| Credit - |
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Understanding credit is an essential part of leading a successful life. Credit can do the world of good for you and your family or credit can lead to misery and heartbreak.
Your credit is an ever-changing part of your life. If you pay your bills on time and have little debt, your credit is considered good and you will be enticed constantly to assume more debt. If you have not paid your bills on time and have excessive credit, creditors will constantly harass you in an attempt to collect on the bad debt. Either way, credit will be an intricate part of your life.
Credit Scores
Among other things, credit scoring is a point system used to determine whether or not you should be extended credit. Scores are based on your credit history. The higher the credit score, the better your credit is. If you have had little credit, but have paid it on time, your score might be a 660. If you have had credit and have not paid it on time, your score might be a 450. If you have had credit, paid it on time and even paid it off early, your score might be a 720.
Credit Scores are being used by an increasing number of lenders to underwrite (approve or deny) loans. The scores are based on mathematical equations and take a long period of time to be established.
Credit score is not only effected by your timeliness of repayment, it is also effected by how much credit you have, what type of credit you have and how much credit you have attempted to obtain. What does all of this mean? If you have excessive obligations, your score will be low. If you have little obligation but a lot of open accounts, even with zero balances, your score will be low. If you have only had credit with typical “finance companies” your score will be low. If you have never had any obligations but shop around a lot and allow companies to check your credit regularly your score will be low. Every time there is an inquiry on your credit report, it drops your credit score!
Fair or not, the world is moving towards convenience. Part of this convenience in a financial sense is the ability to serve consumers rapidly. Credit scoring allows lenders to do this, but at the same time allows little room for compensating factors. It is easy to see how important your credit score is to you and your family’s future.
Download Road to Homeownership, Part I, Credit (12kb PDF)
Check your credit at Equifax
or
Trans Union. |
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| Budget - |
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One of the very best ways to keep your credit clean or repair your credit is to establish a "workable" budget and stick to it! Personally, I'm quite fond of Yankee Candles, but, I don't have the budget to buy one a week, therefore I reward myself with one monthly. A candle may not seem like a lot, but for those who know, Yankee Candles cost $20 for the big jar candles! Twenty dollars per month is equivalent to an Internet subscription!
Part of any good budget is considering things that we really want and need. And placing value upon those things. First we have to budget for the things we need versus the things we want. And, don't forget to budget for savings and retirement! It's a lot to think about, but once it's written down, it gives you a much clearer picture of where you are and where you need to be.
Part II in our Homeownership (76kb PDF) concerns budgeting. Click here (25kb PDF) to download a budget worksheet in Adobe Acrobat. We also have a financial counselor on staff who would be happy to work with you to establish a budget, email or call
Dan Veasey with questions or to setup an appointment.
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| Mortgage 101 |
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| f you've ever applied for a mortgage, you know how nerve wracking it can be! Fortunately, we've come a long way with documentation these days and though you won't be carrying a crate in to see your loan officer, you will need more than a couple of things. The basic necessities for applying for a mortgage loan are: |
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Two Years Tax Returns with W2's |
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30 Days Pay Stubs |
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3 Months Bank Statements (all accounts) |
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Up to date balances on Loan Accounts |
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Sales Contract, Deed or Building Contract |
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More information may be needed, but this will certainly get you started. For more detailed information on Mortgages, download Part III, in our Homeownership (105kb PDF) articles.
To Refi or Not? That is the question!
It's not an easily answered question. You must first consider your reasons for doing so. If you are simply refinancing for a lower interest rate, you need to calculate your savings. You may save a couple of thousand dollars over the Term (life) of the loan, however, have you considered whether or not you will remain in this home? It often takes years to recoup closing costs. Some financial institutions advertise that they will pay your closing cost if you refinance with them. Look carefully at the fine print. Often times they will pay your closing costs, but if the loan is paid off within a certain time frame, you will be required to pay back those funds.
There are many mortgage calculators on the Internet that will assist you in your decision making process. Do some research before "diving in". |
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| Kids & Cash |
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| URW Community Federal Credit Union offers free savings accounts to all of our members including KidZ! Savings accounts can be setup for as little as $5 and payroll deduction is available with no minimum. A great way to start saving for your child's:
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First Car |
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College Spending Money |
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Investments |
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| We have an Annual Easter Egg Hunt and Our Haunt the Credit Union Halloween Party! Contact
a
Member Service Representative for details or any
to setup an account for your child. If you child already has a savings account, or once you setup one, we pull our invitation list from our Accounting System, therefore your child will be included in any mailings.
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| What Kids should know about Money
And When |
| Baby to Five |
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At around 3 years of age, children start asking for things in stores. Sometimes it’s easier to just get the item rather than talk about why it’s needed or not needed. Doing this however is costing your child valuable lessons about needs versus wants as well as financial responsibilities.
Saying “no” all the time is not the answer just as always giving in is not the answer. Saying “no” all the time causes your child to constantly test your limits. They are curious as to what questions would warrant the much coveted “yes”. Parents should allow the children to sometimes get what they want and at others should tell the child that it’s not time for that yet. If a child picks up a toy and wants the toy, and his/her birthday is a month or so away, the parent should explain that the child’s birthday is coming up and that perhaps one of his/her friends or relatives would want to purchase the item for the child. If it is in fact a toy that the child is genuinely interested in, you might have a grandparent, etc. buy the toy. If it is a trivial toy that the child will soon forget, it’s probably best left on the shelf.
If it is a special toy and the child did not get it for his/her birthday, though the child might be disappointed, a valuable lesson is presented.
1. Sometimes we don’t always get what we want.
2. Most of the time, we have to get our own toys.
Take the opportunity if the child didn’t get the toy to teach some financial skills.
Did the child get money for his/her birthday? Explain to them what money is. Instead of writing a check, allow the child to occasionally see you pay cash for items. Explain to the child that Mom & Dad are expected to work everyday to earn this money. Finally, take your child to the store with his/her money in their own “wallet” and assist them with taking the toy from the shelf and actually paying cash for the toy. Explain to them, that now that they have purchased their toy, some of the cash has been depleted and that they must first “earn” more in order to make any more purchases.
Click here to download a full color coin identifying worksheet for your child.
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| 3 - 5 |
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During the ages from 3 years to 5 years, you can introduce your child to identifying money such as pennies, dimes, quarters and dollars. This way by the time they are of counting age, you can slowly begin the process of breaking down what a nickel is. How many pennies are in a nickel, etc.
When children begin to count, start with dollar bills and have them count the dollars.
Around the age of 4 your child can start doing small tasks around the house. Don’t reward every task, simply start instructing your child to pick up his/her own toys, close the door, put their clothes in the drawers, putting away groceries, etc. Always thank your child for his/her help, but refrain from rewarding with money at this time, you might opt instead to introduce your child to an allowance as small as a $1 per week, given sometimes in the form of four quarters and at others in the form of a dollar bill. Have a “piggy” bank set aside for the child to deposit his/her money in it.
At around 5 years of age you can start driving your message home. If you are making a trip to the grocery store and there is an item that your child usually will ask for, but is not part of your grocery list, accompany the child to his/her piggy bank to withdraw the necessary funds. Tell them what you think the item will cost and have them get out only that amount.
Have the item rung up separate from your household items and have your child make the purchase. If he/she is short, “loan” them the difference until you get home. If they have enough, have them deposit any change back into their piggy bank.
If you haven’t done so already, start a savings account for your child at age 5 with deposits made by you. You can introduce the child to saving their money and depositing it around age 6 or 7.
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| 6 to 8 |
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Congratulations! Your child has now settled down a bit and can focus easier or learning lessons. By now, they should be able to identify coins and dollars and count. At this age, you'll start driving home your message of what equals what.
At 6 children should be able to use dull scissors. Have them scout the newspaper coupons for items that you use on a regular basis. Don't allow them to choose items just because you have a coupon for it. You might say “Do you see anything in the coupon section that we use?” You might introduce this to your child when in fact you have seen an item that you use.
Have the child cut out the coupons and save them for the next grocery trip. When preparing for grocery shopping, remind your child to get their coupons. Tell them you will give them the face value of the coupon as a reward for helping saving money! Have the cashier ring the groceries up and tell your child how much is needed. Then have your child give the cashier the coupons, then tell them how much less is needed because of their help. After you have moved away from the cashier, give the amount to your child to put in his/her “wallet” to be deposited in their “piggy bank” at home.
You might want introduce your child to an “allowance” at this age. Instead of just giving them a dollar or two, why not have your child help around the house to introduce the idea of a “work” ethic. Children can do easy chores like rinsing dishes, dusting, emptying small trash cans, etc. They can also put away their own clothes. Have set schedules for your child to do his/her chores and remind them of their responsibilities. Give the allowance on a scheduled basis also. Children at these ages are interested in how they can earn money and what things costs. Have your child assist in making grocery lists and explain what errands will be run on a certain day and why.
Make chore lists with your child that include the day the chore should be completed and have your child check each item off the list. Allowance is only given when the tasks are complete. If your child did not finish his/her tasks, take the time to explain to them the importance of the task and help them do the task. After doing this a couple of times, the child should be expected to complete all of his/her tasks on his/her own.
Take your child with you to make his/her deposits into their savings account. Allow the child to keep some small “cash” at home, but deposit the majority into a savings account. Have the child make the deposit themselves. On occasion, take the child to make a withdrawal for a toy, etc. This will introduce them to saving for big items and learn that they can put the money away, but still get it back when needed. You'll soon see that children are much more proud of having a savings account versus a childish “piggy bank” as children emulate their parents' actions and covet responsibilities that they observe their parents engaging in. |
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| 9 to 12 |
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Children at this age are very interested in ways to earn money. They are bombarded by advertisements. They will quickly learn about priorities, goal setting and saving and spending if they have to buy their own “extras”. Give your child spending money every week, this could mean a “raise” in their allowance. Continue to pay for normal activities and allow the child to see you paying for these activities, but don't focus on it.
Start giving them their school “lunch” money at the beginning of the week. This is great time to help your child set spending goals and budgets. You might consider calling the school to inquire about the typical price of school lunch and what “extras” cost. If the “extras” are something that you can live with, give them money for school lunch and the “extras”.
Continue your chore list, allowances and savings patterns already established. Introduce goal setting and budgeting. |
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| 13 to 16 |
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Give your child more responsibility and control over their spending habits and what you pay for them to do. Take averages of money that you spend on their activities and give the child the money at the beginning of the month. If they run out of activity money, then they don't get to do the activity. You'll want to plan for them to have money for all activities you usually allow them to attend.
Give them control over their clothing expenses. If you buy clothing on a regular basis, give your child that amount on that basis and instruct him/her that this is for that specific purpose. If they spend all of it and still need something, they will have to go without or wear their old ones. If they don't spend it all, either give it to the child for their savings or tell them you will save it for their next shopping trip. Keep records so that both you and your child know how much is being spent and on what. If you typically buy “school clothes” and clothes at Christmas, practice the same rules.
If you've had any positive experience with teaching financial skills to your kids, we'd love to hear from you! Please
email
us! |
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