Could Your Budget Handle a Decrease in Income?

One of the most difficult situations to deal with is a decrease in income, especially if you are like many Americans of late – living paycheck to paycheck. Many of us base our lifestyle around and live right up to the limit of what our income can afford us to purchase. Living this way can really hinder your budget no matter how much you bring in.

However, spending above our means and not sticking to a budget can really be a problem – because what happens if life throws out a curveball? This unfortunate instance happened to many Americans this year during the COVID-19 pandemic. Here are a few ways to make sure you are financially prepared should you ever experience an unexpected income drop.

The Importance of a Variety of Income Sources

One of the best ways to handle a potential loss of income is to build up income from various sources, if possible. This can be important so that you aren’t relying on one source of income for everything.

If you don’t make as much as you’d like in your daily 9 to 5, starting a side business or part-time job in order to be able to fall back on additional income can be a help. Try to consistently save some of your extra income when times are good so that you are prepared the next time a crisis happens.

What Can You Cut from Your Budget?

It’s important to know which items you would cut in a pinch from your budget if you had to. It’s also good practice to plan ahead of time and figure out where you could cut back if you ever needed to.

Look at your spending patterns, and figure out what is most important. Items such as groceries and bills are necessities, and will need to be managed even if you are making less. However, dining out and added services such as cable can always be temporarily cut from your budget if you needed to.

Review what you spend money on currently and start to get prepared. You could even think about cutting back on some of that spending now, and put it aside in your emergency savings fund to be ready for a rainy day.

Do You Have an Emergency Fund?

This is one of the most important savings accounts to ever have. An emergency fund’s purpose is to be a safety net in the event that your income takes a cut, and you no longer have enough money to meet your current financial obligations. When you have somewhat of a buffer saved in the bank, you’ll feel better prepared and less stressed should you experience any sort of financial emergency. Continue to save what you can and keep putting it away into your emergency savings account – every little bit helps!

Article Source: Moneyning.com

Should You Take Out a Personal Loan or Line of Credit?

When it comes to Personal Loans and Personal Lines of Credit, the options for how to use the funds are endless. While both offer flexibility in the different ways you can use them, there are certain instances where choosing a Personal Loan might be a better fit than a Personal Line of Credit and vice versa. Let’s explore these options and help determine which is the best choice for you and your budget.

Consider the Nature of the Expense

Personal Loans are distributed in one lump sum and are typically best for large, one-time expenses. Popular uses include back-to-school costs, paying off high-interest debt, and higher education expenses. In contrast, Personal Lines of Credit are revolving and operate similarly to a credit card – where you only pay on the amount you use for a specified term. This credit line is consistently available – once you pay off the money you have borrowed, the funds open up again.

A Personal Line of Credit can be optimal if you aren’t sure how much money you will need to borrow or for how long. Common examples of ways to use a Personal Line of Credit are supplementing irregular income, making home improvements, and having a backup for when unexpected expenses arise.

Evaluate the Terms and Your Budget

One way to remember the difference between a Personal Loan and a Personal Line of Credit is that a Personal Loan is fixed and a Line of Credit can change over the term. If you’re looking for a way to budget a certain amount each month, a Personal Loan ensures that you’ll pay a set amount each month for the life of the loan. With a Personal Line of Credit, the term will typically be longer and you’ll only pay on what you use. For example, if you are approved for a $10,000 credit line and only use $2,000 of the money, you will only need to make payments on the amount you’ve used. Alternatively, if you have a Personal Loan – you’ll make payments on the total amount of money borrowed, whether you’ve used the funds or not.

Qualifying for a Personal Loan vs. a Personal Line of Credit

Typically, receiving approval for a Personal Line of Credit is more challenging to obtain than a Personal Loan. Why?  Due to the flexible nature of a Personal Line of Credit, having a good credit score is a significant factor in the decision to approve funding. On the other hand, a Personal Loan with its fixed term and amount borrowed – usually allows for easier approval.

Making the Decision

Why is it important to know the differences beyond the interest rate when it comes down to Personal Loans and Personal Lines of Credit? While often confused, these loan types have distinct differences that – if not chosen wisely, you could end up paying more. Factor in the end result of what you will be using the loan or line of credit for, how soon you’ll be able to pay it back, and take a close look at what your monthly budget is before you apply.

If you’re looking to fund the next step in your life, First Financial can help you achieve your financial goals. Talk to us today about your options and how to choose the right solution for you. Learn more about our Personal Loan and Line of Credit options here, and apply online 24/7!

*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers 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/loan. Federally insured by NCUA.

 

How Much Do Your Financial Vices REALLY Cost?

What is one thing you just can’t live without? That little indulgence that helps you make it through the day. For some of us, it’s a jolt of caffeine. For others, Netflix and Hulu offer a sweet escape from the hustle and bustle of everyday life. What we sometimes fail to think about, is these little escapes can be a drain on our wallets. Here are some ways you can cut those costs.

Coffee/Energy Drinks

The mid-morning slump, the mid-afternoon slump, and the post-mid-afternoon slump. The idea is that sometimes the day seems to drag on for way longer than seemingly possible. Some people reach for the nearest Starbucks to replenish their energy reserves, while some crack open an energy drink in the hopes of pushing through the rest of the day. What neither often considers, is that these sources of liquid energy can really add up. The average price of a cup of regular (non-latte) coffee from Starbucks is $1.89, and that’s only the average – some areas will be much higher. That may not seem like much, but consider this: an American who drinks coffee at home will save approximately $427 per year over those who regularly visit coffee shops. When we look at energy drinks, on average they cost anywhere between $2-$4. They can be almost double the cost of coffee. A cheaper alternative – green tea! If saving money is high on your priority list, put your at-home barista skills to work.

Subscription Services

From snacks to pet toys, a new wardrobe, and everything in between, there is a subscription service for it all these days. Many in fact, sometimes forget what they have subscribed to, leading to a big bill each month. Arguably the most common subscription is Netflix, which will cost you around $12.99 a month (if you only want the standard package). Add in Hulu ($5.99), BarkBox ($22), and StitchFix ($20), and you now have a monthly subscription bill of slightly over $60. See how fast that adds up? Not to mention the ever-popular meal subscription services can run you about $200 a month. While these modern conveniences are well…convenient, they are also pricey. Most of us don’t want to give up our Netflix, and that’s fine. Take a hard look at all your subscriptions. Are you getting your money’s worth? Do you eat all the meals from the meal kit? Do you keep enough from StitchFix that the $20 a month fee is worth it? Odds are, you’ll find one or two subscriptions you can live without. Your quality of life will stay the same, and you’ll save money too.

Take Out

Do you look at a recipe and instantly get woozy? Cooking isn’t for everyone, and take out can taste great and you barely have to lift a finger to get it nowadays. Before you pull up DoorDash or GrubHub, consider that the average household spends $3,000 a year dining out. That’s no small amount. On closer look, a prepared meal at a restaurant costs on average, $13. Compare that to the average cost of groceries per person for an at-home meal…$4. Yes, that is a $9 savings just from eating at home. The good news is that anyone can cook. All it takes is a little preparation. Plan your meals, choose easy recipes, and don’t expect every meal you prepare to be a Michelin-star experience. Casseroles are an easy meal that is also inexpensive and tasty. If you are completely opposed to cooking, be responsible with your take out. Choose locally-owned businesses and restaurants so that your money is stimulating the local economy. When you use a delivery service, you aren’t just paying for the food. Your total also includes a service fee, tax, a delivery fee, and a tip. Many times your order total will be double. A recent study showed that your meal will cost you 32.8% more when you order food from DoorDash vs ordering directly from a restaurant.

Online Shopping

“Add to Cart.” The temptation is always just a click away. Surfing the net can bring some expensive side effects as you see a constant flood of targeted ads. It’s like they know exactly what you’re looking for. When an online retailer meets your wants and needs (and at such a deal), it becomes hard to pass it up. And free shipping? It can more than likely be a trap to get you to continue to spend. Sure, you are getting good deals on your online purchases, but this can also make you feel like you can buy just one more thing. Soon, your whole budget has been blown on online shopping. There are many ways you can curb this habit. For starters, make sure to delete your payment information from auto-populating in services like PayPal and Amazon. Secondly, set strict limits for yourself. In your budget, set aside some funds for online shopping. If you know this is the only money you have to splurge, you might think twice before clicking “complete purchase.”

If you do any of the things above, the first thing to remember is not to get discouraged. A cup of coffee or a new shirt never hurt anyone. With most things in life, our financial vices are all about moderation. We wouldn’t expect you never to visit a Starbucks or get take out ever again. Set realistic goals for yourself and hold yourself accountable, you’ll be amazed at the savings. At First Financial, we are here to help you reach your goals and attain financial stability. To get started, check out our handy budgeting guide.

Considering a Pet? Do Your Financial Homework First

While many people have been spending more time at home and working from home due to the COVID-19 pandemic, you’ve decided you’d like to bring home a furry friend also. You’ve done your research, you’ve figured out what type of pet you want, and you’re ready to sign on the dotted line. But, have you thought about the ongoing cost(s) associated with getting a pet?

There are two main areas regarding costs to consider when it comes to owning a pet. First, there are initial costs (adoption fees/breeder fees, first vaccinations, training, etc.) and then general costs over your pet’s lifetime (food, toys, routine vet visits, grooming, etc.). It’s a good idea to prepare for the several different types of costs you might have, before you decide to bring your pet home.

Adoption Fees vs. Breeder Fees

One of the first expenses pet owners experience is an adoption fee or purchase price. Typically, adoption fees are going to be less expensive than breeder fees.

Most shelters and rescue organizations will provide medical care, vaccinations, and possibly even spaying or neutering animals. If you decide to go the shelter route, it’s essential to ask what services your adoption fees include.

It’s also a good idea to find out what the adoption process looks like. It could be different depending on the shelter or rescue organization you choose, but usually the basics are the same. Once you select your fur-ever friend, you’ll have to fill out paperwork to be approved. The shelter or rescue organization will want to know where you live, whether or not you have other pets, if there are kids in your home, and they may even do a house visit before you’re allowed to take your new friend home. Once you pay the adoption fee and your application is approved, then the real fun begins!

If you plan to purchase from a breeder, the type of breed you’re interested in determines the amount you’ll pay in fees. When buying from a reputable breeder, you’ll likely get a fair, competitive price, and most will have official paperwork on the animal you’re purchasing. Do your homework on the breeder and make sure you’re buying from someone who is breeding ethically.

Medical Costs

Vet bills are often the most expensive aspect of owning a pet. If you’re lucky, you’ll have a relatively healthy animal that only needs a vet visit once or twice a year. On the other hand, if your pet does need additional vet care, it can be pretty costly and you’ll want to be prepared.

The average vet visit can cost a pet owner anywhere from $50 to $400, depending on the nature of the visit. If you’re trekking to the vet once a year, it’s not as challenging to work into your budget. However, if it happens every couple of months, you could find yourself in over your head with vet bills.

Eating Right for Less

For every question you have about pet ownership, there are a million different answers – and that includes what to feed them! When you’re picking out what your pet eats, think about their size (are you feeding them once a day or do they require multiple feedings), how much they eat, and what they like. You might find that your cat loves a particular brand (let’s say it costs less than $20 for a 22-pound bag) or that your dog lives for a specific brand (let’s say that a 50-pound bag is less than $25). Don’t automatically buy the most expensive food. See what works for your animal and your budget.

Toys!

You can’t have an animal without toys. Every cat needs a scratching post, and every dog needs a good rope to play tug-of-war. The great thing about toys? You can spend as much or as little as you want. You might have a cat that would rather play with bottle caps than catnip mice. Before you spend your paycheck buying toys, get a few and see which ones your furry companion likes. You might be surprised.

Training & Grooming Costs

Training and grooming are additional costs that you may not have to consider. If you’re getting a cat, you won’t have to worry about training classes or grooming (unless you choose to do so). With a dog, however, training classes might be something you need to consider. Depending on the breed of your dog, grooming might be a necessity too. Do your research. Look around and find the best deals on grooming and training.

Bringing home a furry friend is a huge commitment. It’s essential to evaluate your current financial situation before deciding to purchase a pet. We have affordable personal loans or low-interest credit cards that meet your needs for multiple parts of your life.* We’re your credit union, let us see how we can help! Contact us today.

*APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a loan or credit card, and is open to anyone who lives, works, worships, volunteers 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/loan. Federally insured by NCUA.

 

How to Dispute and Pay for Large Medical Bills

If you’re looking at astronomical medical bills due to the coronavirus pandemic or another health emergency, you might think there’s no choice but to pay thousands of dollars for your treatment. This may not always be the case. Here’s some advice on how to bring down the numbers on your medical bills and tips on how to cover the remaining costs.

Step 1: Review your bill(s).

Typically, you’ll receive an Explanation of Benefits (EOB) from your insurance company along with the actual bill, which tells you how much you’re responsible for paying. It’s important to hold onto both of these documents and to review them carefully.

The EOB is a document provided by your insurance company explaining your insurance benefits as it pertains to a bill. It will usually include the following information:

  • Amount Billed by Provider (this refers to the amount the doctor or hospital charged)
  • Plan Discounts (this refers to a discount negotiated by your insurance company)
  • Amount paid by insurance company
  • Amount you owe the provider

Most EOBs will also include information about your deductible, co-pay and co-insurance. If a procedure or treatment is not covered, the EOB should include a short explanation about why it’s not covered. If your statement includes charges for COVID-19 testing or related expenses, like co-payments and deductibles, your insurance should be covering the entire amount, as per the Families First Coronavirus Response Act.

Review your bills carefully and make sure the EOB and the medical bill correspond with each other. If there is a discrepancy between the two documents, it may be a billing error. If you suspect an error, you may want to ask for itemized bills. This will provide you with a detailed breakdown of all costs charged to you for services and/or inpatient stays.

If you’re being billed for a hospital stay, review the charges carefully to be sure you’re not getting billed for a treatment you haven’t actually received.

Step 2: Review your insurance coverage.

It’s a good idea to familiarize yourself with your health insurance policy before disputing any charges. Most health insurance providers will present their members with a detailed manual that outlines exactly which treatments and charges are covered and which are not. Here, you can refer back to the EOB to see if the insurance paid for all the procedures it claims to cover.

Step 3: Dispute any errors.

If your insurance billed you incorrectly or did not cover a procedure or treatment that is covered under your plan, call a company representative to ask about the charge. Be sure to have your bill in front of you when you make the call, note the time of your call, the contents of the conversation, and the name of the representative you speak to in case you need it for future reference.

If the error is with your doctor’s office, ask to speak to an office billing representative and explain your position. Here too, keep a record of the conversation for future reference. Be prepared to make multiple phone calls until you reach a party who can make the change. It’s also a good idea to follow up with a written request to challenge any charges in question.

Step 4: Negotiate the remaining bill.

If the bill is unimaginably high after all the errors were corrected, you still have options. Consider negotiating with the billing department at your doctor’s practice for a lower price on the treatments rendered. You may want to do this in person, and most practices will allow you to schedule an appointment with a representative of the billing office. Bring all your bills and other supportive documents, such as receipts from the pharmacy and information from your insurance provider. If you believe a charge for a procedure has been unreasonably inflated, it’s a good idea to research the going rate of coverage through sites like HealthcareBluebook.com and My Healthcare Cost Estimator first.

At the meeting, explain that you are having difficulty with your bill and that you’re looking for a way to lower the costs. Here are some open-ended questions to guide your negotiations:

  • What discounts do you offer for financial hardship?
  • Which of these fees can be waived?
  • Many hospitals have charity relief plans for patients having difficulty meeting their payments, can you tell me about yours?
  • Can you charge me what Medicare would pay for this service?
  • Can you lower some charges if I pay this off sooner?

Step 5: Create a payment plan or seek funding.

Once you have your final bill amount, you’ll need to choose to pay it now or work on creating a payment plan to make it more manageable.

If you’d rather not have a huge bill hanging over your head for awhile, or your doctor’s office insists on immediate payment – consider some other options. One way to help pay your bill is by applying for a personal loan from First Financial.* This method will provide you with the funds you need to pay your bill, along with a payback plan offering flexible terms and manageable monthly payments. Another option would be using your emergency savings fund, if it will help cover any expenses.

Step 6: Going forward.

To avoid an unexpectedly large medical bill in the future, you may want to consider switching your insurance plan to one that provides more robust coverage and less expensive co-pays and deductibles – if at all possible. Your premiums will likely increase, but the change may be financially worthwhile if you know you may have ongoing medical expenses.

Another long-term option to consider is setting up a Health Savings Account (HSA). The funds you contribute to this account are tax-deductible, grow tax-free and can be withdrawn to cover qualified medical expenses.

If you’d like to talk to us about personal or consolidation loan options, contact us! We’re here for you.

*APR = Annual Percentage Rate. Rates are subject to change. Maximum loan is $25K and maximum term is 60 months. Not all applicants qualify, subject to credit approval. A First Financial membership is required to obtain a personal loan, and is open to anyone who lives, works, worships, volunteers 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/loan. See credit union for details. 

Article Source: CUContent.com

Should You File for Bankruptcy?

Your debt feels impossible. New bills and past due notices are showing up constantly. Creditors won’t stop calling. As you feel like throwing your hands in the air, you wonder – should I file for bankruptcy?

Due to the COVID-19 pandemic, this is a reality that many might be facing. Millions of Americans across the country have been unemployed since earlier this year. It’s incredibly easy to get behind on bills when the money isn’t coming in, but the bills are still showing up. It’s an overwhelming feeling.

The longer this pandemic continues, the more likely it is that you’ll see an attorney on a TV commercial asking if you’re thousands of dollars in debt, feeling overwhelmed by creditors and looking for a solution. Next – they’ll present the option of filing for bankruptcy, which who wouldn’t want to have their debt forgiven, right? Not so fast.

Filing bankruptcy might help you get rid of your debt, but it’s important to understand the serious, long-term effects it can have on your credit. When you file bankruptcy, it remains on your credit report for 7-10 years as a negative remark, and it affects your ability to open credit card accounts or get approved for loans with favorable rates.

What exactly is bankruptcy? Bankruptcy is a legal process designed to help individuals and businesses eliminate all or part of their debt, or in some cases – help them repay a portion of what they owe. There are several types of bankruptcy, but the most common types are Chapter 7, Chapter 11 and Chapter 13.

Chapter 7 forgives most of your debt and allows you to keep all of your assets with a few exceptions, depending on state and federal laws. During the process, you and your creditors are invited to a meeting where they are allowed to make a case as to why a federal bankruptcy court shouldn’t forgive your debt. Once your case is approved, your debt will be forgiven, and none of your creditors will be allowed to hassle you over the forgiven debt.

Chapter 11 is generally for small business owners. It allows small business owners to retain their business while paying back debts according to a structured plan. With this option, business owners give up a certain amount of control to court officials, debtors, or counselors assigned to help them rebuild their credit. Despite losing some control of the business, owners are able to keep their business running while working on their financial future.

Chapter 13 is different than Chapter 7 in that it requires you to come up with a plan to repay your creditors over a 3-5-year period. After that, your debt will be forgiven.

Things to consider if you’re thinking about filing bankruptcy:

It’s important to note the serious impact bankruptcy can have on your credit report. Bankruptcy effectively wipes out everything on your credit report – good and bad remarks, and will stay on your credit report for 7-10 years.

This also means any account you’ve paid off or left in good standing that could positively impact your credit score, is also wiped out. Any hard work you’ve put into building your credit is basically nonexistent once you file bankruptcy. All the negative remarks will be gone as well, but you will also be considered high-risk when it comes to lending moving forward.

Bankruptcy affects your ability to open lines of credit – credit cards, mortgages, auto loans, personal loans, etc. Because you will be labeled high-risk, most banks will likely deny any application you submit for a line of credit – even though your credit score might have gone up when your credit report was initially wiped out. If you are approved for a line of credit, you’ll likely get a much higher interest rate which will make your monthly payments higher too.

Should you file for bankruptcy?

When it feels like your debt is caving in on you, bankruptcy might seem like the only way to reach financial peace. Here are a few steps to consider taking before you consider filing.

  • Take a moment to talk to your creditors. Negotiate and see if there are options to make your debt more manageable. Can you lower the interest rate? Is it possible to settle for less than you owe? Can you set up a payment plan?
  • Talk to us about your financial picture. We might have options that will allow you to consolidate your debt into one, more affordable payment.
  • Go through your house. Do you have things you don’t use or need that you can sell? If so, sell some of those items and apply that money to your debt.

Also, it’s important to note that not all debt is eligible for bankruptcy. While bankruptcy can eliminate a lot of your debt, some types of debt cannot be forgiven:

  • Most student loan debt.
  • Court-ordered alimony.
  • Court-ordered child support.
  • Reaffirmed debt.
  • A federal tax lien for taxes owed to the U.S. government.
  • Government fines or penalties.
  • Court fines and penalties.

Bankruptcy should be the last option you consider. Look through your debt, see what you owe and carefully weigh all your options. Again, make an appointment to come in and talk to us and we can help you review your options. We’re your credit union, and we’re here for you!