Author Archives: Chief Marketing Officer Jessica

Is There Such a Thing as Good Debt?

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3d man sitting sad with text 'debt'.Most of the time, the word “debt” has negative connotations. Debt costs you money and therefore takes money away from financial goals like saving and investing.
So could there ever be good debt? That’s no easy answer. How you use debt has a big impact on whether or not you can consider it “good.” If you have too much of a “good” thing — that’s when it can turn into bad debt. So let’s consider 3 types of debt: investing in a college education, buying a home, and starting a business.

1. Are Student Loans Always Good Debt?
Student loans aren’t always good debt, because most people don’t consider how long they’ll be paying back their student loans when they take them out. But that doesn’t make them bad. If you take them out to obtain a job that you could have only secured with a college education and earn enough to make your student loan repayments manageable, your student loan debt was a good debt.

Here are some tips for student loans:

  • Keep your total loans under your projected starting salary when you graduate. If you’re able to do that, you should be able to pay them off with the standard 10-year plan.
  • Cut down on the loan amount. Get college credits while you’re in high school, go to a community college for your first two years, stick to a state school, and apply for scholarships.
  • Get a job to pay for your living expenses while you’re in school so you don’t take out loans for living expenses.
  • Keep in mind that private student loans don’t offer the flexibility of federal loans, so try to apply for federal student loans first.

2. How Much Should I Borrow for a Mortgage?
Owning a home used to be considered the American dream, and for many people it still is. Most people need to take out a mortgage for their purchase. If you think you’ll be in the same area for several years and can put a 20% down payment on a home, a mortgage could be a good long-term investment. Interest rates on mortgages are historically low, and owning a home can also provide tax benefits. The nice thing about a home is that it’s an investment you can live in.

However, many people end up buying a home without thinking about how it will affect their lifestyle or how they’ll pay their mortgage if an emergency came up. To avoid this, here are a few rules of thumb:

  • Make a 20% down payment so you can avoid paying private mortgage insurance.
  • Don’t use your entire savings account for a down payment. Homes are a hotbed for dipping into your emergency savings, as there are far more unexpected expenses that come up than when you’re living in an apartment.
  • Boost your credit score before you buy. Make sure you have a score above 700 so you can qualify for the best mortgage rates available. This can save you thousands of dollars in interest over the life of the loan.
  • If you think you might move in the next five years, you might want to rent so you don’t have to move during a down market and possibly sell your home for a loss.
  • In figuring out your monthly housing costs, the principal and interest on the mortgage loom large. But don’t forget property taxes, insurance, utilities, repairs, landscaping, snow removal and other factors. Make sure that your monthly housing expenses leave room for other expenses too.

We offer a number of great mortgage options, including refinancing – click here to learn about our 10, 15, 20, and 30 year mortgage features and see what a good fit for your home is!*

First Financial also offers a Mortgage Rate Text Messaging Service so you can receive updates on our low Mortgage Rates straight to your mobile phone. You can subscribe to our Mortgage rate text message service by signing up for text alerts, and receive instant notification when our mortgage rates change.**

3. What About Using a Loan to Start a New Business?
Entrepreneurship seems to be the new job security for many people in this generation. Incurring debt to start a business can be good debt if the funds help you to build a sustainable livelihood that allows you to repay any money borrowed and improve your financial situation. Just be cautious of how much debt you’re taking on.

Follow these tips to be financially smart and successful in your business:

  • Self-fund your business venture with savings first.
  • The smaller the investment, the quicker you can make money.
  • Do your research and get experience in the field before your launch. Some business opportunities require much bigger up-front investments, which may lead to a small business loan.

Did you know First Financial offers Business accounts, loans, and services? We understand that not every business is the same and, therefore, not every loan need can be the same.  This is exactly why we look at each individual business and create a customized lending solution to meet your specific needs. Please contact us at business@firstffcu.com and we’ll be happy to provide you with more information on business loans and services.

Debt Costs Money, So Use it Wisely
Debt can be good, but only if it helps you leverage your assets to build wealth. Every good debt has the potential to turn bad, so do your research first. The fewer monthly obligations you have, the more money you have to fund a lifestyle that you love.

Don’t forget about our free, online debt management tool, Debt in Focus. In just minutes, you will receive a thorough analysis of your financial situation, including powerful tips by leading financial experts to help you control your debt, build a budget, and start living the life you want to live.

* A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.  Subject to credit approval. See Credit Union for details.

**You must check the Text Message Signup box when registering in order to receive rate change text messages.+ If you do not receive an automated confirmation message after enrolling, please text “Yes” to (201) 808-1038

+The Text Message Signup box must be checked in order to receive text messages. Standard text messaging and data rates may apply.

How to Assess a Neighborhood When House Hunting

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House-HuntingWhen you buy a house, you aren’t just buying a house. In a way, you’re buying a neighborhood. After all, you’ll likely choose a home partly because it’s close to work, the schools are great, or it’s walking distance to restaurants and stores.

In fact, you could argue that picking the right neighborhood is more important than picking the right house. The last thing you want is to buy property in a place where everyone is trying to leave. So if you’re looking for a home for your house, here are some things to consider.

1. What to look for. If you’ve been focused on your dream house and not your dream neighborhood, the most popular areas tend to be ones that offer an instant sense of community to those relocating there. If living in the right community is important to you, then it’s important to think about these five factors:

  1. Aesthetics. An attractive neighborhood indicates the residents care about it.
  2. Affordability. Sure, you want an inexpensive house, but you also want to be able to afford the cost of living in the neighborhood.
  3. Safe environment. Nobody wants a criminal as a neighbor.
  4. Easy access to goods and services. Can you make a quick run to the bank or grocery store, or will every day be a headache behind the wheel due to traffic congestion or construction?
  5. Walking distance to goods and services. If exercise and a sense of community are important to you, find a house near the establishments you’ll be frequenting that is accessible by foot.

2. Online research. You probably use websites like Zillow.com, Realtor.com, Trulia.com, or Homes.com to search for a new house. But there are neighborhood-related websites and apps as well. Here’s a sampling of what’s available:

  • HomeFacts.com. This website contains mostly neighborhood statistics and information, but it also has data on more than 100 million U.S. homes (type in the street address of your prospective house to get the scoop on the whole area). Wondering how many foreclosures are in the area or if there are any environmental concerns? This is your site.
  • NeighborhoodScout.com. Read up on crime, school, and real estate reports for the neighborhood you’re considering.
  • Greatschools.org. Here, you can find reviews written by parents and students of schools in the neighborhood you’re considering. You can also find test scores and other data that may help you decide if this is a school you want your kids to attend.
  • CommuteInfo.org. This site offers a commuting calculator. Plug in information like miles driven and how many miles per gallon your car averages, and the calculator will give you an average cost of what your commute costs may look like in a month and in a year.

3. Red flags. As you’d expect, spotting a neighborhood on the decline isn’t rocket science. For example, pay attention to the property maintenance – overgrown lawns and shrubs, toys left outside, garbage bins not taken in – often reflect that the area is not well cared for and it can negatively affect the property value.

Though things are subject to change, selecting the right neighborhood is important. Your neighborhood’s character will likely shape your family’s character.

If you’re looking to purchase or refinance a home, First Financial has a variety of options available to you, including 10, 15, 20, and 30 year mortgages. We offer great low rates, no pre-payment penalties, easy application process, financing on your primary residence, vacation home or investment property, plus so much more! For rates and more information, call us at 732.312.1500, Option 4 for the Lending Department.*

First Financial also offers a Mortgage Rate Text Messaging Service so you can receive updates on our low Mortgage Rates straight to your mobile phone. You can subscribe to our Mortgage rate text message service by signing up for text alerts, and receive instant notification when our mortgage rates change.**

* A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.  Subject to credit approval. See Credit Union for details.

**You must check the Text Message Signup box when registering in order to receive rate change text messages.+ If you do not receive an automated confirmation message after enrolling, please text “Yes” to (201) 808-1038

+The Text Message Signup box must be checked in order to receive text messages. Standard text messaging and data rates may apply.

Article courtesy of US News Online by Geoff Williams.

ID Theft Risks That Lurk in Your Child’s Backpack

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Girl walking away from School Bus while texting on her phoneWhile you’re out searching for the perfect back-to-school backpack for your child, the more important consideration other than style, size, and color should be — what can happen if a dishonest person gets a hold of it? The things your child carries in his or her backpack can become a huge financial headache if they fall into the wrong hands.

With identity-related crimes at historic levels, the odds are better than ever that a dishonest person will know the basics of taking advantage of the kinds of personally identifiable information, sensitive data (like passwords and credit card numbers), and the many other keys to your household economy that can lurk in your child’s backpack.

Here’s a short list of what a relatively creative thief might find in your child’s backpack, and what you can do to prevent the worst from happening.

1. A Smartphone

While obvious to you (hopefully), does your child understand the serious potential for disaster that a walk-about smartphone can bring to your doorstep?

It can be as simple as a scammer dialing 611 and ordering new services. Chances are good that there’s enough information in your child’s backpack for a motivated thief to get your name and thus the keys to your telephonic kingdom.

But there are other identity indignities that can be done. Many people store user name and password information on the Notes app of their phones. The Notes may contain other informational cracks and crevices as well and open up unsuspecting third parties — relatives and friends — to scams. Email scams, grandparent scams, an iTunes or apps shopping spree, malware installation — so many tidbits to exploit.

What to do: Talk to your kids about the dangers of an unsecured phone and discuss basic data storage details with them — like what information shouldn’t be on their phones. Is the phone locked with a passcode? It should be! Also have them set strong (think creatively alpha-numeric) passwords, and a Find Me app to erase the contents should the device fall into the wrong hands.

2. Their Laptop

You don’t need to be a movie buff to know that a computer is a dangerous thing in the wrong hands. Most issues associated with a lost phone come to bear here as well. Emails can be sent to relatives or strangers in the service of stealing money or wreaking havoc.

Beyond the irresistible cornucopia of files that may well be saved on the device, email is a treasure trove of personally identifiable information — everything from credit card numbers to more data like name, address, email addresses and birthdays — pieces of a puzzle that can be assembled to present a believable story to a customer service representative and then steal valuable goods and services, or used as a fly trap to accumulate even more personally identifiable information.

Does your child have access to your Netflix account? How about Amazon or iTunes? Where else have they gone in cyberspace that might have their information — or yours? Open social media sites that are set to login automatically afford a wide vista of scamming opportunities too.

What to do: Make sure your child gets into the habit of logging out of all their online accounts, and that they don’t store sensitive information on their laptops. Talk to them about the wisdom of not saving user ID and password information, and how to make a good one. Finally, have your child set a password — shared with you — to protect their device against the wrong person accessing it.

3. Keys and Name Tags

So, this is pretty straightforward: If your child uses a karabiner to attach his or her keys to their backpack, you’ve got a potential robbery waiting to happen.

Additionally, there are apps that can allow a fraudster (as well as a person who might want to use the app to avoid unnecessary inconvenience) to make a copy of a key that a locksmith can duplicate.

What to do: Tell your child to keep the keys to your home in their pocket rather than on their back.

4. Gaming Device

Playstation Vita is a popular gaming device — and not the only device that could cause you a world of woe should it fall into the wrong hands — but we’ll single it out for the sake of illustration.

The good news: Your personally identifiable information is safe even if someone grabs the device, because it’s password-protected and associated with your gamer’s access to the network.

That doesn’t mean that a bad player can’t do some damage. First, they can play games and wreck your child’s sterling reputation in the community. Worse: Whoever has that device can buy games and run up a hefty bill. One-click purchased games are something any malicious third party can rack up in the way of a very expensive just-because crime.

What to do: Have your child set a passcode for access to the device and make sure they share it with you.

When it comes to data security, best practices are universal. It’s your job to pass on what your kids need to know to stay safe and keep your family out of the crosshairs of ID theft.

Article Source: Adam Levin for Credit.com, http://www.today.com/parents/identity-theft-risks-lurk-your-kids-backpack-1D80042370

Will Paying Off My Car Loan Help My Credit Score?

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Credit-Score-325x222There are a lot of different kinds of credit out there. One of the most common forms is the auto loan. Though we are all itching to pay off our long-term debts and own something free and clear, there are a few precautions to know about before racing to get that statement to read zero.

To determine if paying off your car loan will help your credit score, it is important to understand several factors that go into your credit score.

Multiple facets of FICO

First, it’s important to understand the components that make up your FICO credit score. There are five key elements that are used to makeup that all-important number:

  • 35% of your score is weighted toward your payment history
  • 30% is weighted toward the amounts owed on your credit cards
  • 15% is devoted to length of credit history
  • 10% is generated by new credit
  • 10% comes from types of credit used.

The relative importance of each category depends on the consumer themselves.

If you have an auto loan that you’ve been diligent about paying, you’ve benefitted from that 35% devoted to payment history. By paying it down, you are also contributing to that 30% element of amount owed, since theoretically you are decreasing your credit utilization rate. However, if you’ve been increasing the balance on other forms of credit, that may cancel out some of that good behavior.

If you have a 3 to 5 year car loan, you also have length of credit history going for you. The new credit category doesn’t really apply in this scenario.

Types of Credit

But what’s interesting is the 10% weighted to types of credit used. On a positive note, a car loan alters the types of credit you have, assuming you have things like credit cards or even a mortgage.  However, if you pay it off, you may eliminate this type of installment loan as a type of credit used (this is a very different type of credit than a credit card).

Your ability to pay installment accounts, in addition to others, demonstrates that you are responsible and diligent enough to plan your finances around all these different types of credit.

The Biggest Factor

Weighing against all this, however, is a large factor that requires you to look more holistically at your credit lifestyle. A general rule of thumb is that if you can pay off a debt of any kind, in full, do so (with the exception of a mortgage).

How to Plan for Your Child’s Financial Future

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Piggybank family isolatedIn this economy and time period, every parent shares a mutual fear. You think to yourself, “What if my son or daughter isn’t financially stable in their lifetime?” You may be nervous that your child will not be able to pay off college loans or purchase a home when they are older. You might also be worried that your child will struggle to meet car payments, or that they won’t be able to save up money in case of emergencies or for when they grow older.

Read the tips below to learn how you can relieve your fears and help prepare your children for their financial future.

  • Teach financial responsibility. It’s natural to fear that your children will take on too much debt or be unprepared for financial emergencies when they reach adulthood. But you don’t have to wait until they make a mistake to prepare them to be financially responsible. It’s important to remember that it’s never too early to start talking to kids about money and saving. When your kids are young, you’ll want to start with simple conversations about money (sharing tips about your purchase decisions with them when you shop), and as they get older introducing more complex money matters (such as the value of having an emergency fund and saving for unexpected events).
  • Use an allowance as an educational tool. An allowance is an ideal way to teach about responsible spending and saving. Provide your children with the opportunity to save and spend their allowance as they please (with some guidance). This flexibility will allow them to learn early on that spending money as fast as they earn it can have consequences. Depending on the age and maturity of your child, you may choose to share with them a financial mistake you made in the past and how you recovered from it.
  • Plan for college. As college tuition increases, many parents worry about how their children will afford to attend, or how you as a parent can possibly save enough to pay for your child’s college education. As parents, consider beginning to save into a 529 Plan early in your child’s life. When it comes time to make college decisions, help your child evaluate the tuition and other college expenses (travel home, club dues, entertainment costs, etc.) for each college he or she is considering. Make sure to educate yourself on current student loan lending practices and options and help your child determine a realistic amount of student loan debt he or she can take on if necessary.
  • Prepare for life’s big purchases. Even for young adults with a responsible mindset, a lack of financial knowledge can be detrimental for large purchases like a car or home. As a parent, you can offset this concern by being open to discuss these things as your child grows older and begins managing their own money.
  • Reframe your money mindset. Changing the way you think about money can go a long way to alleviating your financial fears for your children and, at the same time, help your children learn to make smart financial decisions. The real question you should ask isn’t, “Can we afford this?” but rather, “Do we need this, and if so, is this the best deal we can get on it, and should we wait and buy it when we have saved the money for it?” These may seem like small differences, but they aren’t. How our children think about money will make a huge difference in their ability to wisely manage it and consequentially will have a huge impact on their quality of life.

Visit First Financial’s website resources tab to view a list of free financial calculators and resources that you and your children can utilize to help save for college and future big ticket purchases like a car, home, and how to save money.

The 10 Commandments of Saving Money

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saving moneyThere are thousands of savings tips that can help you grow your nest egg. Whether they involve brown-bagging it to work or using coupons at the supermarket, these are generally useful savings habits that can give you a leg up on ending each month in the black.

But there are only a few super-sized savings rules that can truly transform your finances. Rules so big they deserve to be etched in stone. So, here are the “The Ten Commandments” of saving.

1. Thou Shalt Know Where Thy Money Goes

When generals go to war, they need an overview of the battlefield. Maps, exploration and data show them where the enemy is susceptible. In the battle for savings, the first thing you have to know is where your money is going.

Sites like Mint.com allow you to connect all your bank accounts, credit cards and loans to cloud-based software so you to track your finances on one screen, in real time, with just the click of a button. They also analyze your expenses and highlight areas where you might be wasting money. Best of all, it’s free.

2. Thou Shalt Eliminate Debt with Extreme Prejudice

Debt is bad, but it’s the interest on that debt that’s like kryptonite to your savings goals, and the sooner you eliminate it, the sooner you can become a savings Superman.

Moving debt from high-interest instruments, like credit cards, to lower-interest instruments, like a line of credit, is a start. Consolidation loans can be a help as well, but the easiest way to get out of debt fast is to take the interest expense you save and put it directly toward your debt’s principal amount.

First Financial’s Visa Platinum Cash Plus Credit Card has one of the lowest APRs around! It’s a good idea to check the APR on your current credit cards to see if it’s time to switch.  You can apply for a balance transfer by stopping into any branch or by calling 732.312.1500, Option 4.*

3. Thou Shalt Read the Fine Print

Most people would be shocked at the amount of money that they waste on service charges, convenience fees and annual dues hidden in financial contracts. If that low-interest credit card charges you $99 annually no matter if you use it or not, is it really that great of a deal?

Make sure if you transfer a balance to a lower-interest credit card that there is not a transaction fee attached. And if you rarely or never use that credit card with the annual fee, think about applying for a card that better suits your financial well-being.

4. Thou Shalt Pay Attention to Timing

At the risk of sounding like a ’60s folk-rock star, to everything there is a season, and waiting for the right season to purchase big-ticket items can save you a bundle. For example, car dealers will discount their inventory when the new model year arrives to free up room on their lots, so If you are in the market for a new car, that’s the season to buy.

Many big-box retailers and department stores have semi-annual sales where you can pick up appliances, electronics and home goods at a discount. The key is to fight against the urge for instant gratification on your purchases.

5. Thou Shalt Keep an Eye on Interest Rates

Even if you are able to pay off your credit cards and loans, the one debt most people can’t pay off is their home mortgage, which is why you should watch interest rates. When interest rates move down, it can be an opportunity to refinance your home loan and save money on your monthly mortgage payment.

But remember, if you just take the money you save and spend it, you’re not saving at all. Earmark the difference between your new mortgage payment and your old one for your bank account, or if you plan to live in your home for the life of the loan, put the extra toward your principal and own your home sooner.

6. Thou Shalt Find Money in Thy House

Most people would be surprised to learn just how much money they have laying around their house. Those books you’ve already read can be sold on Cash4Books or Amazon.com, and your old phones and mobile devices can be sold to companies like Gazelle.

Cleaning out the clutter in your home doesn’t just feel good but provides you with an opportunity to feed your piggy bank by having a garage or yard sale. And what about those figurines you inherited or your comic book collection? Do you still really want them? If not, try listing them on eBay.

7. Thou Shalt Use Technology to Find Deals

The Internet makes saving money so easy that your grandmother would likely throw her coupon box at your head if she knew. Sites like Groupon and Living Social will send deals on goods and services in to your inbox, and apps like Out of Milk can alert you to store sales just by driving by them.

The Internet also is a great resource for finding free activities for you and your family to do on weekends, holidays and school breaks.

Subscribe to our First Scoop Blog and receive free, fun financial education straight to your inbox – at the beginning of each month we post a budget-friendly activity list for that month in Monmouth and Ocean Counties, NJ!

8. Thou Shalt Not Forget to Prioritize Your Retirement

This is a tough one, because it’s hard to save money now that you don’t expect to use for 30 or 40 years. But like it or not, there is going to come a time when your earning years are over and we will all need a retirement fund to bankroll the golden years. So if you don’t want yours to be bronze years, you have to make retirement saving a priority.

The good news is that you have many years to accumulate those funds and to let them grow, which means that small amounts of savings directed toward it can go a long way. For example, you can take a percentage out of every saved dollar, say 25 percent, and earmark it for your retirement. This is an easy and painless way to create both a short-term and long-term savings fund.

To set up a no-obligation appointment with our Investment & Retirement Center to go over your retirement and investment portfolio or to get started with one, call 732.312.1500 or email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com.**

9. Thou Shalt Not Try to Keep Up With the Joneses

A huge part of winning the saving game is changing your mindset about how you think of money and what its function is. Too often we get caught up in the game of keeping up with the Joneses and buy things we don’t really want — and certainly don’t need — just to keep up appearances.

What many people don’t take into account is that that boat, RV, ATV, third car or giant flat screen that their neighbor bought probably comes with a loan or a high-interest credit card payment. Before making that next impulsive purchase, ask yourself if you really want it and if it will bring you that same warm fuzzy feeling that a full savings account will.

10. Thou Shalt Act Like Thy Don’t Even Have It

We can’t spend what we don’t have, so the more you act like you don’t have it, the more you will be able to save it. Have retirement and college savings funds automatically deducted from your paycheck before you ever see it. Schedule a “secret” payment from your checking account to your savings account each week.

When you come across found money — like a rebate, an overpayment refund or even $20 in your pants pocket — just act like you never had it and put it right into your savings. With practice, you can get pretty good at this, so much so that if you have an unexpected windfall — say from an investment or an inheritance — you’ll forget it even happened. Only your savings account will know.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

**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: