What I Wish I Learned in School 3 of 12: Credit Card Smarts

When it comes to life skills, managing credit cards is one of the most important lessons. But mastering the ins and outs of responsible credit card management can be the key to a lifetime of financial wellness. On the flipside, irresponsible credit card usage might trigger a downward spiral toward long-term debt and not being able to get larger loans later on. Here are the basic credit card smarts to know.

Understand how credit cards work

A credit card is a short-term loan. So, there is an expectation that you’ll pay it back — ideally on time and in full. Many first-time credit card owners don’t realize that paying only the minimum balance can lead to a lot of interest charges, and thus, make every purchase more expensive over time. Know the annual percentage rate (APR) on each of your credit cards and understand how interest accrues for times when you must carry a balance on your card.

Build credit early

Your credit score plays a pivotal role in your financial life. It can impact everything from your ability to rent an apartment to securing a car loan or even landing a job. It’s also super-important to start building your score as early as possible because the length of your credit history makes up a large percentage of your credit score. Paying your bill on time and keeping your credit utilization low are key factors in keeping a healthy credit score.

Use your credit card like a debit card

Credit cards make it easy to spend money you don’t have. As a teenager or college student, the temptation to swipe for meals, new clothes or gadgets is hard to overcome. It’s important to remember, though, that every swipe adds up. Losing track of your spending might bring a balance that’s difficult to pay off. Budgeting and tracking expenses are crucial habits to develop early on to avoid credit card debt.

Never miss a payment

Never miss a credit card payment, even if you can only afford to pay the minimum payment. Missing just one payment can have a bad impact on your credit score, in addition to late fees and penalty interest rates.

Understand rewards and perks

Credit cards often come with rewards programs, cash-back options and perks, like travel insurance or purchase protection. While these benefits can be valuable, they shouldn’t drive your spending. Make sure you weigh the potential costs of using your credit card for purchases before deciding to whip out the plastic.

Avoid credit card traps

Credit card companies don’t always make their terms crystal clear, and that’s no accident. Before signing up for a new credit card, read the fine print. For example, an enticing 0% APR offer might revert to a much higher rate after the promotional period.

Learn about credit utilization and its impact

Credit utilization refers to the ratio of your credit card balance to your credit limit. This percentage significantly impacts your credit score. It’s best to keep your credit utilization (across all your cards) below 30%.

Use these tips to learn how to manage your credit cards responsibly.

What I Wish I Learned in School 2 of 12-Budgeting Basics: A Step-by-Step Guide to Taking Control of Your Finances

Managing your money doesn’t have to be hard! Here’s how to budget in seven simple steps.

Step 1: Know your income

Before you can plan your spending, identify exactly how much money is coming in. List all sources of income in your household, including:

Salary after taxes
Side hustle earnings
Investment returns
Any other regular inflows

Be realistic and stick to consistent, reliable income sources when calculating your monthly total.

Step 2: Track your expenses

Now you’re ready to track your spending. Keep a log of every purchase you make over 30 days. Divide your expenses into the following categories:

Fixed expenses, like rent or mortgage, insurance and car payments.
Variable expenses, like groceries, dining out and utilities.
Discretionary spending, like subscriptions, hobbies and shopping sprees.

Step 3: Set financial goals

Having a clear financial goal will motivate you to stick with your spending goals. For example, you may want to pay off high-interest debt, save up for a large purchase or prepare for retirement. Clarify your goals before moving on.

Break your goals into short-term goals (saving $500 in three months) and long-term goals (paying off $20,000 in student loans over five years).

Step 4: Choose a budgeting method

Choose the budgeting method that aligns with your personality and lifestyle:

Zero-based budgeting. In this traditional form of budgeting, every dollar is assigned a job. If you earn $3,000 monthly, allocate it to cover all expenses, saving and debt repayment until there’s no money unaccounted for.
50/30/20 rule. In this plan, you’ll allocate 50% of your income for needs, like housing, food and utilities; 30% for wants, like entertainment, dining out and hobbies; and 20% for savings and debt repayment.
Envelope system. This plan involves putting cash for each category into labeled envelopes. When the money’s gone, the spending in that category stops.

Step 5: Trim your spending where needed

Budgeting can show you where you’re leaking money. There’s no need to sacrifice all indulgences, but trimming unnecessary expenses can free up money for savings or debt repayment.

Here are some tips for trimming expenses:

Cook your favorite foods at home instead of dining out.
Cancel subscriptions you don’t really use.
Shop smarter with sales, coupons and cash-back apps.
Choose free or low-cost entertainment.

Step 6: Build an emergency fund

Without an emergency fund, any unexpected expense can throw off your budget and set you back with your financial goals. Aim to save up at least $1,000, then gradually work up to 3-6 months’ worth of living expenses.

Step 7: Review and adjust

Life is unpredictable, and so is your budget. Review it monthly to ensure it reflects your current income, expenses and goals.

Tips for sticking to your budget

Follow these tips to stick to your budget:

Automate your savings.
Track progress and celebrate small wins.
If one method isn’t working, try another.
Use apps to help you.

Use this guide to get started on budgeting today!

Q&A: How Can I Stay Warm this Winter Without Breaking the Budget?

The temperatures are dropping, and that means your heating costs are about to soar! The good news is: You can have a well-heated home and your budget, too. Here’s how:

1.Use a programmable thermostat

Set your thermostat to lower temperatures when you’re asleep or away and to slightly higher when you’re home. According to the Department of Energy, reducing your thermostat by 7-10°F for eight hours a day can save up to 10% on heating costs yearly.

2. Seal all leaks

Check all windows, doors and attic spaces in your home for drafts. You can do this by holding a candle near these areas to see if the flame flickers, which tells you there’s a draft. Use weatherstripping or draft stoppers to seal all leaks you find.

3. Utilize zone heating

There’s no need to pay to heat areas of your home that don’t get much use. Shut the doors and vents in rooms you rarely use so the heat only works where it’s needed. You can also use space heaters in the rooms you’re occupying instead of heating your entire home.

4. Use insulated curtains

Heavy, thermal-backed curtains can block cold drafts from windows. Open them during the day to let sunlight in and close them at night to retain heat. You can also add rugs to hardwood or tile floors and dress in layers for extra warmth.

5. Reverse your ceiling fans

Most ceiling fans have a reverse setting. In the winter, set the fan to rotate clockwise at a low speed to push warm air downward.

6. Beef up your insulation

A well-insulated home is key to keeping heating costs down. Check your attic, walls and floors for sufficient insulation. If insulation is lacking, you may want to add layers or replace the existing insulation, especially if you live in an older home. This upgrade may involve an upfront cost, but it pays off in long-term savings.

7. Maintain your heating system

Maintaining your furnace and heating devices is crucial for saving on heating costs.

First, clean or change air filters and heating devices because accumulated debris can keep the warm air from circulating. You may also want to call a professional to inspect your furnace and either clean it or upgrade it. It’ll cost, but the expense will likely be well worth the savings in heating.

Finally, consider contacting your utility company for a free home checkup. Costs for service or upgrades can be offset by federal tax credits, and utility rebates are available for many energy-efficient upgrades.

Use these tips to keep your home comfortably heated without breaking the budget.

What I Wish I Learned in School 1 of 12: Compound Interest

If there’s one financial concept that has the power to change lives, but is underappreciated, it’s compound interest. For most of us, compound interest wasn’t covered in school, leaving us to stumble upon its magic later in life. And it’s sometimes too late for us to fully benefit from its power. Here’s why understanding compound interest early could make all the difference.

What is compound interest?

Compound interest is the process of earning interest on both the initial principal of an investment and the accumulated interest over time. In other words, your money makes money, and that money makes more money, too. Compound interest has tremendous potential to grow wealth when applied consistently over time.

An example of compound interest

Imagine you invest $1,000 at a 5% annual interest rate. If the interest is simple (not compounded), you earn $50 annually. After 10 years, you have about $1,500. But, with compound interest, you earn interest on the $1,000 in year one, then on $1,050 in year two, and so on. After 10 years, your $1,000 grows to $1,628.89 — not because the rate is higher, but because of the compounding effect.

Why timing matters

Compound interest thrives on a single crucial element: time. The earlier you start saving or investing, the more exponential the growth.

For example, investing $200 a month at age 25, with an annual return of 7%, will net you nearly $480,000 by age 65. If you start the same plan at age 35, you’ll only have approximately $227,000 by age 65,

Lessons on compound interest you wish you’d learned in school

Here are the most important principles of compound interest:

1. Start early, even with small amounts. Compound interest needs time to work its magic, and even a small amount of investing early in life could lead to significant returns over time.

2. The Rule of 72. Divide 72 by your annual interest rate, and you’ll get the number of years needed for your investment to double. Learning this trick early can inspire better saving habits.

3. Compounding works for debt, too. Credit card debt, for example, compounds at alarming rates, turning small balances into financial nightmares.

4. Harness the power of automation. Setting up automatic transfers to savings or investment accounts ensures consistent contributions and removes the temptation to spend.

Why understanding compound interest can be life-changing

Understanding the concept of compound interest can truly be life-altering. Here’s why:

Increased financial freedom with robust investments.
Less stress in emergencies, thanks to fast-growing savings.
Early start on retirement savings, ensuring years of growth.

How to make up for lost time

It’s not too late to start harnessing its power. Here are a few steps to get going:

Open a high-yield savings account or start investing.
Take advantage of employer-matched funds in retirement accounts.
Automate your savings to ensure consistency.
Educate yourself to better understand how compounding works.

Learning to harness the unique power of compound interest can make all the difference to your financial health.

Don’t Get Caught In a Paper Check Scam!

Don’t get caught in a paper check scam! Here’s some info, and how you can stay safe.

What is a paper check scam?

There are several variations of paper check scams. The most common forms include:

Forged checks. Fraudsters forge the signature of the account holder to write unauthorized checks.
Counterfeit checks. Fake checks are created to mimic real ones; complete with fabricated account and routing numbers. Scammers then use these bogus checks to pay for their purchases.
Altered checks. A legitimate check is stolen and altered to change the payee and/or amount.
Overpayment scams. Scammers send a fraudulent check for a higher amount than what’s owed, asking the recipient to refund the difference.

How to spot a fraudulent check

Identifying a fake or altered check can be challenging, but there are warning signs:

Unusual payer information. Look for spelling errors, mismatched fonts or incomplete payer details on the check.
Check number discrepancies. Legitimate checks have sequential numbering. A check with a low or no number, or one that doesn’t align with the issuer’s checkbook, can be a red flag.
Poor print quality. If the check feels flimsy, has blurry text or looks off in any way, it could be fake.
Too good to be true. If you get an unexpected check, especially for a large amount, be skeptical.
Suspicious sender. A check from an unknown source, especially with vague instructions or additional requests, should raise alarm.

Protect yourself from paper check fraud

Here’s how to stay safe from check scams:

Verify your check’s authenticity. If you receive a check from an unknown sender, call the issuing financial institution to confirm it’s legitimate.
Secure your mailbox. Use a locking mailbox or take checks directly to the post office to prevent theft.
Use check safeguards. Write checks using pens that have permanent ink to make it harder for fraudsters to alter.
Switch to digital payments when possible. While checks are sometimes necessary, online payments with trusted services are often safer and faster.

If you’ve been targeted

If you believe you’ve been victimized by a check scam, report it to your credit union or bank as soon as possible. If the fraud involves a forged or altered check from your account, inform the original payee or issuer as well. Next, file a police report, especially if significant financial harm has occurred. You’ll also want to file a complaint with the FTC. Finally, if your personal information was stolen, monitor your credit for unusual activity.

Stay safe!

The Hidden Costs of Buying a Home

Buying a home is a big milestone, but there are many hidden costs that can quickly add up, catching many first-time homebuyers by surprise. Here are some of the hidden costs of buying a home.

1. Home inspection

Cost: $300-$500

A home inspection isn’t always a required part of the homebuying process, but having your future home inspected by a professional can save you thousands of dollars in future repair costs by identifying problems before you close.

2. Appraisal fees

Cost: $300-$600

Most lenders require an appraisal to confirm that the home is worth the purchase price. If the appraisal comes in lower than the agreed purchase price, you may need to renegotiate the price or cover the difference out of pocket.

3. Closing costs

Cost: 2-5% of the home’s purchase price

Closing costs might be the most substantial hidden expense in the homebuying process. They include various fees, such as:

Loan origination fees. Lenders charge this fee to cover the administrative work that’s involved in processing your loan.
Title insurance and title search. Title insurance protects both you and the lender from potential ownership disputes. The title search is conducted to ensure there are no existing claims on the property.
Recording fees. Local governments charge these fees to make your ownership official in public records.
Escrow fees. An escrow company manages the transfer of funds and important documents between buyer and seller.

4. Property taxes

Cost: varies

Property taxes are an ongoing expense that can vary significantly depending on where you live. While most people understand they’ll pay property taxes, it’s easy to dismiss how much they can cost each year.

5. Private mortgage insurance (PMI)

Cost: 0.3-1.5% of the loan (annually)

If your down payment is less than 20% of the home’s purchase price, most lenders will require you to pay for private mortgage insurance (PMI). PMI protects the lender if you default on the loan, and it typically costs between 0.3% and 1.5% of the loan amount annually.

6. Homeowners insurance

Cost: $800-$1500 (annually)

Homeowners insurance is a necessary expense that protects you in the event of natural disasters, theft, or accidents. Many lenders require buyers to pay for the first year’s premium upfront at the time of closing.

7. Professional cleaning

Cost: $120-$325

Most sellers will deep-clean their home before putting it on the market, but they may not be as detailed when they actually move out. Real estate contracts generally require the home to be “broom-clean” before the seller moves, but this only means a very basic cleanup, with floors swept and trash removed. You may choose to have your home professionally cleaned and sanitized before you move in for a real, fresh start. Be sure to budget for this cost.

8. Immediate repairs

Cost: Varies

Unless you’re buying a new construction home, your new house will likely need some repairs. From a fresh coat of paint, to new window treatments and light fixtures, to replacing carpets and appliances, this can cost just a few hundred dollars to several thousand or more.

9. Moving

Cost: $500-$3000

The cost of moving itself is often overlooked, but can add up quickly, especially for long-distance moves or if you need professional movers. Moving expenses include packing supplies, rental trucks or a moving company. The cost of this can run anywhere from a few hundred to several thousands of dollars.

Don’t let the hidden costs of moving take you by surprise! Use our guide to be prepared for the true cost of moving.

8 Ways To Beat Holiday Stress

‘Tis the season to be merry-except sometimes, it’s not.

If you tend to feel stressed when the holidays roll around, here are eight tips to help turn that frown upside down.

1. Watch the buck

Nothing kills holiday cheer like a mountain of debt. Stick to a budget when doing your holiday shopping, and only spend what you can afford. Be extra careful not to overspend as the holidays draw near, and you’re feeling the pressure to finish your shopping in time.

2. Give back

According to the American Psychological Association, one of the best ways to reduce stress is to give back to the community.

Beat the stress by sharing holiday cheer with those who are less fortunate. You can bring some toys to the local hospital to brighten up a sick child’s holiday, volunteer at a soup kitchen or visit a nursing home and put a smile on the residents’ faces.

3. Stick to a schedule

Lack of quality sleep can make stress levels soar. You don’t need to follow your regular routine over the holidays, but it’s a good idea to keep some sort of schedule. Make sure you’re getting enough shut eye, and if a physical workout is part of your daily routine, don’t neglect it over the holidays.

4. Party smart

If you like to party, you can end up getting sick over the holidays. Do yourself a favor this year and watch what you imbibe. Enjoy a glass or two of your favorite alcoholic beverage but try to keep the drinking to a minimum. Similarly, it’s OK to break your diet over Christmas, but it’s best not to go overboard.

5. Delegate

If you’re hosting a large crowd this Christmas, all the extra work can bring your stress levels through the roof. Here’s the good news: You don’t have to do it all! There’s nothing wrong and there’s everything right with asking for help.

6. Take some “me” time

“Me” time is important, and in the chaos of the holidays, this need is often neglected. Consider getting a manicure, taking a solitary half-hour walk, or just locking yourself in your room for some peace and quiet. You’re not being an antisocial snob if you need your “me” time; you’re just being human.

7. Give up the guilt

If you tend to overanalyze every interaction you have with family and friends, you can really beat yourself up over the holidays, questioning everything you’ve said. Try to let go this season and give yourself a break.

8. Lower your expectations

A common cause for holiday stress is unrealistic expectations. It’s best not to build huge castles in the air and to keep your expectations to a minimum. If you don’t expect perfection, you won’t be struggling with mountains of disappointment this holiday.

Here’s wishing you a Merry Christmas from all of us here at High Point FCU.

Q&A: How Should I Fund my Holiday Expenses?

Q: I’ve listed all my anticipated expenses for the holiday season and I’m ready to hide under my covers until January. There’s so much to buy and so little money! How can I pay for my holiday expenses?

A: Yep, ‘tis the season to shop until you drop and your budget goes pop! But with proper planning, you can celebrate the holidays with your budget intact. Here are four ways you can pay for your holiday expenses along with the pros and cons of each.

1. Credit cards

Pros:

Convenient. Credit cards negate the need to carry cash around and are accepted at most retailers.
Rewards and cashback. Many credit cards offer rewards points, miles or cashback for your purchases.
Purchase protection. Most credit cards offer protection on big purchases so you can reverse a charge if a product turns out to be different than promised. Some cards also offer extended warranties, price matching and coverage for lost or damaged purchases.

Cons:

High interest rates. If you don’t pay off your balance each month, interest charges can pile up, making your holiday spending far more expensive.
Overspending. The ease of swiping a card makes it easy to overspend, especially during the holidays.
Debt accumulation. If you carry a balance into the new year, you might be stuck with lingering debt that could take months, or years, to pay off.

2. Holiday club accounts

Pros:

Encourages saving. Holiday clubs help you save for the holidays throughout the year.
No debt. Using money you’ve saved helps you avoid going into debt from holiday expenses.
Set it and forget it. You can set up your holiday club to take automatic monthly contributions from another account or payroll deposit throughout the year.

Cons:

Limited access. The funds are usually only accessible at the end of the year, which can be problematic if you don’t have other liquid savings to cover you in case of an emergency.

3. Unsecured/personal loan

Pros:

Fixed payments. Unsecured loans offer predictable monthly payments, which can make budgeting easier.
Low interest rates. Unsecured loans tend to have lower interest rates than credit cards.
No collateral needed. Most personal loans are unsecured, which means you don’t need to risk your home or car.

Cons:

Increased debt. Taking out an unsecured loan adds to your overall debt load.
Interest costs. While rates are lower than credit cards, you’ll still be paying interest on the money you borrow.
Eligibility requirements. You’ll likely need good credit to qualify for the best rates; some people may not qualify.
Temptation to overspend. Borrowing a large lump sum can tempt you to overspend.

4. Home Equity Loan (HEL) or Line of Credit (HELOC)

Pros:

Lower interest rates. Since these loans are secured by your home, they typically come with lower interest rates than credit cards or unsecured loans.
Large borrowing capacity. You can potentially borrow a significant amount of money.
Flexible terms. A HELOC allows you to borrow what you need, when you need it.

Cons:

Risk of losing your home. You risk losing the home if you default on the loan.
Fees and closing costs. HELOCs and HELs may have application fees, appraisal costs and more.
Long-term debt. Using home equity to fund short-term holiday expenses could result in carrying debt for years.

There are several ways to pay for your holiday expenses, and each option has its own benefits and drawbacks. Use our guide to choose the one that best suits your purposes.

Black Friday Hacks

Black Friday is the bargain-hunter’s dream, but it’s a game that’s gotta be played right. Follow these hacks to score big during the biggest shopping day of the year.

Do your research

Many stores release Black Friday ads ahead of time. It allows you to preview upcoming deals and compare prices across different retailers to make a plan for your buying spree.

Make a budget and stick to it

With all the tempting offers during Black Friday, it’s easy to overspend. That’s why it’s so important to set a budget before you start shopping. Decide how much you’re willing to spend overall and allocate amounts for specific items.

Get following

If you aren’t already doing it, follow your favorite retailers on social media. Sign up for email and text alerts, too. You’ll be the first to know about their upcoming sales and deals. You may also want to join their loyalty programs for exclusive early access to Black Friday sales.

Look for discount codes

Don’t settle for the marked-down Black Friday prices. Look for discounts that can bring the price down even further on sites like Vouchercodes and MyVoucherCodes. You’ll find discounts for designer retailers, restaurants and experience days.

Use apps and websites for price comparisons

During Black Friday, it’s important to compare prices from different retailers to make sure you’re really getting the best deal. Lucky for you, there’s an app for that! Tools like Google Shopping, PriceGrabber and ShopSavvy let you scan barcodes or search for products to see how prices stack up at various stores.

Check an item’s pricing history

Don’t just assume every price you encounter on Black Friday is actually being sold at a great discount. Check the price history of any product on price-checking websites like Keepa, Honey and CamelCamelCamel to see the item’s original price and whether it’s really being sold at a significant discount.

Stack coupons

Some retailers let you combine multiple coupons or promotions on top of their Black Friday discounts, which can lead to steep savings.

Focus on big-ticket items

Black Friday is often the best time to buy big-ticket items like electronics, appliances and furniture. Retailers tend to offer their biggest discounts on high-value products during this time, which means it’s your chance to save hundreds of dollars on a new TV, laptop or large kitchen appliance.

Use our hacks to be the Black Friday beast this year with the best bargains on the block!

How to Celebrate Thanksgiving on a Budget

Thanksgiving isn’t cheap! With the costs of food, decor and travel, there are so many expenses to cover. With a bit of planning, though, you can enjoy a festive holiday without breaking the bank. Here’s how to save on Thanksgiving costs this year.

Start your shopping early

Retailers start displaying Thanksgiving staples early, so if you start ahead of time, you can build up your supplies over weeks while spotting the best deal on everything. Plan your menu around these deals to save even more.

Stick to your list and budget

Before starting your prep, take the time to create a Thanksgiving shopping list and a budget for all your expenses. Without a budget, it’s easy to go overboard with your shopping. Be sure to include all Thanksgiving expenses in your budget.

Plan your travel wisely

If your Thanksgiving plans include traveling, follow these tips to keep costs low.

First, choose to fly on slower travel days. Flying the Monday before Thanksgiving will generally net you cheaper tickets than traveling on Tuesday or Wednesday. You’ll also want to book tickets at least six weeks ahead so you don’t end up paying a premium for last-minute plans. Finally, consider traveling lightly to avoid baggage fees.

Go potluck

Save on your Thanksgiving dinner costs by sharing the load and going potluck. Ask each of your guests to bring along one dish for a dinner that’s easier to prepare and lighter on the wallet. As a bonus, your dinner will have a lot more variety and will likely be more enjoyable as well.

Keep it simple

Thanksgiving is about spending time with the people who matter to you most and expressing gratitude for blessings in your life. Keep this in mind as you prepare for the holiday and resist the pressure to go overboard with food or décor. A simple meal served by a calm and present host can be more meaningful than an extravagant spread prepared by a cook who is frazzled and worn out.

Decorate on a budget

Instead of spending boatloads of money on store-bought décor, make your own with items you already have. Beautiful fall leaves, pinecones and branches can be used to create striking centerpieces and table settings. You can also repurpose things you already own, like Mason jars, candles and baskets.

Use these tips for a memorable Thanksgiving on a budget.

Anatomy of a Car Payment

When you get a loan to buy a car, you’ll get a new set of keys — and a new monthly payment. It may have you wondering how this payment is determined and how it’s calculated.

So many questions, and we’ve got answers! Let’s break down the parts of a car payment, explain how monthly payments are calculated and offer tips for managing your payments well.

What are the components of a car payment?

Principal

The principal is the amount of money you borrow to purchase the car. For example, if you buy a car priced at $35,000, and you put $5,000 as a down payment, the principal of your loan is $30,000.

A portion of each monthly mortgage payment will go toward paying down the principal balance of your loan.

Interest

Interest is the cost of borrowing money from a lender. It’s calculated as a percentage of the principal amount and is added to your monthly car payment. The interest rate on your loan will depend on a handful of factors like your credit score, the length of the loan term and the current market conditions.

Loan term

While this is not really a part of the loan, you’ll likely see this referenced on your monthly statement or loan bill. The loan term is the length of time you have for repaying the total loan, typically expressed in months. Common auto loan terms range from 36 to 72 months, with some loans extending even longer. The longer the term is, the lower the monthly payments will be, but the more interest you’ll pay over the life of the loan.

If you’ve rolled additional costs into the loan, they may also be part of your monthly payment. This can include:

Taxes and fees

If you choose to finance taxes, registration fees or other upfront costs of the loan, these will be included in your loan amount and will increase your monthly payment. These costs are not itemized separately; instead, they’ll be incorporated into the principal.

Add-ons

Optional add-ons like extended warranties, gap insurance and other products you choose to finance will also be included in your loan principal, thus increasing your monthly payment.

Additional costs of car ownership

While not included in your monthly loan payment, these expenses are an inherent part of owning a car:

Insurance. Lenders typically require you to carry comprehensive and collision coverage as part of your financing agreement, ensuring the car is protected if in an accident.
Maintenance. Your car will need regular maintenance and upkeep, which you’ll need to budget for.
Fuel or electricity. Of course, you won’t be able to drive a car without gas or springing for electricity to power it.

How are car payments calculated?

To calculate your monthly payment, the lender will take the principal of the loan along with any add-on costs, and the interest amount due, and divide this number by the months in your loan term. This is the amount you’ll need to pay each month.

Managing your car payment

Managing your car payment well requires careful planning and budgeting. Here are a few tips to help you stay on top of your payments and minimize the overall cost of your car loan:

Compare offers from multiple lenders to find the best interest rates and loan terms.
If possible, make a larger down payment to reduce the amount you need to finance.
Choose a shorter loan term.

High Point FCU auto loans offer great terms, easy eligibility requirements for qualifying members and a quick application process. Call, click or stop by today to learn more.

Beware of Auto Repair Scams

Unless you’re an auto mechanic or self-professed expert on cars, you likely don’t know all there is about the inner workings of your car. This can make you vulnerable to falling for an auto repair scam, which can be challenging to spot.

Here’s what you need to know about auto repair scams, and how to keep yourself from falling victim.

How auto repair scams play out

Auto repair scams can come in many forms, but they generally follow a similar pattern. Here are a few common scenarios:

The mystery problem scam. You take your car in for a simple issue, like an oil change or tire rotation and the mechanic “discovers” a more serious, often vague problem requiring immediate attention.
The bait and switch scam. Here, a repair shop advertises a low price for a common service. Once your car is in the shop, they’ll find additional “necessary” repairs that inflate the final bill. The shop may even perform the extra work without your consent, leaving you with no choice but to pay.
The used parts scam. In this scam, a mechanic charges you for new parts but installs used or refurbished ones. The parts may be of inferior quality, leading to more frequent breakdowns and the need for additional repairs..
The endless repairs scam. After completing a repair, the mechanic tells you that another unrelated issue needs fixing. This cycle continues, with one repair leading to another, making it seem like your car is constantly in need of service.

Red flags to watch out for

Look out for these warning signs that you may have been targeted by an auto repair scam:

1. Unsolicited repair suggestions.
Vague or confusing explanations for repairs that are allegedly necessary.
High-pressure tactics.
Refusal to provide written estimates.
Unexplained charges on the invoice.

Protect yourself

Here’s how to protect yourself from falling victim to an auto repair scam.

First, before hiring a mechanic or heading to an auto repair shop, do your research. Look up reviews online, ask for recommendations from friends or family and check the shop’s credentials. It’s also recommended that you familiarize yourself with your car’s basic maintenance needs and how it functions. The more you know, the less likely you are to be taken advantage of.

Next, get a second, or even third opinion on any major repairs before agreeing to have work done. Comparing estimates can help you determine if a shop is overcharging or recommending unnecessary work.

Keep detailed records of all repairs and services performed on your vehicle so you can track its history and identify any inconsistencies if a mechanic claims something needs repeated attention.

Finally, if you find a mechanic you trust, stick with them. Building a long-term relationship can help ensure that your car receives honest, high-quality service over time.

Auto repair scams can be a nightmare for car owners, but by staying informed and vigilant, you can protect yourself from falling victim. Stay safe!

The Anatomy of a Mortgage Payment

Trying to understand your mortgage payment can be like trying to decode a secret language. At the very least, you may be wondering what all the lingo means.

No worries; we can help! Let’s take a look at the different components of your mortgage payment, explain how it’s calculated and offer tips for managing payments effectively.

Principal

The principal of your mortgage is the amount of money you borrow from your lender when buying your home. A portion of each payment goes toward paying down this principal. In the early years of your mortgage, a smaller portion of your payment goes toward the principal while most goes toward interest. As time goes on, though, this balance shifts, and more of your payment goes toward principal.

Interest

Interest is the cost of borrowing money from your lender and is calculated on the outstanding principal balance. It’s typically expressed as an annual percentage rate (APR). The interest rate you get depends on several factors, including your credit score, your down payment amount and current market. There are two main types of interest rates: fixed and variable. A fixed-rate mortgage keeps the same interest rate for the life of the loan, while a variable-rate mortgage can change over time based on market conditions.

Property taxes

Property taxes are levied by local governments and are based on the assessed value of your property. These taxes fund essential services in your community, like schools, police and fire departments and road maintenance. The amount of property taxes you’ll pay varies widely by location.

Homeowners insurance

Homeowners insurance protects your property and belongings from damage or loss due to events like fires, storms and theft. Most lenders require borrowers to carry homeowners insurance, so your choice will not be whether to get insurance, but how much coverage to purchase.

Private mortgage insurance

If your down payment is less than 20% of the home’s purchase price, your lender will likely require you to carry private mortgage insurance (PMI), which protects the lender in case you default on your loan. The cost of PMI varies, but typically ranges from 0.3% to 1.5% of the original loan amount per year. Once you have built up 20% equity in your home, you can usually request to cancel PMI.

Tips for managing mortgage payments

Budget for your payments: Create a budget that includes your mortgage payment and other homeownership costs.

Refinancing: If interest rates have dropped since you got your mortgage, consider refinancing. Refinancing can lower your interest rate and/or monthly payment. It’s also a way to switch from a variable to a fixed-rate mortgage.

Extra payments: Making extra payments toward your principal can help you pay off your mortgage faster and save on interest paid over the life of the loan.

Understanding the anatomy of a mortgage payment is essential for managing your finances. Use this guide to learn about the components of your mortgage and how to manage your payments effectively.

Beware Advance Payment Scams!

It’s an awesome deal, but there’s a catch: payment of an advance fee. Before you pay up, though, take a step back and look at the transaction from every possible angle. You might be wrapped in the allure of an advance payment scam.

Let’s take a look at these scams, how they work and what steps you can take to keep yourself from falling for these ruses.

How the scams play out

In an advance payment scam, a fraudster asks for an upfront payment from the victim. They promise something valuable in return. Once the payment is made, the promised goods, services or benefits never materialize. Instead, the scammer disappears with the money and is never heard from again.

Variations of advance payment scams

Advance payment scams can play out in many forms:

Job offer scams-Scammers post fake job listings offering high-paying positions. They’ll ask for an upfront fee to cover the cost of background checks, training materials or other expenses. Once the fee is paid, the job offer vanishes.
Lottery and prize scams-Victims get notifications claiming they’ve won a big payday or valuable prize. To claim it, they must pay taxes, fees, or shipping costs ahead of time. After paying, they receive nothing.
Loan scams-Individuals seeking loans are asked to pay processing fees, insurance, or collateral fees upfront. The loan is never provided, and the advance payment is lost.
Investment scams-Scammers lure victims with promises of high investment returns. They require an initial investment or fee. After payment is made, the scammer disappears.
Online marketplace scams-Fraudsters advertise high-demand items at attractive prices online. Buyers are asked to pay upfront for the items, which are never delivered.

Red flags

Here are red flags of a potential advance fee scam:

Offers that are too good to be true
Requests for upfront payment
Pressure to respond quickly
Lack of contact information
Poor grammar and spelling
Requests for untraceable payments

Protect yourself

Here’s how to protect yourself from advance payment scams:

Before making any payments, research the company or individual offering the deal to confirm legitimacy through official sources. You’ll also want to verify every job offer by contacting the company directly using authenticated contact information. Be wary of surprise wins; if you don’t remember entering a sweepstakes, you probably didn’t win a big prize. Consult with a professional when investing in a new stock and, finally, only make online payments by methods that offer protection and recourse, such as credit cards.

If you’ve been scammed

If you’ve fallen for an advance fee scam, contact your financial institution or payment provider to request a reversal of the transaction. Next, reach out to the FTC and other law enforcement agencies to let them know about the scam. Share your experience to warn your friends and family about the scam. Finally, keep a close eye on your bank and credit card statements for any unauthorized transactions.

Stay safe!

How Can I Save on Energy Costs This Summer?

Q: Summer’s here, and my energy bill is burning right through my budget! How can I save on energy costs?

A: It’s hot out, but you can keep your cool with our energy-saving tips! Follow these hacks to save on energy costs this summer.

Have your HVAC system professionally inspected

First, you’ll want to make sure your home is being cooled efficiently. You can do this yourself, but it may be worth hiring a professional to check your HVAC system for leaks and other problems.

Use your AC efficiently

Don’t waste any of that cold air! In addition to regular maintenance, ensure you’re using your AC system as efficiently as possible. Avoid placing lamps or large TV screens near your thermostat, clean your air intake vents regularly and keep doors and windows closed when running the AC.

Get smart

If you haven’t already done so, consider using smart technology to keep your home cool and your costs down. Connecting your thermostat to a mobile device will enable you to control it from a distance and avoid cooling an empty home. You can also use smart technology to set your thermostat on a schedule that suits your family’s needs.

Get grilling

Your oven and stovetop can heat up much more than your food this summer. Make it a habit to take your cooking outside and keep your home cooler.

Time your chores

Using large appliances, like a washing machine and dishwasher, can add extra heat to your home, especially if you live in a small space. Use these machines after dark, when it’s generally cooler.

Use appliances efficiently

Only wash full loads of laundry. If possible, use cold water.
Use glass pans in the oven when possible since they retain heat better and can shorten cooking time.
Use appropriately sized pots and pans on your burners.
Only run your dishwasher when it’s full.
Unplug small and medium-sized appliances when not in use.

Use these tips to learn how to save on energy costs this season so you can keep your cool, and your budget, too.

Cash, Credit or Debit–How Should I Pay?

Q: When paying for my everyday and occasional purchases, should I be using cash, credit or debit?

A: Some purchases should be paid for with cash, some with a credit card and others with a debit card. Let’s take a closer look at each method and when they should be used.

When should I use cash?

Some retailers offer discounts for paying in cash, making it the wise go-to. Also, if you have a tough time sticking to your budget when shopping, it can be helpful to only take along the cash you plan to use. Finally, some small businesses only accept cash payments.

On the flip side, cash offers no purchase protection and should not be used for large purchases. Also, cash leaves no paper trail, so it may be difficult to track expenses. Finally, cash always carries the risk of being lost or stolen.

When should I use my credit card?

Credit cards are the double-edged sword of personal finance. Credit card debt is a leading cause of consumer debt. However, owning credit cards and using them responsibly is a crucial part of your credit rating.

Credit cards also offer two primary advantages: rewards and purchase protection. Many credit cards can earn rewards as you spend on them, so it earns you something for your use. The purchase protection a credit card offers also makes it the ideal choice for paying for large purchases. In addition, using a credit card and making on-time payments can help boost your credit score while also making expense tracking easy.

Ideally, credit cards should only be used to cover fixed or steady payments and for purchases you know you can pay in full when the bill is due.

When should I use my debit card?

Debit cards allow you to track your spending and help you stay within budget since you can generally only spend what you have. In addition, if your card is lost or stolen, you can cancel it and/or close the connected account.

Debit cards can be a great choice for everyday purchases of any kind. However, since they usually don’t offer rewards or the same level of purchase protection as credit cards, they are not the best choice for large purchases.

Use this guide to help you choose the right payment method in every situation.

What Kind of Home Improvement Projects Will Add Value to My Home?

Q: I’m doing work on my house soon, so it has me wondering how I can increase my home’s value at the same time. What kind of home improvements can add value to my home?

A: Renovating your home with an eye toward its future value can help you recoup the costs of the project – and more. Here are five home improvement projects that can boost your home’s value when it comes time to sell.

Kitchen remodel

The biggest return on investment in home projects is the kitchen. This is where realtors and interested buyers usually spend the most time while checking out a new home. And the kitchen is the hub of many households.

The most recent Cost vs. Value Report shows that a kitchen remodel involving cosmetic changes like new floors, cabinet fronts and appliances, can net an 85.7% return on investment (ROI). For example, a $26,790 kitchen remodel can add $22,963 to a home sale. If you do go with a kitchen remodel, keep costs down. A major remodel, such as replacing cabinets, adding custom lighting and expensive appliances will likely not return as much as a more modest renovation.

Bathroom remake

Next up, the bathroom. Potential buyers pay these areas extra attention. Updated walls, floors and fixtures can really make your home more marketable. Plus, you can charge more for your home when the bathrooms have been remodeled. According to the RenoFi Renovation Index, a mid-range bathroom remodel has an ROI of 64% while an upscale remodel can net a 56% return.

Upgrade your insulation

Improving your home’s insulation generally pays for itself when you sell your home, according to the Remodeling Impact Report. However, in addition to breaking even on the cost of the project, your home will feel warmer in winter and lower your energy bills.

Basement conversion

Converting a basement into a livable area can be another fabulous way to increase the value of your home. According to the National Association of Realtors, a basement conversion can cost $57,500 on average while bumping your home value up by $49,250 for an 86% ROI.

Replace your roof

A roof replacement is one of the most expensive homeowner jobs, so a new roof can significantly boost your home’s resale value. According to the 2022 Remodeling Impact Report, a new roof at $12,000 will easily pay for itself. However, a larger, metal roof, at $52,436, will only boost a home’s value by $28,196, netting you a 54.8% ROI.

What determines if a renovation will add value to your home?

In addition to the type of remodeling job, several other factors can determine if home improvements will increase the value of your home, including:

Current real estate market
Home décor trends
Quality of the work
Materials used
Buyer preferences

Are there any home renovations that can decrease the value of my home?

Believe it or not, yes, some remodeling projects can lower home value. This includes renovations that are highly personalized, converting bedrooms into closets and remodels that require ongoing maintenance.

Are you looking to fund a home improvement project through a HELOC? Call, click or stop by today to get started. Our favorable rates, generous eligibility requirements and easy terms, make a HELOC a great choice.

Spring has Sprung Scams: Facebook Marketplace

With Spring in the air, a lot of people have started their Spring Cleaning, selling unused, unwanted items on Facebook Marketplace. Facebook Marketplace has become a hotspot for scammers. Here are some things to look out for:

Prices that are too good to be true

One red flag to watch out for is if a seller is offering an item at a price that seems too good to be true. Scammers often lure in buyers with significantly low prices to attract attention. In the end, the buyer never receives the item. Another warning sign is if the seller insists on using unconventional payment methods or requests personal information such as your bank details or social security number. Never share your personal information and report any suspicious behavior.

Rental Scams

A scam that has become increasingly popular is rental scams. These scams show fake listings for a number of different items. Such as, boats, bikes, equipment, properties, etc. In this scenario, the scammer will ask for payment upfront or a deposit to secure their rental. The victim then ends up with no rental and lost money. Protect yourself by first seeing the rental in person and paying after, use reputable rental platforms instead of Facebook, be cautious of below-market pricing, and avoid wire transfers.

Return Scams

In this scam the buyer states that they want to return the item that they purchased, they will ask for a refund. The scammer will then either not return the item or return a similar item that is broken or something totally different than the original item. The fraudster will send fake tracking information to show “proof” that they are returning the item. To avoid this scam, sellers should wait for the returned item and check that it is in good condition before issuing any sort of refund.

Two-Factor Authentication Codes

Never share a two-factor authentication code! If someone asks for this code, there’s a high chance that you are speaking to a scammer. These codes are ONLY meant for you. Phishers will ask you to send them this code to verify that you are who you say you are. In reality, they are really going to use this code to log in to one of your accounts. You are at risk of being hacked if you share a two-factor authentication code.

Trust your Instincts

To stay safe while using Facebook Marketplace, it’s recommended to meet sellers in person, in a public place, and inspect the item before making any payment. Share your meeting location/plan with a friend or family member and avoid carrying large amounts of cash with you. Additionally, trust your instincts – if something feels off or suspicious, it’s better to walk away from the deal. By staying informed and alert, you can enjoy the benefits of Facebook Marketplace without falling prey to scams.

https://www.aarp.org/money/scams-fraud/info-2024/facebook-marketplace.html

https://www.comparitech.com/identity-theft-protection/top-facebook-marketplace-scams/

https://www.facebook.com/help/2374002556073992

Emergency Funds – Not Just For Adults

Divvying up your kid’s allowance into different jars, each with a specific label and purpose, has become pretty standard. Your kids probably have one jar for savings, one for spending and maybe another for giving.

What most parents and kids omit, though, is one more jar for emergencies. Yes, emergencies, even for kids. Granted, they won’t be shelling out thousands of dollars for a roof repair or a medical crisis like their parents might, but emergencies come in all shapes and sizes, and to all-sized people.

No one needs convincing that having funds for an unexpected expense is crucial to financial security. In fact, building an emergency fund is the first of Dave Ramsey’s famous seven baby steps for getting out of debt. It’s definitely something you want to build into your kids’ psyche. So why not start now?

Some examples of small and not-so-small emergencies for children are:

The pair of new sneakers left in the locker room after PE, now gone forever
The shattered car window from an overeager, but poorly aimed, baseball
The huge data plan overage charge
The misplaced spending money for an afternoon at the mall

So yes, kids have emergencies. Helping them set up a fund to pay for some of these mini crises instead of bailing them out each time will teach them to be prepared.

Here’s how to do it:

Help your kid add an extra jar to their existing set and mark it for emergencies.
Allocate a portion of your kid’s weekly allowance or chore payment to the emergency fund.
With your child, create a goal for the new jar. For a younger child, $25 should be enough, with the number steadily growing to about $100 for preteens.
Once the jar has hit its target, revert back to the original division of money among the other jars.

The next time your child has a financial emergency, have them pay for all or part of it. It’s okay to share the costs for larger emergencies, or even for smaller ones. Your child will still learn responsibility by coughing up some of the funds on their own.

These should be situations due to negligence, irresponsible behavior or simple forgetfulness on the part of your child.

When the fund is depleted for an emergency, be sure to encourage them to replenish it by going back to step two.

Remember, it’s baby steps like these that will prevent your child from having to crawl their way out of debt later on in life.

Don’t Get Caught in an Emergency Scam!

Your grandson’s calling – and he’s in bigtime trouble! He’s been kidnapped and being held for ransom, so he needs you to wire over money ASAP.

Before you wire over anything, stop! You’re probably being scammed. Here’s what you need to know about emergency scams and how to protect yourself.

How the scams play out

In an emergency scam, a target gets a phone call, email or text message pretending to be a close relative. The caller will claim to have been caught in hot water, which can be anything: a kidnapping, an issue with the police, a car accident or getting stuck overseas with no money.

The caller will then ask the target to send over money pronto, using a wire transfer or prepaid debit card. While emergency scams are commonly played out with a grandparent of an alleged caller, they can also target the parents, uncles, aunts, and siblings of the “caller.”

Unfortunately, if the target follows the caller’s directions by sending over money, these funds will go into the scammer’s pockets.

Red flags

Here are some signs that can alert you to the possibility of an emergency scam:

Your “relative” calls to tell you about an emergency situation they’re in, but they ask you not share this information with family members or anyone else.
You’re urged to act quickly.
You’re asked to send money by a wire transfer, prepaid gift card or cryptocurrency.
You’re asked to share sensitive information over the phone.

Protect yourself

Follow these tips to help keep yourself safe from emergency scams:

If a friend or family member calls you with an urgent request for funds, hang up and call them directly from a number they’ll recognize.
Never wire money or send a prepaid gift card to an unverified contact.
Ask an alleged caller some questions about your shared memories to determine if they actually are who they claim to be.
Always be cautious and avoid acting rashly regardless of the situation.
Don’t share your personal info with an unknown contact.
Don’t be afraid to share details of a phone call with other family members and friends.

Stay safe!