New year, new financial resolutions

With 2021 ending and 2022 right around the corner, now is the time to start making those resolutions for the new year. And what better place to start than with your finances?

While getting financials in order at the beginning of every year is a ritual for most, it doesn’t hurt to keep things fresh with some out-of-the-box resolutions. The average American calls their resolutions quits by the time February rolls around (or never follows through with them in the first place), according to the New York Post. So, a new perspective might just be the ticket to sticking to the financial plans you intend to make.

An article published by Wallet Genius takes a new perspective on classic financial goals with suggestions that include talking to your children and spouse about money, not confusing spending less with saving, considering money as a tool instead of a goal, and even volunteering.

Use these helpful solutions from CNBC to stick to your financial goals throughout the new year and beyond:

Set up autopay for everything: From your utility bills to your rent, automate payments so you never have a late fee. Plus, excellent payment history will be reflected on your credit score. You can also automate money directly from your paycheck to your savings, so you won’t even know you’re missing it while saving at the same time.

Give your budget a makeover: If it’s been a while since you’ve tweaked your budget, take the time to restructure it to fit your most current lifestyle.

Match savings to spending: For one month, try this savings technique that allows you to save as much as you spend. Simply add a dollar to savings for every dollar you spend. Or you could put a cap on it, like saving $5 for each purchase made throughout the month.

Try a “savings spree”: Save the dollar amount of each calendar day for one month. Start by saving $1 on the first of the month, $2 on the second, and so on. You could end up saving around $500 for the month!

Bump up your retirement contribution by 1%: A little goes a long way. Investing a few extra dollars per month into your retirement account could pay out big in the end

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Tips for Sticking to a Holiday Budget

With a desire for a much more normal holiday season this year, Americans are set to make it a landmark year for holiday spending.

According to a recent survey from Quantum Metric, 64 percent of the 2,000 United States consumers polled feel this holiday season will be more important and emotional than in years past. With shoppers planning for more meaningful holidays, they are willing to spend more to make it happen. Survey results suggest that many Americans plan to spend $1,000 or more on the 2021 holiday season.

Stores might be back open this year, but online shopping remains the number one way to shop for holiday gifts in the United States. According to the Quantum Metric survey, 62 percent of Americans plan to primarily shop online this holiday season. Results show around the same number of consumers (56 percent) made 75 percent of their holiday purchases online in 2020 as they plan to do in 2021 (54 percent).

With sales up this year, it’s important to make a holiday budget and stick to it, or the post-holiday season could become a financial struggle. Making a list of everything needed, tracking holiday spending, and using cash and making smart credit choices are all good ways to stay on top of holiday expenses before they get out of hand.

The holiday season is full of good cheer, but it can also do a number on your wallet. With the holidays approaching, learn how to create and stick to a feasible budget with these tips from The Balance:

Make a list: Always start your budget with a comprehensive list of all holiday-related expenses. From gifts to food to decor to travel expenses, everything you can think of that pertains to the holidays should go on this list.

Decide on a spending limit: And stick to it. Allot an amount for each gift or area of your budget and don’t spend more on it than you have designated.

Track your purchases: Once you have figured out your budget and you’re ready to start buying, be sure to track each purchase you make. Pay attention to whether you are sticking within the confines of your budget and adjust accordingly.

Don’t rule out Black Friday: Take advantage of all the sales leading up to the holidays, including Black Friday and Cyber Monday. You might find better deals than you were hoping for.

Shop online: Don’t forget to comparison shop online, which will save you time and money. Some of the best deals today are found online. Remember to order your gifts with plenty of time for shipping.

Pick up some extras: Add in a few extra gifts that are generic in nature. That way, you won’t be caught off guard and scrambling (i.e., spending more money than you normally would) if you find yourself needing a last-minute gift.

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Understanding the 2021 Child Tax Credit

Taxes and deductions can be complicated, especially when tax credit eligibility constantly changes. For families with children, understanding what child tax credit assistance is available and how it will be distributed provides helpful insight on how best to optimize personal finances.

Recent changes to the Child Tax Credit expand its reach to help more families for the 2021 tax year. Advance payments, based on 2020 returns, began rolling out in July 2021 and will continue through December, totaling up to 50% of the Child Tax Credit. The remaining half will be delivered to taxpayers through 2021 returns. Here’s all you need to know, according to the IRS.

Families who claim the Child Tax Credit will likely see an increase in credit amounts. Eligible taxpayers can receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021. Families with children born in 2021 and under 6 years of age at the end of 2021 could receive up to $3,600 per qualifying child.

The increased credit amounts are phased out for incomes exceeding $150,000 for married taxpayers who file jointly and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.

Eligible taxpayers who would like to decline advance payments can do so. According to Yahoo Finance, taxpayers waiving the advance payments may prefer a single large payment, believe financial circumstances will change, wish to avoid the hassle of updating information in the IRS portal, or believe an overpayment by the IRS may impact the next filing return. Opting out of advance payments means qualified taxpayers will not see a payment until after their taxes are filed in 2022.

Once you learn all about the latest updates to the Child Tax Credit and determine the amount you qualify for using the free child tax credit calculator, you will want to lean on these suggestions from CNBC.com to help you prepare.

  • Know when the money is coming in – Half the amount received is paid monthly from July until the end of 2021, so don’t assume it’s a lump sum. The other half will be delivered after filing 2021 tax returns in 2022.
  • Make sure your financial foundation is solid – Do you have a sufficient emergency fund, the right insurance, and a plan for paying down debt? Those should be the first steps to be taken with any extra money received. Keep your financial health in check, just as you would your physical or mental health. It’s important in securing your financial foundation.
  • Remember the big picture – Think about your priorities and goals for the next year and determine how some extra cash could go toward realizing them. This will help you to be more intentional with your money.
  • It’s okay to spend – Still not sure what to do with the Child Tax Credit? It’s been a long, tough year for everyone; it’s okay to spend some of this extra money on your family, once your priorities are covered. And, when in doubt, you can always decide to save or invest.
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Improving Financial Literacy

Each year, the National Financial Educators Council releases a National Financial Literacy Test, which is taken by Americans of all ages, financial positions, and backgrounds. The test measures participants’ knowledge as it pertains to earning, saving, and growing their money.

As of 2020, the average score of 15- to 18-year-olds who took the test stood at 68 percent, just shy of a passing score. In fact, of the 60,813 people who have taken the test since it began in 2015, only 59 percent received a passing score of 70 percent or higher. Additionally, the National Financial Educators Council also released results which found that poor financial literacy contributed to Americans losing an average of $1,634 each in 2020. That is a cost of about $415 billion to the country at large.

Those numbers may seem a tad apocalyptic, but there is a silver lining. Younger generations of Americans appear willing and able to learn more about financial literacy. The National Financial Educators Council asked 1,101 young adults ages 18 to 24 what high school-level course would have benefited their lives the most. The majority (51.4 percent) responded with “money management.”

It appears financial literacy classes really do help. The FINRA Investor Education Foundation’s State Financial Education Mandates study found that Georgia, Idaho and Texas all saw increased credit scores and lower delinquency rates on credit cards three years after implementing a financial education mandate in public schools. Additionally, all three states saw significant improvements in participants’ scores on the National Financial Literacy Test with an overall 8 percent rise in score among 15- to 18-year-olds.

 

How to improve your financial literacy

April is Financial Literacy Month. Both a celebration and a challenge, this month is a chance for your members to reflect on the state of their personal finances and an opportunity to improve their financial well-being, one step at a time. Help your members along their financial literacy journey with some suggestions from Athene:

  • Subscribe to financial newsletters – Financial newsletters from trusted sources can put free financial news in your inbox. To start, try Athene’s Smart Strategies, designed to help you take your financial journey to the next level with expert advice on finances and lifestyle.
  • Listen to financial podcasts – Podcasts can help you brush up on financial information while you are on the go. For ideas, check out S. News and World Report’s Best Personal Finance Podcasts to Listen To.
  • Read personal finance books – Explore Insider’s 17 best personal finance books for 2021 to get you started.
  • Start keeping a budget – All the general financial know-how in the world will not mean much if you do not know where your own money is going each month. Start tracking your spending and set up a budget using a simple spreadsheet or applications.
  • Talk to a financial professional – Sometimes, you just need to ask an expert. Financial professionals, like those at ProMedica FCU, can help you assess your current situation and help you stay on a track that works best for you.

Tips for Managing Credit Card Debt

 Ohioans may fair better than the average American when it comes to credit card debt.

The most recent ValuePenguin data showed the average Ohio household holds just $5,446 in credit card debt. That’s the least of any state, while the typical household in Alaska carries the most credit card debt at an average of $13,048.

While credit card debt varies widely by state and region, it’s clear that there is a crisis in America with debt approaching $14 trillion. Credit cards are a big contributor, making up over a quarter of that amount. According to Debt.org, more than 189 million Americans have credit cards. An average household has at least four cards, carrying roughly $8,400 in credit card debt.

Experian reports that credit card debt is the second-fastest-growing debt behind personal loans and has been on a steady climb since 2015. Interest rates seem to be on the decline, with CreditCards.com stating the average credit card interest rate for new cards is currently 17.3%, down three quarters of a percentage point since the Federal Reserve cut rates in fall of 2019. But the annual percentage rate (APR) is still at a near record high – up from 16.8% in 2018.

Credit cards certainly have their advantages if used responsibly, especially if you’re able to pay off the balance in full every month by the due date. Credit Karma reports that credit unions typically offer lower interest rates, as well as competitive rewards and membership benefits. If you do find yourself struggling with credit card debt, you’re not alone. Your local credit union may be able to help you get back on top of your finances.

Credit unions are not-for-profit financial institutions owned and democratically-controlled by their members. Built on the philosophy of “people helping people,” their focus is on better serving their members with great financial benefits, like making life more affordable by dealing with credit card debt.

 

Tips for dealing with credit card debt

 

  1. Assess your financial situation. Come up with a list of everything you owe, including monthly bills, credit card balances and the annual percentage rate (APR) for each card. Then, compare expenses with income.
  2. Prioritize your spending. Before tackling credit card debt, be sure to cover the basics first, such as food, housing and clothing. Next, pay the minimum amount on all secured debts, like your home and car loans. Then, start working on paying down credit card debt with useful tools like the Credit Karma Debt Repayment Calculator, followed by student loans. Try to use cash or debit cards only while paying down debt. Above all else, pay at least the minimum balance on all outstanding debt to avoid hefty late fees.
  3. Establish a budget. Once your debts have been prioritized, it’s important to come up with a budget to track spending and minimize credit card debt. Use online tools like YNAB (You Need a Budget) to get started. Try to adhere strictly to your newly established budget.
  4. Secure a better rate. Negotiate a lower interest rate on your credit cards. According to CreditCards.com, sometimes all it takes is a simple phone call to (politely) request a better rate. Shaving off even a percent or two could save you hundreds of dollars while repaying your debt.
  5. Decide on a strategy. When paying down credit card debt, it’s important to settle on an action plan. There are two main ways to do this. One is to focus on paying down the card with the highest interest rate first, while making minimum payments on the other cards. This is the fastest way to decrease credit card debt, eventually freeing up more cash to pay toward the lower interest rate cards and creating a snowball effect. The other strategy is to pay the lowest balance first, while paying minimums on the others. Though not as cost-effective, this is the fastest way to get rid of debt on a single card.
  6. Stay focused by creating concrete goals and staying motivated. Keep your eye on the prize! Perhaps getting rid of credit card debt will afford you a down payment on a house, new car or dream vacation. CreditCards.com suggests writing your goals down and keeping them in your wallet or purse. When tempted to overspend, take a peek at them for a big picture reminder.

Tips and Tricks to Help Manage Your Holiday Expenses

With the holiday season right around the corner, consumers are often unprepared for the additional expenses for those special presents and occasions and exit the holiday season with debt—a gift that unfortunately keeps on giving.

According to the annual survey released by the National Retail Federation and Prosper Insights & Analytics, consumers expect to spend an average of $1,047.83 this holiday season, which is a 4 percent increase from the $1,007.24 they said they would spend in 2018.

Research shows that many Americans who rack up holiday debt do so on high-interest credit cards, averaging $1,230 in 2018, according to an annual survey conducted by Magnify Money. This notes an increase from $1,054 in 2017, and $1,003 in 2016, in holiday spending.

A lack of preparation could be the problem. According to a 2017 survey conducted by mobile startup Varo, 74 percent of Americans say they often fail to budget properly for the holidays, forgetting to take into account the full range of holiday-related expenses such as last-minute gifts, food, decorations, and holiday outfits.

And then there’s always peer pressure. According to a 2018 survey by Bankrate, two in five Americans feel pressured to overspend during the holiday season, with parents and middle-income earners feeling the greatest burden.

Even after the decorations are stored away, debt on credit cards tends to linger beyond the holiday season. According to a Magnify Money holiday debt survey, 49 percent of holiday shopper respondents said it would take five months or longer to pay the season’s debt off of their credit cards. That means in 2018, those shoppers were still paying off their holiday debt into May of 2019.

The statistics are even more alarming for holiday shoppers who are planning to make minimum payments on their debt. For example, it would take more than five years to repay a debt of $1,230 on a card with an annual percentage rate of 16.5 percent if the cardholder was making minimum payments of $30 each month. That shopper would not be rid of the 2018 holiday debt until 2023.

Despite holiday spending pressure, consumers can still enjoy the season’s festivities and manage to avoid a lump of debt through these following spending tips:

  • Look for travel deals. Book your travel early and use online tools such as Expedia or Kayak to comparison shop. Try carrying on your luggage to avoid excessive fees and avoid peak travel dates where possible.
  • Make a gift list. Make an extensive list of all family members, friends, teachers, and more that you need to purchase gifts for so you can accurately define your budget, then set a specific amount you want to spend for each category of recipients.
  • Track your spending. Return to your gift list and budget after each purchase to track your spending and make sure you’re staying within your financial limits.
  • Pick a payment. Plan the way you’ll pay; cash or credit. If cash, start setting aside savings for your spending now. If credit, make a repayment plan to avoid carrying unnecessary debt into next year. If you need a new source of funds for the holidays, consider a seasonal job or suspending certain luxuries for a couple of months.
  • Do it yourself. Get creative and make your gifts. From pictures of the kids to holiday treats, candles and crafts, there are a lot of easy DIY options.
  • Shop the deals. Pay close attention to sales ads and take advantage of big sale days such as Black Friday and Cyber Monday. Sign up for email lists of your favorite retailers, so you receive notifications of exclusive discounts.
  • Share hosting responsibilities. If you’re hosting a holiday get together with family or friends, consider asking guests to each bring a dish and if sharing gifts, consider drawing names instead of buying for all.
  • Start saving earlier next year. In January, open a specialized savings account at your credit union. This will let you easily set aside money each pay period throughout the year, so you’ll be ready to shop more efficiently next season. To find a credit union near you, visit YourMoneyFurther.com
Heat in the winter

Winter is coming—save on energy costs

Ohioans are spending a significant chunk of change on household energy costs, yet most have not evaluated potential savings opportunities.

According to the 2018 Ohio Utility Rate Survey conducted by the Public Utilities Commission of Ohio, Ohio residents spend, on average, between $2,000 and $3,000 per year in household energy expenses.

This range is slightly higher than the national trends. Each household in the U.S. uses an average of 77.1 British thermal united (Btus) each year, costing each household about $1,856 per year, according to the U.S. Energy Information Administration.

Heating, air conditioning, and water heating account for more than 74 percent of the energy consumed per household nationally and for 60 percent of the household energy dollars spent, according to the U.S. Energy Information Administration. With its population, industrial economy, and seasonal temperature ranges, Ohio is one of the top 10 states in total energy consumption.

Heating costs may be more dramatic in Ohio than the national average. According to the U.S. Energy Information Administration, heating accounts for 15 percent of each U.S. household’s energy expenditures. In Ohio’s residential sector, nearly 7 out of 10 households use natural gas to heat their homes and accounts for almost 30 percent of the state’s total consumption.

The U.S. Energy Administration data mirrors Ohio and other states because it costs more money to heat than cool. According to the data, Midwestern states spend $1,695 per year in energy expenditures with $681 dedicated to heating costs. Meanwhile, households in Southern states spend $1,917 per year in energy expenditures at $465, surprisingly attributed to heating costs while $392 covers cooling. 

The Ohio Consumers’ Counsel calculates Ohioans spend more than 7 percent of their household income on energy costs and encourages consumers to make small home adjustments to reduce the financial burden on consumers.

With winter coming, now is the time to start saving on energy costs through these helpful tips:

  • Conduct an energy audit. Conduct a professional or DIY energy audit on your home to identify savings opportunities. 
  • Use the sun. Open the curtains during the day to allow sunlight to heat your home. Then close them at night to prevent losing heat through the windows.
  • Check window coverings. Cover drafty windows with a heavy-duty, clear plastic sheet on a frame during the cold winter months. Make sure the plastic is sealed tightly to reduce infiltration.
  • Be smart with the thermostat. Adjust the thermostat as low as is comfortable when at home and awake. When away or asleep, turn the thermostat back 10 to 15 degrees and save around 10 percent a year on your heating and cooling bills.   
  • Spot and seal leaks. Seal any air leaks around utility cut-throughs for pipes, gaps around chimneys, recessed lights in insulated ceilings, and unfinished spaces behind closets.
  • Tune-up. Schedule a routine tune-up on your heating system to ensure peak performance.
  • Clean air ducts. Clean your air ducts to ensure fresh, allergen-free air flows through your home.
  • Go LED. Use LED holiday light strings to reduce the cost of decorating your home for the winter holidays.
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Healthy Eating

How to Eat Healthy on a Budget

When was the last time you tried to eat cheaply? You probably focused on a lot of ramen, maybe some potatoes and rice, and occasional trips to the dollar menu. Although these foods are cheap, they are lacking in nutrition — and loaded with sodium.

Healthy food has a reputation for being expensive. And you may need to spend a little more than on a five-pound bag of potatoes and 25-cent packs of salty noodles.

But with a little careful planning, you can eat well without breaking the bank.

Here’s how.

Focus on fiber

Fruits, vegetables, beans, and whole grains are super-healthy — and cheap. Make these the centerpiece of your meal to save money. You don’t have to go meatless if you don’t want to, just cook smaller portions of meat and larger sides.

Want to get the best deals on whole grains and beans? Buy dry beans — these cost a fraction of the price of canned beans. And use the bulk bins to stock up on grains.

Skip pricey organics

If you prefer organic foods, make sure your organic dollars go to the most important items. The Environmental Working Group puts together an annual list of the Clean 15, fruits and vegetables that have the least pesticide residue and are safe to buy in the cheaper conventional version.

Buy in season

Why buy a pale bland tomato in the middle of winter — especially when it costs about four times as much as it would in the summer. Seasonal produce will be the best bargain.

Not sure what’s in season? Eat the Seasons posts a list of fruits and vegetables that are in season by month. You can also tell by seeing what’s got the lowest price in the product section at the store.

Want bonus points? Try shopping at your local farmer’s market or through a community-supported agriculture cooperative. Not only will your food be in season, it will be super-fresh.

Learn to preserve

If you’ve got a freezer, you can turn some of that in-season bounty into off-season delights. You can blanch (lightly boil) and freeze many fruits and vegetables. You can even make your own freezer tomato sauce and salsa so you can enjoy fresh tomato flavor in mid-winter. And your homemade frozen items will be much cheaper than the bags you find in the freezer section of the grocery store.

And consider buying meat in bulk and freezing it in meal-size portions. You can typically save more than a dollar per pound, depending on the type and cut of meat, when you buy the family packs. Ensure it will stay fresh longer by investing in a vacuum sealer. This affordable appliance will pay for itself easily — and you can use it to seal your frozen vegetables and fruits, too.

Stay home more

If you’ve been spending on eating take-out and sit-down restaurant meals, you’ll be amazed at how much money you can save by cooking at home. (As a bonus, many meals take less time than calling ahead and driving to pick up your dinner.) Can’t bear to part with your favorite take-out? Try a web search for “RESTAURANT NAME DISH copycat recipe.” You’ll be amazed at how many great recipes you can find that way.

Now, what will you do with all the money you saved on food?

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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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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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