Unity One CU informs: Shape Up Your Finances 101

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Written by: Michelle M. Haas-Dosher, CCUFC. Originally posted on the CUNA Financial Resource Center.

Improve your financial fitness and manage your wealth. Get your finances in shape by taking these steps:

  • Bulk up your emergency fund. Having a back-up fund may prevent you from having to tap or max out credit cards if your refrigerator dies or your car needs major repairs.
     
  • Improve your credit score. Having a clean credit history is more important than ever. First, obtain your free credit reports from annualcreditreport.com, review them, and dispute any errors. Next, work to improve your score: Pay all bills on time, maintain a healthy mix of credit, use less than 25% of your credit limit, and be sure to pay all fines and tickets—even unpaid library fines or parking tickets may be viewed negatively by potential lenders.
     
  • Stay on top of your accounts. To avoid overdraft fees, account closures, or other unexpected events, regularly monitor your credit card and other account balances.
     
  • Create a spending plan—and stick to it. Bottom line: Expenses should not exceed income.
     
  • Get organized. Consolidate accounts, organize financial documents (paper and digital), and use online banking, which can simplify your finances and reduce the likelihood you’ll miss a payment. Personal finance websites and apps make it easy to track your spending and manage your records, some with services that alert you when bills are due or balances are close to their limit.
     
  • Pay down debt. Attack your high interest credit cards first by paying more than the minimum balance each month. Once you get your debt under control, make it a goal to pay off the balance each month to avoid accumulating interest.
     
  • Use direct deposit. If you still get paper checks, think about switching to automatic deposit. By having all or some of your payroll check directly transferred to your credit union account, you’ll be less tempted to spend what you could be saving.
     
  • Take control of your investments. Regularly review and organize your portfolio, and talk to a financial professional about rebalancing it.

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Credit union informs: Paying for college while saving for retirement

shutterstock 70550551 blogIt can be done. All across America, families are meeting a mighty financial challenge – the challenge of paying college costs with retirement potentially on the horizon. How do they do it? They go about it consistently; they also get creative.

First, make sure the priorities are in the right order. Strange as it may sound, your retirement may need to take precedence over your child’s college education.

Think about it. Your son or daughter might qualify for student loans or financial aid. By the time they are 30 or 35, they will have the earnings potential to pay those loans back. Do you see any ads out there for “retirement loans” or “retirement aid”? For most, it is much harder to earn money at age 65 than at age 35. Because of this, many choose to allow the younger generation to assume the debt.

The following are some short-term and long-term ideas you may want to consider if you have college costs on your mind:

Save for college the DCA way. While dollar-cost averaging is a useful way to build retirement savings, its merit often goes unrecognized when it comes to saving for higher education. If you could put $40 a month even in a basic savings account with a tiny interest rate, over 10 years that is approaching $5,000. That’s nothing to sneeze at, and will certainly help out. Move the money from a checking account each month into a savings account, or …

Consider a tax-advantaged college savings plan. Contribute to a 529 plan, which features tax-advantaged growth and tax-free withdrawals when the withdrawn funds are used to pay qualified education costs. Not all 529 plans are the same – in fact, some of them will even provide a small cash “match” or “sign-up” bonus when you start your plan. Some 529 plans are even “prepaid” – that means you may be able to secure future tuition rates at current prices, usually at in-state public colleges. Another advantage of the prepaid plans – they are often guaranteed by the state.

Exploit your credit card. No, don’t pay for college with it … well, at least not directly. Some credit cards give you a cash-back rewards option. You may as well put the rewards toward college. Some of the major banks let you do this and so do online shopping websites such as Upromise.

Keep your income as low as possible in the base income year. That is the calendar year that starts as your child is in the middle of his or her junior year in high school. That is the year when college financial aid departments start to look at a family’s earned and received income. If you can avoid taking capital gains or a distribution from a 401(k) or 403(b) in that year, that will keep your taxable income low. Will Roth IRA conversions raise eyebrows? Yes, they will.

However, don’t stop contributing to your own retirement savings accounts, and feel free to pay off consumer debts with the money from your savings and checking accounts – the assets in these accounts aren’t used in financial aid formulas.

Let the college know if your financial situation has changed. Has the value of your home fallen? Is your business netting you far less than it once did? Financial aid departments should be willing to review these developments and may be able to adjust aid for your student accordingly.

Make it a family affair. In some cultures, it is common for all members of a family to pitch in on the down payment or mortgage payments for a home. Consider this strategy as your family saves for college. Close friends and family members may be willing (or even excited) to make ongoing contributions to a college savings plan for your child, and/or an annual “birthday” contribution. They may find giving such a gift to be much more meaningful and fulfilling than a mere toy or item of clothing.

In short, hunting for every scholarship or alumni connection you can and finding a great school at a reasonable price – that’s important. But it may be just as useful (if not more) to be both creative and consistent as you save for college. While it has always been a challenge, by putting some thought into it, most families and students can find ways to respond.

Bill Fairley

Sean Weaver

This article was presented by Bill Fairley and Sean P. Weaver of WWK Wealth Advisors. Bill Fairley & Sean P. Weaver, CFP® are Investment Advisors with WWK Wealth Advisors, a Registered Investment Advisor and may be reached at 817-336-6300 or www.wwkllc.com

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*The views and opinions expressed at this event are those of WWK Wealth Advisors and not necessarily of Unity One Credit Union. 

 

ABOUT UNITY ONE CREDIT UNION

Established in 1927, Unity One Credit Union is the oldest credit union in Texas. A member-driven and not-for-profit cooperative, Unity One CU served the employees and families of the BNSF Railway for 70 years. However, after transferring its corporate headquarters to Fort Worth in 1998, the credit union expanded its field of membership to include other non-railroad companies, organizations and individuals.

Today, anyone who lives, works, worships or attends school in Fort Worth, Blue Mound, Saginaw, Haslet, Keller, Colleyville, Bedford, North Richland Hills, Southlake, St. Paul, MN and Kansas City, KS may apply for membership. Unity One CU has seven branches to serve over 30,000 members nationwide. For more information about Unity One Credit Union, visit www.unityone.org. Think outside the bank.™ www.unityone.org

 

Teaching kids about money: a teen confesses

By Kelly Ly, senior at Haltom High School in North Richland Hills, TX

Teaching kids about money can be a tough job. I'm still a child myself, and trying to teach me how to balance my monthly spendings can be a real nightmare. No matter what though, teaching financial literacy to children is an important part of ensuring that they will grow up smart with money.
SkillsUSA
I am part of a team for an organization at my school called SkillsUSA. In this event, my teammates and I benefit the community by teaching financial literacy to our peers and younger children. With the help of Unity One Credit Union, we were certified to teach financial literacy. My group visited various elementary and middle schools in our community; and let me tell you, those kids were tough to reach. The elementary kids were so bright and so energetic. When asked about college and what they do with their allowances, they answered with simple questions like "I use my money for candy!" and "my college is already paid for! It's only like five-thousand dollars." Oh boy, little do they know that reality isn't that simple.Unity One Credit Union

As seniors in high school, we are preparing for college this fall, and studying is the least bit of our worries. Money is such an issue because universities are basically taking your blood, sweat and tears for however many years you're planning on being in college!

We were once walking in the shoes of those elementary and middle schoolers; so, we know how their brains are wired. It was a tough job, but I think that we did a good job teaching them about finances. My teammates and I are not parents nor teachers, but I do believe that we did a great job as amateurs.

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