Merry Christmas!

Is Now a Good Time for a HELOC?

Even though home values have dropped across the country, unemployment is extraordinarily high, and consumers in general are heavily in debt, many people have a need for more credit.

If you're in a position to borrow, consider a loan based on your home equity--the difference between what your house is worth and what you still owe on your mortgage. You could take on a conventional second mortgage or you could enter into a revolving credit agreement with no set term, known as a home equity line of credit (HELOC).

A HELOC works almost like a credit card to enable you to convert some of the value of your homeownership into cash. Interest rates for HELOCs usually are much lower than regular credit card rates, especially if you have more than a 20% ownership stake in your house. At this time, HELOC rates are favorable, down to the 5% range in some parts of the country (bankrate.com Dec. 15). Credit unions offering this kind of loan usually have better rates than other lenders.

As an added bonus, the interest expense for some uses of HELOC funds is tax deductible. But be careful. Just as with your first mortgage, you'll have to pledge your house as collateral on a HELOC. You don't want to increase your risk of losing your home unless the added debt is worth it and you have stable employment. Here's some advice from the Credit Union National Association (CUNA) Center for Personal Finance about using a HELOC wisely:

• Put additional debt to good use. Using a HELOC for prudent home improvements such as a new roof, or for education, or to consolidate more expensive loans can significantly improve your net worth. In contrast, borrowing for vacation or daily expenses or to build a home theater can jeopardize your long-term financial health.
• Avoid going all in on a HELOC. Lenders aren't likely to advance a line of credit equal to 100% of your home's equity, but beware of the temptation to indulge too deeply. Remember that home equity can represent a great deal of your future retirement nest egg's value.
• Manage your HELOC use. Make all payments for loans and other obligations such as utility bills on time to maintain a clean credit report and solid credit score. Keep your total monthly debt payments, excluding a first mortgage and credit card balances, paid off monthly, to no more than a 20% of your take-home pay. Watch the economy--as it gets stronger, interest rates in general will rise, pulling your HELOC's variable rate up as well.

Had Enough Surprises From Your Credit Card Company?

Enough already with short payment deadlines, huge interest rates, and gotcha late fees.

If you're ready to pop for the card with a low rate, predictable fees, and no surprises, call us about a credit union credit card.

We have the jump on other cards.

Car Shopping?

LifeWay Credit Union has contracted with Credit Union Services, LLC to provide our members with the best, most accurate automobile shopping data available. You can get car, truck, motorcycle and watercraft pricing from Black Book; used car pricing from Black Book; customer and dealer rebate information; recall information; and other valuable tools to help you make your purchase.

To access this site, go to lifewaycu.org and click on the box that says "Buying A Vehicle?". You'll have instant access to everything you need to do your car shopping. Questions? Call us at 615-251-2089.

Make the Switch to LifeWay Credit Union

Consumers with credit cards might want to think about doing a balance transfer to a credit union, personal finance expert Suze Orman said on MSNBC's "Morning Joe" program last Friday.

"Credit unions are being more responsible to their [members] than banks," Orman said.

During the show, Orman discussed the limited availability of credit plaguing consumers and said many large banks are raising their interest rates on customers who have consistently have paid their bills.

Check out our credit cards. You may be very surprised at what we have to offer!

Recession Uprooting More Young Adults

In the past year, 13% of parents with adult children reported that one of their daughters or sons moved back home, according to a Pew Research Center survey conducted in late October. With the recession leaving a rising number of young adults unemployed or on reduced salaries, many are facing major changes--moving home, finding a roommate, putting life on hold, or returning to school.

While everyone has been touched by the recession, it has been especially rough on young adults. The Bureau of Labor Statistics reports that only 46% of 16- to 24-year-olds are currently employed. This is the lowest percentage since the government began collecting this data in 1948.

Record unemployment has sent many young adults back to their parents' homes. The survey cites that one of 10 adults ages 18 to 34 moved back home due to the poor economy. Of those living with parents, about half are employed at least part-time. Moving back home can be stressful for both parent and adult child. Setting ground rules--such as rent payment, chores and responsibilities, and privacy expectations--can ease the transition.

As an alternative to moving home, others have found a roommate. About one fourth of those ages 18 to 24 reported moving in with a roommate due to the recession. Those ages 25 to 34 were less likely to share a room, but more likely to postpone a major change.

"I don't." More than a fifth of those ages 25 to 34 postponed getting married as a result of the recession. Likewise 15% in this age group delayed starting a family. With January fast approaching, now is a good time to re-evaluate current debt spending with an eye on forecasting a budget for 2010. Home & Family Finance Resource Center's "Getting Married" Turning Point offers suggestions for merging financial lives and keeping down wedding costs.

Often college enrollment increases during a recession. Hence, it comes as no surprise that the share of 18- to 24-year-olds attending college (either four-year or two-year) hit an all-time high in October 2008 (the most recent date for which data were available). Fueled by high unemployment and increasing high-school graduation rates, 2009 enrollments may reach a new peak. Those attaining additional skills or certifications may find themselves better qualified applicants as they search for employment in 2010 and later.

Secondary Savings Accounts

Switching from Aetna to Blue Cross in 2010? Set up a secondary savings account with us to set aside money for your deductibles. Stop by the office today and we'll take care of it for you.

Investment Scams Exploit Green Theme

"Going green" generally has a positive association, but that wasn't the case for some unsuspecting seniors looking for eco-friendly investments.

The Securities and Exchange Commission recently charged four people and two companies with running a $30 million Ponzi scheme targeting elderly investors and people close to retirement who thought they'd found a green opportunity (USA Today Nov. 16).

Victims were encouraged through seminars, the Internet, and phone calls to liquidate their retirement plans and home equity, and buy securities promising returns from 17% to more than 100% a year.

Rising health-care costs, low investment returns, and increased life expectancy make seniors prime targets of investment fraud, but consumers of any age can fall victim to these tactics.

The National Consumers League, Washington D.C., advises:

• Don't succumb to high-pressure sales--A good investment opportunity today likely will be here tomorrow. Pressure to act on impulse often is a danger sign of fraud.
• Beware promises of quick, large profits--No one can accurately predict how an investment will perform. Investments that promise the highest payoff often are the most risky.
• Realize there is always risk--All investments carry risk. Know your risk tolerance before investing.
• Get details in writing--Representatives from a legitimate company will be happy to provide all the information you need.
• Be wary of testimonials from strangers--Someone you don't know offering investment advice could be a crook trying to lure you into a scam.
• Investigate investment offers--Get help from your state securities regulator, the federal Securities and Exchange Commission (sec.gov), and the North American Securities Administrators Association (nasaa.org).
• Use caution when receiving investment opportunity e-mails--Many unsolicited e-mails are fraudulent.

Happy Thanksgiving

The staff of LifeWay Credit Union wishes you and your family a very Happy Thanksgiving!

Buying a Car?

One of the best things you can do before buying or selling a car is to do your research, right? But what if the information you’re using isn’t the most accurate or up-to-date? LifeWay Credit Union has the solution for you.

We’ve contracted with Credit Union Services, LLC to provide our members with the best, most accurate data available. You can get both new car, truck, motorcycle and watercraft pricing from Black Book; used car pricing from Black Book; customer and dealer rebate information; recall information; along with other valuable tools to help you make your purchase.

To access this site, go to lifewaycu.org and click on the box that says “Buying A Vehicle?”. You’ll have instant access to everything you need to do your car shopping. Questions? Call us at 615-251-2089.

New Homebuyer Tax Credit Boon for Boomers

The new and improved Extended Home Buyer Tax Credit--signed into law Nov. 6--is welcome relief to more than just first-time home buyers. It may be a windfall for boomers or retirees thinking of downsizing (Forbes.com Nov. 6).

The previous $8,000 tax credit was available only to first-time home buyers and to anyone who hadn't been a homeowner during the three years before closing on a new house. Now, longtime homeowners can get a tax credit of up to $6,500, opening the door for anyone thinking of trading down--or up--or moving to a different locale for their retirement years.

Whether you're buying your first house or downsizing, understand the rules:

• Deadlines. To claim either the $8,000 or $6,500 version of the tax credit, you're required to close on the new house--or be locked into a contract to close--before May 1, 2010. Closing must occur before July 1, 2010 (Bankrate.com Nov. 9).
• Maximum allowable credit. For first-time home buyers, it's $8,000. For current homeowners, it's $6,500. The allowable tax credit amounts to 10% of the sale price, so if the purchase price is just $75,000, the tax credit would be $7,500.
• Threshold. If your house sells for more than $800,000, you won't qualify for the tax credit.
• Purchase dates. You must purchase the house between Nov. 7 and April 30, 2010.
• Income limits. Single individuals with modified adjusted gross income (MAGI) of up to $125,000 can qualify for the full credit, up from $75,000 under the old law. For couples filing jointly, the full credit is available for MAGI of up to $225,000--previously $150,000. Above those amounts, there's a phase-out over the next $20,000.
• Eligible properties. The Extended Home Buyer Tax Credit can be applied to primary residences, including single-family houses, condominiums, townhomes, and co-ops.
• Size and price requirements. There are none. Your new house doesn't have to be bigger or more expensive than the old one. And, you don't have to sell your old house to claim a buyer's credit.
• Paperwork. You're required to attach a copy of the new house's settlement statement to the federal tax return for the year of purchase. This proof of purchase is intended to cut down on fraud and questionable tax accounting associated with the previous tax credit legislation.
• Flippers. If you move within 36 months after the new purchase, you may have to pay back the credit.

Military personnel who serve outside the U.S. for at least 90 days in 2009 or 2010 get an extra year to claim the credit. Any servicemember who's forced to sell a house because of a military service assignment won't be required to pay back the credit.

Finally, be on the lookout for tax fraud. If anyone in the transaction advises you to conceal information from your lender, walk away and cease all communication with that individual.

A Free Credit Report Can Cost You $14.95 a Month

Although consumers can request free credit reports online at annualcreditreport.com, many are being lured to other sites, such as freecreditreport.com (an Experian company) and ultimately are paying for unnecessary monthly credit-monitoring fees (The New York Times Nov. 3).

Multiple sites advertise "free" credit reports, but you're actually enrolling in a service that will monitor any changes in your credit reports. The only way to get the report at no cost from these sites is to cancel the service during the trial period. And it appears that not many are cancelling. Some nine million consumers are spending nearly $700 million annually on these services, according to Carter Malloy, a Stephens Inc. analyst.

So what does $14.95 a month in credit monitoring get you? Most offers bundle a copy of your credit report with a credit score (a three-digit number, based on the history in your credit report) with e-mail alerts of changes to your credit report through at least one credit bureau.

Yes, credit monitoring will tell you what's being reported to your credit history. No, it won't prevent credit card fraud or identity theft. If someone else is using your credit card, you'll see the charges on your statement, not in a credit report. Credit report monitoring could, however, spot an unauthorized loan or credit card opened in your name. Bottom line: Unless you've been a victim of identity theft, daily credit report monitoring is probably unnecessary.

"I knew they had roped me into this thing after I started getting these e-mails," says Philip Neustrom in an interview with The New York Times. After six months, Neustrom cancelled the Experian service—never once having used the monitoring. "There are only so many things you can do in a day," he added.

The Fair and Accurate Credit Transactions Act (FACT Act) of 2003 requires each of the three major credit bureaus to provide one free annual credit report to consumers requesting a copy. The government-authorized site, annualcreditreport.com, is a portal that sends consumers to one of three bureaus for a free report. Still, be on your guard. Once at an individual credit bureau's site, you'll most likely be offered additional services for a charge. You can, however, take a pass, getting just your free credit report.

Help Pay for College Without Risking Student's Aid

With the gap between the average annual cost of attending a four-year public university ($14,333) and the average annual amount of financial aid ($8,896) topping $5,400 a year, help from family members is becoming increasingly important. In fact, 65% of grandparents told the College Savings Foundation that they intend to chip in for their grandchildren's higher education (CNNMoney.com Nov. 2).

But as welcome as free money from a relative may be, unless you make the gift properly, it actually can reduce a student's financial aid.

A student must report assets to the government through the Free Application for Federal Student Aid (FAFSA). If money a student receives is considered income, it has the unfortunate effect of reducing the aid award by up to 50 cents on the dollar.

Here are three alternatives from the Credit Union National Association for improving the amount of financial assistance you can deliver without negating the amount of financial aid:

• Good: Give money to the parent. This increases parental assets but, because of the way the aid calculation works, such a gift has a much smaller negative effect on the student's financial aid--less than 6%. Of course, be sure not to exceed the annual gift-tax exclusion, which is $13,000 for 2009.
• Better: Participate in a 529 plan. Depending on the rules in your state, these International Revenue Service-authorized plans allow you to contribute up to $13,000 a year or a lump sum of $65,000. As long as the plan is in your name, its balance doesn't become an asset to the student until distributions start flowing. The 529 plans come in two flavors--a savings plan that operates like an individual retirement account (IRA) or 401(k) investment account or a prepaid tuition fund. Unfortunately, recent stock market declines have squeezed prepaid funds, forcing some states to reject new enrollees and others to raise fees. In either case, it's smart to consult with your financial adviser about 529 plan setup details.
• Best: Help the new graduate pay off student loans to the tune of the annual gift-tax exclusion. This won't help the student avoid debt, but neither will it harm aid eligibility. And as an added bonus, it's a welcome reward for successfully earning a college degree.

Mortgage Market has Opportunities for Consumers

Nearly 6.5 million home owners are deciding whether to stay with their adjustable-rate mortgages or lock in fixed rates (Money November).

In fact, September's 9.4% sales increase was the largest monthly hike in 26 years as buyers moved to qualify for the first-time buyers incentives expiring this month. Nationwide, sales are up nearly 24% since January (MSNBC Oct. 23).

Foreclosures and short sales--where the mortgage exceeds the sales price--have forced prices downward 9% from a year earlier. The median price in September was $174,900, down from $191,200 in September 2008. And prices could fall further if unemployment, expected to rise to 10.5% next year, leads to more foreclosures. Inventories of unsold homes, which fell about 7% in September, are at their lowest level since March of 2007 but could well rise with higher unemployment.

In fact, what is happening in the mortgage market is regional. During the past three years, home prices in metro areas of 23 states recorded gains. The South, the Plains, and most of the non-coastal West showed some ability to weather the stormy mortgage market, according to Fiserv (CNN/Money Oct. 21). Meanwhile, 16 states--those in the Northeast plus California, Florida, Nevada, and Arizona--have posted declines.

For many consumers, the issue is whether to lock in a fixed rate. Roughly 6.5 million homeowners have adjustable-rate mortgages (ARMs) and many of those notes are coming up for adjustment.

For the short term, consumers with ARMs should be fine. But once the economy stabilizes and the government starts to remove policies that are keeping mortgage rates low, rates are likely to rise.

Here are some thoughts about whether to stand pat with your ARM or move to a fixed rate:

• If you plan to move within the next three years, if you have less than 20% equity in your home and home prices have taken a beating in your community, or if you have a jumbo mortgage, you may be better off with your existing ARM.
• If you plan to move in the next three to five years or you have a jumbo mortgage, look at a 5/1 ARM. (A 5/1 ARM locks your interest rate for the first five years and then can adjust annually for the life of the loan.)
• If you plan to stay in your home for more than five years, or you plan to use the equity in your home for college expenses or some other need, you may want to look at a fixed-rate mortgage now; they are not likely to go lower after the next year or so.
• If you have doubts about your future plans, it is usually safer to lock in a low rate while you can.

Volunteer - Feel Better by Doing Good

Did you know that people who volunteer not only help their communities, but reap mental and physical health benefits as well? A 2007 study by the Corporation for National and Community Service (www.nationalservice.gov/) reports that those who volunteer have lower mortality rates, greater functional ability, and lower rates of depression later in life than those who don't volunteer.

Volunteers often experience the upbeat feeling referred to as "helper's high," along with increased trust in others and increased social and political participation. Older adults tend to receive greater benefits from volunteering than other age groups do.

So, as you plan your retirement life, consider making volunteerism a key component. Here are a few tips for getting started:

* As a midlife worker, get out there now and see what volunteer opportunities are available, so you know what you enjoy and you aren't at a loss when you retire.

* Do the same type of self-inventory as when you're seeking a job.

* Figure out what your passion is, what issues you care about, and seek organizations devoted to that mission.

* Determine the right balance between leisure and structured activities, and make sure you give yourself some space to enjoy the freedom of retirement.

* Realize that any help you give is beneficial, and short-term assistance can be very helpful to nonprofits.

* Look around your own community and check out different organizations like you would if you were joining a gym, or making choices in another area of your life. Figure out which organizations are logistically reasonable for you.

* You also can check organizations that match volunteers with activities, like VolunteerMatch (volunteermatch.org).

Pay It Forward Story - 1st Place

The theme for the 2009 Member Appreciation Day was “Pay It Forward”. The first 50 people who came in the credit union and wanted to participate in the event were given $10. The rules were simple: take the money, do something nice for someone, then tell us your story.

We received over 30 stories from members who made a difference in someone else’s life with just $10. The winner of the event was Tracy Cothran. She received a $100 Visa gift card for herself along with another $100 to be donated to the charity of her choice.

Here’s Tracy’s Pay It Forward story:

You probably think that ten dollars will not purchase anything of any real value in today’s market, right? Well that’s what I thought, too, until I started going to The Mat with Janell Fadler. There we have the opportunity to demonstrate God’s love in a practical way by offering people quarters to start the machines or helping them with their laundry. The quarters will not only start the machines, but they will also open the door allowing God to do his thing. It’s not always a lost soul that God sends our way. Sometimes it’s a student from one of the nearby colleges, an abused wife, struggling family, Laundromat employee, or even the owner. It’s always cool to see God in action and how He can take ten dollars to further His kingdom.

If you pick my Pay It Forward experience, I would like to give the $100 donation to The Mission Fund here at LifeWay. I would also use the $100 Visa card to purchase ten rolls of quarters. Can you imagine what God can do with ONE HUNDRED DOLLARS?

Thanks,
Tracy Cothran

Save Money by 'Stepping Down'

If you're singing the budget blues, maybe it's time to change your tune.

Instead of eliminating spending altogether to save money, follow what's called the "step-down principle," which offers several options to make a purchase.

Here's how it works. First, imagine a staircase with five or six steps, with the top rung representing the most expensive way to make a purchase, and the bottom rung the least expensive. For clothing, the top rung may be a high-end department store, followed by a discount store, a factory outlet, a consignment store, and finally a garage sale. If you typically purchase children's clothing at high-end department stores, move down a few steps and purchase gently used children's clothing at a consignment store.

Identified by Dr. Alena Johnson, Utah State University, the step-down principle also works with frequency. For example, you may decide to eat out five times a month instead of 10. Or, use the step-down principle to reduce caloric intake. Rather than drink whole milk, step down to 2% or skim.

Find ways to stick to your budget without cutting out the things you enjoy. The step-down principle is a simple strategy that works. For more ideas to save money, visit the professionals at LifeWay Credit Union or call today at 615-251-2089.

Copyright 2009 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.

Fees Add Up for Cell Phone Users

Looking for extra cash? Adjusting your cell phone habits may be your best bet.

While $50 is the average monthly bill for the more than 255 million cell phone users, according to the U.S. Census Bureau (reuters.com Oct. 12) many pay more than they bargained for. How you use your cell phone may affect the total cost each month.

Depending on a user's service contract, accessing the Internet from a Web-enabled phone, using text messages, and even calling directory assistance can mean additional costs beyond the agreed-upon monthly service fee (cbsnews.com Oct. 8).

Here are three ways to save on your monthly cell phone bill:

• Call online.Limit cell phone use by making calls through a Voice over Internet Protocol (VoIP) service. You must have access to the Web through a digital subscriber line (DSL) or a cable modem, but the costs per call are typically much less expensive. Some providers even offer free service. Costs, call quality, and technical requirements vary depending on the provider.
• Shop around.Looking for a cell phone plan? Go online to compare devices, contracts and services. Be sure to understand how making changes to your service will affect the contract. Visit with sales personnel for the carriers you've identified to ask specific questions and test phones to narrow your choices. This will help you find the best service and cell phone for your needs.
• Track usage.Check your cell phone provider online and review your account often. Typically you can view minutes used during the current billing cycle and plan accordingly to avoid additional fees. Many cell phones also have settings that allow users to see how many minutes they have used, and even alert users when they reach a certain amount.

Secondary Savings Accounts

Switching from Aetna to Blue Cross in 2010? Set up a secondary savings account with us to set aside money for your deductibles. Stop by the office today and we'll take care of it for you.

Switch Your Cards to Us

Consumers with credit cards might want to think about doing a balance transfer to a credit union, personal finance expert Suze Orman said on MSNBC's "Morning Joe" program last Friday.

"Credit unions are being more responsible to their [members] than banks," Orman said.

During the show, Orman discussed the limited availability of credit plaguing consumers and said many large banks are raising their interest rates on customers who have consistently have paid their bills.

Check out our credit cards. You may be very surprised at what we have to offer!

Member Appreciation Day

Need to feel a little appreciation in your life? Stop by our office today for Member Appreciation Day! We'll have cookies in the morning, fresh popcorn in the afternoon, and we'll draw for door prizes at the end of the day. Plus, be one of the first 50 members in the door and you can participate in our Pay It Forward Event.

Benefits Fair

Be sure to drop by our booth at today's LifeWay Benefits Fair! 9:00 AM - 2:00 PM in CL42.

We'll see you there!

Change Money Habits

Member Appreciation Day

Need to feel a little appreciation in your life? We've got just the remedy! Mark your calendar to drop by our office on Wednesday, October 14 for our annual Member Appreciation Day. There will be plenty of snacks and refreshments along with some great door prized which will be awarded that afternoon.

We've even added a new twist to this year's event - so be sure to come early for more information. We're looking forward to a great day of celebration together!

Quicken for Virtual Branch

Are you a Quicken user who uses Virtual Branch? We hope to have the interface in place to allow you to download your transactions from Virtual Branch to Quicken within the next few weeks. Questions? Call us today!

IRS Extends Deadline to Roll Over 2009 RMDs

Individual Retirement Account (IRA) owners who have already received a 2009 required minimum distribution (RMD) this year are getting a break from the Internal Revenue Service (IRS).

IRS announced Wednesday that individuals have until the later of Nov. 30, or 60 days after the date the distribution was received, to roll over a distribution.

An RMD is the smallest annual amount that must be withdrawn from an IRA or qualified plan once the account owner reaches age 70 1/2.

Late last year, The Worker, Retiree, and Employer Recovery Act of 2008 waived RMDs from IRAs and qualified retirement plans for 2009. Because of this legislation, IRA owners and beneficiaries who would have been required to receive an RMD for 2009 are not required to receive a distribution.

Most financial institutions notified their IRA owners about the waiver and gave them the option of whether to waive the 2009 RMD or receive it as a distribution. But some IRA owners didn't have time to notify their financial institution, didn't realize that they could waive the RMD, or if they received the distribution, didn't know that they had 60 days to roll over the funds. In many cases, the IRA owner had no choice but to keep the RMD and pay taxes on it.

IRS Notice 2009-82 grants relief for these IRA owners by extending the 60-day deadline for rolling over a distribution of the 2009 RMD from an IRA until Nov. 30. However, the extension does not affect the once-a-year rollover rule, so at most an IRA owner can roll over one distribution under this extension.

"The IRS recognized the short amount of time financial institutions had last year to notify their IRA owners about the 2009 RMD waiver and the fact that many IRA owners received 2009 RMDs they may not have wanted and were not required to take," said Dennis Zuehlke, compliance manager for Middleton, Wis.-based Ascensus IRA Services, which serves 80% of credit unions offering IRA programs.

By permitting IRA owners extra time to roll over a 2009 RMD distribution, the IRS is helping them avoid taxes on distributions they were not required to take, Zuehlke said.

Notice 2009-82 also provides guidance for qualified retirement plan sponsors and contains sample plan amendments that sponsors may use to stop or continue 2009 RMDs, he said.

Budgeting for Boomerang Kids

More unemployed adult children are moving back in with Mom and Dad during these tough economic times, and although most parents are happy to help out emotionally and financially, some basic ground rules can help keep the peace and balance the budget (Kiplinger's October).

According to Collegegrad.com, more than three-quarters of college graduates in 2008 said they planned to move back home, up from two-thirds in 2006 (Bankrate.com June 8). The recession is only partly to blame. Faced with mounting credit card debt, steep student loan obligations, and the high cost of living in some areas, young adults wind up carrying a lot of baggage in the form of IOUs through Mom and Dad's front door.

Experts encourage parents of boomerang kids not to sacrifice their own retirement. Have an open discussion and establish ground rules from the start:

• Determine the timeframe. Make sure the arrangement is temporary by establishing how long the adult child will live in your house. "Until I find a job" may not provide sufficient incentive for some individuals to get back on their feet in a timely manner.
• Charge a modest rent. Give them some semblance of reality - even if the amount charged is half the going rate. Some parents have used the money collected as a form of forced savings for their own future expenses. Or, use the rent collected to help pay off the adult child's student loan.
• Establish house rules. Have the talk about chores, smoking, house guests, and - yes - curfew. It's your house. The more topics you cover before the suitcases are unpacked, the less likely you'll have boomerangst down the road.
• Stick with your plan. If you don't, you'll become an enabler with a financially irresponsible adult child living off you, rather than with you.

Are You a Facebook User?

If so, be sure to check out LifeWay Credit Union's Facebook page. Add LifeWay Credit Union to your friends list today!

New Initiatives Aim to Boost Retirement Savings

New initiatives announced this month by President Obama and Treasury Secretary Timothy Geithner will make saving for retirement a lot easier and more automatic, particularly for the estimated 78 million working Americans - approximately half the workforce - who don't have a retirement savings plan at work (The New York Times Sept. 6).

A White House document released Sept. 5 outlines four steps, effective immediately, to expand the range of retirement savings options for workers:

• Streamline automatic enrollment. Behavioral research indicates that workers are more likely to contribute to a retirement plan if they're automatically enrolled. Although many large- and medium-size companies already have adopted automatic enrollment, the new initiatives target very small firms that often use a simpler system called the "simple I.R.A." Watch for new guidelines from the Labor Department on how small businesses can use automatic enrollment, and how to institute an automatic "step up" to increase the worker's savings rate each year or with each pay raise. Workers can opt out of automatic enrollment or stop the increases at any time.
• Redirect tax refunds. Beginning in early 2010, taxpayers can check a box on their tax return and use their refund to purchase U.S. savings bonds, which will be mailed to the taxpayer. Beginning in 2011, taxpayers can add co-owners, such as children or grandchildren, to the bonds purchased with tax refunds.
• Use plain language. To help workers understand the confusing rules governing retirement plans when changing jobs, the Treasury Department and the Internal Revenue Service are publishing an easy-to-read, plain-English guide. This road map explains how to transfer plan balances, what key decisions need to be made, and what the tax consequences are for each decision. Look for new user-friendly website materials, too, at irs.gov/retirement.

Robocalls Prohibited Unless You Opt In

Say goodbye to annoying, prerecorded commercial telemarketing calls--commonly referred to as robocalls. As of Sept. 1, most robocalls are banned unless the telemarketer has your written permission to make them (Federal Trade Commission, Aug. 27).

The ban is part of amendments to the Federal Trade Commission's Telemarketing Sales Rule (TSR), and it applies whether or not you previously have done business with the seller. Telemarketers who violate the new rule will face penalties of up to $16,000 per call.

Note that some robocalls are not covered by the TSR. You still may receive robocalls associated with:

• Purely "information" recorded messages that don't try to sell you anything, such as flight cancellations, deliveries, and school delays;
• Debt collection;
• Politicians;
• Financial institutions;
• Telephone carriers;
• Most charitable organizations; and
• Health care.

If you receive a robocall covered by the TSR but you haven't agreed to it in writing, file a complaint with the Federal Trade Commission by visiting the donotcall.gov Web site or calling 888-382-1222.

New Certificate Special

For a limited time, LifeWay Credit Union is offering a "new money only" 7-month share certificate at 2.27%. Need more information? Call us today at 615-251-2089 or 800-833-6805.

New credit rules aim to help young adults, college students

Young adults stand to be the group most affected by the Credit Card Accountability and Disclosure (CARD) Act of 2009, and it's worth the effort to fully understand the changes (forbes.com Aug. 4).

Although the majority of the CARD Act won't go into effect until Feb. 22, 2010, five sections of the Act are dedicated to the protection of young adults:

• Credit usage. Anyone younger than age 21 must be an authorized user on the parent's account, or show proof indicating an independent means of repaying card debts, or have an adult co-signer.
• Special offers. Creditors may not send prescreened offers to consumers younger than age 21.
• Free gifts. Card companies may not offer free gifts for the completion of an application on or near a college campus and at college-sponsored activities or events.
• Privacy protection. Colleges, universities and alumni associations must disclose details of contracts they sign that allow credit card marketers access to student and alumni contact info.
• Full disclosure. Card issuers must file annual reports with the Federal Reserve Board listing all business, marketing and promotional deals with schools. These reports must detail the terms and conditions, list schools by name, and identify how much the issuer is paying the school.
• Education sessions. A "sense of Congress" provision--not treated as law, but rather a suggestion from lawmakers--recommends that colleges offer credit card and debt education sessions during new-student orientation.

Is that computer on campus covered by insurance?

Even if your son or daughter already is packed up and shipped off to college, check to make sure he or she is properly insured. Also, understand how this significant move away from home affects your own insurance policies (The Kansas.com Aug. 19).

Use this checklist to make sure you and your student are covered:

• Does the student have a copy of health insurance cards? The student should have a plan for obtaining referrals and approvals--if necessary--before visiting a doctor or clinic. If the student will be seeking treatment outside a provider network, your insurer may charge out-of-network prices. Understand the level of benefits that are provided.
• Does the student require a student health insurance plan? This may be a good option if she is older than the maximum coverage age, or if she is outside the network service area. Check with the school to see if the college has contracted with an insurer that offers student health insurance plans. If so, expect limited benefits and more exclusions such as treatment for injuries associated with alcohol or drug use.
• Does the student need renter's insurance? Review your homeowner's insurance policy to see if the computer, other electronics, moped, bicycle, books, furniture and clothing are covered on campus. If not, purchase a renter's insurance policy immediately. Young renters often mistakenly believe the landlord has insurance to cover theft, fire, tornados, and other disasters. A landlord's policy does not cover the renter's personal property.
• Do you have a detailed list of the student's possessions--including serial/model numbers and purchase prices? Consider using photos or videotape. Keep this list and photos in a safe deposit box or fireproof safe off-site, or scan the items and store digitally, and keep a backup at a remote site. It will come in handy if you need to file an insurance claim. Visit knowyourstuff.org.
• Have you notified the auto insurer of any changes? Notify the insurer if the vehicle will be kept or garaged at a different location; if you don't, lack of disclosure could jeopardize a future claim (Insure.com Aug. 19). If the student won't have a car on campus and won't be driving your vehicle as often, ask if your rate can be reduced. And ask whether your insurer has discounts for maintaining good grades.

We've Got Money To Lend

How new credit card law affects you now

Most of the significant provisions of the new credit card legislation signed into law in May by President Barack Obama don't kick in until Feb. 2010, but some new provisions kick in now (USA Today Aug. 20).

As of Aug. 20, credit card issuers must give you 45 days notice before they change your interest rate or fees. And that notice has to include a brief statement telling you about your right to cancel the account.

In addition, credit card issuers and creditors that offer other open-end credit must mail your statement 21 days before the due date, or they won't be able to count your payment as late.

More extensive changes are coming in February, including rate increase restrictions on existing credit card debt, how issuers apply your credit card payments, and how issuers market cards to college students.

Be advised, though, that the new law does not require issuers to warn you about rate increases if your payment is 60 days or more late, or about credit-line reductions.

A study released Aug. 20 by Fair Isaac reveals that 8.5 million consumers' credit scores dropped from October 2008 through April as a result of an average reduction of $5,100 in available credit. When a lender lowers your credit limit, your overall use rate increases, thereby lowering your credit score. Your credit score is used to determine your interest rate.

Still Time to Find Money for College

If you're in the process of packing up your son or daughter for college and worried about how you're going to pay for it, here's good news: There are still sources of funding available (USA Today Aug. 11).

The bad news: College prices continue to rise. The average cost of attending a public four-year university for the 2008-2009 school year was $6,585 - up 6.4% from the previous year. And if you're attending a private school, expect an average price tag of $25,143 (collegeboard.com). If you multiply those numbers by four years and figure in inflation, you're laying a lot of money on the table.

Consider these options for financial assistance:

• Federal student loans. This should be the first place you look for loans. To apply for a federal student loan for the 2009-2010 school year, you must submit a federal application for financial aid (FAFSA) by June 30, 2010 at midnight. (Note: the deadlines for your state or college may be different from the federal deadline - check fafsa.ed.gov/before003a.htm for details.) You can receive grants that do not have to be repaid, work-study, or Stafford loans - either subsidized or unsubsidized, or both. Full-time dependent students can receive up to $5,500 in loans their first year, and the amount increases for second- and third-year students. You can find the FAFSA form, as well as more information, at fafsa.ed.gov.
• PLUS loans. Parent PLUS loans are federally guaranteed loans carrying a fixed rate of 8.5% - a little higher rate than some private loans, but you won't have to worry about the interest rate rising. Securing a PLUS loan does not require a high credit score; however, a foreclosure, bankruptcy, or debt more than 90 days overdue could disqualify you.
• Private loans. Although many lenders have tightened their standards, private loans are still available for students--after you've exhausted all other sources of aid. Credit unions generally offer loans at lower rates than for-profit lenders--ask your credit union loan professionals for more information. Further, a group called Credit Union Student Choice works with more than 80 credit unions to make private loans available for college students. Visit studentchoice.org for details and to view a list of participating credit unions and colleges.
• Financial aid. Although most financial aid packages are awarded in the spring, if you have suffered any financial setbacks - such as a job lay-off - you may be able to appeal to the university's financial aid office. Most colleges can take the current year's income and assets into consideration.

Your university's financial aid office also may let you set up an extended-payment plan. With this option, you can pay your tuition bill in monthly installments, instead of one large payment. To set up a plan, you may have to pay a fee of $50 to $100.

Word to the Wise Taxpayer

Recent successful federal prosecutions should serve as a warning to all taxpayers: Hiring someone to prepare your tax return does not absolve you of responsibility for its accuracy and truth.

Last month the Internal Revenue Service (IRS) made an example of James Otto Price III, a Jacksonville, Fla.-tax preparer who pleaded guilty to claiming a first-time homebuyer tax credit for a client who was not eligible. Price could receive a sentence of up to three years in jail and/or a fine of up to $250,000.

"The kicker here is that this guy's client is not off the hook," pointed out Jim Hanson, vice president of the Credit Union National Association's Center for Personal Finance. "Whether you prepare your own tax return or hire someone else to do it, you are personally responsible for the information you provide. And false claims can make you liable for penalties and interest in addition to back taxes."

CUNA's Center for Personal Finance editors offered these tips for getting sound tax preparation assistance:

• Hire a professional with a proven track record. Look for an enrolled agent, certified public accountant (CPA), or tax attorney. Only these professionals are empowered to represent you before the IRS in all matters, not just audits that they prepared and signed. Another indication of competency is affiliation with a professional organization requiring members to meet continuing education standards and follow a code of ethics. Check with the Better Business Bureau, your state's board of CPA accountancy, your state's bar association, or the IRS Office of Professional Responsibility to see if there is any record of problems with tax preparers you're considering.
• Shun preparers who promise to get you a larger refund than their competitors can. Tax returns done correctly should arrive at roughly the same results, no matter who does the calculations.
• Review the preparer's work thoroughly before signing your return. Make sure that your identifying information is correct and that nothing is left blank. Never sign a return before it's filled in and then sign only in nonerasable ink.
• Take advantage of free assistance only from trained volunteers. You can receive free tax preparation assistance through the Volunteer Income Tax Assistance Program (VITA, for taxpayers with "low- to moderate-income," which is generally $49,000 and less), Tax Counseling for the Elderly (TCE, for those aged 60 or older), and the Armed Forces Tax Council (AFTC, for members of the military and their families). Qualified volunteers with these programs are trained to help taxpayers identify and legitimately claim special credits, such as Earned Income Tax Credit. (Bear in mind that only paid tax preparers are required by law to sign returns that they have worked on.)

Cash for Clunkers to Keep on Rolling

Buyer response to the Cash for Clunkers program exceeded expectations - the appropriated $1 billion disappeared in just a few weeks - and legislators have just approved an additional $2 billion to keep the program rolling. The refueled funds are expected to last through Labor Day (Washington Post Aug. 7).

Cash for Clunkers, the government-funded Car Allowance Rebate System (CARS), began July 1, and funds were expected to last until Nov. 1. Under the program, consumers can trade in old cars for new - not used - more fuel-efficient models and receive a $3,500 or $4,500 voucher. The value depends on the mileage improvement of the new vehicle. To participate, your trade-in must meet specific requirements. You can find the most detailed requirements at cars.gov, the only official government site for the CARS program.

July new-car sales were the highest the industry has seen since August 2008 (msnbc.com Aug. 3). Car dealers, sitting on piles of inventory, are thrilled consumers are reacting to the program. The vouchers offer a good deal to many, but consumer advocates are encouraging potential buyers to think carefully about the costs of owning new car. Ask yourself several questions before buying:

• Can you afford the new-car payments? Because of the recession and high unemployment, some buyers may sign a contract they don't have the money for.
• Will your insurance costs change? Keep in mind that they may go up or down, depending on the new model.
• Do you know whether the new car you're considering is reliable? ConsumerReports.org has a section dedicated to the Cash for Clunkers program. Find a list on its site of "Recommended cars that qualify for a voucher"--models that meet program requirements and also score well in safety and reliability testing.
• Are you dealing with a reputable CARS program dealer? Scam artists already have created bogus websites to take advantage of unsuspecting consumers. A site requesting your name, address, account details, Social Security number, or other personal information for voucher registration is likely a fraud. The CARS program requires no pre-registration and will never request information from individual consumers--all transactions go through the dealer (FTC July 28). Find registered dealers in your area using the dealer locator at cars.gov.
• What is the trade-in value of your old car? If the trade-in value is more than the CARS voucher amount, take that instead. You cannot receive both the voucher and the trade-in value for your vehicle. Edmunds.com has a list of cars with values less than $4,500--check if your trade-in is on the list.
• Have you done your car-buying research? You can find new car-buying advice on ConsumerReports.org and by searching other auto sites, such as Edmunds.com, kbb.com, or JDPower.com. If you decide to make a purchase, gather pricing information before hitting the dealerships. And, see the professionals at your credit union for assistance. They can help you evaluate your financial situation, pre-approve you for a car loan, and answer any questions you may have.