Tag Archives: personal finance

The DO’s and DON’TS of Using Credit Cards

creditcard

Using a credit card is a great stepping stone to help boost your personal credit history. By proactively managing your ongoing finances, you can showcase to potential lenders that you know how to fulfill your repayment promises. What many people don’t know, is that simply having a credit card does not automatically indicate an increase in your credit score. To help you succeed with your credit, Raccoon Valley Bank has put together our most commonly asked do’s and don’ts of using credit cards.

DO: Pay your balance in FULL every month or every two weeks.

DON’T: Keep a balance even if the interest rate is low

While keeping a balance less than 30 percent won’t drastically harm your credit score, it’s always better to be safe than sorry. We recommend never spending more than you can pay off each and every month. By keeping yourself to this standard you can make certain to never become a victim of expensive credit card debt.

DO: Choose a card that will compliment your lifestyle.

DON’T: Pick your credit card based of mail or TV offers.

There are countless websites and app centered around helping you find the ideal credit card. Instead of signing up for a credit card through the mail, start perusing sites like NerdWallet to discover which card fits not only your spending but your rewards preferences too! Before you start applying, remember to only apply for a credit card if you need one If you plan on using more than one, wait six months or more before applying for a new line of credit. This will help to keep your credit score on track and assist in preventing any unwanted dips.

DO: Use reward points to save money.

DON’T: Spend more just to get additional points.

While some credit card options certainly do offer some great sign-on rewards, remember that added debt and expenses are never worth the hike in points. The money you manage is yours, and it’s real! While the points are truly a great perk, never let them outweigh the tangible money you currently have in your individual accounts. If you allow this to happen you may find yourself with a mountain of debt, the equivalent of half the vacation you can no longer afford to take.

DO: Have more than one card when you can pay them all off on time.

DON’T: Cancel a credit card without researching its history.

There are certain cards that boast the best rewards when utilized for specific industries, and others that can add extra perks for those all-encompassing purchases. To make the most of these various benefits, we recommend using multiple credit cards for your household’s purchases, only once you’ve maintained a zero balance on one for more than six months. If you feel confident in managing multiple credit cards, you’ll find great advantages of using the rewards behind the various programs and their associated bonus structures. However, if you close a card, always check and see if that card holds your longest history of a credit line. Should that be the case, you may not want to cancel it, as it could create a slight dip in your credit score.

Did you know Raccoon Valley Bank offers credit cards too? If you’re looking to boost your credit, or want to begin building your history with a local institution, our dedicated staff would love to help you get started. Simply stop by your nearest location, and we’ll help find the perfect fit for you and your spending.

Money Advice Gone Wrong

Money Management

Sometimes the best intentions can lend themselves to producing the worst results. While many friends and family members may offer quick solutions to your financial anguish, often times, the best education, is understanding those lessons first hand. At Raccoon Valley Bank we’d like to showcase several of the most common pieces of advice we hear, and what you can do to remedy these particular miscommunications.

Bad Advice #1: You have to go to college to get a decent job.

While a college degree does open additional doors, it is not required for many well-paying jobs available around the nation. Social figures like Mike Rowe, have made it their personal mission to spread the message that you can earn a living without having to sink into debt. Whether you’re interested in IT, manufacturing, grocery management, or other skilled work, you can find numerous positions through technical training or management programs, and avoid the majority of debt most four year college students incur.

Bad Advice #2: Having debt is okay if you pay your minimum payments.

While it is important to make installments on your loans or debts, eliminating them all together should be the desired end goal. Did you know that when credit reporting companies review your credit score, there are five factors considered? The two most important factors are your payment history and your debt to income ratio. If your monthly debt payments require more than 43 percent of your income, that may raise a flag to any future potential lenders.

Bad Advice #3: To build your credit score you need to purchase everything on your credit card.

While it certainly helps to have a long and healthy track record associated with your credit card usage; having an on time payment history is far more important. This payment history represents the largest factor of your credit score, which the reporting bureaus track. By never spending more than you have, you can make certain you are able to pay your bill in full each and every month. This action may have the potential to help foster growth for your credit score.

Bad Advice #4: Retirement savings can wait.

Contrary to what many young adults think, right now is the most important time to start saving for retirement. While later in life you might have more disposable income to save, you’ll also have less time before you need those funds. Once compound interest enters any equation, time becomes the most valuable commodity for growing your wealth. For instance, if you saved the Roth IRA maximum of $5,500/year starting at age 25, you’d have $1.17 Million by the time you’re 65. Who wouldn’t want to capitalize on those kinds of savings?

We think you can tackle any piece of advice with a few grains of salt. If you’re curious what your next financial move should be, stop by Raccoon Valley Bank and speak to one of our dedicated personal bankers. Our team of financial experts is here to help you and your family succeed; get started today!

Red Flags to Look for on Your Credit Score

Credit Score

Everyone and their brother seems to be sharing the importance of checking your credit score, but once you have the information, how do you actually know what it means? At Raccoon Valley Bank, we want you to not only have the information about your personal finances but be able to understand and act upon it as well. If you see any of the following red flags while viewing your report, you may want to look into the appropriate remedies as quickly as possible.

Missed or Late Payments

Your credit report should accurately showcase your current repayment history, which accounts for approximately 35 percent of your credit score. This area of the report should indicate if any payments have been missed and have been reported to the bureau as late. If you see a payment that you were unaware of, be sure to reach out to the company listed and contact them to pay off the bill in question.

Fraudulent Activity

It is possible to view your credit report and find bills or inquiries that you did not initiate. In this instance, it is important to take the appropriate steps to report identity theft and begin recovering your financial reputation. The sooner you alert the authorities and lending organizations to this unfortunate dilemma, the less likely you are to suffer any long-term side effects.

Excessive New Accounts

While having more than one account open can positively affect your credit score, attempting to open too many in a short time period can cause a negative reaction. If you see more than two accounts opened in the last three months, you may want to wait before attempting to apply for a credit card or other lending option.

Active Collections Accounts

If you haven’t checked your credit score in a few years, any potential missed or late payments may now have spiraled into active collection attempts. In this instance, the best practice is to contact the companies listed and discuss repayment options. Many times if you are actively working to pay down an account receivable, the company will work with you to structure monthly installments that fit within your personal budget.

At Raccoon Valley Bank, we recommend checking your credit score each month. Tools such as Capital One’s CreditWise make it affordable to see your score without having to pay any associated fees. If you’d like more information on how to increase your credit score, stop in today. One of our trusted personal bankers would be happy to answer any questions or curiosities that you have.

Nature v. Nurture: The Psychology of Spending

Psychology of Spending

If you’ve ever taken Psychology 101, you’ve probably heard the argument for nature v. nurture. In this multi-century discussion, psychologists have debated whether a person’s genetics or environment make a greater impact on their personal behavior. At Raccoon Valley Bank we’re excited to share our take on this timeless debate, and share how nature and nurture affect your spending habits.

The financial traits which we see as more nature based are:

None

Are you surprised? Contrary to many personal opinions, financial lessons and preferences are 99.99 percent teachable. This concept is backed by an interesting study in which children were given one marshmallow immediately, but were given another if they could occupy themselves until the tester returned to the room. Researchers found that the kids who were able to wait to receive the second marshmallow went on to have more successful ACT scores and other measurably improved personal relationships. This information is particularly interesting due to the fact that delayed gratification is a skill, which can be taught from a young age.

Delayed gratification is one of the initial skills learnt for financial education in the form of savings. For this reason, it is practical to begin a child’s understanding of finances with this particular task, however, there are many other aspects of managing your money that can be tied to these initial skill sets as well.

The financial traits which we see as more nurture based are:

Whether you prefer to save or spend.
The specific items you enjoy saving or spending for.
Your skillset for prioritizing tasks and expenses.
The desire you have to compare yourself to others.

While the list of nurtured traits could go on for miles, the important fact is that like any other skill, fiscal education can be learnt through practice and continued repetition.

If you want to grow your personal financial skills set, we recommend starting with a household budget and saving plan. By committing to these two monthly activities you can start to build a foundation of learning to ensure you are adhering to the best financial practices. As you grow your understanding of finances, adding in a retirement savings plan and debt repayment schedule can be valuable steps to gaining your financial freedom.

To start teaching your child these valuable lessons, we suggest great activities (like these) to help them understand the value of waiting. Simple games such as Mister Noodle can provide valuable comprehension for your child early in life.

The Best Financial Quotes and How to Use Them

Quotes

There are endless famous quotes amongst Facebook newsfeeds and Reddit threads, however, time and time again people seem to hold fast to their favored stand-bys. For topics ranging on everything from love to education, the wise words of others seem to implement a perspective in our lives that may be left vacant otherwise. To help you achieve your financial aspirations this year, Raccoon Valley Bank would like to share the quotations we hold dear, to help encourage you along the way.

“Of this be sure: you do not find the happy life… You make it.” -Thomas S. Monson

The meaning of this phrase can be as simple or as complex as you see it. For us, it is a calming and reassuring reminder that the emergency fund, retirement plan, and vacation fund are all worth the effort. Unfortunately, no one will offer us a trip to Mexico for free, but with dedicated work and savings, WE can make it happen for ourselves and our loved ones.

“Attention is the rarest and purest form of generosity.” -Weil

This quote can be applied to both personal and business relationships. The more time you invest in a person, the more value they hold for you or your company. Whether it’s taking the time to answer customer questions, making it to your child’s basketball game, or simply being willing to pick up a phone call from a frazzled friend, giving someone your time is the ultimate connection to others. If you’re looking to improve a relationship, budget, or business, investing your time into it is the best place to start.

“If you define the problem correctly, you almost have the solution.” -Steve Jobs

Whether you’re working on restructuring your personal finances or trying to determine your most profitable product, the first step in finding a remedy is identifying the ailment. In the example of a budget, knowing what you’re spending, earning, and saving offers a visual into potential issues, so you can further adjust those efforts into a constructed monthly plan. This is the same with many things in life. By speaking with others, and getting all the cards on the table, you can ensure that problem is first made clear before the appropriate solution is determined.

“Never be afraid to try. Remember, amateurs built the Ark, professionals built the Titanic.” -Unknown

The worst action you can take is no action at all. No matter what challenge you are facing, always remember that the failure to act is the only true defeat. If you’re looking to start saving for retirement, expand your business, or tackle your debt, the first thing you have to do is start. No matter how you start, the biggest obstacle of your task will be committing to your end objective.

At Raccoon Valley Bank, we want to help you succeed in both your personal and financial life. If you need a helping hand with your next venture, stop by our nearest office, and we’d be happy to lend an ear.

6 Steps to Scoring Your Savings Goal

Hockey Savings

Do your savings goals make you feel frozen? Get back on the ice this season, and let Raccoon Valley Bank help you win your personal financial game. We’ll show you how to keep pushing forward with these strategic hockey tactics:

Find the 5-hole.

One of the first and most important ways to save is to keep your eyes open! Whether it’s taking advantage of grocery store specials, buying household items in bulk, or cutting spending from your monthly budget, the biggest opportunity you have while saving money is continually searching for new ways to save.

Complete the hat-trick.

Before you start saving for the short-term items, be sure you have the long-term set in place. Just as in hockey, there are three things you need, to make the best play of the game. Start by setting up an emergency savings account, to help guard your savings. Follow up by opening a personal retirement account such as IRA, to continually grow your savings. For the last trick of the play, we suggest creating a 529 or Coverdell account to help save for your child’s future education. These three accounts will help not only you score your savings goals but will assist you in winning your entire financial game as well.

Put your debt on the boards.

Show your debt whose boss, and push them against the glass. By aggressively paying off your outstanding debt, you make additional funds available to further your monthly savings. We recommend paying the minimum payment on each debt, and then using any surplus funds to add extra payments to help pay it off sooner. Once you have paid off a debt, use the funds from that allocation to help erase the next obstacle, one payment at a time.

Place your spending in the penalty box.

While working on your savings goals, look into your monthly spending to see where you can cut costs. Consider reducing your funds for eating out and entertainment. The extra money can go towards your debt, or once paid off, can help you achieve your savings goal sooner!

To help, there are some innovative apps available that can you visualize your various expenses.

Beat the buzzer.

Saving for retirement is a marathon, not a sprint. Like hockey, if you don’t play until the end, you may lose the game in the last five minutes. To help prevent this, we recommend working with a personal financial adviser, ensuring your funds are in the right place at the right time. If you make a pass and transfer them to stocks too late, you could lose money and valuable time. We suggest creating a strategic and well-coordinated retirement plan to make certain all your savings get time on the ice, and your key players continue to stay in the game.

Drop your gloves for additional fees.

Whether it’s big banks searching for unnecessary add-ons, or potential financial advisers looking for a percentage of earnings, don’t be afraid to negotiate fees you deem excessive. The business is certain to have referees to let you know if you’re asking too much. However, it never hurts to ask!

With our affordable deposit accounts and expert financial coaching, we look forward to helping you sink your upcoming goal in the back of the net! Stop by and meet our dedicated team today!

5 Financially Savvy Ways to Use Your Tax Refund

Taxes

Getting your taxes done early not only takes one more thing off your to-do list but further allows you to start planning for the future. Working with your tax professional, determine how much your family may receive this year from a tax refund. No matter the amount, we recommend putting it towards your financial goals for the year. Here are some great strategies we’ve tried to get the best bang for our buck:

Max out your 401(k) or Traditional IRA contributions. If you aren’t taking advantage of one of these two accounts, we highly suggest opening one! These tax-beneficial accounts help holders accumulate and grow their funds without the burden of tax at the time of deposit. Each account, however, is limited by how much you can contribute. By allocating funds into these account types it may not only help you save for retirement, but also allow your money to mature throughout the years, with no additional effort.
Make an extra payment on your mortgage or student loan. Paying down your loan is always a great option when selecting financial goals. In the case of a mortgage, you earn more equity as you pay, while with student loans, you gain more momentum towards financial freedom. Instead of adding money to each monthly installment, we recommend creating one lump payment. By doing this you can create a single but large decrease in your principal amount owed, drastically reducing your associated interest as well.
Save for the 2017 holiday season. While holiday events, family gatherings, and memories are held dear, the burden of the season can pose potential problems for your personal finances. If you struggled saving last year, now is the perfect time to set aside funds for the holidays. Determine how much you need to pay for each aspect of your seasonal activities, and save as much as possible in a separate account from your tax refund. If additional funds are needed, automate your savings to transfer a specific dollar amount into this account each month.
Pay off outstanding credit card debt. With one of the highest interest rates, credit cards are notorious for taking years to pay off. If you want to make a dent in your debt, we recommend tackling one card at a time. Using your tax refund, see if you can eliminate smaller debts first, then with the remaining funds, begin paying down each additional credit card. By paying off the card with the least amount of debt first, you can begin to snowball your way to financial freedom!
Start saving for a vacation. Whether it’s a spring break, a summer adventure, or a fall festival, it’s never too early to start saving. Once you have determined a destination, you can then create a rough budget of the expected expenses. Depending on your refund you may be able to pay for the whole trip outright, or you may need to supplement the funds with some additional monthly savings. No matter how you choose to save, we recommend keeping your vacation funds in a separate deposit account so you’re not tempted to use them throughout the year.

If you still have questions on how to best use your tax refund, our personal bankers would love to help. At Raccoon Valley Bank, we can assist you in coordinating all your accounts to help make the most of your money. Stop in and see us today!

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!