today a sound one financially, as well as spiritually.

If your child hasn’t displayed any gifts or specific interests, this might be a chance to spark something.  You could try paying for a school trip, which seems to happen every other month, or even take a family trip to Europe.  If you still can’t figure out what they’d like, you could always put the money into their college fund.  We offer several tax-exempt programs, which would let this year’s refund come off of next year’s taxes while it earns interest toward their inevitably enormous tuition bill, which many experts think will be around $250,000 by 2030.

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New Year’s Resolutions

New Year’s Resolutions? We Have Some Easy Suggestions!

fireplace with candles around itBy the end of January, many of us will have forgotten all about our New Year’s resolutions. It can be difficult to change our lives, even when it’s for the better.  Knowing this, we want you to know that, in your financial life, there are changes you can make today that will last the entire year.  Here are three resolutions you can set today and some follow-up goals for the rest of the year. 

Today:  Save money automatically.  If you want to improve your net worth, build financial security or make a big purchase at this time next year, the easiest way to do so is simply to automate your savings.  You can set up an automatic transfer to savings so you won’t be tempted to spend it.  With many of our savings products, you can even access the money if an emergency arises.  Check out our savings accounts and automatic transfer options for those savings accounts.

Later:  Set up an emergency fund.  How much do you have set aside for a rainy day or to cover the unexpected?  If an emergency came up, would you have to sell investments, cash in your retirement or borrow from family?  Make this the year for setting up your emergency fund.  You’ll eventually want to have at least six months of income put aside where you can get to it. for now, start with $1,000, a month’s income, or whatever feels realistic.  It might be difficult to get in the habit of saving money, but this is the resolution you’ll be really happy you kept if something unexpected happens.

Today:  Pay down your debt.  If you’re struggling with debt, there are three basic solutions for paying it down, getting your payments under control and getting ahead of debt.  You can make more frequent payments, pay more each month or lower your interest rates.

Paying more frequently makes sense if you get paid every two weeks: You might already know about the advantage of bi-weekly payments, which let you make the equivalent of an extra monthly payment every year.  If you’re already doing that or you don’t get paid on a weekly schedule, you can also increase the amount you pay every month.  Even an extra $25 per month is $300 per year, and you can set up those payments automatically.  Make sure you increase your payments the most on the bills with the highest interest rates first, even if they don’t have the largest balances.

Finally, you can get ahead of your debt by lowering your interest rates.  You can call the creditors who are charging you the highest interest rates and pay the bill, transfer the balance to a credit card or loan with a lower interest rate, or see if they’ll offer you a lower rate due to improved credit.  One way to make this work is to arrange a home equity loan at a lower fixed rate, then move your balances with the highest interest rates to the loan.  You can apply for a loan here!

Later:  Get control of your spending.  It’s time to make a budget and stick to it.  Build rewards into the budget so you’ll actually be happy to follow it.  Take a look at what you use your credit cards to buy, then budget at least some money for those items or activities.  You’ll never keep a resolution like “stop eating out,” but you have a good chance of keeping a resolution like “don’t go over the eating out budget.”  This also gives you 12 chances to succeed:  Every month you can do better than the month before.

Today:  Make a drawer.  Many of us who have had the misfortune to act as the executor on a loved one’s estate have had the terrible task of finding all the savings, debts, insurance policies and other financial parts of their lives.  Don’t do this to whomever is taking over your life.  Empty a drawer in your kitchen or study and put as many relevant documents in it as you can find.  Make a list of everything in the drawer and everything that’s missing.  Put a copy in the drawer and another with your will so it’s as easy as possible for the grieving individual in charge.  As with any sensitive, personal data, keep this information in a safe place that only you and the likely executor(s) of your estate will have knowledge.

Later:  Fill the drawer.  What’s missing from the drawer?  Do you have a will?  How much life insurance do you have?  Do you have enough savings to take care of your children?  What about a plan for how they will receive that money?  

Talk to a financial planner and insurance specialist to make sure you’re set.  With any luck, 2016 won’t be the year you need it, but if it is, it’ll be better for everyone involved if there’s a plan.

And that’s it … three things to do today and three projects to complete during the year.  None of them are out of reach, so you’re setting yourself up for success by making resolutions you can keep.

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This Guy Paid Off His Mortgage In Three Years. So, Why Does He Regret It And Why Is Everyone Angry At Him?

an image of the combination of a house and calculator

Paying Off Your Mortgage Too Soon?

There’s not much in life that is more freeing than finally paying off a large bill. Suddenly, our checking accounts are flush, the future feels more open, and even our favorite jeans seem to fit better. When it comes to a mortgage, of course, that seems so far down the road it’s difficult to imagine, particularly for those just starting out. If you’ve always paid rent or a mortgage, it just kind of feels like that bill is always there, the background noise of your life.

So, when 30-year-old Canadian resident Sean Cooper paid off his mortgage in three years, he celebrated by burning his mortgage papers and found a news crew to film it. But, here’s the twist: He isn’t happy about it, and judging from social media posts and comments on the news coverage, no one else is, either. In fact, Cooper seems full of regret and everyone else is full of scorn or pity. What’s going on?

Cooper sacrificed a lot to pay off his mortgage, and even he admits he focused too much on his financial goals. He worked three jobs, including as a full-time CAD technician $75,000 (about USD $56,000) white-collar job, a customer service job at a local grocer, and writing freelance articles. In addition, he supplemented his income by living in the basement of his home while he rented the house to others. As many commenters note, that’s not a healthy way to live and it’s unsustainable.

Often, we lose sight of what’s around us when we focus on our financial goals. That moment when the bill is paid seems so sweet that we don’t really think about everything it’ll take to get us there. If you’d like to make financial headway on your mortgage without making yourself crazy, we’ve collected some tips below. The key idea among them is finding a balance, so you’ll need to adjust them for your own personal situation. If you’d like a more personal meeting to discuss your financial goals and finding balance, let us know. Cassie is a certified Financial Counselor who can help you make a plan. Also, follow us on Facebook and Twitter to let us know: What do you think about paying off a mortgage in less time than it takes to earn a college degree? What would you do differently from Sean Cooper?

Take gigs, not jobs. It’s easy to see why renting out one’s home and securing extra employment are so appealing. Regular income feels safe and makes it easy to plan ahead. But extra employment can also be confining; It’s difficult to work full-time and still find time for your hobbies, your family, or the occasional afternoon spent binge-watching Netflix (something everyone needs occasionally). If you don’t find time for your hobbies, you’ll find that your job has become your hobby. If you don’t spend time with your family, you just won’t have the bonds that families need.

Instead, look at gig-based jobs like Uber and Air-BNB. While they might not offer the steady income of a regular-hours job, you can scale your work up or down depending on need and availability. Plus, if you don’t feel like working on a given day, you don’t have to. With Air-BNB, the owners of a rental property can cancel for any reason with as little as 24 hours notice. That’s the kind of fantastic option that’s not available if you have renters who are playing their music a little too loud above you.

Turn your hobby into a gig. If you want another way to generate income, one that doesn’t require you to do mindless tasks, and you want to keep enjoying your hobby, then it might be time to turn that hobby into a gig. Do you scrapbook or make crafts? Open a store on Etsy. Are you an avid collector? Start investing and re-selling collectibles on eBay. Do you build or tinker? Time for a workshop. Have a design? Put together a working prototype and take to Kickstarter. Want to write a novel? Fifty Shades of Grey and The Martian both started life as fan-made, self-published ebooks. It’s never been easier to find an audience or customer base.

If you’re looking to make the move from weekend warrior to someone who can make money with your passion, get some start-up capital. You’ll need workshop space, supplies or a new laptop. We’ve got a lot of ways for you to invest in yourself. Who knows, that investment could be the start of a new path to leaving the rat race behind. But the first step is checking out our loans.

The goal is financial security, not paying off a single bill. There’s no prize in paying off your mortgage. It’s just one less bill to pay. Your goal is overall financial security. That could mean refinancing your mortgage to have cash in hand when interest rates are low, or investing significantly when interest rates are high. So, don’t pay off your mortgage while racking up credit card debt or neglecting your student loans. Instead, take a look at all of your debt. Work from the highest interest rate to the lowest, paying off each in turn, so you can pay as little interest as possible every month.

Whatever you do, you’ve got to be happy. It’s difficult to find balance, particularly with debt and obligations hanging over our heads. The solution isn’t to take on more obligations and retreat from humanity. The solution needs to be understanding that money exists as a means to an end, not an end itself.

Sources:

http://nypost.com/2015/12/03/no-one-is-happy-for-the-man-who-paid-off-his-mortgage-in-3-years/
http://www.dailymail.co.uk/news/article-3345476/Frugal-man-30-pays-255-000-mortgage-THREE-years-thanks-Kraft-dinners-bike-riding-100-hour-work-weeks-no-one-admires-it.html
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/meet-the-mortgage-free-30-year-old-whose-frugality-riled-the-internet/article27539357/