Tag Archives: member one federal credit union

Six Ways to Optimize Your Tax Refund

According to the Internal Revenue Service (IRS), the average taxpayer received a $3,000 refund in 2017. This chunk of change—depending on how you allocate it—could make a big impact on your bottom line. Before you’re tempted to spend it on impulse buys, consider these options for maximizing your tax refund.

Boost your emergency fund. Financial experts say you should have three to six months’ worth of living expenses saved in an emergency fund to protect yourself in case of a job loss or another unexpected financial hardship. Stashing your tax refund into an emergency fund could get you well on your way to reaching that dollar goal.

Pay off high-interest debt. Doing this results in an instant return on your investment because you’re saving yourself from paying interest to the lender. If you have several debts to tackle, aim for the one with the highest interest rate first. If you can’t pay off the entire balance, look into transferring the remaining debt onto something with a lower interest rate, like a credit card or personal loan.

Prepay your mortgage. Putting extra money toward your mortgage payment is a great way to save money over time. Use your tax refund to make one additional, full mortgage payment. If you do this every year, you could shave off thousands in interest, shorten your repayment years, and build equity faster.

Fund an investment account. If you’re new to investing, a great place to start is at your local financial institution. Many offer competitive, low-risk investment options like money market or share certificate accounts. You could also consider putting your tax refund toward a Roth or traditional IRA, which can be great ways to save for retirement.

Save for the future. The IRS allows you to split up your refund into several accounts. Consider putting some, or all, into a special savings account to help fund a future purchase, like a vacation or next year’s holiday gifts. This is also a great opportunity to jump-start a college savings fund for your child.

Make home improvements. While your refund won’t cover an entire kitchen or bathroom remodel, you could make minor improvements such as painting cabinets, updating hardware, or installing a new backsplash. Look into replacing old appliances for more energy-efficient models or installing new windows to save on heating and cooling bills.

 

Presented by Member One Federal Credit Union

 

 

 

Avoiding a Financial Doomsday

A major car repair, job loss, or medical emergency—all are scary realities and could lead to financial ruin unless you’re prepared. While these misfortunes are often unpredictable, there are things you can do to prevent financial catastrophes. With a new year on the horizon, now is the perfect time to get your emergency fund in place.

Build up your emergency fund. According to financial experts, you should have three to six months worth of living expenses saved in an emergency fund. This should protect you in case of a job loss or another unexpected financial hardship. While that amount might seem daunting, you can start small. Make a goal of saving one month’s worth of living expenses in six months or a year. This will help boost confidence in your saving abilities while getting you to your goal.

Determine where to store your money. Your emergency fund needs to be readily available, so don’t tie it up in things like investment accounts. A high-yield savings account or a money market account is a good place to start. If it has checks or a debit card, it’s a safe bet. Set up an account that’s separate from your regular savings. Some even recommend getting an account at a different financial institution altogether. Consider setting up automatic deductions into that account so you don’t even need to think about it.

Find extra money. If you find it difficult to build up your emergency fund, look for other ways to contribute like putting your tax return toward your fund or selling items you no longer need or use. Closely examine your household budget and discover ways to save. Maybe it’s time to cancel subscriptions you don’t need (cable, magazines, or the gym), or cut down on eating out. And if you haven’t done this yet, make a household budget so you know exactly where every dollar you earn and spend is going.

Maintain your fund. It’s recommended that you visit the dentist every six months for a cleaning and to spot any problems before they become major issues. The same attention should be paid to your finances. Commit to regular check-ins to make sure you’re on track with building up your emergency fund. If you do and a financial disaster occurs, the impact will be much less devastating.

 

Presented by Member One Federal Credit Union

Home Equity Basics from Member One

Your home improvement to-do list is a mile long, but you’re lacking the funds to get anything done. Sound familiar? Since the likelihood of stumbling upon a pot of gold is none, consider tapping into your home equity—the difference between what your property is worth and what you still owe on your mortgage. Read on to learn more about how to leverage your home’s hidden value.

Do the math. Home equity is calculated by looking at the value of your home and subtracting the amount you owe on any mortgages. Let’s say your home is valued at $200,000, and you owe $150,000 on your mortgage. That means you have $50,000 in equity you could potentially use to fund a renovation.

Know the difference. With a home equity loan, you receive the money you’re borrowing in a lump sum payment. It usually has a fixed rate and is often best for large, one-time expenses like a new roof. A home equity line of credit (HELOC) operates more like a credit card in that you can draw money as needed from an available maximum amount. This is best for ongoing expenses that require spending flexibility.

Shop around. You have to apply for a home equity loan or line of credit through a financial institution that offers it. As with any loan, shop around for the rate and features that fit your financial situation. It’s important to understand that committing to a home equity loan or line of credit means you’re using your home as collateral—if you don’t repay the loan, it could go into default, and you could risk losing your home. Make sure you understand the terms and only borrow the amount you can afford.

Budget accordingly. One of the most common ways to use a loan or line of credit is for renovations because they add even more value to your home. You can also use it for things you might not expect like college tuition, debt consolidation, or unexpected medical costs. Whatever you decide to fund, make sure it fits your budget. If your income is unstable and you can’t keep up with the payments, it’s probably not a good idea to incur more debt. If you don’t need to borrow much money or you’re just going to use this for basic day-to-day expenses, it might be wise to consider different options—such as a credit card—or reevaluate your spending habits.

Member One: Credit Score Quick Guide

It’s one of the most important numbers linked to your identity: your credit score. But are you fully aware of why it’s so significant, and what constitutes a good credit score? Read on for a brief explanation of what it is and tips for improving it.

What is it? Your credit score is a number that ranges from 300 to 850 and, along with repayment history, is an indication of your creditworthiness. Anything above 700 is generally viewed as good credit and signals to potential lenders that you’re more likely to pay back your debts on time.

Why should I care? A credit score helps determine whether you’re approved or denied for a credit card or loan and your interest rate. On-time payments have a big impact on your score, and just one or two late payments can significantly lower it. If you’ve ever had a bill go to collections, declared bankruptcy, or had a foreclosure, your score will go down. The number of loans in your name matter and the more accounts you have (in good standing), the better, because it shows that multiple lenders have approved you.

How do I find out my score? The three major credit-reporting agencies—Equifax, Experian, and TransUnion—are required by law to provide you with a free credit report every 12 months. Keep in mind that this is just the report and not the actual score. In order to receive your score, you typically have to purchase it. Visit MyFICO.com to buy your official FICO score. Also, check your monthly credit card statement as some lenders now include your credit score as an added service.

What are some quick ways to improve it? One of the best ways is to consistently pay your bills on time. Other ways include paying down a credit card balance to improve your utilization rate, and keeping lines of credit open with zero balances. Both of these strategies show lenders that you’re able to manage debt and aren’t biting off more than you can chew.

As a general rule of thumb, you should review your credit report along with your score at least once a year. Not only is it beneficial to keep yourself informed and aware, it could help protect against fraud or identity theft.

Presented by Member One Federal Credit Union

 

Warm Up to Responsible Spending

With warm, sunny days upon us, it’s time to plan for more than just your tan: summer spending. Vacations, airline tickets, dining out, and entertainment—it adds up. If you haven’t budgeted for these expenses in advance, a quick swipe of your credit card takes care of it. But if responsible credit card use isn’t your strength (or you just need a refresher), these tips could help curb the temptation to overspend this summer.

Be selective. There are several factors to look at when picking a credit card. First, you’ll want to see what your limit is. If you don’t think you can handle the freedom of a credit card, start with one that has a lower limit, like $1,000. Additionally, look at the credit card’s annual percentage rate or APR. That interest will add up if you’re not planning on paying off the total each month, so shop around for a low APR. Finally, look out for cards that charge annual fees just for keeping them open.

Monitor your balance. You should keep credit card payments to 10 percent of your monthly take-home income. For example, if your monthly income is $2,000, your monthly credit card payment should not be more than $200. This doesn’t mean your balance should not exceed $200, but make sure your minimum payment is no more than that. Keep in mind, however, that paying off the entire balance each month is in your best interest financially.

Know the benefits. By making purchases with your credit card and paying the balance off each month, you’re proving to lenders that you’re a responsible, creditworthy consumer. It boosts your credit score and will help you in the future if you ever want to get a loan—or another credit card.

Stick to a budget. It’s important to set parameters for yourself when using a credit card. One simple way to do this is to use the credit card for one specific purpose, like gas or groceries, so it’s easier to keep your spending in check. Another way is to get a card with a low limit. This forces you to keep your spending under a certain amount.

Smart credit card use doesn’t have to be a mystery or limit your fun this summer. Follow these simple tips and your poolside lounge session (while possibly chasing the kids) will be that much more relaxing.

Presented by Member One Federal Credit Union