5 Ways You Could Be Sabotaging Your Future Net Worth

The 3d person under a bill's rain. crise hopelessnessYou may not realize it, but the actions you take now can greatly impact your sense of financial security down the road. Many Americans inadvertently minimize their future net worth by focusing only on the short-term. It can be great to live in the moment, but in some situations it’s a good idea to take a step back to evaluate the long-term impact of your financial decisions.

Here are five ways many Americans are shooting their future net worth in the foot:

1. Renting a Home Instead of Buying

Purchasing a home is probably the biggest investment you’ll ever make, but if you choose a property wisely, it’s definitely worth it. Sure, you’ll need to come up with an initial down payment and you’re responsible for all upkeep and repairs, but in most cases these costs pay themselves back.

When you own the property, you build equity in an investment that will likely increase in value over time. Rather than making monthly rent payments to someone else, your mortgage payments are essentially an investment in your future. Homeowners enjoy the stability of knowing their monthly housing expenses are for the long term, whereas renters never know when their monthly rent will increase. Additionally, interest and property tax paid by homeowners is tax deductible, often offering the chance for an annual break from Uncle Sam.

Need a mortgage or you’d like to re-finance your current mortgage? First Financial has great, low rate mortgage options!  Check them out today. We also have a mortgage rate text messaging service, and when you text firstrate to 69302 – you’ll receive a text message whenever our mortgage rates change.*

2. Not Paying Into a Retirement Plan Early in Your Career

When you’re young, saddled with student loans and barely making enough money to pay the rent, it’s easy to put off saving for retirement because it’s still 40 years away. However, waiting until you’re older to start saving can have a significantly negative impact your financial stability in your golden years.

The earlier you start saving, the more money you’ll earn in interest. For example, if you opened a 401(k) account in your mid-20s, saved a total of $30,000 and realized an 8 percent rate of return, you would have approximately $280,000 by age 65. However, if you save the same amount, realizing the same rate of return, but wait until your mid-40s to start the process, you’ll have only about $60,000 at age 65. Many companies also have a 401(k) match program, where they’ll match your contribution to a certain percentage or dollar amount, so you’re essentially turning away free money by not taking full advantage of this opportunity.

3. Waiting Until Withdrawal to Pay Taxes on Retirement Plan

Traditional 401(k) and IRA plans allow you to make tax-free contributions into your retirement account, with the deductions made in retirement when you withdraw funds. However, it might be smarter to open a Roth 401(k) or IRA, where taxes are deducted upfront, allowing you the benefit of making tax-free withdrawals in retirement. This could be a savvy move, as there’s a very good chance you’ll be in a higher income tax bracket when you retire than you were when you opened your retirement account.

4. Leasing Vehicles Instead of Financing

At first glance, leasing a vehicle can seem like an attractive option — less money down, lower monthly payments and the ability to drive a higher-priced car than you could afford to finance. However, leasing won’t add any gains to your future net worth. The monthly payments you make are essentially rent to the dealership, as you don’t get to keep the vehicle at the end of the lease. Rather than paying off the car and driving it for a few years payment-free, you’re forced to return it and immediately start making payments on another model — and continue the cycle every few years when your lease is up. Additionally, you’re limited to the number of miles you can put on a leased vehicle, you have to pay extra for excess wear-and-tear charges and you’ll pay sky-high early termination fees if you need to break the lease early.

In the market for a vehicle?  At First Financial, our auto loan rates are the same whether you buy new or used.** Apply online 24/7!

5. Using Credit Cards to Overspend

Everyone wants things they can’t afford, but offers for zero or low-interest credit cards can make it very difficult to avoid temptation. It might seem harmless to book a vacation or purchase a new furniture set using a credit card with little-to-no introductory financing, but what if you can’t pay the balance off before the promotional period ends? It’s not uncommon for these promotional interest rates to rise from zero to 18 or 20 percent, which can seriously increase the initial price of your expenditures and leave you with a mountain of debt that can take years to pay off.

Do you have a large balance on a high interest credit card? Have no fear, First Financial’s Visa Platinum Card has a great low rate, no balance transfer fees, no annual fee, and rewards!*** Apply online today.

Making savvy financial choices now can help ensure you’re able to enjoy stability later in life. Sometimes it’s worth making initial sacrifices now to allow yourself to ultimately come out ahead. Always consider what the impact of the choices you make now will have on your long-term happiness before jumping head first into a decision you’ll grow to regret.

 *Subject to credit approval.  Credit worthiness determines your APR. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.  See Credit Union for details. Standard text messaging and data rates may apply.

**A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties. Subject to credit approval.

***APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Article Source: Laura Woods of gobankingrates.com, http://www.reviewjournal.com/business/money/5-ways-you-re-sabotaging-your-future-net-worth

 

4 Times You Should Ignore Good Financial Advice

finances-e1303266500480It’s so great when someone gives you advice that helps you make a positive change in your life. Sometimes, we can truly learn from the experience and the tips that others provide. However, there are other times when we need to learn to ignore the advice given to us by other people. While it’s often well-meaning, sometimes the advice that other people give can lead us down the wrong path entirely.

Especially when it comes to financial tips and advice, sometimes people become set in a certain way of thinking, or they believe a financial myth because it has been told to them by someone else. It’s important to make your own financial decisions. There are certain financial tips that are either out-dated or conditional. Some tips are just wrong all together.

Here are four financial tips that you definitely should ignore, and how to spot poor financial advice.

1. Avoid credit cards. Credit cards can be dangerous. According to Lifehacker, they make it easy to spend money, we can easily feel peer pressure to use them because so many other people do, and of course, the interest can really add up.

However, credit cards are not all bad, as long as you use them responsibly. If you can afford to pay the balance off immediately, there is no harm in using a credit card. There are actually several positive aspects of credit cards, including the fact that most credit card companies protect you against fraudulent charges (whereas if someone steals $200 in cash, you probably are not getting it back). Also, many credit cards come with excellent rewards.

Did you know First Financial has a lower rate VISA Platinum Credit Card, great rewards, no annual fee, and no balance transfer fees? Apply today!*

2. Save first. It is absolutely essential to set savings aside each month toward future purchases, an emergency fund, and your retirement. If you don’t save now, you risk not having enough saved later. However, as important as prioritizing savings is, it isn’t always the right decision for each person. If you are drowning in debt, but you are setting aside hundreds of dollars each month toward savings (while your bills lay unpaid), you are probably making the wrong choice. There’s no use having savings if you are in a bad financial situation, and it’s getting worse because interest and late fees are piling up while you focus on your savings.

We offer a number of Savings Account options, click here to learn about our various accounts and to find one that fits your needs.**

3. Stick to your budget. Many Americans have a hard time sticking to their budgets (and many don’t even have one), and in general, you should try to stick to your budget. However, you actually need to be flexible when things change. If you go from a two-income household to a one-income household, and you are still living on a budget that was designed when you had a lot more money available, you could set yourself up for a lot of debt.

At the same time, when you get a raise, it’s appropriate to change your budget (even if you are just adding the extra income directly into savings or your retirement fund). Circumstances change, and inflation causes prices to go up, so it isn’t fair to yourself, or even responsible, to expect to have the same budget all the time. While in general you should try to stick to your budget each month, sometimes you need to reevaluate it.

Don’t forget to utilize our great financial calculators – they’re free and a great tool to help you get your finances on track.

4. Don’t take a risk. This is another piece of advice that is often well-meaning, but is given by people who usually are more interested in saving everything than taking risks. While it is important to save, unless you take risks, you probably won’t get very much interest back on your savings. People disagree about the best way to handle various financial decisions, but you have to determine what is right for you. You might lose a lot of money by taking a chance on a risky stock, or you might end up rich. Although diversifying your portfolio is often the smartest choice, it might not be the right choice for you. If you want to start your own business, but others advise you against it because of the risk of failure, you have to decide if the risk is worth it to you. There is very little financial advice that fits every single situation.

According to Fox Business, if you are trying to figure out if the advice you are receiving is bad, there are certain signs you should watch out for. If the person giving you the advice has a stake in your decision, they may not be presenting a fair picture. If you didn’t solicit the advice, that could be another sign to watch out for, and they might be trying to scam you. You should also avoid accepting advice that follows the one-size-fits all idea (like don’t take a risk).

Financial advice can be extremely helpful, whether it comes from a financial advisor or even a trusted friend or family member who really wants to help. Just make sure that the advice is really worth listening to. Also, remember to go with your gut. If someone suggests a financial move that you don’t feel good about, don’t do it. Whether the other person is intentionally leading you down the wrong path or not, your intuition might be trying to warn you.

Take advantage of the Investment & Retirement Center located at First Financial. If you have questions about retirement savings or investments, set up a no-cost consultation with our advisor to discuss your brokerage, investments, and/or savings goals. Call us at 732.312.1565 or stop in to see us!***

*APR varies from 10.90% to 17.90% when you open your account based on your credit worthiness. This APR is for purchases, balance transfers, and cash advances and will vary with the market based on the Prime Rate. Subject to credit approval. No Annual Fee. Other fees that apply: Cash advance fee of 1% of advance ($5 minimum and $25 maximum), Late Payment Fee of up to $25, Foreign Transaction Fee of 1% plus foreign exchange rate of transaction amount, $5 Card Replacement Fee, and Returned Payment Fee of up to $25. A First Financial membership is required to obtain a VISA Platinum Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the Bronze Tier. Click here to view full Rewards First program details, and here to view the Tier Level Comparison Chart. Accounts for children age 13 and under are excluded from this program.

***Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC , a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Original article source by Sienna Beard of Personal Finance Cheat Sheet.

10 Huge Mistakes to Avoid When Trying to Save Money

downloadAddressing the issue of saving money is the most fundamental, yet neglected, aspect of personal finance in the U.S. today. According to a 2012 survey by Credit Donkey, almost 50 percent of Americans don’t have more than $500 in their emergency savings accounts, which not only puts a kink in savers’ finances in the event of an unforeseen expense, but also creates undue stress for failing to prepare a safety net adequately.

Here are the top 10 money mistakes Americans make when it comes to saving money.

1. Not budgeting.
There are a number of philosophies on the best approach to take when budgeting your money, but at times the thought of sitting down with statements, bills, and an expense sheet is just too stressful. This mind-set is an easy trap to fall victim to, but is one of the worst money mistakes to make if you want to grow your savings fund.

2. Saving too little.
It’s commendable that about half of Credit Donkey’s survey participants had saved up some cash; but often, individuals don’t save enough money to carry themselves through a challenging and sudden financial crisis. A common recommendation when it comes to the appropriate amount to save in a nest egg is about three months’ salary, or six months worth of expenses (i.e. mortgage, auto loan, utility bills, gas, etc.).

For instance, the average American in 2013 made $42,693 before taxes. Take away about 25 percent of that income for taxes, and the average person walks away with $32,020 annually. Three months of net income (the ideal emergency fund amount) is about $8,000 to help keep you comfortably afloat in an emergency.

3. Not setting specific goals.
Determining what exactly you’re saving for, and when you need to save by, is a helpful motivational guide to follow. It acts as a constant reminder of what you’re working toward, and lets you know when your efforts have been successful.

Examples of this include saving money for a down payment on a car in the next six months, or getting more specific like committing to saving $200 per month for the next six months, to achieve this goal.

4. Failing to track spending.
Creating a budget is the start of the savings process and setting a goal is the end of it, but there has to be a quantitative way to follow your progression in the time between. Tools such as Mint.com  or even a simple spreadsheet are great ways to avoid this money mistake.

5. Living paycheck to paycheck.
When budgeting your spending allowance, don’t stretch your money to the last dollar. Not allowing yourself about a $100 per month buffer sets you up for disaster, as small, seemingly harmless purchases quickly add up.

6. Overdrawing an account.
Overdrawing a checking account is usually the result of making one of these other money mistakes, but expensive overdraft fees are a cost you have complete control over. A $35 overdraft fee might not sting now, but as more pile up on your account statement, the damage can become apparent in a short period of time.

Simply put, overdrawing is a money waster and an entirely avoidable circumstance if you stay diligent with your savings plan.

7. Claiming the wrong tax withholding.
Claiming the lowest withholding allowance when it comes to your federal taxes is a mistake that Americans commonly make. When you do so, the government takes away more income taxes throughout the year, and you’re left with a fat tax return check.

Don’t let this windfall fool you — what you’re doing is essentially giving Uncle Sam an interest-free loan and getting nothing back in return. Instead, you can claim the withholding allowance you rightfully qualify for, and use the extra cash in each paycheck to grow your savings fund in a high-interest savings account.

8. Signing up for low deductibles.
One way to increase the amount of cash you can save each month is to lower your premium and raise your deductible for auto and health insurance. This means you assume more risk up front by paying a lower monthly premium, with the expectation to pay more out of pocket in the event you have to file a claim (which should be no problem if you’ve saved that emergency fund).

According to the Insurance Information Institute, increasing your deductible from $200 to $1,000 can lower collision and comprehensive coverage premiums by at least 40 percent.

9. Buying name brands.
More customers are employing frugal tactics like passing on branded products in lieu of a generic version. Similarly, retailers have caught onto the fact that shoppers are looking for a frugal alternative in today’s challenging economic times.

That’s not to say you should never splurge on a brand that’s worth it, but most generics are the same product as their pricier counterparts. Look for generic products on the lower shelves of grocers’ aisles.

10. Waiting.
One of the worst money mistakes you can make is procrastinating on getting started with your savings plan, since achieving a savings goal can take longer than you might expect. Paying $500 per month toward an emergency fund at the income outlined in mistake No. 2, for example, would take the average American 16 months to save up three months’ income.

Utilize First Financial’s free, anonymous debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

Here at First Financial, we also encourage our members to come in at least once a year for an annual financial check-up – to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 866.750.0100 or stop in to see us today!

*Click here to view the original source by Nasdaq.

Share Your Best Financial Tip on Instagram and You Could Win a $50 Visa Gift Card!

InstagramFinancialTipContest

We want to hear your best financial tip! Don’t forget to tag us @FirstFinancialNJ and use #FFCUFinancialTip on Instagram to participate. If you have any questions, call us at 866.750.0100 or email info@firstffcu.com.
Good luck!
*To be entered, follow First Financial on Instagram and post a photo or 15 second video sharing a financial tip on or before 1/23/15 at 11:59pm. The winner will be randomly selected from the entries and notified by the Marketing Department on 1/26/15. Winner will be able to pick up their gift card in a First Financial branch or receive it via mail. No purchase necessary to enter or claim prize. You must be 18 years or old to enter. One entry per person.

8 Things You Should Do With Your Money Before 2015

Checkbox 3DThe last thing we want to do right now while preparing for the upcoming holidays, is probably think about money. That’s what New Year’s resolutions are for, right? While it’s tempting to put off your finances until the New Year, you might miss some critical financial deadlines or lose the opportunity to save extra money. An end-of-year financial checklist gives you the opportunity to make changes and save before the clock strikes midnight on December 31st.

Here is a year-end financial planning checklist. Use these last few weeks to get your finances organized and under control — a great way to close out 2014.

1. Look over your spending.

Ideally, you’ve been tracking your spending all year. What were your spending patterns? Did you go over or under in a certain category? Take a look at what you actually spent vs. what you had budgeted for. Do you need to change your expectations? Review your financial goals from last year and consider whether they will work for you in the coming year and make the necessary adjustments. If you paid off a loan, see if you can redirect that money into a paying off another debt or adding to a savings or retirement account. Don’t let the money get eaten up by miscellaneous expenses. If you don’t have a budget, start one now. Mint.com, Level and Check are all good free budgeting tools with features to help you create a budget from scratch, track your spending, and set financial goals.

2. Order your free credit report.

You’re entitled to one free yearly credit report from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion. Get a report now so you know where you stand before heading into the new year. Look over your report and check for errors or negative information. If your credit history could use some improvement, make 2015 the year you get back on track.

3. Get your credit cards in check.

That means checking your balances, rates, and cash back or other rewards. Make a large payment if you are carrying debt and have extra money to do so. If you can’t pay down a chunk of the debt you accumulated this year, create a debt repayment plan that will get it down next year.

If you have a great deal of debt, First Financial has a free, anonymous online debt management tool called Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

4. Make an extra mortgage payment.

Making just one extra mortgage payment each year can cut your loan down by years, saving you possibly thousands in interest. Also, making an extra mortgage payment means you may be able to claim an extra month of mortgage interest deductions in 2014. If you can’t afford an extra payment, try to make January’s payment before the first of the month. If the payment gets credited before January 1, 2015, it may still be tax-break-eligible for 2014.

5. Review your insurance plans.

Look over your health, life, homeowner’s/renter’s, and car insurance plans. Do you need to adjust your coverage, premiums, or add any dependents? Do you need to purchase new coverage, like life insurance or disability? Did you get married, have a baby, or buy a house? Do you have any changes coming in 2015 that you need to plan for? Those life events all trigger insurance changes.

PS: If you answered yes to any of those questions, you might need to make changes to your W-2, too.

6. Automate everything.

It’s time to finally automate your bills and savings. The more you can automate, the easier your finances will be in 2015. Automating helps you pay your bills on time and maintain a regular savings plan. This is also a good time to cancel any automatic subscriptions you aren’t using: video and music streaming, magazines, premium subscriptions, etc.

7. Make a tax-deductible charitable contribution.

If you are going to itemize deductions on your 2014 tax return, consider making a charitable contribution to a cause you believe in. The donation must be made to a qualifying organization and the tax benefit only saves you a fraction of what you donate, but you’ll be supporting a good cause to end the year.

8. Use your Flexible Savings Account.

If you have a Flexible Spending Account for healthcare or other qualifying expenses, now is the time to submit any outstanding claims. This is also the perfect time to make any year-end doctor appointments.

If you get your finances in order at the end of the year, it can only help you get more organized for the coming one!

Don’t forget to stop in to have your annual financial checkup before the year ends, or to kick off the beginning of the new year! Here at First Financial, we encourage our members to come in at least once a year to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 866.750.0100 or stop in to see us today!

Article Source:

Morgan Quinn of Gobankingrates.com, http://www.gobankingrates.com/personal-finance/10-smart-money-moves-make-before-2015/

6 Apps That Can Save Your Financial Life

Save-Money-with-AppsWelcome to the bulging world of smartphone applications that will do the logging, tracking and thinking for you as you get your financial life in order, help you follow a budget, and nudge you to pull in the reins on your spending. New smartphone apps are going to market at speedy rates as consumers, both young and old, demand on-time access to all their accounts at a moment’s notice and thanks to Mint, Bona was able to do just that.

1. Mint: Mint is the oldest and most popular free app that pools your personal-finance accounts and investments into one place. You can pull up Mint on your smartphone or laptop and set goals — like paying off credit cards or saving to buy a home — that you can follow closely through graphs and colorful pie charts. If you stray by spending too much on, say, clothing, Mint does the equivalent of yelling at you. The app will alert you when a bill is due, but you cannot actually make a payment directly. This function is actually a good thing, in that it doesn’t allow you, or anyone else, to deposit or withdraw money, move money around or pay bills. It is encouraged that you download your financial institution’s mobile app or sign-up for Online Banking to move, transfer, and/or pay bills.

Here are budgeting and bill-paying apps besides Mint that will make your financial life simpler:

2. LearnVest: This new app is an extension of the financial-planning site of the same name that’s been around since 2009, initially as a personal-finance education site for women. The free app is a lot like Mint. It helps you create budgets and prioritize your financial goals while nudging you to meet them. Like Mint, it also connects directly to all your accounts — savings, checking, credit cards, investments — and tracks every credit and debit. That gives you an instant picture with easy-to-decipher charts and graphs of your net worth as well as alerts that you’re spending too much in one category. There’s a lot of reading material to help you navigate your financial future and for an extra $19 a month, plus an initiation fee of as much as $399, you can get financial advice services.

3. HelloWallet: This app, which is owned by Morningstar, takes a behavioral science approach to business to help you plan your financial future, not just today’s bills and debt management. Its founder, Matt Fellowes, is a consumer-finance scholar at the Brookings Institution who melded technology with behavioral psychology to offer individualized personal-finance recommendations based on income, age and spending patterns. Using your GPS, for example, it can alert you that you already have spent too much money at a particular restaurant. It will also point out the gaps in your financial life, like a missing emergency-savings plan or inadequate levels of insurance. It’s primarily distributed through employee wellness plans but household memberships are available — with a three-year commitment — for $100 annually.

4. OnBudget: This new app and its fee-free prepaid-card component follow an unfussy approach to budgeting: You can’t spend more than you have. With a MasterCard prepaid debit card — what OnBudget calls a “monthly budgeting card” — you find yourself organizing spending much as your parents and grandparents may have, with different “envelopes” for each spending category. But in this case it’s virtual envelope organizational behavior that delivers real-time spending patterns, tips on saving money and constructive suggestions for better decision-making. There’s no setup involved because the software system learns your habits as you spend — and tells you about them. A plus: Unlike with most other personal-finance management tools, more than one person in a household can share a single budget. And there’s no hiding spending here because the system tracks who is spending what.

5. Better Haves: Another envelope-budgeting system, this is a relatively new one designed particularly for couples, though individuals can use it too. You can track expenses on the go and watch your color-coded envelopes deplete with each purchase. Once the envelope’s empty, everyone is advised to stop spending in that category. This one’s dashboard charts joint expenses, but there are separate tabs for joint and individual budgets. There’s even an early-warning system that a money fight could be in the offing. Plus it asks you how you felt about your spending that day.

6. Check: This is the rare app that helps you stay on top of your bills and actually pay them from your smartphone. It touts itself as a “free app that does the worrying and work for you.” Once you set it up, it sends reminders of due dates as it monitors your bank accounts and credit cards. It also alerts you in real-time of large purchases or unusual charges, but it won’t assist in budgeting.

Our Mobile App is now available for iPhone and Android users! Receive 24/7 instant access to your First Financial accounts – including bill payment, make transfers, check your balances, find branch and ATM locations, and receive account alerts. Click here to learn more and how you can download the app today!*

*You must have an account at First Financial Federal Credit Union (serving Monmouth and Ocean Counties in NJ), and be enrolled in online banking, to use this application. Standard data rates and charges may apply.

Original article source by Jennifer Waters of Personal Financial, Market Watch.