Category: Budgeting

Tips to Reduce Financial Stress – From Panic to Plan

If you are feeling overwhelmed and losing sleep at night because of your finances, you are not alone. There are many factors that can contribute to financial stress such as: kids, marriage, debt, pregnancy, job status and physical health.  According to the American Psychological Association’s 2015 survey, 64% of stress is attributed to money. If you are experiencing a creeping sense of panic over your finances, take a deep breath and exhale. We are going to walk you through a simple plan to get you back in control.

1). Identify Stressors

Take time to write out a list of everything that is weighing on you. This can be financial burdens or anything that adds to your anxieties. Maybe you are struggling to meet your mortgage payments or taking care of an aging parent. Maybe it’s an addiction to spending with a mountain of debt surrounding you. Everyone has a story and struggle. Listing out and identifying these is not only therapeutic, but will be the start to knowing what you can and cannot change. What are the problems, and what are your realistic goals? Take this financial stress test to get a better understanding of where you are at and where you would like to be.

2). Create a Budget

This will be the map to the end of your tunnel. Doubtless, you have heard the importance of budgeting. Now it is time to heed those words into your plan. There are many financial gurus out there with their preferred budgeting outlines. We would recommend speaking to one of our financial advisors at First Security State Bank, or learning more about people like Dave Ramsey and his program. When you are crafting your budget, keep in mind the goals you have created and the daily habits you want to develop. This is how you learn to make the most of your income. By adding a goal of establishing an Emergency Fund, you will help to eliminate future stressors should and when misfortune occurs.

3). Stay Positive & Get Help

The key to staying on track, is staying positive. Once you have your budget set, you are able to track your spending. You may fall off the wagon a time or two, but don’t let shame keep you from starting over. Reach out to a trusted friend or join an accountability group like Shopaholics Anonymous. Be sure to let them know your goals and your struggles. Having someone to keep you accountable will help you to not only relieve current stress but prevent future panic.

 

Dreamin’ of Summer- Saving for Your Next Vacation

The monotony of the day to day can get you down in the season of cold and gray. However, that beach on your screensaver doesn’t have to be an esteemed fantasy if you are ready to take some action. You can turn your ideal vacation into a reality by starting to save and plan that getaway now, before travel season hits in full.

Create a Budget

If you are thinking about a vacation, you are definitely going to need to establish a budget to keep your spending in check. Some budgeters swear by the 50/30/20 rule. This is a simplified budget where you allot 50% of your after-tax income to necessities, 30% for wants and 20% for savings. Adjust this as you need. We all know that adding kids into the mixture of vacations increases prices exponentially, so you may want to increase savings, and see what you can go without.  See if you can even tap into a Grandparents Travel Grant.

Set Up an Account

Stop by First Security State Bank to speak with one of our specialists about options for savings accounts. We recommend setting up an automatic withdrawal to come from your account each month, or asking your employer to put a portion of your paycheck into a different account. For a majority of people, if the money is there, it will get spent, so having an automatic savings will keep you on track of your goals.

Decide How Much You Need

Get a grasp of how much your vacation will cost you. That means calculating hotels, food and flight. However, don’t forget the expenses you will still have while traveling. You will still have your normal bills and you may need to pay a local kid to get your mail or a business to board Fido. Divide this amount by the number of weeks until your desired vacation date.

Go the Extra Mile

When calculating this all out, don’t be dismayed. This vacation can be attainable for you, as long as you stick to the process. It just may not be in the exact time frame you desire. Keep yourself motivated by listening to music, looking at pictures and eating food reminiscent of your destination. Go the extra mile to scrap for savings everywhere you can. Clean out your closets and post them for sale. Start a change jar or carpool to work. You will be surprised that by putting in the extra effort your savings can increase fairly quickly as your spending depletes and scrappiness grows. Best of luck, and please let us know how we can help you reach your goals at First Security State Bank!

Money Advice Gone Wrong

money advice

Sometimes the best intentions can lend themselves to producing the worst results. While many friends and family members may offer quick solutions to your financial anguish, often times, the best education, is understanding those lessons first hand. At First Security State Bank we’d like to showcase several of the most common pieces of advice we hear, and what you can do to remedy these particular miscommunications.

Bad Advice #1: You have to go to college to get a decent job.

While a college degree does open additional doors, it is not required for many well-paying jobs available around the nation. Social figures like Mike Rowe, have made it their personal mission to spread the message that you can earn a living without having to sink into debt. Whether you’re interested in IT, manufacturing, grocery management, or other skilled work, you can find numerous positions through technical training or management programs, and avoid the majority of debt most four-year college students incur.

Bad Advice #2: Having debt is okay if you pay your minimum payments.

While it is important to make installments on your loans or debts, eliminating them all together should be the desired end goal. Did you know that when credit reporting companies review your credit score, there are five factors considered? The two most important factors are your payment history and your debt to income ratio. If your monthly debt payments require more than 43 percent of your income, that may raise a flag to any future potential lenders.

Bad Advice #3: To build your credit score you need to purchase everything on your credit card.

While it certainly helps to have a long and healthy track record associated with your credit card usage; having an on time payment history is far more important. This payment history represents the largest factor of your credit score, which the reporting bureaus track. By never spending more than you have, you can make certain you are able to pay your bill in full each and every month. This action may have the potential to help foster growth for your credit score.

Bad Advice #4: Retirement savings can wait.

Contrary to what many young adults think, right now is the most important time to start saving for retirement. While later in life you might have more disposable income to save, you’ll also have less time before you need those funds. Once compound interest enters any equation, time becomes the most valuable commodity for growing your wealth. For instance, if you saved the Roth IRA maximum of $5,500/year starting at age 25,  you’d have $1.17 Million by the time you’re 65. Who wouldn’t want to capitalize on those kinds of savings?

We think you can tackle any piece of advice with a few grains of salt. If you’re curious what your next financial move should be, stop by First Security State Bank and speak to one of our dedicated personal bankers. Our team of financial experts is here to help you and your family succeed; get started today!

Saving for Tuition 18 Years in Advance

tuition

After you get to see those little eyes open, it’s like a whole new world has unfolded before you. When you’re elbows deep in changing diapers, cleaning up whoopsies, and trying to sleep more than four hours a night, the last thing on your mind is college savings. At First Security State Bank we understand the chaos which ensues with each new addition to your family. To help you prepare for this upcoming transition, we’d like to help you find the best educational savings account for your little bundle of joy before he or she arrives!

There are two primary types of accounts when it comes to saving for your child’s ongoing education. Similar to retirement savings accounts, both of these options do require various stipulations when it comes to distributing the saved funds. Here we’ll show you the pro’s and con’s of each option, to help you better determine which option will suit you and your needs best.

The Coverdell Savings Account: This account option utilizes after tax dollars, which means there are no taxes on distributions when the funds are used for education. The account does have a nationwide $2,000 a year contribution limit, in addition to various income restrictions. While you and your spouse may manage and contribute to the fund, once the child turns eighteen, he or she will own the account and all the funds within it.  However, the child once of age, may only use the funds for education related expenses without incurring additional distribution tax.

The 529 Savings Account: This account option also utilizes after tax dollars, which again indicates no future taxes on distributions if the funds are used for education. The account does not have income limitations, however each state stipulates their own total contribution limit, typically ranging from $100,000 to $350,000.  For this account type, the physical savings account, and the funds within it, remain yours, only designated toward a specific beneficiary (which you can change up to once per year.)

Let’s compare the two when looking at national average college costs across the U.S.

If you choose to save using the Coverdell account option, suppose you save $2,000 per year for eighteen years, yielding a total of $36,000 of total out-of-pocket contributions. Add in the compound interest of those eighteen years, and you’ll find yourself with approximately $80,983 in total educational savings. Fun Fact: The national average for a year of in-state public college in the U.S. is $20,090 or $80,360 for a four year degree.

Alternatively, if you choose to save with a 529 account, you can save more than $2,000 per year, say $3,500 per year instead. Multiply those contributions by eighteen years, and you’ll have $63,000 in total out-of-pocket contributions. After calculating your compound interest into the equation, you’ve grown up to $141,562 in total educational savings. Fun Fact: The national average for a year of any college in the U.S. is $35,370, or $141,480 for a four year degree.

As you can see, both of these accounts allow you to make much more through the benefit of time and compound interest. Just like your retirement savings, the sooner you start contributing, the more interest you can earn. While the Coverdell allows you to give the account to your child, the 529 shows better savings opportunities, allowing you to maximize your potential interest.

If you’d like to learn how you can start saving for your upcoming chick-a-doo, stop by and speak with one of our dedicated personal bankers at First Security State Bank today! We’d love to help your family continue to grow!

The DO’s and DON’TS of Using Credit Cards

creditcard

Using a credit card is a great stepping stone to help boost your personal credit history. By proactively managing your ongoing finances, you can showcase to potential lenders that you know how to fulfill your repayment promises. What many people don’t know, is that simply having a credit card does not automatically indicate an increase in your credit score. To help you succeed with your credit, First Security State Bank has put together our most commonly asked do’s and don’ts when using credit cards.

DO: Pay your balance in FULL every month or every two weeks.

DON’T: Keep a balance even if the interest rate is low

While keeping a balance less than 30 percent won’t drastically harm your credit score, it’s always better to be safe than sorry. We recommend never spending more than you can pay off each and every month. By keeping yourself to this standard you can make certain to never become a victim of expensive credit card debt.

DO: Choose a card that will compliment your lifestyle.

DON’T: Pick your credit card based on mail or TV offers.

There are countless websites and apps centered on helping you find the ideal credit card. Instead of signing up for a credit card through the mail, start perusing sites like NerdWallet to discover which card fits not only your spending but your rewards preferences too! Before you start applying, remember to only apply for a credit card if you need one. If you plan on using more than one, wait six months or more before applying for a new line of credit. This will help to keep your credit score on track and assist in preventing any unwanted dips.

DO: Use reward points to save money.

DON’T: Spend more just to get additional points.

While some credit card options certainly do offer some great sign-on rewards, remember that added debt and expenses are never worth the hike in points. The money you manage is yours, and it’s real! While the points are truly a great perk, never let them outweigh the tangible money you currently have in your individual accounts. If you allow this to happen you may find yourself with a mountain of debt, equivalent to half the vacation you can no longer afford to take.

DO: Have more than one card when you can pay them all off on time.

DON’T: Cancel a credit card without researching its history.

There are certain cards that boast the best rewards when utilized for specific industries, and others that can add extra perks for those all-encompassing purchases. To make the most of these various benefits, we recommend using multiple credit cards for your household’s purchases, only once you’ve maintained a zero balance on one for more than six months. If you feel confident in managing multiple credit cards, you’ll find great advantages of using the rewards behind the various programs and their associated bonus structures.  However, if you close a card, always check and see if that card hold your longest history of a credit line. Should that be the case, you may not want to cancel it, as it could create a slight dip in your credit score.

7 Items Worth the Splurge

splurge

When you make your savings plan, you often don’t think about the things you should spend extra money on. While scrimping on other items such as groceries or kids clothes could help you in the long run, there are some expenditures that could cost you in the future if you don’t pony up for the better option. At First Security State Bank we suggest taking a second look at these seven products, and see if you need to upgrade the next time you buy:

Toilet Paper: You may not think it’s necessary, but let’s be honest; when you’re staying at a hotel that doesn’t have the good stuff, you notice. Household items such as toilet paper or garbage bags are bought to complete a task, and if they don’t complete it well or comfortably then it’s time to reconsider your options. We believe this product is worth the extra couple bucks, but we do recommend saving by buying in bulk!

Office Chair: If you’re like many Americans, you may spend a majority of your day sitting down. To avoid chronic back pain, and a slew of other ailments, we recommend investing in a comfortable and reliable office chair. If your employer is willing to pay for all or a portion of the chair, be sure to offer your measurements to be sure their options fit your height and weight specifications.

Mattress: Did you know you spend 33 percent of your life sleeping? For such a large portion of your time, you’ll want to be sure you’re getting the best sleep possible. Avoid those box store less costly options, and test out a few of the higher end options available in your budget. Not only can you sleep better, but you may find yourself spending less on coffee or energy drinks as well.

Pillows & Bed Sheets: While the mattress will make the biggest impact on the quality of your sleep, upgrading your thread count and purchasing the proper pillows can make a world of difference as well. Something as simple as changing the firmness of your pillow could help you sleep through the night more soundly.

Work Clothes: Sweats, shorts, and other home attire may not require the added expense, but the clothing that you wear to portray yourself at work should come across as professional while also remaining intact over time. We suggest finding one or two brands that fit both your budget and your style, and selecting key basic pieces to compile a wardrobe of endless combinations.

Garbage Bags: Do you enjoy it when you go to take the trash out in the early morning and just as you reach the bin, the bag breaks across your feet? No, neither do we. We agree that it is more than worth the extra dollar or two for the name brand bags that won’t break. Afterall, if the bag breaks, that means you’ll need to take a shower too!

Data Plan: Every cell phone provider seems to come out with a brand new plan option as soon as a new phone is released. While the choice of phone is completely up to you, we think that the data plan should cover not only what you think you’ll use, but some buffer room too. Instead of paying the expensive overage fees every time to go over your data limit, we recommend purchasing a more comprehensive plan to ensure you have a little extra space when you need it.

These seven things will prove their worth in the long run, and many items only require a one-time investment. If you have any other items you think we should add to our list, let us know on our Facebook page. We’d love to hear from you!

Why Checking Your Credit Score Matters

Credit Score

Across television ads, online banners, and even chit-chat among relatives, the phrase, “Check your credit score,” seems to be popping up everywhere. If something so important needs constant reminders, why does it have such a key importance in your personal finances? Well, the truth is that it doesn’t, your financial actions do.

A credit score is comprised of five different measures which indicate how you as an individual are perceived in terms of repayment and risk. Individuals who pay their bills on time, have been utilizing loans and credit cards, and don’t maintain too much debt, typically have a higher score. While the score itself is seen by potential lenders as a positive or a negative, the true meaning it portrays is to showcase whether you as an individual are a promising person to repay any funds you are lent. This score can be changed for the better or the worse depending on the actions you take.

This is why checking the report itself can be beneficial for your personal financial reputation. By reviewing your history on a recurring basis you can quickly identify any mistakes or missed payments that need correcting and do so in a timely manner.

For those who do not check their score, scenarios such as the following could occur:

Say you accept a job in another town, and after moving, you realize you still need to forward your mail. After a week or two in the new place, you go online and make the switch. However, unknownst to you, there was one last utility bill that was mailed to your prior address after you moved away. Weeks go by, even months, only now you’re connected with a new utility company, and you have new bills to pay. Behind the scenes, however, your credit score could be declining, because that one last bill has now been reported to collections. Your credit history will now note that a payment has been missed, and the longer it is missed the more it could damage your credit score.

Situations like this happen to many Americans, and while sometimes they can’t be prevented, the damage they cause can be minimized by checking your credit score on a monthly basis. Instead of allowing a payment like this to retain a balance for over 120 days, you can catch it in under 90 and minimize any potential negative effect on your score.

This is just one example of how checking your credit score can impact your financial health for the better. Other benefits include fraud prevention, better financial negotiation, and more accurate personal financial records.

If you’re ready to get started checking your credit score, we recommend Capital One’s FREE Credit Wise service, available for current and noncurrent Capital One customers. Our team at First Security State Bank would be happy to walk you through the information from this service and we are always available to answer any questions you may have.

 

The Latte Factor 101

Financial Education

Making your way through the drive through every morning before 7:30 may give you a refreshing start to your day, but at what cost? The ideology that coffee shops and other retailers capitalize on is the notion that these small expenditures add a little excitement to your day without a hefty bill. However, when you enjoy perks like these on a daily basis, they add up, and quick!

Financial author, David Bach, is the mastermind behind the Latte Factor. This helpful calculator enables shoppers to see not only the cost of an individual purchase but the lost value it could cause for further investment as well.

For example:

If you purchase a $4.45 grande latte from Starbucks every weekday for the next thirty years, the total cost of your daily coffee is $34,786.29. However, if you had put that weekly $22.25 expenditure into an investment with an average earnings rate of eight percent or more, you could have made $109,225.02 in earned interest during that time. This showcases the true cost of a daily latte as the overall product expense ($34,786.29) + the lost interest ($109,225.02) = ($144,011.30)

While less than $5.00 a day may seem like chump change, compounding these expenses on a long-term level can showcase helpful savings opportunities to maximize your retirement savings efforts and limit unnecessary spending.

This equation doesn’t work just for coffee either! If you find yourself splurging for a fast-food lunch break, buying extra sodas at work, or even paying for a magazine you hardly read, you’ll soon find that all of those little expenses can make a big impact.

To help break some common splurging habits First Security State Bank recommends the following:

  • Before making a purchase, ask yourself, “Should I spend these funds or should I invest them?”
  • Use free services like our Online Banking or Mint to visualize your spending and see areas where you can cut excess.
  • Remember the rule of 7. On average, invested funds will double every seven years, without any added contributions.
  • Utilize accounts like IRA, HSA, and 401(k) to maximize the dollars you invest and save.

If you have any questions on how to get started, or want to learn more about how to make your money work for you, our trusted personal lenders are here to help. Just stop by or drop us a line to set-up an appointment today.

The Cost of Kids: How to Plan for Your Growing Family

Managing Money

At First Security State Bank we understand that adding to your family may not only be an emotional decision but a financial one as well. With the growing costs of childcare alone, it’s important to have a well-rounded plan for covering the expenses of your expanding household. In order to plan most effectively, we recommend structuring your budgeting into these three stages:

 

Beginning or Before Pregnancy: Examine your current health insurance to determine an estimate of cost for both prenatal care and delivery expenses. While many insurers offer prenatal care at no or little additional cost, the price for delivery can be complex. Study your monthly premium, annual deductible, and out-of-pocket limits for the calendar year to help establish these costs before the baby is delivered.

 

After Birth: Once the baby is born, there will be traditional costs such as health care, food, diapers, clothing, and more. However, many new parents also spend more on take-out meals to help lessen their time cooking. These expenses, along with a decrease in income for parents on maternity leave, can cause many parents to slide into debt. To help alleviate the burden of these growing figures, we recommend creating a monthly budget to designate every dollar to a purpose. By allocating a specific dollar amount to each area of your spending, you can ensure that all of your costs are covered while also planning for the future.

 

During the First Year: As your child continues to grow, the costs for new clothes and equipment will continue to grow with them. Many expectant parents can spend upwards of $16,000 during the first year of their child’s life, and variables such as location, number of children, and other factors can contribute to the overall costs as well. When possible we recommend saving for each step in your child’s growth. From birth to three month’s they’ll need many one-time purchases, but during the later stages, you may have adequate time to save for each time period’s necessities.
Continue to grow your finances as you grow your family using First Security State Bank’s trusted deposit services. We’ll help you organize your funds, and make the most of your savings.

The Best Deal for Your Drive

Consumer Lending

Purchasing a new vehicle is an exciting milestone in your personal finances. Filled with countless decisions, finding the perfect price can at times feel like an uphill battle. Luckily First Security State Bank is here to help you find the ideal drive while staying between the lines of your budget.

 

If you’re looking for a used vehicle:

There are four things to take into account when purchasing a car or truck that has been previously owned. In most instances, you can request a full history report on the car to help answer the following prompts.

  • Miles v. Year
    • While purchasing a car that is over four years old can be economical, it can often times come with high mileage as well. For the best return on investment, we recommend finding a car with a comfortable number of miles that is still equipped with the functionalities and safety features you desire from newer models.
  • History of Repairs
    • A full report of a used vehicle is a must! This important document will cover the car’s history and allow you to identify potential warning signs. If reported collisions appear frequently it may result in additional monthly maintenance fees. However, if the previous owner had a consistent service history, your vehicle should last you well into the future.
  • Budget Friendly
    • Used cars will typically have a lower price point than many new makes and models. This can be a valuable money-saver, however, it’s still paramount to find a cost-effective vehicle to fit your needs. We suggest working with dealers to find an option that meets your basic criteria and comes in under budget. By having some cushion with the cost, you can ensure there are funds still available, in the event of possible maintenance or repairs.

 

If you’re looking for a new vehicle:

There’s nothing like that new car smell. Purchasing a vehicle with no prior owners certainly has its benefits. From new industry updates, upgraded entertainment options, and advanced safety options, there are a variety of things to focus on when selecting your new ride. However, we recommend taking the following points into account:

  • Safety and Technology Features
    • Things like a rearview camera and four-wheel drive can make a big impact on your personal safety. In addition to the ever-changing technological features, these advancements can help make you and your family feel more secure. We recommend making a list of the vehicle features that are important to you. Be sure to bring it along whenever you browse for potential matches.
  • Room to Grow
    • New vehicles have the potential for a long lifespan. When purchasing your next ride, be sure to plan for future milestones along the way. If you plan on growing your family or venturing across the states, keep those goals in mind when choosing the best vehicle for you.
  • Affordable Payment Options
    • Many dealers work with trusted local lenders, like First Security State Bank to help their customers secure the financing they need for both new and used vehicles. When purchasing a car or truck, remember to select payment options that fit into your monthly budget, while still allowing room for flexible spending.

Whether you’re searching for a new pickup or a used hybrid, First Security State Bank is excited to help make your car buying dreams a reality. Stop by today to speak with one of our experienced consumer lenders, and see what type of vehicle can fit into your monthly budget.