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GROW! Personal Banking • Home Buying Retirement Planning • Investments Money Management
Friday, March 24, 2017
Celco Community Credit Union P.O. Box 361, Narrows, VA 24124 “People Helping People”
Two Locations
celcofcu.org
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Gary R. Mills Chief Executive Officer & President FirstCommunityBank.com
1090382954
1090382992
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Skip Hageboeck Chief Executive Officer
1090382455
Tol: 888-921-2701
5862 Virginia Ave Pembroke, VA 24136 Tel: 540-626-2700
1090382457
3381 Virginia Ave Narrows, VA 24124 Tel: 540-921-2700
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2 | Friday, March 24, 2017
Donate smart and avoid charity scams Nonprofit organizations and charities do extensive work to help people and fulfill their missions. When commercials, emails or direct mail pamphlets tug at the heartstrings, it’s understandable to want to help as quickly as possible. But just as there are scores of legitimate organizations banking on the generosity of willing donors, so, too, are there scam artists hoping to exploit that generosity. These crooks not only prey on innocent donors, they indirectly steal from people affected by disasters poaching donations meant for relief organizations. The American Grandparents Organization says Americans donate upwards of $300 billion to charities each year. These include well-known and well-established charitable groups and crowdfunding sites like GoFundMe. Statistics Canada says Canadians make
roughly $11 billion in charitable donations each year. While the majority of donations end up in the right hands, charity scammers still manage to victimize unsuspecting individuals. Follow these tips to make sure hard-earned money is going to reputable groups and not to criminals preying on your generosity. • Start by doing research. Charity Watch and Charity
Navigator, each of which is recommended by the Federal Trade Commission, have carefully researched many different charities. This can be the first stop in verifying the legitimacy of a particular charity. Check for a charity’s registration number and see if it’s registered on the Better Business Bureau website at www.bbb. org/us/charity. • Don’t give to cold calls or
emails. It’s best to take your time with charitable requests and confirm their authenticity. This may require visiting the website of a particular group or contacting them directly to see how you can help. You never know who is on the end of a phone call or who sent an email soliciting donations. What’s more, according to Charity Navigator, cold calls are usually conducted by for-profit telemarketers that have contracted with charities. These contracts are not favorable to the charities — with up to 95 cents of every donated dollar going to the telemarketers. • Don’t give cash donations. Cash is difficult to trace, making it a preferred method of donation collection among scam artists. If a charity is insisting on cash or wants you to make a decision immediately, this should raise red flags. • Protect your privacy.
Only work with charities that respect your privacy and will not sell your name or information to other groups. • Request information. Reputable charities will tell you how they will spend your money and if your gift is tax-deductible. • Be aware of sound-alike groups. Some scam artists create sound-alike organizations to trick donors. In such instances, donors believe they are donating to legitimate charities but are really giving to another organization. In 2016, the Federal Trade Commission brought charges against four sound-alike cancer groups, highlighting just how prevalent such faulty organizations are. Charity scams are prevalent. But by being diligent about researching and gaining information, donors can avoid parting with their money unnecessarily.
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1090382952
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Friday, March 24, 2017 | 3
How to approach refinancing or consolidating student loans The average college student can expect to pay between $10,000 and $23,000 in tuition fees at public universities depending on if they live in-state our out. Those costs are even higher for private colleges, with prices starting at $30,000, according to The College Board, a mission-driven not-for-profit organization that connects students to college success and opportunity. Millions of students and their families simply cannot afford to pay for tuition and boarding outright, leaving them to seek out student loans and other options to finance their educations. Today’s college students can expect to graduate with substantial debt. According to an analysis of government data by
Mark Kantrowitz, publisher at Edvisors, a group of websites offering advice about planning and paying for college, members of the class of 2015 can expect to have a little more than $35,000 in student-loan debt upon graduation. In an effort to make repayment more manageable, many students opt to consolidate their loans or refinance for better rates. Renegotiating, consolidating or refinancing can help recent grads in various ways. Some grads may find it easier to work with a single lender, while others may recognize how much they can save over the life of their loans if they refinance with lower interest rates. But before restructuring their loans, borrowers should take steps to understand the
process so they can rest easy knowing they made the best decision. • Know the risks. Borrowers who have federal student loans and are looking for better interest rates should realize that they may sacrifice some benefits by cutting ties with the federal program. These can include passing up on federal loan protection, such as deferment and certain loan forgiveness programs. • Explore the strengths of other lenders. Many banks are out there looking to do business, but lower interest rates may not be reason enough to refinance. Think about the convenience of keeping the loan with the bank you currently use for other accounts. This can make managing your finances
much easier. There may even be incentives to keep all of your accounts with the same bank. Such perks may include lower interest rates or fee forgiveness. Some borrowers may want to work with lenders that specialize in student loans. • Inquire about potential fees. Some lenders charge fees to transfer loans. Weigh the benefits of paying that fee against the perks of the new lender. Will you really save money? • Think about interest rates. Rates are usually separated into fixed or variable rates. Although variable rates can start out low, they may increase incrementally based on the market. Fixed rates do not vary and can be a safer option if you cannot pay off the loan very quickly.
• Verify your credit standing. Even after all of the rate advertisements and the assumed benefits of a new loan, loan rates and terms are usually based on a borrower’s financial health and credit. Be sure your credit rating is good; otherwise the rate you end up with may not warrant refinancing. • Make sure loans are eligible. Not every lender will take on student loans. Determine your eligibility before you begin doing all the legwork required to restructure your existing loans. Restructuring student loans can benefit borrowers in various ways. But borrowers should do their best to learn the ins and outs of restructuring before changing their existing terms.
4 | Friday, March 24, 2017
3 ways to maintain good credit
A good credit score can go a long way toward helping men and women secure their financial futures. When armed with a good credit score, men and women can secure lower interest rates on mortgages and auto loans, saving them thousands upon thousands of dollars over their lifetimes. Some people deftly use credit to their advantage their whole lives by never missing a payment or never digging themselves into deep holes with regard to consumer debt. Others fight an uphill battle, earning a great credit score after digging themselves out of debt accumulated in early adulthood. Regardless of how men and women made it to the top of the credit score mountain, once they’re there the work has only just begun. Credit scores are fluid, so high scores must be maintained in order for lenders to continue to view prospective borrowers as worthy investments. The following are a handful of ways consumers can maintain their high credit scores so they can continue to benefit from their well-earned financial reputations. 1. Routinely monitor your score. Credit scores change constantly, so it’s important that you continue to monitor your score to make sure there are no inaccuracies that can affect your standing. While each of the three major credit reporting agencies (Equifax, Experian and TransUnion) must supply one free copy of your credit report every 12 months upon your request, some credit
card companies now offer free monthly credit report updates. Cardholders can take advantage of such
bill pay. Credit scores can plunge quickly when consumers miss payments. No one is
haps the most influential variable when determining the final score, so a single missed payment can do sig-
H
always has a relatively hight balance so you don’t run theb risk of having insubstantialh funds when the money isn automatically deductedm a from your account.
t d 3. Don’t use too much ofm
offerings to monitor their scores. Report any discrepancies to the appropriate rating agency immediately. 2. Sign up for automatic
perfect, so it’s not out of the question that you might miss a payment one time. Numerous factors contribute to your credit score, but payment history is per-
nificant harm. One way to avoid that and protect your credit score at the same time is to sign up for automatic bill pay. When signing up, use a bank account that
your credit. One of the benefits of hav-o ing a great credit score isi your available credit is like-f ly to go up. That’s becausec lenders see consumersp with high credit scores ass good investments worthyn of higher lines of credit.t b But using too much credit,o even when you have a highv score, can be detrimentalP to that score. Credit utiliza-o tion is another factor usedg to determine your creditp score. Your credit utiliza-a tion rate is the sum of allo c your balances divided by c your total available credit.c A study from CreditKarma.b com found a strong correlation between credit utiliza-t tion rates and credit scores,f as consumers who hadp lower utilization rates gen-e erally had higher scores.w While it’s important to used h credit (the study also found those with a zero percentb utilization rate had lowerh credit scores than consum-t ers with rates between 1m and 20 percent), avoid usingc too much of your availablei credit. Even if you pay yourt balances in full and on timea each month, a high utili-t zation rate may hurt yourw w score. m Achieving a good crediti score is only half the battle2 for consumers. Once thatt credit score is high, consumers must take steps toB maintain it so they can con-t tinue to benefit for years tof l come.
Friday, March 24, 2017 | 5
How to save enough for a down payment on a house A home is the most costly thing many people will ever buy. The process of buying a home can be both exciting and nerve-wracking. One way to make the process of buying a home go more smoothly is to save enough money to put down a substantial down payment. Saving for a down payment on a home is similar to saving for other items, only on a far grander scale. Many financial planners and real estate professionals recommend prospective home buyers put down no less than 20 percent of the total cost of the home they’re buying. Down payments short of 20 percent will require private mortgage insurance, or PMI. The cost of PMI depends on a host of variables, but is generally between 0.3 and 1.5 percent of the original loan amount. While plenty of homeowners pay PMI, buyers who can afford to put down 20 percent can save themselves a considerable amount of money by doing so. Down payments on a home tend to be substantial, but the following are a few strategies prospective home buyers can employ to grow their savings with an eye toward making a down payment on their next home. • Decide when you want to buy. The first step to buying a home begins when buyers save their first dollar for a down payment. Deciding when to buy can help buyers develop a saving strategy. If buyers decide they want to buy in five years away, they will have more time to build their savings. If buyers want to buy within a year, they will need to save more each month, and those whose existing savings fall far short of the 20 percent threshold may have to accept paying PMI. • Prequalify for a mortgage. Before buyers even look for their new homes, they should first sit down with a mortgage lender to determine how much
a mortgage they will qualify for. Prequalifying for a mortgage can make the home buying process a lot easier, and it also can give first-time buyers an idea of how much they can spend. Once lenders prequalify prospective buyers, the buyers can then do the simple math to determine how much they will need to put down. For example, preapproval for a $300,000 loan means buyers will have to put down $60,000 to meet the 20 percent down payment threshold. In that example, buyers can put down less than $60,000, but they will then have to pay PMI. It’s important for buyers to understand that a down payment is not the only costs they will have to come up with when buying a home. Closing costs and other fees will also need to be paid by the buyers. • Examine monthly expenses. Once buyers learn how much mortgage they will qualify for, they will then see how close they are to buying a home. But prospective buyers of all means can save more each month by examining their monthly expenses and looking for ways to save. Buyers can begin by looking over their recent spending habits and then seeing where they can spend less. Cutting back on luxuries and other unnecessary spending can help buyers get closer to buying their next home. • Avoid risky investments. Some times it’s great to take risks when investing, but risk should be avoided when saving for a down payment on a home. Traditional vehicles like certificates of deposit, or CDs, and savings accounts can ensure the money buyers are saving for their homes is protected and not subject to market fluctuations. Saving enough to make a down payment on a home can be accomplished if buyers stay disciplined with regard to saving and make sound financial decisions.
6 | Friday, March 24, 2017
Traditional IRAs vs. Roth IRAs
Adequate retirement planning can set men and women up to enjoy their golden years however they see fit. Getting to retirement with enough money takes discipline and commitment and may require some sacrifices along the way. “Retirement planning” is an umbrella term that covers various types of financial products and investments. One of the products prospective investors are likely to hear about when mulling their retirement investment options is an Individual Retirement Account, or IRA. An IRA is a personal retirement savings plan that can provide tax benefits to those who qualify. When speaking with a financial planner or exploring options on their own, prospective investors will hear about Traditional IRAs and Roth IRAs and wonder what distinguishes one from the other. The following breakdown can help investors understand those differences with the hopes of finding the best option for them. Contributions Contributions to Traditional IRAs are pre-tax, and they may be tax deductible depending on the account holder’s income and other factors. Contributions to Roth IRAs are made with posttax income and are not eligible for tax deductions. Taxes on distributions While men and women about to open an IRA likely won’t have to worry about distributions for quite some time, it’s important that prospective account holders know that, according to Prudential, Traditional IRA account holders will pay federal taxes on their account’s investment earnings and on pre-tax contributions when money is withdrawn. Roth IRA account holders will not pay federal taxes on withdrawals, including their investment earnings, if they
meet certain eligibility requirements. Prospective investors should know that there are tax penalties for account holders who withdraw money from their Traditional or Roth IRAs before they reach age 591⁄2. Exceptions to that rule should be discussed with a tax or accounting professional. Income requirements In order to open an IRA, whether it’s a Traditional or Roth IRA, prospective account holders must have earned income, such as wages, salaries or income from self-employment. Men and women who do not work can still open an IRA, but only if their spouse is employed and the couple jointly files their tax return. There also may be income limits depending on which type of IRA an investor chooses. There are no income limits attached to Traditional IRAs, but account holders’ ability to deduct contributions from their income may be limited if their spouse is eligible to participate in an employer-sponsored retirement plan. There are income limits associated with Roth IRAs. Account holders’ adjusted growth income must be below certain limits depending on their tax filing status (i.e., filing single or filing jointly with a spouse). Distributions and age The Internal Revenue Service notes that Traditional IRA account holders must begin taking distributions by April 1 following the year in which they turned 701⁄2 years of age and by December 31 in future years. No minimum distributions are required for Roth IRA account holders. Understanding the various types of IRAs can be difficult. Prospective investors who need help navigating their retirement planning should not hesitate to contact financial planning professionals.
Friday, March 24, 2017 | 7
How to get and keep your finances in order In 2015, analysts with the Government Accountability Office found that the average American between the ages of 55 and 64 had accrued roughly $104,000 in retirement savings, a shockingly low figure that would make it very difficult for men and women nearing retirement to maintain their quality of life into their golden years. Things don’t look much better north of the border, where the 2015 Global Investor Pulse Survey from the asset management firm BlackRock found that the average Canadian in the same age group had amassed an average of just $125,000. While many people fear retiring with small nest eggs, that fear has apparently not been enough to inspire men and women to commit to saving more money for their golden years. But retirement
saving is essential, especially since life expectancies are rising. According to the United Nations Department of Economic and Social Affairs, global life expectancies at birth are expected to rise to 76 years by the mid-21st century. That’s a far cry from the mid-20th century, when global life expectancy from birth was roughly 48 years. Longer life expectancies mean men and women will have to find ways to make their money last throughout their retirement. The earlier adults figure out how to keep their finances in order, the more money they will have when the time comes to retire. The following are a handful of strategies men and women can employ to rein in their finances in the hopes of saving more for retirement. • Review your finances at
least once per month. Hectic schedules or fear of the financial unknown make it easy for adults to ignore their finances for long stretches of time. But adults should review their financial situation at least once per month, examining how they are spending their money and if there are any ways to cut costs and redirect dollars going out into their retirement accounts. Redirecting as little as $100 per month into a retirement account can add up to a substantial amount of money over time. • Pay monthly bills immediately. Many adults receive monthly bills for utilities, rent/ mortgage, phone, and television/Internet. If you have the money in your account, pay these bills the moment you receive them. Doing so is a great way to avoid overspending on other items, such as
dining out or shopping trips, and then finding yourself scrambling to pay bills come their due dates. Once all the monthly bills have been paid and you have deposited money into your savings/retirement accounts, then you can spend any leftover money on nights out on the town or new clothes if you feel the need. • Buy only what you can afford. It sounds simple, but many adults would have far more in their retirement accounts if they simply avoided buying items they cannot afford. According to a 2015 Harris Poll conducted on behalf of NerdWallet, the average credit card debt per indebted American household in 2015 was $15,762.07. Adults who want to get their finances in order and start saving more for retirement should put the plastic away and only make
purchases with cash or debit cards that take money directly out of their bank accounts once the card is swiped. • Downsize. Downsizing is another way to free up more money for retirement savings. Empty nesters can save money by downsizing to a smaller home or even an apartment. Drivers who no longer need room for the whole family can downsize from SUVs or minivans to smaller, more fuel-efficient vehicles. Adults also may be able to downsize their entertainment, switching from costly cable packages to basic plans or cutting the cord entirely and subscribing to more affordable streaming services. Getting a grip on spending can help adults save more for retirement and ensure their golden years are not compromised by lack of funds.
Have we got a tool for you...
A Home Equity Line Of Credit, to make those ideas you have a reality.
Call or come by at either our Pembroke or Narrows locations for more details on a Home Equity Line Of Credit.
Narrows 921-2700
u
Pembroke 626-2700
u
celcofcu.org
8 | Friday, March 24, 2017
We believe in local banking. Ask us about Community Free Checking.
9 branches in Mercer, Monroe, and Tazwell Counties. 45 branches throughout West Virgina, Virginia, North Carolina, and Tennessee.
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Community Bank Your First Financial Resource
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