Holiday Spending Is Getting Smarter, But You Can Be Smarter Still

The average American will spend nearly $900 on holiday presents this year. If you have two adults in your household, that’s almost $1,800. The odds are good that you’ve already spent a good chunk of that on Black Friday, Small Business Saturday, and Cyber Monday specials.  In looking at the sales numbers from the weekend, Americans are getting smarter about how they spend that money.  Brick and mortar stores suffered about a billion-dollar decrease in sales from 2014, largely avoiding many of the big-ticket items that lure customers into waiting overnight in cold parking lot lines.  Instead, consumers pushed online purchases to a record high of $4.45 billion, roughly 20 percent more than last year. At the time of this writing, Cyber Monday sales had not yet been released, so we can’t compare those. 
In addition to this, sales numbers indicate earlier spending, more diversified spending and shopping carts that were more full at fewer locations.  All of this points to people purchasing items they had selected before the big weekend sales, then spending less time browsing and far less time in the harsh winter conditions and occasional inhuman violence that only cheap electronics and toys can provoke.
Even with the transition to warmer, quicker and more pajama-clad shopping, the money being spent is astounding.  The odds are also good that you don’t remember everything you bought for the holidays last year, and even if you do remember what you were given, it probably doesn’t add up to hundreds of dollars worth of things you still use.  If you don’t remember or use what you were given, the people who received gifts from you probably don’t either.  So why do we insist on spending so much of our hard-earned money on cheap plastic junk? Is there a better way to spend that money?
Yes, we’re getting smarter about how we spend on the holidays. But let’s set up a plan today to be in an even better position at this time next year. 
Step One:  How much did you spend or will you spend this year? 
Consider how much you’re going to spend this year.  If you’ve finished your shopping, then you can use your receipts.  Otherwise, you can estimate what else you plan to buy or just use the $900 per person national average.
Next, add to that how much you’ll spend in interest on credit cards while you pay off the balances.  If you’d like to avoid the math, you can estimate that the total cost is $1,000, because that’s a nice round number for this exercise. 
Step Two:  Putting away that money for next year. 
To use this money as intelligently as possible, it’s a good idea to save as much as possible ahead of time.  That way, compound interest is in your favor instead of working against you.  Start with one of our savings plans. A great option is our Holiday Club, which offers easy automatic deposits and doesn’t let you withdraw prior to the due date without a penalty. If you are more disciplined and not worried about using the money prior to the holidays, another option is our High Yield Account, which will pay a higher dividend if you’re ready to put the money into savings today.  
Step Three:  Paying off this Christmas. 
It’s time to get those credit card payments down so we can move into the new year with a clean ledger.  If you’ve got the extra income, pay them down with that, but we also know times are a little tighter for many of us.  Luckily, your credit union has a variety of solutions for paying down credit card debt: 
  • Home equity loans are great for high balances, because they turn high interest credit card debt into low interest home equity debt.  Also, if the Federal Reserve raises the prime interest rate early next year, you’ll be protected by a fixed-rate loan.  If you don’t want all the math, a home equity loan reduces the interest you pay, so you can pay off your loan more quickly.
  • If you don’t want a home equity loan, your credit card debt isn’t that high, or you don’t own a home, you could also consider transferring your higher rate balances to a Destinations MasterCard Credit Card.  We offer incredibly low rates, so you can transfer your higher interest balances onto a lower interest card, which will let you pay off the debt more quickly. Plus, there is no fee for balance transfers and no annual fee for the card.

Step Four:  Cutting costs. 

Make a list of everyone for whom you’ve bought gifts and how much you spent or will spend.  Then, go through and imagine what would happen if you got them nothing.  Would life be worse?  Would it be embarrassing?  Do you really need to give everyone something?  For those you feel an obligation to gift, keep them on the list for next year. For those you don’t, send them a card.  For anyone about whom you’re unsure, how about a gift of home baked cookies? Simply cutting out a few people can save you several hundred dollars every year.  Ask yourself:  would I rather avoid a potentially awkward situation or have a new … well, you probably know what you’d rather buy with several hundred dollars.
If you’re worried about last minute awkwardness in case someone gets you something, there’s a really simple solution:  Buy a few cards, write a general inscription inside, sign them, and add a gift card to a big store you’d shop at anyway.  Would anyone be upset at an Amazon gift card?  Then, if you need it, you can write the name of the person in question on the envelope and hand it to them.  If you happen to have any of these standby gifts left at the end of the holiday, the gift cards are yours to keep:  call it profit. 
Step Five:  What will you do with your money? 
At this point, you’ve paid off holiday 2015, and by the time holiday 2016 rolls around, you’ll have saved more money than you need since you saved enough for this year but cut costs for next year. Interest has worked in your favor, and suddenly your next December is one in which your pockets will be full.  That gives you 12 months to decide what to do with your money.  Reinvest it in a savings plan? Buy supplies to open that web store you’ve always wanted? Take a class or learn a language? Maybe your dog needs a little brother or sister.
Whatever you do, it’s probably going to be better than that necktie you got for Bob in accounting this year, and it’s all for you. 

International Credit Union Day

It’s time for International Credit Union Day! Every year, this is observed on the  third Thursday of October, like a Thanksgiving that comes a little early. Also like Thanksgiving, International Credit Union Day is a time to be thankful for the shared history of people coming together to make life better for their community. International Credit Union Day doesn’t require buying presents for anyone or making costumes for the kids. You also get the added benefits of avoiding family rifts and not having to clean a kitchen. As your credit union, we will still set you up with a bunch of gifts, though.

Question:  Why do we observe International Credit Union Day?

While we might take the idea for granted today, credit unions haven’t always been around.  There was a time when money was controlled by a few very wealthy individuals, who could then decide who would receive loans and at what rate to pay or charge interest. They essentially had unilateral control of local economies without much fear of competition.  Basically, the economic outlook of 19th century Europe looked an awful lot like the megabanks of the 21st century with less regulation, less responsiveness, and a greater slant in favor of a few oligarchs.  It may seem difficult to believe, but not that long ago, the big banks were even worse for consumers than they are now.
We celebrate this day to remember that people taking control of their money is a radical idea.  Loans let people create businesses, innovate technologies, better themselves through higher education or protect themselves from financial disasters.  Competition from credit unions brought bank rates down, forcing the big guys to play on an even field with the rest of us.  When communities came together to control their money, it meant that citizens didn’t need to worry about angering some irritable local banker, because one powerful person couldn’t control an entire economy.  We may not have school plays about it and we may not spend all day cooking a turkey to remember it, but International Credit Union Day is also a time when people realized that the best way to make it through a long winter was to work together.
Question:   How did those first credit unions help?
Farming has always been a business that lived close to the edge – one bad season could kill a family farm.  In 19th century Europe, even with the Industrial Revolution in full gear, most small towns needed the agrarian part of their economies as a means of existence.  In parts of Switzerland and what is now Germany, a bad drought hurt local farmers, threatening to put the bulk of these towns out of business. Local banks throughout the region were reluctant to provide loans to the farmers, even though that money was desperately needed to keep their farms and farming communities afloat.  As if that wasn’t bad enough, food prices skyrocketed because of the same drought, making bankers less confident in lending money to the people who most needed it.
The first credit unions formed during the 1850s and 1860s, founded by Franz Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen. Providing bridge loans to local farmers helped alleviate the immediate problem, but as members of these credit unions saw how much good they could do, the idea spread quickly and credit unions swept through Europe, providing aid to the rapidly developing industrial sectors of Europe’s burgeoning economies just as it had helped to buoy the agrarian sector.
It was a fertile time in Europe and the world at large, for new economic ideas designed to address the needs of a new industrial workforce; but even as Karl Marx, Friedrich Engels, and their colleagues have been swept into the dustbin of history, credit unions are thriving.  The credit union movement offered people the chance to control their success, protect themselves from disaster, and do so without revolution, violence or sacrificing the benefits of capitalism and meritocracy.
Question:  How do we celebrate?  I’m ready to party!
Well, of course you’re ready to party!  Who doesn’t love to read up on the Industrial Revolution and the benefits of community-backed economic growth?
There’s no wrong way to celebrate International Credit Union Day, which is why the 200 million credit union members world-wide all celebrate with their credit unions differently. While we will have a small celebration in the lobby, we, at Destinations Credit Union try to celebrate every day by providing the best products and services and by helping educate you on your finances.
See some of our many blog posts on topics of interest, and follow us on Twitter and Facebook to keep up on the latest information about your money and how to manage it.

10 Facts About Credit Unions

In preparation for International Credit Union Day, October 15th, we thought we would share a few facts about credit unions. Being a member of a credit union is a coup for your finances for many reasons. Here are just a few facts that make credit unions a great option. 

Fact #1: President Roosevelt signed the Federal Credit Union Act in 1934 to promote thriftiness and prevent usury during the Great Depression. 
Fact #2: Credit unions are insured. Most credit unions are insured by the National Credit Union Administration (NCUA), which provides essentially the same coverage on funds as does the FDIC. If the word “federal” is in the name, they are insured. If not, check with your credit union. It may be state-chartered and/or have private deposit insurance.  Destinations Credit Union is chartered by the state of Maryland and Federally insured by NCUA.
Fact #3: Eligibility is fairly flexible at most credit unions. Most require residency in a certain community, city, or state, or that you are employed by the credit union’s sponsor company, also known as a Select Employee Group (SEG). But requirements are pretty broad on most, making eligibility at a credit union a possibility for almost anyone. 
Fact #4: Credit unions are not-for-profit institutions and are owned by the people they serve, not by a few shareholders. 
Fact #5: Credit unions can offer better rates on savings accounts, lower interest rates on loans, and little or no fees on accounts because they return their profits to the member/owners.
Fact #6: The credit union’s board of directors, which is elected by members, can set loan limits in an effort to help the credit union grow. 
Fact #7: Credit union members have democratic control of the credit union and can attend and participate in regular and special membership meetings. 
Fact #8: Nonmembers benefit from credit unions too. Competition for low rates keeps banks’ fees in check, thereby benefiting nonmembers. 
Fact #9: With more than 5,000 credit unions across the globe and access to tens of thousands of ATMs, credit unions are increasingly convenient on a national scale.  Destinations Credit Union is part of a national shared branching network, giving you access to your accounts all over.

Fact #10: Once you are a member of a credit union, you stay a member for as long as you maintain your deposit account (share), regardless of whether or not you continue to meet the original eligibility requirements.