7 Financial Goals to Make 2017 a Success

Financial Goals

Raccoon Valley Bank challenges you to make 2017 the year of financial prosperity. Complete with an emergency fund, sound credit, and a monthly budget, you can conquer any fiscal goal so long as you keep moving towards it. To optimize your money management potential, we recommend these seven goals:

 

  1. Check Your Credit Score. There are many websites available which allow you to view your current credit score across the three reporting bureaus. However, the only federally authorized FREE site is annualcreditreport.com. This site gives users one free report from Equifax, TransUnion, and Experian every year. By keeping regular track of your score, you can ensure that no fraudulent inquiries have been made, and no outstanding debts are currently being held against you. After all, a higher credit score could mean potential savings elsewhere.
  2. Make a Monthly Budget. This tool is invaluable when building your personal financial success. By creating a plan for each dollar you earn you are no longer reacting to your spending, but proactively telling your money where it should go. Adding this transparency to your spending can often showcase areas where you may be spending more than desired. After adjusting your monthly allocations you can then reassign some of those dollars to help build your personal savings and other areas of improvement.
  3. Automate Your Savings. “Out of sight, out of mind,” or so the saying goes. Adding processes to your budget, such as automated savings, can help you to accumulate money before you miss it. Before you start planning your spending for the month, determine how much you want to save. So long as your fixed monthly expenses are covered, you can then create an automatic monthly transfer from your checking to your savings. By doing this the same day you are paid, the funds will be gone before you even know to miss them. You can then budget the rest of your spending to cover flexible categories like groceries, entertainment, and more.
  4. Start an Emergency Fund. In order to safeguard your savings, you’ll need to create an emergency fund. This particular account offers protection against unexpected expenses or dilemmas that could otherwise infringe upon your diligent accrual of funds. It is often recommended to begin by saving $1,000, and then gradually work up to three or six months worth of income. By adding this cushion to your personal finances, you ensure that you are financially stable enough to weather storms both big and small.
  5. Submit Your Taxes Early. Tax fraud is an increasingly relevant issue, posing many problems for both the IRS and tax paying citizens. To help avoid potential criminals from using your information to their benefit, we suggest completing your tax return as soon as possible. Additionally, if you have a potential tax refund, the earlier you file your return, the sooner you are able to receive it.
  6. Maximize Your 401(k). To make the most of your diligent savings, we recommend revisiting your HR materials, to find out the specifics of your company’s 401(k) plan. If they will match up to ten percent, and you’re only contributing six, you could be missing out on free funds! Additionally, if you want to retire by a certain age, you may need to adjust your contributions to maximize the years you still have during your employment.
  7. Pay Down Your Credit Cards. Interest rates on credit cards are infamous for being consistently high. If you have multiple credit cards which carry a balance, we recommend paying down the account that has the least amount on it. By continuing to pay the minimum installment on each card, you can then assign any additional funds to the card with the lowest value, to help pay it off sooner. Once the first card is no longer carrying a balance, you can then utilize the monthly installment and the additional funds to put toward the next card, and continue through the accounts.

The Cost of Kids: How to Plan for Your Growing Family

Family Budgeting

At Raccoon Valley Bank we understand that adding to your family may not only be an emotional decision but a financial one as well. With the growing costs of childcare alone, it’s important to have a well-rounded plan for covering the expenses of your expanding household. In order to plan most effectively, we recommend structuring your budgeting into these three stages:

 

Beginning or Before Pregnancy: Examine your current health insurance to determine an estimate of cost for both prenatal care and delivery expenses. While many insurers offer prenatal care at no or little additional cost, the price for delivery can be complex. Study your monthly premium, annual deductible, and out-of-pocket limits for the calendar year to help establish these costs before the baby is delivered.

 

After Birth: Once the baby is born, there will be traditional costs such as health care, food, diapers, clothing, and more. However, many new parents also spend more on take-out meals to help lessen their time cooking. These expenses, along with a decrease in income for parents on maternity leave, can cause many parents to slide into debt. To help alleviate the burden of these growing figures, we recommend creating a monthly budget to designate every dollar to a purpose. By allocating a specific dollar amount to each area of your spending, you can ensure that all of your costs are covered while also planning for the future.

 

During the First Year: As your child continues to grow, the costs for new clothes and equipment will continue to grow with them. Many expectant parents can spend upwards of $16,000 during the first year of their child’s life, and variables such as location, number of children, and other factors can contribute to the overall costs as well. When possible we recommend saving for each step in your child’s growth. From birth to three month’s they’ll need many one-time purchases, but during the later stages, you may have adequate time to save for each time period’s necessities.

 

Continue to grow your finances as you grow your family using Raccoon Valley Bank’s trusted deposit services. We’ll help you organize your funds, and make the most of your savings.

How to Shave Thousands of Dollars off Your Mortgage

Save Money

Congratulations on purchasing your home. You are now privileged to enjoy the thrills of home repair, maintenance, and occasional renovation. Depending on your mortgage structure, you may be paying off your home for up to thirty years. Luckily Raccoon Valley Bank has some tips and tricks to help you reduce your repayment time. Using these three strategies, we’ll show you how to pay off more of your principal to decrease the term of your loan, and lessen your overall interest costs.

 

Method 1: Making Additional Payments

In addition to your regularly scheduled payments, making extra installments can help you knock down your principal and associated interest. These additional amounts can be paid on the same day as your scheduled portion, or they can be more frequent throughout the month as funds become available. If you find yourself having a surplus in your budget, a great option would be to use those dollars as an additional mortgage payment.

 

Method 2: Increasing Your Monthly Payments

As you make your mortgage payments each month, create a plan for how much you can add on top of your regular installments. Similar to method two, these subsequent funds will continue to help you pay down your principal amount, and lessen the amount of interest owed for the life of the loan.

 

Method 3: Making One Lump Payment

Sometimes if you’re refinancing or purchasing a home, you may be trading an old mortgage for a new one. In this case, we recommend making one large installment after closing. This not only pays off a large portion of your loan but brings your overall interest accumulation down as well.

 

Owning a home is an exciting and well-earned milestone, however, the additional costs of ownership can raise questions. If you’re curious about the most efficient way to pay down your mortgage, stop in and speak with one of our experienced lenders today.

Tax Beneficial Accounts You Need to Use

Personal Finance

One of the most proactive ways you can protect your personal finances is to take advantage of tax beneficial accounts such as an HSA, 401(k) and IRA. Though these accounts are typically tied to retirement savings, this is not always the case. At Raccoon Valley Bank we want to help you make the most of your money, by offering these three account options:

 

Health Savings Account (HSA): Currently tied to your insurance provider, this account allows you to save pre-tax income into an interest bearing account. The funds within this account can be rolled over yearly, and are meant to help supplement the cost of various medical and childcare needs. However, there are limits on how much you can save for this account, the 2017 limit for an individual is $3,400 a year, and $6,750 for a family. You can typically access these funds using a debit card or written check to cover qualifying expenses outside of your insurance offerings. Another great perk of this account is that it can be invested. To further grow your funds you can work with a financial adviser to invest in mutual funds, stock, and bonds to help your money mature.

 

Work Sponsored Retirement Account (401k): Many companies now offer this account as a corporate benefit. By automatically withdrawing pre-tax dollars from your monthly income, you are able to save for retirement before you even receive your paycheck. The funds you contribute, along with those matched by the company, can then be invested into a variety of options, pushing your money to continue multiplying. Since these funds are meant to act as retirement savings, any early withdrawals have a 10 percent penalty in addition to the income taxes due. However, once you reach age 59 ½, you can start taking regular distributions from this employer-sponsored plan.

 

Individual Retirement Account (IRA): This is a great example of a non-work sponsored retirement account. Generally offered in two versions, the Roth IRA, and the Traditional IRA, both offer various tax incentives so you get the best bang for your buck. Each account has a contribution limit of $5,500 a year, or $6,500 for those age 50 or better.

 

In a Traditional IRA, you contribute pre-tax dollars into an interest-bearing account, which can then be invested into an array of opportunities to expand growth. If you want to remove funds from this account prior to age 59 ½ however, you will incur 10 percent early-withdrawal penalty along with paying State and Federal taxes. At age 70 ½, the account requires you to begin taking minimum distributions. This retirement savings option is open to anyone, with no immediate requirements.

 

With a Roth IRA there is no age requirement for distributions, and after five years, you can withdraw as much as you like up to the total amount of contributions. The only amount you cannot withdraw is the added interest earned after contribution. The main tax benefit with a Roth IRA, opposed to the Traditional IRA, is that contributions are post-tax dollars, but distributions bear no tax. This means if you are in a higher tax bracket upon retirement, you do not have to pay additional taxes to withdraw those funds, potentially keeping more of your savings. This account option does have an income limit, which disqualifies single filers whose adjusted gross income is more than $132,000 or $194,000 for joint filers.

 

Start maximizing your money and look into your account options today! Stop by Raccoon Valley Bank and our team can answer any questions you have. With our experienced lenders, we can help you choose the best accounts to get the most value out of your long-term savings.

How to Save for Retirement at Every Age

Retirement

How much do you need to retire? Will you continue working after age 65? Do you want to travel during your retirement? These are just a handful of questions that are important for retirement preparation. Unlike saving for a home or new vehicle, saving for retirement requires long-term commitment and goal oriented benchmarks. At Raccoon Valley Bank we want to help you succeed as you save, and offer these milestone marks:

 

Age 18-25: During this point in your life, you are discovering what you want to do, and how to get there. Focus on creating a solid foundation through a monthly budget, and designated emergency fund. If your employer offers a 401(k) option we highly recommend utilizing its potential by contributing the maximum amount your budget will allow. Always be sure to take advantage of a company matching policy if available.

 

Age 25-35: In addition to your 401(k), we also suggest opening an IRA. This enables you to continue to save without having your funds tied to an employer. Now is a great time to take advantage of other tax beneficial accounts, such as an H.S.A., 529, or Coverdell account. Both the 529 and Coverdell accounts aide you in saving for your child’s education without the burden taxes.

 

Age 35-45: One of the key aspects of retirement is making sure your money is where you need it when you need it. An experienced financial adviser can help you invest in appropriate stocks, bonds, and other financial strategies. Together you can construct a plan to ensure your risk decreases as you age, and be certain the funds you need are available upon retirement.

 

Age 45-55: Now is the time to examine your current career path, and determine the year at which you would like to retire. Although the average age of retirement is 66, this may not hold true for you. Whether you decide to retire later at 72, or earlier at 57, you’ll need to have this number available to help continue the development of your savings. To easily calculate your current savings projection, this tool can provide the most accurate information to help you make the most informed decision for your specific goal.

 

Age 55-66: During this time you may begin to qualify for distributions from your 401(k) and IRA. By postponing these distributions, you can continue to save, and work to build your retirement nest egg before you need it. Additionally, look into various employment options upon retirement. If you decide to work part-time for enjoyment, it could mean added savings to help you afford extra splurges in the future.

 

Age 66 and up: Once you have officially retired, you will begin to take distributions from your 401(k) and IRA. While both a 401(k) and Traditional IRA require you to accept funds after age 70 ½, a Roth IRA can remain untouched until you decide to use the money. For this reason, we recommend using a Roth IRA when your income levels allow.

 

We look forward to joining you on your journey to retirement. Whether it’s in 10 years or 50, it’s never too early to start saving!

10 Steps to Opening Your Own Business

Business Banking

Creating the foundation of your next enterprise can be a challenging process. For everything from ideas to permits, it takes a lot to get a new business up and running. At Raccoon Valley Bank we would like to help you make your dream a reality, and offer these ten steps to opening your avant-garde operation:

 

  1. Write a business plan. Creating the sound reasoning behind what you want to do and how you want to do it, represents the building blocks to a good business. There are many tutorials to help you develop a plan and to accompany them, we recommend researching information for each section of the document.
  2. Select the best location. Location can make or break a business. In conjunction with your plan’s market research, we suggest scouting out the best potential locations. Adding this element to your proposal can help you create the optimal visualization when describing your concept.
  3. Build a marketing strategy. Great service and great promotion go hand in hand. Unfortunately the old adage, “If you build it they will come,” no longer applies. Now, in order to get clients through the door, you’ll need a structured and continual marketing plan to ensure customers in your area are aware of your business.
  4. Plan your finances. These not only refer to the funds you need to open your business, but also the additional costs to help support the initial years of operation. This extra capital will help ensure your business doesn’t topple while building its ongoing customer base.
  5. Meet with a commercial lender. Once you have the core of your business planned and calculated, it’s time to meet with a small business lender to evaluate your risk. He or she may require a percentage down, or that certain criteria are met before loan signing.
  6. Fulfill any requirements. Whether it’s saving additional funds, offering up collateral, or obtaining designated permits, it is best practice to meet and exceed the requirements that your lender has suggested, in order to maximize your lending potential.
  7. Close on a business loan. After securing the funds for your business, be certain they’re placed within a business account, instead of a personal one. To help ensure your funds are separated, we also recommend creating an LLC for your business prior to opening.
  8. Purchase or lease space. Using the money you’ve budgeted, move forward with purchasing or leasing the space for your new enterprise. After space has been secured you’ll need to acquire equipment and supplies from another portion of your predetermined budget.
  9. Structure and hire your team. Another old saying goes, “If you take care of your employees, they will take care of your customers.” This is a great adage to stick by, as more often than not, people are what makes a business successful. Decide your role within the company, and then craft detailed job descriptions for the rest of your potential employees. Start building your team with the best people for the job, and add further help as needed.
  10. Open and continually promote. The big day has arrived and the doors are officially open. Continue to keep them open through constant and innovative marketing efforts. By pushing your products and services to the public you can ensure that they’re aware of your offerings and consider your business a valued option.

 

We look forward to meeting with you about your next corporate venture. If you have any questions on how to complete the steps above or have additional inquiries on commercial lending, please don’t hesitate to reach out.

Low-Cost New Business Ideas

Small Business

Creating a new business is an exciting journey filled with a constant flow of ups and downs. When deciding which industry to invest your time and money, consider these cost-effective options, courtesy of Raccoon Valley Bank:

 

Virtual Assistant: Needing a basic set-up of only a desk, computer, and phone, this affordable opportunity allows you to work from home, and establish your own hours. Start slow with one or two clients, and work your way up to a full-time schedule.

 

Medical Reporter: Quick typing skills and a high accuracy is all you need in this quick start-up. Speak with area hospitals and gain contracts for their on-location reporting. The higher your words per minute, the better!

 

Pet Groomer: Keeping dogs squeaky clean may sound like a lot of fun, but it can be tough work! With minimal startup costs, you can start your own service straight from home. By focusing your business on smaller dog breeds, you can minimize your cost, and maximize the number of clients you can maintain!

 

Freelance Writer or Photographer: Put your skills to use in this nomadic and highly flexible field. With an increasingly high amount of online publications, many magazines are searching for additional content and imagery to accompany them. Search the web for opportunities, and begin to build your digital content portfolio.

 

Event Planner: If arranging holiday parties and birthday celebrations sounds like fun to you, this could be your ideal career! Get started planning events for families and friends, and begin building your network of clients at each function. Once people start to see what you can do, you can begin to build your client list, and slowly fill your calendar with events and your pocketbook with revenue.

 

Wherever your passions take you, Raccoon Valley Bank will help you arrive safely! With our trusted business financing, we can help you and your budget stay on track. Stop by today to speak with one of our commercial lenders, and discover how to create your ideal cash flow.

Community Banking: Why It’s a Wonderful Life

Community Banking

As the seasons begin to change, and the holidays approach, our team at Raccoon Valley Bank would like to share all the wonderful reasons we are grateful to be a community bank. Just like Mr. George Bailey, in the classic tale, It’s a Wonderful Life, we have found countless people and experiences that make our bank lucky to consider this community home:

 

It’s all About the People: Unlike the big banks of America, our small and locally-owned operation prides itself on putting our people first, making the success of our customers the bank’s number one priority. Just like the old Building and Loan, Raccoon Valley Bank strives to help our customers make their home ownership dreams become a reality.

 

Growth Engine for Small Business: We succeed when you succeed. Just as George Bailey invested funds in Mr. Martini’s home and business, Raccoon Valley Bank is here to offer advice and financing on your next home or commercial project. We want to help you and our hometown community grow, just like Bedford Falls.

 

Built on Long Lasting Relationships: The movie’s guardian Clarence, was a very wise man saying, “No man is a failure who has friends.” At Raccoon Valley Bank we pride ourselves on not only helping our customers with their finances, but also building relationships with them as well. If you have a question on how to budget, which retirement plans to look at, or other money management inquiries, consider us your friendly neighborhood adviser!

 

Community Backed: Instead of being underwritten by Mr. Potter, or other national big banks, our institution is built directly upon the needs and wants of our community’s citizens. With no higher ups attempting to monopolize the town, our dedicated team of officers works to build up the community, and the men and women who call it home.

 

Employees Local Citizens: Just like George and Uncle Billy, Raccoon Valley Bank is filled with fun and loveable characters. We take great pride in employing local citizens throughout our company, and helping them grow within the banking industry. If you’re looking for a new career, stop in and see if Raccoon Valley Bank is right for you!

 

Get to know all of us at Raccoon Valley Bank and discover how community banking can help you achieve a wonderful life. For everything from personal financing, to commercial lending, we have the perfect solution for you. Get started today and share your next financial goal with us, we’ll help you shoot for the moon!

3 Questions to Ask Yourself Before You Buy

Holiday Giving

The holiday season is filled with glad tidings, seasonal dishes, family get togethers, AND seemingly endless expenses. Don’t let the price of the holidays bog you down. Keep the holiday spirit alive by spending your money wisely throughout the winter season. Instead of purchasing unwanted gifts that may end up back at the store, Raccoon Valley Bank recommends asking yourself the following 3 questions before you buy:

 

  1. Why are you buying the present?

If it is for a family member or close friend, you may be purchasing it for your annual gift exchange. If it’s for a co-worker or continuous service provider, it may not necessarily be warranted. Often times if you give someone a gift who may not have been expecting one, the awkward condition of reciprocity may arise. Instead of gifting store bought goods, consider a card or homemade treat to say thank you.

 

  1. Is this gift appropriate?

While Aunt Lynda loves gourmet chocolates, a child’s chocolate baking set may not be the most compatible gift. Before you check out, take a minute to think how your loved one may use this gift. Try to remember any discussions you had about things they may need or want during the holiday season. Even if the gift comes at a great price, it may be wasted if the person whom you purchase it for, has no use for it.

 

  1. Does this fit into my budget?

Keeping an accurate monthly budget is helpful in many aspects of your personal finances. The same applies when planning your holiday spending. After allocating a specific dollar amount to each person on your list, stick within these guidelines to remain in budget. If you happen to find the perfect shade of lipstick for your sister-in-law, but it’s $20 more than you want to spend, it may be time to consider other gift options.

 

Whether you’re searching for the perfect holiday gift, or just a simple thank you, these 3 questions can help you find the best present for your person! Remember to get started with a holiday budget, and if you have questions on how to begin planning for your holiday expenses, stop in and see us today!

4 Ways New Homeowners Can Save on Their Taxes

Mortgage

Becoming a homeowner is an exciting and trying time in your life. Once all the papers are signed, and the keys turned over, it all seems worth it. That is until a pipe bursts, lightning knocks out a tree, or your dog decides to burst through the screen door. Not all hope is lost however. In return for your endless work, and commitment to a never ending to-do list, the U.S. Government has provided four tax-based ways to reward you for your new home ownership. See how to take advantage of these four tax breaks, and make the most of your home purchase:

 

  • Early IRA Withdrawal: For many new homeowners, securing the initial down payment can be the first hurdle in their real estate journey. If you’re a first-time home buyer and have an IRA, or Roth IRA, the IRS will allow you to withdraw up to $10,000, penalty-free, to aide in the cost of your new dwelling!
  • Valuable Deductions: Between your mortgage interest, mortgage insurance, and real estate taxes, your home deductions could make a big dent in your taxable income. When preparing your taxes as a new homeowner, be sure to bring any mortgage documents, and escrow account information, to your tax professional to gain the full benefit of the deductions.
  • Renewable-Energy Tax Credit: Did you upgrade your home appliances to more efficient and environmentally-friendly options? Did you install a geothermal system in your home? If so, this helpful tax credit may be able to take a portion of that improvement cost out of your deductible income!
  • Tax-Free Profit on Sale: When you go to sell your home, the IRS allows you to avoid the capital gains tax on the profits you generate from the sale. This means that if your home’s value goes up $35,000 in the two or more years you live there, you are then able to retain the additional $35,000 your home is sold for without having to pay any taxes on those funds. One other major stipulation of this benefit is that in order to avoid the capital gains tax, you must purchase a new home as your primary residence within the next two years.

With these key homeowner tax breaks, the next thing to put on your to-do list is to make a plan for those tax refunds! If you have questions on how to best budget for your new home, don’t hesitate to stop in. We’d love to talk taxes, financing, or other improvement ideas you have for your home!

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