Thanks to a new rule passed by the Federal Trade Commission (FTC), debt settlement services will face more restrictions on how they operate, what they can charge and what they can promise.

Some of the new rules concerning debt-settlement services include: 

• Elimination of up front fees
• Regular payments must be made to a dedicated account in order to make payments to the creditor
• The dedicated account must be in the name of the person in debt, accessible at any time and held at a financial institution
• Fees for debt settlement programs will be based on the estimated percentage of money that will be save.

It’s important that anyone thinking about signing up for a debt settlement program considers all of their options because debt settlement programs can have some disadvantages, including:

• A negative impact on your credit score.  The lower a person’s credit score, the more difficult it is to qualify for a loan.  In addition, if someone with a low credit score is approved to borrow money from a financial institution, they may have to pay much higher interest rates than someone with a higher credit score.  Therefore, a negative impact on your credit score can significantly impact how much can be borrowed and at what interest rate.  

• Forgiven debt may not actually be forgiven. If a creditor agrees to eliminate or reduce a portion of your debt, don’t consider that free money. Forgiven debt is considered personal income by the government.  When debt is forgiven, the creditor may well issue the debtor a 1099 tax form which the debtor will be required to report as income.  For some, this could mean a decreased tax refund or a large tax bill that you were not expecting.

• Any slip-up can void the settlement offer and put you in a worse situation than when you got started.  A missed or late payment when working with a debt settlement program can not only void any arrangements you had made with creditors, but can also lead to large penalties and set you back to where you started with even more debt and worse credit

Before jumping into a debt settlement program, contact your financial institution, accountant or attorney to examine what your best options are.  It may be possible to contact your creditors to discuss if alternative payment arrangements. The creditor’s ultimate goal is to receive payment for your debt.  Sometimes arrangements can be worked out before debt settlement or bankruptcy options are utilized.  In addition, since bankruptcy laws have changed drastically in the last five years, be sure you’ve done a complete financial analysis with a financial professional before moving forward.

It’s always a good idea to reduce your debt as much as possible.  Just be careful of consolidation companies that offer large savings in a short period of time and make sure to weigh out all of your options before moving forward with any plan.  If you need assistance or have questions about debt consolidation, contact your financial institution for help.

Having a financial plan and financial goals that you address all year long will dramatically increase a person’s chances of reaching financial freedom.  At the beginning of the year when tax season is upon us, it’s common to take the time and look over your finances and where you stand compared to where you want to be.  However, after tax season passes, it’s easy to let these types of check-ups slip to the bottom of your to do list.  

To ensure your finances are on track throughout the year, follow these basic steps to help make your financial plans and goals a priority.

• Get reorganized.  Take the time and write down all of your monthly expenses and your monthly income to see where you stand. Some financial services, such as Pioneer Credit Union, offer free financial services to help track your spending.  For instance, a new program offered by Pioneer called FinanceWorks, allows you to pull your financial information from a variety of different financial institutions into one place.  It’s an easy way to see all of your income and expenses in one place.  If your expenses have become more than your income, you know it’s time to do a little adjusting.  Throughout the year expenses change so it’s important to check them periodically to be sure things are in line.  

• Look at retirement.  Schedule a meeting with your financial advisor to see how your investments are doing.  For many young investors, after the money is invested, you just assume it’s growing. The most recent economic downturn has led to the decrease of many investment vehicles so it’s important to stay on top of your investment plan and periodically analyze it so the appropriate changes can be made.

• Health savings plans. If you have a health or flex savings plan, it’s a good idea to gather all of your eligible expenses and the appropriate documentation to see where you’re at.  Remember, the monies you put in a health or flex savings plan are forfeited if you do not spend them.  At the end of year it can be difficult to go back and find all the materials you need or you may simply forget about that visit to the doctor last February.  Gathering this information in the middle of year will help you gauge what monies you have left and what you have already spent.  Plus, it will give you extra time to get that prescription receipt you just can’t find.

• Priorities.  As we all know, our priorities change as we get older, when we have children, when we get married, etc. The same is true when talking about your finances.  At the beginning of the year, paying off your student loans may have been on the top of your priority list.  Now, maybe your priorities have changed to needing a new vehicle because yours broke down.  Either way, it’s important to reevaluate your priorities and make sure you are spending the appropriate amount of money on each priority, in order of importance.  For example, if paying off your house is your biggest priority, it should receive the largest allotment of money.

• Rates and fees. When you’re 16 years old, your car insurance is usually significantly higher than when you’re 30.  When is the last time you’ve taken a look at how much you pay for your health insurance, car insurance, cell phone, etc.? It may be easier to just keep all of your current plans but it can be a lot more expensive then it needs to be!

• Emergency fund. If the recent economy has taught us anything, it’s that we need to be financially prepared at all times. Check the status of your emergency fund and make sure you have an appropriate amount of funds set aside should you lose your job, get injured or experience any kind of emergency that will decrease your income.

If you don’t have an emergency fund, get one started immediately!  Automatic deposits are a great way to keep your savings goals on track. Just make sure you don’t take money out of the account unless it is truly necessary.  If you’re a person who tends to dip into your emergency account more often than you should, there are some financial institutions that offer higher interest rates on savings accounts that you can only access only a limited number of times during the year.  

Staying on top of your finances is a year-long task. Taking the time to review your finances only around tax time can end up costing you greatly.  Review your finances on a regular basis and reserve time at least twice a year to fully analyze and evaluate your financial position.  If you have questions or need assistance with your mid-year check-up, your financial institution is always there to help.

To learn more, visit www.pioneercu.org.

The biggest advantage young investors have is time. Time is crucial because of the opportunity it gives young investors to make up any losses they may see if the economy experiences a recession or any other type of decline. Think about it this way, investors in their twenties and thirties have 30 to 40 years to let their investments grow. If the market takes a turn for the worst 15 years down the road, decades would still remain to make that money back. Many don’t realize that the history of the stock market shows a steady increase over long periods of time.  This means even as the stock market experiences ups and downs, it will recover in the long run. 

Investing too conservatively could delay retirement. Investments that carry higher risk also come with the reward of a higher return.  Many think that having forty years or more to invest is more than enough time and that investing conservatively is the wisest choice. Unfortunately, in most cases, this is not true. The level of risk you take with your investments should depend on your individual personality and the years you have left until retirement. However, unless you are only a few years from retiring, some risk is important because the opportunity for return is so much greater. While slow and steady will eventually win the race, slow and steady may win the race years after you want it to.

Remember that saving and investing are two different things. Saving typically consists of setting money aside in an account and letting it sit there until you decide you need it or have an emergency.  However, many savings accounts have low interest rates, leaving little room for growth unless you keep adding more money to it. The upside to a savings account is that there’s no risk, meaning your money remains safe and secure. Investing involves risk but has a much higher potential of increasing the money you will have available in retirement. In addition, investing gives your money the opportunity to build on itself and grow with little or no action from you.   

You don’t need a large lump sum of money to begin investing. Beginning to invest at a young age gives you the luxury of starting small. You don’t have to have thousands of dollars to stick into the market right away. Instead, you can start with a small amount and watch it grow gradually. The general rule of thumb is to invest 10 percent of your income for your retirement.  However, if your employer offers a company match for your retirement account, you should at least contribute that percentage. It’s free money!

As previously mentioned, the market takes natural ups and downs throughout the course of a year, so don’t scare easily. After the recent downturn, many are afraid to jump in and get their feet wet for the fear they are going to lose money. However, when the market is going through a down swing, the last thing you want to do is pull all of your money out. History shows that the market will eventually rebound. Stay the course as long as you can and wait for the market to make up any money you may have lost.

No matter what your age, saving for retirement is important. The key is to start investing now.  Don’t wait for the perfect time. Don’t wait until you have an extra $1,000 lying around. Start now and stay the course.  If you have decades before you reach retirement age, take some risk and let your money work for you. If you need help, speak with a financial advisor and they can help you find an investment plan that works best for you and your money.

Meet Bill and Mary.  They are married, mid-thirties, and have two children.  For most of their adult life they had good credit.  Then the recession came and Bill, who through no fault of his own, lost his job.  The predictable financial problems ensued.  Fast forward two years and Bill found a new job and the household income is better than ever.  Problem is, their credit has tanked and the only places that will even consider them are finance companies (can you say 27 %?) or check cashing stores where the 27% looks like a bargain. 

You see, the problem is that a person’s credit score has become the Holy Grail by which financial institutions make their lending decisions.  In normal times, it worked fine, save for the fact that it doesn’t take individual situations into consideration.  The economic upheaval of the last three years has shown us that these aren’t “normal” times, and the “normal” times aren’t going to return any time soon.  If ever.

At Pioneer, we’ve taken a proactive approach and are making changes based on the new economy.  We do still look at credit scores, but we have also added what we call a “Relevant” lending strategy, which asks a series of questions that go deeper than just the numbers to find out the story that goes with it.  We understand that sometimes bad things happen to good people, and Bill and Mary are perfect examples.  They are the same people they were before the setback and deserve a closer look.

We implemented Relevant Lending in April of this year, and it has been very, very successful for us.  On the business side, we are making more loans than ever.  On the personal side, we are doing what a credit union should do………..staying in the people business.  It helps the members, Pioneer, and the economy…..and in this day and age, that’s a home run.

Do not take this as an indication that we are willing to bring out the checkbook for anyone with a hard luck story. We still need to run a business and protect our members’ money.  However, if you have had a setback, or know someone who has, don’t be afraid to have them come in and talk with us.  We’re making loans.  A lot of loans.  And the best part is that they go to deserving people.

Anytime you use your debit card, credit card, social security number, driver’s license number, birth date, home address, etc., you need to be cautious about who can potentially see this information. Fortunately, there are a couple of steps everyone can take to help protect their personal information while online.

Make your passwords unique. Create different, complex passwords for each online account you have.  Stay away from using significant numbers such as your birthday or social security number and avoid common passwords such as your mother’s maiden name, 1234 or the word password.  To help keep your passwords complex, consider using letters, numbers and symbols. If you fear you won’t be able to remember multiple passwords, and need to write them down, be sure you keep them in a secure place like a locked safe.  Never store your passwords on your computer. Doing so could help a hacker gain access to your online accounts.

Disable your computer’s cookies. Cookies on your computer leave a blueprint of the websites you’ve visited, and if you choose, could also save your passwords for commonly visited sites.  Disabling these cookies will help keep your website history and passwords safe.

Be careful what information you put on social networks.  When setting up your Twitter, Facebook, MySpace or any other type of social network, consider what personal information you include. Do not include personal details like your home address or date of birth on your profile page.  If you insist on including some personal information on your profile, it’s a good idea to set your privacy settings so nobody can see any of your personal information unless you accept them as a friend.  In addition, only accept requests from people you actually know. The fewer people who have access to your personal information, the better.

Avoid unsecured wireless internet signals.  Many establishments offer free wireless Internet to their patrons as a perk for visiting their business.  Businesses offer this service by establishing an unsecured wireless Internet signal that allows anyone with a laptop to access it. The danger lies in the fact that the wireless signal is unsecured.  This could give hackers the ability to access information you are sending through the unsecured signal. If you have wireless Internet at home, make sure you secure your signal and protect it with a complex password. 

Use common sense. If a website you’re visiting doesn’t look right, close it.  If you’re uncomfortable entering your personal information, don’t do it. If an offer seems too good to be true, ignore it. Before entering your personal information on any website, make sure it’s a website you trust.  If there is anything that looks suspicious about the website you’re visiting, don’t be afraid to the call the business or organization of the website to double check that everything is OK.

Identity theft can cost thousands and thousands of dollars and put a stain on your credit report that can take years to get rid of.  It’s important whether carrying a wallet up to the cash register or entering credit card number online, that you’re aware of your surroundings and are doing everything possible to protect your identity.

As we stated in an earlier blog, it is no secret that “free” checking is coming to an end.  The nation’s three largest banks (Citi, Bank of America, and Wells Fargo) have already eliminated it.  At Pioneer we wanted to take a different approach.  Rather than following their lead and adding a bunch of fees to our existing accounts, we have decided to revamp our products.  The goal was to add value for you while providing ways you can still avoid paying anything. 

In addition to our Cha Ching checking, we will be introducing four other new products which were designed to meet our member’s individual lifestyles.  One offers cash back, another free media downloads, a third offers merchant discounts and free identity theft protection.   Additionally, we will also offer a basic “no-frills” account.  More importantly, you can avoid the monthly fee by making some small changes in how you bank. 

Sound too good to be true?  Let’s take an example.  Say one of the above accounts has a monthly fee of $8.  Pioneer will give you a $2 credit for direct deposit, $2 credit for e-statements, and reduce the fee by $.20 each time you use your debit card.   Use the debit card 20 times and the fee is gone altogether.  (Pioneer members already use their debit card an average of 23 times per month).  Or, keep $500 on deposit and there is no fee………………  YOUR banking preferences will decide which account is best for you.  For specifics, please click here https://www.pioneercu.org/home/fiFiles/static/documents/RelevantChecking.pdf.

 You don’t need to take any action right now; this blog is just a heads-up as to what the future has in store.  There will be a lot more information coming on the website, in the mail, and electronically, and we want to give you ample time to look it over.  On the other hand, we do encourage you to talk to a Relationship Manager who will help you determine which account best matches your needs.