Category: Personal Finances

What is a Credit Score and Why is it So Important

What is a Credit Score and Why is it So Important?

We have all heard we need to have a good credit score, but many people do not know what a credit score is – this is ok, we are here to help! Having a good credit score is a lifeline for your future, so it is very important to know what a credit score is, how it can be positively and negatively impacted, and why it is so important to everyone. Take a few minutes to brush up on your knowledge of credit and how you can have a good credit score. 

What is a Credit Score? 

Credit scores have the ability to affect a lot in your life, so it is crucial to know what a credit score means and what yours is. Credit scores are a financial tool that determines each individual’s creditworthiness. A credit score is a number between 300 – 850 that is determined by your credit history. A high credit score means you are a responsible person who will repay your debts. 

Your credit score moves as you use and repay debts you have incurred. A bad credit score could result in a higher payment due to a higher interest rate or missing out on a purchase you’d like – such as leasing an apartment, obtaining a loan or credit card, purchasing insurance or a vehicle, etc. You may be asking – What if I do not have a credit score? Not having a credit score means you have not tied anything to your credit profile. This can often be a bad thing as you have no history of good credit or debt payment to a lender. 

What Does Your Credit Score Impact? 

Your credit score essentially affects your financial life. There are many good and bad ways to affect your credit. Your credit score plays a huge part in a lender’s choice to offer you any sort of credit. A credit score may also impact the amount of the deposit you have to pay for utilities, phone services, rental properties, and more. Your credit score impacts your interest rate or credit limit. 

What Impacts Your Credit Score?

Your credit score is impacted by five main factors that are evaluated when you take out credit. Your credit score is reported and updated by credit reporting agencies in the United States. The five factors that affect your credit score are: payment history, the total amount owed, the length of credit history, the types of credit, and new credit you use. 

How to Improve Your Credit Score

There are many ways to improve your credit, so if your score is on the low end, do not worry! Here are 4 ways to increase and improve your credit score:

1. Pay your bills on time – on-time payments for six months will positively affect your score. 

2. Use a credit card – contact Peoples Bank & Trust to open a credit card today!

3. Don’t close your credit card account – stop using the card rather than closing it as this could negatively impact your score. 

4. Take out a line of credit and make consistent payments on time. 

Why is Your Credit Score Important?

As you can see, your credit score is very important to be able to do the things you wish financially. Having a good score can affect you in many ways, so if it is low, it is important to work on growing the number. An excellent score ranges from 800 to 850 while a poor score is between 300 and 579. The middle range can be considered very good to fair and can affect the terms of the credit you are offered quite a bit, even if you are a few numbers off from the next range. 

As we have you thinking about your credit score, please reach out to Peoples Bank & Trust to discuss where you are at and how our services can positively impact you.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

money; spring savings

Creative Ways to Save Money this Spring

Conduct A Closet Cleanout  

Spring is a time for cleaning, so why not address your closet? As the warmer weather comes, we are reaching for the sweaters less and less. It’s a great idea to do a deep dive into what you have in your closet so you can get rid of items you’ve not worn in ages as well as find some items you forgot you had. Decrease your urge to purchase new by organizing what you have in a way you can easily see all your options to pick from. You most definitely will come across old favorites you’ll be excited to wear, as well as maybe some items you forgot you purchased and still have the tag on. 

Once you decide what you’ll be keeping and what you’ll be getting rid of, sell some of your clothes. Spring is a great time to either have a garage sale or even sell online with Facebook Marketplace, Postmark, etc. Those old clothes can turn into some extra cash this spring.  

Gain A Green Thumb  

Fresh produce seems to taste the best in the warmer months, but the cost can really add up. Consider planting your own garden this spring to save a little extra. Not only is growing your own produce better for your wallet, but it is great for your health. Gardening can be a fun hobby for you and the kids. If you can devote some time to maintaining a garden, your stomach and budget will thank you.  

Having a garden gives you the freedom to plan your meals around what you have as well as incorporating fresh fruits and veggies into a majority of your meals. As your thumb gets greener, you could consider selling some produce locally as a side hustle. The cost of having your own garden can be very budget-friendly, but it also is a free hobby to enjoy and unwind with after a hard day of work.  

Better Your Budget  

If you want to save a little extra this spring, look through your budget and see what you can cut. Maybe you save a little extra and cancel the TV subscriptions as you will be spending more time outside or cancel the gym membership and get your exercise for free outdoors. Be in control of what you are spending your money on, spring is a great time to cut unnecessary spending so as fun stuff comes up this summer, you have the spare cash.  

The best part about the spring and summer months is that you can do free activities outside rather than going out and spending money on activities all the time. Rather than eating out, consider grilling or cooking outside. This is such a fun activity to do with friends too when planning your next night out. You could try out a spending freeze where you don’t spend for x number of days to save extra to either save for or cover an upcoming expense.  

Enhance Your Energy Efficiency  

One of the biggest ways you can save this spring is to be energy efficient. Cut the cost of some of your bills by using the nice weather to your advantage. Spring is the time of year you can shut off the heat and open the windows. As the weather heats up, be frugal when you’re turning your AC on. 

Keep your house cool by adding window treatments to reduce the amount of heat that gets in. Another way to be more energy efficient is to run your large appliances less. For example, consider only running full loads of dishes or laundry. One tip that many people forget is to shut your fans off when they are not being used. A fan running is not cooling your house, so when you’re done cooling off, shut it off.  

Spring clean your savings with these creative tips. Spring and summer seem to be busy months with a lot of fun stuff to go and do. Start saving a little extra here and there to add an extra chunk to your savings. Save this spring to set yourself up for a financially successful year. The more frugal you can be to cut some costs, the bigger the payoff you will see. 

Peoples Bank & Trust Co. 

Member FDIC 

Equal Housing Lender 

Home Sweet Home

6 Reasons Why You’re Ready for Home Ownership 

Questioning if you are prepared to become a homeowner? Here are six helpful tips to break down buying a home and what you need to be prepared for. Purchasing a home can be a stressful process. Let these recommendations set you up financially and emotionally when you are ready to pull the trigger on buying.   

1. Be Mentally and Financially Ready  

Maybe you have reached your savings goal or have gotten out of debt. Knowing you are ready and what you want is probably one of the most important pieces of the house buying process. Buying a home is a big investment, so be sure you’re in a financial situation ready to pay for the house itself, property taxes, homeowners insurance, along with the furnishings and upkeep of your home.   

2. Check Your Credit  

Another big part of being ready for homeownership is making sure you have a good credit score. Your credit score will help determine the loan you can qualify for during this process. If you can qualify for a better interest rate, that will help lower what you are paying monthly towards your mortgage.   

3. Have a Steady Income  

Being sure you have a steady income is highly important when wanting to buy a home. Down payments can be a good chunk of money. You will want to be sure your income and savings will allow you to put down a very healthy payment. Mortgage lenders will check your income along with your credit score, as they both show your ability to repay. Purchasing a home is a very big financial and emotional decision, so being sure financially you’re in a good place can help give you peace of mind on the emotional side. It is important to think through your 5 or even 10-year personal and professional goals before buying. You’ll want to think about family, relocating for work and where you truly want to be at that stage of your life.   

4. Build Healthy Savings and an Emergency Fund  

There is a lot to think about when purchasing a home, but hopefully this helpful tip you have already been working on! It is especially important, regardless of whether you are buying a home, to be working towards healthy savings and an emergency fund. Why do you need strong savings and an emergency fund when buying a house? Along with the house itself, there can be many expenses and often unpredictable circumstances. Having some additional savings can ensure your comfort when moving as expenses arise. Setting aside money to build healthy savings will be great backing as you adjust your budget and incur monthly house payments.   

5. How Much House Can You Afford?   

How do you know what you can afford? There are several methods for calculating what you can afford, as well as several factors to address. You can utilize online down payment calculators to give you a better idea of what to expect.   

Down Payment Calculator: Calculate Your Down Payment https://bit.ly/3I0xCHM   

Refer to your budget to analyze your gross monthly income as well as annual. After you can nail down what you are bringing in, look at your set expenses. Another expense to account for is your state property taxes. Many lenders will utilize the 28/36 rule to determine their ability to afford a house. Money.com shares the 28/36 rule suggests your housing expenses should be no more than 28% of your total pre-tax income. Your total debt should not exceed 36% of your pre-tax income.  

6. Align with Your Personal and Home Goals   

Once you have learned about your home affordability, be sure making the move aligns with what you want. Buying a home is a big deal and can take up a good chunk of your budget. If it is more important to you to have the extras over a home, consider crunching the numbers to see what life would look like moving forward. In reality, when purchasing a home, you may have to push back that vehicle upgrade or vacation. Those are all good things to think about when aligning your personal goals with your home goals. It is critical to acknowledge the future and factor in your goals.   

The process of deciding to buy a home can be a lot to think about. Share these helpful tips with a friend, colleague or family member who is debating homeownership. Reach out to Peoples Bank & Trust today to discuss a mortgage on your new home! We would be happy to help you through this exciting process of becoming a homeowner.  

Peoples Bank & Trust Co. 

Member FDIC 

Equal Housing Lender 

NMLS #407724 

Student paying off loans

How Do I Pay Off Student Loans Quickly? 

Paying off student loans isn’t going to happen overnight – it takes time, and most importantly, discipline. There are some steps you can take to speed up the process and be debt-free sooner rather than later. If you’re in need of some advice on this subject, you’re in the right place.   

1. Pay MORE than the minimum.  

If you’ve only been paying the minimum, odds are you haven’t seen a whole lot of progress. Plus, the interest you’re piling up isn’t helping either. Instead of worrying about saving as much as you can, focus on putting a bigger chunk of your money towards your student loan debt to make the payoff process much faster.  

2. Put all promotions, tax refunds and bonuses towards your student loans.  

It may seem tempting to reward yourself when you get a promotion or a bonus, but take a step back before spending impulsively. Make the decision to put all your “extra” money towards paying off your student loans rather than spending it all.  

3. Pick up a side hustle.  

If you have some extra time on your hands before or after work or on the weekends, consider picking up a side job for extra cash. You could waitress on the weekends or evenings, start your own side business involving a hobby of yours or sign up to be an Instacart driver or DoorDasher.  

4. Re-evaluate your budget (and stick with it).  

Take a look at your current budget if you already have one and figure out what adjustments can be made. You’ll most likely have to make some sacrifices, but they’ll be worth it in the long run when you’re finally debt-free. Once you’ve adjusted your budget and left plenty of room for money to go towards your student loans, stay disciplined and make it a priority to stick with your budget.  

5. Don’t give up – stay motivated.  

Paying off student loans takes time and patience – you won’t see results in a week or month. The key is to stay positive and consistent in your payments and you’ll be debt-free before you know it.   

Today’s the day to make a change! Your future self will thank you for ridding yourself of debt as soon as possible. Peoples Bank & Trust believes in you and is here to help! 

Peoples Bank & Trust Co. 

Member FDIC 

Equal Housing Lender 

Beginner's Guide to IRAs

A Beginner’s Guide to IRAs 

Why should I worry about saving for retirement right now? Are IRAs really that important? If you are wondering the importance of saving for retirement and how much that can drastically affect your future, you’ll want to continue reading. We wanted to provide a beginner’s guide to IRAs so you can understand your options and the differences between IRAs.  

What is an IRA?  

An individual retirement account (IRA) is basically a savings account with tax advantages for you to use to prepare for retirement. There are several different types of IRAs, including Traditional IRAs, Roth IRAs, SEP IRAs and SIMPLE IRAs.  

What are different IRA options?  

A Roth IRA or Traditional IRA are two options. These will be explained in the next section. Other options may be a SEP IRA which stands for simplified employee pension. A nondeductible IRA may be an option if you (or your spouse) have a retirement plan at work and your income exceeds the IRA income limits, then you may not be able to deduct your traditional IRA contributions. A SIMPLE IRA stands for Savings Incentive Match Plan for Employees – it mainly exists for small companies and the self-employed. There are others out there, but these are the most common you would come across based on your employment.  

What is the difference between a Roth and Traditional IRA?  

For starters, with a Roth IRA, you contribute after-tax dollars, your money grows tax-free, and you can generally make tax- and penalty-free withdrawals after age 59½. With a Traditional IRA, you contribute pre- or after-tax dollars, your money grows tax-deferred, and withdrawals are taxed as current income after age 59½. Investopedia states, “Roth IRAs are similar to traditional IRAs, with the biggest distinction between the two being how they’re taxed. Roth IRAs are funded with after-tax dollars; this means that the contributions are not tax-deductible. But once you start withdrawing funds, the money is tax free. Conversely, traditional IRA deposits are generally made with pretax dollars; you usually get a tax deduction on your contribution and pay income tax when you withdraw the money from the account during retirement.” To learn more, click here: https://www.irs.gov/retirement-plans/traditional-and-roth-iras   

How much should I be saving for retirement?  

There are lots of different ways to be sure you are saving enough for retirement. When you retire, you’ll need to factor in monthly bills, living expenses, rent, loans, medical bills, travel and so on – so it does add up quickly! One way to be sure you are saving enough is to look at your age. In your twenties, one rule of thumb is to save 10% to 15% of your pay for retirement. By thirty, you’ll want it to be at least 15%. At 40, you should aim to save 3 times your salary. Consulting a financial advisor will also be helpful, so you can determine how much to save and also how much to contribute to other areas such as a savings account or 401k.  

We hope this helps you feel more confident about beginning to save for retirement with an IRA. We offer solutions for you along with any other help you may need financially. Reach out to us today! 

Peoples Bank & Trust Co. 

Member FDIC 

Equal Housing Lender  

old-couple

Common Retirement Mistakes to Avoid

Whether you’ve barely thought about retirement or are nearing the typical retirement age and want to know how to go through the transition properly, learning about the process is always a good idea. Learn from the mistakes of others and avoid these common mistakes: 

Putting Off Retirement Savings 

Don’t keep putting it off – the time to start saving for retirement is now. The earlier you start, the less stressed the retirement process will be. A CD or IRA is a good place to start!

Not Having a Plan 

There are so many things that factor into how much money you’ll need to save, including when and where you’re retiring. Plan these things out in advance, coming up with an amount you’ll need to retire comfortably, then take action steps towards saving that much. 

Not Taking Advantage of Your Company’s 401(k) Employer Match 

If your employer offers a 401(k), make sure you maximize the amount you contribute and utilize the employer match if that’s an option. This is extremely important and the money matched can really add up. 

Waiting to Pay Off Debt 

Don’t wait until the last minute to pay off your debt – get rid of that as soon as you can so you don’t have to save for retirement at the same time as you’re paying off your student loans. Experts often say you should focus on paying off debt before you worry about saving for anything, including a new vehicle, a house and even retirement. 

Looking Past Potential Health Costs 

You never know what the future holds, and you may end up in a situation where you must pay for unexpected medical bills. While we hope this isn’t the case, it’s always better to be safe than sorry when planning for retirement. 

Changing Jobs Frequently 

There are benefits to sticking around at a certain company for an extended period. For some companies, when you’re there for a set period (usually five years), you become fully vested which means ownership of the funds or stock that your employer “matches.” Consider this as you navigate the job world and consider hopping around from one to another. 

While this is just the tip of the retirement iceberg, these are all common mistakes that can be easily avoided. Make sure you are planning for retirement ahead of time so you can save yourself the trouble that comes with going into the process blind! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

credit score

Improving Your Credit Score 101

Just by glancing at a single number, lenders can determine how financially responsible you are and decide whether to lend you money or not. Your credit score determines other important things like interest rates as well, which is why it’s so important to make sure your score is good. If you don’t have the greatest credit score, here are some basic ways you can improve it.  

Check Your Credit Score Frequently 

Just like you should be checking your checking and savings account balances frequently to make sure you’re on track, you should also take a look at your credit score every so often. If your score goes down, you might be able to pinpoint the reason and make adjustments as needed. 

Always Pay on Time 

One of the biggest things that affects your credit score is whether you pay your credit card bill on time. Late payments can take a hit to your score, so do everything in your power to make sure that’s not an issue. There’s usually a way to schedule automatic payments so you don’t even have to worry about forgetting to do it yourself. 

Keep Those Old Accounts Open 

If you have credit accounts open that you don’t use, it may seem obvious that you’d close them. You’re actually more favorable to lenders if you have an older credit age. As always, everyone’s situation is different so speak to a financial advisor if you’re unsure what to do with open and unused accounts. 

Keep Your Credit Utilization Percentage Low 

The general rule of thumb is to aim for 30% credit utilization or less. One way to do this is to pay your balances in full every month or at least keep your outstanding balance at 30% or less of your limit. You could consider asking for a credit limit increase which would help your credit utilization as long as your balance doesn’t increase at the same time. 

Monitor Your Credit Using a Service 

Credit monitoring services are very helpful and lots of them are even free. These services monitor the changes in your credit report over time and can help you figure out what will improve it. One of the best parts about credit monitoring services is that they can help prevent fraud and identity theft by alerting you, for example, when a new account has been opened in your name. 

Now that you know the basics, it’s time to kickstart your journey towards improving your credit score. If you don’t have a credit card yet, we’re here to help with that. Contact Peoples Bank & Trust to get started! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

chart

Retirement Strategies for Your 20s

It may seem like a lifetime away, but retirement has a way of sneaking up on all of us. Something to remember when it comes to retirement is that the earlier you start saving, the better. Plus, you’re never too young to invest in your future. If you’re in your 20s, here are some helpful strategies you can implement to set yourself up for a successful retirement. 

Rid Yourself of Debt 

The first step in creating a retirement fund is to look at what you’re dealing with in terms of debt. If you can realistically pay off your student loan debt in less than 10 years, financial advisors often recommend that you focus on that before worrying as much about saving. 

401(k) Plans 

Investing money into an account specifically for retirement allows you to store up without paying taxes on gains until you reach retirement. If your employer offers a 401(k) plan, that’s a great place to start. 

Open an IRA 

On the same note, an IRA is a retirement account that has lower contribution limits than 401(k)s. This doesn’t have to go through your employer, either, so the amount you invest is more in your hands. If your company doesn’t provide a 401(k) match, the smartest route would be to max out on your IRA then put the remaining money into your 401(k). 

Create an Emergency Fund 

You may have a good amount of money stored in your savings account, but how much of that can be used in cases of emergency? Keep your life savings and your emergency fund accounts separate so you have a cushion if things go wrong. This will prevent you from needing to withdrawal from your retirement account or main savings account. Try to save three to six months worth of living expenses to be safe. 

Automate Your Savings 

If you have a hard time staying disciplined and remembering to contribute to your savings account each month, there’s a way to help with that. By making your savings automatic, you won’t even have to think about it since it will transfer for you. Set a savings goal for the year, figure out how much you’d need to save each month in order to make that happen and go from there! 

Keep an Eye on Your Account 

If you’re making saving for retirement a priority in your 20s, you’re in a good place already. Check back on your account frequently to see your savings grow and that will continue to motivate you throughout your 30s, 40s and beyond.  

Questions about retirement or unsure where to start? Our team is here to help! Contact Peoples Bank & Trust with any questions. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

moving-boxes

How Much Does Moving Cost?

If one of your to-dos for 2022 is packing up your house and moving, you may be wondering how much that will end up costing you. While the amount varies greatly depending on how far, how much stuff you have and other factors, this blog will help you come up with an idea of what to expect. 

Average Moving Cost 

Local move: $1,250 

Long distance move: $4,890 

Factors Affecting the Cost 

The following factors are unique to your specific moving experience, meaning the price you pay varies: 

1. Fuel 

If you have a long-distance move, gas money is an expense to keep in mind. Not only do you have to drive any vehicles you have to the new home, but you also must pay a per-mile rate if you use a moving truck. 

2. Amount of Items 

The size of your moving truck will affect how much you pay for it, so if you have more things to move it will be more expensive. If you’re hiring a moving service, it’ll also take them longer to move the boxes out if there’s more stuff.  

3. Storage 

Sometimes moving gets a bit complicated and you need to store your belongings in a storage unit for a period of time. Storage rates vary as well depending on the place, how much you have to store and how long you store your items for. 

Cutting Costs 

Now that you know the general costs of moving, it’s time to discuss a few ways you can lower those costs to make your moving experience as cheap as possible: 

1. Reach Out for Help 

Ask your family members and friends to help with packing and moving if possible. There’s a good chance you’ll get plenty of help at no cost! 

2. De-Clutter and Sell Some Items 

One of the best ways to make the moving process both cheaper and easier is to go through your things as you pack and make a pile of items you no longer need. Take this extra stuff to a donation center and you’ll clear up lots of space in the moving truck. 

3. Find Free Moving Supplies 

Rather than going out to buy a bunch of boxes, seek out free supplies from grocery stores, office buildings, schools and other places that may have boxes to get rid of.

Do what you can to be prepared for the moving costs to come as well as to cut costs as much as possible. We wish you the best of luck on your new adventure this year and we hope the moving process goes smoothly! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender