Make 2017 the Year Your Budget Shines

For many, "budget" is a four letter word. If budgeting seems difficult or unappealing to you, it may help to look at it differently. Budgeting doesn't necessarily mean giving up everything you love and converting to a super-frugal lifestyle. Nor, is the goal to shame you into being financially responsible. Budgeting is about awareness. Once you understand where your money is going, you can design a plan that lets your money work for you instead of the other way around.

The easy part
Putting together a budget is actually pretty basic: you look at how much money you're bringing in each month, how much is going out and where it's going. To get started, calculate your monthly income. Be sure that you are using your "net" or "take-home" pay, and not your gross pay. Your take-home pay is your income after taxes and other deductions, like health care, 401(k), etc., have been subtracted from your pay.

The not-so-easy part
Next, add up your ongoing monthly expenses. This is often where you will procrastinate, afraid of what you'll discover when you take a hard look at our spending. But discovery is half the battle. If you don't know what you're spending our money on, you can't make positive changes. Budgeting isn't about guilt, it's about having enough money to pay your bills, enjoy your life, and save for the future without amassing large amounts of debt.

Once you have tallied up your expenses, you should have a pretty clear picture of where you may need to cut back on spending, and if you need to increase your income—maybe by changing jobs or taking on a second job part-time.

Don't forget to plan for a rainy day
One important budget item that is often overlooked is an emergency fund. If your car conked out tomorrow, would you be able to pay for thousands of dollars in repairs or replacing it altogether? Or, if your spouse suddenly came down with a long-term illness and couldn't work for several months, would you still be able to keep up with your bills?

If you have not made an emergency fund a priority, you're not alone. According to a 2016 study by the U.S. Federal Reserve, about 46 percent of Americans said they would not have enough money to cover a $400 emergency expense. Instead, they would have to put it on a credit card and pay it off over time, borrow from friends or family, or simply not cover it at all.

You may say, I have enough money saved to cover a $400 expense. While that's a good start, have you truly saved enough? Experts recommend that an emergency fund cover at least three months' worth of expenses, and many recommend 6-9 months in case of a job layoff or major illness.

While saving in an emergency fund may seem like a daunting task, if you set aside a little bit at a time, your money will build over time. For example, if you set aside $100 every paycheck in an emergency savings account—assuming you get paid bi-weekly— in just six months you would have $1,300.

Make it a family effort
Research shows that over half of American parents aren't always forthcoming when talking to their kids about money matters. However, one of the best ways to make a budget "stick" with your family is to make it a group endeavor. Talk to your kids about why budgeting is important; use concrete examples instead of vague references or financial jargon. For example, if you switched jobs last year to find a better life/work balance but also took a pay cut, discuss with your kids why you felt the change was important and discuss what expenses the family is okay with cutting back on. Often, you'll be surprised how willing kids are to go along with a spending plan if they feel involved in the process.

View budgeting as an opportunity to teach your kids basic money saving concepts like saving money, spending less, and avoiding debt. Encourage delayed gratification by setting a family goal. Perhaps with the money you save by doing away with eating out so often or pulling the plug on cable, you can plan a trip to an amusement park this summer. Put a picture of the place your family wants to visit on the fridge as a visual reminder of why you're budgeting—and that you're all in this together.

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References: Federal Reserve,

The Cost of Living in 2017

There may be some slivers of savings, but many costs are going up this year, from medical insurance to the price of a cup of coffee.

On top of this, while the economy has continued improving, wage increases have been relatively modest in the last few years, and are expected to remain so in 2017.

The typical raise for workers will be 3 percent, just slightly higher than 2016's meager 2.8 percent raise, according to Aon Hewitt, a global human resources services company.

HEALTHCARE Premiums and deductibles for health insurance are going up once again, whether you receive it through your employer, or pay privately. Private insurance is seen rising an average of 25 percent and employer-provided insurance is going up between 10 percent and 24 percent, Aon Hewitt said.

Also, look for price increases in virtually all brand-name drugs, with hikes in specialty drugs driving the trend. They're projected to increase 18.7 percent this year (after growing 18.9 percent in 2016), according to human resources firm Segal Consulting.

Still, while skyrocketing prices of specialty prescription drugs have received a lot of attention, the cost of generic drugs has quietly been falling. And some believe President-elect Donald Trump will lower the bar on generic drug approvals from the FDA, which could put more of these types of drugs on the market and further lower prices.

MONEY Expectations that the Federal Reserve will finally resume raising interest rates, combined with an economic plan from Trump that includes less regulation and lots of infrastructure spending, has economists at Deutsche Bank projecting interest rate increases.

Another bright spot could be federal taxes, with more dollars returned to wallets. The exact impact of Trump's tax reforms is yet to be seen, but under his reported plan, almost all taxpayers will pay less this year, with the wealthiest Americans getting the biggest breaks. The top tax rate would fall from 39.6 percent to 33 percent, and the lowest tax rate would be 12 percent.

HOUSING After a 6.3 percent increase over the past year, home prices are poised to go up another 5.2 percent through September 2017, according to financial analysts at CoreLogic.

HEAT Colder temperatures and higher fuel costs will raise the average homeowner's heating bill this winter, although you'll still be paying less than the historic norm. Analysts at the U.S. Energy Information Administration estimate the average household using heating oil will pay 38 percent more than last winter. Costs will go up 22 percent for natural gas and 5 percent for electricity, the agency projects.

FOOD, REFRESHMENTS It's going to cost more to eat in and dine out in 2017, according to projections by the U.S. Department of Agriculture (USDA). The agency is expecting overall prices to go up 1.5 percent to 2.5 percent this year, led by increased costs at restaurants.

But don't be afraid to ask where the beef is. After spiking in 2014, an increase in production has caused an oversupply of beef, putting pressure on wholesale prices, according to the USDA. Retail prices are currently down 1 percent year-over-year and are expected to fall further.

People across the globe keep guzzling more caffeine, and that demand is pushing coffee prices to all-time highs. Those prices are unlikely to fall soon, given that consumption has exceeded production for the past two years, USDA says.

ENTERTAINMENT And, of course, it's going to cost more to have fun. Large parks, such as Walt Disney World and Universal Studios Hollywood, are moving toward "dynamic pricing," which costs guests more during popular times. Recent hotel mergers also won't be much of a friend to consumers. Prices for North American hotel rooms are projected to go up 4 percent in 2017, and the increase will be even larger on the West Coast, according to the Global Business Travel Association (GBTA).

TRAVEL As low gas prices and a strong economy have more people driving, the likelihood of getting into an accident has also risen, pushing up the cost of auto insurance last year by nearly 10 percent. Those factors aren't likely to change this year, which means insurance costs should continue to rise, industry consultants say.

While low oil prices may continue to push fares down, airlines will continue to make up that revenue through increased fees, according to the GBTA. Prices for North American fares, in their entirety, are projected to rise 3.7 percent next year.

Prices for used cars in general have been going up, thanks to easy credit and the flood of relatively new cars coming on to the market as lease expirations. But there is a bright spot if your lifestyle allows it. Low gas prices have most buyers looking to purchase SUVs or larger vehicles, so small and sub-contact car prices have actually been falling. In the second quarter, used compact car prices were down 2 percent, according to Edmunds, while overall used car prices were up 2.7 percent.

Judging Success One Home at a Time

Routine and Realtor just don't go together. Consider REALTOR® Tina Cheung. Her day, any day, typically begins at 5:30 am. There is paperwork to be done, listings to be scoured—those that have come directly into her office and those through the Multiple Listing Service (MLS), which aggregates listing data—maybe a house or two, or several, to show, along with a closing and the walk through that precedes it.

And there is also time checking in with Lori Vranish, Manager of Real Estate Lending Sales at Tower, to see how Tower's HomeAdvantage™ program is faring.

Cheung is a HomeAdvantage Real Estate Agent, working through CU Realty Services, a national real estate service which aids home buying and selling for credit union members like those at Tower.

Rebate on commissions
Cheung, who is principal of The Gold Standard Group of RE/MAX Realty Centre in Olney, Maryland, has worked with Tower for nearly a decade, placing members in single family homes, townhomes and condos. The program is unique, in that it gives members who purchase homes money back in the form of a rebate at settlement. The rebate is 20 percent of the Real Estate Agent's commission and Cheung says the arrangement is well worth it.

"I am absolutely thrilled to do it," she says. Members are already well qualified through the screening they receive from Tower's Real Estate Lending Sales group, Tower loan advisors "are very reachable," Tower has its own title company, and the clients "are ready to go," Cheung said.

Plus, many members have attended the free homebuyer seminars that Tower regularly holds, which includes one for first time buyers.

Advantage: client
The referral through Tower begins a process where Cheung and the buyers meet to discuss everything from timeframes to whether the home will have carpet or wood floors. One of the most unusual requests Cheung has received was that the home's yard not contain too many trees. She doesn't ask questions, just provides what she feels are the best properties for each client based on their preferences.

Cheung says her success rate with HomeAdvantage clients has been phenomenal. "We show them the homes, we educate our clients, negotiate the purchase, members get their home and everybody is happy," Cheung said. "We've all accomplished what we set out to do."

In between showing homes, Cheung is calling and e-mailing clients to make sure listings are on the mark, guiding them if the property they have chosen has multiple offers, and giving her opinion, if asked, on a property.

Cheung knows she has other clients through her RE/MAX business, but says there is something special about Tower members. "What I do is a reflection on their financial institution and it is very important a member trust their real estate agent," Cheung said. "When the referral comes from the credit union it holds quite a lot of weight. When they come to us we are as accommodating and respectful as possible."

Financial Milestones for Each Decade

As you can imagine, a 20-year-old's financial concerns are usually quite different from a 60-year-old's.

Here's a glimpse into financial security issues at five key age milestones. Of course, you can accomplish any of these goals sooner, but look at this as a general roadmap of where you should be at a given age.

Your 20s

Save money every month. Put some of your paycheck into a savings account. Choose a debit card with cash-back rewards to save more.

Build credit. Get a credit card with a low borrowing limit and use it regularly, but pay it off monthly.

Establish a Roth Individual Retirement Account (IRA) even if you have to ask your parents to help you fund it. Start a 401(k).

Start paying down student loans. Make it a top priority once you have a steady income.

Allocate income to marriage and children. Not all people get married in their 20s, but if you are contemplating this life change, you'll need to adjust your budget. Open a savings account to save for your dream wedding.

Your 30s

Buy life insurance. Even if it's a small policy.

Set up an emergency fund. Save enough to cover 6-9 months' worth of income so that if you or your spouse loses a job, has a serious medical problem or becomes disabled, you can still pay the bills.

Boost your retirement savings. Ramp up your savings—put in at least 15 percent of each paycheck.

Work with a Financial Planner. You're at a point in your life where you need to start prioritizing your goals and getting advice about your estate plan.

Your 40s

Get Term Life Insurance. Start thinking about how you would provide for your family should something unexpected happen to you. Term life insurance ensures that your funeral costs will be covered, and your spouse and kids will have access to your assets should you die prematurely.

Invest with an eye toward the future. Make your investments less aggressive.

Buy a vacation home because you earn money for a reason. And it might make you a dollar later.

Erase credit card debt. If you have kept revolving accounts open for their credit benefits, make sure you are paying off the balances in full every month in order to free up income and keep your credit score high.

Your 50s

Make retirement catch-ups. If you're 50 or over you can make up for a bit of lost time with catch-up contributions to your tax-deferred retirement accounts.

Pay off your mortgage. If you still owe any money on your house, now is the time to pay it off, so you can enjoy your home during your retirement. Paying off your mortgage now ensures that you won't have to delay retirement in order to afford mortgage payments.

Plan your estate. You should already have a will, but if you don't, get one drawn up as soon as possible. You may also want to put some of your assets in trusts or other estate planning tools to ensure your heirs can get them in a timely manner.

Your 60s

Apply for Social Security. Benefits are available as early as Age 62. At age 65, you should apply for Medicare coverage.

Sell unneeded assets. Sell vacation homes and other assets you no longer want or need; this can help you reach your retirement savings goals sooner.

Get a retirement career. Find something that pays in a field that you like—such as a ski resort, a nursery or an art gallery. You'll draw less from your savings.

Get big discounts. Take advantage of senior pricing at shops, restaurants, and entertainment.

Resources: Huffington Post, Forbes Magazine

Retirement a Horizon That Can Be Ably Planned For

Some of us look forward to it, while others rue the day-- but few get out of retirement. And given that it is pretty much a certainty, there are a number of things that can be done to be ready for it.

While scores of calculators, spread sheets and pie charts promise to pinpoint just how much money you will need, and can definitely offer assistance, a comfortable retirement is also based on having been a good saver, mapping out a retirement lifestyle within your means and taking into account that you may live longer than you expected.

"For most members, considering retirement is both exciting and scary" said Brett Marchand, vice president of Tower Wealth Management.

"The fear of outliving your savings is an on-going concern that most members have when contemplating retirement," Marchand said. "Having a structured retirement plan will serve as a roadmap and allow members to retire with confidence."

Retirement is no longer about sitting on the back porch and drinking a glass of lemonade. It's about embracing the next horizon and that takes sound financial planning.

Financial planners advise taking stock of what you currently have—and what you owe—and crafting a savings program around those factors.

The good news is that if you have a mortgage, are paying your children's' college tuition or are helping with the long-term care of a parent, those commitments are going to end, although for the latter it is an unfortunate reality.

That will give you free cash flow that can be combined with what you already have, as well as money coming in through your paycheck, to begin building toward retirement. Or, if you are already on the way with your retirement preparations, you will have more money to work with.

While cash savings should definitely factor into a retirement program for day-to-day living and emergency needs like a new car or a large appliance like a refrigerator, many financial planners strongly recommend you turn to the stock and bond markets because they can do some long-term heavy lifting for you.

You may want to invest in products that give off an income stream, like annuities and bonds. At the same time, the goal is to protect your savings from inflation and you may be able to do this by investing at least some of your money prudently in the stock market, using vehicles like large and small cap stocks, mutual funds and annuities.

A good approach is to be a disciplined saver. Make saving for your retirement the first thing you do with each paycheck.

A number of financial advisors recommend devoting at least 10% of what you net to your retirement planning program.

Also, consider behavioral changes. Look at your lifestyle. Just because you have excess now doesn't mean you need to spend in excess. Be humble with your money.

And don't forget income streams that will come into play once you retire. If your company provides a pension, call the human resources department and find out how much it will be.

To determine how much you will get in Social Security benefits go to the Social Security Administration's website and use its retirement estimator link.

And to maximize Social Security benefits, have—upon mutual agreement—the spouse who makes the most money work for a longer period of time.

When it comes to time, you have a strong probability of being in retirement longer than any other generation.

People are living longer. The life expectancy for women is 81.2 years, according to the Centers for Disease Control and Prevention. That compares with 78.9 roughly 25 years ago. Men have a life expectancy of 76.4 years, the CDC says. Twenty years ago it was 78.9.

What you are trying to do is create a permanent cushion for when you are no longer working. Starting, or continuing to contribute to, a diversified savings program is considered the best approach, as well as looking at how you live now and perhaps making some adjustments.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks, including the loss of principal and no strategy can assure a profit or protect against loss. The prices of small cap stocks are generally more volatile than large cap stocks. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Securities and financial planning offered through LPL Financial, a Registered Investment Advisor, Member FINRA and SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Tower Federal Credit Union and Tower Wealth Management are not registered broker dealers nor affiliated with LPL Financial. The Tower Wealth Management Web site is for U.S. Residents only. LPL Financial's U.S. Investment Representatives may only conduct business with residents of states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state.

Disclosurer Box

Are Your Passwords Strong Enough?

You want to protect your personal information: Your email. Your Tower accounts. Your address and credit card number. Photos of yourself and your kids. But thanks to an explosion of personal information being stored in the cloud, and our tendency to use short passwords and reuse passwords, exploits can occur.

A smart move to protect yourself is to select highly secure passwords on all of your accounts that are difficult to crack or guess. Here's how.

The longer the better
While many sites and applications only require you to create passwords with a minimum of eight characters, security experts are now recommending passwords be 15+ characters long.

Why? It's because computer technology today allows hackers to run more efficient password cracking tools. Given enough time, the automated method can correctly guess any password. A simple device can crack an eight letter single-case password in five hours. However, if you use a password with 12 or more characters, it increases to 200 years.

Don't double-dip
Don't use the same password across multiple sites or for different services you may have on the Internet; for example, using the same password for your Web mail and your Home Banking account at Tower. If you're using this same password on other sites, attackers will be able to log in as you on those sites as well. It's best to create individual passwords for every account you have.

Use a phrase
Avoid obvious and easily guessable passwords like "password" or "123456", as well as any information that can be gathered from your social media accounts. Avoid using pet names, e-mail addresses, names, places, etc. Try not to use words found in a dictionary. Don't use movie or book titles, or sequential patterns on a keyboard. Hackers can run through all of these familiar patterns easily using brute-force attacks—in which a computer runs through every possible combination of characters in order to crack your password.

Instead, use password mnemonics to create a complex, but memorable password. Start with a meaningful phrase, sentence, song lyric, etc. and add numbers, capital letters, and symbols for password complexity, such as: "I love watermelon because it just turns to water in your belly!" = "iLwmbcijtth2OiyB!"

Keep it weird
Use special symbols that you've never used before—such as !@#$%^&*(){}[]. While you think you could get away with just replacing an "S" with a "$" or changing an "A" to "@", hackers are already one step ahead of you and can easily pick up on these patterns.

Hints are good
Can't remember your new password? If you need to write something on paper to help remember it, write down a hint that will trigger your memory, but is meaningless to anyone else. For example, write down "Fruit juice" as your hint to remember "I love watermelon because it just turns to water in your belly!" = "iLwmbcijtth2OiyB!" Then, store that hint in a safe place, like your wallet.

Manage it all
If you have trouble remembering good passwords (everyone does, actually), let a password manager randomly generate a password for you. There are both browser password managers and app-based services. This will help you manage unique and complex passwords for all your accounts. And then you only have to remember one strong password—the one for the password manager. LastPass and Keeper are widely used.

What the future bodes
According to some, the future of the Web is geared toward removing passwords entirely—replaced by the use of biometrics—such as fingerprint scanners on smartphones and other devices. But that day isn't quite here yet. The best way to batten down the hatches right now is to make it a priority to clean up your passwords. Make them airtight now. And avoid regret later.

Resources:, Wired Magazine, Consumer Reports,

New TowerCares Foundation Website Is Coming!

The new and improved TowerCares Foundation website,, will soon be live. The site has a modern look and feel, is easy to navigate and lets you find important information quickly.

The mission of TowerCares, a 501 (c)(3) organization, is to help children in need, as well as the brave and heroic individuals and their families who sacrificed while protecting our freedom. The new, expanded site is chock full of information about TowerCares and the types of organizations the Foundation supports. You can read about recent TowerCares grant recipients and the good work they are doing in the community. There's information about how individuals can make a donation and become a member of TowerCares. For charitable organizations, find out how to apply for a TowerCares grant. You'll find information about upcoming events and volunteer opportunities, along with recent press releases and news articles.

Be sure to visit the updated TowerCares website when it launches, and check back often to see what's new.

SOUP, There It Is!
Tower Employees Join Together to Support TowerCares

In the spirit of giving, 75 employees from Tower's Operations & Technology division recently came together to offer homemade soups, chili and other baked goods to raise money for the TowerCares Foundation. Upwards of 200 Tower employees and members bought the homemade wares, sold over two days in November at Tower's Headquarters in Laurel.

The soup sale raised $1,700 for TowerCares, with the funds going to support Sarah's House, a local shelter that provides emergency and transitional housing for homeless families in Anne Arundel County. The donation will help purchase essentials the shelter needs year-round like baby wipes, diapers, canned goods, paper towels and bed linens.

The soup sale was so well-received it will become an annual event to raise money for TowerCares, according to Vickey Rohde, Tower's VP of Deposit Services. "It's a way of giving back," she says.

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