30 Dec

Focus on What You Can Control During a Recession

calculating costs of recession and cutting down budget

Discussions about an upcoming recession are extremely frightening. Focusing on what you can control is a good way to be prepared and maintain your sanity.

The most important thing is to focus on what you can influence in your own life. While things may seem scary and the unknown is looming, it’s going to be all right! Look hard at your job security, debt, and investments.

Secure Your Job

The first step is to look at the money you earn, which means you should consider the safety of your work. Make yourself indispensable in your job in order to create job security. To complement your role, learn new skills and begin to acquire more responsibilities. Pursuing an education is one of the best investments you can make.

You should also get your resume together and start networking in order to be prepared for a Plan B. If a recession hits, you don’t want to start a job search with a bunch of other people already laid off. By networking ahead of time, you’ll have a head start.

Pay Down Debt

If you have high-interest debt, now is the best time to begin aggressively attacking it. Prioritize debt starting from credit cards and switch to other types of loans, such as mortgages or auto loans. Student loans have more favorable terms, making it less important to pay them off.

One technique that is often advised by experts in the form of a debt avalanche. The plan is to continue to pay the minimum on each balance, on time, but put any extra money on balance with the highest APR.

To order to create some breathing room in your budget, it is important that you pay down any outstanding debt, more precisely high-cost debt, such as your credit card balance.

Start Saving

If a recession truly scares you, take your budget out and start cutting expenses now. The money you save can go straight into your emergency fund, which can be kept in a high-yield savings account with zero market risk and even growth opportunities.

Regardless of the condition of the economy, maintaining an emergency fund is key. After all, an enormous medical bill or temporary income loss may occur at any time. The first line of defense against debt is to support yourself with a cash safety net.

Recessions can be worrisome, but if you follow these tips and help prepare yourself for a recession, you may come out of it smoothly! Follow our blog for more recession tips. If you have any questions, call RMLEFCU at 303-458-6660.

13 Dec

How to Prepare for a Recession

preparing for a recession with paperwork and financial documents

Recessions are a natural part of the economy. They are hard to predict with accuracy and usually start before anyone even knows they’re happening. And before economists have enough data, they’re over. In fact, they are usually very short. There have been 13 recessions in the U.S. since the end of the Great Depression, and nine of them have lasted less than a year.

A recession’s impacts on individuals can be much larger and longer-lasting, causing permanent financial damage to those who are unprepared to ride out the short-term implications and get back on their feet quickly. It is not only important but crucial to take steps to protect yourself and your family from the potential consequences of a recession.

Let’s take a closer look at what a recession is and what you can do to ensure you are as prepared as possible for the next recession.

What is a Recession?

A recession is generally considered to be a slowdown in economic activity as calculated by GDP (gross domestic product) which lasts two or more consecutive quarters. The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”.

Looking beyond the dry textbook definition, this is what it entails for average people.

Jobs

With rising unemployment rates during a recession, individuals and families struggle to find work to pay the bills every month. The inability to find a job can be stressful, scary, and upsetting, and can lead to even more problems. Here’s what you can do to mitigate these negative circumstances.

Short-term solutions could include making a claim for unemployment, borrowing money from friends or relatives, and taking a job with lower pay. Long-term solutions can include working closely with headhunters and recruiters to find a higher-paying job, returning to school while on unemployment, and relocating.

Moving to a new city for work can also open up new career opportunities. However, there are a lot of costs associated with a move. It should also not be seen as a last resort. In reality, being open to job opportunities in different areas can expand a job search significantly.

Real Estate Values

Recessions can lead to a decrease in borrowing money, and after an economic downturn, families might become more fiscally responsible. Less debt and greater responsibility will lead to better management of money and financial life that is stress-free.

A lot of families depend on the value of their homes as part of their retirement plan. Nevertheless, during a recession, real estate values drop dramatically, and foreclosures rise, driving many families out of their homes. During an economic downturn, real estate can no longer be seen as a safe investment. To keep your investments safe, here is what you can do.

Over time, the prices of real estate can shift, so families should try to maintain ownership of their homes, if at all possible. Through refinancing loans, homeowners may be able to avoid foreclosure. Homeowners may also benefit by renting out a room in their homes to third parties to cover some mortgage costs.

We will be updating our blog for more tips and tricks on how to prepare for a recession. Stay tuned on social media to get the first look into each blog post when they come up!

If you have any questions on how to prepare yourself for a recession, please call RMLEFCU at (303) 458-6660.

09 Dec

The Dangers of Moving Your Certificate of Deposit (CD)

Certificate of Deposit CD savings stacks of money increasing as years go by

Life is all about balancing risk versus reward and your safe investments should be managed with a safe institution. Safety is why many people have a certificate of deposit or CD. It’s a federally insured savings account that has a fixed interest rate and fixed date of withdrawal, known as a maturity date. These accounts typically do not have monthly fees.

Most CDs come with fixed rates, meaning annual percentage yields are locked in for the duration of the term. These rates are usually higher than regular savings accounts since there are penalties for early withdrawal. CDs really pay off when people are certain they won’t need access to that cash during the duration of the term length.

If you have a longer-term CD, you may be tempted to move it to another institution for a 25 or 50 basis point increase. Moving your CD into a risky institution for a 25 or 50 basis point difference in rate is NOT worth the risk, fees, and hassle for a nominal gain. Advertisements for institutions that will offer you a 25 basis point increase are typically involved in high-risk investments. There’s no guarantee your money will be safe and if you’ll even get the money back on these unpredictable accounts.

Also, if you happen to withdraw your CD early, it will eat into your existing gains. Before you withdraw your CD, take a moment to calculate the cost of CD early withdrawals. Early withdrawal penalties can vary depending on the length of the CD term and the bank offering the account. CDs with longer terms usually pay higher rates, but the early withdrawal penalties for these accounts tend to be harsher. It’s just not worth the hassle, risk, and fees of moving your money.

RMLEFCU is in the Top 40 healthiest credit unions nationwide and our accounts are insured by the National Credit Union Association (NCUA). You can feel good about your investments in our institution helping your community. We use the money you save at RMLEFCU to help fellow law enforcement officers get loans and the interest returned is given to you and other members, not greedy shareholders at a bank!

The cons outweigh the pros of moving your CD to another financial institution. Sure, you might get a few more dollars each year, but at the same time, you’re risking losing all your money and taking money away from the law enforcement officer community. Take a look at how little you’ll earn with a 25 basis point increase.

02 Dec

How to Prevent Elder Financial Abuse

Preventing Elder Financial Abuse

There is an alarming epidemic of elder financial abuse. This kind of abuse involves taking advantage of an older person for financial gain. Older adults are losing billions each year as a result of scams, fraud and exploitation.

It’s even more disturbing that nearly half of that money is lost because of tactics that are technically legal, but dishonest in nature. Experts predict the problem will only get worse with a large number of Baby Boomers going into retirement. Here’s what you can do about it.

How Seniors Can Protect Themselves

There are a number of ways for seniors to be better protected from elder financial abuse. Use these strategies to identify financial abuse and avoid it because not all financial abusers take money from their victims using the same methods.

  • Remain socially active
    Isolation is one factor that can lead to the financial vulnerability of a senior since being cut off from the outside world will make it harder for others to spot warning signs.
  • Avoid joint bank accounts
    Some seniors might open a joint bank account in order to make transactions or withdrawals on their behalf easier for a family member and better manage their finances. However, a shared bank account can also be an easy way for fraud and violence to take place.
  • Invoke a power of attorney
    Financial abuse risk increases after a person develops a reduced ability to make independent financial decisions. Invoking an attorney’s power can be a constructive way to prepare one’s property and resources for the future. Seniors may recommend seeking legal advice to assist in this process.

How to Identify Elder Financial Abuse

It can be difficult to identify elder financial abuse, particularly if you don’t know what you’re looking for. It is also challenging to identify signs of abuse if the abuser is someone you know and trust. Here are some signs and what you can do with financial elder abuse.

  • Money Missing from Accounts
    Is there a shortage of funds or large amounts of money missing from the savings or bank accounts? If so, it’s crucial for you to find out where the money went.
  • Unusual Use of Credit Cards
    If an elder unexpectedly uses their credit cards more often or if cash advances are being taken out, there may be financial abuse or financial hardship.
  • Unpaid Bills, Collection Letters, Lack of Food in House
    If a person who is financially responsible does not seem to pay bills or buy food or other necessities, it is time to investigate. Signs of abuse, disease, or dementia can be mismanaging money or neglecting self-care.

If you see any of the signs listed here, it is important to talk to old friends or loved ones. Try to determine what is happening, specifically with your financial situation, such as a new person “helping” you with money management, or a relative using cards or credit without your permission. Then, report elder financial abuse to your financial institution and enlist the help of your banker to stop it and keep it from repeating. Call the city or state’s Adult Protective Services for support. If you have any questions or concerns about elder financial abuse, call RMLEFCU at 303-458-6660.