Preparing for Natural Disasters: Financial Tips

November 13, 2019

Natural disasters happen – they can strike without warning and have no mercy. Natural disasters such as hurricanes, floods, earthquakes, or tornadoes can force people to evacuate their homes, and even worse, they can destroy homes, property, and even take lives.

When it comes to natural disasters, most people don’t think about how they can affect your ability to conduct essential financial transactions. In addition to planning to gather your basic needs such as food, shelter, and water, you should also be prepared to deal with the financial challenges associated with natural disasters, such as paying for supplies and temporary housing if necessary. Here are some tips that will help you prepare.

What to Have Ready

Consider keeping the following documents, bank products, and other items in a secure place and readily available in an emergency:

All forms of identification: These primarily include driver’s licenses (or state identification cards for nondrivers), insurance cards, Social Security cards, passports, and birth certificates.
Your checkbook: Make sure to have enough blank checks and deposit slips to last at least a month.
ATM cards, debit cards (for use at ATMs and merchants), and credit cards: Don’t assume that merchants and ATMs in areas affected by a disaster will immediately be functioning as usual. Have other options available for getting cash and making payments.
Cash: This is self-explanatory.
Phone numbers for financial services: These include local and toll-free numbers for your bank, credit card companies, brokerage firms (for stocks, bonds, or mutual fund investments) and insurance companies.
Important account numbers: These include bank and brokerage account numbers, credit card numbers, and homeowner’s or renter’s insurance policy numbers. You may want to copy the front and back of your credit cards (and keep them in a safe place).
The key to your safe deposit box.

What to Keep and Where to Keep It

After you’ve gathered your most important financial items and documents, protect them as well as you can while also ensuring you have access to them in an emergency. Here’s a reasonable strategy for many people:

Make backup copies of important documents. Make an electronic image of your documents so you can more easily store the information. Store your backups some distance from your home in case the disaster impacts your entire community.
Give a copy of your documents to loved ones. Alternatively, let them know where to find the documents in an emergency.
Determine what to keep at home and what to store in a safe deposit box at your bank. A safe deposit box is best for protecting certain papers that could be difficult or impossible to replace, but not anything you might need to access quickly. What should you put in a safe deposit box? Examples include a birth certificate and originals of important contracts. What’s better left safely at home, preferably in a durable, fireproof safe? Your passport and medical care directives because you might need these on short notice. Consult your attorney before putting an original will in a safe deposit box. Some states don’t permit immediate access to a safe deposit box after a person dies, so there may be complications accessing a will stored in a safe deposit box.
Seal important documents. Use airtight and waterproof plastic bags or containers to prevent water damage.
Prepare one or more emergency evacuation bags. Pack essential financial items and documents (e.g., cash, checks, copies of your credit cards and identification cards, a key to your safe deposit box, and contact information for your financial services providers). Make sure each evacuation bag is waterproof and easy to carry and kept in a secure place in your home. Periodically update the contents of the bag. It will not do you any good if the checks in your bag are for a closed account.

What Else to Consider

Sign up for direct deposit. Having your paycheck and other payments transmitted directly into your account will give you better access to those funds by check or ATM, and you won’t have to deliver the deposit to the bank or rely on mail service, which could be delayed. Note: There could be delays in the processing of direct deposits in a disaster situation, but the problem is usually fixed within a reasonable timeframe.
Arrange for automatic bill payments from your bank account. This service enables you to make scheduled payments, (e.g., for your phone bill, insurance premiums and loan payments, and avoids late charges or service interruptions).
Sign up for online banking. This also makes it possible to conduct your banking business without writing checks.
Review your insurance coverage. Make sure you have enough insurance, including: flood, earthquake, and personal property coverage, as applicable, to cover the cost to replace or repair your home, car, and other valuable property.

To find out more about being financially prepared for disasters visit fdic.gov/consumers/consumer/news/index.htm and type in disaster preparedness in the search box.

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

Create a Budget

If you don’t already have a budget, create one! This will allow you to see if you can afford your current student loan payment. It will also show you areas where you’re spending unnecessarily. If you find there just isn’t enough income to cover all your necessary expenses, then you can begin working on different ways to reduce your student loan payment.

Research Different Payment Plans

If your federal student loan payment is overwhelming, consider switching to a different payment plan. When you initially begin repayment, your loans are automatically put on the standard repayment plan. On this plan, your payments are based on a ten-year repayment term. A Direct Consolidation Loan can help you change your payment plan to help make your payment more affordable. It can also help consolidate multiple federal loans into one loan. (Note: Consolidating your federal loans is different from student loan refinancing, discussed below.) This will help you qualify for certain longer repayment plans, resulting in a lower monthly payment. One of the drawbacks of extending your payment term is you will end up paying more in interest costs over time.

Income-Driven Student Loan Repayment

Certain loans are eligible for income-driven repayment plans. They can help make your payments more affordable and are based on your income and family size.

Graduated Student Loan Repayment

If an income-driven repayment plan does not work for you, you can change to a graduated repayment plan. Your payment will begin low and increase over time for a ten-year term.

Extended Student Loan Repayment

Another option is an extended repayment plan. To qualify, you must have certain loans over at least $30,000. Your payment may be fixed or may increase over time for a 25-year term.

Look Into Refinancing

If you have overwhelming private or federal student loan payments, consider student loan refinancing. Refinancing may lower your interest rate and reduce your monthly payment. This is a good option even if your current payment fits your budget. Refinancing can help lower your monthly payment, and can also save you thousands of dollars in interest over the life of the loan. Refinancing means obtaining a private loan to pay off your existing student loan or multiple loans. Student loan refinancing differs from consolidation, which is only for federal student loans and may not necessarily reduce your interest rate. You can refinance private or federal loans, or both, and can also change your student loan repayment term to better fit your needs. Here is an example of how refinancing can save you money: If you have $65,000 of student loans with a 6% interest rate and have 10 years remaining on your loans, you will pay approximately $722 per month. If you refinance and qualify for a lower interest of 3.61%, your monthly payment would be reduced to approximately $646 per month. This equals savings $76 per month in savings. You will also save more than $9,000 in interest over the life of the loan. To see how much you could save, try ELFI’s Student Loan Refinance Calculator.*

Increase Your Income

Of course, increasing your income is easier said than done. If your student loans payments are becoming overwhelming, however, it may be a necessary step. Increasing your income through overtime hours or a side hustle can make your payments more manageable. A side hustle can be as easy as babysitting or dog walking, or more involved like starting a side business based on a passion. If you haven’t begun repayment on your loans, but know you will face a significant loan payment after graduation, consider these steps:

Build a Budget Early

Start a budget before repayment begins that includes your future student loan payment. This will allow you to see if you will be able to comfortably afford your payment. It will also help you build an emergency fund and a strong financial foundation.

Seek Employer Student Loan Benefits

Look for an employer that offers student loan assistance. The number of companies that are offering student loan benefits is increasing, although the benefit is still rare. Some offer monthly benefits that can help you pay your loans off faster. Others offer a yearly benefit amount for a certain number of years. Either way, extra money from an employer to help pay loans will help you reduce your loan amount faster.

Work Toward Public Service Loan Forgiveness

Apply for employment that may qualify for forgiveness. If you have federal loans, certain employment can qualify for forgiveness under the Public Service Loan Forgiveness program. Certain loans and types of employment are required so be sure to pay close attention to the requirements.

Bottom Line

If you have an overwhelming student loan payment, explore your options to reduce your payment while furthering your debt-free journey.

*Subject to credit approval. Terms and conditions apply. Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

2020-10-09

How to Start Investing: A Millennial’s Guide

One of the best things you can do for your finances is start investing. Over time, investing is one of the likeliest ways you’ll build enough wealth to reach your financial goals — and even achieve financial independence. While investing can seem like a daunting task, the good news is that it’s easier than ever to get started. Here’s what you need to know about how to start investing.

Decide how much you can invest

Figure out how much you can invest each month. The key to long-term investing success is consistency. Even if it’s a small amount, you can start investing. Look at your income and expenses. Review which items can be reduced to create some room for investing. Even if you can only invest a few dollars per week, it will help you get started.

Paying down debt vs. investing

One of the big issues facing millennials is whether to pay down debt or invest. In the end, it depends on your preference, but having debt doesn’t mean you can’t invest. For example, if you have student loans, you might put 70% of your available money toward paying down those student loans and the other 30% toward investing. However, if you have high-interest debt like credit cards, it might make sense to put 90% toward debt reduction and 10% toward investing. Depending on your situation, you might want to tweak where you put the money, but you don’t have to let being in debt stop you from investing if you want to start building wealth.

Know your goals

Next, decide on your goals. What do you want your money to accomplish on your behalf? What you plan to use your money for, as well as your timeline, can determine how you invest your money.

Short-term goals: If you want to save for a down payment on a house, a vacation or a similar goal in the next one to three years, consider putting your money in high-yield savings vehicles, or, depending on your situation and risk tolerance, bond investments. Even for short-term goals, in some instances, a mix of stocks and bonds can work.
Long-term goals: For longer-term goals like saving for a child’s college education or your retirement, you might decide to invest more heavily in stock funds, real estate investment trusts (REITs) and other higher-yielding assets.

Your risk tolerance

As you learn to start investing, make sure you understand risk tolerance. You need to be familiar with how much risk you’re prepared to take on. For example, if you’re relatively young, you have more time to withstand and recover from market downturns, economic problems and investing mistakes. You should also consider your emotional risk tolerance. Even if, financially, you can handle the ups and downs of the market, you must be able to handle them emotionally, as well. If you struggle with the idea of using a stock index ETF to meet your short-term goals, then look for something that better suits your needs.

Get help to learn how to start investing

There’s nothing wrong with asking for guidance as you learn a new skill. A number of online investment brokers can offer you professional help as you make your plans. Betterment, Wealthfront and Wealthsimple can help you build a portfolio that matches your risk tolerance and goals. Additionally, it’s possible to get help from human advisors as you create a portfolio.

Basic tips to help you start investing

Start ASAP

It’s all about compounding returns, so the earlier you start, the better off you’ll be in the long run. Many investing experts talk about “time in the market instead of timing the market.” For many investors, starting early and being consistent about investing, while increasing contributions over time, is most likely to result in long-term success. You can start investing at any time. If you haven’t started already, begin now. It’s relatively easy to open an account and begin investing.

It’s fine to start small

You don’t need a lot of money to start investing. In fact, there are a number of apps that allow you to invest using pocket change. Check out our recommendations for the best investing apps here. It’s true that investing a few dollars each week isn’t likely to fully fund your retirement or other financial goals. However, starting small gets you in the habit of investing and growing your wealth. As your finances improve, you can increase how much you invest, growing your contributions to meet your goals. But, for now, start with whatever amount you can. The money you do invest in will grow over time, and you can keep adding to your portfolio in the future.

Consider index mutual funds and ETFs

When trying to decide what to invest in, some people are overwhelmed by the prospect of sifting through individual stocks and trying to pick “winners.” For many beginners, it makes more sense to focus on vehicles that offer “instant diversity.” Index investments offer exposure to hundreds — or even thousands — of securities at once. Rather than trying to choose individual stocks, you can get access to a wide swath of the market. If you decide later that you want to invest differently, you can change your portfolio makeup. For beginners, however, index investments offer a way to start building wealth while you research other choices.

Learn the basics

Finally, make sure you learn the basics. Read about how investing works, how different assets perform and when they might be appropriate. While you can start small with index investments, use that time to learn when (or if) it’s time to try other investing strategies. In the end, no one knows your situation as well as you do. Before investing, carefully consider your own situation and consider requesting help from an investing professional.

2020-10-08

7 Ways to Celebrate Paying off Your Student Loans

At last, you’ve done it! You’ve been diligent in paying off your student loans, and now you’re finally free of them. Being free from student debt means you can start tackling other financial goals. Before you go back to the money-saving grind, however, why not celebrate paying off your student loans? After all, with student loan debt reaching 1.2 trillion in the United States, every time someone pays their debt off it’s worth celebrating. While it may be a little more difficult to celebrate during the ongoing COVID-19 pandemic, you can still have a good time. Here are 7 great ways to celebrate paying off your student loans without acquiring new debt on the way:

Relax

Simple as that, sit on the couch and enjoy being debt-free. Paying down student loan debt is stressful, but you’ve done it. Good job. Imagine we’ve given you a high-five and a pat on the back.

Throw a Digital Party

Include all your friends or family in a video call and enjoy each other’s company. Maybe even schedule several separate video calls so you can focus on celebrating with each group.

Treat Yourself

It’s time to treat yourself to something nice. Choose an item or experience that is meaningful to you: a new outfit, a new pair of shoes, go out to dinner, whatever makes you happy. Take some time to enjoy whatever you’ve gotten. You’ve certainly worked for it. Just make sure it’s not something that’ll put you into credit card debt!

Treat Someone Else

What better way to celebrate your paying off your student loans than by including those who helped make you successful? Take your parents out to a nice dinner or have a good time with some close friends. Make sure they know how much you appreciated their support throughout your student loan repayment journey, especially if they’ve helped pay along the way. Another great option is charitable giving. You can celebrate paying off your student loans by giving to a worthy cause. Whether as a one-time gift or a monthly series of donations, your money will go toward something that you feel is important. Not only will you feel great for having given to something worthwhile, but you may also be able to deduct your charitable donation from your taxes.

Plan a Trip

Even if you’re planning for the future, now is the perfect time to consider where you’d like to travel. Take a look at some spectacular destinations. Decide where to go. Start saving now, and when the departure date arrives, you’ll be ready to go. If you’re already saving toward other financial goals and want to be careful of your budget, consider a road trip. There’s still plenty of time for a cross-country odyssey before winter, and the countryside will look particularly beautiful in the fall. If you’re looking for more vacation ideas, here are a couple of vacation ideas that won't break the bank.

Plan Your Next Financial Conquest

For those who are goal-oriented, now is the perfect time to decide what financial goal you’ll tackle next. Is it time to get a new car? Eliminate the rest of your credit card debt? Maybe it’s even time to buy a house. Ultimately it’s up to you to decide, but you should set up a plan to tackle that next big financial goal in a timely and efficient manner. The good news is, since you’ve already bested your student loan debt, you’re not only experienced but also prepared to face whatever comes next.

Save Your Student Loan Payment

They say the best time to start saving was yesterday. The second-best time is today. Celebrate paying off your student loans by investing in your future financial health. Put the amount of your student loan payment in a savings account each month or consider investing it. Your future self will thank you. You’ve already proven you can live without it, so why stop now? But as always, make sure to do your research before you launch any type of investing strategy! Congratulations on eliminating the last of your student loan debt. You should be incredibly proud of the effort you’ve put into seeing your payments through. Before you start the next step in your financial journey, take some time for yourself. Enjoy that feeling of success and use it to push yourself toward your next goal. Now is the time to celebrate! If you haven’t yet paid off your student loans, you may want to consider student loan refinancing. Take a look at what student loan refinancing could do for you here.