Category Archives: Financial Advice

Get a Fresh Start to Your Finances with these Resolutions

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Entering the new year means setting an annual resolution. Whether you’re looking to better your wellness, career, or relationships – there’s one resolution that’s crucial to all aspects of your life: improving your financial fitness. Rather than investing in a pricey gym membership or a resolution that’s difficult to stick to, take the opportunity to set financial goals that are easier to achieve than you think. Here’s our guide to getting a fresh start to your finances in 2022.

Create a Budget

Creating a budget may sound scary, but it can actually be very empowering once you’ve finished. Having a full understanding of your income and expenses can help you be more aware of your financial state and help you save more money down the line. There are steps you can take to make the process easier.

  • Review your expenses from 2021 to see where you spend your money and how you can better save.
  • Create a list of essential spending categories such as rent, food, transportation, clothing, internet, cell phone, insurance, etc. – and write down how much you spend on each.
  • Add up your monthly income and deduct your expenses. The amount left can be used toward building savings or on entertainment.

When building a budget, it’s recommended to use the 50/30/20 concept when planning out your expenses. Meaning, 50% of your income should go toward necessities, 30% on wants, and 20% on savings and debt repayment.

Reduce Debt and Improve Your Credit

Speaking of debt repayment, another goal to make for yourself in 2022 is to work toward reducing any debt that may be lingering. To start, make a chart of everything you owe and organize it by the size of the debt and interest rates. Check your credit score to better understand your financial fitness and where there’s room for improvement. Then, calculate what you owe and use the monthly budget you created to build a realistic repayment plan.

To prioritize debt repayment, you’ll need to trim your budget and eliminate any unnecessary expenses that are not essential. We also recommend refraining from using credit cards and allocating cash for your needs instead. While this is not ideal, a tight budget will only be temporary until you’re in better financial standing and your credit score improves. Plus, you can always treat yourself once you’ve achieved your repayment milestone (within reason, of course)!

Build Your Savings

Having a savings account is essential whether you need an emergency fund, money for retirement, or to buy a home. While it may sound daunting to build and maintain a savings account, the key is to start small. You’ll want to first evaluate what you’d like the savings to be for and how much you’ll need. Then, dedicate a certain amount of your paycheck to go toward your savings and make the transfer automatic. While it’s recommended to keep 20% of your income for savings and debt repayment, you’ll need to evaluate what works within your budget and when you’ll need the funds. Even if you’re starting with $25 per paycheck, you’ll be surprised how quickly the account will grow without you even thinking about it.

If you need help with creating a budget, managing debt repayment, or building savings, the team at First Financial is here to help! Visit one of our branch locations or contact us to speak with a representative today.

 

Money Moves to Make Before Year’s End

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It’s almost a new year – are you financially ready? Have you hopefully started planning ahead and setting financial goals for the new year? Here are a few things you can do to prepare your finances for the end of one year and beginning of the next.

Review Retirement Contributions: How much are you putting away for retirement? Before the start of a new year is an ideal time to review this amount, so that if you need to make any adjustments – you can start fresh in January. It’s also a good time to see if you would be able to increase the amount going into your retirement account(s). Did you get a year end raise, and if so – can you increase your retirement savings moving into the new year?

Spend Any Flex Account Dollars: If you have a Flexible Savings Account (FSA), the money usually needs to be used by 12/31 every year or you will lose it. Check out your FSA and see if you have any remaining money available that can be used on a year end eye exam, new glasses, dental work, or medical supplies.

Donate to Charity: The end of the year is a great time to make a donation to your favorite charity. Not only will it allow you to clean out your home and donate any clothing, appliances, or toys in good condition that you no longer use – you’re also helping a local worthy cause during the season of giving. Donations are also tax deductible, so be sure to get a receipt for tax time.

Review Your Budget: This is the perfect time to review your budget from the year that’s ending, and decide if it worked well enough to continue into the new year – or if you need to make some adjustments. Sit down and really look over the numbers. Ask yourself what worked well and what went wrong – and be honest. If something didn’t go as well as you had hoped this year, decide how you’re going to revise your budget to allow it to work in the new year.

Wishing you a happy, financially healthy holiday season and upcoming new year!

 

Article Source: Moneyning.com

What You Should Know Before Using Buy Now Pay Later

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If you shop online, we’re sure you’ve seen Buy Now Pay Later (BNPL) payment options like Klarna, Afterpay, Affirm, Zip, and Sezzle – as you are checking out. For some, this might be an easy way to pay online and manage your budget – however, there are some risks and hidden fees you should be aware of before trying out a BNPL payment option.

What is Buy Now Pay Later, and how does it work?

BNPL is a type of payment deferment option, which typically allows the buyer to purchase an item with little to no money paid up front and remaining payments are made in installments. Items with BNPL options usually apply to clothing purchases, furniture, and electronics, and can range in price from $100 all the way up to a few thousand dollars. If you select this option during checkout, you’ll get an email with a payment schedule (usually about 4 fixed payments that you would either make bi-weekly or monthly until the balance is paid). Paying this way is often advertised as being quick, and with no interest or finance charges.

BNPL companies also don’t usually perform a hard credit inquiry when you apply to use this method as a payment option. They typically only will require that the applicant is at least 18 years of age, has a cell phone number, has either a debit or credit card currently, and that the applicant’s identity can be validated.

While this might sound easy and convenient – you do need to be aware of some hidden fees and read the fine print first.

Things to consider before using BNPL:

  • Don’t financially strain yourself – While Buy Now Pay Later might seem like an easy way to pay for a big ticket item, you still need to be aware of your monthly budget and have a good sense of the money coming into your bank account. Even though you might qualify for this type of installment loan, can you actually afford to pay the amount they’ll be asking for by each payment due date?
  • BNPL products often come with hefty late fees – These payment services are quick to advertise that they don’t charge buyers any interest, however if you miss a payment deadline – get ready to be hit with a pretty expensive late fee. In addition, you may also get blocked from making future purchases and have the late fees or failure to repay on time – sent to a debt collector or listed on your credit report. Late fees for BNPL can range up to 25% of the original order amount. Before choosing BNPL as a payment option, it’s always a good idea to read the disclosures and understand what you might be responsible for if you make a late payment. In addition, if you are paying the installment with a debit card or directly through your bank account and don’t have enough available to cover the payment – you’ll also likely be hit with non-sufficient funds fees from your financial institution. This makes your initial purchase, a very expensive one.
  • Payment protection options – Another issue with BNPL is that you won’t find the same payment protections that you’d have available to you by using a credit card. Buy Now Pay Later does not have the dispute protections available that a credit card does when the item purchased is a scam, or if it arrives broken (or not at all). Returning items purchased this way can also be a hassle. The payment company may hold you responsible for the cost of the purchase, even if you returned the item – or it might take a very long time for a return payment to be processed. It’s also important to read through the return policies of whichever BNPL company you decide to use beforehand, since some may differ.

The moral of the story? For some shoppers, BNPL installment payment options may certainly be a beneficial and easy way to pay, and may work out just fine. However, before you decide to use this type of loan as a payment method – it’s important to carefully read through all of the terms and conditions, be aware of the company’s policies, have a monthly budget, and know what fees you could potentially get charged. In addition, because this is a relatively new type of loan – there aren’t as many protections in place for consumers. It’s definitely a good idea to be prudent and ensure that you fully understand all the terms of the loan before deciding to pay this way.

 

Article Sources: NBC News and the Consumer Financial Protection Bureau

 

How to Tip in Different Scenarios: Updated for 2021

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A few years ago, we published a blog post about tipping in various situations. Since it’s been a little bit, and the world has changed a lot over the past 18 months – here is an update on how and what is considered an ideal tip for service in 2021.

Tipping does not only let you show your appreciation to a delivery person or server’s hard work – you’re likely also helping them pay their monthly bills or pay for tuition. Keep scrolling!

Server at a Restaurant

Many servers earn only about $2 per hour. Tipping them 20% makes a huge difference. Did their service exceed your expectations? Tip them 25%! The restaurant industry has particularly suffered a great deal over the past year and a half. Many servers were either out of work as restaurants were closed, or once they reopened – many had trouble and are still having trouble finding enough employees. Your server may be doing double or triple the amount of work than in normal times lately, so if they went above and beyond – it makes a difference to show your gratitude for excellent service.

Buffet Restaurant

At buffet restaurants, you choose and get your own food. However, remember that servers still refill your drinks. They also prepare new clean plates, silverware, and cups for you. Consider tipping them at least 10%. If they showed superb service, don’t hesitate to be a little bit more generous with your tip!

Takeout

The fact that your food was prepared for you, and you now don’t have to worry about what to cook for dinner tonight is something to be grateful for. Tip at least 10% and make the server or cashier’s day a little brighter.

Delivery

Thanks to hardworking delivery drivers, your cravings for some fresh, hot pizza have been satisfied! Tip them at least $2 to $4. If they deliver your food in bad weather or are driving a further distance to get to you, try tipping them some more.

Coffee Barista

While you’re not required to tip coffee baristas, a small act of kindness can go a long way. Place a dollar in that tip jar, enjoy your coffee, and make your favorite barista feel appreciated for their hard work. After all, that first cup of morning coffee is definitely something to get your day started off on the right foot!

Bartender

Wondering if you still need to tip a bartender? Of course you do! Preparing your favorite drinks requires art, expertise, and speed – so honor their craft by giving at least $1 or $2 per drink order.

Hairstylist or Barber

Getting a new haircut , color, or hairstyle is one of the best ways to pamper yourself. Give your favorite hairstylist or barber a 20% to 25% tip. After all, they help you look your best!

Tattoo Artist

Not everyone can draw a permanent, beautiful, and unique piece of art on your body. Given this, tattoo artists should receive at least a 20% tip. If you love how your tattoo turned out, why not tip more?

Manicurist

Apart from getting a new haircut, getting a manicure or pedicure may be another one of your favorite forms of self-care. Tip like you would to a hairstylist. Manicurists also typically deserve a larger tip for keeping your nails clean and colorful – especially if you visit the same one every two to three weeks.

Uber/Lyft/Taxi Driver

Not sure how much to tip an Uber, Lyft, or taxi driver? Around 15% to 20% will do. If you had a great ride and your destination’s a bit far, feel free to raise your tip.

Conclusion

While tipping allows you to applaud good service, it can also mean so much to servers, baristas, delivery drivers, hairstylists, and other passionate workers. Therefore, a general rule of thumb is to tip from 10% to 25% depending upon the situation. When in doubt, always try to be more generous if you can!

What is a Payday Loan and How does it work?

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A payday loan also called a “cash advance” or “check advance” loan, is a type of unsecured personal loan based on how much you earn in your paycheck. These loans charge borrowers with high interest and have short-term repayment demands.

Due to their extremely high-interest rates, payday loans can keep you in a cycle of debt. Payday loan lenders usually don’t consider the borrower’s ability to repay and often charge added fees through hidden provisions. Read on to learn why payday loans are not typically an ideal option and to see some better loan alternatives.

How Payday Loans Work

Amount Borrowed

There is a limit on how much you can borrow in most cases. The amount can range from $300 to $1,000, with $500 typically being the most common amount.

High Interest

Payday lenders charge all borrowers the same interest rate. It can be as high as 780% annual percentage rate (APR), with an average payday loan running as high as nearly 400% APR.

Short-Term Repayment

Payday loans must be paid back once you get your next paycheck. The loan term usually goes from two weeks to a month.

No Installments

A regular personal loan allows you to pay back the money borrowed in installments. With payday loans however, you will most likely have to pay back the interest and principal all at once. This amount is usually more than what your budget can handle.

Automatic Repayment

When taking out a payday loan, you sign a check or document that permits the lender to take money out of your bank account. If you fail to repay the loan as scheduled, the lender will either cash the check or withdraw the money from your account.

Alternatives to Payday Loans

If you need to borrow money, consider the following alternatives instead of taking out a payday loan.

Create a Budget

Evaluate all your expenses, including rent, utilities, and food, and create a budget. Know how much money is coming in and how much you can afford to spend on your expenses. Then, find ways to cut down on unnecessary expenses to be more in line with your income.

Get Credit Counseling

If you need help dealing with your debt, you may need to get credit counseling. There are non-profit agencies that can offer credit advice at little to no cost. They can also help you set up a debt management plan (DMP).

Better Loan Options

Getting a personal unsecured installment loan from your local credit union is probably a better option over a payday loan. With lower interest rates and fees, they are most especially beneficial for borrowers on a tight budget. When you make on time payments, it will even help build your credit and help you qualify for lower loan rates in the future! Learn more about our Fast Cash Payday Alternative Loan here.*

*Loans of $200 to $1,000 available for terms of one to six months. An application fee of up to $20 will be charged; other fees and charges may apply. At least one month of First Financial Federal Credit Union membership is required to obtain a Payday Alternative Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Not all applicants qualify, subject to credit approval. Rates vary based on creditworthiness, but will not exceed 28%. Terms and conditions of this offer may be subject to change at any time.

References:

https://www.investopedia.com/terms/p/payday-loans.asp

https://www.debt.org/credit/payday-lenders/

https://www.moneycrashers.com/how-do-payday-loans-work-dangers-payday-loan-alternatives/

https://www.investopedia.com/credit-unions-vs-banks-4590218

How to Get a Loan if You are Self-Employed

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If you are self-employed, it may be a little harder to qualify for a loan based on other borrowers who can easily furnish a W-2 form. Keep reading to find out how you can still qualify for a loan when you’re self-employed.

Check Your Credit Rating

Your credit history is probably one of the most important factors in qualifying you for a loan. Your credit score is used by lenders to gauge how and if you’ll be able to repay the loan. So if your credit isn’t that great, getting a loan could be extremely difficult – or if you do, you may be paying a great deal more in interest for the loan you’re seeking.

If your credit score isn’t in the higher 600s or above – your best bet may to be to wait before applying, and continue to build your score. You can increase your credit score by paying bills on time, rectify any past due payments, and keep all your lines of credit open.

Need to know your credit score? Visit https://www.annualcreditreport.com/index.action and be sure to check your credit report for errors too. Errors on your credit report can also affect your score, so you’ll want to make sure you review the report in detail to ensure all open lines of credit are truly yours, and that all charges and loan payments are legitimately yours.

Compile the Necessary Documents

Due to the fact that you are self-employed, more than likely your lender is going to ask you for more documents in order for you to qualify for a loan. Here are the most frequently asked for documents, that you’ll want to get organized for at least the last 2 years before you apply:

  • Bank statements
  • Profit and loss statements
  • Tax statements (Your 2 most recent tax returns, schedules and transcripts)
  • 1099 forms

Get Prequalified

Many lenders will prequalify you for a loan first before you actually need to apply. If this is an option you might be interested in, reach out to your lender and ask what might be needed in order to issue a prequalification (where you’d find out the amount you’d be approved for and the loan terms).

Decide About Applying

If you’re happy with your lender’s terms and rate, you’re now ready to apply for the loan. Or if you’ve been researching several different lenders to compare the loan rate that you’d be offered, decide which one you’d like to apply with.

Lenders will typically offer online applications, or you may be able to call and apply over the phone or in person. This is where all the documents from above will come in handy. You’ll be asked detailed questions about your business income and finances. Having everything ready to go in advance will streamline the process.

Await Loan Approval and Funding

Once your loan application is fully submitted and complete, your lender will review your documentation and let you know if you were approved for the loan. Once your loan is approved, the funds will be deposited into your account and you’ll be able to continue to improve your credit rating, finance a large purchase, or fund your business needs.

At First Financial, we understand that not every business is the same – therefore not every loan is going to be the same. We pride ourselves in personalized service and reasonable timelines, keeping your business in mind. Email us at business@firstffcu.com and we’ll be happy to provide you with more information on loans for your business. Or, if you’re self-employed and looking for a consumer loan for personal use – check out the Loan Source page on our website. We have various consumer loans too!

 

A First Financial membership is required to obtain a First Financial loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties in New Jersey. See credit union for details. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. Federally insured by NCUA.

Article Source: CUInsight.com