Class of 2017: A Student Loan Repayment Checklist

The six-month grace period on your student loans after graduation will go faster than you think. You’ll no sooner let out a sigh of postgrad relief when the first bill will arrive. Prepare for the day with this student loan checklist.

Apply for income-driven repayment

Income-driven repayment can make your monthly student loan bill more affordable. If you qualify, it’ll cap your payments at a percentage of your income and extend your loan term to 20 or 25 years. And if you’re still on the postgrad job hunt, you may not have to pay anything right away.

In addition to lower payments, any remaining balance at the end of your extended loan term will be discharged — but it will also be taxed as income.

If you’re under an income-driven repayment plan and qualify for Public Service Loan Forgiveness, you can save even more money: After you make qualified payments for 10 years, the remaining balance on your loans will be discharged tax-free.

You’ll need to reapply each year to stay on your plan, so set a reminder one month beforehand to make sure you don’t miss the deadline.

Sign up for auto-pay

Many student loan servicers will knock 0.25 percentage point off your interest rate if you sign up for auto-pay, and it’ll keep you from missing payments. Plus, if you set it to withdraw more than your monthly payment from your bank account, you can pay off your debt faster. Just check that those extra dollars are going toward your principal balance to maximize savings.

Look into refinancing

You can refinance your student loans with another lender to get a lower interest rate. It’s usually best to refinance only private loans so you don’t lose any federal borrower protections, like income-driven repayment or forgiveness programs. To qualify, you’ll need to have a credit score above 650, a steady source of income and a low debt-to-income ratio.

If your credit score is on the low side, focus on building it by keeping credit card balances at or below 30% of your line of credit and paying your bills on time.

Devon Delfino is a staff writer at NerdWallet, a personal finance website.


Bad Financial Habits You Need to Break Right Now

Human beings are habit-creating machines, craving any mental or physical shortcut that lets us focus on higher-level thoughts, such as what’s for lunch or developing theories about Netflix dramas.
Bad money habits are more difficult to steer out of than other automated behaviors like driving a car. Why? Financial peace of mind is a much more subtle reward than the satisfaction of navigating a half-ton piece of metal through city streets without death or injury.
Still, every person who is good at money learned good habits, which means you can, too. “What we know from lab studies is that it’s never too late to break a habit. Habits are malleable throughout your entire life,” Charles Duhigg, author of “The Power of Habit,” told NPR.
Here are seven financial habits you should break before you go broke.

1. Stop spending more than you earn

Who do you think you are, the U.S. government? America’s fiscal deficit is projected to be $559 billion in the fiscal year 2017, according to the Congressional Budget Office.
How is your own personal deficit? About one in five Americans spend more than they earn and 38% break even, research from the National Financial Capability Study shows. Your goal must be to join the 40% of Americans who spend less than they earn.

2. Stop ignoring your bills

Here’s how not to handle your obligations: When a collection agency calls, you pay the bill. This kind of financial firefighting only guarantees you’ll veer from crisis to crisis as your credit score burns.
Payment history carries huge weight on your financial future; more than one-third of your credit score is judged by your ability to pay your power bill, car insurance, and credit cards on time. If you can’t, work out a payment plan with your creditor before it goes to collections.

3. Stop using your credit cards like free money

Credit cards are a weapon in your financial arsenal. Like all armaments, they can be used in strategic defense or to shoot yourself in the foot. Too often, it’s the latter — the average U.S. household with credit card debt has $16,748 of it.
That plastic in your pocketbook is the greatest enabler of bad money habits, allowing you to spend on a whim and forsake all budget plans. Sticking to a budget should be your most faithful money habit.

4. Stop thinking you’re not smart enough

Today, consumers must take control of their own financial lives, whether its understanding health insurance or guiding their own 401(k) plans to invest for retirement. Even so, during the rollout of the Affordable Care Act, many consumers struggled to understand basic health insurance terms such as “deductible,” a survey by the Kaiser Foundation found.
Learn the lexicon of finance to manage your money better.
“I used to catch myself saying, ‘Investing is hard. I just don’t understand it.’ This gave me permission to avoid learning how to invest,” wrote Ann Marie Houghtailing, author of “How I Created a Dollar Out of Thin Air.” “Now I say, ‘Investing is a skill. You just have to start small.’”

5. Stop making it hard to save

Old habits die hard, and one of the oldest habits is using checks to pay bills or make savings deposits. “Personal finance habits take longer to change than the way you might switch from one smartphone to another. That’s because money is so important to us,” Fred Davis, a professor of Information Systems at the University of Arkansas, told Marketplace.
Set up automatic transfers for bill payments. Also automatically have 10% or more of your paycheck sent directly to your savings account. These two steps will go a long way toward building good money habits and credit scores with little effort.

6. Stop complaining about your paycheck

Whatever energy you’re spending complaining about the size of your paycheck takes energy away from finding ways to improve your bottom line. Think you’re being underpaid? Negotiate a raise or at least talk with your boss to understand what’s needed to see a bump in pay. If you’re valued, your supervisor will see the implicit threat that you may leave for a higher-paying job. Start looking for that more lucrative gig while you’re at it.
In the meantime, investigate ways to build other streams of income and seek ways to improve your skills.

7. Stop thinking more cash brings happiness

OK, money does bring happiness, but only to a point. Purchasing experiences and giving to charity have a much longer shelf life for our well-being, research suggests.

Replace bad habits with good ones
Breaking your go-to financial routines will take time and effort. Subbing in habits that improve your bottom line — paying bills on time, using technology and increasing your income and savings — will be worth the work in the long run.

The article 7 Bad Financial Habits You Need to Break Right Now originally appeared on NerdWallet


Meet our Homeownership Expert

Yulanda Munford
Citizens Trust Bank Mortgage Division
Operations Manager  – NMLS#785434

Through my experiences, there are 10 Reasons Why Homeownership Remains Important –

1.  Home ownership is still considered to be a financial investment.

2. Home ownership provides financial benefits such as equity and an improved credit rating.

3.  Home ownership is perceived as being wiser than renting.

4. Homeownership is cheaper than renting in many markets.

5. Home ownership provides financial security and stability.

6. The majority of Americans believe in home ownership as a positive step for well-being.

7. Renting is not as desirable as owning a home.

8. Home ownership is a better family situation.

9. Home ownership allows more personal freedoms.

10. Pride of ownership.

As an institution of excellence, we pride ourselves in offering a full range of quality products and services, including a variety of low down payment mortgage options. Contact Us Today – we can help you realize your dreams – Start the Process.

Follow the #MyMoneyisPowerful for more financial and money management tips #CTBStrong – Facebook – @CTBank – Twitter and citizenstrustbank – Instagram


 What are the 3 Cs of Credit?
What every conscious, stuff-loving consumer should know. 

Your credit score is a measure of factors that may affect your ability to repay the credit. It’s a complex formula that takes into account how you’ve repaid previous loans, any outstanding debt, and your current salary.

A credit score is dynamic and can change positively or negatively depending on how much debt you accrue and how you manage your bills. The factors that determine your credit score are called The Three C’s of Credit – Character, Capital, and Capacity.

1. Character:

From your credit history, a lender may decide whether you possess the honesty and reliability to repay a debt. Considerations may include:

• Have you used credit before?
• Do you pay your bills on time?
• How long have you lived at your present address?
• How long have you been at your present job?

2. Capital:

A lender will want to know if you have valuable assets such as real estate, personal property, investments, or savings with which to repay the debt if income is unavailable.

3. Capacity:

This refers to your ability to repay the debt. The lender will look to see if you have been working regularly in an occupation that is likely to provide enough income to support your credit use.

• The following questions may help the lender determine this:
• What is your current salary?
• How many other loan payments do you have?
• What are your current living expenses?
• What are your current debts?
• How many dependents do you have?

 


Bouncing Back: Economic Recovery in Minority Banking

The number of black-owned banks in the U.S. continues to decline, at a time when many African-American communities are still coping with the effects of the mortgage crisis and are in need of basic financial services.

Black-run banks took a bigger hit from the housing crisis than the banking industry at large, and they’ve struggled financially in recent years as the communities they serve have suffered higher-than-average job losses and home foreclosure rates.

NerdWallet

 


 

Follow the Light

Building a Strong Credit Score from Scratch

Young adults who grew up during the recent recession tend to be cautious about debt, and data on millennials’ credit scores suggest that some even make it a rule to avoid using credit cards altogether. What they may not realize is that having no credit history can limit your options almost as much as having bad credit. But how do you take that first step?

ctbeacon

Obtaining a starter card and using it responsibly can boost your credit score over time. If need be, you can ask a family member or significant other with well-established credit to co-sign your credit application or add you as an authorized user on his or her card. Many card issuers will report authorized users’ activity to the credit bureaus, but it’s not a guarantee. If you’re unsure, call the issuer and ask.

If you can’t piggyback on someone else’s good credit, you can apply on your own for what’s called a secured credit card. These cards require a cash deposit as collateral, and financial institutions like Citizens Trust Bank offer them for customers interested in building a good credit history. If you establish a record of paying on time, you may be able to qualify for an unsecured credit card, and get your deposit back.

When using your card, following these guidelines should boost your credit score:

Pay on time
Your history of bill payments accounts for more than a third of your FICO score, the most widely used gauge of creditworthiness. A strong credit score is the key to affordable rates for mortgages, auto financing and other loans. If you can’t pay your balance in full each month, at least make the minimum payment to avoid a blemish on your credit history. Using Citizens Trust Bank online bill payment or setting up auto-pay are convenient ways to pay your bills on time.

Watch your balance
Try to keep your balance below 30% of your spending limit at all times. Don’t charge up to the max, because it will not reflect well on your creditworthiness. Your credit utilization — that is, your outstanding balance divided by your credit limit — makes up 30% of your FICO score.

Build up a track record
The longer you keep your accounts open, and in good standing, the better. The length of your credit history accounts for 15% of your score.

Limit new applications
Don’t apply for too many new accounts in a short period of time, or you might appear to credit bureaus to be in dire need of credit. This counts for 10% of your score.

Consider your mix of credit accounts
Credit bureaus consider the different types of credit you use (10% of score). Over time, it’s generally positive to have a diverse mix including credit cards, mortgages and auto loans.

Get in the habit of reviewing your credit reports regularly. You can get one free report a year from each credit bureau — Experian, Equifax and TransUnion — from AnnualCreditReport.com, so you can check for errors and get the satisfaction of watching your credit score rise.

Jeanne Lee, NerdWallet

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