Educational Articles
Financial Education and Articles
Financial topics, articles and resources to help you make better informed decisions and manage your personal finances! Check back often as we add more articles and financial information about:
- Buying a Car
- Saving Money
- Buying or Selling Your Home
- Renovating Your Home
- Retirement
- Starting or Growing a Small Business
- Credit Union Information and Member Benefits
- Explore your financing options—especially your credit union. A credit union tends to lend more money than a bank and generally offers more favorable rates. Credit unions also have arrangements with local dealerships, offering member-only sales.
- Do not give the dealership a credit application until you know for sure that you are going to finance through them. Make sure that you have exhausted all other sources including your local credit union. A little extra time shopping at your local credit union may save you a lot of money. If you do apply through the dealership, and then try to go somewhere else for your loan, you may find that you have a number of inquiries on your credit report. This makes it look like you weren't approved for other loans and each lender thinks the others know something bad about you.
- If you finance at the dealership, never take delivery the same day. Pick up the car only once you know that the financing is absolutely final.
- Always check the dealer’s numbers carefully, and don't sign the paperwork until you are positive that the numbers are correct. Remember, once you've signed, you rarely can get out of the deal.
- Whether the vehicle is being sold "as is" or with a warranty
- What percentage of the repair costs a dealer will pay under the warranty
- The fact that spoken promises are difficult to enforce
- The major mechanical and electrical systems on the car, including some of the major problems you should look out for
- Get all promises in writing
- Keep the Buyer’s Guide for reference after the sale
- Ask to have the car inspected by an independent mechanic before the purchase
- Examine the car using an inspection checklist that can be found in magazines and books and on Internet sites that deal with used cars
- Test drive the car under varied road conditions—on hills, highways, and in stop-and-go-traffic
- Ask for the car’s maintenance record from the owner, dealer, or repair shop
- Hire a mechanic to inspect the car
- Check the mileage. If it's low, question whether the owner ditched the car because of problems. Ask the seller to prove any claims that the car was returned for trivial reasons.
- Check the label. If the car is advertised as an executive, brass hat, demo, program, or repossessed vehicle, confirm it. These aren't always problem cars, but you should insist that the seller support such claims in writing.
- Check the warnings. Carefully read all disclosures on the car's window sticker, door frame, title, and contract. Look for any reference to defects such as factory or manufacturer buy backs, or warranty return.
- Check the past. Request and review the car's service history and note any frequent problems or gaps in records. Study the title. Have the Vehicle Identification Number (VIN) analyzed. Experian Automotive Information Systems (a branch of the Experian credit bureau) maintains a database of more than 135 million VINs which can provide mileage reports at previous points of sale, safety recalls issued for the vehicle, and insurance claim information.
- Check the car. Before you buy any used vehicle, have an independent mechanic assure you that it's sound. Ask the technician to check if all of that model's safety recall work has been done.
- Many consumers will not qualify for the low rate financing. You generally must have near-perfect credit to get the best rates.
- In many cases, special financing is available only on specific models
- Most often, offers of special financing are for a limited term, generally up to 36 months. This can make the payment considerably higher than most of us would like.
- Large down payments may be required.
By John Revilla
The saying use to be that your house would be your single largest purchase and your car would be your second.
When you really think about it many of us will spend far more over the years on our automobile purchases than our house.
The old saying in the 70s (showing my age) was that if you couldn’t pay your vehicle off in 36 months you couldn’t afford it.
I started my career in a community bank in 1982 and my first car loans I did in fact finance for 36 months. As vehicles became more expensive we watched finance terms increase to 48 months, than 60 months, than 72 and now 84.
The problem is that most of us still buy a payment and cars have increased in price substantially and wages have been stagnate.
Many of us today that buy a new or near new vehicle have fallen into that trap of extending the term to have an affordable monthly payment.
The problem is that we have not changed how frequently we like to trade so we are now often times upside down or as they say have negative equity in our trade. This has to be refinanced into the new purchase and the term must be extended again, compounding the problem.
Others of us think we can bury the negative equity in a vehicle with large rebates. The reality is that vehicles have large rebates because they are overpriced in the eyes of the consumer so there real value is the price net of rebates.
So how do we improve the experience and make informed decisions?
Determine a realistic value of your trade using the many tools on the internet. I like to use Edmunds, Kelly Blue Book and NADA. I add the three together divide by three and have a solid average value.
If possible sell your current vehicle yourself realizing that it’s only worth the private sale value for its respective condition. (Always better off than a trade)
Check the True Market value of the vehicle you are purchasing using the many tools found online. I also like to look at sites that speak to the true value of ownership. This looks at depreciation, maintenance, fuel economy and other factors.
Do not get emotionally invested in a vehicle on a specific dealer lot, its only sheet metal and they are available at many locations.
If I have sold my trade than it’s a simple transaction starting with going online and determining current incentives. Looking at inventory online and calling dealers to determine their cash price (no trade) less any incentives. The dealers that get the closest to invoice price less incentives is where I’m focused.
The Finance and Insurance person will try to sell you a number of add on because they make their living on commission.
Finance rate: If your FICO credit score is 730 and above you are in the driver seat, ask them what the best buy rate is they have for the term you want. Buy rate is what they can get the money at and they are typically allowed to increase the rate by as much as 3%. Example Buy Rate is 2.5% APR they can have you pay as much as 5.5% APR. The dealer would get the other 3%. For them to realize the 3% they will most likely tell you that you have to keep the loan for 4 months. The reason is that if the loan is paid off or refinanced in less than 4 months they will not get their 3%.
If you do not have an equity position in the vehicle you are purchasing they will attempt to sell you GAP insurance which covers the difference between what your insurance pays and the balance of the loan in the event the vehicle is Totaled or stolen. Many dealerships charge $700. Plus and the credit union offers this service for under $300.
Many people are buying extended warranties today because of the longer loan terms. In the vast majority of instances the credit union can provide mechanical breakdown insurance at a much lower cost than the dealership.
Life and disability insurance on auto loans is also available at the credit union and unlike a dealership that offers a lump sum premium based on the term and financed into the loan. The credit union offers it as part of your monthly payment based on a declining balance and ends when you pay of the note or request us to discontinue the service.
So why is this all important?
Ultimately you want to finance the least amount for the shortest term, living within your monthly budget. Being an informed buyer and seller, purchasing the additional services you need at the lowest possible cost and receiving a competitive rate will serve you better.
Remember always take the rebate and finance the smallest possible amount.
Need help?
Stop in and we will help you through the process.
John Revilla is a consultant for the credit union industry with an extensive knowledge of the Auto industry
The saying use to be that your house would be your single largest purchase and your car would be your second.
When you really think about it many of us will spend far more over the years on our automobile purchases than our house.
The old saying in the 70s (showing my age) was that if you couldn’t pay your vehicle off in 36 months you couldn’t afford it.
I started my career in a community bank in 1982 and my first car loans I did in fact finance for 36 months. As vehicles became more expensive we watched finance terms increase to 48 months, than 60 months, than 72 and now 84.
The problem is that most of us still buy a payment and cars have increased in price substantially and wages have been stagnate.
Many of us today that buy a new or near new vehicle have fallen into that trap of extending the term to have an affordable monthly payment.
The problem is that we have not changed how frequently we like to trade so we are now often times upside down or as they say have negative equity in our trade. This has to be refinanced into the new purchase and the term must be extended again, compounding the problem.
Others of us think we can bury the negative equity in a vehicle with large rebates. The reality is that vehicles have large rebates because they are overpriced in the eyes of the consumer so there real value is the price net of rebates.
So how do we improve the experience and make informed decisions?
Determine a realistic value of your trade using the many tools on the internet. I like to use Edmunds, Kelly Blue Book and NADA. I add the three together divide by three and have a solid average value.
If possible sell your current vehicle yourself realizing that it’s only worth the private sale value for its respective condition. (Always better off than a trade)
Check the True Market value of the vehicle you are purchasing using the many tools found online. I also like to look at sites that speak to the true value of ownership. This looks at depreciation, maintenance, fuel economy and other factors.
Do not get emotionally invested in a vehicle on a specific dealer lot, its only sheet metal and they are available at many locations.
If I have sold my trade than it’s a simple transaction starting with going online and determining current incentives. Looking at inventory online and calling dealers to determine their cash price (no trade) less any incentives. The dealers that get the closest to invoice price less incentives is where I’m focused.
The Finance and Insurance person will try to sell you a number of add on because they make their living on commission.
Finance rate: If your FICO credit score is 730 and above you are in the driver seat, ask them what the best buy rate is they have for the term you want. Buy rate is what they can get the money at and they are typically allowed to increase the rate by as much as 3%. Example Buy Rate is 2.5% APR they can have you pay as much as 5.5% APR. The dealer would get the other 3%. For them to realize the 3% they will most likely tell you that you have to keep the loan for 4 months. The reason is that if the loan is paid off or refinanced in less than 4 months they will not get their 3%.
If you do not have an equity position in the vehicle you are purchasing they will attempt to sell you GAP insurance which covers the difference between what your insurance pays and the balance of the loan in the event the vehicle is Totaled or stolen. Many dealerships charge $700. Plus and the credit union offers this service for under $300.
Many people are buying extended warranties today because of the longer loan terms. In the vast majority of instances the credit union can provide mechanical breakdown insurance at a much lower cost than the dealership.
Life and disability insurance on auto loans is also available at the credit union and unlike a dealership that offers a lump sum premium based on the term and financed into the loan. The credit union offers it as part of your monthly payment based on a declining balance and ends when you pay of the note or request us to discontinue the service.
So why is this all important?
Ultimately you want to finance the least amount for the shortest term, living within your monthly budget. Being an informed buyer and seller, purchasing the additional services you need at the lowest possible cost and receiving a competitive rate will serve you better.
Remember always take the rebate and finance the smallest possible amount.
Need help?
Stop in and we will help you through the process.
John Revilla is a consultant for the credit union industry with an extensive knowledge of the Auto industry
You’ve decided that you can afford a new car. Now what? Follow these tips for smart financing:
"I can’t wait to get my own car." Sound familiar? Before you start shopping for a used car with a teenager you know, do some homework. It may save you serious money. Consider driving habits, what the car will be used for, and your budget. Research models, options, costs, repair records, safety tests, and mileage through libraries, book stores, and Web sites.
Cash or Credit?
Once you’ve settled on a particular car, you have two payment options: paying in full or financing over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other loan costs.
You also must consider how much money you can put down, the monthly payment, the loan term, and the Annual Percentage Rate (APR). Rates usually are higher and loan periods shorter on used cars than on new ones. Dealers and lenders offer a variety of loan terms. Shop around and help your teenager negotiate the best possible deal. Be cautious about financing offers for first-time buyers. They can require a big down payment and a high APR. To get a lower rate, you may decide to cosign the loan for your teen. If money is tight, you might consider paying cash for a less expensive car than you first had in mind.
Dealer or Private Sale?
The Federal Trade Commission’s Used Car Rule requires dealers to post a Buyer’s Guide in every used car they offer for sale. The Buyer’s Guide gives a great deal of information, including:
Before You Buy
Whether you buy a used car from a dealer or an individual, you should:
There’s more to buying a car than just paying for it. Other items to budget for include insurance, gas, maintenance, and repairs. To help save money, compare coverage and premiums with several insurance companies. Buy from a low-price, licensed insurer, or add your teen to your policy. Some companies offer discounts to students with good grades. Remind your teenager that it pays to drive safely and observe speed limits. Traffic violations can cost money in tickets and higher insurance premiums. Next, pump your own gas and use the octane level that your owner’s manual specifies. Third, keep your car in safe driving condition. Following the vehicle’s maintenance schedule can help forestall costly repairs. Finally, look for a mechanic who is certified, well established, and communicates well about realistic repair options and costs. Find one who has done good work for someone you know.
Cash or Credit?
Once you’ve settled on a particular car, you have two payment options: paying in full or financing over time. Financing increases the total cost of the car because you’re also paying for the cost of credit, including interest and other loan costs.
You also must consider how much money you can put down, the monthly payment, the loan term, and the Annual Percentage Rate (APR). Rates usually are higher and loan periods shorter on used cars than on new ones. Dealers and lenders offer a variety of loan terms. Shop around and help your teenager negotiate the best possible deal. Be cautious about financing offers for first-time buyers. They can require a big down payment and a high APR. To get a lower rate, you may decide to cosign the loan for your teen. If money is tight, you might consider paying cash for a less expensive car than you first had in mind.
Dealer or Private Sale?
The Federal Trade Commission’s Used Car Rule requires dealers to post a Buyer’s Guide in every used car they offer for sale. The Buyer’s Guide gives a great deal of information, including:
Before You Buy
Whether you buy a used car from a dealer or an individual, you should:
There’s more to buying a car than just paying for it. Other items to budget for include insurance, gas, maintenance, and repairs. To help save money, compare coverage and premiums with several insurance companies. Buy from a low-price, licensed insurer, or add your teen to your policy. Some companies offer discounts to students with good grades. Remind your teenager that it pays to drive safely and observe speed limits. Traffic violations can cost money in tickets and higher insurance premiums. Next, pump your own gas and use the octane level that your owner’s manual specifies. Third, keep your car in safe driving condition. Following the vehicle’s maintenance schedule can help forestall costly repairs. Finally, look for a mechanic who is certified, well established, and communicates well about realistic repair options and costs. Find one who has done good work for someone you know.
While many connect the phrase "lemon" with shady used-car purchases from auto dealers, this particular investigation revolves around auto makers who buy back defective new cars only to resell them to dealers. The dealers subsequently sell them to buyers without disclosing the vehicle's past problems. Consumer advocates call the practice laundering, alleging that car sellers deceptively wash all stains of previous troubles from the car's paper trail.
State laws do exist which are designed to protect consumers from unknowingly buying defective vehicles. Each state does require that consumers receive refunds or replacements if problems with a new car cannot be fixed after a specified number of attempts over a given period. Thirty-six states also require dealers to reveal that a car is a lemon to buyers prior to the final purchase. In Michigan, for instance, the Consumer Protection Act safeguards consumers by requiring merchants—auto dealers included—to disclose to potential buyers any defects or problems with merchandise. However, there are no laws requiring manufactures to disclose such information to the dealership. Reliable dealers attempting to protect themselves and their customers, will, in most cases, request all such pertinent information about the vehicles they are purchasing.
While consumer advocates hope that the FTC will set national disclosure standards to protect buyers from laundered lemons, consumers need to be cautious when purchasing used and like-new used cars. Everybody's Money Magazine suggests that potential buyers:
State laws do exist which are designed to protect consumers from unknowingly buying defective vehicles. Each state does require that consumers receive refunds or replacements if problems with a new car cannot be fixed after a specified number of attempts over a given period. Thirty-six states also require dealers to reveal that a car is a lemon to buyers prior to the final purchase. In Michigan, for instance, the Consumer Protection Act safeguards consumers by requiring merchants—auto dealers included—to disclose to potential buyers any defects or problems with merchandise. However, there are no laws requiring manufactures to disclose such information to the dealership. Reliable dealers attempting to protect themselves and their customers, will, in most cases, request all such pertinent information about the vehicles they are purchasing.
While consumer advocates hope that the FTC will set national disclosure standards to protect buyers from laundered lemons, consumers need to be cautious when purchasing used and like-new used cars. Everybody's Money Magazine suggests that potential buyers:
Financial prudence dictates that we stash away enough cash to cover living expenses for three to six months in case something catastrophic comes our way—a job loss, an unexpected illness or an unpredicted home expense.
Some items that also should be covered in such a fund include health and car insurance deductibles, rent or mortgage, food, energy bills, and phone bills. Get your rainy-day fund started by doing the following:
Aim low if you can’t amass the recommended cash. If you’re burdened with debt and your income is low, you can still set up a decent emergency fund. Aim for one that will cover at least one month of expenses. A cash reserve should be a priority—even over your 401(k) contributions.
Consolidate debt. Now stop using the credit card. Make the minimum monthly payment so you can build up savings for one month of living expenses. After you’ve done that, then you can turn your attention to other goals, such as retirement savings and paying down debt.
Steer clear of the stock market. You’ll want to put your emergency money in a place where you can easily get your hands on it. The two best options are a savings account at a credit union, or a money-market mutual fund. Note: Although a money-market fund isn’t federally insured, it typically has higher interest rates than a savings account.
Some items that also should be covered in such a fund include health and car insurance deductibles, rent or mortgage, food, energy bills, and phone bills. Get your rainy-day fund started by doing the following:
Aim low if you can’t amass the recommended cash. If you’re burdened with debt and your income is low, you can still set up a decent emergency fund. Aim for one that will cover at least one month of expenses. A cash reserve should be a priority—even over your 401(k) contributions.
Consolidate debt. Now stop using the credit card. Make the minimum monthly payment so you can build up savings for one month of living expenses. After you’ve done that, then you can turn your attention to other goals, such as retirement savings and paying down debt.
Steer clear of the stock market. You’ll want to put your emergency money in a place where you can easily get your hands on it. The two best options are a savings account at a credit union, or a money-market mutual fund. Note: Although a money-market fund isn’t federally insured, it typically has higher interest rates than a savings account.
Credit unions know that you need more than a variety of products and services. You need to know that your money is safe—and at a credit union it is.
Money is Insured
The National Credit Union Administration (NCUA) is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. As an alternative, many credit unions choose to insure your funds through private insurance companies.
The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their individual accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates. Individuals with account balances totaling $250,000 or less at the same insured credit union have full NCUSIF coverage.
Members have full NCUSIF coverage at each federally insured credit union where they are qualified members. While NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings account and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities.
Responsibly Managed
Credit unions generally offer higher interest rates for savings accounts and lower rates for loans, when compared to most banks. And credit unions typically do not engage in predatory lending practices, such as offering subprime loans or payday lending programs with exorbitant rates and fees.
Credit unions also follow conservative investment practices and live within their financial means. That means you can trust your credit union to put the needs of you and its other members first.
Financial Guidance
Across the country, credit union staff members participate in programs that help consumers learn the basic financial skills that will serve as a strong foundation for their financial futures.
Also, many credit unions and their state associations work with other non-profit entities to help educate consumers about the risks associated with predatory lending.
Whether it’s working with schools to open in-school branches, hosting a financial planning seminar, or offering ID-theft prevention tips at a branch, credit union staff members share their knowledge with the community. Because the more knowledge credit union members have, the wiser the decisions they can make with their money.
Money is Insured
The National Credit Union Administration (NCUA) is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. As an alternative, many credit unions choose to insure your funds through private insurance companies.
The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their individual accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates. Individuals with account balances totaling $250,000 or less at the same insured credit union have full NCUSIF coverage.
Members have full NCUSIF coverage at each federally insured credit union where they are qualified members. While NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings account and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities.
Responsibly Managed
Credit unions generally offer higher interest rates for savings accounts and lower rates for loans, when compared to most banks. And credit unions typically do not engage in predatory lending practices, such as offering subprime loans or payday lending programs with exorbitant rates and fees.
Credit unions also follow conservative investment practices and live within their financial means. That means you can trust your credit union to put the needs of you and its other members first.
Financial Guidance
Across the country, credit union staff members participate in programs that help consumers learn the basic financial skills that will serve as a strong foundation for their financial futures.
Also, many credit unions and their state associations work with other non-profit entities to help educate consumers about the risks associated with predatory lending.
Whether it’s working with schools to open in-school branches, hosting a financial planning seminar, or offering ID-theft prevention tips at a branch, credit union staff members share their knowledge with the community. Because the more knowledge credit union members have, the wiser the decisions they can make with their money.
Credit unions know that you need more than a variety of products and services. You need to know that your money is safe—and at a credit union it is.
Money is Insured
The National Credit Union Administration (NCUA) is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. As an alternative, many credit unions choose to insure your funds through private insurance companies.
The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their individual accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates. Individuals with account balances totaling $250,000 or less at the same insured credit union have full NCUSIF coverage.
Members have full NCUSIF coverage at each federally insured credit union where they are qualified members. While NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings account and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities.
Responsibly Managed
Credit unions generally offer higher interest rates for savings accounts and lower rates for loans, when compared to most banks. And credit unions typically do not engage in predatory lending practices, such as offering subprime loans or payday lending programs with exorbitant rates and fees.
Credit unions also follow conservative investment practices and live within their financial means. That means you can trust your credit union to put the needs of you and its other members first.
Financial Guidance
Across the country, credit union staff members participate in programs that help consumers learn the basic financial skills that will serve as a strong foundation for their financial futures.
Also, many credit unions and their state associations work with other non-profit entities to help educate consumers about the risks associated with predatory lending.
Whether it’s working with schools to open in-school branches, hosting a financial planning seminar, or offering ID-theft prevention tips at a branch, credit union staff members share their knowledge with the community. Because the more knowledge credit union members have, the wiser the decisions they can make with their money.
Money is Insured
The National Credit Union Administration (NCUA) is the independent federal agency that regulates charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. As an alternative, many credit unions choose to insure your funds through private insurance companies.
The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their individual accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates. Individuals with account balances totaling $250,000 or less at the same insured credit union have full NCUSIF coverage.
Members have full NCUSIF coverage at each federally insured credit union where they are qualified members. While NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings account and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities.
Responsibly Managed
Credit unions generally offer higher interest rates for savings accounts and lower rates for loans, when compared to most banks. And credit unions typically do not engage in predatory lending practices, such as offering subprime loans or payday lending programs with exorbitant rates and fees.
Credit unions also follow conservative investment practices and live within their financial means. That means you can trust your credit union to put the needs of you and its other members first.
Financial Guidance
Across the country, credit union staff members participate in programs that help consumers learn the basic financial skills that will serve as a strong foundation for their financial futures.
Also, many credit unions and their state associations work with other non-profit entities to help educate consumers about the risks associated with predatory lending.
Whether it’s working with schools to open in-school branches, hosting a financial planning seminar, or offering ID-theft prevention tips at a branch, credit union staff members share their knowledge with the community. Because the more knowledge credit union members have, the wiser the decisions they can make with their money.
Whether you run a small business or a large corporation, the key to sustained growth is investing in the right areas.
You don’t have to spend lots of money. Here’s a look at three important categories:
Research and development
Perform regular customer surveys. What are people buying? What do they want that you’re not offering? What are they buying from your competitors? Look for ways to offer more while staying close to your core competency.
Marketing
You can’t afford not to let your customers know you’re out there. Stay focused on what works, and keep a lookout for new opportunities, like trade shows or Internet advertising. Maybe you can use your customer research to write an article for a trade journal and expose your company to a new audience. And don’t be afraid of social media; used well, they can reap big benefits.
People
Take care of your current workforce so they won’t be tempted to go elsewhere. Always be looking for new talent to recruit. In the meantime, upgrade your own skills. Take a seminar on communication, leadership, or motivation so you can do a better job of managing the people you have.
You don’t have to spend lots of money. Here’s a look at three important categories:
Research and development
Perform regular customer surveys. What are people buying? What do they want that you’re not offering? What are they buying from your competitors? Look for ways to offer more while staying close to your core competency.
Marketing
You can’t afford not to let your customers know you’re out there. Stay focused on what works, and keep a lookout for new opportunities, like trade shows or Internet advertising. Maybe you can use your customer research to write an article for a trade journal and expose your company to a new audience. And don’t be afraid of social media; used well, they can reap big benefits.
People
Take care of your current workforce so they won’t be tempted to go elsewhere. Always be looking for new talent to recruit. In the meantime, upgrade your own skills. Take a seminar on communication, leadership, or motivation so you can do a better job of managing the people you have.
E-newsletters typically get better readership than newsletters sent by traditional direct mail. They cost much less than paper versions because there’s no printing or postage costs. As a public relations tool, they can build traffic to your Web site and give you valuable information about your customers.
Launching an e-newsletter is not difficult, but it takes some planning.
First, you need to build an opt-in list of subscribers, that is, a list of people who have signed up to receive the newsletter. You’ll need to post a sign-up box on the home page of your Web site. Don’t try to gather lots of information from the subscriber by creating a long registration form, as new subscribers may be put off by any attempts to gather additional information that could be used for marketing. You may be able to gather that information later using surveys and customer feedback requests.
Next, you should structure the content. You’ll want a consistent look from issue to issue, including the same masthead and the same typeface. You should also decide whether to write the e-newsletter in HTML, which is visually more interesting, or plain text, which accommodates more e-mail programs.
The length of articles should be relatively short, since nobody has the time to scroll through long text. Interspersing the text with hyperlinks to related stories or products of interest helps keep articles short.
Fourth, you will need to decide how to manage the mailings. The frequency of the e-newsletter should be consistent, arriving on the same day each week, month, or quarter. If you decide not to use a mailing service or list server, make sure you break your list down into groups of 50 names or less. Otherwise your newsletter could be mistaken for spam and bumped by the Internet service providers.
Bounce management is one advantage of hiring a professional list host. It can keep your list continually updated and delete undeliverable addresses. Typically, it also provides management reports and a security system.
Whether you keep fulfillment in-house or not, the purpose of an e-newsletter is to build strong customer relationships that will ultimately add to your bottom line—so provide content that will be a resource for readers.
Launching an e-newsletter is not difficult, but it takes some planning.
First, you need to build an opt-in list of subscribers, that is, a list of people who have signed up to receive the newsletter. You’ll need to post a sign-up box on the home page of your Web site. Don’t try to gather lots of information from the subscriber by creating a long registration form, as new subscribers may be put off by any attempts to gather additional information that could be used for marketing. You may be able to gather that information later using surveys and customer feedback requests.
Next, you should structure the content. You’ll want a consistent look from issue to issue, including the same masthead and the same typeface. You should also decide whether to write the e-newsletter in HTML, which is visually more interesting, or plain text, which accommodates more e-mail programs.
The length of articles should be relatively short, since nobody has the time to scroll through long text. Interspersing the text with hyperlinks to related stories or products of interest helps keep articles short.
Fourth, you will need to decide how to manage the mailings. The frequency of the e-newsletter should be consistent, arriving on the same day each week, month, or quarter. If you decide not to use a mailing service or list server, make sure you break your list down into groups of 50 names or less. Otherwise your newsletter could be mistaken for spam and bumped by the Internet service providers.
Bounce management is one advantage of hiring a professional list host. It can keep your list continually updated and delete undeliverable addresses. Typically, it also provides management reports and a security system.
Whether you keep fulfillment in-house or not, the purpose of an e-newsletter is to build strong customer relationships that will ultimately add to your bottom line—so provide content that will be a resource for readers.
If you are thinking about starting a new business there are a few things you need to know before you get started. The Michigan Association of CPAs provides the following list to help you.
Stick to what you know and love. Successful businesses don't just happen. They are made. Whether you plan to profit by “clowning around” at birthday parties or growing a multinational corporation, your success relies on your knowledge, passion, and commitment. Evaluate your skills and interests and find a business that works for you.
Get smart. Learn all the intrinsic details of the businesses that interest you. Use the Internet to research the industry. Investigate the competition. Subscribe to magazines that cover your field or trade (the cost may be tax deductible) and attend association meetings and local networking groups. Talk with business owners in similar fields. The more knowledgeable you are, the better your chance for success.
Choose an organizational structure. You’ll need to decide whether to organize your business as a sole proprietorship, partnership, limited liability company, or corporation. Each has its own advantages and disadvantages. Since your choice affects both your income taxes and personal liability, it is important that you learn as much as you can about each and seek professional advice before making a decision.
Name your business. This is not as easy as it may sound. It’s often best to select a name that is short, easy to remember, descriptive of the type of business you’re in, and likely to attract attention. Depending on your legal structure, you may have to register your business name with your local or county government. If a Web presence is important to your business, check to see if your desired domain name is available.
Make it possible with a business plan. Think of a business plan as your blueprint for success. The process of developing a detailed and accurate business plan, however daunting, will help you think through important issues. A business plan should outline your strengths and weaknesses, and show where you are, where you want to go, and how you plan to get there. A typical plan includes an executive summary, a description of the business and its products or services, marketing strategy, operations plan, financial data and projections, management description, and market, competitive and risk analyses.
Find the best location. Location is almost always a critical factor in a business’ success. Some local governments can provide information on traffic patterns for city and county roads. They also may have local population demographics. On your own, you can check area competitors and measure pedestrian traffic during business hours to estimate walk-in potential. Once you’ve settled on a location, decide whether to rent or own the building and then evaluate different sites.
Raise money. Raising the money needed to start a new business is almost always one of the most difficult steps. Financial resources available to small businesses can vary depending on whether you are starting a new business or purchasing an existing one. Generally speaking, business loans for start-up enterprises are not easily obtained. Many start-ups are financed by personal resources including savings, home-equity loans, and credit cards. Relatives and friends also may be potential sources of financing.
Make it legal. Governments often require licenses and permits for conducting business. In some cases, it’s as simple as paying for a license. In others, you may face the more difficult task of complying with regulatory ordinances that protect public health and safety and, increasingly, aesthetics.
Insure your business. Don’t make the mistake of cutting corners by not insuring your new business venture. Look into a business owner’s policy that includes, at the very least, property, liability, and business interruption coverage.
Plan to work extremely hard. While many people start businesses in the hopes of not being tied down to a job, business owners find themselves working longer and harder than most employees, especially in the beginning.
You seek the expertise of CPAs at tax and audit time, of course. But CPAs also promote personal and professional financial security year round. Visit the CPA Referral Service on the MACPA website to search for a CPA in your geographical area or specific area of expertise.
Stick to what you know and love. Successful businesses don't just happen. They are made. Whether you plan to profit by “clowning around” at birthday parties or growing a multinational corporation, your success relies on your knowledge, passion, and commitment. Evaluate your skills and interests and find a business that works for you.
Get smart. Learn all the intrinsic details of the businesses that interest you. Use the Internet to research the industry. Investigate the competition. Subscribe to magazines that cover your field or trade (the cost may be tax deductible) and attend association meetings and local networking groups. Talk with business owners in similar fields. The more knowledgeable you are, the better your chance for success.
Choose an organizational structure. You’ll need to decide whether to organize your business as a sole proprietorship, partnership, limited liability company, or corporation. Each has its own advantages and disadvantages. Since your choice affects both your income taxes and personal liability, it is important that you learn as much as you can about each and seek professional advice before making a decision.
Name your business. This is not as easy as it may sound. It’s often best to select a name that is short, easy to remember, descriptive of the type of business you’re in, and likely to attract attention. Depending on your legal structure, you may have to register your business name with your local or county government. If a Web presence is important to your business, check to see if your desired domain name is available.
Make it possible with a business plan. Think of a business plan as your blueprint for success. The process of developing a detailed and accurate business plan, however daunting, will help you think through important issues. A business plan should outline your strengths and weaknesses, and show where you are, where you want to go, and how you plan to get there. A typical plan includes an executive summary, a description of the business and its products or services, marketing strategy, operations plan, financial data and projections, management description, and market, competitive and risk analyses.
Find the best location. Location is almost always a critical factor in a business’ success. Some local governments can provide information on traffic patterns for city and county roads. They also may have local population demographics. On your own, you can check area competitors and measure pedestrian traffic during business hours to estimate walk-in potential. Once you’ve settled on a location, decide whether to rent or own the building and then evaluate different sites.
Raise money. Raising the money needed to start a new business is almost always one of the most difficult steps. Financial resources available to small businesses can vary depending on whether you are starting a new business or purchasing an existing one. Generally speaking, business loans for start-up enterprises are not easily obtained. Many start-ups are financed by personal resources including savings, home-equity loans, and credit cards. Relatives and friends also may be potential sources of financing.
Make it legal. Governments often require licenses and permits for conducting business. In some cases, it’s as simple as paying for a license. In others, you may face the more difficult task of complying with regulatory ordinances that protect public health and safety and, increasingly, aesthetics.
Insure your business. Don’t make the mistake of cutting corners by not insuring your new business venture. Look into a business owner’s policy that includes, at the very least, property, liability, and business interruption coverage.
Plan to work extremely hard. While many people start businesses in the hopes of not being tied down to a job, business owners find themselves working longer and harder than most employees, especially in the beginning.
You seek the expertise of CPAs at tax and audit time, of course. But CPAs also promote personal and professional financial security year round. Visit the CPA Referral Service on the MACPA website to search for a CPA in your geographical area or specific area of expertise.
The IRS has many resources available for individuals that are opening a new business. Here are six tax tips the IRS wants new business owners to know.
First, you must decide what type of business entity you are going to establish. The type of business entity will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.
The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.
IRS Publication 583, Starting a Business and Keeping Records, provides basic federal tax information for people who are starting a business. This publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). Visit the Business section of IRS.gov for resources to assist entrepreneurs with starting and operating a new business.
First, you must decide what type of business entity you are going to establish. The type of business entity will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.
The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.
IRS Publication 583, Starting a Business and Keeping Records, provides basic federal tax information for people who are starting a business. This publication is available on IRS.gov or by calling 800-TAX-FORM (800-829-3676). Visit the Business section of IRS.gov for resources to assist entrepreneurs with starting and operating a new business.
You can make your own budget worksheet using either a pen and paper or a computer spreadsheet program. Think of your budget in terms of two things: money and time. Money, of course, is divided into its own two categories: Income and Expenses.
Follow these steps to make your budget worksheet:
List your income in a vertical column down the left side of the page. Think of all the sources of income (including paychecks and interest) that you receive. Also, consider how often this income becomes available to you. For example, are you paid weekly or every other week?
List your expenses below your income in that same column. Begin with major expenses such as a car payment, car insurance, food (including school lunches), clothing, and entertainment. Include all expenses, whether you pay in the form of a check, cash, credit card, or the amount is deducted from your credit union account. Remember to include any finance charges, such as interest on your auto loan.
Now, list the related timeframes in a row across the top of the page. For instance, does the expense or income occur weekly, per paycheck, monthly, quarterly, or yearly? Is the expense tax-deductible? If so, add a heading for this in your horizontal row. When you are finished you should have the beginning of a grid or chart. Use this as a worksheet to help you categorize and plan. When you first start using your budget worksheet, you might find that you change it often. That’s good! Your worksheet should be a working document.
Now that you have a “skeleton” worksheet, add anticipated expenses. Are you planning to go to college or participate in a wedding (as either a bridesmaid or a groomsman)? All of these require that you spend a lot of money. (Hint: Anticipate that you will have to spend more than you’d prefer, and budget accordingly. It’s better to be prepared than shocked.) You can also consider anticipated sources of income, such as the yearly birthday check from your Aunt Mildred. Be careful, though; don’t spend the money before you have it.
Don’t forget the “small stuff”! Do you buy soda pop or special coffee, eat lunch out, or buy snacks from the vending machine? If so, keep track of how often you do—and how much you spend. All of these purchases add up throughout the week, the month, and the year. So budget for these, or do without!
Remember: Use your budget as a tool to help you achieve your goals.Once you set up your categories and make it a point to record the appropriate dollar amounts, you’ll see how easy it is to continue recording your income and expenses.
The most difficult part is getting started. But once you have your plan in place, you’ll recognize the power of the information that you have at your fingertips!
Follow these steps to make your budget worksheet:
List your income in a vertical column down the left side of the page. Think of all the sources of income (including paychecks and interest) that you receive. Also, consider how often this income becomes available to you. For example, are you paid weekly or every other week?
List your expenses below your income in that same column. Begin with major expenses such as a car payment, car insurance, food (including school lunches), clothing, and entertainment. Include all expenses, whether you pay in the form of a check, cash, credit card, or the amount is deducted from your credit union account. Remember to include any finance charges, such as interest on your auto loan.
Now, list the related timeframes in a row across the top of the page. For instance, does the expense or income occur weekly, per paycheck, monthly, quarterly, or yearly? Is the expense tax-deductible? If so, add a heading for this in your horizontal row. When you are finished you should have the beginning of a grid or chart. Use this as a worksheet to help you categorize and plan. When you first start using your budget worksheet, you might find that you change it often. That’s good! Your worksheet should be a working document.
Now that you have a “skeleton” worksheet, add anticipated expenses. Are you planning to go to college or participate in a wedding (as either a bridesmaid or a groomsman)? All of these require that you spend a lot of money. (Hint: Anticipate that you will have to spend more than you’d prefer, and budget accordingly. It’s better to be prepared than shocked.) You can also consider anticipated sources of income, such as the yearly birthday check from your Aunt Mildred. Be careful, though; don’t spend the money before you have it.
Don’t forget the “small stuff”! Do you buy soda pop or special coffee, eat lunch out, or buy snacks from the vending machine? If so, keep track of how often you do—and how much you spend. All of these purchases add up throughout the week, the month, and the year. So budget for these, or do without!
Remember: Use your budget as a tool to help you achieve your goals.Once you set up your categories and make it a point to record the appropriate dollar amounts, you’ll see how easy it is to continue recording your income and expenses.
The most difficult part is getting started. But once you have your plan in place, you’ll recognize the power of the information that you have at your fingertips!
Make one or two mistakes in handling your retirement money and you could be paying a stiff penalty later in your life. With the stock market on such unsteady legs, it pays to stay clear of these common mistakes:
You pay attention to the market losses instead of your long-term needs. Catastrophic events and long-term health care needs cause as much damage when you’re caught unawares as does a shaky stock market. Will your nest egg be able to handle the costs of long-term care?
You forget about inflation and taxes. Your retirement savings is a lot smaller than you think it is when you start factoring in the rate of inflation and the taxes you’ll have to pay when you start drawing out of it. Again, experts say a volatile market isn’t your portfolio’s greatest risk. Inflation and taxes may be.
You indulge instead of save in the last years before retirement. Just because you’ve got just a handful of years left before you retire doesn’t mean you should go ahead and buy that new Lexus. Some people are able to build up almost a third of their savings in the last five years of retirement because they got serious about saving and investing.
You think you can withdraw more than you really can. If you rely on average annual returns on your investments to determine just how much you can withdraw, you could be drawing down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb is to count on a 3 percent rate of withdrawal.
You don’t think you’ll live a long life. Despite the dramatic rise in life expectancy, people still seriously underestimate how long they’ll live. If you’re not thinking about longevity, you could tap out your savings much faster than you should.
You pay attention to the market losses instead of your long-term needs. Catastrophic events and long-term health care needs cause as much damage when you’re caught unawares as does a shaky stock market. Will your nest egg be able to handle the costs of long-term care?
You forget about inflation and taxes. Your retirement savings is a lot smaller than you think it is when you start factoring in the rate of inflation and the taxes you’ll have to pay when you start drawing out of it. Again, experts say a volatile market isn’t your portfolio’s greatest risk. Inflation and taxes may be.
You indulge instead of save in the last years before retirement. Just because you’ve got just a handful of years left before you retire doesn’t mean you should go ahead and buy that new Lexus. Some people are able to build up almost a third of their savings in the last five years of retirement because they got serious about saving and investing.
You think you can withdraw more than you really can. If you rely on average annual returns on your investments to determine just how much you can withdraw, you could be drawing down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb is to count on a 3 percent rate of withdrawal.
You don’t think you’ll live a long life. Despite the dramatic rise in life expectancy, people still seriously underestimate how long they’ll live. If you’re not thinking about longevity, you could tap out your savings much faster than you should.
You can feel the panic. Retirement is just around the corner and you haven’t saved anywhere near enough. Now you face the prospect of scraping by on just Social Security, perhaps with a small pension. Worse, you face the prospect of running out of money. This isn’t how you dreamed of retiring. Now what?
It’s never too late, according to CERTIFIED FINANCIAL PLANNER™ professionals. Here are a few pre-retirement and post-retirement planning ideas that can help you salvage your retirement dreams.
Prepare written budgets. Budget for pre- and post-retirement. This injects a dose of reality into your financial planning and helps you plan the following strategies.
Rethink retirement. Do you really want or need to retire soon? This isn’t a cop-out. Our concepts of retirement are changing rapidly. Some experts point out that age 62 or 65 can be an early age to quit working when people routinely live to age 80, 85, or 90. Consider retiring in stages, working full time longer, then transitioning into retirement by working part time. Every year longer that you work — and save for retirement — will significantly improve your financial nest egg and reduce financial needs for the time you are fully retired. Think of it this way: would it be better to work two or three years longer in the job you’re in now, or have to find another job after you retire when you discover you don’t have enough money?
Avoid “lifestyle creep.” It’s not uncommon that in the last five years before retirement, when the kids are gone, the mortgage and college are paid off, and employment earnings are at their peak, that people boost personal spending with cruises, country club membership, even an expensive new home.
The problem is that not only are you diverting money from retirement savings, you are simultaneously increasing the cost of retirement assuming that you want to maintain that pre-retirement lifestyle once you retire. For example, say you take the extra money from increased earnings and reduced child-rearing expenses and put half of it into retirement savings and half into improved lifestyle. If this increases the cost of your lifestyle by one-third, the other half of earnings and savings will increase your retirement nest egg by only eight percent.
Reduce expenses. Try shaving 10 or even 15 percent from your living expenses. If you don’t have enough money when you retire, you’ll be shaving expenses then, anyway. Better to do it before retirement and put the savings into your nest egg. Many households have “lazy” debt such as high-interest credit cards or a home that could be refinanced. The budgets will help you here.
Maximize retirement plan contributions. Once you maximize those vehicles, consider tax-deferred annuities, which have no contribution limits, or growth stocks, which don’t kick out current taxable income. Consider extra contributions to retirement plans. The contributions won’t qualify for a tax deduction, but the earnings will grow tax deferred.
Review investments. You don’t want to invest too aggressively so soon before retirement, but you may not want to have all your investments in low-risk (and thus lower-earning) accounts, either. Most planners recommend that even retirees have some portion of their portfolio in stocks.
Moonlight. It’s usually better to work an extra job before retirement than afterwards. The money you make can then work for you by being invested, perhaps in a tax-deferred account, resulting in a larger nest egg.
Consider delaying Social Security. For every year beyond your normal retirement age and age 70 that you can delay taking Social Security benefits, the size of the monthly benefits that you eventually collect will increase. However, this may not be a good strategy for people with shorter-than-normal life expectancies.
Make use of your home. Move to a smaller, less expensive home, and invest the profits. Rent out a room for extra income. Consider a reverse mortgage.
Withdraw from the right accounts. Often you can stretch your retirement savings by withdrawing first from the right accounts. Typically, this is taxable savings, which allows tax-deferred accounts to continue to grow faster, but not always. A Roth IRA conversion might make sense. Review your options with your financial advisor.
This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.
It’s never too late, according to CERTIFIED FINANCIAL PLANNER™ professionals. Here are a few pre-retirement and post-retirement planning ideas that can help you salvage your retirement dreams.
Prepare written budgets. Budget for pre- and post-retirement. This injects a dose of reality into your financial planning and helps you plan the following strategies.
Rethink retirement. Do you really want or need to retire soon? This isn’t a cop-out. Our concepts of retirement are changing rapidly. Some experts point out that age 62 or 65 can be an early age to quit working when people routinely live to age 80, 85, or 90. Consider retiring in stages, working full time longer, then transitioning into retirement by working part time. Every year longer that you work — and save for retirement — will significantly improve your financial nest egg and reduce financial needs for the time you are fully retired. Think of it this way: would it be better to work two or three years longer in the job you’re in now, or have to find another job after you retire when you discover you don’t have enough money?
Avoid “lifestyle creep.” It’s not uncommon that in the last five years before retirement, when the kids are gone, the mortgage and college are paid off, and employment earnings are at their peak, that people boost personal spending with cruises, country club membership, even an expensive new home.
The problem is that not only are you diverting money from retirement savings, you are simultaneously increasing the cost of retirement assuming that you want to maintain that pre-retirement lifestyle once you retire. For example, say you take the extra money from increased earnings and reduced child-rearing expenses and put half of it into retirement savings and half into improved lifestyle. If this increases the cost of your lifestyle by one-third, the other half of earnings and savings will increase your retirement nest egg by only eight percent.
Reduce expenses. Try shaving 10 or even 15 percent from your living expenses. If you don’t have enough money when you retire, you’ll be shaving expenses then, anyway. Better to do it before retirement and put the savings into your nest egg. Many households have “lazy” debt such as high-interest credit cards or a home that could be refinanced. The budgets will help you here.
Maximize retirement plan contributions. Once you maximize those vehicles, consider tax-deferred annuities, which have no contribution limits, or growth stocks, which don’t kick out current taxable income. Consider extra contributions to retirement plans. The contributions won’t qualify for a tax deduction, but the earnings will grow tax deferred.
Review investments. You don’t want to invest too aggressively so soon before retirement, but you may not want to have all your investments in low-risk (and thus lower-earning) accounts, either. Most planners recommend that even retirees have some portion of their portfolio in stocks.
Moonlight. It’s usually better to work an extra job before retirement than afterwards. The money you make can then work for you by being invested, perhaps in a tax-deferred account, resulting in a larger nest egg.
Consider delaying Social Security. For every year beyond your normal retirement age and age 70 that you can delay taking Social Security benefits, the size of the monthly benefits that you eventually collect will increase. However, this may not be a good strategy for people with shorter-than-normal life expectancies.
Make use of your home. Move to a smaller, less expensive home, and invest the profits. Rent out a room for extra income. Consider a reverse mortgage.
Withdraw from the right accounts. Often you can stretch your retirement savings by withdrawing first from the right accounts. Typically, this is taxable savings, which allows tax-deferred accounts to continue to grow faster, but not always. A Roth IRA conversion might make sense. Review your options with your financial advisor.
This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.
Buying a new vehicle doesn’t need to be an overwhelming experience. Just do your homework before you visit the dealership, and you’ll be prepared to find the car you want—not just the car they want to sell you. Before you go to the dealership, you should do the following:
Determine if you can afford a new car. The total of all your debt shouldn't be more than 40 percent of your monthly take-home pay.
Shop for financing first. A credit union tends to lend more money than a bank and generally offers more favorable rates. Credit unions also have arrangements with local dealerships, offering member-only sales.
Decide exactly what you want this car to do for you. How many people will you be carrying? What options do you want in order to be comfortable? Know exactly what you want before you set foot into the dealership and stick to it.
Research dealerships. Make sure that you find one close to you. If your vehicle needs service, it will be much easier to establish a relationship with the service manager if the location is convenient.
Know the car you want to buy before you go shopping. The Internet is an excellent way to find information. There are numerous sites specifically for supplying consumers with information on the make and model of the car you want to buy. Most sites include information such as dealer price, equipment listings, specifications, safety features, and warranty details.
Find out how much insurance is going to cost for the new vehicle. If you can afford the car, but you can’t afford the insurance, then you should purchase a different vehicle.
Try to determine the actual value of your trade-in. Use the market guide books for an estimate, and then visit various used car lots to get a bid on the car.
Determine if you can afford a new car. The total of all your debt shouldn't be more than 40 percent of your monthly take-home pay.
Shop for financing first. A credit union tends to lend more money than a bank and generally offers more favorable rates. Credit unions also have arrangements with local dealerships, offering member-only sales.
Decide exactly what you want this car to do for you. How many people will you be carrying? What options do you want in order to be comfortable? Know exactly what you want before you set foot into the dealership and stick to it.
Research dealerships. Make sure that you find one close to you. If your vehicle needs service, it will be much easier to establish a relationship with the service manager if the location is convenient.
Know the car you want to buy before you go shopping. The Internet is an excellent way to find information. There are numerous sites specifically for supplying consumers with information on the make and model of the car you want to buy. Most sites include information such as dealer price, equipment listings, specifications, safety features, and warranty details.
Find out how much insurance is going to cost for the new vehicle. If you can afford the car, but you can’t afford the insurance, then you should purchase a different vehicle.
Try to determine the actual value of your trade-in. Use the market guide books for an estimate, and then visit various used car lots to get a bid on the car.
Home ownership remains one of the best investments you'll ever make. Just think, what other investment can you make that will not only give you a solid return on your money but will also be something you use each day?
If you are looking at buying a home, here are the seven basic steps to follow:
Pinpoint your target. Decide where you want to live. Consider things such as commuting time, quality of schools, and proximity of stores and services. If you limit your hunt to one or two areas, you'll be able to keep closer track of available properties. Talk to people who live in that area or pick up a local newspaper to find out more about what's going on there.
Get pre-qualified for a mortgage. This way you will know your price range and how much of a down payment you're going to need. You will also be able to move fast if you find the right property. Finally, you’ll learn in advance if there will be any hitches in securing a mortgage.
Start shopping. Be prepared to run into a lot of real estate agents. It's important to know that agents represent the seller and not you, the buyer, unless you've hired someone specifically for that purpose. So buyer beware! Open houses are usually held on Sundays, but don't hesitate to ask for a private viewing. Read the classified ads and drive through the neighborhoods that interest you and look for "For Sale" signs.
Ask lots of questions. Agents should be able to answer most of your questions but always ask for the seller's disclosure, which is a document on which sellers must list whatever defects they are aware of in the home. It may also show the age of the roof, furnace, and other critical parts of the house. Ask the agent for "comps," statistics which compare what other houses in the neighborhood have sold for. Check your library for books on home buying and home repair. The more you know, the better the decision you can make!
Now get that mortgage. Even if you've been pre-approved, you can still shop for a better deal on your mortgage. You might play it safe by staying with the company that pre-qualified you, but if your credit is sparkling, it'll be easy to shop around.
Get an inspection. Municipalities often issue "certificates of occupancy," but these are based only on limited criteria. A professional inspector is like a detective and may unveil problems you can't spot. If you are unhappy with the home after the inspection, you may be able to get out of the deal without suffering any financial loss.
Close on your mortgage. The closing is where you sign all the papers, take legal possession of the property, and become indebted for your mortgage. Again, don't be afraid to ask questions. You're signing a legal contract, and you definitely want to know what you're getting into before signing all those forms. You may have an attorney with you at closing, although most people don't want to go the extra expense. If you want to be a little more careful, you can try to have a lawyer look over the papers in advance.
You seek the expertise of CPAs at tax and audit time, of course. But CPAs also promote personal and professional financial security year round. Visit the CPA Referral Service on the MACPA website to search for a CPA in your geographical area or specific area of expertise.
This article was submitted by the Michigan Association of CPAs.
If you are looking at buying a home, here are the seven basic steps to follow:
Pinpoint your target. Decide where you want to live. Consider things such as commuting time, quality of schools, and proximity of stores and services. If you limit your hunt to one or two areas, you'll be able to keep closer track of available properties. Talk to people who live in that area or pick up a local newspaper to find out more about what's going on there.
Get pre-qualified for a mortgage. This way you will know your price range and how much of a down payment you're going to need. You will also be able to move fast if you find the right property. Finally, you’ll learn in advance if there will be any hitches in securing a mortgage.
Start shopping. Be prepared to run into a lot of real estate agents. It's important to know that agents represent the seller and not you, the buyer, unless you've hired someone specifically for that purpose. So buyer beware! Open houses are usually held on Sundays, but don't hesitate to ask for a private viewing. Read the classified ads and drive through the neighborhoods that interest you and look for "For Sale" signs.
Ask lots of questions. Agents should be able to answer most of your questions but always ask for the seller's disclosure, which is a document on which sellers must list whatever defects they are aware of in the home. It may also show the age of the roof, furnace, and other critical parts of the house. Ask the agent for "comps," statistics which compare what other houses in the neighborhood have sold for. Check your library for books on home buying and home repair. The more you know, the better the decision you can make!
Now get that mortgage. Even if you've been pre-approved, you can still shop for a better deal on your mortgage. You might play it safe by staying with the company that pre-qualified you, but if your credit is sparkling, it'll be easy to shop around.
Get an inspection. Municipalities often issue "certificates of occupancy," but these are based only on limited criteria. A professional inspector is like a detective and may unveil problems you can't spot. If you are unhappy with the home after the inspection, you may be able to get out of the deal without suffering any financial loss.
Close on your mortgage. The closing is where you sign all the papers, take legal possession of the property, and become indebted for your mortgage. Again, don't be afraid to ask questions. You're signing a legal contract, and you definitely want to know what you're getting into before signing all those forms. You may have an attorney with you at closing, although most people don't want to go the extra expense. If you want to be a little more careful, you can try to have a lawyer look over the papers in advance.
You seek the expertise of CPAs at tax and audit time, of course. But CPAs also promote personal and professional financial security year round. Visit the CPA Referral Service on the MACPA website to search for a CPA in your geographical area or specific area of expertise.
This article was submitted by the Michigan Association of CPAs.
People typically spend money on home improvements for one of two reasons: personal gratification, or to increase home value. Unless you purchase a true “fixer-upper” and are looking for a quick flip, there aren’t too many modifications that will pay greater dividends than what’s invested. That makes the real goal of home improvement before selling increased visibility and appeal. With that in mind, here are a few quick and low-cost improvements that have good return on investment:
Cleaning and general maintenance: One of the easiest, but most important things to do. Luckily, it’s also one of the lowest cost investments. Some people are able to see past smudged windows, dirty carpet, and cracked caulk; others will move right along to the next house.
Painting: A nice coat of paint on the interior and exterior can make a big difference. It’s all about curb appeal on the outside, and non-obtrusive or off-putting colors on the inside.
Hardware: Kitchen cabinet knobs and pulls, bathroom hardware, door handles, light fixtures … if chosen carefully, they can create a flow throughout the home on a relatively small budget.
Landscaping: Another big factor in the curb appeal category. It starts with making sure that the lawn and existing groundcover are neat and in good order. If you want to take it another step, a few well-placed shrubs or borders can create an attractive entrance for a moderately small investment.
Beyond the more overt fixes, you should consider hiring an inspector to examine the rest of the home for any other major considerations. Understandably, a clean bathroom and fresh coat of paint won’t be major considerations if there’s a leaky roof or broken furnace. If everything else is in good standing, make sure to put your best foot forward by focusing on the details.
Cleaning and general maintenance: One of the easiest, but most important things to do. Luckily, it’s also one of the lowest cost investments. Some people are able to see past smudged windows, dirty carpet, and cracked caulk; others will move right along to the next house.
Painting: A nice coat of paint on the interior and exterior can make a big difference. It’s all about curb appeal on the outside, and non-obtrusive or off-putting colors on the inside.
Hardware: Kitchen cabinet knobs and pulls, bathroom hardware, door handles, light fixtures … if chosen carefully, they can create a flow throughout the home on a relatively small budget.
Landscaping: Another big factor in the curb appeal category. It starts with making sure that the lawn and existing groundcover are neat and in good order. If you want to take it another step, a few well-placed shrubs or borders can create an attractive entrance for a moderately small investment.
Beyond the more overt fixes, you should consider hiring an inspector to examine the rest of the home for any other major considerations. Understandably, a clean bathroom and fresh coat of paint won’t be major considerations if there’s a leaky roof or broken furnace. If everything else is in good standing, make sure to put your best foot forward by focusing on the details.
According to the Better Business Bureau (BBB), a well maintained lawn and landscape can add 5 to 7 percent to a property’s value. Considering the power of curb appeal on home sales, this came as little surprise. Still, how does one achieve a magnificent landscape without sacrificing every Saturday, and sometimes Wednesdays, of the growing season?
You might consider employing a lawn care service. When doing so, heed the following advice from the Federal Trade Commission (FTC):
Talk with neighbors who have used a lawn care service. Inquire specifically about the quality of service. Was service adjusted for weather conditions? In other words, after spurts of heavy rainfall and aggressive growth, did the service respond accordingly? How would your neighbor rate customer service?
Shop around and obtain estimates. The lowest estimate may not necessarily provide all the services you need. Remember that each lawn is different and that your lawn does not necessarily need the same treatment as your neighbor’s lawn. Our lawn is pocked with small peaks and valleys. Commercial, riding mowers leave an uneven cut, so it was important for us to hire a service that would use a push mower.
Make sure you are getting “custom” service. Even the best lawns have weeds and pests. Ask to see evidence of specific and real problems before you agree to any treatment. The service we employ leaves evidence of insects in sealed plastic bags for our inspection. Further, a written report describes areas where pests are prevalent for our investigation. Check to see if the company is licensed with the state. Licensing often requires employees to have special training, especially those who apply pesticides to lawns. Ask what specific lawn care training the employees have. Check with your local consumer affairs office or BBB to learn if any complaints have been lodged against the company. Find out if the company has liability insurance to cover any accidents that might happen while work is being performed in your yard or while pesticides are being applied.
Once you have chosen a lawn care service, secure the deal with a written contract. Peruse the contract carefully; know what specific services and lawn problems are covered and what are not: Are there extra charges for special services, such as fertilizing, disease control, or reseeding? Is the work guaranteed? If it is, get the guarantee (or warranty) in writing. Know when the guarantee expires, and what is included and excluded. What is the cancellation policy? Must you renew annually or is service scheduled indefinitely? Many lawn care service contracts require written notice to cancel.
You might consider employing a lawn care service. When doing so, heed the following advice from the Federal Trade Commission (FTC):
Talk with neighbors who have used a lawn care service. Inquire specifically about the quality of service. Was service adjusted for weather conditions? In other words, after spurts of heavy rainfall and aggressive growth, did the service respond accordingly? How would your neighbor rate customer service?
Shop around and obtain estimates. The lowest estimate may not necessarily provide all the services you need. Remember that each lawn is different and that your lawn does not necessarily need the same treatment as your neighbor’s lawn. Our lawn is pocked with small peaks and valleys. Commercial, riding mowers leave an uneven cut, so it was important for us to hire a service that would use a push mower.
Make sure you are getting “custom” service. Even the best lawns have weeds and pests. Ask to see evidence of specific and real problems before you agree to any treatment. The service we employ leaves evidence of insects in sealed plastic bags for our inspection. Further, a written report describes areas where pests are prevalent for our investigation. Check to see if the company is licensed with the state. Licensing often requires employees to have special training, especially those who apply pesticides to lawns. Ask what specific lawn care training the employees have. Check with your local consumer affairs office or BBB to learn if any complaints have been lodged against the company. Find out if the company has liability insurance to cover any accidents that might happen while work is being performed in your yard or while pesticides are being applied.
Once you have chosen a lawn care service, secure the deal with a written contract. Peruse the contract carefully; know what specific services and lawn problems are covered and what are not: Are there extra charges for special services, such as fertilizing, disease control, or reseeding? Is the work guaranteed? If it is, get the guarantee (or warranty) in writing. Know when the guarantee expires, and what is included and excluded. What is the cancellation policy? Must you renew annually or is service scheduled indefinitely? Many lawn care service contracts require written notice to cancel.
To protect yourself, always check the contractor's references. This is an essential stage of qualifying the right person for your project. Here are just a few questions to ask previous customers:
Could they communicate well with the remodeler?
Were they pleased with the quality of work? (This is a tough question, however, since everyone defines "quality" differently. It is much better to ask to see the completed project to determine the level of quality for yourself.)
Were they satisfied with the remodeler's business practices?
Did the crew show up on time?
Were they comfortable with the subcontractors who were hired?
Was the job completed on schedule?
Did the remodeler fulfill his or her contract?
Did the contractor stay in touch throughout the project?
Were the final details finished in a timely manner?
Would you use the remodeler again without hesitation?
This article was submitted by The National Association of the Remodeling Industry, which is committed to educating both trade professionals and remodeling-ready homeowners. NARI does this by reaching out to a diverse audience in a variety of formats including education, training, publications and programs. Contact NARI at (800) 611-6274. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.
Could they communicate well with the remodeler?
Were they pleased with the quality of work? (This is a tough question, however, since everyone defines "quality" differently. It is much better to ask to see the completed project to determine the level of quality for yourself.)
Were they satisfied with the remodeler's business practices?
Did the crew show up on time?
Were they comfortable with the subcontractors who were hired?
Was the job completed on schedule?
Did the remodeler fulfill his or her contract?
Did the contractor stay in touch throughout the project?
Were the final details finished in a timely manner?
Would you use the remodeler again without hesitation?
This article was submitted by The National Association of the Remodeling Industry, which is committed to educating both trade professionals and remodeling-ready homeowners. NARI does this by reaching out to a diverse audience in a variety of formats including education, training, publications and programs. Contact NARI at (800) 611-6274. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.
Manufacturers often market vehicles by offering a rebate or exceptionally low financing. Should you take the rebate or the special financing? The dealer does not give you both.
For example, you have decided to purchase a vehicle for $20,000. The dealer is going to give you a rebate of $3,000 or a finance rate of 0%. Which deal is in your best interest?
Here is a comparison of the loan payments with the dealer’s reduced financing and a credit union’s standard financing.
0% APR financing for 36 months on a $20,000 loan
Result:
Monthly Payment = $555.56
Total of Payments = $20,000.00
5.5% APR Credit Union Financing* for 36 months on a $17,000 loan
($20,000 minus the $3,000 rebate)
Result:
Monthly Payment = $513.33
Total of Payments = $18,479.88
$1520.12 is saved over the term of the loan with credit union financing. In addition, if you were to sell the car during the time you were paying on the loan, more money would come back to you because you had a lower loan balance.
Here are a few other things to consider:
*The rates quoted are for comparison purposes only, and are not a guarantee of the rates offered by any particular credit union. Contact your credit union for the current rates on new and used car loans.
For example, you have decided to purchase a vehicle for $20,000. The dealer is going to give you a rebate of $3,000 or a finance rate of 0%. Which deal is in your best interest?
Here is a comparison of the loan payments with the dealer’s reduced financing and a credit union’s standard financing.
0% APR financing for 36 months on a $20,000 loan
Result:
Monthly Payment = $555.56
Total of Payments = $20,000.00
5.5% APR Credit Union Financing* for 36 months on a $17,000 loan
($20,000 minus the $3,000 rebate)
Result:
Monthly Payment = $513.33
Total of Payments = $18,479.88
$1520.12 is saved over the term of the loan with credit union financing. In addition, if you were to sell the car during the time you were paying on the loan, more money would come back to you because you had a lower loan balance.
Here are a few other things to consider:
*The rates quoted are for comparison purposes only, and are not a guarantee of the rates offered by any particular credit union. Contact your credit union for the current rates on new and used car loans.