Five Ways to Tidy Up Your Personal Finances This Spring

Five Ways to Tidy Up Your Personal Finances This Spring
When it comes to Spring cleaning, it’s time to start thinking outside the box. This spirit of renewal applies to more than just your closet! Spring is an ideal time to dust off your finances and tidy up your budget. Maybe your tax returns have motivated you to increase your emergency savings for the year ahead, or perhaps you need a refresher on the New Year’s resolution you made to improve your credit score? Whatever your situation, now is the perfect time to get your financial house in order.

When it comes to Spring cleaning, it’s time to start thinking outside the box. This spirit of renewal applies to more than just your closet! Spring is an ideal time to dust off your finances and tidy up your budget. Maybe your tax returns have motivated you to increase your emergency savings for the year ahead, or perhaps you need a refresher on the New Year’s resolution you made to improve your credit score? Whatever your situation, now is the perfect time to get your financial house in order.

Image of woman and child peeking under a bed while cleaning

These four strategies can help you get your personal finances in check and maintain a strong foundation for the rest of the year.

  1. Clean Up Your Credit

Your credit score can have one of the biggest impacts on your financial life – so don’t let it collect dust! Did you know you can check your credit score for free with each of the three credit bureaus? Staggering your requests every four months allows you to keep a regular eye on your credit report. Once you know your score, you can set goals to continue to improve your responsible credit habits. Learn how to keep your credit score healthy with a quick lesson on credit scores & reports.

  1. Pay Your Bills on Time

In today’s digital age, there are various mobile payment options available to help you to get ahead of your bills. Set up online banking and use automatic bill pay to save yourself the hassle of mailing checks, and protect against the costs of missing a deadline. Additionally, many retailers, banks, and credit unions allow you to pay your bills in real time via mobile payment technology. Take our two minute course to understand how to use mobile payments responsibly.

  1. Protect Your Accounts

With the prevalence of digital transactions, it’s important to protect yourself from consumer fraud and identity theft. In fact, nearly 3 million consumers reported fraud in 2017 alone. Regularly checking your credit score (see #1) for errors and unauthorized transactions is one simple strategy to protect your identity. Make it a priority to refresh the tactics you use to keep your identity safe this spring.

  1. Save for a Rainy Day

Rainy day funds protect against more than the weather. Did you know that 78% of Americans do not have enough savings to cover unforeseen expenses? Saving doesn’t have to be hard, although it does take discipline. Small adjustments in your daily routine can make a big difference in your ability to cover emergency costs or meet a payment due date. In addition, many savings vehicles will pay you interest on the money you have deposited, which will help your money grow over time. Commit to creating new savings habits to help yourself be better prepared.

No matter where you start your financial Spring cleaning, incorporating these tips and tactics into your routine will give your personal finances a fresh start. Check out our full suite of personal finance education resources on F&M Bank’s Community Classroom.

 

Bank of Knowledge: Students Learn Ins, Outs of Industry

Eleven high school seniors spent about four hours Thursday learning about banking and didn’t see a single bit of currency.

Aaron Green, VP and Commercial Relationship Manager, talks to students from Broadway and Stonewall Jackson high schools during bank day in Timberville.

TIMBERVILLE — Eleven high school seniors spent about four hours Thursday learning about banking and didn’t see a single bit of currency.

Farmers & Merchants Bank gave the students a behind-the-scenes look at the industry as part of the Virginia Bankers Association’s Bank Day program. Each has an opportunity to submit an essay that could earn them scholarships worth up to $5,000.

Bank Day officially is Tuesday, but F&M held its Timberville-area session early because it will host eastern Rockingham County students that day at its Crossroads branch. First Bank & Trust also will host students Tuesday at its Bridgewater branch.

The students got around the company’s headquarters in Timberville, touring the customer support area, sitting in on part of an audit committee meeting with the bank’s external auditors, and speaking with leaders in the human resources, marketing and lending departments. About 60 people work in the office, which no longer contains a bank branch.

Melody Emswiler, the company’s director of human resources, gave the students a rundown of the types of positions available at F&M, covering everything from the retail branch staffers who consumers see to the customer support, loan processing and credit analyst positions that they don’t.

“There’s just a lot of different opportunities within banking that a lot of times people don’t think about because you don’t always know that they’re there,” said Emswiler, a vice president with the company. “As a consumer, you don’t think about that.”

Top Students

To attend Bank Day, the students each needed to have a 3.0 GPA and apply to participate. The group — eight from Broadway High and three from Stonewall Jackson in Mount Jackson — is the largest F&M has had in the five years it has offered the program, with eight students signed up for Tuesday’s event.

Aaron Green, a commercial relationship manager, led the students throughout the day. He persuaded F&M to start the program as a form of outreach to local high school students with a goal of making them aware of job opportunities available back home after they finish college.

Bank Day is supposed to be a shadowing exercise, but Green thinks his method provides a more well-rounded view of the professional options.

“They get much more exposure to all of the areas of the bank, not just watching me do some mundane credit analysis for loans,” said Green, a vice president.

Green and other F&M staffers covered all that a bank does. Aside from the consumer checking and savings options that are best known, banks make consumer and commercial loans, provide financial advice and give back to the community through donations, sponsorships and other measures.

“Banks loan money to businesses to create economic growth and to provide jobs in our communities, and that’s really important,” Green told the students. “Because if there’s no jobs, why in the world would you stay here?”

Tom Campbell, a commercial relationship manager, said he entered banking 12 years ago after a 20-year career in the poultry industry. Campbell was told community connections were more important than industry knowledge because relationships are the key to banking.

“With our bank and a community bank,” said Campbell, an assistant vice president, “it’s more about that relationship that hopefully spans generations.”

Surprises Uncovered

The students also learned that the bank is working to reach young consumers who aren’t connected with traditional media and how F&M must take significant measures to protect its customers’ finances from fraud.

Thieves use everything from card skimmers at gas pumps to identity theft to gain access to accounts.

“We deal with debit-card fraud almost daily,” Green said.

Fraud protection is an aspect of the industry that struck Catherine Bailey, 18, because she hadn’t thought about it.

“This bank is on top of keeping fraud very minimal,” the Stonewall student said, “and they’re working 24/7.”

She added that she was intrigued by the rules banks must follow and how bankers work within the framework of those restrictions to help clients.

Broadway senior Sean Ewell, 17, said he once wanted to be a banker. He signed up for Bank Day to get a closer look at the industry and was surprised at how banks give back to the community and provide so many different occupational paths.

“I didn’t expect it to have that many [job] opportunities,” he said. “I thought there would be the tellers and the executives and not everyone else, the marketing people. I didn’t realize it was so massive an organization.”

By Vic Bradshaw, Daily News-Record
Original Story: http://www.dnronline.com/news/local/bank-of-knowledge/article_a067cd0c-28ca-11e8-bd8d-1bc1832eb040.html

 

F&M President Meets with VA Senator Mark Warner

U.S. Senator Mark Warner recently met with small business owners and community bankers about how his bipartisan bill is working to grow business and the local economy.

Wednesday, March 7, 2018

F&M President Mark Hanna met last week with U.S. Senator Mark Warner regarding the Senate Bill that may bring regulatory relief to small community banks. The Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155) ensures that small lenders can provide mortgage and other credit to hardworking Americans, helping them and their families grow and start businesses.

Thanks to F&M President Mark Hanna for representing us in the Shenandoah Valley! See Mr. Hanna in the video below (4:02-4:14): “…community banks are the backbone of our country, and many of our rural markets… I think we serve a vital role to the growth of the economy.”

Video courtesy of Senator Warner’s office

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How Tax Reform Will Impact The Shenandoah Valley Housing Market

In this article, we cover some of the provisions of the new tax legislation according to their potentially positive or negative impacts on the housing market, followed by a discussion of what would happen to real estate in a high-inflation environment, and why that’s important.

Taxes are one of the most influential factors on the price of a house. Local property tax rates,  the portion of a buyer’s paycheck that goes to Uncle Sam, and various other taxes influence the “amount of house” one can afford. Since most people with mortgages have their loan payment, insurance, and property taxes bundled together, high property taxes can greatly diminish the size of the mortgage loan a buyer can qualify for.

For example, a $175,000 mortgage (30 years, 4 percent interest) carries a payment of about $835 before insurance and taxes, with every $20,958 of the loan equivalent to $100/month of payments. However, if the property tax is $6,000 a year, or $500 a month, the buyer would be paying an amount of tax that, if it didn’t exist, could qualify them for almost an additional $105,000 of principal. Of course, all houses have some level of property tax. The good news for the Shenandoah Valley real estate market is that property taxes are generally lower than in other states, particularly higher-tax states on the coasts.

Now that Congress has passed the Tax Cuts & Jobs Act of 2017, how will the housing market be affected? The bill’s various repercussions include a permanent reduction in corporate tax rates, temporary reductions in individual tax rates, and the elimination of certain deductions in exchange for an increase in the standard deduction. In this article we cover some of the provisions of the new tax legislation according to their potentially positive or negative impacts on the housing market, followed by a discussion of what would happen to real estate in a high-inflation environment, and why that’s important.

Positive Effects

  • Estate tax exclusion: The estate exclusion doubles to $11.2 million. While this could have a beneficial impact on home prices in the top percentile, it’s unlikely to affect the rest of the market.
  • Economic Optimism: Data shows Americans are feeling more optimistic about the economy now than they have in years. This could be good for real estate, as positive feelings about the future tend to inspire big decisions like buying or selling a home.

Negative Effects

  • Standard deduction: The revision of the standard deduction (increased to $12,000 for single filers and $24,000 for families) is expected to mildly dampen demand for home buying because of the decreased incentive to itemize deductions such as mortgage interest and property tax–two reasons a person considers purchasing a home versus renting.
  • Caps on mortgage interest /property tax deductions: The new tax law caps state income and property taxes at $10,000. The maximum amount of a mortgage that can have interest written off on it is $750,000. Implementation of the mortgage interest/property tax write-off caps is expected to disproportionately influence the housing markets in states with both high property taxes and home prices. These would generally be states with large urban areas and more affluent populations. Since median home prices in the Shenandoah Valley are well below the maximum, and property taxes are low, our local real estate markets shouldn’t be hurt by these caps.
  • The end of the “moving expenses” deduction: Now only members of the military can claim moving expenses as a deduction on their taxes. One would think that the effect of this would be minimal, but it’s potentially negative in terms of house prices and value.

Could The New Tax Policy Over-Stimulate The Economy?

Could the new tax policy over-stimulate the economy?

The Tax Cuts & Jobs Act, which is projected to add more than one trillion to the deficit over the next 10 years, is a stimulus of sorts—it uses deficit spending to provide tax cuts that primarily benefit corporations and those on the upper rungs of the income ladder. Currently, with unemployment at 4.1% as of January 2018 and record highs in the stock market (along with very high house prices)—not to mention an 0.5% inflation reading in the Consumer Price Index for January—there is a possibility that the tax policy could lead to several rate hikes.

The current stated intention of the Federal Reserve is to raise interest rates three times this year. The threat of inflation, then, is real, and mortgage rates could spike—the current 4% to 4.125% that’s typical of a 30-year fixed loan is historically low to begin with. Home prices would likely decline by a good amount if inflation was accompanied by a lack of concurrent elevations in wages. If annual inflation as measured by the CPI is 6%, but wages only go up an average of 3%, purchasing power would be reduced at the same time that interest rate hikes are causing home prices to go up.

To put this into perspective, let’s return to our $175,000 mortgage, 30-year fixed at 4%, with a payment of about $835. This payment goes up to around $939 if the interest rate is 5%, and up to about $1044 if it goes up to 6%. With stagnant wages (what was called “stagflation” in the 1970s), this would reduce the number of potential buyers of houses at given prices, theoretically causing prices to drop. Alan Greenspan, the former chair of the Federal Reserve, has posed the argument in favor of the case for potential stagflation here.

The Good News About The Shenandoah Valley Real Estate Market

Negative impacts aside, there’s plenty of bright side to look on from a financial perspective of home shopping in the Shenandoah Valley. Median home prices and the number of homes purchased in major markets such as Harrisonburg have increased over the past few years as the area becomes more attractive to different demographics such as families and retirees. Furthermore, most of the tax bill’s housing-related propositions are for tax bills that are far greater than the typical tab for a single-family property in the Shenandoah Valley’s most popular towns, and a $750,000 mortgage cap for interest write-offs is far above the median home price of a place such as Harrisonburg, even with the price increases (which have placed Harrisonburg’s median at about $200,000).

Overall, home buyers are just as likely to weigh lifestyle preferences such as proximity to work and family as abstract economic conditions. Luckily, The Shenandoah Valley is a great place to buy a home for both financial and emotional reasons. Strong schools, a good job base, university presence, and outdoor recreational options are all qualities of our region that most home buyers have on their wish list.

 

With interest rates still relatively low, now is as good a time as ever to think about buying your first or next home. Contact F&M Bank’s mortgage team for expert advice and help with getting the right loan to buy the perfect home for you and your family.

We do not provide tax advice. Please contact your tax advisor.