New Article from Practical Money Matters: Put Your Tax Refund to Work

By Jason Alderman with Practical Money Matters

 Find the original article here courtesy of Visa, Inc.’s Practical Money Skills

If you’re among the millions of Americans expecting an income tax refund this year, you’ve probably already filed your 2011 return and are eagerly awaiting the money. But if you haven’t already mentally spent your refund on a guilty pleasure, here are several great ways to better put that money to work for you:

Pay down debt. Beefing up credit card and loan payments can significantly lower your long-term interest payments. Suppose you currently pay $120 a month toward a $3,000 credit card balance at 18 percent interest. At that pace it’ll take 32 months and $788 in interest to pay off, assuming no new purchases. By doubling your payment to $240 you’ll shave off 18 months and $441 in interest.

Start an emergency fund. To protect your family against the impact of a layoff or other unexpected financial crisis (e.g., medical emergency, major car repair, theft), set aside enough cash to cover six to nine months of living expenses. Seed the account with part of your refund and then set up automatic deductions from your paycheck or checking account.

Boost retirement savings. Beef up your 2012 IRA or 401(k) contribution, especially if your employer offers matching contributions; a 50 percent match corresponds to a 50 percent guaranteed rate of return – something you won’t likely find in any investment. 

Spend now to save later. Reap long-term savings on things you’ll eventually pay for anyway:

• Replace older appliances with energy-efficient models that will pay for themselves through lower utility bills. For example, replacing a 1980s refrigerator with an Energy Star model will save over $100 a year. The Energy Star website can help you find Energy Star products and estimate savings.
• Switching from traditional light bulbs to energy-efficient alternatives like CFLs and LEDs, while initially more expensive, can save about $6 per bulb in annual energy costs. Just make sure they are Energy Star-qualified models, which exceed minimum standards.
• Schedule routine car maintenance. According to AAA, simply changing your car’s air filter once a year can save over $270, while replacing older spark plugs can save $540 in wasted fuel.
• Ask whether your utility offers free or subsidized home energy audits. An audit will reveal which investments – such as increasing home insulation and replacing drafty windows and doors – will lower both winter and summer energy bills.

Finance education. Strengthen your career prospects and earnings potential by adding new skills through college courses or vocational training. Ask if your employer will help pay for job-related education. You can also set money aside for your children’s or grandchildren’s education by contributing to a 529 Qualified State Tuition Plan or Coverdell Education Savings Account. Bonus: Your contributions will grow tax-free until withdrawn.

Prepay bills. If you expect major expenses later this year (e.g., insurance premiums, orthodontia, college tuition), start setting money aside now so you won’t rack up interest charges later. Also, paying slightly more each month toward your mortgage principal can save thousands of dollars in interest over the life of the loan.

And finally, if you regularly receive large tax refunds, you’re probably having too much tax withheld from your paycheck – you’re essentially giving the government an interest-free loan. Ask your employer for a new W-4 form and recalculate your withholding allowance.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

New Article from Practical Money Matters: Can Your Family Afford College?

By Jason Alderman with Practical Money Matters

Find the original article here courtesy of Visa, Inc.’s Practical Money Skills

I’m a firm believer that the more knowledge you acquire, the richer your life will be. But as college tuition and fees continue to skyrocket, students and parents increasingly are asking, “Is a degree really worth the cost?”

For many people it certainly is: On average, college graduates earn $550,000 more than high school grads over a lifetime, according to a Pew Research Center study. Not only that, the current unemployment rate among college grads is only half that of high school grads.

So, assuming your kid is interested in college, ask yourself, “How much can we afford to spend without digging ourselves into a hole?” Unless you started socking away money long ago or Junior can count on a full-ride scholarship, you’ll probably need to take out student (and parent) loans to pay for that degree.

Tread carefully so you’re not saddled with too much debt. Here are a few factors to remember:

Not all degrees are created equal. The average college graduate now carries roughly $25,000 in student loan debt, but many families rack up far more, especially if they have several children. Students should follow their passions – in education and in life – but remember, someone with a degree in engineering or computer sciences will probably garner much higher pay and more easily pay off loans than graduates in lower-paying fields like education.

In other words, don’t take on debt that will overwhelm your future ability to pay it off. To save money, many students start out at a community college then transfer to a four-year institution.

Calculate college’s true cost. As with buying a car, when tallying a college’s true cost there’s the sticker price – the stated full cost for tuition, fees, room and board, etc. – and there’s the net cost you’ll actually pay after subtracting grants, aid, work study and other adjustments that may apply.

Thanks to a new federal law, all post-secondary institutions must post a “net price” calculator to help families more accurately estimate the true costs of attending, based on the student’s individual situation. Colleges may either use the Department of Education’s basic calculator template or develop their own if they require additional information.

Although you won’t be able to do exact comparisons, the new calculators do provide a good starting point for estimating the true costs of various colleges. Indeed, some students find that because of financial incentives offered, such as grants, merit-based scholarships and low-income subsidies, they can actually afford schools they’d previously ruled out. Expensive private schools sometimes end up cheaper than comparable state schools.

Another good comparison tool is the Department of Education’s College Navigator, which lets you search for details about colleges throughout the U.S., including tuition and housing costs, majors and degrees offered and typical SAT scores of students attending. You can even build a list of schools for side-by-side comparisons.

Fill out a FAFSA. Even if you think your income’s too high to qualify for financial aid, you still should fill out the Free Application for Federal Student Aid (FAFSA), since it’s also required by virtually all institutions for access to federal student loans. Federal loans generally have more favorable interest rates and repayment terms than private loans so it’s best to exhaust those alternatives first.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

See Us About a Debt Swap

Consumers have spent the Great Recession paying down debts. Evidence shows that savings have risen as debt has fallen, and that’s a good thing.

Still, many people continue to struggle with high debt levels. If you’re in that situation, maybe it’s time to look at your debts in a new way.

If you qualify, you’ll make better progress retiring those old debts by swapping them in for lower rate credit union loans. For example, nationally, credit union credit card rates are more than two percentage points less than other cards. For new auto loans, the rate difference averages just shy of two percentage points.

Bring your high-interest debts to one of our helpful loan officers. There’s a very good chance you’ll be able to reduce your interest rate, and that will make your payments go further and reduce your bills faster.

You can do better at your credit union. Give us a call at 800-448-4096, email us at cuinfo@aacfcu.com or visit one of our 17 branches to see how we can help!

Copyright 2011 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

Step Up Your Savings During Military Saves Week

Now, it’s more important than ever to establish an emergency savings fund.

Current economic events are making it harder to save, even for high-wage earners, self-employed professionals and business owners just one paycheck away from disaster. For those who struggled to save before, it may be even harder now.

“This year Military Saves Week 2012 has a theme: Set a Goal, Make a Plan, Save Automatically. The Military Saves campaign wants to put emphasis on the importance of automatic savings for service members and their families. Many short-term financial difficulties cans be linked to inadequate savings. If we can encourage service members and their families to set aside money each and every month into savings, this can help alleviate many of those challenges,” says Andia Dinesen, Military Saves Coordinator, Consumer Federation of America, Washington, D.C.

“The Department of Defense realizes the unique financial challenges that service members and their families face and is working year round with the Financial Readiness Campaign to combat those challenges. Military Saves is one of the main components of the DoD Financial Readiness Campaign. Mission readiness relies heavily on financial readiness and having the peace of mind that your money is there when needed can help service members keep their mind on the mission,” she adds.

Join thousands of other military members during Military Saves Week–February 19 through February 26, 2012–and step up your savings. Military Saves is part of the nationwide America Saves campaign that focuses on the way Americans save money. Military Saves encourages service members to evaluate their savings progress and take action to save more.

No matter your financial situation or how much you earn, you can save. Even the smallest amounts tucked away regularly will accumulate into a nice savings cushion.

Start now. Make the dream of saving a reality.

To join Military Saves, visit militarysaves.org. Registrants automatically will receive three electronic resources: the quarterly American Saver newsletter, the monthly Military Saves e-news, and monthly eWealth Coach tips.

Army Aviation Center Federal Credit Union is proud to support Military Saves. For our Fort Rucker, AL members, look for us at the Soldier Service Center, Bldg. 5700 on February 24, 2012 from 9:00 a.m. until 11:00 a.m. to see how we can help you meet your savings goals.

Copyright 2012 Credit Union National Association Inc. Information subject to change without notice. All other rights reserved.

New Article from Practical Money Matters: Talking Finances with Your Valentine

By Jason Alderman with Practical Money Matters

Find the original article here courtesy of Visa, Inc.’s Practical Money Skills

As you and your spouse celebrate Valentine’s Day over a candle-lit dinner, you may want to avoid romance-killing topics like, “Honey, let’s talk about our financial future.” But you really should have that conversation sooner rather than later to keep your relationship on a healthy footing.

Major life changes may require you to reassess how you manage the family finances. Unfortunately, many couples don’t make time to plan ahead and are later caught off guard around issues like having children, aging parents, planning for emergencies and changing career and retirement goals.

If you haven’t had a financial heart-to-heart lately and aren’t sure what to do next, here are a few suggestions:

Make a financial “date.” Even if you’re in complete agreement on money matters, the family “accountant” should keep his or her spouse in the loop – if nothing else, so they can easily take over in an emergency. Set up regular meetings to discuss bill payments, progress or setbacks regarding savings goals, budgeting for upcoming expenses, and strategies for coping with unforeseen expenses.

Don’t postpone uncomfortable discussions. Should one of you accidentally bounce a check or miss a payment, don’t wait until your next powwow to address it or try to hide the problem. You’ll only make matters worse and create an atmosphere of mistrust. Fess up and deal with the issue right away – you might even save yourself additional late fees or penalties.

Be united. When the news isn’t good – say your 401(k) balances tanked last quarter or one of you got laid off – communication is all the more important. Whether you need to temporarily tighten the budget or make a major life-altering decision like postponing retirement, talk it through and be prepared to compromise so neither party becomes the bad guy.

Reaffirm your goals. Couples often start out with one game plan but then life deals an unexpected hand and goals change. Touch base periodically on how you both feel about such major issues as family size, home ownership, career changes, financing college for your kids (or yourselves), financial risk appetite, when and where you’ll retire, and taking care of elderly parents.

Update legal documents. Make sure your legal and financial documents are up to date and reflect your current wishes, including wills, financial and medical powers of attorney, life insurance policies, retirement accounts, investment funds and any other accounts where beneficiaries or people who control your health or finances are named.

Follow your budget. Some of the worst marital disagreements occur when one or both parties sabotage the family budget. If you don’t already have a budget, many free tools are available. Check out the U.S. Treasury Department’s http://www.mymoney.gov, www.mint.com and Practical Money Skills for Life, a free personal financial management site run by Visa Inc. (www.practicalmoneyskills.com).    

Seek help. If you discover that you’ve gotten off track or need help realigning your financial goals, a number of outside resources are available:

• The NFCC can help you locate a free or low-cost credit counselor.
• You can find a financial planner or advisor through the Financial Planning Association (www.fpnet.org), the Certified Financial Planner Board of Standards (www.cfp.net), or the National Association of Personal Financial Advisors (www.napfa.org).

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

PLAN (AND SAVE) FOR WHAT IS AHEAD IN 2012 from SmartAboutMoney.org

Original article courtesy of SmartAboutMoney.org

Every new year brings lots of changes and new expenses that can impact your budget. Many of them are surprises, but chances are you already know what a few of them will be. Instead of waiting until later in the year to save for them, or throw them on a credit card, plan ahead to make sure your big expenses don’t throw your finances out of whack.

Think About It

Although some big-ticket items, such as car repairs, are unexpected — which is why it is important to build an emergency fund — there are others you can predict:

• Friends and family: Will anyone close to you be getting married, having children, or reaching big milestones that you want to celebrate? If so, will these events require travel, and will you be asked to play a bigger role, such as hosting a shower or taking part in a wedding?
• Your own life: Will you be tying the knot, adding to your family, taking a much-needed vacation, or attending a class reunion? Do you have any big purchases planned, such as buying a new car or putting down money for a new home?
• Your children: Will your child be a senior in high school or heading off to college? Or will your adult son or daughter be tapping you for financial support or returning to the nest?

Start Estimating

Once you have an idea of your future events and purchases, start thinking about the price tags.

1. Make a list. Write down every big expense and estimate the costs for completing each. If you are unsure of the costs, start pricing things out by researching online.
2. Figure out your timeline. Estimate when you will be paying for the event, and determine how many weeks you have to save.
3. Start saving. Do the math to decide how much you need to set aside each week to reach your goal.

Make Savings Happen

If you start saving at the beginning of the year, you can avoid charging big purchases on a credit card at the last minute, and paying more in the long run. But finding money to save each week may be difficult.

Try making some of these adjustments in your life to help you jumpstart your savings, but also, be realistic. If you do not think you will be able to save enough for the purchase, don’t make it. Or, find ways to make it cheaper. Because, who wants to start a new year knowing they will be taking on more debt?

New Article from Practical Money Matters: Women and Personal Finances

By Jason Alderman and Practical Money Matters

Find the original article here courtesy of Visa, Inc.’s Practical Money Skills

By many measures, women’s lives have changed substantially in recent decades. According to a comprehensive government report called “Women in America,” although certain social and economic situations for women have improved, when it comes to personal finances, many women still face challenging hurdles.

Key report findings include:

• Women live longer than men but are much more likely to experience critical health problems that hamper their ability to work – and to pass up needed care due to cost.
• Although the earnings gap between women and men continues to narrow, it’s still significant: Among full-time workers, women’s weekly earnings as a percentage of men’s have increased from 62 percent in 1979 to 80 percent in 2009.
• More women than men now graduate high school and college, but far fewer earn degrees in engineering, computer sciences and other higher-paying fields.
• Women increasingly marry later, have fewer children or remain childless, yet still are more likely to live in poverty, particularly single-mother families.
• Women are less likely than men to work outside the home (61 percent vs. 75 percent in 2009) and are much more likely to work part-time and to take time off to raise children or care for aging relatives.

In a nutshell: Women generally earn less and live longer than men, so at retirement they often have less in savings, receive smaller retirement and Social Security benefits and must spread out their money longer. Clearly, women need to take charge of their financial wellbeing. Here are a few places to start:

Develop a budget to track income and expenses. Either download a budget spreadsheet template or investigate software packages and online account management services like Quicken, Mint.com, Yodlee and Mvlopes.

Plan for retirement. Time is your biggest ally when it comes to retirement savings, so get cracking. Start estimating your retirement needs:

• Social Security’s Retirement Estimator, which automatically enters your earnings information from its records to estimate your projected Social Security benefits under different scenarios, such as age at retirement, future earnings projections, etc.
• Check whether your 401(k) plan administrator’s website has a calculator to estimate how much you will accumulate under various contribution and investment scenarios. If not, try the retirement calculators at Bankrate.com and AARP to determine your current financial status and what you’ll need to save to meet your retirement needs. 

Do your research. Many helpful personal financial education and management tools are available online, including:

• The National Foundation of Credit Counseling’s MyMoneyCheckUp™ program offers a step-by-step assessment of your overall financial health and behavior in four personal finance areas: budgeting and credit management, saving and investing, planning for retirement and managing home equity.
• Social Security’s Website for Women provides information on retirement, disability and other issues. You can also order or download their informative, free publication, “What Every Woman Should Know.”
• The Women’s Savings Initiative, a program jointly developed by Heinz Family Philanthropies, the Women’s Institute for a Secure Retirement (WISER) and Visa Inc. This free program features an audio- and e-book called “What Women Need to Know About Retirement,” which you can order on CD or download as a PDF or audio file from Practical Money Skills for Life, a free personal financial management program run by Visa.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

Common Financial Resolutions

Resolutions can be a powerful motivator to help you change your bad habits in the New Year, but the resolutions you think you should have aren’t always the best choice for your financial plan. Our partner, On Your Way, lists three of the most common resolutions, and considerations you should make before you commit to them:

• Spend less. It’s great to have the goal of lowered spending, but if you want to succeed then you need to be specific about what spending you want to reduce. You can start by deciding how much you want to cut your spending, but you should follow that decision with specified reductions in specific areas.
• Save more. Everyone wants to save more money, but for some the idea isn’t a good one. Every individual should dedicate some portion of their income to saving, but for those with a lot of high-interest debt, keeping your savings steady and dedicating more money to paying off debt might be a better choice.
• Pay down debt. Paying off debt is a good idea for many, but in some cases, increasing the rate at which you pay off your debt might be a bad idea. For example, if you focus only on paying off debt, but don’t reserve some funds for savings, then you could easily see your debt increase again after just one unexpected car repair or other emergency. Also, if you have low to no interest debt, then it can sometimes be better to focus on savings and making just minimum payments—especially if you get a tax write-off for some of the debt.

Financial decisions may seem simple on the surface, but often each one is tied to many layers of collateral effect that you should consider first. Pay attention to all the details of your resolutions and the domino effect that the decisions could have before you start holding yourself accountable.

Be sure to visit On Your Way to find more helpful tips on managing your finances and reaching your financial goals. When you log on to the site, you’ll also increase your chances to win rewards such as a Nintendo Wii or SpaFinder gift cards!

Holiday expenses catch you by surprise? Open a Christmas Club Account!

Did holiday expenses catch you by surprise this year? It can seem like expenses rise each year, which means it takes a little more preparation than the year before to be ready for the all the costs of the holiday season.

You can start preparing for the 2012 holiday season now by opening a Christmas Club Account with us. With this account, you earn dividends on money you save throughout the year, and in November the money is deposited into your savings account. However, if you withdraw this money early, you will be faced with a fee to do so. The fee helps discourage you from making unnecessary withdrawals since you are saving for a clear goal, but keep in mind you have full access to your funds if necessities arise.

Make it easy to save when you set up automatic deposits into your Christmas Club account. You can have part of your paycheck deposited directly into this account with payroll deductions, or you can set up automatic transfers from another account.

After the holidays have passed, take a close look at your expenses. This will give you a good idea of how much you’ll need to save, therefore giving you a clear financial goal for next year and allowing you to put together a budget early in the year before any stress over finances sets in. Don’t forget to include expenses other than gifts such as holiday parties, food or travel costs in this budget as well.

Give us a call or stop by any of our branches to start your Christmas Club account today.

Make Each Day Better

Find this original article on AACFCU’s On Your Way site. Be sure to log on to the site daily for helpful tips and for your chance to win prizes and monthly giveaways.

Every day we face a myriad of choices — from where to eat lunch to what to wear to work to where to attend college or university. Some of these questions don’t seem important, but most of them really are. For example, you might think the question of where to eat lunch is unimportant — but let’s say you only have $50 in your checking account and you decide to eat at Denny’s instead of eating the lunch you brought in with you. After eating, you end up with only $42 to last you until payday. An unexpected charge comes in between now and then and you no longer have enough to cover it, and you get an NSF fee. Your easy decision just became a major expense.

Or, let’s say you have $500 in your account, so an $8 lunch isn’t a big deal. After five of those lunches, however, you’ve taken $40 out of your account that could have gone into savings or toward a credit card bill.

Reducing the fallout of an impulsive or indulgent decision creates a residual effect that helps make everyday life better — and it’s easy to do. Each day that you go out to face the world, don’t just focus on what will make you happy right now, think about the long-term effects of even the simplest decision and weigh the potential consequences against the gains.