The Money IDEA
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The Money IDEA
Ideas on How to Save and Ideas for What to Do with Your Savings!
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 When you apply for a loan, your future lender wants to make sure that you aren’t too much of a risk on defaulting. In the past, lenders have used the Allowance for Loan and Lease Losses (ALLL) standard to evaluate the risk of your loan. However, the Financial Accounting Standards Board (FASB) has decided to switch to a new system, known as Current Expected Credit Losses (CECL). This means that, starting in 2020, loans will be evaluated differently. Here’s what you need to know about these changes. Why The Change? The financial crisis of 2007 was devastating for a number of reasons, but one of the biggest ones is that it demonstrated that the ALLL was not adequate for making timely adjustments. ALLL worked well for evaluating losses that would happen with some certainty, but it was not able to respond to changes that happened suddenly. The financial crisis demonstrated that the current evaluation was not able to adjust for fluctuations in the economy. As a result, The FASB decided to reevaluate how risk was calculated for loans. In 2016, they announced the new accounting standard, known as CECL, that would be implemented by 2020. CECL is Based on GroupsUnder CECL, review for loans is mostly based on collective groups. CECL looks at your situation and puts on you in a category. Each institution will have to develop their own way of dividing these groups up, but they will be based on things such as credit score, type of loan, length of the loan, the interest rate, what year you are applying, and what your individual finances look like. Once you are placed in a category, your lender is able to determine how much risk this loan will carry. However, under CECL you can still be individually reviewed, but only when you fit a couple different requirements. Your lending institution will decide whether your loan will be individually reviewed based on your circumstances and other factors with your loan. Understanding the Effects In the banking industry, there has been some criticism about CECL accounts. Some lenders have a tough time adjusting to the policies since they have to implement procedures in order to pinpoint losses that could possibly happen down the road. This requires a lot more data and analysis than they have previously used. However, CECL will help lenders stay competitive and prevent a lot of the losses that many of these institutions saw during the 2007 financial crisis. To use CECL methods, bankers must always monitor the conditions in the economy, and this process heightens focus, awareness, and drive. Most of the major changes will occur behind the scenes, and you may not see much impact on your loans as a consumer. When applying for a loan, you will still need to pay attention to your earning potential, personal debt, and credit score. While it may seem intimidating and confusing, don’t let these changes scare you when it comes to getting a new loan. Your lender will be able to guide you in the right direction. Here are a couple interesting articles we think you’re going to like: KEYWORDS
If your homeowner insurance rates are creeping up even though you haven’t filed any claims, it may be time to take a look at how you can bring those prices back down. Research, smart shopping and even some home upgrades can make a noticeable difference in your insurance premiums. Explore the cost-savings potential with these tips.Save Your Way to Lower Home Insurance
(Family Features) If your homeowner insurance rates are creeping up even though you haven’t filed any claims, it may be time to take a look at how you can bring those prices back down. 
Research, smart shopping and even some home upgrades can make a noticeable difference in your insurance premiums. Explore the cost-savings potential with these tips from the experts at CertainTeed, a leading manufacturer of exterior and interior building products: Shop for the best rates. It’s easy to be complacent when you’ve used the same insurance company for years, but if getting the best rate is your objective, it’s a good idea to shop around. To do effective comparison shopping, have a copy of your current policy ready and contact a handful of competitors. Provide them the exact same coverage details so you can compare like rates, but also be ready to listen to information about additional coverage options that may suit your needs. Combine homeowner insurance with other policies. Most insurance carriers offer multiple policy discounts, which they apply when you insure more than one item. For example, if your homeowner insurance carrier also insures your cars, you’re likely to save money on the rates for protecting both your home and automobiles. Update your home’s first line of defense. Many homeowners focus on aesthetics when it’s time to make upgrades, but there are some important functional improvements that can make a difference when it comes to your insurance premiums. For example, as extreme weather becomes more commonplace, the first line of defense is often the type of roofing material chosen. Many insurance companies even offer discounts for using impact-resistant shingles. Check with your insurance provider before making a final selection, but in general, look for products that include “impact-resistant” in their name and specs, and “Class IV Impact Resistance,” the highest rating available for roofing materials. For example, NorthGate Class IV impact-resistant shingles from CertainTeed are engineered to have a higher probability of resisting hail. These shingles are made using rubber-like polymers that offer flexibility and impact resistance, as well as crack and shrink resistance, even in cold weather. So when severe weather strikes, your home can be protected and stay looking good. Install a home security system. An intruder alarm can provide more than peace of mind. Insurance companies often reward homeowners who take steps to minimize the chances of burglary or vandalism. After all, a well-protected home is less likely to result in a claim for losses. Some companies offer varying degrees of discounts on insurance rates depending on the type of system you install, so be sure to thoroughly research the options. For example, a system that simply emits a loud noise when triggered may generate one level of discount, while a system that dispatches emergency personnel when activated can lead to an even better rate. Insurance rates are one place to save money on your home costs. Learn more about impact-resistant shingles and how they can save your home and wallet at certainteed.com. SOURCE:CertainTeed
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Thinking about home repair costs? Maybe you should be...
Don’t fall victim to the financial risks and mental stresses associated with owning a home. Appliances have set lifespans, breakdowns are inevitable and repairs and replacements are costly. Make sure your home is covered, so you and your wallet can rest assured that your home is taken care of.
(BPT) - Nobody bats an eyelash when it comes to buying homeowner's insurance, but many homeowners don’t apply that same logic to planning for home repairs — not what might happen, but what will happen.
Only a fraction of the 120 million U.S. households today are protected by a home services plan, also known as a home warranty. That number is growing, as homeowners recognize the value of coverage when appliances go on the fritz, hot water heaters run cold in the middle of winter or a leaky faucet drives up their water bill. Perhaps one reason more homeowners don’t have home service plans is because they think they are covered through their homeowner's insurance policy. Homeowner's insurance doesn’t protect you from the natural home aging process. Insurance kicks in when damage occurs from an outside force, like a busted sewer line or roof damage due to a major storm. While insurance covers you when Mother Nature strikes, it doesn’t protect you from the natural wear and tear that your home’s major systems and appliances go through during the aging process. Understanding how home service plans work and how they fit into your financial and risk-planning strategy allows you to be prepared for covered breakdowns, without breaking the bank. Let’s start at the beginning. What is a home service plan? Home service plans typically cover the repair or replacement of major home appliances, including refrigerators, washers, dryers, ovens or cooktops, and components of major systems like plumbing, HVAC and electrical. When your air conditioning system breaks, or your washer or dryer stops spinning, you want the confidence of having a home services plan in place that will help protect your budget. This is where the true value of a home service plan comes in. Home service providers such as American Home Shield accept service requests and assign professionals to diagnose the problem and offer a solution through its vast network of skilled and trusted contractors, which includes more than 15,000 licensed and qualified pros throughout all 50 states. What’s the bottom line? With a home service plan, you won’t pay the full cost of repairing or replacing items covered by your plan. Regardless of age, make or model, your contract helps cover the repair or replacement of items covered in your plan. For example, if your refrigerator malfunctions, your service provider will connect you to a quality contractor to diagnose and repair the problem. This can help reduce the hassle of repairing it yourself and help protect your budget. Think about your home’s future (and yours). Service plans can come in handy when selling a home. The appeal speaks for itself: When buyers are making that final decision around one of the biggest investments in their lives, having a home service plan in place gives the new homeowner confidence that the home’s systems and appliances are protected, and they won’t bear the entire financial impact of repairing or replacing it if it breaks down. The choice seems obvious: Don’t fall victim to the financial risks and mental stresses associated with owning a home. Appliances have set lifespans, breakdowns are inevitable and repairs and replacements are costly. Make sure your home is covered, so you and your wallet can rest assured that your home is taken care of.
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Understanding and managing personal information is vital to achieving life goals such as owning a home, financing your education or having the convenience of credit cards for everyday purchases. With responsible financial behaviors, discipline and consistency, you’ll be on your way to improving your credit, and in turn, feeling more confident about your overall financial health.
(BPT) - It’s always a good time to reassess financial goals and work toward improving your overall financial health. No matter what your financial goals may be, having the right information and tools in place is key to getting you on track to take control of your credit.
Taking the first step towards financial wellness can provide a sense of empowerment as you get rid of everyday financial stressors, which is why many see a positive connection between financial control and self-perception. Though increasing your credit score might seem daunting, following these healthy credit behaviors can help you make positive changes to your financial health and even your personal well-being. Understand your credit: When starting on your journey to better financial health, begin by familiarizing yourself with your current credit standing, as well as understanding what factors may be negatively impacting your credit score. A great place to start is with your Annual Credit Report, which provides one free credit report each year from all three nationwide credit reporting agencies. The information in these reports directly impacts credit scores, so it’s important to carefully review for any factors that could cause your score to be lower than it should be. This TransUnion Credit Score Overview is also a helpful educational resource and provides tips towards building a healthier credit standing. Review your report and take action: While assessing your credit report, carefully review for any inaccuracies or problem areas that may negatively affect your credit score. For instance, high accumulations of debt such as maxed out credits cards and unpaid bills will likely be reflected in your credit report. Unpaid collections are also commonly reported delinquencies that can cause a big hit, even when as low as $100 or less. Prioritize addressing these smaller problem areas first before they get worse. Inaccurate information caused by identity theft can also lower your credit score and should be disputed online. Create a plan for better credit: After resolving any outstanding issues identified while reviewing your credit report, create a plan towards improving your financial health, which should include: 1) On-time payments: Paying your bills on time and in full each month is key as it builds a positive history of on-time payments and responsible credit use. 2) Credit utilization: It is recommended to maintain a low credit utilization ratio, that is, how much of your available credit you’re using at any given time. It is recommended that you use no more than 30 percent of the available credit, otherwise, your score could be suffering. 3) Evaluate your credit cards: Before opening or closing any credit cards, do your research on the different types of credit cards and the benefits they have. Do one or more of your cards have an annual fee that you could live without? Strategize which cards you use regularly and keep daily spending concentrated to one or two cards total. However, don’t close an old account just because you aren’t using it. Longstanding credit accounts are vital for building credit as this demonstrates a responsible credit history. Remain vigilant about credit monitoring and protection: Once you’re in control of your credit, the next step is to be diligent about monitoring your credit and cautious about your personal information, which includes fraud protection. Fraudsters may take out loans, lines of credit, or rent apartments in your name, which can negatively affect your credit if it results in a non-payment. If you think your information has been compromised, you can protect your credit by freezing it at all three credit reporting agencies. With TransUnion, you can simply freeze and unfreeze your credit with the touch of a button through the myTransUnion app at any time. Understanding and managing personal information is vital to achieving life goals such as owning a home, financing your education or having the convenience of credit cards for everyday purchases. With responsible financial behaviors, discipline and consistency, you’ll be on your way to improving your credit, and in turn, feeling more confident about your overall financial health. For more information, visit TransUnion.com.
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No matter where you are in life, whether you’re just starting your career or nearing retirement, it’s important to understand the voluntary benefits available to you that can complement traditional health insurance. With the right information about the options available you can make choices that best fit your lifestyle and budget. Consider these common voluntary options.Understanding Insurance Benefits
(Family Features) No matter where you are in life, whether you’re just starting your career or nearing retirement, it’s important to understand the voluntary benefits available to you that can complement traditional health insurance. While health insurance can help cover medical costs in the event of injury or illness, sometimes there are additional expenses your health care plan doesn’t cover. Voluntary benefits, such as life insurance, disability insurance and dental insurance, offered by your employer or as portable options through a company like Colonial Life can help bridge the gap should an unexpected event occur. “Even if an employee has to pay a nominal sum for a voluntary benefit like disability insurance or dental coverage, it can be well worth it,” said Sharlyn Lauby, president of ITM Group Inc., creator of the HR Bartender blog and contributor to Colonial Life’s WorkLife blog. “Think of voluntary benefits as those specialized, personalized extras that make your overall benefits package exactly what you’d like it to be.” Benefits can be complex, but with the right information about the options available you can make choices that best fit your lifestyle and budget. Consider these common voluntary options: Life Insurance Disability Insurance Dental Insurance Accident Insurance Critical Illness Insurance Learn more about how you can live healthier, enjoy more success at work and take full advantage of your benefits at worklife.coloniallife.com. Photo courtesy of Getty Images SOURCE:Colonial Life KEYWORDS
Could mortgage insurance be the key to unlock buying your first home?
(BPT) - The homebuying process is exciting, but can also seem fraught with added costs, like a home inspection, title insurance and closing costs. And if you can’t afford a full 20 percent down payment on a conventional home loan, then you will most likely pay for private mortgage insurance (MI). Some people consider private MI yet another added cost, but it helps creditworthy middle-income homebuyers qualify for home financing sooner with a low down payment. Is it really an added cost if it saves time and money in the long run?
For most people, low down payment home loan options include conventional loans with private MI and government-backed loans like those offered by the Federal Housing Administration (FHA). While comparable, each of these options has important differences. For example, the minimum down payment for an FHA mortgage is 3.5 percent while it’s only 3 percent on a conventional, privately insured mortgage. Another key feature of private MI is that it can be canceled when a borrower reaches 20 percent equity in his or her home. Borrowers who purchase a home with private MI can typically cancel it within 5 to 7 years, resulting in their monthly bill going down. Private MI’s cancelability makes it a more affordable option over FHA-backed mortgages, which typically require mortgage insurance premiums for the entirety of the loan term. Both are offered by most mortgage lenders, so it’s smart to ask a loan officer for both options so you can compare and do the math. The myth that a homebuyer needs 20 percent down to obtain a mortgage is simply not true. Low down payment mortgages are widely available and used every day across the country. In 2018, the National Association of Realtors found that first-time homebuyers typically put down 7 percent, while repeat buyers put down an average of 16 percent. Many homebuyers choose a lower down payment option to preserve some savings for home improvements or save for other goals. The time it could take to save up a 20 percent down payment is significant. On average, it could take up to 20 years to save a full 20 percent, plus closing costs, for a $257,700 house — the national median sales price. With home prices on the rise, the amount of time it takes to save up could only increase. Private MI can mean the difference between getting into the home of your dreams sooner or waiting for years. For over 60 years, more than 30 million homeowners of all backgrounds have used private MI to successfully buy their homes. In the past year alone, private MI helped more than one million borrowers nationwide purchase or refinance a mortgage. According to a study by U.S. Mortgage Insurers, 56 percent of purchase borrowers were first-time homebuyers and more than 40 percent had incomes below $75,000. For decades, millions of homeowners and prospective homebuyers have relied on private MI to help them affordably and responsibly purchase their homes — in turn helping them build personal wealth. Today’s historically low mortgage interest rates are a good reason to buy a home now. It is estimated that in 2019, the average rate for a 30-year fixed-rate mortgage will be around 5 percent. Borrowers should take advantage of these historically low mortgage interest rates because experts forecast that primary mortgage rates are on the rise. Getting a mortgage with private MI and keeping more of your hard-earned money in the bank can be a very smart way to invest in your future. Check out lowdownpaymentfacts.org to learn more. KEYWORDS
Do you know what you need to know about life insurance?
(BPT) - If you haven't made solid financial plans, now would be a good time to consider a life insurance policy to protect you and your family in your time of need - or protect your loved ones in your absence.
Given the importance of life insurance, it's surprising that 37.5 million American households lack such a policy, according to the 2016 Facts About Life study by the industry group LIMRA. That may be because many people misunderstand how such policies work and how much they cost. For example, recent Insurance Barometer studies by LIMRA and Life Happens found 63 percent of Americans cite expense as the reason they don't carry term insurance, yet 80 percent overestimate the cost - millennials by 213 percent and Gen Xers by 119 percent. While some Americans hope to rely on other sources to protect their families, they may not realize all the benefits life insurance offers. Every family has different needs, and some life insurance products are flexible enough to offer customizable options to provide a measure of financial security to your spouse and children - the people that matter most. Consider these other common myths about life insurance: Myth: Life insurance is only available through financial advisors. In fact, quality policies for your entire family are often available through your employer or your spouse's employer. For example, Boston MutualLife Insurance Company offers a range of workplace solutions paid for by employers, employees or both, including permanent life, term life, critical illness, accident and disability insurance. Talk to your company's HR department about the process involved in securing comprehensive coverage for your family. Myth: Workplace policies can't offer enough options for your needs. You'll find that well-established life insurance companies understand the market well enough to offer a range of flexible products, including policies that are payroll deductible, stable in cost regardless of your age, portable when you're changing jobs and available with add-on riders or other insurance types through the same carrier. Myth: Young, healthy people don't need life insurance. The truth is, your health can change at any time and it's best to expect the unexpected. Uninsured people can easily leave behind personal, medical or mortgage debts and/or funeral expenses that end up burdening family members or executors when they die. Myth: Your life insurance policy only covers you, not your family. Not true. Some products protect you, your spouse, your dependent children and even your grandchildren, often at one affordable cost. That's why marriage and becoming a parent can be excellent reasons for buying new policies. Investing in life insurance is a crucial step to take to protect yourself and your family from unexpected losses. But it doesn't have to be confusing or complicated. Find more detailed information about life insurance options for you and your family at www.BostonMutual.com. KEYWORDS
From heading off to college to marrying the love of your life to taking those dream vacations, life’s biggest moments are often tied to being financially responsible. A credit card is one tool that can help you achieve your financial goals while offsetting some costs along the way. These tips from financial experts can help you maximize financial tools like credit cards throughout life’s milestones.A Financial Planning Tool for Every Stage of Life
(Family Features) From heading off to college to marrying the love of your life to taking those dream vacations, life’s biggest moments are often tied to being financially responsible. While memories of your first dance as newlyweds don’t often include the cost of the band, money is frequently front and center when planning for some of life’s larger events. From early adulthood through retirement, a credit card is one tool that can help you achieve your financial goals while offsetting some costs along the way. “No matter your stage in life, it’s important to plan ahead and have the right tools to meet your financial needs,” said Jason Gaughan, credit cards executive at Bank of America. “A credit card offers flexibility, convenience and an increasing amount of rewards that can make your budget go even further.” These tips from financial experts can help you maximize financial tools like credit cards throughout life’s milestones. College Years “Though credit can be a somewhat foreign topic for beginners, online resources such as Bank of America’s Better Money Habits offers tips to help young adults learn about things like how your credit score is calculated, the difference between a credit report and credit score and explains why it’s important to understand before signing up for a credit card,” said Lysandra Perez, a relationship manager for Bank of America who is responsible for educating clients on establishing strong financial habits including managing and building credit.” According to BetterMoneyHabits.com, an important rule for building strong credit is to spend no more than 30 percent of your available credit line. The online resource also recommends that students look for credit cards that offer low interest rates and no annual fee to help minimize finance charges if they aren’t able to pay their bills in full each month. “Establishing strong financial habits early on can help set you up for future credit opportunities later in life,” Perez said. 
Early Adulthood Using a credit card that offers rewards tied to interests is a strategy some young adults utilize. According to a Bank of America survey, 91 percent of Millennials ages 23-29 plan to use a rewards card to help pay for upcoming travel. “It’s common for people in their mid-to-late 20s to prioritize maximizing credit card rewards,” Gaughan said. “They understand using a card for smaller, everyday purchases like coffee and groceries can be an easy way to earn points to pay for fun events like a trip abroad or home for a college reunion.” Saving and tracking rewards is key during this period, too. Digital tools like My Rewards provide new visibility into the rewards you earn and how to maximize their value. Also look to explore banking rewards options like Preferred Rewards, which can offer special perks and benefits like credit card rewards bonuses, discounts on home and auto loans, interest rate boosters and no-fee ATM transactions. Marriage and Parenthood These years typically require more financial savviness to make every dollar count as large expenses requiring loans, such as houses and cars, are more prevalent during this stage. Along with larger purchases, these years also often come with grocery store trips, filling up the gas tank for carpool duty and buying new clothes as your kids grow. Look for a cash back card that lets you earn rewards on your everyday purchases and offers redemption for cash back to cover expenses or invest in a savings account. Retirement “There are many ways to continue saving and investing once in retirement,” said David Poole, head of Merrill Edge Advisory, Client Services and Digital Capabilities at Bank of America. “Credit cards that allow you to invest rewards back into your retirement fund is an easy way to continue contributing to your 401(k).” Credit cards can also help retirees fulfill long-standing travel goals. Some like the Bank of America Premium Rewards card offer lucrative travel benefits such as earning two points for every dollar spent on travel and dining purchases. Look for points that are flexible and can be used toward future travel purchases or as cash back. “With so many credit card options available, it’s important to understand what your current needs are,” Gaughan said. “Do your research, develop a strategy and work with your financial institution to determine the best card for your lifestyle.” Find more information and credit card options at bankofamerica.com/creditcards. Photos courtesy of Getty Images SOURCE:Bank of America KEYWORDS
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