Did hackers steal every Social Security number? Here’s what you need to do.

In August 2024, a new class action lawsuit claimed that every American’s Social Security number was stolen in a data breach in April 2024.

The lawsuit says that hackers stole the personal information of nearly three billion people, including every existing Social Security number, from background check company National Public Data (NPD). If true, this would mean every American is at risk of having their identity stolen.

While the exact details of the breach are not confirmed, don’t wait. Freeze your credit now and keep it frozen by default.

Freezing your credit:

  • Is free
  • Doesn’t impact your credit score
  • Is easy and fast to un-freeze if you need to apply for credit

How to freeze your credit

Freezing your credit prevents anyone from applying for lines of credit (such as credit cards and mortgages) using your identity. This includes you, but you can temporarily unfreeze or thaw your credit and re-freeze it.
Contact Equifax, Experian, and TransUnion, the three credit reporting bureaus, to initiate a freeze. You must freeze your credit with each bureau—you can do this online or over the phone. We recommend keeping your credit frozen by default.

If you discover someone attempted to open a credit card under your name or find unauthorized charges, dispute the situation immediately with the bank or credit card company.

Freeze your kids’ credit

You can even freeze your children’s credit, too. Cybercriminals can try to create a different name and identity using a child’s Social Security number—sometimes it doesn’t matter that the number doesn’t belong to an adult. This fraud can happen for years and might be undetected until the victim turns 18. The Federal Trade Commission (FTC) has more details.

Additional actions you can take:

If you haven’t already done so, update your antivirus protection and perform security scans on all devices. If malware is found, most antivirus programs should be able to remove it. But, you may need to seek reputable professional assistance in some cases.

Update passwords for bank accounts, email account(s), social media accounts, and other services used, ensuring your updated passwords are strong and unique for each account. Passwords should include uppercase and lowercase letters, numbers, and special characters whenever possible. They should never contain personal information that a hacker could guess or obtain from stolen data.

Use multifactor authentication (MFA) on any accounts or services that offer it to ensure proper identity verification. Take extra caution with email and social media accounts and beware of phishing, which is an attempt to get your personal information or access to accounts by misrepresenting the identity of the person or entity sending a message.

Bottom line

In an era where data breaches have become increasingly common, the possibility of Americans’ Social Security numbers being compromised is a sobering reminder of the importance of proactive security measures. While the details of this breach are still emerging, the need to protect your financial identity can’t be overstated.

By freezing your credit and staying vigilant against cyber threats, you can take significant steps to safeguard your personal information. Don’t wait for confirmation of the worst-case scenario—act now to protect yourself and your family from the risks of identity theft.

How to get kids and teens to care about cybersecurity

Even though they’re digital natives, research shows younger generations are at a high risk of falling victim to cybercrimes—so it’s important to teach kids and teens about safe internet usage and online gaming from a young age. How do parents, teachers, and other concerned adults get kids to care about cybersecurity and data privacy? While it’s not the most thrilling lesson, it’s a necessary one. Here are a few ways you can get your child or teenager to care about cybersecurity:

For younger children

Engage kids with activities

Interactive activities are a great way to introduce cybersecurity concepts to younger kids. Here are some engaging ideas:

  1. Interactive lessons and simulations: Check out online lessons and simulations that teach cybersecurity concepts to children. These interactive tools can make lessons on password security, phishing, handling cyberbullying, malware detection, and other topics enjoyable and memorable. One great resource is the FBI’s Safe Online Surfing. You can select age-appropriate games based on grade level, and it’ll help students learn all about cyber safety and digital citizenship.
  2. Gamify security: Try turning your cybersecurity lesson into a game. For example, your younger child might be more engaged by pretending they’re a top-secret agent. Who can create the longest, strongest password and store it safely? Use biometrics for next-level, personalized multi-factor authentication like you see on TV. Back up your digital art and stories onto a hard drive and store it in a safe place in the house. With a little imagination, security can become cinematic.
  3. Hands-on projects: Encourage kids to participate in hands-on projects related to cybersecurity. How can they change security settings? What are the signs of a phishing message? What should they do if they find a strange USB drive?

For teenagers

Have open and honest conversations

Once your children are older, it’s time to have a frank approach to internet safety and encourage communication. Here are some discussions you should have with your teens on internet usage:

  1. Establish guidelines: Create an online safety plan together and establish clear guidelines. For example, you can set boundaries on what sites are approved and what isn’t, as well as teach them to treat people they meet online as strangers—even if they’ve chatted for a long time.
  2. Be aware of risks: Ensure your teen is aware of the risks of using the internet, like cyberbullying, online predators, identity thieves, and inappropriate content.
  3. Protect personal information: Teach your teenager not to share personal information, like their full name, address, phone number, or Social Security number online. Show them how to use privacy and security settings on social media apps to control who can see their posts.

Empower kids to take security into their own hands

Beyond just teaching concepts, you can empower children and teens to actively participate in their online safety. Here are ways to foster empowerment:

  1. Be proactive with Core 4: The “Core 4” concepts are a great place to start on a cybersecurity journey for people of any age: strong passwords, MFA, keeping software and apps updated, and learning to identify phishing.
  2. Open communication: Create an environment of open communication where children feel comfortable discussing their online experiences and any concerns they may have. You want them to come to you if they encounter troubling content. Encourage them to ask questions about using the web. Provide guidance and support as needed.
  3. Responsibility and advocacy: Instill a sense of responsibility regarding cybersecurity. Emphasize that cybersecurity is not just about personal safety but also about being a responsible digital citizen. Encourage kids to advocate for cybersecurity awareness among their peers and within their communities.

Kids can stay safe online

You don’t have to be a parent to help kids and teens use the internet securely. Together, we as a society can get them to care about cybersecurity and take an active role. Staying safe online isn’t just a computer skill—it’s also a life skill. Teaching these skills early enhances online safety and cultivates a mindset of awareness and proactive behavior in the digital world that allows us to create a more secure online environment for future generations.

What does refinancing really mean?

Even for the most financially literate, understanding mortgages and other loans can be a bit of a challenge. Add in the option to refinance your loan, and you may be feeling totally thrown for a loop. That’s why we’re breaking down what it really means to refinance and when you may consider the option.

What is refinancing?

In the simplest terms, refinancing is when you take out a new loan at a different interest rate and use those funds to pay off your existing loan. Commonly referred to as a “refi,” refinancing allows you to review and revise some of the terms, like the interest rate or your repayment schedule. Depending on the institution and loan type, you may be able to refinance your loan with the original institution, but you may also consider a new lender.

How does refinancing work?

You’ve likely heard about refinancing in terms of your mortgage or auto loan, but you can also refinance other loans, including student loans and credit cards. Because there are variety of loans that can be refinanced, there are also a variety of options for how you may want to refinance your loan.

Rate-and-term

The most common type of refi is rate-and-term financing. Exactly like the name suggests, this type of refi replaces your original loan with a better rate or term. In some situations, you’ll want to refinance for a better interest rate and to lower your monthly payments. However, you can also use this kind of refi to change your repayment schedule—if you’ve been paying off a 30-year mortgage for a decade, refinancing for 15 years may be preferable instead. Rate-and-term refinances typically occur after mortgage rates have dipped.

Cash-out Refinancing

Another type of refinance is a cash-out refi. Let’s say your house has increased significantly in value—instead of selling it, a cash-out refi lets you exchange your home’s equity for cash, while still maintaining ownership. With a cash-out refi, you would use your home as collateral for a new loan, creating a new mortgage for an increased amount, with the difference paid out to you directly.

Cash-in Refinancing

You may also consider a refinance if you’re looking to pay down some of your debt and you have a bit of money saved up already. In this case, you might consider a cash-in refinance, where you replace your current loan with a smaller one by making a lump-sum payment. With this payment, your principal balance decreases, which lowers your monthly payments.

Consolidation

As mentioned above, you also have the option to refinance student loans or credit card debt, which you can do with a consolidation. In this case, your loans are combined into one single loan at a rate that is lower than your current average rate. If you have several student loans for different degrees, or a lot of credit card debt, this may be a good option. Consolidation refinancing can also be used in situations where you may have accrued medical debt due to an unforeseen incident.

When should you refinance?

As with most financial decisions, refinancing is a personal choice. There are plenty of benefits to refinancing—but as with all things, there can be downsides.

Of course, one of the biggest potential benefits is lowering your monthly payment or interest rate. Interest rates for home purchases right now are higher than they’ve been in decades, so you may be considering a refinance when interest rates drop. If so, you’ll see this reflected in the interest portion of your payment, which would be much smaller, or an overall shorter loan duration.

You can also refinance if you’re trying to lower your monthly payment, even if you’re not reducing your interest rate. In this scenario, you’d extend your loan period, while decreasing your monthly payments. While you may end up paying more over time, the lowered payments may provide you with a little financial relief. And of course, you can also refinance a loan for a shorter period of time, saving you money on the total interest paid.

Another type of refi involves converting from an adjustable interest rate to a fixed interest rate. Fixed interest rates afford you much more predictability, but could cost you savings—you won’t reap any benefits if interest rates drop unless you refinance again.

Refinancing could end up costing you more money overall. As mentioned above, refinancing for lower monthly payments may end up increasing how much you’re paying in total. Additionally, if you reset your loan term to its original length, the total interest you’ll end up paying may outweigh any savings. When refinancing for a reduced loan term, your monthly payment increases, and you’ll have to pay closing costs on the refinance. Lastly, refinancing could potentially lower your equity on the house.

I’d also like to offer my personal perspective. At the end of 2023, I found the perfect house for me. Unfortunately, inflation caused the rates to be less competitive, but I couldn’t pass up the opportunity—I’d been commuting nearly two hours one-way for over a year, and the house was close to work with the perfect yard for my pets and my garden. While I’m not ready yet, I know that refinancing at some point will be a good option for me to get a lower interest rate and decrease my monthly payments.

Key takeaways:

  • Refinancing replaces your existing loan with a new loan at a different interest rate.
  • You can refinance many types of loans, including mortgages, auto loans, student loans, and credit card debt.
  • Refinancing is a good option if you want to lower your monthly payment, your interest rate, or your loan term, or a combination.

Overall, refinancing can be a good option if you’re looking to lower your monthly payments, lower your interest rate, or pay off your loan sooner. Refinancing can also help you deal with debt like student loans, credit cards, or medical debt.

Still have questions? Our mortgage loan officers can help you navigate your next move, or check out our personal and auto loan rates to see if refinancing could save you money. Have you ever refinanced a loan? Tell us about it in the comments!

5 steps to tackle home improvements on a budget

One of the perks of being a homeowner is the option to renovate what you want when you want. And while home improvements can sometimes be costly, you don’t always need to do a complete demo. It’s possible to implement small but impactful changes without shelling out tens of thousands of dollars. Here are five steps you can take to tackle your next home improvement project on a budget:

1. Set a budget

Create a budget before you dive in head first. Figure out what you’re comfortable spending—and what won’t put you into major debt. Be sure to include costs for materials and labor (if you plan to hire a professional), plus allow 15-20% for unexpected expenses.

You’ll also need to decide how you’ll pay for your home improvements, whether that’s with a credit card, a personal loan, or even a home equity line of credit (HELOC). Many think HELOCs can only be used for large-scale projects and professional renovations, but that’s false. Most banks or credit unions offer a line of credit starting at $10,000—but that doesn’t mean you have to use all of it. HELOCs are a great financing choice because they come at a lower interest rate than other high-rate options, like credit cards. They also offer tax-deductible interest payments if you use funds to improve your home substantially.1

2. Prioritize your projects

Home renovations are exciting, but they can also be overwhelming if you don’t walk into it with a plan. Go through your home and list what you want to accomplish room by room. Doing so will help you know what your money is going toward and stick to your budget. If what you want to accomplish will set you over your allotted spend, pick the most important projects and save the others for another time.

3. Choose cost-effective options

While you want to ensure you’re not cutting corners quality-wise, choosing cost-effective options is a great way to stretch your dollars. A full kitchen remodel costs around $25,000—and not everyone has the funds to make that happen. However, there are dozens of ways to change the look of a space without completely gutting it.

For example, if your cabinets are structurally sound, but you want an updated look, consider refinishing them rather than replacing them altogether. Or, you could change the cabinet pulls. If you hope to make a larger impact with minimal effort, add (or update) a backsplash, replace light fixtures, or even paint.

4. Explore DIY options

Hiring a professional might not always be the most economical choice, especially for projects you can easily do yourself. As mentioned above, adding backsplash is a fairly simple upgrade you don’t need to hire a professional to achieve—same with changing light fixtures. With the internet at your disposal, hundreds of tutorials show you how to tackle projects from start to finish. Then, you can put those extra funds toward hiring experts for more complicated tasks.

5. Shop around

Whether you hire a professional or opt to DIY, it’s important to shop around for the best price. Thanks to TikTok, “dupes” are a hot buying trend. While the concept itself isn’t new, it’s become increasingly popular—and a great way to save some cash.

If you’ve been eyeing a new chandelier or couch, for example, but don’t love the designer price tag, you can often find the exact items online for cheaper using either Google’s reverse image search or a site like dupe.com, which lets you search by URL or image. It then scours the internet for lookalikes at different prices.

Facebook Marketplace is also a great way to find secondhand items in great condition at a significantly lower price. Here are a few tips to keep in mind:

  • Pay attention to photos and listing info, and see how much similar items are listed for.
  • Ask the seller about the item’s history and condition.
  • Only communicate through Facebook Messenger.
  • Use a secure payment method, like PayPal Goods and Services.

Bottom line

Tackling home improvement projects on a budget might seem daunting, but with careful planning, it’s entirely attainable—small steps can lead to big transformations! By prioritizing your needs, exploring DIY options, and taking advantage of affordable materials and resources, you can enhance your home without breaking the bank.

Do you have a favorite budget-friendly home improvement tip? Share it with us in the comments!

Guide to financial independence part 2: how to manage your debt and improve your finances

Welcome back to our guide to financial independence. In our first post, we covered some of the most common terms you’ll find when dealing with your finances. Understanding these key terms is a great first step towards financial freedom, but what comes next? After basic financial literacy, one of the biggest hurdles in the way of achieving financial freedom is debt.

You’re not alone if you find yourself dealing with debt. According to the Federal Reserve Bank of New York’s Center for Microeconomic Data, total household debt in the second quarter of 2023 has reached over $17 trillion, with credit card balances increasing the most.

So, let’s dive into what debt is, how to manage your debt, and improve your finances.

Types of debt

Debt is any money owed to another entity—if you’ve ever had to borrow money, whether it’s from your parents or from the government, then you’ve experienced debt. Debt can come in various forms, both in terms of security and repayment plans.

Secured or unsecured debt

All debt is either secured or unsecured. Secured debt is backed by some form of valuable property, like your car or house, referred to as collateral. For example, a mortgage or an auto loan is a form of secured debt—if you stop making payments, the lender is legally allowed to seize whatever you’ve offered as collateral to repay your debt. On the other hand, unsecured debt has no collateral. These debts, like student loans or credit cards, don’t require collateral and instead rely on information like your credit score.

Sometimes there isn’t an option to choose between secured or unsecured—you can’t get a mortgage without offering the house you’re purchasing as collateral. That said, sometimes there are benefits to choosing one option over the other. The biggest benefit of unsecured debt is that you don’t have to put any of your valuables up as collateral. However, secured debts often offer lower interest rates than unsecured debts since there is less risk for the lender.

Revolving or installment debt

There are two main types of repayment structures: revolving debt and installment debt.

Revolving debt allows you to continually borrow and repay money up to a set amount, like a credit card or home equity line of credit (HELOC). In these instances, you can charge purchases up to your limit and then repay your balance, usually with interest. Revolving debts typically have a minimum monthly payment, so you’ll accrue interest only on the balance you carry. Installment debt comes from a loan that’s received in a lump sum, like your mortgage or student loans. Money is repaid with predefined terms, typically in equal installments with a fixed interest rate.

Is debt bad?

No—debt isn’t inherently bad. In fact, some debt is beneficial. Establishing a consistent record of on-time credit card payments can help you build credit, making it easier to obtain future auto loans or mortgages. Mortgages can also be considered “good debt” when they help you build equity.

Debt becomes bad when you can’t pay it back, like if you’re hitting your credit card limits regularly but can’t repay them. You should also beware of high interest rates or predatory repayment terms. Good debt can also become bad—paying your bills late or missing payments, for example, can be detrimental to your credit score.

What if my debt has already gone to a debt collector?

Currently, about 26% of Americans have debt in collections. This typically happens after you’ve missed three or more monthly payments.

The first thing you should do when you realize a bill has gone to collections is to reach out to them. Even if you don’t think you can repay it immediately, talking to the company will give you more information about the debt, and more importantly, confirm that it’s really yours. But don’t give out your information to anyone who calls about potential debt—scammers often pose as collectors in an attempt to steal your money.

When contacting or responding to collectors, you should first ask to confirm the information they have with a validation notice about the debt. They should provide this during your first phone call with them or in writing within five days after first contacting you. Additionally, collectors cannot lie, harass you, or treat you unfairly, as we’ll discuss more below.

How can I manage debt?

Whether you’re in collections or not, you want to be sure you’re appropriately managing your debt.

Take stock of your accounts

Your first step should be to review all of your accounts and list all outstanding debt. As you go, include the interest rate on each so you can determine which ones are causing you the most stress.

Check your credit report

Part of your review should be to request a free copy of your credit report from one or more of the three credit-reporting agencies to ensure you haven’t forgotten anything. It’s important that you’re also reviewing your reports to make sure there aren’t any accounts you don’t recognize. If you see accounts that aren’t yours, contact the lender right away to figure out if you’ve been a victim of identity theft.

Determine your debt-reduction strategy

Once you have a list of your debts and have confirmed them all, you’ll want to decide how you want to pay down your debt. There are multiple options for tackling debt, and you want to make sure you’re doing what’s best for your situation. One popular strategy is to pay off your debts with the highest interest rates first. With this strategy, commonly called the avalanche method, you save more money over the long run. The other most popular strategy is the snowball method, where you pay off the lowest balances first. This method is preferred when people need help seeing progress more immediately and can help you keep momentum over time. Regardless of your preferred method, both can help you make progress towards repaying your debt, so remember to be consistent.

Make a budget

Now that you’re on track towards managing your debt, stay ahead of future issues by creating a budget. List your monthly expenses, like rent or utilities, as well as your debt payments and any other expenses, like your streaming subscriptions, groceries, and entertainment. If you haven’t made a budget before, consider the 50/30/20 rule—divide your after-tax income into three categories: needs (50% of your income), wants (30%), and savings (20%). You may also check out financial wellness apps, like EveryDollar and Wally, to help you estimate your regular spending.

Need more help?

Having issues paying your debt? One of the best places to start is by calling lenders directly. You can often work out a plan to make smaller monthly payments. It’s important to remember that if you’re planning to contact them, you’re legally protected from debt collector harassment. When you talk to a debt collector, keep a record of who you’re speaking with and at what time. Ask for your validation notice, which confirms that the debt belongs to you and is in collections. If you don’t recognize the debt, there should be instructions included with the notice about how to proceed. If a collector threatens you or uses inappropriate language, hang up and file a complaint immediately with the Federal Trade Commission. It’s also possible to request the collector stop calling—you should report them if that debt collector still calls.

If you’re still struggling with your debt, consider reaching out to a credit counselor who can help you with a budget, develop debt management plans, and offer money management workshops. To find a counselor, you can check out the Financial Counseling Association of America, the National Foundation for Credit Counseling, or see of a list of approved credit counselors through the U.S. Department of Justice.

Key takeaways:

  • Debt is either secured or unsecured and can be borrowed and repaid in installments or with revolving debt.
  • Debt is not inherently bad, and some debt can be beneficial for your credit score. Debt becomes bad when you can’t repay it.
  • Request and review your free copy of your credit report yearly to ensure you’re up-to-date on all your debts and stay ahead of identity theft.

Debt is an inevitable part of life—whether you’re buying a house or car, applying for student loans, or signing up for the newest travel rewards card, you’re bound to experience debt at some point. In some cases, debt can be beneficial and help you increase your credit score. But when you’re struggling to repay your debt, that can take a toll both mentally and financially.

Do you have a tip for dealing with debt? Drop it in the comments below!

Cybersecurity for wedding planning: Say “I do” to digital bliss

Planning a wedding is one of the most exciting moments in your life, but it can also be stressful. Many couples spend at least several thousand dollars, juggle multiple online services, and handle dozens of people’s contact information—even simple courthouse weddings can often involve transmitting sensitive data.

You can ensure your perfect day goes smoothly with a few simple security measures. We’re here to help with tips on securing your personal information, even in the thick of wedding planning (dealing with family members and learning how to dance—that might be outside our scope).

A password shouldn’t be your “something borrowed”

Many couples might open several new accounts when planning a wedding, from joint bank accounts to a wedding website. Although you trust your partner, it’s best not to share passwords. It isn’t a knock against them—each time you text, email, or otherwise share a password between multiple people, it could leave crumbs a prying cybercriminal can put together.

Instead, have each person create their own username and password for shared accounts. If you must share passwords, quality password managers allow you to share passwords through encrypted channels with other trusted people. You should also enable multi-factor authentication on any account that allows it because it adds another layer of security.

Need a refresher on the qualities of a strong password? Generate a password that’s complex, long, unique, and strong—and not your maiden name.

Verify your vendors

Especially if you’re planning your wedding on your own, you’ll be dealing with many vendors: venues, caterers, DJs, photographers, videographers, photo booth experts—the list is endless. But you should verify everyone you hire before signing contracts or submitting payments.

How? Read multiple reviews of each vendor. Check that the reviews seem legitimate, i.e., not written by the vendor. Do star ratings match up with what the reviews say? Sometimes, vendors might offer cash or discounts for high ratings. If the vendor seems like they’re just starting, proceed with caution—try to make contact in various ways (email, phone, and in person) before sending any money (and only after you both sign a thorough contract).

Does a price seem too good to be true? Listen to that instinct. Never pay anyone before both parties sign a contract that explains what goods and services the vendor will provide for a specified cost.

Be choosy with your online services

Treat your and your future spouse’s personal information like cash. This includes Social Security numbers and bank account data of course, but also birth dates, mailing addresses, and contact information. Before signing up for any online services related to your wedding (such as a wedding website hosting service), read reviews and try to get a sense of what they do with your data. If you aren’t comfortable sharing your personal information with a service, don’t do it.

Keep that wedding gift cash secure

Accepting digital cash deposits as wedding gifts is super convenient—because who needs another waffle maker? However, evaluate any payment service closely for security holes. You wouldn’t want a random person with the same name as you getting a chunk of change from your grandma. See if your bank has an online payment feature, for example. Paper checks are a secure option, too.

Think about who sees your honeymoon pictures

When you’re enjoying the bliss of your honeymoon, spend a few moments thinking about your security. Avoid using public Wi-Fi while traveling. Also consider who can see your honeymoon pics and your location via social media. If all this information is public, a bad actor might put together that your home is empty and potentially break in.

Bottom line

Planning a wedding can be fun—but it’s easy to get caught up in the whirlwind and let your guard down, leaving you vulnerable to cybercriminals. Whether you’re just starting to plan or getting ready to walk down the aisle, it’s crucial to stay vigilant and secure your personal information. By following the above tips, you can help ensure your big day goes smoothly and enjoy the process along the way.

How to start saving for college

School may be out for summer, but saving for education should always be on the books. Whether you’re already a parent or starting to plan ahead, the cost of higher education can be a looming financial burden. While universities aren’t the only option—trade schools and community colleges are also fantastic choices—they still aren’t free. According to a study from NerdWallet, 20% of parents of children under 18 say they haven’t yet started saving for their children’s college education, but they want to. With so many different options, trying to find the right account for your family can be overwhelming. That’s why we’ve put together this article to help you start saving for college!

Account options

529 Education Savings Plan

There are a ton of account options available to start saving for college or other education needs. The most common type of account is a 529 Education Savings Plan. Unlike a traditional savings account, a 529 is an investment account that offers tax benefits while you save for education. 529 plans are a great option if you’re interested in saving for education expenses specifically—money from these accounts can pay for tuition at any qualified college and university in the country, including vocational or technical schools and graduate programs. Plus, you can use up to $10,000 per year to pay for kindergarten through 12th grade tuition-related expenses at both public and private schools. Another benefit is that qualified withdrawals from your 529 plan aren’t subject to federal income tax. Should your child change their education plans or not need all of the money in the account, funds can be transferred to another qualifying 529 account. Starting in 2024, a lifetime limit of $35,000 can be transferred after 15 years to the beneficiary’s Roth IRA.

Coverdell Education Savings Account

Coverdell Education Savings Accounts (ESA) are also worth a look. Similar to a 529 plan, ESAs offer tax-free investment growth and tax-free withdrawals when the funds are spent on qualified education expenses. One key difference is that while 529 plans only allow withdrawals for tuition-related expenses, an ESA can pay for other expenses like books and school supplies, as well as academic tutoring. Additionally, ESAs are only available to families below a specified income level—$110,000 for individuals and $220,000 for married couples filing jointly—so they also have a lower contribution limit per child. However, ESAs offer more flexibility in how you invest your funds, including self-directed investments. ESA funds must be used or transferred by age 30 or are subject tax penalties unless the beneficiary has special needs.

Uniform Transfers to Minors Act

The next type of account you may consider is called a Uniform Transfers to Minors Act (UTMA). An extension of the Uniform Gift to Minors Act, UTMA accounts allow a minor to receive gifts without the need for a guardian or trustee. UTMA accounts are beneficial because they allow your child to save and invest their money without any of the tax burdens until they reach the legal age for the state in which the account is set up. In Georgia, the age of termination for these accounts is 21. However, there are limits for avoiding tax consequences—the IRS allows for an exclusion from the gift tax of up to $18,000 per person for 2024.

To save for college or other future expenses, the donor names a custodian, who has the fiduciary duty to manage and invest the property on behalf of the minor until they become of legal age. One of the biggest benefits of UTMA is that it extends the original definition of gifts beyond cash and securities to include real estate, paintings, royalties, and patents. This means money can be invested with more options compared to a 529, and there are fewer restrictions on withdrawals. It’s important to note that overall, the money belongs to the minor, which limits who can withdraw from the account and could potentially impact the financial aid they receive. Earnings generated within a UTMA are taxed at the kiddie tax rate by the IRS up to the allotted threshold of $2,500, after which earnings are taxed at the adult donor’s marginal tax rate.

Standard brokerage account

Maybe you’re interested in investing but want to have control over the account and more flexible withdrawal options. If so, you’ll likely be interested in a standard brokerage account, which can be opened individually or jointly by two or more people. Like a UTMA account, a standard brokerage account offers various investment opportunities, including stocks, bonds, exchange-traded funds, and more. Unlike a UTMA, whoever opens the account retains ownership and is responsible for taxes. Additionally, there are no limits on how much money you can contribute, and money can be withdrawn at any time for any reason, though you may incur tax penalties.

Roth IRA

Another option for education savings is a Roth IRA, which is a retirement account that allows earnings to grow tax-free. To start a Roth IRA, your kid either has to have earned income, like from a summer job, or you can create a custodial Roth IRA. While withdrawing from your Roth before retirement typically incurs penalties, withdrawing for qualified education expenses is one of the few tax-free options. One benefit of an IRA is that there are more investment options, allowing you to potentially grow your account easier than with a 529, for example. Plus, if you don’t use the expenses for education, you and your kid have a head start on retirement planning. Contributions are limited to $7,000 in 2024 ($8,000 if age 50 or older), which may not be enough overall for education expenses. There are also income restrictions, and your contributions can’t exceed your earned income.

Certificate of deposit

If you’re looking for more savings-type accounts than investments, look into a certificate of deposit (CD). Issued by a credit union or bank, CDs allow you to set money aside for a specific time-frame at a fixed interest rate, and you’re typically unable to access the funds early without penalty. CDs are backed by the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Company (FDIC) depending on the issuing institution, which means your money is protected up to $250,000. The biggest risk with CDs is interest rate—as the financial markets fluctuate in response to economic and political factors, you want your CD’s rate of return to remain competitive. If rates rise, your current investments could be locked into a lower rate for an extended period. While you don’t risk losing your investment and earned interest, you could miss the opportunity to earn more money than with your current CD.

Savings bond

The last way we’ll discuss saving for college is through buying U.S. savings bonds. Backed by the Department of Treasury, bonds are a low-risk investment, though they typically provide minimal returns. The government currently offers two types of bonds: EE bonds and I bonds. EE bonds have a fixed interest rate that remains the same for at least the first 20 years. I bonds earn a rate that can change every 6 months. Both types of bonds are federally tax-deferred and state tax-free, and may be used tax-free for qualified higher education expenses. Similar to other accounts, you can only invest $10,000 ($20,000 as a married couple) per year, per owner, per type of bond.

How to choose an account

We’ve covered a lot of account options, so now you’re wondering how to figure out which one is best for you. While only you can decide what works for you and your family, here are a few considerations:

  • Do you want the funds to go specifically towards education expenses, or do you want more flexibility?
  • Who do you want to control and/or access the account? Is this an individual or joint venture?
  • What is your income?
  • What is your timeline?
  • What are the potential tax benefits or penalties?

While you want to start saving as early as possible, take time to consider all your options and understand the pros and cons of each.

How much to save for college

There are a few things to consider when deciding what your financial savings goal may be. Two of the most important will be your timeline and the cost of education.

According to a recent study from CollegeBoard, the average cost of attendance at a public, four-year university is $28,840 in state and $46,730 out of state. If you’re interested in a private, four-year university, tuition is around $60,000. These figures include tuition and fees, housing and food, books and supplies, transportation, and other personal expenses for full-time undergraduate students.

If your child is already in high school, you may want to take a stronger approach to saving—this could be more money contributed each time, an aggressive investment strategy, or both. However, if your kid is still in kindergarten, you don’t necessarily need to save as much, as quickly. It’s important to remember, though, the numbers above don’t account for inflation, so if you’re thinking a decade ahead, you’ll likely want to save even more.

Other considerations

One of the best things you can you do for your children is instilling good financial habits early. Kids are always watching, so do your best to lead by example by following a budget and building an emergency fund. Start discussing finances with them early and in ways they can understand. You also want to be sure you’re saving for your own retirement. Paying for your kid’s education is an amazing gift, but setting them up for future financial success with good habits and not passing on debt is an even better one.

Key takeaways:

  • If you’re interested in saving for education-related expenses specifically, consider a 529 Savings Plan or a Cordell Education Savings Account. If you’re interested in saving with more flexible options, consider a brokerage account, an IRA, a CD, or buy savings bonds.
  • Setting a good financial example goes a long way, so set yourself up for success with an emergency fund and retirement accounts.

With all the options available to save for your child’s future education expenses, the best thing you can do is research all available alternatives and see what aligns best with your needs—and start saving as soon as possible. Even a small amount can help you lessen the financial burden down the line.

Still not sure what’s best for you? Our team of financial professionals are available to help you determine your best options!

 

5 tips to safely use AI

Artificial intelligence, including so-called “large language models” like ChatGPT, has rapidly become a talking point in the press, amongst governments, and maybe even in your office. While AI has been a background subject for decades, everyday web users can now engage with AI like never before.

But, whenever there’s a technology change, it’s always wise to think about the security issues. With any shiny new technology, you should consider security and privacy risks before diving in. When it comes to AI-powered language models and other services, there are five major factors to consider when loading up AI for help at work, school, or for fun:

1. Don’t hand over personal information

AI models partly learn from what users input into the system. Therefore, you shouldn’t input any information you want to keep private, from your company’s proprietary computer code to sensitive information about yourself or your family, like addresses, account numbers, or passwords.

2. Prompting isn’t the same as creating

When it comes to your child’s homework or your work endeavors, know that putting a query to AI and copying/pasting the results isn’t the same as doing the work yourself. Also, if you’re asking a fact-based question, fact check everything. These models have become infamous for giving very confident but wrong information in many situations. Other times, people have noted that AI models produced bizarre—and sometimes creepy—responses suggesting that the model had a mind of its own, which have been deemed “hallucinations.” It’s best to look at them as tools: they can help you get the work done, but you’re more talented than a machine!

3. Privacy concerns

There are many concerns over how AI models scrape the web, from how these programs use artists’ and writers’ creations to what personal information they know about us. Many experts worry that it’s collecting data on children, for example, and how these services can alert people about sharing their data remains an open question. In many cases, your chats with an AI aren’t private—the company can see what you input, even if it’s anonymized. Carefully read the privacy notices of any AI service you use and ensure that you’re okay with sharing the data it collects.

4. Cybercriminals also use AI

Another trend is the rise of cybercriminals using AI to get better at their crimes. There’s evidence that bad actors are using AI to craft more deceptive phishing emails and help develop malware. When there’s any big disruption in tech, take it as a good time to review your cybersecurity basics: use strong passwords, take advantage of password managers, and enable MFA for all accounts that allow it.

5. Read your company policy

As AI has risen in popularity, many companies have enacted guidelines on its usage in the workplace. For example, some companies might require their employees to disclose the use of AI in their work. Others might require those who use AI to receive training on how it works, as well as how to use it ethically. Some companies may prohibit the use of AI altogether. Regardless of what your stance is, be sure to stay informed of your company’s AI policy.

AI can be extremely helpful for everyday situations, whether you’re using it to brainstorm ideas, summarize long articles, or even create an itinerary for an upcoming trip. But, like with any new technology, it’s important to be aware of security and privacy risks before fully immersing yourself. By keeping the above tips in mind, you can safely incorporate AI into your life and keep your online presence secure.

How to attend festivals on a budget

Summer is the season of sunny days, fun with friends, and music festivals! Whether you prefer to camp out for the weekend or stay for the day, music festivals can be a ton of fun—and money. Here are seven tips to help you get the most out of your money at a music festival.

Make a budget

Of course, we’re going to recommend you make a budget. Start by creating a list of potential expenses. Once you’ve made your list, prioritize your needs and designate specific amounts to each category, like travel, food, tickets, and more. Be honest with yourself—it’s easy to say you won’t buy any merch, but it’s called an impulse buy for a reason. Speaking of a budget, be sure to set aside an emergency fund specifically for any issues that arise during the festival. Whether your tent rips, your food gets spoiled, or you get injured, it’s better to be prepared for the worst so you can still have the best time.

Skip the shopping

If you’ve been to a festival before, chances are you have a few outfit options already. Before spending money on something new, consider ways to repurpose your past pieces. Have a group you travel with? Host a clothing swap a few weeks before and find some new pieces for free (and clean out some of the unused items in your closet)! If you find yourself really in need, check out thrift stores or second-hand shops for pieces that are more reasonably priced. You’ll want to save your more expensive outfits or shopping trips for other events.

Volunteer for free tickets

One of the biggest costs of attending music festivals is paying for tickets. Save money by volunteering to work the festivals in exchange for a free ticket. There’s a ton of positions available, like handing out wristbands, setting up and taking down equipment, and so many more options. Plus, volunteering may score you other free swag or the chance to meet your favorite musicians. Just remember, you have to sign up early, so be sure to plan ahead to get access to these awesome opportunities.

Pack wisely

Another huge expense at music festivals is food and beverages. Plan carefully and pack as much of your own food as possible to cut down on food purchases. If you’re going with a group, pool your resources! Different group members can bring different foods or other relevant essentials, like dishes and utensils, so you can all save money together. You’ll also want to review any festival restrictions so you don’t lose money on items that will get confiscated. Take advantage of free water stations by bringing refillable water bottles to stay hydrated and save costs on bottled water, and be sure to bring sunscreen and sunglasses. If you attend festivals regularly, consider investing in quality pieces that are festival compliant, like backpacks with hydration packs and charging cords. A comfortable pair of sturdy shoes is also a must-have.

Plan ahead

The early bird gets the worm, or in this case the best discounts. The sooner you decide you want to go, the better off you are buying tickets, as tickets are often more expensive later on. You’ll also want to book any flights needed as soon as possible. If you’re driving, carpool with friends so you can all split the cost of gas (and snacks!) There are also a ton of free extras at festivals, so do your research ahead of time. Free charging stations are often available, so map out the grounds to take advantage of those as needed. And while the main event is obviously the music, most festivals have a ton of interactive experiences, art exhibits, and workshops available to concertgoers for free. Be sure to explore your festival’s options ahead of time to make the most of your experience.

Save on accommodations

Friends who stay together, save together. Compare the costs of hotels versus camping, and split the costs with a group to get the most out of your money. Prefer to have a little more privacy? Check options like Airbnb or VRBO to rent out a house or apartment. You may also consider a local festival so you can skip paying for accommodations altogether!

Check out credit card rewards

Another great way to save money at music festivals is to take advantage of your credit card rewards. Depending on your card, you could get cash back on tickets and festival supplies, access to early bird pricing, or additional exclusives. If you have a card with reward points, you may be able to cash in those points for travel purchases, like flights or hotels, or even tickets to the events themselves.

Key takeaways:

  • Make a budget with an emergency category.
  • Plan ahead to get the best deals or score volunteer opportunities.
  • Pack wisely—food and beverage purchases add up!

Music festivals can be a ton of fun, but also a ton of money if you’re not careful. Make a budget and prioritize your needs to make sure you’re spending money on things that actually matter to you. Whenever possible, split costs with your friend group on necessities like food, shelter, and transportation. And remember, planning ahead can get you some great deals and save you a ton of money—and stress. We hope these tips help you have the most fun this summer. Heading to a festival? Share your go-to money saving tip in the comments below!

What is a home equity line of credit and what can you use it for?

Owning a home comes with many advantages, whether you’re focused on the financial aspect, like the tax benefits, the surface-level perks, like the option to pick out your own paint colors, or simply the pride that comes with homeownership. But, you may be missing out on one of the greatest benefits: tapping into your equity with a home equity line of credit (HELOC). Here, we’re diving in and explaining what a home equity line of credit is, how it works, and some popular ways to use a HELOC:

What is a home equity line of credit?

A home equity line of credit is a revolving line of credit that uses the available equity in your home as collateral. A line of credit is an agreed-upon amount you can draw from when needed—similar to a credit card. The amount available for you to borrow depends on your credit score, debt-to-income (DTI) ratio, and the equity in your home. HELOCs are secured by an asset (your home), so they generally have higher credit limits and lower rates versus credit cards and personal loans.

How does a home equity line of credit work?

A HELOC works by determining the amount of equity available in your home. This is calculated by taking the estimated value of your home minus any liens, like your mortgage. Most qualified borrowers can take out up to 80% of their home’s equity. For example, someone with a good credit score and low DTI ratio with a home valued at $400,000 and a loan balance of $150,000 could be approved for a HELOC up to $200,000 ($400,000 – $150,000 = $250,000 x 0.80 = $200,000). HELOCs usually have low or no origination fees and are relatively easy to get.

When you have a HELOC, the terms have a draw period and a repayment period. During the draw period, you can withdraw from your line of credit at any time and make interest-only payments. When the draw period ends, you make larger payments to repay the balance owed. Most HELOCs have a draw period of 10 years and repayment periods as long as 30 years.

What can you use a home equity line of credit for?

A home equity line of credit is typically used for renovations—but that’s not your only option. You can use a HELOC to tackle other major life costs as well. Here are a few popular ways you can use a HELOC:

Renovations

HELOCs are often used for home improvements or repairs like a bathroom remodel or a kitchen renovation. They’re popular for home renovations because they offer tax-deductible interest payments1, which could help you save big come tax time if you use the funds to substantially improve or repair your home. Because home improvements are often long projects, a HELOC is also helpful because of the extended draw period, so you can access money over time as needed.

Education

Another popular expense for HELOCs is college tuition. This is ideal, again, because of the long draw period. You can withdraw funds as needed, like tuition for a semester, and owe interest only on what you borrow. You likely want to check out all student loan options before choosing this route—you’d want HELOC rates to be lower or competitive compared to federal student loan rates.

Consolidating debt

If you’ve racked up a ton of high-interest credit card debt paying for large expenses, like medical bills or a wedding, a HELOC is an option to consolidate debt. HELOCs generally offer lower interest rates compared to unsecured loans—especially your credit card.

However, it’s probably not wise to take out a HELOC if you reached this point because of excessive spending. Otherwise, you’ll dig yourself into more debt. Remember, your house is collateral, and you could face foreclosure if you can’t afford to repay your HELOC.

You can also use HELOCs to consolidate student loans. Keep in mind, that by refinancing or consolidating federal student loans, you could lose out on certain benefits.

When should you not use a HELOC?

HELOCs can be helpful in many circumstances, but there are a few situations where you’re likely better off using a personal loan or other measures.

Weddings

Before you say “I do” to using your largest asset as a way to fund your wedding, think again. We get it—weddings have a hefty price tag, with the average wedding costing upwards of $35,000. However, using a HELOC to fund a single day isn’t the best use of funds. Instead, you’re better off using a personal loan or line of credit, or credit card (so you can rack up those points!).

Vacations

No matter how much you need some R&R, using a HELOC to fund your dream vacation isn’t the most sensible choice. Instead of using your most valuable asset to travel, plan for how much you’ll need and store your savings in a separate account just for your vacation.

Cars

Cars are a depreciating asset, meaning they lose their value over time. Therefore, using a HELOC to purchase your next vehicle isn’t the best choice because you’re putting your home—an appreciating asset—on the line. And, if your credit score is high enough to qualify for a HELOC, you’ll likely qualify for an auto loan, which you should use instead.

Key takeaways:

  • HELOCs are a revolving line of credit that uses your home as collateral. This means you can borrow money against the value of your home but with potentially lower interest rates and higher credit limits than unsecured loans.
  • HELOCs have two key phases: the draw period, which allows you to withdraw money from your credit line and make interest-only payments, and the repayment period, where you pay back the principal and interest owed.
  • HELOCs can be a good option for financing various expenses, like renovations, education costs, or consolidating high-interest debt, but there are also situations where they’re not ideal, like frivolous spending or depreciating assets, like cars.