Planning for college is a 17 year journey

Eighteen years ago, my wife and I found out we were going to have a baby. We immediately began thinking about college and paying for it. Both of us had received the gift of college from our parents and agreed that we would provide the same for our children. We knew that saving for college was going to take using all the tools available to us.

State Prepaid Tuition Plans

We were lucky enough to have the Texas Tomorrow Fund available to us just before they closed it to new enrollments. Basically, the plan allowed us to purchase years of college at the current price know that in 18 years, the cost would be much higher. The state has since replaced this program with other opportunities to save for college including a qualified 529 Plan.

529 Plans

A 529 Plan is a tax-advantaged way to save for future education expenses including college. In most cases, the money you put into one of the plans is invested so that it can grow over time. Each state offers a 529 Plan which have different features which may appeal to people for different reasons. For example, we chose the Nevada plan based on the ability to invest in certain mutual funds.

If you don’t feel comfortable enough with investment matters, most of the plans have an age based option that adjusts automatically based on the age of the beneficiary of the 529 Plan. Which brings up a point about 529s that important which is the ownership of the fund and what happens if the beneficiary doesn’t end up going to college. You can either name a new beneficiary who is a family member or take the cash out with penalty.

Choosing a College

I had no idea that the search for colleges to attend took place so early in high school. Thankfully, my wife is a teacher and is in the know. She began taking my oldest on college visits as a sophomore. Once she had decided where she wanted to go, my wife sent her to summer camps there and making contacts with admissions.

The sooner you start on this journey, the more tools are available to you. I encourage parents or soon to be parents to have a serious discussion about planning for college.

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Do you know where your money goes?

Some people are really good about tracking their expenses and using software or spreadsheets to account for where their money goes right down to the penny. I am not one of those people. Don’t get me wrong, my Scottish upbringing does mean I care about my money and has instilled in me a frugality that some may confuse for cheap.

I log into my accounts every day to check balances and see what transactions have cleared but never really had a true sense of where my money was going. Until now. Recently the credit union added a feature to the digital banking system that cleans transaction data and enables it to auto classify transactions. In the past, a debit card transaction at Kroger would have looked like this:

POS 0624 1607 890416 KROGER #144 1920 W LEAGUE CITY LEAGUE CITY TX

And now, the system simply shows:

Kroger and automatically classifies it as Groceries.

Now if I select the Analytics tab in my account, I get a spending break down and see how much my family has spent on Groceries in the last month.

spending breakdown

I can also access the information for all of my accounts at once using the financial wellness widget. Afterall, the first step to financial wellness is knowing where your money goes. Using the financial wellness widget, I can track my family’s spending trends. For example, since the start of the pandemic, our gas purchases are way down and our grocery bill is way up.

Knowing this information is the best way to start a conversation about our family spending. We’ve already identified areas where we need to make adjustments.

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Considerations for a Health Savings Account

HSAIf you work for a district that offers TRS Active Care, you have an important decision to make every year. Typically, you have three choices with one being Health Savings Account compatible (TRS ActiveCare 1-HD).

Before we get into the considerations, we should define what a Health Savings Account (HSA) is. A Health Savings Account as defined by the IRS in Publication 969:

A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.

No permission or authorization from the IRS is necessary to establish an HSA. You set up an HSA with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.

Sounds complicated, doesn’t it? Basically, it is a way to save and pay for medical expenses much like a more familiar Flexible Spending Account (FSA) with one major difference: no use it or lose it stipulation. In other words, you keep the money you put in and it rolls over from plan year to plan year. Case in point, my wife adds a set amount to her HSA each month and has built up a balance of over $4500 which is impossible in an FSA.

Consideration: Cost of premiums and deductibles

Since you must have high deductible plan to qualify for an HSA, your deductible will be higher than one of the other TRS ActiveCare option. In this case, we’ll compare TRS ActiveCare 1-HD to ActiveCare 2 using numbers for employee only coverage found on a school district’s website.

ActiveCare 1-HD ActiveCare 2 Difference
Monthly Premium $67 $482 $415
Yearly Premium $804 $5,784 $4,980
Deductible $2,750 $1,000 ($1,750)
Yearly savings selecting TRS ActiveCare 1-HD with deductible met $3.230

So even with the deductible being met, your annual savings would be over $3000 which could be put into an HSA. If you don’t have any medical expenses, the savings would be the full $4,980 which would be a noticeable difference each paycheck. This brings us to our next major consideration, your health.

Consideration: Your current and expected health
If you are generally healthy, then you should seriously consider the ActiveCare 1-HD option paired with an HSA. It would offer you the opportunity to save much like an IRA and grow the savings tax free for future medical use or retirement savings.

If you require a lot of medical attention including medications, you need to review your options carefully. For example, the prescriptions you purchase all count against your deductible and your out of pocket maximums may be higher.

Other Considerations
There are several other considerations to take into account such as:

  • Record keeping of HSA purchase in case of audit
  • Out of pocket maximums for in and out of network
  • Need for additional retirement savings

 

We encourage you to take your time and consider your options carefully while you have time. If you wait until open enrollment to make your decision, you may not have the time to fully take all of the considerations into account.

 

Learn More About HSAs

HDHP Limits

HDHP Limits

Before you launch your HSA, take a look at your health insurance coverage. To contribute, you must be covered under an HSA-eligible high deductible health plan (HDHP). An HDHP generally requires that you pay out of pocket for medical expenses incurred (excluding certain preventive care expenses) until your deductible is met. After that, plan coverage kicks in. An HDHP may be HSA-eligible if it satisfies the IRS’ annual deductible and out-of-pocket expense limits. However, the rules that define an HSA-eligible HDHP can be complicated so check with your insurance provider or employer to see if your health plan is HSA-eligible.

In addition, to have HSA-eligible HDHP coverage, you:

  • cannot be covered by another health plan (with limited exceptions)
  • you cannot be enrolled in Medicare, and
  • cannot be eligible to be claimed as a dependent on another person’s tax return.

HSA eligibility is determined as of the first day of each month.

HDHP Limits*

2020
Minimum Annual Deductible: $1,400 for self-only, $2,800 for family
Maximum Out-Of-Pocket Expenses: $6,900 for self-only, $13,800 for family

2021
Minimum Annual Deductible: $1,400 for self-only, $2,800 for family
Maximum Out-Of-Pocket Expenses: $7,000 for self-only, $14,000 for family

*These limits are subject to annual cost-of-living adjustments.

Contributions

Contributions to your HSA

As long as you don’t go over the limits that apply to your type of insurance coverage, you can contribute as much as you want, as often as you want throughout the year until your tax return due date (generally April 15 of the following year). In addition, anyone can contribute for you, even your employer.

HSA Contribution Limits*

2020
Self-Only Coverage: $3,550 ($4,550 if age 55 or older)
Family Coverage: $7,100 ($8,100 if age 55 or older)

2021
Self-Only Coverage: $3,600 ($4,600 if age 55 or older)
Family Coverage: $7,200 ($8,200 if age 55 or older)

*These limits are subject to annual cost-of-living adjustments.

Direct Transfer Form

Use this form to transfer your existing HSA balances to your Gulf Coast Educators HSA.

FAQs

FAQs






Rates & Disclosures

Rates & Disclosures

Standard IRA & Health Savings Accounts (Traditional, Roth, & Education IRAs)

BALANCEDIVIDEND RATEANNUAL PERCENTAGE YIELDMINIMUM OPENING BALANCEMINIMUM BALANCE TO EARN DIVIDENDS
$0 - $499.99No dividends paidNo dividends paid$100 for all IRA types. No minimum to open HSA$500 for all types
$500 - $9,9990.15%0.15%
$10,000 - $49,9990.25%0.25%
$50,000 - $99,9990.35%0.35%
Over $100,0000.45%0.45%

Dividends compounded monthly Dividends credited monthly Dividend Period is monthly Balance Method is daily

Truth in Savings Account Disclosures

Health Savings Account Agreement
Except as specifically described, the following disclosures apply to all of the accounts.

  1. Rate information.

    The Dividend Rate and Annual Percentage Yield on your accounts are set forth above. The Annual Percentage Yield is a percentage rate that reflects the total amount of dividends to be paid on an account based on the dividend rate and the frequency of compounding for an annual period. Dividend Rate and Annual Percentage Yield may change monthly as determined by the Credit Union’s Board of Directors. A withdrawal will reduce earnings.

  2. Nature of Dividends.

    Dividends are paid from current income and available earnings after providing for the required reserves. The Dividend Rates and Annual Percentage Yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.

  3. Compounding and Crediting.

    Dividends will be compounded and credited as set forth above. The Dividend Period for each account is set forth above. The Dividend Period begins on the first calendar day of the Dividend Period and ends on the last calendar day of the Dividend Period.

  4. Balance information.

    The minimum balance required to open each account is set forth above. Dividends are Calculated by the Daily Balance method which applies a periodic rate to the balance in the account each day.

  5. Accrual of Dividends.

    Dividends will begin to accrue on cash deposits on the business day you make the deposit to your term account. Dividends will begin to accrue on noncash deposits (e.g. checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued but unpaid dividends will be paid on term share certificates; accrued but unpaid dividends for all other accounts will not be paid if you close the account before accrued dividends are credited.

  6. Transaction Limitations except for checking transactions.

    During any statement period, you may not make more than six withdrawals or transfers to another credit union account of yours or to a third party by means of a preauthorized or automatic transfer or telephonic order of instruction. No more than three of the six transfers may be made by check, draft, debit card, if applicable, or similar order to a third party. If you exceed the transfer limitations set forth above in any statement period, your account may be subject to closure by the credit union.

  7. Fees could reduce earnings on the account.

HSA Administration for Districts

HSA Administration for Districts

Gulf Coast Educators Federal Credit Union offers members of the credit union HSAs in response to the increase in popularity of High Deductible Health Plans (HDHP) offered by school districts in our service area (TRS Active Care). In addition, our Health Savings Accounts have some distinct advantages to our members:

  • The ability to make additional deposits in person, by mail or online, including same day deposits
  • No monthly service charges
  • Instantly issued Visa debit card
  • Earns dividends
  • Local, trusted employees to support HSA holders

In addition to saving school district employees money, we offer our HSA Program to school districts and their employees with qualifying HDHPs in the state of Texas. The credit union will administer a school district’s Health Savings Account program at no charge to the district. Our offer includes:

  • No per user charge to district
  • No set up fee
  • Unlike Flex Spending Accounts, we do not prefund accounts
  • District can send pre-tax or post-tax funds via direct deposit or payroll deduction
  • HSAs can be opened electronically or on site
  • Co-branded debit card
  • Presentations on benefits of Health Savings Accounts to district employees

If your school district would like more information on our HSA Administration Program, please fill out the contact form below and we will contact you shortly.

HSA Administration Request

Request more information about our HSA Administration Program
  • Name
  • Please check the box to confirm you are not a robot.

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

 

Take care of minor repairs before they turn into major expenses

One of the lessons I’ve learned over the years is that problems don’t normally go away without addressing them. And if the problem involves having to spend money, not only does the problem not go away, it usually ends up costing me more money.

I had originally started this post several months ago and thought I would get around to finishing it before now. What brought me back to it was the constant hum of the air conditioner in my office which one of my coworkers heard and said we should get that looked at before it turns into a much more expensive problem. He said it as though he’d learned the lesson much like I had, the hard way.

This lesson applies to all problems, but I think I’ve experienced it most often through automobile and home ownership. Everyone of us has had that squeal or sound our car makes and we just hope it goes away. Sometimes they do but most often the squeal or sound just gets louder and more expensive. If only we had addressed it sooner. For example, when I was younger, my brakes started squealing and I kept putting off a minor repair that would have cost me about $100. Don’t get me wrong, that was a lot of money at the time. I put it off however, and it turned from a squeal to a grinding sound which ended up costing me over $500.

When it comes to home ownership, routine maintenance can help avoid those expensive repairs on items such as air conditioners and appliances. Having someone come out and do routine maintenance on your air conditioning could potentially save you several thousands in costly repairs. Once it goes out, you don’t have much of a choice as to the type of repair, especially here in the Texas Summers.

Anyway, I can’t hear myself think with this loud noise coming from the air conditioning in my office so I need to wrap this up so I can report the noise. Hopefully we can get someone out while the issue is minor and before it turns into one of those expensive repairs we’ve all experienced at some time in our adult lives.

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

 

 

Let the math help you decide on 0% financing

Zero percent financing deals are being advertised on almost every new car ad you’ll see these days. Sounds like a great deal, right? I mean, no interest, how can that be a bad deal? Well, one of my coworkers helped someone buy a vehicle recently and all it took was a simple math lesson to show why the 0% deal was not in their best interest.

Real life example:

The offer was simple. For a vehicle price of $50,000, the member had two options:

Option A: Finance the vehicle at 0% with no rebate

Option B: Finance the vehicle at 3% with a $9,000 rebate

 

Now let’s do the math:

Option A:

Interest Rate: 0% APR*
Loan Term: 60 months
Rebate: $0
Vehicle Price: $50,000

Full amount paid over the life of the loan: $50,000

Option B:

Interest Rate: 3% APR*
Loan Term: 60 months
Rebate: $9,000
Vehicle Price: $41,000

Full amount paid over the life of the loan: $44,203

The Result:

By taking the rebate option, the member saves over $5,700!

Decision driven by feelings and not math

So why is the 0% interest offer so compelling? My theory is that interest is treated subconsciously like taxes. No one wants to pay taxes, and the same goes for interest. The decision is based on feeling rather than simple math. By taking the time to do the math and taking the emotion out of the decision, the choice is clear in this case.

Don’t take my word for it

Use math to verify for yourself. If you find yourself at the dealership and are offered the 0% APR* interest rate or a rebate, use a financial calculator to do the math and make a decision that works for you.

 

*APR = Annual Percentage Rate

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Always be prepared on the Gulf Coast

If you’ve lived along the Gulf Coast long enough you know that you should always be prepared. In addition to hurricane season, we’ve got year-round severe weather with flooding chances, damaging winds and more. Just in the last few years we’ve had several events that have led to school and business closures such as floods, fires and a pandemic. The key to getting through it has always been preparation.

So far in 2020, the credit union has already had to activate two plans that outline how we as an organization prepare for different circumstances. Our pandemic plan was activated early this year and the preparation from that plan helped the credit adjust during the pandemic to continue providing service to our member-owners. June 1st marks the start of hurricane season and our hurricane preparedness plan was activated as a named storm entered the Gulf.

Prepared at home

My wife is much better at preparing our household for contingencies such as floods, hurricanes and as I found out more recently, pandemics. A big part of preparing is paying attention and since it is hurricane season, a visit to the National Hurricane Center is a must. She quickly identifies potential concerns and prepares the house for at least a minimum of a week without being able to access outside services such as grocery stores.

The list usually includes the following:

  • Bottled water
  • Nonperishable foods
  • Batteries
  • Bags of ice

Prepared to leave

A part of being prepared on the coast is an evacuation plan. For hurricanes, mandatory evacuation orders may come to those who live closest to the coast and bays. Know where you will be going ahead of time. For example, we have family on the west side of Houston where we can go. You no doubt have seen the digital signs on area roads that read storm in Gulf, keep tank filled. Sound advice that I know some people always follow and never let their tanks go below halfway.

Prepared for the aftermath

This part of planning is the most difficult. Take the pandemic and stay at home orders for example. It was very difficult to plan for the volume of job loss and business closings that came with it. People had to use their emergency savings to sustain them as they instantly were out of work. With hurricanes, the aftermath can include being without power for weeks to having to demo your house due to flood damage. Preparing for the aftermath includes having all your important documents and insurance contacts readily available.

Being prepared should be the motto of everyone who lives along the Gulf Coast.

Additional resources:

 

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Is now a good time to buy a house?

As you’ve undoubtedly heard, mortgage loan rates have been at historic lows. That reason alone shouldn’t be the only reason you decide to buy a house though. Judging by how busy our mortgage team has been these past few weeks, many of our members have indeed decided that this is the right time to buy. Those members have probably gone through a laundry list of considerations, beyond simply the rate being low.

Buying a house is an enormous investment. If you are considering making a home purchase, we recommend you ask yourself these three questions:

1. Do I plan on staying in the house for a long period of time?
If you move around frequently, buying a house may not be your best option. Yes, you can build up equity through home ownership, but that takes time and/or extra payments. When you purchase a home, there are closing costs and fees charged that can eat away your equity, so frequent sales and purchases erode the equity that you build up.

2. Am I ready to take on the additional costs of home ownership not included in the mortgage payment?
This one hit me like a ton of bricks when the air conditioner went out in our first home. No simple call to the apartment maintenance department was going to take care of this issue. No, it required my own money to fix the problem. Furthermore, there are a number of other expenses and time required that come along with maintaining a home, such as the yard and minor repairs.

3. How much house can I afford?
A common rule of thumb is the 28/36 rule. According to this rule, your mortgage payment (including escrow) shouldn’t be more than 28% of your before tax income. In addition, your total debt, including mortgage, auto loans, personal loans, credit cards, and student loans, shouldn’t be more than 36% of your before tax income. So to answer the question, you can do simple math or use an online mortgage calculator such as the one on our website.

A big part of buying a house is getting a mortgage.
Your rate will be based in part on your credit score, so you’ll need to know what your score is so that there aren’t any surprises. In addition to your score, take a look at your credit report for any potential roadblocks. The credit union makes this information available to you at no charge via our partnership with SavvyMoney.. Once you are armed with that information, you can start the mortgage process. At the credit union, you can work with a member of our mortgage team online or in person and they will help guide you through the process.

So depending on how you answer those questions, now may be a very good time to buy a house. If you are actively searching, we wish you happy house hunting.

 

 

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

The Resiliency of the Class of 2020

Congratulations to the class of 2020, you’ll always have a story to tell. The one word that I will forever associate with the Class of 2020 and those who helped them get there is: Resilient.

Class of 2020

Definition of resilient from Merriam-Webster
: characterized or marked by resilience: such as
a: capable of withstanding shock without permanent deformation or rupture
b: tending to recover from or adjust easily to misfortune or change

All involved as a part of the Class of 2020 have exhibited resiliency in spades. Everyone from the students, parents, teachers, and administrators have shown resiliency during the events of this pandemic. The normal end of year ceremonies and traditions have been adjusted and changed.  There has been a lot of lemonade made lately through creative events such as: parades to honor the graduates, alternative graduations, online proms, etc.

The majority of what I observe from the Class of 2020 has focused on the journey to get here and not what they’ve lost. This mindset will serve them well as they embark on the journey to adulthood. Most would agree that change is happening at a faster rate now than ever before, and maybe that constant change has created this resilient characteristic in the Class of 2020.

My hope is that this resiliency will help them navigate their financial lives as they enter college and the work force. The Class of 2020 has shown they can use different tools to succeed and as they enter adulthood, the tools at their disposal to succeed financially is growing rapidly. Congratulations again to the Class of 2020. I look forward to witnessing your future successes.

 

 

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Buying local always matters

Several years ago, as Chairman of the Clear Lake Area Chamber of Commerce, one of my top priorities was a buy local initiative. Buy into Bay Area was our vehicle for letting area residents and businesses understand the importance of buying local. We expanded this beyond just buying local, we wanted people to think local. We expanded it to every facet of life including getting your education locally, volunteering locally, and playing locally.

Why buying local mattersshop local

Study after study can be found about the benefits to the community of buying local. Three of the biggest benefits are:

  1. Strengthening your community’s economy. Buying local means keeping money in your community. Buying from local small business has an even bigger impact and more of that money stays in the local area. A strong local economy attracts more services and businesses that benefit community members.
  2. Taxes. Local sales taxes help municipalities provide services and infrastructure to keep communities safe and functioning.
  3. Jobs. Local businesses provide jobs for friends and neighbors and cut down on the need to look for jobs outside of your community. Working in the community you live in can add to your quality of life and work-life balance.

Matters now more than ever

Given the struggles our local businesses face due to the pandemic and stay at home orders, buying locally means more now than ever. As a credit union, we are a local business and appreciate the loyalty of our member-owners during the good times and the bad. We try to use local resources whenever possible and have built some great relationships with local businesses over the years.

I encourage you to look to the local businesses that have provided your community with services and give them the opportunity to serve you as they reopen. It could mean the difference between that business being able to keep its doors open and your fellow community members employed.

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.

Comparison shopping can save you big

saving money

It never ceases to amaze me how certain companies take you for granted as a customer. They make you that great new customer offer and put their best foot forward only to raise the price on you each year you stay with them.

Insurance

I’ll never forget the first time I comparison shopped my homeowner’s insurance. I had been with the same company for years and thought they were taking good care of me. The comparison quotes told a different story. Each year (without any claims), the cost had gone up and I had just left it alone since it was paid by my mortgage company through an escrow account. Once I began paying for the insurance myself, I felt compelled to see what else was out there. What I found was the same coverage from another reputable provider at half the price I was paying. Now, I shop it each year. If you use an independent insurance agency like the credit union owned agency, you can get multiple quotes to compare.

Utilities

Another service I shop on an annual basis is my electric provider. This one makes total sense because the price is market driven and if the cost to make electricity goes down, shouldn’t I get to share in those savings? So I make my annual visit to powertochoose.org and select a provider based on current market conditions.

Travel

Given present circumstances, travel may or may not be something I shop for soon, but in the good old days we used to travel quite extensively. My wife even started working as a travel agent in her spare time and we discovered that pricing between providers can vary wildly – for the same trips, flights, cruises, hotels etc. With all the online tools available, this one is low hanging fruit.

Time is the only investment

Comparison shopping is a lot like reading this post. It is only an investment of your time. You may learn something or you may not. You may save money or you may not, but the only way to find out is to put in the time.

 

 

 

 

 

 

 

Post author: Jamieson Mackay, CCUFC

The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.