Is a Home Equity Loan Your Path to Eliminating Credit Card Debt?

By Paul Mulligan,

Senior Vice President, Consumer Lending

Now that the holidays are a distant memory, everyone has settled back into their “normal” routines, which inevitably includes paying the bills. Hopefully, you didn’t max out all your credit cards, but if you did, that may create strain on your budget, especially if you also have other debts you’re paying off as well, like college loans.

The reality is this situation can happen to anyone, at any time. You may run into some unexpected expenses or you simply aren’t budgeting wisely, or you haven’t figured out how to save enough and the next thing you know, you have multiple debtors hitting you with high interest rates every month. It can make it hard to make a dent in your balances and become financially secure.

If you own a home and have built up equity, there is an option that could help get you out of debt faster than paying off all your credit cards each month. You could look into a home equity loan. Especially if you’ve been paying of your mortgage for several years, or your home value has increased significantly, you may actually have an easy time securing a home equity loan.

Using a home equity loan to pay consolidate multiple debts has some advantages. For instance, home equity loans often come with lower interest rates than credit cards, making the interest you’re accruing each month lower. With a home equity loan, you are also only paying a single creditor, making your monthly budgeting a little easier to manage, and a longer repayment period may help you reduce your monthly payment, giving you a little breathing room in your budget. In addition, if you are also using the home equity loan to fund a major home improvement project, the interest may also be tax deductible.

But, you should be aware there are risks with consolidating debt into a home equity loan. Perhaps the biggest is that, if you default on the loan, your home can go into foreclosure. Unlike credit card debt, it’s almost impossible to discharge a home equity loan. In addition, if your home’s value drops, you could end up paying more than it is actually worth at that point.

Perhaps the biggest drawback is loan consolidation doesn’t address the spending habits that got you into a debt problem to begin with. In addition to paying off your loans, you should also get into better spending habits to make the most of your paycheck and avoid getting into even more debt. It’s very easy to start running up credit card balances if you aren’t careful. So, if you are having a hard time putting money into savings, there are several ways you can help yourself become more financially responsible, including using a savings app like Plinqit.

But, if you think a home equity loan could be the right option for you, come speak with one of our financial specialists, who can help you make a smart decision and get your finances back on track.

Plinqit Makes Saving as Easy as Using an App

By Tina Mason,

Customer Solutions Specialist,

Post Road East Office

Saving is not always easy. Just ask the 58% of Americans who have less than $1,000 saved (73% have less than $5,000 in savings). Financial experts suggest having an emergency fund of 6-12 months of expenses, in addition to saving for retirement, which should be around 15% of your annual income. Of course, that doesn’t factor in saving for additional large expenses, like vacations, college tuition, home improvement projects, among others.

So, when you put it all together, saving close to 20% of your income can help provide a comfortable level of financial security. But, according to another survey, 69% of Americans set aside 10% or less, and only 15% are saving more than 15%.

There are several reasons behind the lack of savings, including expenses being too high, income levels not being high enough, and debt – as well as simply not having gotten to it. It’s very possible that some expenses can be reduced by doing a spending analysis, which would help those with high expenses or lower incomes. But, the simple fact is it’s just not easy to save.

There’s good news, though. We’re living in a tech-driven world, and innovative companies are creating apps and services to solve just about every problem, including fintechs and the saving dilemma.

The Milford Bank has partnered with one of those fintechs, Plinqit, to help customers save. The key is that it’s simple to set up and simple to use. Customers simply set up a Plinqit account, connect it to their checking account, set up to five savings goals and a schedule for depositing small amounts into their Plinqit accounts.

Because we want to help customers succeed, The Milford Bank and Plinqit incentivize users to become more financially literate and to follow through on their savings goals. By watching educational and financial videos through the app, users can earn savings rewards that are added to their Plinqit accounts. Users can also be rewarded for successfully reaching their savings goals – but there are penalties for withdrawing their funds early.

How much users are able to save is completely up to them. Each user has to set reasonable savings goals based on their own budgets and expenses. The Milford Bank and Plinqit are here to help keep those savings goals on track. The app works; Plinqit users have saved more than half-a-million dollars since the app was launched.

If you’re serious about saving money for any reason, The Milford Bank is here to help. Anyone can set up an account on their own and start saving, but if you want advice on your personal finance needs, please visit one of our offices and speak to one of our financial specialists.

Making the Most of Your Paycheck in 2020

By Lynda Mason,

Group Manager, Post Road East Office; Woodmont Office

Now that we’ve started a new year – a new decade, in fact – many of you may have made New Year’s Resolutions to be more financially responsible, to spend a little less and save a little more.  It’s a great approach to your finances, and it’s never a bad idea to take a close look at how you’re spending your income.  But, if you didn’t make a resolution, that’s OK – only 8% of resolutions are kept, and 80% fail within the first month.

So, if you did set one and want to make sure you are able to keep it, or if you simply want to take a fresh approach to your personal finances this year, there’s no time like the present.  The key is having specific, attainable goals and a strategy for success that is both challenging and feasible.  With that in mind, here are a few tips that will help you adjust your strategy for saving this year – and keep your New Year’s personal finance resolution if you made one.

Define your goals

The first step when you’re looking to make financial changes is to know what you’re hoping to achieve.  It’s hard to evaluate how well you’re doing if you simply say, “I am going to be more responsible with spending.”  There are many reasons to reduce spending and increase savings – you need to identify your objectives in order to project how much you need to reduce your spending.  A few examples include:

  • Pay off credit card debt or mortgages
  • Build retirement savings
  • Start a college fund
  • Save for down payment on a home or car
  • Start a rainy day/emergency fund
  • Plan for other major expenses (remodel, wedding, etc.)

Knowing what you are saving for provides motivation for sticking to your budget.  Once you have decided what your goals are, you can set target amounts to start budgeting.  You can always adjust these, but having a target in mind will help you understand what is truly attainable and what is likely to cause you to fail.  In addition, if you are saving for known upcoming expenses, you can figure out exactly how much you need to save to reach the required amount by your deadline.

Understand your spending

The only way to evaluate how well – or poorly – you are handling your finances is to understand how you’re spending your income, what you’re spending it on, and how much you are saving.  Track all your spending for a month to understand exactly where you paycheck is going – and if you are spending more than you earn.

Set a budget

Once you know how you have been spending your money, you can define a budget based on your spending habits and savings targets.  At a bare minimum, you should know your fixed expenses (mortgage or rent, car payment, utility bill, cell phone, etc.), along with how much you want to put towards your new goals.  This will allow you to define how much discretionary spending power you have for eating out, going to movies, etc.  Remember, you can always be flexible within your monthly budgets.  For instance, if you want to see two new movies, but have only allocated for one, you might look to spend less on dinners out for balance.

Eliminate bad habits

Take a look at your monthly activity and identify the things you do that could be costing you more than necessary.  Are you paying full price for clothing?  Are you eating out several times a week?  Are you buying expensive Pay-per-View events every month?  Are often late with your bill payments?  There are many poor financial habits that could be costing you more than you realize.  Take a look at these and look for ways to eliminate or at least reduce them.

Elevate good habits

There are many ways to reduce spending simply by using the tools available to you – most of them on your mobile devices, which you take everywhere.  Loyalty programs offer member savings and allow you to collect points towards various purchases.  Find retailers you like and try to stick with them.  Don’t underestimate the power of coupons and sales – there’s no reason to spend more on something than you need to.  This may also mean learning to be flexible with what you buy and when. One of the many Online Services the Milford Bank provides is the ability to create bill reminders to allow you to set preferences for receiving e-mail notifications reminding you that your bill has arrived and/or your bill needs to be paid. This tool enables you to control the entire bill payment life cycle. The Bank has also recently partnered up with Plinqit, a simple savings tool that allows you to set up and customize your savings goal and have Plinqit help you set aside a small amount of money regularly, on a schedule you choose. You can also earn money with Plinqit by watching videos and reading educational articles to learn more about money and saving.

There’s no simple answer for saving money.  It all comes down to what your priorities are.  As you evaluate your own priorities, if you need advice on how to save or where to put the money you’re saving, consult your bank’s financial advisors, who can help determine the best kids of accounts for  your specific needs.  Then, it’s all up to you.

Why Digital is an Advantage for Local Banking

It’s no secret that the world has gone digital. So much of everything we do each day happens online with the mobile devices that seem to be attached to our appendages. Mobile and desktop apps and online portals have changed the way we manage our lives, including our finances.

With the Millennial generation now the largest single population group in the workforce, the majority of spenders and financial decision-makers will soon be digital natives. They have grown up in the smartphone era and expect to be able to do just about everything digitally, including banking.

According to a recent report, 69% of Millennials use their laptops or PCs at least once a week to access bank accounts, but 92% do the same thing on their smartphones, and more than half engage in banking activities on their mobile devices more than five times a week.

Interestingly, Gen X is actually ahead of the Millennial generation in terms of laptop banking (82% at least once a week), and not far behind when it comes to smartphones (83% at least once per week and 47% more than five time a week).

The Milford Bank has always prided ourselves on the personal service we deliver and the community and human connections we are able to create. While on the surface it would appear that national banking brands would have an advantage with digital banking, we are happy to be provided the opportunity to build on our relationships we have had with our customers by offering a variety of digital products and services that can be correctly tailored to our customers’ needs and wants. Some of the advantages of this digital shift are:

Expanded customer base – Digital banking allows us to expand our customer bases. Because most people don’t need to visit branches very frequently, offering digital banking products can showcase our brand to new customers. Customers are comfortable doing most of their banking using digital tools, and are within a reasonable distance from a branch to be able to go when they need to.

Quality customer experience – The Milford Bank prides itself on delivering superior customer service. While it may seem digital banking could detract from that experience, it’s actually quite the opposite. Because customers expect to be able to do their banking online, giving them the tools to do it is part of a great experience.

Improved customer engagement – Digital tools create opportunities for increased engagement between The Milford Bank and its customers. That means that we now have more ways to let our customers know about the tools that are available for their banking needs – especially new ones, like partnering with P2P payment networks, and to emphasize the flexibility the combination of local and digital banking offers.

Perpetual availability – One of the great benefits of digital banking is its 24/7/365 availability. While offices are closed for holidays, the Internet stays open for business, which means you can access your accounts, pay bills, and send money to your kids in college any time at all – from anywhere.

The bottom line is banking is going digital, and it is important for The Milford Bank to give our customers a diverse variety of tools to choose how they want to bank. As banking competition has moved online, The Milford Bank cherishes the opportunity to blend the personalized experience a customer gets when they visit one of our offices with the ease and convenience of our digital product offerings. Customers like feeling that they matter and it is important for us to provide quality products and services regardless of whether it is in person or online.