Do you know how much money you have?

Check your balance

Now this might sound obvious, but how often have you avoided checking your bank balance before a night out. I’ve been known to (gasp) put my hand over the screen when my balance flashes up. Sometimes you really just don’t want to know. Especially not if you know you had a big night out at the weekend. And that’s fine, as long as it doesn’t become a habit. You should know to the nearest hundred how much money you have. You know what’s worse than your face falling when you realise you’ve spent too much? The sinking feeling when you try and take money out and you’ve spent it all a week before pay day.

Set up text message alerts

Most banks these days will text you at a certain limit on your account. Most banks will text you every day if you ask them. This is key to you knowing where your money is going. I forget a lot of things I buy, and I don’t think I’m alone. You go to the shop to buy biscuits, you buy three magazines and a packet of cigarettes and pop it all on your card. But you only remember the biscuits and have no idea where your money is going. Even a weekly text alert is better than guessing. Your brain will only ever guess in your favour. Your brain is almost always wrong.

Write down your online spending

Get a massive pen and piece of paper. Stick it above your desk. Every time you spend online, write this down and tot up at the end of the week. When we’re not actually handing over any cash, or physically paying for something, I think we forget that we’re spending money at all. By writing it down and having it staring you in the face, you’ll remember. And possibly think twice about that extra pair of shoes. You’ll also remember those little extras like delivery charges that we don’t factor into our spending.

Set up standing orders

Standing orders mean that you know where your money is going, as well as when it comes in. It’s not easy for me to deal with standing orders – as I’ve mentioned, I don’t always know when I’m getting paid. But if I can keep track of where my money is going, I won’t get a massive shock when I think I’m rich on minute and the landlady is calling me the next day to find out where the rent is. This has happened. It’s not fun. This way you control what day your cash is leaving your account.

Use cash

Want to really keep track of your money? Take cash out instead of using your cards. Once you know how much cash you’re taking out this week, you’ll be more aware of where it’s going. Banks and technology are doing their very best to make spending simple. But it’s a really issue if you’re trying to stick to a budget and I’m going back to cold hard cash for a while.

What are your tips for keeping up with your finances? Do you know how much money is in your account?

Ten Ways to Save on Filling Your Tank

With the average price of gas more than $1 higher than this time last year, American consumers are feeling the pain at the pump as more of their income goes to keeping their cars on the road.
Here are 10 money-saving tips from the U.S. Department of Energy for everyone fed up with filling up at the pump:
Tune ups add up: Keeping your car engine tuned can improve mileage by four to 40 percent while saving 12 cents per gallon.
Pressure tactics: Save nine cents per gallon by keeping your car tires inflated to their proper pressure.
Don’t fool with fuel: Use the octane fuel recommended in the owner’s manual and save three-to-six cents per gallon.
Remove the junk in your trunk: Save between four and eight cents per gallon by reducing the weight in your vehicle by 100 pounds.
Slow down to save: You can assume that each five miles per hour you drive over 60 will cost you an extra 24 to 87 cents per gallon.
You better shop around: Comparing prices at different stations can save you hundreds of dollars a year. Consider paying for gas with a credit card that offers gas rebates or buy gas gift cards to use at the pump with a credit card that offers rewards.
Lose the lead foot: When driving, avoid fast starts and stops, and maintain an appropriate speed. Over time, you will save hundreds of dollars on lower gas and maintenance costs.
Time for a change: Use motor oil with friction-reducing additives labeled “Energy Conserving” on the API performance symbol.
Don’t get tripped up: Instead of making several different trips in a week to run errands, map out a plan to tackle several errands in one outing and minimize the number of miles driven.
Log on before starting out: Use smart phone apps and resources such as gasbuddy.com, which will show you where you might be able to find the cheapest gas near you.

Choose the Best Savings Account for You

In a recent national study, nearly three in four Americans surveyed reported having a savings account, money market account or certificate of deposit (CDs). CDs do not allow for as easy access to your money as the other types of savings accounts since they require the deposit of a fixed sum of money for a specified amount of time and have penalties for early withdrawal. Savings accounts should do more than merely safeguard your money. They should also motivate you to save with convenience and compounded interest that adds to your savings.
Types of savings accounts
The typical savings account is a passbook account that offers a low interest rate and generally charges little or no fees or has balance requirements.
The second type is a high-yield savings account such as a money market account that offers a higher rate of interest but usually has restrictions regarding a minimum balance and the amount of withdrawals you can make.
For both types of accounts, the FDIC insures $250,000 of money deposited in one insured bank. Accounts kept in different banks, but not different branches of the same bank, are each insured for $250,000.
How to choose the best account for you
If you need easy access to your money and plan to make regular withdrawals, the restrictions of a high-yield account may discourage you from saving. Although it won’t pay as much interest, the low balance requirements and unlimited transactions of a passbook account may be a better fit for your needs.
It may not be worth spending the money on gas to drive across town to get a slightly better interest rate. Look for banks with branches near where you live or work. Some high interest banks are primarily online and you should be sure you know the process to make a transaction and the time it will take before completed.
While you can earn money with interest, you can lose it in fees. Be sure you understand and compare all the conditions regarding deposit, withdrawal and balance limits when shopping for a bank.
Some high-yield accounts offer higher rates during an introductory period and impose certain restrictions to maintain the rate. If you are saving with a long-term goal in mind, look for the account that will offer the best return over that entire period.
Three Ways to Save

1. Ask for direct deposit at work if they offer it and money will go into your savings account automatically.
2. Pay yourself first with any extra money you find by cutting back. If you decide to spend $25 a week less at work by bringing your lunch, avoiding the vending machine and not going out for coffee, plan to allocate $5 to savings.
3. Stick to your spending plan and pay your bills on time. The money you may be spending on late fees for credit card payments or checking account fees would be put to better use earning interest in a savings account.

How Well Do You Know Your 401(k)?

Since the time which major corporations shifted away from defined benefit plans (pension plans) the responsibility and risk for retirement accumulation moved to the employee. 401(k)’s and other qualified plans or defined contribution plans have been the predominant vehicle for retirement accumulation for most Americans over the last 30 years.
In a recent article published by Forbes, these defined contribution plans, specifically the 401(k), were called into question regarding the fees that are charged to the account owner by third party service providers.
The article goes on to reference a new study by AARP that illustrates how in the dark most American are in regards to their 401(k) plans and the fees charged.

“7 in 10 participants reported that they did not pay any fees in their 401(k)…  and 62% said they are unaware of how much they are paying in fees for their plans.” – AARP: 401(k) Participants’ Awareness and Understanding of Fees

“The government has expressed concern that this widespread ignorance is causing significant financial damage.  High fees and hidden conflicts of interest are the culprits in causing 401(k) plans to under perform professionally managed traditional pension plans…, a U.S. Government Accountability Office report declared in January.” – Forbes

As a significant portion of the American population moves towards retirement it is all the more important to understand the vehicle in which you are relying on to sustain you in the later years of life. Don’t fall prey to ignorance or complacency…educate yourself today.

Resources and References:

AARP – Study of 401(k) Participants’ Awareness and Understanding of Fees

U.S. GOA – 401(k) Plans, Improved Regulation Could Better Protect Participants From Conflicts of Interest

BrightScope – Look Up a Company 401(k) – www.brightscope.com

Forbes.com - Find the Fees

Do it Yourself Credit Repair

A credit report shows a person’s entire financial history from the date when they open their first credit card to present day. The report contains information including all open and closed credit accounts, mortgages, loans, etc. A credit score can suffer from late payments, unpaid credit card balances, and defaults. But, what if your credit report contained harmful information that was completely inaccurate? This is actually a more common occurrence than one would think. A 2004 study estimated that as many as 79% of credit reports contained some kind of factual errors.

A large percentage of these errors were less harmful things like the misspelling of a person’s name or an incorrect address. But overall 30% of all credit reports contained serious errors that might cause a consumer to be denied a loan or new credit. This makes keeping close tabs on your credit report an absolute necessity.

How Can You Check Your Report for False Information?

Consumers are constantly being barraged by “Free Credit Report” advertisements on television and the internet. Unfortunately for us, these services are not actually free. The marketing campaign serves ass a gimmick to get people to sign up for credit monitoring, then receive a credit report after purchase. Credit monitoring is a service that alerts people when new credit accounts are opened in their name, or other changes are made to a person’s credit history. This may be a helpful service if you are very concerned about identity theft, but some experts think that keeping tabs on your own credit report a couple times a year is sufficient. The costs for credit monitoring can rage from $5 – $30 a month.

The best place to check your credit report without having to pay a single cent is annualcreditreport.com. This is a website that was created in response to the Fair Credit Reporting Act. It is run by the 3 major credit bureaus and gives everyone free access to their credit reports once per year. This website is extremely simple to use and takes about 5 minutes to receive your information for the 3 bureaus.

Once you have access to your 3 reports, you can inspect them to see if the information is accurate and if any of them are negative credit items. Make sure all closed credit accounts correctly show up on your report as closed. Another error that was shown to be on reports was a double listing of accounts like mortgages or credit cards. Make sure all the data in each of the 3 reports reflect your true financial status.

What To do If You Find False Information

If you find information that you do not believe is correct, you can send a dispute letter to the offending bureau. This dispute letter should contain a copy of your report with a written letter that clearly states what errors are on the report. You should also include any documentation that supports your claim. This letter should be sent certified mail, so you have proof that it was received by the credit bureau. Your claim will usually be investigated within a month’s time and the company that is responsible for the specific credit account will be contacted. If the claim is found to be invalid, the company that made the claim has the obligation to contact all 3 bureaus and ask them to make the necessary changes.

Even though credit report errors are very common, there are ways to have these errors fixed. If you still arent quite sure how to handle the situation with credit report errors, the FTC provides a sample dispute letter here, along with some more detailed information to help you out.

The Wow Factor In Current Mortgage Rates

30-year mortgage rates have fallen for eight straight weeks now, and are now at the extremely low level of 4.49 percent. Still, the real wow factor in current mortgage rates can be found in 15-year mortgages.

15-year mortgage rates are at 3.68 percent, which is close to an all-time low. What's striking is that this is 0.81 percent below the level of 30-year mortgage rates.

Over the eleven previous years so far in this century, the spread between 15-year and 30-year mortgage rates has ranged between 0.31 percent and 0.66 percent, so the 0.81 percent spread between current mortgage rates is very unusual territory.

Even though the more compressed repayment schedule of a 15-year mortgage would result in significantly higher monthly payments than a 30-year mortgage, current mortgage rates indicate the anyone buying a house or refinancing a mortgage should at least consider the shorter option.

Over the long run, of course, the amount of principal involved in a 15-year and 30-year mortgage would be the same. However, the interest you would pay on a 15-year mortgage is considerably less. This is true in general because you would be repaying the loan in half the time, but it is especially true now because of that unusually wide spread between 15-year and 30-year mortgage rates.

While this is an opportunity for new home buyers to save a great deal of money over the course of a mortgage, the opportunity represented by 15-year mortgage rates should be especially compelling for anyone who is refinancing.

If you are several years into paying down a 30-year mortgage, you effectively no longer have a 30-year loan. Your remaining principal is spread over however many years you have left on the mortgage. For example, if you are ten years into a 30-year mortgage, you effectively have 20-year loan remaining. At that point, it might not be too big a stretch to refinance into a 15-year loan. The exceptionally low level of 15-year mortgage rates may mean the increase in your monthly payments is manageable, and in the long run your interest savings will be substantial.

Don’t Take Out a Loan From Your 401(k)

As a very last resort, employees with active 401(k) retirement accounts have an option to take out a loan against their future. Borrowing money is never a good position to be in, but if you’re borrowing money from yourself, you ease the pain. 401(k) plans permit borrowing at interest, and paying interest to yourself can help improve your finances in retirement.

The existence of a 401(k) account is often used as an excuse for not creating an emergency fund; if a loan is available at any time, why settle for low high-yield savings accounts when your money could be put to better use? This isn’t a valid argument as elucidated by the dangerous drawbacks of 401(k) loans.

Most people who take out 401(k) loans stop contributing new earnings to their 401(k) plans. Not only is the withdrawn loan not earning more or increasing value in your retirement account, you’re not adding new investments.

One of the most popular emergencies requiring more cash is the loss of a job. If you lose your job, you won’t be able to take a loan from your 401(k). Additionally, if you already have a 401(k) loan when you lose your job,it will be due within 60 days or less. At the same time you need cash, you’ll need to pay back your loan or suffer income taxes plus a 10% penalty. According to a recent study by Aon Consulting, 70 percent of workers who lose their jobs while having an active 401(k) loan default on that loan.

Even if the 401(k) loan is paid back in full, there’s another drawback. The interest on the loan is considered income, and therefore taxed, twice. When you pay interest back to the 401(k) account, it is paid with your regular income, which would be included on your tax return as taxable income. Once that interest is in your 401(k) account, it is mixed in with the before-tax contributions, if your loan was from the before-tax portion of your 401(k). When you retire and you withdraw your funds, the full amount of your before-tax contributions and their earnings will be subject to income tax. You could also argue that the principal portion of the loan payback amounts are taxed twice as well, because a 401(k) loan payback is not considered tax-advantaged and does not reduce your taxable income like a 401(k) contribution.

Congress is currently mulling legislation to limit 401(k) loans. If the law passes as it currently stands in bill form, employees could only take three loans against their 401(k) at a time. Repeated borrowing just sounds like trouble. The law would allow employees to continue contributing to 401(k)s while a loan is outstanding. I would think if any extra money is available, it would be better served paying off the loan rather than making new investments. I suppose it could be more tax efficient this way, but paying off debt should be a priority, even if the borrower is the same individual as the lender. Third, the law would ban 401(k) accounts from issuing debit cards that allow investors to use retirement funds as a transaction account. This sounds reasonable.

Some 401(k) plans might be more restrictive than the law. In most cases, borrowing from a 401(k) is just a bad idea. It’s tempting in emergencies, though, particularly for households that have not been able to create an emergency fund. A 401(k) loan should be a last resort. If you get stuck and are unable to pay the loan, the government takes a big chunk. On a $10,000 loan, assuming 25% federal taxes, 5% state taxes, and a 10% penalty, you’ll only be able to keep $6,000.

Have you or would you borrow from your own 401(k)?

Money Smart Kids Allowance Tips

SVDCU wants to share tips for teaching children good habits about money management. The information was originally published in Smart Parenting - Money Smart Kids.

Allowance

Experts agree that the very best way to teach money- management skills is to give your kids cash, along with control over how it's handled. Allowances provide hands-on, real-world experience in managing money and teach kids about decision-making, budgeting and the value of saving. 

When and How Much

Start giving an allowance by age 6 or 7. Some parents start even earlier, as soon as their kids learn the different values of coins and bills. Children ages 6 and up, however, usually have a better understanding of money and responsibility. The amount of the allowance should be enough to give your kids practice in spending—but not so much that they won't have to make choices. Some popular weekly formulas are $1 or $.50 for every year of age, or $1 for every year of school (e.g. $3 for a second-grader).

The Chore Debate

Most money experts agree that an allowance should not serve as payment for doing chores. Chores are part of kids' responsibility as members of the family. However, consider paying your kids for extra, more demanding tasks, such as cleaning out the garage. If it's a job you would pay others to do, such as baby-sitting, house painting or washing the car, hire your kids instead. 

Allowance Tips

ü  Pay it regularly and on time, such as every Friday evening.

ü  Give younger kids a weekly allowance, but consider paying teens on a monthly basis to reinforce budgeting skills.

ü  Clearly explain what the allowance is expected to cover. Are your kids supposed to buy school lunches with it? Purchase clothes and gifts? Or is it just for personal entertainment and treats? The amount you provide should realistically cover the anticipated expenses.

ü  Give out the allowance in small denominations. For example, if it's $2, give a $1 bill and four quarters. This teaches young kids money equivalents and helps them divide their income into savings and charity.

ü  Provide guidance, but leave decisions about how the money will be spent up to your kids (except if the proposed purchases are unhealthy, unsafe or contrary to your family's principles).

Allow your kids to make mistakes. These can be powerful learning experiences.

You can teach your children how to save money by partnering with SVDCU. Open an account today with a minimum deposit of $10.00. They then become a member of the "Very Important Kid" Club.

Research and Planning are Keys That Open the Door to Homeownership

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you with homeownership.Purchasing a first home can be one of the most exciting experiences in life. But, if you’re not familiar with the home buying process, the experience can be akin to doing a belly flop into the middle of the ocean. So, whether you’re considering a modest starter home or a five-bedroom house in a posh neighborhood, you’ll do well to familiarize yourself with the ins and outs of buying a home.

Ask plenty of questions. Begin by quizzing your friends and family who have recently bought a home. Did they do something they shouldn’t have; should they have done something they didn’t? Besides offering some good general information, they can provide you with real estate agent and lender referrals.

Call your financial institution to learn of possible home buying seminars, or look in your local newspaper for sessions hosted by community groups. These educational sessions are usually offered for free or for a nominal cost. And they often feature a speaker with a financial background who can, in addition to explaining the home buying process, offer strategies for budgeting and improving credit scores.

Your local book bookstore is always a good resource. If you’d rather learn about the process from your desk, consider online sources such as the U.S. Department of Housing and Urban Development’s Web site, which offers information geared toward the first time homebuyer.

Understand your finances. So the handsome colonial you’ve been admiring for the last year has been put on the market. Before you put your big toe over the threshold, calculate how much you can spend on a home. Shopping for unaffordable homes is an exercise in futility and a real spirit dampener. By learning how much house you can realistically afford, you can pour your time and energy into finding the ideal home in your price range.

The rule of thumb says your house payment shouldn’t exceed 28 percent of your income. In other words, if your annual household income is $70,000, your monthly house payment shouldn’t be any more than $1,633. This amount should not only include your mortgage, but your property taxes, homeowner’s insurance and private mortgage insurance (providing you have less than a 20 percent down payment), and any association fees. You’ll also want to figure in the cost of yearly maintenance, which is about 3 percent of the home’s total value.

Phone your local property appraiser’s office for an estimate on property taxes on the homes in your price range. When you phone an insurance company to inquire how much it will cost to insure the home, have details ready such as the address, square footage, and the distance to the nearest fire department.

Even though your yearly income will grow over time, you may wish allot a smaller percentage of your income to your housing expenses, if, for instance, you plan to have children, or you’re late on paying into your retirement fund and want to increase your contributions to make up for lost time. You can reduce your monthly mortgage payments by putting a substantial down payment on your house, or by buying a more modest house until you’re financially ready to shoulder a large mortgage.

Order your credit reports. About the same time you figure out how much you can spend on a house, you’ll want to order copies of your credit report from each of the three credit reporting bureaus (Equifax, TransUnion, and Experian). Examine your report for things like accounts that belong to someone else and closed lines of credit that are still being reported as open.

If your credit has some blemishes, you may want to put off purchasing a home until you clean up your credit rating. Making your car payments on time for at least three consecutive months and paying down credit card debt will help demonstrate to creditors that you’re responsible enough to take on the responsibility of a mortgage. With an improved credit standing, you’ll have a better chance of qualifying for a reasonable interest rate.

Lenders like to see a debt-to-income ratio of less than 36 percent, depending on the lender. That means that no more than 36 percent of your pretax income should go to paying your mortgage, credit cards, alimony, student loans, and auto loans.(You still may qualify at a higher debit to income ratio, but you’ll likely feel financially squeezed.)

From LoveMyCreditUnion.org

Drive Your Savings with GM and Invest in America!

While it sounds like a great offer, the 0% and 2.9% financing that GM offers is usually available to eligible and well qualified customers on select Chevrolet and GMC models only.  Generally, these financing offers are in lieu of consumer cash incentives.  So, you can either take the low financing rate offered by the dealer or  you can take the consumer cash incentive. 

An even better deal?  Credit unions historically offer low loan rates.  You may be able to save thousands by using your credit union's low rates and combining that was the Invest in America Credit Union Member Discount from GM and the consumer cash incentive from the dealer instead of taking the 0% or 2.9% financing.

Not convinced?  Check out this example on a 2011 Chevrolet Silverado 1500 LT Extended Cab 2WD.  In this case you can either get 0% financing for 60 months or a consumer cash incentive of $4,500.  We've also included $2,000 down payment that you would provide:

                                  

	0% for 60-Month GMAC Financing	3.9% for 60-Month Credit Union Financing
Vehicle Payment	$31,615	$31,615
Down Payment	$2,000	$2,000
Consumer Cash	$0	$4,500
Invest in America Discount	$1,672	$1,672
Loan Amount	$27,943	$23,443
Monthly Payment	$466	$431

Total Savings From Financing at Your Credit Union: $2,100

By financing with your credit union, in this case at 3.9%, you'll save $35 each month or $2,100  over the course of the loan.  So, before you visit Love My Credit Union to get your GM Authorization Number, check the rates at Sterling Van Dyke Credit Union and do the math.  Chances are you'll save money by using the Credit Union Member Discount from GM, the consumer cash incentives and by getting your financing at your credit union!

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you with the purchase of a new or used vehicle and to check rates now!

Article from lovemycreditunion.org

For Small Businesses, Credit Unions Serve as Bank Alternative

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you with your small business loan.

Matthew and Kelly Lembke know the frustration of getting turned down for a business loan at a commercial bank.

In 2004, they applied for a $40,000 loan to buy a truck brokerage company in downtstate Normal. But the bank said “no,” and they went to plan B, Peoria-based Citizens Equity First Credit Union. The credit union approved their loan and Lembke Inc. was born.

“As our business grew, our line of credit also needed to grow in order to keep up,” Kelly said. And since turning to the credit union, they have received several increases to their credit line, “from $30,000 in 2004 to a current limit of $625,000.”

The Lembkes, it turns out, were ahead of their time.

Post-recession, with banks holding back on small business lending, credit unions have picked up some of the slack. They are poised to lend even more aggressively if Congress lifts an existing cap on loans, as expected.

“We see banks pulling back, but in contrast, credit union portfolios are growing fairly strongly,” said Mike Schenk, vice president of economics and statistics with the Credit Union National Association.

Credit union loans in the U.S. climbed 6 percent to $38.54 billion as of December 2010, the most recent data available, compared with the year earlier. In Illinois, loans by credit unions also rose by 6 percent over the same period to $895.9 million.

At the same time, the total amount of commercial bank business loans outstanding has been on a steady decline throughout the Great Recession, falling 6 percent to $652.29 billion in 2010 from $695.25 billion in 2009.

The latest data from the Small Business Administration show that banks in Illinois are mirroring that national trend, though to a lesser degree, with a 3 percent decline in business loans outstanding to $18.80 billion in 2010.

Although credit union business lending is a small piece of the pie – just 5 percent – it’s poised to get bigger if Congress acts to raise the current lending cap on credit unions of 12.25 percent of assets. Many credit unions are close to bumping up against that cap.

A bill introduced in March, the Small Business Lending Enhancement Act, would more than double that threshold.

“We believe that if it goes up from 12.25 percent to 27.5 percent of assets, credit unions could land up to $13 billion in additional loans and 140,000 jobs throughout the nation in the first year after the cap is raised,” Schenk said.

Schenk says the quality of credit union loan portfolios puts them in a better position to lend, another argument in favor of lifting the cap. This, he said, was reflected in credit unions’ 2010 net charge-offs that were roughly one-third the bank average.

Still, making more capital available isn’t a guarantee that lending will take place.

The Small Business Jobs and Credit Act enacted last fall was supposed to encourage commercial banks to use a $30 billion pool set aside specifically for lending to businesses.

But with a disappointing response from banks so far, the Treasury Department extended the deadline for the program to May 16 from the original deadline of the end of March.

“There is definitely a little bit of caution,” said Brian McDowell, chief investment officer for the Oregon-based financial firm Cascadia Wealth Management. “The heart of the matter, in my opinion, lies around uncertainty and new risks.”

Without a clearly laid-out regulatory framework, “most bankers do not want to take the risk of employing capital or making loans with the uncertainty of not knowing what the rules are,” McDowell added.

“Our bank and loan portfolio has shrunk some in the last year as part of our strategic plan,” said James G. Gorst, chief operating officer of Foster Bank based in Rolling Meadows. Foster Bank’s small business portfolio dwindled by 8 percent to $195 million from 2009 to 2010.

Experts in the financial services say such restraint is understandable.

Greater scrutiny from government regulators, a drop in credit lines and dramatically reduced home values have made lending “a risky business for bank officers,” said Dave Bagley, managing director at the financial consulting firm MorrisAnderson and member of the Turnaround Management Association Chicago/Midwest Chapter.

“There is a lot of hesitancy on the part of banks toward these smaller companies,” he said, pointing to the burden that falls on the bankers who put their names on new loans.

This kind of caution in the banks’ decision-making process has left small business owners with more restrictive requirements that are hard to meet, such as credit scores of no less than 740 for SBA-backed loans.

In addition, more small businesses are reluctant to take on more debt given the weak economic recovery.

“Small businesses equate borrowing with debt and debt with burden,” said John Krubski, research advisor at the Guardian Life Small Business Research Institute.

McDowell of Cascadia agreed that “if [owners] can get by without loans, they are doing so,” to avoid the risks and vulnerabilities that come with loans.

But at some point, confidence will return, according to Bagley of MorrisAnderson, and banks will start lending more broadly again. Already, he said, there are hopeful signs, such as mounting competition among banks to lend to the most credit-worthy, financially healthy businesses.

As banks bide their time, however, credit unions are making loans, and inroads, with small business customers.

Article from lovemycreditunion.org

Get Your Free Credit Report from the Official Site

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you plan your financial future.

The federal government requires that each of the three national credit-reporting agencies—Experian, Equifax, and TransUnion—gives you a free credit report every year. You can order them from all three at once, or at different times.

According to the Federal Trade Commission, the only authorized online source is AnnualCreditReport.com. Consumers should be aware that there are many sites out there that claim to offer “free” credit reports but often charge you for another product if you accept the report.

To request your credit report online:

Go to AnnualCreditReport.com.

Follow the instructions on the home page.

To request your credit report by phone:

Call 1-877-322-8228.

You will go through a simple verification process over the phone.

To request your credit report by mail:

Download the request form from the AnnualCreditReport.com site.

Print and complete the form.

Mail the completed form to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281


Article from lovemycreditunion.org

We Have Money to Lend

Current Lending Promotion

Call Sterling Van Dyke Credit Union at 586.264.1212 ext 3 for an appointment to discuss the ways we can help you apply for your funding needs.

Dealing with Parents' Financial Problems

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you plan your fianancial future.

We get our first lessons about saving and spending our money wisely from our parents. That’s why it can be particularly difficult for adult children to recognize the problem when their own parents have financial troubles. But many Americans have had to do just that, as the older generation—and their retirement nest eggs—have been particularly hard hit in last year’s market meltdown. The Michigan Association of CPAs offers this advice for those trying to cope with a parent’s financial questions and concerns.

Acknowledge the Problem

It can be embarrassing for parents to turn to their children for help, so they may ignore or conceal the problem until it’s too late. Don’t be afraid to raise the issue yourself, asking if and how your parents have been affected by the bad economy and what hardships it may have caused them. Be sure in particular to look for warning signs of money troubles, including unpaid bills, bounced checks, calls from creditors or indications that they are cutting back on meals or other necessities. Once you have the facts in hand, you have a better chance of solving whatever problems your parents are facing.

Don’t Panic

When things go wrong, people often are tempted to do something—anything—in a hurry. If your parents are grappling with financial problems, try to reassure them that it’s best to take a deep breath and consider their options before making any hasty moves. If they lost a great deal of money in the stock market, for example, urge them not to immediately put all their existing savings into a new investment they hope will be safer. Instead, take the time to study a number of possibilities and pick the one that seems the most prudent now and for the long term.

Reconsider Retirement

If your parents are not yet retired, talk to them about the possibility of remaining in the workforce longer than they had expected. With lengthening life spans and improving health, many people are working long past the traditional retirement age of 65. Postponing their retirement date provides two benefits: It gives them more time to bulk up their retirement nest egg and it can help ensure there’s more waiting for them when they are ready to quit working.

Look for Smart Fixes

If your parents are scrambling to find ways to meet expenses, be aware that there may be some simple solutions available to them. For example, if they haven’t refinanced their home mortgage recently, it might be possible to cut their monthly payments by getting a new loan with a lower interest rate. If they have gone into debt because of financial problems, a home equity loan might be the answer because they usually carry relatively reasonable interest rates, and the interest on this loan may be tax deductible as well. Your parents can use the money from a home equity loan to pay off high-interest-rate credit cards or other costly financing, once again lowering their monthly outlays. Transferring debt from a high-rate card to a low- or no-interest card is another good way to bring down fixed costs. Be wary of one option often marketed to seniors—reverse mortgages, a kind of loan available to seniors that is used to release he home equity in one lump sum. While these may be appropriate in certain circumstances, the fees associated with the type of mortgage are high and other options should be explored first.

Consult Your CPA

It can be daunting to try to help your parents navigate their way through a financial crisis, but remember that help is available. Your local CPA can offer advice on a wide range of issues facing your family. Be sure to turn to him or her for help with all your financial questions.

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 Web site to search for a CPA in your geographical area or specific area of expertise.

This article was submitted by the Michigan Association of CPAs for lovemycreditunion.org

What You Need to Know about Estate Taxes

Call Sterling Van Dyke Credit Union at 586.264.1212 for an appointment to discuss ways we can help you with your estate planning needs.

If you are handling the disposition of an estate, you are probably already aware that there was an unexpected reprieve from taxes on the estates of those who died in 2010. But if you’re involved in future estate planning for a loved one or yourself, it’s important to know that high estate tax rates have come back in force this year and beyond. The Michigan Association of CPAs offers a rundown on some of the complexities of estate tax issues.

A One-Year Hiatus

Congress allowed the federal estate tax law to expire for 2010, meaning no taxes were due on the estates of anyone who died in 2010. That was good news for the families of numerous famous people—including New York Yankees owner George Steinbrenner—but it also meant many families at the more modest end of the income scale did not have to deal with estate taxes. In addition, the executors of estates of those who died last year did not have to file a tax return for the decedent’s estate with the Internal Revenue Service.

Are You Aware of all the Assets that Are Part of Your Estate?
Many individuals do not understand what kinds of assets make up their estates. Many people have a misconception that their estate consists solely of cash in their account. They may be in for an unpleasant surprise, however, if they don’t consider the current value of all the assets in their estate. A parent who did not have a lot of cash on hand may have owned a home that has increased substantially in value over the years, especially if it’s located in an area with high or rising property values. Add in the value of a retirement account savings or other assets and the total may quickly jump to more than $5 million. That may also be the case with a small business that family members built from scratch into a thriving enterprise, especially if the company owns valuable property or equipment.

In addition, while an estate may not be subject to a Federal estate tax, the estate’s executor may still have to pay an estate tax at the state level, depending upon the appropriate state’s laws. Your CPA can help you in the accounting and valuation of your estate to determine whether your situation calls for undertaking some tax-savvy estate planning for both Federal and state purposes.

The Tax Burden Returns
On December 17, 2010, President Obama signed into law the “Tax Relief Act of 2010.” In this bill, Congress reinstated the estate tax for decedents dying after December 31, 2009. The new rules are only temporary and will sunset on December 31, 2012. Executors of deceased taxpayers must pay taxes on an estate over $5 million (there are considerations for surviving spouses, which should be discussed with your CPA). The estate tax will be based on the new 35 percent top rate.

In light of the rules that were in effect prior to the “Tax Relief Act of 2010,” Congress afforded executors of decedents dying after December 31, 2009 and before January 1, 2011—such as the Steinbrenner Estate—the option to elect to not come under this newly revived estate tax. In this case, the estate would pay no estate tax as originally described above, but beneficiaries would be subject to the modified carryover basis rules.

A CPA Can Help
Estate taxes are complicated, so it’s wise to consult with a CPA about long-term estate plans. Turn to your CPA with all your questions about estate tax planning or any other financial concern.
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 Web site to search for a CPA in your geographical area or specific area of expertise.

This article was submitted by the Michigan Association of CPAs