Handy financial tips for travel

Handy financial tips for travel

A credit mishap abroad can ruin any good trip. Here's a few tips to avoid financial trouble while travelling outside of the country.

Before You Travel, Get a Free Copy of Your Credit Report

If you haven’t obtained a recent copy of your credit report, that is the first step. Visit www.annualcreditreport.com for a free report from all three bureaus.
 
If you see errors on your report, dispute these with each bureau. Instructions on how to do so are at each site.
 
Notify Your Financial Institution Before Traveling
With the summer months upon us, if you are traveling, you probably do not want to be stuck without access to your debit and/or credit cards—how else are you going to pay for all of those wonderful souvenirs?
 
Don’t get your card frozen.
Making purchases outside of your normal pattern can trigger suspicious activity on your account often resulting in your account being frozen until you can be reached by phone. Or in a worst case, if your card is compromised by fraudsters, you will be left without use of your card.
 
To minimize any disruption, it is always a good idea to notify your financial institution of your travel plans and provide the best contact number to reach you at while you are traveling—especially if you are leaving the country. By doing this you are hopefully minimizing the chances of your card being frozen when you are trying to make a legitimate purchase.
 
Helpful Tips for Traveling with Your Card
1.Make sure you have emergency phone numbers for your financial institution. If traveling outside the U.S., toll-free 800 phone numbers will not work. Make sure you have a contact phone number for your financial institution that is accessible from outside the U.S.
2.Immediately notify your financial institution if your card is lost or stolen.
3.Monitor transactions on your account using Online Banking.
4.Always take at least one back-up source of funds with you, and be sure you have contact phone numbers for your credit card provider.
5.In Europe, many ATMs do not offer the option of withdrawing or transferring funds from a savings account. Make sure your checking account has sufficient funds to meet your cash needs.
6.Look at the logos on the back of your card. These logos indicate the networks where your card will work. If your card is refused, it may be because the machine is not on a compatible network.
 
 

 

Why you should be interested in interest

mortgage, becu, saving, compound interest

The 8th Wonder of the World

To quote Albert Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
 
What did he mean by this?
Assume at age 31 you start saving $2,000 a month for your retirement and you do so until you are age 65. Earning 9% interest you will have accrued over $470,000. Not bad for a $70,000 investment over 35 years.
 
However, if you had started saving the same $2,000 when you are 22 and did so only until you were 31 you will have over $579,000 and will have only invested for 9 years.
 
This is the power of compound interest. In this example the person who started saving at age 22 and did so for only 9 year will always have more that the person who started at age 31.
 
It’s never too late.
Don’t let this discourage you. Though it is always best to start young, it is never too late to prepare for retirement. Some money in retirement is better than no money in retirement. Consider taking some time to visit with a financial advisor who can help you put a customized retirement plan together to make sure you are on track.
 
What Impacts Your Credit Score?
How your credit score is calculated may seem like a mystery at times. It is not your marital status, where you live, or how much money you make that determines your credit score rather, your credit score it determined by the following five elements:
 
Payment History
Paying all of your bills on-time is probably the most important thing that you can do. Failure to do so will result in adverse items showing up on your credit report that will impact your score.
 
Amounts Owed
This is often referred to as your utilization or how much of your available credit do you have available. What is important is what is reported on your monthly statement. For example, even if you pay your account off in full each month, if you have a $1,000 credit limit and your statement shows an outstanding balance of $500, you would have 50% utilization which is higher than optimal. If possible try to keep your utilization below 30% and being below 10% is even better. Maxing out your credit is seen as a negative by the credit bureaus.
 
Length of Credit History
For someone just starting out only time will help you improve in this category, however, if you have had credit for a while you may not want to close your oldest credit account. A long history of credit is considered a positive by the credit bureaus.
 
New Credit
Applying for new credit can have an impact on your score. For this reason it is probably not the best idea to regularly apply for new credit. Rather, if you are shopping for a new car loan, home loan, or better credit card, it is best to do it all over a 10-14 day window rather than spreading it out over a period of time. 
 
Types of Credit Used
Rent-to-own credit options may be looked at negatively while having a mortgage may be looked upon as positive. Having different types of credit can be good but do not overextend your-self.
 
You can find more information at myfico.com.

Is it best to pay off your mortgage?

Is it best to pay off your mortgage?

  Is It Best To Pay Off Your Mortgage?

We all want the peace of mind of know that we own our home, and not the financial institution. But, before you decide to apply extra income to your mortgage or refinance to a shorter term, here are a few things to think about:
1. Are you taking full advantage of your employers company match on your workplace retirement plan? 
 
2. Do you have other debt that is accruing interest?  Chances are that the interest rate you are paying on any revolving debt is going to be higher that what you are paying on your mortgage and this does not even take into consideration the possibility that your mortgage interest may be tax deductible.
 
3. How about your emergency fund?  If you were to be out of work for an extended period of time or suffer a major financial expense, would you have the saving to get you through?  
 
4. How much risk are you willing to take? With record low interest rates, it is possible that with the tax advantaged treatment of mortgage interest that you may decide that the effective interest rate of your mortgage is low enough that you can invest the money somewhere else to obtain a higher return.  Before you make this decision you should speak to a financial advisor to make sure you are aware of all the risks and consequences. .  
 
At the end of the day the correct answer really comes down to what is important to you and how much risk you are willing to take.  These record low mortgage rates will not be around forever, so not would be a good time to speak with a financial advisor to make sure that you are on track to meet your financial goals.  
 

 

Retirement is in your best interests

Retirement is in your best interests

The 8th Wonder of the World

To quote Albert Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

 

What did he mean by this?
Assume at age 31 you start saving $2,000 a month for your retirement and you do so until you are age 65. Earning 9% interest you will have accrued over $470,000. Not bad for a $70,000 investment over 35 years.
 
However, if you had started saving the same $2,000 when you are 22 and did so only until you were 31 you will have over $579,000 and will have only invested for 9 years.
 
This is the power of compound interest. In this example the person who started saving at age 22 and did so for only 9 year will always have more that the person who started at age 31.
 
It’s never too late.
Don’t let this discourage you. Though it is always best to start young, it is never too late to prepare for retirement. Some money in retirement is better than no money in retirement. Consider taking some time to visit with a financial advisor who can help you put a customized retirement plan together to make sure you are on track.
 
What Impacts Your Credit Score?
How your credit score is calculated may seem like a mystery at times. It is not your marital status, where you live, or how much money you make that determines your credit score rather, your credit score it determined by the following five elements:
 
Payment History
Paying all of your bills on-time is probably the most important thing that you can do. Failure to do so will result in adverse items showing up on your credit report that will impact your score.
 
Amounts Owed
This is often referred to as your utilization or how much of your available credit do you have available. What is important is what is reported on your monthly statement. For example, even if you pay your account off in full each month, if you have a $1,000 credit limit and your statement shows an outstanding balance of $500, you would have 50% utilization which is higher than optimal. If possible try to keep your utilization below 30% and being below 10% is even better. Maxing out your credit is seen as a negative by the credit bureaus.
 
Length of Credit History
For someone just starting out only time will help you improve in this category, however, if you have had credit for a while you may not want to close your oldest credit account. A long history of credit is considered a positive by the credit bureaus.
 
New Credit
Applying for new credit can have an impact on your score. For this reason it is probably not the best idea to regularly apply for new credit. Rather, if you are shopping for a new car loan, home loan, or better credit card, it is best to do it all over a 10-14 day window rather than spreading it out over a period of time. 
 
Types of Credit Used
Rent-to-own credit options may be looked at negatively while having a mortgage may be looked upon as positive. Having different types of credit can be good but do not overextend your-self.
 
You can find more information at myfico.com.

The big credit score myth

The big credit score myth

 The Big Credit Score Myth

Paying down your credit card balance to zero every month may seem like the best way to boost your credit score…and we’ve all been told to pay our credit card debt in full each month, but this may not be completely accurate.

 

 

How does it impact your credit score?

While it may be a great money habit to pay off your credit card debt every month, it could impact your “utilization.” Most lenders report the balance on your monthly statement in relation to your credit limit. This is often referred to as your “utilization” and accounts for 30% of your credit score.

What should your utilization be?

If at all possible, you want to keep this below 25%. For example, if you have a $1,000 credit limit you want to make sure that the balance on your monthly statement does not exceed $250.00.

Pay attention to what is reported on your statement and if it is higher than what you would like consider making additional payments prior to your lenders billing cycle.

You can find additional details on how your cred score is determined by visiting www.myfico.com

Photos: Exclusive BECU Auto Event

Photos: Exclusive BECU Auto Event

During BECU's exclusive Spring Auto Event, members can qualify for special financing rates, as well as take advantage of special offers, discounts and rebates from area dealers. Check out the rides you may be able to drive home.

During BECU's exclusive Spring Auto Event, members can qualify for special financing rates, as well as take advantage of special offers, discounts and rebates from area dealers. Check out the rides you may be able to drive home.

How to Save Money and Purchase a HomePath Home

How to Save Money and Purchase a HomePath Home

Are you currently considering buying your first home or perhaps your first, second or even third investment property? If so you may want to consider Fannie Mae’s HomePath program.

Who’s Fannie Mae

Fannie Mae is a government-sponsored enterprise chartered by Congress to keep money flowing to mortgage lenders. They do not make loans directly but rather buy loans from lenders. Unfortunately, due to the housing crisis, they now own homes that they must sell.

To minimize the impact to the neighborhoods in which they reside, they have created the HomePath program and special HomePath financing. If the property is in need of light to moderate renovation the HomePath Renovation Mortgage may be available on your selected property.

What is a HomePath Mortgage?

A HomePath Mortgage allows you to finance a Fannie Mae-owned property with no minimum loan amount, a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance; ask us for cost details on loans without mortgage insurance.

What is a HomePath Renovation Mortgage?

In addition to the above HomePath Mortgages, we are also offering HomePath Renovation Mortgages. This program allows you to purchase and finance a Fannie Mae home that needs light to moderate renovation—the loan amount includes the purchase of the home and the renovation. The funds for renovation can be less than or equal to 35% of the “as completed” value, but no more than $35,000.

What are the benefits?

·       Low down payment and flexible mortgage terms—fixed-rate or adjustable rate

·       Down payment (at least 3%) can be funded by your own savings, a gift, a grant or a loan from a nonprofit organization, state or local government, or employer

·       No mortgage insurance

·       Expanded seller contribution for closing costs allowed

·       HomePath and HomePath Renovation Mortgages are available for primary residences, second homes and investment properties

·       Many condo project requirements are waived

·       For the renovation mortgage, the renovation amount is based on an “as completed” appraised value

BECU is an approved lender bringing HomePath and HomePath Renovation Mortgages to homebuyers locally around the Puget Sound region and all of the states where BECU lends. To learn more about HomePath, visit www.homepath.com.   

Borrowing from a 401K

Borrowing from a 401K

We work hard to contribute money to a 401(k) in the hopes of using that money for a nice retirement. But life happens and you may find yourself in the position of asking—should you take out a loan against your 401(k) to buy a home or pay down debt?

As long as you can handle the payments, taking out a loan against your 401(k) is usually a less expensive option than a straight withdrawal where you may have to pay income taxes and a 10% penalty; however, there are pitfalls that you must take into account. 

Most plans will give you only five years to repay the loan.

If you borrow a large amount the payment could be substantial. If you fail to make the payments or leave your company you may be required to pay back the outstanding balance within 60 days or be forced to take it as a hardship withdrawal. This means you’ll be hit with taxes and penalties on the amount you still owe.

Get help to make the right decision.

Before you decide if a 401(k) loan is the right choice for you just make sure you understand all of the consequences. Financial Advisors with BECU Investment Services can help you make a good decision for your financial situation. Schedule a free consultation to get started. Visit www.becu.org/investments

Claim Your Full State Sales Tax Deduction

Claim Your Full State Sales Tax Deduction

It’s tax season and the most important thing that we all can do is be prepared. If you itemize your deductions on your tax return, don’t forget to claim the full deduction for the Washington State Sales Tax. 

The IRS provides tables that show how much residents of Washington State can deduct, based on their income and state and local sales tax rates. But the tables aren't the last word—if you purchased a vehicle, boat or airplane, or homebuilding materials you may add the sales tax you paid on these big-ticket item to the amount shown in the IRS table for your state.

These add-on items are easy to overlook, but could make the sales-tax deduction even bigger.

If you forgot the deduction for this year or the last three years you can file an amended return to get your full refund.

Doing your taxes is rarely fun. Here are a few helpful tips to help get you through this tax season: 

1.     Gather your records…asap! It’s never too early to start gathering any documents or forms you’ll need when filing your taxes: receipts, canceled checks, and other documents that support your income or a deduction you are taking on your return. Also, be on the lookout for W-2s and 1099s, coming soon from your employer.

2.     Take your time. Rushing to get your return filed at the last minute increases the chance you will make a mistake.

3.     Double-check your return. Mistakes will slow down the processing of your return. In particular, make sure all Social Security Numbers and math calculations are correct as these are the most common errors made.

4.     Save time and money by filing your taxes online. TurboTax is a step-by-step online tax-filing system that asks simple questions and automatically places your answers onto IRS-approved forms. TurboTax double-checks your return for accuracy and files it electronically. Direct deposit refunds are typically received in 7-15 days.

5.     Consider Direct Deposit. If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than waiting for a check by mail.

6.     Relax. There’s no need to panic. We all have to go through this every year. There are plenty of tax resources available for you when you access TurboTax online.

Avoid Losing Your Home Loan Pre-Qualification

Avoid Losing Your Home Loan Pre-Qualification

When purchasing a home or refinancing your existing home, the last thing that you want to happen is to find out that upon closing you are no longer qualified. Applying for a home loan is not the time to change jobs, become self-employed, or take on new debt such as buying a car or originating new inquiries on your credit report. 

When you apply for a mortgage, the lender is looking at a number of factors: 

·       Income

·       Credit score

·       Job history

·       Debt levels

·       Money for a down payment and reserves

When you get to closing your lender is going to check to make sure that the assumptions on which the loan was originally approved are still valid. Because of this it is important that you make sure you do not make big changes. If you do make changes just make sure that they will be favorable in the eyes of your lender. 

BECU offers free educational resources on the home buying process, to learn more visit www.becu.org/seminars.  

What to Do When You Can't Pay Your Tax Bill

Tax  Form

It's April 15, you've just finished your income tax return and you owe more money than you can pay. Maybe you had unexpected income during the year that wasn't subject to withholding. Maybe your W-4 doesn't accurately reflect your current tax situation. Maybe you underestimated tip income or royalties.

Whatever the reason, you can't pay what you owe. Don't panic, many people find themselves in this unenviable position and manage to find a solution. The most important thing for you to do is file your return on time (there are substantial penalties for not filing -- usually five percent of your tax liability per month up to a maximum of 25 percent) and figure out exactly how you're going to pay your bill.

Generally speaking, it's a good idea to start by including with your return a check for as much as you can afford on the amount you owe. If possible, consider negotiating a no-interest or low-interest loan from your family and friends. Even if you can borrow only a portion of what you owe, this might be a good idea. Paying as much as possible not only shows "good faith" on your part, but a smaller outstanding balance will accrue smaller interest charges and penalties.

After you file and pay what you can, the IRS will send you a notice of the balance due, including interest charges and a late payment penalty. Then it's up to you to pursue one of the following options.

Use a Credit Card to Pay What You Owe

The IRS accepts plastic...sort of. When you pay your tax bill using a credit card, you are actually making the payment through a service provider that handles the transaction and forwards your payment on to the IRS. The payment processing company charges a convenience fee based on the amount you charge. For example, if you owe the IRS $1,000 and the provider charges a 2.5 percent fee, you will pay an extra $25 for the privilege of paying with plastic. The IRS itself does not collect any fees on credit card payments.

Bear in mind that you will owe finance charges to the credit card company if you don't pay the balance in full when you receive your statement. With many credit card interest rates hovering around 20 percent, your tax bill could quickly escalate. Still, for many, not having the IRS as a creditor is worth the extra cost of paying their taxes with a credit card.

Ask the IRS for an Extension to Pay

You can request an extension of time to pay what you owe by completing IRS Form 1127. You must prove that paying the entire bill now would cause undue hardship, which entails providing statements of assets and liabilities and an itemized listing of all money you received and spent in the three months prior to making the request for an extension.

As printed on Form 1127, taxpayers rarely want this kind of extension because the legal requirements are so strict.

Enter into an Installment Plan with the IRS

You can request permission to make installment payments by attaching a letter to your return or by completing IRS Form 9465

You must keep your current tax liability paid up while you make installment payments on an earlier tax bill or the IRS can cancel the agreement and demand payment in full.

Make an "Offer in Compromise"

An offer in compromise is a request to pay a portion of what you owe and have the IRS accept that amount as payment in full. You have to prove that you do not have the resources to pay the full bill and you must keep the current year's taxes up to date. See Publication 594, The IRS Collection Process, for more information about offers in compromise.

It may take time to hear back from the IRS since they process many offers. If your offer is accepted, you may be able to make installment payments on what you finally owe in compromise.

Avoid Future Tax Bills

There are lots of ways to get out of a tax pinch, but the best approach is always to avoid getting into one in the first place.

If you end up owing the IRS, check your W-4 form on file with your employer. The tax bill you have is an indication that you may want to lower the number of withholding allowances you claim or even ask your employer to withhold more money from each paycheck. If you're self-employed, you may need to increase your quarterly estimated tax payments. Also, anyone who expects to owe at least $1,000 in taxes (after subtracting withholdings and credits) must pay quarterly estimated taxes.

Owing the IRS isn't pleasant, but it doesn't mean you have to change your name and move to a Caribbean island. It does mean you'll have to be proactive about paying your bill and avoiding the same situation in the future.

Do You Need Help Keeping Your Home?

Do You Need Help Keeping Your Home?

If you currently own a home but are having problems making your payments, familiarize yourself with the many options that may be available to you.  As time passes, your option grow fewer -- so you should act as quickly as possible.  

Notify your lender as soon as you know your payment will be late and present your circumstances with a plan of action.  If you need assistance, start by calling the Washington Homeownership Resource Center.

Reach Out for Help

The Washington Homeownership Resource Center is a not-for-profit, 501(c)(3) agency that can help you navigate this challenging time and connect you with a HUD approved housing counselor who may be able to help you develop a household budget, or negotiate with lenders on workout strategies.

Don’t fall for scams that make promises.  If it sounds too good to be true, it probably is.  You can reach the Washington Homeownership Resource Center at 877-894-4663 or visit their website at www.homeownership-wa.org.

Finding the Right Credit Counselor for You

Whether it is too much credit card debt or falling behind on auto or mortgage payments, many of us face a financial crisis at some time in our life. But who do you turn to for help?

Fortunately credit counseling agencies are available to help consumers through these tough times as well as provide tools and techniques that will help in the future. But, not all credit counseling agencies are created equal. Promises to eliminate all or a portion of your debt or eliminate legitimate credit items should raise a red flag.

Where to Start:

A good place to start is the National Foundation for Credit Counselors or NFCC. NFCC Members represent non-profit accredited agencies with high standards, ethical practices, certified counselors, and policies which help consumers achieve financial stability. Visit www.NFCC.org to find a non-profit member agency near you as well as other tips and resources.

Tips on Financing Your Next Auto

When purchasing a new or used car, it is important to do your research ahead of time. KellyBlueBook.com is a great resource to get you started. You can compare different makes and models, find out what you should pay for a particular car, and even get an estimate of what it will cost you to own the car over a five year period.

After You Have Done Your Research—Shop Around For Your Loan

Think about paying for your auto before you go to a dealer to negotiate a purchase price. If getting a loan is a part of your plan, credit inquiries made within relatively short period of time will only count as one on your credit report so don’t be afraid to shop around for the best rates and terms.

It pays to compare loan rates from a number of sources with any financing options that a dealer may offer. Remember to focus on the total cost of the car, not just the monthly payments. For example, at the same interest rate, higher monthly payments for a shorter period of time would ultimately cost you less than lower payments for a longer time.

Also remember that it’s okay to finalize the financing at the dealership—just make sure it is the lender you have chosen and not the lender that the dealer wants you to choose.

BECU offers free financial education on buying autos. Visit www.becu.org and select the Education & Resources tab for more information.

Simplify Your Banking in the New Year

The start of a New Year is a great opportunity to set fresh goals in every area of your life, including your finances. In the same way as you can take steps to be more physically fit, why not begin 2013 with the goal of improving your financial well-being?

As everyone is making resolutions, it’s important to remember that January is also Financial Wellness Month. This is a good time to commit to year-long financial wellness.

Below are a few tips to help you simplify your banking in the New Year:  

Do you have multiple bank accounts? The more accounts you have, the harder it is to keep everything organized and the more likely you are to make costly mistakes.  

If you find yourself moving money from one account to another, or missing payments because there are so many accounts to track, it's time to simplify your banking.  

When was the last time that you looked into all of the services that your financial institution offers you to access your accounts or to conduct your banking? You now may be able to deposit a check using your smart phone set up account alerts or have access to surcharge ATMs that you did not know existed.  

To find out about remote banking services at BECU, visit www.becu.org/access.