Shop Local!


Your credit union is built on the idea of people helping people.  You already know we can do a better job looking after your money than a mega-chain bank that answers to shareholders, because we know you and our community.  So why give that up when you find a bargain online?  Shopping locally is better for the community, better for the environment and the best way to find something unique that can make all of your friends say “wow.”  

Shopping locally benefits your community. 

When you shop locally, the money you spend stays in the community.  Buying a new pair of shoes from a local shop takes dollars out of your pocket and puts them into the pockets of a local resident, of course.  What you might not consider is that those dollars get spent by the business owners as well, and they’re also likely to spend their money locally.

American Express estimates that about 68 cents out of every dollar spent in local shops stays at home, and if that dollar is spent locally three times, it means that – for every dollar you spend at local shops – $1.45 goes back into the community.  It’s what economists refer to as the multiplier effect, and it’s very powerful.

Fun fact:  The multiplier effect is why the government is still willing to make pennies, even though minting them costs more than one cent.  The multiplier effect is powerful enough to justify all that loose change in the jar next to your bed, and it’s powerful enough to make shopping locally a force for change.

Of course, that money doesn’t just go to shopkeepers and restaurant owners. The local government takes out its share in local taxes.  Even if you hate the idea of taxes, and we all may grumble in April, local taxes go to schools, firefighters, and other services in the area.  Buying dinner at a local bistro can be the reason the town has enough money to fix the potholes on your street. Not a bad dessert.

 Shopping locally is better for the environment. 

You already know about the danger of greenhouse gases and the effects of global warming.  If you don’t remember anything else, you probably remember Al Gore’s visual of a polar bear floating away. What’s easy to forget is that everything you buy had to come from somewhere.  If you’re drinking imported spring water from Fiji, that water flew halfway around the world.  If your new pants were made in China, they racked up frequent flyer miles, too.

It’s really hard to avoid foreign manufacturing, but many local businesses have locally made goods for sale, which eliminates at least one flight your product might take, saving on fuel and greenhouse gases.  Even if the product you’re buying was manufactured overseas, buying it locally can shave a flight or two off the product’s carbon footprint.

Shopping locally is the best way to find hidden gems. 

There’s nothing quite like the feeling of finding something your friends have never seen before. Whether it’s jewelry from a local metalsmith, a purse from a local boutique or pottery from a local artisan, local shops have the best potential for one-of-a-kind, where-did-you-get-that, I-love-it-so much uniqueness out of any shopping you can do.  Anyone can get on Amazon or check out a department store.  It takes a real connoisseur with a real eye for style to shop locally and find the best products.  Show off your personal style with buys from local artisans. The Parkville Towne Fair or the many ethnic festivals are great places to look for local crafts.

One final benefit of shopping locally is that many of your finds come with a story.  Those earrings might be from a local artist who got the inspiration from the nursery rhyme her mother told her, or those plates might borrow their pattern from the artist’s love of pop art.  Whatever the story, local artists will tell you how they came up with their unique designs.  Part of the fun of local shopping is the connections you can build with local artists, and hearing their stories is part of it.

San Francisco started recognizing the historic contributions of local businesses by listing important shops on its historic registry.  Looking around Parkville and Baltimore, which businesses would you nominate for historic status?


And, don’t forget to keep your banking local.  Destinations Credit Union (along with many other credit unions and local banks) is right here in Parkville offering world-class financial services and access wherever you travel.  We’re owned by our members and the money is invested back into our residents and our communities.

Check out the Parkville/Carney Business Association to see many local businesses who support our community.

Sources: 

http://money.usnews.com/money/personal-finance/articles/2011/10/28/how-consumers-and-communities-can-benefit-from-buying-local

Is It Time To Upsize Your Home?

Life rarely turns out the way we plan, and when a surprise comes along, it’s usually not an opportunity to simplify our lives.  If you’re one of the many parents blessed with one more angel than you had planned for, you understand just how such surprises can make the simplest things much more complicated. Or maybe the innocent angel you’ve been raising has entered adolescence and wants some space alone.  Or maybe it’s gone the other way for you:  You bought a house when prices were low and wages were tight, and now that you have some equity and a higher income you’d like to bump up your standard of living.

If any of those scenarios sound familiar, it might be time to upsize your home. But is expanding right for you? 

Upsizing is great … 
You probably don’t need anyone to tell you that a bigger house in a nicer neighborhood would be fantastic.  If you could get the kids out from under your feet, you could go back to reading that book you never finished or start that workout regimen you’ve been putting off, or whatever it is that makes you want to plunk down your hard-earned money for a new home.
But there are really strong arguments to be made for upsizing that might not be as obvious.  For example, you may not actually want more square footage.  One way to upsize without getting a giant house full of rooms you might not need is to look into adding outdoors space.  Some homes have gorgeous patios, outdoor kitchens and even wood-burning outdoor pizza ovens!
Another alternative to upsizing your space is to move into the home of the future.  That Cape Cod or Queen Anne you’re in right now might be beautiful, but is it built for the 21st century?  Are the speakers built into the walls?  Is it set up for home automation?  Or does it have that one bizarre room with no outlets, like some mid-century houses in the Midwest?  For some people, particularly those with a home business, it can even be worth paying more every month if doing so moves you to a neighborhood with faster Internet.
Baby Boomers have been upsizing their homes at a surprising rate, often moving into larger homes for retirement.  Usually, people move into larger homes because they want the space and retirees presumably have an empty nest.  Moreover, as we get older, it can be harder to lug a vacuum up the stairs or commit to mowing an enormous lawn every weekend.  But Boomers have learned the value of luring others over, often choosing houses on artificial lakes or in gated communities with kid-friendly amenities.  Suddenly, the big house is a blessing, because there’s room for everyone at Thanksgiving!  If you’re wanting to cut down on your travel time or increase your hosting duties at social events, a bigger house might be just the ticket. 
… But maybe not? 
You’ve been through this before, when you bought your current place. Buying a home is a little tedious and a lot expensive.  As you’re looking back on it, you might wonder why you’d ever go through that process again when it might be easier just to ask one of the kids to sleep in a tent out back or put up guests in a nearby hotel.
The good news is that it’s not going to be that difficult this time.  You know what you’re doing and you should have fewer surprises.  You’ve got the down payment set up through the equity in your current home.  And if you’re already financing through [credit union], a new loan approval will be fairly quick and easy. 
What about right now? 
If you’re considering the idea of upsizing your home, now’s the time for action. The dollar is gaining steam and plenty of economists are predicting we’re likely to see interest rates go up at some point this fall.  If you can get in before then, you’ll save some real cash in the long run.
It’s also a good idea to act now because you can catch both sides of the housing recovery.  If your home has regained its value, but you know a neighborhood that hasn’t gotten back to full value yet, you can make a shrewd investment to get a bigger, nicer house in the other neighborhood and wait until that new home gets to the value it should have been selling at all along.  Right now, you’ve got a great buy low, sell high opportunity.
If you’re ready, or you think you might be ready to think about being ready to upsize your home, give Destinations Credit Union a call.  Rates are still fairly low.  If you don’t know if you can afford to upsize, give us a call anyway.  Our home loan specialists can help you figure out if upsizing is the way to go, help you build a budget, or show you our construction and remodeling loans if you’re looking to upgrade your new home before you move in.

The Effects of China’s Market Crash On Typical Americans Like You

Predicting the future of international finance can be a fool’s errand. Fluctuations in a small aspect of a small market can ripple in untold ways, changing the environment all the time, like the proverbial butterfly responsible for all of those hurricanes.

Unfortunately, shrugging in the face of the unknown is really uncomfortable when it comes to finances. When we need to know how it will affect us, we go to financial advisors.

What about when we don’t have any specific investments in either area?  How might it affect us then?  Below are some of the people likely to be affected by the economic news of China’s struggles last week.  Some it will hurt, some it will help and some we’ll have to wait and see. 

You might be hurt if:
Your portfolio is heavy on retail brands.  In the last decade or so, American demand for retail goods slowed at the same time Chinese demand grew, so many of our corporations recorded sales growth that was largely or exclusively based on Chinese consumers.  Yum! Brands, Intel, McDonald’s and Starbucks all rely on Chinese consumers for between 15 and 20 percent of their revenue, and the Chinese middle class just got hit with back-to-back market crashes.  We won’t really know which companies were hit the worst until sales figures and quarterly reports start coming out, but you should identify which stocks you own that are heavily invested in China and see what they plan to do to keep afloat.
 Your income is directly related to manufacturing.  Banks around the world are stockpiling dollars because American currency seems much safer than a Euro that’s dealing with a crisis in Greece or any Asian currency that is inextricably tied to China.  As a result, the dollar has increased in value about 3% in the past month.
That sounds great, but a strong dollar makes exporting more difficult and makes imports cheaper, both of which make it harder for American manufacturing firms to compete with overseas factories. The Obama administration, like the Bush administration before it, has repeatedly pushed China to strengthen its currency for this reason, but has little to show for it.  Some financial analysts suggested the Asian free trade agreement signed last month was meant to prevent exactly this kind of situation: Chinese market insecurities resulting in problems for American manufacturing.
You might be helped if:
You own a business.  Whether your company is big or small, a strong dollar gives you a leg up right now.  Obviously, you can order stock from overseas, knowing it will cost less and pocket the profit.  It might be time to think bigger, though.  If your dollar is worth 3% more than it was a month ago, that means any loan you take out will come at a discount.  If you wanted to buy a $10,000 piece of equipment from China but scoffed at the interest rate, you can cut it considerably right now. 
You own a home.  It may not be obvious at first, but everything in your home goes through China. Your car had parts manufactured or assembled there, your clothes, your furniture … everything. You’ll feel the effects of Chinese firms trying to get sales every time you go to the store and possibly until Black Friday.

But you could also get a great deal on home fixtures and appliances very soon. Chinese factories need the cash, and with their domestic housing bubble bursting, you’re the only one left to buy that amazing new washer/dryer.  What if you moved up your remodel to this fall?  You could be looking at glorious home goods at ridiculous prices.

Talk to Destinations Credit Union about automobile and personal loans. Get one of the lowest loan rates in the Baltimore area in addition to the cheaper cost of the goods you want to buy.  Let’s see if we can help you capitalize on this opportunity. 


Sources:

http://www.theguardian.com/us-news/2015/jun/24/barack-obama-fast-track-trade-deal-tpp-senate

3 Mortgage Scams And How To Beat Them

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!

SOURCES: 

Hackers Develop New Attack Method: Charities


It’s around this time of year that most charitable organizations run their biggest fund-raising drives. In so doing, they’re getting millions of contributions from many new contributors. Yet while they must make it as easy as possible for folks to donate, their limited personnel are overworked, making it difficult to thoroughly review all credit card authentication data.

Meanwhile, another group is working some holiday overtime too: Internet scammers. Because many consumers are shopping for goods they don’t usually buy, fake websites pop up, taking advantage of this inexperience to harvest payment information. The biggest challenge is sorting out the real sites from the fake or canceled ones. These two problems may have more in common than you think.

A new report by security firm, Phishlabs, unveils a shocking new strategy for solving that hurdle. Hackers use a chat-based program to transmit credit card information to make a small donation. If the transaction is successful, the program confirms the data the hacker supplied is legitimate.

In essence, hackers are using charities as a trial run for stolen credit card numbers. To understand what this means for you, let’s look at how the authentication process works, why charities are ideal targets, and how to keep yourself safe.

Authentication explained

Before you make an online transaction, the retailer will take some steps to verify your identity. You provide a credit card number, a security code and some other information. The form might ask for your billing address or ZIP code, for example. The idea is to keep your account safe by requiring several authentication factors. It works fairly well at frustrating casual scammers.

That’s why this bot is so useful to cyber-criminals. It can check data in low-risk, easily concealable ways. The operators of these services charge a fee in “credits” to would-be scammers. They earn these credits by paying for them or by performing a variety of “services” for the operator’s criminal enterprise.

By making a small donation to a charity, the bot can check to see if the information a scammer stole works. These donations are usually between $1 and $5 to one of a selected range of charitable organizations. If the payment sends, the scammer is free to use the information to buy other, more expensive goods.

Why charities?

Charities are the perfect target for this kind of operation. They use the same authentication strategies as every other business, but they seldom have the resources to investigate fraud. They also want to make it as easy as possible for people to donate. This means they use static donation website names and don’t use anti-bot software like Captcha. This makes them easy for a program to target.

Charities are also good targets because they have little at stake in stopping fraud. Defrauding a retailer puts them out the goods they sell. A fraudulent credit card used to buy a TV leaves the seller of that TV responsible for replacing the TV. Nothing like that exists for a charity. The donation amounts are usually miniscule, so their loss won’t seriously affect budgets.

Finally, charities are good targets because they are innocuous. Average consumers are more likely to overlook small charges to charitable organizations. They might think of them as contributions they made without thinking about it.

Protecting yourself

If you take all the usual measures to keep your identity safe online, this shouldn’t be much of an issue for you. If you think your information might have been stolen,though, consider taking the following steps:

1.) Watch for oddly specific amounts that have been sent to charities in your statement. Neither you nor your partner would give $4.48 to a charitable organization.

2.) Be preemptive in your giving. Donate to charities where you’ve done your research and only give to those that align with your values. Keep a list of charities you support and check your statement for any organization not on that list.

3.) Report these charges immediately both to your card issuer and to the charity on your statement. They can use a variety of indicators to track other fraudulent charges and catch other scammers in the act.

Beating this scam requires care and vigilance, just like every other scam. You need to know where your money’s going and be careful with where you make your payments. Don’t shop at websites you don’t know and trust, and don’t give out credit card information to anyone you don’t know. Check your statements regularly and report any suspicious activity.
SOURCES:

Top 7 Home Improvements You Can Do Yourself With A Little Help From Destinations Credit Union

Stop and take a look around your house. Are you delighted with everything in it? This is where you spend a good portion of your day, and where you and your family build happy memories. There’s no reason why it should be anything less than your dream home.

It can be expensive to hire a professional to redo some part of your home, and choosing a contractor can be a stressful process. Instead of shelling out tens of thousands for a contractor, why not consider these great home improvement ideas that you can do yourself!

1) The deck of your dreams

With cooler fall weather on the way, you might be thinking about turning your boring outside space into an outdoor living room! Whether you’re after a raised wood deck to give your guests someplace to sit or a classy brick patio for lounging by the grill, a usable outside space can make a big difference in how you enjoy your home. The charming visual addition to the outside of your home is a great way to add value, too.

While this is a big project, it’s big on rewards, too. Start by drawing up some plans – remembering that you’re basically building a series of wood boxes that are bolted together. Draw up a shopping list of things you need, and head over to Destinations Credit Union to get the financing done. Then, head to your local home improvement store for lumber, bolts and a few new power tools.

2) Paint a room … or a whole house!

If you’re not feeling up to building much, you can make your house feel new again with a fresh coat of paint on the interior. Choose colors that complement your furniture and flooring, but choose slightly different shades for different parts of the house. Maybe you want to paint your kitchen and dining room in mellow earth shades to give it a sense of coziness, but you want to paint your bedroom a calming blue to help you sleep.

This can be a great project to get the kids involved in, too. Wall paint, sponges, and scissors can let children paint fun and imaginative shapes on their walls. A sense of ownership over the design might encourage them to help keep it a little cleaner as well. You can get creative in main spaces, too! Try painting an accent wall to change the light effects in your living room! Aside from paint, brushes, and rollers, make sure you get covers for furniture and floors and painters’ tape.

3) Fix up an entryway!

Your front door is the first thing people see when they come into your home. You want to make sure it says great things about you and your family. A little bit of time and effort can make this part of your house feel more welcoming while also saving you time and effort.

You can make relatively minor changes here. Metal house numbers, trim paint and a few planters can make your front stoop look much nicer. You can also make some serious investments. A new door can really liven up the front of your house. New weather stripping can make your front door more energy efficient to save on winter heating costs. Nice light fixtures can take a little time to install, but they can make your house both more charming and a little safer. Sketch out some ideas, then head to your home improvement store to figure out what you need to make your front door the talk of the neighborhood.

4) Add a splash of class with a tasteful backsplash

The section of wall above the sink can see a lot of water damage. Left uncovered, this can lead to mildew and even mold behind the sink. A backsplash is an attractive option for preventing that damage.

While these are typically done in tile, there’s nothing stopping you from looking at wood bead board, ceiling tile or wallpaper. You could even turn them into a functional addition to your organization system with chalkboard, whiteboard or magnetic film! Write up a recipe or meal plan to help keep your prep work organized in the kitchen, or write a fun morning greeting to your kids in the bathroom! There’s no limit to what a backsplash can do for your home. Head down to your local home improvement store to see what kind of material you want to use, and don’t forget to pick up adhesive to stick it all together!

5) Create a new outlook with new windows!

Installing new windows can seem like a daunting task, but they’ll pay for themselves. Energy efficient windows with new molding and stripping can significantly reduce your energy bills. Plus, having new windows and screens will make your home look well-cared-for when it comes time to sell.

Do some research on energy efficient two- and three-ply windows. Figure out which will both fit your budget and hold long-term value. Remember, though, that the general rule is you get what you pay for. Cheap windows won’t conserve much energy.

6) Refresh a tired kitchen or bathroom with new fixtures!

Your faucets and knobs see a lot of abuse. They get touched by grimy hands, splashed by soapy water and can build up calcium and rust even if you’re careful about washing them. Because they’re usually metallic, they tend to draw a lot of eyes. Dull, streaky fixtures can suck all the energy out of a kitchen or bathroom.

Replacing them, though, is pretty easy. In the bathroom, you can get sleek, modern fixtures that will save you sink space for storage. In the kitchen, consider getting a detachable head with a vegetable sprayer to make cleanups easier. Whatever you do here, you’ll end up with a nicer looking kitchen or bathroom.

7) Bring your stuff together with built-in storage!

If your house looks like most others, it’s chock-full on the inside with memorabilia and keepsakes. Tossed about the room, this can look cluttered and dingy. It makes it hard to clean and dust. Adding more furniture, though, can make a space feel cramped and tiny.

Instead, think about adding more built-in storage. Whether you just want to hang a shelf over an entryway, put some coat hooks by the door, or build a bookshelf into a living room wall, built-in storage is a great way to display your treasured memories without shrinking a room with too much stuff. Installing it requires lumber, mounting tools and a few other gadgets that DIY experts should have no trouble identifying.

When it comes to improving your home, Destinations Credit Union is ready to be a partner every step of the way. You may have heard about home equity loans and lines of credit, but you may have thought you can’t use it for small remodeling projects. However, it’s actually one of the most common uses for those accounts.

Let’s talk. You supply the ideas, Destinations can supply the home equity loan or line of credit to make your dreams a reality. Call 410-663-2500 and speak with a loan officer and start enjoying the equity in your home today.

Are HELOCs A Good Idea These Days?


Debt is the wealth killer. You’ve heard this piece of advice repeated in a million different corners of financial news. You’ve read articles telling you to get rid of all your debt in order to build wealth and save for the future.

There’s one very notable exception, though, and you’re living in it. Debt secured by your home has low interest rates, and regular payments can do wonders to improve your credit score. In many cases, too, you can get preferential tax treatment to the interest you pay.

 Money you owe on your home is often called “good debt” and there are a few ways in which it’s different than other kinds of debt. First, it’s secured. That is, your ability to repay the debt is ensured by the value of the property. Second, its effective interest rate is lower even than advertised. Your home will likely appreciate in value. The value of appreciation of real estate has been 6.4% on average nationwide. So, instead of losing you money, your mortgage just decreases your investment income. Third, creditors take the presence of installment loans, like mortgages, as signs of responsible use of credit, not to mention the consistent repayment history looks very favorable to potential lenders and credit scoring entities.

If you’ve already paid for your house, there are still ways you can reap the benefits of getting this “good debt.” You can use what’s called a home equity line of credit, or HELOC, to pay for a variety of expenses. There are a few key differences between a HELOC and your mortgage.

First, HELOC rates are far more stable. Between 2010 and 2014, home equity loans had an interest rate that fluctuated by more than 2%, while HELOC rates changed by less than .5%. Second, HELOC loans generally offer lower interest rates from the start. Because they’re secured by the equity you already have in your home instead of the possible resale value of your home, lenders need to charge less interest to secure the value of the loan.

Because of these benefits, HELOC loans are on the rise. More than 200,000 people took out HELOC loans in the last quarter, up 9% from last year. More people are borrowing more, too. The average HELOC limit in March was just over $100,000.

Bear in mind, HELOC loans are not risk-free. You’re securing your purchases with your home. If you don’t pay your loans, you can face very serious consequences. You can lose your house, seriously damage your credit, and still be liable for the balance of the loan. Like all debt, HELOC loans are serious financial instruments. You should have a good reason for using it and a plan for paying it off.

If you’re interested in getting a HELOC, Destinations Credit Union can help. Let’s take a look at a few ways our members are using their HELOC to improve their lives and financial well-being:

  • Financing home improvement. This is the most common reason given for using a HELOC. It makes sense. Improvements to your home increase its value, so home improvements are like a low-risk investment. Using the equity that’s in your home to finance these improvements is the cheapest way to increase the value of your holding.
  • Debt Consolidation. If you have a lot of “bad” debt, like credit cards, car payments, or other high-interest loans, you can save a lot of money each month by paying off that debt with a HELOC. Your HELOC will have a lower rate of interest and you’ll only have to make one payment each month. Plus, you may be able to take advantage of preferential tax treatment for the interest (consult your tax advisor for details).  But, beware of running up a lot of bad debt once again – you’ll be in worse shape if you do that!
  • Purchasing a car. Unlike your home, your car is certainly going to depreciate in value. If you buy a used car then resell it immediately, you will almost certainly lose money on that transaction. This depreciation means the interest rates on auto loans will be higher than those on your HELOC. You can also get a lower price overall by buying the car outright.
  • Major purchases. For most people, the biggest source of wealth is their home. A home loan is one of the few monthly bills that actually builds wealth instead of zapping it. If you need to make a major purchase, the biggest source of capital you’re likely to have is your house. If you want to start a business, purchase a boat or an RV, or buy rental property, a HELOC is one of the best ways to finance it.
  • Covering emergency expenses. Most financial experts recommend keeping an emergency fund that could cover you for between 6 months and 1 year if you lost your job. That’s good advice. If you don’t have the cash on hand, though, you can open a HELOC to cover medical expenses, car repairs, and other unexpected costs. You should still work to build savings that can prevent borrowing in the event of a catastrophe. Opening a HELOC can provide you some security in the mean time.

If you own your home and are considering any of the above plans for your future, you should call or stop by to speak to a representative from Destinations Credit Union today. The friendly and knowledgeable staff can answer any questions you might have about what a HELOC is and how you can use one. They can even get started with the paperwork so the credit is there when you need it. Don’t wait until you’ve got a giant bill for remodeling or an expense you can’t cover; speak to a representative about HELOC loans today!

SOURCES:

 http://homeguides.sfgate.com/benefits-home-equity-line-credit-9182.html 

Fireworks and Finance

As we get ready to celebrate our Independence Day here in the United States, I got to thinking about how fireworks can be both celebratory and explosive.  You must learn how to handle these explosives and take great care in order to avoid personal harm. 

Our finances too can be something to celebrate when we learn how to handle them and are careful to protect ourselves.  If you don’t really understand personal finance, you should take the time to educate yourself.  Look for people you trust and who manage their money well.  Ask for their advice.  Go online to personal finance sites and blogs to learn more – Destinations Credit Union has great resources on our website including “On Your Way” (geared toward young adults), as well as this Blog.  We also have some great tools, such as Money Desktop, to help you manage your money better.

You must protect your credit rating in order to make life easier (and cheaper) in the long run.  The better your credit rating, the better your interest rates on loans.  If you destroy your credit by borrowing too much and not paying on time, you may eventually not be able to borrow at all, or be forced to borrow at exorbitant rates from payday lenders.  That can cause your whole financial picture to blow up.  We all need credit from time to time – to buy a car or a home in particular.

If you find you’ve already blown up financially, Destinations provides free unlimited financial counseling through a partnership with Accel Financial Counseling.

Care for your financial well-being as you would for your family or your health.  You’ll find you’ll be celebrating your own Independence Day – financial independence and a more comfortable future!

Carol Szaroleta
Destinations Credit Union

3 Financial Decisions To Make Before Interest Rates Start To Climb


By all indications, interest rates are headed back up. Every economic indicator, from employment reports to bond market performance, points in this direction. If you’ve been watching financial news shows, you’ve definitely heard this prediction. Yet to most observers, it’s somewhat abstract and far away. Sure, interest rates are going up; so what? And when?

You’ve no doubt heard that if you’re thinking about refinancing your home or buying a new one, now is the key time. That’s true, but that’s not the whole story. Here are three other financial decisions that can save you money in the long run if you make them soon.

1.) Consolidating your unsecured debt

  

If you’re carrying unsecured debt (credit cards, personal loans, or payday loans), you might find yourself paying a lot more soon. Don’t assume you are locked into your current rate. Most often, these kinds of debts use an adjustable interest rate. How much it costs to service your credit card debt is determined, among other factors, by the prime rate as set by the Federal Reserve. As the interest rates that the central bank charges other financial institutions rise, the rate your credit card provider charges you will probably also rise. (Note:  Destinations Credit Union’s MasterCard is a fixed interest rate, meaning it will not go up automatically when rates rise.)

If you owe $7,000 on your credit cards (the American household average), a one percent change in the interest rate would mean an increase of $70 to your balance every month. That could mean an increase of as much as $15 on minimum monthly payments. That’s a tough hit, and it will also just make it harder to dig yourself out of debt trouble.

It’s best to pay off this debt as quickly as possible. If you have a large balance, though, consider a debt consolidation loan. These loans have fixed interest rates, so your debt won’t get more expensive in response to changes in the economy. Working with a representative from your Destinations Credit Union can keep this cost from consuming a bigger portion of your budget.

2.) Buying a new car

  

If you’ve been on the fence about upgrading your personal transportation or getting another vehicle for a new driver, the coming interest rate rise might be the final push you need. The rates that lenders can offer on car loans are influenced by the prime rate, too. An increase in the prime rate means car loans are going to get more expensive, thus decreasing your buying power.

  

For a $20,000 car, a one percent increase in interest rates means paying $10 more a month on a 5-year car loan. It means paying $400 more over the lifetime of the loan. That’s a direct decrease in the amount of car you can afford. Worse yet, dealerships may run promotions promising no interest financing for a portion of the loan. These promotions almost always revert to an adjustable rate based, in part, on the prime rate.

  

As a credit union member, you can get access to fixed rate auto loans that allow you to get the most car for your money. You can also plan with confidence knowing the portion of your budget devoted to paying your car note. You can even negotiate from a position of power knowing you’ve got financing squared away with a lender who’s got your back.

  

3.) Self-directed retirement planning

  

If you take personal care of your retirement funds, you need to prepare yourself for the market changes that will result from rising interest rates. These rates will most likely be coupled with a decrease in bond rates. This change will send brokerage investors running from long-term growth bonds into securities and commodities. This market shift will likely produce a great deal of short-term instability, as speculators try to time the shift in the market. The resulting market volatility can place your retirement savings at risk.

  

As the rates that lenders charge for loans go up, though, so does the rate they provide their investors. The interest rates you can earn on certificates and club savings accounts will go up in response to changes in the prime rate. Best of all, money you put into these accounts will be safe from the volatility of the market as changes occur in macroeconomic policy. When things have settled down, you can pull the money out of these accounts and put it into a more growth-oriented investment.

  

It’s easy to think of the decisions of the Federal Reserve as occurring in another separate world. The events of Washington, DC can seem far removed from your community. The truth is, in an increasingly interconnected world, timing your personal decisions to take advantage of changes in policy can save (or make) you money in the long term. This may not be enough motivation to buy a car you don’t need or consolidate a $100 credit card bill. But, if you’re making big financial decisions, you need to be smart about your timing and act fast. Stop by Destinations Credit Union’s office to see how we can help you before it’s too late!

Financial Advice for Graduates


The air is warming, the flowers are blooming, and the grass is turning green. Spring is in the air, and the joyous shouts of children playing will soon mingle with the drone of boring speakers reading names during commencements all across the country. Spring means many things, and for students across the nation, it’s time to graduate.

By definition, graduation is a state of transition and students no longer are students in the typical sense. It’s easy to make mistakes during this transition, and they can create serious problems later in life. Here are some of the common questions students face while in this transition and how to deal with them.

I’ve just graduated. What should my first financial priority be?

            There are a lot of options for those first few paychecks. Some experts will tell you to invest in a retirement fund or to focus on paying your debts. You may have different ideas, too, like saving for a car, a wedding, or a house.

            The number one cause of financial struggle is sudden and unexpected expenses. The easiest way to avoid these problems is to build an emergency fund. If you have a sudden windfall from graduation presents or tax refunds, use it to start a short-term savings account. This fund should be in an interest-bearing account such as a money-market or deposit account.

            Making these investments should be your first priority. Make minimum payments on your other debts and keep saving until you have at least one month’s living expenses. This savings is how you avoid getting into more debt. Avoiding new debt is the biggest step toward getting out from under old debt and moving toward financial security.

Is more education worthwhile?

            There’s a growing public controversy about whether college or graduate school is worthwhile. The question is much more complicated and depends upon the kind of education and its cost. Statistics about lifetime earnings aren’t reliable. They tend to survey only people who are employed and rely upon self-reported incomes. Instead, do research about the outlook in your field and the education most people have in that field.

            Making this decision should be about the costs versus the expected rewards. Opportunities like community college and trade school have low costs and significant likely rewards. Other opportunities need more careful scrutiny. In any event, don’t view these opportunities as a way to escape the job market. Getting a job, even volunteer work or an internship, will help build a resume and get you closer to your financial destination.

            When thinking about the costs and benefits, you need to think about more than the financial cost. There’s the money you will pay for tuition and living expenses, which you will likely have to finance with debt. There’s also the opportunity cost. Even working a low-wage job will earn you some money, which is more than making nothing while attending school.

Should I focus on eliminating debt or saving for retirement?

            The answer to this question depends upon what your short-term goals are and what kind of debts you have. If you’re planning to buy a house or car, or start a small business, you need to lower your debt use percentage. This will get you a better credit score and ensure that you can get cheaper access to credit for these activities. If you plan to go to work and don’t mind putting off home-buying, then the paying off debt and investing are equal. This being the case, you need to think about the kind of debts you hold.

            For subsidized student loans, the interest rates are no higher than 4%. You can likely earn a higher rate of return than that with an IRA or other long-term investment. For private loans, the interest rate will vary based upon when you took out the loan and the kind of loan. These may be closer to an 8% interest rate, which would be close to the return on an IRA. If you have credit card debt, the interest rate is in the 20% range. Paying down this debt is far more important to building long-term financial security.

            Remember, in making this decision, that retirement savings is more about time in the market than principle. Starting your investment early is the best thing you can do to provide for your financial security. You may need to strike a balance between paying for your past and saving for your future.

What’s the biggest mistake to avoid?

            The biggest danger facing new graduates is “lifestyle inflation.” Every product that’s advertised becomes the solution to all life’s troubles. A 60′ television would make your evenings more enjoyable, which is how you justify spending $1,000 on it. It does provide a measure of happiness for a few weeks, but you get used to it in a short period of time. Then, a new reclining couch or a sports car becomes the answer. Spending experts call this the “hedonistic treadmill.” It most often happens right after getting a new job that brings a bigger paycheck.

            The best way to avoid it is to make a budget and include some room for luxury expenses. You can spend it every month on dinners out, concerts, or other items. You can also save it in a short-term savings instrument for a bigger splurge. Building space into your budget for this kind of spending can help keep you from feeling “entitled” to expensive luxuries and overspending.

Destinations Credit Union
online@destinationscu.org