Crock-Pot® Serves Dinner to Hackers


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In case you are annoyed that you cannot control your slow cooker after you have set it and left it for the day, your savior has arrived. WeMo now makes it possible for you to control that needy Crock-Pot® device with an app on your smartphone. Yes, it’s true. Now you can adjust your thermostat without getting out of bed, can flush your toilet from another room, can turn your lights off if you forget and leave the house, and thanks to WeMo technology, you can adjust your slow cooker temperature from your desk chair.

While all of this is great, having smart devices like these on your wireless network comes with risks. Those include opening up yet another way for hackers to get inside your home. Remember that with every entry point, it makes it just that much more likely that someone will make themselves at home in your home and on your computer where you probably store a lot of sensitive and confidential information. This doesn’t mean it will happen. It just means it’s another way for them to get inside and get right to your information or perhaps use your computer as a bot or to perform distributed denial of service attacks (DDoS) as happened recently on several websites including Twitter, Amazon, and Netflix as well as many other large and small companies. They could also plant ransomware and try to extort money from you before they will give you a key to decrypt the files.

Make sure you really want or need those smart devices before hooking up items in your home to wireless. Take some time to think about how much risk you want to take. Do you really need to your refrigerator to tell you that you’re out of milk or can you open the door and look yourself? Do you need to be able to spy on your dog when you’re at work all day? Do you need to be able to control your Crock-Pot® after you’ve left it to cook up dinner for you? What benefit will it give you to have all of these devices and entry points opened up to the Internet? If the answer is little or none, perhaps you should skip them. It’s not so hard to push the “on” button on the Crock-Pot® after all. Those are meant to set and forget anyway. You probably already have enough to remember throughout the day anyway. At least you can forget your dinner.

© Copyright 2016 Stickley on Security

Stop! Can you REALLY Afford That?


Don’t buy what you can’t afford. Simple, right? Well, sort of. While restricting spending to the finite boundary of a paycheck is the foundation of sound money management, actually doing it can be extremely difficult. The reasons are manifold, but primary among them is the popular idea that living in debt is not only unavoidable, it is acceptable. However, this is a very dangerous way to view your finances.

The widespread availability of credit has made not having cash to pay for both necessary and discretionary items inconsequential. Currently about 227 million Americans hold at least one credit card, each card equipped with a typical $3,000 limit. Having immediate access to such a sum inspires many to quickly charge their way into impenetrable arrears. Though the average per-household consumer debt currently exceeds $7,300, balances in the six-figure range are not unheard of. Credit cards have morphed from their true purpose as a convenient payment tool to instant emergency account, holiday bonus, vacation fund, and salary increase all rolled into one.

It’s not just plastic that makes descending into debt so easy. Payday loan institutions have exploded onto our landscape. We can now tap into our future earnings just by writing a check. Many who use these businesses become enmeshed in a never-ending balance cycle, complete with interest rates that would make a loan shark gasp.

Having consumer debt is generally not fun. It causes stress and worry. It may also undermine your ability to save for such things as retirement and higher education.

How do we reverse the trend? Here are some ways:

  • Refute the idea that maintaining debt is inevitable and just another way of managing money.
  • Redefine yourself as a “saver” rather than a “consumer.”
  • Relish the feeling of living within, rather than beyond, your income parameters.
  • Accept that you may not be able to have everything you want (or even need) today, and that a quick cash fix won’t really bail you out of a bad situation; it will just make the following month more difficult.
  • Borrow only when you are absolutely certain you can repay the entire balance when the bill comes in.
  • Reject the idea that it is your responsibility to keep the economy rolling. It is not. You need to save for (rather than borrow from) tomorrow, so you and your family can be financially independent, prepared and secure.

If you are unable to cover your expenses, don’t get a loan—get help. We at BALANCE offer free, high-quality assistance. If you are contemplating a purchase that is outside of your means (and if you don’t know what your “means” is, you are not alone, but once again, contact us. We can work with you to develop a spending plan.), stop and think hard before you borrow for it.

Don’t buy what you can’t afford. Sometimes it really is that simple.

BALANCE, Revised January 2016

Lowering Your Property Taxes: How Falling Home Prices Can Save you Money


There is one upside to the bleak housing market. You may be able to lower your property taxes. Chances are, your property taxes are calculated as a percentage of your home’s value. However, your home’s tax-assessed value is not necessarily the same as its current market value, i.e., what you could actually sell it for.

How are the taxing authorities coming up with a value for your home, if they are not taking the current market value? That varies from place to place. Some just take the purchase price of the home. Some reassess the value every few years, either by sending out an assessor, looking at recent home sales, or plugging information into a computer program. So, it is possible that your home’s tax value is, for example, its market value in 2010, not its market value in 2016.

Paying taxes on an amount that is greater than your home’s current market value does not seem to make much sense. After all, you don’t pay income taxes on money you don’t earn. In fact, many taxing authorities recognize this and will allow you to have the tax value of your house reassessed, reducing your property taxes if the value is lowered. For example, if your property tax rate is 1.5% and a reassessment lowers your house’s tax value from $300,000 to $250,000, you will save $750 a year!

The city or county usually collects property taxes and each taxing authority has a different procedure. Some will let you apply for a reassessment year-round, while others may only allow it a few months out of the year or not at all. Likewise, in some places, you may have to prove that your home value’s is lower than the current tax assessed value by having a private assessment done or providing the recent sales of comparable homes (which can usually be obtained from a real estate agent or public records office). In other places, your city or county may do a new assessment for you. Contacting your local property tax agency is the best way to know what you need to do. Many agencies provide the paperwork that you need to fill out right on their websites.

Doing a little bit of work could save you hundreds or thousands of dollars a year in taxes, but keep in mind that the reduction is usually temporary. Most taxing authorities will raise your property taxes once the value of your house goes up. Furthermore, even if there are declines in home values, not everyone is eligible for lower property taxes. If your home’s market value is still above the tax value, you may be stuck with your current taxes. Still, for those that are eligible, the rewards are worth the effort, even if the reductions are temporary.

BALANCE, Revised January 2016

Five Steps to Smart Tax Management


What is “smart tax management”? It’s a combination of timely filing and taking advantage of everything that can reduce the amount of money you pay in taxes. While tax management does take a bit of planning, organization, and know-how, the overall financial benefit is strong.

Maximize retirement savings plans
If you have an employer-sponsored retirement savings plan (such as a 401(k), 403(b), or 457) available to you, it makes sense to use it. Since you make contributions with pre-tax dollars, your taxable income and possibly your tax rate will be lowered. Investments grow on a tax-deferred basis, so when you retire and take the money out the earnings will be taxed on your new, and usually lower, tax rate.

IRAs are part of good tax management too. Contributions to a traditional IRA are tax-deductible, and account earnings aren’t taxed until you withdraw that money at age 59.5. There are income restrictions, though, and if you’re an active participant in an employer-sponsored retirement savings plan you can’t deduct your contributions. While contributions to a Roth IRA are always non-deductible, the earnings are tax-free.

Use your employee benefits
If you are an employee, your company may offer benefits that can reduce your taxable income and therefore your tax liability (the amount you owe):

Flexible Spending Accounts (FSAs). Medical FSAs allow you to set aside money for common health-related costs, and dependent care accounts let you to save for work-related child or dependent care expenses. For both, the money is taken out through payroll deductions on a pretax basis.
Transportation plans. These plans allow you to use pretax dollars (and reduce your taxable income) to pay for public transit, vanpooling, or parking.

Pay the right amount
You know you are paying the correct amount of taxes if you neither owe taxes nor receive a large tax refund. While a refund may seem positive, it is really not making the most of your income during the year. For example, a $2,000 tax refund translates into $166 that you don’t have in your pocket every month. On the other hand, if you owe and can’t pay the entire sum, you’ll have to pay interest and possibly penalties, which will only add to your tax debt.

Make the most of your adjustments, deductions and credits
Tax adjustments and deduction are expenses that you can subtract from your income, resulting in a lower taxable income. Common examples of these are:

  • An exemption amount for you, your spouse, each child, and any other qualified dependents, and certain disabilities
  • Mortgage interest paid on your primary residence
  • Equity loan or line of credit interest
  • Charitable contributions to eligible organizations
  • Certain business expenses
  • Union and professional dues
  • Some medical expenses
  • The cost of tax advice, software, and books
  • Depreciation of business assets
  • Some work uniforms and clothing
  • Moving expenses, in some cases
  • Some educational expenses

A tax credit is a dollar-for-dollar reduction in what you would owe for taxes. For example, if you qualify for a tax credit of $1000, you would be able to subtract that amount from your total tax liability. Common examples of tax credits are:

  • Earned income credit. This credit reduces the tax burden for lower-income taxpayers.
  • Education-related credits. The American Opportunity credit can be used for the expenses that you incur in the first four years of higher education. The Lifetime Learning credit applies to tuition costs for undergraduates, graduates, and those improving job skills through a training program.
  • Child-related credits. These include credit for child and dependent care expenses, the child tax credit, and the adoption credit.

File on time – whether you have the money or not
Filing your tax return by April 15 (or August 15 if you file an extension) is important. The drawbacks of not filing include:

  • Your tax bill could increase by 25%, due to penalties, or interest charges on balances owed.
  • Additional penalties and/or criminal prosecution if you continue to not file (considered tax evasion).
  • Losing the refund, if there’s one due (typically after 3 years).

Even if you don’t have the money to pay, file anyway. Programs are available to help you avoid many of the harsher penalties.

Properly managing your taxes can greatly reduce the amount of money you pay in taxes and put more money into your pocket. After all, why pay more if you don’t have to?


BALANCE, Revised January 2016

Changes to the FAFSA Make It Easier to Apply for Student Aid


Do you have a high school senior who is knee deep in the college admissions process? Writing essays and filling out forms can be a stressful process for students, just as covering the cost of college can be for parents. This year, the Free Application for Federal Student Aid (FAFSA) submission period opened on October 1 – three months earlier than in previous years.

That extra time to get financial information in order could be a big benefit to many families. Don’t put off completing the application, sending the FAFSA in early could increase your financial aid package and give you more time to compare aid offers from different schools.

Understanding this form of student aid. The FAFSA determines your family’s expected contribution to the cost of higher education and serves as an application for federal financial aid, such as student loans, work study and the Pell Grant. It’s also used by some state agencies and schools to determine aid, including merit-based awards, and some scholarships require applicants fill out the FAFSA.

Current and prospective college students must complete a new FAFSA each year. Dependent children will need their parents’ financial information to complete the form, and parents may want to work on the application alongside their child.

Most students complete the FAFSA online at While it can be complicated, once you have all the paperwork in order, the application could take less than 30 minutes.

New changes in tax requirements make filling out the FAFSA easier. The earlier submission period isn’t the only difference for the FAFSA this year, there’s also a change in the tax information you need to submit. You’ll now report your income based on the student’s and parents’ tax return from two years before the school term begins. Your 2015 tax return for the 2017-2018 FAFSA for example.

You might be able to electronically transfer your tax return information to your FAFSA using the Internal Revenue Service’s Data Retrieval Tool. If you’re unable or don’t want to use the tool and don’t have a copy of your 2015 tax return, you can order a free tax transcript of your return online, by mail or by calling 1-800-908-9946.

The 2017-2018 FAFSA requires that applicants use their 2015 tax return information even if there have been significant changes in your financial situation since then. After submitting, applicants can contact schools’ financial aid offices to make adjustments.

Pay close attention when filling out the FAFSA because some of the questions, such as those pertaining to current assets, are based on when you fill out the form, not your tax return.

Submitting your application early offers several advantages. The federal deadline for the 2017-2018 FAFSA is June 30, 2018, but don’t wait that long to complete your application. States and colleges have deadlines of their own, and your eligibility for aid can depend on meeting these deadlines.

Some states and schools also distribute aid on a first come, first served basis. Submitting your application early can help ensure you’ll receive the aid you’re eligible for before the funds run out.

Prospective students who submit the FAFSA early might receive estimated financial aid offers from schools earlier as a result. This gives families more time to compare the offers before making the big decision on which school to attend.

You can list up to 10 schools on the FAFSA, including schools you’re considering but haven’t applied to yet. Submitting your info holds your place in line for aid, and you can switch out schools later if you want. You’ll also receive a Student Aid Report (SAR) after submitting the FAFSA that you can send to additional schools.

Many states require you send your FAFSA to at least one in-state school to be eligible for state grants, and some states require you list a state school in the first or second position to be eligible. The Department of Education has a list of each state’s requirements.

Bottom line. The FAFSA’s submission period opens up three months earlier than in previous years. Sending your FAFSA in early could increase your eligibility for financial aid and give you more time to compare aid offers from schools.

By Nathaniel Sillin

Retirement Plan Considerations at Different Stages of Life


Throughout your career, retirement planning will likely be one of the most important components of your overall financial plan. Whether you have just graduated and taken your first job, are starting a family, are enjoying your peak earning years, or are preparing to retire, your employer-sponsored retirement plan can play a key role in your financial strategies. How should you view and manage your retirement savings plan through various life stages? Following are some points to consider.

Just starting out

If you are a young adult just starting your first job, chances are you face a number of different challenges. College loans, rent, and car payments all may be competing for your hard-earned yet still entry-level paycheck. How can you even consider setting aside money in your employer-sponsored retirement plan now? After all, retirement is decades away–you have plenty of time, right? Before you answer, consider this: The decades ahead of you can be your greatest advantage. Through the power of compounding, you can put time to work for you. Compounding happens when your plan contribution dollars earn returns that are then reinvested back into your account, potentially earning returns themselves. Over time, the process can snowball.

Example(s): Say at age 20, you begin investing $3,000 each year for retirement. At age 65, you would have invested $135,000. If you assume a 6% average annual return, you would have accumulated a total of $638,231 by age 65. However, if you wait until age 45 to begin investing that $3,000 annually and earn the same 6% return, by age 65 you would have invested $60,000 and accumulated a total $110,357. Even though you would have invested $75,000 more by starting earlier, you would have accumulated more than half a million dollars more overall.1

That’s the power you have as a young investor — the power of time and compounding. Even if you can’t afford to contribute $3,000 a year ($250/month) to your plan, remember that even small amounts can add up through compounding. So enroll in your plan and contribute whatever you can, and then try to increase your contribution amount by a percentage point or two every year until you hit your plan’s maximum contribution limit. As debts are paid off and your salary increases, redirect a portion of those extra dollars into your plan.

Finally, time offers an additional benefit to young adults–the potential to withstand stronger short-term losses in order to pursue higher long-term gains. That means you may be able to invest more aggressively than your older colleagues, placing a larger portion of your portfolio in stocks to strive for higher long-term returns.2

Getting married and starting a family

You will likely face even more obligations when you marry and start a family. Mortgage payments, higher grocery and gas bills, child-care and youth sports expenses, family vacations, college savings contributions, home repairs and maintenance, dry cleaning, and health-care costs all compete for your money. At this stage of life, the list of monthly expenses seems endless.

Although it can be tempting to cut your retirement savings plan contributions to make ends meet, do your best to resist temptation and stay diligent. Your retirement needs to be a high priority.

Are you thinking about taking time off to raise children? That is an important and often beneficial decision for many families. But it’s a decision that can have a financial impact lasting long into the future.

Leaving the workforce for prolonged periods not only hinders your ability to set aside money for retirement but also may affect the size of any pension or Social Security benefits you receive down the road. If you think you might take a break from work to raise a family, consider temporarily increasing your plan contributions before you leave and after you return to help make up for the lost time and savings. Or perhaps your spouse could increase his or her contributions while you take time off.

Lastly, while you’re still approximately 20 to 30 years away from retirement, you have decades to ride out market swings. That means you may still be able to invest relatively aggressively in your plan. But be sure you fully reassess your ability to withstand investment risk before making any decisions.

Reaching your peak earning years

The latter stage of your career can bring a wide variety of challenges and opportunities. Older children typically come with bigger expenses. College bills may be making their way to your mailbox or inbox. You may find yourself having to take time off unexpectedly to care for aging parents, a spouse, or even yourself. As your body begins to exhibit the effects of a life well lived, health-care expenses begin to eat up a larger portion of your budget. And those pesky home and car repairs never seem to go away.

On the other hand, with 20+ years of work experience behind you, you could be reaping the benefits of the highest salary you’ve ever earned.

With more income at your disposal, now may be an ideal time to kick your retirement savings plan into high gear. If you’re age 50 or older, you may be able to take advantage of catch-up contributions, which allow you to contribute up to $24,000 to your employer-sponsored plan in 2016, versus a maximum of $18,000 for most everyone else. (Some plans impose different limits.)

In addition, if you haven’t yet met with a financial professional, now may be a good time to do so. A financial professional can help you refine your savings goal and investment allocations, as well as help you plan ahead for the next stage.3

Preparing to retire

With just a few short years until you celebrate the major step into retirement, it’s time to begin thinking about when and how you will begin drawing down your retirement plan assets. You might also want to adjust your investment allocations with an eye towards asset protection (although it’s still important to pursue a bit of growth to keep up with the rising cost of living).4 A financial professional can become a very important ally in helping to address the various decisions you will face at this important juncture. You may want to discuss:

• Health care needs and costs, as well as retiree health insurance
• Income-producing investment vehicles
• Tax rates and living expenses in your desired retirement location
• Part-time work or other sources of additional income
• Estate planning

You’ll also want to familiarize yourself with required minimum distributions (RMDs). The IRS requires that you begin drawing down your retirement plan assets by April 1 of the year following the year you reach age 70½. If you continue to work for your employer past age 70½, you may delay RMDs from that plan until the year following your actual retirement.5

Other considerations

Throughout your career, you may face other important decisions involving your retirement savings plan. For example, if your plan provides for Roth contributions, you’ll want to review the differences between these and traditional pretax contributions to determine the best strategy for your situation. While pretax contributions offer an upfront tax benefit, you’ll have to pay taxes on distributions when you receive them. On the other hand, Roth contributions do not provide an upfront tax benefit, but qualified withdrawals will be tax free.6 Whether you choose to contribute to a pretax account, a Roth account, or both will depend on a number of factors.

At times, you might face a financial difficulty that will tempt you to take a loan or hardship withdrawal from your account, if these options are available in your plan. If you find yourself in this situation, consider a loan or hardship withdrawal as a last resort. These moves not only will slow your retirement saving progress but could have a negative impact on your income tax obligation.

Finally, as you make decisions about your plan on the road to retirement, be sure to review it alongside your other savings and investment strategies. While it’s generally not advisable to make frequent changes in your retirement plan investment mix, you will want to review your plan’s portfolio at least once each year and as major events (e.g., marriage, divorce, birth of a child, job change) occur throughout your life.

1This hypothetical example of mathematical principles does not represent any specific investment and should not be considered financial advice. Investment returns will fluctuate and cannot be guaranteed. 2All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful. Investments offering a higher potential rate of return also involve a higher level of risk. 3There is no assurance that working with a financial professional will improve your investment results. 4Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against a loss. 5Withdrawals from your employer-sponsored retirement savings plan prior to age 59½ (or age 55 in the event you separate from service) may be subject to regular income taxes as well as a 10% penalty tax. 6Qualified withdrawals from Roth accounts are those made after a five-year waiting period and you either reach age 59½, die, or become disabled.

Source: Broadridge Investor Communications, Inc.


* Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. NASA Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members. CUSO Financial Services, L.P. and its representatives do not provide tax advice. For such advice, please contact a tax professional.