Student Loans 101

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by Jorge Santiago

College is expensive. In the 2020-2021 academic year, the average private college’s tuition and fees was $35,087; public colleges averaged $21,184 for out-of-state students and $9,687 for in-state students. Multiply that by at least four years, and the total cost of a degree is one very few students — or their families — can afford out-of-pocket.

That’s where student loans come in. Student loans create opportunities for students who might not otherwise be able to afford their education, which can in turn lead to more stable, gainful, and fulfilling employment.

But student loans are just that — loans that must eventually be paid back. If you’re one of the 47.9 million Americans carrying a combined $1.71 trillion in student debt, you probably already know that repayment can be a strain. And if you’re considering applying for college loans, you should understand your options before taking on student debt.

So let’s get back to the basics. Here are four questions everyone with student debt — or considering taking out student loans in the future — should know how to answer:

What types of student loans are available?

Types of federal student loans

As their name suggests, federal student loans are offered through the federal government via the Department of Education’s Office of Federal Student Aid (FSA). Three different types of federal student loans are available: Direct Subsidized, Direct Unsubsidized, and Direct PLUS.

  • Direct Subsidized Loans are available for undergraduate students with financial need (the difference between your school’s cost of attendance and your household’s expected contribution). Interest rates are fixed for life when the loan is first disbursed and are generally lower.
  • Direct Unsubsidized Loans are available for both undergraduate and graduate students, regardless of financial need. Interest rates are fixed for life when the loan is first disbursed and are generally higher.
  • Direct PLUS Loans are available to parents financing their child’s education, and to graduate or professional students funding their own education. The application process requires a credit check, but borrowers with low credit scores can still qualify if they have an endorser or can document extenuating circumstances. Interest rates are fixed for life when the loan is first disbursed and are generally the highest rate compared to other federal student loans.

Types of private student loans

Private student loans are offered through financial institutions like banks and credit unions. The terms of private student loans are controlled by the lender, so there are lots of different options available. Private loans often entail higher interest rates and stricter eligibility criteria, but they can be a helpful tool for borrowers who have already maxed out their federal aid.

 

How does student loan repayment work?

Federal student loan repayment

If you have federal Direct Unsubsidized or Direct Subsidized Loans, your loans will be in deferment while you’re still in school and for six months after you graduate or withdraw. After this grace period ends, you’ll be responsible for making monthly payments through your loan servicer (FSA will assign your servicer — a third-party company that manages student loan billing — after your first loan is disbursed).

Direct PLUS Loan borrowers can expect a very similar process, with the exception that you must request deferment through FSA or your student loan servicer. Otherwise, you’ll have to start making payments while you are or your child is still in school.

All federal student loan borrowers will have the opportunity to select a repayment plan when they first start making payments and adjust their repayment plan later on. There are eight different federal student loan repayment plans available, including income-driven repayment plans, which cap monthly payments to a manageable percentage of your discretionary income.

Private student loan repayment

Private student loan repayment varies based on your lender’s terms. Some require payments while you’re still in school or immediately after graduating, some manage repayment through a servicer or in-house, and repayment plans vary. If you’re considering private student loans, be sure you understand the lender’s repayment policies.

Can I get my student debt cancelled, paused, or forgiven?

If you have private student loans, your options for getting your loans cancelled, paused, or forgiven are limited.

But if you have federal student loans, it’s possible — provided you meet certain eligibility requirements.

You may be eligible to have your federal student loans partially or totally cancelled if:

  • Your school closed while you were a student or shortly after you withdrew or graduated
  • You develop a total and permanent disability
  • You were defrauded by your school
  • You declare bankruptcy

You may be eligible to have your student loans paused if you apply for and are granted temporary deferment. You might qualify for deferment if:

  • You’re enrolled in a graduate fellowship
  • You’re undergoing cancer treatment
  • You’re serving in the Peace Corps
  • You’re on active military duty
  • You’re receiving welfare assistance
  • You work full-time but earn 150% below the poverty line

You may be eligible to have your student loans forgiven through special forgiveness programs if:

  • You’re a teacher
  • You work at a nonprofit organization
  • You work for a federal, state, local, or tribal government agency
  • You’ve been on an income-driven repayment plan for at least 20-25 years

How can The Milford Bank help me manage my student loans?

When it comes to student debt, you don’t have to go it alone. The Milford Bank is excited to launch a new partnership to give our customers tools that make managing their student loans easier than ever before. Stay tuned for an announcement soon!

Celebrating Home Owners: Are You Ready to Buy?

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June is National Homeownership Month, celebrating a key part of what many people see as part of their life dreams.  And why not?  Home ownership can be a great investment with many benefits.

Long term cost savings – By paying your monthly mortgage, you are creating your own nest egg, instead of paying off someone else’s mortgage or generating revenue for them.  In many cases, mortgage payments, especially for first-time buyers, can be very close to or even lower than monthly rent.

Equity – As you pay down your mortgage, you build equity in your home, increasing your net worth and your future ability to obtain home equity loans for other expenses, including home improvements (which can further increase the value of your investment).

Improving credit – As long as you make your monthly payments on time, you can improve your credit rating, making it easier to secure other loans for future expenses.

It’s yours – When you own property, the decision on how to use it is yours, not your landlord’s.  You can decide how to decorate, renovate, add on to create more living and entertaining space, and generally use your property however you want.  The financial benefits are great, but this may be the greatest benefit of all.

Of course, if you’re a first-time home buyer, you’ve got a lot to think about, including securing a mortgage, which can be an uncertain prospect.  But, working with the right bank can make it a much easier and satisfying process – especially those with special first-time buyer programs.  The Milford Bank offers a program that includes a reduced interest rate, application fee refund, pre-qualification certificates, and low down-payment options, which take the hassle out of buying your first home.

In addition to financing, you have many other things to think about when buying a home – especially for the first time.  This includes location, school system, style, property size, and of course home features.

To help you consider what is most important to you, here’s a list of the most commonly desired features by home buyers today.  Each of these features was listed by at least 80% of people as being either a must-have or desirable feature.

  • Laundry room
  • Exterior lighting
  • Ceiling fan(s)
  • Energy efficient windows
  • Patio
  • Double kitchen sink
  • Walk-in pantry
  • Front porch
  • Energy efficient appliances
  • Hardwood floors
  • Full bath on main level
  • Energy efficient lighting

As you get start with the home buying process, make sure you’re buying a home that you’ll be happy with.  It’s not a bad idea to think about the future and your ability to renovate or add on.  You’ll have question, naturally, especially when it comes to the mortgage.  Don’t hesitate to call on our mortgage specialists to answer them so you have an enjoyable experience.

Financial Literacy: Teach Your Children to Save

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One of the greatest gifts you can give your child is a financial education.  We all want our children to succeed in life, which means helping them become financially stable.  Once they reach college age and leave the comfort and safety of your home, a solid understanding of banking and financial best practices is critical to helping them avoid getting into debt at an early age.

More than three-quarters of adults live paycheck-to-paycheck, and 40% say they wouldn’t be able to cover a $400 emergency expense.  Looking towards the future, a third of Americans have no retirement savings, and almost a quarter have less than $10,000 saved for retirement.

Saving isn’t easy.  Neither is avoiding debt.  But it can be easier if children learn about banking and finance from an early age.  Currently, fewer than half of U.S. states require high school students to pass a personal finance course as a graduation requirement.  But, parents have to manage finances every month, which gives them an opportunity to teach their children good financial habits.

The American Bankers Association (ABA) understands that financial literacy is critical for children, and since 1997, the ABA Foundation has sponsored its Teach Children to Save program to promote financial literacy to millions of elementary and middle school students.

Today, April 22, is this year’s Teach Children to Save Day.  It’s a free national program that is designed to help young people develop savings habits at early ages and covers topics like saving, financial decision making, interest, banking careers, and more.  The goal of the program is to help children understand the value of saving and develop the knowledge, tools, and skills to make informed financial decisions throughout their lives.  The ABA has created a series of interactive resources for you and your children of all ages (including high schoolers and young adults) to help build their financial literacy.

The Milford Bank also supports financial literacy for children and offers its own Centsible Kids program designed to teach smart money habits to your kids.  The Centsible Kids program includes a free, kid-friendly mobile app – available for both iOS and Android devices – that encourages your children to become financially literate at an early age.  Key features of the Centsible Kids app include:

  • Games that teach financial knowledge and skills
  • Enabling kids to track spending, saving and giving goals
  • Foster positive family conversations around money
  • Allows safe tracking of money virtually without connecting to your actual bank accounts.

We know children pick up habits very quickly.  That means they will pick up good financial habits just as quickly as they will pick up bad ones.  So why not put them on a path to financial success early by helping them develop good savings and spending habits, encourage giving, and giving them a chance to practice their math skills in the process?

To learn more about the Centsible Kids program and app, contact any office of The Milford Bank.

When Should You Open a Savings Account for Your Child?

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By Celeste Lohrenz

You’ve had your baby shower, the nursery is set up, the closet is full of onesies, and you’ve got what seems like a year’s supply of diapers and formula, which will actually only last you a month, and your baby is due any day.  The only thing you haven’t thought about is your baby’s long-term financial future.  But, maybe you should.  After all, it’s never too early to start planning by opening a baby savings account.

If you’re wondering when it’s a good idea to open an account for your child, the answer is it’s never too early.  Why?  There are several great reasons to start early, and as soon as your baby is born, you’ll have all the information you need to open an account.

Start small

There’s no question a baby will have a significant impact on your budget for more than two decades, so you may not have much to save.  You don’t have to put away a lot.  Compound interest works best the longer an account is open, so starting early is the key.  Even if you put away only $10 each week, the account will grow consistently.  By the time your child reaches legal adulthood, the account you started at birth could have $10,000 or more, depending on the actual rate of return.

Financial literacy

As your child grows, the savings account can become a teaching moment.  By teaching your child to save early – like setting aside a portion of allowances or birthday money – you’ll be providing invaluable financial education around saving, budgeting, interest, and balancing.  From an early age, your child will see the long-term benefit of regular contributions.  It will not only help them understand how and why to save, but also benefit them once they enter the workforce, when they can start contributing to their own retirement accounts. Financial literacy is important, and more than half of young adults say the most valuable course they wish they had been able to take in high school is money management.  So why not put your kid on the right track?

Automatic deposits

Since your child won’t be accessing the account for years to come, you have a long runway for building a great financial base.  At the same time, since you’re not withdrawing funds, it can be easy to forget to contribute to it regularly.  Consider setting up small automatic deposits into the account to ensure it grows consistently and, if you find you can spare more, you can always increase the deposits or add additional funds on a one-off basis.

Choosing the right account

There are many types of accounts with different interest rates and minimum balances.  Check with your local bank to see what options they offer.  Some have special programs for children savings accounts that are affordable for parents and geared towards building children’s financial literacy as they grow.

529 Plans

An alternative to a savings account that is specifically earmarked for education expenses, including college tuition, is a 592 plan.  At a time when student loans are at an all-time high, starting a college fund early can be a great way to at least partially fund your child’s education.  These plans come with the additional benefit of tax-free interest, as long as the funds are used to pay for education-related expenses.

Your child will most likely have a piggy bank at some point, and that’s a great way for them to save some spending money to buy a special toy or video game.  But for the longer term, and to really teach them about banking and the value of saving, a savings account it the smarter option.  In fact, as they accumulate cash in their piggy bank, you can even encourage them to deposit a portion into the savings account.

As parents, your goal is to set your children up for success.  Making sure they have a solid understanding of banking will benefit them for their entire lives, and starting a savings account early comes with a bonus of a potentially large savings account to help them get started on their own or to help pay for college tuition.

While it’s never too early, it’s also never too late to open an account for your child.  For more information on what your best options are, contact your local bank’s financial experts.

Setting Your High School Senior Up for Financial Success

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By Tina Mason

Now that we’re in the second semester of the school year, the college applications have been submitted and high school seniors are waiting anxiously to receive a response.  Soon, they’ll take another step on the the path to their future and before you know it, parents will be be packing up cars to take them to college.

During the past four years, seniors have focused on school work and probably some extracurricular activities – sports, music, drama, or others – to prepare for the next stage of their life journeys.  Most likely, worrying about money hasn’t been a huge priority, which means you probably need to make it one now.  You don’t want to send your soon-to-be college freshman off to school without a solid financial understanding because, much like the college decision itself, understanding financial basics will have a long-term impact.

Here are a few things to keep in mind that you may want to talk about or do with your senior. (If you don’t have a senior, starting when they’re younger certainly doesn’t hurt.  If they’re old enough to have money, they’re old enough to understand banking.)

Savings and Checking Accounts

If you haven’t already opened savings or checking accounts in your child’s name, this is a good time to do it.  Your child will want access to funds and you want them to build financial awareness.  You can always add yourself to the account so you can stay involved with finances to whatever degree makes you comfortable.  Check with your local bank about rates, fees, and other benefits to determine which accounts are best for you.  That includes finding out about ATM fees.  Some banks charge high fees for using other ATMs, while others don’t.

Credit Cards

If you haven’t already, it’s also not a bad idea to open a credit card for your child to start building a credit history.  Make sure you explain how and when credit cards are to be used – and set very specific guidelines if you are paying the bills for now.  Regardless of who is managing payments, be sure to talk about how late and missed payments, balances, and other variables impact credit scores.  You may also want to warn them that college students tend to be heavily targeted with credit card offers claiming to offer unique or exclusive benefits.  Make sure they understand that, while credit cards can be valuable financial tools, they also carry risk if not managed properly, leading to debt.

Emergency Funds

While your child may not be financially independent, going off to college and living away from home does mean unexpected situations can arise.  This is a great time to help young adults understand the value of an emergency fund and you might even want to start one for them.  If they are working during school, adding just a few dollars from each paycheck, or they could dedicate a portion of birthday or holiday gifts to their funds.  It will help them learn at an early age that saving doesn’t have to be difficult, and they’ll have an emergency fund to fall back on if needed.

Budgeting

Budgeting and saving go hand in hand, so this is also a great time to make sure your children – even if they’re not yet heading off to college – about budgeting.  Most students have very limited sources of income.  The good thing is they also don’t have the same level of expenses they will have when they graduate and head off into the working world.  Teaching them to budget appropriately today will build a foundation for their financial stability in the future.

Privacy and Security

Your children have grown up in a digital world and cyber security is probably not a new topic for them.  As they enter the world of banking, it’s a good idea to highlight the need to keep all financial information secure and private.  They should never share their PINs or credit card numbers with anyone, for instance, even if they are doing it with the best of intentions, such as trying to help a friend in need.  There are many digital banking tools that make managing money convenient, but make sure you talk about appropriate password usage, two-factor authentication, which P2P apps are safe to use.

It’s never too early to start teaching children about banking and finances.  But, as you get ready to send yours off to college for the first time, they will be exposed to a new level of freedom.  Making sure they have a solid financial understanding is important and can help keep them from getting into risky financial situations and high debt.

If you have questions about which accounts are best suited for your children, contact your local bank’s staff for advice and information.

Are You Prepared to Retire Early?

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Early retirement has always been a dream for many Americans, yet most have not been able to achieve that goal.  Prior to the COVID-19 pandemic, 46% of retirees said they ended up retiring earlier than expected due primarily to four factors:  health conditions, emotional status, financial readiness, or job loss.  That means, while many were hoping to retire early, others were forced into it due to unforeseen circumstances.

Likewise, 43% of today’s largest segment of the workforce – the Millennial generation – is expecting to retire early.  But, more recent data suggests that, due to the pandemic, that number has grown even higher, with 20% of the total workforce, including 15% of Millennials, saying current conditions have accelerated their retirement plans.

The question is, can they afford to retire early?  Some people will have a very hard time if they are pushed into early retirement, while others may have been able to plan ahead and, even if they weren’t planning on retiring early, will be able to live comfortably.  Here are some things to consider as you plan for retirement, regardless of your current age.

Invest – Despite the fact that the stock market has been extremely volatile this year, consider investing.  Whether you are just entering the workforce or nearing standard retirement age, maximizing your retirement investments may help you when you do retire.  That includes your 401k or IRA contributions.  But, you should do it wisely and adjust your allocations based on your current and expected circumstances to maximize your retirement funds.  Be sure to speak with a financial expert who can help you make choices that are best for you.

Social Security – The amount of social security benefits you receive is dependent upon when you claim benefits.   The longer you wait, the more you’ll receive.  Waiting until full retirement age (65-67 years, depending on birth year) will mean your benefits can be almost a third higher than if you take them at an earlier age.  Similarly, if you retire late (or at least wait to start claiming your SSA benefits), you stand to get almost a third more than at standard retirement age.  If you can afford to live comfortably without it, waiting to claim your benefits may be an advantage later in life.

Understand retirement – Perhaps the most important part of planning for retirement is knowing what you’ll need to live comfortably.  That includes what you plan to do once you retire, what your other sources of income may be, what your expenses will be, and other factors.  Retirement planning can also impact where you retire:  A significant portion of Americans today are looking to retire in other countries with lower costs of living. Remember, if you plan on early retirement, you’ll need more savings because you’ll be living off your retirement income for longer, and don’t forget to factor in healthcare costs, inflation, and changes to expenses as you age.

Pay off debt – If you have existing debt, try to pay it down before you decide to retire.  Massive debt can impact your retirement lifestyle.

Build your emergency fund – It’s always good to have an emergency fund that can cover several three to six months worth of expenses should an emergency arise.  This is particularly important when you retire, so you won’t have to dip into your retirement savings to cover unexpected costs.

Evaluate your current spending – If you are looking to put more into your retirement savings, the easiest way is to reduce your current spending.  If you need help saving, there are some great digital tools that can help you put away extra income, which you can put towards retirement.

It can be hard to plan far into the future, especially when it involves a dramatic change like no longer working.  But, by taking the steps today and being aware of some of the factors that can impact your retirement income, you can set yourself up more comfortably.  If you need advice on saving, retirement plans, or other ways to make sure you have enough saved, your bank’s financial experts are ready to help.

10 Tips for Safe Online Banking

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It’s not surprising to see digital banking continue to grow, considering nearly everything else we do is accessible online.  Over the past several years, online and mobile banking has grown as the primary banking method by almost 25%, according to the FDIC.  It’s not hard to imagine that growth continuing this year, especially as the pandemic closed many branches temporarily and people generally trying to avoid risk.  That’s not to say people aren’t visiting branches – they are.  In fact, 80% of households that used digital banking as their primary banking resource still visit branches.  But, the growth is a clear indicator that the convenience of online banking is real, and with banks providing many of their services online and through mobile apps, customers are taking advantage.

Of course, as with other online activities, online banking comes with risks if you’re not careful.  Banks take security seriously and ensure they have the best security measures in place to protect your accounts.  But, there are two sides to every transaction and, if you’re not practicing safe online banking habits, you could be exposing your information to hackers.

Here are a few tips to help you keep you digital banking information secure.

No sharing – Your personal and banking information is yours; keep it that way.  If you get a call or email from someone asking for sensitive information, it’s very likely a scam.  Even if you think there’s a chance it’s a legitimate request, hang up (or don’t respond to the email).  Look up the company’s phone number and call them to confirm.  Remember that your bank will never call asking you for your card numbers, security codes, PIN numbers, or other sensitive information.

WiFi security – Make sure you have followed best practices for home WiFi, including using a strong, unique password.  It’s a good idea to leave that network for you immediate family’s use.  Most modern WiFi routers allow you to easily set up a separate guest network for others to use (make sure to use a different password for the guest network).

Public WiFi – Quite simply, don’t do it.  There’s too much risk and limited security on most public networks.  They are meant to enable access to the internet, but they are typically not safe for financial transactions.  If you have access to a VPN, use that or your mobile network if you have to make banking transactions before your get home.

Passwords – Just as you do for your WiFi, use strong, unique passwords for your online and mobile banking apps.  Not all sites use the same high levels of security as banks.  Using unique passwords means that, even if one password is stolen from a site with weaker security, your banking information will not be exposed.  Check our post on creating strong passwords to help.

Sign out – Remember to sign out of your online banking accounts when done to avoid exposing your accounts in the event your devices are compromised.

P2P payments – There are many great tools for easily sending and receiving money from friends or family members.  It’s a smart habit to limit your P2P activity to people you know and trust explicitly.  If someone asks you to pay for a purchase using a P2P product, you should think twice about it.  These options are great for quickly sending money to someone, such as when splitting a bill, but they don’t offer you recourse for recovering lost funds.  On the other hand, other payment options, like credit cards and digital payment platforms like PayPal, Google Pay, and others, offer fraud protection (check before you use them to make sure you understand what is covered and what isn’t).

Mobile security – Even if you’ve secured your home devices, don’t forget your smartphones.  Treat your mobile devices just as you would a laptop or desktop with good security software.  Many security solutions available for consumer use package mobile security apps in their solutions.  If you subscribe to security software, check to see if it comes with a mobile solution.  As with your home devices, always make sure your security software is current.  Consider allowing your security software to update automatically to make sure you always have the latest protection.

Firewalls – Make sure you have an active firewall for your broadband connection to reduce risk.  Your operating system or security software should include a firewall option that you can enable.

Contact info – Make sure you update your bank and your mobile accounts if you get new contact information.  It will help your bank communicate with you and will make sure you continue receiving important information, including your account activity alerts.

Monitor your accounts – Banks have good fraud detection in place to protect your accounts, but cyber criminals are also good at what they do.  Checking your accounts regularly can double down on your bank’s efforts and spot any questionable transactions.  It’s easy to do with your online portal or mobile app and won’t take you much more time than checking email.  You can also set up automated alerts via text or email to let you know each time a transaction is made.  Alerts It will help not only help you manage your spending, but will alert you immediately of any suspicious account activity so you can contact your bank and take appropriate steps.

Online banking has become extremely convenient.  With all the digital tools available for many of your banking needs, you will rarely have to physically visit a branch if you don’t want to or are just not able to.   But, you need to make sure you’re taking precautions and following best practices for online activity to avoid putting your financial information at risk.

7 Things You Think You Know About Credit Scores, But Don’t

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By William LoCasto

When was the last time you checked you credit report?  If you’re like many people, it’s probably not frequently enough.  The good news is you can do it at least three times a year at no cost, because the three major credit reporting agencies are required to provide one free credit report a year.  In addition, your bank may offer additional services for checking you credit.

You credit scores and report will be a factor for so many decisions you make in life.  With many major financial commitments, you credit report is likely to be checked.  When you’re buying a home, your mortgage lender will look closely at your credit report.  The same goes for car loans.  Credit card companies check to determine not only whether they are willing to offer you credit, but also your card limit and interest rate.  Utility and phone companies may also want to check to determine how likely you are to pay your bills, or whether they should require a prepaid plan.  Even prospective employers often check credit reports.

The bottom line is that your credit report will play a role in most major events in your life.  This means it’s in your best interest to check you scores regularly for any anomalies, and so you know if you need to take steps to improve your score.  Checking your score is a great start, but only if you know how they actually work, which isn’t always easy.  For one thing, about a year ago, FICO (the most widely used credit scoring resource used by lenders), updated its scoring system, which could impact your score.

Aside from that, there are a number of common misconceptions about credit scores that could prevent you from improving your credit ratings.

Checking your credit report impacts your score

This is not true.  You can check your own credit score as often as you want without any impact.  However, if you are applying for credit from multiple sources, such as a car dealer, a mortgage lender, and a retail store, those credit checks could slightly dip you score.

Accessing lines of credit doesn’t impact your score

Again, this is not true.  The amount of credit you have used, compared to your available credit, is one of the biggest factors in your credit score.  A lower utilization rate is better for your overall credit.

Income changes your credit score

Yet again, this isn’t true.  Your job and income history has no impact on your credit score.  It is, however, used by lenders to determine how much they are willing to lend you.

Closing credit cards can improve your score

This is also not true.  In fact, if you close a credit card at the wrong time, you might actually lower your score because you’re reducing your available credit, which will increase the percentage of credit you’ve used.  That’s not to say you should never close credit accounts – there are often very good reasons to do so, but be aware it could impact your score.

Marriage changes your credit score

You guessed it, not true.  Credit scores aren’t like taxes; they aren’t combined into households.  Your credit score is yours alone.  Lenders, though, may ask for information about your spouse to determine your loan amount and interest rate.

You need to have a perfect score

Also false.  While it’s possible to have a perfect credit score, there’s isn’t a benefit.  Once you have reached high credit worthiness, making it perfect won’t create any noticeable benefits, other than knowing you have a perfect score.  That’s not to say you shouldn’t strive for perfection, but you also shouldn’t worry about not reaching it with your credit score – it won’t hurt you.

Poor credit is forever

This may be the best misconception of all.  Unless you have perfect credit, you can always improve your score over time.  The key is to not only understand what goes into your credit score, but to start following smart financial habits, including creating and sticking to budgets, paying off existing debt, and cutting out unnecessary spending.

There are many other questions that don’t have simple yes or no answers when it comes to credit scores.  For up-to-date information on what impacts your credit score and what doesn’t, or for advice on how you can start rebuilding your credit, talk to your bank’s experts.  Remember, you credit score will impact you for your entire life, but just because you don’t have a high score today doesn’t mean you can’t improve it.

Making New Year’s Resolutions That Will Actually Be Helpful

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By Celeste Lohrenz

As we reach the end of what has been nothing short of a challenging year – and hope 2021 will bring good news – it’s time for the age-old tradition of making New Year’s resolutions.  Most people, though, don’t follow through on them.  But, the key to making them stick is to make resolutions that are specific enough and achievable and, importantly, beneficial.  If you have a vested interest in keeping your resolutions, you’ll be more likely to do so.

Taking stock of your financial situation is a great place to start.  Then, you can look at where you may need or want to make changes in your spending or saving habits to improve one or more areas of your personal finances.  You can certainly do these things at any time, but if you need a little additional motivation, try making a financial New Year’s resolution and see how it changes your financial outlook by this time next year.  It’s something you have control over, and improving your finances will have short and long term benefits.  Here are a few suggestions.

Stick to your budget

One of the most important tools for financial responsibility is your budget.  Without one, it can be difficult to manage your spending and increase savings.  If you haven’t created a budget, start with understanding your monthly spending, then you can start to build a budget and see how that relates to how much you want to save.  If you already have a budget, review it to see if you can cut any spending to help save more.  But, make sure you create a reasonable budget.  If you set one that’s not realistic, you will not only fail to stick to it, but once you go over budget once, your spending can snowball quickly.

Check your credit report

Your credit score is a key factor in how banks decide whether to lend you money or not, and also what interest rates borrowers will get, which can all impact your ability to finance major investments, like homes or cars, or to get credit cards.  You can see your credit score every time to log into your online account here at The Milford Bank.  If there’s nothing suspicious and your credit score is strong, you won’t spend much time on it.  But, if you need to improve your score or notice something wrong, make it a priority to fix it.

It’s easy to say you’ll eliminate all your debt, but it’s a lot harder to do it if you have significant credit card balances, auto loans, student loans, or other debt.  Reducing it is much easier.  Try setting incremental, more achievable goals, like paying off one loan at a time, or paying an extra $50 or $100 a month on your credit card.  Even if you don’t pay it all off by the end of the year, you’ll have made significant progress that you can carry over into the following year.

Automate saving

Saving isn’t always easy, but using automated tools, like Plinqit, can help you reach your small and large saving goals by automating your savings deposits.  Regardless of what you’re saving for – college tuition, a wedding, the down payment on a new home, or anything else – you no longer have to remember to put money away.  Instead, set your goals and watch your savings grow each month.

Build an emergency fund

The thing about emergencies is you never know when they may happen.  Your roof may start leaking, dishwasher may stop working, your car may need a new engine, or any number of other things may come up that require access to funds.  That’s where having an emergency fund is can be a major benefit.  Instead of dipping into your savings or accumulating debt, an emergency fund provides security for any unexpected situations that come up, including loss of income.

Save for retirement

It’s never too early to start building your retirement nest egg.  It’s simple logic – the earlier you start, the more you are likely to have when you retire.  Whether you have a 401k plan or IRA, try maximizing how much you put into it each month, while still maintaining a reasonable budget (especially if your company matches your contribution).  You may also want to pay more attention to how your contributions are being invested.  Talk to your financial advisor if you’re not sure how to effectively manage your investments.

Start banking digitally

Just about everything we do these days can be done online.  If you haven’t yet tried online or mobile banking, you haven’t experienced the freedom and flexibility it provides.  Most of your everyday baking transactions can be done through your bank’s website or mobile app, reducing the number of trips you have to make to the branch and giving you more time to enjoy doing other things.  If you need help setting up your online account or mobile app, our bank’s specialists are ready to help.

Review your will

Nobody wants to think about it, but creating a will and making sure it’s updated as your financial circumstances change can be a huge help to your loved ones when the time comes.  Take the time to meet with a professional to document how you want your assets allocated, and enjoy the peace of mind that you’ve made things a little easier for your family in the future.

These are just a few ideas for kicking off the new year with a positive financial outlook.  Once you have assessed your current situation, you may find other ways you can improve your financial wellness.  The key is finding something that makes sense while setting a goal that is achievable yet meaningful enough to make you want to follow through.  Whether you’re looking at short-term benefit or long-term opportunities, you can’t achieve them if you don’t set objectives and create a path to financial success.

Safe Shopping Tips for the Holidays

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The holiday shopping season is upon us.  Starting with Black Friday and running through Christmas, the next month will be the busiest shopping period of the year – as it always is.  Each year, online shopping has increased, due to convenience, availability, free shipping from many retailers.  This year, the trend will be even more significant, considering the unprecedented circumstances that continue to surround us with the global pandemic, driving more people to do much of their shopping online.  It also means cyber criminals will be even more dangerous than ever, trying to take advantage of people looking for great deals.

Be aware though, that not all deals are good ones – some are likely to be scams targeting unsuspecting shoppers during peak periods where many people lower their guard in an effort to save or get popular items.  As you do your online shopping, keep a few simple rules in mind to help protect you and your personal information.

Check out sellers – It’s worth doing some research on online retailers, especially ones you don’t know and haven’t used previously, to make sure they are legitimate.  Online and social media reviews can be a good source of information, since customers are typically very quick to post about poor experiences and fraudulent site.   You can also look up companies at the Better Business Bureau.  The BBB also has a scam tracker site where you can look up (or report) scams.  It’s currently showing more than 200,000 scams.  If you’re buying through P2P services, like eBay, make sure you look at the seller’s history, ratings, and feedback.

Hard to find items – Be aware of offers promoting hard to find items.  Scammers often target buyers by offering deals on hard to find items.  Be aware of this and be sure to do your research on retailers.  Though it’s not always the case, if items are sold out at popular retailers – including the brands own e-commerce site – it’s not very likely they are available from other sources.  Your best bet is to shop early to avoid missing out on these items and setting yourself up to fall for a scam.

Be cautious with links – You’re likely to get countless emails from retailers promoting sales and gift ideas.  Many will be legitimate retailers you’ve purchased from in the past but, it’s almost a certainty there will also be fake ones looking to steal your personal information and money.  Some of the emails or texts you receive about amazing offers may contain links to fake websites.  Follow safe practices by carefully inspecting or searching any URLs before clicking on them, looking for typos or poorly written emails, and keeping an eye out for fake sites with URLs that are close to legitimate brands.  Instead of clicking on email links, you may want to search for brands and get to their sites that way.  Sales and specials are usually available directly from the websites as well.  If not, it may be a scam.

Use credit cards – Whenever possible, pay with a credit card.  Most major credit card issuers provide online purchase protection, so your liability will be limited, if any.  Some banks are also extending the same protections to their debit cards, so you should check with your bank to understand your liability.  Using a credit card instead of a debit care also means your primary bank account won’t be compromised if your card information is stolen.

Online payment platforms – Online payment platforms, like PayPal, Google Pay, Apple Pay, and others are another alternative available at many retailers.  The benefit is you are still using your credit card, but because you’re authorizing payment through the third-party platforms, your payment information is never seen by sellers.

Use only secure sites – Always make sure you are shopping on secure sites, indicated by the small closed padlock icon next to the URL in your browser.  While the icon doesn’t guarantee the legitimacy of the seller or the security of their payment system or website, it does mean you have a secure connection to the site, reducing risk of your data being intercepted.

Protect your accounts – Most retailers will allows you to make purchases as guests.  If you don’t have to, don’t sign up for an account with every seller, especially those you aren’t likely to use repeatedly.  For those you do have accounts with, follow your normal best practices, including strong passwords and two-factor authentication to protect accounts.  2FA typically works by sending a confirmation code to your mobile device to confirm your identity.

Security software – Hopefully, you already have a good security solution installed on your home and mobile devices.  They can help protect you against cyber criminals by alerting you when you are trying to access an unsecure or potentially fraudulent site, in addition to all the other security features that help keep your information safe.  As a regular course of action, you should make sure your software is always up to date.

Following these guidelines can certainly help protect you as you do your holiday shopping, but they are good steps to follow all year long.  But, even if you are careful, there’s always a chance your information may be exposed or you may make a mistake.  If you think something has gone wrong and you may have been a victim or fraud or exposed your information, contact your bank immediately to alert them and block your accounts.