When was the last time that you felt like quitting? It was a couple of weeks ago for me. I was writing my post for the week, which talked about de-cluttering our finances. The post was turning into a guilt-inducing post, which I did not want, but I couldn’t figure out why it wasn’t coming together. I had worked on it, and I woke up early in the morning unable to sleep and worked on it. I started to wonder if these posts had helped anyone. I felt like quitting. As these negative thoughts bombarded me, I started remembering the reasons why I am so passionate about helping others learn to manage their personal finances. The reason has to do with grief, pain, and peace.
A couple of years before my Dad died, he went through financial stress. My parents owned many assets, but all of their wealth was tied into the real estate market. Dad worked as a realtor and a landlord. He also ran a construction crew, and he owned his home. During the recession of 2006, home prices plummeted, building of new homes decreased, and lending practices tightened. As his income decreased, he borrowed against some of the properties.
After Dad died in 2009, I prepared the accounting reports for the rental units and realized that there wasn’t enough cash coming in to pay the expenses of all of the rentals. One morning I woke up at 4 am to work on his business accounting. As I realized how much pain he experienced during the last few years of his life due to financial stress, my chest hurt! It was one of the most painful times of my life! I remembered these lines from Emily Dickinson's book, The Complete Poems, which I had memorized in my youth: “If I can stop one heart from breaking, I shall not live in vain. If I can ease one life the aching or cool one pain…. I shall not live in vain.”
At that point, I decided to direct my pain outwards by serving others. If I could help one family, even if it was my own family, then it was worth my effort.
I contacted my family finance professor from college and thanked her for encouraging me to live what she taught. I will never forget when Professor Lown told our class that if we earned an “A” grade in her class, but we didn’t live what she taught us, that the “A grade” wouldn’t mean a thing. I started volunteering at a financial counseling nonprofit agency. When I could no longer work in the office, I wrote a blog for them. I taught a class in my church about financial principles and then wrote a book about those principles. I was later asked to write for Wasatch Peaks Credit Union, which I felt grateful to be able to do.
Although the pain surrounding my father’s death has subsided a lot, grief does resurface. Sometimes grief is almost predictable: holidays, my dad’s birthday, Father’s Day, and family events. Other times grief hits me unexpectedly, like snow hits in May.
That’s what happened the night before I finished the post about decluttering finances. I had a bad dream and woke up in the middle of the night crying for my daddy. I was missing him. No wonder the post would not come together! Finally, I ran out of time and had to pause work on my post so I could wake up my kids and help them get ready for school.
My husband Ty came home from the gym that morning and said, “I wasn’t feeling it. I couldn’t get into a rhythm while I was swimming. My arms felt dead tired.” Then my son threw tantrums after he woke up. He and I got into the car 3 minutes before school started. Several kids were already in the car, and the emergency lights were flashing. I turned the key, and nothing happened. My five-year-old was innocently sitting in her pajamas. The neighbor’s cat pooped in our sandbox. Then, the internet stopped working on my Chromebook, losing half of my work. It was my version of a Terrible, Horrible, No Good, Very Bad Day. After a good cry, I got back to work.
Even though I felt like quitting, I remembered the quote, “We are not our feelings.” It came from Steven Covey’s book, 7 Habits of Highly Effective People. He taught that no matter what happens to us, we can choose how we respond to it. I teach this saying to my kids, but that day I applied it to my situation. The sun was shining! Friends and family came to help me work on the car and take the kids to school. I finished the post late, but it wasn’t a big deal. The credit union staff treated me graciously.
I’ve been thinking about what I learned from my dad’s passing. With Father’s Day coming this week, I want to share some financial lessons I learned from my Dad’s death. I hope that they can help you and your family.
While planning my dad’s funeral, I searched through mom’s piano books for the right song to play. When I flipped to Bridge Over Troubled waters I knew that it was the song Dad wanted. I wasn’t very familiar with it at the time, and the music was too difficult for me to learn to play in that short period of time. Obstacles kept coming. Our family friend told me that he was just getting his voice back from laryngitis and didn’t think he could sing because he could barely speak. He also did not know the song, and we only had a couple of days to prepare. I almost gave up, but we found a way to perform it: my sister played the left hand while I played the right hand, and our friend was able to sing.
Here are a few of Simon & Garfunkel’s lyrics that I felt were like messages from my dad to my mom. Even though it isn’t the typical song I’ve heard at funerals, my dad wasn’t the typical person.
“When tears are in your eyes
I will dry them all
I'm on your side
When times get rough
And friends just can't be found
Like a bridge over troubled water
I will lay me down….
When darkness comes
And pain is all around
Like a bridge over troubled water
I will lay me down
Sail on, silvergirl
Sail on by
Your time has come to shine
All your dreams are on their way
See how they shine
If you need a friend
I'm sailing right behind
Like a bridge over troubled water
I will ease your mind.”
Because my dad had life insurance, my mom didn’t have to worry about finances at the time of his death. Our lives stopped. There was so much grief, sorrow, and adjustment to having him gone from our lives. Mom had to get used to daily life without him and had to do many of the tasks that he used to do. His life insurance policy provided the “bridge” to help us get through this troubled time. What a relief that my mom was able to pay any bills. Even the mortuary bill was paid directly from the life insurance so that we didn’t have to pay money upfront. That period of time was rough enough without the financial stress!
When I refer to life insurance, this includes being self-insured. If you have enough assets, you can get to the point where you can self-insure if you choose, but I still consider that life insurance. Life insurance enables your family to continue on paying for their financial expenses after you and the income you provide are gone.
Last Saturday, we saw a lot of dads teaching their kids how to fish as part of Free Fishing Day. Picture this: A man was walking with his fishing pole in his left hand and his daughter’s hand in his right hand. It reminded me of fishing and camping trips with my dad. He taught me to ride a horse. He taught me to love being outside in the mountains. Dad also taught me to help others.
Dad taught me to pay off debt. He paid off cars as fast as he could, and he refinanced his home into a fifteen-year mortgage. But in 2006, when his income decreased, he overleveraged, and this taught me that financial storms will come to everyone. I learned that we can lower our risk by decreasing our debt and saving for emergencies. Because of what my parents went through, I have spent the last 8 years working on paying off our debt and “saving for a rainy day.”
When we had a income crisis two years ago, we were prepared and we worked through it together. We had a lot of peace during that turbulent time. We experienced peace knowing that we both had marketable degrees with experience. We had peace knowing we could pay for six months of expenses. Emotionally, this was one of the hardest times of our marriage, but it strengthened our marriage. I was Ty’s cheerleader to help him recover his lost confidence. Within a few months, he realized that his employer did him a favor by releasing him. He felt very fortunate. Our story could have ended in bankruptcy, foreclosure, or divorce. I’m thankful that we were spared all of those.
The housing market is really good where I live right now. Homes are selling within a few hours in some cases. I considered selling our home this year, but I realized that to upgrade our home, we would increase our debt, which will increase our risk. We didn’t feel comfortable doing that.
I feel thankful for the lessons grief has taught me. They are gifts that have helped me so much. I’m thankful for my dad. He is my hero! I’m celebrating his life and celebrating dads! What’s one thing you have learned from your dad?
We’re here to provide excellent mortgage loan options for first-time homebuyers at Wasatch Peaks Credit Union, and some of the best options on our list are federally-backed loan options. These programs are guaranteed or insured by arms of the government, lowering risk for lenders and allowing you to get better mortgage rates and qualify for more advantageous loans.
A great example here is an FHA loan, insured by the Federal Housing Administration. They offer several more flexible options than many conventional loans. Here’s how you can benefit from an FHA loan.
There are several areas where the requirements for qualifying for an FHA loan are much lower than they would be for a similar loan in a different format. Credit score is the most important: Only a 600 minimum credit score is typically required for an FHA loan, with some wiggle room depending on the institution.
There are other qualification benefits as well. You will be required to pay a much smaller down payment, as low as 3.5 percent rather than up to 20 percent for most traditional situations. There are no prepayment penalties, either. This makes these loans perfect for first-time homebuyers.
The rates you can get through FHA loans far outstrip those you’ll find through the equivalent standard loan. If you have a credit score of 660, for instance, this will qualify you for an FHA interest rate roughly equivalent to what a score of 740 would have qualified you for in a conventional format.
FHA loans are perfect for refinancing. They allow options for members who got their first mortgage from outside lenders, never a guarantee during a traditional loan situation. They’re offered in both fixed and adjustable rates, and you can typically refinance up to 98 percent of a home’s value.
When a buyer is allowed to take over an existing home loan from someone else rather than taking out a new one, this is called an “assumable” loan. FHA loans fall under this classification, meaning you can pick the best option between assuming a previous loan at its rate and looking for a new loan with a better market rate. There are no penalties here in either case.
Want to learn more about FHA loans, or any of our other mortgage services? Speak to the financial advisors at Wasatch Peaks Credit Union today.
You've learned to invest 15% of your household income into retirement. Now what? The ultimate goal of investing is to let your money work for you and provide you with stable, passive income.
But getting there is going to cost a pretty penny.
This month, take the time to learn the dollars and cents of investing. Of course, you knew that investing was going to mean coming up with the actual money you’re putting into the market, which always holds the possibility of being lost forever. But did you know there are going to be various fees, commissions, and taxes you’ll have to pay, too?
Let’s take a peek at an actual investment to illustrate this. The company and amounts have been changed, but they’ve been accurately scaled down to size.
Suppose that, on Aug. 13, 2015, a share of stock in Apple closed at $43.26. During the next few months, Apple issues four dividends of $0.55 per share. On Aug. 25. 2016, a share of stock in Apple closed at $51.23.
Let’s say you chose to invest $1,000 in Apple on Aug. 13, 2015 and you withdrew it on Aug. 25, 2016.
At the time of your investment, $1,000 would buy you 23.25 shares of Apple. Over the year, you would have received $51.16 in dividend payouts. When you withdrew from the company a bit over a year after your initial investment, you’d sell that stock for $1,191.09.
It seems like your gain from this stock is $242.25, broken down into $51.16 in dividends and another $191.09 from selling the stock. Simple, right?
The problem is, though, you haven’t exactly earned that much. Here’s where the costs of investments come into play.
First, the dividends would be subject to income tax. In this case, the dividends are considered qualified dividends, and would therefore be taxed at a rate of 15% by the federal government and possibly more by state and local sources. As a result, $7.67 of that dividend gain is eaten up by these taxes.
Second, you’re going to have to pay your broker for the cost of buying and selling the stock. Let’s say, hypothetically, you’ve used an online discount stock brokerage firm. The buy and the sell would each cost $9.99. That’s another $19.98 dropped from your gain – although this fee is tax deductible.
Third, the gain on the sale would be a long-term capital gain, so 15% of that gain goes to the federal government. Since your gain was $191.09, you’d be paying an additional $28.66 in taxes on the sale.
In total, your expenses for your gain add up to $56.31. Just like that, nearly 30% of your gain is gone!
Even if your investment is a loser, you’re still paying the brokerage fees and will earn less in dividends.
The moral of the story? Investing costs. You’re taxed if you gain, and you’ll get hit with brokerage fees whether you win or lose.
Some forms of investing have lower costs than others. If you invest directly with an investing house, you can bypass the investing fees and only pay the taxes on your gains. However, you’re limited to the offerings that the investing house has available, and you’ll be subject to their often inflexible minimums for investing.
You could also simply invest in a money market account or other savings option at Wasatch Peaks Credit Union. Your returns will come with fewer or no costs. Plus, your balance isn’t at risk. Yes, you might “lose” some gains by only having the cash in a savings account, but your money is earning a steady return. If you invest elsewhere, it’s possible that the costs, the fees and the taxes can easily eat up a substantial amount of whatever you gain or make an already painful loss even harder.
It’s important to note that the bigger your investment, the smaller the impact such costs have. At the $1,000 level, the investment fees in the above scenario typically eat up about 2% of your balance. If you’re investing $10,000, the fees will only eat up 0.2% of your balance, and if you invest $100,000, the fees eat up only 0.02% of your balance.
Thus, as a beginning investor, it’s crucial to know the total cost of ownership of an investment as you consider it. Even a small fee can significantly lower your total return when you’re starting out with small investments.
That’s why it’s best to take it slowly at first and continue learning about the market and stocks you’re interested in. Know exactly what you’re going to invest in – and what all of the costs of that investment are – before you put down any of your money. After working out the math, you may find you’d rather wait until you have a substantial amount saved up for investing, as these fees don’t make such a big dent when the gains are larger.
So, before you make that first investment, learn the costs and be sure it’s worth the price!
Did you get hit with any surprise costs on your first investment? Share your experience with us!
Credit score is one of the most important factors of mortgage rates and many other important elements of a home loan, but many people have several misconceptions about the basics of credit score. At Wasatch Peaks Credit Union, our financial advisors are here to help clear up any confusion you may have in any element of the mortgage loan process.
We’ve found that much of our clients’ confusion often relates back to a simple lack of knowledge about credit score numbers – how many scores you have, how they’re calculated and what you can do to view your current score without dinging yourself financially. Let’s look at a few of these lesser-known areas of credit scores.
The most popular form of credit score monitoring is called FICO score, introduced by a company called the Fair Isaac Corp. over 25 years ago. It uses a proprietary formula designed to predict how likely someone is to repay a debt balance. Its chief competitor is VantageScore, a metric designed by three major credit bureaus that has gained popularity in recent years – we’ll compare the two in a moment.
Even within each type, though, know that things won’t always be standardized. Each different one is frequently updating their algorithms, and different individual creditors or lenders may not be on the exact same versions. Think of it like updating your computer to a new version of Windows – some lenders might have the FICO 8, but others might have the newer FICO 9, and your score may not come out exactly the same. If you want to standardize here, you’ll have to make sure you use the same version of a credit report, not just the same brand.
FICO is used more commonly by lenders, while VantageScore is gaining ground with consumers and lenders alike. There are a few other key differences:
Many people assume that you simply can’t view your credit for free, but this is no longer true. A site like NerdWallet offers free scores online and score simulators, and there are other tools available to landlords.
To learn more about credit score, or any part of the mortgage process, speak to a financial advisor at Wasatch Peaks today.
Utah saves money with historically low interest rates!
You can save money with your Wasatch Peaks auto loan:
Getting your auto loan started is as easy as coming into any branch, applying online, or calling 801-627-8700!
Wasatch Peaks makes it easy for you by preparing your loan documents and paying off your current loan balance with another financial institution. All you have to do is sign and drive away with a lower rate on your new auto loan!
*Annual Percentage Rate (APR). On Approved Credit (OAC). This is our best rate; your rate may be different depending on credit history and underwriting criteria. Rates subject to change based on vehicle loan-to-value and term. Limited time offer.
Whether you're a regular news junkie or you rely on your better half to keep you updated on the latest, you'll get the same conflicting messages about the state of today's economy. One day you'll hear about rising wages, and the next day you'll read about the lagging growth in the GDP, or Gross Domestic Product.
The only thing certain about today's economy is that it is uncertain. While things look relatively stable now, no one can guarantee what the next few years will bring.
Fortunately, you don't have to give up on the home of your dreams because of a fluctuating economy. Read on for four steps you can take to make sure your money - and your house - are completely safe regardless of what's going on.
The magic number for down payments has been established at 20% of the home's value. Those who can't afford to plunk down that much money, though, will often put down a much smaller amount.
If you can't come up with a down payment worth at least 5% of the home's total value, you may not be ready to buy a house just yet, because having little or no equity in a home could mean taking a loss should you need to sell it. Also, not making any profit from selling your home means you won't have funds to cover the down payment on your new home and offset the closing costs. That's why it's always best to own as much of your house as you can.
If you've been hoping to qualify for a more expensive home, you may be planning to push the limits of your mortgage approval. In fact, it's best to buy a house that comes in well under your approved limit, allowing you to maintain a lower debt-to-income ratio. This will give you breathing room and keep your mortgage payments from dwarfing your monthly budget.
Also, if the economy worsens and you feel the effects, you'll have a smaller mortgage payment to scrape together each month.
Here's how to cut through the hype of the real estate market and find the Realtor that is truly best for you:
A professional inspection before signing on a home is a given, but did you take a careful look around? You don't want any unpleasant surprises after you've moved in.
Check for the following:
Don't forget to call, click or stop by Wasatch Peaks Credit Union to learn about our fantastic programs on home loans and mortgages before you start your search. We're here to help you with the finances as you find the home of your dreams!
Did you recently purchase a new home? What did you wish you'd known before you started on your search? Let us learn from your experience; share your wisdom with us in the comments!
Learn about all the tips and techniques to negotiate with high-pressured car dealers. Wasatch Peaks Credit Union will email your FREE eBook on how to buy and keep your car.
Learn all about what you need to know:
You will also get a Car Buying Budget Worksheet to help you with your financing and loan planning. What you learn may save you money on your next car purchase!
Managing money is a foundational life skill. There are so many factors involved and so many open-ended questions at play. How much should you be saving? When is it worth spending more? How do you keep spare change from burning a hole in your pocket? It takes years of discipline and training to perfect this skill, and ongoing self-control to maintain it.
That's why it's best to give your kids a head start on money management and saving. As a parent or guardian, remember that the lessons you plant today will take root and blossom, enriching your child's life for years to come.
Here at Wasatch Peaks Credit Union, we understand the enormity and difficulty of this task. In honor of National Credit Union Youth Month, we're focusing on ways to help make this process as smooth and as simple as possible.
Wasatch Peaks is proud to offer specialized savings accounts that are designed just for kids.
Our youth savings accounts offer no monthly service fee and no minimum balance to earn rewards to help you teach your child that saving money always pays.
We're more than just a place for your kid to keep their money, though. We also want to help your young ones learn all about money management. To do that, we go out of our way to make banking fun and kid-friendly. When your child has an open Kids Club Account with Wasatch Peaks they also have free access to fun kid websites, online games, MONEY MOO$E™ Kids Club Peaks Passbook™, prizes, and more.
When adolescence overtakes childhood, kids need a sense of independence and autonomy. We get this. That's why the holders in our Young Members Accounts are eligible for a Free Visa Debit Checking Card and we’ll refund your ATM fees, nationwide (up to $25 monthly). With our Kasasa Tunes checking account, teens earn $5 every month in iTunes® or Amazon.com downloads! Learning responsible saving habits at an early age will prepare your kids for a sound financial future.
Ready to open an account for your child? Does your child already have one? Read on for three steps to take for ensuring your child gets the most out of a new or existing account:
Now that your child's money will be sitting in an account instead of a piggy bank, let her use this opportunity to save up for something big. Sit down with her and discuss what she'd like to save for. You can create a long-term goal, like saving up for college or for a first car. Also establish a short-term goal, like a new gaming console or a hoverboard.
Set a date for your goals, and then set up a savings calendar for illustrating how much money needs to be saved each month to reach the intended target by the designated date. Discuss ways to add to the savings, being sure to include money from birthday gifts, summer jobs, allowances and chores.
Whether your child is a first-grader or a lanky teenager, if this is their first time owning an account, they'll need you to show them the ropes.
Always bring your young child along with you when you stop by Wasatch Peaks to deposit his savings. Show him how it works and let him see the account balance growing. If your child asks you to withdraw money from his account, make sure he sees how this translates into a dip for his savings.
For teens, you'll need to walk them through that first deposit and withdrawal. When they've probably got the hang of it, it's time to take a step back and let them be on their own. They'll feel like a million dollars managing their account independently.
However, share with your teen that every swipe of their debit card also means a dent in their account balance. Also be sure to warn kids of all ages about security. They should know to never share their account information with anyone, and to keep their debit card in a safe place.
Don't aim to be a helicopter parent, but do keep an eye on your child's account. If he's depositing a lot less than planned, ask him where his money is going. Speak to him about money management and impulse purchases.
Remember: Every financial lesson you teach your child today equips them with money management skills for a lifetime.
How do you maximize the benefits of having a youth account for your child? Share your best tips and techniques with us in the comments!