Archive for spending

Help! I Overspent On Christmas!

Buyer’s Remorse after Christmas?

It’s easy to go overboard for Christmas. Giving extravagant gifts to your family members seems like a great idea…until you’re facing a huge credit card
bill in January.
 
However it happened, approach this problem rationally. Blaming yourself is pointless; the important thing now is to right yourself financially.
Fortunately, you’re not facing this alone. Section 705 Federal Credit Union is here to help. Check out these four ways you can patch up your finances and have things right before summer.

1.) Budgeting adviceYour CU: personal loans, budgeting advice, debt counseling, and refinancing major purchases.

It’s very tempting to make only the minimum payments on the credit card you used to buy Christmas. Unfortunately, it’s also the best way to ensure you’re in debt for every Christmas to come.
 
Making minimum payments on credit cards prolongs the length of time you’re in debt and spikes the total amount you pay, adding an extra $175 to a $10,000 balance at 21% APR.
 
What you need is an aggressive debt repayment plan. Instead of looking to pay the smallest amount possible, identify the most you can afford to pay. Section 705 FCU can help with informative guides and worksheets on household budgeting.
 
Commit to an extreme budget until you make headway on the debt. Coming up with an extra $35 or $50 a month is tough, but it’s the easiest way to get things moving.

2.) Refinancing major purchases

If you splurged on one or two major purchases, it may not be credit card debt you’re facing. Slick car dealers offer crazy-sounding incentives to entice people to give cars for Christmas. Unfortunately, when you realize you’re in over your head with a car payment, there’s no undoing the deal.
 
Section 705 Federal Credit Union can help. Our auto and other major purchase loans often feature rates that are better than dealerships. You may need to finance the purchase over a longer term, or you may need to restructure the loan to pay less now. Either way, you’ll find more favorable and flexible terms at with us than you will at the dealer.

3.) Debt counseling

Does reading those credit card statements fill you with despair? The credit union can help you make sense of them.
 
Make an appointment to speak with a debt counselor through Section 705. You’ll learn about your rights and responsibilities and create a realistic plan to pay off your debt and avoid falling into the same trap next year.

4.) Personal loans

Instead of making dozens of minimum payments, focus your debt into one manageable plan through a debt consolidation. Amazingly, taking this step can save you money in the long run by lowering your interest rate and monthly payment commitment.
 
Collateral isn’t necessary. All you need is some basic personal information and a willing partner. Our loan specialists can help you organize and simplify your payments, working toward a debt-free life.
 
 
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How Not To Bust Your Holiday Budget

Christmas tree with presents underneath it

Holiday Budget Tips

According a T. Rowe Price survey, more than 50% of parents will aim to get everything on their kids’ wish lists this year. Many of these parents will be paying for these gifts for months, or even years, afterward.

There’s a better way, and it’s simple: create a budget, and make informed decisions about your spending before you hit the shops.

Short-term effects

Tipping your budget just a bit every once in a while isn’t a disaster. But the spending hangover many parents face after holiday shopping is too large to be easily forgotten.

Over half the parents surveyed will pay for their holiday gifts with credit cards. Just 61% of them plan to pay off their spending within three months, and 16% say they will pay it off over the course of six months or more. That’s half a year spent catching up on holiday spending!

Think carefully this shopping season before you drop another item into your cart. Is this gift really worth trimming your budget for the next three – or six – months?

Long-lasting effects

11% of parents use money from their retirement accounts, 14% have taken funds out of their emergency savings and 11% have taken out a payday loan.

While their kids may be delighted with their loot, parents can be paying for it for longer than they think.

Taking $500 out of a 401(k) at age 35 translates into giving up $6,000 that was earmarked for retirement. Parents are forking out additional taxes and penalties to gain access to the money, and are also losing the opportunity for that money to grow.

Life Lessons

There’s nothing quite as exciting as unwrapping a present. Kids wait all year for the holidays and as their parents, you want to make them happy. This is why 60% of the parents surveyed claimed they try to check off every single item on their child’s wish list.

Aside from the financial drain, purchasing every gift your kids have their hearts set on teaches them a host of lessons they’re better off without. Do you really want your kids thinking they can always have everything they want? Do you want them to feel that everything they own must always be the best and most expensive?

This holiday season, teach your kids that true happiness can’t be bought.

Be proactive

Try saving up for the holiday season throughout the year. While it may be too late for this year, it’s never too early to start thinking about next season. Sign up for our holiday club accounts, and put money aside each month!

Be an informed shopper this holiday season and your decisions will pay off in more ways than one.

Your Turn:  How will you fund your holiday spending? Do you plan to buy your kids everything on their lists? Why or why not?

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Three Jars: Kids Saving Challenge

The Three Jars!

When it comes to smart money management, transparency is key. For adults, that means keeping accurate records. But how can young children get a real sense of how much of their money goes to spending and how much they’re saving? It can be done by providing them with a simple, visual system for dividing their money. Instead of an old-fashioned piggy bank, consider using three clear glass jars.

Three Jars: Kids Savings Challenge

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Financial Realities V. Financial Priorities

Are Your Financial Realities Keeping Up With Your Financial Priorities?

Happy New Year! It isn’t three months late, it’s just a different calendar. That’s because filing your taxes effectively closes the book on the financial year gone by while opening up a world of possibilities. Will this be the year you break free from the clutches of debt? Will you set up an emergency fund? Maybe you’ll finally start saving for retirement! New years are typically a time of reflection, and the financial new year is no exception. It’s time to kick back and dream big about what goals you’ll achieve in the financial year to come (provided you’ve finished your taxes first)!
 
Whatever their goals are, many Americans are about to get a big chunk of change back from the federal government in the form of a tax refund. How they choose to spend that money will be a good indicator of their financial priorities. Here, it is worth noting that there’s a big disconnect between what they say those priorities are and how they act in reality.
 
When surveys ask Americans what their top financial priorities are, they most commonly name managing bills, paying off debt and saving. Yet, only about half of Americans plan to save their tax refund or use it to reduce debt. Worse still, the number of Americans planning to use their tax refund in those two ways is down for the third straight year.
 
If you want to know what someone’s priorities are, don’t ask them. The answer you’ll get is more about what they think you want to hear than what relates to their actual priorities. If you want to know what someone prioritizes, see where they spend their money.
 
Do you ever get the feeling that your financial priorities might be out of whack? Since you’ve already got your receipts, account statements, credit card bills and other piles of paper that comprise your recent financial history, it’s a good time to find out. Don’t worry – this won’t be nearly as hard as filing your taxes! Try this 3-step process.
 
1. Establish your priorities
 
Going through the daily motions of life, you may never have time to think about the reasons for which you’re earning money. Very few people are getting up and punching the clock every morning with the hope of building a Scrooge McDuck-style money room. Most of us are trying to put food on the table, keA Balance holding a tax refund and prioritiesep the lights on and provide for our loved ones. Those things are our priorities.
 
Write down on a sheet of paper the top five things you want to achieve with your money  Number one will likely be paying bills, but there’s quite a bit of flexibility in the rest of the list. Are you saving for a down payment for a house? Maybe you want to take a dream vacation or start a small business. Perhaps financing your children’s higher education is a priority for your family. You might have charities you like to support, or dreams of retiring early.
Spend some quality time thinking about where you want to spend your money. If five options feels too limiting, feel free to go beyond that. Just keep the list in order of what you want to do. There aren’t right and wrong answers here. If your priority is owning the world’s largest Barney the Friendly Dinosaur costume collection, that’s fine. What matters is that your list reflects your values and commitments.
 
2. Identify your realities
 
This is where that mountain of paper in front of you comes in handy. Take stock of your spending in any given month. For each of your financial priorities, how much of your paycheck goes to each?
 
Make a list of your top 10 categories of spending. Try to account for a much of your paycheck as you can. Put your biggest expenses at the top, and then list all the way down to the smallest. Feel free to make categories as you go and reshuffle them as patterns become more apparent. Don’t stress too much about where to categorize things. Just go with your gut.
 
Now, compare the list of expenditures to the list of priorities. Is your money going where your mouth is? Are you spending to bring yourself closer to your priorities, or do they just exist on that sheet of paper you had in step one?
 
3. Make a plan to fix it
 
Don’t get discouraged if you find you’re nowhere near your priorities. Remember the statistic in the beginning. Half of Americans are going to spend their tax refund on a big-ticket purchase or a vacation, and most of them also say they want to save for retirement and get out of debt. You’re not alone in living far away from your financial ideals.
 
It might not be a bad idea to revisit your priorities briefly. Perhaps you were too strict when you set your priorities. It might be that you prioritize day-to-day comfort. There’s nothing wrong with doing so, but look where it ranks on your list of priorities. Is the joy you get from your daily indulgences worth the trade-offs it brings? In short, given the plans you have, do you regret any purchases? Those are the ones you want to cut from your budget and lifestyle.
 
You don’t need to switch overnight from your current financial attitude to one that’s totally in line with what you want your money to do. Making too strict of a plan will make you unhappy, frustrated and more likely to bend back the other way. Don’t let perfect be the enemy of good.
 
Pick one action you can take tomorrow to bring yourself closer to achieving your priorities. Cancel a monthly music subscription and put the $10 into a savings account. Cook in one more time next week and put the difference toward your credit card bill. Once these changes start to feel effortless, look for more ways you can tweak your spending habits to make your priorities and realities line up a bit better.
 
If you need help reaching your savings goals, Section 705 Federal Credit Union can help. There are many ways you can automate your savings and assist in keeping you on the right track. Call, click or stop by the credit union today!
 
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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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