The Bottom Line
Small business is important to Central Oregon, and to Mid Oregon. Find tips and resources for business, and information about Mid Oregon’s commercial services and business members.
Credit Cards- Pay More Than Minimum for Faster Payoff
January Credit Card Hangover?
So it’s January, and many of us are getting our credit card statements showing all of our holiday gift transactions. Is it worse than you expected? Or did you decide to go the credit card route intentionally to supplement what you were able to budget in advance?
In any case, you need to make your payments, so what should you do? Here are some suggestions to help you manage your credit card debt, and hopefully save you money. Putting you in a better position for next year would be a bonus.
The Minimum Payment Trap
Minimum payments on credit cards are now between 1% to 4% of the balance due. While paying the minimum will satisfy your credit card provider, it’s not a good lon-term strategy. If you can afford higher payments each month, you’ll benefit over the long haul. If you can’t afford to pay this percentage of your balance, chances are you’re in over your head.
Consider the example of a $2,000 balance at 18% interest. If your minimum payment is 2% of the balance due each month, it will take you about 19 years to pay it off and you’ll pay $3,862 in interest. (A 2% minimum payment would start at $40 and taper to $20. Maintain the $40 and you’ll pay off the debt faster.) If your interest rate is over 18%, the cost and time increases.
If you’re paying 4% of the balance due, you’ll pay off the balance in seven years and four months and cut your interest costs to $1,031. (A 4% minimum payment starts at $80 and tapers to $20.)
By paying 8% of the balance due, much more than minimum, it will take you three years and nine months to pay off, and you’ll pay about $433 in interest. (An 8% minimum payment starts at $160 and tapers to $20.) Remember, these calculations assume you add no more charges to the card.
Always pay at least the minimum amount due so you don’t incur a late fee, and if possible, charge only as much as you can pay in full each month or within a few months.
The Debt Snowball
Have you heard of paying off your debt using a debt snowball? It works if you have more than one credit card to pay off. The debt snowball method is a great way to get started and stay on track. To better describe a debt snowball, below is an excerpt from Dave Ramsey’s blog article “How the Debt Snowball Method Works“:
“When you were a kid rolling a snowball in the backyard, the best way to do it was to pack some snow into a tight ball, then start rolling it through the yard. Your snowball would become a snow boulder much quicker than it would if you just built it up by hand. That’s exactly how the debt snowball method works.”
There are two schools of thought on this principal. One is to pay off the most expensive (highest interest) debt first, the other is to pay off the smallest debt first.
If reducing interest expenses is your priority, and paying off the expensive card first ultimately limits your debt costs and saves you the most money. Pay off your highest interest rate cards first while making minimum payments on all the rest. With the smallest debt methond, start with the lowest balance card. You’ll see faster progress, pay off more creditors quicker, and build on that success.
Lower Credit Card Rates
And if you’re paying high credit card rates elsewhere, check out Mid Oregon Credit Union’s credit cards for consistent savings. Not only do we have some of the lowest rates in Central Oregon, we have no balance transfer fees. So you could move your expensive card balances to our Visa credit card. Pay no fee, and save more on your interest payments. To see how much you might save, try our debt consolidation calculator.
If you’d like more information about our Visa credit cards, visit our Mid Oregon website, drop in to one of our seven Central Oregon branches, or send us an email with your request.
In any case, get started cutting down that credit card debt. With a plan and seeing it through, you’ll get rid of that hangover in no time!
Six Strategies to Make College More Affordable
College Costs for Average American Family: $23,757
With the price of college still on an upward trajectory, families are looking for ways to make higher education affordable.
According to “How America Pays for College,” a report by Sallie Mae, the average American family spent $23,757 on college costs in 2017.
Six Strategies to Make College More Affordable
Here are some ways families are reducing their college costs:
• Live at home. The report found 50% of students live with their parents or relatives.
Wayne Hanson, Membership Development Manager at Mid Oregon Credit Union, lived at home for his first three years of college: “I was able to commute to school, and work near school 25-35 hours a week. I know education has gotten a lot more expensive since then, but I paid for all my education and had more money when I finished school than when I started.”
• Cut the pricey top picks. Nearly 70% of families eliminated colleges during the application process due to their high price tags, up from 58% in 2008. About 73% are choosing an in-state school.
Central Oregon has two great colleges, with different cost structures. While freshmen now have the option of starting their college life at OSU Cascades, many successful OSU graduates made Central Oregon Community College (COCC) their choice for the first two years. Besides a top notch education, COCC is a less expensive option.
Making Good Use of College Time
• Take a student job. At least 76% the students surveyed reported planned to work while in college, with 55% working year-round.
In Central Oregon, we have a shortage of job applicants in many industries and at many employers. It’s a good time to find work as a student, especially if you can flex your school schedule to work. There are also internships available– many paid- which can get your foot in the door for a long-term, paid position after.
• Finish quicker. Nearly 26% of students enrolled in accelerated courses while in high school to pay for fewer semesters in college.
Ask the career counselors at your high school to see which courses qualify for college credits. There are a lot of opportunities in Central Oregon high schools.
Sources of Funds
• Use grants and scholarships. Families reported covering about 35% of their school bills with grants and scholarships—the biggest portion of their payment sources. About 87% of these scholarships come from the schools.
• Start a college-savings plan. In 2016-17, 13% of families used the 529 tax-advantaged college-savings plan, with an average amount of $10,031. See Mid Oregon Credit Union about starting a college-savings plan today.
Resolve for Financial Well-being
Majority of Americans Resolve for Financial Well-being in 2018
Below is great information from NEFE, the National Endowment for Financial Education. Mid Oregon believes that NEFE is an organization which provides quality financial information. From time to time they share content on tips and resources to those interested in improving their financial well being. Occasionally we will post information we believe will be helpful to our members and the Central Oregon community. We hope you find “Majority of Americans Resolve for Financial Well-being in 2018” useful.
Nearly 7 in 10 Will Set Goals to Improve Finances
NEFE, January 4, 2018
The latest issue of an annual survey on consumer expectations from the National Endowment for Financial Education (NEFE) finds over two thirds (69 percent) of U.S. adults will set a financial New Year’s resolution for 2018, a consistent indication that many Americans continue to focus on their financial health as much as their physical health.
This year’s survey also finds that the majority of U.S. adults (53 percent) feel the current quality of their financial life is about what they expect it to be, with 18 percent saying it is better than expected. Regretfully nearly one in three (29 percent) rate the current quality of their financial life worse than they expect it to be. The survey was conducted online in December 2017 by Harris Poll on behalf of NEFE, among more than 2,100 U.S. adults.
Finances Causing Americans Stress
“We continue to see a lot of anxiety about money. Three quarters of Americans (76 percent) say something causes them financial stress. It’s the usual suspects of not saving enough and debt that they say is to blame,” says Ted Beck, president and CEO of NEFE. “Financial setbacks add to the distress. Almost two thirds (63 percent) experienced an unexpected expense in 2017. We have to change our mindset. We must realize that these expenses are not if they will happen, but when they will happen. An emergency savings, even a modest amount as a starting point, can alleviate uneasiness.”
The most common financial setback in 2017 seen in the results of the NEFE survey are transportation issues (23 percent). Next are housing repairs/maintenance (20 percent), and the inability to keep up with debt/falling behind on bill payments (16 percent). Additionally, the survey finds the top anticipated expense in 2018 among U.S. adults will be paying off debt (40 percent). Close behind are home improvement and maintenance (33 percent), and transportation-related expenses (32 percent).
Tips for Financial Success in 2018
Get debt under control. Take a hard, honest look at what you owe. Set a goal to reduce your debt load in 2018 by 5-10 percent. That might mean reducing impulse shopping. When you face temptation, delay the purchase and give yourself time to consider whether it’s a wise move that fits within your budget.
Save now and do so often. Preparing for unexpected events like medical emergencies can help reduce the financial impact of a life-changing event. Emergency savings can offset unexpected costs and help you get back on solid footing. A good rule of thumb is to have six to nine months of income set aside. That may seem out of reach so start with a smaller goal—even as little as $500. When it comes to saving, it’s also a smart idea to think long term. Review your long-term savings and ensure they are on target for your retirement plans.
Shop for better services. You may be surprised by how much you can save when you periodically shop for the most competitive rates on your recurring bills. Make a game out of shopping providers to find the best value on your insurance policies, cell phone plan, internet and utilities. Ask your providers about current rates and any promotions available to long-time, loyal customers. Then look at alternative providers to determine where you can trim some spending. Be sure to understand your current offering thoroughly so that you are comparing apples to apples.
Understand what’s behind your financial decisions. If you ever wonder why you feel good about spending money on vacations but avoid saving for retirement, the answer may lie in your unique values and how they influence your financial decision-making. Consider taking the LifeValues Quiz on smartaboutmoney.org to help understand how you spend your money.
About the Survey and NEFE
For help getting finances in order in 2018, visit www.smartaboutmoney.org.
Survey Methodology
Harris Poll® fielded the study on behalf of the National Endowment for Financial Education from December 7-11, 2017, via its Harris On Demand online omnibus service, interviewing 2,165 U.S. adults aged 18+. Data were weighted using propensity score weighting to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity, and propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available on www.nefe.org.
About the National Endowment for Financial Education
NEFE is an independent nonprofit organization committed to educating Americans about personal finance and empowering them to make positive and sound decisions to reach financial goals. For more information, visit www.nefe.org.