How Should I Use My Tax Refund?

Q: I got a bigger than expected tax refund this year and I don’t want to blow it all. How hand holding money over file folderscan I use it responsibly?

A: You’re already making the better choice by thinking about what to do with your small fortune instead of splurging and then watching it all disappear within a few weeks.

When you receive an unexpected windfall, whether it’s from a tax refund, work bonus or a cash gift, it’s always a good idea to be proactive about how you’ll spend it instead of letting it just blow through your checking account.

Below, we’ve listed some dos and don’ts for you to consider.

Do: Pay down debt

You probably don’t want to see your entire refund go straight to your credit card bill, but you don’t have to take the all-or-nothing approach. Consider earmarking 20% of your windfall toward paying down high-interest debt you may be carrying. You can adjust this number as you see fit, but you’ll be doing yourself a favor by paying off a large chunk at once. You’ll save a ton on interest and you’ll be finished with this debt a lot sooner than you’d planned.

Don’t: Lend out your refund money

It’s sweet of you to want to help a friend or relative out of a tight spot, but lending all of your refund money is not the smartest idea. You might not see that money for a while, and if you do, it’ll likely be repaid in small amounts instead of the large chunk of cash you have now. And that is severely limiting to what you can do with it.

If a friend or relative is in desperate need of financial help, consider lending them a small portion of your refund. Also, be sure to create a repayment plan so you can have some assurance you will see that money again.

Do: Start saving or investing

If you’ve always been waiting until you have a substantial amount of cash in hand to start a savings account or an emergency fund, you’ve just run out of excuses! Take $1,000 out of your refund and use it to start a savings account. You can set up an automatic transfer to take money out of your checking account each month to help it grow, even if you can only afford as little as $10. The head-start you’re getting now, along with the small monthly contributions, will add up quickly.

If you’re feeling super-responsible and forward-thinking, use this opportunity to start investing. The rewards will greatly outweigh any qualms you might feel about not spending this money. Say you receive an annual refund of $2,800 and invest this money at 6% interest. If you continue investing this amount each year, you’ll find yourself with approximately $250,727 in 30 years’ time.

Now that’s making your refund work for you!

Don’t: Invest in a low-interest account

If you decide to sock away some or most of your refund money, don’t be lazy about it. Keeping all of that cash in a low-interest savings account or an ordinary checking account with little to no interest at all will dramatically decrease its growing power. If you’re not sure where to invest or save your refund, call, click or stop by Destinations Credit Union where a member service representative is happy to help.

Do: Invest in yourself

It might sound trite, but you are your own most precious commodity. Advance your career and increase your earning power by using your tax refund to pay for a work-related conference, additional training in your field or for learning an entirely new skill. Money invested in yourself is never wasted!

Don’t: Blow it all on impulse buys

Don’t spend your entire refund without planning or you’ll be setting yourself up for disappointment later. You’ll likely end up with nothing substantial and not more than two pennies of your refund money to rub together.

Do: Reward yourself

While you don’t want to blow it all, it’s OK to celebrate on one or two major purchases you’ve been eyeing throughout the year. Now’s the time to splurge on that pair of designer shoes you’ve been drooling over all season, or to treat yourself to a night out at that expensive new restaurant in town.

Don’t: Receive your refund on a gift card

Gone are the days when Uncle Sam licked a stamp for every refund he sends. Today, you can choose to get your tax refund deposited directly into your checking account, and many tax software programs even offer you the opportunity to get the refund via gift card. While direct deposit is fine, if you’re offered your refund on a gift card, opt out. You always stand the chance of losing the card. A gift card will also limit the ways you can spend your refund money.

Do: Donate to charitable causes

For many people living paycheck-to-paycheck, donating to charity can take a back seat on their list of priorities.

This might be a great time to break that habit. The bonus cash in your pocket gives you the opportunity to give back to your community in ways you might not be able to afford throughout the year. Plus, it gives you a head start on potential deductions for next year if you plan to itemize.

However you choose to spend your refund, consider all of your options carefully before making your decision and you won’t have any regrets.

Your Turn: Are you expecting a tax refund this year? How are you going to spend it? Share your plans with us in the comments!

SOURCES:
https://www.moneycrashers.com/what-to-do-with-your-tax-refund-money/  

https://www.nerdwallet.com/blog/taxes/smart-ways-to-spend-your-tax-return/  
https://money.usnews.com/money/blogs/my-money/articles/2016-04-07/heres-how-you-should-spend-your-tax-refund  
https://www.google.com/amp/amp.timeinc.net/time/money/4712331/what-not-to-do-with-tax-refund

5 Tips For Raising Secure And Unspoiled Kids

Raising children is a constant balancing act. You want to provide structure and stability,Piggy bank in front of blackboard but you also don’t want to run an overly militant household. It’s important to you that you show you care about your child’s whereabouts and choices, but you don’t want to be a helicopter parent. You want your kids to do well in school, but you don’t want to put too much pressure on them.

And when it comes to money, you want your kids to know you can provide them with all of their physical needs, but you don’t want to raise spoiled children who feel entitled to their every whim.

How can you achieve that?

Giving your children a sound financial education should be an integral part of your parenting, and it all goes toward creating this balance. To make things easier, we’ve compiled a list of five steps you can take to achieve your goal. A parent can never have too many practical pointers!

1.) Use an allowance as a teaching tool

According to a study conducted by the American Institute of CPAs, 89% of parents who give their kids an allowance require them to earn that money through chores. But Ron Lieber, author of The Opposite of Spoiled, argues that this practice is counterintuitive. Lieber claims that allowances should not be given as a reward or as a salary, but as a teaching tool. By giving kids their own spending money with no strings attached, you can help them learn how to manage their money and control their spending habits.

You can also use this opportunity to help them implement the three-jar system, in which they allocate predetermined percentages of their money toward spending, saving, and giving.

2.) Boost their confidence

Peer pressure is a lifelong struggle that may be at its strongest during school-age years. After all, your kids are spending most of their waking hours in the presence of their peers. They may not be astute or mature enough to understand that people must make spending choices that reflect their personal financial situation – and not their neighbor’s.

Help your children make the right choices by fostering a sense of worth that is independent of material possessions. Boost their confidence and build them up so they feel good about themselves just for who they are, and not for what they own or wear.

3.) Say no

Regardless of your financial status, it is crucial that you to refuse your children’s requests from time to time. Everyone needs to learn how to accept a no, and every time you give in to a child’s demand, you are raising their standard of living a bit more.

Say your daughter asks for a $200 designer jacket when you know she has a perfectly wearable one from last spring. If you give in to her begging, you may be affecting her future choices in two ways:

  • By giving in easily, you have just diminished the value of $200 in her eyes.
  • You are raising her standards to a level you – or she – may not be able to sustain.

This doesn’t mean you can never give a child something “just because.” But experts recommend the sporadic “no” so your kids learn to accept that they can’t always have everything they want.

When turning down a request, it’s best to keep money out of the picture. You want your kids to know you can provide them with everything they need, and to understand that they don’t really need everything they want.

Instead of saying: “We can’t afford that right now.”

Try: “You don’t really need that right now.”

4.) Encourage work

Kids who hold down a job when they’re still young are getting a head start on life as an adult. Encourage your child to look for a summer job, shovel snow for your neighbors in the winter and rake their leaves in the fall and accept the occasional babysitting job. They’ll learn responsibility and develop a work ethic. And, best of all, they’ll start valuing their money more when they see how hard it can be to earn a single dollar.

5.) Model gratitude and giving

One of the most important lessons you can give your children is to appreciate what they have and to give back to others. These lessons won’t hit home by being shoved down your kids’ throats through lectures. Instead, use every opportunity you can find to model these behaviors for your children.

Someone did you an unexpected favor? Thank them loudly and profusely – in front of your kids.

Thrilled with your new living room couches? Don’t just luxuriate in their loveliness and softness; verbalize how thankful you are to be able to afford such fine furniture.

You can easily make gratitude a family project by instituting a thankfulness routine at the dinner table in which every child shares a part of their day for which they’re thankful. Or, you can create a “Jar Of Gratitude,” in which family members drop small slips of paper describing something they’re grateful for, to be read aloud on a weekly basis in front of the entire family.

Do the same with giving, bringing your children along with you when you donate old clothing or food, and allowing them to watch you give money to your favorite charitable causes.

By helping your children develop these habits and essential traits, you’ll ward off feelings of entitlement and raise kindhearted, giving adults.

Your Turn: How do keep your kids from getting spoiled? Share your best tips with us in the comments!

SOURCES:
https://www.google.com/amp/s/www.forbes.com/sites/laurashin/2015/02/24/how-to-not-raise-spoiled-children-7-crucial-money-lessons/amp/ 

https://www.washingtonpost.com/lifestyle/on-parenting/how-to-raisee-kinder-less-entitled-kids-according-to-science/2016/10/03/1a74fa3a-7525-11e6-b786-19d0cb1ed06c_story.html?utm_term=.b2cf30aef01c 
https://www.parents.com/parenting/better-parenting/style/un-spoil-your-kid/ 
https://www.google.com/amp/s/www.psychologytoday.com/blog/the-power-prime/201102/parenting-how-not-raise-spoiled-brats%3Famp 

Medical Identity Theft

Scammers never rest. Even when the government and financial institutions take addedimage of medicare card merging into money measures for protecting consumers against fraud, scammers are dreaming up new ways to con you out of your money – and your identity.

In the latest wave of identity theft, scammers are cashing in on Medicare’s extra level of protection. In order to help prevent ID theft, Medicare is replacing the Social Security numbers that had appeared on its old cards with an 11-digit code. The new cards aren’t in circulation yet. They will be mailed out within the next 13 months, but scammers are already using them for a new variation of identity theft.

Here’s how the scam works: A caller pretending to be a Medicare representative will phone a beneficiary and ask for payment in exchange for the new ID. The victim willingly complies. In reality, though, the new cards are free and are being mailed out automatically. The caller might also claim to be a Medicare representative who is not after the victim’s money but needs their medical information to send out their new card or to update their system.

In another iteration of this scam, a caller will ask a victim if they want to purchase Medicare’s prescription drug coverage, or Part D. Part D is voluntary and is not necessary for Medicare coverage, but the caller will insist the victim must purchase Part D or risk losing their entire coverage.

In another ruse that is not limited to Medicare members, the caller will ask for the victim’s checking account number and Social Security number to deposit a supposed refund from their medical insurance company.

Once the scammer has the victim’s medical information, though, there’s an endless amount of damage they can do, including (but not limited to):

  • Posing as the victim to see a doctor and using their insurance to pay the bill,
  • Obtaining prescriptions they don’t need and then selling them or misusing them,
  • Purchasing medical equipment,
  • Filing a false health claim.

Protect yourself from being the next victim! Here’s what you need to know about medical identity theft.

What it can cost you

According to the Ponemon Institute, the average medical identity theft costs the victim a whopping $13,500 to fix. But it’s a lot more than money at stake. There are several significant ways medical identity theft can affect you.

1.) Loss of health coverage

Medical identity theft can cause you to lose your health coverage. Scammers might max out your benefit limits, leaving you at a real disadvantage in case of a medical emergency.

2.) Ruined credit history

Medical identity theft can wreak havoc on your credit history. You may have spent years building and maintaining an excellent score, but scammers can bring all of that tumbling down by racking up tremendous hospital bills in your name and then disappearing. The outstanding bill will then go to collections and you might not even be aware of it until creditors come calling.

3.) False medical records

The scammer may be seeing doctors, receiving treatment and obtaining prescriptions under your name. All of this will be documented on your medical records. This can prove to be extremely dangerous, or even fatal, when you seek medical attention in the future.

4.) Higher premiums

When insurance companies take note of the maladies you’ve “contracted” or the many doctors you’ve been “seeing,” your premiums will likely rise.

Preventing medical scams

Learn to recognize the signs and take proactive steps to ensure that you’re not the next victim of medical identity theft.

  • Know that Medicare will never call you for information. The agency will always reach out to its members via mail. By simply being aware of this fact, you can immediately identify a scammer on the phone.
  • Be wary of bills from third-party providers. If you receive notices regarding your medical information from a third-party provider that do not look familiar, or that contain inaccurate information regarding your medical history and recent treatment, alert your insurance provider immediately.
  • Study your Explanation of Benefits (EOB). Every health insurance company provides its members will an EOB. Be sure to take a hard look at yours. If you spot any treatments you don’t remember receiving, notify your insurance provider immediately.
  • Check medical records. It’s a good idea to review your medical records on a regular basis and check for any suspicious doctor visits, prescriptions or maladies.
  • Review your credit. It’s always prudent to check your credit history several times a year. If you see any unfamiliar charges, immediately ask for a fraud alert and place a freeze on your credit.

Fixing your medical history

If you spot something suspicious on your medical records, it’s crucial that you take the necessary steps to correct it so it doesn’t affect your medical treatment in the future.

Send a copy of the documents detailing the discrepancy or error to every medical professional and facility involved in your care, including doctors, hospitals, labs and private clinics. It’s best to send a copy of these documents and keep the original documents for your own records. To ensure the documents were received by the correct parties, send them through certified mail and get a receipt.

Fighting back

Have you been victimized by medical identity theft? Report the incident to prevent future scams!

You can report your scam on the Federal Trade Commission (FTC) website at ftc.gov, or by calling the agency at 1-877-438-4338.

If you are a member of Medicare and suspect fraud, call 800-MEDICARE for assistance or visit Medicare.gov. Alternately, report the scam to your own insurance provider.

You deserve to live out your years in health and happiness without worrying about medical identity theft. Make sure you take the necessary precautions to ensure you’re not the next victim!

Your Turn: Have you had to repair damages caused by medical identity theft? Share your experience with us in the comments!

SOURCES:
https://www.google.com/amp/s/www.cnbc.com/amp/2018/02/07/beware-theres-a-new-wave-of-medicare-scammers.html  

https://www.thebalance.com/common-types-of-medical-identity-theft-4157717  
https://blog.sdfcu.org/2018/01/medical-identity-theft/

Rising Interest Rates

If you follow the national business news, you are likely getting mixed messages about thenewspaper with interest rate headline state of the economy. While never very reassuring, pundits’ opinions on the stock market and the country’s economic state are changing as frequently as the weather.

But there’s one area that’s been constant for some time now: rising interest rates. If you’re thinking of taking out a mortgage, or any other large loan, in the near future, you might be waiting until those rates start going down again.

Here’s why that might not be the best idea.

Interest rates will continue to rise throughout 2018.

Experts predict that interest rates on financial products will continue to increase throughout the year. There are several factors triggering this rise, none of which are likely to be resolved anytime soon. Whether you’re interested in taking out a personal loan or a second mortgage, 2018 may not be a very good year for borrowers.

It’s not looking too great for those who are looking to take out short-term loans either. The U.S. central bank raised short-term interest rates a total of three times in 2017, and that trend is expected to continue. Experts claim 2018 will see an additional three interest rate hikes, each being 0.25%. If you need to borrow money from Destinations Credit Union, it’s best to consider your plans sooner rather than later to ensure you can lock in before rates get higher.

The inflation factor

Unemployment rates may be down across the country, but wage growth continues to crawl at an almost nonexistent pace. This, in turn, leads to limited price growth, which keeps the inflation rate stagnant. However, the feds are expecting all of this to change in the coming year. They expect wage growth to finally kick off and then set in motion an uptick in inflation and price growth.

The government wants to stay ahead of any surge in inflation. It does so by increasing interest rates even before there is clear evidence of an inflation peak. In fact, just last month, the feds raised interest rates on short-term loans yet again, citing an inflation scare at the beginning of February as the primary factor behind their decision.

Financial institutions and credit card companies pattern their own interest rates after the government’s rate. For this reason, it’s best to work on aggressively paying down outstanding debt you have before you’re hit with increased interest rates.

Government deficits and tax cuts

Long-term interest rates have been rising since December. This is largely due to the growing government deficit linked to recent tax cuts. The pending two-year budget plan will put the government even deeper into the red and likely cause those rates to climb even higher.

In short, this trend of rising rates will not become history for a long while.

Mortgages

Mortgage interest rates are now at an all-time high; they are currently close to 4.6% and are up more than 20% from a year ago.

There are multiple factors driving this increase, including the administration’s proposed tariffs on steel and aluminum and the associated concerns over the U.S. trade market.

For the most part, though, mortgage interest rates are based on the 10-year Treasury yield. When bond yields rise, so do mortgage rates. The recent tax overhaul caused investors to favor stocks over bonds, and consequently mortgage rates have been climbing since the tax plan was first introduced in September.

Some experts are actually predicting a turnaround for mortgages in 2018. They are hopeful that the expected volatility in the yield curve will trigger a similar curve for mortgages, possibly even causing them to dip below 4% sometime this year. However, all agree that by year’s end, the mortgage rate will settle at a stable 4.5%.

No one can be certain of anything, though. And waiting until the rates drop might prove to be pointless. In fact, you might even end up paying a higher rate because of that delay.

The good news

Take heart; it’s not all doomsday forecasts on the economic front!

Greg McBride, Bankrate’s chief financial analyst, predicts a great year for returns on savings. He claims that 2018 will be beneficial for all savings accounts, and especially for CD holders, with an average one-year CD yielding a 0.7% return by the end of 2018.

If you’ve been thinking about opening a share certificate or other ways to grow your savings, talk with Destinations Credit Union, and start putting your plan into action!

What it means for you

Let’s review the practical steps you can take in this economic environment:

1.)   If you’re thinking of taking out a mortgage or another long-term loan, don’t wait for rates to decrease; it isn’t likely to happen anytime soon.

2.)   Try to pay off your debt at a quicker pace than you’ve been doing until now to avoid getting hit with rising interest rates.

3.)   2018 is a great time to increase your savings and to open a share certificate.

Volatile economy got you stressed? No worries! At Destinations Credit Union, we’re always here to help you through any financial turn. Call, click, or stop by today!

Your Turn: What steps are you taking in the current financial climate? Paying down debt? Increasing your savings? Tell us all about it in the comments!

SOURCES:
https://www.kiplinger.com/article/business/T019-C000-S010-interest-rate-forecast.html  

https://www.google.com/amp/s/www.bankrate.com/finance/mortgages/interest-rates-forecast.aspx/amp/  
https://www.google.com/amp/s/www.bankrate.com/mortgages/analysis/amp/ 

Cryptocurrency Hacks

Cryptocurrency is all the rage. Money you can’t see? Online accounts that aren’ttwo people looking at computers regulated by big banks or even the feds? It has a futuristic feel, and anyone and everyone seems to be buying into the trend.

Lots of those folks who are buying up bitcoins by the hundreds claim cryptocurrency investment is the ticket to a richer tomorrow. But security experts think otherwise. They’ve repeatedly warned that all cryptocurrency is extremely vulnerable and at risk of being hacked – and that includes yours.

Is cryptocurrency the wave of the financial future, or is it really as risky as experts would have you think?

Before making your decision, read on to arm yourself with all the information you’ll need about cryptocurrency hacks.

How it works

Cryptocurrencies are decentralized and unregulated. That means there is no single country or institution controlling bitcoin, Ethereum or Litecoin. These currencies are, consequently, extremely volatile and vulnerable to risk. Since all cryptocurrency transactions are processed online, a hacker can simply break into crypto exchanges, drain people’s wallets and disappear without a trace.

As you may expect, hackers have been following the meteoric rise of cryptocurrency and are eager to cash in on the prize. They’ve been systematically frauding the system for years, and have only gotten bolder over time. In the most recent major heist, hackers made off with an incredible $530 million in cryptocurrency from Coincheck, the leading Asian bitcoin exchange, this past January.

And experts predict that it will get worse.

An Ernst & Young report studied 372 preliminary coin offerings between 2015 and 2017 and found that more than 10% of the funds were stolen, amounting to as much as $1.5 million a month.

It’s not only individuals who’ve been defrauded; the report shares that huge companies have lost several million dollars on hacked cryptocurrency.

According to Chainalysis, a risk management software company for virtual currencies, more than 50% of these hacks occurred through phishing.

In other instances, hackers have modified malware to redirect bitcoins to their own wallets during a trade or purchase. This scam is particularly nefarious because the hackers snag the victim’s exchange credentials and login information so they can gain complete control of the mark’s bitcoin wallets.

By extension, this means the hackers have also accessed the victim’s credit card information and can do untold damage to their credit score while racking up huge bills in the victim’s name.

Any way you slice it, cryptocurrency hacks pose a major risk to all investors and users.

Who’s paying?

Nearly 20% of bitcoin investors purchase their cryptocurrency using a credit card – and almost 25% of them cannot pay off their credit card balance after making this purchase.

Some credit card companies are ready to throw in the towel on cryptocurrency. They’ve had their fair share of headaches caused by cryptocurrency hacks aimed at their cardholders, including disputed charges, fraudulent transactions and the inability to pay for large purchases.

Earlier this year, many major credit card companies, including Discover and Capital One, announced they will no longer allow cardholders to purchase cryptocurrencies using their credit cards due to the high level of risk and potential fraud associated with such transactions.

Lots of financial institutions have followed suit with similar announcements, claiming the increased volatility poses a loss to the institution, which may be forced to pick up the pieces for their member if a cryptocurrency investment or purchase is hacked.

Are cryptocurrency exchanges government-regulated?

The short answer is no. The very attraction of bitcoins and Ethereum is that they are decentralized, answering to no institution or government.

A little digging reveals that some foreign countries, like China, are actually taking stronger approaches toward protecting their citizens from cryptocurrency fraud and are coming down hard on all scammers and hackers.

For the average U.S. citizen, though, when it comes to cryptocurrency, you’re on your own.

Protecting yourself

Cryptocurrency transactions pose an extra risk by being absolutely final. There’s no way to cancel a cryptocurrency payment, back out on a purchase or secure an anti-fraud guarantee from a reputable financial institution. In case of fraud, you may be able to trace the computer that was used for robbing you, but it’s nearly impossible to identify the scammers that took off with your money.

In other words, by using cryptocurrency, you’re putting yourself at significant risk. There’s no one protecting you and no way to undo the damage once you’ve made a payment that’s been hacked.

The only thing you can do is take proactive steps to be as careful as possible when engaging in crypto-payments:

1.) Stick to established, recognized exchanges, like Coinbase.

Only use exchanges you’ve heard of, and only those that utilize two-factor authentication.

2.) Don’t store too much digital currency online.

It’s best to store your money as actual greenbacks in a brick-and-mortar financial institution. You can keep some cash in your wallet or even hoard it in a home safe, but be careful not to put too much in an online digital exchange.

3.) Keep your OS and security software up-to-date.

Always accept and install the most recent patches and updates when they become available. To ensure your system doesn’t fall behind, elect to have it update automatically.

4.) Be wary of suspicious emails and links.

Never share sensitive information over the internet, no matter how sincere or urgent an email or link may appear to be. Don’t download anything from an unverifiable source, and keep your spam settings working at their strongest capacity.

Cryptocurrency may be the dollar bill of the future, but don’t fall prey to the many criminals who are counting on consumer naivety to make a quick buck. Use caution and be on guard to keep your money safe!

Your Turn: Do you use or invest in cryptocurrencies? What precautions do you take against hacks? Share your own tips with us in the comments!

SOURCES:
https://www.google.com/amp/s/www.nbcnews.com/business/business-news/amp/hidden-dangers-buying-virtual-currency-go-beyond-simple-hack-n852706  

http://money.cnn.com/2018/01/29/technology/coincheck-cryptocurrency-exchange-hack-japan/index.html  
https://www.fool.com/investing/2018/01/29/after-the-biggest-cryptocurrency-hack-ever-bitcoin.aspx