5 Steps to Take When Applying for a Business Loan

If your business can use a shot of cash to help it grow, fund a move or to get through its slowest season, a business loan can be the right answer. 

Here’s what you need to know about applying for a business loan.

  1. Check your credit

Before you apply, check your personal and business credit health. 

Personal credit scores range from 300-850. A score in a range of 580-669 is fair, 670-739 is good, 740-799 is very good and 800-850 is exceptional. In general, the higher your score, the easier it will be for you to qualify for a loan and the lower the interest rate you’ll have on your loan when approved.

Business credit scores are measured differently. Experian uses Intelliscore Plus as its credit scoring model, with scores ranging from 1 to 100. Equifax assigns each business a payment index score, which ranges from 0 to 100; a credit risk score ranging from 100 to 992 and a business failure score ranging from 1,000 to 1,880. The D&B score, assigned by the Dun & Bradstreet Corporation, ranges from 0 to 100. Finally, the FICO Small Business Scoring Service score ranges from 0 to 300. 

If your personal and/or business credit scores are low, work on improving your credit before applying for a loan. Be timely or early with your bill payments, work on getting rid of debt and check your monthly credit statements for any erroneous charges.

  1. Update your business plan

Most lenders will ask to see a current business plan before approving a loan. It’s a good idea to review and update yours so it’s ready to show a potential lender. The plan should include information about the loan, such as how the company plans to use the funds. 

Be sure to have a comprehensive business plan to show a prospective lender. The plan should include details about how the company intends to use the funds, the anticipated increase in revenue and plans for repaying the loan. 

3. Organize your personal and business documents

You’ll need the following documents and identifying paperwork when applying for a business loan:

  • Photo ID
  • Accurate monthly financial statements from the past two years
  • Business license
  • Any commercial leases
  • Business insurance plans
  • Payroll records
  • Incorporation documents
  • Current financial obligations
  • 3 months of bank statements
  • Personal and business tax returns
  • Collateral

4. Research potential lenders

A business loan is a big deal, and it’s best not to jump into the decision too quickly. Take the time to research potential lenders carefully, being sure to check each lender’s eligibility criteria, the average size of the loans they offer, their current interest rate average and more. 

Consider applying for a business loan through a credit union. A credit union will offer you personalized service, looser qualifying criteria and a competitive interest rate. [Call, click, or stop by Advantage One Credit Union today to discuss your options.] 

5. Submit your application

You’re ready to apply for a loan! With luck, you’ll soon have the funds you need to take your business to the next level. 

Your Turn: What are your best tips for taking out a business loan? Tell us about it in the comments. 

The Ultimate Grad Gift Guide

Your soon-to-be grad has worked super-hard to reach this momentous occasion and to have their diploma in hand. Celebrate with your grad and show them how proud you are of their hard work and dedication with these low-cost, but awesome, gifts!

  1. ID lanyard

Make it easy for your grad to carry their ID and wallet around campus or the workplace. Super-cute and durable, these lanyards make the perfect graduation gift. 

  1. Oh the Places You’ll Go

You can’t go wrong with this Dr. Seuss classic! Whimsical, yet inspirational, it’s a great read for the older teen setting off into the big world of adulthood. Add your own words of wisdom to the front inside cover for a personalized touch. 

  1. College survival kit

Hit the dollar store and scour the aisles for a big basket and all sorts of stuff you can add to it for making a college survival kit or house/apartment warming kit. You can include essentials, like flip flops and hair ties, kitchen utensils and hand soap. Don’t shy away from having fun by adding extras, like Bluetooth speakers, wall decals and more!

  1. “Open when” letters

Your recent grad’s got a long road ahead of them, but you can make it a little easier with a few well-worded missives. Pen some letters for your grad to open at specific milestones and/or at more challenging times, such as after the first round of final exams, when they’re feeling homesick, when they need a laugh, after handing in their first term paper, etc. Your letters will be the gift that keeps on giving throughout their time in college.

  1. Picture collage

Help your grad have the most awesomely decorated room in college with a fantastic homemade picture collage! Check out their social media pages for the best snapshots of your grad and their friends and family. Then, put together a low-cost, meaningful gift they’ll always treasure. As a plus, they’ll think of you every time they see the collage hanging on their dorm room wall.

  1. Laundry essentials

Spring for an adorable laundry hamper and fill it with all your grad needs to master the wash. Think detergent, dryer sheets, stain remover and more. Add a cute note, like “Have LOADS of fun in college!” to complete the gift. 

  1. Chef’s special

Is your grad a foodie who’s thrilled to prep their own meals? A kitchen-phobic young adult who is worried about being in charge of their own meals? Either way, they’ll love a chef package to help them out. Take a huge mixing bowl, Bundt pan or another large, round cooking essential, and fill it with all they need to master the kitchen. You can load it up with spatulas, measuring cups and spoons, a cute apron, oven mitts, a skillet and more. To make it even more personal, fill a small cookbook with your favorite easy recipes for your grad to try out. If you don’t have a collection of recipes, you can purchase one of the many college cookbooks you’ll find on sites like Amazon.

  1. Bright light

If you’re looking for a cute way to present a cash gift to a grad, try this bright idea: Throw some money in a fake lightbulb and add a note that says “Wishing you a future that’s as bright as you are!” For a variation of this idea, insert cash into the photo slot of an empty picture frame and add a note that says, “In case of emergency, break glass!” Cash is always appreciated, and a creative presentation makes it personal and fun. 

Your grad is off to college or into the workforce soon. Show them how proud you are and prepare them for the exciting years that are ahead. Use these ideas to find the perfect low-cost gift for your grad. 

Your Turn: Have you found the perfect low-cost gift for your grad? Tell us about it in the comments. 

Should I Buy Out My Lease?

Q: My lease agreement is nearing its end, and I’m getting many offers to buy out my lease due to the current state of the economy. Should I ignore the hype, or is it really a good idea to buy out my lease?

A: With cars in hot demand, and selling at all-time high prices, many lease customers are looking at trade-in values for their vehicles with the intention of buying out their lease. While this can be a smart choice for many consumers, it’s important to consider all relevant factors before making a decision. Here’s what you need to know about buying out your lease.

What is a lease buyout?

Many drivers are confused by the offers they’re getting and the promotions they’ve seen for buying out leases. How is it possible to buy a lease when a leased vehicle, by definition, is essentially a rented car?

First, buying out a lease involves paying the car’s “buyout price” as specified in the lease contract, which makes you the car’s new owner. Second, it’s important to establish that buying out a lease generally makes the most sense when you are nearing the end of your lease term.   Finally, this may necessitate taking out an auto loan to afford the buyout price, just like you might do when purchasing a new or used car at a dealership.  

How can I determine my car’s buyout price?

To estimate how much you’d need to pay to buy your leased car, look for the term “residual value” in your lease contract. This tells you what your leased vehicle is expected to be worth at the end of the term, which may be months or years away. To reach your vehicle’s buyout price, add the residual value to any remaining payments. For example, if your car’s residual value is $25,000 and you owe another 10 payments of $500, the car’s buyout price is $30,000. Of course, the more time left on your lease, the higher price you can expect to pay to buyout.

Will I need to pay any fees in addition to the buyout price?

Depending on your home state, your vehicle’s buyout price may be subject to an auto sales tax. Your lender may also charge additional fees, such as a ‘purchase option fee’. It’s important to know about any additional fees you may need to pay in addition to the buyout price and to 

estimate the total you’ll be paying before deciding to purchase a leased car.

The good news is that you won’t be accountable for the typical lease-end fees, which can include the costs of reconditioning the vehicle for resale, fixing any damage the car may have incurred during your term, and an over-mileage penalty for every mile you may have driven over the official limit.  

What are the advantages of buying out a lease?

Many drivers are opting to buy their leased vehicles now due to the current state of the auto industry. Supply is low and both new and used cars are in high demand. A driver nearing the end of their lease agreement may find it challenging to purchase or lease another car. Buying a car you already lease will give you first dibs at a hot commodity.  

Some drivers are choosing to capitalize on the high demand for used cars by buying out their leases and then flipping the car to a dealership or selling it privately to a new owner. They assume they will earn enough from the sale to help offset the price of a new car. While this may be true, it’s important to remember that it may be difficult to find a new car in a desired model and at an affordable price.

Before taking out a loan to buy out a lease, find out what your car is actually worth. Due to the state of the market, it’s likely worth more than you’ll pay. However, if it’s worth less than the buyout price, you’ll be upside-down on your loan, which is never a good idea. In addition, you may find it difficult to qualify for a loan in an amount that is higher than the value of the asset.  

How do I buy out my lease?

If you decide to go ahead and buy out your lease, you’ll first need to run the numbers as described above to be sure it’s a financially responsible decision. When you have the total buyout price, your next step is to work on financing. You can choose to take out an auto loan or a personal loan to help cover the costs. 

Next, you’ll contact the company behind your lease and complete the purchase. The sale process will be similar to the sale of any car. Finally, be sure to notify your insurance company about the change in ownership of your vehicle. Leases generally require plans with low deductibles and high premiums, so you may want to choose a new plan with higher deductibles and lower monthly premiums.

If you’re looking to finance an auto loan for a lease buyout car, look no further than Advantage One Credit Union! Our auto loans offer low interest rates [see for current rates], easy payback terms and a quick approval process. Call, click or stop by to get started or discuss available options!

Your Turn: Have you bought your leased car? Tell us about your experience in the comments. 

15 Fun Gifts for Dad that Don’t Break the Budget

It’s Dad’s time, and you want to go all out to make your all-time favorite hero happy. Fortunately, that doesn’t mean you need to drain your wallet. You can make Dad’s day, and keep your budget, too. Here are 15 fun and low-cost gifts that’ll make Dad smile this Father’s Day.

  1. IPhone, Apple Watch and AirPod charging dock

This awesome charging dock can give some juice to an iPhone, Apple Watch and AirPods all at the same time. With a sleek design and sturdy structure, the dock is compatible with Apple Watches and iWatches of all sizes and styles, and with all iPhone models as well. Get Dad’s 3-in-1 charging station for just $19 on Amazon

  1. BenShot pint glass with real golf ball

Does Dad love to golf? Surprise him with this unique pint glass that has a real golf ball embedded in it. Make him smile every time he fills up a frothy glass. Just $26 on Amazon.

  1. KingCamp foldable fire pit

This awesome travel fire pit is like a campfire on the go. The rollable stainless steel net and folding legs are collapsible and compact enough to take anywhere. No assembly needed—just unroll and light up! Get yours here.

  1.  Classic charades

You don’t have to spend much to make Dad happy. The classic game of Charades, just $12 at Chroniclebooks.com, will help create warm family memories well beyond Father’s Day.

  1. Open bottle wine rest

This adorable mountain-shaped wine bottle rest is the perfect gift for the outdoorsy dad who loves to enjoy a good glass of wine and save the rest for later.

  1. 6. Rainbow socks pizza socks box

Everyone knows you can never have enough novelty socks. The pizza-box packaging of these socks makes them a super-fun Father’s Day gift. Just $26 on Amazon

  1.  Baby Yoda device holder

Let the Force be with Dad when you give him this device-holder that’s shaped like a baby Yoda. Prop up phones, video game controllers, and more. $25 on UrbanOutfitters.

  1. Bluetooth speaker beanie

With its built-in Bluetooth speakers and a super-warm design, Dad won’t want to take this beanie off all winter! Just $28 on Amazon.

  1. Mosiyeef pop-up wallet with money clip

Dad can finally toss that overstuffed and worn-out wallet when you gift him this minimalist, ultra-modern one! Crafted from aluminum and stainless steel, this pop-up wallet is lightweight, yet functional, holding up to six cards at a time, all of which can pop up at the push of a button. Available in 16 colors for only $19 on Amazon.  

  1.  Fitness dice

At-home workouts are fun again with this innovative fitness dice set. Every roll gives you one out of 45,000 possible routines, all with no equipment required. Only $19 at uncommongoods.com.

  1. Bean Box coffee subscription

If Dad loves his morning cup of Joe, he’ll love getting a regular delivery of fresh bags of whole bean coffee from artisanal brand Bean Box. Subscriptions are highly customizable and start at just $16.50.

  1. Chillsner

Dad will never have to wait for his drink to chill again when he has this nifty little gadget. Keep the Chillsner in the freezer and pop it into any drink for an instantly chilled beverage. $10 at uncommongoods.com.

13.  Marvel’s greatest comics

Let Dad dive into an anthology of the greatest Marvel comics of all times, including all-time favorites like Iron Man, Captain America and more. Get the collection here.

  1. Harry’s Truman shave set

Dad will look dapper when he uses this luxury shave set, complete with a signature handle, textured rubber grip, three German-engineered blade cartridges, foaming shave gel and more. $15 from Harry’s

  1. Zippo FireFast torch

It’s a blazing flame whenever Dad wants it. Ultra-hot and precise, the torch will help Dad get his outdoor fire pit going, add some char to his entree or dessert or light up a dark campsite. $15 on Amazon.

It doesn’t cost much to make Dad happy. Use this guide to find the perfect gift for Dad that doesn’t break the budget.

Your Turn: What’s your gift to Dad this Father’s Day? Tell us about it in the comments. 

4 Ways to Stay Financially Fit this Summer

Ahh…summer! The season of flip-flops and sunscreen, of lemonade and baseball games. What’s not to love about summer?

Unfortunately, though, summer is also the season of overspending for many. When the sun is blazing across a cloudless sky and the day stretches on with endless possibilities, purse strings are looser and cards are swiped with abandon. But nothing kills summer fun like a busted budget and a mountain of debt. So, how can you stay financially fit this summer?

Keeping your finances intact throughout the summer is well within reach if you’re ready to plan ahead and make responsible choices. Here are four hacks for a summer of financial fitness. 

  1. Prepare for a possible change in income

If you’re a freelancer, business owner or you get paid per diem, you can expect to see a drop in income during the summer months. Business is notoriously slower across a wide range of industries during the summer, so it’s best to be prepared for this reality. To avoid dipping into savings or going into debt, you can trim your discretionary spending and use the extra funds to cover non-discretionary expenses. You can also choose to find a side hustle for the summer to cover the gap in your income. 

  1. Get your budget ready for summer

Your budget will see some changes in the summertime, and it’s a good idea to prepare in advance instead of being caught unaware. Here are some changes you can anticipate:

  • Higher utility bills. With the AC blasting, your energy costs will likely be higher. Water costs can rise, too, especially if you water your lawn and any outdoor plants and flowers on a regular basis. 
  • Increase in fuel prices. Just when you thought it couldn’t go any higher, the price of fuel is likely to jump again in the summer. 
  • Travel expenses. Of course, if you’ll be traveling this summer, it’s going to cost you. If you haven’t yet budgeted for your getaway, start saving up and/or trimming costs from other categories in your budget now.
  • Social events. It’s wedding season, and they don’t come cheap, even if you’re not the one in the white gown. You may also receive invites or host other events during the summer months, such as family reunions, block parties, anniversary celebrations and more. It’s best to budget for gifts, the travel costs of attending these events and of course, for the expense of hosting, if applicable.
  • Activities for kids. School’s out, and the kids need to be kept busy. Aim for free activities whenever possible, but you may want to set aside some funds in your budget for occasional activities that have a price tag attached. 
  1. Create a vacation budget 

Aside from adjusting your monthly spending plan, you’ll want to build a workable budget for your summer getaway to avoid overspending. Money choices are nearly always better made in advance, so plan for every conceivable expense during your vacation. Attach a dollar amount for your hotel stay, car rental, food costs, transportation expenses, entertainment and outings, gifts, and any other cost you might have. Leave a bit of wiggle room for miscalculations, but try to keep your budget as close to the actual cost as possible. While on vacation, be careful not to go over budget and be open to a last-minute change of plans if some expenses end up being substantially higher than expected. 

  1. Review and adjust as necessary

Like going off a diet, blowing a budget is never an excuse to go all out and overspend without sparing a thought to the consequences. To avoid falling into this trap, resolve to review your budget and your overall spending on a regular basis throughout the summer. You can choose to do this weekly, or bi-weekly, but be sure to take a careful account of every dollar in and every dollar out. Being aware of the state of your finances in real-time instead of waking up after the damage has been done will make it easier to make responsible choices going forward. 

The temptation to overspend is especially strong during the summer. Follow these tips to keep your finances intact throughout the summer. 

Your Turn: How do you plan to stay financially fit this summer? Share your tips with us in the comments.

Step 5 of 12 to Financial Wellness: Practice Mindful Spending

Creating a budget and deciding to stick to it is easy; it’s actually carrying through on your plan that’s the hard part. For too many people, financial responsibility ends at having good intentions and real life gets in the way of all well-laid plans. A large part of the discrepancy between what they want to do and what they actually do is caused by their failure to spend mindfully. When every indulgence and impulse buy is just a swipe away, it can be super-challenging to rein in that spending instinct – but it is possible. Here’s how to learn the art of mindful spending. 

Find alternative ways to de-stress

Too often, people claim they need “retail therapy” and use it as an excuse to practice mindless spending. But choosing to turn to shopping for alleviating stress, dealing with a challenging situation or just to escape real life for a bit makes it very difficult to make smart, responsible choices. In addition, the bills, or debt that will likely accumulate as a result will increase stress levels considerably. Instead, it’s best to find another way to lift a heavy mood. Find someone to talk to, take a long, hot bath, go for a jog while listening to your favorite pick-me-up playlist or take up a forgotten hobby again. 

Consider disabling the one-click feature for online shopping

If you’re big into online shopping and often end up buying more than you’d planned, you may want to disable the one-click feature on sites like Amazon. You can also choose not to have your device “remember” your payment information so you have to input it whenever you shop. The more resistance or friction required to complete a purchase, the greater the chances of that purchase being a mindful choice and not a decision you’ll soon regret. 

Leave your cards and cash at home

When you don’t plan on spending any money, don’t take any with you. For safety reasons, you may choose to carry a card with you, but it’s a good idea to keep it as out-of-reach as possible. If you make all your payments with your phone, keep it tucked away, too. Similarly, if you’re hitting the shops to pick up a specific item, bring just the amount you’ll need for the purchase and nothing more. 

Put large purchases on hold

One of the best ways to avoid buyer’s remorse is to put all large purchases on hold. Set your own dollar amount for what you consider to be a large purchase and resolve to wait a while before completing any purchase in that amount or more. For example, you can decide to wait two weeks for every purchase of $50 or more. Delaying a large purchase will give you time to think it over and consider whether you really want to spend this money now. Of course, if you’ve been saving up for a large purchase for a while, you’ve already thought about the purchase and decided it’s worthwhile. 

Avoid temptation

It’s hard to keep telling yourself no when temptation is constantly flashing across your screen. Opt out of social media accounts that get you to spend more than you should, and unsubscribe from email lists. Avoid browsing on brand sites that often trigger overspending and only visit when you need to make a purchase. You can do this in real life as well, being careful to avoid shops that provoke mindless spending. Similarly, when shopping for groceries, keep away from aisles and checkout counters that cause you to overspend and purchase more than you have on your list. 

Mindless spending can be the undoing of the most carefully-crafted budget. Follow these tips to learn how to spend mindfully. 

Your Turn: How do you practice mindful spending? Share your best tips and tricks in the comments. 

How to Celebrate Memorial Day on a Budget

Celebrating Memorial Day can cost a pretty penny, but there’s no need to spend lavishly to have an epic holiday weekend. Here’s how to celebrate Memorial Day on a budget.

1. Hit the beach

Get out to the shore at the first opportunity! The beach can provide hours of relaxation and fun for the entire family at little or no cost, depending on your location. Stock up on some inexpensive patriotic-patterned towels to make the day feel a little more festive. 

2. Attend a local event

There’s no need to travel far for a fun Memorial Day outing. Check out local online forums and newspapers to see what’s happening in your town. You’ll likely find a carnival, parade, concert and/or street fair that’ll give you some Memorial Day fun at no cost. As a bonus, local activities that do charge an entrance fee will often donate all proceeds to charity, so you’ll be paying it forward all day long.

3. Host a potluck

If you’ll be hosting this Memorial Day, make it a potluck party. Ask each guest to bring one dish for a complete dinner that won’t cost anyone a lot of money. As a bonus, the menu is a lot more fun when it’s varied and prepared by lots of different cooks.

4. Go easy on the decor

No need to blow a ton of money on making your Memorial Day celebration look festive. Spruce up the place with some red, white and blue balloons from the dollar store, find some patriotic banners like these and deck the tables with inexpensive and on-theme tablecloths, too.

5. Make a signature drink

Instead of setting up a full bar, make one signature drink for the night. Festive and fitting for the celebration, this comes out a lot cheaper than springing for a full-blown bar. You can find some great ideas for your signature Memorial Day drink here.

6. Look for coupons

Don’t go anywhere without first checking if you must pay full price. You can pick up some great discounts on restaurant meals, entertainment venues and more at web sites like Groupon.com. If you are a member of AARP or AAA, check to see if you can enjoy some additional exclusive discounts as well.

7. Host a DIY sports event

For a fun and frugal alternative to the traditional Memorial Day BBQ, invite family and friends over to your place, or meet up at a park, for a day of sports and games. You can play flag football, soccer, have a tug-of-war competition or even drum up a full game of baseball. You can set up some light drinks and snacks, or ask your guests to bring their own for a truly cost-free day.

8. Visit historical sites

What better way to spend Memorial Day than checking out historical attractions? Lots of historical sites, like the Gettysburg National Military Park in Pennsylvania, host free events in honor of the three-day holiday. This event, along with other similar events across the U.S., are a great way to honor the courageous men and women who have served and lost their lives for our country.

9. Rent a boat

Enjoy a day out on the water at little cost by renting a boat from a nearby boat rental service or a private owner. Small boats, like kayaks and canoes, can cost as little as $30 for a few hours of use. Speed boats and pontoons will be pricier, but can also hold more people to share the cost. Bring along some snacks and drinks and good music for a fantastic day of water fun.

10. Participate in a race

Joining a race can be an enjoyable and healthy way to spend your Memorial Day. Participating in a race can cost you as little as $50. As a bonus, lots of Memorial Day races donate all proceeds to organizations that help soldiers pay for expenses that are not covered under military benefits. You’ll be supporting our servicepeople while stretching those muscles!

Memorial Day is always great fun, but it doesn’t need to cost a great deal of money. Use these tips to enjoy a memorable holiday weekend on a budget.

Your Turn: What are your low-cost plans for Memorial Day? Share them with us in the comments.

Step 3 of 12 to Financial Wellness: Pay Down Debt

You’ve tracked your spending, designed a budget for your monthly expenses, and you’re well on your way to financial wellness. In this next step, you’ll create a plan for paying down your existing debt.

Consumer debt can be one of the biggest challenges to realizing good financial wellness. Credit card companies design their business model in a way that makes it easy to get stuck paying off debt for years. With some intentional action and commitment, reaching true financial wellness and being financially independent is possible. At the very least, seek to be on track for paying it off shortly. 

Below, we’ve outlined how to pay down debt in five simple steps, along with three debt-paying strategies to avoid. 

  1. Organize your debt

Before you get started, determine how much debt you must pay off. List every credit card you own that has an outstanding balance and jot down the amount owed to each. Next, list the interest rate of each card. Do this for any other fixed installment loan debt you have as well. These numbers will help you build a debt-payoff plan in the next two steps. 

You can also add up the amounts owed on each account to reach your total outstanding debt amount.

  1. Choose your debt-crushing method

There are two main approaches people utilize for getting rid of their debts: 

  • The snowball method involves paying off your smallest debt first, and then moving to the next-smallest debt until all debts have been paid off. 
  • The avalanche method involves getting rid of the debt that has the highest interest rate first and moving on to the debt with the next-highest rate until all debts are paid off. 

Each method has advantages and drawbacks. The snowball method provides frequent motivation as debts are paid off sooner, but it may involve paying more overall interest on the debt. The avalanche method, on the other hand, generally saves the borrower a significant amount they pay in interest, but it can take a while to generate results.

Choose the method that makes the most sense for your personal and financial circumstances.

  1. Maximize your payments

Once you’ve chosen your debt-crushing method, it’s time to find ways to maximize your monthly credit card payments. You can do this by trimming your spending in one budget category and channeling that money toward paying down your debt. You can also find ways to pad your pocket with extra cash for your payments, such as freelancing for hire or selling your creations on a platform, like Etsy, if you’re the crafty type.

Once you’ve determined how much you can afford to pay each month, you can create a debt-payoff plan using the systems you’ve reached in Step 1. 

  1. Consider a debt consolidation loan

For some consumers, the most challenging part of paying down debt is managing multiple payments across several credit card accounts. With several monthly debt payments to make, it can be complicated to remember them all. It can also feel like the monthly payments are only going toward interest.

A debt consolidation loan can change all that. When you consolidate debts to one low-interest loan, it’s a lot easier to manage the monthly payments. Plus, the savings on interest payments can be significant, especially if the new loan has a low interest rate. 

If this approach sounds favorable, consider taking out a personal loan from Advantage One Credit Union. The loan will provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest monthly payment. 

  1. Negotiate with your creditors

Many credit card companies are willing to lower your interest rate once you prove you are serious about paying down debt. After kicking off your debt payment plan, it’s worthwhile to contact each credit card company to discuss your options. At the very least, see if you can get the company behind the first debt on your list to lower your rate. 

3 Debt-Crushing strategies to avoid

As you work toward paying down your debt, beware of these debt-crushing strategies, which may do more harm than good: 

  • Debt settlement. Debt settlement services offer to lower your interest rates and boost your credit score in a short amount of time – for a fee. Unfortunately, though, many of these companies are fronts for scammers and should be avoided. Do note, though, that there are legitimate debt settlement companies, so do your research well if you are thinking of using one.
  • 401(k) loans. It’s rarely a good idea to borrow from the future you. Withdrawing funds from your 401(k) to pay down debt can mean getting hit with all sorts of penalties, fees and taxes. 
  • Home Equity Line of Credit (HELOC). Borrowing against your home means putting yourself at risk of losing your home.  

Regardless of the strategy you choose, or the methods you use for paying off your debt, commit to not adding more charges onto your card while paying it down. Paying off a large amount of debt will take time and willpower, but living debt-free is key to financial wellness. Best of luck on your debt-crushing journey! 

Your Turn: Have you successfully paid down a significant amount of debt? Tell us about it in the comments. 

The Best Way to Spend Your Paycheck

Everyone loves payday, but too many employees don’t know how to allocate their paycheck in a way that best serves their financial needs. Use the tips outlined below to learn how to manage your paycheck responsibly. 

1. Automatically deduct contributions

Your first step in managing your paycheck is making sure you are deducting the optimal amounts. Your employer will likely deduct funds for your health care plan and taxes, but you can determine how much tax is withheld by changing a few elections on your W-4. If you receive too large a tax refund for the prior year, or you’re stuck with a big bill when you file, consider adjusting the amount withheld on your W-4. Also, be sure to take full advantage of any employer-matching offers for your retirement funds — don’t give up free money! 

2. Budget for necessities 

After your contributions are deducted from your paycheck, you’ll be left with your take-home pay, or net income. You’ll use this money for covering expenses until the next payday, so it’s best to budget first for necessities, such as your mortgage or rent payments, utility bills, insurance premiums, etc. You can use the “envelope system” to actually put cash away for necessities or set up a detailed old-fashioned budget, which prioritizes your needs. You can also choose to use the “50/30/20 budget” that sets aside 50% of your income for needs. 

  1. Budget for wants

Once you’ve set aside money for your needs, you can use some of the remaining funds for wants, or discretionary expenses. This can include entertainment costs, dining out and clothing, in addition to what you really need. Here, too, you can put away the cash you need for a spending category into an actual envelope, mark down the amount you can spend in that category on a paper or in an app budget, or simply keep in mind that 30% of your paycheck can be spent on these expenses. 

  1. Pay yourself 

Now that you’ve taken care of your needs and wants until the next paycheck, it’s time to think about the future. Put a percentage of the remaining funds into savings, including IRAs, college saving plans, CDs, investments, emergency funds and the like. Use your predetermined amounts, or 20% of your take-home pay, if using the 50/30/20 budget. If you have any outstanding consumer debt, be sure to pay toward it as well. 

  1. Don’t feel forced to spend it all

Many people mistakenly think they need to spend all of their paycheck before the next one arrives. If you’re left with extra money at the end of the month, there’s no need to waste it. You can beef up your savings, get ahead of your debt or stash some cash away for an expensive time of year, like the holiday season. 

Learning how to wisely manage a paycheck can take some time, but once you’ve got the hang of it, it will be easy and almost happen by itself. 

Your Turn: Do you have any tips on paycheck management? Share them with us in the comments.

Leaving Your Job? Make Sure Your Wallet is Ready

One of the many pandemic’s lasting effects on the U.S. economy is the so-called Great Resignation of 2021. Employees are voluntarily leaving their jobs in droves. In fact, according to data from the Bureau of Labor and Statistics, a whopping 20.2 million workers left their jobs from May 2021 through September 2021. Reasons for the high turnover range from availability of federal economic aid to general burnout, which reached a turning point during the pandemic. 

If you are considering becoming a part of the Great Resignation, it’s important to make sure your finances are in order before you give official notice at your job to cover any gaps in employment. Below, we’ve outlined some important steps to take before you leave your job.  

Review your savings

Before giving up a steady paycheck, make sure you have enough savings to tide you over until you find new employment. Ideally, you should have an emergency fund with 3-6 months’ worth of living expenses to help you survive periods of unemployment, such as when you’re between jobs.  If you don’t have this kind of money saved up, consider pushing off your resignation until you can put together a nest egg to help you get by without a paycheck. 

Check your benefits 

If your job includes employee benefits, like retirement funding, be sure to review them carefully before giving notice. Here are different options to consider for the most common employee benefits: 

  • Health insurance. Work-sponsored health coverage generally ends on an employee’s last day at work, though coverage will sometimes continue until the end of the month. Similarly, some companies start covering new employees on their first day of work, while others have a waiting period that can last from 30 to 90 days. If you’ll have a gap in coverage, try to negotiate for early coverage when securing your new job. If this is not possible, thanks to COBRA, you can continue your current health coverage at your own expense for 18 months after you leave your job. It’s important to note, though, that this can be a pricey option. You can also purchase a short-term policy through the marketplace. 
  • Pension. If your previous place of employment came with a pension, you may be able to keep it or take out the money when you leave. This depends on whether or not your contributions are vested and the other rules of the pension plan. In general, if you were only at this job for a short while, you likely will not be able to hold onto your pension. If you have a choice, it can be better not to take out a pension in a lump sum because you will likely get a better return with a pension than on other investments. If you do take out your pension, you may want to roll it over into an IRA or a 401(k), which is tax-deferred. 
  • 401(k). If your old job came with a 401(k), you’ll need to decide what to do with the funds. You can keep the account as it is without making any additional contributions, roll over the funds to a new 401(k) program, roll the money over into an IRA or cash it out. Consider the investment options in your current 401(k) when making your decision. 
  • Life insurance. Don’t forget to consider a possible gap in your life insurance coverage when leaving a job. You may be able to continue paying for coverage until you have a new plan through your next place of employment. 

Assess your risk tolerance

Before accepting a new job, make sure you can handle a possible blow to your income. Many jobs will present new employees with the possibility of better pay in the future, while initially only offering a starting salary. How comfortable are you taking a risk with a new job that doesn’t guarantee as much financial security? 

Adjust your budget for your new salary

If your new job comes with better pay, or you’ll be bringing home a smaller paycheck for now, you’ll need to adjust your budget accordingly. You may want to increase the contributions you make toward your investments or find a new place to park your cash, such as a Advantage One Credit Union Savings Account, for the extra income while you decide on a more permanent strategy. On the flip side, if you’ll be earning less money now, look for ways to trim your budget so your paycheck can stretch to cover all your expenses. 

Leaving an old job and looking for a new one can be an exciting opportunity, but it’s important to make sure your finances are in order before taking that leap. Follow the tips outlined here before giving notice at your place of employment to ensure ongoing financial security.  

Your Turn: Have you recently changed jobs? Share your best tips and strategies in the comments.