Monthly Archives: November 2014
Reflecting on the past year, are you thankful for having reached certain financial goals? Perhaps you’ve set aside a target amount in retirement savings or reached a certain level in a fund for a future expense, such as a child’s college tuition or a house.
The holiday season is a time when many evaluate how they did on their most recent New Year’s financial resolutions. If you’ve got plenty of cash for gifts and other holiday expenses, you probably did well on your savings goals. But if you’re struggling to come up with the money you need, it may not feel like there is much to celebrate on the financial front.
Now is a good time to think about setting objectives for next year so that when Thanksgiving 2015 arrives, you’ll have a shot at being financially thankful.
As Easy as One, Two, Three
How can you ensure you have something to celebrate financially at Thanksgiving—if not this year, then in 2015 and beyond? Follow these three steps.
- Establish a budget and stick to it. A budget starts with recognizing priorities and cutting out the unnecessary indulgences, such as a daily pumpkin spice latte. See where you can cut expenses that aren’t vital, and bolster your savings.
- Avoid credit card debt. Try not to buy things using a credit card unless you can completely pay off the balance each month. A variable interest rate can quickly run up your debt, especially when rates range close to 23%. Avoid swiping the card unless you can pay it off with the next bill.
- Consolidate your debt. See if you can get a lower interest rate on debt, whether it’s tied to credit cards, school loans or other expenses. Consider taking out a home equity loan or line of credit, or even a personal loan to reduce your costs. With the Federal Reserve taking steps that may push rates higher starting next year, now may be the last time for a while that you’ll be able to lock in low rates.
If sticking with a savings plan has proven too challenging, consider setting up an automatic deposit system through your financial institution. A specified amount will be withdrawn from your earnings and plugged directly into a savings account or retirement fund. By salting it away, you can eliminate the temptation to spend the money on unnecessary items—as the saying goes, out of sight, out of mind.
And don’t forget to keep your eyes on the prize. Next year at this time you may find that, financially speaking, you indeed have plenty for which to be thankful.
Cait Klein, NerdWallet
Interest rates are hovering at near historic lows, but may not be for much longer. The Federal Reserve’s move to end a policy designed to loosen credit may lead to a hike in borrowing costs next year. So if you expect to need a new car within the next year, now may be a good time to make your move, at least on the financing.
Average new car loans with 48-month terms across the U.S. carried rates of just over 4% as recently as September, according to Fed data. Now, some credit unions, like BrightStar Credit Union, are offering to finance as much as 99% of the cost of a new vehicle for as low as a 1.8% annual percentage rate.
Getting an auto loan
As you gear up to drive away in a new car, here are a few tips on securing low-cost financing ahead of any potential rate increases.
Use a credit union
Credit unions are member-owned, not-for-profit organizations, which lets them offer significantly lower-rate loans than most lenders. Research from the National Credit Union Association shows four-year, new-car loan rates averaged 2.64% in the second quarter of this year at U.S. credit unions. That compares with a national average rate of 4.78% at banks. Credit unions on average offered better rates on both new and used car loans for all durations measured.
Secure financing before heading to the dealer
It’s a good idea to know how much monthly payments are likely to be before heading to the dealer. Consider using an auto loan calculator to determine how much money you’ll pay each month for different loan terms and rates. Securing the financing before you negotiate a price for a car may take the pressure down a notch and help you land a better deal.
Shop at the right time
Timing is everything when it comes to buying a new car. Toward the end of the year, dealers may be scrambling to meet annual sales quotas, and salespeople maybe angling for holiday bonuses. Combined, those motives can make it an ideal time to negotiate a good price. As January approaches, dealers often try to clear out this year’s models to make room for next year’s on the sales floor. You may also benefit from bargaining during the early part of the week, as that helps to ensure you’ll have a salesperson’s full attention, undistracted by the traffic of a busy weekend. Making an offer toward the end of the day can also help you win a better deal, as salespeople may be tired and anxious to head home.
If you expect to replace a car or buy a new one before 2016, acting now rather than in nine months could help you score significant savings, should rates rise as expected. And a credit union’s favorable loan terms may help ensure that you make the most of the opportunity.
Cait Klein, NerdWallet
The holidays are approaching. Maybe you’re excited for spending time with your family, the food, or just the holiday lights that seem to pop up overnight. With all of those mentioned guarantees, there is another one you just can’t seem to avoid, gift giving. Even if you tell your family and friends you don’t want to exchange gifts there is always that one person that gives you a gift because “Oh, I just saw it and it screamed your name!” Or maybe you love to buy gifts for everyone; parents, siblings, significant others, bosses, mailmen, your hairdresser. Whichever category you fall in make sure you are prepared. Did you budget for the holidays this year?
If you’re like most people you haven’t even thought about the holidays until they put decorations in the stores during October. So what’s your plan? Is it swiping it your credit card that charges 22% interest so they can pay off Alec Baldwin and Tina Fey to promote their cards? If that’s the case you should keep reading.
Many of those high-interest credit cards come with compound interest. What is compound interest you may ask? Its interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or a loan. You can look at it as “interest on interest.” If you’re not interested in paying the credit card companies those high interest rates (let’s not forget that annual fee you’re paying as well) keep on reading.
If you’re looking to save money the BrightStar Credit Union Holiday Loan is just right for you. First, it offers simple interest, the interest charge is always based on the original principal, so interest on interest is not included. Second, we offer rates as low as 7.99% APR and go up to 16% APR. Even then our rates are still lower than the credit card companies. Third, you set the limit to how much you want to spend this season, up to $5000. So if you plan to spend $1500, take out $1500 and you don’t overspend and you won’t be overwhelmed when the holiday season ends.
The BrightStar Credit Union Holiday Loan is available until December 31st. So be prepared for Black Friday, Cyber Monday and anything else the retailers throw at you. And above all else, enjoy your holidays.
Apply for a loan today at https://www.bscu.org/holiday/