Financial stress haunts many of us. We say, “If only I had more money?” At Compass, helping members become more financially confident is a big part of who we are. One step you can take to increase your peace of mind: create an emergency fund. For those who have limited income or little room in …
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Financial stress haunts many of us. We say, “If only I had more money?”
At Compass, helping members become more financially confident is a big part of who we are. One step you can take to increase your peace of mind: create an emergency fund.
For those who have limited income or little room in their budget to put money away, an emergency cash reserve may be even more essential than college funds or retirement savings. You may know how many years you are from retiring and how soon the kids will be old enough for college. But, there’s no way to tell when your car’s transmission will begin to slip, your goalie daughter will break a tooth or an arm, or your job will evaporate.
Emergencies happen when we least expect them, and our wallets usually suffer collateral damage.
Here are five steps to reduce your financial stress:
1. Figure out the cost for your monthly “must-haves.” On your most recent checking account statement, circle the amounts you paid for essentials. This means the necessities required for bare-bones living, such as your rent or mortgage payment, groceries, gas, insurance, utilities, credit card and loan payments.
2. Estimate how long you might need to stay afloat in an emergency. Most people should have enough savings to cover for three to six months without a paycheck. You may want to adjust this target up or down if your job would be harder or easier to replace. Let’s say your monthly amount is $2,500, so your emergency savings goal, if three times that, is: $7,500. Mission impossible? Maybe not, if you set up milestones on the way.
3. Make a road map toward your goal. Using $2,500 as an example, you’d get there in about 23 months by putting aside $50 every two weeks. Boost that $50 to $75, and it would take only 15½ months to get to $2,500. Within four years, you could reach your goal of $7,500.
4. Set up “driverless savings.” Once you’ve decided how much to set aside regularly, set up automatic transfers in online banking. Instead of hoping there’s money left to save at the end of each pay period, set it and forget it. That’s a crucial step for success.
5. To manage your stress, keep on saving after you reach your goal. Life is unpredictable, so there may be times you’ll need to draw cash from your emergency account. Just keep squirreling away into your savings, and you’ll replenish your reserve.
Some credit union members like to use our low-interest credit card or equity line of credit as a financial safety net. But when it comes to building confidence, nothing beats having savings in reserve. If you would like to open a separate “Emergency Savings Account”, you can open a secondary savings account online or stop by one of our branches.
Phone scams have been around almost as long as phones. Sadly, the prevalence of automated robocalls has exploded and appears to invade our lives almost daily.
Three general warning signs your call may be a scam:
Beware of these particular scams that are sweeping the nation:
The IRS Swindle
A threatening phone caller “from the IRS” (or “from the Federal Reserve”) says you’re guilty of tax evasion and must pay the penalty at once with your credit or debit card, or else face jail time or revocation of your driver’s license. Some folks with complex financial lives may pay up, assuming they made a mistake on their taxes. Wrong—the IRS never demands payment over the phone. Self-defense: Don’t pay. Report the scam to the U.S. Treasury Inspector General’s office at 1-800-366-4484.
The “Family member” Scam
The person claims to be a family member in trouble and needs your help, asking you to send them money or use your credit card. You might be asked to guess who’s on the line. If so, don’t give out any names. You ask the caller to identify who they are. Then ask them to describe something you know only the real person would know like a special occasion or trip together, a gift you gave or received or something in your home that they would know. Self-defense: Be absolutely sure you know who you are speaking with and do not give out any information until you know for sure who it is you’re talking with.
The “Computer Crash” Con
You get a phone call from a self-described “computer security expert” who warns that your Windows PC or laptop may be infected with a fatal virus. You might be asked for money to protect your system or to remove this nonexistent malware. If you agree to download a fix or allow remote access to your computer, the crook can ask for your passwords—and may actually install malware that you then have to pay to get rid of. Self-defense: Hang up on this scammer. No legitimate IT security pro will ever cold-call you in this way.
If you find yourself running out of money before you run out of days until your next paycheck, you’re not alone. In fact, even people who earn tons of money find themselves in this situation every month. And the reason they do is because they have no idea where all their money went.
To figure that out, start with a money diary. Every time you buy or pay for something, write it down. This includes everything from your mortgage and car payment to something as small as a candy bar. Then at the end of the month, take a look and see where all your money is going. Now look to see which expenses you can reduce or eliminate — like that large cup of fancy coffee every morning.
Once you find and reduce frivolous expenditures, take that money you would normally spend on them and deposit it into your savings account for a rainy day fund.
Next, establish a budget. Most financial experts recommend the 50/30/20 budget. 50% of your after-tax dollars on necessities like a mortgage, groceries, and other bills. 30% on wants like clothing and eating out. And 20% on savings and debt repayment. Tracking expenses and living on a budget may take some getting used to in the beginning, but over time it will give you a better financial future.
Before you run out and buy that new pair of shoes or that really big, big screen TV, don’t just ask how much it’s going to cost. Ask yourself how many hours are you going to have to work to pay for it.
That may sound like a silly question, but let’s face it; working is how you get the money to pay for things. And figuring out just how many hours you’ll have to work to make a purchase may cause you to rethink whether you really need to make that purchase or not. At least that’s what most financial experts believe.
For example, if you earn $20 an hour (after taxes and deductions) and purchase a big screen TV for $2,000, it’s going to cost you 100 hours of work. Spend over $1,100 on a nice vacation? That’ll be another 50 hours you’ll have to work to pay for that tan.
So how many hours will you have to work to pay for your next purchase? Just take the price of the item you want to buy and divide it by your hourly wage (after taxes and deductions). You might find out that purchase isn’t really worth your time.
Any time you research ways you can save money, you usually see the same things: Stop eating out. Stop buying fancy coffee. Even we’re guilty of offering those up as great suggestions for saving money.
But let’s be honest, people like eating out at nice restaurants and drinking coffee with fancy names. So we put on our thinking caps and tried to come up with some other things you can do to save money that you might actually be willing to do.
Let’s start with the most obvious and least painful. Get a big jar. Then at the end of every day, drop any change you have in your pockets into that jar. (If you really want to go crazy, you could add the singles in your wallet.) Once the jar is filled, bring it in and deposit it into your savings account — not your checking account and definitely not back into your pockets.
Next, try living on the 50/30/20 budget. Basically, that means 50% of your income is devoted to necessities like bills, etc. 30% goes to wants. And the final 20% goes into your savings. To help make sure that 20% will actually go into your savings, just pretend it’ s a bill and pay it into your savings every time you write out your bills.
Another easy trick is to take whatever balance is remaining in your checking account on the day before payday and transfer some of that balance into your savings. For example: If your balance is $150 then transfer at least $50.
Here are a few other money-saving tips:
• Have a weekly “no spend day” and don’t buy anything (even lunch) on that day
• Stop paying others for work you can do — like yard work or cleaning the house
• Cancel any auto-renew subscriptions that you aren’t using regularly
• Only make big purchases like furniture or appliances during annual sale periods
• Ditch cable for streaming services
• Shop around for the best cell phone plans and insurance services
• Grocery shop with a list so you’ll be less likely to buy stuff impulsively
• Buy generic whenever possible. According to an NPR study, it’s something even chefs do
• Save your raise (if you’re lucky to get one)
We hope you find these tips helpful. Or at least more palatable then giving up your favorite restaurant or morning cup of coffee.
If you have poor or no credit, don’t feel bad. Because you’re not alone. According to Experian, a credit reporting agency, 68 million people in the US are in the same boat.
The good news is that since you’re a Compass Community Credit Union member, you already have an easy way to start building or rebuilding your credit score. It’s your Compass Savings account.
Simply take out a loan against the balance you have in your savings account. Make payments on the loan on time. And your credit score will start to reflect that in a positive way. Plus, you can use the money from the loan to help pay down any high interest credit card debt or catch up on other bills that you may not be paying on time.
But while taking out a loan against your Compass Savings Account is a really easy way to start improving your credit, it’s not the only step you can take. Here are a few other tips we recommend you try:
• Pay all your bills on time — including your utility and cell phone bills
• Pay off debt and keep balances low on credit cards
• Don’t close unused credit cards unless they charge you annual fees
Remember, having a good credit score can help you qualify for better interest rates and terms when borrowing money, buying a car, or applying for a mortgage. It’s also used by landlords when you apply to rent. And it might even influence your smartphone lease and your life or car insurance rates.
If you’d like to learn more about taking out a loan against your Compass Savings Account, stop by your local branch. A Compass representative will be happy to tell you more.
When it’s time to make a big purchase like a new TV, computer, furniture, appliances, or yard equipment, most people wait for a sale to buy them.
And that’s a great way to save money. But then they’ll put their purchase on a credit card and make monthly payments. Or even worse, they’ll take out a loan.
So why is that so bad? Because what you probably don’t realize is that by paying for your purchase with monthly payments with a credit card or loan, the interest you pay will completely eliminate any of the savings you got from the sale. Or worse, make you end up paying even more.
To avoid making this costly mistake, try planning ahead when you want to make any big purchase. And start putting extra money aside every month until you have enough to pay for the item in cash.
You can earn interest on it by putting that extra money in your Compass CCU savings account. Plus, making direct deposits from your paycheck will make it even easier to save. Once you have the amount you need to make that purchase, then it’s time to start looking for the sales. It’s the best way to ensure that you’ll never pay more than the sales price for anything.
Of course, if it’s an absolute emergency to make a purchase before you save up enough money to pay cash, you can put it on a credit card or ask us for a personal loan. Just make sure you pay it off right away or at least make more than the minimum payment every month. That way, you’ll save on some of those extra interest payments.
In short, a credit union is a cooperative financial institution where people work together to make everyone’s lives better. Everyone who has an account here is a member. And every member is an owner.
Rather than making profits to send to far-off shareholders, Compass CCU reinvests in our credit union. Which means we reinvest in YOU. That’s why we say that, at Compass Community Credit Union, we guide you to better banking.