28 May

What to Do with Your Stimulus Check

By now, most of you have probably received your stimulus check of up to $1,200 per adult (and $500 per child) as part of the federal coronavirus relief package. This money is meant to help U.S. households withstand the coronavirus pandemic and pump some extra cash into the economy by encouraging consumer spending.

Depending on your financial situation, the best use of your stimulus check will be different. If you’ve been laid off from your job or experienced a loss of work hours or other income loss due to the COVID-19 crisis, then you’ll probably use this stimulus check to help meet your immediate financial needs. If you are still employed and receive your usual paycheck, this stimulus money could potentially help you to shore up your savings or invest for the future.

Here are some ideas on how to use your coronavirus stimulus check to get the most value, based on your financial priorities.

Cover Basic Essentials

Have your hours been cut because of the coronavirus, or has your employer reduced a certain percentage of salaries? Use this money in your paycheck to patch a hole. Depending on how much money you’ll be missing, you may be able to break up the stimulus check funds to help you get a “full” paycheck for a few months. Hopefully, you have already been able to sign up for the latest extended unemployment insurance if you’ve been laid off or furloughed from your work. But even if you get unemployment, your stimulus check will still be useful to pay bills.

If you’re unemployed, you should be strategic about how to use the stimulus check funds is important. Since the stimulus check is a one-time payout, and your unemployment benefits continue for a while, you might want to set aside the stimulus check as a temporary “mini-emergency fund.” You could use this mini-emergency fund for a few different financial goals during the next few weeks or months.

The stimulus check can also be divided to help you make partial payments on your rent or mortgage. If you are unable to make a full rent or mortgage payment, talk with your landlord or lender as soon as possible.

Pay Down Debts

At a time when so many lenders and credit card issuers are offering relief and forbearance to borrowers, it might seem strange to talk about using your stimulus check to pay off debt. But paying down debt also can be a good option for your stimulus cash, depending on your situation and goals.

For example, what if you owe just a few more payments on your car? $1,200 could potentially pay off a few months’ worth of car payments and save you some money on interest.

What if you have some debt that, for whatever reason, you don’t want to refinance, renegotiate or ask for loan relief for, such as medical debt, student loans, or a long-delayed credit card balance? If the $1,200 stimulus check will help you have peace of mind by paying off debt, go ahead and do that.

Paying off debt is almost never a bad financial move. But think carefully about how to prioritize your debt payments. Even in these uncertain times, it’s usually a good idea to pay off the highest-interest debt first, such as credit card debt.

Don’t feel like you have to be in a hurry to put all your stimulus money toward paying off debt. Look at your options for forbearance or payment deferrals first; many banks are offering relief to borrowers. If you can get some relief on your debts for a few months, you can hold on to that stimulus money and decide how to use it later.

Boost Your Emergency Fund

You may want to put some or all of your stimulus check into an emergency fund if you don’t have debt or if your debts are manageable, and you don’t have an adequate cash emergency fund in the bank. In times of uncertainty, by having cash in the bank, a lot of people feel an extra sense of calm and confidence.

If you don’t have any immediate bills that threaten to go unpaid, you might just want to put your stimulus check into a high-yield online savings account and let it accrue interest for now.

Invest for the Future 

What if you already feel pretty stable financially, even in the middle of this crisis? You will want to use your stimulus check to save for the future if you already have an emergency fund of three to six months’ expenses, you do not have urgent debts, and your work is safe.

RMLEFCU is here to help our members. We are offering our services to help you and your family during these uncertain times and encourage you to contact us if you need financial help. If you have any questions, please call us at 303-458-6660 or email us at lending@rmlefcu.org.

30 Apr

What to Do If You Can’t Pay Your Loans During the Coronavirus

girl sitting on bed with bills and credit cards due debt

The coronavirus (COVID-19) has significantly altered how we manage our lives and our workplaces. Many people face a drop in wages or work losses entirely and may find it impossible to keep up with their student loans, mortgage payments, credit card bills, and other debts.

In this post, you’ll get details on the different solutions that may be open to you if you’re concerned about falling behind in bill payments, as well as what you can do to try and protect your credit during this crisis.

Federal Student Loans

The federal “Coronavirus Aid, Relief and Economic Security Act” or the “CARES Act” (H.R. 748) suspends payments without interest for federal student loans held by the United States Department of Education for a total of six months, until 30 September 2020. The termination of payment is automatic, you don’t have to ask for it.

Mortgage Payments 

As soon as you know you’ll be having trouble making your next mortgage payment, contact your loan service company to find out what choices are open to you. You may be eligible for default under the CARES Act or some form of short-term immediate mortgage relief, such as a late-payment waiver.

The CARES Act also imposes a 60-day foreclosure moratorium on federally funded mortgage loans and loans issued, guaranteed, or insured by the Department of Agriculture. This moratorium includes much of the country’s residential mortgage loans.

Property Tax

 If you are late in paying property taxes, several counties are enforcing a moratorium on property tax foreclosures and tax sales. Call your county treasurer’s office or search online to see if your region has a moratorium.

Credit Cards, Personal Loans, Small Business Loans

 Many credit card issuers have issued announcements on their websites detailing a range of forms of customer assistance during the COVID-19 outbreak. Accessible assistance covers credit line changes, forbearance collection, and missed payments. With our credit cards, RMLEFCU provides a free balance transfer and competitive APR*.

When you need money, various lenders, and the U.S. Small Business Administration (SBA) is providing loans to those affected by the coronavirus.

Utilities, Phone, Internet

Many phone service and internet providers also waive late charges and postpone shutdowns. Some providers provide free Internet service to new customers or unrestricted data to current customers for a limited period of time, such as 60 days.

Auto Loans 

Lenders offer payment extensions and other options to those that may have trouble paying their car payments. If you refinance your auto loan with RMLEFCU, we offer a 90-day payment free period!

You Have Options at RMLEFCU

The best thing to do is to contact your service or loan providers immediately. RMLEFCU can help you cope with financial stresses during the COVID-19 recovery period. For instance:

  • Consider a low rate personal loan to pay bills to those institutions who aren’t as understanding.
  • Debt protection offers superb financial shielding to cover loan payments in the event of death, disability, or involuntary unemployment.

These and other services are at your fingertips. Please reach out to our Member Experience Team for more information! Email them at lending@rmlefcu.org.

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.

12 Jun

What is Debt Protection Insurance?

Debt Protection Insurance

Debt protection insurance is designed to help borrowers by providing financial support in times of need. Whether it’s due to unemployment, sickness, or disability, debt protection insurance can protect the insured from defaulting on their loans.

There are a lot of benefits to this type of protection that will protect you and your family more directly and thoroughly in an unexpected event. If you haven’t thought of debt protection insurance yet, here is a list of reasons why you should consider debt protection options from your local credit union.

RMLEFCU offers you six different options, giving you the flexibility to pick the Debt Protection package that’s right for you. Each option has specific eligibility requirements and a different range of benefits.

Do I Need Debt Protection Insurance?

Debt Protection provides you with the peace of mind of knowing your monthly loan payments will be canceled in the event of death, disability or involuntary unemployment. The cost of debt protection insurance depends on where you live and how much coverage you would like to have. Debt protection insurance can be very expensive if you have a poor credit score and you might end up paying a higher premium for coverage. However, having debt protection insurance can pay off when you select a policy that is inexpensive and will provide the amount of coverage that’s right for you.

A great thing about debt protection insurance is that it helps maintain your current credit score because the policy enables you to keep up-to-date with loan payments. The policy will continue to pay your loans in times of financial crisis, so your credit score is not affected.

Are There Other Options?

If you’re unsure of getting a debt protection insurance policy or if the premium is too high, there are other options you can take to protect yourself and your family from defaulting on a loan. Here are some alternate solutions you can consider to protect your loan:

  • Life insurance or disability insurance to protect the loan
  • Using long term savings to repay the loan when an unexpected situation occurs
  • Building larger emergency savings to cover your loans
  • Asking family if you can rely on them to pay the debt if necessary

Keep in mind a debt protection policy is beneficial if the premium payments are affordable. Look at it like protection plans offered on small and large appliances and other goods you buy at retail stores. If the plan would set you back an extra $15, it’s probably worth it to protect your expensive item.

How Do I Get Started?

Speak to your local credit union or bank today to see how you can get started on obtaining a debt protection insurance policy!

If you’re an RMLEFCU member, speak with one of our loan representatives today by calling us at 303-458-6660 or sending an email to lending@rmlefcu.org for complete details — including the monthly cost for each option.

We can discuss this program with you, explain how it is different from traditional credit insurance, and provide you with a copy of our new Debt Protection Brochure which outlines the details of each one of our Debt Protection options.

13 Sep

Using a Home Equity Line of Credit to Pay Off Debt

Attention: Please read this article until the end. 

Pay off debts with HELOC Rocky Mountain Law Enforcement Federal Credit UnionA Home Equity Line of Credit, or HELOC as we will refer to it, is an amount of credit that we extend to a homeowner based on their credit history and the value of their home. A HELOC differs from a mortgage in that you will only pay interest on the money you draw from your line of credit. For example, if you accept a HELOC of $10,000 and never draw from it, you will not have to pay any interest. If you choose to take $5,000 from your HELOC, that you will pay back $5,000 with interest.

Wait, wait, wait. I know what you you’re thinking. Whoever, is writing this article must be taking advantage of the recent legalization of a certain green substance in Colorado. How can you pay off debt, by taking on more debt? Great catch.

The advantages of getting a HELOC is that by using your home as collateral, you will receive a considerably lower interest rate than with the credit card where your debt is now. At the time of this writing we are offering a HELOC with amazingly low rates based on the prime rate plus 0 points (based on current Loan to Value (LTV) and your credit history.) At 3.25% (as of 9/12/14) that is insanely low! What is the interest rate on your credit card? 20%? 25%? 30%? More?! Even our Visa Platinum Select without rewards credit card is 6.75% which is still double the rate of a HELOC.

By using a HELOC to pay off debts with higher interest rates, you can save a lot of money in interest, and pay off your debts faster. To make things even more convenient, we offer the HELOC on a Visa card so you have access to it on the go. No waiting for a check and no waiting for approval.

IMPORTANT! DO NOT STOP READING.

The dangers of using a HELOC to pay off debts.

A Home Equity Line of Credit is an extremely powerful privilege. And like any powerful privilege such as yielding the Excalibur,captaining the Starship Enterprise, or having the power to read minds, a HELOC requires great self-control and responsibility. Read More

13 Jun

Financial Problems? Don’t go it alone.

Financial Problems Debts RMLEFCUYou love being part of a credit union. By being a member you have access to great interest rates on loans, earning interest on your checking account, and low credit card rates. Not to mention the conscientious customer service you receive during every transaction. During the good times, RMLEFCU is there for you helping you save money and make your purchases. However, what happens when times aren’t so good? RMLEFCU is still there for you. Don’t forget that when you are part of a credit union, you are not just a customer, you are actually a part owner of our institution. Read More