Monthly Archives: February 2017

Ways to Pay Off Your Home Loan Sooner

Are you looking for ways to save on your home loan? Following these simple tips will put you on the path to paying off your loan sooner or if your goal is to purchase an investment property, creating equity from which you can draw on.

Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay. By repaying more than the minimum you can cut the overall term of the loan and save thousands of dollars in interest. The more you pay off earlier on in your mortgage, the more you’ll save over time. Some products may charge you an early payment fee for paying your loan in advance. These costs can be large, so it’s best to always check beforehand.

Consider how mortgage features can help
Think about how using an offset account or a credit card linked to your home loan might help you keep your loan balance low. If you’re looking for ways to keep your interest down, it’s worth investigating what other features your mortgage comes with.

Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments, but if your lender reduces the interest rate, consider repaying more than the minimum loan repayment amount. This can help you save on future interest payments. Don’t pay the interest-only An interest-only loan might mean you’re able to make lower repayments for the first few years, but this means your repayments will be larger when it comes time to pay off the principal.

Consider re-financing
If you’ve had your mortgage for 12 months or more, re-financing might be able to get you a better deal on your home loan. There may be costs associated with re-financing and it’s important to take this into account.

Consider a split home loan
A split loan allows borrowers to divide their mortgage into both variable and fixed components. You can lock in a low fixed rate on part of your loan, if you only want to limit exposure to the variable rate.

Explore your options
Before you sign on the dotted line, make sure you’ve explored all of your options. It’s worth looking into whether you can get a discounted loan rate with a financial package that includes special rates on other products and services. With just a few easy steps, borrowers can significantly reduce the length of their loan and save thousands of dollars in the process.

Federal Employees Ready for Retire

I meet regularly with Federal employees about their retirement benefits and their current payroll deductions. Most are not aware of what their Paystub reflects but more importantly do not know that a few tweaks to what they are currently doing can make a huge difference in their retirement.

Some key questions you need to ask yourself is:

1) Do I know what I am getting from CSRS/ FERS retirement? This is a simple calculation that is provided in your Summary of Benefits Workbook. Knowing this number is key to setting up the rest of your retirement plan.

2) Do you know what your TSP contributions translate to a lifetime Annuity? Most people contribute to their TSP as a main source of retirement funding. It is important to know what the TSP will translate to in an Annuitized retirement vehicle.

3) Do you know when you can start taking Social Security? Do you know how much your projected monthly Social Security Payments are? If you have not received a statement from Social Security about your benefits, you should call the Social Security office and have one sent to you. As a Federal Employee you can start receiving Social Security income at age 56 through a Special Retirement Supplement. A Special Retirement Supplement is a plan put in place to help Federal employees pad their monthly income until they are eligible for Social Security Benefits. This is available in your Summary of Benefits Workbook.

4) Do you know what your FEGLI Benefits are and do you know how to interpret your FEGLI code on your paystub? Your summary of Benefits workbook, goes into detail about the FEGLI code and how to interpret it. The Workbook also shows some areas of concern that you need to be aware of when approaching retirement.

5) Are you contributing enough or too much to your TSP? Do you know about the 1% FERS contribution? Most people do not know that as a FERS employee the Government matches another 1% if you contribute all 5% to TSP. Thus you are getting a true 100% match.

What is the perfect contribution level? If you are not contributing 5% to your TSP, you are making the biggest error in your retirement investing. The Government matches the first 5% with a 100% match. So for every $1 dollar you invest you are getting $1 dollar plus the additional return of the fund you invest in.

On the other side of the coin I have seen many people invest 10% or more into their TSP and this is also a mistake. The funds within the TSP are very conservative by nature and provide a low rate of return. The maximum you should invest in a TSP is 5% of your income.

6) Do you know the minimum age you can retire with “FULL” Benefits?

Ages are 56-30, 60-20 and 62-5.

7) Do you know how to accurately determine what you are making now compared to what you will be making during your retirement? Do you know what items you will no longer need to pay at retirement? One of the key things that may bring Federal Employees comfort is the knowledge that there are several deductions that they will no longer need to pay at time of Retirement.

For Instance, you no longer need to contribute to TSP or FEGLI.

8) Is your W4 deduction status set to the proper level? Are you giving the government a tax free loan by mistake when you could be earning tax free interest? If you are getting money back each year, it may seem like a bonus but you have missed out getting interest on that income all year.

These are all key questions that will make a HUGE difference to your retirement. Take time to review your Summary of Benefits workbook.

To get your Summary of Benefits Workbook and a Benefit Review call 800-221-3928 and schedule a 20 minute appointment.

Tips For You to Improve Your Credit

Credit Scores. It can be one of those touchy topics depending on how you see it. Your score can take years to build up and just months to destroy. We’ve all suffered from credit mishaps; from forgetting to make a payment to utilizing all of your credit. Sometimes, a bad score can be result of something out of our control- divorce, medical bills, and bankruptcy. Simply, maintaining your credit is a way of life. Since almost all big purchases require credit, A low score will make everything more expensive. You’ll have to pay a higher interest rate on loans over time.

A score Is used to show credit history, on-time payments, responsibility and discipline. A low credit score will improve naturally over time, so don’t lose sleep over it. However, if you have upcoming equipment financing or leasing needs in the near future. It’d be smart to try raising your score beforehand. That can be the deciding factor between boosting you into the next tier and saving money.

Let’s be realistic. There’s no miracle method to raise your credit score 100 points in a month. Some Credit Repair “Experts” will try to fool you into believing this can be done, but it’s simply impossible. You hear it all the time in advertisements – ” 1-2% APR for excellent credit “, but you’re never sure what exactly is excellent credit. Let’s break it down, There are 4 tiers of credit.

Tier 1 (Excellent Credit): 700 and above

Tier 2 (Good Credit): 660-699

Tier 3 (Fair Credit): 620-659

Tier 4 (Poor Credit): 619 and below

Credit score

Tier 1 and 2 typically get the best rates. Tier 4 is usually the most difficult to get approval for. Even if you have a Tier 3 score, it’s still advisable to try and improve your score. It’s a important part of your life and business. If you’re a newer business without cashflow statements, it can be hard to obtain financing. Many Lenders will use your score to assess you. That’s why it’s important to improve your credit score when you can.

Here are our 4 best hacks for quickly improving your credit score. The improvement can be anywhere between 10 points to 40 points which should be enough to bump your credit score up. Note: These are quick tips to boost your score up, we will have a more comprehensive guide on maintaining your credit later.

Dispute the negative marks – We get it. It’s hard to pay your bills on time sometimes. Between juggling your business and family, paying your bill sometimes slips your mind. There’s 3 major credit reporting bureau: TransUnion, Equifax, and Experian. Your credit report with all of them will vary a little bit. Contact them and dispute whatever you can. Write as much as you can with your dispute and make copies of everything.

NOTE: Spend time and be thorough – This can make a huge impact on your scores.

Open A New Secured Credit Card – According to Credit Karma: People with a credit score of 800 and above typically have 7 open credit cards. While you don’t want to open more than 1 a year, 7 is just a guideline number to aim for. No matter how bad your credit score might be, you can still get approved for a secured credit card. Secured Credit Cards are the best way to rebuild your credit. You’ll have to put a deposit down, but the lender will give you a line of credit. To pick a good secured credit card to use, we would use this Guide by Magnify Money.

NOTE: You want to keep your credit utilization under 30% usage, so monitor your usage accordingly. Only open 1 credit card as doing more may hurt your score.

Raise your Credit Limits – Call your existing card companies and ask for your limits raised. If you’re not at 100% credit utilization, it’ll be helpful to get your limits raised. Even if it’s just a 10% increase, It’ll help your overall report health.

Become an Authorized User – This one is a little tougher to do. You’ll need someone who is in good credit standing. They’ll add you onto their existing credit card accounts. You’ll be provided a card linked to their account and responsible for charges spent. Family members and Close friends are going to be the people you ask. Understandably, It’ll be difficult convincing someone to add you, so don’t take it personally. Becoming an authorized user can cause a boost in score up to 50 points!

TIP: Don’t use the card when you get added. Shred it so you won’t have any temptation.

Leveraging your credit is important to getting the most out of your money. Hopefully with these 4 hacks, you’ll get the score improvements that you need. The usual advice applies, don’t overspend with your new increased credit limits and pay your bills on time! Many people have success using the autopay feature to eliminate late payments. Feel free reach out to us and let us know how this has benefited you!

The Credit Cards for Armed Forces

Having a credit card and maintaining a good credit score are definitely challenging jobs. There are some credit cards which are designed especially for the armed personnel. Having the national flag design and regular contribution to the Defence Welfare Association are some of the privileges these types of cards offers to the armed forces.

Highlights of these credit cards

• Joining fees and annual fees for first year usually will be nil.
• Similarly, joining and annual fees for an add-on member are free.
• Card holders do not have to pay charges for loss/re-issue/replacement of card as well for SMS transaction alerts
• If the card is misplaced or lost, the holder can withdraw cash by cheque – no fee for the service
• Charges for duplicate statement, charge slip retrieval and balance enquiry are nil.
• Dining Delight option – Minimum 15 % discount for dining at specific partnered restaurants.

Benefits

• Complimentary access available to airport lounges
• Want to include a beloved family member – spouse, children, siblings, parents? – They just have to be above 18 years of age.
• Similar to all bank credit cards, even this card will be PIN protected and equipped with an EMV certified chip. Card holders can remain hassle free while making all kinds of transactions on mobile and other devices as there is less possibility of skimming/counterfeit fraud.
• Reward options may include a visit to a theme park, paragliding trip or going abroad a charter.

Features

• Zero Lost Card Liability – Lost or misplaced the card? Afraid it fell on wrong hands? This liability protects the holder from the moment the loss of card is reported to the customer service. However, terms and conditions apply.

Eligibility Criteria

To be eligible for these cards, the card holder should be
• Defence Personnel
• The primary card holder should be between 18 and 70 years of age
• Add-on card holder should have attained the age of 18 years

These cards come with multiple reward points which can be gained by participating in community competitions. Accumulation of more than 1000 points leads to a voucher having value of $50. A card holder can get discounts in multiplexes by just showing proof of the discount voucher.

Or they can avail of free travel (as per the conditions and terms) in a theme park.
In all, these credit cards issued to the armed forces are a boon to their families as they can make bill payments online, book tickets for their favourite show or shop for essential items at multiplexes.

SathyaNarayana B has completed Post Graduation and is interested in writing articles on health, martial arts, finance, history, travel etc.