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June 2018 E-Newsletter

 Q&A: "The Fed" and How It Impacts You

If you've been keeping up with news stories about the economy lately, you may have heard that "the Fed" has been raising rates, and is likely to do so more often in the future. What does this mean, and how will it impact you? Do you know what the Fed is and how it influences your money? Learning a bit more about how the central bank of the United States works and how it can impact your finances can help you make long-term plans for big financial decisions.
What is "the Fed"?
The Federal Reserve is the central bank of the United States. It is owned by private banks and operates independently of the U.S. government; it is not a government agency, though its Board of Governors are appointed by the President. The Fed has three mandates: maximize employment, stabilize prices and moderate long-term interest rates. 
What does it do?
The main way the Fed accomplishes its three mandates is by raising or lowering the Federal Funds Interest Rate (the basis for most other interest rates). In general, when the Fed lowers interest rates, the goal is to stimulate the economy. Conversely, they usually raise rates when they want to slow down the economy and/or control inflation. 
Does the Fed Funds rate impact me?
Yes. Even though consumers do not directly borrow money from the Fed, the banks that provide their car loans and mortgages do. Since the Fed Funds rate is the basis for other rates (by being the cost of what your bank must pay in order to get money) raising and lowering it affects the rates you, the consumer, can get from your bank. So, if you're in the market to buy a house and you hear that the Fed may be raising interest rates soon, you know to act quickly so you can secure a lower interest rate for your mortgage.
So are high rates bad?
No. While low interest rates on large purchases like homes are good for consumers, extended low interest rates (like we've seen over the past 10 years) means that the economy isn't growing very fast and consumers aren't earning much on their savings. When the Fed Funds rate goes up, depositors see increased interest rates on their savings accounts and CDs, so higher rates are a bonus for savers. It's also important to note the Fed raises rates a little at a time (usually only 0.25%) and the higher rates only affect new loans and loans with adjustable rate terms. Higher rates also mean the FOMC sees signs that the economy is getting stronger, which is good for everyone. 
By keeping these basic concepts in mind, consumers can create a better financial plan for themselves. Be sure to speak with your local banker if you want to learn more about the Fed. They'll be able to offer specific advice according to your accounts and circumstances.
An archive of Consumer Columns is available online at

 Class of 2018: 8 Ways to Prep for Financial Adulthood

Whether you’re graduating from high school or college, a diploma and a job represent the beginning of your personal — and financial — adult life. It’s an exciting, sometimes overwhelming time.
When you have the inevitable “I have no idea what I’m doing” freak out, remember these tips:
1. Set clear financial priorities
You probably can’t save, invest and pay off debt all at once, so prioritize in this order:
  • Save $500 for emergencies, because there will be emergencies
  • If your employer offers a 401(k), contribute at least enough to get any “employer match” — it’s free money
  • Pay down high-interest debt, like credit cards
2. Learn a simple budgeting strategy
Identify your after-tax income on your pay stub, then use the 50/30/20 rule as a budgeting guideline:
  • Use 50% for necessities like rent, groceries, transportation, utilities and minimum loan payments
  • Put 30% toward savings and debt repayment
  • Spend 20% on nice-to-haves like restaurants, travel and entertainment
If 50% isn’t enough to cover living expenses, dip into your nice-to-haves bucket.

3. Learn how credit works and why it matters
Credit is adulthood’s currency. You need good credit to qualify for travel rewards credit cards, get the best rates on loans and insurance and eventually buy a house.
To have a good credit score, you generally must:
  • Use credit by taking out loans and opening credit cards. You don’t need to carry a balance on them, though
  • Consistently make payments on time
  • Use less than about 30% of your available credit. If you have a card with a $3,000 limit, for example, charge no more than $1,000
Check your credit score to see where you stand. If you have bad credit or no credit, consider getting a secured credit card or credit-builder loan to boost it.
4. Do some money multitasking
In fact, credit-builder loans can help establish credit and save money at the same time.
You can get credit-builder loans through some credit unions, community banks or the online lender Self Lender. Borrow a small amount — say, $1,000 — and repay in installments over a year or two. The lender holds the cash until the loan is repaid. Then you’ll get the money, minus some interest.
Assuming you make full, on-time payments, you’ll get some positive credit history under your belt — and have cash on hand for that emergency fund or retirement account.
5. Leverage your youth to build wealth
Speaking of retirement, saving for it is one of the best uses of your cash now. Compound interest over decades is like magic: A small amount invested today will be worth more than a larger sum you invest 10 years from now.
For example, every $1,000 you invest at age 22 becomes nearly $20,000 at age 72, assuming a 6% rate of return, according to NerdWallet’s compound interest calculator. If you put off starting by a decade, you’d have to save almost double to have the same amount by age 72.
6. Start saving for retirement
We didn’t use age 72 by accident — that’s the age at which the class of 2018 can expect to retire, assuming they contribute 6% of their incomes to a 401(k) and have a 50% employer match, according to a 2018 NerdWallet analysis.
If your employer offers a 401(k) with a match, sign up and contribute at least enough to get the match. Increase your contributions annually or whenever you get a raise.
If you don’t have an employer-sponsored retirement account, open a Roth IRA through a brokerage or robo-advisor and contribute up to $5,500 yearly. The account’s earnings will be tax-free.
7. Make a plan for your student loans
Student loan payments typically come due six months after you leave school, giving you time to get a job before payments begin. But interest accrues during this grace period — except on federal subsidized loans — so begin making minimum payments sooner if possible.
Once you have very good credit and a job with a steady income, consider refinancing your student loans to save money by lowering your interest rate.
If payments on your federal student loans are overwhelming, review your options carefully. Income-driven repayment and Public Service Loan Forgiveness may offer relief, but both require meticulous attention to detail and annual maintenance to pay off.
8. Research your job’s market value
Advocating for yourself can be a particularly challenging part of adulthood. As your career progresses, you’ll feel empowered to negotiate your salary if you back your ask with hard numbers.
Research the going rates for similar roles in your field, at your skill level. Then, reference your findings during the negotiation conversation. Even if the employer declines, they’ll likely respect your preparedness and confidence.
More From NerdWallet
·      Ask Brianna: 5 Money Mistakes 20-Somethings Make
·      Does the CFPB Still Care About Students?
·      Make Saving for Retirement Easier — Invest Some Fun
Teddy Nykiel is a writer at NerdWallet. Email: Twitter: @teddynykiel. The article Class of 2018: 8 Ways to Prep for Financial Adulthood originally appeared on NerdWallet

Coulee Bank's Q-Tip: Cybersecurity While on Vacation 

Cybersecurity threats don’t take a vacation when you do.  If you’re headed out of the office for an extended absence, be aware that cyber threats continue. When traveling, you must take extra precautions to safeguard personal and sensitive information you carry inside your phone, laptop, and tablet. You can protect yourself and others by leaving any equipment that you won’t need behind (just make sure it’s secure where you leave it).  If you do need to take your work-issued computer and personal internet-connected devices, be sure to add these to-dos to your travel preparedness list.
Install Security Updates and Patches
Be sure to patch and update operating systems and software (including mobile device apps).  This should be a regular practice, but it is particularly important if you will be unable to update while traveling.  Updates and patches can fix security flaws and enable security software to detect and prevent new threats.
Create New Passwords and Change Passwords
Change passwords you will use while traveling. Passwords should be at least 10 characters or longer with a combination of letters, numbers, and symbols.  Consider using a passphrase – a combination of words that are easy to remember, such as “Mydogatemyhomeworkandgotindigestion”. Once you’re home, change your passwords again!
Lock Devices Down
Most smartphones, laptops, and tablets come equipped with security settings that will enable you to lock the device using a PIN or fingerprint ID.  Do this on every available device.  In the event you misplace or lose a device, this will be the first line of defense against a security breach.
Remove or Encrypt Sensitive Information on Mobile Devices
If you do not need to access sensitive information while traveling, don’t bring it. However, if you need the information while you are traveling, make sure sensitive information is encrypted.  For example, laptops should have full-disk encryption.
Turn Off Wi-Fi Auto-Connect and Bluetooth
Go into your device’s Settings feature, and disable the Wi-Fi auto-connect option so that you manually connect when it is safe to do so.  Similarly, disable Bluetooth connectivity. If left on, cyber thieves can connect to your device in a number of different and easy ways.
Avoid Public Wi-Fi
Avoid connecting to any public Wi-Fi network.  You didn’t connect to the free, open Wi-Fi on the airplane, so continue that mindset on the ground.  Using your mobile network (like 4G or LTE) is generally more secure than using a public wireless network. Do not conduct sensitive activities, such as online shopping, banking, or sensitive work, using a public wireless network.  Always log into your work networks through VPN, and only use sites that begin with “https://” when online shopping or banking.
Ensure Physical Security of Your Devices
NEVER let your devices leave your sight.  If you cannot physically lock devices in your hotel room safe or other secure place, take them with you.  There are no good hiding spots in your hotel room! When traveling with laptops and tablets, the best protection is to carry them with you.  It’s never safe to pack your devices in your checked luggage.
Use Geo-Location Cautiously
Most social media sites are happy to automatically share your location as you post photos and messages. This also tells thieves back home that you are away, which is a great time to break in. So, limit the information you post regarding your location at any point in time.
Q-Tips are provided by Coulee Bank's IT Network Risk Manager, Quentin Fisher. He is always on the lookout for ways to keep our customers' information safe, here at the bank, at work and home.

Coulee Investment Corner: Missteps That May Negatively Impact Estate Plans 

Inattention and procrastination can hurt family wealth.
Some estate planning is better than none, but sometimes people address wealth transfer issues inadequately or ineptly when they tackle the task. Here are some classic miscues.
Waiting too long. A wealthy individual may postpone estate planning until too late in life, which may present obstacles due to diminished faculties or declining health.
Poor communication. Failing to discuss details of an estate plan with a spouse, an executor, a charity, or heirs may lead to assumptions and differences in expectations—potentially setting the stage for more difficult conversations after you pass away.
Choosing the wrong executor. Some people lack the interest or temperament to carry out an estate plan. Others face a steep learning curve. Sometimes, an executor is chosen inconsiderate of his or her health—and passes away before the grantor does.
Failing to update beneficiary choices. Beneficiary designations on retirement savings accounts and life insurance policies can legally override will bequests. Outdated designations may result in ex-spouses or estranged children receiving life insurance proceeds or retirement plan assets.[1]
How up-to-date is your estate planning?
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

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[1] [10/8/16]