Congratulations!

Congratulations to those members who won door prizes at today's Annual Meeting:

Greg Young - $50 Kohl's gift card
Benjamin Waller - $50 Carrabba's gift card
Greg Maddux - $50 Outback gift card
Gayle Kee - $50 Chili's gift card
Tonya Belch - $50 Home Depot gift card
Nancy Morrison - $50 Macy's gift card
Christina Crawley - $200 Best Buy gift card

Thanks to all our members who were able to attend our Annual Meeting. We were glad to have you there!

Young Adults Stung by Bankruptcy

The nation's youngest adults--many of whom admit they wish they'd learned to manage their money before leaving home--are among an increasing number of individuals filing for bankruptcy in these tough economic times.

During 2008, bankruptcy filings in U.S. courts increased 30% over fiscal year 2007 (uscourts.gov March 17). Compared with the same period in 2008, bankruptcy filings have increased 33% in the first quarter of fiscal year 2009 (uscourts.gov March 5). And despite bankruptcy filings by adults of all ages, more than 25% of filers since 1991 are between ages 18 and 34, according to the report, "Generations of Struggle" (AARP June 2008).

Take steps to get your spending under control and avoid bankruptcy:

• Chop credit card spending. Stop using credit cards until your finances are back on track. Pay with cash or a debit/check card. Keep track of what you spend--particularly with debit purchases--by writing down the amounts or keeping receipts. That way you won't withdraw more money than you have in your account.
• Trim unnecessary "wants." Identify monthly expenses that aren't necessary for survival and eliminate them or cut back. For example, replace going out to dinner with renting a movie, cancel some magazine subscriptions, and consider downgrading or canceling cable TV.
• Snip variable expenses. Find ways to cut back on necessary expenses. Unplug electronics when not in use, turn off lights when you leave the room, keep your thermostat at or below 68 degrees, combine trips to save on gasoline, and buy generic items instead of brand name goods at the grocery store. Find more energy-saving ideas at the Department of Energy's Energy Savers Web site: eere.energy.gov/consumer/tips/.

Financial Tips for Turbulent Times

Whether you're an older worker with seemingly few options to recoup significant investment losses, or a younger worker with minimal or no investment savings at all, don't let the financial crisis scare you into not taking any action at all.

Take stock of your situation, learn from others' mistakes, and don't panic or pull all your money out of the stock market. Formulate a plan by starting with the basics:

* Rebalance your portfolio. Do your investment choices reflect your risk tolerance and investment strategy?

* Keep some liquidity. Consider stashing some cash--perhaps three to six months' of living expenses--in a money market account at [name of credit union]-- which is insured to at least $250,000 by the National Credit Union Administration.

* Increase your contributions. Most stock prices are at low, bargain-basement levels. If possible, bump up your contribution.

* Diversify. Spread your wealth among a variety of investments: domestic, international, financial services, technology, health care, and so on.

* Use dollar-cost averaging. By having just $50 each paycheck automatically directed to a mutual fund, your contributions will purchase more shares when the price is low, and fewer shares when the price is high.

* Pay down debt. Reduce the choke-hold that credit cards have on your budget. Use the PowerPay principle: Pay off the highest interest-rate card first, and then apply that payment to the next-highest interest-rate card. Stop charging.

* Spend less. Identify needs vs. wants, and then set priorities. Many so-called needs actually are wants in disguise.

* Work longer. If you're close to retirement, consider hanging on to your current job longer than planned, if you can. Or, secure part-time work after retirement. This reduces the number of years you'll dip into your investments and helps build additional savings.

LifeWay Credit Union is ready to help during these tough times. Call or stop by today.

Refund Loans Cost Taxpayers and Treasury

At a time when most consumers are scrambling to find extra cash each month, many of them also are expecting sizable tax refunds. Syndicated financial columnist Humberto Cruz points out that the average 2008 refund topped $2,400--the equivalent of $200 a month (Tribune Media Services March 8).

A National Consumer Law Center (NCLC) and Consumer Federation of America (CFA) study indicates that many taxpayers in need of fast refunds apply for refund anticipation loans (RALs), at a high cost to themselves and, surprisingly, even to the U.S. Treasury.

CFA reports that the effective interest rate for an RAL can range from about 50% annual percentage rate (APR) to nearly 500% APR. Most taxpayers could have a refund in less than 14 days - without the pricey loan.

For 2007 tax filings (for tax year 2006), one of 15 tax returns involved an RAL, according to Internal Revenue Service (IRS) data for the latest year available and analyzed by NCLC and CFA. Nearly two-thirds of RAL recipients are earned income tax credit (EITC) recipients, although they make up only 17% of taxpayers.

The loan fees, combined with the influx of spendable money coming to recipients, motivate "fringe tax preparers" as diverse as payday lenders, beauty salons, and liquor stores. As one consequence, a 2008 IRS study revealed that RAL returns are 27% to 36% more noncompliant than returns without a loan product, compromising the integrity of tax administration.

Taxpayers have several better options:

• Claim your tax refund in each paycheck; file an amended W-4 with your employer to have less money withheld each payday.
• Divert that extra cash to automated bill payments to pay down debt and/or to your savings account to build your emergency fund.
• Pass on the unnecessary refund loan. Instead, e-file and you'll have your refund in just a few days.
• If you must have refund money for an urgent need, talk to a credit union loan officer about a fairly priced short-term loan.

Personal Saving Rate Spike in 4th Quarter

It took a worldwide economic crisis, but U.S. consumers have finally become serious about saving again, socking away 3.2% of disposable personal income in fourth quarter 2008, according to the Federal Reserve Board of Governors (Mar. 12).

This is the highest quarterly saving percentage since 2001. Since then, the personal saving rate even went negative for one quarter.

"At times like this, I take whatever silver linings I can find," said David Mancl, director of the Office of Financial Literacy for the Wisconsin Department of Financial Institutions and a member of the President's Advisory Council on Financial Literacy. "We Americans have neglected saving recently. And when our incomes haven't kept up with our desires, we've borrowed to keep spending. I'm glad to see people setting money aside again, no matter what their motives, because saving increases your future opportunities, giving you more choice, more security, and more flexibility."

Mancl's advice is founded on bedrock principles of personal finance. But while many experts say that only renewed consumer spending will revitalize the troubled economy, consumer confusion is justified from conflicting messages. Here's how the Credit Union National Association's Center for Personal Finance resolves the apparent contradiction:

• Saving is a survival skill. Families with no financial reserves cannot respond to emergencies or take advantage of opportunities. They have no margin for error if job loss or illness reduces household income. At a minimum, you should build a liquid emergency fund equal to at least six months' expenses. You also should save for periodic predictable expenses such as insurance payments. Finally, you should save for big goals such as education, housing, and transportation.
• Saving cuts the cost of credit. Borrowing for big-ticket items is a necessity of modern life. But the bigger the down payment you amass before you buy, the smaller your loan, your monthly payment, and your total financing cost.
• There are safe, productive ways to invest your savings. Deposit insurance from the federal government's National Credit Union Administration insures money in credit union deposit accounts up to $250,000 or more, depending on how it's distributed. Diligent investors can find other investments that are increasing in value, even in today's market.
• There are productive ways to spend. If you have adequate reserves, a secure source of income, and a budget, there's nothing wrong with going shopping. Eager retailers are now offering ample discounts, and smart consumers are seizing the day.

source: cuna.org

Excessive Internet Use Harmful to Teens

Parents face daunting challenges when guiding their children's study and work habits. Today, when you can carry the Internet in your pocket, a virtual smorgasbord of online activities is tempting.

While recent studies indicate that teenage social networking leads to higher quality friendships that buffer them from stress, there's more to the story (Science Daily March 3). A 24/7 Internet connection easily can overstimulate and overstress young minds. The result is interference with important relationships, sleep patterns and grade point averages.

Clinical psychologist Dr. Maressa Hecht Orzack, director and founder of the Computer Addiction Study Center at Harvard's McLean Hospital in Belmont, Mass., compares excessive Internet activity to drug use. Rena Crispin, managing editor of the Credit Union National Association's Googolplex offers parents guidelines for raising children to be teenagers with healthy Internet habits:

• Make Internet use a family affair. Place your computer in a common area where you can monitor activity. While your youngsters are still children, ask them to teach you the games they play and share their favorite websites. That way, you'll establish your authority to monitor their online activity later.
• Set house rules. Decide on the number of hours per day your children and teenagers are allowed online. (Don't count legitimate online homework against the recreational limit.) And don't merely forbid them to go online. Be alert for new ways to engage them in a variety of fun offline activities.
• Resist using the Internet as a babysitter. Avoid using it to keep young children occupied while you do housework. Instead, involve your kids with housework sometimes, and be firm about giving them "alone time" to play and dream at other times. Consider bartering non-Internet play dates with other families, giving both sets of parents regular free time.

Annual Meeting

Be sure to attend this year's Annual Meeting on Tuesday, March 31. The meeting will be held in DCT 117 A-C and will begin at 9:00 AM. We'll have refreshments and give away door prizes throughout the meeting.

See you there!

Teens - Start Your Summer Job Search Now

The new federal stimulus package includes $1.2 billion to create up to one million summer jobs for youth. But even with that boost, there may not be enough jobs.

Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, Boston, predicts in "Out With the Young and In With the Old: U.S. Labor Markets 2000-2008 and the Case for an Immediate Jobs Creation Program for Teens and Young Adults" (December) that teenage employment will dip to about 30% this summer, down from 32.5% last summer.

Sum's report is based on the Current Population Survey, a national household survey conducted by the U.S. Census Bureau for the U.S. Department of Labor's Bureau of Labor Statistics.

So what's a teenager to do? Start early and be prepared. One job site designed by teenagers to help other teenagers is Myfirstpaycheck.com. It includes resources such as an interactive resume builder and these tips for job seekers:

• Visit your high school guidance office. Ask counselors to help you complete job applications and obtain references. Take names, addresses and phone numbers to your meeting.

• Look locally. Watch for help-wanted signs or ask if a company intends to hire summer help. Remember to check with summer camps, amusement parks, and other seasonal businesses.

• Visit online sites. Go to Myfirstpaycheck.com and search other teen job sites to see what's available. Some sites require registration, but be on guard if you're asked for a name or phone number. Make sure the URL has an "s" (https://) if you're supplying personal information.
  

• Make your job search known. Tell everyone--family, friends, coaches, teachers--that you're looking for a job and what your interests are. Sometimes the best connections are right next door. Many adults credit their networks for finding out about job openings and getting that first interview.

• Create a resume. If you've never had a "real" job, don't hesitate to include babysitting, pet care, lawn mowing and other paid activities, along with volunteering and school activities. Prospective employers are likely to be impressed with your professional approach to a job search.

Paying Taxes With Plastic Could Backfire

Although the convenience of charging your tax bill may be tempting, fees and interest could end up costing a bundle (SmartMoney.com Feb. 19).

By paying your taxes with plastic, you commit to pay an additional 2.49%--the fee merchants usually pay credit card companies when you charge purchases. The Internal Revenue Service (IRS) isn't interested in doling its revenue to card companies, so you must foot the charge.

If you're thinking of putting your 2008 tax bill on a credit card, understand the costs:

• Paying a $14.94 fee to charge a $600 tax bill may seem worth the convenience to some. But if that tax bill climbs to $3,000, or $4,000, you're looking at fees between $75 and $117. And, unless you pay off your credit-card balance in full the next month, any one of these tax bills will begin to pile on interest.
• Some more financially sound options include a personal loan from a friend or family member, a signature loan from your credit union, or an installment plan with the IRS (Bankrate.com video Oct. 1). The $52 installment setup fee and the 0.667% monthly interest rate (8% annual percentage rate or APR) is lower than most credit cards. Even if your card carries a lower APR, the installment plan can help you make quicker and more regular payments. File IRS Form 9465 to get started.
• If you decide to use plastic to gain credit card reward points, frequent-flier miles, or other benefits, make sure you're able to pay off the balance in full right away. Accumulating interest on a very large tax bill can quickly wipe out the benefit of those rewards.

Even if you can't afford to pay your tax bill, be sure to file on time. The monthly interest rate for not paying a bill that has been filed is 0.5%, but jumps to 5% for those who simply chose not to file. On a $1,000 tax bill, that amounts to $10 and $50 a month, respectively.

You can find more information about payment options at irs.gov.