Social Security Changes: What You Need To Know

About 46 million retired people and their dependents receive Social Security, and the average benefit is around $1,300. If you’re reading this, odds are good you either know someone who gets this benefit or are someone who does. What you may not know is that this benefit may be subject to change this year. 

Most experts agree that the Social Security program is in long-term trouble. By 2033, the program will only be able to fund about 75% of its current obligations. By 2083, that level drops to 72%. With these breakdowns in funding looming, changes had to happen. Imagine a current retiree on a fixed income being asked to give up 23% of her monthly check. That would mean poverty and destitution for millions of elderly people. 

Significant overhauls of the program are coming but involve a lot of complicated political maneuvering. In legislative circles, Social Security is known as the “third rail.” In subway language, the third rail is the one in the middle that carries all the electricity. If you touch it, you die.

In the mean time, a variety of smaller reforms have been implemented, designed to ensure the short-term survival of the program. In 2015, there are three significant changes to Social Security benefits. Note that most of these changes only apply to future beneficiaries and current recipients will continue to receive a benefit similar to the one they’re currently receiving.

If you’re worried about how your chances of collecting change, take a look at these three upcoming changes:

1.) Mail-in benefit statements

If your age ends in “5” or “0” in 2015, expect a letter from the Social Security Administration this year. The statement will explain how much you’ve paid in and what kind of benefit you can expect to receive. The benefit will be estimated based upon several retirement age options, starting with age 65.

The administration suspended mailed statements last year, but restored them for 2015 to allay fears about the short-term survivability of the program. Obviously, the numbers listed in the statement are estimates, but they should provide a helpful guide for those approaching retirement. They expect to send out 48 million statements in 2015.

If you’re already receiving Social Security, you’ll receive an annual statement unless you’ve already opted to receive online-only statements. That recipient statement will include the cost of living adjustment for the year, the monthly benefit and any survivor benefit your spouse will receive.

2.) Higher Social Security taxes

One of the biggest problems facing Social Security as a program is a shortage of revenue. The way income is taxed for the program is riddled with exceptions and exemptions. The Social Security Administration can’t encourage people to die sooner, but it can collect more revenue to make up for longer life spans.

Previously, employees were taxed on the first $117,000 of income. This year, that amount will be $118,500. To make up for the slightly increased ceiling, the maximum benefit will also increase. For people who wait until age 66 to take Social Security, there will be no maximum to their benefits. Also new this year, people who wait until 66 will receive an additional return on benefits they deferred during their 65th year.

3.) Windfall Elimination Provision

The biggest change facing Social Security is the attempt to correct “double pensioners.” People who work government jobs (as well as some kinds of non-government jobs whose salaries are carefully regulated) are enrolled in separate retirement programs outside Social Security. These individuals did not have FICA (the tax that pays for Social Security) deducted from their paycheck. They instead paid into a different retirement system.

Previously, such employees received the same spousal benefits as those who paid into Social Security. They also received additional Social Security benefits if they held a FICA-paying position at another time in their lives. This windfall elimination is the subject of a 1985 regulation that takes effect this year.

This change doesn’t affect members of the Armed Forces, whose checks have included FICA deductions since 1957. It also doesn’t affect state or federal employees who have FICA deductions from their paychecks. If you’re unsure, check your paycheck stub for a line labeled “FICA taxes.”

Those who didn’t pay in will have their direct benefits reduced by a proportion of their government pension. They will also have any spousal or widower benefits they would have received reduced by a similar amount. These so-called “double-dipping” eliminations will save Social Security $3.4 billion, helping to ensure the program’s longevity.

If you’re concerned about the availability of Social Security for your retirement, it’s never too late to take control of it yourself. Many savings vehicles are available, from savings accounts and certificates to IRAs. To find out what options work best for you, call, click, or stop by Destinations Credit Union today. Our representatives can walk you through all the options and help you get to the retirement of your dreams.


The 4 Hidden Dangers Of Membership Club Shopping

If you’re feeding an army or just a hungry family, you’ve probably been considering the benefits of membership in a shopping club like Sam’s Club, Costco or BJ’s Wholesale. On the surface, the membership decision seems like a very simple calculus. You take your projected savings from buying in bulk and subtract from that the cost of a yearly membership ($45 for Sam’s Club, $50 for BJ’s, and $55 for Costco). If that works out to be positive number, you should sign up.

This simple math, though, overlooks some of the more serious hidden dangers in signing up for a club membership. The availability of bulk goods can encourage different spending habits that may not be in your financial best interest. Before you sign up, remember these hidden costs.
1.) The extra cost of impulses
One of the most tempting Costco items is a drum-sized container of peanut-butter pretzel bites. In most stores, this might be an impulse item. It would be the kind of snack you’d pick up because you’re a little hungry or because you might have company later in the week. At ordinary snack food quantities, this indulgence will cost you a dollar or so. Because you’re buying in bulk, though, this splurge could easily run you $5. It’s a savings if it’s something you need, but for extra items, it’s just extra cost. Add up those extra costs over a whole shopping trip and ordinary impulse buys could eat a significant part of your grocery bill.
If you’re not used to shopping with a list, the extra costs involved in ordinary impulse spending can add up quickly. More than in other stores, you need to make a list and be a diligent, informed shopper before you set foot in a wholesale store. Do your research, make a plan and stick to it.
2.) The extra cost of cheap goods
Most people wouldn’t buy a big-screen TV on impulse. Something changes in the brain, though, when one appears on an end cap for a bit cheaper than they are at a conventional retailer. After an entire shopping trip of saying no, the willpower gives up and the credit card comes out. Suddenly, there’s a TV in the car.
The wholesale club model is to get people in the door with savings on everyday goods, wear down their resolve with an incredible array of goods, and finally hit them with high-margin goods like clothes or electronics. It works surprisingly well, even on smaller-ticket items like giant candy bars and holiday decorations. It’s a technique psychologists call “confuse and reframe.” It works quite simply.
The confuse part of the operation is the volume and price of goods. Most people have no idea how to adequately value a 20-pound jar of mayonnaise or a pack of 35 frozen steaks. Nor do most people have easy ways to categorize the thousands of products available at these stores. The brain’s natural response to this confusion is to look for shortcuts and the store provides them: price tags offer comparisons to other brands, shops, and products, showing the considerable savings available if the shopper buys now. That’s the reframe part of the operation. Having convinced the shopper that the appropriate frame is amount saved, that becomes the decision-making procedure.
It’s easy to say that those tactics won’t work on you, but studies say differently. These companies have spent lots of money designing a retail experience that gets you to spend big. They wouldn’t keep doing it if it didn’t work.
3.) The cost of missed sales
It can be easy to see an item advertised in one of these stores and assume it’s the best price you will ever find for the item. It’s frustrating, then, to go back the next week and see the product on sale for $25 cheaper. Yet this is very common, particularly with seasonal goods that need to be sold by a certain date.
In many cases, these stores will be happy to honor the sale price and refund the difference — but only if you ask for it. Because all transactions are linked to a membership card, it’s far easier for the store to see that you purchased an item and issue a refund. They’re counting on the bulk effect to create less frequent trips so customers won’t see these new sale prices. Shopping at a conventional retailer means more chances to price-check goods.
4.) The cost of waste
If you’re trying to encourage your family to try new things, you know there are going to be some foods they just don’t like. If you’re shopping at a conventional retailer, you might waste a half-pound of asparagus when it turns out your youngest just can’t stand it. If you tried that same experiment while buying from a wholesale store, though, you might end up throwing out several pounds of fresh produce.
Even when buying tried and tested staples, beware the perishable item. If you’re buying something that can spoil in bulk, you’re taking the risk that you’ll have something to do with it before it goes bad. You can minimize this risk by having a plan in place to deal with the surplus. This plan can be as simple as putting it in the freezer or sharing excess with neighbors, friends, and family members.
You can also focus your stock-up efforts on non-perishable goods. Buying things like medications, spices and paper goods in bulk can let you take advantage of the economy of scale without worrying about spoilage. Many of these goods also offer the deepest discounts.
Wholesale stores offer the chance for incredible value, but they also invite some risk. Whether membership is worth it to you or not depends on the kind of shopper you are. If you’re a diligent planner and a seasoned researcher, you can save a lot on things you need. If you tend to make impulse buys, then let the buyer beware.

Remote Deposit Applications: The Convenience Of The Future, Today!

Imagine you’re talking to someone who’s been in a coma for 20 years. They see

you pull a device out of your pocket or purse that is more powerful than the biggest, fanciest computers from the last time they were conscious. What’s more, it’s got a GPS, a digital camera and enough storage capacity to fit the Library of Alexandria on it hundreds of times over. The smartphone has been a technological revolution, and it’s slowly becoming the way more and more of us handle most of our affairs.

It’s really no surprise, then, that smartphones are the way people in this dazzling science fiction future do even basic things like depositing checks. Yes, remote deposit applications are becoming more common and offered by more financial institutions every day. With the passage of the Check Clearing for the 21st Century Act (AKA: “Check 21”), financial institutions are quickly moving toward a world of digital checking. Thanks to the Act, a digital image of a check is now a legally binding document, just like the check itself. This change is what opened the door to direct deposit from your pocket. 

Here’s how the system works. Someone writes you a personal check. You take a picture of the front and back of the check with your smartphone using the app provided by your credit union. The app on your phone then transmits the images to your credit union, which can immediately deposit the check into your account.

Everyone who works with checks can stand to benefit from remote deposits. Small businesses can take personal checks without a waiting period, enabling them to take more forms of payment from more people. Busy workers can deposit paychecks without having to race the clock to make it to their institution before closing time. Consumers can quickly and securely transfer funds to their savings.

Institutions also benefit from the efficiencies that are gained by offering by remote deposit. Paper checks have to be scanned and processed by hand, which takes lots of labor hours. Remote deposit takes considerably less time, allowing financial institutions to keep costs lower and pass the savings onto members through better rates and other programs.

The one downside for consumers is the absence of “float.” Typically, it takes checks a day or so to be processed. So, writing a paper check might give a consumer a little time to get the money together and put it in the bank. Because remote deposit works much faster, the “floating” period, the time between when a check is written and when it’s deducted from the account, is much shorter. “Floating” a check like this is illegal and can cost a fortune in fees, fines and penalties. It’s a bad practice even when it is possible.

Concerns over security are largely unfounded. While the remote deposit application does make it possible to deposit the same check twice, unique check identifiers make this process very easy to detect. One Kentucky man attempted to operate such a con with Western Union money orders and managed to defraud Kroger grocery stores of $12,000 before he was caught days later. The money was returned and the perpetrator went to jail. Realistically, the same concerns exist with photocopied paper checks, a problem that barely registers in the minds of most security experts. In fact, data clearinghouse EasCorp estimates that many more of these “double-deposit” incidents are simple accidents rather than complex frauds.

Conversely, remote deposit may be a way to stop an under-reported style of check fraud known as check kiting. In a kiting scam, a criminal writes a check with insufficient funds from one account, then writes another check from a different account, also one with insufficient funds, to cover the first check. Because paper checks typically take a day or two to process, these “floating” checks are never returned for insufficient funds and the scammer gets away with the balance of the first check. Thanks to the nearly instantaneous return of mobile deposit checks, this kind of fraud is much more difficult, if not impossible.

Worries about data theft or other hacking can also be put to rest. Cellphone data encryption is the same as the encryption for any other Internet service. Check images are no more likely to be stolen from a cellphone than they are from a check clearinghouse after a paper transaction. There’s nothing unique about cellphone data that makes it easier to steal.

Taking reasonable precautions with remote deposited checks will make life considerably easier. If you choose to take advantage of remote deposit, keep the check for a brief period after your remote transaction – no more than 7 days. This holding period is to ensure the image was of sufficient quality for every institution in the chain and that there are no issues with processing. Once that period passes, clearly mark the check as deposited and shred it. This could be quite a bit of paperwork if you’re a small business owner who takes a lot of checks. But if you just want to use it for your paycheck, it shouldn’t be too hard to keep up.

Remote deposit isn’t just the future of mobile banking, it’s already here. And it’s an exciting time for it. If you’re one of the 45 million people who take advantage of smartphone banking services, you should be excited about remote deposit, too. It won’t change your life, but it will make a lot of your transactions easier, faster, and safer than ever before.

If you want to access remote deposit to Destinations Credit Union, download the Sprig for Co-Op application from the Google Play Store or iTunes Store.


7 Reasons to Love Your Home Loan

Every corner of the personal finance world seems to hammer home the same point: Debt is the wealth killer. Debt is the single greatest threat to your retirement planning, college savings and financial independence.

Except, as it turns out, there is one kind of debt that defies all of these rules: mortgages. Money you owe on real property can, in fact, be a boon to your financial independence in a lot of ways. While we’ve seen the recent financial trouble that occurs when people finance their lifestyles using the value of their home, there’s no reason why you shouldn’t see mortgages as a reasonable and realistic financial tool to build your wealth. Let’s talk about 7 reasons why mortgages are different from other kinds of debt:

1.) Having a mortgage can improve your credit score. Mortgages are seen as “good debt” by creditors. Because it’s secured by the value of your house, lenders see your ability to maintain mortgage payments as a sign of responsible credit use. They also see home ownership, even partial ownership, as a sign of financial stability. Since 2009, credit scoring agencies have added points for consumers who are able to manage different kinds of debt. Having a mortgage that you pay each month makes you look like a better, more responsible user of credit.

2.) It’s the lowest interest rate loan you’ll ever get. Mortgage loans are among the safest types of loans that lending institutions can issue. If there’s a problem during the life of the loan, the real property is a guarantee that the loaned money can be recovered. As a result, mortgage rates generally track the “prime” rate – the interest rate the Federal Reserve charges institutions to borrow money from them.

3.) It’s the cheapest way to build wealth.If you have an investment opportunity that you think will make more than 4%, you can finance it with a mortgage and make money on the deal. While this kind of transaction is not without risk, it’s arguably less risky than cashing out a 401(k) or an IRA to use toward new investments.

4.) It gets preferential tax treatment.The interest you pay on your mortgage is generally tax-deductible, which puts it in a class of debt by itself. The government wants to encourage home ownership, and is therefore willing to offer you a tax break for the financing costs of your mortgage. This tax treatment makes mortgages potentially even less expensive.

5.) It’s proof against volatility. If you’ve got a fixed-rate mortgage, you can make plans around the amount you pay each month. If inflation accelerates, your payment stays the same. If interest rates skyrocket, you’re protected from that, too. If interest rates drop, you can usually refinance to save money. Whatever happens, your mortgage is locked in to protect you from uncertain economic times.

6.) It’s a safe emergency fund. While you want to keep some money in a savings account to protect you from minor emergencies, you can use the equity in your home to protect you from major events. If you can get more than a 4% return on your investment, you’ll make money by keeping a home equity line of credit as an emergency fund and pursuing returns with your savings.

7.) It can serve as a source of retirement income. So-called “reverse mortgages” are increasingly popular among retirees whose portfolios are struggling. Functionally, you take out a mortgage on your home, and the lending institution pays you a set amount every month. Usually, the loan doesn’t come due until you pass on or vacate the home. That way, the proceeds from the sale of the home, along with life insurance and other death benefits, can be used to pay off the debt. Mortgages can help finance your retirement.

If you’re interested in purchasing a new home or refinancing an existing one, Destinations Credit Union can help. Call today to speak to one of our representatives and see if you qualify for home loans. Our knowledgeable service personnel can answer any questions you might have about how to get the most financial power out of your dream home



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!


Still Not Saving? You’re Not Alone!

We like to think of ourselves as learning animals. We take our lived experiences, extract valuable lessons from them, and use that information to improve our daily lives. This is how we get better at doing things over time.

However, a recent survey from shows that we haven’t yet learned the lessons of the Great Recession. While Americans paid down their debt in the months since the recovery, a shocking 26% of Americans still report having no emergency fund. Another 24% have less than three months living expenses saved. Only 23% of survey respondents have the recommended 6 months living expenses saved.

It’s not for lack of caring. The same survey reveals that 60% of Americans don’t feel comfortable with their current savings position. We all know we need to save more, but we still don’t actually do it. Why is that?

Many experts say the problem is there’s just not enough money left at the end of the month for savings. This is true no matter how much you make; fewer than half of people with incomes more than $75,000 have that 6-month cushion. Rebecca Kennedy, the founder of Kennedy Financial Planning in Denver, says that after utilities, rent, and other expenses, there’s no money left over for savings.

Not having an emergency fund is like walking a tightrope without a net. No one likes to think about it, but what you would do tomorrow if you lost your job, wrecked your car, or had to miss work due to illness? In 2008, the answer provided by many would have involved tapping into a home equity line of credit. But, when house prices began falling and interest rates rose, these people had to rely on expensive debt to finance their lifestyles. That forced them to postpone retirement, miss vacations, or compromise on educational plans for their children.

You can avoid this problem. It may seem impossible to create an emergency fund, but there are always ways to squeeze a few extra dollars out of each month. Consider these seven ideas:

1.) Start small. If you save $5 a week for four years, you’ve got an emergency fund of just over $1,000. That’s a great start to a rainy day fund, and you can do it by giving up one vending machine soda a day. Many people stash every $5 bill they get in a coffee can or store all their loose change. You might also consider a 52-week plan where you save $1 the first week, $2 second, and so on. These incremental steps can make a big difference in the long term – at the end of a year, you’ll have saved almost $1,400.

2.) Take on a second job. It’s never fun to leave one job and head to another. Remember, though, that you’ll have to work fewer hours to build a savings than you would have to work to pay down debt. Don’t limit your search to part-time jobs. Consider freelancing, taking surveys, babysitting, or selling tupperware. You don’t need to finance another lifestyle. You just need to make enough to start a savings fund.

3.) Pay yourself first. Think about your savings as another bill. This mode of thinking prevents you from treating the money as discretionary and frittering it away on impulse buys and luxuries. Make your savings as important as your house note, car payment, and utility bills.

4.) Automate it. Consider setting up a Club Account or a savings account with direct deposit. This step ensures you’ll remember to take the savings out of your budget each month. You’ll also be earning a little bit of interest on your savings to help you on your way. These savings products have the flexibility to allow for immediate withdrawals if you need it, but are limited by law in how many withdrawals they allow. This means your money is there when you need it, but far enough away that you won’t be tempted to spend it.  With one of Destinations “Kasasa” rewards checking accounts, your rewards can automatically be swept into a high-yield savings account.

5.) Put luxury in the back seat. Whether it’s a fancy coffee drink, a pack of cigarettes, a fast food meal, or the latest cell phone, things we don’t need will consume much of our income. You don’t need to give up your vices all together. In fact, financial expert Candice Elliot compares these choices to dieting. Repeated denials can drain our will-power, leading us to snap back harder. The answer may be to cut back on our consumption instead. Go without your Starbucks on Friday or wait 6 months for the price to drop on a gadget. Put the difference into your savings account.

6.) Look at recurring expenses. If you’re honestly spending everything you get on your monthly bills, it may be time to look at them. Consider cutting your TV services or switching to a pre-paid cell phone plan. Simply giving up a premium movie channel for a year could save you as much as $240. Now that Game of Thrones is over for the season, do you even need it? These don’t have to be long-term choices. Your goal should be to make temporary sacrifices to ensure yourself against future loss.

7) Don’t spend it. Your emergency fund should only be used for actual emergencies. Ask three questions before you take even a dollar out of your emergency fund. Is the thing I’m paying for absolutely necessary? Is there nothing I can cut back on this month to pay for it? Do I have to pay for it right now? Unless the answer to all of these questions is yes, leave the money where it is.


The New Sharing Economy: Earning Money From Your Underused Property

Need some cash? Thousands of people are turning to sites like AirBnB to turn their spare rooms, cars, and free time into extra spending money. You can capture some of this entrepreneurial spirit and capitalize on it in three ways.

1.) Rent your spare room

If you haven’t heard of AirBnB, it’s the flagship of this new economy. People list their spare rooms for rent, and short-term vacationers can search them by location, amenities or price. Rates are usually lower than hotels, and the accommodations can be much nicer. The thrill of staying with a local who can recommend nearby attractions or restaurants also attracts tourists. AirBnB is popular – the company boasts 350,000 people who are renting rooms by using the service.

Getting started with AirBnB is as easy as sprucing up a spare bedroom and making a listing. Obviously, living in a tourist hotspot is a major benefit, but it’s far from required. If you want to increase your revenue, renovations like a private entrance, secure storage facilities and private bathrooms are highly sought-after by renters.

If you rent, you may need to check your lease for potential sub-leasing complications. If you own your home, a quick call to your insurance agent to ensure this practice isn’t forbidden by your homeowner’s policy wouldn’t be a bad idea. One New York AirBnB user made $37,000 from renting the spare room in his condo. He used the profits to buy a vacation house, which he now rents on the service.

2.) Share your car

For people traveling by plane, car travel is one of the biggest expenses. Whether by taxi or in a rental car, it can be quite costly to get from place to place. Popular services like Uber allow folk with spare time to undercut the big rental and taxi companies and offer rides to traveling strangers. Alternative services like RelayRides allow you to rent your vehicle to others during extended periods of disuse while you’re traveling or if you only need your car a few days a week.

These services occupy a significant legal gray area. If someone borrowing your car damages it, how will you hold them responsible? If they run a red light and are caught on a traffic camera, will you be stuck with the ticket? You may run afoul of larger, established taxi and rental companies that have the power to influence regulation.

Still, success stories with these services exist. One struggling California musician started renting his car on the service. One $200,000 investment later, he owns eight high-end SUVs and a few sedans. Renting cars has become his full-time job. It’s required sacrifice, as he now finds his music career increasingly confined to weekends. But it’s allowed him to pay the bills.

3.) Share your skills

For some people, like engineers and writers, the freelance economy of the Internet was fairly obvious. These kinds of tasks can be done remotely. Increasingly, though, other kinds of labor are becoming sharable. Services like Amazon’s Mechanical Turk began as a survey site, but entrepreneurs realized its potential as much more. Now, tasks like transcription, data entry, and research can be completed by willing laborers who never have to leave the comfort of their computers.

More specifically, services like Google Helpouts allow you to share skills remotely, too. A video conference instruction enables you to instruct others in doing something you’re good at, and the possibilities are endless. You can use Helpouts to help people practice English, organize a kitchen cabinet or cook your family specialty. You can use your specialized knowledge to make a little extra money and brighten someone else’s day.

Realistically, wages for this type of work are not high at all. A global economy means competing against people who live in countries with considerably lower standards of living. You can expect to earn between $2 and $3 per hour for unskilled Internet labor, though many skilled workers are earning much more than that. With enough dedication and practice, you can turn your hobbies and spare time into your own cottage industry.


The Closing Mortgage Window

Over the past 6 months, you’ve no doubt heard that this is the best time in recent history to refinance your mortgage or buy a new home. While it’s easy to assume that those low mortgage rates are just the new normal, recent action from the Federal Reserve tells us that this window to lock in a mortgage at 60-year lows may be closing.

Before we look at the reason, let’s take a quick look at why mortgage rates have been so low for so long. A little background on the banking system might help explain why experts are making this observation.

Financial institutions base the rates that they charge for loans on how much it costs them to borrow money. Because other financial institutions are the lowest-risk borrowers, they get the best rate. This is usually called the “prime rate.” This rate is set by each individual institution, although they all follow signals from the Federal Reserve. The Federal Reserve uses a variety of instruments to influence the prime rate. These signals come in two forms: lending rates and bond purchases. Lending rates are the interest rates that the Federal Reserve charges to other financial institutions. Bond purchases are investments that the Federal Reserve makes in loans that institutions are making.

Since 2008, the Federal Reserve has used these signals to make credit cheaper in an effort to spur growth in major employment sectors, like construction and small business. The Federal Reserve Board kept rates low until unemployment dropped below 6.5% or inflation went up over 2.5%. New economic reports suggest that the unemployment figure could be approaching that 6.5% target. New Fed Chair Janet Yellen has begun reducing bond purchases. Experts suggest that this tapering is the Federal Reserve’s first step toward reigning in the stimulus. These signals tell financial experts that rates may soon go up, including the interest rates on new mortgages.

The frightening reality is that it doesn’t matter if they’re right or not. If enough big lenders decide they are, those institutions can start raising their interest rates. This move will prompt other lenders to raise their rates in response, and your chance to get into a cheaper mortgage will be over.


Unless you can get a full percent lower interest rate, the costs of refinancing make it unfeasible. You might not be able to do that by just extending the term of your mortgage. Yet, this may be a good time to revisit your financial goals and figure out what kind of mortgage suits your financial future. Here are a couple of questions to help you figure out if a new mortgage is for you:

Can you afford a higher monthly payment for a shorter period of time?

The most significant impact you can have on the interest rate for your mortgage is to shorten the term of the loan. Because your lender gets paid in full sooner, they’re exposed to less risk, so they charge a lower interest rate. If you’re 10 years into a 30-year mortgage, you aren’t likely to save by refinancing into another 30-year mortgage. You might be in a better financial situation than you were 10 years ago, though. The higher monthly payment of a 15-year mortgage might not be as much of a problem. This refinancing strategy gets you out of debt sooner and saves you money in the long term.

Are you going to be out of debt before you retire?

The best way you can make retirement more affordable is to retire debt-free. This allows you to use your retirement funds to support your lifestyle and hobbies. Now is a good time to investigate a shorter-term mortgage that you can have paid in full before you retire. It’ll never be cheaper to get into a mortgage that better fits your financial needs.

Are you unsure if you’ll be moving soon?

Remember, “soon” for big decisions like mortgages means in the next five years. If the next 5 years could bring a move for career or family, it might be wise to lower the total debt load on your house. For this kind of decision, the monthly payment matters less than the total amount owed. You’ll be selling your house to cover the debt. The smaller you can make the amount owed, the more of the sale price of your house you get to keep. Consider a “hybrid” mortgage (Our 10/1 ARM is a good example of this type of loan). These loans are fixed-rate for a specified time, and then use adjustable rates for the rest of the loan. This kind of refinance can save you money for the time you’ll be paying for the home.

Have you been denied for refinancing before?

If you considered refinancing your mortgage before but were told that you didn’t qualify, now is a great time to try again. If you were unemployed for a while, but now have a job, lenders are more willing to see this as a positive sign of recovery. Additionally, home prices are on the rise. The collateral you have for your loan might be worth more, which will help your lender get you the best rate possible. If you signed a mortgage before 2008, it just makes sense to investigate a refinance. The interest rates are lower, the economy is stronger, and now might be your last chance to take advantage of recovery. Call our mortgage experts at (410) 823-3300 today to see what refinancing options are available for you.

The ACA deadline: What to do now that it’s passed

March 31 was the last day to sign up for health insurance through the Affordable Care Act marketplace, and 7 million Americans enrolled in the health care exchange before the deadline. However, if you’re one of the many who missed your window to sign up, and you don’t have health insurance this year, it looks like you’re going to have to pay a penalty next year come tax time.
But just because it’s too late to sign up in “open enrollment” for 2014 doesn’t mean you’re stuck paying the penalty. There are still some solutions to your health insurance needs. Let’s take a look at a few ways you can get covered post-deadline.

Qualifying life events
The ACA allows for “special enrollment” periods for people whose life circumstances change. These changes are “qualifying life events.” Examples of these are having a child, marriage, divorce, moving out of state, or losing significant income. After one of these events occurs, you get 60 days to apply for coverage on the exchange. Although there are better options than quitting your job or getting divorced to get health care, if you’re expecting one of these events, you could sign up for health care within 60 days of that event.

Applying for an extension
Like most government programs, the ACA includes a sort of human release valve. You can apply for an extension to open enrollment on the marketplace enrollment website. To qualify for an extension, you’ll need to show good reason why you need one. One of the most common reasons for applying for an extension is technical difficulties. If you struggled with the website, you can note that on your application. Describe the attempts you made to enroll and the technical hurdles you encountered.
Remember, lying or intentionally submitting false information in an attestation is a crime. Not only could it put you in legal trouble, it could also be a reason to void your insurance coverage. While there’s no harm in asking for an extension, you should be truthful about your reasons for the request.

Getting private insurance
Though the exchange deadline has past, you can still get insurance through a private company. Companies like Blue Cross Blue Shield are still open for business and they would be happy to sell you a plan. Calling the insurance company and signing up for a plan the old fashioned way is still an option. You won’t get the benefit of seeing all the available plans next to each other, but you can still get health insurance.
The ACA mandates simplified insurance pricing, so you can still get access to all the same benefits at the same price. If you had thought that private insurance was too expensive, it might be time to take another look.

Paying the fine (or not)
The penalty for non-compliance is small. If you don’t have health insurance, you can expect to pay either $95 or 1% of your income. The federal filing threshold for income was $10,000 last year and ought to be about the same next year. If you don’t make more than that, you don’t have to pay the fine. There is also a list of exemptions. If you belong to a recognized religious organization with objections to health insurance, you’re exempt. Also, if the least expensive plan costs more than 8% of your household income, you won’t be penalized.
The penalty is also pro-rated for the number of months you’re uninsured. If you don’t have insurance now, you can reduce the amount you’re fined by starting insurance next month. The March 31 deadline isn’t an all-or-nothing. You can get coverage for most of this year, and then plan to sign up on the exchange next year.
Even if the penalties are low and infrequently applied this year, expect them to become harsher in future years. In 2015, for example, the penalty will be $325 or 2% of your taxable income, and it will probably go up from there. There will be another open enrollment period starting in November, so start planning to get covered then.


5 Tips For Buying Your Next Car

If you have great credit, getting a car loan at a great rate is no problem.  In tight credit markets, some buyers with less than stellar credit may have trouble getting a loan at a reasonable rate.  There are lots of ways to finance your car, even without the best credit, but be careful — these may cost you a lot of money in the long run.

Check your Credit Union’s rates first!  No matter what your credit score, chances are we can offer you a better rate because we are not-for-profit and owned by you, our members.

Do your research

You will most likely pay more for your vehicle if you go into a dealer not armed with information about the vehicle you are interested in purchasing.  Make sure you do the research and know how much you should be paying for your new or used vehicle.  The internet has made it easy to get this information — just go to the AutoSmart section of our website to get started.

Get Pre-Approved

Apply for your loan to see exactly how much you can afford before you go shopping for your car.  You’ll know exactly what your credit score is and what rate you qualify for through this process.  You can then make your best cash deal. Apply online and simply leave the make and model information blank or write in “pre-approval.”

If you already have your financing in place, beware of a dealer scam involving getting you to fill out a credit application, even though you are not applying for credit.  They claim it is required by the “Patriot Act,” but it is not. This is an attempt to run your credit to try and get you into the dealer financing.

Beware of “Choose Your Payment”

Many dealers are now offering to let you choose your payment.  While this may seem like a good idea on the surface, all it really does is extend the term of your loan, costing you thousands in extra interest and leaving you with a car that is worth far less than you owe on the loan.  As an example, a $20,000 car financed at 7% APR for 5 years will run you $396 per month and you will have paid at total of $3,763 in interest by the time it is paid off.  Taking that same loan, and choosing a payment of $250, you will be paying the loan for 9 years and will have paid over $7,000 in interest! If you can only afford a payment of $250, choose a car that fits your budget, instead of choosing a payment on a more expensive car.

Low Rate Financing vs. Taking a Rebate

It is generally better to negotiate the best cash price, take the rebate, apply it to the principal balance of your loan and finance at the best possible rate outside of the dealer.  If you run the numbers, you’ll usually find you save money this way.

Purchasing GAP Insurance

If you put less than 20% down on your new vehicle, you may want to consider GAP insurance.  The minute you drive a new car off of the lot, the value depreciates significantly.  If your car is stolen or totaled in an accident, you may find you owe more on the car than the insurance is willing to pay you.  Guaranteed Asset Protection (GAP) insurance makes up the difference.  Don’t just take what the dealer offers you though!  Check around because you can usually get the policy less expensively elsewhere (such as your credit union).   

Extended Warranties

You may want an extended warranty on your vehicle, especially if you have trouble coming up with the funds to repair it on your own.  However, beware of the dealer “requiring” the warranty in order to get the loan.  Some unscrupulous dealers will tell you that in order to sell the product.  Most likely, you will pay less for a warranty if you purchase it through the Credit Union.  It’s a choice, not a requirement!