Personal FInance Archives - Common Trust FCU

Tax Tips for the Self-Employed

Whether you’re a seasoned business owner, newly self-employed or testing out a side-gig, TurboTax has you covered on tax tips, deductions, and tax forms for your business income. Common Trust Federal Credit Union breaks down a few ins and outs.

Common Write-Offs

  • Rideshare Driver – Car repairs, insurance, mobile phone, even bottled water you provide for your fares.
  • Freelance Designer – Studio rental, tools & supplies, design association fees, home office space.
  • Real-Estate Agent – Marketing materials, mileage, home office space, even portions of real estate taxes, mortgage interest, rent, utilities, insurance, etc.
  • Consultant – Training courses, computer and software, business travel, mileage driving to see a client, heading to a meeting, or going to work from another location.

TurboTax Self-Employed Has You Covered

TurboTax helps you get every self-employed tax deduction and dollar you deserve.  Get expert help on-demand, find industry-specific tax deductions – and get your biggest possible refund, guaranteed. As a credit union member, you can save $15 on the TurboTax Self-Employed product, PLUS you get a one-year complimentary subscription to QuickBooks Self-Employed* to effortlessly track expenses, jobs, and mileage throughout the year. Click here to access TurboTax and your savings!

When you are ready to start working on your taxes, click here to access TurboTax and your savings!

Get Your Financial House in Order This New Year

As the New Year begins, it’s time to start thinking outside the box. This spirit of Resolutions’ applies to more than just going to the gym!  The new year is an ideal time to dust off your finances and set up your budget. Maybe your upcoming tax returns have motivated you to increase your emergency savings for the year ahead, or perhaps one of the New Year’s resolutions you made was to improve your credit score? Whatever your situation, now is the perfect time to get your financial house in order. These four strategies can help you get your personal finances in check and maintain a strong foundation for the rest of the year.

1) Clean Up Your Credit

Your credit score can have one of the biggest impacts on your financial life – so don’t let it collect dust! Did you know you can check your credit score for free with each of the three credit bureaus? Staggering your requests every four months allows you to keep a regular eye on your credit report. Once you know your score, you can set goals to continue to improve your responsible credit habits. 

2) Pay Your Bills On-Time

In today’s digital age, there are various mobile payment options available to help you to get ahead of your bills. Set up online banking and use automatic bill pay to save yourself the hassle of mailing checks and protect against the costs of missing a deadline. Additionally, many retailers, banks, and credit unions allow you to pay your bills in real-time via mobile payment technology.

3) Protect Your Accounts

With the prevalence of digital transactions, it’s important to protect yourself from consumer fraud and identity theft. In fact, nearly 3 million consumers reported fraud in 2018 alone. Regularly checking your credit score (see #1) for errors and unauthorized transactions is one simple strategy to protect your identity. Make it a priority to refresh the tactics you use to keep your identity safe this spring:

4) Save for a Rainy Day

Rainy day funds protect against more than the weather. Did you know that 78% of Americans do not have enough savings to cover unforeseen expenses? Saving doesn’t have to be hard, although it does take discipline. Small adjustments in your daily routine can make a big difference in your ability to cover emergency costs or meet a payment due date. In addition, many savings vehicles will pay you interest on the money you have deposited, which will help your money grow over time. Commit to creating new savings habits to help yourself be better prepared.

No matter where you start your financial Spring cleaning, incorporating these tips and tactics into your routine will give your personal finances a fresh start.

Check out our full suite of online personal finance education resources in our Common Trust Federal Credit Union Financial Education Center, which can be found at www.commontrustfcu.org .

5 Steps to a Debt-Free 2020

The holiday season is a great time to buy sentimental gifts for all of your family and friends. Unfortunately, this also means spending much more than you typically do during the rest of the year. After the holidays are over, you can be left with a lot of debt. With 2020 in full stride, has your debt got you down? Here are 5 steps to a debt-free future.

1. Minimize Your Spending

When debt is growing each day from high-interest rates leading to even higher balances, it can become a serious hindrance to your mental health. Try to minimize spending during this time of repayment. The more you add on to your principal balance, the more money you’ll end up having to pay in the long run. Only buy the things you need, like groceries, gas, utilities, and bills of course. If needed, try to stay away from any stores or places that may lead you to splurge. Don’t highly restrict yourself, but don’t spend frivolously either.

2. Take Advantage of a Low-Interest Loan

If your debt is getting out of hand, it may be time to consider paying it off with a lower-interest loan in order to prevent tacked-on interest payments. Since most credit cards usually rest around a 20% APR interest rate, that’s a lot to save over time. Act quickly when you realize the interest rate on your credit card is starting to rack up, and start searching for a debt payoff loan that works best for your needs. Either way, you’ll likely be paying around 10% less on a loan than in credit card fees.

3. Credit Balance Transfers Are Your Best Friend

Another quick alternative to lessen the blow of built-up debt is a Credit Card Balance Transfer. Similar in savings to a loan, this is when you transfer your higher-interest balances onto a lower-interest credit card and pay a lower rate until your balances are paid off. Over time, this solution will save you loads of money and help you make more payments on your principal balance rather than mountains of accumulating interest.

4. Save, Save, Save!

In this instance, you may not have been prepared for the oncoming holiday debt. Make it a New Year’s resolution to start saving more in preparation for big spending. It’s nice to not think about your funds when continuously swiping your credit card, but it’s even nicer to have a large nest-egg to fall back on when you’re in need. 

Open multiple savings accounts to track these goals and save up enough to shower your friends and family with the gifts they deserve. The incentive for planning ahead is a higher interest rate, meaning you’ll have even more money when the terms are up. Select the type of account that works best for you, and start stockpiling those pennies! With this easy step, you’ll be ready for any financial hardships or random splurging. 

5. Steer Clear of Future Debt

We understand how hard it is to stay out of future debt. It’s easy to grab a whole new wardrobe while scouring the racks of Nordstrom, or a funky piece of furniture at that cute antique shop on the corner. Try to build the habit of saying “no” as you move into the new year. 

If you absolutely must buy that thing, make sure you have a reputable and low-interest credit card at your side. And if you find yourself in another financial sinkhole, don’t hesitate to pay off debt with lower-interest loans before the interest starts accumulating. If you have a hard time staying true to your spending limits, try constructing a budget and sticking to it. Staying out of debt will have a long-term benefit on both your credit report and score.

Holiday debt lingering a little longer than intended? It’s time to find a solution. Our team is highly knowledgeable in financial planning and can help you get back on track. With low-interest rates and a wide variety of flexible products, a better financial future is right around the corner. Don’t let the pressure of debt bring you down – give us a ring or reach out via email today!

Risk or Responsible: Your Quick Guide to Credit Reports & Scores

 In the tumultuous world of finances, different numbers and scores can start to blend together into one confusing blob. Thankfully, there is a bounty of helpful guides and articles to help you differentiate between contrasting numbers and their meanings. In this week’s blog, we’ll discuss the main differences between Credit Reports and Credit Scores—and how to maintain them. 

While the words “Credit Report” and “Credit Score” are sometimes used interchangeably, there is one main difference between the two.

Your Credit Score illustrates how much of a credit risk you are to lenders. It is a numerical value most commonly scored between the ranges of 300 and 850 (we’ll delve deeper into what constitutes a “great” score a little later).

Your Credit Report is a record of your credit and lending history. This includes payments, debts, number and types of accounts you’ve had, and so much more.

Why Should I Maintain Them?

If the chance to be labeled “excellent” on your credit score isn’t incentive enough, it’s important to note that having a score above 700 usually leads to lower interest rates and more member perks. Having a good credit score isn’t just a financial title. It can help save you hundreds of thousands of dollars over your lifetime. You won’t be hit with high-interest rates and can negotiate loan terms more freely. Plus, having a great credit score can instantly make you eligible for bigger loans and higher credit limits, ensuring that you never have to cough up the full payment amount for any big purchases. You’ll automatically get better rates when signing up for things like insurance, and approval for apartments or leases will be a breeze.

Do I Need to Look at Both?

The short answer—yes! It’s important to stay up-to-date on both your credit report and credit score. Doing so will allow you to know how lenders will assess your financial responsibility before approving or denying things like loan requests or opening a new credit card. Sites and apps like Credit Karma provide free access to your credit score and will send you copies of your credit report upon request. You can check as often as you need, or want, and it won’t negatively impact your score. Conversely, if you are trying to raise your credit score, monitoring your credit report will allow you to see what may be impacting it and how to take preventative measures in the future. 

It is important to note that checking both your credit score and credit report regularly can help prevent fraud. Always be sure to analyze for anything that looks faulty or incorrect, and if anything seems out of place always reach out for further information. Your credit score is one of the most important things you have in your possession and can make or break anything from purchasing a pair of boots to purchasing your first home. 

What Is Used to Calculate Your Credit Score?

This aspect of credit is where both credit scores and credit reports cross paths. There are a few main aspects of your credit report that impact how your numerical credit score is calculated. Although it is important to note that each credit-reporting system utilizes their own unique formula to calculate your score, generally it is made up of the following:

  1. Payment history accounts for 35% of your credit score. If you have not historically made your credit card or loan payments on time, your score will naturally go down.

    Tip: To keep your score in tip-top shape, you should make a point to schedule all payments before the due date. Doing so will also save you money – say good-bye to accumulating more and more debt via hefty interest rates!
  2. How much you owe on your accounts makes up 30% of your credit score. Especially if you don’t make payments on time, you may see a dip if you continuously rack up debt on your open accounts. Do you really need those sparkly heels?

    Tip: Try to avoid accumulating too much debt on credit cards or loans at any time.
  3. Length of credit history accounts for 15% of your credit score. The longer, the better. This portion illustrates that you have been financially responsible for longer, and are more-likely-than-not going to continue making payments on time and are thus less of a risk.

    Tip: Even if you haven’t used your high school credit card in years, keeping it open can help lengthen your credit history. 
  4. Opening new cards is a significant factor in the equation. In fact, 10% of your score is based on new credit, and how many accounts you have opened recently.

    Tip: even if a $100 best buy gift card or low APR is at stake, don’t open too many new credit cards at once. Not only are they hard inquiries, but doing so categorizes you as a credit risk and can quickly lower your score. 
  5. Multiple lines of credit and being able to maintain them can positively impact your score by illustrating that you are financially responsible. 10% of your credit score is based on existing lines of credit. Do you have a variety of accounts? Do you have multiple accounts?

    Tip: explore ways to maintain multiple lines of credit (without opening a bunch of credit cards at once). Successfully managing multiple accountscar loans, credit cards, school loans—can yield major positive dividends for your score.

Keeping the above factors in good standing is crucial to maintaining your credit score. Don’t fret if you have an off-month, though. One missed payment won’t completely diminish your score. And if you happen to have a few mishaps, you’ll be relieved to know that they do eventually fall off your report. Just keep making on-time payments and maintaining your credit lines—eventually, your score will fully recuperate!

What’s a “Good” Score?

Your FICO® credit score falls into five general categories:

  • BAD: 300 – 560
  • POOR: 560 – 650
  • FAIR: 650 – 700
  • GOOD: 700 – 750
  • EXCELLENT: 750 – 850

Not instantly listed as “Excellent” or even “Good”? Not to worry.  Over time, as long as you keep up with your payments, your score is sure to pick up.

Got Credit Q’s? Looking to open a new line of credit? Have questions about your credit score, report, or just need some quick credit advice?  We’re here to help. At Common Trust, we thrive on helping our members successfully manage their credit in every way, from HELOCs to car loans to credit cards and everything in between. Give us a call today or shoot us a message and we’d be happy to chat. We look forward to hearing from you!

Digital Vs. Paper: Understanding Online Payment Services

Ever get stuck behind a customer paying by check at the grocery store? Or get forced to make change when someone owes you their half of the dinner bill? It’s getting less frequent by the day as the digital age expands and money becomes more about 1s and 0s than paper currency. 

As these online methods of payment spring up and gain popularity among the tech-savvy younger generations, older generations are increasingly wary of their reliability, deciding instead to cling to more traditional payment methods. It’s time to debunk the myths of online payments. The reality is that, since their induction into our lexicon in the late 2000s with e-tail and mobile banking, online transactions can be safer, more reliable, and less of a hassle than whipping out a wallet full of cash. 

Let’s take a look at the most popular online payment services:

  • PayPal — Since its 2002 IPO, PayPal has stood strong as the de facto method of online payment. It’s linked directly to your debit card or bank account, is as simple as a normal banking transfer, uses email addresses for payments, and is free for personal use.
  • Venmo — When you have to make a personal transaction — pay back a friend or send money to one of your kids — this free service is simple to use. There is a 3% fee if you use a credit card, so avoid that, if possible.
  • Payza — Link your credit card and bank accounts easily to securely transfer and receive money from personal acquaintances. You can even exchange currencies within the app for a fee. 
  • Dwolla — This app has stringent account verification practices that could include photo IDs — which might make you feel a bit safer. It’s free for transactions under $10 and only $0.25 for anything above that. 

With each option, your bank, debit, and (in some cases) credit cards are linked to your account, which is typically an email address. Sending and receiving money is as simple as accessing the app, typing in an email address and amount, and hitting send. Aside from the occasional fee, depending on the service and transfer amount, the only catch is that the person you’re sending money to or receiving money from has to have their account on the same service. Meaning, you can’t send someone money on Vemno using a PayPal account. 

Okay, But Are They Safe? 

The simple answer is YES, they are safe to use — the more complicated answer is that, with all methods of payment, there are risks. You could always drop your wallet full of cash. Someone could steal your purse with all your credit cards in it. You could misplace your checkbook, giving any signature forger open account access.

However, there are digital methods in place for each of the above sites to help protect your identity. Most sites/apps use two-factor authentication — which means you have to provide a password and a one-time code sent to your phone or email — or fingerprint scans to ensure you have full access to your account. 

In some cases, online transactions are even more secure than physical ones based on the digital trail you’re leaving as evidence that you paid or were paid. This gives you peace of mind, which is what we are all really looking for with any type of transaction. 

If you are still uneasy with the idea of online banking, it’s simple to allay your fears with online account tools offered at Common Trust Federal Credit Union. We offer mobile and online banking, remote check deposits, even online security best practices to keep your accounts secure. Questions? Contact us today! 

Retirement for Beginners: 5 FAQs about the 401(k)

Getting your first job can be both exciting and scary, especially when dealing with the onboarding paperwork associated with those big financial decisions. This is a watershed moment that most young workers will recognize: According a survey from Fisher Investments, 80% of millennials want to work for companies that offers a 401(k) — yet, only 25% of those working at companies with >200 employees actually enroll in their retirement savings program. 

Why? Though the process seems fairly straightforward, it can get complicated quickly if you don’t understand how the various contributions, penalties, and investments fit together. Let’s take a deeper dive into the 5 most frequently asked questions when faced with your first 401(k) plan and give you the answers you need to start planning for your future today.

1. What is a 401(k)?

In its most basic definition, a 401(k) is a type of Individual retirement account (IRA) into which you contribute money each month. This money can be invested on your behalf into various funds (more on that later) and is left to accrue tax-free until you retire — at which point you will hopefully have a nice nest egg ready to fund the rest of your life. 

2. What is my company’s match?

When you’re choosing the amount you want to contribute to your retirement account, it’s critical to know if your company offers a match. Let’s say you make $50,000 per year. If your company offers a match of 5%, they’re willing to contribute up to $2,500 per year into your 401(k) — but only if you contribute that much, too. If you choose to only contribute 2.5% (or $1,250), you’re giving up an extra $1,250 your company was willing to give you for free. 

3. What is vesting? 

Some companies offer generous matches that are saddled with “vesting” timelines. This means that they could offer a 10% match, but in graded increments based on how long you’ve been with the company. This can affect the amount shown in your 401(k) balance statement; if you’re not fully vested (meaning, if you haven’t been at the company long enough to earn the full amount of their contribution), your account may show more than you actually have.

4. Can the account be moved?

Yes — and this is a critical step in changing jobs. When you end your employment with Company A, you need to take the money from your 401(k) account with them and either move it over to your next employer’s 401(k) account or cash it out with tax penalties. You can also set up a personal IRA (like with Common Trust Federal Credit Union) to house your retirement funds so you don’t have to move them after every job.

5. How should I invest my funds?

A large — and risky — part of the 401(k) account is choosing to invest your saved retirement money. Here are the most common options:

  • Stock funds: Choose the stocks in which you can invest a percentage of your 401(k).
  • Target-date funds: Simply pick your target date for retirement, then pick the matching fund. There’s little maintenance, as the fund adjusts your asset allocation over time.
  • Blended-fund investments: Choose a set ratio of stocks and bonds appropriate for your situation and risk assessment.
  • Bonds/managed income: These can safeguard your money, but it won’t grow much.
  • Money market funds: There’s zero growth, as these funds barely keep up with inflation. 

The choice is yours and can be adjusted over the life of your retirement account, based on your situation.

When you transition from one life stage to another — be it graduation or retirement — it’s a scary move no matter your age. You face new financial decisions, but you just aren’t sure how to make the right choices for your future now that you’re the one in charge of it. What you need is a crash course in financial education designed to help you choose the path using sound information and advice. 

Common Trust Federal Credit Union understands your concerns and offers our Financial Education Center to help you best understand and prepare for new life milestones. Get started today!

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