Tuesday, August 25, 2015

Seven Pointers for Seniors Living at Home

The vast majority of older Americans want to remain in their homes as they grow older, also known as aging in place. More than 90 percent of the baby boomer population prefer to age in place, according to a recent Georgetown University survey.

“America’s 50 and older population is expected to increase by 20 percent in the next 15 years,” said American Bankers Association President and CEO Frank Keating. “It’s important that older adults and their families plan ahead to ensure they have the housing they need for a safe, comfortable and independent life.”

1.) Take a hard look at your finances

Arrange a meeting with a trusted family member or friend and a banker. It’s critical to understand your financial resources, how long they’ll last and what housing options are the most cost effective for you. Be sure to consider all costs associated with aging in place, including:

  • Home modifications
  • Transportation to medical appointments, shopping, and other errands
  • In home caregiver for house upkeep and medical purposes
  • Property taxes and home insurance

2.) Consider a reverse mortgage

Though not for everyone, a reverse mortgage loan can provide monthly cash payments based on your home’s equity.

3.) Assess your home and determine what modifications are necessary

While staying in your home is preferable for many, there are often design changes that must be made to ensure it’s also safe and comfortable. Make sure there is at least one step-free entrance to your home. Update lighting inside and outside of the house so that all walkways and stairs are well lit. Clear pathways throughout house and firmly secure all carpets to the floor to prevent tripping. If a bedroom and bathroom does not or cannot exist on the first floor, consider installing an elevator or chairlift. At a minimum, make sure you have handrails on both sides of your stairs. Install grab bars in the bathtub, shower, and/or near the toilet.

4.) Make security a priority

Older Americans are often targets for scams and other criminal behavior. Be cautious about who you allow in your home and disclose sensitive information to.
Install up to date and easy to use locks.
Make sure your front door has a peep hole or a security monitor so you can see who is outside. Consult someone you trust when hiring a contractor, financial adviser, etc.


5.) Look into community resources

If mobility is limited, look in to services offered in your area. Many communities have established non-profit programs that offer transportation and food delivery to assist older Americans at a reasonable cost.

6.) Be prepared for possible emergencies

Keep a list of all emergency contacts on your refrigerator or by a phone.
Consider a Personal Emergency Response System. Transmitters can be worn as a bracelet or around your neck and require the simple push of a button to send a signal to a call center.
Have your address number visible from the street so emergency responders can easily identify your home.

7.) Reevaluate every six months to make sure all needs are being met

As you age, your needs inevitably change. Take time twice a year, or as needed, to sit down with your trusted family or friend and make sure your current living situation is still the right one.

Tuesday, August 18, 2015

How to Start and Maintain an Emergency Fund

You might have seen our last Tuesday's Tip about having a rainy day fund. Most people agree it's a good idea to have an emergency plan in place, but they are uncertain about starting. How much do I need to save? How do I get started? Here are three steps to help you get your emergency fund started.

1) Set your savings goal

The first step in any savings plan is to determine how much
you want to save and how quickly you want to set that money aside. Be realistic. Goals are great and can be motivating, but if they aren't realistic then they will only discourage you. Generally, experts advise keeping between three and six months' worth of living expenses set aside in your emergency fund. Once you've calculated that amount, (including rent/mortgage, student loans, food, utilities, entertainment, fuel, etc.) decide on a reasonable time frame for achieving your goal. Keep your income level in mind when deciding this. For example, if you want to save $9,000, a time frame of three months would mean putting $3,000 into the fund every month. For most households, that is not realistic. A better time frame would be at least eight or nine months, probably much longer. 

2) Start small. 

Whether your goal is to set aside $1,000 or $10,000, it all starts with that first dollar saved. If you're just starting your emergency fund, even finding $25 extra each month to put away can increase your confidence. Setting up an automatic transfer with your bank can help you stay consistent. You can start by transferring $25 each month from your checking account to your savings account. Then, start adding any budget surpluses and the amount you saved by cutting your expenses. That way, each month you're saving at least your minimum; anything in addition to that is a bonus to yourself.

3) Finding the extra cash. 

This is the most difficult part for most people. Sometimes, finding the money to deposit into your emergency fund account each month will be a struggle. If you can't tighten up the monthly budget any more, consider adding profits from a garage sale, selling a few things online (Craigslist and Facebook are great for this!), or picking up a few more hours. Do you have a hobby such as photography, woodworking, or gardening? Try selling your projects at a local farmers market or gift shop, or online. Put the extra income straight into savings. Another strategy is to start taking a bagged lunch to work and/or school and cooking your meals at home instead of ordering pizza or heading out. Put the money that you would have spent directly into your emergency fund so you're not tempted to spend it elsewhere. Save on your morning coffee by brewing at home. Even if it's only $2.00 each day on your way to work, that's $42 that could be added to your emergency fund at the end of each month.

Taking these three steps will help you start and grow your emergency fund, giving you peace of mind as you prepare for the unexpected.

Wednesday, August 12, 2015

Financial Tips for College Students

Many college freshmen are moving into their dorms, eager to enjoy the new freedoms life away from home has to offer. A brand-new credit card, books, and room and board costs are just a few of the financial balls new students have to juggle. 

Here are a few tips to help freshmen manage their finances away from home:

1)  Create a budget. Take the time to establish what your income will be each month, whether that's from a work-study stipend, part time job, etc. Then, subtract all your debts, including what you'll need to spend on housing, food, gas (if you're driving), and loans. Once you have a good idea of how much you can spend each month, set aside a portion of that for an emergency fund. Be sure to update and adjust your budget monthly according to your actual spending. Your budget won't help you control your spending if you set aside $100 per month for groceries but regularly spend $200. Set yourself up for success with a realistic monthly budget based on your actual spending habits. If your spending is more than your income, you know something has to change.

2)  Use credit cards, but use them wisely. Credit cards aren't evil and they don't automatically trap the people that use them under a mountain of debt. In fact, it's a good idea for students to use a credit card regularly in order to help build a credit history. However, this strategy only works in your favor if you pay off the full balance each month and never use the credit card to buy something you couldn't buy that same day with cash. This approach will help you live within your means, but still build a good credit score.

3)  Look for student perks. Many restaurants and stores have special discounts for students with a college ID. Here's one blog post with a list of discounts (disclaimer: we did not verify the claims made in linked blog). Make sure you take advantage of these extra opportunities to save money. Renting your textbooks or buying them used can also save you hundreds, and many booksellers offer discounts for college students. Finally, don't visit the coffee shop every morning for your dose of caffeine, even if they do have a student discount. Making your coffee in a dorm-sized coffee machine can save you $90 every month - more if you typically buy expensive coffee drinks.

 4)  Save early and save often. Retirement may seem like a long ways away, but if you're able to contribute to an IRA now and roll it into a 401k when you start working full-time, it will have a tremendous impact on your retirement savings.

5) Enroll in online and/or mobile banking. If you are heading to college away from your hometown bank, you will need a way to check account balances and transactions. See if your bank offers online banking or mobile banking so that you can stay in control of your account and always know your balance. 

Keep these five tips in mind and you'll avoid major financial pitfalls while in college.

Tuesday, August 4, 2015

3 Strategies for Paying Down Debt

Have debt? 

You're not alone. 

The average U.S. household has over $15,000 in credit card debt, and that doesn't take into account mortgages and student loans. However, just because you owe money now doesn't mean you'll never be debt-free. 


First and foremost, always pay more than the minimum balance every month (even if it's only by a few dollars), and pay on time. Second, create a monthly budget so you know how much you can afford to put toward paying off debt. After that, there are several strategies you can use to pay off your debt in manageable increments. 

Here's a look at three of the most effective options:
  • Tackle the Highest Interest Rate First  One strategy is to identify the debt that has the highest interest rate and work to pay that off first. This strategy is effective because it gives you the most bang for your buck. The higher the interest rate, the more expensive the debt is and the more it will cost you in the long run. For example, if you owe $5,000 on a 20% interest credit card and $10,000 on a 6% car loan, this strategy advises paying off the credit card debt first because it will have a bigger long-term impact than paying the car loan.
  • Sort Debts by Principle Size  Another possible strategy is to sort your debt by the principle size (the amount you still owe, not including interest). One school of thought says to pay off the largest principle first, because it typically has the largest monthly payment. Therefore, once that debt is paid off, you'll have more money left each month to apply to other debts. On the other hand, some think that paying off the smallest principal first works better. That strategy is most effective if you've experienced a financial windfall and are able to completely eliminate one of your debts. For example, if you've been carrying $2,500 on a credit card that you don't use anymore, using your tax return to completely pay off the card and then cancel it will be more beneficial than spreading that money around to all of your debts and then continuing to make just the minimum payment on that credit card.
  • Consolidate   Another strategy that works very well for some people is to consolidate your debts. Sometimes done by taking out a home equity loan or a personal loan, consolidation is an effective way to combine all of your individual debts into one loan with one payment, ideally at a better interest rate than what you were paying. This is a common tactic for student loan debt and credit card debt held on multiple cards with similar interest rates. If you are able to consolidate, it may feel like you've just eliminated a lot of debt, but be sure to control your spending to avoid piling more debt on top of what you already owe.

Finally, if none of these strategies seem to be working, or you feel that you need help selecting the best plan for your circumstances, speak to a professional. Your banker will be able to assess your situation and recommend a plan of action that you can achieve successfully. 

Have a strategy that worked for you? Let us know in the comments below!