05/15/2017

Enjoy Your Summer Vacation — Without Maxing Out Your Credit Cards

By Eric Jorgensen

Learn more about Eric on NerdWallet’s Ask an Advisor

School is out, and summer is upon us. It’s time to let loose and have some fun. That sounds great in theory, but it can be horrible for our finances if we aren’t careful — especially when it comes to taking summer vacations.

For many people, travel is a significant part of their summer budget, but reckless spending while on vacation can wreak havoc on their finances. People often spend more when on vacation, perhaps because they get caught up in the moment or simply because things are more expensive than at home.

So what can you do this summer to make sure you don’t end up with a financial hangover, wondering where the money went or how the credit card bills got so high? Here are a few tips to help you enjoy your summer vacation without derailing your finances. [external link disclosure]

Make a plan 

It helps to start with a plan for your summer vacations. You don’t have to rule out spontaneity entirely, but having an overview of when and where you’d like to go, what you’d like to do and how much it will cost gets you started off on the right foot.

You can also do some research to identify deals ahead of time. Many hotels offer discounts during offseasons, and some airlines have lower fares when you fly during off-peak times. Services like Airbnb offer competitive prices for lodging and may help you reduce expenses if you eat some meals in instead of going out.

Set up a ‘fun fund’

With a plan in place, you can start saving for your trip. Creating a separate “fun fund” helps cement why you’re saving the money and can help you keep your eye on the big prize when lesser temptations, like a new TV, arise.

To determine how much you need to save each month, divide the cost of the trip by the number of months you’ll be saving. Major trips, such as to a Disney location or overseas, may require significant planning and a longer time horizon to save. For instance, taking a $6,000 trip every three years would require you to save around $170 a month. If you wanted to do this more frequently, you’d have to save even more.

If “staycations” or weekend getaways are more your speed, you may not need to save as aggressively or as long. You can build these trips into your spending plan by setting aside an extra 5% or 10% from your check each pay period.

You can also get the whole family involved by encouraging your children to set aside a portion of the money they receive from birthdays and allowances for parent-free spending while on vacation.

Know your limits

Set a daily spending budget for your trip and don’t exceed it. Include what you’ll spend on food, activities, lodging and anything else that might come up. You can also get your children involved in the planning, having them participate in the family’s budgeting. Even young children will benefit as they are exposed to responsible spending.      

But remember, setting these spending limits means being realistic. If you have to budget $500 a day for a five-day trip because you plan to eat at restaurants for every meal and you want to bring souvenirs home to friends and family, so be it. It’s more important to be realistic about what you’ll spend and to save for it than it is to convince yourself you won’t spend much and go two or three times above what you budgeted.

Stay disciplined

Once you’ve settled on how much you’ll spend, stick to it. It’s easy to talk yourself into not counting little purchases like a coffee here or mouse ears there, but those little purchases add up and can have a significant impact on your vacation fund. Give yourself a 3% to 5% buffer in your budget for the “Oh, that’s so cute” and “Man, I just need to have that” moments — we’ve all had them.

With practice, you’ll get better at estimating how much you’ll need each day, but having a cushion can help in case you underestimate.

Have fun

Most of us aren’t going to plan a vacation down to the minute, but with money saved up in a “fun fund” and a cap on your daily spending, you can enjoy yourself and avoid maxing out your credit cards.

Eric Jorgensen is a fee-only financial planner with MainStreet Financial Planning in Silver Spring, Maryland.

The article Enjoy Your Summer Vacation — Without Maxing Out Your Credit Cards originally appeared on NerdWallet.

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03/20/2017

Key Tax-Preparation Tips to Cut Stress

Although it comes around every spring, tax season tends to inflict the same headaches year after year. To reduce your stress — and maximize your refund — it’ll help to stay organized and be aware of recent changes to the tax code.

For additional motivation to get on track, keep in mind that the average refund has been about $3,000 in recent years. Even if you don’t expect to get that much back, there are plenty of ways to put a refund to good use. But first, you’ll have to file your returns properly, taking advantage of any deductions you might qualify for. Here’s a look at where to get started.

Compiling the necessary information

For starters, you’ll need your W-2 form listing earnings and tax withholdings, which employers typically send out in January or early February. Be sure to have your Social Security number or taxpayer identification number available, as well as those numbers for any dependents you’ll claim. You’ll also need documentation of any income they may have had.

Affordable Care Act penalty

The 2010 Affordable Care Act ushered in one of the most significant tax law changes in recent years. It stipulates that if you didn’t have health insurance for more than three months in 2015 and didn’t qualify for an exemption, you may face a penalty. [external link disclosure]

For tax year 2015, taxpayers who lack adequate insurance may be penalized at either 2% of a portion of their income or $325 per adult and $167.50 per child, to a maximum of $975 per family — whichever is higher. Those fees are set to increase in upcoming years, which means it’s a good idea to get insured as soon as possible[external link disclosure]

Tax deductions reduce taxable income

Deductions reduce the amount of your income that you have to pay taxes on. Sit down and figure out whether the standard deduction or itemized deductions will work best for you. The former is a set amount that reduces your taxable income depending on your filing status; the latter lets you list qualified expenses separately, such as mortgage interest and local property taxes. If your itemized deductions add up to more than your standard deduction amount, go with that.

So what kinds of expenses can you deduct? Contributions to eligible organizations and interest on education loans are among the more well-known deductions you can take. Others, such as medical and home office expenses, aren’t as widely used for various reasons. Make sure to look into which of your expenses you can use to reduce your taxable income, which will probably increase your refund. Bear in mind that income limits and expense thresholds may limit these deductions or eliminate them entirely. [external link disclosure]

If you qualify to contribute to a traditional individual retirement account, or IRA, you may be able to shield up to $5,500 of income from taxes — plus $1,000 more if you’re 50 or over — by putting it in an IRA. You have until April 15 to make deductible contributions for the previous year. Withdrawals are subject to income tax, however.

Also, if you’re in a same-sex marriage, stay alert for further changes in the rules governing your tax status and other financial issues.

The bottom line

Completing your tax returns won’t be much fun, but it’s the first step in claiming a refund. Once you’ve filed your returns, you should expect to get what you’re due within three weeks — or in less than half that time if you ask for the money to be directly deposited to a savings or checking account. Just remember to compile all the essential paperwork before getting started, keeping an eye out for tax credits and changes to the tax code. [external link disclosure]

© Copyright 2016 NerdWallet, Inc. All Rights Reserved [external link disclosure]

02/22/2017

Keep Your Budget in Mind When Planning a Vacation

Vacations don’t have to be expensive to be memorable and fun.  Here are some suggestions to plan a successful vacation.

Create a vacation budget

Decide how much money you can afford to spend on a summer vacation.  Start by updating your monthly budget. Review your income, expenses, and debt obligations and be sure to set aside money for emergencies.  Then decide how much you can direct towards a summer vacation.  Add up the total estimated costs of your trip in advance, before making final plans.  Then, put away money each month into a savings account.

Involve your family

Once you’ve determined how much money you can afford for a vacation, decide how best to spend it.  Include your family members to decide on where to go and what to do.  If your budget is limited, consider an at-home vacation like a grand picnic with families, friends and neighbors.  You could also host a pool party at a local pool or visit tourist attractions in your area.

Research your vacation options

Use the internet to get information on sightseeing, tourist attractions, and discount travel and lodging.  Ask travel agents for information on seasonal discounts.  Read the latest travel guides available online, in newspapers, and through local visitor and tourism associations.  Get advice from friends and relatives who’ve traveled to places you plan to visit.  They can help direct you to places that are fun and affordable.

Plan your itinerary in advance

Map out your daily activities and routes to ensure that you’re staying on-course and on budget.  Unplanned activities can often amount to unplanned spending.  Before you know it your budget will be busted.

Have a credit plan

Check credit card balances on your accounts well before you travel.  Make sure they are paid off or under half the limit that you can charge.  Credit cards are helpful on the road.  They’re safer than cash because they can be replaced if lost or stolen.  They can make it easy to overspend, though, so be sure to limit your charges to budgeted expenses.  Also, limit credit card cash advances.  This is expensive cash because you could be assessed a flat fee and charged interest as of the date the advance is taken.  If you need cash, use your ATM or debit card instead.  Only use one or two credit cards and be sure to keep all receipts and record your charges in a ledger.  When you return home, pay off the credit card charges using the money that you saved for the vacation.

If you would like to discuss your vacation budget with someone, you can take advantage of the GreenPath Financial Wellness program, a free financial education and counseling program of Wakota FCU.  GreenPath counselors are available Monday through Thursday 7 a.m. to 9 p.m. (CST), Friday 7 a.m. to 6 p.m. and Saturday from 8 a.m. to 5 p.m. To use this new service, simply call 1-877-337-3399 or visit them on the web at www.greenpathref.com.

02/21/2017

7 Ways to Protect Your Identity While on Vacation

Summer vacation season is here, and if you’re traveling far from home, you probably want to do all you can to make sure your wallet or purse doesn’t end up in the wrong hands.  But according to a recent Experian ProtectMyID survey, 30% of travelers have experienced identity theft while away from home or know someone who has.

It’s best to take steps now to keep control of your sensitive information.  Here are some ways you can take to protect yourself on your next trip.

1. Sign up for bank fraud alerts.

Gary Devan of San Diego says he signed up to receive texts from his financial institution so that he’d be immediately notified of unusual or suspicious activity in his accounts, like unusually large purchases.

“If alerts are available on your accounts, you can receive them even while on vacation,” he says.

Devan has good reason to want to avoid an account breach — he happens to be the chief information officer where he banks, Mission Federal Credit Union. He hasn’t experienced any noteworthy issues, but says the fraud alert service gives him peace of mind while traveling.

2. Be careful surfing on public Wi-Fi spots.

Hackers may be able to access public networks and see any information you send over them, including bank account numbers, logins and passwords, says Jason Glassberg, co-founder of Casaba Security, a computer security firm in Redmond, Washington.

Glassberg suggests skipping Wi-Fi while traveling, unless you use a virtual private network.  “If you don’t have a VPN, stick with a cellular signal, as it’s much safer,” he says.  “For a laptop, you can hotspot your phone to connect over cellular.” [external link disclosure]

Cellular text-messaging and VPNs are good alternatives, but the reality is, you may still choose to use public networks to surf the Web, especially if you’re not sending sensitive data over Wi-Fi. If that’s the case, it’s a good idea to set your device to forget that network when you log off.  That way, it won’t automatically log back on to it the next time you go online.

3. Install phone-tracker software.

If your device goes missing, you may be able to use “find my phone” or similar software to pinpoint its location and retrieve it. If that’s not possible, some apps could erase all the data on the device, so it won’t get into the wrong hands. Another way to help prevent data theft is to lock the screens on your electronics.

4. Keep your purse or wallet secure.

If you carry a handbag, try to keep it in front of you, so it’s not an easy mark for thieves.  If you have a wallet, try to secure it as well. “I keep mine in a zipped pocket or travel pack,” Devan says.

Another idea is to wrap the wallet in a rubber band or other coarse material so that it won’t easily slide out of your pocket.  In addition to securing your belongings, it’s also a good idea to be aware of your surroundings and try not to become distracted.

5. Be careful around ATMs.

“Look at them before you swipe. Check for loose housing, exposed wires, bulkiness and anything that looks out of ordinary,” Glassberg says. Those are all signs that a thief may have installed a skimmer on the machine, which could lift the data from your card, he says.  Also, try to use a bank branch or merchant you trust when withdrawing cash. [external link disclosure]

6. Watch out for fake front desk calls.

Say you’re staying in a hotel and someone calls your room, says he’s from the “front desk” and needs to verify your credit card number. Don’t think you have to share your information immediately. You could say you’ll call back and thenhang up. Then, you can call the front desk using the number you have in your records and ask the staff if they really need this information. If not, you may have just avoided an identity theft attempt.

7. Leave your important financial files at home.

Social Security cards as well as credit and debit cards that you don’t plant to use on the trip can stay behind. The fewer sensitive documents you have, the fewer chances that they could be stolen.

Despite your best efforts, if you find that your identity has been stolen, it’s important to report it quickly to your financial institutions and the local police. [external link disclosure]

Your summer vacation should be a time for relaxation, so take steps now to avoid crossing paths with a thief or hacker. By using these tips, you could lower the odds of having your identity stolen and boost your chances of having more fun in the sun.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette

This article originally appeared on NerdWallet.

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01/04/2017

Organize Your Finances for the New Year

A new year brings a chance to start fresh with just about anything. If your midnight toast includes a resolution to improve your financial health, here’s how to make it happen.

Get on a budget

To get ahead, it’s important to know where you stand and to create a plan with realistic goals such as a comfortable retirement, education and home ownership. Budgeting may sound old-school, but it’s still one of the best ways to accomplish this. Start by totaling your income and subtracting your monthly expenses for a quick financial snapshot. Then set goals, reduce unnecessary spending and, if the situation calls for it, explore ways to increase your income. [external link disclosure]

Budgeting doesn’t have be time consuming or complicated. Downloading a budgeting app to your smartphone lets you track spending and financial progress effortlessly in real time. To take the work out of saving toward your goals, you may also want to sign up for an automatic plan that electronically deposits an amount you choose from your paycheck or checking account into your savings account at regular intervals.

Prepare for the unexpected

Life can throw you some scary curveballs. Challenges like job loss, medical issues or property damage can leave you drowning in debt for years if you’re not prepared. That’s why it’s essential to build an emergency fund that can cover at least three to six months of living expenses. Even if you can save only a little each month, with consistent deposits and compound interest you can eventually grow a sizable protective cushion. [external link disclosure]

Break free of debt

Making just the minimum payments on major debts means you’re paying mostly interest and barely even chipping away at balances. One effective approach for eliminating debt is to concentrate your efforts on your highest-interest balance first, while still making timely smaller payments on all other obligations. Once this first debt is paid off, focus on the most expensive remaining balance, and continue this way till you’re debt free.

When multiple debts are truly out of control, debt consolidation may provide some relief. This makes it easier to pay off debt faster and more affordably by streamlining multiple debts into one single lower monthly payment. Debt consolidation options include home equity financing, personal loans and zero-interest credit card balance transfers.

Maximize tax deductions

Researching tax deductions and gathering appropriate documents can help you avoid paying more tax than absolutely necessary. You may qualify for tax breaks including:

  • Interest deductions for mortgages, home equity financing, business financing, student loans and loans for boats with living quarters.
  • Deductions for other taxes paid, including sales tax, foreign taxes and self-employment tax.
  • Home office and business insurance deductions.
  • Deductions for monetary and nonmonetary charitable gifts.
  • Pre-tax contributions to traditional IRAs and 401(k) plans. [external link disclosure]
  • Lifetime learning credit.

Re-evaluate your investments

Life conditions change over time, so it only makes sense that investment and retirement accounts should be adjusted periodically. In early years, it’s beneficial to favor an aggressive mix of securities, but as retirement approaches, gradually shift toward more conservative choices like bonds, CDs and mutual funds. It’s also smart to examine your estate plan and make sure your will, insurance policies and beneficiaries are up to date. [external link disclosure]

Financial housecleaning kicks off the new year just right. Over time, things that seemed out of reach become affordable, and every unexpected expense won’t seem like the end of the world. This change may be gradual, but by the next New Year’s Eve toast your improved financial wellness will be something to celebrate.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved [external link disclosure]

How to Avoid the Busy Holiday Scamming Season

You’re not the only one joyfully anticipating the holiday season. Cyber criminals are all aflutter, too, as they look forward to the killing they’ll make ripping off innocent shoppers like you. Here are some of the most common ways these thieves operate, because awareness can help you avoid becoming yet another victim. [external link disclosure]

Antisocial media

Beware those enticing ads that turn up on Facebook and other social media sites offering vouchers, gift cards and deep discounts, as well as the online surveys these ads often link to. These offers are often only empty promises designed to steal your personal information.

Additionally, if you receive concert, theater or sporting event tickets as a gift, never post pictures of them online. Cyber thieves spend lots of time monitoring social media, just waiting for the opportunity to create phony tickets they can resell from your barcode image. If your ticket is resold, you might just find yourself out of a seat on the night of your event. It’s also unwise to post live from an event that gives criminals a heads-up that your home is empty and ripe for picking. Better to wait until the next day to post about the wonderful time you had.

Pandora’s inbox

It may be a mystery to you how cyber thieves got your private email address, but it’s chillingly clear they’re up to no good. Your inbox may fill up with all kinds of legitimate-looking product offers and delivery notices this holiday season, but clicking on links of bogus ones or entering personal information on the linked sites can provide criminals with the opportunity to steal your identity.

Apps are far from immune

With mobile apps available for just about everything, it’s a sad sign of the times that certain free mobile apps (often disguised as games) have been specifically designed to steal personal information from your phone. This is a particularly scary development since many people use their phones to secure their cars and homes. For this reason, only install apps from familiar companies and, at the very least, find a third-party review from a trusted site if you’re interested in an app from an unfamiliar source.

USB Trojan horses

Lots of people use portable USB drives, which makes it all the more important to avoid those being distributed as giveaways this holiday season unless they’re from a trusted source. These innocent-looking devices are often used as a method of introducing malware to computers.

Gifts that keep on giving … to criminals

A spirit of generosity is traditional at holiday time, but if you’re not careful, your donations may never make it to the needy. Fake charities that skillfully tug at your heartstrings abound at this time of year, just waiting for you to willingly give your hard-earned cash to scammers. Before donating, be sure to check out charities thoroughly, to make sure that they’re not only legitimate, but also that they allocate the bulk of funds toward their causes rather than “administrative costs.” [external link disclosure]

Tips to avoid holiday scams

These strategies will also help keep you a step ahead of scammers:

  • Only shop online with reputable businesses you trust, using secure websites with an address that begins with https.
  • Don’t shop or bank over public Wi-Fi.
  • Protect your credit card privacy by covering your account number with your hand when shopping in public. [external link disclosure]
  • Don’t respond to suspicious unsolicited calls or emails. Only open email attachments from senders you trust, and contact businesses only through their official websites, phone numbers or email addresses.
  • Monitor your credit to catch fraud at its earliest stages. [external link disclosure]

Scammers may be smart, but you can still outsmart them. A little foreknowledge and caution go a long way toward ensuring you’ll enjoy a safe and memorable holiday season.

© Copyright 2016 NerdWallet, Inc. All Rights Reserved [external link disclosure]

When to Consider a Home Equity Loan

Are there things you’d love to do if only you had a little extra cash? A home equity loan puts the equity you have in your home to work for you. Here’s how to decide if this option is right for you. [external link disclosure]

Home Equity Loans 101

A home equity loan is a type of second mortgage that uses your home as collateral. You may be able to borrow as much as 80% of your home’s equity, and you’ll receive the money as a lump sum. You’ll have about 10 to 15 years to pay back your loan and interest, although some financial institutions may offer longer or shorter terms. Annual percentage rates tend to be fixed, which means payments won’t change over the life of the loan. Because a home equity loan is secured by your home, the interest rates tend to be low. [external link disclosure]

How can I use a home equity loan?

Since there are no restrictions on qualifying expenses, you can spend this money any way you like. Perhaps you want to consolidate debt, make some home improvements or help your kids with college expenses. A home equity loan can also be a lifesaver if you’re dealing with an unforeseen emergency.

Benefits of a home equity loan

Home equity loans offer a number of advantages over other types of financing:

  • Predictable budgeting: Fixed interest rates ensure that your monthly payments will never increase.
  • Low APRs: Interest rates tend to be lower than for most other loan options, which gives you more affordable payments as well as considerable borrowing power.
  • A tax break: In most cases, your interest will be tax deductible. [external link disclosure]

Important considerations

Before committing to a home equity loan, it’s important to understand the risks. Because your home is securing this loan, if you can’t make the payments, you could lose your home. Additionally, if the housing market falls sharply, you may end up owing more than your home is worth. [external link disclosure]

Is a home equity loan right for me?

Home equity loans are best suited for major one-time expenses such as consolidating debt, building a home addition, remodeling a kitchen or bath or covering an emergency repair or replacement. If you’re dealing with multiple expenses that will be ongoing, a home equity line of credit might be a better choice. A HELOC lets you borrow just what you need at the time you need it. In either case, home equity financing makes sense only if you have a secure and stable income and are confident you’ll be able to make timely payments over the entire financing term. [external link disclosure]

With interest rates still holding at near historic lows, there’s no better time to explore home equity financing. Financial institutions like Wakota Federal Credit Union offer both home equity loans and lines of credit with competitive rates and terms. You can even make payments online, so staying current doesn’t have to interfere with your busy schedule. [external link disclosure]

Roberta Pescow, NerdWallet [external link disclosure]

© Copyright 2016 NerdWallet, Inc. All Rights Reserved

11/24/2015

7 Ways to Protect Your Money and Identity During the Holidays

Shoppers will swarm stores and the Internet during the holidays. Joining them will be thieves who are waiting to steal their money and identities. According to Javelin Strategy and Research, 12.7 million American consumers lost $16 billion due to identity fraud in 2014.

During the holidays, thieves want to take advantage of your potential to be distracted by your lengthy to-do list. Here are seven ways to protect yourself when you shop online and in stores.

  1. Look at your credit card and checking account activity frequently during the holidays to be sure there have been no unauthorized charges. Yes, you have a million things to do besides your regular chores, but logging on to your financial sites once a week only takes a minute and can head off any problems. You should also check your credit report for free [external link disclosure]at least once a year. Why not do it today?
  1. Be careful about using public Wi-Fi [external link disclosure]to shop or to connect to your bank or credit union’s website or app. Your personal details like passwords are vulnerable when you connect to public Wi-Fi. If you must use public Wi-Fi, turn off the sharing option on the control panel of your mobile phone and turn off Wi-Fi when you’re not using it. And remember to enable the four-digit security code on your phone.
  1. Don’t click on links in emails, especially those that claim to be from your bank, credit union or credit card issuer advising you of a “problem” with your account. Phishing [external link disclosure]emails proliferate during the holidays. If you get an email of this type, call the bank or credit union to be sure that it’s authentic.
  1. Make sure an online shopping site has the padlock image and https in the URL. You may find the perfect gift for Aunt Lucy on a site you’ve never used. Before you input your credit card information, check the web address and look for the SSL security symbols.
  1. Only carry the credit and debit cards you need when you go shopping; leave the others at home. It’s also better to put your purchases on a credit card, not a debit card — it’s easier to fix if there’s an unauthorized charge. Some financial institutions, such as Wakota Federal Credit Union in Minnesota, have the “Verified by VISA” program attached to their credit and debit cards. You set up a password when you enroll and use it each time you make a purchase.
  1. Beware of offers that promise a discount in exchange for opening a credit card. You’ll have to write personal information, including your Social Security number, on a piece of paper, and your identity could be compromised.
  1. If your credit card or other personal data is compromised, freeze your credit file with Equifax, Experian or TransUnion, the major credit bureaus. A credit freeze means no one, including you, can apply for new credit. The next time you apply for credit, you’ll have to inform the credit reporting agencies that you want the freeze lifted.

By taking the appropriate precautions, you can make sure that holiday joy doesn’t turn into the January headache of dealing with identity theft.

Ellen Cannon, NerdWallet [external link disclosure]

© Copyright 2015 NerdWallet, Inc. All Rights Reserved 

People Helping People

The credit union movement began 160 years ago with a simple but radical idea. That with the help of your neighbors, you can improve your financial well-being.

This idea spread across the world, and credit unions flourished, especially during times of economic hardship.

During the Great Depression, scores of ordinary Americans—farmers, teachers, small business owners—found themselves without access to banking services, so they banded together to become their own not-for-profit financial institution. Credit unions opened in record numbers.

During the recent Great Recession, again credit union memberships swelled. Today there are more than 200 million credit union members worldwide—100 million of them in the U.S.

But even after all this time, the bedrock principles of credit unions remain unchanged. Credit unions are still:

People coming together to be their own bank, so no one can deny them a path to prosperity.

People pooling their savings to provide each other affordable credit.

People helping people.

To celebrate this powerful movement, join Wakota Federal Credit Union at 1151 Southview Blvd. South St. Paul, MN 55075.

International Credit Union Day Celebrates People Helping People

On October 15, 2015, credit unions around the world will celebrate International Credit Union Day (ICU Day).

Since 1948, on the third Thursday of every October, credit unions have celebrated a simple but radical idea—that by working together, people can improve their financial well-being. “People helping people,” this year’s ICU Day theme, is the foundational philosophy of the credit union movement, going back to the very beginning.

In 1850s Germany, a group of weary workers formed the world’s first credit union. Suffering through an economic downturn and tired of loan sharks exploiting them, they banded together to provide affordable credit to each other. Not-for-profit and governed by and for the people who created them, credit unions not only gave working-class people a way to break a cycle of debt that had bled them of any financial gains. It showed them, for the first time, a path to prosperity.

It’s no wonder then that when economic times are hard, credit unions flourish. Credit union membership swelled during the Great Depression and again during the recent Great Recession. Today, there are more than 200 million credit union members worldwide—100 million of them in the United States.

The World Council of Credit Unions, supported by credit unions in the U.S., works to develop credit unions around the world because they believe that every person deserves access to affordable, reliable financial services. As not-for-profit financial cooperatives, credit unions are governed by their members—one member, one vote. In many countries, credit unions offer people their first true taste of democracy.

“Credit unions must do their part. We must share our knowledge, our experience, and our dreams,” World Council Board Chairman Grzegorz Bierecki said earlier this year. “It is the duty of free people to support freedom.”

At its most basic level, a credit union is people pooling their money to provide each other with affordable loans—a credit union is literally people helping people. This is why we celebrate ICU Day at Wakota Federal Credit Union.  This simple idea empowers people, wherever they are in the world or life, to take control of their own financial future.

So when we wish you a Happy ICU Day at Wakota Federal Credit Union, know that we’re thanking you for belonging to a movement that’s helping your neighbors—and people around the world—grow and thrive and follow their dreams.

If you have any questions about the credit union philosophy or how Wakota Federal Credit Union can help you, stop by or contact us at 651.451.3330.

ICUD

Unclutter Your Home With a Financial Spring Cleaning

Bogged down by mountains of statements, records and bills around your home? A financial spring cleanup will create some more breathing room. Here’s what to do to get that mess under control.

Divide and conquer

Separating documents into those retained forever, records held temporarily and papers to be trashed immediately simplifies the job of cleaning up:

Shred and toss these documents today:

  • Pay stubs reconciled with W-2s
  • Income tax records over seven years old
  • Owners manuals for items no longer owned
  • Expired warranties

Retain these records indefinitely:

  • Birth certificates
  • Social Security cards
  • Valid passports
  • Legal or bankruptcy filings
  • Marriage or divorce documentation
  • Proof that mortgages and other loans have been satisfied
  • Records of IRA contributions and withdrawals
  • Family health and education records

Here are some recommended time frames for storing remaining paperwork:

  • Income tax-related paperwork: Save tax returns and supporting documents, including income statements and receipts, for seven years.
  • Banking and investment statements: In general, keep for one year. If they support tax filings, keep for seven.
  • Canceled checks: Retain until reconciled with banking statements (or seven years if needed for taxes).
  • Current bills and credit card statements: Hold until reconciled with next statement (or seven years if used for tax filing).
  • Insurance policies: Keep as long as policy is active.
  • Wills: Retain until updated.
  • Property deeds, vehicle titles and receipts for major purchases: Retain as long as item is owned (or seven years if needed for tax filings).
  • Monthly mortgage and loan statements: Hold until reconciled with annual statements or loan is satisfied.
  • Small-business records: Employment tax records should generally be held four years and other business paperwork for three years. Special circumstances, such as certain losses or filing inaccuracies, may make it necessary to hang onto documents longer or indefinitely.

Lighten your load

If paperwork still feels unmanageable, going paperless allows access to records but eliminates paper clutter [external link disclosure]. Opt in for online bill payments and eStatements with utilities, creditors, service providers and financial institutions like Wakota Federal Credit Union. Not only will this simplify your life, it also will reduce waste.

It might seem like drudgery to roll up your sleeves and organize years of paperwork with a spring financial cleanup. But when you discover that important documents are now at your fingertips and you’re enjoying the benefits of an uncluttered home, you’ll be glad you took the time to do it.

Roberta Pescow, NerdWallet [external link disclosure]

04/30/2015

Smart Ways to Use a Tax Refund

When a big pile of cash lands in your lap, it’s natural to want to do something fun with it. And perhaps you can — after you’ve put most of that money to work where you need it most.

Here are some good ways to use your tax refund.

Save it for emergencies

What would you do if you got hit with a $1,000 medical bill or car repair? Setting aside an emergency fund can help you avoid going into debt when unexpected bills crop up. Experts suggest keeping six months’ worth of living expenses in an easy-to-access savings account at a financial institution like Wakota Federal Credit Union. But if you’re carrying a lot of debt, think about starting with a mini emergency fund of $1,000 for now so you can pay off more of what you owe.

Pay down debt

Credit card debt is especially toxic, both because it can exert downward pressure on your credit score and because the typical account has relatively high interest. Paying finance charges can make it awfully hard to reduce balances.

Putting your tax refund toward credit card debt can have a big immediate impact. Your credit score might go up when you reduce your balances. And if you can manage to pay off one card entirely, you’ll be eliminating a monthly payment, so long as you avoid using it.

Look to the future

If you’re like most people, your retirement savings could use a boost. Consider funneling that refund into your 401(k) plan by increasing your contributions, or put it in an individual retirement account, or IRA. Putting the money in a traditional IRA will reduce your taxable income for the year when the contribution is made, making a refund next year more likely. Money put into a Roth IRA, on the other hand, won’t reduce your tax bill in the short term — but both contributions and investment gains can be withdrawn tax-free in retirement.

Change your withholdings

Of course, a big tax refund means you’ve been making an interest-free loan to Uncle Sam all year. Adjusting the amount of taxes withheld from your pay will put the money in your wallet sooner. But don’t forget to do something smart with the extra cash — like increasing your retirement contributions or paying down debts a little faster.

Once you’ve used most of your refund on responsible things, don’t forget to keep a little bit back to treat yourself to a massage or a nice dinner. You deserve a reward for not blowing it all at the mall.

Virginia C. McGuire, NerdWallet [external link disclosure]

01/13/2015 Helping Kids Learn Money Skills Can Be Easy and Fun Teaching kids about money is a huge responsibility, but it needn’t be a daunting task. Here are some easy ways to introduce them to the basics they’ll need to know to  develop healthy financial habits.

Everyday opportunities Daily events present countless teachable moments.

  • Tempting toys: Talk about saving for bigger goals rather than buying on impulse.
  • Large purchases: Discuss how satisfying it is to reach savings targets.
  • Unplanned expenses: A broken microwave oven can open up a conversation about setting money aside for emergencies.
  • Using credit: Explain that you’re borrowing money when you use a credit card, and it’s not free.
  • Using cash machines: Make clear the money you’re withdrawing went into your account earlier, so what you can take out is limited.

Learning at every age Fun, age-appropriate activities help kids grasp key financial concepts and skills. Here are some ideas:

Preschoolers These youngsters can learn what different coins are called and that money is used to buy things or pay for services. Playing “store” lets them experience how to “buy” goods using pennies, nickels, dimes and quarters. Give little ones a small allowance and explain the difference between wants and needs. By age 5, children can understand currency values. Letting them clip coupons with you can help teach them about saving money while spending.

Grade-school kids Giving kids separate jars to hold money for everyday spending, savings for large items, investing for the future and giving to others helps them understand the many uses of income. Encourage them to create savings goals by writing down things they want and the cost. Taking youngsters with you to a bank or credit union can introduce them to banking concepts. As your child begins to accumulate cash, a financial institution like Wakota Federal Credit Union can help you open a youth savings account that makes it fun with rewards and even birthday prizes.

Middle-school kids Older children can learn comparison-shopping when you explain how you shop and evaluate the difference in prices based on quantity, brand and quality. Kids also benefit from being on the other side of the coin and hosting a garage sale. They’ll love setting prices, bargaining with customers, making change and, of course, turning a nice profit. Begin to include kids in family financial discussions. They can grasp the idea of everyday living expenses such as food, gas and utilities, as well as long-term savings goals like a special vacation or new refrigerator. This is also a time to explain how money in certain types of accounts earns interest.

Teens As your teenager begins working and driving, help him open a fee-free checking account to manage his expenses. A debit card for the account offers the valuable experience of shopping with plastic. You may also want to discuss the risks and the advantages of credit cards. Introduce teens to advanced concepts such as investing and long-term savings through examples like individual retirement arrangements (IRAs) and encourage them to try their hand at fantasy investing.

Take advantage of tech Let’s face it: It’s more fun to play games online than to listen to a lecture about money, and some games are surprisingly effective in teaching financial concepts and skills. Here are a few your kids might enjoy:

D2D Games

Rich Kid Smart Kid

Savings Spree

The Mint

By combining real-life experience with technology, your kids can develop money skills and habits to last a lifetime.  [external link disclosure]

Roberta Pescow, NerdWallet  [external link disclosure]

01/13/2015

Budgets Can Free College Students From Money Distractions

Going off to college often is the first chance teens get to experience handling money on their own. Although this freedom is exciting, many students quickly find themselves broke and asking their parents for a bailout. Here’s how to set up a budget for one that works, and how to stick to it.

Creating a budget

Drawing up a budget isn’t as complicated as it might sound. Start with a family meeting to clarify which expenses will be covered by parents and which by the student. The latter category might include movie tickets, late-night pizza and coffee. Those living off campus might receive a parental allowance to cover rent and some groceries.

Once everyone is on the same page, add up all sources of the student’s income, such as part-time jobs, financial aid or an allowance. Then total expenses that fall to the student to cover. Subtract those costs from income and calculate how much cash is available to spend in a set time frame: weekly, monthly or per semester. Although every situation is unique, experts suggest that those students who are covering most expenses themselves allocate 70% of the budget to living costs, 20% to saving for the unexpected and 10% to pay everyday bills.

The tech advantage

Tracking spending is half the battle of sticking to a budget. To stay organized, take advantage of financial websites and apps, many of which are free to use. Financial institutions such as Wakota Federal Credit Union offer clients online services that can make account monitoring, paying bills and other actions easier to accomplish. [external link disclosure]

These free apps can also serve as good money-management tools: [external link disclosure]

  • Mint: Designed for iPhone, Android and Windows phones, this app links to bank, credit card, loan and investment accounts to track activity. You can use it to set up a detailed budget with specific spending categories and get tips on smarter ways to do things. Mint also sends alerts when bills are coming due or when an account balance gets too low. A particularly nice feature for new credit card users is that the app compares balances with available cash to help prevent users from getting in too deep.
  • Level Money: Students overwhelmed with new responsibilities might especially appreciate this free smartphone app that simplifies budgeting. Instead of separating expense categories, it tells you how much available cash you’ve got on hand and how it’s allocated under your spending plan for the coming month. Just link it to your accounts and set savings goals.
  • LearnVest: This app for iOS devices links to accounts and files purchases into category folders to help track spending. You can set a separate budget for each folder and know what needs to be set aside for clothing, textbooks, entertainment and other college expenses. Users also get access to lots of relevant articles and information.

A number of excellent low-cost budgeting apps also work well for those with limited cash. These include Budgt ($1.99, for iOS), which is designed especially for college students with small incomes, and Spendee ($1.99, for iOS and Android devices). Good planning and a little help from technology to stick with the program can result in worry-free budgets that let students focus on learning, living independently and having memorable college experiences without the distraction of money worries.

Roberta Pescow, NerdWallet [external link disclosure]

01/13/2015

How to Choose a Credit Card That Best Suits You

With thousands of credit cards to choose from, you may have trouble determining which piece of plastic fits best in your wallet. Don’t be swayed by celebrity endorsements or interest rates alone. Whether you simply want to rack up rewards or need help funding a big purchase, it’s important to consider the following factors when picking a credit card.

Introductory offers

Credit cards often feature introductory offers to entice consumers. With rewards cards, you’re likely to see sign-up offers for thousands of free bonus points or miles. The catch: There’s always a minimum amount you must spend in a certain time period to qualify. Read the fine print to ensure you can meet the spending requirement, and don’t load up on unnecessary credit card debt just for bonus points.

Another common introductory offer is 0% interest on purchases (and sometimes balance transfers) for a limited time, usually from six to 18 months. If you’re tempted to apply for one of these, read the disclosures so you know what the regular rate will be afterward.

Interest rates

If you think you may carry a balance, look carefully at the interest rate on purchases. If you want to transfer a balance from a high-interest credit card to one with a low rate, also pay close attention to the rate charged on transferred balances, as it may differ.

Rewards programs and restrictions

Rewards-seekers should get familiar with the different types of rewards cards available. There are cash back cards, general points cards and travel cards, including some that earn miles that can be redeemed on any airline and others that are airline-specific. Think carefully about which type of reward program will benefit you most. Travel cards that earn frequent-flier points may look intriguing, but if you don’t travel often, you may be better off with a cash back or general points card. You should also read the fine print to familiarize yourself with restrictions, such as point caps, category limits or blackout dates.

Annual fee

An important factor to consider when comparing cards is the annual fee, which can range from nothing to hundreds of dollars. Many cards that charge an annual fee waive it for the first year to persuade you to sign up, but it can come as a shock once it kicks in. The cards offering the richest rewards often carry a fee, so do some math to determine whether you’ll really spend enough to earn more in rewards than you’ll pay to have the card, or at least break even. For example, if you pay $100 each year but can spend only enough to generate $75 cash back annually, it may not be such a good deal. On the other hand, if you can use points to score a free $300 flight, it may be worth it. Financial institutions like Wakota Federal Credit Union can help you sort through the options.  [external link disclosure]

Other costs

There are a few other fees to consider. If you plan to transfer a balance from a high-interest account to a lower-interest card, check to see whether it will cost you anything. This is usually calculated as a percent of the amount or a minimum dollar cost, whichever is more. Frequent international travelers should also consider foreign transaction fees; not all credit cards have them, but those that do tack on a percentage of every purchase made in a foreign currency. You should also see what the late fees are in case you miss a due date.

Comparing credit cards can take some time, but weighing all of these factors is important if you want to find the right card for your financial goals and needs.

Emily Crone, NerdWallet  [external link disclosure]

12/19/2014

How to Set Financial Resolutions You Can Reach

If you aim to make 2015 the year you attain certain monetary goals, start by making some plans. If you fell short of meeting the past year’s resolutions, don’t be discouraged. Often the reason people fail stems from a flawed process. This year, follow these steps to create effective financial objectives:

Set actionable goals

Outline specific the objectives you want to achieve, how they can be met and when. Don’t set goals that are nearly impossible to reach or too vague to act upon. Your plans could be as simple as setting aside an extra $50 a month to save up a holiday shopping fund for next season, or putting an extra $1,000 aside for retirement by the end of the year.

Follow your plan

Consider what it will take to succeed to ensure each goal you set is attainable. For example, if you want to save $50 a month, do you have enough coming in to set up an automatic transfer into a savings account? Can you cut expenses, such as making your own coffee each morning instead of buying it in a store? If the plan seems out of reach, adjust accordingly. [external link disclosure]

Monitor results

Track your progress. For short-term objectives, check how you’re doing every week. For longer-term goals, such as saving for a house down payment or setting aside a retirement nest egg, monthly or quarterly reviews may be enough.

Visualize success

Write down a summary of each goal and the plan to reach it in a notebook that can also be used to record your periodic checkpoints. Maintaining a vision of what it means to succeed can help keep you on track all year.

If you’re feeling overwhelmed, talk to a representative of a lender like Wakota Federal Credit Union about your situation and the financial goals you’d like to reach. Help with the planning process may be available, including tools like savings and investment accounts. [external link disclosure]

Don’t let past failures deter you. And if it’s any consolation, you’ll have plenty of company. Research shows that about 45% of Americans usually make New Year’s resolutions, but just 8% actually fulfill them. By following the steps above, you can be on your way to joining that 8%. [external link disclosure]

 

Cait Klein, NerdWallet  [external link disclosure]

 

12/19/2014

How to Get a Grip on a Holiday Debt Hangover

As the holiday season winds down, you may find yourself stuck with debt that can produce a nasty financial hangover. It’s easy to go overboard this time of year, but as 2015 begins, it’s time for a financial cleansing. Here are five steps you can take to quickly whip your wallet back into shape:  [external link disclosure]

Face your debt  

Don’t simply hide from your debt load, ignoring how much you spent and paying the minimum due each month. List how much you owe on each account, payment due dates and interest rates.

Make a plan

Set up a budget to tackle the debt. To do this, determine your normal monthly expenses, including rent, utilities, food and other necessities and obligations, like education loan payments. If there’s little or nothing left over, see whether any of those expenses can be reduced. With the remainder, set aside enough to pay more than the minimum due on accounts with the highest interest rates, because those will cost the most in the long run, and at least enough to cover minimums for other debts. [external link disclosure]

Stop shopping

You may be in the habit of shopping for yourself and others during the holiday season, but do yourself a favor and hide the credit cards. Don’t be tempted by sales or extending the seasonal cheer. Instead, return unnecessary gifts or purchases and use the credit to reduce what you owe.

Add income

Getting a side job, generating some income with freelance work or doing things for neighbors like yard clean up or snow shoveling can help you ease your debt burden faster. If adding extra work isn’t feasible, you may be able to sell items in your home.

Find lower interest rates

If you have good credit, you may be able to find credit cards with lower interest rates. You can transfer your balances from higher-rate cards to the lower-rate ones to cut the cost of the debt. Some issuers offer no-fee balance transfers. Others use low-rate introductory periods to attract business. You may be able to take advantage of both. Take fees into account and make sure you can pay off what’s owed before any introductory period ends. [external link disclosure]

Don’t let a financial holiday hangover linger – it will only get worse with time. Feeling overwhelmed? A representative of a local lender like Wakota Federal Credit Union may be able to help you resolve the situation, including taking out a debt-consolidation loan. Setting up a savings account targeted for the 2015 holiday season could help you avoid a similar situation a year from now. [external link disclosure]

Cait Klein, NerdWallet  [external link disclosure] 

12/15/2014

Holiday Budget Tips to Keep You From Sliding into Debt

Holiday spending can really sneak up on you. Before you know it, you’re drowning in debt. It might start with splurging on that high-end iPod your daughter’s been eyeing or a new gaming system for your son. If you’re not careful, you’ll blow your budget in the blink of an eye. Paying off the crust of debt left over from the season of good cheer may take months or even years. To avoid sliding down this slippery slope, here are five easy shopping tips to follow: [external link disclosure]

  1. Set limits

Before hitting the stores, list what you need to buy – gifts, decorations, special foods, everything – and then set a spending limit for all of it. Because it can be difficult to keep track over a full season, consider using a budget app such as goodbudget[external link disclosure]

A prepaid debit card can be a good way to stick to your limit. It’s safer than cash, but you may lose some purchase protection offered by credit cards and the insurance backing for money in savings and checking accounts. Avoid credit cards unless you have enough willpower not to overspend, which is all too easy with plastic.  [external link disclosure]

Sometimes something or someone important is left out. And every so often you’ll see a great deal you can’t pass up. So create a splurge fund. Load this amount onto a separate debit card to save for those moments.

  1. Get creative

Buying toys and electronics for the kids is probably unavoidable, but adults who agree to exchange gifts creatively instead can cut down on costs. Grown-up family and friends might enjoy these heartfelt and fun ideas:

  • Comical Come up with silly, inexpensive presents that bring laughter rather than debt. Rubber chicken, anyone?
  • Super discounters Sometimes dollar stores have gifts that are surprisingly nice, such as glass candleholders, figurines and decorative towels.
  • Talent show Prepare a song, dance, comedy routine or magic show to dazzle friends and loved ones.
  • Re-gifting Give a second life to presents that missed the mark last year.
  • Homemade Sew, knit, paint, bake or print and frame a nice picture to give.
  1. Find the best deals

Just because you’ve spied that perfect gift doesn’t mean you’ve found the lowest price. Stretch your money by using free websites and smartphone apps. At the mall, scan barcodes to check for lower prices online.

  1. Slow down

Resisting temptation can help you avoid impulsive spending that could bust your budget. Give yourself some time to think by intentionally putting barriers in the way of convenient purchasing. Take your name off retailer email lists and merchant sites. Once you’ve found something you want, walk away. Give yourself a half hour to make sure you can afford it and it’s really needed.  [external link disclosure]

  1. Get help when needed

If you need a special gift that’s more than you have to spend, options from lenders like Wakota Federal Credit Union can include personal loans and payment skipping on current obligations. Another way to get the big gift might be to give the intended recipient a promise for the item, then save enough each month to reach the amount needed. With a little planning, creativity and the right financial tools, you can create happy holiday memories without slipping deeper into debt.  [external link disclosure]

Roberta Pescow, NerdWallet   [external link disclosure]