Category Archives: Money management

A, MR & PR | date created: 2006:08:30

Easy ways to spend less at the grocery store

Do you ever look at your grocery receipt and cringe? We all need to eat, but that doesn’t mean our wallets should be punished for it every time we visit the store.

While groceries are a never-ending household expense (we’re out of frozen waffles again?), they don’t have to eat away at your paycheck. There are a lot of simple ways to save on groceries, and it all starts at home.

Make a list
Before your regular trip to the store make a list of what you plan to buy. This way you’ll know exactly what you want, decrease your time spent in the store and cut down on any potential impulse buying.

Clip coupons
We know clipping coupons isn’t glamorous or fun, but the extra effort can really pay off. Whether you cut them out from the weekly circulars, download them from your grocery store’s mobile app or print them from sites like coupons.com or SmartSource, using coupons is an excellent way to shave a little off your grocery bill. Although the savings per coupon may be small, they can add up. The trick is waiting for the right time to use them.

Focus on sales
Knowing what’s on sale each week goes a long way. Items tend to go on sale in 6-8 week cycles, so it’s a good idea to stock up on certain foods while you can. You can even build your list around what’s currently on sale and use those coupons you’ve been saving to get even more of a discount. Just remember, just because something is on sale doesn’t mean you need it—stick to your regular purchases when possible to avoid impulse buying things you would normally pass on.

Limit your trips
The more you visit the store, the more you spend. Plan accordingly and shop for groceries only when you have to. Buy your dry goods (canned soup, cereal etc.) in large enough quantities to last you for a couple weeks, and limit your produce purchases to what you can eat before it spoils. You might have to stop by the store to replenish you veggie supply, but you won’t need to make the rounds to every department. That way you save time, and avoid impulse purchases.

Do it yourself
While it’s easier to buy pre-cut, prepackaged or prepared foods, you’re paying for that convenience. It’s more time consuming, but preparing your own meals from whole ingredients is usually much more cost effective. Buying the entire chicken or block of unsliced cheese includes a little extra work, but your wallet will thank you for it.

Buy generic
It may be hard to break out of your brand-loving comfort zone, but you might be pleasantly surprised. The difference between store brand and full-price name brand products is usually hard to detect, and the savings are always real. If you’re looking to save a couple dollars on cereal, food staples (flour, cooking oil, etc.) or cola, buying generic is an easy way to do it.

Shop alone
As anti-social as it sounds, it may be a better idea to leave your kids and spouse at home next time you hit the grocery store. Kids are the ultimate impulse shoppers, and giving in to their requests can really add up. It’s not always easy to say no, but that doesn’t mean you should pay more because of it.

Beware of store tricks
Whether it’s positioning the produce section in the front entrance or playing slower music, stores use a variety of subtle tricks to get you to spend more. Knowing what to watch out for will reduce that risk as well as make you a smarter shopper. (“Not today, 10 for $10 dollar deals!”)

What do you do to save money at the grocery store? Let us know in the comments!

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Crash Course in Credit: The Basics

You’ve heard people talk about good credit, bad credit, building credit, repairing credit, etc. But unless you have a real understanding of credit itself, you probably don’t know what any of that really means. Asking someone to explain credit can be tough—especially if you already have a student loan or credit card you feel you should know more about.

If you’ve been too afraid to ask about credit, here’s what you should know:

Credit is your ability to get a product or service based on the understanding that payment will be made later. Your credit history tells creditors and lenders how reliable you are to pay it back. The better your credit history, the better your chances are of getting credit.

There are four basic types of credit available:

  1. Revolving credit is credit that is automatically renewed as debts are paid off, like a credit card. They have a maximum credit limit, and you can make charges up to that limit.
  1. Installment credit is issued for a set amount, and you make monthly payments (or installments) of a fixed amount over a period of time until the balance is paid in full. Unlike revolving credit, installment credit doesn’t automatically renew after payments are made. Auto loans, mortgages and student loans are examples of installment credit.
  1. Service credit is any service you receive and pay for with monthly installments—like a cell phone plan, electricity or cable. Not all service accounts are reported on your credit history.
  1. Charge cards operate similarly to credit cards, but you’re usually required to pay the balance in full each month.

Your credit report is the detailed record of your credit history. These reports are compiled by credit bureaus (more on those later) and used by lenders to determine your creditworthiness. It includes personal information, like your address and social security number, in addition to the number and types of accounts you’ve held in good and bad standing. Any negative information will usually stay on your report for about seven years, while bankruptcy filings usually remain on your report for ten.

There are three major credit reporting bureaus in the United States: Equifax, Experian and TransUnion. All three companies collect information about consumers’ bill paying habits, personal details and accounts to build a unique report. The information in each report will probably be similar, but there are usually some small differences.

Your credit score is created with the data from your credit report. This number is one element lenders use to determine your creditworthiness. Fair Isaac Corp. (FICO) produces the most commonly used credit scoring algorithm in the U.S. Scores typically range from 300 to 850.

So what makes up good credit?
Every lender has different standards for what is considered “good” credit, but scores below 629 are generally considered bad, 690 or above is good and anything over 720 is excellent.

Knowing the basics about credit makes it easier to understand why it’s so important that you use credit wisely—late payments, maxed out cards and bankruptcy all tell potential lenders that you can’t necessarily be trusted to pay them back, making it harder to get credit in the future.

While this is a good place to start, there’s still a lot to know about the credit industry. Stay tuned for our upcoming blog on common credit misconceptions.

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[INFOGRAPHIC] Should you refinance your student loans?

Refinancing your student loans is a big decision–it could potentially save you thousands of dollars in interest over time, or make your payments more manageable by extending your repayment period.

But all student loans aren’t created equal. Refinancing federal student loans with a private lender could mean the loss of the borrower protections guaranteed by federal loans.

If you’re struggling to decide if refinancing is right for you, check out the infographic below, then learn more from NerdWallet.

Infographic: should you refinance your student loans?
Via: NerdWallet

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Graduation doesn't mean you'll live with debt forever

How to Quickly Pay Back Your Student Loans

If you’re like most recent college grads, you’re probably dreading the day your student loans go into repayment. We’ve all heard (or lived) the horror stories of grads with $1500/month minimum payments, living in their parents basement until they’re 45 because there’s no money left over.

While those scenarios do exist and are all too real for some people, you don’t have to live under that cloud of student debt forever. With some planning and diligence, you could pay off your debt faster than you think.

Understand your loans.
The terms of your loan could affect your payment schedule. If you have loans with a fixed rate, you’ll likely have a fixed payment. But, your payment could change drastically if you borrowed with an adjustable rate. Knowing if and how your payments will change in advance allows you to create a flexible budget and prepare yourself for rising minimum payments.

Make payments while you’re in school.
This advice is a little late for recent grads, but making interest-only payments while you’re in school can have a huge impact on your post-grad balance. Private and federally unsubsidized loans begin accruing interest when the loan is dispersed. As your loans enter repayment, that interest will most likely be capitalized—meaning it’s added to the principal balance of the loan, and your interest rate will then apply to the new balance. The more interest you pay off while you’re in school means you’ll pay less overall in the future.

Pay more than the minimum.
It may seem obvious, but making extra payments is the fastest way to pay off any loan. Make sure you won’t be penalized for pre-payment, then figure out what works with your budget. Some lenders will automatically apply any extra monies to the next month’s payment, allowing you to essentially pay a month early. So make sure your lender knows you want it anything extra to be applied to the principal and will continue to make monthly installments.

Consolidate—if it works for your situation.
Consolidation—rolling several smaller loans into one big loan with the same servicer, could make it easier to manage your payments. But, be careful combining federal and private loans. Consolidating federal loans with a private lender means you forfeit the buyer protections, like income-based repayment, that comes with them.

Though consolidation will usually leave you with a smaller monthly payment, it might also extend your repayment period. So even if you have a lower interest rate after consolidation, you could end up paying more overall when you factor in the extra time.

If this seems like the plan for you, IH Mississippi Valley Credit Union can help consolidate or refinance your private student loans with features like a low, variable interest rate and zero origination fees. Learn more from our partner, Student Choice.

Enroll in automatic payments.
Enrolling in automatic payments allows your lender to receive payments without requiring you to log in or mail a check each month. Just make sure the correct funds are available in your account before your due date so you aren’t charged overdraft fees. You can still make one-time payments too. So it won’t prevent you from paying a little more when you find yourself with extra cash.

Even better than reducing some stress, some servicers will reduce your interest by a small amount as an incentive to enroll in automatic payments. Check with your lender to see if they offer an incentive—according to FinAid.org, the most common discount is a .25% interest rate reduction.

Everyone’s financial situation is a little different, but the key to paying off any debt is consistency. By making at least the minimum payment each month, you avoid late fees and penalties, putting you much further ahead than if you skip payments.

Need help planning your payback budget? Talk to our financial services team about a free financial checkup.

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There are plenty of bad reasons to buy a house.

Why You Shouldn’t Buy A House

“Renting is just throwing money away.”
“A house is a great investment.”

Sound familiar? Maybe you’re facing pressure from friends or family to make the switch from renter to homeowner. Or, maybe you feel like everyone else is doing it, so you should, too. Maybe it just feels like the logical next step in your path to becoming a Responsible Adult.

But here’s the thing: none of those are good reasons.
There’s only one really good reason you should buy a house: because you’re financially prepared to do so.

We’ve said it before and we’ll say it again. Buying a house is a big deal, and likely the biggest purchase you’ll ever make. You shouldn’t take it lightly and you shouldn’t rush into it. If you’re feeling the pressure but aren’t sure if you’re financially fit for home ownership, there are some things you should know.

Not all investments are good
Your uncle may be convinced otherwise, but a house isn’t always a great investment. Yes, some people make (a lot of) money investing in real estate. But the reality is that most people do not. When you consider market volatility, taxes, interest and depreciation, you may not even get an annual return on that “investment” at all. While time certainly helps level out volatility, not everyone has 30 years to wait for investment to pay off. Unless you’re buying properties for rental income, it’s wiser to think of a home purchase as just that: a home. Not an in investment.

You’re not throwing your money away
Perhaps one of the biggest benefits of renting is the luxury of being able to call your landlord when things go awry. It may take longer than you’d like for the maintenance team to show up, but at least you aren’t footing the bill for that broken furnace.

Are you ready to spend your weekends fixing leaky faucets and doing yard work? Not all houses require extensive maintenance, but some do and almost all of them are bound to need a new roof or water heater or other major repair/replacement during your ownership stint. Experts recommend saving between one and four percent of your home’s value each year to pay for general upkeep and major repairs. If none of that sounds appealing, you may want to keep writing that rent check.

You can’t take it with you
Feel like moving across the country? If you’re renting, your housing situation isn’t likely to prevent you from doing so for very long or cause a major blow to your finances.  You may have to pay a penalty if you leave before your lease is up, but that’s nothing compared to the expenses you could face if your house doesn’t sell.

If you buy a house, you should plan on staying put for at least five to seven years if you plan to break even, ten if you’d like to make a profit. Moving before that could end up costing you money when all is said and done.  If your job requires you to move quickly, you could get stuck in the unfortunate situation of paying rent in your new location on top of your mortgage.

Bottom line: Owning a home is a great thing for some people, when they’re financially and emotionally prepared for the task. But, if you’re buying a home because of peer pressure, societal pressure or any reason other than because you’re financial prepared, you probably shouldn’t.

If you’re not sure if home ownership is right for you, IH Mississippi Valley Credit Union is here to help. Try our online calculators to estimate the costs of owning vs. renting. Or, give one of our Financial Services Officers a call. They’ll give you a financial check-up and put you on the right track to be ready in the future.

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3 Ways to Get Your Budget Back After the Holidays

If holiday spending left you dreading the mailman, you’re not alone. According to a survey conducted by American Research Group Inc., Americans plan to spend an average of $882 this year on Christmas gifts alone. Add in the cost of family dinners, decorations and other holiday events and your average American household is spending well over $1000 during the holiday season.

If you’re one of the many Americans who to plan to make all their holiday purchases with a credit card, or you just totally overshot your budget, you may find yourself carrying a mountain of new debt into the New Year.

Here are some suggestions to get your budget back on track before the temperatures start rising again.

Know what you spent.
Don’t be surprised by your bill in January. Save your receipts from any holiday related credit card purchases and immediately make a mental subtraction from your checking account. You’ll know what to expect when the holidays are over, and you’ll have enough to pay for it.

Make a repayment resolution.
Many Americans add holiday purchases to existing credit card debt. If this sounds like you, separate the total you spent on holiday purchases and make a plan to pay off that amount by the end of the first quarter of the year. You’ll be back to making pre-holiday payments by April.

Save your bonus.
While it can be tempting to use that year-end bonus or money you got has holiday gifts to just pay off your credit card debt, it’s probably only a temporary solution. According to Nancy Anderson, a financial planner and Forbes.com contributor, it’s often better to develop a realistic repayment plan and save your hard earned bonus to prevent the same debt-accumulation problem in the coming year. To find out if this is the best plan for you, read her article “When Not to Pay off Your High-Interest Credit Card Debt.”

For more help rebooting your budget, check out our easy savings, debt and budget calculators at ihmvcu.org/calculator. See what it will take to pay off your debt, calculate your household cash flow or even see the impact of setting a savings goal.

What’s your best holiday budget advice? Share in the comments, on Facebook or Tweet us!

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The Credit Union Difference


If you’re in the market for a financial institution, it pays to learn more about the credit union difference.

You might think it’s hard to join a credit union, like it’s an exclusive club with a lot of weird requirements. The truth is credit unions are for everyone! Credit unions, like IHMVCU, serve a common field of membership based on things like geographical area, employer or membership in an organization. No matter who you are there’s a credit union for you, and joining is easy!

Credit Unions even offer all the same services as banks—a worldwide ATM network, online banking, mobile deposit, loans, mortgages and checking accounts. Banks and credit unions might look pretty similar on the surface, but many credit union members claim to feel a stronger sense of loyalty and familiarity with credit unions. But why? What’s the credit union difference?

Credit unions are member-owned financial cooperatives.
That means every member is an owner. What does that mean for you? Credit Unions work for your best interest—not stockholder profits. You can’t buy stock in credit unions and we don’t issue payouts to stockholders. Credit union earnings are returned to members in the form of lower loan rates, higher deposit yields and lower fees.

Credit unions care about your financial well-being.
We want our members to live their best financial lives and feel informed and empowered in their financial decisions.

At IHMVCU, we’re using our CDFI (Community Development Financial Institution) designation to address rising poverty while fulfilling our mission to improve the financial well-being of our members. In the coming year, we’re rolling out new programs designed to address poverty drivers and educate members on available resources and programs to help them achieve financial success.

Credit unions are people helping people.
Credit unions exist to help people achieve financial success, not to make shareholders wealthy. At IHMVCU, we make our members feel like they’re worth more by giving back to the communities we serve. Last year our employees raised nearly $15,000 for Family Resources, Race for the Cure, Toys for Tots, City of Moline Police Department, Angel Tree and QC Paws through casual days, bake sales, raffles and personal contributions.

We’re committed to serving area youth with our support of Big Brother Big Sisters, Boys and Girls Club and our Cash for Class scholarship program. We offer $26,000 in scholarships, paving the way for educational opportunities that won’t leave students with a mountain of debt.

People helping people isn’t just a motto to credit unions, it’s a way of life. And it’s how IHMVCU tells members You’re Worth More.

 

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Why Your Budget Isn’t Working

Creating a budget that works for you and your family is the first step in living a financially healthy life. We talk a lot about budgets. If you’re a regular reader of our MoneySmarts blog, you know we frequently offer “budget friendly” tips  and easy ways to “stick to the budget.” But what does all that mean if you don’t know anything about the way you or your family spends money?

Odds are you probably have at least some kind of budget for your family—whether it’s just monitoring your accounts and keeping a general idea of how much money goes in and out, or a totally itemized spreadsheet. Is how much you spend each month reasonable while leaving room to save or invest? How do you find out?

While there’s no perfect budget that will work for every family every month, experts agree that the best way to ensure you live within your means is to follow a percentage based plan. The most common suggestion is the 50/30/20 plan:

50% of your income should go towards required expenses. This includes housing, food, utilities, transportation (including car payments), insurance, etc. These are NEEDS.

30% of your income goes towards optional expenses like clothing, vacations and gifts–the little things that help you enjoy life. These are WANTS.

20% of your income should be allocated for paying off debts (like student loans and credit cards) and saving/investing.

These guidelines are helpful, but keep in mind that they’re not the end-all-be-all of budgeting. You’ll have to make adjustments based on your family’s needs. A recent college grad living at home is going to have a wildly different budget than a family of five with a mortgage and a baby on the way. Where you live, how far you commute, the size of your family, etc. will all play a role in how you make the budget work for you. Whatever adjustments you make, just make sure it all adds up to 100%.

If you’re not the spreadsheet type, you may benefit from online services that make keeping a budget less tedious. Try IHMVCU’s budgeting and saving calculators to find out what would happen if you changed your money habits. IHMVCU members also get free access to FinanceWorks, a budgeting tool within Online Branch. FinanceWorks tracks your income and expenses, allows you to set realistic spending goals, and even alerts you when you meet or exceed your spending limits.

Now that you have a place to start, calculate your current spending and see how it compares to the recommended percentages. No matter what adjustments you need to make, keep in mind that every month will be different. The most important thing is to be diligent.

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5 Ways to save money on your first apartment or dorm

Skip paying for movers--have your friends move your stuff.

Skip paying for movers–have your friends move your stuff.

Venturing out on your own for the first time? Whether you’ve just signed the lease for your first apartment or you’re heading off for your freshman year in a college dorm, the prospect of moving into your own place can be overwhelming.

Moving into your first place means starting from scratch, and that can be expensive! There’s a lot to buy, and a lot of expenses you’ve probably never considered before (like a shower curtain and cleaning supplies). Never fear—there are plenty of ways you can make it on your own and save some dough.

1. Don’t do it all at once.
There are a few things you’ll definitely need to get through your first night in your new place—like a shower curtain and a mattress (or at least something soft to sleep on). But you don’t have to move in with everything you’ll ever need.

After spending some time in your place, you may realize that you have no need for things other people claim they can’t live without. This rule is especially true when it comes to décor. Your place doesn’t have to be fully decorated on day one, and will have a more authentic feel if you take time finding the perfect pieces to complement your space and your stuff.

You might get there and realize you already have way too much stuff, especially if you’re in a dorm. Save your parents the trouble of hauling your excess stuff back home and wait to buy furniture and other big stuff until you’ve spent some time inside the apartment or dorm you’ll actually be living in.

2. Ask for help.
Chances are your parents, grandparents or other relatives have a basement or attic full of stuff that’s perfect for your new place. Even if it’s not perfect, it’s probably going to be free (and that’s hard to beat). Most people have too much stuff, but don’t want the hassle of selling it. Let everyone know you’re moving and you’ll be amazed at how much stuff people are willing to give away to a good home..

3. Buy used.
While we don’t recommend you thrift your mattress or bath towels, not everything in your apartment needs to be brand new. Thrift stores, garage sales, and Craigslist are all excellent places to find gently used electronics, lamps, dishes and furniture.

True story: I once bought the exact same juice glasses used on Seinfeld for $10 at a thrift store. I saved money, and I have an (almost) interesting story.

If you really want to save some dough, try FreeCycle or the free section on Craigslist. People are giving away all kinds of things, and usually all you have to do is haul it.

4. Master the art of spray paint
Ok, so maybe that dresser Grandma gave you is a little ugly or it just doesn’t match the rest of your stuff. With a little colorful spray paint even the grungiest thrift store find or hand-me-down can look fabulous. If you’ve never refinished furniture before, this tutorial from Centsational Girl is perfect for beginners.

5. Do it yourself
Anything someone else can do, you can probably do for less money. Even if you’re not handy, there’s plenty you can do yourself to save some cash. Make your own coffee, cook your own food, clean your own house, bag your lunch and (gasp!) drink tap water. Make your own budget (try FinanceWorks, a free budgeting tool in Online Branch) and measure your spending before and after you start doing things for yourself. Try not to faint when you see how much money you’ve saved.

Have some other great ways to save money on the big move? Share them in the comments!

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