What's a HELOC and how do I use it?
What’s a HELOC?
HELOCs resemble a second mortgage and also function like a credit card. You are able to draw from this fund whenever needed. Therefore, you don’t have to withdrawal it all at once. The main difference between a HELOC and mortgage loan is that a mortgage is used to buy a home. You never see the money since it’s given to the seller and you pay monthly for a certain period of time. A HELOC is a line of credit that uses your home as collateral that you can withdrawal from at any time. The interest is only paid on the amount that you use. For example, you could get a $50,000 HELOC and only use $10,000 of it. You will only pay interest on the $10,000 that you borrowed.
Six Smart Ways to Use a HELCO
Renovate rooms
This is a great way to increase your home’s value. One of the best rooms to start with is the kitchen. Many homebuyers look for a modern kitchen that is updated with current trends. Using a HELOC to pay for this renovation is a great way to get the most bang for your buck. After your kitchen, focus on bathrooms and then bedrooms.
Convert unused space into living space
Finish your basement or convert unused space into something cozy and livable. This is a great way to add more space to your current layout and will make potential homebuyers intrigued with the amount of usable area in the home. You could also consider adding a mother-in-law suite somewhere in the layout. Adding something like this has the potential of adding quite a bit of value to your home.
Give your home a makeover
Replace siding, doors, garage, etc. for a better outdoor appearance. Having a nice outside appearance will attract buyers and will allow your home to stand out in the neighborhood. It’s amazing what a fresh coat of paint or a new roof can add to a home’s appearance!
Pay off debt
You can pay off high interest debt such as those typically associated with credit cards. Be careful if you choose to do this because you are gambling your home on it. HELOCs will offer a lower interest rate but have a high level of risk associated with them. Make sure you have a great plan in place to ensure you are able to pay off the HELOC and not default.
Pay for a vacation, college, car, etc.
Along with home improvements and debt consolidation, a HELOC can be used to pay for “fun”. Although this is a very tempting option, make sure you have a solid plan on paying back the loan. REMEMBER… your collateral is your house. If something were to happen and you weren’t able to pay the loan back, you will lose your home!
HELOCs are great tools to use when used correctly. Whether it’s fixing up your home, consolidating debt, or having a little fun; BrightStar CU can get you set up with a low-rate HELOC!
How to Make Budgeting Fun with Your Family
Setting spending limits and crunching numbers is not exactly a traditional recipe for family fun. But you can make budgeting fun by getting a little creative. Here is how:
Talk it through
Finances are a complicated subject. But it is important for your children to learn this very important skill early in life. In order to make budgeting fun for all, make it a game. Seat everyone at the table and talk about where the money goes.
Show them the money
Ideally, you should keep record of your finances in a tangible place. A specific folder in your computer or an organized excel sheet. But let’s be realistic, creating excel formulas is hardly fun for a child, let alone a fun activity for the family.
Our suggestion: Go old school!
Set out three containers, jars, banks or baskets. Mark one of the receptacles with the word save. One with the wod spend and the final with the word share.
Use real money and coins to fill the containers each month so the whole family can see exactly how a budget works and where money needs to go. Folger recommends divvying up money according to set percentages. This is an especially beneficial method to help your tweens and teens balance their own allowances while earning real-life financial lessons.
Work toward family-fun goals
Budgets are designed to keep your present bills paid as well as plan for the future. If your family is only focusing on what they’re giving up or not getting, there’s no way your family budget will resemble anything but doom and gloom.
Instead, making budgeting fun by including goal that everyone can appreciate or look forward to using. Perhaps you can work toward a family-fun day at a local amusement park or even an extended getaway.
When planning for a vacation, Godfrey stresses the importance of involving everyone in the family on decisions from where to go and what to do to how money should be spent. A budget designed specifically for fun-in-the-sun or a first-time adventure is sure to keep your kids interested in your family’s financial planning.
Give back as a family
Teaching your kids to give back is an important, life-long lesson. Dedicating a portion of your finances will create a life lesson and a lot of fun memories.
With open communication and an eye on future fun, you and your family can make budgeting fun and support your financial goals.
3 Great Financial Skills for Young Adults
The real world is expensive, and if you are a young adult the lack financial aptitude will harm you later on in life. Being financially unaware will make you struggle not only fiscally, but emotionally as well. That’s why you need to acquire financial skills as you make your way through college, navigate your first job and learn to save for the years to come.
College-bound
College is often the first time you will experience a real sense of freedom. Gone are the days of a traditional school schedule with parents and teachers standing over your shoulder to make sure you study, eat and complete your assignments.
College may also be the first time you are faced with managing your own money to cover bills, school expenses and inevitable loan payments. To help keep you from failing Personal Finance 101, we recommend establishing a budget.
Record income from sources such as part-time job, student loans, money from parents, grants, savings accounts and scholarships.
Then record expenses: things such as books, tuition, rent, clothes, entertainment, college fees, supplies, personal care items and transportation costs. By tracking the first two months of spending, you will earn an accurate baseline of necessary and unnecessary spending and where’s there’s room in the budget for saving.
On the job
The thought of saving for retirement after securing the first job out of college may seem ludicrous.
After all, you still need to pay off college loans, rent, car payments and insurance fees.
However, saving for the future as soon as possible and investing in employer-matching retirement programs with the max amount possible are smart financial moves, according to The Balance writer Miriam Caldwell.
Remember the budget you used in college?
Now is the time to update if for the real world. Tracking your income, expenses and spending is the only way to gain control of your finances. As you progress in your career, your financial health should become more robust.
Be sure to consistently evaluate and re-evaluate your budget, plans for the future and investment options.
Credit cards are convenient, and sometimes the only resource you have to get through stressful financial times. But, they come at a high price. Sinking into credit card debt happens quickly and before you know it, you’re over your head in fees and balances you can’t clear.
To help you stay afloat, forgo any dependence on plastic.
In case of emergency
Life will throw you expensive curveballs, and without an emergency fund, your financial health will take on serious damage.
According to Investopedia writer Amy Fontinelle, any amount you can save each month in a money market account, certificate of deposit or online savings account will do wonders in establishing your financial safety net.
Be sure the account you choose earns high-interest rates, too.
By adopting smart money habits, like budgeting, you’ll create a lucrative and secure future.
4 Ways to Raise Capital for Your Business
Very few people know how to raise capital for their business, especially if it is their first startup. Though a necessary part of the process, investing your own money may not be enough. How can you raise capital for your business, and where can you get it?
1. Create a solid plan
Your business won’t be successful without a solid plan in place. Without one, you won’t be able to secure capital to get on your feet.
“Every successful business transaction starts with a carefully developed plan,” Jeffrey Hayzlett writes in a September 2017 article for Entrepreneur.
Hayzlett says that a good plan should identify the problem your business is trying to solve. It highlights the unique features that make your service or product stand out. Use these to build a short pitch. You should identify future milestones and then estimate how much capital you will need to meet them.
Without a solid plan, potential investors won’t have any reason to believe they can trust you and your business with their funding.
2. Friends and family
Borrowing money from friends or family is one of the most common ways to raise capital for a new small business. However, many investors shy away from it. After all, the potential cost of failure isn’t just financial; it’s personal. The key is to present your pitch professionally and treat your friends and family like real investors. This will make things go more smoothly if you are turned down.
On the upside, that personal relationship can take you further than you could go with an unfamiliar investor.
3. Crowdfunding
Crowdfunding is an increasingly popular way for small businesses to raise capital money to get started. Websites like Kickstarter and GoFundMe let you solicit funds through online campaigns. In return for their money, donors receive services or products related to the project you are trying to launch. The value of which is based on the amount donated.
4. Angel investors
Angel investors are individuals with deep pockets who will invest in your startup in exchange for a higher rate of return than traditional investors.
Companies like Google and Yahoo, received help from angel investors in their early stages. “The big advantage is that financing from angel investment is much less risky than debt financing,” Susan Ward writes in an October 2018 article for TheBalance’s Small Business. “And, most angel investors understand business and take a long-term view.” You can find angel investors on websites like New York Angel and Angel List.
These are some of the ways you can raise capital for your business. Others include credit card loans, personal business loans, SBA loans and microloans from nonprofits. Talk with a professional to explore all of your options.
6 Smart Financial Choices You Should be Making
The world is a revolving door of bills, savings, spending and decisions. When we talk about financial wellness, we don’t usually talk about millions. We talk about living within your means. This means you have to make financial choices that will benefit you. For example:
- Create an emergency fund
Every single one of you, regardless of how much you make should have an emergency fund. Unfortunately, more than 50 million Americans forget about this very important financial choice.
This very important aspect of savings will help you take care of unexpected life events that will require you to spend money. The last thing you want when an emergency arises is stress about money. This fund will help you get to your next step easier.
- Embrace minimalism
Do not spend money on things you don’t need. Yes, you may treat yourself once in a while but if you are going out every weekend or changing your house décor every 2 months; STOP!
Take a step back, breathe and ask yourself “Can you live without this?” If the answer is yes, then put your credit card/cash back. We cannot stress this enough; you must live within your means. Once you start doing this, you can actually start achieving other goals like traveling, saving for a home and go on a shopping spree without having a huge financial strain.
- Make your money accrue interest
Growing up I heard everyone older than me say that financial stability came along when you figured out a way to make your money make own its money. CD’s and Money Market Accounts are the perfect way to make your money accrue interest by just letting it sit. It is also the perfect way to get disciplined with your savings. CD’s and Money market accounts are also a guaranteed way to make money because they do not rely on the stock market to grow. You just need patience.
- Change your insurance
We briefly mentioned changing your insurance on our “How to Make a proper Budget” blog. The internet has made research easy. Changing your insurance is research you should be making. See how you can take advantage of discounts, promos and benefits that can help you reduce the cost of your insurance.
- Save money on gas
Gas is one of those little things that makes a difference. If you live anywhere in Florida, you are spending money on gas. A way you can start saving on gas is buying or switching into a smaller car. This may not be possible if you are a parent or have a big family, but if this is not something you need…CHANGE IT!
- Find ways to make extra money
Making a little extra money is smart- especially when you want to treat yourself a bit more. You can use APPs and websites like eBay, Offer Up and Facebook to sell gently used items. You can open a separate Savings Account to add the little extra money you are making. The extra dollars can help you pay for a plane ticket and help you pay for a vacation. It can also make it easier to grow your Emergency Fund.
Try to follow these tips to help you make better financial choices. It is the little changes that make a difference in your financial well-being.
How to create a proper budget
Budgeting is the little plan in 2019 that will keep you financially organized and stress-free. However, to make an accurate budget you must have a clear picture of what your goals are.
For example, aside from paying bills this year, you will also like to travel and buy a home. Both are achievable but will take some discipline in your part.
Before you start, go through find ways to reduce your bills.
Reduce Your Bills
We can thank the internet for making research and price comparison a lot easier. Basically, your first job is to review how to lower your main bills. You should try to reduce your car insurance, phone bill and internet payment. Take around 2 to 3 days to make accurate research and try not to fall for hidden fees.
Second, make a list of any additional expenses you have. These expenses are your wants. They will probably include coffee trips, friend dinners, splurge shopping and any expense you simply do not need to do. Minimalism is key when it comes to sticking your budget. After you have written these out find a way to cut them by 80%. Start making coffee at home and have a home-made breakfast with your friends instead.
Your budget will be divided in 3 parts. Your goals, emergency fund and everyday living.
Set aside 5% of your income after taxes and make this number your emergency fund goal. You will not touch this money unless you absolutely need too.
Then write down every expense you have. Starting with your groceries and ending with your favorite leisure expense.
If your end result shows more income than expenses, you are off to a good start. This means you can prioritize this excess to areas of your budget such as traveling and retiring. If you are showing a higher expense column than income, it means some changes will have to be made.
Make adjustments to expenses.
If you have accurately identified and listed all of your expenses, the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense or savings goal.
If you’re in a situation where expenses are higher than income, you should look at your “wants” to find areas to cut. Since these expenses are typically non-essential, it should be easy to shave a few dollars in a few areas to bring you closer to your income.
Review Your Budget Monthly
It’s important to review your budget on a regular basis to make sure you’re staying on track. After the first month take a minute to sit down and compare the actual expenses versus what you had created in the budget. This will show you where you did well and where you may need to improve.
Most importantly, keep yourself organize. A budget only works if you are willing to follow it and put in the work.
How to ensure that your business taxes are filed safely
How to ensure that your business taxes are filed safely
As a business owner, your number one priority is safeguarding the interests of your enterprise, which is why you should take extra precaution to ensure that your information is protected when filing your business taxes. These tips will ensure that your returns are filed safely, and your information remains uncompromised.
Practical protection
Tax returns require sensitive information pertaining to your business as well as personal details which make them attractive to hackers and identity thieves.
Since the Internal Revenue Service requires you to keep your tax filings and supporting documents for a minimum of three years and a maximum of seven years. The agency advises that you keep all paper documents locked safely away.
A locked drawer or cabinet are good options, but your best bet may very well be a hidden, fireproof safe.
When working with a tax professional, take the time to vet their credentials before you hand over any sensitive documents. If you choose to file on your own via tax software, make sure that your computer is equipped with up-to-date anti-virus and anti-malware software and that you are protected by a firewall.
If you store your documents on your computer for record-keeping purposes or for electronic filing, the IRS recommends installing software designed to encrypt your files and backup drives to prevent important information from being stolen.
Once you’re ready to cycle out older tax documents, the IRS advises that you shred any paper documents thoroughly to prevent identity theft. For electronically stored documents, you will need to wipe your drives before selling or disposing of an old computer or external drive.
Delivery methods
Before you send off or hand over physical tax paperwork, The Balance’s William Perez and Beverly Bird advise that you make a detailed list of everything you’re sending and make copies of every document. You can scan and save the documents as PDFs on your computer. To get an extra layer of protection get add secondary copies to a flash drive or an external hard drive.
Having readily available backup copies will reduce the stress that occurs if something should go missing en route to your accountant or to the government.
If possible, Perez and Bird suggest hand-delivering your documents to your accountant or professional tax preparer, as this serves as the best option to ensure the safe filing of your documents.
If your accountant is too far to reach in person, it’s suggested that you spring for delivery or signature confirmation and that you maintain your tracking information to monitor your documents’ progress. Additionally, Try not to use email.
Never send sensitive details within the body of an email and ensure that all documents are encrypted and password-protected.
Your tax paperwork is too important to the health of your business. By taking the proper precautions, you can better ensure its success and stability without having to worry as much.
5 Money Saving Tricks for this Holiday Season
The Holiday season is upon us and this could either mean you are overly excited about the celebrations or you’re overly stressed out about money. Granted, you can also be both, excited and stressed out. This is normal during this time and we are here to offer you some guidance.
How can you save your money and spend wisely this holiday season?
Make a Budget
It should be no surprise to you that a budget is the smartest way to keep track of your money. You should keep one year-round but you should also have a separate one during the holiday season.
When you create your holiday budget, be smart and avoid setting yourself up for failure. Do not set a budget that is unrealistically low or one that is way too high. Also, think about cutting back in other areas. Can you avoid brunch Sundays with your friends for a month? Or even little things like buying coffee every morning?
Make a list of gifts that you absolutely need to get and another list of gifts you can make yourself. Getting a beautiful printed picture in a cute affordable frame can be just as nice as a $50 bottle of wine. After all, it is the thought that counts.
Make a Potluck
Getting your friends and family together to celebrate is always a beautiful tradition. However, if you are the host, it can be a very expensive one too. Deviate from the all-or-nothing thinking and ask your friends to help you with side dishes and dessert for your celebration. Not only will a potluck save you money, it will also save you precious needed time.
Get Flying Deals and Discounts
If you’re planning on taking a nice trip out of town, search for discounts. Gone are the days where travel agents had the only good flight packages. Now you have a million ways to get discounted fly tickets, car rentals and hotels. In fact, you can even get some travel benefits with your BSCU credit card.
Here is a trick: When you search for flights online, make sure to check at different times of the day. Believe it or not, some flights can get very cheap when you purchase them at odd hours like 2:00am.
Have Will-Power and Know When You Need to Stop
When your list is finished and you’ve checked it twice, it’s time to stop shopping. Know when you’re finished, and avoid stopping by the mall “just to see what they have” – this can lead to making poorly planned purchases and blowing your budget.
Most people get the itch to shop a few days before Christmas, if this is you, then leave some shopping you NEED for the last days. This way, you will still feel like you are getting something but you are not just “checking things out.”
Time to Use Coupons.
If this isn’t typically you, that is okay but during this time you’ll be wise to utilize coupons. You can get coupons online, via email, through a newspaper and you can even buy a cheap coupon book at the mall. The point is you have choices. Do not buy that $25 dress when you can get it for $15. Be smart because every dollar adds up.
Finally, remember to enjoy this time with your family and if you have to spend, spend wisely. We hope this helps.
How to make your savings grow with a Money Market account?
Money market accounts can provide a safe, productive way to store your money
A money market account is an account that typically comes with a higher interest rate than other savings accounts. If investing in stocks and bonds is not something that appeals to you, but you would still like to make your money grow safely, opening a money market account could be the right move. There are still some factors that you should consider before committing to your decision.
Higher interest
The main appeal of money market accounts is that they typically offer higher interest rates than savings accounts, though this is not always true on a case-by-case basis. Investing deposits for money market accounts are held in government securities, commercial paper and certificates of deposit, returning higher yields than you would normally get from a savings account.
MMAs also provided the added bonus of security comparable to that of a traditional savings account. According to NerdWallet’s Margarette Burnette, these accounts are backed by the Federal Deposit Insurance Corporation and National Credit Union Administration for up to $250,000.
Minimum balance
Compared to a regular savings account, which may have a minimum balance requirement, a money market account is likely to require an even greater minimum daily balance as well as a higher minimum deposit requirement when you want to put money into the account. The minimum requirement may also be based on a tiered system. With more money in the account, you can benefit from higher interest rates. If you are under your minimum requirements, you could be hit with expensive maintenance fees. Because of this, it is best to open an MMA if you are sure that you will be able to maintain its conditions and reap the full benefits of using it for saving.
Should you open a money market account?
Money market accounts are a great alternative to the traditional savings account that provide benefits similar to that of a checking account should you need to make the occasional withdrawal. Check out our Money Market options. It’s possible they offer even more fruitful ways to store your money, or equally fruitful options that have fewer limitations.[/vc_column_text][/vc_column][/vc_row]
4 Essentials Every Young Entrepreneur Should Know
No matter how old you are, the entrepreneurship bug can bite you and give you the itch to start a business. If you have been working for some time, you probably have some experience in the industry you’re launching into and have spent time in the business world. However, if you’re younger, there is more for you to learn. Here are some financial tips that will help you start off on the right foot.
- Keep it separate
Almost every resource about business finance declares loudly and often that you need to keep business and personal funds separate. It’s easy to think that you’ll make sure to track things and know what money belongs to whom, but when everything mixes together it can be tempting to dip into business funds for personal use. At BSCU we have a low cost Business Checking product that may help you keep things on budget and organized.
Besides that possibility, Dmitriy Fomichenko of NerdWallet points out that if the IRS comes calling for an audit, you’ll need proof of business expenses and income. That is much easier when the money isn’t in the same place. If your business is a corporation, you’re actually required by law to maintain a separate account for your business.
2. File your taxes
Speaking of the IRS, it’s imperative that you remember to pay your taxes. This might seem like an obvious tip, but your taxes get more complicated when you own a company. Project Eve points out that you might be so wrapped up in day-to-day operations that you forget about taxes, or you might not have the right information to file correctly and meet quarterly deadlines. If you don’t have an accountant for your business already, it’s important that you seek the advice of a tax professional now to avoid penalties (or jail time) later.
3. Start a retirement plan
When you first start your business, more money will be going out than in. But when funds do start to come back and you have enough to cut yourself a paycheck, Yoav Vilner of Entrepreneur says it’s important to also start a retirement fund. If another company employed you, retirement plans would probably be part of your intake paperwork and someone else would take care of it. When you’re working on your own, that task falls to you. No matter how much you think you’ll love your business, you will thank yourself in the future for saving now so you can ride off into the sunset later.
4. Get ready for emergencies
You probably insured your business when you opened up, but don’t forget about yourself. NerdWallet points out that, as an entrepreneur, any serious illness of injury can put that source of income in jeopardy. Make sure that you purchase disability insurance to cover you in case the worst should happen. While you’re at it, consider buying business overhead expense insurance. If you have to take an extensive leave of absence and that temporarily closes your business, this policy will cover certain business costs like rent, employee salaries or taxes until you’re back on your feet.
If you’re young, driven and ready to start a business, we wish you the best of luck. Just make sure to look both ways before you make a major decision, and consider consulting a financial adviser.