Happy 2014!

Photo Credit: Thinkstock

Everyone is being over saturated with resolutions resolving to resolve 2014 into a resolute dreamland of skinny debt-free smokeless travelers. I like more specific goals like wanting to run an 8 minute mile this year (my personal battle with the stopwatch). As a financial institution, it’s our priority to help you make the most out of your money. Which is why we’ve resolved to assist you in becoming Financially Fit this year!

For all of us, it’s tempting to get swept up in dreams of the future and look right past what we need to do today to help make them a reality. So whether you want to improve your credit score this year, slash your debt or finally start that emergency fund, we’ll be your supporting role in tackling your goals.

To get you started, every month we’re going to check in and set up simple goals to complete. We’ll post personal stories of Savings Superheroes, healthy recipes that won’t break the bank, as well as host several contests swapping knowledge for giftcards. If you would like to follow along, make sure you subscribe to our blog or sign up for our newsletter.

Let’s get Financially Fit & rock 2014 together!

WW

Keep Your Information Safe: Password Security

You probably have a password for your email accounts, favorite online stores, and social media sites, not to mention countless more. At West Community, we take the security of our members’ accounts very serious, but there is only so much we can do if your password is as simple as “password123.” As part of our series on online safety, we want to inform you about what makes strong passwords and how to use them securely.

Build a Better Password
Cyber criminals have gotten very sophisticated at stealing passwords by developing programs that expertly make educated guesses. They also use information that can be easily found on social networking sites or Google to hack your accounts. Beat them to it by not using common information such as birthdates or pet’s names. Create a more complicated code that includes upper and lowercase letters, numbers and symbols. In fact, we recommend using a passphrase that uses multiple words or complete sentences.

Example: “time for coffee” can become Timef0rCoffee? or Time4Coffee!
Or take a favorite song or poem lyric:

Using Passwords Securely

• Make sure to have different passwords for every account. If you have too many passwords to remember, consider using a password manager.
• Never share your passwords with anyone else.
• Do not use public computers to log into a work or bank account. Anyone could infect these computers with a code and capture your data.
• Be careful when you are required to create personal security questions. Try to use questions where answers aren’t publicly found on the internet.
• If important information or passwords are kept on your mobile device, make sure you have a PIN set up to secure your phone in the event it is lost or stolen.
• If you are no longer using an account, be sure to close, delete or disable it.

Implement these tips into your daily online routine and stay on top of your credit and debit statements for suspicious activity. Remember that using a password with mixed case characters, numbers and symbols is far more secure than anything else. For more information about protecting yourself online, view our security training video library. And stay safe!

Seminar Highlights: Car Buying

Going to a dealership and negotiating with a salesman may fill you with dread. But it doesn’t have to, according to Angie Anderson of Credit Union Lending Systems. Angie recently gave a seminar at West Community Credit Union preparing potential buyers on the art of negotiation. These were some of the tips:

Research
The key to any big purchase is preparation. Even before stepping into a dealership, do your homework. The Internet has made it easier than ever to find out the dealer’s cost for each vehicle and its options. Set a target price and start comparing rates. If you plan to trade in your current vehicle, find out its value in the NADA Guides or Kelly Blue Book.

It is important to consider the purpose of most of your driving. Is it commuting? Hauling kids? Weekends? Vacations? Finding out how different vehicles were rated in different categories from sites like consumer reports. They will help you distinguish hype from fact.

Personal Inspections
It is easy to get caught up in the excitement of the entire car buying process, but it is recommended that you thoroughly review the entire vehicle as closely as possible before making any commitments. Everything you discover can be used in your negotiations. Here are things to look for:

• Check the exterior and the paint for dents and scratches.
• Check the alignment, shock absorbers, tires, frame, windshield, windows.
• Check for rust – everywhere, especially tire wells.
• Check the interior including the seats, pedals, backseat, and trunk.
• Make sure all the buttons work: the air conditioner, the electric seats — anything that you push, pull, turn, or lever.
• Check the engine, all gauges, coolant, oil, all fluids, battery, air filter, power steering, and the transmission.
• Take a test drive. See how the car runs on the highway, up hills, down hills, and backing up.
• Don’t be afraid to ask the dealership mechanic to check out the car.

Never Appear Ready to Buy
Your actions at the dealership matter. Be comfortable and casual, but also be prepared to walk out if you are being pressured. Try to act like you are in a hurry and never sit down. It is important not to complete any paperwork until you are ready to close the deal.

When to Buy
The best time to buy a car is at the end of the month, an hour before the dealership closes. Have your research well prepared before making an offer, possibly even starting your negotiation a few days before going in to close the deal. The advantages of buying at the end of the year are that trades-ins are worth more in December than January.

Additional Coverage Options

• Extended Warranty shields you from future repair costs – even older used cars with high mileage. No matter where you travel in the U.S., you are protected against major mechanical expenses, with no deductible on covered parts or labor.
• Guaranteed Auto Protection (GAP) helps pay off your remaining loan balance if your vehicle is stolen or totaled in an accident – so you can start fresh with a new vehicle purchase. It’s inexpensive and can be rolled into your loan payments.
• Life and Disability Insurance takes care of your payments or outstanding balance in the event of disability or death. It protects you and your family by removing the financial burden of your loan should something happen to you. No physical exam or medical questionnaire is required.

ACTION PLAN  

• Research! Set your target price, compare rates, and decide on the car you want.
• Get pre-approved with a financial institution (but don’t mention this in your negotiations with the dealership until a price has been agreed upon).
• Negotiate the vehicle price, and then discuss your trade-in if applicable.
• Unless previously decided through your financial institution, negotiate warranty, GAP, and life and disability insurance.
• Close the deal and drive away in your brand new ride!

When financing a car, you should be certain your lender 
has your best interest in mind. West Community will work hard to offer you the 
lowest rate possible and monthly payments that fit into your budget. Apply online or call Member Services at (636) 720-2400 for more information and happy shopping!

Resources:
Make a Smart Vehicle Purchase and Get a Competitive Loan
See if Your Used Car is a “Lemon”
Find Out a Car’s Complete History at CARFAX 
Check Enterprise Car Sales
Save on Your Next Rental Car!

Seminar Highlights: Home Buying

Buying a home can seem complicated and possibly too expensive for your taste, but its appeal is rooted in the fact that historically, houses increase in value over time, have tax benefits and put a roof over your head. Lisa Boaz, Mortgage Manager with West Community Credit Union, breaks down the basics of what you need to know about securing a mortgage.

What Does a Mortgage Lender Look for in a Borrower?
Getting pre-approved will make the whole process go more smoothly and make your offer more desirable to a seller. There are a few things that can affect pre-approval like your credit score, employment history and income, assets, and current debt-to-income ratio. 

It’s important to maintain a good credit score since this is the primary way that lenders evaluate potential borrowers. If your credit report shows that you do not have a good credit history, talk to your lender. Not all credit issues will keep you from being pre-approved. Your lender can give you suggestions on how to re-establish credit. It is important to keep in mind, though, that adverse credit information may affect your interest rate.

Having a steady job will help you look more desirable to a lender. Typically, they will need to verify that you have two years of continuous employment and confirm your gross monthly income. There may be acceptable reasons why you have not been employed for the preferred period of time, so work with your lender to explain these gaps.

Once your loan information is approved, you will receive a pre-approval letter that is good for 90 days.

Current Debt and Monthly Obligations
Your credit report is also used to determine the amount of total monthly payments you currently have. Auto loans or leases, credit cards, personal loans, lines of credit and alimony/child support payments are taken into consideration. They are used to calculate your debt-to-income ratio by dividing your total monthly payments by your gross monthly income. Your lender must be assured that you can comfortably make all of your monthly payments so it is recommended that this number not exceed 45%. The amount of your mortgage payment will depend on how much you borrow, the term of the loan, the interest rate as well as taxes and insurance.

Private Mortgage Insurance (PMI) guarantees that the lender is paid off if the buyer defaults on a mortgage. This amount depends on the loan amount and the size of the down payment. The mortgage insurance premium is added to your monthly payment. A credit score of 680 or higher is required to qualify. If you put 20% down, you do not need PMI.

Types of Loan Programs

• Conventional – up to 97% loan to value (LTV). LTV is calculated by dividing the loan amount by the contract price. Any loan with an LTV higher than 80% requires PMI. There is no prepayment penalty and the remaining money needed to cover closing costs and prepaids can be gifted or serve as a seller’s credit.

• Federal Housing Administration (FHA) – 3.5% down payment required. Closing costs and prepaids can be gifted and/or a portion paid by the seller. Have your lender compare FHA to conventional to see what’s better for you.
• Veterans Administration (VA)

Fixed rate mortgages are popular because the rate stays fixed for the life of the loan. Only escrows (taxes and insurance) can change your payment. These are best for homebuyers who are counting on a predictable payment and plan to stay in the home for a long time.

The interest rates on adjustable rate mortgages will be fixed for a specific term then adjust annually based on future market conditions. Usually, ARMs have lower interest rates than fixed mortgages due to the borrower’s increased risk. The shorter the fixed period, the lower your rate.

ACTION PLAN

• Build up your credit and start saving for a down payment.
• Determine your price range.
• Find a reliable, reputable lender and get pre-approved.
• Select a real estate agent and begin your search for a home.
• Once you select a property, negotiate the contract and select a title company.
• After you close on the loan, move in!

Ready to start house hunting? Give Lisa Boaz a call at (636) 720-2495 for more detailed information about our mortgage loans or apply now.

Resources
How to Get a Mortgage in This Economy
Ten Things to Know About Mortgages
What to Know About Refinancing Your Mortgage

Seminar Highlights: Enhancing Your Credit Score

What’s in a number? Credit scores are basically your financial report card. Only now your financial habits are graded from 300-850.  So, what makes up that score and how does it affect you? Barbara Davis, a Credit Analyst with West Community Credit Union, tackles these questions in a recent seminar, “Personalized Review: Enhancing Your Credit Score.”

Everyone has a relationship with credit. Your score is predictive of how reliable you’ll be when paying back a loan by taking into acount your previous history with lenders. In other words, it evaluates your “creditworthiness” and can be the defining factor in your ability to purchase a home or new car.

A commonly used acronym for credit score is FICO which stands for “Fair Issacs Company.” FICO scores are used to assess risk, determine approval of loans and how to price them. So, the higher the score, the more likely a lender will take a risk on you. Negative credit activity, such as foreclosures or repossessions, can affect higher scores significantly more than lower scores.

What makes up a credit score?

• 35% Payment History — Your on-time payment history is the biggest factor when it comes to your credit score. You may want to check your loan documents and credit card statements to see if you have a grace period (which is typically 15 days). Companies usually report all loans that have a payment that is 30 days past due.

• 30% Capacity — Capacity is a heavily weighted factor of your credit score. It refers to your credit cards and the amount of available credit on revolving accounts. It can be calculated by taking your total credit card balances and dividing it by your total credit card balance limits. It is best to keep your balances under 30% for good credit health. Credit cards are a very good way to build credit and you may not need to use them to keep your cards active (check with your lender concerning annual fees, etc.).

• 15% Length of Credit — Some people can be considered too responsible with their money. They hardly ever use credit, preferring cash. This can cause you to have a harder time getting credit than the guy who has debt. Just six months of on-time payments will get you “established,” but the longer your credit history, the more accurately a lender can assess your creditworthiness. Not using an open card will not move your score up or down, but closing the account will hurt your credit.

• 10% Debt Accumulation — This percentage refers to credit inquiries, which typically occur when you’re applying for credit and a lender checks your score to decide whether or not to approve you. These can negatively affect your credit, so we suggest when shopping around, to do so in a short period of time. Soft inquiries, such as pulling your credit for a job interview, auto insurance or other non-lending purposes do not affect your score.

• 10% Mix of Credit — Consumers with a mixture of revolving, installment (auto loans, personal loans) and mortgages generally have better credit scores because it indicates that more lenders are willing to grant them credit. Also, having a variety shows an ability to manage multiple kinds of credit.

ACTION PLAN TO INCREASE YOUR CREDIT SCORE

• Pay your bills on time—this should be the top priority.
• Keep your credit card balances low.
• Rate shop within a focused period.
• Keep unused credit cards open, even if you do not plan to use them.
• Focus on correcting negative factors.
• Check your score regularly. You are guaranteed a free copy of your credit report every year. 

Solutions for Debt: Trade Revolving Debt for Installment
If you have too much credit card debt or you just want it paid off much quicker, you may consider consolidating that debt into a fixed term signature loan or refinancing your vehicle as collateral. This could help you pay off your debt much faster with one low monthly payment. If you think you may need help, see our Listening & Lending® Solution.

A good credit score is critical if you ever plan to apply for student loans, buy a car, or get a mortgage. If you want to review your credit report or talk to someone about establishing credit, eliminating debt or consolidating it, schedule a meeting with a Member Services Consultant at (636) 720-2400.

Resources:
Ten Things to Know About Your Credit Score
Pay Down Debt and Start Saving
Important Things to Know About Fixing Your Credit
Get Control of Your Debt
Credit Score Myths and Facts
Choosing Your Credit Card Wisely
Be a Smart Shopper

Seminar Highlights: Preparing for Retirement

The future of retirement: people are living longer, have more active lifestyles, yet Social Security benefits are starting later. When do you plan on retiring? Will you have health insurance? Will you have a pension through your work? There are a lot of decisions to make while making your plan. Jake Bleyenberg, LPL Financial Advisor for West Community Investment Services, exposes these questions in his seminar “Building a Strong Financial Future: Strategies for Age 45 to Retirement.”

It is a good estimate that you will probably need 60-100% of your final year’s working salary for each year in retirement. Social security will cover between approximately 20-40% of your pre retirement income at your full retirement age. That is only a fraction of what you will need, and this number varies.  To get an accurate estimate of what you could potentially receive from Social Security, fill out the worksheet scenarios on ssa.gov.

Another important and often overlooked element to consider is inflation. It is paramount for people to earn at least 3% on their money to meet inflation risk. For a quick illustration of how inflation can erode the purchasing power of your savings, check out this inflation calculator from the Bureau of Labor Statistics. Investment earnings can potentially compound over time making up this margin, and it’s never too late to start.

Roth IRA vs. Traditional IRA
Traditional IRAs are tax deductible and taxes are paid on funds when withdrawn. The tax break is upfront so this is good for people who need more money right now or are in a higher tax bracket now than they will be in retirement. Roth IRAs are not tax deductible, but the earnings are 100% tax free if withdrawn within the guidelines.

The Roth IRA is going to make more sense in some situations. Unfortunately, not everyone qualifies for a Roth. A person filing their taxes as single cannot make over $112,000. Married couples are better off, with a maximum income of $178,000 yearly.

Stocks
Stocks have higher risk, but yield a higher return potential. By taking a risk and spreading some savings into other types of investments, we can sometimes beat inflation.

Bonds
In any scenario, bonds should be the base of your portfolio. They have less risk than stocks and a pretty good return. In short periods of times, they can have some fluctuations.

Money Market
There is not a lot of risk in money market instruments and you won’t make a killing in cash return. But the overlying theme is to diversify your portfolio with risk and safe options.

A major mistake in preparing for retirement is the fear of losing money and not taking risks. Most investors will probably need to take on some risk in order to get the returns they desire. The key is to know what to expect with the amount of risk willing to be taken. One way to do this is to look at historical returns for the type of portfolio you might have and make sure you are comfortable with the swings (losses and gains) you see.

ACTION PLAN

• Establish savings goals and make regular contributions to your retirement accounts.
• If you are over age 50, plan to make additional contributions as permitted by tax laws.
• Invest your savings to potentially outpace inflation.
• Keep wills and trusts updated as well as beneficiaries.
• Review your asset allocation regularly and make adjustments as you near retirement.
• Work with a financial advisor.

For additional information, view the complete presentation and worksheet from the seminar. And to set up a free consultation or to work on a personalized retirement plan, contact Jake Bleyenberg at (636) 720-2421.

Protecting Yourself Online

Earlier today, the Associated Press Twitter account was hacked, posting a false tweet about an attack on the White House. The fake tweet rattled quite a few feathers today, even causing stocks to briefly drop over 100 points. The twitter account has since been suspended, and they have been working to correct the issue.

After the incident, Mike Baker reported that the employees of the Associated Press received a phishing email about a half hour before the hack. Phishing emails use suspicious links or attachments to record your confidential information. If these hackers were able to bring the AP, as well as the stock market, momentarily to its knees today, think of the damage they could do to the rest of us. That’s why we’ve compiled these safety tips to help protect you from these kinds of attacks:

1. Do not trust an email with grammatical and/or spelling errors.
2. Look for your name. If an email contains generic greeting or just uses your email as the greeting itself, this is a major red flag.
3. Roll over links to see the actual URL. If it does not match up with what the text says or you’re unsure, don’t click on it.
4. Don’t trust solicitations. West Community does not send text messages or emails to members asking for credit card or personal information that could compromise the security of your identity and finances.
5. If you are really in doubt, call the number on the back of your debit/credit card. Don’t trust any phone numbers contained in the email itself.
6. Sometimes these emails will look very legitimate. We suggest you treat all email as suspicious. Think before you click on the link or attachment and use your better judgment.

For more information about online safety and protecting your identity, be sure to check out our security videos library.

Transferring Your Mortgage

Transferring your mortgage to a new lender can lower your interest rate, reduce your monthly payment or even let you to pay off your loan early. But, first you must determine if it makes sense.

First, look into loans with shorter terms. If you currently have a 30-year fixed-rate loan, refinancing to a 10-, 15- or 20-year term will lower the total amount of interest you will pay and let you to pay it off faster. Then look at rates. Generally speaking, if rates are lower by one percent or more, it may be a good time to transfer. But, when shopping for rates, be careful. Lenders offering no points and fees usually charge higher interest rates.

To figure out whether it pays to transfer, you must calculate refinancing costs and determine how many months will it take to break-even. You should consider transferring if you plan to stay in your home for more than the time it takes to break-even.

Remember, you can also transfer personal loans and credit card balances and save money. By transferring a loan to a new lender you can spend less money each month. So, no matter what kind of loan you currently have, you should check out your refinancing options with several different lenders. Check out our website for more information including our current rates and the various loans we offer. Remember, transferring a loan can help you squeeze more money out of your monthly budget and save more at the same time!

Transferring Your Car Loan

Transferring or refinancing a car loan with a different lender is one of the best kept secrets around for saving money, but most people never think of it.

Car refinancing is like mortgage refinancing – only easier, quicker and without closing costs. When you transfer a car loan, you pay it off with a refinanced loan from a different lender that offers some benefit, such as a lower Annual Percentage Rate (APR), longer payment term or cash offer. A lower APR can reduce the amount of interest you will pay over the life of the loan. A longer term could help lower your payments. And, a cash offer can simply put money in your pocket.

However, if your current interest rate can only be reduced by a few points, transferring your loan probably won’t save you enough money.

Begin by researching lenders. Credit unions, banks, finance companies and online lenders refinance car loans, so be sure to compare rates. And, be prepared to research new lenders because most will not refinance their own loans. Be sure to visit our website for additional helpful information including our current rates and the many benefits we offer.

Swing into Spring Cleaning with Our Shred Day

We are hosting a free document Shred Day on Saturday, April 27 from 9 a.m. to noon in the parking lot of our Brentwood office located at 2345 South Brentwood.

As a service to the community, we host this annual event to help combat identity theft and raise awareness about this growing problem. By shredding outdated and expired documents, people can better protect themselves and prevent thieves from stealing personal information from mailboxes and rummaging through trash.

Both members and non-members are invited to bring sensitive documents they no longer need to the West Community Brentwood branch parking lot where they will be shredded for free while they wait.

For information about what documents to shred and what to keep, click here or visit westcommunitycu.org.