investing

7 Steps To A Mid-Year Financial Checkup

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It feels like you just packed away the holiday decorations yesterday, but believe it or not,man with laptop and phone 2019 is already half over. As we sail into the season of barbecues and beaches, take a few minutes to give yourself a mid-year financial checkup. A small investment of time can spur important changes that can affect your financial wellness for the rest of 2019 or even for years to come.

Use the seven steps detailed below to guide you through your checkup.

Step 1: Revisit Your Budget

Remember sitting down in December and crunching all those numbers? There’s no need for such a detailed job again, but take some time to review your monthly budget. Are you sticking to the planned budget for every category? Are you overspending in some categories or under-spending in others? Do you need to adjust your allotted budget in some areas or maybe trim your discretionary spending across the board?

Review your spending over the last few months and make any necessary changes so your budget can continue working for you. Be sure to account for any significant life changes that may alter your financial needs, such as a marriage, the birth of a child, a divorce or a job change.

By reviewing and adjusting your budget, you will avoid falling into the mindless spending trap and you will be taking proactive steps toward staying on top of your finances for the rest of 2019.

Step 2: Anticipate Large Expenses

Now that you’ve updated your monthly budget, take a moment to list any large expenses you anticipate having in the next six months. This can include household appliances that may need replacing, expensive car repairs that will likely become necessary or an anticipated medical expense that is not fully covered by insurance.

Once you have this information in hand, determine which spending category you will take the money from to cover these expenses. Do you have a rainy-day fund that can pay for one or several of these costs? Can you use the money in your emergency fund? Make the decision about sourcing this money now so you don’t make the wrong choices when you’re stressed and pressed for time in the future.

If you do not have enough money set aside for these expenses, build a savings plan into your monthly budget now so you have the funds available when you need them.

Step 3: Review Your Tax Withholdings

Review your tax withholdings to see if they need any adjusting. If taxes and numbers are not your thing, ask your accountant for assistance with this step. Your goal here is to pay the perfect amount so you’re not hit with a huge tax bill at the end of the year but also not lending the government your money interest-free.

Step 4: Check Your Credit Score

Your credit score is like your money grade, indicating the degree of your financial wellness and responsibility.  Visit AnnualCreditReport.com for your free credit report from any of the three major credit bureaus: Experian, TransUnion and Equifax.

If your score has gone up in the last six months, you’re doing great! Keep up the good work.

On the flip side, if your score has dropped, review your report in detail. Are there any errors you’ll need to contest with the Federal Trade Commission? Is there a credit card bill or another line of credit you’ve been neglecting that is dragging your score down? Are you having trouble remembering to pay your monthly bills in a timely manner? Take the necessary steps to fix your score today, whether that means contesting a charge, setting up an automatic payment on some of your bills or lowering your credit utilization rate by paying with plastic less often.  HOPE Inside Destinations Credit Union can assist you in bringing up your credit score, paying down debt and saving more.  Call today.

Step 5: Review Your Investments

Now is the time to review and adjust all of your investments. This includes your contributions to your retirement funds, any stock investments, bonds, trust funds or savings certificates at Destinations Credit Union. Make sure you are maximizing your contributions when possible and that your other investments are performing according to plan, making adjustments as necessary.

Step 6: Tackle Your Debt

List every single outstanding debt you carry, including credit card debt and loans. Designate one debt to tackle first, either choosing the one that carries the highest interest rate or the one with the lowest balance. Next, work on a plan to get rid of your chosen debt, being careful not to neglect the others. See if you can trim your budget or boost your income in any way to increase your payments on this debt. Once you’ve paid it off, move to the next one on your list so you’re on your way to a debt-free life.

Step 7: Review Your Financial Resolutions and Long-term Goals

Which financial resolutions did you jot down at the end of 2018? What are your dreams for the future? Did you want to start socking away another $200 a month? Is your goal to retire comfortably at 55?

Take some time to review these goals and to determine whether you are indeed taking the steps necessary for making them happen. If you’ve been neglecting them for the first half of 2019, create a plan for working toward them for the rest of the year. Remember: With determination and proper planning, nearly any financial goal is possible!

Now that you’ve given yourself a thorough financial checkup, you can kick back and enjoy the sweetness and the sunshine of the season, guilt-free. Happy summer!

Your Turn: What’s on your list for your mid-year financial checkup? Tell us about it in the comments.

SOURCES:
https://money.cnn.com/2016/07/28/investing/financial-checklist/index.html
https://onebiteblog.com/its-time-for-your-mid-year-financial-checkup/

All You Need To Know About Flipping Houses

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In the 2019 real estate market, home-flipping has become more popular than ever.man painting as family looks on

Flipping houses is a basic real estate investment concept that involves purchasing a rundown or undervalued home at the lowest possible price, spending the necessary time and money fixing it up and then selling it for a profit. Flipping, or rehabbing, homes has become the primary or secondary source of income for thousands of people across the country. In fact, according to a report by ATTOM Data Solutions, a total of 48,457 single-family homes and condos were flipped in the first quarter of 2018.

If you’re thinking of jumping on the home-flipping bandwagon, proceed with caution. You’ll need nerves of steel, large sums of cash to work with and the ability to juggle several projects at once.

Read on to learn more about buying, rehabbing, and selling properties for profit so you can make an informed decision.

Is it a good time to flip houses?

2019 can be an excellent time to make money by rehabbing properties. The robust economy and falling mortgage rates mean more people are rushing to buy homes this year. Consequently, prices on homes are predicted to rise as supply falls behind demand. This can be excellent news for rehabbers who can make a bigger profit off a home-flip.

Before you get started

If you think house-flipping may be for you, ask yourself these questions before getting started:

  1. How is my credit?  Unless you’re paying for each house in cold cash, you’ll need to have a minimum credit score of 720 to qualify for mortgages on the homes you’ll be flipping. If you’re not there yet, work on raising your score before launching a house-flipping business.
  2. Can I afford the down payment?  You’ll also need to have a large amount of cash available for your first down payment. The more you can drop on a house, the bigger chance you have of winning a bidding war.
  3. Can I handle a delay or a loss? You might sink $40,000 into a house and then watch in horror as it sits on the market while refusing to sell. You might buy a house in an up-and-coming neighborhood, but the market promptly falls apart as soon as you close. Hopefully, you’ll only see success, but you’ll need to be emotionally and financially prepared for unpleasant surprises.

5 Steps to Starting a House-Flipping Business

Are you ready to flip some houses? Follow these steps to get your business up and running!

Step 1: Create a business plan

Sit down and write up a business plan before making any other moves. Outline your goals, delineate the number of projects you can realistically manage over the course of a year, create timelines for each project, build a marketing strategy and determine a financing source for your business. Get as detailed as possible for optimal success.

Step 2: Acquire financing

The simplest way to flip a home is to acquire the entire property with cash. But, if you don’t have access to such huge sums of cash, you can still be a successful house-flipper. You can take out a personal loan or a business loan from [credit union], tap into your 401K or open a HELOC against your home.

Step 3: Find the right group of professionals

If you’re super-handy around the house, you can rehab the homes yourself. Otherwise, you’ll need to hire a group of professionals to help you succeed at rehabbing the houses you intend to flip. You’ll also need to seek counsel from attorneys and others who are well-versed in local laws to make sure your house is up to code and that you have all the necessary permits for construction projects. Take your time researching and hiring the right group of professionals, as a smart choice now will save you loads of money and time down the line.

Step 4: Find your property

Once you have your business plan, financing and group of³ professionals in place, you’re ready to look for your first property. But where do you start looking?

Most experts predict that the best investment opportunities of the 2019 housing market will be found in the suburbs, and more specifically, in emerging new neighborhoods. This way, you can capitalize on lower prices without getting stuck with the house no one wants to buy in a less-than-desirable neighborhood. Check out factors like crime rates, desirable schools, and the number of foreclosures in any neighborhood you’re considering.

The best way to find homes is to trundle around a neighborhood, look for vacant houses, and then send the owners a letter, asking if they’re willing to sell. You can find properties for sale at auctions, on home-searching sites like Zillow and Realtor.com, or by driving around your chosen neighborhood and scouting out For Sale signs. It’s best to have a licensed inspector check a potential home for structural problems and deficiencies before you close.

Step 5: Buy, rehab, market and flip

Once you’ve found a potential house to flip, use the “70% Rule” to determine if it’s a worthwhile proposition. The 70% rule states that an investor should pay no more than 70% of the ARV (after-repair value) of a property minus the repairs needed. If you follow this rule and all works out, you’ll walk away with a sizeable profit.

As soon as your purchase is finalized, the clock starts ticking. Every day you own the home is another day you need to pay the mortgage. If your doing the rehab yourself, get ready to start as soon as you close. Otherwise, have your team of professionals prepared to begin their work as soon as the home is yours. Depending on the condition of the home, this can take anywhere from several weeks to several months. During this time, be sure to check periodically that all renovations are up to code.

When the rehab is nearing completion, you can start marketing the home and vetting out potential buyers. Check out similar homes in the area to work out a fair asking price. With any luck, you’ll find a buyer quickly and the home will once again change owners.

If you’re ready to start a home-flipping business, stop by Destinations Credit Union to talk about your financing options. We can help make your business dreams a reality!

Your Turn: Have you ever flipped a home for profit? Share your experience with us in the comments.

SOURCES:
http://money.com/money/5640988/why-500-houses-in-st-louis-are-on-sale-for-1/
https://www.mashvisor.com/blog/2019-start-house-flipping-business/
https://www.google.com/amp/s/www.thestreet.com/amp/how-to/flip-a-house-14843879
https://www.investopedia.com/articles/mortgages-real-estate/08/house-flip.asp

Yes The Dow Jones Reached 22,000. What Does That Mean?

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It seems like everyone is talking about the stock market hitting an all-time high of 22,000.bull bear What does that mean, in real-world terms? Is that a good thing?

The stock market can be confusing and seem overwhelming. If you’re not completely clear about the stock market, stock exchange, the Dow Jones Industrial Average, etc. – you’re not alone.Let’s start with a brief explanation of what the stock market is.

1.) What is the stock market?

The stock market is where stocks and bonds are bought and sold. When you purchase stock, you become a shareholder, which means you now own a “share” of the company (much like you are an owner of shares at your credit union). If the company’s profits go up, the value of your shares goes up. If the company’s profits go down, so does the value of your shares. When a company needs to raise money, it issues shares. The price of the share is based on how much the company is estimated to be worth, and how many shares are being issued. The company gets to keep all of the money raised in the initial sale of shares. Traders and investors continue to buy and sell the stock of the company on the stock exchange, although the company itself no longer receives any money from this type of trading.

2.) Why do stocks continue to be traded once they’re purchased?

Traders and investors continue to trade their purchased stocks because the perceived value of the company changes over time. The investors may make or lose money depending on whether or not their predictions on the value of the stock are correct or not. Trying to predict which stocks will rise or fall in value, and when, can be tricky. The ultimate goal of buying stock is to make money by purchasing stocks in companies you expect will do well and increase in value.

3.) What are the stock exchanges?

Stock exchanges are the markets where stock buyers connect with stock sellers. The two most common stock exchanges in the United States are the New York Stock Exchange (NYSE) and the NASDAQ. The NYSE is primarily auction-based, which means the trading facilitators are physically present on the trading floor. The NASDAQ is an electronic exchange where buyers and sellers are connected over a telecommunications network. Companies listed on either of these exchanges must meet various minimum requirements and baseline rules. But these are by no means the only legitimate exchanges. Electronic communication networks (ECNs) connect buyers and sellers directly, cutting out the trade facilitator. There are also Over-the-Counter exchanges (OTCs). OTC markets generally list small companies, and these companies often (but not always) have been placed on the OTC market because they were delisted from NASDAQ.

4.) What is the Dow Jones Industrial Average?

The Dow Jones (aka, Dow) is a U.S. stock market index composed of 30 large public companies such as Disney, Wal-Mart, Coca-Cola and Pfizer. It is calculated by adding up the 30 companies’ stock prices and then dividing them by a magic number called the Dow Divisor. The divisor is adjusted to account for stock splits, dividends or spin-offs, which affect the share prices of Dow components.

On Aug. 2, 2017, the Dow Jones Industrial Average hit 22,000 for the first time in history. The reason for this jump could be due, in part, to several factors:

  • Low unemployment, steady GDP growth and other economic indicators point to a still-improving economic climate, encouraging optimism. This all leads to more investment and spending.
  • The Federal Reserve has increased interest rates three times since December; another reason to be optimistic about the economy.
  • Companies have been earning higher profits and expect to earn more in the future as the economy improves and business and consumer spending increase.

5.) What does the Dow reaching 22,000 mean for me?

On the surface, not much. The number 22,000 itself is a relatively meaningless milestone. It will simply become a new trading level that in no way guarantees an improving economy or a declining unemployment rate.

What is relevant, though, is the trend this number represents. The Dow has reached 30 record highs this year, leading some investors to fear that this latest milestone could be a market top, as stock prices are likely too high for the current economic environment to support. Others believe this trend will continue.

Your Turn: Are you a stockholder? If so, what are your thoughts on the Dow reaching 22,000 points?

SOURCES:
https://www.cnbc.com/2017/08/01/wall-street-set-to-open-higher-on-earnings-momentum.html  
http://www.investopedia.com/terms/s/stockmarket.asp  
http://www.businessdictionary.com/definition/stock-exchange.html  
https://www.thebalance.com/what-is-a-stock-exchange-358113  
http://www.investopedia.com/terms/d/djia.asp  
http://www.jsonline.com/story/money/2017/08/05/dow-keeps-climbing-making-some-investors-wary/538685001/  
https://www.usatoday.com/story/money/2017/08/02/dow-has-reached-another-record-too-late-buy-stocks/532563001/  
https://www.nytimes.com/2017/08/01/business/dealbook/dow-22000-stock-markets-dollar-value.html 

Risking It When Investing

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Sometimes one partner is a risk taker and wants to invest in things that aren’t really iniStock_000034071002_Medium the other’s comfort zone. Some generally consider it better to invest where returns are higher, but that also means a higher risk! Is there some sort of middle ground?

It’s a good idea to think (and talk) this through. Many couples face the same question, and while the simplest solution might be to split your funds down the middle and invest as you each see fit, that’s not likely to bring peace or wealth into the relationship. In a marriage, for one thing, whether accounts are titled separately or jointly, they are considered marital assets (even 401Ks). And a healthy relationship depends on working jointly toward financial goals, not going it alone.

One of the most difficult issues for couples to resolve is how much risk they’re willing to take with their investments. According to Fidelity’s 2015 Couples Retirement Study, 47 percent of couples disagree about how much money they’ll need to maintain their lifestyle in their later years. Even more troubling, a Harris survey found that 33 percent of couples weren’t saving anything for their retirement years. And, of those who were, one in five said they were clueless about how much their partner was contributing to their accounts.

Some tips if you’re starting down the investment road together:

  • As in so many areas of a relationship, communication is key. Let your spouse or partner know you’re willing to research options together and come up with a plan. Erica Coogan, partner at Moss Adams Wealth Advisors in Seattle, recommends that each partner complete a risk assessment questionnaire and then compare answers. “It makes a subjective conversation a little more objective,” she says.
  • Remember that planning needs to cover both spouses, not just a breadwinner. Experts advise couples to be mindful of the “It’s my money because I worked for it” syndrome. Couples need to work together on a plan for investing (and spending) their money, no matter who earns it. Apart from any resentment, an uneven divide in the ownership of assets can make a mess of cash flow, estate planning and taxes.
  • Consider transparency. Wherever you stand on risk, consider selecting some investments that are, by nature, transparent. This includes individual stocks, bonds and exchange-traded funds. You can also reduce risk by diversifying your portfolio across asset classes. Ask a financial advisor at your credit union for help in untangling the strands of modern-day investing.
  • Think about your time horizon. Allowing an investment to compound leads to much better returns. So, if you’re the more risk-averse half of a couple, and you’ll need your money within 10 years, say with confidence to your partner: Slow down. Remember that it doesn’t make intuitive sense (but is nevertheless true) that your money doubles in seven years if you earn a compounded annual return of 10%. Don’t let a little fumbled math lead to a rash or risky decision.
  • Keep the goalposts in sight. Your mutual goals will determine how, and how much, the two of you should invest. For instance, when do you want to retire? Do you plan to pay for your kid’s college expenses? Purchase a home (or a second home)? Start a business?

Finances are one of the leading causes of separation. The more ownership and open communication a couple has over this potentially rocky topic, the less likely it is that they’ll panic when there’s a ripple in their plans or something happens in the markets.

Your Turn: Do you and your spouse or partner disagree about investments? Let us know how you’ve smoothed that potentially rocky road and headed for a secure sunset.

SOURCES:
https://blog.wealthfront.com/couples-investing-risk-assessmentwww.gofffinancial.com/investing-for-couples
http://money.usnews.com/investing/articles/2016-09-21/5-common-investment-mistakes-that-couples-make
http://www.bankrate.com/finance/investing/5-steps-effective-investing-as-couple.aspx#slide=2