Rent or own photo

What is Your American Dream?

These days, the “American Dream” is no longer a universal idea; it means different things to different people. In previous decades, the American Dream meant doing better than your parents, which can include buying a home. But today, owning property isn’t necessarily everyone’s immediate goal.

During the Great Recession, between 2007 and 2014, 7.3 million consumers lost their homes, according to RealtyTrac. With so many families affected by this loss, it is no surprise that in recent years the home ownership rate has fallen from 69 percent in the early 2000s to 63.7 percent at the beginning of 2015, according to the Washington Post. As home ownership has declined, the 2010s are on track to see the fastest growth in renters in history.

In the Ohio Credit Union League’s 2017 Consumer Survey, 25 percent of all respondents do not own their home, and only 8 percent of all respondents are planning on buying a house in the next year. A CityLab article recently reported that renting is increasing nationally across an array of demographics, including age and income bracket. This indicates people are renting because they choose to, not because it’s their only option.

Some consumers want more flexibility and don’t want to be locked into a mortgage when they might want to leave in a few months or years. Some don’t want the responsibility of maintenance and shouldering costs of homeownership, and would rather rely on landlords to handle. To others, choosing a location, even if they can’t afford to buy a home in the desired area, is the deciding factor, and they are willing to forego ownership to live exactly where they want.

As for how Ohio consumers make their housing decisions, 67 percent of survey respondents said location plays the biggest role, followed by 23 percent who consider monthly rent or mortgage payment to be the most significant factor. The size and layout were the most important consideration for 10 percent of respondents.

So, will you put off those big life purchases or remain a mainstay of the American Dream with homeownership? For those weighing renting vs. buying, here are a few things to consider about where you want to live.

• Short-term future: Think about the lifestyle you want to live. If you’d like to stay in a place for at least five years and have enough savings to make a down payment, buying a house may be the best choice. Use a home affordability calculator to crunch the numbers.

• Consider the details: Moving to a new home isn’t just about the building where you’ll be living. Think about the neighborhood: what stores, shops, and restaurants are nearby? Is your new home close to public transportation? If you have kids, what sort of schools does the area have?

• Be prepared: Check your credit score and history before you look for a new place. If you’re going to rent, get renter’s insurance. If you’re going to buy, get pre-approved financing to ensure a smooth closing process. Fully understand the terms of your lease or purchase agreement.

• Take your time: Avoid waiting until the last minute to decide where you’ll be living next. Knowing what’s available in your market will help you choose well and save the trouble of moving again shortly.

ProMedica FCU will be hosting a home buyer seminar in the near future. Please keep a look out for dates and times.

Estate Planning

How can a little planning protect your assets and your family?

We make five-year life plans, savings plans, and even dinner plans, but what about the plan for when the unthinkable happens and we are no longer here to care for our families? Nationally, only 42 percent of adults in this country have estate planning documents such as a will or living trust, according to a Caring.com survey. The numbers in Ohio are slightly more encouraging; with 57 percent saying they have a will in place stipulating who will care for their children in the event of the parents’ death, according to results from the Ohio Credit Union League’s 2017 Consumer Survey.

Two things people don’t like to talk about are money and death. However, taking care of these uncomfortable subjects with a will can formally address the distribution of assets, and for parents, outline directives for the care and custody of their children. These formal papers communicate your wishes to the people who you want to care for your children and communicate your intentions to the state via legally recorded documents.

What many people don’t realize is that verbally stating your wishes to family members and friends is not enough to ensure those wishes are followed. Without a will, the state takes the responsibility of dictating the disposition of any property and the care of any children. People also sometimes think they don’t have enough assets to warrant the trouble and cost of a will. Regardless of how much or how little one has accumulated, most people would still rather decide what happens to their assets than have the government make that determination.

Most parents don’t want to think about dying or becoming incapacitated, but it’s a possibility that shouldn’t be ignored. It’s important to make sure children are provided for, and it’s imperative to clarify parents’ wishes for the children’s care and upbringing should they be unable to raise them. Even people without a lot of assets or a complicated financial picture should follow these basic guidelines to protect their children’s interests.

• Designate first responders: These people will go to your children in a time of crisis. Ensure these trusted friends or families have the appropriate documentation to establish their clear legal authority to care for your kids. This will guarantee your children go directly into the care of an adult of your choosing rather than into the foster care system until the courts determine who should have guardianship.

• Define guardians for long-term care: Parents can agree upon guardians for their children, and even verbally communicate their wishes to their families. But if those intentions are not communicated in a legally-binding, written document, every family member would have equal priority of guardianship, and again, the courts will be the final say in who raises the children. This legal documentation is especially important if you choose a friend, rather than a family member, as a guardian.

• Make sure the designated guardians know how you want your children raised: What educational, spiritual, and cultural path do you want them to take? The only way to ensure your children are raised with the values you would have instilled in them yourself is to make those values clear to the guardians you’ve chosen.

• Document your plan, regardless of your assets: If you have any assets at all, you should have a will. You’ll want to make sure the right thing happens to your assets, and to your children, in the event of your death. Simple estate planning can be done with online legal document services, but it’s still wise to speak to an attorney about drawing up your will.

• Plan to provide sufficient financial support: When you have children, you are responsible for supporting them until adulthood. With sufficient life insurance, even if you pass away, you can still fulfill that responsibility and financially provide for your family. It’s not just the main breadwinner who needs life insurance. Even stay-at-home parents who don’t earn an income should be insured. If they pass away, everything they do without getting paid needs to be done by someone like child-care providers, which require weekly fees.

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Emergency Savings

Nearly a Quarter of Americans Have No Emergency Savings

Nearly a quarter of Americans have no emergency savings, according to a new report from Bankrate.com.

However, the percentage of those without an emergency fund currently sits at a six year low, down to 24% this year from 28% last year.

Additionally, Americans with an adequate savings cushion – enough to cover six months’ expenses or more – jumped to 31% (from 22% in 2015 and 28% last year), a new high during the seven years Bankrate.com has been polling on this subject.

Overall, Americans are doing a better job at saving. Those with some savings, but not enough to cover three months’ expenses, increased from 18% to 20%. Americans with enough savings to cover 3-5 months’ expenses nosed higher from 16% to 17%.

Bankrate.com chief financial analyst Greg McBride, CFA commented, “With all the spending that is not happening in the economy, something else apparently is – Americans are putting money in savings! We’re still not out of the woods yet – everyone should strive to have at least six months’ expenses socked away for the unexpected – but it’s encouraging to see progress being made.”

The tendency to have no emergency savings is highest among those ages 53-62, who seem to be all-or-nothing, as they have an equal propensity to have no emergency savings and enough to cover six months’ expenses (32% for each).

After that, the likelihood of having zero emergency savings declines substantially; the oldest Americans (63+) report the lowest likelihood of having nothing set aside for a rainy day (17%) and the highest probability of at least a six month reserve (44%).

While one quarter of Millennials and Generation Xers lack any emergency savings, younger Millennials (ages 18-26) seem to be well on their way; they have the highest propensity to have enough to cover 3-5 months’ expenses (31%). Generation X is most likely to have some savings, but not enough to cover three months’ expenses (28%).

Not surprisingly, those with enough emergency savings to cover at least six months’ expenses tend to be higher income and more highly educated, while those with no emergency savings are more likely to be lower income and have lesser levels of education.

That being said, lower-middle income households ($30K-$49.9K per year) are more likely to have enough savings to cover six months’ or more of expenses than to have no savings at all.

Residents of the Midwest are most likely to have enough to cover six months’ expenses or more, while residents of the South are least likely.

If you are looking at jump-starting your emergency savings, talk to a representative at ProMedica FCU. ProMedica FCU has several products and services to assist your savings plan including a save your change account that makes savings easy and automatic. ProMedicaFCU also has financial counselors on staff to assist with other important financial areas such as budgeting and credit. Contact ProMedica FCU at 419-479-4040.

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Mortgage Rates

Mortgage Rates Remain Near 7-Month Lows

Mortgage rates touched seven-month lows early this month, and stayed there last week.
According to Bankrate.com’s weekly national survey, the benchmark 30-year fixed mortgage rate inched lower last week, moving from 4.04 percent down to 4.02 percent.

The larger jumbo 30-year fixed nosed up to 4.00 percent, and the average 15-year fixed mortgage rate settled at 3.25 percent. Adjustable mortgage rates were mixed, with the 3-year ARM slipping to 3.48 percent while the 7-year ARM climbed to 3.60 percent.

Bankrate points out that, despite another interest rate hike by the Federal Reserve, mortgage rates are hovering at the lowest point since mid-November and are little changed from where they were 18 months ago when the Fed started boosting interest rates.

The common theme then, as now, has been a slow growth economy with low inflation. This week brought additional evidence of low inflation and the recent softening has garnered the attention of the Fed, who noted in their statement that they are “monitoring inflation developments closely.”

Mortgage rates are closely related to yields on long-term government bonds, which appeal to investors any time uncertainty, or low inflation, is in the air.

Car Prices

Car Prices: Something Funny Is Going On

People are paying way too much for new vehicles these days, with average transaction way out of whack with average household incomes.

According to Kelley Blue Book, the estimated average transaction price (ATP) for light vehicles in the United States was $33,261 in May 2017. According to the government, the median household income in the U.S. was $56,000 in 2015.

This is just too much, once we apply the time-tested “20/4/10” rule.

Use This Rule to Determine How Much Car You Can Afford:

This rule stipulates that a car is affordable when a buyer can make a down payment of at least 20%, use financing lasting no longer than four years — with principal, interest and insurance not exceeding 10% of a household’s gross income.

If a median-income household cannot buy a median-priced new vehicle using the “20/4/10” rule, then we have a problem with affordability.

So, why are new vehicle sales so strong? The answer to this is simple: people aren’t following the “20/4/10” rule, and automakers keep coming up with ingenious new financing strategies that ensure they won’t.

Think about the number of “0 Down” financing schemes on offer; think of all of the factory leasing deals.

Leasing used to represent a tiny portion of new vehicle transactions. Today, more than 50% of all new vehicles are leased in certain vehicle categories.

In short, car companies are making it easier than ever to help Americans drive away in vehicles that they cannot really afford (according to the “20/4/10” rule).

Don’t Buy the Payment

Car salesmen are trained to “sell the payment” to buyers. If the monthly payment is do-able, a sale can be made. The trouble is, getting that monthly payment down to an “affordable” level often means stretching payment out to 60 months, 72 months or even more. It also means factory lease deals that may seem cheap, until you factor in that they leave you with nothing at trade-in time.

Before You Shop for a Vehicle, Go See ProMedica FCU

The simple truth is that following the “20/4/10” rule is still an excellent way to buy a new vehicle without threatening your long-term financial health.

If you’re considering a new vehicle purchase, do yourself a favor and go see ProMedica FCU before you drive to a dealer lot.

ProMedica FCU will help you to see how different car buying scenarios fit in with your other financial goals – such as saving for emergencies and retirement. It’s the best way to ensure that you don’t buy yourself a shiny new mistake.

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Identity Theft

Consumers, be wary: Identity theft is on the rise

If you’ve been a victim of identity theft, you’re not alone. Thirty-three percent of Ohioans reported that they’d been victimized by fraud and/or identity theft in a year-end 2016 survey conducted by the Ohio Credit Union League. More could have suffered at the hands of fraudsters without knowing it yet.

In 2015, Ohio had the twelfth greatest number of identity theft-related complaints filed with the Federal Trade Commission. Dayton ranked 34th and Cleveland/Elyria ranked 38th among the 50 largest U.S. metropolitan areas with the most identity theft-related consumer complaints.

According to a study by Barclays, most identity theft that occurs happens in the United States (about 47 percent); 55 percent of these identity thefts are caused by a malicious outsider, followed by an accidental loss of the card (25 percent). EMV chips (which stands for “Europay, MasterCard, and Visa” and is a global standard to authenticate and secure global card transactions) have caused a decline in the use of counterfeit cards.

These days, 45 percent of identity theft is committed online. Online fraud gives hackers and predators a multitude of ways to get your information. From creating fake forms to posing as legitimate companies, the internet has spawned a wide array of tactics to get your personal and financial information, which means consumers need to remain vigilant.

Some of the most common forms of identity theft are:

• Child ID theft: Children’s IDs are vulnerable because the theft may go undetected for many years. By the time they are adults, the damage has already been done to their identities.

• Tax ID theft: A thief uses your Social Security number to falsely file tax returns with the Internal Revenue Service or state government.

• Medical ID theft: This form of ID theft happens when someone steals your personal information, such as your Medicare ID or health insurance member number, to get medical services or to issue fraudulent billing to your health insurance provider.

• Senior ID theft: These ID theft schemes target seniors. Seniors are vulnerable to ID theft because they are in more frequent contact with medical professionals who gather their medical insurance information, or caregivers and staff at long-term care facilities who have access to personal information or financial documents.

• Social ID theft: This type of thief uses your name, photos, and other personal information to create a phony account on a social media platform.

Despite the prevalence of identity theft, only half of the League’s survey respondents closely monitor their accounts to check for fraudulent transactions. On the other hand, 10 percent figure that someone will let them know if any of their accounts have been compromised and just leave protecting their identity and accounts to their financial institutions.

Here are some steps savvy consumers can take to protect themselves from identity theft:

• Guard your (and your children’s) personal information: Don’t carry your Social Security card in your wallet or write your number on your checks. Only give out your Social Security number when absolutely necessary. Ask if there is an alternative way for you to verify your identity. Don’t respond to unsolicited requests for personal information and store personal information in a safe place.

• Keep an eye on your accounts: Pay attention to billing cycles. If bills or statements are late, contact the sender. Collect mail promptly and put your mail on hold when you’re away for several days, so thieves don’t have a chance to get to account information on mail left in your box. Review your receipts and compare them to your account statements. Watch for unauthorized transactions. Shred receipts and credit card offers and other paperwork you don’t need, but that could contain personal information.

• Be vigilant online: Install firewalls and virus detection software on your home computer and create complex passwords that fraudsters can’t easily guess. Change passwords often, especially if a company or organization has your information and has suffered a database breach.

• Order your credit report once a year: Review it to make sure it doesn’t include accounts you have not authorized. Check it more frequently if you suspect someone has gained access to your account information. You can pull this information for free at sites like www.CreditKarma.com and www.annualcreditreport.com. If you are having trouble reading your credit report, please contact ProMedica FCU for assistance.

ProMedica FCU’s Pinnacle Checking Account includes identity theft protection for up to 3 generations of family.

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Teen Driver

Breaking News: Parents and Teens Disagree on Auto Ownership

Here’s a finding that will surprise nobody: 76% of teens say they’re ready for a car, while 85% of parents disagree.

This comes from independent research conducted for Junior Achievement & American Honda Finance Corporation.

The discord may lie in the fact that 86 percent of teens feel that parents should help them with automobile expenses such as insurance, repairs and gas, while 91 percent of parents believe assistance is unreasonable.

According to the results, nearly one-fourth of teens expects a car with their cap and gown this graduation season.

At the same time, 61 percent of parents expect their teen to complain about the financial upkeep of a car within 30 days of getting their vehicle.

“When it comes to newly licensed drivers, in addition to important discussions about distractions and curfews, parents should rev up the car talk about the financial aspects of car ownership,” said Jack E. Kosakowski, president and chief executive officer of Junior Achievement USA. “It’s a great way to prepare them for future financial security both on and off the road.”

Interestingly, 61 percent of parents say that a car is a more effective means of teaching kids financial responsibility than a credit card.

To that end, 96 percent of parents say they would only help their teen buy a car if they first demonstrated responsibility, such as by preparing a budget to pay for expected and unexpected expenses, having a certain amount of money saved or explaining what is required to buy a car.

A third JA-AHFC survey conducted among young adults ages 18-25 may reveal the truth about teens’ financial understanding.

According to this more mature cohort, looking in the rearview mirror, 73 percent admit they did not understand the financial responsibilities of owning a car when they were in high school.

And, with age, comes wisdom.

Ninety-three percent of these young adults are confident that they fully understand the financial responsibilities of owning a car, and they turn to a wide variety of sources for information when considering purchasing a vehicle, including financial institutions, car dealers, online forums, magazines and social media.

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Travel

Travel Smarter and Save Bigger this Summer Vacation

Spring flowers are in full bloom, which can only indicate one thing: summer is nearly upon us. For many, that means it’s time for a well-deserved vacation with family and friends. In a year-end 2016 survey conducted by the Ohio Credit Union League, an overwhelming majority of respondents, 71 percent, are planning to get some rest and relaxation with a vacation this summer.

Whether heading somewhere new or traveling back to a family favorite, most Ohioans plan their vacations in advance, but at varying times – 34 percent plan six months to a year in advance, 31 percent plan three to six months in advance, and 15 percent plan one to three months in advance. And, while ample time to organize is important, budgets definitely play a role in those plans as well, with 70 percent of Ohioans surveyed noting the cost of the trip as a major influence on where they go for vacation. Other factors included travel distance, scheduling, and amenities or activities at the destination.

We all want and need downtime, but a large financial burden will long outlive the benefits of a vacation. In 2016, households likely to take a vacation spent $1,798 on average, up roughly 11 percent from 2015, according to Condé Nast Travel. In addition, a survey conducted by ValuePenguin noted that the typical vacationing family spends 44 percent of their travel funds on transportation.

Since many vacation decisions are driven by cost, here are a few tips to spend wisely when you take those hard-earned vacation days.

• Scheduling matters: When planning low-cost trips, timing is everything. To save money booking accommodations, try traveling during an off-season or even a few weeks before peak-season starts. If you’re booking airfare, do so at least a month in advance, if not earlier. Airlines price their flights differently depending on the day of the week, so use an airfare tracker site or app, like Hopper, to keep up with changes.

• Travel smart: Many vacation destinations take advantage of the naiveté of travelers, so tourist hot spots may be higher priced than smaller, locally-owned places. Do your research before deciding where to say, what to eat, and what activities you should embark on and you’ll likely save during your trip.

• Use rewards: ProMedica FCU’s VISA Platinum Card earns rewards points that can be redeemed for airfare or other vacation expenses. Even though you may not consistently travel, airlines, and booking services may also offer rewards points.

• Set aside a little at a time — If traveling is important to you, make room for vacation savings in your annual or monthly budget. ProMedica FCU has an account specifically for saving for your dream vacation. ProMedica FCU is also a great resource to consult if you’re looking for ways to save and budget for vacation.

To learn more about ProMedica FCU and how they can help you afford life, call us at 419.479.4040.

Debt

Drowning In Debt

Nearly three quarters of Americans are struggling with debt and the burden is significant in terms of both size and duration, according to a new study from insurer Northwestern Mutual.

The company found that, among Americans with debt, 4 in 10 (45%) spend up to half of their monthly income on debt repayment.

Nearly half of Americans (47%) are carrying at least $25,000 in debt, with average debt of $37,000 excluding mortgage payments. Notably, more than 1 in 10 say their debt exceeds a staggering $100,000.

More than one third (36%) said they will be in debt between 6 and 20 years while 14% expect to be in debt for the rest of their lives.

When looking at the sources of debt, similar to 2016, mortgages (29%), credit card bills (19%), and personal educational loans (7% gen pop and 23% for Millennials) topped the list.

See your Credit Union Today
There’s no magic bullet for getting rid of debt. Sure, we’d all like to win the lottery, but the odds are stacked against that happening. What we can do is manage our debt load better – and this is where ProMedica FCU can be a real help with two certified financial counselors ready to assist.

For starters, it’s helpful to lay things out on the table. Consumer debt creeps up on us, with so much revolving and installment credit available to most of us. We open so many accounts, with so many different terms, that it’s hard to keep track of it all.
Sometimes, it’s easier psychologically to not keep track of it all. This is a game we play with ourselves.

Putting it on the table, and sharing that knowledge with an experienced representative can really help us to face the reality of our debt load, and to find better ways to manage things.

ProMedica FCU has options for doing this. Not-for-profit options that put your interests first.

Work with PFCU to determine a budget, and to find ways of accelerating the repayment of your debt. There are multiple options depending on your personal situation. It all starts with a visit to ProMedica FCU.

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Mortgage

Mortgage Rates Do an About-Face

Mortgage rates started the year on a tear, continuing an upward trend that push them to highs not seen in years. There was one-party rule in Washington! A new president who wanted to spend a trillion on infrastructure! An aggressive Fed eager to push interest rates higher and higher! And then, reality set it.

First, the one-party rulers failed to pass a healthcare bill. This exposed deep rifts within the party, and cast doubt on the spendy president’s ability to get his agenda passed.

All of this played out against a backdrop of global uncertainty, with a (potentially) unravelling European Union, a horrible civil war continuing in Syria and an emboldened young tyrant in North Korea, eager to play with his nuclear toys.

According to Bankrate, the international tensions, coupled with a spate of weak economic data, have prompted more investors to move into safe haven instruments like U.S. Treasuries.
When bond prices rise, bond yields fall and mortgage rates are closely related to the yields on long-term government bonds.

And fall they have: last week, the benchmark 30-year fixed mortgage rate fell to 4.16 percent – its lowest level of the year, Bankrate said.

Weakness, uncertainty, and nervousness, which have each been in plentiful supply in recent weeks, are good news for bond investors and mortgage shoppers alike.

Expectations for a June Fed interest rate hike have also eased slightly, further contributing to the downward adjustment on bond yields and mortgage rates.