Top Ways Americans Are Slashing Spending

Posted by SIU Credit Union on Jul 14th, 2011 | no comments

Between the beginning of the recession in 2007 up until May 2011, Americans have cut spending by nearly $7,300 compared to what they would’ve otherwise spent if the recession didn’t occur. Looks like the recession had a lingering silver lining. Reported by the Federal Reserve Bank of San Francisco, the report shows that the average consumer spent about $175 less each month than before the recession.

Hats off to all you consumers out there for pinching pennies at the grocery store, clipping coupons, skipping morning lattes, trimming vacations, and whatever small yet significant ways your own household tightened its belt to cope with the recession. It’s healthy to trim the fat from your finances, and imagine what $175 saved each month can go towards—to pad a savings account, build an emergency fund, or hack away at debt.

Consumer spending is inching up since the start of 2011, which is necessary for a recovering economy. However, look for ways to keep up your  smart saving and budgeting; slipping back into pre-recession spending habits could lead to the same over-borrowing on credit that pushed Americans to the brink of recession.

 Need motivation to keep up money-saving habits? 

Try following the crowd! A recent Harris poll found the top 10 ways Americans are cutting back on spending, which can definitely help keep you on the right track for smart spending. 

1)      67% of Americans started purchasing more generic brand goods at the grocery store. 

2)      Almost half of us, at 46%, are brown-bagging lunch from home instead of buying. 

3)      43% are skipping appointments and going to the hairdresser or barber less often.

4)      39% switched from purchasing bottled water to using a refillable water bottle (a wallet and environment friendly move).

5)      31% cancelled one or more magazine subscriptions (also environmentally friendly).

6)      About a quarter of us, at 24%, are cutting down on dry cleaning.

7)      22% cancelled or downgraded television cable.

8)      21% are skipping buying coffee in the morning (and maybe making it at home instead).

9)      Following #5, 18% cancelled a newspaper subscription .

10)   16% cancelled landline phones and are relying on cell phone instead.

Which of these strategies are you already doing, and which new ones can you pick up to add more money-savvy moves to your daily routine?

Justine Rivero is the Credit Advisor and resident Credit Rockstar for Credit Karma, the pro-consumer credit advocate that helps more than 2.6 million consumers realize the everyday cost savings of having great credit health.

THE CURRENT CD QUANDARY: Today’s yields can’t beat inflation.

Posted by SIU Credit Union on Jun 21st, 2011 | no comments

Scott McClatchey, CFP^®
SIU Credit Union Investment Services

CD investors are effectively losing money. According to Market Rates Insight, a research firm tracking bank rates, annualized inflation has surpassed long-term certificate of deposit rates since February. In April, 12-month inflation hit 3.16% while the highest-yielding 5-year callable CD on the market offered a 2.4% interest rate. May’s Consumer Price Index put annualized inflation at 3.6%; as of mid-June, the highest-yielding nationally available 5-year CD was at 3.05% APY.^1,2,3

Still, the Federal Reserve found that almost $9 trillion of American wealth was held in CDs, bank accounts and various FDIC-insured products as of April.⁴

It’s a case of déjà vu. This is the second time in recent history that CD investors have been punished for assuming so little risk. During the period from January-July 2008, the negative yield on 5-year CDs was 1.8% according to MRI.⁵

They might come out ahead … should inflation diminish. As Bankrate.com senior financial analyst Greg McBride reminded Bloomberg, “Investing in a CD isn’t compensating you for last year’s inflation; it’s compensating you for next year’s inflation, which is unknown.” Will inflation ease in the long term? Many analysts aren’t betting on it.

The appeal of CDs remains strong. After all, not many investments are federally insured. MRI vice-president Dan Geller said it best to Bloomberg: “Right now, people are more concerned about the return of their deposits rather than a return on their deposits.”

With 63% of Americans still believing the nation is in a recession (according to a recent Rasmussen Reports poll), there is still plenty of skittishness about equity investment. Even with the Fed’s bond-buying campaign sending yields on short-term Treasuries and CDs toward all-time lows, some investors really aren’t hungry for risk.⁵

Are CDs still worth it? There is no pat answer. Your own answer will depend on your preferred investment style, your risk tolerance and your financial objectives. Many people choose to park some of their invested assets in CDs and other savings instruments as part of a diversification approach. The inflation-adjusted return is dismal at the moment, but knowing that your principal is safe certainly has its appeal.  Note that Surrender charges apply should you attempt to liquidate your CD.  Any guarantees regarding safety of principal are based on the claims paying ability of the issuing financial institution.  Traditional CD’s are NCUA or FDIC insured and offer a fixed rate of return if held to maturity.

Citations.

1 – bloomberg.com/news/2011-05-23/savers-lose-as-long-term-cd-yields-fall-below-inflation.html [5/23/11]

2 – bls.gov/news.release/cpi.nr0.htm [6/15/11]

3 – depositaccounts.com/blog/2011/06/highest-5year-cd-rate-in-the-nation-at-fort-knox-federal-credit-union.html [6/17/11]

4 – articles.philly.com/2011-06-13/news/29653033_1_inflation-rate-mutual-funds-stock-market/2 [6/13/11]

5 – online.wsj.com/article/BT-CO-20110523-712255.html [5/23/11]

6 – montoyaregistry.com/Financial-Market.aspx?financial-market=roth-ira-rules-and-regulations&category=1 [6/19/11]

Scott McClatchey provides investment and retirement planning services to SIU Credit Union members through a partnership with Alliance Investment Planning Group.  A CERTIFIED FINANCIAL PLANNER™, Scott keeps regular office hours from 9:00 to 1:00 on Tuesdays at the Carbondale East branch and is also available by appointment.  Call 618-549-8632 to set up an appointment with Scott.

Seven scams targeting small businesses

Posted by SIU Credit Union on Jan 10th, 2011 | no comments

MADISON, Wis. (1/10/11 CUNA)–Small businesses should note seven scams, according to the Better Business Bureau (BBB).”Small-business fraud can come from internal threats, such as employee fraud, or from external full-time scammers,” said Alison Southwick, BBB spokeswoman. “Because small-business owners often lack the time and resources to fight fraud, they are a popular mark for any number of different scams” (LoneStar Leaguer Jan. 5).Credit unions can warn their business members about these scams: 

• Directory Scams–Usually the scammer will call a business to “update” the company’s entry in an online directory, or the scammer might lie about being with the Yellow Pages. The business is later billed hundreds of dollars for listing services it didn’t agree to or for ads which it thought would be in the Yellow Pages.
• Office Supply Scams–Some scammers prey on small-business owners and hope they won’t notice a bill for office supplies–such as toner or paper–that the company never ordered.
•  Overpayment Scams–Businesses should be cautious if a customer overpays using a check or credit card and then asks the business to wire the extra money back to them or to a third party. Overpayment scams often target catering businesses, manufacturers, wholesalers and even sellers on sites like eBay, Craigslist and Etsy.
•  Data Breaches–No matter how vigilant a company is, a data breach can still happen. Whether it’s the result of hackers, negligence or a disgruntled employee, a data breach can have a severe impact on the level of trust customers have in a business.
•  Vanity Awards–While it’s flattering to be recognized for hard work, some awards are just money-making schemes and have no actual merit. If approached about receiving a business or leadership award, research the opportunity carefully and be wary if asked to pay money.
• Stolen Identity–Scammers often will pose as legitimate company to rip off consumers. A company whose identity is stolen doesn’t necessarily lose money, but its reputation is potentially tarnished when angry customers ripped off by the scammers think the real company is responsible.
• Phishing e-mails–Some phishing e-mails specifically target small-business owners with the goal of hacking into their computer or network. Common examples include e-mails pretending to be from the Internal Revenue Service that claim the company is being audited, or phony e-mails from the BBB saying the company has received a complaint. Companies receiving a suspicious e-mail from a government agency or the BBB should not click on the links or open attachments. Contact the agency or the BBB directly to confirm the legitimacy of the e-mail.

  

Simple Ways To Prevent Check Fraud

Posted by Dennis Schaefer on Jun 29th, 2010 | no comments

Skilled professional criminals are using sophisticated technologies to easily defraud individuals and their financial institutions using a copy of a check and or an individual’s personal information. A thief is able to create new, authentic looking checks using a blank check or personal information obtained from an intercepted check mailed to pay a bill. Common-sense and a logical approach with the way an individual uses andstores checks can help reduce the risk of this type of loss.

WAYS TO REDUCE THE RISK OF CHECK FRAUD

1. Keep your account information confidential and never provide your account number or personal information to unknown persons. Be particularly cautious of unsolicited phone sales.

2. Reconcile your bank statement as soon as possible after receipt (within 20 days) to detect any irregularities. Delays may subject you to liability for any losses due to check fraud.

3. Protect your checks – Store your checkbook, blank checks, deposit slips and bank statements in a secure location.

4. Don’t leave blank spaces on the payee or payment amount lines on your checks.

5. Monitor check orders to ensure they are received timely and immediately verify that all checks were received with the order.

6. Mail bill payments through the Post Office and not from your mail box at home. Seeing the upright red flag on your home mail box is a favorite signal for criminals to look in the box and steal whatever is there.

7. Do not add personal information on your check (Social Security #, Driver’s License # or DOB).

8. Destroy (shred) cancelled checks (if received), account statements and deposit tickets unless needed for tax purposes.

9. Use your own pre-printed deposit slips and make sure the account number on your slip is correct. Thieves have made attempts to alter deposit slips at drive-up windows in the hope that bank representatives will not notice with the result that the funds are deposited into the thief’s account.

10. Don’t ever make a check payable to cash and also, never endorse a check until you are ready to cash the item or make the deposit. If lost or stolen, a check made payable to cash may be legally and rightfully cashed by anyone.

11. If someone pays you with a cashier’s check, be cautious and if possible, have them accompany you to the bank to cash the item. If you need to accept a check for payment, do so during normal business hours so you can verify with the financial institution that it is legitimate. Make sure you obtain identification information from the individual.

12. If your home is burglarized, determine if any checks have been stolen. Look closely because thieves will take checks from the back or middle of your check book to avoid immediate detection.

-Allied Solutions

Show Me The Future

Posted by SIU Credit Union on Jun 14th, 2010 | no comments

We spend a good amount of time out in the community teaching financial literacy. Whether it’s to families, college students or high school and grade school students, we understand the importance of teaching the basics of good financial habits. I’m always on the lookout for new ways to deliver the information. When Show Me The Future came across my desk this morning it caught my attention. 

If you have grade-school to college-age kids, you’ll definitely want to pass along this link to them. With this game, you’ll have a whole new identity including occupation, income, whether you’re married or single, whether or not you have kids, and more.   You have a checking account with a register, which will contain the money you earned as your new identity.  Then you get to make choices, like the kind of house you’ll live in and what you’re going to eat, based on your identity.  Every choice you make costs money, which will be deducted from the money in your checking account.  The trick to the game is to see if you can make ends meet and still have some cash at the end. 

About Show Me the Future

Click here to Take a look and enjoy.

“Don’t Change Interchange” by The Disclosures

Posted by Joshua English on Jun 10th, 2010 | no comments

Protect your credit union’s debit card! Recently, the US Senate approved the Financial Regulatory Reform Bill which included a provision that would mandate price controls on the interchange fees paid by merchants for accepting debit cards. This bill has unintended consequences for credit union members and every consumer with a debit card in his or her wallet.

Contact your federal legislators ASAP and ask them to oppose the Senate-passed interchange provision.

TAKE ACTION:

Send a letter to congress:
http://capwiz.com/cuna/home/

Call Legislators:
1-877-223-5275

Please post, watch, and share this video anywhere you see fit to help spread the word on this important issue.

Song performed by The Disclosures with apologies to George Michael. The Disclosures are Chad Helminak (right) and Christopher Morris (left).

The views and opinions expressed in this video are solely those of The Disclosures.