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Coulee Bank

May 2016 E-Newsletter

 

Monitor Your Credit Report to Protect Your Finances 

Do you know your current credit score? When was the last time you checked your credit report? Your credit score affects many aspects of your life, including interest rates on large purchases, obtaining loans, renting an apartment and even applying for a job! Keeping a close eye on your credit report can also help you prevent identity theft. Here are a few important facts to keep in mind when monitoring your credit score.
 
Check Frequently - For Free!
First and foremost, make sure you check your credit report three times per year (one for each of the three major credit reporting agencies: Experian, TransUnion and Equifax). You can do so for free by visiting www.annualcreditreport.com. This is especially important to do a few months prior to major purchases like a house or vehicle.
 
Watch for Unauthorized Transactions
Second, use this check of your credit report to protect your identity. Unauthorized accounts, loans or purchases will damage your credit and let you know someone has stolen your identity. This is also important because your credit report has information on current and previous addresses, your social security number, and the number of times you have applied for credit. All of this information is valuable to identity thieves and needs to be checked regularly.
 
So what do you do if your credit report is inaccurate? You can dispute errors on anything from inaccurate late payments to accounts that aren't yours. You can also dispute falsely reported bankruptcy, or a bankruptcy that has stayed on your report for longer than the ten-year limit. You can make the dispute online, by mail or over the phone. To dispute via the Internet or phone, you must have ordered a copy of your credit report within the past month and you will need to provide the credit report number. Once you have the necessary information assembled, contact the credit bureau associated with the inaccurate report (Experian, TransUnion or Equifax).
 
In Between Reports
Since you can only check your full credit report every few months, monitoring your accounts on a daily basis is a key component to keeping your financial data secure. Utilize free tools like online banking, mobile alerts, and electronic bank statements to track your accounts. Watch for unauthorized or strange purchases or charges, even small ones. Sometimes, when financial information is stolen, the criminal may make a small purchase to see if the information is accurate. If the small transaction goes through with no problems, the thief goes on a shopping spree - with your money!
 
If you notice unauthorized activity on any of your financial accounts, your first step should be to contact your bank using the phone number on your statement or on the back of your credit/debit card. They will help guide you through the process of cutting off the compromised account and switching to a secure one.
 
Source: WBA Consumer Column E-Newsletter


Security Q-Tips – Think Before You Click!

Last week, news broke that Prince Rogers Nelson was found dead in his home in Minneapolis at age 57. He was found unresponsive in an elevator and was declared dead shortly after. Internet criminals are going to exploit this celebrity death in a number of ways, so be careful with anything related to Price's death: emails, attachments, any social media (especially Facebook), texts on your phone, etc. There will be a number of scams related to this, so ‘Think Before You Click!’

Also, with the recent earthquakes in Ecuador and Japan, there are charity scams sticking up their ugly heads. If you want to make donations, go to your favorite charity by opening your browser and type their link in the address bar.

There has also been a recent wave of phishing attacks that try to trick you into opening "secure documents". You receive an email that looks like it is a DocuSign or EchoSign or Secure Adobe PDF notification with an important document attached that needs to be looked at.
The bad guys try to trick you into opening and clicking the attachments, and "enable macros" or "enable editing" but when you do, your workstation gets infected with malware or ransomware.

When you receive this type of document, which you did not ask for, and it's from someone you do not know, be very cautious and if you want to be sure, delete the email. If it looks like it comes from someone you do know, pick up the phone, use a phone number you know is valid (not a phone number from the suspicious email itself), and verify if this actually was sent by them and what the purpose was.

To learn more about these topics go to https://blog.knowbe4.com.



Are Shakespeare’s musings on money still relevant today?

 

You may have attended one of hundreds of events around the country this past weekend to celebrate the 400th anniversary of Willliam Shakespeare’s death in 1616.
 
Few writers have ever caught our imagination like the Bard of Avon. Many of you will have studied his plays at secondary school, examining their universal themes of love, revenge, sorrow and comedy. But now that personal finance is on the curriculum could works be used to educate children?
 
One of my favorite Shakespeare money quotes is from Iago (Othello, Act II, scene iii):

‘Poor and content is rich, and rich enough,
 
But riches fineless is as poor as winter
 
To him that ever fears he shall be poor.
 
Good heaven, the souls of all my tribe defend
 
From jealousy!’
 
The first line conveys the importance of frugality, which for many is the only way to make sure we can save enough for our retirements. I also like the final line’s message about not trying to keep up with the Joneses.
 
There are hundreds more quotes about money in Shakespeare’s enormous body of work – but perhaps not as many memorable ones as you would expect from 34,895 speeches in 37 plays, plus 154 sonnets.
 
Shakespeare seemed more concerned with the themes of love, revenge, comedy, ambition and violence than what we do with the money in our pockets. The Merchant of Venice, in which the plot hinges on a large loan provided by an abused Jewish moneylender, is perhaps the only ‘money’ play.
 
But the quote that first springs to mind when we think of Shakespeare musing on money issues, ‘Neither a borrower nor a lender be’, is actually from Hamlet, Act 1, Scene iii.
 
And in the context of today’s growing popularity of peer-to-peer lending, it is perhaps the one that doesn’t endure so well. What would the Bard have made of peer-to-peer lending? This is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers. Starved by rock bottom interest rates, many savers are turning to peer-to-peer lenders for better rates on their money.
 
Before Shakespeare’s time, borrowing or lending money was seen as sinful and banned by the Christian Church. But Queen Elizabeth 1’s Parliament decided to legalise money-lending – as long as interest rates weren’t over 10 per cent, which would have been viewed as usury.
 
As someone who has worked himself into the ground, Shakespeare found easy access to credit abhorrent and had little sympathy for people who got into debt. ‘I can get no remedy against this consumption of the purse. Borrowing only lingers and lingers it out, but the disease is incurable.’ {Henry IV Part 2, Act 1, Scene ii}.
 
Many of us today won’t necessarily agree with this view. It’s accepted that if people work hard and if they are on top of their finances and can afford to pay it, then it’s ok to take out a loan – to finance a much-needed new car, for instance. And the yoke of long-term mortgage debt is the only way to eventual home ownership.
 
Would we agree with Shakespeare’s strong stance on gambling being off limits? ‘O, that way madness lies; let me shun that.’ (King Lear, Act III, Scene iv). Yes, probably, excepting any holdings in Premium Bonds, the UK’s most popular financial product with the chance to win a £1 million jackpot, or our weekly flutter on a Lotto ticket.
 
As for our May bank holiday plans for DIY, Shakespeare seems to consider this a waste of time rather than a worthy investment. ‘Why so large a cost, having so short a lease, does thou upon your fading mansion spend?’ {Sonnet 146}
 
But some of the Bard’s money musings have weathered the centuries much better. ‘You pay a great deal too dear for what’s given freely,’ says Camillo to Archidamus in A Winter’s Tale, Act 1, Scene i. Here it is not too difficult to think of today’s lousy current account rates or high charges on actively managed investment funds that are actually closet index trackers. This quote is as relevant today as it was 400 years ago.
 
Source: http://blogs.spectator.co.uk/2016/04/are-shakespeares-musings-on-money-still-relevant-today/


The Best Ways to Borrow for Your First Home


Putting down as little as 3% is back, but so is the risk of going under water.
 
Student loan debt, high rents, and high home prices have combined to make it difficult for millennials to get into a first home. The under-35 home ownership rate was 36% in 2014 (the latest data available), according to Harvard’s Joint Center for Housing Studies, down from a 2004 peak of 43% and the lowest level since 1994. Even 35- to 44-year-olds are less likely to own homes.
 
This isn’t a problem just for young buyers. Less demand on the low end can put a damper on prices overall, as trader-uppers are slow to sell and downsizers find fewer takers. “Baby boomers who want to retire and sell their homes need available buyers,” says Nikitra Bailey, executive vice president of external affairs at the Center for Responsible Lending.
 
That has left the government in a sticky situation. When you can’t scrape up a big down payment, as many first-time buyers can’t, you run the risk of becoming saddled with a home worth less than your mortgage if real estate prices crater. At the peak in 2012, 16 million homeowners were underwater, according to Zillow, though that was down to 6 million at the end of 2015. No one wants a repeat of history.
 
Still, the government has been enhancing programs for first-time buyers, and millennials are starting to make up a bigger portion of buyers. So whether you’re aiming to buy a starter home yourself or helping your kids realize that dream, the outlook is brighter.
 
Go to the government
Last year the Obama administration made one of the best solutions to the down payment problem even better. With a loan from the Federal Housing Administration, you can buy with as little as 3.5% down and a credit score of 580. The trade-off is that you pay for mortgage insurance, fees that essentially boost your loan rate. But the FHA cut the annual premiums for borrowers putting down less than 5% from 1.35% of the loan value to 0.85%, a move estimated to save a typical buyer $900 a year.
 
See if you can do better
In 2014, Fannie and Freddie started offering mortgages with as little as 3% down. These require higher credit scores (typically 620). But they have a big advantage over FHA loans: You pay mortgage insurance for the life of the loan with a 3.5%-down FHA loan; with Fannie and Freddie you stop once your principal payments add up to 20% of your initial home value. One caveat: you may run into income limits to qualify—no more than 100% of the median income in some areas. For more, visit TheMortgageReports.com and click on “loan types.”
 
Defer the dream
Just because you can buy a house with 3% down doesn’t mean you should. Even a small drop in home prices could leave you underwater, especially since real estate commissions typically amount to 5% of the sale price.
 
Plus, notes Denver financial planner Kristin C. Sullivan, “if all you can manage to save is 3% down, you might not be ready for all the other costs of ownership.” She suggests putting at least 10% down. Failing that, look at cheaper houses or wait a little while before you buy.
 
Be ready to leave
With fixed rates so low nowadays, it’s hard to make the case for risking higher rates later. But adjustable-rate mortgages are more affordable in the short term, and according to the National Association of Realtors, 56% of homeowners under age 34 stay in their homes for five years or less.
 
“If you know you are going to be in the house less than seven years, it can make sense to get the lower rate,” says HSH’s Tim Manni. Today you’ll pay 3.5% on a seven-year ARM, vs. 3.9% for a 30-year fixed.

Source: http://time.com/money/4289177/borrow-buy-first-home-mortgage/
 


The Best Times To Book Flights For Summer 2016 Travel


With high travel season around the corner, a new study is shedding light on the best time to book summer airline tickets. The study, published by The Hipmunk, an online travel agency, also gave insight into which summer holidays were most expensive for summer travel.

In general, the news is all good. With oil hovering at a ten-year low, the global price of airline tickets is slowly starting to fall. According to data taken from 2015 to 2016, the median cost of domestic airfare has fallen from $330 to $286 this year, a drop of just over 13%.

The bad news is that those savings are on top of already-inflated summertime flights, including travel across the Memorial Day, Fourth of July and Labor Day holidays. To help alleviate that pain, The Hipmunk calculated the best time to book travel for each respective holiday, pulling from a legacy of bookings to build out its dataset.

Surprisingly, the best booking window for each holiday varies. According to the study, the best time to find cheap flights for Memorial Day travel is seven weeks prior to the holiday — right around the middle of April. Travel for the Fourth of July holiday was determined to be least expensive at six weeks prior to travel, while Labor Day tickets were best booked seven weeks prior.

Across the full pricing study, perhaps the most obvious trend was that booking fares at the last minute can be financially catastrophic. In addition to the well-known practice of airlines raising prices within two weeks of travel, holiday flights in high demand can be extraordinarily expensive.
On the other side of that equation though, it follows that consumers can benefit most by booking flights as early as possible. Although The Hipmunk was able to highlight windows in which lower prices might be available, holiday travel, just like year-round travel, is often least expensive when demand is lowest — or flights aren’t full. For routinely inexpensive fares — summertime or not – the best approach may simply lie in booking before everyone else.

Source: http://www.forbes.com/sites/grantmartin/2016/04/17/the-best-times-to-book-flights-for-summer-2016-travel/#58245efe35f0

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Coulee Investment Corner: Boost Your Borrowing Power by Boosting Your Credit Score 
 


Your credit score is a rating that lenders can use to gauge how likely you may be to repay debts on time. A typical credit score will range between 300 points and 850 points. Generally speaking, higher scores are presumed to represent lower risks -- the more attractive your score might be to a lender, the better the deals you may be offered. In other words, you can improve your position in the borrowing process by taking steps to boost your score.
Factors That Determine Your Credit Score
Credit scores are compiled by the three major credit reporting agencies -- Equifax, Experian, and TransUnion -- based on information provided by creditors. They generate scores using a proprietary formula that assigns weightings to the five main factors illustrated below: Your payment history, which is whether you have missed or been late with any credit payments (the fewer late or missed payments, the better); your utilization ratio, which is the amount you owe creditors compared with the amount of credit that is available to you (the lower the utilization, the better); the length of your credit history (how long various accounts have been open); the types of credit you use (the more diversified your credit resume is among car loans, mortgages, credit cards, etc., the better); and the amount of new credit on your record. As you can see in this chart, the most important factors in your score are generally the amounts you owe and the rate at which you repay your loans.
Relative Weights in the Credit Score Equation
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Source/Disclaimer:
Sources: myFICO.com; Fair Isaac Corporation.

Required Attribution:
Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.
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