Category Archives: Educational

Home Equity : What It Is and Why It Matters

It is often said that home ownership builds wealth. So, what is home equity, and how can it enhance your net worth?

What is home equity?

Home equity is the current market value of your home, minus what you owe. You’re looking for a positive number. Any gain comes from:

  • Paying down the principal balance on your loan.
  • An increase in market value over time.

How does home equity work?

Building home equity is a bit like investing in a long-term instrument, like bonds. Your money is, for the most part, locked up and not spendable.

There are some ways to tap it, but wealth is created over years as your share of “free and clear” ownership of the house increases.

It seems simple enough, but home equity is not guaranteed. Just ask any homeowner who went through the last housing bust. That’s when home equity fell sharply for many homeowners — and, in some cases, completely disappeared.

As a rule, building home equity is a slow climb, at best. U.S. residential year-over-year home price appreciation averaged 1.89% from 1997 to 2017, adjusted for inflation, according to CoreLogic, the Bureau of Labor Statistics, and the Urban Institute.

However, behind that average are some major year-over-year price swings during the same period, ranging from a gain of 12.6% to a drop of 18.1%, according to the Urban Institute.

When it comes to short-term home appreciation, sometimes it’s more of a bungee jump than a climb.

How do you find out how much equity is in your home?

home equity calculator can give you an idea of what your home is worth and how much equity you may have, if you’re thinking about selling your home or borrowing a chunk of your equity.

An appraisal will really nail down the value of your house.

Why is home equity important?

Home equity can be a long-term strategy for building wealth.

Mortgage payments reduce what you owe while your home gains value, so paying on a house has been called “a forced savings account.”

This is unlike virtually every other asset purchased with a loan, such as vehicles, which lose value while you pay them off.

A growing number of U.S. homeowners are amassing “impressive stockpiles” of home equity wealth, according to Daren Blomquist, senior vice president at Attom Data Solutions.

At the end of the second quarter of 2017, over 14 million U.S. properties were considered “equity rich” — meaning the debt on the property was 50% or less of the home’s current market value.

That’s about 24% of all owner-occupied homes with a mortgage.

Home equity takes time to build

Another nutrient helping to grow home equity wealth is time. Homeowners who stay in their homes longer are more likely to accrue equity.

In the second quarter of 2017, people selling their homes had lived there an average of more than eight years. That was the longest ownership period since Attom began tracking homeownership tenure in 2000. Before the recession, people were staying in their homes an average of about four and a quarter years, Attom data show.

“That’s a paradigm shift — a more conservative approach to homeownership and building wealth through homeownership,” Blomquist says.

Just 10% of homes owned for less than one year are considered equity rich, according to ATTOM.

You don’t have to sell to tap the profit inside your home. Instead, you can borrow against that value with a home equity loan or line of credit. A home equity loan will provide you a lump sum; a HELOC allows you to draw on the available balance as you wish.

Home equity is not a get-rich-quick scheme

Building home equity is definitely a long-term proposition. Blomquist says wise words from one of his relatives may state it best.

“My wife’s great-grandfather — who bought property in Southern California a long time ago — his advice was, ‘You take care of a piece of real estate for 20 years, it’ll take care of you forever.’”

From our friends at Nerd Wallet


Not impressed with your kitchen or bathroom? Dream big with your space! Tackle your next home project with our Home Equity Special — rates as low as 5.21% APR*! Connect with our Loan Specialists today at 503-275-0300 Option 2 or apply online. We can’t wait to help make your dreams come true!

 

*Rate quoted valid for second lien loans only. Available in Oregon, Washington & Idaho. Minimum loan amount is $25,000. Maximum loan amount is $100,000. Maximum loan-to-value is 80%. Rate will vary depending on term, loan-to-value and credit qualifications. 10-year maximum term. Payments: On a $50,000 loan with a 120-month term at 4.99% interest rate (5.21% APR), your monthly payment would be approximately $531.21 or $10.64 per $1,000 financed. Payment approximation does not include taxes or insurance. Offer ends 5/31/2019

Kids and Learning the Value of Money

“Children as young as three to five years of age are developing the basic skills and attitudes that lay the foundation for later financial well-being.” – Consumer Financial Protection Bureau
These skills are known as “executive function” and they lay the groundwork for future decision-making by building our capacity to plan for the future, focus attention, remember information, and manage multiple tasks. Although this sounds complicated, parents can play a pivotal role in facilitating their child’s development by talking with their children about basic money management ideas like earning, saving, planning, and spending that all rely on the elements of executive function.Parents can reinforce these ideas through play as well and “on the job training” so to speak, when they are out and about with their children in the neighborhood and/or the store.Here are some tips to get you started on the path of teaching your child smart money handling.

EARN

Share with your child that the way you get money is by working to earn it.

Describe your job to your child or, as you are out in the neighborhood or community, point out people who are working different jobs and describe what they do.

  • Point out people working like the bus driver, police officer, cashier, and your child’s teacher or caregiver.
  • Share that these individuals earn money for the work they do which helps them to pay for items like homes, food, clothes, etc.
  • Play pretend with your child and ask him or her to imagine working one of these jobs. What would the job be? What would the day-to-day work be? What would the money earned go toward?

SAVE

Once we get money it is important to think about putting some aside for the things we want in the future.

  • Start a piggy bank or saving jar with your child, have them help you decorate and label it, and put is someplace out in plain sight.
  • Practice sorting change with your child so that they start learning the names and values of coins and cash. Have them sort into categories of things you need to buy every day and things you want to save for in the future i.e. food, housing (now), vacation, large purchase (later).
  • When they receive money ask them to put all or part of it in the piggy bank or jar and have them tell you what they are saving for.

PLAN

It helps to pay attention, remember, and adjust.

  • Games help build skills that might not seem related to money management – but they form an important foundation.
  • Playing musical chairs or Simon Says help your child pay attention and make quick decisions.
  • Guessing games like 20 Questions or I Spy can help your child exercise his or her memory and think creatively.

SHOP

You need money to buy things and spending money always means making a choice.

  • As recommended above, help your child sort out change into their different denominations and help them to identify different coins and their value.
  • Encourage them to put some of them away in their piggy bank or savings jar and then talk about what they would like to spend the rest on.
  • When you are at the store or in the neighborhood point out to your child items that cost money, such as food, clothes, pets, cars, etc.
  • Talk about how your family decides what to buy and what to pass up and let him or her practice, too.
  • Give your child a few dollars and let him or her choose what to buy with what they have.

In collaboration with Money Smart Week


Ready to get your child a savings account? Connect with a Member Relationship Specialist today to get started at 503-275-0300 Option 3 or info@usacu.org. You and your child can also visit our branch located at 95 SW Taylor St., Portland, OR 97204. We cannot wait to see you!

Eco-Friendly Ways to Save Money

Today is Earth Day, so we wanted to not only bring you positive ways you can impact the planet, but how those changes can impact your savings account as well. We came up with 11 ways to save money all while going green.

1. Use the Sun to Save Money

You don’t need expensive equipment to do a little solar heating. Just open the curtains on the south side of the house during winter days to let the sun shine in. And open the drapes on east-facing windows in the morning (if they’re not shaded).

Of course, the opposite is true when you need to keep the house cool.

2. Drink Tap Water

Not only can a bottled water habit get expensive, it takes it toll on the environment as well. The Water Project says:

  • It takes three liters of water to package one liter of bottled water.
  • Water bottles can take 1,000 years to biodegrade, and if incinerated they produce toxic fumes.
  • Making water bottles for U.S. demand alone takes more than 1.5 million barrels of oil.

We know not every state has access to drinkable tap water, so if you can, drink from the tap.

4. Develop Green Laundry Habits

There are a number of ways to save money doing your laundry — and almost all of them are also environmentally friendly.

Here are some of the best green and frugal habits, according to these various sources, along with the potential annual savings:

  • Wash in cold water ($40)
  • Use less detergent ($80)
  • Line-dry your clothes ($85)
  • Skip the fabric softener ($65)
  • Replace the old washer ($55)
  • Run full loads (savings vary)
  • Keep the dryer lint trap clean (savings vary)

5. Hunt Down and Put an End to Energy Vampires

The U.S. Department of Energy says energy vampires — electronics and appliances that keep using power when turned off — can add 10% to your electrical bill.

For example, phone chargers keep sucking down power even when you’re not charging, and a digital cable box can add more than $40 per year to your bill if you don’t unplug it between uses.

But who wants to run around unplugging things all the time? Instead, plug electronics into power strips that have an on/off button so you can easily cut the power to the TV and DVD player with a flip of a switch.

6. Walk and Bicycle More

If the store is nearby and you only need to carry a few things, walk or take your bike. 

Depending on how many places are within reasonable walking and biking distance, you can significantly reduce your car-related expenses — and you’ll put a lot less pollution into the air.

7. Use Public Transportation

Even if you own a car, you can save money using public transportation. Take the bus or train on longer cross-town trips that would eat up more gas, or to avoid paying for parking.

Here in Portland, Tri-Met is always looking for ways to do more for the environment. Choosing public transit in Portland eliminates over 200,000 daily car trips, which reduces carbon emissions by over 60%.

8. Get an Energy Audit

A home energy audit can identify easy-to-correct energy waste issues in your home, and many utility companies offer them for free or a small charge.

If the cost of a professional audit or assessment is too high for you, just do it yourself. The U.S. Department of Energy has a video to walk you through the process.

10. Stop Those Water Leaks

Leaky faucets and showers are bad enough, but constantly running toilets can be really expensive. A moderately leaky flapper can cost you $70 per month!

Given the potentially high cost of this wasted water, it’s probably worth $5 or so to buy and install a new flapper if you ever hear the toilet running in the middle of the night.

11. Vacation Closer to Home

Of course, this green habit can also save you a lot of money.

12. Dress Warmer

One of the easiest ways to save on your heating bill is to simply turn down the thermostat. You can knock $10 per month off your winter heating bill for each degree you lower the setting.

To do so comfortably, you may have to start another new habit and wear warmer clothes around the house.


Want to get a savings account started for all the money you are about to save? Connect with a Member Relationship Specialist today to find the one that fits your needs best by calling 503-275-0300 Option 3. You can also stop by our branch located at 95 SW Taylor St., Portland, OR 97204.

Tax Return Not What You Expected?

In collaboration with our friends at Greenpath

Are you hoping to get a refund from your 2018 tax return? Many people intend to use their refund as a “forced savings plan” (essentially withholding extra taxes on purpose so that they get a larger refund at the end of the year, instead of being tempted to spend it during the year).  However, 42% of taxpayers who file their tax returns early end up using their funds to cover things like rent, food and utilities – catching up on expenses, rather than putting money away for savings.

How you plan for your taxes and what you do with your refund can give you a boost in your overall financial health. On the flip side, if you don’t receive the refund you expected, or if you find yourself owing taxes, it can cause a lot of stress. Our financial counselors offer a few tips for putting your tax return to work for your financial health.

1. Get a Clear Picture of Your Financial Situation

If you didn’t have a specific plan for the funds but typically depend on them for breathing room or extra cash, take a step back and work to get a clear picture of your financial situation. A great place to start is by using Money Management to track your income and expenses, which can help highlight the areas you may need to make adjustments. Our certified financial counselor can also provide free financial counseling and can assist you with setting your budget and figuring out next steps based on your individual situation.

2. Address Past-due Bills

If your plan for your tax return was to catch up on past-due bills, consider how you still might be able to address the issue. See if you can trim expenses in another area to free up money so that you can get current on your bills, and open a dialogue with your lender/creditor. They may be willing to consider your situation and find flexible solutions for temporary relief or even permanent refinancing options to help the debt fit better into your budget. Getting ahead of a problem you are anticipating is key. You may be surprised at how willing a lender will be to work with you.

Another way to stay on top of your bills, is by setting them up for automatic payment with free Bill Pay. You can pay virtually anyone, anytime in the United States, saving you time and money from having to remember several logins for different payees.

3.  Pay Off Debts to Save Money and Find Breathing Room

If you did get a refund, it can be an extra boost on your journey to financial health.

Often, addressing highest-interest debt is the first step. By paying off debts faster, you save money on interest, and as you pay it off, you free up more money to devote to savings. If you’re all caught up on debt, a great next step is to build an emergency fund that will protect you if you have an unexpected loss of income or unplanned expense.

What to Do If You Can’t Afford to Pay Your Tax Bill

If you did not anticipate having to pay taxes at the end of the year but now have a bill, you still have options. The IRS has pre-set guidelines on options that are available to filers that may not be able to foot the entire bill at once. Flexible options like deferred payments or long-term payment plans allow a restructuring of an existing repayment plan, depending on the circumstances.

While there are typically some additional fees associated with these options, this may be a  more affordable way to address the tax debt, as opposed to borrowing from high-interest sources like credit cards, cash advances, or payday loans.

Get Ahead of Next Year: Adjust Your Withholding if Needed

If you owed taxes in 2018, you may need to increase your withholdings (the amount that your employer deducts from each paycheck for taxes). Paying a little more in each check so that you don’t have to pay a large tax bill at the end of the year, can be a much more appealing alternative. Consult with your company’s Human Resources department, or the equivalent, for more information on this. Consulting with a tax professional can also be a helpful experience in determining what the best course of action would be.


Questions? We are here to help. Connect with us at 503-275-0300 or by visiting our branch located at 95 SW Taylor St., Portland, OR 97204.

What to Keep and What to Toss

It is Financial Literacy Month, and we are dedicated to bringing you tips and educational information on how to stay financially healthy.

Today we are talking about clutter.

How does clutter begin? A junk drawer with old batteries, gum and receipts? A desk full of abandoned paperwork? Pretty soon your dining room is looking like a thrift store with clutter all over the place, and you’re not even counting the garage or the attic!

The problem with clutter in your life is that it reduces your effectiveness. It gets in your way, impedes free movement, blocks progress and essentially keeps you from living your life at 100%.

Financial clutter is especially troublesome. Financial clutter can block your progress toward a clear financial path, and the cost can be tremendous if it keeps you from paying bills on time or leaves you vulnerable to identity theft. When you’re ready to clear the financial clutter, refer to these guidelines to help you decide what to keep and what to toss:

  • Keep sales receipts until the product warranty expires or until the return/exchange period expires. (If you need sales receipts for tax purposes, keep them for three years).
  • Keep ATM printouts for one month, or until you balance your checkbook. Then they may be thrown away.
  • Keep paycheck stubs until you have compared them to your W2s and annual social security statement (usually one year).
  • Keep paid utility bills for one year unless you’re using them for tax purposes (deductions for a home office, etc.). In that case you need to keep them for three years.
  • Keep cancelled checks for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years.
  • Keep credit card receipts for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years.
  • Keep bank statements for one year unless you’re using them for tax purposes. In that case you’ll need to keep them for three years. Keep quarterly investment statements until you receive your annual statement (usually one year).
  • Keep income tax returns for at least three years (six if you have multiple sources of income).
  • Keep paid medical bills and cancelled insurance policies for three years.
  • Keep records of selling a house for three years as documentation for Capital Gains Tax.
  • Keep records of selling stock for three years as documentation for Capital Gains Tax. Keep annual investment statements for three years after you sell your investment.
  • Keep records of satisfied loans for seven years.
  • Keep contracts as long as they remain active.
  • Keep insurance documents as long as they remain active.
  • Keep stock certificates and records as long as they remain active.
  • Keep property records as long as they remain active.
  • Keep records of pension and retirement plans as long as they remain active.
  • Keep marriage licenses forever.
  • Keep birth certificates forever.
  • Keep wills forever.
  • Keep adoption papers forever.
  • Keep death certificates forever.
  • Keep records of paid mortgages forever.

In collaboration with Money Management International


Questions? Connect with us by calling 503-275-0300 Option 3, or stop in our branch located at 95 SW Taylor St., Portland, OR 97204.

Spring Clean Your Finances

In collaboration with our friends at Consumer Financial Protection Bureau.

There is something about Spring that makes us feel like we have a fresh start. From the sunnier skies to the blooming flowers – this time of year always gives us a little extra boost to tidy up around or homes and yards. It is also important to take the time to do the same with our finances! Here are a few ways to get started on Spring Cleaning your finances.

1. Request a free credit report

You can request a free credit report  every 12 months from each of the three major consumer reporting companies (Equifax, Experian and TransUnion). Once you have your credit report, you can check for and correct any errors. This is especially important if you’re thinking of making any big purchases, like buying a new home. Our checklist will help you know what to look for in your credit report. Try setting a calendar reminder so you remember to check your credit reports on a regular basis. You can request all three reports at once or you can order one report at a time. By requesting the reports separately (for example, one every four months) you can monitor your credit report throughout the year.

Just like with the big three consumer reporting companies, you can also get free copies of your nationwide specialty consumer reports every 12 months from many of the specialty consumer reporting companies. Specialty consumer reporting companies collect and share information about employment history, medical records and payments, check writing, or insurance claims.

2. Address debt

If you’re facing a large debt or your payments are overdue, your first instinct may be to ignore the debt or hope it goes away. But, that will things worse and lead to more stress down the line. There are strategies that can help you make payments that work for your current financial situation.

First, review your bills and make sure you understand what you owe. Using automatic Bill Pay with your credit union, or utilizing a bill tracker can help you stay on top of your payment due dates.

Second, contact your lenders to see if alternative payment options are available. You may be able to change your due date so that a payment is due closer to when you receive your income.

3. Review your spending

Have you ever looked at your credit card bill and wondered where all those charges came from? Or, have you found yourself swiping your credit card for a purchase before you’ve had a chance to think about it?

Gain control over your credit card spending by taking a close look at your credit card purchases over the past couple months. If you’re looking to cut back, try breaking down necessary expenses vs. wants. Once you see how you’re spending, try creating a “rule to live by” to make sure you stay on track. These kinds of simple personal guidelines, such as using cash for smaller purchases, make it easier to stick to your goals over time.

You can also utilize money management tools to help keep all your finances in focus. By knowing all your accounts and tracking your budget all in one place, it can help reduce stress and give you peace of mind.

4. Save automatically

After checking your budget, you may see some more opportunities to boost your savings. For example:

  • If you have a credit union membership and direct deposit, you can arrange to automatically deposit some of your paycheck to a savings account every time you’re paid, instead of all of it going into a checking account.
  • You can check with your employer to see if it’s possible to split your paycheck into two accounts. You may also be able to transfer some of the money in your checking account into a savings account at another institution to keep it out of sight out of mind.

Did you know that nearly 46 percent of consumers indicated that they could not pay for an emergency expense of $400? When you save for unexpected expenses, you can handle them when they happen without having to skip other bills or borrow money. Start with $500 as your goal. This is enough to cover a lot of common emergencies, like car repairs, a plane ticket to care for a sick family member, or smaller medical costs.


Questions? Connect with our Member Relationship Specialists today at 503-275-0300 Option 3, send a secure message or chat with us when you log into your Online Banking! You can also stop by our branch located at 95 SW Taylor St., Portland, OR 97204 – we are here to help!

Comparing the Costs: Buying a New Car vs. Used

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