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3 tips to instill effective money management habits in your children



Children need to be taught about financial literacy and responsible money management in order to properly prepare them for their futures.


  • Jason Powers is the senior vice president of Administration and Ascend Federal Credit Union.

With the school year having recently started, this is an ideal time for parents to start helping their children learn the do’s-and-don’ts of managing money.

Financial education can dramatically and positively shape a young person’s financial future. It helps teach students the basics of money management – saving, investing, using credit cards and much more – so they can develop valuable habits that can last a lifetime.

Understanding and applying money management practices is critical for young people who may have to make significant financial decisions soon after graduating from high school or college. That includes taking out student loans if they’re going to college or creating a spending plan to manage their money after accepting their first full-time job.

Most high school students and young adults, unfortunately, say they don’t feel prepared. A March survey conducted by ENGINE Insights for Junior Achievement found that 87% of teens agreed with the statement, “Every student should have at least one financial literacy class before graduating high school.”

Unfortunately, only 38% of teens said they had some sort of financial literacy class in school. In my experience in the financial services industry, I have seen too many people come into our credit union seeking counseling to help get their financial house in order.

Most haven’t had the training that could have prevented many common mistakes— loading up on credit card debt or not having an emergency fund.

As a parent of school age children, my wife and I are making sure financial literacy and money management a part of the family discussion. Here’s how we’re doing it:

1. Determine a spending plan

For parents, the best place to start is to discuss the importance of creating a budget. Here’s an important tip: Call it a spending plan. Avoid using the word budget because it often has a negative connotation.

Young adults interpret a budget as something that restricts how they are spending their money. A spending plan, on the other hand, sounds like you are helping your children design a strategy that will help them spend their money more wisely, which is a lot much more fun.

When creating a spending plan with your child, discuss how you manage your own plan. Talk about categorizing spending into wants, like fashionable clothing or electronic gadgets, and needs, like food, gas and rent/mortgage.

Talk about real life trade-offs and compromises: not dining out frequently to save money for a family vacation or buying a used car instead of a new one.

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Lastly, show your child how to take advantage of free financial education and financial literacy resources. Just about every credit union and bank offer free online platforms that can be used to create a spending plan.

For example, Ascend members have access to a wide variety of resources on our Money Management tool and kids can learn the basics by viewing short educational videos.

2. Save, save and save some more

After creating a spending plan, talk to your children about the importance of saving for the future—to pay for college or a down payment for a new home.

Emphasize this point: It’s never too early to start. Make sure your children understand that by saving now, that money has the potential to grow significantly over time. Break out a calculator and show how even small monthly deposits of money can increase over time, especially when put in a retirement account.

Bonus points to parents who take it up a notch and discuss what Albert Einstein called “the eighth wonder of the world” – compound interest.

In financial literacy programs with Ascend members, we are frequently reminding people that one of the best ways to build savings is to have money automatically deposited into various accounts.

If your child has a job, talk about how having funds automatically deposited from his or her paycheck into a savings account will reduce the temptation to spend money on things that are not included in their spending plan.

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3. Underscore the significance of an excellent credit score

Most parents know the importance of having an excellent credit score and how it can lead to a lower interest rate for a home or auto loan.

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 Just a half percent change in the interest rate can result in savings or extra costs of thousands of dollars for a car or tens of thousands of dollars in mortgage payments. A bad credit score can result in credit unions or banks turning down loan requests.

This area of financial education can be a little challenging to explain because a credit score consists of several different components: payment history (35% of the total score), credit utilization (30%), credit history (15%), credit mix (10%) and new credit (10%). 

If you are the parent of a teenager, start the conversation now to see how financially literate your child is. Stress the importance of developing the right personal finance habits now so they can avoid costly makes and position themselves to build a solid financial future.

Jason Powers is the senior vice president of Administration at Ascend Federal Credit Union.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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