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How to Get Smart with Your Credit

 

Today, practicing the simple credit concept of “living within your means” can be extremely difficult due to medical and housing costs growing more rapidly than income in many American households. However, this doesn’t mean you can’t manage your credit and debt responsibly. Here are a few tips to help you get your credit on track, even when times are tough.

1. Understand what credit is. According to Finance Solutions Credit 101, credit is your “promise to pay in the future for purchases made today.” You may be aware that when applying for credit with a lender, your credit report will be pulled to determine your payment history, amounts owed, credit history, new credit and types of credit, which is all taken into consideration when determining your credit limit. Understanding the terms and fees associated with your credit will help you make more educated decisions in terms of lenders, especially if you were to become overextended.

2. Maintain healthy debt. Maintaining healthy debt is all about making good choices when it comes to debt. This means developing a happy medium in terms of credit history, exercising timely bill payments and managing a variety of credit accounts.

A good example of this is the attractive additional 25% off at your favorite store in exchange for signing up for their store credit card at the moment of purchase. Doing this once or twice is harmless enough, but if you are maintaining credit cards for a variety of stores, this can negatively affect your credit score by repeated hard inquiries and hidden terms not discussed in the rushed sign up process. Overall, the potential damage to your credit may not be worth the immediate savings.

3. Stay out of the credit danger zone. Similar to points made in the previous two tips, you need to make good choices when it comes to purchasing on credit. Watch your accounts carefully to avoid overextending yourself, keep your balances low and always pay your bills on time.

If you are in a position where you can’t pay your bill on time, communicate with your lender to make them aware of the situation and determine an alternate rate of payment. And we get it, emergency expenses come up, but the best way to handle these is to do your best to prepare for them. If you don’t have an emergency savings fund built up, start one today and prepare yourself for the unexpected to avoid unplanned credit charges.

Managing your credit responsibly can be extremely difficult, and due to unforeseen circumstances you may already be in over your head. Reach out to us to discuss your financial management needs today. We are here to help you get on track!

How to Financially Prepare for Natural Disasters

When it comes to preparing your finances for certain occasions, natural disasters usually aren’t one of the events that come to mind. However, not creating an emergency fund for the unexpected could hurt you immensely since Mother Nature doesn’t care whether you’re prepared or not. That’s why Sunset Bank & Savings has put together a few tips on how you can ready yourself for a natural disaster.

Make Your Fund A Priority

While some disasters come with a warning, others do not. If you try to prepare too quickly and scramble to figure out what the best strategy for saving your emergency fund is, things will fall apart. Adding to your fund by taking a little out of each paycheck will help you to begin saving quickly. For example, an emergency fund of $500 would be able to pay for a small family’s hotel, transportation, or food if a disaster occurred.

Have Cash On Hand

When being forced to evacuate, ATMs may be overrun or go down, meaning there is no way for you to get cash. Power can go out, leaving debit and credit cards useless. By having cash on hand, you will be able to know that you can purchase necessities when an event occurs.

Document

Be sure to have a fireproof and waterproof box with documents you will need to pick up the pieces after a disaster. You will need documents that have numbers and information to your bank, creditors, health insurance, and property insurance. By having your personal, legal, health, and financial documents together, moving through the disaster will be a much smoother process. Other documents to include would be passports, birth certificates, health records, social security cards, bank routing numbers, deeds, income tax information, and more.

Take Inventory

Be sure to take videos and photos of your belongings. Photograph the interior and exterior of your home along with your vehicle. By documenting all of your belongings and the state they were in, you can be sure that your insurance company won’t shortchange you.

We don’t ever hope a natural disaster will strike, but it’s better to be prepared if something does occur. By having some cash on hand when disaster strikes, you will have a foolproof plan to help aid in your recovery. Contact Sunset Bank & Savings to set up an emergency fund or to understand what more you can do in order to be prepared financially!

5 Strategies to Shrink Debt

shrink debt

Minimizing your debt can always seem like a mountain of to-do lists. With various recurring payments, differing interest rates, and due dates that never seem to end, if you feel overwhelmed, you’re not alone.

While having credit card, or other outstanding debt, isn’t a situation anyone wants to find themselves in, a surprising 38.1% of American households carry credit card debt.  Couple that with a total household debt average of $134,643.00 and the idea of debt starts to seem more common than you’d think!

While we know that having debt isn’t always the best solution, but Sunset Bank & Savings is here to help you conquer it. We’ve found five proven ways to reduce your debt, and stop your spending process from adding more! Take a look at the five tools below, and see if they help you become debt free!

  • Find New Ways to Save: Whether it’s reducing your grocery bill, finding more affordable clothing options, or simply turning to the cash-only budget. There are numerous ways you can save. In fact, we recommend blogs such as The Simple Dollar, Making Sense of Cents, and Penny Hoarder to continue bolstering your savings knowledge.
  • The Snowball Method: This is by far our favorite way to reduce your overall debts. While you may need to start with finding some new ways to save, once you can allocate some extra dollars, you can put this effective method in action, eliminating your debts. Simply pay the minimum amounts on all outstanding balances, and then using the surplus funds, add to your smallest payment to help pay it off sooner. Once your smallest debt is completely paid, you can rollover the funds being used for that into your next largest debt and so on. Repeat this process until all the debts have been paid off.
  • Refinance Your Current Loans: The snowball method will help you erase debts one by one, however, using this other strategy you can see about reducing those payments in one quick action. Speak with one of our dedicated lenders to see if your home mortgage or personal loan can be refinanced at a lower rate to save on monthly payments. This may make a small dent, but every little bit counts!
  • Freeze the Credit Cards: In order to proactively prevent yourself from overspending, freeze all credit cards you currently have in your possession. This step helps you to force yourself to spend only what you have. If you decide to use cash only, the envelope system may help you save even further!
  • Set Up Automatic Transfers: This one simple trick can save you hundreds each and every year! By using your online banking as a resource, you can create an automation to ensure you are never tempted to spend those extra dollars. Instead of of waiting for them to be spend, allocate them in your savings plan, and tuck them away for paying down debt or building your emergency fund to eliminate emergency debts.

However you and your family decide to decrease your household’s debt, Sunset Bank & Savings is behind you! We’d love to talk about your family’s financial goals and help you identify the best tools to help you get there. Give us a call, or stop by your nearest branch to get started today.

How NOT to Get Hacked

hacked

Every day you hear tips and tricks to ensuring the safety behind your personal information. While many of these offers and promotions are advertising a safety service, at Sunset Bank & Savings, we believe you can handle the majority of these precautions yourself! See what steps you’ll need to take in order to best prepare for your financial future. We’ll be there to help you every step of the way.

DO: Store your passwords in a secure app like LastPass.

DON’T: Write your passwords on post-it’s which you keep around your desk.

Remembering your passwords is important, but leaving them unattended for hackers could be dangerous. Ensure you keep your details out of plain site by utilizing secure password storage apps such as LastPass or Dashlane. Not only will this help you forget your passwords less often, but it helps you create more complicated passwords to help keep unwanted hackers at bay.

DO: Use social media to connect with friends and family.

DON’T: Connect with people you don’t know or share personal account information.

Even though social media can be a great way to interact with people you know, many users become choose to become connected with individuals they’ve never met. If you find yourself with a friend request from someone you don’t recognize, always decline it, to keep you and your contact safe. If for some reason you’re unsure if you know the individual or not, you can always message them to see how you’re connected instead.

DO: Shop online and find great deals.

DON’T: Use your debit card when shopping online.

Both your debit and credit card can be used online, however, only your credit card offers a zero fraud liability with no strings attached. Should your debit card become compromised you will need to act more swiftly, and you may even have to wait weeks or months before you see any stolen funds returned to your checking or savings account. Always be proactive and use your credit card if you plan to purchase online!

While these three strategies will help to keep your personal information safe, there are always new tips and tricks to learn! Check back on our blog each month to see how you can continue to improve your personal cyber security, courtesy of Sunset Bank & Savings.

Money Advice Gone Wrong

money advice

Sometimes the best intentions can lend themselves to producing the worst results. While many friends and family members may offer quick solutions to your financial anguish, often times, the best education, is understanding those lessons first hand. At Sunset Bank & Savings we’d like to showcase several of the most common pieces of advice we hear, and what you can do to remedy these particular miscommunications.

Bad Advice #1: You have to go to college to get a decent job.

While a college degree does open additional doors, it is not required for many well-paying jobs available around the nation. Social figures like Mike Rowe, have made it their personal mission to spread the message that you can earn a living without having to sink into debt. Whether you’re interested in IT, manufacturing, grocery management, or other skilled work, you can find numerous positions through technical training or management programs, and avoid the majority of debt most four-year college students incur.

Bad Advice #2: Having debt is okay if you pay your minimum payments.

While it is important to make installments on your loans or debts, eliminating them all together should be the desired end goal. Did you know that when credit reporting companies review your credit score, there are five factors considered? The two most important factors are your payment history and your debt to income ratio. If your monthly debt payments require more than 43 percent of your income, that may raise a flag to any future potential lenders.

Bad Advice #3: To build your credit score you need to purchase everything on your credit card.

While it certainly helps to have a long and healthy track record associated with your credit card usage; having an on time payment history is far more important. This payment history represents the largest factor of your credit score, which the reporting bureaus track. By never spending more than you have, you can make certain you are able to pay your bill in full each and every month. This action may have the potential to help foster growth for your credit score.

Bad Advice #4: Retirement savings can wait.

Contrary to what many young adults think, right now is the most important time to start saving for retirement. While later in life you might have more disposable income to save, you’ll also have less time before you need those funds. Once compound interest enters any equation, time becomes the most valuable commodity for growing your wealth. For instance, if you saved the Roth IRA maximum of $5,500/year starting at age 25,  you’d have $1.17 Million by the time you’re 65. Who wouldn’t want to capitalize on those kinds of savings?

We think you can tackle any piece of advice with a few grains of salt. If you’re curious what your next financial move should be, stop by Sunset Bank & Savings and speak to one of our dedicated personal bankers. Our team of financial experts is here to help you and your family succeed; get started today!

When to SAVE and When to SPLURGE

save splurge

When you and your sweetheart set your budget each month, there are a variety of factors at play. Where can you get the best deals on groceries? How many date nights will you have each week? Do the kids have any sporting activities that require new equipment? At Sunset Bank & Savings we recognize that everyone’s budget is different. No matter which categories you enjoy most, we’d love to showcase some great examples to help you find extra ways to save, and better identify which costs are worth the splurge.

SAVE: The best areas to find savings.

  • Weekly Groceries: If you don’t need the atmosphere or the free samples, there are numerous discount grocers which can save you BIG for weekly grocery runs. Coupling those savings with a pre-planned menu and sale scanning, can further reduce your overall food costs.
  • Kids Activities: During both the summer months and those after school hours, you may find yourself searching for activities to keep your children occupied. Whether that’s going to the pool, attending various summer camps, or finding an after school caretaker, keeping your kiddos active can be easier said than done. To help reduce these costs, we recommend season passes to recurring parks/activities, along with fun and affordable activities at home, which you can do with a number of household supplies.
  • Exercise: If you have ever purchased a gym membership you didn’t use, you are not alone! Many Americans see a gym membership as automatic attendance, when truly, it may be easier for you to workout at home. With so many new calisthenic exercises, yoga, and free-weight routines, there are a variety of tools out there to help you stay in shape without having to pay that monthly membership fee.
  • Travel: Searching “travel savings” on Google will inevitably leave you with pages of results. One fantastic tip we’ve found is purchasing travel through membership programs such as Costco, even if there’s not one in your area! There are countless reports of happy customers who not only saved money but had a much better experience when compared to booking it themselves.

SPLURGE: The expenditures worth the extra cost.

  • Budgeted Special Occasions: Occasions like your child’s birthday or you and your spouse’s 30th anniversary deserve a special treat. While we do recommend saving for these outings in advance, so long as the funds are budgeted for, feel no regret in celebrating your family’s happiness.
  • Childcare: Raising a child is no simple task, and for most parents the number one expense after a mortgage is childcare. We recognize that there are certainly savings opportunities to be had, however, in the long you’ll find that a friendly and reliable caretaker can make the world of difference on your child’s happiness, and your sanity, for years to come.
  • Healthcare: Your health, and the health of your family members is paramount to everything else in life. Whether you’re looking to find a reliable family practice physician, or are seeking long-term care treatment, now is not the time to scrimp and save. Making sure that your family is well taken care of and continues to live a happy and healthy life means you’ll have plenty of time to save for nearly everything else life throws your way.
  • Toiletries: Toilet paper, toothpaste, shampoo, etc.; these are items you use every day. If you’re using poor quality products to save a few cents you may find yourself with dry skin or poor hygiene. While it’s not necessary to purchase the most expensive option available, know that spending the extra dollar or two is well worth the cost to avoid potential problems.

Whether you’re looking for a place to store your savings, or budget your spending, Sunset Bank & Savings has the perfect solutions for you. Stop by your nearest branch today and learn about our personal savings and checking services.

Why Your Child’s Allowance Should be Tied to Their Chores

There are literally thousands of how-to’s and self-help books for parents, but truly the only real way to learn how to raise a child is to do it! Luckily our growing team of parents at Sunset Bank have some true hands-on experience when it comes to upbringing and explaining money management to little ones.

One of the most common fiscal questions parents have concerning their child’s financial education is, “How do I teach them about money using an allowance.” The simple answer is, however you want. There are a number of ways you can utilize a recurring allowance to help your children understand both the importance of good money management and a sound work ethic. Below are two of our favorite strategies:

Example #1: Earn Your Extras

In this scenario, allowances are guaranteed to an extent. Every two weeks give your child a pre-determined amount of cash, say $5.00. That money then has to be split evenly between their educational savings and their retirement savings (yes – retirement savings!) While this money is technically theirs for future use, they have no tangible money to immediately spend. Where the fun part comes in, is the commission. Assign a small dollar value to various tasks around the house. Ensure things like making their bed, or doing their homework are givens, and they are required to do them no matter what. However, extra work such as mowing the lawn, cleaning the bathroom, or cooking dinner, earn a predetermined amount of commission. Paid every two weeks, this commission is then there’s to spend between three areas, save, spend, and donate, but they MUST allocate at least $0.50 in each area. This lesson teaches three primary lessons; the first is housework is a part of everyday life and it doesn’t come with a paycheck. The second lesson is that working hard pays off, and the third is that creating a plan or budget for your money allows you to use it as a tool instead of using debt as a burden.

Example #2: Ambition Is Important

There is a viral story trending about a young boy whose allowance was determined by how many self-help books he read and wrote a report on. This simple lesson offers many variations and proves an important point on the dedication to values at a young age. For this example, there is no guaranteed allowance on a weekly or monthly basis. In this scenario, all funds are accumulated via commission. How that commission is earned is determined by you. This can be the number of extra assignments completed or the amount of successfully replicated YouTube tutorials. It could even be the quantity of miles your child is dedicated to running each week. Through this valuable learning experience, you can showcase to them that a solid work ethic is the pinnacle to success, and can at times even out earn an education.

However you decide to help your children understand the complexities of personal finance, Sunset Bank is here to support you. Stop in today, and ask about our savings accounts. We’d love to help your family get started on their journey to financial success.

6 Ways to Save on Your Study Abroad

Are you or your child dreaming of learning abroad, perhaps on the coasts of Spain, or the mountains of Italy? As a young adult now is a perfect time to broaden those horizons and explore new lands while continuing an education. Unfortunately, all of these great experiences don’t come for free! If you’re searching for some innovative ways to scrimp and save to make a potential study abroad a reality, we have a few strategies to help you make it happen.

  1. Scholarships, scholarships, scholarships. Whether it’s through a prospective program, current university, or perhaps even an area non-profit organization, make it a dedicated part-time job to apply to any and every study abroad application that is relative to your upcoming study abroad. You can save anywhere from a couple hundred dollars up to the entire cost of your travel and tuition through a combination of various scholarship programs.
  2. Work study. This is a fantastic opportunity many foreign programs offer. In exchange for a small amount of work during the week, such as AV management or library maintenance, you can reduce your educational costs by thousands! Be sure to apply for these early as they’re typically capped at a specific number of students.
  3. Plan your own excursions. Many study abroad opportunities also offers pre-planned excursions to go to neighboring cities or countries. Instead of footing an inflated travel bill, plan your own excursions with a group of friends and split the costs. You may find yourself having a better time than the official itinerary attendees!
  4. Pay with cash. Once you’ve arrived at your destination, continue your savings journey, by only taking the amount of cash you need for your planned purchases. It does help to have an international credit card such as Mastercard or Visa for emergencies, but when shopping day-to-day, spend less and pay with cash.
  5. Pack your staples and buy your conveniences. When packing for several months, it helps to include clothes which can be combined for multiple outfits. Couple this with versatile shoes and accessories and a two-week wardrobe can easily last you a whole semester! Other amenities such as toiletries, snacks, and basic school supplies can be much easier to purchase once you arrive.
  6. Use apps to call home instead of expensive calling cards. Helpful apps like WhatsApp, Skype, and Facetime make it simple to connect with loved ones back home without having to pay costly fees. If you can find a local wifi hotspot, or happen to have the internet where you’re staying, there’s no need to pay for an international cell phone or expensive cell phone fees. If you plan to use your regular U.S. based cell phone while abroad, just be sure to keep it on airplane mode to avoid astronomical roaming charges.

No matter where you or your child are planning to study abroad, the key is to enjoy it! Sunset Bank can help you set-up a dedicated savings account, all we ask is you make the most of your time and explore as much as you can!  We’ll help you take care of the rest.

Money Magic Tricks

Magic is one type of entertainment that will never go out of style. Whether it’s David Blaine and his shocking stunts, or newly famous films such as Now You See Me, this classic art has proved to truly stand the test of time. While Sunset Bank may not be the best at slight of hand, we do have a few savings tricks up our sleeves! See if you can understand the steps to these financial stunts and make your fiscal success appear out of thin air.

Make your money disappear (into your savings!)

Before you’re tempted to spend those hard earned dollars, we’ll show you how to make them vanish, and then reappear! By logging into your online banking, you can set-up recurring monthly transfers for a set amount from your checking to your savings. This way, your funds will get tucked away before you even knew they were there! The extra money saved can contribute to your retirement, education, or even an exciting getaway.

Cut your debt in two.

Tired of paying pesky credit card debt, a mortgage, or student loans? This helpful hack can show you how to saw that number in half, and potentially make it disappear. Financial talk show host Dave Ramsey has a proven method called Snowballing Your Debt. By continuing your monthly minimum payments, and using extra funds to “attack” one debt at a time, you can then rollover extra money from the fully paid loans into paying off the next biggest debt and then the next. Before you know it you’ll be debt free, and looking for another financial trick to master!

See double dollars on your retirement plan.

If you’re like most Americans and need to play a little catch-up on your personal retirement savings, this trick is sure to impress! To really maximize your saved dollars, we recommend diversifying your retirement accounts, by allowing one to be maintained by your employer (401k) and creating a separate account for you to contribute to on your own (IRA.) By automatically withdrawing money from your paycheck through your 401k, you can potentially invest MORE while having it managed through your employer. In addition to this, creating a dedicated IRA to store personal savings dollars in allows you to explicitly manage the growth of your continued contributions. Know what’s better than one retirement savings account? Two!

Pull extra money out of a hat.

Just like magicians, a good budget can help you find things you never knew were there – like money! Whether you’re using traditional methods like the envelope system, or more digital options like the YNAB, the end goal is still the same. To help you save even faster, you can couple your budget with additional savings tips and tricks on common recurring expenditures such as groceries, and you’ll see the savings in no time!

How to Create Better Habits

If you’re like us, starting a new diet, or working to exercise more often is more difficult than we initially planned. The same is true with many financial goals you may have. Saving for retirement, eliminating credit card debt, increasing your credit score; these are all things that take time and dedication to complete, but sometimes it’s hard to stay on track.

Luckily, Business Insider recently released an article that showcases just how long it takes for your brain to form a habit. Surprisingly, it’s less than you’d think! It takes approximately 66 days for a consistent behavior to be added to your brain’s list of automatic actions. Thankfully, those 66 days do allow for some error. We’re all human, so there’s no need to be perfect during your trial practice. However, by committing to your new habit for 66 days or more, you can ensure that this new beneficial behavior sticks with you well into the future.

This new habit can be as simple as remembering to take the trash out, or as complex as maintaining a specified number of calories in a day. At Sunset Bank we want to inspire you with some important financial habits to help you progress down the path of financial success. Take a look at these three examples, and don’t hesitate to ask our dedicated team members for help if you’re ready to begin your next 66-day practice round!

  1. Use the Envelope System: To help train your brain to only spend what you budget for, withdraw your total flex spending budget for the month. Then, divvy it up amongst your budget categories like food, entertainment, transportation, etc. After it’s been segmented, stick to your dollars, and only spend what you have in the envelope. No credit or debit cards to spend extra. If you can successfully make this a habit, you could see a large amount of extra savings which can then be used for vacations, retirement, or other savings ventures.
  2. Pay All the Bills Before They’re Due: Many habits appear easier than they truly are. In order to process this behavior into a habit, there are several steps you’ll need to repeat each month. To get started, make a calendar at the beginning of every month to mark the dates bills are due and for how much. Then, as the bills arrive, structure your payments to pay one at a time, leaving extra cushion in your account, should an unexpected expense arise. Using this recurring schedule, you can help yourself to get each expense paid before the designated due date. As an added bonus, an ongoing history of on-time payments may benefit your credit score too!
  3. Save for Retirement: This one is often a habit that takes longer than 66 days because there is no immediate reward for the effort you put forward. Later in life, your future self will thank you, for putting the time and savings away early on. The first step in this process is to research your options. If your company offers a 401(k) and a match, that may be the first place you want to start. By automating payments from your paycheck, you can use pre or post-tax dollars to bolster your savings without the temptation of spending. Then, when you save extra money with your envelope system, remember to add those surplus funds into your retirement savings account to give it an added boost.

We love the three goals listed above, but that doesn’t mean you can’t create your own unique financial habits! If you’d like to get started on a new financial behavior, stop into your nearest branch today and speak with one our personal bankers. Our team at Sunset Bank would love to help kick off your next 66-day habit!