Month: December 2017

Will The New Tax Code Destroy Medicare?

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Everyone and their next-door-neighbor has an opinion on the revised tax code. But people reviewing tax formswhether or not you think the simplified tax brackets and the cuts to small businesses are brilliant, all agree that slashing taxes translates into budget cuts across government programs. This is due to the Pay-As-You-Go (PAYGO) Act that Congress passed in 2010 to keep the national deficit in check.

Unfortunately, the program that’s expected to take the biggest hit is also one that millions of Americans rely on: Medicare.
Medicare is what funds health insurance coverage for senior citizens and much of the disabled population. According to the law, only 4% of the Medicare budget can be trimmed. However, financial experts predict that the tax code that is now on the table could clean out the Medicare funds completely by 2029.
Why does the new tax code pose such an extreme threat to Medicare? Are any other programs under similar threat? Can individuals protect themselves?
There are so many questions – here’s what you need to know about the new tax code and its proposed impact on Medicare.
The actual cuts
Numbers are being thrown around the web with abandon, and there’s nothing like an unsubstantiated claim to instigate fear-mongering and generate panic.
Here’s the real deal: The tax bill will increase the federal deficit by approximately $1.5 trillion over the next decade.
It’s important to note that the tax code was created with the primary goal of increasing economic growth. However, it is unlikely that this growth will be significant enough to offset the resulting deficit.
Since the government has to fund this deficit, many programs are expected to suffer from budget cuts over the next few years. It is anticipated that Medicare will be subjected to automatic cuts to the tune of $25 billion – as early as next year.
That’s only the beginning, though. After several years of cuts, along with an undernourished economy from which to draw funding, there is talk of Medicare running out of money by 2029.
Which other programs will be affected?
Many social insurance programs will likely be subjected to cuts, including food stamps, WIC, unemployment benefits and Social Security. However, most of these programs receive their funding from a mix of mandatory and appropriated funds, so the expected cuts will not eliminate them completely.
Unfortunately, the two programs expected to be hit the hardest, Social Security and Medicare, are already struggling mightily to remain solvent. Both programs are currently running at deficits.
Even if they weren’t already battling a deficit, these programs are the ones that need the most funding. Medical costs, from long-term care to medications, only rise with time. In addition, the aging Baby Boomers far outnumber preceding generations and are likely to drain any available funds more quickly.
The Social Security Trust Fund reports that, if no further action is taken, its reserves will be depleted by 2034. If this indeed comes to pass, it can mean almost instantaneous poverty to millions of aging Americans.

Will those who are losing benefits receive a tax cut?
Ironically, the financial class that will be hit the hardest by the loss of funding for these programs will also be hit with a higher tax rate. Most middle-class Americans will be paying more in taxes under the new code, and the AARP has estimated that 1.2 million taxpayers age 65 and older will be paying higher taxes as well by 2019. By 2027, that number is expected to increase to 5.2 million.
What can you do about the impending change to the tax code?
Unfortunately, the average American can’t do anything about these imminent changes. You can hope that the code will change again and the damage done to these programs will reverse itself before any lasting harm is done, but that’s essentially out of your hands.
What you can do, though, is double down on all your retirement investments and try to put away a little more than you already are for your golden years. It isn’t easy to deny yourself something today to have a more comfortable tomorrow, but it’s the responsible thing to do. You don’t want to end up stuck with medical bills you can’t afford to pay or worse if the most awful predictions materialize and Medicare does indeed run out of money.
Protect yourself now! For tips on setting up or improving a retirement fund, call, click or stop by Destinations Credit Union to ask how we can help. We’ll assist you today so that you’re ensured a financially secure tomorrow.
Your Turn: Do you think Medicare will really run out of money? Why, or why not? Share your thoughts with us in the comments!

Financial Preparation For 2018

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2018 is almost here. Are you ready?

Clock nearing midnight

New year clock on abstract background

Remember the Boy Scout motto: Be prepared! A brand-new year, always ripe with resolutions, is the perfect time to reassess your financial attitude, improve, and vow to do more.

“It’s a time of planning for going forward,” shares Sallie Krawcheck, co-founder of Ellevest. “We see a lot of people, often over the Christmas holiday, but certainly in the new year, taking stock of where they are on their personal finances and investments.”

Have you taken any steps to prepare for the financial realities of the coming year?

Here are some tips to get you started.

Tune your budget

It’s a great idea to begin the new year with a plan. A budget is just that-a plan that starts with the income you expect, along with your fixed expenses, such as rent or mortgage costs, homeowners association fees, insurance, utilities and transportation costs. The plan also incorporates your savings goals.

Then, the money remaining is designated for your other expenses. A realistic budget will help you set your financial goals and remind you to stick to them. These last few days in December, as the year draws to a close, is the perfect time to assess last year’s budget or to create a new one if you don’t yet have one in place.

Reviewing where you spent last year’s money will help you make better choices in 2018. If you did not save money for retirement, for example, this can be a new budget item.

While planning for the coming year, make sure to include a method for tracking your spending. You can do this on a spreadsheet or you can simply tag items in your financial account.

Even with a solid strategy in place, there will always be surprises along the way. Losing a job, a leaking roof or an illness can throw off your entire plan. Be sure to build an emergency fund into your budget.

Plan ahead to meet your goals

Next, consider how you will accomplish your goals. You’ll have short-term goals, such as purchasing a new car or home, as well as long-term goals, such as saving for retirement. Each set of goals requires a different kind of planning and saving.

Financial planner, Rachel Rabinovich, recommends setting up a separate savings account for each goal. This way, you can easily track your progress.

Experts suggest working backwards to determine how much you need to save for a specific goal. For instance, if you dream of taking an expensive vacation two years from now, determine the total cost of the vacation and then establish a reasonable time-frame and the amount you’ll need to save each month to reach that goal. Make sure the amount you plan on setting aside each month is doable, or you may just have to move your goal over by six months or more.

Spend mindfully

You can also make your financial future more secure by identifying the difference between your needs and wants. Needs are necessary for your survival, and include items like food and shelter. Wants are things that are not necessary but you would like-such as a luxury car or European vacation.

First, tend to your needs. Then, based on what’s left to work with, consider your wants. This might sound obvious, but for many of us, the line between wants and needs is often blurred. This can lead to awfully tight financial situations, even prompting us to “borrow from Peter to pay Paul.” By clearly differentiating between what you want and what you need, you can avoid this outcome in 2018.

Maximize retirement contributions

Retirement plan contributions can be a valuable source of savings, especially if you have the option of employer-matched funds. If you do, be sure to take advantage of them!

Also, check with your HR contact and your accountant to make sure you are contributing the optimal amount to your 401K and IRA. For the coming year, you can contribute $5,500 to a Roth or traditional IRA, or $6,500 if you are making “catch-up” contributions.

Check your flexible savings account (FSA)

If you have unspent money in your FSA, now is the time to use it. These pre-tax dollars often have to be spent before the end of the year. Do you need a new pair of eyeglasses? Are your teeth in desperate need of a cleaning or repair? This might be a good time to spend that money on self-care and other needs you’ve been pushing off. You don’t want to lose this money, so be sure to use it if you can.

Put the brakes on holiday spending

Avoid going overboard on your holiday spending. Think three times before you pull out your credit card. Going over budget now can mean spending the first few months of 2018 playing catch-up with your credit card bills. Spend less, and start the year off with a clean slate!

Your Turn: What are some of the things you’re doing to prepare for 2018? Share them with us in the comments!

SOURCES:
https://www.cnbc.com/2017/11/20/ceo-sallie-krawcheck-3-ways-to-get-your-finances-in-order-before-2018.html
https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/2017-12-11/5-steps-to-building-your-2018-budget 
https://www.investopedia.com/articles/personal-finance/111813/five-rules-improve-your-financial-health.asp 
https://www.forbes.com/sites/markavallone/2017/10/01/10-quick-year-end-financial-planning-tips/#205a7f9b3a59 
https://www.cnbc.com/2017/11/20/ceo-sallie-krawcheck-3-ways-to-get-your-finances-in-order-before-2018.html

How To Protect Yourself From Identity Theft

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Chances are, you or someone you know has had their identity stolen at one point or Image of Man cloning credit informationanother.  It can be expensive, stressful and extremely complicated to recover from.  Here are seven ways to help protect yourself and your most important data from identity thieves.

Secure Your Hardcopies

Most of us think of identity theft as a digital crime, but many thieves are just as eager to get their hands on your paper documents.  While online accounts are password-protected, important paper documents are often left in a drawer or simply tossed in the trash, where dumpster-diving thieves can find them.

What’s the solution?  Buy a safe and a shredder.  What’s not shredded goes in the safe. Of course, the same level of care should go into protecting your physical credit cards.  Don’t put your wallet in your back pocket. Make it a habit to check to see you have all your cards and IDs when you get home at the end of the day.  This will help you be aware of missing items earlier so you can cancel lost or stolen cards before too much damage is done.

Examine Your Financial Statements

Reviewing your financial statements is a good practice.  Not only will this help you track financial habits, it will also alert you to any fraudulent charges.  Credit unions and banks do a lot to protect consumers from fraud and identity theft, but only you know what you purchased and what you didn’t, so look closely at those statements!

Choose Good Passwords

Many people have one simple password they use for all devices and platforms.  This is convenient, but dangerous. Yes, there is reason to worry that having multiple hard-to-remember passwords may make it more difficult for you to access your own accounts, but potential identity thieves will have a more difficult time too.

If you’re worried about remembering your own passwords, check out these easy and safe ways to store your passwords from Gizmodo.

Protect Your Computer

Malware is just one way identity thieves steal your data.  Invest in a good and reputable antispyware program to make sure your hardware is safe from invaders.

Another way to protect your computer is to encrypt your hard drive.  Apple computers and PCs alike will offer the option to encrypt all data in your hard drive.  Go to your security settings and choose to activate the encryption option.

Be Aware of Suspicious Emails and Websites

If an email looks suspicious, it probably is. Make your email inbox a tightly curated collection.  If you have too many promotional emails, start clicking the unsubscribe button.  This will help you spot suspicious, unsolicited mails.

The same goes for websites.  Your browser or antivirus software may try and warn you about suspicious websites before you enter them.  Don’t disregard those warnings.

Use Two-Factor Identification

The most convenient option is not always the most secure, but given the choice between convenience and security, your best bet is the more secure one.  Two-factor identification for email accounts and other important online accounts will add an extra step to the security process for log-ins, most often making use of your phone number as well.

Secure Your Wi-Fi and Avoid Public Wi-Fi

Public Wi-Fi is often insecure and can be a great way for thieves to get to your data.  Steer clear if you can.  If you have no choice, be sure to avoid all online banking or password logins while using public Wi-Fi.  Additionally, be sure to secure your own home Wi-Fi with a unique and hard-to-guess password.

SOURCES:
http://www.identitytheftkiller.com/10-ways-to-avoid-id-theft.php 
https://www.wikihow.com/Prevent-Identity-Theft

Protecting Yourself Against Card Cracking Scams

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In a recent scam targeting cash-strapped millennials, fraudsters are once again cashingImage of man touching fraud prevention icon in on people’s naivety and goodwill. Only this time they’re using social media to make it happen.

What makes the scam especially cruel is that fraudsters specifically look for victims who are short on funds, such as students with large loans hanging over their heads, struggling single parents or young professionals searching for a job. People who are desperate for cash also prove to be desperate enough to believe almost anything that will help them earn them a quick buck. Unfortunately, this vulnerability, coupled with the broad reach and easy plundering that scammers are granted by using social media, has made card cracking more successful in luring victims than many other scams.

Card cracking scams start with an innocent-looking social media post that appears like the dozens you scroll through every day. The post may show up on the victim’s Twitter feed, Facebook page or on Instagram, and it will always showcase some form of quick cash. It might be an easy-to-win contest with a huge reward for the winner. It can be a dream job that will instantly be yours – as soon as you follow the instructions. It may even be a complete giveaway, such as a cash bonus or a gift card that you’ll be granted just for sharing some information. If you click on the embedded link, you’ll be asked for your checking account information, your PIN or your online banking credentials.

Once the scammers have this information, they can do any number of things with their prize, from withdrawing large sums of cash from your account to using your debit card number for a massive shopping spree. They may even help themselves to funds you have in your account, such as a paycheck or student loan.

In another iteration of card cracking, scammers will tug on victims’ heartstrings, claiming their personal accounts are frozen and they have no access to money. They’ll ask the victim to allow them to access the victim’s account for simple transactions such as depositing checks. Once the checks are in, the scammer will cash in on the amount, and a few days later, when the check bounces, the scammer will be long gone. This variation is sometimes played out in person, on college campuses.

In yet a third scheme, card crackers promise victims a cut of fraudulent funds if the victim allows them to use their account. Victims often rationalize this crime by assuring themselves that they’re not actually playing a part in the fraud. Of course, they will still be held accountable when the scammers are busted.

Sadly, falling victim to a scam can be especially harmful for a millennial who is just beginning to build their credit history.

Don’t be the next victim. Here’s how to protect yourself from card cracking:

1.) Never share personal information with a stranger

You’ve heard it a thousand times, but this rule cannot be overstated. Never share sensitive information with a correspondent whose identity you can not verify with absolute certainty. You wouldn’t think of giving your checking account number to a solicitor you met on the street; why would you share it with a stranger online?

Of course, victims of card cracking and similar schemes believe the scammers are legitimate. That’s why it’s important to authenticate a web address, company or offer by asking for a street address or phone number. Additionally, by educating yourself about these scams, you’ll be able to spot one immediately.

2.) When it’s too good to be true, it usually is

Remembering this rule of thumb will go a long way toward helping you recognize scammers. Free or easy money exists only in fairy tales. Don’t believe the Facebook post that promises you’ll land that dream job you’ve been searching for if you only hand over your account passwords. Ignore the offer for a free gift card and don’t believe the sob story about frozen accounts leaving people penniless.

3.) Never cash a check for someone else

You are not a credit union or a check-cashing business. If someone approaches you in person or online and asks you to cash a check for them, politely refuse. Unless you would trust this person with your life, there is no reason to believe their tale is legitimate or that their check will be honored.

4.) Report suspicious activity

If you notice any suspicious activity on your account, report it immediately. You may have fallen prey to a card cracking scam and you don’t even know it!

Scammers may be smart, but you can be smarter. When you’re educated, alert and aware, you’ll be able to spot most scams before it’s too late.

Your Turn: Have you recently spotted any card cracking scams on your social media platforms? Share what tipped you off in the comments!

SOURCES:
http://info.rippleshot.com/blog/what-you-need-to-know-about-card-cracking 
https://www.google.com/search?q=card+cracking+scam&rlz=1CDGOYI_enUS753US753&oq=card+cracking&aqs=chrome.1.69i57j0l3.10532j0j7&hl=en-US&sourceid=chrome-mobile&ie=UTF-8 
https://www.nextadvisor.com/blog/2016/07/18/know-about-card-cracking-scams/

Surviving the Holidays With Your Sanity Intact

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The holiday season is a special time. With Charlie Brown on TV and carols on the radio, Image of cookies in the shape of a sleighand an ever-growing list of people to shop for, it’s easy to get carried away.  The pressure to over-shop and overspend when you’re rushing to buy everything on your list can be overwhelming. No worries, though; we’ve got you covered! Read on for fantastic pre-and post-holiday tips to ensure you’ll have a holly, jolly December without breaking the bank.

6 Pre-Holidays Tips

Revise your gift list

Gift giving is a treasured tradition, but chances are, lots of the people you exchange gifts with would be as relieved as you’d be to be taken off your list. Narrow down your gift list. Talk to coworkers and acquaintances about just exchanging cards this year, or make a deal to only exchange homemade or inexpensive gifts.

This way, you can focus on buying special gifts for those closest to you instead of generic gifts for everyone you’ve ever met and their cousins, too.

 Organize a Yankee Swap or Secret Santa

Still got a list that’s a mile long? Try one of these creative solutions! A Yankee Swap or a Secret Santa activity not only saves money and stress, it adds a bit of intrigue and playfulness to the holiday. These swaps are great for family gatherings, office parties and neighborhood get-togethers.  Everyone involved only needs to bring a single gift – and it’s always fun.

Set a reasonable price cap on gifts so no one ends up leaving with a candy cane while the person next to them hauls off a flat-screen TV.  You can check out online tips for organizing a fun and affordable Yankee Swap or Secret Santa.

Bake holiday treats

Another great way to reduce the financial weight of your gift list is to break out the baking supplies and start whipping up your own holiday treats instead of buying gifts.

It’s hard to know exactly what your friend will like as a gift, but no one turns down a tin of homemade holiday cookies! Use your favorite traditional recipes, or try something new and different.

 Make a budget and stick to it

This tip sounds a bit obvious.  After all, we all plan to stick to a budget, right?  But make this the year it really happens!

Don’t set yourself a ballpark budget.  Set an absolute limit to how much you will spend on the holidays this season.  This will encourage you to plan your spending rather than grabbing impulse items as you move through a store.  It will also encourage you to look for great deals, which brings us to our next tip.

 Make use of holiday deals….but don’t get distracted

It’s easy to become hypnotized by deals. Prices drop and we go wild, spending more than we originally intended because we don’t want to miss out on those “crazy, low holiday prices.”

Take a deep breath.  Make use of these deals wisely by buying items on your list at a discounted price.  But don’t be tantalized by the deals to the point that you buy things you don’t really need….or even want.

 Rethink giving

We know that the holidays are all about giving – but giving doesn’t need to mean spending money.  Instead of running to the mall again, think of other ways you can give that will help improve your community, make the world a better place, and truly brighten someone’s holiday.

It’s the perfect time of year to volunteer at local soup kitchens, homeless shelters and charity organizations. This kind of giving doesn’t cost a dime, but can be a memorable and significant experience for all involved.

To find local volunteer opportunities, click here.

Post-Holiday Tips

Use those gift cards

Gift cards are a typical holiday gift, but many people forget they have them, and they go unused.

Put all of your gift cards in your wallet and spend them creatively.  Maybe you don’t care for coffee on the go, but you can buy a package of ground coffee beans at Starbucks and use it at home.  Use that iTunes gift card to rent a movie instead of taking the family out.  Whatever it might be, use these gift cards and appreciate them for what they are – money in your wallet.

Invest in next year’s regifting effort

In addition to gift cards, you’ll probably find yourself with a bunch of gifts you don’t really want.  Some of these can be saved and re-gifted next year or used as birthday gifts throughout the year – scented candles, bottles of wine, bath products, etc.  Even if you don’t actually want it, you can find someone else who does!

Why Do I Need To Get Preapproved For A Loan?

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Q: I’m in the market for a new home, and everyone I talk to, from friends to financial Home with Sold Sign in frontadvisors, suggests I get preapproved for a mortgage before I start house hunting. Why is this so important?

A: You’re actually on the receiving end of great advice. When looking to take out a large loan, whether it’s for purchasing a home or buying a car, having that preapproval in hand before you start your search is crucial.

Depending upon the type of loan, the process of getting preapproved for a loan can take time. The lender will begin by asking for your financial history and other personal information. If you have a co-borrower, the lender will need this information about them as well.

You’ll be asked to provide your Social Security Number (SSN) and for permission to allow the lender to access your credit report. If the information you provide is satisfactory, as is your credit report, the lender will begin constructing the details of your loan. When they have determined how large of a loan you will be eligible for, they will grant you a preapproval letter. The letter will also detail your estimated interest rate on the loan, though that will sometimes also depend upon the specifics of your purchase, such as the year and condition of a car or appraisal on a home.

Having your preapproval letter will shorten the loan process significantly when you’re actually ready to take out the loan. However, that is only a small benefit of getting preapproved before you start “shopping.”

Here are some other advantages of getting preapproved for a loan:

1.) You’ll know what you can afford

Your preapproval will tell you exactly what you can afford. This way, you’ll avoid being disappointed later when you have your heart set on a certain home only to be told you can’t swing it financially. Knowing how large a loan you’ll qualify for will simplify your search and get you into your new home or car sooner.

Be sure to calculate other monthly costs, such as property taxes, home insurance and increased auto insurance rates when determining the actual amount of money you’ll need to shell out each month.

2.) Don’t get taken for a ride

Picture this scene at a car dealership:

Salesperson: So, you’re here to buy a new car! What are you looking for?

You: Well, I want something with a smooth ride and –

Salesperson: Got it. And how much of a monthly payment can you afford?

You: Weeelll, I think I can swing up to $200 a month, but I’d rather something closer to $150 if you —

Salesperson: Step right this way please! Let me show our new line of Camrys at just $205 a month! They have the most luxurious feel and the ride is smooth as butter!

What happened here is, quite simply, a salesperson looking to make the most money out of a customer. When you’re unsure about how much you can spend, the dealer will capitalize on your uncertainty and try to sell you a car that just barely skims the maximum amount you’ve decided you can afford.

Also, when you name a monthly payment you can manage, the dealer will work with that number instead of talking about the price of the car. They may try to inflate the payment with charges and fees just because they fit within your named payment amount.

In contrast, when you show up at the dealer with a preapproval in hand, the salesman will have to show you cars with price tags that fit within your loan amount.

Don’t get taken for a ride; get your preapproval before you set foot in the dealer shop!

3.) Be taken seriously

A car dealer will take you a lot more seriously when you wave that preapproval in their face, since having that information in hand shows you’re ready to buy.

When purchasing a home, the same rule holds true. A realtor will be able to assist you more efficiently when you know exactly how much house you can afford. They may also give you better service since you’re showing that you’re serious about buying a home. In fact, many realtors refuse to show homes to buyers who don’t have a preapproval in hand.

4.) Know you have financing you can trust

When you show up at the car dealership with a preapproval from your credit union, you know the deal is in your best interest. Many auto shops have access to several financing options and they’re almost always going to put customers into financing options that are in their own wallet’s best interests.

5.) Purchase your dream home

A preapproval makes you a valuable customer. It also helps you stand out from the pack. If you’re looking to buy a home in a competitive market, you may be competing with several other buyers for the same house. Having your preapproval will give you a leg up on bidding wars. A seller will be more eager to work with someone who’s already started the mortgage process. You can end your search sooner with a preapproval!

In the market for a new home or car? Don’t forget to call, click, or stop by Destinations Credit Union to hear about our fantastic rates on mortgage and auto loans!

Your Turn: Based on your own experience, why do you think it’s important to get preapproved for a loan? Share your thoughts with us in the comments!

SOURCES:
http://www.investopedia.com/mortgage/pre-approval/ 
https://www.nerdwallet.com/blog/loans/advantages-of-getting-pre-approved-for-a-car-loan/
https://www.google.com/amp/s/www.zillow.com/mortgage-learning/pre-approval/amp/