Tuesday, March 29, 2016

2015 Community Matters Annual Report

A Message from CEO Bill Lawton 

2015 was an exciting year for Community Financial. We grew to over 60,000 members who are saving and borrowing hundreds of millions of dollars together. Our continued growth and branch expansion also led to the creation of 20 new positions within the credit union, for a total of 220 team members employed in our local communities.

As a not-for-profit financial cooperative, we have a significant impact on the areas we serve. Our volunteer board of directors understands the importance of having healthy communities for our members to live and work in. They want local consumers and businesses to enjoy sound financial health, and for our communities to be enriched through our existence.

Our 2015 results show that we have once again successfully fulfilled our board’s promise. We saw some of our strongest loan growth ever in 2015, especially in mortgages. We are proud to help our members achieve their dreams of home ownership. Helping members accomplish their financial goals not only makes Community Financial successful, but also builds stronger communities.

In 2015, we supported local nonprofits through our Summer of Sharing, Warming Hearts & Homes, Thumbs Up For Charity, and Community Sharing programs. We also partnered with 46 schools to help youth learn money management skills through our Student-Run Credit Union program, classroom presentations and the junior achievement program.

As we move into 2016, we will celebrate 65 years serving our communities. The values on which we were founded— service, commitment, and respect for our members— remain as strong today as when our story began 65 years ago. Our members make this all possible as owners of Community Financial Credit Union. I hope they feel a sense of pride in being part of a very special cooperative that is changing lives and making our communities better places to live and work.

We are proud to present Community Matters, our Annual Community Report for 2015.

Tuesday, March 22, 2016

A Better Way to Use Your Raise

For many of us, the start of a new year means more than just a bunch of looming resolutions; it means more money. In fact, recent data indicates that U.S. employees across the board will be celebrating salary increases in 2016, to the tune of 2.7 percent or possibly more. But before you take that raise of yours and use it to upgrade to a larger living space, update your cellphone or treat yourself to a brand-new wardrobe, here's another tactic to consider: Pretend that raise doesn't exist.

Of course, this doesn't mean you ought to take that extra money and throw it away. Instead, you should trick your brain into thinking it's not there and arrange for it to land somewhere it can be put to better use. Here are some options that will serve you well for the long haul:

Your Retirement Account 
If you have extra money coming your way, one of the best things you can do with it is allocate it toward retirement. According to Fidelity, by age 30, you should aim to have saved the equivalent of your salary in a retirement account. By 35, you should have twice your salary stored away. If you've got some catching up to do, now's the perfect opportunity to take advantage of a raise. Best of all, if your employer offers a 401(K) matching program, putting that extra money in could translate into additional free money from your company.

Your Emergency Fund
Pretty much every financial expert agrees that it's important to have an emergency fund for situations like job loss or unforeseen medical expenses. Most advise putting aside enough money to cover three to six months' worth of expenses. If your emergency savings is lacking, here's your chance to pad that account by taking whatever extra money is coming your way and sticking it in the bank. You can even set up an automatic savings plan so that you don't need to remember to transfer that money month after month. Incidentally, this will also help you avoid the temptation to spend that money on frivolous things you want but don't actually need.

Your "Let's Pay off These Student Loans" Fund
Are you among the many college grads still carrying a wad of student loans? One of the smartest things you can do with your raise is use the extra money to pay down your debt. Remember, the sooner you pay off your loans, the less they'll end up costing you, as you'll eliminate some of those pesky interest charges by lowering your principal more quickly.

Your Down Payment
Whether it's a car or a house you're saving to buy, coming up with that down payment can be a major challenge. If you're getting a salary increase this year, use it to save for major life milestones like purchasing a vehicle or becoming a homeowner. Even if you're only looking at a few extra thousand dollars, you'd be amazed at how much every little bit helps.

You work hard for your money, and it's natural to be tempted to spend it on things that offer instant gratification. But before you do, think about your future and whether you're on track to meet your long-term goals. Yes, it might be nice to have a larger apartment, or a new TV, but in the grand scheme of things, attaining financial security is far more important. And while you may lose out on the fun factor by going the responsible route, there's something to be said about buying yourself a gift that truly keeps on giving: financial peace of mind.

By Maurie Backman Copyright 2016 brass Media, Inc.

Tuesday, March 15, 2016

Help us Award $25,000 with “Thumbs Up For Charity!”

When someone does a great job, a common sign of approval is to give them a “thumbs up.” During the month of March and April, Community Financial wants you to give a “thumbs up” to your favorite charity.

So how does "Thumbs Up for Charity!" work?

Nominations
We invited the community to submit nominations for local organizations to receive recognition and a financial donation up to $10,000! Nominations were accepted at cfcu.org/ThumbsUp until Saturday, April 2nd.

Voting
Five finalists were chosen from the nominations received and voting started April 11th. Residents can vote for one of the five nominees once a day until April 29th, so don’t miss this chance to give recognition to the group you think deserves it most!

This year's finalists include:
  • Feed the Need: Summer Lunch Program, Novi
  • Fire/EMS Members Charity, Atlanta
  • Miracle League of Plymouth, Plymouth
  • 88.1 The Park- WSDP, P-CCS Schools
  • Partnership for the Arts and Humanities, Canton
Winners will be announced on May 2. The charity that receives the most online votes will receive the grand prize of $10,000! Second and third place winners will receive $5,000 each, and the fourth and fifth runners-up will each receive $2,500.

“Thumbs Up for Charity!” gives residents the chance to be a part of giving back to local nonprofits that have already given so much to the communities where they live, work and play.

“The nonprofit groups in our communities work hard and we are proud to support them throughout the year,” said Community Financial manager of community relations Natalie McLaughlin. “We want to provide the residents of our communities a chance to tell us which groups they think deserve recognition, and ‘Thumbs Up for Charity!’ gives them that opportunity.”

If you would like to nominate a charity for "Thumbs up for Charity!" next year, please make sure that it is a registered 501(c)(3) organization, recognized community support organization, or associated with an accredited educational institution serving the communities within Community Financial's field of membership. 

For complete contest rules and more information about the “Thumbs Up For Charity!” program visit cfcu.org/ThumbsUp.

Now is your chance to make a difference in your community!

Tuesday, March 8, 2016

The Do's and Don'ts of Home Equity Loans

For the first time in six years, Americans continue to see gains in the value of their homes. If you’ve been carefully managing your debt, you might find that you have an untapped line of credit: the equity that’s in your home.

What is equity? 
Equity is the value of your property minus the debts that are held against it. If you pay down your mortgage by $500, you have an additional $500 worth of equity in your home (assuming the value isn’t less than what you owe on your mortgage). Building up equity is one of the best arguments for owning a home as opposed to renting one. The money you pay monthly toward your mortgage is still yours, and you get it back when you sell the house.

Many people use that equity to help fund home improvements or other projects. Before you start, let’s look at some common mistakes people make with home equity lines of credit as well as some low-risk opportunities they can provide if managed responsibly.

Don’t: Think of it as “free money” 
One of the key causes of the sub-prime mortgage crisis was abuse of home equity loans. People would spend recklessly using the equity in their homes. They expected the value of their property to forever keep pace with their levels of spending. When it didn’t, they found themselves owing more money on their homes than they were worth, and there was not enough credit (or value) in the home to refinance. Spending your home equity to finance your lifestyle is a lot like burning your house down to stay warm in the winter. It’ll work for a while, but you’ll be left without a place to live.

Don’t: Use it to pay for tuition 
Unlike student loans, which have a fixed interest rate, the interest rate on a home equity line of credit is variable. Changing economic conditions can make the loan more expensive without much warning. A home equity line of credit also doesn’t get interest deferment, repayment delays, or federally subsidized interest rates, which makes them a poor choice for college financing.

Do: Think of it as an emergency fund 
One of the smart money habits of financially successful people is establishing a small pool of savings to pay for unexpected disasters like job loss, car repairs, or major illness. Having this savings enables them to avoid going too heavily into debt if one of these catastrophes occurs. You can use your home equity line of credit in a similar way. While it’s not an ideal emergency fund, it’s a far better rainy day answer than credit cards or payday loans.

Do: Use it to start a business 
If you’ve been thinking about opening a small business, you probably already know that financing that dream can be a struggle. Your home equity line of credit can help pay for some of your start-up expenses. You can use it in conjunction with grants and small business loans to diversify your risk. The favorable, flexible repayment terms and lower interest rates can make this a viable option for your new venture.

Do: Improve your home
One of the safest investments you can make with a home equity line of credit is remodeling or improving your home. Installing new appliances, vinyl siding, or energy efficient windows will pay dividends both in the increased value of your house and in your quality of life. These improvements will increase the value of your home. They will also increase your available home equity, and the money you’ve put into your home will possibly pay off when you sell it.

Considering a home equity loan? Give us a call at (877) 937-2328 or visit cfcu.org/HELOC for more information. We’d be happy to review your unique situation and recommend the home equity loan or line of credit that’s right for you.

Friday, March 4, 2016

Why Refund is a Four-Letter Word

Retailers across the country expect big sales for the first quarter of the year. They know this is the time of year when 75% of Americans get a big check in the mail courtesy of Uncle Sam. Nobody likes filing their taxes, but everyone likes getting a refund. It’s free money, right? Whoa … hold that thought for a moment. Before you celebrate your sudden windfall with a new big-screen TV, think about how your refund gets there. It might not really be the free money you think it is.

How the refund process works 
When you were hired at your job, you had to fill out a W-4 and tell your employer how you wanted your income taxes deducted from your paycheck. It’s a pretty simple form. You check a box if you’re married and fill in the number of kids you have. That gives your payroll office an idea of your tax rate.

Every paycheck, they take a percentage of your gross pay and send it to the IRS. That’s called your “withholding.” If you’re withholding the right amount, the IRS should get as much money as it’s due. The problem is, the withholding formula is designed to protect people from having to cough up money in April. For millions of Americans who live paycheck to paycheck, this would be a significant hardship. So, the withholding formula errs on the side of over-withholding.

When you complete your tax return, you’ll be much more aggressive in figuring your deductions and credits. You’ll also wind up with an income that’s a little lower than what your employer was estimating. That means you get a refund. The government pays back some of the money it withheld from your paycheck. The reason you might want to get mad about this practice is that you’ve basically given the government an interest-free loan. Your refund actually represents a loss. If that amount had been sitting in a savings account earning interest, you’d actually have more money to spend!

Why is your salary different on your tax return? 
There are a number of legitimate reasons why your tax bill may be different than your employer was estimating. If you qualify for a number of tax credits like the Earned Income Tax Credit or the Child and Dependent Care Credit, those numbers aren’t reflected in your paycheck. Trying to estimate them in your W-4 can be a hassle, especially if your income changes over the course of the year. You might suddenly find your tax credit isn’t worth as much as you thought it was!

You might also have received a promotion or a raise this year. The withholding rate assumes you’ve been making that same salary all year, so a bump in salary means a bump in withholding. This is also difficult to plan for, and changing your W-4 mid-year, only to change it back the next April, probably isn’t worth it.

If this was just a regular year and you’re getting $2,000-3,000 back, you’re just over-withholding. To figure out how much you’re over-withholding, take your refund and divide it by the number of paychecks you get in a year (26 if you’re paid bi-weekly, 12 if you’re paid monthly). The mean tax refund was $2,800, which means the average American is over-withholding by $233 each month!

What to do instead 
You can fill out a new W-4 at any time. The IRS has a W-4 Calculator to view different scenarios to help you determine if you need to adjust your withholding for making sure you’re not overpaying your taxes. It’s unlikely you’ll nail your tax burden exactly, and it’s better to overestimate than underestimate your tax payments. Still, fixing your withholding could result in another $200 in your pocket every month!

If that $200 would just slip through your fingers, you may be better off letting the IRS hold on to it for you. However, if you have a plan for that money, and stick to it, the hassle of the paperwork may be worthwhile. Here are a few ways to put that money to work.
  1. Use it to pay down your high-interest debt. If you’ve got a credit card balance racking up 20% interest, paying it off is like getting a no-risk 20% return on an investment. You can’t beat that! The same is true of student loan debt or other obligations. 
  2. Start an emergency fund. The root cause of most debt is an unexpected expense on a tight budget. Being able to use cash to cover car repairs, medical expenses or an unexpected short paycheck can keep money off the credit card and in your pocket. 
  3. Put it in a retirement fund. Increase your contribution to your 401(k) program or IRA. You can reduce your tax burden even further and raise your quality of life down the road. 
  4. Use the extra budget space to start a money-making side project. With a few power tools, a bucket of paint and an imagination, you could turn curbside furniture into treasures! 
Whatever you do with your money, you can rest assured you don’t have to wait until April to get it. There’s no paperwork to fill out before you get your own money each month and you don’t need to store up a wad of receipts and pictures to get it. It’s your money, and now it’s working for you. 

Tuesday, March 1, 2016

The Difference Between Good and Bad Debt

Today’s students pay a premium to go to college. It’s more expensive than ever to pay tuition, textbooks are borderline extortion, and after inflation the minimum wage is about 30% less than it was a few decades ago. So working all summer to pay for school has turned into working as many hours as you can to support yourself while taking out a staggering amount of loans. We all know it; the headlines are everywhere.

It’s no surprise that more college students are shying away from financial risks. Today’s twenty-somethings are less entrepreneurial than their parents, less interested in owning a home and even less willing to take on a car loan. It’s been drilled into your head that debt is bad, often with family horror stories about how much debt your parents had to overcome, or maybe never did. Unfortunately, those same lessons that were meant to teach you frugality have instilled some bad habits and perhaps some unnecessary fears.

There are really two kinds of debt. Bad debt is money you owe and have no chance to repay. Credit card debt can stay with you for a long time, particularly with the high interest rates young people have to endure. You can end up paying off that mall shopping spree long after the clothes you bought have made their way to the local charity shop.

Good debt, on the other hand, represents a risk you’ve taken, and may yield a financial reward. Opening a business involves taking on a loan, but in exchange, you have the chance to build a constant source of cash for your life. You need a loan to buy a house, but you can always sell the house, often making a tidy profit. Even your student loans represent a risk. You’re taking on the loans now in the hopes that your lifetime earning potential will increase enough to offset the cost of your education and secure employment in a career that pays more than you would have otherwise earned.

At some point, you’re going to want that good debt. You’ll want to stop renting, or own your own business, or go back to school to get ahead at work. The only way to get enough cash for those options is to take out a loan. When the time comes, you’re going to need a good credit history. So, let’s turn that bad debt into good debt. Get a credit card from someone you trust, and use it for your monthly expenses, such as groceries and gas. Then, pay it off in full every month. If you have outstanding credit card debt, roll it into a lower-interest rate loan. Start with the highest interest rate and work your way down.

If you would like a free review of your credit score call us at (877) 937-2328 or stop by your local Community Financial branch. You can also learn more about how your credit score is calculated by visiting cfcu.org/Review. If you’re already on top of your bad debt, give us a call to find out about good debt. You can find out what it will take to own a home or start a business, and then start the process of getting everything in line. The younger you are when you start, the easier it can be to get everything working for you.
Community Financial Credit Union, P.O. Box 8050, Plymouth, Michigan 48170-8050;
© Community Financial 2013
Federally insured by NCUA.
Equal Housing Lender
Additional coverage provided by ESI.
Federally insured by NCUA.