The Problem with Money Is…Accountability

Why is it so hard to save? And practically impossible to spend less? And even more unthinkable…to invest?

In theory, these seem like easy tasks. Put extra into your savings account, skip the trip to the restaurant, and follow the steps to smart investing.

But it’s never that simple in real life.

The easy part is getting pumped up with big ideas on revolutionizing your financial life. The hard part is doing the work. It takes being accountable.

A tidbit on accountability:

The majority of Americans are not staying accountable when it comes to finances.

In fact, “Americans have more personal debt than at any other time in history. Most people aren’t earning nearly as much money as they’d like to be earning. They’re spending too much, not saving enough, and struggling financially.” In Hal Elrod’s Miracle Morning, he acknowledges that Americans are facing a financial hurdle.

How did we get here? Poor financial choices, a poor economy, misinformation, mistakes, unexpected circumstances…there are a variety of reasons and they all add up.

For many of us, these reasons end up being excuses. Phrases like, “you only live once,” or “every time I get ahead something comes up,” are common mindsets around money. These words are powerful, and they affect the financial choices that we make.

Do you think that if your mindset is, “you only live once,” that you’ll be encouraged to spend irresponsibly to enjoy the moment? Or, if your mindset is that you’ll never get ahead, do you think that eventually, that will manifest into reality?

The truth is, you can do the things you enjoy while being financially responsible and you can get ahead even when things come up.

I used to ignore my financial situation with the hope that it would never bother me. If I ignored payments and debt that was too high,  it would all go away and I could go on living life.

That’s not how it works. And oftentimes, when you ignore your financial situation, it only gets worse.

Taking control of your financial freedom means accepting hard truths and accepting responsibility. It takes being accountable.

I’m going to share the accountability steps that worked for me, so feel free to use them or tweak them! If you ever want more in-depth and personalized advice, stop into Casco FCU and see our financial advisor.

(1) Know your budget; (2) Start saving; (3) Check in.

Know Your Budget

If you’ve ever read a financial blog, I’m sure you’ve heard the tip “use a budget.” A budget tells  your money where to go instead of wondering where it went. But don’t start with the budget. Decide on these things first:

1 – Do you like detailed or broad?

2 – Do you prefer using your phone, computer, or a notebook?

3 – What are your financial goals? Start with this year’s goals, and because you’re feeling ambitious, write your 2, 5, 7 and 10 year goals, too. Do you want to buy a house, car, take a vacation, start a business, buy a dog?

Writing goals will help you determine whether your spending habits align with your goals. Don’t skip this step, it’s an important one!

4 – When are you going to budget? Marking it on your calendar helps you follow through. The best results come from checking in on your budget weekly.

To start your budget, simply categorize your spending, figure out where you need to cut back, and put a cap on your spending so that you’re saving money, fulfilling all of your financial obligations, and leaving room for flexible, or “just in case” spending. Then come back, and analyze your spending habits.

You’ll need a way to keep track whether it’s with a budgeting app, an excel sheet, or a notebook. If you don’t keep track, budgeting will not serve you any purpose.

Once you get a complete picture of your spending habits, you’ll be able to answer these questions:

  • Where can I cut back?
  • Can I buy knock off brands without sacrificing value?
  • What monthly subscriptions am I not using?
  • How can I cut back on my electricity bill? Other bills?
  • Am I saving enough? Can I put more toward saving?

Stay on track and repeat!

Start Saving

Start by making a list of things you’re saving for. You can refer back to your list of short- and long- term financial goals. This will remind you why you’re putting money away.

Then, categorize your savings. The two necessary savings accounts are a Savings Account and an Emergency Savings Account. A Savings Account is general – for a down payment on a home/car, vacation, small business startup, continuing education, etc.; an Emergency Savings is for unexpected events – vehicle repairs, technology issues, extended sickness, etc.

How do you start growing your savings account?

  • Aim to save at least 10% of your net monthly income. If you can’t swing that, then start smaller and work your way up slowly.
  • Live below your means.
  • Keep the big picture in mind, remember your goals.
  • Fund your savings accounts on a monthly basis. Automate the transfer.

Check In

The last step in staying accountable for your financial life is to CHECK IN!

Don’t ignore your finances.

You will get billed regardless of whether or not you look. You might as well keep an eye on everything to make sure you don’t get fees, incorrect charges, or overdrafts on your account.

Get in the habit of checking into your online or mobile banking when you have some down time. You’ll be way more likely to stay on top of your finances if you’re getting the full picture on a daily basis.

As always, share your thoughts! What helps keep you accountable for your finances? Share them with us! And, if you’d like more guidance on getting your financial life on track, Casco FCU members can benefit from the help of our Financial Advisor!

Thanks for reading,

Mallory

Advertisements

3 Easy Ways To Build Your Credit

how-long-does-it-take-to-build-credit-score

If the term “building credit” is new to you, don’t worry. It’s not as scary as it sounds (and luckily, it doesn’t involve physically constructing anything).

Everyone has credit. If you live in the U.S., I’m sorry, you can’t escape a credit score. If you’re too young to spend money or own a credit card, your score is neither good, nor bad. You have a clean slate. You have to build credit.

For those who do spend money, pay bills, have a car loan, or a credit card, you are either building (or hurting) your credit…depending on your habits. (See my last post about 6 money mistakes that are hurting your credit score.)

You have to use credit in order to build credit. Whether you have a clean slate or want to improve your score, here are three easy ways to use credit to get you started!

1. Get a Credit Card

I cringe when people say, “don’t own a credit card, it’s bad!”

That’s false. A credit card is an excellent tool to help you build your credit (if used responsibly, of course). I’m not saying to go out on a thousand dollar shopping spree because no, that would not help your score. Neither would opening ten new credit cards. Get ONE credit card.

Here’s an example of a great way to use your credit card:

Jimmy went to the gas station. He bought $30 of gas and paid with his credit card.
Then, Jimmy went to the grocery store. He bought $50 of groceries and paid with his credit card.

Later, when Jimmy got home, he used online banking and paid $80 on his credit card.

Jimmy now has no balance on his card, and by paying off his balance right away, he has proved that he can use credit responsibly. You look awesome to lenders when you do this!! This boosts your credit score.

Here’s an example of what you should avoid doing with your credit card:

Maggie went to the store. She saw a dress. She wanted it. She paid $200 on her credit card.  Maggie was hosting a party. She needed food for her guests. She went to the grocery store and paid $180 on her credit card.

Maggie gets home and does not pay her credit card immediately. The limit on her credit card is $500. She is at $380. This hurts her credit score. (The rule of thumb is to stay below 30% of your limit.)

Next month, she forgets to pay the minimum monthly payment on her credit card. This knocks her score again. It counts as a missed payment, and payment history has a huge impact on your score. (The rule of thumb is to make your payments on time, every time!)

Using a credit card in this way will hurt your credit score…even if you are using credit.

2. Get a Credit Builder Loan

There is a certain loan designed to help you build credit. It’s called a Credit Builder Loan. This is a simple way to start establishing credit! Casco FCU offers this loan to people who are just getting started, and need to start building credit. You can also get a credit builder loan if you’re trying to improve your score.

Call us if you’re in need of a credit booster, and ask about the Credit Builder Loan!

3. Set Up Automatic Transfer Payments

If you’re always forgetting about your electricity bill, or your car payment, automatic transfer payments will be your life-saver! Setting up automatic transfer payments from your checking account to your bill means you’ll never forget about upcoming payments. You will have to remember to keep enough money in your checking account, though!

Call us! Casco FCU staff would be happy to help if you have more questions!

Or, if you’re hoping to get the scoop on your credit score, stop in anytime this August and ask us for your free credit report!

Thanks for reading!

Mallory

 

 

 

 

6 Money Mistakes That Are Hurting Your Credit Score!

You probably know that a credit score is important. But, you might not know why, or what, makes it so important. 
Let’s start with the basics, and then jump into why these six actions will hurt your score.

A credit score is a number, more specifically, it’s a snapshot of your spending habits. Lenders use your credit score to get an idea of how responsible you are with your money.

There are five categories that make up your credit score:

35% Payment History
30% Capacity
15% Length of Accounts
10% New Credit
10% Mix of Credit

credit-card-wallet-ts-1360x860

Your payment history and your capacity are the two most significant factors affecting your credit score. Your payment history takes into account whether you make your payments on time and your capacity is the credit that you have available. For instance, if you have a credit card, with a limit of $500, and you have a $0 balance, you’re at 100 percent capacity.

The third factor is how long your accounts have been opened. The longer you’ve had accounts, the clearer the snapshot of your spending habits.

Next, new credit is how many new lines of credit you’ve opened recently. Lastly, your mix of credit tells whether you can handle different types of payments. For example:  you have a credit card, a car payment, and a mortgage. A mix helps your score.

Now you know the components of a credit score, so what six money mistakes cause your score to drop?

1 – Missing payments.

Regardless of the amount, it can take 24 months to restore credit with only one late payment!

2 – Credit cards at capacity.

In other words, if you’ve recently gone on a shopping spree, and maxed out your credit cards, that negatively impacts your score. Contrarily, if you have a $500 limit on a credit card, and only a $50 balance, that’s fine. As long as you stay under 30% of your card limit.

3 – Shopping for credit excessively.

If you’re trying to open several new lines of credit at the same time, or if you’ve been applying for several new loans recently, it looks risky. Your credit score will reflect that.

4 – Opening up numerous trades in a short time frame.

5 – Having more revolving debts in relation to installment debts.

Credit cards are an example of revolving debt and an auto loan is an example of an installment debt.

6 – Closing credit cards.

Closing out your credit cards will lower your credit score because it will decrease your capacity. If you pay off a credit card, keep the card open, but do not use it.

If you’re wondering what your credit score looks like, or if you’d like some advice on improving it, stop in Casco FCU anytime this August for your free credit report! Just ask us for your free credit report! (You don’t even have to be a member, just stop in!)

Thanks for reading,

Mallory

 

 

 

Get the Scoop on Your Credit Score!

What’s The Scoop?

Credit scores. They’re a mysterious number that seem to come from nowhere, yet your score tells so much about you. It’s a snapshot of your payment history, your available credit, the length of your accounts, new credit you’ve opened, and the mix of credit you have.

Yes, all of this information about you and your spending habits is gathered and factored into the equation that becomes your credit score.

Everyone has a score, and it’s a number worth paying attention to. Whether you ignore it or not, it impacts your ability to be approved for a loan, a rental agreement, or even a job. Basically, your credit score tells a lender, landlord, or employer how responsible you are with your money.

Do you remember the first time you looked at your credit report? 


I remember my first experience:  I sat in an appointment, and watched as the woman scrolled through my credit history. I was unsure of what to expect. Was an identity thief making transactions under my name? Have I made all of my payments on time? How much debt do I really have?

Luckily, I made it out of the appointment in one piece. And I came away with a better understanding of what my credit score means, and why it’s so important. But for something so complex and critical, it was nice to have guidance.

And that’s just what Casco FCU is offering:  guidance, advice, and suggestions on how you can improve and understand your credit score. What is your credit score, what does your score mean, how can you improve it? These are all questions that Casco FCU staff would be happy to help you answer!

Facebook Post copy

During free credit report month, members and nonmembers can visit the branch, and ask for their free credit report. It only takes 15 minutes to get your credit score, credit report, and a little guidance, for free.

Having someone to explain your report, and offer guidance, is a huge reassurance. Financial experts at Casco FCU are excited to help you with your credit score! Stop in any of our 3 locations this August, and just ask us for your credit report!

Who:  Anyone is welcome to receive their free credit report!
What:  Free Credit Report Month
Where:  Casco Federal Credit Union
393 Ossipee Trail Gorham | 375 Main St. Gorham | 35 Cumberland St. Westbrook
When:  August 1 – 31, 2016

Thanks for reading,

Mallory

My $40,000 Experience: Was It Worth It?

It’s the inevitable post-college question:  Was it worth it? Four years and $40,000 later, I still say:  maybe.

I never questioned whether or not I would go to college. All of my friends were going, and I didn’t have any other plans. Although, I didn’t quite have a plan for my college career, either.

Screen Shot 2016-08-04 at 10.32.45 AM

My parents are both entrepreneurs. My father went to a technical college to become an electrician. And my mother went to beauty school to become a hair dresser. At one point, they each owned their own businesses:  Rino’s Electric and Karen’s Styling Salon. Later, they took on a joint venture:  KaRino’s Restaurant.

My parents never lacked for business ideas, but at 18 years old, I didn’t have the spirit to pursue an entrepreneurial path. Maybe that’s not it. Maybe it was that I didn’t know that pursuing an entrepreneurial path was a viable option. I sat in a classroom where everyone talked about applying to college, and getting a career. No one talked about becoming an entrepreneur. So, I hopped on the bandwagon and went to college, even if I didn’t know what I wanted to do or be yet. Mistake? I think so.

The College Experience

I don’t want to look back and regret my college experience. I had many fantastic opportunities to explore, meet new people, study abroad, and learn things I otherwise would’t have. College opened my eyes to diversity, culture, and new ideas. For the first time, I got to experience independence. I lived on my own and managed my own schedule. I went through four years, pursued a double major in Journalism and French, and walked off the campus for the last time in 2012, diploma in-hand. I was ready for a career.

Screen Shot 2016-08-04 at 10.35.45 AM

But, College Isn’t the Only Path

Despite my experience, my stance is that college doesn’t always have to be the only, or even the best, path to a career that you love.

In high school, I was under the impression that it was. College is where you go if you want to be successful. But, looking at my parents, neither of whom obtained a four-year degree, have each launched their own successful businesses. And I know they aren’t alone. In fact, some well-known college dropouts have struck massive success:  Bill Gates, Oprah Winfrey, Steve Jobs, Ellen DeGeneres, Mark Zuckerburg, Natasha Beddingfield, to name only a few. But they got there because they are insanely self-motivated and disciplined…not the case for everyone. If you’re motivated  enough to pursue your passion, you could redirect college tuition funds to startup your very own business.

So…Is College Worth It?

The answer to the question is completely dependent on who you are, what you want, and how you decide to get there.

If what you want is to pursue a degree in Nutrition to become a Registered Dietician, then pursue it! College is the way to go. You’ll need a degree and certification. If you’re floating through college, switching from major to major in an attempt to “figure out what you like,” then maybe college isn’t ideal. Instead, you could job shadow, gain real-life work experience, or travel! You’ll still gain tons of experience, and hopefully a better idea of what you really want to pursue.

In other words, college can be worth it if your dream job requires you having a degree. Statistics do suggest that college graduates make higher salaries, on average, than high school graduates. However, there’s no harm in putting off your college degree one, two, or three years until you can concretely say, “this is what I want to pursue.”

Now that the $40,000 experience is over, it’s time to focus on the next step:  getting rid of debt. If you’re in a similar situation, stop back in to read my next blog about top tips and tricks to pay down your student loan debt faster!

Make sure to share your thoughts:  What do you think about college? Was it worth it for you? Do you have any regrets? Or, did you not go to college to pursue your own path? Share your experiences!

Thanks for reading,
Mallory
Casco FCU