Month: May 2015

College Credit: Where will you live?

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Brought to you by Destinations Credit Union

Top on the priority list for high school graduates is often, “Move out of mom and dad’s house.” And while sometimes mom and dad can’t agree more, this is not always the best financial move for teens.


What are some options for room and board while you are in college? There are plenty. Weighing the financial and personal benefits and downsides to each living situation can help you find the best possible option. Here are some possibilities for you to consider:

  • Staying at Home. This is often the most affordable option, especially if your parents will let you live in their home rent-free. If your college is within driving distance, you can live for free, eat for virtually nothing, and have the moral support of your parents nearby. The downside is being an adult and living in your parents’ home. This is not always an ideal situation for some new college students.
  • Living in the Dorms. The dorm life will help you meet people on campus and make it easier to get involved. However, the convenience comes with a price tag. The cost of living in the dorms varies by college and you often have at least one roommate in a very small room. There’s also the added cost of campus meals plan to consider.
  • Finding an Apartment. An apartment provides you the privacy of a home but at a lower cost than a house or some dorms. Finding a roommate will help defray some of the cost so you don’t have to foot the bill all on your own. The downside is that apartment living can be more expensive than a dorm room when utilities and other expenses are added in. Don’t forget to factor in the cost of food as well.
  • Live with Family. If your college is away from home, living with other family members that reside in or near the college town is a great option. You’ll get to know your extended family a bit more, plus live at a relatively low cost. Perhaps you can babysit for younger cousins to help cover expenses. The downside, again, is living in someone else’s home. If you’re looking to reconnect with family, though, this could be a great option.

Whatever housing option you choose during college, make sure you do your research and find an option that works for you-both financially and personally.

3 Mortgage Scams And How To Beat Them

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Brought to you by Destinations Credit Union 

The phrase “home security” is pretty widely used and has a variety of contexts. It can mean locking doors and windows when leaving the house, setting up an alarm system, participating in a neighborhood watch, or setting up automatic lights for vacations. These are all steps homeowners take to keep the contents of their homes safe.

When it comes to the home itself, though, folks can be a lot less particular. While homeowner’s insurance can protect against natural disasters, there’s a new threat to the cornerstone of the American dream. Scam artists are targeting desperate homeowners, trying to steal their money, personal information or even the home.
These scams come in a variety of shapes and sizes, and each one needs a detailed response. Before you do anything with your mortgage, check to make sure your “once-in-a-lifetime” offer isn’t on this list. 
1.) Up-front cost refinance 
The scam: You get a phone call or a letter from someone who wants to refinance your mortgage. The rates they’re offering are crazy low. They can cut your monthly payment by hundreds of dollars or help you pay off your mortgage in record time. All you have to do is pay a small percentage of those savings up front.
Of course, the company offering the mortgage is fake. You might get bills from them for the new amount, but paying them won’t affect your mortgage. Meanwhile, the institution that does hold your mortgage still expects you to make your regular payments.
How to beat it: It’s illegal to charge up-front fees for mortgage refinancing. Some institutions may try to waffle around this by calling them “document processing” fees or using some other jargon. Whatever they call it, it’s against the law and is a sure sign this “lender” is really just looking for a quick payday while not delivering anything in return.
Also remember that, while rates can fluctuate over time and from institution to institution, the fluctuation is limited. If someone is offering a rate that is several percent lower than anyone else in town, be highly skeptical. Check with your Better Business Bureau to see if the company exists and/or if complaints have been filed against it. 
2.) Hope foreclosure relief 
The scam: This savage scam targets homeowners who are facing foreclosure. Whether because of job loss, medical expenses, or other hardships, foreclosures affect 100,000 households each month. People in desperate situations try anything they can to dig themselves out. That’s when they get a phone call from someone representing Hope Services who can connect them with government assistance to stop their foreclosure. All they have to do is make three “trial payments” into a mortgage escrow account.
Hope Services collects the money and encourages borrowers to stop paying their mortgage. They’ll actively encourage homeowners not to talk to lenders or lawyers. They’ll take care of everything. As it turns out, Hope Services provides neither hope nor services. Homeowners are stuck facing foreclosure hearings without any assistance whatsoever.
How to beat it: Anyone who tells you not to get a lawyer or talk to a lender does not have your best interests at heart. If you miss several mortgage payments due to extenuating life circumstances, call your lender. Most institutions would always rather you pay something and keep you in your home than have to go through the process of foreclosure. Keeping lines of communication open is critical to getting back on the right track.
Also, watch out for high-pressure sales tactics. Anyone who wants you to make a mortgage decision on the spot is trying to deceive you. Mortgages are long-term arrangements and they should be considered carefully. A “money-back guarantee” is also a big red flag. Getting your money back will do you little good if you lose your house in the process. 
3.) The fine print deed sign 
The Scam: Scammers use a variety of up-front pitches. Some might offer to lower your rates or lower your mortgage payments. Others might try to rescue you from foreclosure. Still others might offer a home equity line of credit with alarmingly good terms. They may also offer to take over the deed to your house and then use their superior credit rating to secure a lower rate, while allowing you to remain in the home as a renter. Whatever the pitch, there are a ton of forms to sign. All of them are written in indecipherable legalese.
Somewhere amid these forms, perhaps buried in the back, is a form signing the deed for your house over to the scammer. Once they have the deed, they can rent the home to someone else or sell it outright while forcing you to vacate. Worst of all, you’re still on the hook for the balance of the mortgage, since the loan is tied to you and not to the home.
How to beat it: Scrutinize every document you sign relating to your mortgage or home. Have someone with experience in these matters look over documents if you’re not confident in your ability to detect these scams. Spending 20 minutes with a real estate lawyer is expensive, but not as expensive as losing your home.
There is never a legitimate reason to sign the deed of your house over to someone else unless you’re selling the house. While rent-to-buy schemes aren’t illegal, they very seldom end well for the renter. It won’t even get you out of legal or financial trouble.
Also, be wary of anyone who claims to guarantee a halt of foreclosure. No one can make such a guarantee, and legitimate businesses would  lose everything in lawsuits. The same is true with money-back promises. That’s good protection when buying a blender. It’s not something anyone can promise for your house. 

Destinations Credit Union offers free financial counseling, including certified housing counselors to our members.  If you have questions, ask!

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Property Taxes

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Around this time of year, it seems like we get taxed coming and going. We get a bill for our income, then another for our house! There’s no end! In reality, these taxes are being levied by different levels of government and property taxes play an important part in funding schools, public transportation and other important civic goods.

That said, there’s no reason not to try minimizing your liability. If you can pay less, you should. The amount of your property taxes is determined by the value of your home, as determined by an assessor. The assessor looks at nearby houses, as well as improvements and features of your home, to determine what your property is worth.

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

1.) Follow the assessor 

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

While you’re doing so, be sure they take note of any flaws, damage or needed repairs. These can reduce the assessed value of your house. If you’re not there pointing those out, they may never see them. They’ll focus on the wonderful parts of your house and make the assessment based on that.

Additionally, following around the assessor and talking to him may encourage him to hurry the inspection. The assessor may miss new fixtures or overlook value-adding features of your house. By following them, you subconsciously rush them. This can also set you up well for an appeal (but more on that later). 

2.) Check for breaks 

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

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

3.) Limit your curb appeal 

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

You shouldn’t try to wreck your yard or do anything to compromise the value of your property. Such tactics will likely draw the attention of nosy neighbors and others who might consider your tasteless display a violation of zoning laws. Instead, just try holding off on major exterior improvements.

Minor tricks, like opening windows on one half of the facade to mess with the symmetry, can be effective in marring the assessor’s impression of the house. You might also hold off on resealing driveways and cleaning vinyl siding until after the assessment. These little tricks can nudge your property value down a bit. 

4.) Appeal your assessment 

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

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

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

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

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


SOURCES:

Home Equity: Loans Vs. Lines of Credit

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If you are looking for funds to improve your home, using the equity in your home can be a great way to finance the improvements.  Using the equity in your home is not something to take lightly, but if you are doing something to improve the value of the home, it can be well worth your while. 

What is My Equity?

The available equity in your home is calculated by taking the current market value of the home (as determined by an appraisal) and subtracting the current mortgage balance.  Destinations will loan you up to 80% of that amount.  To get a rough idea of what your home is worth on the market, you can check internet sources, such as zillow.com, for recent sales of homes in your neighborhood.

Loans Vs. Lines of Credit

A Home Equity Loan is a fixed-rate, fixed-term loan.  The payment and the interest rate are constant over the agreed-upon term.  Therefore your payment amount will not fluctuate.  You cannot borrow against the equity again until the loan is paid off.

A Home Equity Line of Credit (HELOC) is an open-ended loan that you can borrow against any time you need the funds.  The line of credit is up to 80% of the equity in your home.  The rate on the line of credit is generally lower at the time you apply because it is a variable rate.  As market rates rise, so may your interest rate.  With a HELOC, you can draw against the line whenever you need the funds. 

Both options provide low rate loans to accomplish your goal.

With Destinations Credit Union, our HELOC rates are the Prime Rate minus 1% with a floor of 4%.  Since the Prime Rate is now at 3.25% (and has remained so since the end of 2008), our current rate is 4% Annual Percentage Rate.  Prime would have to rise to more than 5% before the rate would rise on our HELOC.

If you are interested in exploring a Home Equity Loan or Line of Credit, contact us through our website or give us a call at 410-663-2500.

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

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Most people have a checklist they go through before they leave the house. Is the stove turned off? Are the doors locked? Do I have my wallet, my keys and my cellphone? The only thing that has changed about that process in the last few years has been the addition of that last item on the list.

Today, 91% of Americans have cellphones and 61% of them have smartphones. This is a remarkable change from even two years ago. More than half of the people you see every day are carrying a computer that dwarfs the most powerful computing technology that was available a decade ago. It’s also connected to all of the world’s information, literally at our fingertips. What do we use it for? Drawing moustaches on our selfies and tossing wingless birds at shoddily made pig housing.

If you’d like to use your smartphone for more sophisticated purposes, plus add a ton of convenience and peace of mind to your life, consider mobile banking. With a couple of taps, you can access a whole suite of financial information. Let’s look at four scenarios where mobile banking can save you some time … and even some money. 

1.) Say goodbye to security woes 

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

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

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

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

2.) You can check your balance any time 

Rather than waiting for your statement every month or booting up that slow PC for checking your account balances online, you can view transactions while waiting for a bus or in line at a restaurant. You can stay vigilant against illegal account access any time you’ve got your phone and a spare few seconds.

The convenience of mobile banking can also keep you from making costly mistakes. If you know funds may be running tight, check your account balance while in the checkout line to make sure you can cover the cost of your purchases. You can see if your monthly rent check has been withdrawn from your account to avoid the costly fees associated with overdrafting. It’s easier than ever to keep track of your finances.

You can also help to prevent errors with mobile banking. Accidental overpayment, duplicate payments and other errors are a regrettable reality of the modern high-speed economy. By regularly checking your account statement, you can catch these pesky problems before they turn into big issues. 

3.) It’s where you’ll find the next big thing 

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

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

4.) 24-hour-a-day instant access 

Do you ever wake up in the middle of the night in a panic because you can’t remember if you paid your electric bill? Ever have a tiny freakout on the bus because you suspect someone may have accessed your account? Are money worries preventing you from enjoying your vacation? If you have these concerns and are nowhere near your computer, you could just suffer through them.

As an alternative, though, you could use a mobile app to check your balance and transaction history. See if your monthly bills have cleared. Make sure your balance is safe. You can do all of this any time you’ve got your phone, day or night.

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

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Four Steps To Checking Your Credit Report

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

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

1.) Get your credit report

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

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

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

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

2.) Go over your report

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

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


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

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

3.) Report inaccuracies

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

The FTC has a template for a dispute letter available on its website. You can use that or you can draft your own. Either way, you’ll need to clearly identify the accounts or items you’re disputing. Where possible, use partial account numbers or other numerical information. You’ll also need to explain why you consider the item an error. Attach copies, but not originals, of documents that support your claim. Examples include police reports for stolen or lost wallets, bankruptcy orders that discharged a debt or letters from a lender indicating that an account was opened fraudulently.

Send your letter via certified mail. This costs a little more than a stamp, but you’ll get proof of receipt. This is important because the agency has 30 days to make a determination about your dispute. They’ll send your dispute to the information provider (the company that told the agency about the account or negative item).

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

4.) Stay on it

Checking your credit report periodically is the only way to keep yourself safe from identity theft and other modern crimes. If you need assistance, Destinations Credit Union is here to help.  Call, click, or stop by today.

SOURCES:

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

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

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

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

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

1.) A savings account for college students

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

Your student work or part-time job might not make a dent in astronomical tuition costs, but it can still help you get out of debt faster. Setting up automatic savings account transfers will force you to put away a little bit each month. Check out Destinations Credit Union Kasasa Cash or Cash Back (free checking with rewards) to see how you can get extra money for your savings every month.  You can use that once you’re out of school to make a big first payment. It’ll really take the sting out of the debt load.

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

2.) Automatic bill pay

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

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

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

3.) Pay with a Destinations Credit Union credit card

One of the benefits of a student loan is the bump you get on your credit score by paying it regularly. Lenders see your management of student loan debt as evidence of responsible borrowing, making them more likely to trust you in the future. If you want to maximize the benefit to your credit score, you can use a credit card from Destinations Credit Union to make your student loan payments.  You can earn rewards with each “purchase” but make sure you are paying down the credit card as you make these payments.  There’s not much point in trading one kind of debt for another unless there is a long-term benefit.

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

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

4.) Consolidate and refinance

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

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

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

SOURCES:

http://www.bankrate.com/finance/college-finance/repay-college-loans-fast-4.aspx

Bubble Bursting

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The economy has always moved in cycles. There are times of vigorous expansion followed by periods of slower growth or retraction. It’s been happening since the dawn of recorded history and will likely continue to go that way for generations to come. There are a million theories to explain this phenomenon, from sun spots to demographics, but the “why” is less important than the demonstrable fact of the business cycles.

When people talk about “bubbles” and “bursting,” they’re putting this widely observable fact into panic-inducing language for the purpose of sensationalism. A headline reading “Economy doomed due to bursting bubble” sells a lot more papers than one that reads “Economic cycles continuing as normal for past and foreseeable future.” Yes, some periods of economic retraction are more intense than others, but the sky is not falling.

Federal Reserve meetings have begun regularly discussing the possibility of raising interest rates. Such a move might make several investments that have been lucrative for several years, such as insurance companies and financial service providers, suddenly less attractive. Such a shift, particularly by investment-generating annuities and other managed funds, will drive down prices in these sectors.

Changes are likely coming in the economy and it makes sense to modify your investment strategy. Sensible investors respond to market conditions to protect their portfolio. There are a number of seasonal adjustments that can help to insulate you from the inevitable retraction. You should discuss these moves with a qualified financial advisor.

1.) Sell off risky investments

Most people who predict a bubble bursting have some idea of what industries are exposed to the greatest levels of risk. Popular choices include real estate, financial services and manufacturing. These industries are generally more exposed to volatility in the market, so it makes sense to shade your portfolio away from these sectors.

This isn’t a permanent move. This is part of the most basic wealth-building strategy: sell high and buy low. Stocks and funds that comprise these sectors are likely near a temporary high. Their prices will fall and investors who sell will have the opportunity to reinvest at much friendlier prices.

2.)  Shift to non-cyclical stocks

“Sell in May and walk away” is common stock market advice. Many sectors, especially cyclical consumer goods, tend to notice dropoffs in their stock prices during the summer months. Families choose to spend their discretionary money on vacations and other experience-related items instead of electronics or fancy clothing. While this advice is generally good, it’s incomplete.

Rather than leaving your investments in cash, move them into less volatile options. With interest rates poised to go up, bonds and other savings instruments can be a good way to shield yourself from risk. This is called “defensive investment.” When you expect stocks to perform slightly worse than average, investment vehicles, which are less influenced by market forces, become smarter picks.

3.) Adjust your retirement plans

One of the only dangers to the coming retraction is to people who are planning to retire in the next year or two. Those folks may experience a dramatic dip in their available retirement funds right at the time they need it. If retirement plans are flexible, it makes sense to wait out a market downturn. Postponing retirement by a year or two can improve your standard of living dramatically.

Otherwise, not only will you not be pulling out money from your retirement account at the time you can least afford it, but you’ll also lose out on years of buying cheaper stocks. Those prices will rebound eventually, which will magnify the return on those dollars. Earnings invested in down economic times are worth more in retirement than those invested in boom times.

4.) Stay calm

If you’re invested in managed funds, you may not need to take any action. Mutual funds, which are widely diversified, will likely continue to experience a similar rate of return. Individual securities will fluctuate wildly in price and sector funds will also be subject to some day-to-day volatility. Market-wide index funds will have slightly higher day-to-day changes in price, but on the whole, will still experience the same gradual rate of return. Odds are good your retirement account is in one of these funds if you selected it in consultation with a retirement planner.

As always, you need a certain amount of money available easily in case of emergency.  This is where Destinations Credit Union can help.  We have lots of savings options that will help you get the best return on your safe (insured) and liquid cash.  Payroll deductions or automatic transfers can help you save painlessly.  
You don’t need to panic about your 401(k) and put all your money in a mattress. You don’t need to quit your job and run for the hills. You may need to adjust your portfolio to take advantage of changing market conditions, but you shouldn’t stop planning for the future. Keep calm and save on!

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