Author Archives: VP of Marketing and Business Development Jessica

Navigating Federal Rate Cuts as a Small Business

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The Federal Reserve’s recent rate cuts can impact small businesses significantly, influencing everything from borrowing costs to consumer behavior. Understanding how these changes can affect your business finances and potential growth is crucial in making strategic decisions. As rates decrease, there are key factors small business owners should consider to navigate this economic shift and capitalize on new opportunities.

Access to Affordable Capital for Growth

When the Federal Reserve lowers interest rates, small businesses can benefit from more affordable access to capital. A reduction in borrowing costs could mean your business can more easily afford loans for various purposes – such as for purchasing inventory, expanding operations, upgrading equipment, or remodeling. Aside from loans, rate cuts can also lower interest rates on lines of credit, which for some business owners can translate into thousands of dollars saved annually and higher profit margins. This savings can then be invested back into the business for further growth.

At First Financial we understand that not every business is the same, and therefore – not every loan need can be the same. We offer a wide range of business loan options and look at each individual business and create a customized lending solution to meet your business’ specific needs. We pride ourselves on educating our members prior to finalizing loan decisions to provide peace of mind in knowing they chose the right option for their business.

Increased Consumer Spending and Confidence

Federal rate cuts don’t just benefit businesses; they also directly impact consumer spending. As interest rates drop, discretionary income increases – leaving consumers with more money to spend on goods and services. This creates a favorable environment for businesses to attract more customers – especially in the retail, hospitality, and service sectors. Offering promotions or expanding marketing efforts during these times can help businesses capitalize on increased consumer confidence.

Be Strategic with Business Credit and Loans

While lower rates can make borrowing more attractive, it’s important to approach new financing strategically. Even though rates may be lower, taking on additional debt should align with a clear business plan. Ensure that your business’ financial health can support the repayment of any new loans or credit lines you take out. Business owners should review their current debt, such as business loans and credit cards, to see if refinancing at a lower rate makes sense. Reducing interest payments through refinancing can improve cash flow and free up resources for other areas of your business.

Plan for Future Rate Fluctuations

Although rates are currently lower, they can rise again in the future. Business owners should be cautious when taking on variable-rate loans or lines of credit, as these products can become more expensive if rates increase later. Locking in a fixed-rate loan now could be a good way to safeguard against potential future rate hikes. If your business has an immediate need for funding, such as purchasing equipment or seizing a time-sensitive opportunity – it may make sense for you to move forward with financing at current rates. The key is to strike a balance between timing and necessity.

Preparing Your Business for Financial Success

As federal rates continue to fluctuate, small business owners may have a unique opportunity to lower borrowing costs and tap into increased consumer spending. However, these benefits must be balanced with careful financial planning to ensure long-term stability. At First Financial, we’re here to help you navigate through your journey as a small business owner. For more insights and guidance – call us at 732.312.1500, email business@firstffcu.com, or visit a branch today.

Do’s and Don’ts When Accessing Your Home Equity

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Accessing the equity in your home can provide financial flexibility, whether you’re looking to fund renovations, consolidate debt, or cover unexpected expenses. However, with such a significant financial decision – it’s essential to make informed choices that protect your long-term stability. Home equity products like loans and lines of credit (HELOCs) offer great benefits, but they should be approached carefully to avoid potential pitfalls. Below are key tips to help you navigate the process.

Do: Understand the Product That Suits Your Needs

When using your home equity, it’s helpful to know whether a home equity loan or a HELOC is the better option. A home equity loan offers a lump sum of money with a fixed interest rate, making it easier to manage predictable, long-term expenses. A HELOC on the other hand, functions more like a credit line – with variable interest rates and the flexibility to borrow as needed. Choosing the right product depends on the nature of your financial goals.

Don’t: Apply for Additional Credit Before Accessing Equity

If you’re considering applying for a home equity loan or HELOC, avoid applying for other loans or credit cards during the process. Opening new accounts can affect your credit score and impact your ability to get the best rates on your home equity product. Additionally, taking on more debt can increase your debt-to-income ratio (DTI), making you a less favorable candidate for a loan.

Do: Research Lenders for Competitive Rates

Just like with any loan, it’s beneficial to shop around and compare lenders before committing to a home equity product. Interest rates, terms, and fees can vary widely between institutions, so it’s a smart move to gather multiple quotes. Even a small difference in the interest rate can result in substantial savings over the life of the loan. First Financial Home Equity Loans offer great rates, no pre-payment penalty, no application fees, no points or closing costs, flexible terms up to 20 years, and fixed monthly payments.*

Don’t: Make Large Purchases or Increase Your Spending

In the lead-up to applying for a home equity loan or HELOC, it’s wise to hold off on making large purchases or racking up credit card debt. Increased spending can lower your credit score and increase your DTI, hurting your chances of getting approved for the loan or resulting in higher interest rates. It’s best to keep your finances as steady as possible during this time. Consider creating a budget to curb unnecessary spending and demonstrate strong financial discipline.

Do: Use Home Equity for Value Enhancing Projects

One of the most responsible ways to use home equity is to invest in home improvements that can enhance the value of your property. Renovations such as kitchen upgrades, bathroom remodels, or energy-efficient improvements not only improve your living space – but can also increase the market value of your home, ultimately boosting your overall equity.

Don’t: Neglect Regular Payments or Change Your Employment

Consistency is key when applying for a home equity loan or HELOC. Make sure all your payments—whether for your mortgage or other loans, are made on time. Missed or late payments can hurt your credit score and jeopardize your chances of getting favorable terms.

If you’re considering a job change, it’s a good idea to delay the switch until after your loan is secured. Changing jobs or reducing your work hours may make you seem like a less stable borrower.

Do: Maintain an Emergency Fund

Before you dip into your home equity, ensure you have a solid emergency fund. Accessing home equity means using your home as collateral, so if you’re unable to make your payments, there’s a risk of losing your home. A financial cushion helps prevent the need to use home equity for smaller, unexpected expenses.

Successfully & Responsibly Access Your Home Equity with First Financial

Home equity can be a valuable financial resource, but it should be used with care. By making informed decisions and avoiding common mistakes, you can maximize the benefits of your home equity while protecting your financial future. At First Financial, we’re here to guide you through the process and help you make the best decisions for your needs.

For personalized advice or more information on home equity options, call 732.312.1500 option 4, or visit a branch today. Be sure to subscribe to the First Scoop blog for ongoing tips and insights into managing your finances.

*First Financial FCU (FFFCU) will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and the borrower(s) will be required to pay back closing costs in full to FFFCU. A First Financial membership is required to obtain a Home Equity Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See FFFCU for details or visit firstffcu.com for all current rates. Rates for financing up to 80% of Appraised Value less other Mortgages.

The Impact of Elections on the Markets and Tax Policy

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We’re in the final stretch of the 2024 presidential election race. As we follow the news and parse the most recent polls, some may ask, “How might what happens on November 5 impact my finances?”

As financial professionals, we’ve done some homework and come to the following conclusion: you may care passionately about who wins, but your investment portfolio probably doesn’t.

Markets Over the Long Term

Consider how the stock market has performed under Republican and Democrat presidents throughout history. As the accompanying chart shows, the stock market has fluctuated under the leadership of both parties. However, the long-term trend suggests that the stock market’s performance may have more to do with the overall strength and resiliency of the U.S. economy than the person who sits in the Oval Office.1

Stocks are measured by the Standard & Poor’s 500 Composite Index, an unmanaged index considered representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. Stock price returns and principal values will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

Is a Split Government Better for the Financial Markets?

While stock market performance has not historically depended on who wins the presidency, history shows that the market tends to like split control between the two major parties.

As the chart below illustrates, Democratic control of the White House and Senate, with Republican control of the House, has produced the highest average annual return.

However, the runner-up is the opposite—a Republican president and Senate and a Democratic House. While mixing and matching control of the levers of power in Washington, D.C., produced comparable results, the low results for the Republican president and Democratic Congress combo may be attributed to the 1973 oil crisis and 2008 global financial crisis bear markets.1

What Matters to the Markets

Following how election results have affected the stock market over time is fascinating. Still, data suggests economic trends tend to have a more consistent relationship with market performance than who wins in November. Improving economic conditions (which can include falling inflation) tends to create a more favorable business environment.2

The Fate of the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act of 2017 overhauled the federal tax code by adjusting individual and business taxes. Although some of the provisions were permanent, most individual tax changes are not. Unless extended, many of the changes implemented are scheduled to “sunset” on December 31, 2025. At that time, rates will revert to pre-2017 levels.3

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice. Tax policy is subject to revisions during the legislative process. We encourage you to consult your tax, legal, and accounting professionals before modifying your tax strategy. Also, we always welcome collaborating with your tax professional to help align your financial and tax strategies.

Staying the Course

While elections can trigger some market volatility, it’s critical to keep short-term events in perspective and not allow them to distract you from long-term financial strategy. The best approach is often to create a portfolio that reflects your goals, time horizon, and risk tolerance.

We’re Here If You Have Questions

We’re here to help. If you are a current client and want to discuss your strategy, please contact First Financial’s Investment & Retirement Center by calling 732.312.1534.  You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Prepared by FMG Marketing

Sources:

1 Baird.com, March 14, 2024. The S&P 500 Composite Index represents the stock market, which is an unmanaged index considered representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. https://www.bairdwealth.com/insights/market-insights/baird-market-strategy/2024/03/all-that-matters-elections-and-your-money/

2 U.S. Bank, June 21, 2024. https://www.usbank.com/investing/financial-perspectives/market-news/how-presidential-elections-affect-the-stock-market.html

3 Tax Foundation, June 2024.  https://taxfoundation.org/research/federal-tax/2024-tax-plans/#Topics

Habits That Can Work Against Wealth Creation

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Are You Undercutting Your Efforts to Build Wealth?

Good money habits can help you as you save and invest for the future. Bad habits can leave you treading water financially. Let’s review three bad money habits to avoid.

1. Not saving enough. Instead of paying themselves first, some families pay others first. Dollars they could save and invest are instead spent on consumer goods and services they don’t truly need. Money that could be saved and invested for tomorrow is spent today. Are there areas in your life where you could cut costs?

2. Carrying too much debt. Every effort should be made to reduce the size of credit card bills, student loans, and other consumer debt that risks siphoning money away from the pursuit of your long-range financial objectives.

3. Investing too conservatively. Historically, equity investments offer the potential for double-digit returns when the markets perform well. Fixed-income investments are frequently dependent on interest rates – when interest rates are low, their value is greater. When interest rates increase, these investments are subject to increased loss in value. Accepting some risk may give an investor a chance for greater reward.

Are these habits slowing your wealth-building momentum? Why not see where you stand today and gauge the potential positive impact that can come from paying yourself first and adjusting the way you invest? Call or email the financial professionals in the First Financial Investment & Retirement Center at 732-312-1534, mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

 Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC

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Celebrating Halloween on a Budget

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Halloween is a fun and festive time of year – but the cost of decorations, candy, and celebrations can add up quickly. With a little planning and creativity, you can still get into the spooky spirit without breaking the bank. Here are six simple tips to help you celebrate Halloween on a budget while making the most of the spooky season.

1. Get Crafty with Decor

Halloween decorations can be expensive if you rely on store bought items, but you don’t have to splurge to transform your home into a haunted haven. Instead, get creative and make your own spooky decor using items you already have around the house. Old sheets can become ghostly figures, cardboard can be transformed into gravestones, and stretched out cotton balls can make perfect cobwebs. Remember, these decorations only stay out for a few weeks out of the year so they don’t have to be top-notch quality. By reusing what you have, you can create a festive atmosphere without overspending or being wasteful.

2. The Dollar Store is Your Best Friend

For those looking to complement their DIY decor, dollar stores are an underrated goldmine for affordable Halloween items. Many discount stores will set up seasonal sections filled with Halloween decor at a fraction of the prices you’d find at stores like Target or Home Goods. From plastic spiders and skeletons to themed tablecloths and candles, you can stock up on decorations without spending a fortune. With some creativity, items in the craft section can become the perfect decorations with a little glue and paint. These inexpensive items are perfect for creating a spooky vibe on a budget.

3. Shop Smart for Halloween Candy

We all know candy is one of the biggest Halloween expenses, especially if you live in a neighborhood with lots of trick-or-treaters. Instead of making multiple trips and buying tons of regular-sized bags at the grocery store, buy your candy in bulk from warehouse clubs. If you don’t need an entire bulk bag, consider teaming up with friends or neighbors to split large candy purchases and share the savings. This way, you can still get a good deal without overstocking. Don’t have access to a club membership? Opting for off-brand candy is okay too—most kids are happy with any sweet treat!

4. Stick to a Pumpkin Budget

Pumpkins are a fall favorite, but they can be pricey—especially if you get swept up in the excitement of buying too many or buying from the wrong places. To keep your spending in check, set a pumpkin budget. Let each family member pick one pumpkin or cap the total amount the family can spend together. While pumpkin patches are fun for photos, they often come with a higher price tag. Head to the pumpkin patch for a day of fall fun, but consider buying your pumpkins from a grocery store instead. Look out for buy-one-get-one deals and coupons, and remember – a pumpkin is a pumpkin no matter where you buy it!

5. Take Advantage of Free Halloween Events

Fall is filled with community events, and many of them are free. Look for local Halloween parades, trunk-or-treats, and outdoor movie screenings. Cities, neighborhoods, and community centers often host fall festivals or harvest fairs where you can enjoy seasonal activities without the hefty price tag. In addition to Halloween-specific events, fall offers plenty of budget friendly outdoor activities. Take a walk through a local park to enjoy the fall foliage, go apple picking, or visit a farm for a hayride. Check the local events page on Facebook, browse town websites for free or low-cost events happening near you, or subscribe to our First Scoop Blog and check out our monthly things to do on a budget posts!

6. Budget Friendly Costume Ideas

Costumes can be one of the most expensive parts of Halloween, but there are plenty of ways to save. Start by setting up a costume swap with friends, neighbors, or other parents—costumes are only worn once, so swapping with others can give them new life. Don’t shy away from thrift stores. Most second-hand stores setup Halloween sections, and you can find gently used and even brand new costumes with tags. Just like decor, DIY costumes are a fantastic option. Look through your closet for items that can be repurposed. With a little creativity, you can put together a fun costume without spending a fortune.

Don’t Break the Bank on Halloween

Halloween is all about fun and creativity, you don’t have to overspend to enjoy the holiday. At First Financial, we’re here to help you make the most of your money all year long. For more financial tips and personalized advice, call 732.312.1500 or visit a branch today.

Protect Yourself From Presidential Election Deepfakes and Scams

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With the 2024 Presidential Election just about a month away, it’s not just political ads and debates that will capture your attention — scammers are also gearing up to deceive voters and steal sensitive financial information. Advances in artificial intelligence (AI) and deepfake technology are making it easier than ever for fraudsters to manipulate voters through fake videos, robocalls, and phishing schemes. With AI improving daily and scammers taking full advantage, it’s crucial to stay vigilant to protect yourself this election season and beyond. At First Financial, we’re here to help you navigate these risks and safeguard your finances.

What Are Deepfakes, and Why Are They Dangerous?

Deepfakes are AI-generated videos or audio recordings that convincingly mimic real people, often for malicious purposes. While these deepfakes are used in political campaigns to spread misinformation or manipulate public opinion, scammers are also using this technology to create fake donation requests or impersonate political figures. These realistic videos and calls can trick even the most discerning individuals into giving away their hard-earned money or sensitive information.

Common Election Scams You Might Encounter

  • Donation Requests: Scammers can pose as campaign representatives asking for donations via phone, email, or on social media. While these requests may seem legitimate, they are designed to steal money from unsuspecting voters who don’t verify the source.
  • Voter Registration Services: Scammers can pretend to be voter registration services, offering to update your voter information via phone, text, or email. They may convince you there is a fee associated with the updates and/or steal your personal information for identity theft or financial fraud.
  • Election Surveys: You might be asked to participate in a political survey, with scammers offering a reward in exchange for personal information such as your Social Security Number or bank details.

How to Spot and Protect Yourself from Scams

Election-related scams can be hard to identify, but knowing the common warning signs can help protect your finances. Here’s how to spot a scam and avoid falling victim to it:

1. Pressure to Act Quickly: Scammers often create a sense of urgency, insisting that you need to donate or update your information immediately. Be wary of any unsolicited request for immediate action, whether it’s to donate to a political campaign or fix a voter registration issue.

2. Unverified or Unfamiliar Sources: If you receive a donation request or voter registration update from an unfamiliar number, email, or website – take a step back. Always verify the source before engaging, and go directly to the campaign or government official’s website to check the legitimacy of the request.

3. Too Good to Be True Offers: If a survey or donation request promises you something that sounds too good to be true, like a large reward or an incredible opportunity – it probably is. Scammers often entice their targets with rewards in order to collect personal or financial information.

4. Suspicious Payment Methods: Be cautious of requests for unusual payment methods such as wire transfers, cryptocurrency, or gift cards. Legitimate campaigns will not ask for donations through these methods, as they are often a hallmark of scam activity.

5. Mismatched or Inconsistent Details: Look for small inconsistencies in emails or messages. Scammers may attempt to use AI-generated content, but these often include tell-tale signs such as unnatural movements, mismatched audio, or incorrect details about the candidate or campaign.

6. Double-Check Campaign Requests: If you feel connected to a political candidate or cause and wish to contribute, always verify donation requests by going directly to official campaign websites. Avoid donating through informal platforms or requests that you didn’t initiate.

Stay Vigilant & Protect Your Finances This Election Season

By staying informed and cautious, you can protect yourself from financial fraud and ensure that your personal information stays secure. At First Financial, we’re dedicated to helping you navigate this election season safely. For more financial tips and personalized advice, reach out to us at 732.312.1500 or visit a branch. Be sure to subscribe to the First Scoop blog for ongoing insights into staying financially secure year-round.