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Is a credit union better than a bank?
Have you ever wondered if a credit union is better than a bank? The choice between the two will ultimately boil down to the different products, services, and fees each one offers and what components are most important to you as a customer. Let’s look at some key differences between banks and credit unions, so you’re able to decide which works best for you.
The fundamental difference between the two institutions is that a credit union is a not-for-profit institution owned by its members. Their mission is to provide their members with affordable financial services. Banks are corporations controlled by board members and owned by shareholders. Credit unions traditionally use their not-for-profit status to offer higher interest rates on savings accounts and CDs and lower interest rates on loan and credit cards.
One of the most noticeable differences is the discounted or absence of fees from many of the products offered by credit unions. At a time when many banks have raised their minimum balance requirements, the large majority of credit union checking accounts still do not require a minimum balance and don’t incur any fees. In fact, credit unions make every effort to keep their fees low, including eliminating products and services instead of adding fees. If you’re familiar with the fees that banks typically charge for direct deposits, transfers, wires, and balance transfers, you’re not likely to find them at a credit union.
It’s of the utmost importance for credit union representatives to establish a relationship with each of its members. If you’re looking for personalized attention, credit unions are less formal and work hard to deliver a superior level of customer service. It’s a people-centric business whose top priority is the best interest of their members.
Online and mobile functionality
For years, credit unions were substantially lacking in online manageability. Given some recent attention, however, many have made great strides in technology and what they’re able to offer. Members should have the ability to view account balances, initiate transfers and make online loan payments, which are the most requested transactions by online users. In addition, many credit unions offer a mobile check deposit feature that allows you to safely and securely deposit your check from your mobile device anywhere, anytime –all without visiting an ATM or a branch office.
The biggest benefit of a credit union membership is likely its loan products. Because of its cooperative structure and genuine concern for the financial well-being of its members, a credit union doesn’t have to charge high-interest rates to turn a profit. Generally, loans offered by a credit union are less expensive. Some even offer the option to skip a month’s payment without incurring a penalty.
A personal choice
Doing business with a bank or a credit union is a personal choice. Is it the financial perks, the online services, the style of service, and the number of branch locations that you value the most? Does the type of ownership, the size of the company and their mission matter to you? Weigh these factors to help you decide which option will work best for you and your hard-earned money.
Tax Tips for First-Timers
Filing your taxes for the first time doesnâ€™t have to be scary â€“ and, in fact, it shouldnâ€™t be. The key to overcoming uncertainty in many situations is educating yourself and being prepared. Following these simple steps will help make filing for the first time a breeze.
Organization is key
Before you can file your taxes, youâ€™ll need to have the proper forms. At the very least, this will include a W-2 from each workplace you earned a salary. You may have more than one W-2 if you worked more than one job, or you may have a Form 1099 if you received income from another source.
You may also receive other tax forms, such as Form 1098-E if you are paying interest on any student loans. Most tax forms arrive by late January or early February, and you must wait to file until you have all of the proper documentation.
Credits and deductions are your friends
Tax credits and deductions are imperative in increasing the amount of your refund (or lowering the amount of taxes you owe). Below are a few credits and deductions you might qualify for. More information for each write-off can be found here.
- Earned-Income Credit: This credit benefits low- to moderate-income earners by reducing or eliminating the taxes paid. There are income limits depending on the number of dependents you have.
- Job Search Expenses: While you canâ€™t deduct job search expenses if youâ€™re searching for your first job, you can deduct some expenses if you are looking for a new job within the same field. RÃ©sumÃ© costs, job placement agency fees, travel expenses are some items you may be able to write off.
- Cost of Moving: If you moved due to a job change or started a new job, you may be eligible to deduct some of the expenses associated with relocating.
- Lifetime Learning Credit: If youâ€™re paying out of pocket for your college education, you may be able to deduct some of those expenses.
- Retirement Saverâ€™s Credit: This credit helps low- to moderate-income earners save for retirement.
- Home Office Deduction: If you work from home on a regular basis, you may be able to write-off some of the expenses associated with your home office based on the percentage of your home used for business activities.
- Energy-Saving Credits: Qualified energy-saving additions and improvements, such as appliances or adding energy-efficient windows and doors to your home, may earn you a credit on your taxes.
Online or in-person: how should you file?
For many Americans, filing taxes is free. Online software like TurboTax, H&R Block, and TaxAct are great choices if you feel comfortable taking things into your own hands. These services often guide you through the process step-by-step and can help catch missing information, as well as alert you to credits and deductions you may qualify for based on your individual tax situation.
If youâ€™re hesitant to file on your own, consider taking your tax documents to an accountant or other tax preparation office. However, do your research so you donâ€™t fall victim to tax scams â€“ always be wary of tax preparers who base their fees on the size of the refund they can get you.
Now that youâ€™ve gotten all your documentation organized, researched tax write-offs, and decided whether to file using online software with the help of a professional, itâ€™s time to actually file your taxes. The deadline to file your taxes, which is set by the IRS, is April 18, 2017. You donâ€™t want to wait until the last minute to file (plus, the sooner you file, the sooner youâ€™ll receive your refund!), but if there is a situation that will prevent you from meeting the April deadline, you can file for an extension.
If you do choose to file for an extension, youâ€™ll need to fill out Form 4868, which will give you an additional six months to file. The extended deadline this year is October 16, 2017.
If youâ€™re filing for the first time, donâ€™t wing it. Taxes are a major part of your adult life, and not being prepared could mean losing out on money owed to you or even worse â€“ owing more money to the IRS. Educate yourself and youâ€™ll set yourself up for a healthier financial future.
What it means to have a “friend in the industry”
“I have a friend in the industry.”
It’s safe to say that in the world of mortgage, we have all heard this one before. When someone broadcasts this to you, the real question is, “What does having a friend in the industry mean?” It could mean, “A realtor lives down the street from me.” It could mean, “My son’s basketball coach is an appraiser.” Or it could even mean, “I know someone at church who works for the bank.”
We all have “friends” in the industry – not just the mortgage industry either, but in many industries. And working in the industry doesn’t make them all experts. Having a friend in the industry and having a trusted advisor to help you determine your mortgage options are two completely different things. Just because you have that “friend” in the industry, it doesn’t mean that you’ve shared your financial situation with them. Most people tend to keep their private business…well, private. However, by having a relationship with someone who is a trusted advisor, and who puts your interests above all else, that’s really having a friend in the industry.
If you’re looking for a “friend in the industry”, let us know because we are here to help!
How to make Valentine’s Day inexpensive
Valentine’s Day is tomorrow which means now is the time to start scrambling. If you’re anything like a lot of folks, you probably have yet to make plans for your special someone. The problem with putting it off until the day before is that when you start calling restaurants to get a reservation, the only available times are before 5:00 and after 10:00 pm. So what are you left to do? Luckily, you still have enough time to make Valentine’s Day inexpensive and plan a romantic evening without heading to a fancy restaurant. Here are a few quick ideas:
- Dinner at the house. This can make for a really special evening if you take the time to do it right. Try to pick out a main entrée that you know your significant other will enjoy, then utilize your favorite search engine for a recipe. If you’re not quite sure what you’re doing in the kitchen, there are tons of recipes available online and you can probably even watch a video on how to make it happen.
- Be at their service. Instead of spending lots of cash on expensive gifts, give up your time. Offer to give a massage or do errands that they might otherwise do. Suggest doing the dishes or another one of your partner’s dreaded chores for a month and you’ll really have made them feel special.
- Plan an activity together for a later date. Think about something they would enjoy doing (painting, hiking, watching their favorite show) and plan to do it together. Get a nice card, type out your proposed plan and insert it in the card. Although this activity may not be something you’re super excited about, if you know it will make them happy, it will definitely be worth it.
Valentine’s Day is supposed to be a day about the love and adoration you have for your special someone, so don’t make it stressful or expensive. If you haven’t planned out that special date yet, there’s still time – but not a whole lot.
Todd’s Mortgage Minute: Are you really ready to buy your first home?
In the mortgage industry, nothing is more rewarding than helping a client purchase their first home. The day is met with excitement, enthusiasm, and oftentimes photos to remember the day that someone has started “a new life!” That day can also be met with anxiety, worry, and wondering, “Did I make the right decision by purchasing this home?” At the end of the day, those of us in the mortgage industry should really be educating these first-time buyers so they’re prepared once the moving truck is gone and so they’re budgeting for the one-time/first-time expenses, as well as monthly bills, that come along with being a new homeowner.
From a monthly perspective, if you’re moving from an apartment or condo, you may not have had all of your utilities set up in your name — some may have been included in your rent. Cable, water, electricity, gas, internet, garbage pickup, and pest services are all monthly expenses that you’re going to have as a new homeowner. Oh, and by the way, many utility companies will not set up these services unless you pay a deposit. Did you have these costs in your budget?
First-time purchases should also be budgeted for, considering some of them are big-ticket items. Do you have a lawnmower? You’ll need a gas can, along with a weed-eater of some sort, as well. Does your new home have a refrigerator or a washer and dryer? Chances are if you’re moving from an apartment, those appliances stay in the apartment and you’ll have to buy these items. If your home is newly built, you’ll need blinds for the windows, or some sort of window treatments — not just for the front-facing windows of the home, but for ALL windows. And trust me, you don’t want to be known as the house on the street using Star Wars sheets as curtains.
The bottom line: there’s more to purchasing that first home than just having the funds needed for closing and being able to afford the monthly loan payment. Make sure you’re ready so you don’t stress after the move. Homes are meant to enrich our lives, not to stress us out!
How Much 20-Somethings Should Save for Retirement
Your 20s may seem like an odd time to think of saving for retirement, but it’s actually the perfect moment to start planning for your later years. That’s because the earlier you start saving, the more time your money has to grow.
Savers who begin setting aside 10% of their earnings at 25, for example, could amass significantly more by retirement age than those who wait just five more years to start saving. You can use a retirement calculator to see how much you should start saving now to reach your retirement goal.
Building a nest egg on a starter salary and a shoestring budget can seem daunting, though. Focusing on the incremental savings, rather than the goal, can help your savings objectives feel more manageable.
How much to save for retirement
For those earning around $25,000 a year, the median income for 20 to 24 year olds in 2015, saving the recommended sum of 10% amounts to a little more than $200 a month.
It may seem like a reach, but consider this: If you start saving $100 a month at age 25 and invest it to return 7.7% a year — the average total return of the Standard & Poor’s 500 Index of U.S. stocks over the past decade — you’ll have more than $378,000 available at retirement age. And it could be tax-free.
If you wait until you’re 30 to start and save the same monthly amount at the same rate of return, you’ll wind up with less than $253,000.
Several vehicles can help you build a retirement fund. A 401(k) plan, typically offered by your employer, is often the most convenient and easily accessible of these. Contributions you make usually aren’t taxed, which helps reduce your income tax liability.
Pre-tax 401(k) accounts make up around 80% of retirement plans offered by employers, according to the American Benefits Council. Roth 401(k) accounts are another option, though these are less widely available, and money contributed to a Roth 401(k) account goes in after it’s taxed. Money withdrawn from this type of account — including earnings — is usually tax-free.
Companies that offer a 401(k) plan often match employee contributions, up to a certain percentage. This is essentially free money toward your retirement.
If your employer will match your contributions, try to take full advantage and commit a large enough percentage to get the full benefit.
Beyond a 401(k), individual retirement accounts, commonly referred to as IRAs, offer another solid option. There are two types: traditional and Roth.
Money put into a traditional account is tax-deferred, similar to funds put in a traditional 401(k) plan. That means those funds aren’t taxed until they’re taken out. But typically any earnings you make with the money are also subject to income taxes on withdrawal.
Money put into a Roth IRA has already been taxed when you earn it, so there’s no immediate tax benefit. When it’s time to withdraw the cash, however, you usually don’t pay taxes on it. And anything the money earns also can be taken out tax-free.
Contributions to both types of IRAs are currently capped at $5,500 a year for those under age 50, and $6,500 for older workers.
How much to save for emergencies
In addition to retirement, it’s also wise to save for a rainy day. Ideally, your emergency fund should be enough to cover three to six months of living expenses.
Some experts suggest setting aside even more for savings and investments: 20%. That’s roughly $415 a month on an annual income of $25,000.
That’s not always feasible, especially if a big chunk of your monthly income goes to student loan and credit card payments. Consider saving what you can, even if it’s just $10 a month.
Making a habit of saving now could serve you well down the road. And, as your income increases, the percentage you save can as well.
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