Car Buyers’ Worst Mistakes

How much money do you think educated car buyers can save over uneducated buyers when buying the same car?

Would $5,000 get your attention? While you may not save as much as $5,000, you’ll save a bunch if you avoid these classic car-buying errors.

 

* Showing enthusiasm. If you act excited, the sellers know they have a unique product you want. The price goes up instantly. Keep that enthusiasm in check until you’ve driven home. Sneer a little if you like the car.

* Buying in a hurry. If you buy on your first visit to a dealership, you don’t have time to compare. Take your time. Be willing to walk away. The price at most dealerships falls quickly if you move slowly.

* Giving deposits before the dealer approves your offer on a vehicle. Feel free to give a deposit, if you really want a vehicle. But don’t give it until the boss has said “yes.” Some dealerships use deposits to keep you there while they try to convince you to pay more. And you can’t leave if they have your deposit—money, a credit card, a driver’s license, or your kids.

* Being switched to leasing without doing your homework. Because dealerships make a much larger profit if they lease rather than sell, even the best dealership may try to “switch” you. They’ll try to convince you leasing is cheaper than buying. In most instances, it isn’t. If you want to lease, fine. Just don’t do it on the spur of the moment.

* Trading in your old car without knowing its value in advance. A dealership has the right to give you the least you will take for your old car. But you have a right to get the most your car is worth. To know that value, simply clean it up, and try to sell it to several used car departments. The highest amount you’re offered for it is your car’s real value right now. Don’t accept less than that in trade.

* Financing automatically at the dealership. The dealership may be the cheapest place to finance, but not always. To find out, simply bring a copy of the filled-out dealer contract to New Century Credit Union and compare contracts. If the dealership won’t give you a copy, they’re probably telling you they’re not really the cheapest.

Big mistakes, big bucks out the window. We like to help you preserve your money—that’s what credit unions are all about. Avoid these mistakes, and put that money to work rather than throwing it away.

Easy Ways to Save for the Holidays

Yes, the holiday season seems to come earlier every year, but unfortunately for too many Americans, saving for Christmas often arrives too late—if at all.

The average American spends $800 on holiday-related expenses every year, according to the National Foundation for Credit Counseling (NFCC), Washington, D.C. Despite the significant outlay, many consumers forget to plan for these annual costs and instead charge them to credit cards.

If you charge $1,000 and pay only the minimum 2% balance, at an 18% annual percentage rate it will take you 12 years to pay it off. And by the time you do you will have spent $2,353. Now imagine if you have to do this every year.

The NFCC offers a better alternative—plan for the holidays.

If you spent too much this holiday season, here are five easy ways to save for next year’s holiday season.

1. Tighten your everyday spending with the goal of saving about $1 a day between now and December 25th, 2015.

2. Adjust your W-4 to accurately reflect what you owe in taxes. The average tax return is $3,000, but that money doesn’t arrive until April. By taking less out of each paycheck, you can save that money for the holidays.

3. Cut back on monthly expenses that aren’t fixed. Aim to spend $10 less every month on categories like gas, food, and entertainment.

4. Sell unused items. Sell clothes at consignment shops, books, utilities, and CDs online at sites such as Amazon, resale shops, or have a garage sale.

5. Open a Century Club account with New Century Credit Union. Don’t use existing accounts because you could too easily spend that money on other items.

You can also always rethink the kind of gifts you give.

“It makes no financial sense to pile new debt on top of old. Kindness and experiences are meaningful substitutes for purchased gifts, and are remembered long after the wrapping paper and bows have been discarded,” says Gail Cunningham, spokesperson for the NFCC.

Don’t Fall For These Common Money Myths

Even the most battle-tested budget warrior might be making money decisions based on bad information, according to results of a recent survey.

Charles Schwab interviewed 998 people to discover their biggest financial misconceptions. A large number of them believed common money myths. In fact, those who described themselves as “savvy” actually were more likely to believe the myths.

Because it’s dangerous to not know what you don’t know, here are nine common money myths.

Myth No. 1: A will guarantees your property and money will be distributed the way you wish.
Unfortunately, 91% believed this. However, if you’ve named beneficiaries on financial accounts, such as your IRA (individual retirement account) or insurance policy, those designations override any will. You’ll need to update them to ensure you don’t leave assets to someone you didn’t intend, such as an ex-spouse.

Myth No. 2: You shouldn’t have any debt when you retire.
Differentiate between “bad” and “good” debt. No credit card debt is a good goal, but you shouldn’t pay off a low-interest mortgage or student debt at the expense of saving more for retirement.

Myth No. 3: You can always shore up your income in retirement by getting another job.
This is easier said than done for a number of reasons, including declining health and the erosion of marketable skills. Only 4% of retirees end up getting another job, despite 39% of those surveyed indicating they plan to work after they retire.

Myth No. 4: Everyone should have life insurance.
Life insurance is necessary only if you have disabled or young children or a spouse depending on your income, or if you own a small business.

Myth No. 5: You should take Social Security when you turn 62.
Not unless you really need it. If you wait and take Social Security at age 70, your benefits will be 76% higher.

Myth No. 6: You should buy long-term care insurance in your 40s when premiums are lower.
The premiums will be lower, sure, but you’ll be paying them for a longer time. If you’re healthy, Schwab says the ideal age for purchasing long-term insurance is between 50 and 65.

Myth No. 7: Retirees should keep their money out of the stock market.
If you anticipate a long retirement, keeping a portion of your savings in the stock market can help you keep pace with inflation.

Myth No. 8: You should borrow from your 401(k) if you need a loan.
Borrowing from a 401(K) should be a last resort; otherwise you’re putting your retirement savings at risk. New Century Credit Union offers other low-cost loan options that won’t derail retirement savings.

Myth No. 9: Your 50s are too late to make a difference in your financial future.
If you don’t retire until your late 60s, you could have almost two decades left to save. In 2014, anyone older than 50 can add an additional $5,500 in catch-up IRA and 401(k) contributions.

If you have questions about money management, the professionals at New Century Credit Union can help. Contact us today!