5 Ways to Make Budgeting Easy Even Around the Holidays

Business man with a santa hat isolated, santa's budget

A budget is essential because having a budget is the first step to achieving financial success. “It’s the backbone of everything else that you do financially,” says David Weliver, founder of financial blog MoneyUnder30. “It all comes down to that golden rule of spending less than you earn. A budget is how you control that.” Think you can’t budget around the holidays?  Think again. You can use these helpful budgeting tips all year long!

Follow the Rules

One guideline of budgeting is the 50/30/20 rule. In the simplest terms, 50% of your income should go to your needs, 30% for wants, and 20% for savings.

What’s a need? For most people, that will include housing costs, whether that’s rent and rental insurance or mortgage payments and homeowner’s insurance. Beyond that, spending priorities can vary greatly. Essentials also might include groceries, car payments, cell phone bills, and utilities.

Wants would fit in the flexible spending category. They might include eating out, going to the movies, buying clothes, or other day-to-day expenses that can vary greatly from month to month.

Finally, the 20% you save should go to your financial goals, whether it’s short-term goals, such as saving for a vacation, or long-term goals like funding your retirement.

These guidelines can be adapted to your personal situation. “It’s okay to set your own ratios,” Weliver says. “But the goal is to try to live so that your essentials are 50 percent or less of your income, and then you have money left over.”

Organize Your Money

Once you set your budget, there’s a good chance you’ll need help tracking your progress. You may want to do so using an Excel spreadsheet, a pencil and paper or an online budgeting tool like YNAB.

You may even try the envelope method, for which you use cash that you divvy up between a number of category-labeled envelopes. Once an envelope is empty, you’re done spending for that category that month. It’s an extreme strategy, especially in today’s world of plastic and online payments, but it really works.

Mvelopes digitizes the envelope strategy. It offers a free version, as well as a premium option for $95 a year that comes with additional features, such as the ability to link more than four accounts and create more than 25 envelopes.

Weliver suggests a twist on the envelope method: Try using different bank accounts for different types of spending. One account can be reserved for your fixed essential costs, another for groceries, another for dining out and so on. Of course, you need to make sure you are using fee-free accounts.

Focus on Repaying Debt

If you’re carrying a lot of debt, it can quickly consume your budget.

The minimum amount due on any debt you have must count among your essential expenses. Ideally, you want to pay more than the minimum, even if it means socking away less in savings and investments. “Paying down debt is a form of savings,” says Weliver. The faster you pay off your debt, the more you save in interest charges.

There are two common approaches to paying off debt. With one, you tackle the balances with the highest interest rates first. This one will save you the most on interest charges in the long run. The other strategy, often called the snowball method, involves paying off the smallest debt first, which makes you feel good and encourages you to keep rolling until your debt is gone.

If you are carrying a lot of high interest debt across multiple accounts, it may make sense to consolidate or refinance those loans.

Go Digital

Mint is the reigning king of free budgeting sites and apps, but there are tons of other options that work pretty similarly.

The big idea: You connect the site to your accounts with other financial institutions. The site then tracks all of your money’s movements in one place, automatically categorizing each transaction and organizing your expenses into colorful charts and graphs to help you identify spending trends.

Set Spending and Saving on Autopilot

Once you have your budget in place, setting up automatic contributions for your savings and automatic payments for regular bills can make it a breeze to stay on track. Some companies even provide discounts to people who sign up for automatic payments.

Two apps can help you automate your savings further:

  • Acorns rounds up to the nearest dollar on every purchase you make with a linked checking account and automatically invests the change into a diversified portfolio for you. You can customize your risk tolerance and adapt your investments based on personal preferences.
  • Digit monitors your spending habits and, when it determines you can safely afford it, transfers a small amount of money (typically between $5 to $50 every few days) from your linked checking account to a special Digit savings account.

Automating your budgeting and spending will encourage you to save more and make it easier to achieve your financial goals, even when you’re holiday shopping too!

Article Source: http://www.forbes.com/sites/tomanderson/2016/04/05/5-ways-to-make-budgeting-easy/2/#11f576f1558c

 

4 Retail Tricks You Don’t Know You’re Falling For

Two Female Friends With Bags In Shopping Mall

The holiday shopping season is well upon us.  Don’t fall for these common retailer tricks while you are out buying gifts this year, try to keep as much of your own money in your pocket as you can!

The cold clothing store

Ever wander into a department store only to immediately notice a temperature drop? This change isn’t always made for the customer’s comfort. Often times, retailers will lower the temperature on purpose, prompting you to head to the coat section of the store. You may or may not actually purchase a jacket, but they have subconsciously made the thought cross your mind. If you don’t leave that day with new outerwear, you may be thinking now, “Do I need a new jacket? Should I come back and buy one later?”

The 10 for $10

On trips to the grocery store you may notice bins with signage shouting “10 for $10!” Before you fall for the trap, stop and think whether these items are ones you actually need. Do you really need ten boxes of cereal? Also, many customers don’t realize that even though the sign says 10, more times than not this deal often means one for $1 as well.

The “left-digit effect”

Ever wonder why something is priced one cent from the nearest dollar? This sales strategy has been proven successful according to a study by Colorado State University and Washington State University. The “left-digit effect” describes how customers overwhelmingly choose prices like $3.99 rather than $4.00 because when shoppers see the left-digit (lower) number, their brain has a stronger reaction.

The sneaky display

When you’re standing in line to check out and you see the random display of odd-and-ends (think travel coffee mugs, candles, or cookie gift bags) remember this isn’t an accident. There is plenty of room to display these items elsewhere in the store, but retailers choose to place them up front in an effort to add even more items to your purchase.

Article Source: Wendy Bignon for CUInsight.com

5 Money Moves to Make Before 2017

New year is loading. Holiday concept on a blue background with snow and snowflakes. New year template vector illustration.

Here comes the end of the year. Are you ready financially?

1. Review Your Retirement Contributions

Are you putting enough away for retirement? Now is a good time to check into that. Make sure you put aside what you can for your future. A tax-advantaged retirement account is a great way to go because it increases the efficiency of your earnings, and might even get you a bit of a break on your tax bill now.

Questions about retirement contributions or investments? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 732.312.1564, email samantha.schertz@cunamutual.com or stop in to see us!*

2. Spend from Your Flex Account

If you have a Flexible Savings Account (FSA), you need to use your money or you’ll lose it. This is a great benefit, and comes with a tax deduction, but if you still have money left over and don’t use it for a qualified expense within a certain amount of time, you could lose the money.

Look at your FSA and see if you can spend that money on something that qualifies, like eye exams, new glasses, some medical procedure you’ve been waiting on, or dental work.

3. Harvest Your Investment Losses

You shouldn’t sell an investment lightly. However, you can take advantage of the losses in your portfolio. Consider selling some of the losing investments and deducting the loss before year end. Your investment losses reduce your income by the amount you lose, which helps, especially if you made more money this year than last year. Just be careful to avoid getting caught in the “wash sale rule” from the IRS. If you sell a losing investment, you can’t buy it back within 30 days.

4. Donate to Charity

This is a great time of year to donate to charity. Clean out the house and donate items in good condition to a charity thrift shop. This way you can claim a deduction for charitable goods while also helping a worthy cause. You can also get a tax deduction for cash donations you make. Just be sure to get a receipt from the organization so you have it for your tax records, and be sure to itemize on Schedule A of the federal tax return.

5. Review Your Budget

Now is the time for a budget review. How are things going with your budget? Are you on the right track? What’s worked well this year? What hasn’t? Be honest about how the budget is working. You might need to tweak the specifics before the new year so that you are ready to hit the ground running in 2017.

*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. Non-deposit 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.

Article Source: Miranda Marquit for Moneyning.com, http://moneyning.com/misc/5-money-moves-to-make-before-year-end/

10 Financial Habits You Should Start Today

Office folder with inscription Best Practice on Office Desktop with Office Supplies. Business Concept on Blurred Background. Toned Image.

When you look at people who are financially fit, they all have several things in common. They know the value of money and have developed plans and habits that keep them in shape — financially speaking, of course. They are never late with their bills. They know the value of money. They have little to no debt at all.

These are their habits. They all have this common thread, which binds them together. They know what to do when it comes to money — and what not to do. They may not have thousands of dollars in the bank, but they are still financially fit. They just handle money in a way that seems magical to many of us.

The truth is that it is not magic. There is no secret formula that they follow. They have one thing in common: Good financial habits.

Anyone can do this. You just need to know where to start. Below, you will find 10 habits that these people all have in common. Best of all, they are things you can start doing today.

1. Have a Written Budget

This is the key to any financial plan. Many people – sort of, have a budget. They know who they have to pay each month, but maybe it’s not in writing. When you have a written budget, you see exactly where your money goes. Best of all, you can direct your money where you want it to go. You can decide what you want to save and how much you want to spend on groceries. When writing out your budget, be sure to include every single expense (don’t forget about the coffee you stop for every morning or if you pay for parking each day). Your budget is your roadmap to financial success.

2. Pay Your Bills On Time

Never be late with your bills. There are so many ways to ensure they get paid on time, including easily setting up automatic payments or setting reminders on your phone. You can even use a calendar and write in due dates. When you pay your bills on time you show you are responsible. Not only that, but you won’t have to worry about late fees either.

3. No Need for Immediate Satisfaction

It can be tempting when you are shopping to pick up that new bag or pair of shoes. However, do you really need them? Will buying them truly make you happy? Why do you want to buy them? Asking yourself these questions can help you avoid emotional purchases, which typically only lead to buyer’s guilt later on. If you do want to buy something, use the 24 hour rule: Go home and think about it. Check your budget, and if 24 hours later you still really want and can afford the item – go ahead and purchase it.

4. Try Not to Use Credit or Debit Cards

Cash is one of the best ways to ensure you are financially fit. Even if you think you use credit cards the right way and pay them off each month, you could still be overspending. For example, if you only have $100 to spend on groceries, you can’t spend even $101 if you only have cash. If you are using plastic, it’s often too easy to spend more than you anticipate.

5. Keep the Lines of Communication Open

Have regular budget updates with your other half – look over your finances and check your spending. Don’t hide money or spending – just be honest. Try to make time for a monthly meeting, and add it to both of your calendars so you can go over your budget together.

6. Pay Down Debt

Take steps to pay off any debt you have. If there’s a lot of it, you will probably need to create a debt pay off plan. It may take some time, but you can do it!

7. Save Money Every Month

Your budget should include a line item for every penny you earn, including savings. Saving could be needed for retirement, holidays, emergencies, and so on. There is never a right or wrong thing to save for. The best trick here is to automate your savings. When it’s automatic, you can never make excuses for yourself that you can’t save. Instead, it’s money not available for you to spend – and this is never a bad thing!

8. Live Within Your Means

Who wouldn’t love a huge house or fancy car? We all would – but can you actually afford it? Everyone has a different income, therefore the way we live will be different based upon that income. The real difference is not in how much you make, but in what you spend.  If you can’t afford that huge house right now, you shouldn’t buy it.

9. Use Credit Wisely

Credit cards can be a great way to not only build your credit, but also to gain rewards and perks. But, you need to use credit cards the right way. Never charge more than what you have in the bank – if you only have $500 in your account, do not charge more. The reason being, a payday is never a guarantee. You should generally be able to pay your balance in full each month, and on time.

10. Balance Your Accounts Regularly

While you can use online banking 24/7 to check your account balances, there may still be transactions that haven’t posted yet, checks that haven’t cleared, and online bills that haven’t been reflected yet either. If you balance your account regularly, you know exactly what you have to spend.

These 10 habits will easily get you to be financially fit.  You don’t have to start with all ten at once – even if you master a few now and slowly add in the others, you’ll be financially fit in no time!

Article Source: Tracie Fobes for Gobankingrates.com, https://www.gobankingrates.com/personal-finance/financial-habits-need-start-today/

How to Get Back on Track If You’re Drowning in Debt

bigstock-Businessman-Run-Away-From-Debt-103353212Getting out of debt is much harder than getting into it. But you can do it — and along the way, you’ll rid yourself of a lot of stress.

Countless people find themselves drowning in debt simply because they can’t control their spending. If this sounds familiar, try tracking everything you buy for a month, including all those “little” items that cost just a few dollars. Once you see how those purchases add up, you’ll realize how important it is to lay out a budget and stick to it.

Understanding how much you actually spend is a good first step, but that alone won’t get you out of debt. The following strategies for managing different types of expenses — and bringing in some extra income — can you help you reach a happy, debt-free future.

Control your credit card usage. If credit card debt is the problem, take these steps right away:

  • Cut up your cards: Save one card for use in emergency situations. Cut up all the others, and throw away the pieces.
  • Pay with cash: Only pay cash for purchases such as groceries, clothing, and gas.
  • Attack high-interest debt first: Pay off the credit card with the highest interest rate first. Once this card is paid off, apply what you were paying on it to the card with the next highest rate.
  • Negotiate a lower rate: Negotiate your interest rate with your credit card companies. Your issuer will usually work with you if you say you’re going to transfer the balance to another card with a lower rate.

Cut some recurring expenses. Most people have recurring monthly expenses that can be eliminated, including:

  • Excess phone service: If you have a mobile and a landline, you probably don’t need both. Pick one and stop paying for the other.
  • Satellite/cable television: Consider disconnecting satellite or cable service and replacing it with a streaming service, such as Netflix or Hulu. You can get entertainment at a fraction of the monthly cost.

Keep an eye on your indulgences. We all have little indulgences we like to spend money on here and there, but we often don’t realize how much they add up.

  • Specialty coffee: Stopping by Starbucks on your way to work every morning is certainly a luxury you enjoy, but you could save $25 or more a week by making your own coffee at home.
  • Fast food lunches: If you work outside your home, chances are you buy lunch out at least a couple of days per week. These costs mount quickly. Even if you spend only $40 per month eating lunch out, that’s $40 that could go to your savings account or toward a credit card payment.

Bring in extra income. When you lose control of your finances, getting out of debt requires serious action.

  • Take a second job: No one wants to work 16 hours per day, but if that’s what it takes for your family to thrive financially, then it must be done — at least temporarily. It may be that working an additional, part-time job for just 20 hours or less per week is all that’s necessary to help you out financially.
  • Sell things you don’t use: Many of us keep things we no longer need in the basement or storage shed. Sell any item you haven’t used within the last year online or have a garage sale.
  • Sell your (extra) car: If you’re a two- or three-car household, chances are you could make do with one less car. Consider selling one if it isn’t a necessity.

Reduce debt — and stress.

It requires work and a commitment to doing what it takes to reduce your expenses-to-income ratio. Once you make that commitment, you’ll find that your bank account grows and your stress level decreases.

Take advantage of First Financial’s free, online 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.

*Original article source courtesy of Pamela Sams of the LA Times.

12 Money Rules to Live By

bigstock-Piggy-bank-on-money-concept-fo-118171091One-size-fits-all financial advice isn’t supposed to work. We’re all as unique as snowflakes, so the financial rules that guide us should be molded to our individual situations.

Except it turns out that rules of thumb can be really helpful.

A study of West Point cadets, for example, found teaching rules of thumb was at least as effective as standard personal finance training in increasing students’ knowledge and confidence as well as their willingness to take financial risks. Researchers found money rules of thumb actually were more effective than teaching accounting principles to small-business owners in the Dominican Republic.

Besides, we all have busy lives — sometimes, we just want an answer. If you’re tired of the “on the one hand this, on the other hand that” approach to financial advice, check out these guidelines that have been collected over the years. Perhaps you’ll find some one-size-fits-all advice that suits you.

1. Car buying: Buy used and drive it for 10 years

New cars are lovely, but they’re expensive and lose an astonishing amount of value in their first two years. Let someone else pay for that depreciation and take advantage of the fact that today’s better-built cars can run well for at least a decade if properly maintained. You can save hundreds of thousands of dollars over your driving lifetime this way.

2. Car loans: If you have to borrow, use the 20/4/10 rule

Ideally, you wouldn’t borrow money to buy an asset that loses value, but you may not always be able to pay cash for a car. If you can’t, protect yourself from overspending by putting 20% down, limiting the loan to four years and capping your monthly payment at no more than 10% of your gross income. A big down payment keeps you from being “underwater,” or owing more on the car than it’s worth, as soon as you drive off the lot. Limiting the length of the loan helps you build equity faster and reduces the overall interest you pay. Finally, capping the size of the payments prevents your car from eating your budget.

3. Save for college

Retirement saving is more important, but get in the habit of putting at least $25 a month aside for college soon as your child is born. Your kids can always get student loans, but as you’ve probably heard, no one will lend you money for retirement. Your children will not thank you if the price for their education is your having to move in with them because you’re 70 and broke. The good news is that even small contributions to a 529 college savings plan can add up over time. “Starting early can mean the difference between choosing the college that is right for your child as opposed to the one that offers the best financial aid package,” says Joe Hurley, founder of SavingForCollege.com.

Our Investment and Retirement Center can help you get your colleges savings in order with a 529 College Savings Plan – give us a call at 732.312.1564, email Samantha.Schertz@cunamutual.com or stop into any branch!

4. Credit cards

If you carry a balance, look for a low-rate card to help you pay off your debt. If you pay in full each month (as you should), find a rewards card that returns at least 1.5% of what you spend. Don’t mess with rewards cards if you’re dragging around credit card debt. Focus on paying it off fast with a low-rate card. If you pay in full, though, you should regularly review your rewards programs to make sure you’re getting enough value from them. The programs can change, as can your spending and the way you use rewards. “Even if you don’t want to ‘play the game’ and manage a complicated wallet, there’s no excuse for earning less than 1.5% back for all of your purchases,” says NerdWallet credit card expert Sean McQuay.

Our Visa Platinum Credit Card is the perfect addition to your wallet! We currently have a special 80th Anniversary Introductory Rate for a limited time! From 7/1/16 through 2/28/17 all qualifying new consumer Visa Credit Card Accounts will be eligible for .80% APR on purchases and balance transfers for 8 months! Qualifying existing consumer credit cardholders who are approved for a new balance transfer between $800 and $8,000 are also eligible for the same anniversary rate.*

5. Emergency savings

You need to be able to get your hands on cash or credit equal to three months’ worth of expenses. The classic emergency fund advice — that you need three to six months of expenses saved — is great, but it can take years to save that much and you have other priorities that are more important (see “retirement,” below). While you build up your cash stash, make sure you have a Plan B. That could be money in a Roth IRA (you can pull out your contributions at any time without paying taxes or penalties), space on your credit cards or an unused home equity line of credit.

6. Insurance

Cover yourself for catastrophic expenses, not the stuff you can pay out of pocket. Insurance should protect you against the big things— unexpected expenses that could wipe you out financially, such as your home burning down or a car accident that triggers a lawsuit. You want high limits on your policies, but high deductibles, too. “Making a series of small claims doesn’t make financial sense in the long run. You may gain some small insurance payments, but you risk a rate increase that could more than cancel out your gains,” says NerdWallet insurance expert Amy Danise.

7. Mortgage amount

If you can’t afford the payment on a 30-year, fixed-rate mortgage, you can’t afford the house. You may be able to save money by using another kind of mortgage, such as a hybrid loan that offers a lower initial rate. But if you’re using an alternative loan because that’s the only way you can buy the home you want, you may have set your sights too high. A budget-busting mortgage puts you at risk of spiraling into ever-deeper debt, especially when you add in all the other costs of homeownership.

8. Mortgage rates

Fix the rate for at least as long as you plan to be in the home. Plans can change, obviously, but you don’t want a big payment jump to force you out of a home you hoped to live in for years to come. If you’re pretty sure you’ll be moving in five years, a five-year hybrid could be a good option. If you think you may stay for 10 years or more, though, consider opting for the certainty of a 30-year fixed rate.

First Financial offers great low-rate Mortgages to get you into your dream home – check out our current rates on our website at www.firstffcu.com!

9. Mortgage prepayments

You have better things to do with your money than prepay a low-rate, potentially tax-deductible mortgage. Shaving years off your mortgage and saving money on interest sounds great. But before you consider making extra payments to reduce your mortgage principal, make sure more important priorities are covered. You should be saving enough for retirement, for one thing, and have paid off all other debt, since most other loans have higher rates and the interest isn’t deductible. It would be smart to have that emergency fund built up as well and to be adequately insured. If you’ve covered all of those bases and still want to pay down your mortgage, have at it.

10. Retirement: Save 15%

If you got a late start or want to retire early, you may need to save more. Run the numbers on your retirement plan. For most people, 15% including any company match is a good place to start. Even if you can’t save as much as you should, start somewhere and kick up your savings rate regularly. Retirement should be your top financial priority, by the way. You can’t get back lost company matches, lost tax breaks and the lost years where your money isn’t earning tax-deferred returns.

11. Retirement, Part II

Leave retirement money for retirement. When your retirement fund is small, you may feel like spending it doesn’t really matter. It does. Taxes and penalties will cost you at least 25% and likely more of what you withdraw. Plus, every $1 you take out costs you $10 to $20 in lost future retirement income. Once your retirement fund is larger, it may be easy to convince yourself there are good reasons to borrow or withdraw the money. There really aren’t. Leave the money alone so it’s there for you when you need it.

To set up a no-cost, no obligation consultation with our Investment and Retirement Center contact us a call at 732.312.1564, email Samantha.Schertz@cunamutual.com or stop into any branch!

12. Student loans

Your total borrowing shouldn’t exceed what you expect to make your first year out of school. At today’s interest rates, this will ensure that you can pay off what you owe within 10 years while keeping payments below 10% of your income, which is considered an affordable repayment rate, says financial aid expert Mark Kantrowitz, author of “Twisdoms about Paying for College.” What if you didn’t limit your borrowing and are now struggling? You have options. “If you have an overwhelming federal loan balance, income-driven repayment plans are there for you,” says NerdWallet student loan expert Brianna McGurran. “It’s tempting to want to hide from your debt or be ashamed of it, but you’re better off looking into the repayment options that are out there. You’ll see there are ways to find relief.”

*APR = Annual Percentage Rate. APR varies from 0.80% to 18% when you open your account based on your creditworthiness. This APR is for purchases and balance transfers and will vary with the market based on the Prime Rate. Subject to credit approval. No Annual Fee. Other fees that apply: 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. The qualifying period for the 0.80% promotional rate is between 7/1/16 and 2/28/17. New accounts will receive 0.80% APR on all purchases and balance transfers for 8 months starting from the date the account is opened. Current First Financial Visa Credit Cardholders will be eligible to receive 0.80% APR on balance transfers with a minimum of $800 and maximum amount of $8,000 for an 8 month period starting from the date the balance transfer is posted. A First Financial membership is required to obtain a VISA Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.

Original article source courtesy of Liz Weston of Nerd Wallet.