Why It’s Important to Know How to Manage Your Money

By Dana O. Crandell,

In today’s electronically-oriented society, a surprising number of people never learn to create a budget, balance a checkbook or handle other everyday tasks to keep track of finances. Many of us are simply too busy with our fast-paced lives and believe we can’t afford to take the time. The fact is, though, it’s more important now than ever to know how to manage your money. The high-speed, digital society we live in brings new pitfalls to avoid and the old ones are still there, too. Let’s look at a few good reasons to know where your money is going.

You May Spot Theft Before It’s Too Late

It’s far too easy to become a victim in today’s world. Watch the evening news on any given day and you’ll probably hear at least one story about someone being robbed of their hard-earned money and/or identity. There are new risks around every corner and modern thieves use subtle, intelligent methods that are hard to spot. The best way to know something is wrong is to always know how much money you should have. Spotting discrepancies early means you have a better chance of finding out what happened and taking steps to correct the situation.

There’s Less Chance You’ll Pay For Someone Else’s Mistake

Banks make mistakes. So do creditors, stockbrokers, and cashiers. If you’re always aware of what should be happening with your money, you’ll see the red flags when something goes wrong. Were you charged an extra fee on your checking account this month? Is this month’s water bill significantly higher than normal? There are hundreds of ways you can lose money because of human or machine error. Unless you’re managing your finances, you may never know when it happens to you.

You’ll See Problems Before They Become More Serious

If you’re always aware of where your money is going, you’ll know when too much of it is going to a particular area. If you’re suddenly putting too much gas in the car, maybe it’s time to have it tuned up. Are the heating bills soaring while the temperatures are about the same? Maybe it’s time to check weather-stripping and change the furnace filter. Keeping abreast of your spending will give you a chance to nip potential problems in the bud.

You’ll See What’s Working For You

Managing your money also gives you the opportunity to identify your good investments. You may find that using one credit card pays better dividends than another, or that your recent changes to your checking account are saving you a few dollars a month. Knowing you’re improving your financial status is a good feeling. The best way to know is to see it for yourself.

You’ll Know Where You Have Room For Adjustment

If you’re budgeting and tracking your money correctly, you’ll know what changes can be made when a need arises. If there’s an emergency or any sudden change in your cash flow, you’ll have a better idea of what you can do to maintain stability. A little spending cutback here or there could help you avoid serious damage to your finances and reputation with creditors.

You’ll Improve Your Overall Security

By handling your money management tasks yourself, you limit the number of people that have access to your funds and information. That in turn reduces the risk that information or funds will find their way into the wrong hands.

Your Financial Status Follows You Everywhere

One of the disadvantages to living in the Information Age is the fact that your credit score and financial history are far from private. Those records can affect your buying power, your living accommodations, and even your job. If they’re that important to the people you deal with, it stands to reason that they should be doubly important to you.

It’s Easier Now Than Ever To Manage Your Money

On the positive side of living in today’s world, you have easy, convenient access to all the tools you need to manage your funds. Banking, buying and selling, stock trading and almost anything associated with financing can be handled online, from the convenience of your home or office.

Your Goals Will Be Easier To Realize

The simple, everyday tasks you perform to keep your finances under control will serve as a constant reminder of why you’re doing what you’re doing. You’ll be “keeping your eyes on the prize”, which we all know is the best way to win.

You Aren’t Going To Live Forever

This has always been one of the best reasons to keep your finances in order and it’s even more important today. Whether you’re raising a family of your own or still single, when you die, someone you leave behind will have to be responsible for the expenses associated with your death as well as settlement of your estate. It’s simply not fair to your loved ones to leave nothing behind but debts and it happens far too often – life insurance benefits only go so far.

No matter how small or large your bank account, managing your own money makes sense. It’s your future. Who better to build it than yourself?

(Photo courtesy of meddygarnet)

10 Reasons Credit Unions Are Better Than Banks

If you still have your money in a big bank, you may not be getting the most out of it. More and more people are moving their money from the big corporate banks into smaller credit unions for a variety of reasons. Here are some of the more popular ones:

Member Focused

The great thing about credit unions is that they’re not-for-profit, meaning that they’re owned by members and customers instead of by stockholders. Because credit unions are member focused, they offer more benefits and options for customers. Banks, especially large banks with multiple chains across a state or country, are focused on making a profit instead of helping the customer. Credit unions care about their members and try to give them the best possible products and services.

Better Service

One of the benefits of being member focused means that credit unions can provide better customer service. Large corporate banks are often impersonal and sterile. Since credit unions are smaller, employees tend to know their customer base by name and can provide them with services that accurately match their financial needs. Additionally, credit unions offer face to face interaction instead of automated systems. While automated systems might be great if you have a crisis at an odd hour of the morning or night, sometimes they can’t solve a problem the same way an in-person interaction could.

Bonus Programs

Since credit unions are not-for-profit, they’re allowed to offer customers bonus checks or bonus programs. The profit they make during the fiscal year isn’t shared with stockholders, so it goes right to the members! The offered bonus programs vary depending on the credit union, but they can include bonus checks, “money back” programs (where you receive money for spending money), or rewards programs for credit or debit cards.

Flexibility

Keeping in line with the benefits of being member focused and having better service, credit unions offer you more flexibility. Banks generally have a strict policy to follow when they offer loans, credit cards, or accounts. They’re less likely to overlook previous financial mistakes, even if you’re currently in good standing. Since credit unions are focused on giving the customer what they need, their guidelines aren’t as stringent as a bank’s. If you’re someone who has a troubled financial past or a less than exemplary record with money, a credit union will be more likely to overlook these issues.

Fewer Complications

Banks are all about enforcing strange rules, weird fees, and strict account guidelines. Fortunately, credit unions are about keeping everything simple. A bank might state that in order to maintain a checking account, you need to make at least ten purchases with a debit card or write two checks a month, or log into online banking at least once a week. Most credit unions offer accounts without any over the top guidelines. The terms are easy to follow and don’t inconvenience you.

Low or No Product Fees

If you currently use a bank, you might have noticed fees that suddenly pop up when you make a transaction. Or you might suddenly be penalized with a different fee for doing the same transaction you do every week. Banks are sly about inserting new rules or fees into their products, and they usually do it without informing their customer base. You won’t find these actions happening at a credit union. Most credit union products come without a fee, and if there is a fee (for a bounced check or overdraft protection, for instance), the price is usually significantly lower than what a bank charges.

Low or No Minimum Balance

Unlike banks, most credit unions don’t require a minimum balance to open or maintain an account. The ones that do require a minimum balance usually request a small minimum balance of between $5 to $50, which is a lot less than banks, who can sometimes request a minimum balance of $200 or $500.

Low Interest Rates on Loans

One of the benefits of being a small, customer owned and oriented business is that credit unions can offer lower interest rates on loans and credit cards. Many large banks make a significant portion of their money off of accrued interest, so it’s in their favor to hike up the interest rate. As they’re non-profit, credit unions won’t raise the interest just to make a profit.

Higher Interest Rate on Savings Accounts

Just as they can offer lower interest rates on loans, credit unions can also offer higher interest rates on savings, checking, and money market accounts. Interest rates at banks are usually around 2% or 3%, but credit unions typically offer at least twice that amount. Banks are in the business of making money, so they’re not interested in giving more of it away to you. As a non-profit organization, credit unions can’t keep any of the money, which means you benefit by receiving a higher interest rate.

You Save Money

The biggest reason why credit unions are better than banks is because you save money when you use them! With better interest rates and eliminated or reduced fees, you’re earning and saving more money. Banks are more interested in charging you fees for your products, but the customer oriented credit unions are more focused on keeping your finances happy.

If you haven’t checked out the local credit unions in your area, it is definitely worth taking the time to do so. What’s the worst that can happen? You might find a better place to keep your money.   Sterling Van Dyke Credit Union is waiting to help you achieve your financial goals.    Please give us a call.

The Need for Objective Reporting of Consumer Credit

The Need for Objective Reporting of Consumer Credit by Nicole Kellner-Swick

June 1, 2012, 9:00 am
Filed under: Fair Credit Reporting Act

By Tracy Schwotzer, Attorney

Consumer credit is an indispensible part of our society.  The average consumer relies on credit each day, not only for the financing of a business, house or car, but also for everyday purchases like gas and groceries.  In this country, these transactions would be difficult, if not impossible without the extension of credit to consumers, and the consumer report is a fundamental safeguard for businesses that extend credit.[1] 
Creditworthiness is used to determine whether a consumer qualifies for a loan, it determines the costs of insurance, and is often reviewed by potential employers.  Moreover, consumer reports are an important tool businesses use to make sure they extend credit only to consumers likely to repay the debt.  With the role that credit plays in our daily lives, the importance of a credit rating, either high or low, cannot be minimized.  The flip side, the decision to lend credit, receives less public attention but is equally important to maintain our current system of lending.
The credit rating system was developed to investigate and evaluate the creditworthiness, credit standing, credit capacity, character and general reputation of consumers.[2]   This consumer credit information is acquired, maintained, and distributed by Consumer Reporting Agencies[3]  and is governed by the Fair Credit Reporting Act (FCRA).[4]   The FCRA was adopted as part of the Consumer Credit Protection Act and has the purpose to “ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.”[5]   However, the needs for consumer protection must be balanced with the needs of the credit industry to manage its risk.

Banks, credit unions and other credit lenders depend upon complete and accurate credit reporting in their lending decisions.  “Inaccurate reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.”[6] 
Despite this importance, consumer reports are only a compilation of data and are not without errors, sometimes including inaccurate or outdated information.  To protect consumers, the FCRA establishes procedures for correcting those errors.  The most common route of challenging an item on a credit bureau is to dispute a specific item on the report.  Disputed information that cannot be verified must be deleted from a file.  However, a consumer reporting agency spokesman estimates that “at least a fifth” of the alleged “inaccuracies” being disputed are actually consumers attempting to have negative but accurate information removed from their report.[7]
Manipulation of consumer reports has also become an important bargaining tool in negotiations with the creditor.  A consumer may seek to have an account reported more favorably in exchange for repayment, or may request that the account be deleted upon settlement.
Removing negative information on an account, or deletion of the account as a condition for resolving pending litigation is not a settlement term to be taken lightly.  The deletion of the negative information will obviously boost a consumer’s credit rating and make them more eligible for credit.  While deletion of negative information may be a necessary tool in negotiating settlement of a dispute, the long-term cost to the industry as a whole is potentially devastating.  Without accurate information, a consumer may receive an undeserved credit limit, the interest rate may not accurately reflect the credit risk involved, and the terms of lending may be more favorable than the terms that would be otherwise justified by the consumer’s actual credit history.  By agreeing to deletion of negative information without a verifiable dispute, the lender has accomplished the short-term goal of resolving the dispute, but put the industry at an increased risk for flawed loans.
Finally, consumer reporting agencies are required to “follow reasonable procedures to assure maximum possible accuracy” of information on a report,[8]  and failure to do so is actionable.[9]   Thus, if more favorable reporting or routine deletion of otherwise negative information becomes commonplace in the industry, the consumer reporting agencies will be more wary of the information provided to them for fear of the liability for an inaccurate report.
Credit reports have recently been featured in the news and lenders will undoubtedly find themselves subject to increased regulations on how debts are reported.  For more information, see J. Riepenhoff and M. Wagner’s series in The Columbus Dispatch.

http://thatcreditunionblog.wordpress.com/2012/06/01/the-need-for-objective-reporting-of-consumer-credit/

Posted by Sterling Van Dyke Credit Union 

Credit Union Financial Exchange (CUFX) to Introduce Technological Standards to the Credit Union Industry

The CUNA Technology Council has recently launched a new integration standards project, CUFX (Credit Union Financial Exchange), to streamline how technology companies and credit unions connect applications like online banking and account opening into core systems.

Heather Moshier and Jeff Johnson, chair and vice chair of the CUNA Technology Council, presented an update on CUFX’s goals and recent progress to CUNA’s Board of Directors during a meeting at the most recent Governmental Affairs Conference.

“It’s a good time for this initiative,” says Bill Cheney, President and CEO of CUNA. “The board and I appreciate the Technology Council’s efforts to make improvements that will benefit the entire credit union industry.”

For credit unions to grow and remain competitive in the financial marketplace, they must continually improve their technical infrastructure. By introducing technological standards to the industry, CUFX will increase the speed of delivery of new solutions, improve user experience and credit union member satisfaction and reduce integration time and costs for application providers and core processors.

“Technology companies’ ability to innovate and quickly deliver leading-edge services is hampered by the lack of a single integration standard,” says Jeff Johnson, Vice Chair of the CUNA Technology Council. “Technology providers spend valuable resources independently customizing the same interfaces or adapters for each of their credit union clients, primarily at the expense of further refining their solutions. The standards proposed through CUFX free up more of their resources for innovation.”

Along with keeping credit unions and technology vendors on the same page, CUFX will benefit credit unions and the technology industry by:

• Simplifying integration and reducing initial and ongoing costs of independent vendor-provided and credit union-created offerings
• Increasing the speed of delivery of new business functions across the credit union industry
• Improving member experience and employee efficiency
• Freeing vendors from repetitive, time-consuming, low-impact customization, so they can focus their efforts on application innovation

Initially, CUFX will focus on new applications or existing transaction sets that support new initiatives, like PFM, membership applications and mobile payments. Building on these new key initiatives, a new standard will be iteratively created so back-end systems are speaking the same language. Future initiatives may include re-engineering existing transaction sets.

“Ultimately, the success of the CUFX initiative will depend greatly upon the dedication and commitment of our technology vendors and credit union professionals,” continues Johnson. “CUFX needs the resources, ideas and expertise that these professional bring to the table to ensure our strategic plans are on target and that our initiative proceeds in a direction that is both effective and beneficial for all groups involved.”

For more details about CUFX, a list of credit unions and technology companies that are currently involved, and information about how you can support the effort, visitwww.cufxstandards.com or e-mail info@cufxstandards.com.

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This blog was posted from alltop.com by Sterling Van Dyke Credit Union of Sterling Heights, MI 

Sterling Van Dyke Credit Union
39139 Mound Road
Sterling Heights MI 48310

THE RISKS RETIREES NEED TO BE AWARE OF

Are we prepared for retirement?   Recent figures from the Employee Benefit Research Institute reveal that 47% of Americans, ages 56-62, would run out of funds necessary to pay for basic retirement expenditures if they retire at age 65.  Six in ten Americans express significant concern about their retirement savings and investments.  So why are people so unprepared?  That is a good question and what do they need to be aware of for the future?

The way retirements are funded is rapidly evolving.

1)      The future of Social Security is in question.  Every day more more and more of the 78 million baby boomers approach retirement age.  The Census Bureau estimates that the ratio of people in their retirement years, 65 and older, versus those in their working years, 20 to 64, will rise from 20.6% to over 35% in 2030.  That will put a tremendous strain on the Social Security system.

2)      Pension plans are disappearing.  The traditional employer-sponsored pensions seem to be gone.  The number of defined pension plans being offered to employees has been shrinking steadily since 1980. Defined contribution plans, such as 401(k) s and 403(b) s are the new vehicles for retirement.  The problem with these plans is that these plans leave investors highly vulnerable to market volatility.  The burden of financing retirement is shifting squarely on the shoulders of individuals.  Adding to this burden are financial risks that make retirement today more challenging than ever.

3)      We are living longer.  Life expectancy has increased by more than 10 years and most experts see the trend continuing.  This means retirements could last more than 30 years or more.  Somehow we have to fund these extended years.  We will need an income source that can help maintain the quality of life we enjoy. 

4)      Rising costs are affecting our pocketbook.  Expenses in retirement will tend to keep rising.  We will have to find income to account for these increases. Specifically, there are three key cost related issues that can erode the purchasing power of retirees over time.  The first is inflation.  Most people underestimate the impact inflation can have on their standard of living in retirement.   Inflation can be a significant risk especially for retirees.  Basic necessities such as food, housing, transportation and utilities have risen at between 1% and 13% annually.  The second issue is taxes.  Federal taxes do fluctuate up and down.  According to the Tax Foundation, federal income taxes would need to double in order to close the deficit.  The last issue is healthcare.  Healthcare costs have risen 149% between 2000 and 2009-over four times greater than workers’ incomes.  Healthcare costs will likely continue to rise.

5)      Market uncertainty is posing a risk to financial security in retirement. Volatility poses one of the biggest threats to retirement savings because a downturn just before or after retirement can be devastating to an unprotected portfolio.  It could take years to recover from losses; precious time that someone entering retirement might not have.  One thing we need to do is to understand the financial challenges we have to face in retirement and address them.

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.