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Financial Resources

 
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4.
Bankruptcy - Don't Make a Ten Year Mistake
5.
How to Manage Your Checking Account
 

Save Money at the Gas Pump

With the overall cost of operating a vehicle - fuel, maintenance and insurance - going up every year, it pays to squeeze as much out of every gallon of gas that you possibly can. Here are some tips that will help you save money at the pump:

  • Keep your engine properly tuned.
  • Clean or replace the air filter.
  • Properly inflate your tires (this can save as much as 2-3% on gas mileage).
  • Ease op on the gas pedal.
  • Don’t drive with your windows rolled down. Use the vents for outside air or air conditioning to cool the vehicle. Most new cars are designed to be more aerodynamic with the windows closed. For highway driving, most new cars will actually get better mileage “closed up” with the air conditioning on.
  • Use cruise control on longer trips or open stretches of highway.
  • Anticipate traffic situations and “roll” toward them with your foot off the gas, rather than speeding toward them and jamming on the brakes at the last second.
  • Plan ahead when running errands to avoid unnecessary trips.

What is Estate Planning?

Estate planning is the process during which you review your current situation and identify the alternatives available to establish and accomplish your personal and financial goals. Estate planning assists you in making informed decisions about the ownership and distribution of assets during your lifetime and upon your death. It is often the first step in the preparation of a properly drafted Will. 

Why should I plan my Estate?

You spend a lifetime acquiring and safeguarding assets. You care for your family and others who depend upon you. Unless you properly plan your estate, the objectives you established during your lifetime will not be met after you are gone. With a well-planned estate and a properly drafted Will, your assets will be distributed in accordance with your wishes. Your beneficiaries' needs will be met. Your estate will not be subject to unnecessary administration costs, legal fees or taxes. 
 
Factors to consider

Estate planning is a personal process and reflects your unique situation. When working through the estate planning process you will be asked to consider a number of issues:

  • What assets do you own and how are they registered?
  • What debts do you owe and will there be sufficient assets to meet those obligations in the event of your death?
  • Who has the time, knowledge and experience to act as your estate representative?
  • What are the needs of your beneficiaries?
  • How do you want your assets to be distributed?
  • Do you wish to leave special gifts such as family heirlooms, to specific beneficiaries?
  • Are you aware of the tax considerations associated with your assets and the distribution you are planning?
Who will be willing to accept the responsibility to act as guardian for those who are dependent upon you? 

Understanding Your Credit Score

Many people lack knowledge about their credit scores, arguably the single most influential number in their lives. In fact, forty-nine percent of 1,013 consumers polled do not understand that credit scores measure credit risk, according to a survey by the Consumer Federation of America and Fair Isaac Corp., the company that created the most widely used credit score formula called FICO.

What is a credit score?

A credit score is a number lenders use to help them decide: "If I give this person a loan or credit card, how likely is it I will get paid back on time?" A score is a snapshot of your credit risk picture at a particular point in time. The higher the score, the lower the risk to lenders. Scores are generated by statistical models using elements from your credit report, and sometimes from other sources, such as your credit application. However, scores are not stored as part of your credit history. Rather, scores are generated at the time a lender requests your credit report and then included with the report. Identity theft can also impact your score.

The five areas considered in the calculation of your credit score listed from most important to least important are:
Payment History
Capacity (Amount You Owe)
Length of Credit History
Types of Credit
New Credit

How scores are calculated

Designers of credit scoring models review a set of consumers - often over a million. The credit profiles of the consumers are examined to identify common variables they exhibited. The designers then build statistical models that assign weights to each variable, and these variables are combined to create a credit score.

Models for specific types of loans, such as auto or mortgage, more closely consider consumer payment statistics related to these loans. Model builders strive to identify the best set of variables from a consumer's past credit history that most effectively predict future credit behavior.

About 60 percent of people have credit scores of 700 and above. The best number to have is 720 or above. If your score is 720, there's really no need to try and raise it because lenders lump you in the same category as folks with a score of say 800 or 820. At 720, you are viewed as a safe risk and typically receive a loan without problem and at a low interest rate. However, if your number is below 700, it's definitely worth your time to try and pump it up.

Here is a typical credit score is determined:

  • 35 percent Payment History: Details regarding payments made on credit cards, retail charge cards, installment loans and mortgages play a part here. How timely have your payments been? How much do you owe? If you've made late payments, how recently did these payments occur? If you've got few or no late payments, your score will be improved. Also, recent late payments will hurt your score more than those made years in the past. Having a long history making of payments on time and no missed payments on all credit accounts is one of the most important items lenders look for.
  • 30 percent Amount Owed: About 30 percent of your score is impacted by the amounts you've got outstanding to creditors. Owing a lot on many accounts won't necessarily hurt your score. If you're at or near your limit on your credit cards and other "revolving credit" accounts, though, your score will be compromised. This measures the amount you owe relative to the total amount of credit available. Someone closer to maxing out all their credit limits is deemed to be a higher risk of late payments in the future and this can lower their credit score.
  • 15 percent Length of Credit History: In general, a credit report containing a list of accounts opened for a long time will help your credit score. The score considers your oldest account and the average age of all accounts. If you're just starting to build your credit history, there's not much you can do to improve your standing in this area over the short term.
  • 10 percent New Credit: Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries can represent a greater risk, but this does NOT include any requests made by you, an employer or by a lender who does so when sending you an unsolicited, "pre-approved" credit offer. Also, to compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry.
  • 10 percent Types of Credit in Use: "Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered."

Bankruptcy - Don't Make a Ten Year Mistake

Consumer debt is at an all time high and record numbers of consumers are filing for bankruptcy. If you find yourself over-extended, you are not alone. Whether your current debt problems are the result of an illness, unemployment, or overspending, falling behind financially can seem overwhelming.

Although bankruptcy is one option to deal with financial problems, it is generally considered the option of "last resort."

A bankruptcy remains on your credit report for 10 years and can seriously hinder your future ability to get credit, a job, insurance rates or even a place to live. Normally, it is not until two years after a bankruptcy discharge that consumers are eligible for mortgage loans with terms as good as those for others with the same financial profile that have not filed for bankruptcy.

Some of the other disadvantages of bankruptcy to consider are:

  • Further credit may be very difficult to obtain and may require collateral to secure a loan. The interest rate will normally be substantially higher as well.
  • Greater difficulty purchasing a home or even a rental without a substantial down payment.
  • Greater difficulty purchasing or renting a home without a substantial down payment.
  • Greater difficulty obtaining checking account relationships.
  • Bankruptcy filings can be very lengthy in process – in some instances they can disrupt your personal life for several months.
  • A credit card or debit card is a necessity for conducting your normal business activities and they may be difficult to obtain without collateral and also at an increased interest rate.
For help and other alternatives contact us here at 1st University Credit Union, 1-877-377-2797 or 254-752-2797.

How to Manage Your Checking Account

If you’re like most people, when you write a check—or share draft—it’s so automatic and works so well you probably don’t think much about it. And once you establish good checking habits, you don’t need to think much about it. Check and share draft systems run smoothly when people follow common rules.

How to write a check

Direct deposit protects you from theft, but a forger still can use your stolen checks or discarded deposit slips, and “your” signature, to steal from your account. You also should develop good habits to reduce the possibility that honest errors will result in mistakes in your account. Risk management experts offer these suggestions:

1. Don’t use pencil or erasable ink. Avoid ink colors other than blue or black. Some credit unions record cleared checks on microfilm, which doesn’t show red ink clearly, for example.
2. Use the correct date. Even a postdated check can be deposited for payment.
3. Don’t make out a draft or check to “cash.” This allows anyone to cash it. Instead, write in the name of the cashing institution or your own name.
4. Draw a line after the name of the party who’s supposed to get the money. This prevents a thief from becoming an alternate payee by adding the word “or” and an alias.
5. Don’t use abbreviations on the payee line. A clever forger can change such terms as “Co.” or “Inc.” into believable names.
6. Print figures as close to the preprinted dollar sign as possible. This makes it hard to raise the amount by inserting a digit, for example, changing $ 25 to $125.  Don’t think only large, obvious amounts are at stake. One credit union teller described a fraud where a grocery clerk raised the amount on checks by $10. For example, she would insert the number 1  before the 9 in $9.32 and squeeze the word “teen” between the written “nine” and “32/100.” The clerk pocketed $10 from the cash drawer several times a week.
7. Print the written amount in capital letters, which are much harder to alter than script. Print the amount beginning at the extreme left and draw a line through the rest of the amount space. Otherwise, TWENTY-FIVE could become ONE TWENTY FIVE or TWENTY-FIVE HUNDRED.
8. Develop a form of your name to use only when you sign share drafts, checks, and other documents. For example, if you’re known as “Ed Miller,” reserve “Edward Miller” for share drafts. With this special signature on file and on your driver’s license or similar identification, anyone who presents your draft for payment with any other form of your name will be suspect. And, a forger will need more than your personal correspondence to copy your signature.
9. Sign your name rapidly, freely, and legibly. Connect all letters and avoid elegant flourishes. Play with decorative signatures on personal correspondence if you like, but keep your legal signature consistent.
10. If carbonless copies of written share drafts don’t “block out” your signature, obscure your signature on used drafts. Prevent leaving an impression of your name on the following check by filling in each check except for your signature, then removing the draft from the pad and signing it on a hard surface.
11. Never presign your share drafts or checks.
12. If you make a mistake, write a correction and initial it if you can do so neatly. If not, rip up the share draft, mark it “void” in your register, and start over.
13. Deposit funds before you write the check they’re supposed to cover. The Check Clearing for the 21st Century Act (Check 21) cut the time it takes a check to clear from days to hours. Remember that your account balance changes continually as transactions clear. So don’t rely solely on your balance from an ATM (automated teller machine) receipt or from a phone call to the credit union. Ask at the credit union about overdraft protection.

How to deposit a check

You must endorse—sign—a check before you can deposit it. If there’s an error in your name on the face of the check, you must endorse the check showing the error. Then sign your name correctly just below the first signature for verification. Often, you’ll use a “blank” endorsement by simply signing your name as shown on the face of the check. The problem with a blank endorsement is that it makes the check negotiable by anyone presenting it for payment. Anyone finding a lost, endorsed check can cash it for its face value.

You can protect yourself if you specify that a check is “for deposit only” above your signature; this is called a restrictive endorsement. Another common endorsement is “special” and limits the use of the check. You can use the special endorsement “pay to the order of” and then name the person to whom you’re signing over the check; remember to include your signature. When you deposit a check, you may not have access to the funds right away. The Expedited Funds Availability Act determines how long an institution may “hold” a check before crediting your account. Your credit union will inform you of its funds availability policy. Holds vary based on where you deposit your check (with a teller, by mail, or at an ATM), and where the check is from (the government, a local party, or out of state, for example). The staff at your credit union can answer your questions and help you develop good share draft habits. Ask them for help when you have questions.

How to reconcile your account

1. Start with the balance in your register. __________
2. Subtract any service charges that are on the statement. – __________
3. Add any dividends your account earned. + __________
4. This is your new register balance: __________
5. Start with the end balance from the statement. __________
6. Add recent funds you’ve deposited not on the statement. + __________
7. Subtract the total of all drafts written but not cleared, debit card transactions, and ATM withdrawals since the statement. – __________
8. Your new balance: __________

Your account reconciles when your register balance (line 4) matches your new balance (line 8).