Paying for Your Big Purchases

If you own a home, you know that expenses can add up—especially when it comes to making big purchases such as a new roof, furnace or kitchen appliances.

Be Frugal, But Not Cheap
A common mistake many of us make is shopping for price alone and looking for the cheapest item. When you shop frugally, you are getting more for your money. But, when you shop cheaply, you are most likely buying something that will wear out easily and need to be replaced sooner.

Plan Before the Failure
A roof that has already started to leak will not only damage your home but you will also feel preasured to go with the first contractor you speak with which may or may not be the best option. Plan ahead for your major purchases and consider replacing them when they are at the end of their useful life but before they fail. Not only will you dodge a bad experience but you will also be afforded the time to research the products and contractors to ensure you are getting the best value. 

Work in Numbers
For purchases such as a new roof, see if you have other neighbors who also may be interested. If you get together many contractors may consider offering you additional discounts. 
 

Save on Your Car’s Gas Bill

With gas prices consistently over $4.00 a gallon these days, we are all feeling the pain at the pump but what can you do about it?  Taking mass transit, carpooling, or telecommuting are going to give you the biggest savings but having a well-maintained car and how you drive are also important.

Here are a few helpful tips that the U.S. Department of Energy recommend to help you drive more efficiently and save more at the pump.

Drive Sensibly
Aggressive driving such as speeding, rapid acceleration and braking will waste gas.

Observe the Speed Limit
While each vehicle reaches its optimal fuel economy at a different speed (or range of speeds), gas mileage usually decreases rapidly at speeds above 60 mph.

Remove Excess Weight
Avoid keeping unnecessary items in your vehicle, especially heavy ones. An extra 100 pounds in your vehicle could reduce your MPG by up to 2 percent.

Avoid Excessive Idling
Idling can use a quarter to a half gallon of fuel per hour, depending on engine size and air conditioner use.

Use Cruise Control
Using cruise control on the highway helps you maintain a constant speed and, in most cases, will save gas.

Keep Tires Properly Inflated
When checking your tire pressure it is best to do it when the tires are cold to ensure you get the most accurate reading.
 

Enticed by Credit Card Rewards Programs?

If you are like me, you’ve stopped carrying a checkbook altogether. Many of us rely heavily on our credit cards for everyday purchases and for paying bills. 

Given this uptick in credit card use, rewards credit cards are a great way to profit from your expenses. These programs offer convenience and benefits, along with the opportunity to capitalize on free flights, hotels, dining and more.

We are continuously presented with offers for debit or credit cards that promise cash back or other enticing rewards. What may seem like a great deal on the surface could actually end up costing you a lot more in the long run.

Make sure you really understand all the details.
For example, for a debit card, will you pay fees to have the checking account? Are their minimum balance requirements or hidden fees?

For a credit card, make sure the interest you pay isn’t more than cash back reward. Even if you don’t carry a balance on your credit card, be sure to compare what the award will actually get you. And, make sure to look for limitations such as the redemption rates, expiration of the points, and any annual fees.

Here’s an important rule of thumb when choosing a credit card rewards program: Rewards programs can be a great benefit if the reward is something you can truly use and it doesn’t cost you more in fees and hassle in the long run.

BECU offers several free seminars and informative articles on credit and debt. Visit www.becu.org/seminars for more information.

Tips to Obtaining Your Goals

It’s that time of year where many of us start slacking on our New Year’s resolution—gym attendance starts going down and we start to forget why we made that resolution in the first place. Did you make a new year’s resolution to get out of debt or to reach some other financial goal? Don’t let your resolution be one of the 90% that fail every year.

4 Tips to Help You Reach Your Goals
1. Make sure the goal is realistic and specific enough for you to measure your progress. For instance, getting out of debt is not specific; however, paying an additional $100 to your credit card every month so it will be paid in full by the end of the year is specific.

2. Tell a family member or friend who will hold you accountable. It’s easier to stay on track when we have to answer to someone else. Even better—make sure it is someone with great financial fitness themselves so you’ll have someone to emulate.

3. Plan to celebrate your success.  Maybe it’s a dinner out when you achieve your goal. You need something to look forward to; just make sure it’s an affordable celebration.

4. And, most important of all WRITE IT DOWN. Keep a copy of your goal on your refrigerator or anywhere that you will be constantly reminded of what you want to accomplish.    
 

Are you eligible for Home Affordable Refinance Program?

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

Take the First Steps
Follow the steps below to determine whether you’re eligible to refinance your mortgage under the new HARP program and enjoy the benefits of a more affordable mortgage.

Step 1
Determine whether your mortgage is on file with Freddie Mac or Fannie Mae. To check, complete the short online forms on their websites:

https://ww3.freddiemac.com/corporate/
http://www.fanniemae.com/loanlookup/

You may also call 1-800-FREDDIE or 1-800-7Fannie.

Step 2
If you can answer “true” to the following questions, you may be eligible to refinance your mortgage under the HARP program.

True or False:  I have verified that my loan is owned by Fannie Mae or Freddie Mac
True or False:  I have made all of my mortgage payments on time in the past 6 months
True or False:  My mortgage has not been previously refinanced under the HARP Program

If you have questions or problems a great resource is the Washington Homeownership Resource Center at http://www.homeownership-wa.org/.

Saving on Auto Insurance

It would be nice to have our home, work, grocery store, and kids’ school all within walking distance, but that’s not a reality for many of us. Driving is a necessity for many Americans and so is having a car and auto insurance. Auto insurance can be a large expense so it’s important to check periodically about reducing your rate.

Here are a few ideas that could help lower your premium.

1. Some auto insurance companies offer a discount if you pay your premium in full upfront instead of paying monthly installments. Check to see if your insurance company offers this
2. Consider a higher deductible.  Moving to a $1,000 deductible can make a big difference, but make sure you have the savings to cover the higher deductible.
3. For older cars, make sure it still makes sense to carry comprehensive and collision coverage, especially if you have a teenage driver.
4. Improve your credit score.  Many insurance companies take it into consideration.
5. And lastly, don’t be afraid to periodically shop around. It’s easy to do online. Your situation changes from time to time, so you want to make sure that you are getting the best rate possible


BECU offers several informative articles that are auto related in the Education and Resources section of www.becu.org.

How Are Your Actions Impacting Your Credit Score?

As a consumer, we are becoming more and more aware of the impact our credit score has on our lives—from purchasing an auto or home to getting a job. However, many of us are still unclear about the things that we are doing that determine our credit score.
 

It used to be that credit reports were limited to payment history on loans such as mortgages, auto and credit cards.

But, Times Are Changing
While credit reports do not contain information on marital status and income, credit agencies are finding new ways to collect this data. Soon everything from late rent and cell phone bills to homeownership association dues could impact our credit score.  

Pay All Bills on Time, Always

To ensure good credit, make sure to pay all bills on time. It’s important to set aside a designated time every week that’s free of distractions and focus on paying your bills and organizing your finances. Being on top of things is a good feeling!

What Does Your Credit Report Look Like?
Take a few minutes to get a free copy of your credit report by visiting www.annualcreditreport.com.

How Long Do You Keep Your Tax Records?

Getting audited is not a walk through the park. But, it happens to the best of us even when we feel like we have dotted every “i” and crossed every “t.”

It’s important to be prepared and that’s why one of the most common questions I hear is “How long should I hold on to my prior year tax returns?” The good news is that the IRS has a statute of limitations on when they can take action.

IRS Statue of Limitations From Date of Filing
Auditing a Return – 3 Years
Unreported Income – 6 Years

Keep it for 7 Years
A good rule of thumb is to hold on to your tax returns for at least seven years. If you have records connected to assets, such as the purchase of property or other investments you’ll want to hold on to those records until the statute of limitation expires for the year in which you dispose of the asset.  If you are in doubt, check with your tax preparer.

More Tax Questions?
The IRS has a user-friendly site of frequently asked questions. Visit it here www.irs.gov/faqs/.

Stop Paying Banking Fees

If you’re like me, adding up that occasional $5 here and $10 there can be frightening. If we take a close look at where our money is going we can probably find areas where we are buying things we don’t really need or paying for something that we can get for free. 

Free Checking and ATM Options
One of the most common areas where we waste the most money is…banking, specifically checking accounts and ATM fees. You should never have to pay for a checking account AND you should never be subjected to hidden and surprise fees. You should also not have to pay to get your cash out of an ATM.  If you are paying ATM surcharges, check with your bank or credit union to see what “surcharge free” options they have for you.

You’ll be surprised at how fast the savings will add up.
 

Don't Get Hit with an IRA Penalty

If at all possible, we never want to tap into our IRA or other investment account before retirement; however, unforeseen circumstances in a challenging economy may force you to do so. 

What’s the Penalty
With the ROTH IRA you are not going to pay any taxes or penalty on the amount that was originally principle that you contributed

However, with a Traditional IRA you are going to owe income taxes and possibly a 10% penalty if you are under 59½.

There are Exceptions
If you are disabled or if the money was used for unreimbursed medical expenses, qualified higher education expenses, or the purchase of a first home, you may not have to pay the penalty. 
If you fall into any of these categories make sure you talk to your tax preparer.  If this was overlooked in the last three years look into amending your return.

BECU offers free seminars around the Puget Sound region on investing. To find one near you, visit www.becu.org/seminars.

The Big Credit Score Myth

Common sense tells us that paying our credit card down to zero each month will boost our score…but, that may not be the case.

Get to Know Your “Utilization”
This is certainly a great habit to get into. But what’s more important is the amount owed…this is often referred to as utilization or how much of available credit is still available. Quite simply, if you have a $1,000 credit limit and your statement shows an outstanding balance of $500, you have 50% utilization. It is best to keep utilization below 25%. Maxing out credit is seen as a negative on your credit report and accounts for 30% of your credit score.

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.  

What Does Your Credit Report Look Like?

Take a few minutes to get a free copy of your credit report by visiting www.annualcreditreport.com.

Retirement: Gearing Up for a New Beginning

Those of us who are getting ready to wrap up their careers and leave the working world often refer to retirement as "a new chapter" or "the next act" in our lives. If you are a pre-retiree, you may have even used those analogies yourself. But do you also realize that it's possible to play a leading role in determining how your retirement story will unfold?

 

An Outline for Success

You can start by plotting out exactly which options, resources and strategies you'll need to take advantage of in the near future. For example, ask yourself the following questions:

When exactly will I retire?

Have you pinpointed your target retirement age yet? Even a couple of years can make a big difference in your personal savings and the amount of Social Security income you'll receive. For example, depending on your year of birth, you may not be eligible for full Social Security benefits until age 67. What's more, delaying Social Security benefits beyond that age may actually earn you "delayed retirement credits."

Which accounts will I use and when?

These days, it's not uncommon for pre-retirees to hold retirement assets in several different types of accounts, such as employer-sponsored plans, IRAs, annuities and regular investment accounts. Therefore, you'll probably need to think about which accounts to tap first. Generally speaking, the longer your money can potentially compound in tax-advantaged accounts, the more you may be able to accumulate for retirement overall.

How much will I need to withdraw?

There is no rule of thumb - such as withdrawing 5% of your balance annually - that fits everyone. Instead, you need to identify your specific cost of living requirements and plan accordingly. But consider this: If you were to withdraw 4% of a $500,000 nest egg each year, it would take more than 40 years to deplete the account (assuming 3% inflation and 6% investment returns annually). But by withdrawing 8% each year, you'd deplete the account in only about 17 years.

So What's the Conclusion?

If you're among the millions of pre-retirees getting ready to turn the page to a new stage of life, the next step is to recalculate your retirement savings goal in order to confirm that you'll be able to address the priorities discussed above. After all, the planning you do now can have an enormous impact on your financial ability to live in financial security for the rest of your life.

For more information on your retirement options, visit BECU Investment Services at www.becu.org/investments.

 

 

Bank Simpler with Remote Banking Options

When dealing with the rush of a busy day, it's nice to have the freedom to access your accounts right from your computer, your phone, or a nearby ATM and it may even save you time and money.

 

  1. First, you want to have a good handle on your finances so you understand what you can realistically afford. That requires you knowing the ends and outs of your credit report. Order a free copy of your credit report at www.annualcreditreport.com and get to know everything on it and correct any mistakes directly with the credit bureau.

  2. Secondly, develop a realist budget. This will help you determine how much home you can really afford without causing too much financial stress.

  3. The third part of preparation is to get pre-approved for a home loan. While the days of getting a home loan by just telling the financial institution what you earn are behind us -you now have to actually provide a pay stub or tax return as proof - this does not mean that you have to have perfect credit to qualify for a home loan.

    For example, to qualify for a “conventional” mortgage you will need a credit score of at least 680 however, to qualify for a loan backed by the Federal Housing Administration (FHA) you can have a score as low as 580.

  4. Now, it’s time to prepare for working with a realtor by detailing your wants and your needs. To find the home that will work for you, make a list and prioritize the most important things you want and need in your new home. Be sure to share this list with your Realtor and be ready to answer the questions your realtor will ask.

Free Home Buying Advice

To learn more about how to buy a home visit the website of The Washington Homeownership Resource Center at www.homeownership-wa.org.There are a lot of free first-time homebuyer seminars and resources that are available for you to get you on the path of homeownership.

Visit www.becu.org/seminars for a list of in-person seminars and educational articles.

Notify Your Financial Institution Before You Travel

Don’t get stuck without access to your debit or credit card when you are traveling away from home.

Making purchases outside of your normal pattern can trigger unsuspicious activity on your account, often resulting in your account being frozen until your financial institution can reach you to verify the transaction. Or in a worst case, if your card is compromised you could be left without access to funds.

 

Don’t get stuck without access to your debit or credit card when you are traveling away from home.

Making purchases outside of your normal pattern can trigger unsuspicious activity on your account, often resulting in your account being frozen until your financial institution can reach you to verify the transaction. Or in a worst case, if your card is compromised you could be left without access to funds.

Notify Your Financial Institution When Traveling – Even If You Are Not leaving The Country

If you are going to traveling out-of-state or abroad, to minimize any disruption it is always a good idea to notify your financial institution of your travel plans and how they can reach you before you leave. Doing so will minimize 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.
 

 

Things That Impact 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.

More information 

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.