Are you ready for tax season?

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by Lynn Viesti Berube

Filing your tax forms can bring financial relief in the form of a refund or financial devastation in the form of an audit. Planning ahead is a great way to make sure you maximize your refund and ensure your financial health. Make the best of tax season and lower your chances of getting audited with these tips:

File as early as possible. You’ll beat the rush as April 15 nears, and you’ll have time to catch and fix mistakes before the tax deadline. If you are due a refund, you’ll get it sooner. If you owe, preparing your taxes early will give you time to plan for making your payment. Also, you may be less at risk for identity fraud if you file early because it makes it less likely someone can file in your name over the coming months. One caveat: Be careful about using tax preparation companies that advertise giving you your refund immediately, before your return is filed. This may actually be a loan, and you may be required to pay it back with high interest. Read the fine print.

Keep receipts to take advantage of deductions. Most taxpayers take the standard deduction, but if you have deductible expenses above and beyond the standard amount, it may benefit you to itemize. Be sure you have receipts from throughout the year for the expenses you plan to deduct, and that they match the amounts you are claiming on your return. Be careful, however. Itemized deductions could trigger an audit. Be sure to do your research concerning deductions for business use of your vehicle, meals, home office, charitable donations, and home buying.

Keep track of possible tax credits for life changes. Life changes such as becoming a parent, purchasing a home for the first time, or pursuing higher education can qualify you for tax credits. Credits are different from deductions as they directly reduce tax liability, so they reduce taxes dollar for dollar. If you had a major life change in 2015, it may qualify you for a credit.

Avoid audit triggers. First, don’t rush your return. Take your time with it, and get professional help from a qualified tax preparer, if needed. Mistakes—even simple ones like misreporting your filing status or your income—can trigger an IRS audit. If you do itemize deductions, stay within the rules and don’t try to inflate them or claim them twice. For example, deducting mileage for the vehicle you use to deliver products for your home-based sales business is fine, but claiming a vehicle you only use for business purposes once in a while isn’t. Likewise, if you own a business and claim a loss year after year, the IRS may want to investigate.

Do you have questions about specific deductions? The IRS has help available by telephone or you can speak to someone in person at select locations. Find more information here.

First-Class Vacationing on an Economy-Class Budget

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By Lynn Viesti Berube

Are you overdue for a vacation? You know the signs: little problems may easily morph into big ones, you’re making more mistakes than usual, and perhaps your co-workers keep asking if you feel alright.

Taking a vacation might be a great way to reduce stress and freshen your outlook, while experiencing the wonders of the world! But the price tag that comes along with a dream getaway can be enough to scare you back to reality. To keep the cost down, try getting creative about how you allocate your vacation budget.

Here are some tips on how to save money on your next trip.

Catch a red-eye flight during offseason: Timing is everything with travel discounts. If you’re willing to go against the grain, you could be rewarded for your flexibility. Flights at odd hours may be discounted by airlines to make sure their seats fill up. Likewise, hotels may offer lower rates during off-peak season to keep their rooms occupied. Considering that airfare and lodging are two of a traveler’s largest expenses, flexibility can greatly reduce the cost of your vacation.

Visit a grocery store: While stopping for groceries may not be your idea of a fun getaway, it is one of the first things you could do when you arrive at your destination to save money. Enjoying local cuisine is a pleasurable part of the travel experience, but doing so could be costly. Instead, consider dining at the few restaurants you’re most excited about, and preparing the rest of your meals at a fraction of the cost using grocery items. Also, visiting local markets can be a culturally enriching experience in itself!

Get out of the driver’s seat: Depending on your particular destination, you may never need a car to see the sites. So, before booking a rental, consider the proximity of all the stops you’d like to make, and check the alternative modes of transportation available to get you there. Whether by foot, bicycle or bus, you could also experience a broader swath of your locale than you would by car, while saving money. For jaunts that require a car trip, check up on taxi prices and availability before you arrive. If you do need to rent your own vehicle, however, be sure to consider booking it at the same time as your flights and lodgings to get a discount.

If you’re looking to get out of town for a little while, but you’re worried about coming home broke, these suggestions might help to mitigate the biggest expenses to your travel budget. That way, you’ll be able to focus on what really matters: a fun experience that won’t leave you with buyer’s remorse. For more advice on managing your assets, stop by The Milford Bank or visit us here.

Card Security: What’s That Chip Doing There?

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by Celeste Lohrenz

Credit and debit cards have become the norm for Americans as fewer shoppers opt to carry cash for day-to-day purchases. Swiping for gas, groceries and even train tickets has become second nature. However, the public’s reliance on this payment method has made card systems a rewarding target for hackers and has led to major data breaches at some of the nation’s largest retailers. Furthermore, hackers and cyberthieves have found ways of directly targeting the magnetic strips on the back of credit/debit cards, through use of scanner devices that allow the theft of card information without the physical card ever having left your pocket.

For those who have recently experienced a card theft or loss, you may have noticed something different about the new card your bank sent as a replacement. Now, new credit and debit cards will no longer transfer personal information through magnetic strips but through an embedded computer chip, called a Europay Master Visa (EMV) chip, on the face of the card, which is expected to be the nationwide standard by 2016.

So what is that little chip doing there anyway? Here’s what you need to know:

• What it is: The EMV chip you’re seeing (or soon will see) on the face of your credit/debit acts as a security vault for your card’s information. Over the years, the technology that card thieves use to tap into magnetic strips became so advanced that end users and merchants alike were at risk of having their private data stolen. To address this problem, major credit card companies like MasterCard and Visa found an alternative in EMV chips, which are not vulnerable to hackers’ current toolsets.

• How it works: As of now, and likely until all merchants have begun to accept EMV chips, cards work both through the magnetic strip and the EMV chip. Rather than swiping your credit card through a card terminal at the end of a transaction, you will insert your chip card into a machine that reads the specially made computer chip throughout the transaction. This new method allows your bank to monitor your card’s “security vault” during the entire transaction, affording it more data resource points for augmenting security.

If you currently have a card with an EMV chip, be sure to use it with merchants that accept this new technology to guarantee the safest transactions. Card holders who have yet to receive a new card with an EMV chip should contact their local card providers to upgrade their security features.

What Will Rate Hikes Mean for Your Family?

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by Paul Mulligan

Back in December of 2008, the Federal Reserve instituted a zero interest rate policy in an effort to curtail the effects of what is now commonly called the Great Recession. For the past seven years, borrowers have been able to take advantage of these lower interest rates. But with the economy now improving, the Fed is beginning to raise interest rates once again. This policy change can have a very real impact on American families, including your own.

Here are some of the primary ways that a higher interest rate may affect your family, along with ways to offset the negative and accentuate the positive:

More expensive mortgages: If your family is looking at either purchasing or refinancing a home, now is the time to act. A fixed-rate mortgage will enable you to lock in today’s comparatively low interest for the term of your mortgage. A variable-rate mortgage, on the other hand, is tied to the Fed’s raising and lowering of interest rates, so it will become more expensive if rates go up. New buyers should, therefore, consider taking advantage of a fixed-rate loan. If you own a home, you should consider refinancing for one of two reasons: either you currently have a variable-rate mortgage or your fixed-rate mortgage was set at a high interest rate prior to the zero interest rate policy being enacted. This may be the last chance to capitalize on the Fed’s policies before rates increase. Speak with your banking institution to see if you can benefit.

Higher annual percentage rate (APR) on credit cards: When the Federal Reserve cut interest rates in 2008, fixed-rate credit cards basically disappeared from the market. If your card was issued and your rate fixed prior to 2008, you will not be affected if rates go up. But a large number of credit card owners whose lending rates are variable—and tied to interest rates—may experience an immediate rate increase, including on any existing balances. For credit card holders, the best thing you can do is plan ahead. When working up your monthly budget, be sure to set aside an extra amount relative to the outstanding balance on your credit card. If you’re using a new credit card, try not to overextend yourself before you know what a rate hike will mean for your finances.

Higher returns for savings accounts: There is some good news for consumers when it comes to higher interest rates. Those with money stashed away in savings accounts will see increased returns. In the age of the zero interest rate policy, savings accounts accrued minimal interest. With a rate hike, savings accounts will become more viable savings vehicles again. If you have been able to put money aside in a savings account, keep it there. If you don’t have a savings account, now might be a good time to open one.

While even the brightest financial minds can’t always predict what the Fed will do with interest rates, you can prepare for the ups and downs by reviewing your finances in these three areas. To learn more about how to safeguard your financial interests with a Fed hike looming, call or stop by any office of The Milford Bank.

Three Ways to Get Your Holiday Shopping Done Without Draining Your Savings

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by Lynn Viesti Berube

In an analysis from American Research Group, shoppers across America are planning to spend on average $882 on holiday shopping this year. Yet, in a survey from GoBankingRates, it was found that 62 percent of Americans have less than $1,000 in their savings accounts. The picture being painted here is that many consumers will spend beyond their means this December. But finding gifts for family and friends in celebration of the season shouldn’t have to break the bank.

Here are three ideas to help ensure you’ll still have a jingle in your pocket once you’ve finished your holiday shopping.

1. Check daily deal sites for whole-family experiences. Instead of wrapping up another sweater or tool this season, why not up your game and thrill your loved ones with the gift of a unique experience? Daily deal sites like Groupon or Living Social offer group discount rates on activities ranging from glass-blowing classes to helicopter tours of New York City. By getting your whole family—or those distant relatives—on board, you can qualify for great deals and share in a truly original gift that will create memories that will long outlive the latest electronic gadget or pair of slippers.

2. Do your holiday shopping year-round. One big reason that financial stress weighs so heavily on our shoulders during the holidays is that most of our annual shopping takes place during just six to eight weeks, straining monthly budgets. So, why not keep an eye out for holiday gifts throughout the course of the year instead? This can enable you to make purchases at more manageable increments, avoiding a huge cash outlay in a short time frame that may constitute use of your credit card and the potential for additional costs in the way of interest. Take the year, too, to take advantage of retail sales as they occur.

3. Do it yourself. Do you sew or paint? Are you a carpenter? Whatever your craft, you may be able to think of someone on your shopping list who would love what you can produce by hand. Many recipients will appreciate the personal touch that such gifts deliver. At the same time, you save your hard-earned money, as purchasing the materials required to create your handiwork typically costs less than purchasing the same item in a store. Then, you can use the money saved to offset other purchases, like one of the group activities mentioned above. In other words, pay the DIY method forward.

If you’re one of the many Americans who are letting holiday shopping adversely affect your savings, keep these tips in mind to ease some of the stress it is causing you and your wallet. For more advice on managing your finances, come to any office of The Milford Bank or visit our website here.

Three Ways to Save Energy This Fall

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by Lynn Viesti Berube

With Labor Day in the rear view mirror, we’re now into fall and, with it, colder weather. After the winter Connecticut experienced in 2014, it’s safe to say that we’re all holding tightly to these last few days of warm weather. While you may not have turned on the furnace just yet, you might want to plan for the colder months sooner rather than later when it comes to financing your warm home.

To help you cut heating costs this fall and winter, here are three ways to conserve energy:

• Eliminate the cracks: You may not pay them much attention, but those tiny cracks below your door and around your windows are sucking the money right out of your home. These cracks allow conditioned air within your home to escape and cold air to seep in. By investing in inexpensive draft stoppers and by shrink-wrapping your windows, you can keep the warm air in, the cold air out and save big on your monthly energy bill.

• Optimize your heating system: One major way we waste energy and run up electric bills during the colder months is by overworking inefficient heating systems. Instead, optimize your heating system with a few at-home solutions that shouldn’t break the bank. First, consider placing area rugs in high-occupancy rooms (such as your family room) where you may otherwise have bare floors. Doing so will help retain heat and keep your feet feeling cozy. Second, change the filters in your heating system on a monthly basis to ensure you’re not forcing your system to work harder than it needs to. Finally, make sure heating vents aren’t being blocked by furniture—it may keep the couch nice and warm, but the furniture will draw the heat out of the air and keep the temperature in the room down.

• Opt for electronics with batteries: It’s no secret that during the colder months many of us prefer to wrap ourselves in a warm blanket and watch Netflix, rather than bundle up and brave the elements. However, the extra time we spend in our homes can have a major effect on our electric bills, based on our increased use of electronics alone. Instead of turning on the TV, or heading to your desktop computer this season, opt for electronics with batteries, such as laptops, tablets and other mobile devices. These devices often cost less to charge and, as long as you unplug the charger after you’re all juiced up, will save you big bucks over the course of the next few months.

As the holidays approach, don’t let good tidings be overcome by high electricity bills! These three steps will help you save on your monthly bill while staying warm. And, if you ever have a question of what to do with your new-found savings, consider a Milford Bank savings account!

Want more tips on energy efficiency and saving money on your power bills? Visit our Green Fair on November 14th!

Green-Fair-postcard

 

Three Things You Need to Know About Your Credit Score

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by Trish Townsend

If you have aspirations of one day owning a home, leasing a car or paying for college (either for you or your children) then you know the road to obtaining these goals leads directly through your credit score. Your credit score is the numerical evaluation of your lending history, and it is often the determining factor when lenders accept or deny your loan request. With a good credit score the sky is the limit; however, a poor score can make a task as simple as applying for a credit card become nearly impossible.

Considering how important a credit score is to an individual’s future, it’s surprising to discover that nearly 60 percent of adults haven’t checked their score within the last year. In the spirit of educating our account holders, here are three things you may not know about your credit score:

• Payment history: The largest chunk of your credit score—35 percent in fact—is based on your payment history. This should not be confused with your history of repaying loans, but rather it includes bill payments of any kind. That means if you still have that library book from high school in the back of your closet that’s rung up unimaginable late fees, it is possible that it could end up on your credit score and negatively affect it. Likewise, medical bills, parking tickets and even a late cable bill can be factored in to your credit score.

• Free reports: Your credit report—detailing your credit score and how it was calculated—can be freely obtained three times a year; one each from the three major credit-reporting agencies: Equifax, Experian and TransUnion. While you can contact the credit-reporting agencies individually, they can more easily be obtained through annualcreditreport.com, the only website explicitly directed by Federal law to provide credit reports. Knowing your score is the first step to improving it, and it’s a great way to monitor against identity theft.

• Constant change: Your credit score is alive, and it’s changing almost every single day. Many people are unaware of how a change in their credit score actually occurs, so having this knowledge will be helpful when seeking loans. As a best practice, check your credit score by using one of your free reports as soon to applying for a loan as possible. Doing so will allow you to address any glaring inaccuracies, as well as will offer you a better picture of how much money you’ll be allowed to borrow.

Your credit score can be your best friend or your biggest foe, but you’ll never know until you find out more.

How to Save on Back to School Supplies

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by Lynn Viesti Berube

It’s officially August, and that means parents are getting their kids ready for the new school year. And while the first bell is rapidly approaching, there is still one last obstacle for many people to overcome before students are back in the classroom… back to school shopping.

Anyone sending their kids back to school this fall knows just how expensive back to school shopping can be, but did you know it’s the second-largest seasonal shopping period of the year? That’s the word according to Statista, which ranks back to school shopping as No. 2, just ahead of Mother’s Day and Valentine’s Day. In fact, Statista estimates that $74.9 billion will be spent this year alone on back to school needs.

Here are a few ways you can save during this seasonal shopping period:

• Shop from Aug. 16-22: That is Connecticut’s tax free week. During this tax holiday, consumers can shop for clothing and footwear, tax free, on purchases up to $300.
• Buy in bulk: Not only will you be able to get a lot of items you need for the entire year by shopping in bulk, but leftovers can be used the next year as well, which can help save you some money a year from now.
• Check your inventory: If you already shop in bulk, or even if you don’t, chances are you have school supplies left over from the year before. Check your inventory and decide what can be reused and what needs to be replaced.
• Buy from dollar stores: It’s amazing that pens, pencils, markers and notebooks can be as expensive as they are, but they can also all be found at dollar stores. Consider forgoing the name brands for their dollar store counterparts to get the most bang for your buck.

Being strategic in your back to school shopping can net you big savings. Once you’ve done so, consider depositing your savings into a Milford Bank savings account for your future graduate.

Five Ways to Grow Your Savings Accounts

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by Becky Tudor

We get it… allocating a set amount of your income each month for your savings accounts may seem all but impossible. But it’s important to put money aside for a rainy day; you never know when emergencies (or even retirement) will creep up.

Here are five suggestions to help you save money:

1. Keep Track of Your Spending: To figure out how much you can put aside each month, pinpoint how much you are spending. Tally your monthly expenditures. Hold on to every receipt—no matter if you pay with cash or credit—so at the end of the month you can perform an audit. Take a look how much you spend on recurring items (think rent, cable and electric) as well as one-offs like lunches, movie ticket, and sporting events. Once you’ve aggregated this data, you can set a target for how much money you can put into your savings accounts.

2. Pay Your Savings Account: The best way to save is to make it automatic. For instance, when you receive your regular paycheck, schedule a portion of it to be automatically deposited into your dedicated savings account or 401K—instead of waiting until the end of the month to move it over. In other words, pretend as if that money is not there. When that money is not available, you cannot spend it and, thus, your savings accounts can flourish.

3. Be Careful With Your Credit Cards: All too often, individuals end up paying down the interest on loans, debts and credit instead of paying the actual sum of money borrowed. You may be able to avoid paying interest if you pay off the entire balance each month.

4. Get Creative With Your Social Events: While limiting your entertainment budget is a surefire way to pad your savings accounts, it is incredibly important to find ways to satiate your quest for social gatherings while doing so on a budget. So instead of limiting your social events, get creative with them. Consider going for hikes, playing board games or inviting friends over for a pot luck dinner rather than suggesting pricier social gatherings. Just swapping even one concert night for a karaoke night could save you hundreds of dollars in one month.

There are so many great money saving tips out there, so we want to hear from you! How do you suggest padding your savings accounts each month?

Is It Time For You To Start Planning Your Retirement?

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by Pam Reiss

When should you start planning for retirement?

Assuming you want to stop working one day—and still be able to provide for your family and be comfortable financially—the answer to that question may be yesterday. But the good news is that it’s never too late to start planning for the future.

If you haven’t started preparing for your retirement, rest assured you’re not alone. Believe it or not, more than half of Americans haven’t calculated how much money they’ll need to live comfortably during their elder years. That’s according to the United States Department of Labor (DOL), which also asserts that 30 percent of workers in the private sector don’t participate in a retirement contribution plan, like a 401(k).

According to the Social Security Administration, the average monthly benefit for retired workers was $1,294 in December 2013. Does that sound like enough money to live on? If not, you’re going to need an additional source of revenue to live comfortably during your retirement, which is why you may want to start planning now. With that in mind, let’s look at three steps you can take to invest in your future:

First things first: Make a plan. As with any other goal in life, to be successful in your retirement, you should plan a course of investment. The DOL recommends that you first calculate your net worth, or your assets minus your debts.

Next, you’re going to want to determine your retirement goal. How much money do you anticipate needing to live comfortably each month? Try to figure out a ballpark age around when you might retire. You might be able to work a few years past the age of 65. Heck, you might even want to.

Then, think about how you’re going to invest your money. Do you feel more comfortable buying into a 401(k) plan, or would you rather open a Roth IRA and invest your after-tax money on your own? There are no wrong or right answers; choose what you think will work best for you.

Consider taking advantage of any available retirement plans. Many employers’ generously invest in their employees’ futures. If your company offers such a plan, it’s definitely something you would want to consider.

For example, let’s say your employer matches half of your 401(k) contribution, up to 6 percent. So when you put 6 percent of your salary in your retirement account, your employer tacks on an extra 3 percent. This money is essentially a 3-percent raise to your base salary.

Try not to think about this money. If you touch this money before your retirement, you may have to pay a substantial penalty.

It might be easier said than done, but when you’ve got an account that’s diversified enough, you should set it and forget it. Thanks to compounding interest,  it is possible you may see your $100 per month, for example, grow into quite the sum. If you contribute $100 a month into your 401(k) and it earns 8 percent, that money could grow into more than $150,000 over 30 years.

By not thinking about the money—and thinking about it more as a savings account you can’t access for quite some time—you won’t stress over it. And when you do decide to take a look at how your nest egg is coming along, there’s a good chance you’ll be surprised by the results.

For more information about investing for your retirement, please feel free to contact us.