The 4 Documents You NEED NOW!

by Janice Forostiak

In January, I talked a lot about the importance of budgeting; in February, we focused on whether or not people have money problems vs. spending problems and how to tell the difference. In my last blog, I walked you through everything you need to know about your credit score.

What’s left? Getting your personal documents in order. This is a biggie, and too often something we overlook because we’re too busy shuttling the kids to-and-fro, working, etc. I’m guilty. But it’s not as difficult as you think. In fact, once you have a list, one or two meetings with an attorney can wrap it all up.

In “Money Rules: The Simple Path to Lifelong Security,” financial guru Jean Chatzky lays it all out in plain and simple terms. Here’s an excerpt from this valuable book, plus the list YOU NEED to get started:

“Your heart will stop or the tumor will grow.” (Yikes! That’s serious.)

No one likes to think about this, but you must put your life in order for the people who love you. According to Ms. Chatzky, four documents will do the trick:

1. A Will: This determines who gets your stuff, and, if applicable, the custody of your kids.

2. A Living Will: This tells the hospital whether you want life support.

3. A Healthcare Proxy: Lets someone else make medical decisions for you if you can’t do so yourself.

4. A Durable Power of Attorney: Allows someone else to make financial decisions on your behelf if you can't do so yourself.

Depending on how complicated and rich your financial life is, you may also want a trust or two that further stipulates how your assets pass to your heirs and can help you avoid estate taxes. But the aforementioned four are the biggies. If you’ve got them, you’ve done your job!

One more thing ...if you have elderly parents, don’t forget to ask them if they have the above documents and determine whether or not they are updated. Help them figure out who they need to talk to so that things flow more smoothly when the time comes. You’ll be glad you did!

And the Oscar goes to . . . Your Credit Score!

by Janice Forostiak, Marketing Department

An award-winning credit score can take years to build . . . and a few bad months or years to destroy.

Do you know your credit score? We’ve all seen those cute TV ads featuring the men in pirate hats — we probably even know the song by heart. But it’s a good idea to listen to what they’re saying and take action. Here’s why: many lenders are basing loan rates and terms on your credit score.

What is your credit score? Simply put, it captures your financial picture in a quantitative way, taking into consideration your payment history, lines-of-credit available, outstanding balances, and much more. A good credit score can make the difference in getting a loan to buy a house, car and many other items.

So, what is a Good Credit Score?It depends! Each lender decides how to use these numbers. But here are some basic guidelines:

760 – 850: Excellent
720 – 760: Very good
680 – 720: Average – very good
620 – 680: Fair – poor
Below 620: Poor

How do I get a copy of my credit report? It’s good to know what prospective lenders are looking at when it comes to your financial picture. You can get a free copy of your credit report today by logging onto www.annualcreditreport.com. This central site allows you to request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies: Experian, Equifax and TransUnion.

So what happens if you have a less-than-stellar score? Life is not over, and that score CAN be improved! But you have to take some steps to do it.

How do I rebuild my credit score? Bankrate.com has a few suggestions:

1) Correct errors. There are plenty of reasons that your credit report isn't accurate. Perhaps your identity was stolen, or you paid off a debt but the creditor never reported it.

To correct an error, submit details of the error in writing, including corresponding documents, to the credit bureau that's recorded the error. It has 30 days to investigate and make a determination about its accuracy, the Federal Trade Commission says. If a mistake gets scrubbed from your credit report, you could see your score jump by 50 to 100 points.

2)Pay down your balances. Thirty percent of your credit score is based on your credit utilization ratio -- the amount of credit you've used compared to your limit. If that ratio is higher than 30 percent, it's going to have a negative impact on your credit score. Put a big chunk of cash from a savings account or tax refund toward your debt to lower that ratio and boost your credit score.

3) Start automating payments. Improving your credit starts with paying your debt on time. If late or missed payments have led to bad credit, it's easy to make sure your bills are paid automatically and on time. Set up electronic payments to pay off credit cards, mortgages and other debt. This will ensure you never miss a payment and improve your credit score.

As always, your credit union branch representatives are always on hand to assist you in understanding your credit score and ways to help you trim debt and improve your financial position. Put us on speed-dial and we can help you work towards a better financial picture!

Is it an Income Problem..... or a Spending Problem?

by Janice Forostiak, Marketing Department

I had lunch with a friend recently, and was forced to listen for the 100th time about how little money she has leftover at the end of the month. I felt some sympathy, and yet . . . in the course of our conversation, I got a peek into her spending habits when she told me how often she goes out to eat, goes to the movies, etc. etc.

Not to begrudge anyone's personal frills, but these things add up if you’re not watching how often or how much you spend. Suddenly, a movie a week plus going out twice a week adds up to “I can’t make ends meet” or worse, “I can’t pay the mortgage.” What do you do? Get a second job? Go into debt? Not so fast. Maybe it’s a good time to examine where all your money is going and make a budget. MSN Money offers some guidelines to uncovering the problem. Then, Signal Financial can help you with the answers.

Some money myths, busted by our friends at MSN Money:

1. You Don’t Have Enough Money to Follow a Budget
No matter how much — or how little — money you have, it’s always important to be financially responsible. It’s impossible to keep track of your funds if you don’t know where they’re going. Following a budget helps you monitor your finances regardless of the amount of money in your account.

2. It’s Cheaper to Eat Fast Food Than Buy Groceries
This ridiculous rationale is the mantra of those who hate to cook, but barring a few rare exceptions, it’s simply not true. According to the United States Department of Agriculture, couples in the 19- to 50-year age range following a modest food budget spend approximately $143.10 per week on groceries, as of November 2014. However, the average fast food meal costs approximately $12.75 per person, according to The Christian Science Monitor. For eating out to be cost-effective, each person would only be able to have 5.6 meals per week — not including tax and tip.

3. If You Can Finance It, You Can Afford It
This terrible reasoning causes many people to fall deep into debt. Just because you can afford to make payments on a new TV, flashy car or other expensive item doesn’t mean it’s a good idea. When you finance something, you’re agreeing to pay interest on it, which substantially increases the number on the price tag. Rather than wasting your money on interest, save up and purchase it outright.

4. Take Out a Loan to Build Credit
Don’t take out a loan that you’ll have to pay interest on to build credit. Instead, open a credit card and pay it off in full each month. This will allow you to establish credit without incurring any added fees.

5. It’s Cheaper to Buy a New Car Every Few Years Than to Hold Onto an Old One
Consumer Reports notes that over the first five years of ownership, the median car costs more than $9,100 a year to own. However, if you keep the vehicle for eight years, this cost can be significantly decreased to an average of $7,800 per year. So keep the clunker as long as you can — until the repair bills outweigh the cost of a new car.

Finally, Signal Financial is here to help! Start with our budget worksheet by clicking here. Then, our qualified branch staff will be more than happy to evaluate your financial picture, recommend product solutions or even refer you to CAAB (Capital Area Asset Builders) for some more direction.

Source: MSN Money

10 steps to making a financial budget

by Janice Forostiak, Marketing Department

 

Happy 2015!

It’s a new year, and many are making New Year’s resolutions to quit smoking, lose weight and get out of debt. We can’t help with the first two, but we can give you some pointers for the latter.

Getting out of debt will be a big weight off your shoulders, but how to do it? First, start with a budget. Our friends at CNN Money offer the following steps to successful budget creation:

1. Budgets are a necessary evil.
They're the only practical way to get a grip on your spending - and to make sure your money is being used the way you want it to be used.

2. Creating a budget generally requires three steps.

- Identify how you're spending money now.

- Evaluate your current spending and set goals that take into account your long-term financial objectives.
- Track your spending to make sure it stays within those guidelines.

3. Use software to save grief.
Use a personal-finance program such as Quicken or Microsoft Money; the built-in budget-making tools can create your budget for you!

4. Don't sweat the small stuff.
One drawback of monitoring your spending by computer is that it encourages overzealous attention to detail. Once you determine which expenses can be cut (or expanded), concentrate on those categories and worry less about other aspects of your spending.

5. Is cash "leaking" from your account?
If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it's time to keep better records. And if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going.

6. Spending beyond your limits is dangerous.
But if you do, you've got plenty of company. Government figures show that many households with total incomes of $50,000 or less are spending more than they bring in. This doesn't make you an automatic candidate for bankruptcy - but it's definitely a sign you need to make some serious spending cuts.

7. Beware of luxuries dressed up as necessities.

Is it a "Need" or a "Want." Some of your spending is probably for luxuries - even if you've been considering them to be filling a real need. It might be time to get honest and make some cuts. Plus, as it accumulates, the money you save may be worth the sacrifice.

8. Pay yourself first. 10% if possible.

Aim to spend no more than 90% of your income. That way, you'll have the other 10% left to save for your big-picture items.

9. Don't count on windfalls.

When projecting the amount of money you can live on, don't include dollars that you can't be sure you'll receive, such as year-end bonuses, tax refunds or investment gains.

10. Beware of "spending creep".

As your annual income climbs from raises, promotions and smart investing, don't start spending for luxuries until you're sure that you're staying ahead of inflation. It's better to use those income increases as an excuse to save more.

Here's another tip: If you're doing cartwheels because the price of gas has come WAY down in recent months, better to bank the savings than to go on a spending spree. Gas prices are not forever.

Finally, after you’ve tackled your budget, put your focus on consolidating outstanding debt into one easy, more-affordable payment. Are you paying 20%+ interest on credit cards? Apply for our balance transfer VISA and get those payments taken care of faster and cheaper. Click here for details!

Source: CNN Money

Keep or Toss? Navigate through the paper clutter in your life!

by Janice Forostiak, Marketing Department

Are you ready to de-clutter? Tax prep time is prime time for tossing old paperwork you no longer need. We all tend to be paper hoarders at times, but even the most diligent record-keeper can get out of control. So, the $64,000 question remains: How do you know what to keep or toss? Here’s a handy guide to get you started:

KEEP UNTIL WARRANTY EXPIRES OR YOU CAN NO LONGER RETURN OR EXCHANGE
• Sales Receipts Keep 3 years for tax purposes.

KEEP FOR 1 MONTH
• ATM Printouts Throw out ATM receipts after balancing account.

KEEP FOR 1 YEAR Unless needed for tax purposes and then you need to keep for 3 years. • Paycheck Stubs (Dispose once you have compared to your W2; annual social security statement) • Utility Bills Dispose after one year, unless you’re using these as a deduction like a home office then you need to keep them for 3 years after you’ve filed that tax return.
• Cancelled Checks • Credit Card Receipts • Bank Statements • Quarterly Investment Statements Hold until you get your annual statement.

KEEP FOR 3 YEARS
• Income Tax Returns Keep in mind that you can be audited by the IRS for no reason up to three years after a tax return is filed. If you omit 25% of your gross income, that goes up to 6 years; and if you don’t file a tax return at all, there is no statute of limitations.
• Medical Bills and Cancelled Insurance Policies
• Records of Selling a House Documentation for Capital Gains Tax
• Records of Selling a Stock Documentation for Capital Gains Tax
• Receipts, Cancelled Checks and other Documents that Support Income or a Deduction on your Tax Return Keep 3 years from the date the return was filed or 2 years from the date the tax was paid – whichever is later.
• Annual Investment Statement Hold onto 3 years after you sell your investment.

KEEP FOR 7 YEARS
• Records of Satisfied Loans hold while active
• Contracts
• Insurance Documents
• Stock Certificates
• Property Records
• Stock Records
• Records of Pensions and Retirement Plans
• Property Tax Records
• Disputed Bills Keep until the dispute is resolved.
• Home Improvement Records Hold for at least 3 years after the due date for the tax return that includes the income or loss on the asset when it’s sold.

KEEP FOREVER These documents should be kept in a very safe place, like a safety deposit box.
• Marriage Licenses
• Birth Certificates
• Wills • Adoption Papers
• Death Certificates
• Records of Paid Mortgages

Source: SuzeOrmon.com

Shop safely online during the holiday season!

As you shop this holiday season, remember that being cautious doesn’t mean you are paranoid.

Most retailers online ARE legitimate, but it doesn’t hurt to keep a few things in mind before you click and

pay.

• Pay by credit card rather than by check or money order.

• Don’t buy anything from companies that use bulk email solicitations -- you might not ever see the

merchandise.

• Only do business with companies that provide a physical address and a phone number.

• Only do business with companies that offer a strong guarantee and/or warranty.

• Keep good records by printing out a copy of any online products or services you purchase.
• Search the seller’s name or URL to see if anyone else has posted any complaints indicating fraud.

• Use PayPal or other options that do not reveal your card information to the merchant.

• If you are not sure that the site is legit, don’t use it.

Finally, if you happen to be a victim of online fraud, call your credit card provider to cancel and reissue your card, then report it to the Federal Trade Commission.

Source: Shopsafeonline.org

Winter Emergency Kit Checklist!

Bundle up! Weather forecasters are predicting (as best they can) a colder than normal Winter for the Metro area. Whether we experience another Snowmageddon or not, it’s always best to prepare for emergencies. FEMA recommends emergency planning supplies for home, work and vehicles. (More information can be found at: www.ready.gov.) Here’s a list to get you started:

Home —
• Your disaster supplies kit should contain essential food, water and supplies for at least three days.
• Keep this kit in a designated place and have it ready in case you have to leave your home quickly.
• Make sure all family members know where the kit is kept.
• Additionally, you may want to consider having supplies for sheltering for up to two weeks.

Work —
• You need to be prepared to shelter at work for at least 24 hours.
• Make sure you have food and water and other necessities like medicines in your kit.
• Also, be sure to have comfortable walking shoes at your workplace in case an evacuation requires walking long distances.
• Your kit should also be in one container and ready to “grab and go” in case you are evacuated from your workplace.

Vehicle —
In case you are stranded, keep a kit of emergency supplies in your car. This kit should include:
• Jumper cables
• Flashlights and extra batteries
• First aid kit and necessary medications in case you are away from home for a prolonged time
• Food items containing protein such as nuts and energy bars; canned fruit and a portable can opener
• Water for each person and pet in your car
• AM/FM radio to listen to traffic reports and emergency messages
• Cat litter or sand for better tire traction
• Shovel
• Ice scraper
• Warm clothes, gloves, hat, sturdy boots, jacket and an extra change of clothes
• Blankets or sleeping bags
• A fully-charged cell phone and phone charger
• Flares or reflective triangle
• Baby formula and diapers if you have a small child

Be prepared for an emergency by keeping your gas tank full and if you find yourself stranded, be safe and stay in your car, put on your flashers, call for help and wait until it arrives.