Tag: retirement

6 MISTAKES PEOPLE MAKE IN THEIR 20S AND HOW TO FIX THEM

On By mutualcuIn College Tips, Credit score, Financial Lessons, Uncategorized, Youth SavingsLeave a comment

Like many people, you may have blown through your 20s making financial decisions that served you well in the moment, but may not have been particularly responsible. 20s and 30s Dinner out several times a week, credit card bills you barely looked at and luxury cars way beyond your budget—life was practically a party!   

But now, the party’s over. You’ve woken up in your 30s and realized that all that overspending is going to cost you big—and it’s going to cost for years to come. 

Luckily, there’s hope. It’s not too late to fix the financial mistakes we all make when we’re young and blissfully ignorant. 

Here are six of the most common mistakes people make in their 20s and how to fix them: 

1.) The mistake: Racking up credit card debt 

Maybe you were broke while in college, but desperate for a good time, so you swiped your way through vacations and nights out on the town. Or maybe you knew you were falling into the debt trap to cover student-related needs on a shoestring budget. Unfortunately, it didn’t just go away like you’d hoped. 

The fix: Stop using your credit cards 

It’s time to be an adult and own up to your mistakes. Learn how to say no to impulsive purchases and to live within your means. Create a budget to help monitor and track your discretionary spending instead of mindlessly plowing through your paycheck each month. Stop swiping your credit cards and stick to debit or cash only. Don’t let those credit card bills get any higher! 

2.) The mistake: Ignoring your credit score 

Aside from being the gateway to endless spending, aggressive credit card balances have probably handicapped your credit score, making it difficult or impossible to obtain a personal loan. A poor score will also burden you with an unfavorable interest rate for the loans you do qualify for. And that means you’ll be paying off the mistakes of your 20s for years to come. 

The fix: Know your score and pay down your credit card debt 

It’s never too late to fix a credit score. Begin by monitoring your score. You can order a complimentary credit report once a year from each of the three major credit agencies at annualcreditreport.com. You can also check out your score on sites like CreditKarma.com and Bankrate.com. This will give you an idea of what you’re working with as you work on climbing out of financial hardship. 

Next, work on paying off credit card debt instead of only making the minimum payments each month. Look through your credit card bills and crunch some numbers until you know exactly how high your credit card debt really is. Then, choose one bill to pay down first and begin making the maximum payment your budget will allow. Once you’ve paid it off, divert all those funds onto the next bill until it’s gone and repeat until you have no more debt. Paying down your debt and minimizing the utilization rate on your credit cards will greatly improve your score. 

3.) The mistake: Skipping student loan bills

When you’re facing a debt in the tens of thousands of dollars while earning an entry-level salary, it’s tempting to just pretend it doesn’t exist. Unfortunately, though, that’s the worst thing you can do for your loan and your credit.

The fix: Work it into your budget

Call your lender to work out a more feasible payment plan. You can also check if you qualify for a student loan forgiveness program. Most importantly, make your student loan payments a part of your debt payment plan so you never miss a payment.

4.) The mistake: Neglecting your retirement

Planning for your decades-away retirement may be one of the last things on your list. However, starting to fund your retirement later in the game means missing out on years of compound interest gains.

The fix: Think of it as a fixed expense

Don’t think of retirement savings as an extra; think of it as a necessary, fixed expense that belongs in your budget like your rent and phone bill. Work with the most you can afford and max out your contributions to an IRA or your company’s 401(k) plan.

5.) The mistake: Not having an emergency fund

Life’s great—who needs to think about emergencies? Unfortunately, you do. Scrambling for funds to pay for a large medical expense or to live off of during an unexpected layoff can be a nightmare. Turning toward credit cards to help you get through a rough time can also be the beginning of a debt cycle whose effects are felt for years to come.

The fix: Start small

Experts recommend socking away 3-6 months’ worth of living expenses, but if that’s just not possible for you, start small. Work with whatever you can to make monthly contributions to an emergency fund. Set up an automatic monthly transfer so you never forget. It’s best to keep your emergency money in an account that offers an attractive earnings rate but allows you to withdraw funds without paying a penalty. [Credit union’s Flex Certificates and Savings Accounts are both good choices. Call, click or stop by to speak to a MSRP about setting yours up today.]

6.) The mistake: Not creating financial goals

It’s understandable not to have your entire life planned out yet, but it’s important to set some financial goals.

The fix: Create goals now

Take some time to set some financial goals. Do you want to buy a house within the next decade? Do you dream of opening a business? Are you hoping to retire at 55? Having a concrete goal in mind will help you stick to your budget and manage your money responsibly.

Messed up while in your 20s? It’s not too late to get your finances on track! Follow our tips for a financially sound future.

Your Turn: How did you fix the financial mistakes of your 20s? Let us know in the comments!

 

SOURCES:

https://money.usnews.com/money/blogs/my-money/articles/2018-10-25/how-to-recover-from-financial-mistakes-made-in-your-20s

https://www.thebalance.com/how-to-fix-money-mistakes-in-your-twenties-2385529

https://www.mybanktracker.com/news/fix-financial-mistakes

Nightmare On Your Street – Finances And Horror Movies

On By mutualcuIn Financial LessonsLeave a comment

As Halloween gets closer and you want to avoid the chilly darkness of October evenings, grab a blanket and stream a marathon of scary movies.  Horror flicks are article image2classic fun, whether they’re good enough to keep you up all night when you’re home alone or bad enough to laugh at with a group of friends- because you all know what’s going to happen next.  The classics follow a simple formula, but it works.

The same is true when it comes to your finances.  Spend less than you earn, pay off debt and invest your money with trustworthy people.  Still, we have trouble getting all of the complex parts of our financial lives sorted out.  Let’s try applying the scary movie formula to your finances so you’ll never have that heart-racing moment of panic when you check your balances again.

The scary cat.  In the first 15 minutes of all the classic horror movies, our protagonist gets startled by a cat. It’s a silly little trope that keeps coming up, but screenwriters use it because viewers tend to get bored without a scare in the first few minutes. Bringing out the monster too early can kill the suspense, so it’s an easy-to-insert moment to keep viewers on edge.  Watching scary movies in my household, I can tell you that it works: That stupid cat has caused my heart to race faster than any workout I’ve done.

Are you jumping from the cat?  Does every market hiccup cause you to change strategies?  Are you yanking money out of savings to throw at the stock market (or vice versa) every year?  It’s time to get past that initial scare.  The market isn’t going to kill you overnight, just like it won’t make you rich overnight (Black Tuesday 1929 and Google’s record-breaking July 15th notwithstanding).

If you’re trying to build a safer safety net for retirement or college savings, we’ve probably got more savings options than you’ve ever heard of, many of which have major tax benefits.  We can walk you through a few plans, help you pick the one that’s right for you, and in many cases, we can even set it up with automatic deposits so you don’t have to think about it again.

The victim who runs upstairs when she should run out the door.  Why?  Why?  Why are you running upstairs, you silly soon-to-be victim?  Of all the silly horror movie clichés, this is the one that drives me bonkers.  We always get a few establishing shots of the house early in the movie, which shows us that this house is enormous enough for a final-reel chase scene with the killer.  No one needs this much house.  It’s usually a teenage girl with a single parent (who is not at home) in a house big enough to hold the entire football team of her late boyfriend.

Do you have too much house?  Are you cleaning extra bedrooms you don’t use?  Do you have a home gym, office, or library that you never visit?  Maybe it’s time to simplify.  You can sell that house and move into something a little sleeker, and use your windfall to put in all of the custom features you’ve ever wanted on that new house.  Which would you rather pay for:  the storage room that’s basically a walk-in junk drawer or a dressing room with a walk-in closet?  Give us a call to find out how we can help you finance whichever you choose with super low home equity lines of credit and mortgage rates.

The killer who just won’t die.  In every great horror movie, there’s a killer with an uncanny ability to survive anything the protagonists throw his or her way.  In your finances, sometimes large debts can feel that way.  No matter how fast you run, they just keep coming, like Michael Myers chasing Jamie Lee Curtis through two decades of Halloween movies.  You throw cash at the balance every month, but nothing happens.  What can you do?

If you want to kill a scary movie monster, you can’t do anything that the protagonist does in a scary movie.  After all, the scary movie wants to make a sequel, but that’s the last thing you want out of your debt.  Instead, let’s adapt a strategy from the Terminator:  Even an unkillable robot from the future can’t stand up to a vat of molten steel.  You need to submerge your debts in one large vat that can consume them all:  Turn all of your high-interest, variable-rate, hidden-fee credit card debts into one simple, low-interest, fixed-rate home equity or debt consolidation loan with all of the transparency and confidence you’ve come to expect from Mutual Credit Union.  The first step is filling out an application here:  mutualcu.org

Hopefully, your finances aren’t a horror movie.  Horror movies play on our fears for entertainment, but it’s not as fun in real life.  If they are, though, it’s better to call in some help than it is to split up and try to explore the woods alone. That’s why we’re here.  With a little help, your money can look more like a swords-and-sorcery epic:  Everyone’s a hero and everyone gets a happy ending.

Straight Outta Excuses: The Financial Lessons Of Dr. Dre

On By mutualcuIn Financial LessonsLeave a comment
With Straight Outta Compton being the box office surprise of the summer and a DrDrenew studio album filling America’s iPhones for the first time since before iPods were invented, Dr. Dre is experiencing a late-career renaissance.  While rappers’ careers are notoriously shorter than almost any other group of musicians, Dr. Dre is relevant for the fourth consecutive decade.  Perhaps even more surprising than his prolonged musical success is his financial success.  With the 2014 sale of his iconic Beats headphone company for $3.2 billion, his share of the company vaulted him into uncharted territory:  He claims to be rap music’s first billionaire.
Let’s take time to examine Dr. Dre’s personal narrative and see what lessons we might glean, because no matter who you are while you’re reading this, you almost certainly started with more than he did and currently have less. We could all use a prescription from this doctor.
Pursue your goals with drive and clarity.  One of the themes of Dr. Dre’s life is that he has followed his own vision, no matter what other people are doing.  The biggest rap acts when Dr. Dre started were flashy pop-infused showmen like MC Hammer and Vanilla Ice, but he wanted to make serious music about the world he experienced.  When he backed Eminem in the late 1990s, the idea of a white rapper was seen as a novelty, but Dr. Dre ignored appearances in favor of his faith in his ability to identify talent.  In each case, Dr. Dre believed in himself, understood what his goals were, and did what needed to be done.
What are your goals?  Do you want to retire to the beach?  Do you want to ditch the rat race?  When you pass that billboard with the giant Powerball payout, where does your mind wander?  Let us know.  We have ways to help get you there.  We may have expert advice because we’ve been there before.  Don’t be embarrassed if you think it’s crazy: It was crazy for Dr. Dre to get a local criminal, Eazy-E, to bankroll his band, but it was still the right move.  Let Mutual Credit Union be your Eazy-E (without the criminal background, of course).  Step one to your goals is dropping us a line here:  www.mutualcu.org.
Be careful who you trust with your money.  One person who never comes out looking well in the Dr. Dre story, whether in Straight Outta Compton, Behind the Music, or even the US legal system, is Suge Knight.  The erstwhile villain of the film’s second act, Knight’s character uses violence and intimidation to force Dr. Dre to move on from his record deal with almost nothing.  Less violent is the film’s depiction of Jerry Heller, but the fictional version of N.W.A.’s manager is portrayed as similarly unscrupulous.  Everyone seems ready to steal Dr. Dre’s money.
Even among friends, money can make enemies.  The infamous early-1990s feud between Eazy-E and Dr. Dre had deep roots in questions of trust and money that poisoned the shared bond between N.W.A.’s most famous members.
Who do you really trust with your money?  We all have people close to us to whom we might “lend” money without ever expecting it back, but how many people would you trust to hold your next mortgage payment for a few weeks?  Bonds of friendship and family often fall apart when it comes to money.   As your credit union, we know you’ve put your faith in us to take care of your money.  You already know we exist by the members and for the members rather than a board of executives or stockholders, but it’s worth the reminder that our model was built to make sure you have someone you can trust.  We promise to live up to that trust every day.
Own something that matters to you.  Dr. Dre didn’t get rich working for someone else.  Dr. Dre got rich making his own label, signing his own acts, then doing it all again.  Without releasing an album between 1999 and 2015, he still made a fortune by owning the label that released albums by Eminem, among others.  He didn’t earn his mega-wealth endorsing Beats headphones; he owned a large chunk of the company.
What do you own?  Do you own your home?  Do you own a business?  Do you own a share in your success?  Risk can be scary, and hanging out a shingle can be risky. But in exchange for risk, you are entitled to the fruits of your labor, and those can be fantastic.
If you want to own something that matters and set goals based around your family, you can offer them a home that is safe, comfortable and inviting.  You could take steps to improve the curb appeal of your house, to make your home easier to sell if you pass, add a movie room to transform those Saturday night Netflix sessions into unforgettable family experiences, or even buy a pair of Jet Skis to entice the grandkids.  You can check out our fantastic home equity rates here: RATES After that, you can get some home decoration tips by looking up “Nothin’ but a G Thang” on YouTube.  Note: We do not recommend adding hydraulic lifts to your minivan.
Dr. Dre has been part of our lives for so long that we don’t really think about him much.  In a lot of ways, we forgot about Dre.  But his story is really extraordinary, and if we take a few minutes, we can probably learn some lessons from him for our personal financial health.
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