Author: Bruce Lund

Since 2007, America Saves Week has been an annual celebration as well as a call to action for everyday Americans to commit to saving successfully. Compass is pleased to provide financial resources to our members by encouraging individuals to do a financial check-in that allows them to get a clear view of their finances, set …

Since 2007, America Saves Week has been an annual celebration as well as a call to action for everyday Americans to commit to saving successfully. Compass is pleased to provide financial resources to our members by encouraging individuals to do a financial check-in that allows them to get a clear view of their finances, set savings goals, and create a plan to achieve them.

April 7-11, 2025, learn some great financial tips by visiting America Saves Week

What to Know When Buying a Used Car

March 13, 2025February 13, 2025

While it is an essential purchase for most of us, it’s never an easy decision to make. New or used? Red or blue? Car or truck? While we can’t answer all of these questions for you, we can provide you with some things to think about when buying a car.

Benefits of Purchasing Used

Avoid depreciation – Cars are not an investment. In the first two years of ownership alone, a new car will depreciate about 30%. Looking ahead to when it’s time to sell your used vehicle, less money is lost on resale than had you purchased new, largely due to avoiding the initial depreciation.
Wider selection – While you may not get to choose features a la carte like you can in a new car purchase, you do end up with more choices overall.
Lower Price – The nature of used cars is that they are less expensive. Used doesn’t necessarily mean worn out. Looking for features such as low mileage and recent model years can increase your buying power, and more bang for your buck.

Do Your Homework if Purchasing New

If you decide now is the time to buy a new car, be sure to do your homework!
Decide on your price range – Before you get to the lot, before you are wooed by a car that is outside of your budget, decide what you are willing to spend. Crunch the numbers to know what monthly payment you can comfortably afford and what your overall sticker price cap is. Don’t forget to include fees such as insurance and repairs!
Get preapproved from Compass for financing – Before you scour online sources or visit a vehicle lot, talk to us about getting preapproved for your auto loan. This will also help you know how much you can afford.
Read the reviews – Once you’ve decided on the type of vehicle you want to purchase, read reviews at sites such as consumerreports.org, Edmunds.com, and kbb.com. From recalls to the pros and cons of each make and model, these sites are dedicated to providing you with knowledge about the vehicles you are considering.

The Art of the Sale

Negotiate your offer – Offer 15% below the asking price. There’s about 20% gross margin in the asking price. Offering 15% below allows the salesperson to still make a profit while you get the vehicle you want at a fair price.
Turn down add-ons – If a used-car dealer tries to get you to add on products and services, decline. These are likely offered at a less expensive rate elsewhere.

Being prepared helps take the stress out of car buying. Compass is here to help with any additional questions you have!

How Long Should You Keep Financial Records?

February 12, 2025January 29, 2025

Do you have drawers and filing cabinets full of tax returns, bills, and bank statements? Here are some tips on exactly how long you should hold on to old financial records.

Papers you only need for one-two years

Receipts: These can be shredded, if you keep an accurate checkbook ledger, there is no need to keep receipts unless you are using them as back up information for tax purposes.
Credit Card Bills: After you have checked your credit card statements you can shred your credit card bills. The only time you might need to keep a statement is if it shows a warranty or if you charge a deductible item.
Checking Account Statements: Once you reconcile your statements they can be shredded; as with credit card bills, you need to keep them if you are taking a deduction. A better option is to enroll in e-statements. You have them at your fingertips when you need them and don’t need to store paper copies.
Investment Statements: Monthly and Quarterly statements can be shredded when you receive the new statement. ConsumerReports.org recommends keeping annual investment statements until you sell the investment.
Insurance Policies: You only need to keep the updated policy renewal; you can shred old policy documents.

Papers you should keep for seven years

Tax Records: The I.R.S. requires that individuals be able to produce records for at least three years from the date of return, any of your tax returns in the last three years are subject to random audit. You should keep copies of your tax returns with all of their supporting documents.

Paper to keep indefinitely (preferably in a safe or fire-proof cabinet)

Loan Documents: Keep all loan documents until the loan is paid off. Once the loan is paid off keep the most recent documents to prove that the loans were fully paid.
Retirement Statements: Bankrate.com suggests keeping your annual 401(k) statements and any nondeductible IRA contributions. Including information from current and past employers.
Life Insurance Policies: Life insurance policy documents should be kept until the covered person dies, or until you cash in the policy. Term life policies only need to be kept until the term expires or the covered person dies.
Estate Documents: Any documents related to estate planning; wills, trusts, powers of attorney etc. should be kept for as long as they are in effect. You should also have copies for your attorney and for your executor.

When you choose to get rid of your documents do so carefully, as to avoid potential identity theft. Proper shredding and filing are easy ways to protect yourself against identity theft.

SAVE THE DATE: Free member paper shred day – Saturday, March 8, 2025; 10am-noon. Compass headquarters, located at 321 Wabash Ave, Eureka (corner of Wabash & E Street).

Criminals are looking for ways to trick unsuspecting people through text messages.

December 4, 2024November 22, 2024

With the holidays quickly approaching, criminals are looking for ways to trick unsuspecting people. Many individuals might be increasing their shipping activity, which could make a text message asking you to verify your package with UPS or USPS seem valid. While the message might look fairly legitimate at first glance, there are several red flags that scream “fraud”. First, look at the link to see if it is suspicious. Never click on a link without knowing it’s 100% reliable. Secondly, ask yourself if the additional instructions for how to activate the link are reasonable. Be on guard! The objective from the criminal is all the same, to obtain your personal information or to get you to send money. If you receive a text with a link or instructions on how to activate the link, do not click on the link nor respond. Instead, look up the number and call to verify. While it might take a few extra steps, it will save you a lot of time and headaches in the end.

The Difference Between Frauds and Scams

September 17, 2024September 4, 2024

An individual’s personal and financial information is a valuable commodity, and protecting it is key to maintaining financial security. Being able to recognize the signs and understand the differences between frauds and scams is essential in safeguarding oneself from having their hard-earned money taken away by scammers and fraudsters. Here are the differences and some practical tips to help people avoid falling victim to deceitful practices.

Fraud:

Fraud is financial theft without one’s permission or knowledge. Fraud refers to the deceptive and dishonest activities carried out with the intention of gaining financial or personal benefits––all while breaking the law. Examples of fraud include unauthorized use of someone’s credit or debit card, stealing someone’s identity and opening accounts in their name, and taking over an unsuspecting person’s financial accounts. Fraud is more difficult to protect oneself from than scams, as it happens without people knowing about it. However, regularly keeping an eye on financial accounts for suspicious activity is key to spotting it quickly.

Scams:

A scam is financial theft with one’s permission or knowledge. It’s a trick that is designed to persuade people into believing false information or promises, with the goal of gaining their money, personal information, or other valuables. Scammers often manipulate their victims by exploiting their trust. Examples of scams include people pretending to be debt collectors, offering fake investment opportunities, or promising fake lottery or prize winnings. For example, a scammer could mail, call, text, or email someone to tell them they’ve won a prize through a lottery or sweepstakes and then ask them to pay an upfront fee to receive the rest of the money. There is no prize. The scammer simply wanted quick payment from the victim. One of the most important ways people can avoid falling victim to scams is by staying informed about the latest scams––that way they spot that something is suspicious before they agree to take action.

Tips to Avoid Becoming a Victim:

Be Caution When Sharing Information – People should be cautious about sharing personal or financial information, whether online or offline. They should avoid revealing sensitive information, such as banking information, passwords, Social Security numbers, addresses, and phone numbers to unfamiliar callers, email senders, or unfamiliar websites.

Strengthen Online Security – People should use strong, unique passwords for each online account and use two-factor authentication whenever possible. Two-factor authentication is an extra security step in the process of logging into an account. As usual, people enter either their username or email address––followed by their password. However, instead of being granted access to their account after entering the password, the user needs to confirm their identity via another specified method. For example, the user may receive a text message or an email with a one-time code that must be entered to complete the login process. Other two-factor authentication methods include biometric information, such as fingerprint or facial recognition scanning.

Resist Pressure to Take Immediate Action – Acting in urgency is a warning sign of a scam. Scammers want people to act quickly and make payments without taking the time to think the situation through. Honest organizations will give people time to make a decision.

Avoid Unusual Payment Methods – If someone is asked by an unfamiliar person or business to send a payment via a wire transfer, prepaid card, or cryptocurrency, they should not do it. These methods are nearly untraceable, and once the money is sent, it’s usually gone for good.

Develop Awareness – People should regularly educate themselves about the latest tactics being used by fraudsters and scammers. Common frauds and scams are regularly shared on the Consumer Financial Protection Bureau’s website. This can help people spot common warning signs and red flags that might indicate a fraudulent attempt to obtain their financial or personal information before it happens.

Trust Any Instincts – If something seems too good to be true, it probably is. If someone is suspicious about something, they should talk with a trusted friend, family, or their financial institution before taking action.

The Bottom Line:

Knowing the difference between frauds and scams is an important part of understanding the full picture in regard to the deceptive practices that exist in today’s world. By educating themselves and being prepared to spot the red flags, people can avoid falling victim to fraudsters and scammers.

Budgeting for Both Wants and Needs

August 19, 2024July 19, 2024

Wants are things someone would like to have but can live without. Needs are things someone must have to survive, such as food, water, or shelter. When learning the differences between the two, people are often told the key to budgeting is simply spending money on needs instead of wants. While needs are more important and should be prioritized, it’s okay to spend money on wants––as long as one’s necessities, savings, and debt repayment plans aren’t impacted. By following the popular 50/30/20 model, people can budget for both wants and needs!

First, what is a budget? It’s a plan that outlines where each dollar someone has will go. However, if a budget is too complicated or overwhelming to follow, people may decide to stop referencing it. The 50/30/20 budget model is a simplified budgeting method that is easy to follow and stay committed to. In addition to being easy to follow, it’s an effective financial strategy. People following the 50/30/20 model divide their take-home income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment.

People should begin by determining what their take-home income is each month. This is what they earn for income after the deductions of taxes, benefits, or contributions from a paycheck. Next, they should write a list of all the things they pay for each month. That means everything from hand soap to health insurance. After all the expenses have been listed, people must decide whether each expense is a want or a need. Most expenditures may be obvious and easy to categorize, but others may be more difficult. For example, water is a need. However, seltzer water is a want. As another example, someone commuting from outside the city would categorize a vehicle as a need. For someone living in the city with access to public transportation, a vehicle may be a want. After the expenses have been categorized, the 50/30/20 model can be used to budget upcoming expenditures.

Needs: 50%

These are expenses that are essential for people to be able to live and work. Some common expenses may include:

Rent or Mortgage
Transportation (personal vehicle or transit pass)
Groceries
Basic utilities
Insurance
Loan payments
Childcare

Wants: 30%

These are expenses that aren’t essential to living and working. They’re luxury items, not necessities. Some examples of wants include:

Video game consoles
Coffeehouse drinks
The latest iPhone
Designer clothing
Cable or streaming subscriptions
Gym memberships

Savings and Debt Repayment: 20%

The final 20% in the 50/30/20 model is reserved for savings and paying down extra on any debt. Examples could include:

Starting an emergency fund (people should aim to save away at least 3 months’ worth of expenses)
Investments
Saving for retirement
Paying off debt (loan payments are categorized as needs, but extra payments should be factored in here)

Using the 50/30/20 model, someone taking home $3,000 a month would budget for spending $1,500 (50%) on needs, $900 (30%) on wants, and $600 (20%) on savings and debt repayment.

While calculating the 50/30/20 rule can be done on paper, an online 50/30/20 budget calculator provides people with access to an easy, streamlined budgeting strategy that can help them stay on top of their finances. Find it at https://moneyfit.org/50-30-20-budget-calculator.

Getting Started with Estate Planning

July 16, 2024July 9, 2024

A home is often considered a person’s most valuable asset. But what happens to your home after you die? Estate planning is an important and often overlooked process that can greatly benefit you and your loved ones once you’ve passed away. Here is a checklist to help:

Itemize your inventory
Follow with non-physical assets
Assemble a list of debts
Make a list of memberships
Make copies of your lists
Review your retirement accounts
Update your insurance
Assign transfer on death designations
Select a responsible estate administrator
Draft a will
Regularly review your documents
Visit an estate attorney and/or financial planner
Simplify your finances
Complete other important documents
- Power of attorney
- Healthcare proxy
- Living will/Trust
Take advantage of college funding accounts for your grandchildren

Estate planning is never easy and often overwhelming. However, it’s best not to put this off. Set time aside to tackle this so you will have the peace of mind knowing you are prepared.

Budgeting for Childcare

May 24, 2024

Childcare is not cheap. Right behind a mortgage, student loans are often said to be the largest source of consumer debt. However, the average annual cost of full-time childcare is higher than the average cost of in-state college tuition. Whether you aspire to have children in the future or have already started a family, factoring childcare into your budget can help you avoid piling up debt. Here are some steps that can help:

Educate Yourself on Care Costs

Whether you’re looking into a day care center, a nanny, or you’re even considering being a stay-at-home parent, you should have sense of how much childcare will cost you every month. Do some research and reach out to any care options that are of interest to you. Make sure that you know exactly what the price will be, so that you can factor in the expense when you start putting together your budget. If your yearly salary is at all comparable to the cost of your child’s care, you might even consider leaving work to stay at home. If the cost of a nanny exceeds your budget, explore nanny-sharing. You can split the costs of care with another family and know that your little one will have a friend to socialize with. And possible, accept help from friends and family if they offer. Not only will you be saving money, but you’ll know your child is in good hands.

Track Your Current Spending

Start tracking where all your money is going now – before kids. You can either keep track using good old’ pen and paper or use a free app. Tracking your spending and comparing it to your income can give you an idea of how much you’ll be able to spend on childcare. If you discover that you won’t be able to spend much, it might be time to start looking into a higher-paying job or cutting some spending, which is a perfect segue to the next step.

Find Places to Cut Spending

The great part about tracking your spending is that you have a clear understanding of where your money is going. Look at all of your discretionary spending to see where you can start making cuts. It might be time to finally cut your cable, brew at home rather than stopping for coffee every day, and carpool to save on gas. You don’t want to be borrowing money from your emergency fund or contributing less to your 401(k).

Monitor Changes Over Time

Stay open to the idea that the costs associated with having children will change over time. While your salary may increase, so might the cost at the day care center. You might have another child, doubling the cost of the care. Childcare costs vary by age, with infants being the most expensive. Your child will someday grow old enough that paying for childcare is no longer necessary. Instead of childcare, you might have to fund their activities and interests. Don’t get caught sticking to the same outdated budget. Make sure that you’re sitting down and evaluating your budget every year to stay on track.

Happy parenting!

Watch out for Charity Fraud

March 15, 2024

According to the Giving USA Foundation’s annual report on U.S. philanthropy, Americans contributed nearly $485 billion to charity in 2021. Unfortunately, this willingness to donate money opens a door for scammers, who capitalize on donor’s goodwill to steal money. Charity fraud scammers succeed by mimicking the real thing.

This fraud is an example of Relationship and Trust Fraud under the Fed’s FraudClassifer model.

HOW TO IDENTIFY THREAT: Scammers solicit “donations” by contacting victims using the same channels as legitimate charities, such as telemarketing, direct mail, email, door-to-door solicitations, social media, crowdfunding platforms, and cold calls. Scammers may also use natural disasters or other emergencies to commit fraud. For instance, scammers may commit insurance fraud against natural disaster victims, re-victimizing people whose homes or businesses were damaged by the disaster.

HOW TO PROTECT AGAINST THIS THREAT: Real charities will accept donations using any method available to the donor, such as ACH debit, check, or credit/debit card. Scammers will request payments immediately using payment methods that are difficult to trace and provide the scammer guaranteed funds such as cash, gift card, virtual currency, Instant Payment, or wire transfer. Donors should verify the charity’s names and web addresses before donating. Consumers should also keep records of their donations and view their bank accounts regularly to ensure they weren’t charged the incorrect amount or unknowingly signed up for a reoccurring donation. Consumers who find incorrect or unauthorized entries on their accounts can dispute entries with their financial institution.

The Internal Revenue Service maintains an online database where consumers can check whether an organization is a registered charity and whether their donation is tax-deductible. Click here.

A victim of charity fraud can report it to the FTC and the government agency in their state that regulates charities. The consumer can further report a charity fraud to the FBI at 1-800-CALL-FBI or visit www.fbi.gov for more information.

Coaching kids to stretch a buck on spending

February 15, 2024

By getting your kids more involved with understanding money, many of us could not only reduce expenses but also help our children learn a life lesson. Here are some ways you can involve your kids.

Coach your kids on the concept of budgeting. You might take a couple of dollar bills out of your wallet and explain that spending too much now means there may not be enough later for something else they want (say, a winter trip or summer camp)—a concept a schoolchild of any age can grasp.
Set a budget that encourages them to plan. For example, some parents pay for all academic supplies, then provide each child $100 for other back-to-school needs. The kids are free to stretch the $100 using money they’ve earned or saved. If they’re alarmed about this budget, brainstorm with them about ways they can earn more. (See #5.)
Help them inventory what they already have. Can they reuse backpacks or sports equipment? If there’s peer pressure to have something “new,” how about personalizing those possessions with stickers or stencils?
Ask them to make a list of what they really need. Have their needs really changed? If new clothing is essential, can they mix in clothes from their closet later on?
Hold a yard sale of outgrown or unneeded stuff to raise money. While you’ll probably want to oversee the sale, encourage your kids to get involved in the pricing, set-up, and selling. They’ll value the profits more, having worked for them.
Avoid paying full retail. Start with discount stores and other nearby consignment shops. Teens who like to dress distinctively may find bargains at resale shops, outlet stores, and vintage clothing emporia. If you do need to buy “new,” peruse sale flyers and search for online coupons first. Above all, stick to your shopping list.
Consider sharing with the less fortunate. Many communities have an organization that provides items to truly needy kids. If you come upon a great deal, buy a little extra and donate it. You won’t save money, but you’ll gain rewards of another kind. Your children will, too.