What can you do with a tax refund?

If you’re lucky enough to be getting a tax refund this year, careful planning could help you do a lot.

• Pare debt
  Make a credit card payment, more than the usual monthly payment.
  Pay off part of a student loan.
• Pay bills
  Pay part of your property tax bill.
  Ante up for school supplies and wardrobes.
• Boost savings
  Contribute now to your IRA (if you have earned income); don’t wait until the tax-filing deadline.
  Add it to your sunny day fund for future recreation.
• Have fun
  Enjoy a long weekend at a restful site.
  Enroll in a class to learn a skill you’ve been curious about.
• Do good
  Improve your home with fresh paint in a neglected room.
  Donate to a good cause; get a receipt so you can take the charitable deduction if you itemize deductions on your tax return.
  
  

Save the Date for Annual Meeting

Cut Holiday Expenses, No Scrooge Required

There are plenty of ways to have fun, create lasting memories, and avoid the "Bah, humbug!" approach to the coming holiday season, despite the economic downturn and strain on family budgets.

Consider making a few changes this year that are kinder to your budget and that free up valuable time for family and fun:

* Create coupons. If you ask Grandma whether she'd like another expensive sweater or a coupon from a grandchild to make cookies together, guess which one she'd likely choose! Handmade coupons for adult children or grandchildren to give elderly relatives are welcome treats. Examples: running errands, spending an afternoon in the park, cooking a meal together, shoveling the sidewalk, raking leaves, washing the car, or planting flowers.

* Give homemade items. The time you spend making the item shows how much you really care about the receiver. If Grandpa has an old, unused pitchfork in the barn, use a staple gun to attach greenery, use hot-glue to attach pine cones and decorations, then wrap a string of holiday lights around it. He'll make sure that decoration gets used every year! If you know how to knit, make some handmade potholders for the special cooks in your family and in your neighborhood. If your forte is baking, give holiday tins of homemade cookies to friends, the letter carrier, your hairdresser, and newspaper deliverer.

* Use natural decorations. Gather leaves, pine cones, low-hanging branches from pine trees, or other "gifts" from nature and use them in centerpieces and mantel decorations. Here's a tip for pine cones: Place them in a single layer on a cookie sheet and bake them for 15 to 20 minutes at 200 degrees to rid them of bugs or spiders.

* Wrap it creatively. Use the Sunday comics as a free substitute for expensive wrapping paper. Purchase a roll of inexpensive meatpacking paper from the local butcher and have young children draw and color on the paper, which can be cut to fit any size package. Or, make your own gift wrap--there are countless resources and ideas on the Internet to get you started.

* Make it memorable. Rather than trying to make--and pay for--the entire meal and feed the whole family, organize a potluck that allows everyone to contribute and show off their culinary talents, and share recipes. Ask guests to string popcorn and cranberry chains as decoration for the holiday tree. Bring out photos of past holiday gatherings--that's sure to generate a lot of stories and laughter.

Finally, ask everyone to share their favorite holiday memories. Chances are, the majority of responses will be ones that don't involve spending any money at all. And that's truly what the holidays are meant to be--engaging in special traditions and creating lasting memories. No Scrooge required.

Deck the Halls without much money

Let's face it, Christmas is right around the corner. Here are some great money management tips for the holidays.

Some people may feel guilty about not spending as much time with their loved ones or friends and will compensate with a special gift. Others may feel they need to ‘keep up with the Joneses' to match what friends, families, neighbors, and even co-workers are doing. And some simply get swept away in the glitter of the season--overspending before they realize what they're doing. For all of these reasons, setting a budget and making a list--and matching the two--can be really effective at reining in the ‘over' part of holiday overspending.

Smart spending

Changing the gift-giving dynamic within your own family is one route to holiday savings, but what about the other people on your list? Brad Stroh, founder and co-CEO of Freedom Financial Network, LLC, San Mateo, Calif., and bills.com recommends:

* Crunch the numbers. Create a holiday budget listing all expenses, including small gifts and "extras," such as cards, wrapping paper, decorations, and holiday clothing purchases.

* Avoid money matching. Most people feel the stress of the dollar-for-dollar matching competition, so talk with the people on your shopping list about setting limits. Fill in gaps with homemade presents or offer help to the recipient with chores or services.

* Start early. Avoid the last-minute rush so that you'll have more time to comparison shop. If you're in a rush to get out of a crowded mall or store, you're more likely to spend impulsively as a way of escape.

* Get creative. Set up a gift exchange among friends and family. For children with big-ticket items, consider pooling resources with other family members rather than splurging yourself into debt.

* Be a quitter. When you hit your budget limit, stop! Leave credit cards at home and put each person's budget in an envelope, in cash. When it's gone, it's gone--and you're done.

* Spend within your means. If you run up a big bill to celebrate the holidays and then pay it off at a leisurely pace, next year you may experience financial heartburn--the sour sensation that your holiday overindulgence is taking way too long to leave your budgetary system.

Holiday traditions beyond gifts

The special feeling about the holidays doesn't always come wrapped in a box and tied with a bow. New York executive coach Alisa Cohn works to help clients live, work, and spend/save in alignment with their values. Here are a couple of ideas:

* Mark the holiday through traditions rather than gifts. Pool efforts with other family members or friends to help out another family in need. Contact churches and other organizations in your community and ask for recommendations. You can unite anonymously to buy food, gifts, and holiday goodies for the family in need.

* Make the holidays special. Talk with your friends and family about what they like and dislike about the holidays. From those discussions, build a plan that decreases the attention on gift giving.

And to avoid going in the red next year, contact us for help in setting up a holiday account to budget for holiday shopping.

Steps to Financial Stability in 2010: Understanding your FICO scores

Before the credit crisis and subprime meltdown hit, you probably could get the best interest rates on a mortgage or loan with a credit score of 720 or more. But times have changed. The "new reality" of today's economy says a 760 credit score is the new 720.


Your credit score is one of the most important numbers in your financial life. A credit score is a three-digit number that shows credit card companies, auto lenders, mortgage lenders, and even some landlords and prospective employers a picture of your creditworthiness. The higher the credit score the better.

Now there's a new "high," and for some consumers, it may be tough to make the grade.

A FICO credit score--used by many lenders--ranges from 300 to 850. If you have a favorable debt-to-income ratio and a score between 650 and 850, it's likely you'll qualify for a home loan with no problems. But the best rates are now reserved for those near the top tier of that range.

To improve your credit score, use common sense and start with three simple changes:

* Pay on time. About one-third of your score is based on whether you make on-time payments to creditors. Late payments will come back to haunt you and can cost you tens of thousands of dollars in higher interest payments over the life of a mortgage. Regardless of the amount, one late payment will take 24 months to restore your credit.

* Pay down balances. Know your total line of credit, which is the top limit or ceiling amount you can charge without paying over-the-limit charges. Try not to charge more than 25% of that total line of credit. By keeping your utilization rate below 25%, you'll ensure that lenders likely will see you as a good credit risk.

* Don't cut up old cards. About 15% of your credit score is based on length of your credit history. Canceling those cards cuts short your history of responsible credit usage, and it also increases your utilization rate when your total credit line drops.

A few other actions that will hurt your credit score include:

• Maxing out your credit card
• Shopping for credit excessively
• Opening up numerous trades in a short time period
• Having more revolving loans in relation to installment loans
• Borrowing from finance companies.

You can get a free credit report at http://www.annualcreditreport.com/.  Any website that ask you for payment information will charge you for a credit report, so be careful.

Steps to Financial Security: Prepare to pay for your children’s education

Let’s face it, college is expensive and I don’t see it getting any cheaper. How do we possibly prepare ourselves for such a large expense? Coverdell Education Savings Accounts are a great option.

A Coverdell ESA is an education IRA.  Unlike state 529 plans, Coverdell ESAs can be used to pay for qualified elementary and secondary education expenses.  Earnings grown on a tax deferred basis, and distributions are tax-free if the money is used to pay for qualified education expenses. 

For example, if you make nondeductible contributions of $2,000 every year for 16 years your account will grow to $54,426 with a 6% annual return. 

Important facts about the Coverdell ESA:

• The funds must be used before the child reaches the age 30.
• Qualified education expenses include: tuition, fees, books and equipment required for enrollment or attendance at nearly any post-secondary education institution (public, nonprofit or proprietary)  Certain room and board expenses also may qualify.  Qualified expenses also include these same expenses for elementary and secondary education, and the purchase of computer technology or equipment that is used by the beneficiary and the beneficiary's family while the beneficiary is in school.
• If the child decides not to go to college or leaves school before all the funds are withdrawn, you can roll unused funds into the Coverdell ESA of another child in your family. 
• The tax treatment of Coverdell ESAs is much the same as that of 529 plans with a few important differences. Like a 529 plan, Coverdell ESAs allow money to grow tax deferred and proceeds to be withdrawn tax free for qualified education expenses at a qualified institution. However the definition of qualified expenses in an ESA includes primary and secondary school, not just college and university.

You see that Coverdell ESAs are a great option because they can grow tax-free and they can be used for any type of educational institution. It's never to early to start saving, talk to a representative about opening your child a Coverdell Savings Account today.

A special coupon for you

First Abilene FCU is excited to announce a new exclusive membership offer.  Members will receive a $10 Gift Card when they sign up for a new Sam's Club Membership or renew an existing membership by April 19, 2010.  Click here to print the coupon and for more information.

What a great way to help you budget by shopping in bulk.