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Financial Wellness videos

Financial Wellness videos

Empowering members to achieve their goals and improve their financial footing.

Buying a Car Video

1:55

When you think of buying a car, there are three major financial decisions that you should make.

Welcome to your Financial Fitness Minute. Getting ready to buy a car.

When you think of buying a car, your first thoughts are likely about the size, gas mileage, color, and that new-car smell, but, to make sure you drive away happy, remember the three major financial elements of car buying.

First, be clear on what you can afford. Look at your budget to see what monthly payment you can handle, bearing in mind any changes you may have in insurance, maintenance, and fuel costs. Plug your ideal monthly payment into an online car-buying calculator to find out how much of a car you can afford, taking projected trade-in value, or down-payment money into account.

Compare that to the car you want by checking the Kelley Blue Book website, or Edmunds.com, to see what the true retail cost is. Can you afford it? Consider whether there are any incentives, or rebates that can help bring the car into your price range. If the price is still too high, can you do without some of the upgrade packages, or look for something a bit more reasonable for you?

Second, tackle the financing. If you have any problems with your credit report, resolve them so you can get the best interest rate possible. It’ll save you lots of money in the long run. Check first with your local financial institution to get your financing in hand, before you actually go to buy the car. It’s still a good idea to see what kind of deal you might get from a dealership, so you can make a comparison. Don’t just look at the monthly payment, though. Consider the total cost of the loan.

Third, handle your trade-in. Do your research to find out what your old car is truly worth. If the dealer doesn’t want to offer what the car is worth, as a trade-in, you may just want to sell it on the private market, through Craigslist, or an auto-trader site, and use that cash as a larger down-payment.

Thanks for joining us for this Financial Fitness Minute.

A note about third-party links – By selecting certain links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites.

Your Credit Score

2:14

Find out what a credit score is, what goes into calculating it, and how it affects getting you a loan.

Welcome to your Financial Fitness Minute. Your credit score.

There are a lot of misconceptions about credit scores and how they’re calculated. While the actual algorithms are highly complicated, the factors that go into determining your score aren’t. There are five basic parts of the FICO score. That’s the score most lenders use. Your FICO score is somewhere between three hundred and eight fifty. A higher score indicates that you are considered a less risky borrower than someone with a lower score. The first and most important component is your payment history. Thirty-five percent of your score is based on how you’ve paid your bills.

As you may imagine, on-time payments will result in a higher score, while late payments and collection accounts will damage your score. The fact that you missed one payment three years ago doesn’t mean your score is ruined, however. Recent, frequent or severe lateness will lower your score more than the occasional mild payment mishap. The second element of your score is your total balances relative to the limits on your revolving accounts, like credit cards. Simply put, the less you owe on your revolving accounts, the higher your score. Many people are surprised that this makes up a full thirty percent of the FICO score.

Not using any credit at all, though, can result in no score at all. The third factor is the length of your credit history. It’s fifteen percent of your score. The older your accounts become and the longer you have used credit, the better. Fourth is new credit. This makes up ten percent of your score. Basically, this is the number and proportion of recently opened accounts and the number of inquiries, which are the times you’ve applied for credit. Many people are concerned about applying for credit and it lowering the score.

This is a small part of the entire picture, however, and, in cases in which many people shop for credit, like for auto or mortgage loans, generally multiple applications within a short timeframe, will only count as one inquiry. The final ten percent is types of credit. There are two different types of credit, revolving, like credit cards, and installment, like loans. Having a variety of accounts will show that you can handle different types of credit and generally boost your score.

Thank you for joining us for this Financial Fitness Minute.

A note about third-party links – By selecting certain links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites.

Getting a Mortgage

1:49

When it’s time for you to look seriously at a home purchase, there are several steps you should consider taking.

Welcome to your Financial Fitness Minute. Getting ready for a mortgage.

When it’s time for you to look seriously at a home purchase, you’ll need a guarantee of financing, known as a preapproval letter. This lets you know how much you can borrow, which will help narrow down what you can buy. When you start making offers, having your preapproval in place lets the seller know you’re serious. In order to qualify to get the preapproval letter from your lender, you’ll need to qualify for the mortgage, which requires three major things.

First is a good credit score. In the eyes of a lender, this is above seven hundred. Check all three of your credit reports, including your scores. If your score is low, you may have some work to do to pay off some debt and take care of problem accounts.

Second is the down-payment. This helps offset the risk that a lender takes in order to extend a loan to you. Basically, they want you to have a skin in the game, too. Plus, it means you can borrow a little less. Generally, this will be at least three point five percent of the purchase price. Typically, the higher the down-payment you can make, the less of a risk you represent, and the lower the interest rate that you might qualify for.

Third is your debt-to-income ratio. It should not exceed forty two percent. It’s calculated by taking all of the monthly minimum payment obligations that show up on your credit report, and adding those to the total proposed mortgage payment, including principal, interest, taxes, and insurance. That sum, in total, should not exceed 42 percent of the monthly gross income for the household.

Once you have that preapproval letter, you’ll be in a good position to start working with a real estate agent and find your dream home.

Thanks for joining us for this Financial Fitness Minute.

A note about third-party links – By selecting certain links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites.

 

Getting Out of Debt

2:44

Cutting back on spending helps is one way to get out of debt, but there are a number of other options.

Welcome to your Financial Fitness Minute. Getting out of debt.

To get out of debt, first understand what makes debt so expensive. It’s the interest and fees over time. To reduce your debt, the key is to reduce the interest and fees while reducing the time you’ll be paying them. First, let’s focus on reducing the time by increasing your payments. Paying just the minimum is a recipe for staying in debt for a very long time. For example, let’s say you have ten thousand dollars in credit card debt at fifteen percent interest and are paying minimum payments of two hundred dollars a month. It will take you seventy-nine months to pay that off and cost five thousand eight hundred and five dollars in interest. If you can increase your payments by two hundred dollars, you’ll cut your repayment time down to thirty-one months and save three thousand seven hundred and thirty-five dollars in interest.

Create a budget so you’ll be able to make decisions about your spending and find areas to reduce. Once you know what you can pay beyond the minimum, try the snowball payment method. This is where you attack the most expensive debt first. Check your finance charges to see which of your accounts is costing you the most. Pay all of your creditors the minimum except the most expensive one. Pay that one all the extra money you pulled from your budget. Once that’s paid off, roll that payment into the next most expensive account.

Some people like to modify this by paying the smallest balances first and then rolling the payment into the next smallest one, and so on. While this might not save you as much money as paying off the most expensive first, it can be very motivating to pay off the small accounts quickly, leaving you fewer bills to pay. The other side of the coin is the cost of the debt. Explore ways to reduce your interest rates and fees. Going back to our example of the ten thousand dollars in debt, if you were able to not just increase the payment by two hundred dollars but also reduce the interest rate to eight percent, you’d be out of debt in twenty-eight months and save four thousand eight hundred and twenty-seven dollars in interest.

How do you lower your interest? If you have good credit, you may be able to request lower rates from your creditors or check with your local financial institution to see if they offer accounts with lower rates you can transfer balances to. If you’re struggling to make the payments and have high interest rates, a debt management plan might be your solution. Making changes to your budget so you can increase your payments and proactively exploring ways to reduce interest can help you save hundreds or even thousands of dollars and get you more quickly to your debt free goal.

Thanks for joining us for this Financial Fitness Minute.

A note about third-party links – By selecting certain links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites.

Guarding Against ID Theft

1:50

There are steps you can take to prevent ID Theft from affecting you and your family.

Welcome to your Financial Fitness Minute. Guarding Against ID Theft.

Every week, there are new stories in the media about new ways criminals are trying to steal your information but keeping your private data secure doesn’t require Herculean efforts. Your personal information is a castle for you to protect from potential invaders.

No matter what the newest clever trick the ID thief has up his sleeve – phishing, smishing, skimming, scamming – it all comes down to an attempt to invade the four main pathways to your data castle: your social-security number, your account numbers, your computer, or your passwords, and identifying information. These are the four roads you need to vigilantly watch to safeguard your information.

By locking down this kind of information, making sure your computer has up-to-date security software, shredding statements, and account information, keeping your social-security card, and other essential documents in a safe, and secure place, and using strong, varied passwords, you make your financial life much more difficult for criminals to access.

Similarly, there are four main roads leading out of your castle. These are your check systems, and credit reports, your existing financial information, your government, or insurance accounts, and your communications. If an identity thief has slipped past your efforts to guard the information in your castle, you’ll be able to spot the thief, as he exits with your information on one of these roads, as long as you stay alert.

Getting collection calls, or bills for purchases you didn’t make, or finding unusual activity on your credit report, or accounts may be flags that your information was compromised. Check your statements regularly, and your credit reports every year. By monitoring the roads in, and out, you will be able to better protect your castle, and your information.

Thank you for joining us for this Financial Fitness Minute.

A note about third-party links – By selecting certain links on this page, you will leave DCU's web site and enter a web site hosted by an organization separate from DCU. We encourage you to read and evaluate the privacy policy of any site you visit when you enter the site. While we strive to only link you to companies and organizations that we feel offer useful information, DCU does not directly support nor guarantee claims made by these sites.