Wisdom Wednesday: Banking Terminology Made Easy!

The paperwork that comes with opening a new savings account can be potentially overwhelming and intimidating. But it doesn’t have to be! Greg Spadea, Director of Retail Deposits at Sallie Mae, and Martha Holler, Sr. Vice President of Communications helped review a few of the terms you need to understand.

1.) Annual Percentage Yield

This is the number one thing you’ll see with saving accounts and may also be stated with checking accounts that earn interest. This number tells you the actual amount you may earn on the account by calculating the interest rate across a year’s time. This is important because interest rates can change daily. The difference between APY and the average percentage rate (APR) is that yield takes into account compounding interest.

2.) Compound Interest

Compounding interest is one of the most exciting parts of interest rates. It means interest earned on interest. Adding this amount to your earnings can increase your earnings quite a bit over time. Be sure to look at the frequency. Compounding interest may be done at certain intervals. For instance, interest could be calculated monthly, quarterly or annually. Use online calculators to figure out how this will effect you based on the amount you’re saving.

3.) FDIC Insured

This is the difference between a bank and non-bank products. Also, having your money insured by the Federal Deposit Insurance Corporation (FDIC) means that if the bank becomes insolvent or no longer a viable entity, your money will safely be returned to you. If FDIC does not appear, you should approach with caution. If a bank becomes the insolvent, up to $250,000 per institution of your money is protected.

*Insolvent means that the banking institution is no longer financially viable or able to give back the money they are holding.

4.) NCUA

If you are going with a credit union for your savings account, look for the NCUA symbol.  NCUA is the National Credit Union Administration.  If you do not see it listed, you may be looking at product and not a checking or savings account. Many financial institutions look like banks, but do not have insurance to protect your money.

5.) Minimum Balance

Sometimes banks may require you to maintain a minimum balance to avoid fees. On a checking account, this fee can sometimes be thwarted by utilizing direct deposit services. Savings accounts are a bit different. If the fee exists, you may be able to avoid it with automatic deposits of a certain amount. Excessive withdrawals fees might exists for a savings account if you withdraw money more than 6 times in a month. This could cost you an average of $15 per excessive transaction.

Note: While the terms are generally standard, the amount of associated fees may not be. Always read terms and conditions for the bank accounts you have and the ones you’re considering opening. You can have terms printed at brick at mortar banks (ones with physical locations). Online banks can email this document to you. You may also be able to call the bank’s customer service center to get questions answered or direct you to where to find the answer on the bank’s website.

Originally posted on iGrad.com

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Wisdom Wednesday: How to Budget When You Don’t Make Enough Money

You lose your job. You get sick. Your husband loses his job. You are going through a divorce.

These are huge life-altering challenges with relational, emotional and financial implications. Often, the result is a situation where you don’t have enough money to pay the bills. Talk about things that keep you up at night… we’ve been there. To describe the situation as ‘unfortunate’ is quite the understatement. More like “drowning without a life vest”. Over 25 million Americans are living paycheck-to-paycheck today, and just one event could cause a financial panic.

Or maybe there was no single event that resulted in your financial situation – it’s just been the accumulation of increasing bills and a paycheck that hasn’t kept pace.

Whatever the reason – not making enough money to pay your bills is a HUGE problem facing many Americans today – so what can you do to keep it from becoming an all-out financial crisis?

Here are our 5 tips:

Keep a positive mindset

This is the hardest one, but also the most important. Negativity is attacking you from every direction. Thoughts like:

  • You will never get out of this mess
  • You will never find a job
  • You will lose your home

These thoughts will become a self-fulfilling prophesy if you give into them. And I’m saying this as a person who struggles with negative self-talk – it is a KILLER. You have to find what works for you. If you are able to stay positive and focused on what you need to do to get out of your situation, then reality will follow that positivity.

Recognize that it is temporary

Yes, this is bullet number 2, and you might be thinking ‘2 points in, and nothing actionable?’ This is on purpose. The actionable items below won’t stick if you don’t keep your head in the game. You need to act knowing that your financial situation will not last forever, and that it is simply a challenge that you have to overcome. Do not let this become your lifestyle – choose to be an overcomer instead of a casualty.

You are in a sprint right now because you need to be. But just like running, you can’t sprint forever. So make your sprint count!

Cut, cut, cut

Are you paying for cable? Cancel it. Do you have smartphones? Sell them and reduce your wireless bill. Do you meal plan and use coupons? Do you still go out to eat often?

I remember a time when we couldn’t pay our bills, I thought “well, what’s the point of budgeting?” That line of thinking was a huge mistake. Budgeting is more important than ever when you are running a deficit – you’ve got to drill down and figure out every single place that you can save money.

At this time in your life, you’ve got to get CRAZY (or is it more crazy to be paying for a 300+ channel cable package when you can’t pay your bills?) You are in survival mode – if you don’t need to be spending money on it, then you simply cannot afford to spend money on it.

Get More Money!

When you are running a monthly deficit in your budget, you have to attack this from both sides. Cut expenses and make more money. Yes, yes, I know. Easier said than done. But there are some things you can do from home that you might not have thought of. What if you were able to cut $300 from your monthly bills, and then also make an extra $300 through odd jobs or working from home? That’s $600 more in your pocket.

Can you work more hours at your job? Can your spouse go out and get another job? When you are in survival mode, no job should be beneath you, and any sacrifices you make are temporary because you are digging yourself out. If you had been laid off from a good paying white collar desk job, it’s ok to deliver pizza for a while before you land that next job.

Prioritize your bills

When there isn’t enough money to go around, how do you decide who gets paid and who doesn’t? Since we’ve been using the term “survival”, think of the things you would need to survive – food, shelter, clothing, transportation, energy… you’re first payments have to be the ones that keep you in your warm home, keep food on the table, and allow you to get to work.

After that, you need to figure out what creditors get paid, and which don’t. If you don’t have enough to pay some creditors, make sure to communicate with them. There are ways to negotiate with creditors, and this might be the time to do it. There are implications when settling debt, so be careful and make sure to do your research.

Here’s why I made the first 2 points mental rather than actionable – would you be willing to work those extra hours, to get rid of your smartphone, to take a job that might seem embarrassing, if you didn’t have a positive mindset?

The question we have for you today is what are you willing to do to make this happen?

Author: Mark Greutman

Wisdom Wednesday: How to set Up a Budget

Setting up a budget is a great way to help keep your finances on track and plan for the future. Without one, keeping track of how much money you bring in and spend each month can be nearly impossible! By creating a budget you will become strategic with your money and develop better spending habits that will pay off in the long term. You also will be better able to save for the future and achieve financial security. 

Check out these easy ways to get started creating a better budget for you and your family.


Wisdom Wednesday: 7 Money Mistakes to Avoid in your Twenties

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For the YOLO generation, your 20s may seem like they’re all about embracing mistakes. But when it comes to money, what you do now can make or break your future financial success. Here are seven money mistakes you’ll want to avoid in your 20s.


1. Not Budgeting
Failing to set up a monthly budget and stick to it can leave you living paycheck-to-paycheck. Worse, you may find yourself slipping into debt when you’re tempted to spend more than you earn. But with a well-planned budget, you can’t only stay in the black, but also save for emergencies or retirement.

To get started, you’ll want to track your expenses using a budgeting app or pen and paper. To create a budget manually, list your monthly expenses and subtract them from your total income. From there, you can figure out which unnecessary costs, like entertainment or shopping, you can cut back on in order to reach your savings goals and pay for essentials, like rent, bills, and groceries.
2. Not Saving for Emergencies
An emergency fund can spare you from getting into major debt if you suddenly lose your job, experience a medical emergency, or otherwise incur unexpected costs, like an expensive car repair. Your savings should cover six months’ living expenses. Ideally, that would give you the flexibility to bounce back from an emergency. To make saving convenient and consistent, set up an automatic transfer from your checking to your savings account around payday.
3. Postponing Retirement Savings
Just 55 percent of all millennials are saving for retirement, according to the 2014 Wells Fargo Millennial Study. But a key to building a solid nest egg is starting early enough to reap the benefits of compound interest. Compound interest allows you to earn interest on your original investment, plus any money your account accrues in interest over time. So the earlier you contribute to a Roth IRA or 401(k) the more earning potential your initial investment has.
4. Not Building Credit
Good credit helps you access the best loans, housing, and credit cards on the market. If at first you’re not approved for good credit credit-cards consider applying for a secured credit-card. Secured cards require a deposit as collateral in case you can’t pay your bill. But as you demonstrate your creditworthiness with a secured card, you can apply for cards with lower interest rates and better rewards.

Don’t apply for too many credit cards at once, though, or it will hurt your credit score. Once you have a card, make on-time payments and keep you credit utilization ratio, or ratio of debt to credit available, below 30 percent to raise your credit score. Monitor your credit with a free annual report from each of the three major credit reporting agencies: Experian, Equifax, and TransUnion. For a few bucks extra you can get your credit score, too.
5. Neglecting Student Debt
The longer you take to pay off your student loans, the more you will spend on interest over the life of the loan. For instance, if you’re like the average 2014 graduate who is $33,000 in debt, a 10-year repayment plan at a 3.4 percent rate will cost you just under $6,000 in interest over the life of your loan.

That said, if you have credit-card debt and student loans, paying off credit card debt should be the priority, since it comes with higher interest rates. But your student debt shouldn’t be ignored. And as soon as your credit card debt is paid off, your contribution should increase toward student loans.
6. Letting Your Bills Pile Up
Short-term consequences of not paying your bills could include various fees, as well as higher interest rates on loans and credit cards. Bills that remain unpaid for extended periods of time might be handed over to collection agencies, in which case your debt may be reported to the credit bureaus. Once the delinquency is reported, your credit score could suffer until the debt is paid. Even after you pay up, collections generally remain on your credit report for seven years.Setting up automatic payments on your bills is an easy way to avoid paying a heftier price for your bills in the long run.
7. Hasty Family Planning
The costs of a wedding and child-rearing can set a young couple back financially before they get the chance to harmoniously merge their finances. The average cost of a wedding was $29,858 in 2013, according to a survey conducted by The Knot. And the steady increase in those costs over the years suggests we’ll be paying even more for “I dos” in 2015. Raising a child born in 2013 costs more than $245,000, according to a U.S. Department of Agriculture report. So while considering the money angle while making family decisions is not necessarily what your heart wants, it may make sense for your long-term financial stability.

This article was originally published on NerdWallet.

Wisdom Wednesday: Budget Ideas For People Who Hate Budgets

budget

Follow these three tips to effectively budget your money, even if you hate budgeting.

Raise your hand if you think sitting down with a spreadsheet full of numbers sounds like a good time. Chances are, there aren’t many hands in the air — but if you want to do more with your money and have a positive impact on your current financial situation — it’s critical.

We’re talking about budgets. You need one so you can take charge of your finances and meet your biggest money goals.

For starters, it is important to understand that you actually have a lot of options here! Just because you hate boring spreadsheets or the hassle of keeping up with receipts does not mean you actually hate budgets.

More likely, you haven’t found the right one for you yet. Let’s explore a few budget ideas you can try.

1. Make it automatic

You don’t have to create a household budget that sucks away all your free time and mental energy. Instead, automate it with one of the tools and technologies available to help you do it.

  • Mint.com can help you track your spending and understand where your money goes each month.
  • Personal Capital combines your everyday finances with your investments so you can view the big picture of your financial situation all in one place.

Setting up these tools can help you track your expenses and review your spending each month. They make budgeting easier and lots more fun.

You can also set automatic transfers from your checking to savings accounts to fund important goals and create automatic bill pay so you never forget to handle a fixed expense.

2. Give yourself an allowance

Weekly or monthly allowances aren’t just for kids. A grown-up spending allowance can help you better manage your money each month while also eliminating the need to track every last cent with a dreaded spreadsheet.

For this budgeting alternative to work, you do need to put in some effort upfront. First, know how much you earn each month — and that means the amount of money hitting your checking account after taxes and withdrawals for things like your 401(k) and health insurance. Then calculate your fixed expenses. This includes things like rent, utilities, groceries, transportation, and other living costs and bills.

Subtract your expenses from your income. If you haven’t already set up an automatic transfer to savings or investments, do so now.

After taking into account your savings and expenses, what’s left over? This is your spending allowance for the month. You can spend it on whatever you want, but once that money is gone, remember, it’s gone.

3. Use various accounts for your buckets

A twist on the allowance idea is to set up three accounts: one for expenses, one for fun money, and one for savings. Deposit percentages of your paycheck into each account, and pull from the appropriate one throughout the month to cover your living costs and your discretionary spending.

You’ll need to do some legwork first to determine what percentage of your paycheck belongs in which bucket. But you don’t need to track every last cent throughout the month or worry about overspending before you get around to saving.

Budgeting doesn’t have to be all checkbook balancing and spreadsheet managing. Have a little fun with it, try out different types of budgets. Learn what works and makes the most sense for you.

Source: http://www.trulia.com/blog/budget-ideas-for-people-who-hate-budgets/

Author: Kali Hawlk

Wisdom Wednesday: Living Within Your Means

budget

Spending less than you make is the foundation of personal financial success. In a world that encourages us to get rich quick and take shortcuts to financial stability, it’s often hard to sort out the good advice from the bad. However, simple math never lies. You cannot get ahead in life if you are spending more than what you bring in.

If you constantly feel like there is more month than money, work on developing these five habits and make your money start working for you.

1. Use a budget

A 2013 Gallup survey found that only 32 percent of all American households use a budget. The same poll also found that households making over $75,000 a year were most likely to budget. In other words, wealthy families and individuals become wealthy and maintain their financial status by budgeting their resources. You can find simple budgeting forms online or stop by the GOAL Center on DCC’s campus to speak with a coach about budgeting and receive a free budgeting binder to help stay organized with your personal finances.

2. Keep track of expenses

Make yourself accountable to your budget and you’ll quickly find out where you and your family are overspending. When you start tracking where and how you spend your money, you may be surprised at how much eating out for lunch, quick trips to the store, and movie night are really costing you. Keeping track of spending will also let you know where you can cut back.

3. Distinguish wants from needs

Every day advertisers try to tell us what we need to be happy. In 2011 alone, Ad Age estimates that companies spent over $50 billion US dollars on television advertising. Companies use marketing teams, social psychologists and millions and millions of dollars to trick us into buying things we don’t need. Be aware of how advertising influences your purchasing and ask yourself before every purchase, “Do I really need this?” Impulsive spending habits can lead to multitudes of debt and lack of essential savings.

4. Avoid comparisons

Mark Twain once said, “Comparison is the death of joy.” Trying to keep up with others will rob us of happiness and leave us in debt. When we’re chasing someone else’s lifestyle, we’re forgoing the opportunity to create a life filled with the things that truly make us happy.

5. Develop an attitude of gratitude

Much overspending could be avoided if we appreciated what we already have. Oftentimes, we buy things because we are feeling bored, lonely, isolated or upset. The next time you want to indulge in some retail therapy, make a list of ten things you’re grateful for first. Switching your focus from what you don’t have to what you do puts finances in their proper perspective. Accumulating stuff cannot bring long-term happiness, but feeling like a slave to your money will certainly bring long-term misery.

Financial advisor Dave Ramsey is famous for saying that finance is 20 percent head knowledge and 80 percent behavior. While it’s helpful to have a sound understanding of budgeting and financial planning, the most important ingredient for successfully living within your means is having a good attitude about money.

By being accountable for where your money goes and avoiding the pitfalls of social comparison, you’ll be well on your way to financial stability

Source: http://familyshare.com/5-must-have-habits-to-live-within-your-means
Written By: Heather Hale