How to Make Your Money Work for You

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Every day you hustle. You’re working hard for your money, but have you ever stopped to think about how your money can work for you?

Making your money work for you goes beyond an emergency fund or simply being debt free – although, both concepts are a necessity in this instance. It’s about taking the money you’re already making and making it generate returns for you.

But, how? There’s no simple answer or even a single way to do it, but these tips can help you get started.

Get out of debt.

First things first, if you have debt – get rid of it. After all, you can’t invest in your future if you’re giving your money to other people or lenders. The first step to a debt-free life is figuring out exactly how much you owe. Most people don’t even know how much debt they’re in, according to a study from The Federal Reserve. Once you know how much debt you have, decide how you’re going to pay your debt off.

Budget.

The most important way to change the way you handle your money is to budget. By creating a budget, you are telling your money what you want it to do. When you assign each dollar into a category, you’re controlling where your money goes and what it does. It’s a great first step in reaching your financial goals. Think about it this way: your budget is like a fitness tracker in that it helps you monitor your money. When you monitor your money and know where it is and what it’s doing, it’s easier to make it do what you want it to do.

 Utilize retirement accounts.

Don’t sleep on opportunities to invest in a 401(k) or Roth IRA. A 401(k) allows you to contribute pre-tax money into your account, and you may even be able to get free money from your employer in the process too. Think about it like this: You earn $100,000 a year and your company offers a 3% match on your 401(k). If you invest $3,000 (3% percent of $100,000), and your company matches that – $6,000 will go into your 401(k). A Roth IRA works just a little differently. Unlike the 401(k), a Roth IRA leverages after-tax income. However, when you begin to withdraw the money at retirement, you won’t pay taxes on your withdrawals.

Start a side hustle.

Uber, GrubHub, Instagram – all of these companies began with an idea that blossomed into billion dollar companies. What’s your passion and can you turn that into a billion dollar idea? Consider starting a side hustle and find ways to make some extra money. It could be a traditional second job, a work-from-home job, or turning your ideas into ways that add to your savings. If you can structure your budget and expenses around your primary source of income, any money you make from your side hustle ideally would go straight into your savings.

 Create passive income streams.

Passive income is money you earn with little to no effort involved. Once it’s set up, passive income will earn you money while you sleep. For example, a rental property is a source of passive income. Creative passive income does require some type of investment upfront, whether that’s time, money or both – but it’s an investment that can lead to a bigger payoff later.

Building your future is important, and it takes a lot of hard work. At First Financial, we’re just as interested in your future as you are. We want to help you take the necessary steps to make your financial dreams come true. Maybe you need to consolidate your debt or look at options to pay off some debt. Maybe you’re looking to refinance your car in order to lower your payments and save a little money each month. Whatever it is, we’re here to help you. Stop by and see us or give us a call to get started!

4 Hacks to Raise Your Credit Score

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Your credit score. Chances are you either love it or hate it. It’s either the greatest thing in the world or a total hindrance. Or, maybe you don’t really know enough about your credit score for it to make an impact on your life.

As a whole, Americans’ credit scores are beginning to increase but our knowledge of credit and how it works is declining. A recent survey from credit scoring company Vantage Score and the Consumer Federation of America, found that 32% of the people surveyed didn’t know they had more than one credit score.

Let’s forget about how many credit scores we have for a second and answer a very basic question: What is your credit score? 

Your credit score is a three digit number ranging from 300 (the lowest possible score) to 850 (the highest score). Lenders use your credit score to make decisions about whether or not to offer you credit – such as a credit card, car loan or mortgage. Your credit score is also used to determine the terms of the offer – such as what your interest rate will be.

Your credit score is calculated by looking at these categories:

  • Payment history
  • Your debt-to-income ratio
  • Total debt
  • Length of credit history
  • Types of open credit
  • Public records (such as bankruptcy)
  • Number of inquiries on your credit report
  • New credit

So, what is considered a good credit score? 

The average credit score in the United States ranges between 670 and 710. According to Experian, a “good” credit score is anything that falls between 661 and 780, which is about 38% of the population. Usually, if an applicant falls in that “good” credit range, they’re likely to be approved for credit at competitive rates.

Now that we know what a credit score is and what classifies as a good one, the next question to look at is: Why does your credit score matter? 

Think of your credit score like a report card you used to get while you were in school. Your report card measured your progress during the school year, and your credit activity puts you into a scoring range. But, unlike grades – credit scores aren’t stored as part of your credit history. Instead, your score is generated each time you apply for credit. Fact: It actually negatively impacts your credit score if you have multiple inquiries in a short period of time.

What are your major financial goals? Buying a home? Buying a car? Chances are, your credit is likely going to be a factor in framing that financing picture. Your score will actually tell a lender whether or not you qualify for a loan and how good the terms of the loan will be. For instance, the lower your credit score is, the higher your interest rate on a loan will be.

If you’ve looked at your credit report and you’re surprised to see it’s lower than you thought, there are simple ways to fix that:

  • Pay your bills on time. That goes for ALL your bills – not just credit cards and loans. Fact: Payment history is the most heavily weighted factor of your credit score. It makes up 35% of your total score.
  • Keep your credit card balances low. Credit history accounts for 15% of your credit score, so keep those old accounts open even if you don’t use them.
  • Space out your credit applications. Each time you apply for a line of credit, the inquiry is noted on your credit report. One or two inquiries aren’t a huge deal, but when you have a bunch within a two year period, it can cause your score to fall.
  • Mix up your credit. Your credit mix, or the types of credit accounts you have, makes up 10% of your credit score. Basically, lenders want to see that you can use different types of credit responsibly.

Credit doesn’t have to be scary or overwhelming. There are many responsible ways to start out slowly and build worthwhile credit for the future. First Financial can help! Are you looking to build or establish credit? We have a number of ways to start you on the right path. Stop by one of our branches today or give us a call. You can also check out our credit management guidebook on our website, for some additional tips.

3 Bad Choices that Could Damage Your Credit Score

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Your credit score is a big deal. That number decides what kind of loan you’ll be able to get and what interest rate you’ll have to pay. If your credit score is low, you’ll need to find ways to raise and improve it. If your score is good, here are three things you may want to avoid in order to maintain your high credit rating.

Cosigning a loan: You’re a nice person and you do nice things for people you care about. In reality, you should really never cosign someone else’s loan. If the borrower starts missing payments, your credit score will take a big hit. The last thing you want to do is be on the hook for someone else’s car payments, personal loans, or credit cards.

Closing a credit card account: Maybe you have a credit card that was just used to build credit or have in case of emergencies. You may have paid if off and decided to stop using it, but be sure you don’t close that account. That card’s credit history is good for your credit score. Also, closing the account will lower your amount of available credit which could negatively affect your debt utilization ratio. Closing a credit card account is one action that can damage your credit score in two different ways.

Not looking for errors: Always keep a close eye on your credit score. If you haven’t looked at yours recently, check out annualcreditreport.com. If you don’t keep an eye on your credit report, you could have your identity stolen and not even know it. Even if isn’t the case, there could still be inaccuracies. The day you find an error on your credit report that is negatively impacting your score, is the day you’ll be extremely happy you checked.

If you’d like more insight into your credit score and managing your credit – view our credit and debt management guide here.

Article Source: John Pettit for CUInsight.com

3 Ways to Consolidate Debt

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Debt can be overwhelming, but there are definitely ways you can consolidate. The idea of putting all of your debt in one place, with one simple monthly payment can be a big relief.  So, what are your best options for consolidating your debt? Here are three to consider, that you may not have thought of.

A balance transfer credit card: If you’re looking at this option, you’ll want to first make sure that you find a card that will have a high enough limit to contain all of the debt you want to consolidate. If you can find a card with a zero percent introductory rate, this is ideal for paying off debt. If you have $3,600 in debt, and zero percent interest for 18 months – you can pay $200 a month for 18 months, and be completely debt free without paying a cent of interest. However, be advised that if you continue to use this card and rack up even more debt and you don’t pay it off in time – that interest rate could potentially sky rocket at the end of 18 months, and you could really dig yourself into a hole (which is what you were trying to get out of in the first place). This option only works if you stick to your plan, don’t use this card, and continue to pay off your debt during the introductory period.

You also want to transfer your existing balance(s) to a credit card that doesn’t have a balance transfer fee. First Financial has 3 great Visa Credit Card options that have no annual fee either!* Learn more here.

A home equity loan: After the introductory rate on a balance transfer credit card ends, the interest rate can be pretty high – as mentioned above. A home equity loan uses your home’s appraised value and what is still owed on your mortgage, and will provide you with a lump sum that you will agree to pay back over a set fixed rate term (this type of loan is also called a second mortgage). The main benefit of a home equity loan, is that the interest rate will be much lower. You will want to be careful if you go this route – if you default on the loan, you could put your home at risk.

To learn more about First Financial’s home equity loans and lines of credit options, and apply online 24/7 – click here.**

A personal loan: If you don’t like the idea of risking your home (or any other form of collateral), perhaps a personal loan might be the best option for you. If you have a good credit score, you’ll receive a favorable interest rate that is often lower than a credit card’s. If you think this may be a good option for you, ask your local credit union about any debt consolidation loans they have available.

First Financial’s personal loans have a fixed monthly payment, flexible terms, and are a great way to save money instead of opting for the high cost of retail financing.+ Get started here.

*APR varies up to 18% when you open your account based on your credit worthiness. These APRs are for purchases and 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 Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; 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, volunteers, or attends school in Monmouth or Ocean Counties. See firstffcu.com for current rates.

**First Financial will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and the borrower(s) will be required to pay back closing costs in full to FFFCU. A First Financial membership is required to obtain a home equity loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See FFFCU for details or visit firstffcu.com for all current rates. Nationwide Mortgage licensing System & Registry ID # 685814

+APR = Annual Percentage Rate. Actual rate will vary based on creditworthiness and loan term. Subject to credit approval. A First Financial Federal Credit Union membership is required to obtain a Personal 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.

Article Source: John Pettit for CUInsight.com

3 Important Car Buying Tips

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Are you looking to buy a new ride before the end of the year?  Here are three important factors to consider before you sign your name on the dotted line.

Needs vs. wants: What do you plan to use your new ride for – commuting, weekend trips? These are just a few questions you should consider.  A smart car might get incredible gas mileage during your long commute, but really lacks in terms of cargo space. You may be able to get a bag of groceries home, but what about that 6-foot ladder you need? Don’t forget about things like Bluetooth connectivity and heated seats also. Weigh all your options before getting too excited about what car looks the coolest.

Monthly payments vs. total price: You love the lower monthly payments, but are you really considering how much a new car is going to cost you by the time you’ve paid it off in six years? Maybe you’re a big fan of the total price you’re getting, but you know the monthly payments are going to take some sacrifice in your budget. Is that something you really want to endure? Have you also factored in other costs like insurance, gas, oil changes, tires, and preventative maintenance? Take your time and make a list so you get a better idea of the true cost of your new vehicle.

Know your car before you buy: Do some research and see how other owners are feeling about their purchase.  Always take a test drive, and try riding through parking lots. How does it ride? Is it only smooth on smooth roads? What’s it like going over a speed bump? When it comes time to buy, it shouldn’t be a mystery and you should feel comfortable with your decision – this is a big purchase you will be using daily over at least the next several years.

In the market for a vehicle? If you’re just starting to shop, get preapproved and if you’re ready to make the purchase – apply for an auto loan online 24/7. We have quick approval decisions and same day closings!

APR = Annual Percentage Rate. Not all applicants will qualify, subject to credit approval. Additional terms & conditions may apply. Actual rate may vary based on credit worthiness and term. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. 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.

Article Source: John Pettit for CUInsight.com

3 Things Kids Should Know About Money

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With another school year about to get into full swing, money management is an important lesson your children can be taught right at home.

Your kids probably don’t have a deep knowledge about money and how to manage it. What they do know, they’ve probably learned from watching you. Here are some basics that all kids should learn about finances.

It has to be earned: As you were probably told when you were young (and possibly in a snarky tone), “money doesn’t grow on trees.”  While that’s only partially true (cash is made from paper and paper is actually made from trees), money is not free.  An allowance in exchange for doing chores is a great way to teach your kids about earning money.

It must be saved: An easy way to get your kids to learn how to save is to give them a goal. Whether it’s a video game system or a new toy they have been asking for, don’t just give your kids whatever they want. Have them save up for the item, and for something more expensive like a video game system – give them a savings goal and have them pay for at least a good portion of it.

It should be spent: While it’s important to save your money, it’s also important for kids to understand that money is meant to be spent. You have to spend money in order to live your life. But when learning to spend, they should learn how to spend wisely. Teach your kids about coupons, sales, and generics brand items. Saving and spending may seem like opposites, but spending wisely is also a great way to save!

Need a great way to teach your children to save? Open a First Step Kids Savings Account! Available for kids up to age 18, there are no minimum balance fees, and dividends are posted quarterly on balances of $100 or greater.* Get your kids on the path to savings today, we’re here to help!

*As of 7/2/2020, the First Step Kids Account has an annual percentage yield of 0.03% on balances of $100.00 and more. The dividend rate may change after the account is opened. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location. Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

Article Source: John Pettit for CUInsight.com