Was there a credit union at the first Thanksgiving?
Was there a credit union at the first Thanksgiving?
What happens if you’ve made it to the day you thought you’d be retiring, but you’re simply not financially ready? Perhaps you passed your “Plan B” date. Maybe even “Plan C” has come and gone. You know you’ve been making the right moves, but a temperamental stock market, kids who stayed home longer than expected or an unlucky series of events keeps pushing back your time frame. So, in exasperation, you ask …
Question: “How will I ever retire? When will it be safe to stop working?“
Answer: Well, hopefully very soon. We’re going to show you some ways to put luck back on your side. It’s going to be part planning, part faith and a good deal of ingenuity, but we can get your pictured future back within sight again.
Question: “OK, so how do I know when I’ll have enough money?”
Answer: The first thing you need to do is realize that enough money is possible. It’s scary to read headlines about Boomers running out of money because they lived so long, especially when they’re coupled with stories about how the 4% rule isn’t enough. If you take these articles at face value, you’ve got to come up with 40 years of savings, assuming you’ll be taking out as much as 10 percent of your nest egg every year. Because it’s difficult (if possible at all) to get to that point, it’s easy to give up.
Instead, go back to 4%. Or, if you’re being conservative, make it 5%. That’s a 25% raise! That’s a lot! Then, remember the lessons of your working life: Anything that happens far in the future should be weighted far less, because you never know what might happen between now and then. You might find you don’t care for fly fishing that much or you no longer need that annual trip across the country. Your neighborhood’s home values could rebound. Maybe you’ll stumble onto a strong investment. There’s too much uncertainty in life to freak out about what’s going to happen far away into the future. Take 5% out, per year, until you’re 85. That’s plenty. Anything beyond that is too much.
Question: “How can I make sure I’ve got enough retirement income?“
Answer: One of the easiest ways to produce panic is realizing that money only flows one way once you stop working. You’ve been conditioned to treat any month in which you spend more than you earn with revulsion, shame and guilt. Now, that’s going to happen every month – for the rest of your life.
A lot of retirees feel more comfortable with money coming in on a regular basis. You can accomplish this in a variety of ways. First, try to put off Social Security as long as possible. The higher payout will make retirement much easier. Second, try to create passive income using investment products. In the same way that dividend-producing stocks pay out on a regular basis, you can create passive income that can be accessed any time by moving chunks of your retirement into high yield savings products like money market accounts. That way, you can still budget the way you used to without having to sell your stocks (while hoping you guessed the right time to sell).
You can also create passive income by using your home equity to fund a business venture. Right now, mortgage rates are low, but a lot of Boomers are missing out because they paid off their homes in order to retire. You use a home equity line of credit to buy a rental property (which builds equity at the same time it gives you a paycheck) or start an online business built around your hobbies. If you love to knit, sell handcrafted items on Etsy. Do you like to fish? Start manufacturing lures with the equity in your home. These ideas can generate a monthly income for you and also give you something else to leave to your children. In a pinch, you can even sell the rental property or sell shares in the business for a quick cash infusion.
Question: What about my health? That can be a big cost, even with Medicare.
Answer: One of the best places to put some money when you retire is into various forms of insurance. You probably already have life insurance, homeowners, and insurance on your other big purchases, but you also probably only have Medicare to cover the health side of your insurance portfolio. What happens if you need something Medicare doesn’t cover? Is it worth it to go on Healthcare.gov and try to find a supplemental plan?
One way to keep your options open is to try a “do-it-yourself” Health Savings Account (HSA). While traditional HSAs gain their benefits from your employer paying into them, you can get a lot of the same benefits simply from putting some spare cash into one of our high-yield money market accounts. That way, you’ve got money put aside for a health emergency, but you’re not spending on a premium you’ll only need very rarely. As an added benefit, you can access that money if you need it for things that aren’t health-related if some other kind of emergency comes up.
Hopefully, you’ve gotten a better idea of how to tackle retirement. You need to have faith and protect yourself at the same time. The best way to do that is to put your money with someone you trust and give yourself access to it, just in case. If you need any more info, want more guidance, or just need someone to talk to about taking the leap, give Destinations Credit Union a call at 410-663-2500.
Investing can feel pretty distant. It’s hard to imagine the tiny fraction of Disney or Google that you own, your savings accounts can look a lot like a bunch of numbers with no meaning and mutual funds are about as easy to conceptualize as advanced trigonometry that’s taught in the original Greek. That’s why a big part of building a savings plan you can stick to begins with finding one you understand. Passive income is one such simple concept. It is a valuable addition to your wealth-building strategy because it can put cash in your hand every month while also being tied to something tangible, like real estate.
So, you’re buying a car. You’ve made it past the tedious comparison shopping, you’ve finished the detail-oriented research and you’ve even endured the haggling with the salesperson. Your tongue probably tastes like that terrible coffee they use in every car dealership in America, the kids are probably getting cranky and it’s pretty likely you’re thinking about everything else you could have done with your weekend. But, it’s almost over.
It’s never a good idea to trust someone who doesn’t want you to think. Get your credit score for free once a year from annualcreditreport.com.
Every Sunday, Americans gather to watch football. Wherever you are, whatever else you do, the one thing we all (it seems) have in common is this Sunday ritual. When Dr. King called Sunday the most segregated day in America, he couldn’t have imagined the unifying force football would become, dominating popular culture and conversation in a way few other forces could. In fact, of the 50 most popular programs last year, 90 percent of them were professional football games. Perhaps, in a world of DVRs and on-demand programming, football may be our last shared live event.
We’ve found a variety of ways to enjoy our shared obsession, from tailgating to fantasy football. Over the last few seasons, a new way to enjoy football has come to dominate every commercial break, ESPN segment and preview article: daily fantasy sports. Daily fantasy sports, or DFS, is similar to fantasy football, but it’s played on a weekly basis rather than being a season-long experience. It was also just declared “gambling” by the state of Nevada, which is an interesting development for the rest of the country. If you’re curious about DFS, either because you might want to play or because you want to know what all of those commercials are about, this article explains what DFS is, why it’s controversial, and outlines the potential pitfalls that come along with it.
For fantasy football enthusiasts, DFS seems like a natural evolution. Traditional season-long fantasy football has some major issues. For instance, a single injury can ruin a season, no two leagues have the same rules, and the whole season can swing from a waiver wire pickup of a running back no one had heard of a week prior. Most of these issues are rectified by a universal scoring system and the one-week duration offered by the major DFS sites FanDuel.com and DraftKings.com. If your fantasy football season has gone awry for any of the reasons listed above, joining a DFS league can seem like a logical way to ease the pain. In addition, if your fantasy season is going great, DFS can seem like an appealing way to win some easy money.
The controversial issue, of course, centers around money, because DFS currently exists in a legal gray area. While it may look like gambling, it emphasizes skill over luck, so it is not technically gambling. While the state of Nevada has ruled DFS as such, that doesn’t change a whole lot, since gambling is legal in that state.
Whether it’s luck or skill that’s the more important attribute, anyone who has played fantasy football knows that both are required for success, which is why this issue is so sensitive. For instance, if Cleveland’s tight end catches a touchdown with his knees, that’s worth a lot of points, but it is unlikely anyone who selected him had predicted such a play. Similarly, when the booth reviews a potential fumble at the goal line, it can be worth enough points to swing a matchup from victory to defeat – a touchdown is worth 6 more points than a fumble in most leagues, which is a substantial amount. That booth review can take several minutes to determine the result of a play that consisted of a split second or a few inches.
At the same time, there is a lot of skill in determining which quarterback/receiver tandem will hook up for multiple scores or which defense is undervalued each week. Because of these random occurrences, fantasy sports is what economists and game theorists refer to as a “knapsack problem” because it considers each player – in effect – a weighted random number generator.
The MIT Sloan conference is dedicated to advanced analytical research into sports, and if you’re the kind of person who watches football with a spreadsheet open you may believe skill outweighs luck. However, one of the most interesting things about fantasy football is that the more skilled players tend to think the game is driven by luck while the less skilled think it’s driven by skill. Matthew Berry of ESPN, one of the biggest names in fantasy sports, has argued for years that fantasy players should view each player as a lottery ticket and collect as many as they can, while his colleague at ESPN, Tristan Cockroft, has created what he calls “Fantasy Consistency Ratings” to account for the random variance from week to week.
As we move into a new world of DFS, the issue remains whether the pursuit is more similar to free fantasy football leagues or sports gambling. Congress will have to decide, it appears. Powerful lobbying groups already exist to benefit DFS, so the sites may remain legal for longer than their online poker brethren. Before you spend $200 to get a “free” entry, however, it’s a good idea to remember that even if DFS isn’t gambling, it’s still a way to spend money. It can make an otherwise dull football game between two lackluster teams into something more exciting, but it can also fall nicely into a perfectly legal space where powerful people profit by exploiting human addictions.
If you missed part one of our guide to buying a used car, take a moment to click here and check it out. We covered choosing the right car, understanding the value of the vehicle and many aspects of the process up to the point you sit down with the person from whom you’ll make a purchase.
Question: Do I really have to negotiate? It’s such a terrible experience and I feel so intimidated.
Negotiating a car sale isn’t most people’s cup of tea. If you’re buying from a dealer, it means sitting down with someone who may have more experience than you do, particularly with car sales. It doesn’t have to be an intimidating process, though. You have all the power in the transaction: you can buy a car from the first person or the 10th, while the salesperson needs to make every sale he or she can.
Question: How can I make the negotiation go smoothly?
Know your price – The Internet is a fantastic resource. Once upon a time, the salesperson knew more than the customer about car prices, and that was particularly true of used cars. Now, you can determine the price you’re willing to pay before you ever walk in, and refuse to pay one cent more than that. If you want, you can even email back and forth between multiple salespeople, letting them bid against each other.
Don’t say too much – There’s very little you can say to make a negotiation go better, but there’s a lot you can say to make it go worse. You’re not going to cause the other person to have a sudden change of heart and cut you a better deal, but you might give the clues they need to know they can hold out for more money. If in doubt, don’t say anything. It can be difficult, particularly when the silence is awkward and tense, but saying nothing is often the right thing to do.
Walk away – It’s an old saw in sales: “He or she who can walk away controls the deal,” and it’s been passed down from bullpen to bullpen because it’s true. If you aren’t willing to walk away and leave the salesperson without a sale, then what incentive does he or she have for lowering the price? It feels terrible to spend an entire Saturday on car lots and still wake up on Sunday without a car, but you need to get over it. When you go out to buy a car, make a resolution to wait a week before you buy. That will make it easier to walk away and give you time to make sure you’re certain of your purchase. If you wait, you might even get a phone call during the week with a better price, particularly if it’s near the end of the month or if it’s been raining. Is it worth a few day’s wait and another day’s work to save a few hundred dollars? In most cases, it is.
Question: Should I finance the car at the dealer?
One of the keys to negotiating a car deal, whether at the dealership or from a private seller, is securing the best financing available. After all, even one percent difference in your interest rate can be worth hundreds, or even thousands, of dollars over the life of the loan.
Get your financing first – The best way to get the best rate is to borrow from your credit union. Our auto loans have fantastic rates, and we’re not trying to sneak in any hidden charges or fees. If you come to us first, you can make a clear plan for how much you can spend, so you’re not surprised when that first payment is due. We can also tell you how much you’ll need as a down payment, and we might even have some good tips on who you can trust in town. You can start the pre-approval process online.
Hopefully, if you’re planning on buying a used car, you’ll save money and get a vehicle that will make you happy for years to come. If not, feel free to trade your vehicle in and start the guide over from the beginning. And remember, you’re always welcome to talk with your partners at Destinations Credit Union for more information and guidance to make your car buying experience as enjoyable as possible.