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Jan 24





When you’re young, time is on your side. But retirement is not that far away even though it may seem like it now. In fact, the earlier you start saving for retirement, the easier it will be to hit your financial goals and the less of a drain it will be on your budget over your career.


Compound interest is a simple concept – the money you set aside for retirement earns interest and the interest paid on your deposits also earns interest in the future.

Here’s an example:


Let’s say John is 20.
He starts saving for retirement this year and puts away $100 per month.
If his savings earn 3% until he’s 65, he’ll have approximately $115,000.


Now, Jane waits until she’s 30 to begin investing.
She puts away the same $100 per month and earns the same rate of return.
At age 65, she has significantly less than John – approximately $75,000.


Even if Jane contributed $150 per month, she still saves less than John, approximately $112,000, assuming the same rate of return.


Even when he contributes less, John earns more than Jane because of the magic of compound interest and starting early.


If your employer matches 401k retirement contributions, be sure to contribute. By participating, you’re receiving an immediate and sustainable return on your money. When combined with the power of compound interest, joining your company’s retirement plan is a no-brainer. Moderate and consistent investing is how smart investors grow their nest egg effortlessly and enjoy a comfortable retirement.


The take away is this: start early, contribute often and as much as you can afford.


Happy Saving!


by Jenna, Vice President, Operations

Jan 10


Jenna, Vice President, Operations

Investing in an Individual Retirement Account (IRA) is a valuable way to supplement your retirement income. IRAs offer valuable tax benefits and don’t require a company-sponsored retirement plan. This is a great time of year to get started. For most people, the biggest problem in deciding whether to open an IRA is determining their eligibility. The rules can be confusing.


So, is a traditional or Roth IRA right for you? The essential decision is whether it is more beneficial to take advantage of tax-free withdrawals upon retirement or receive an upfront tax break instead.

Here are some differences to help you decide:



Traditional IRA – Federal tax benefit now

Contribute up to age 70 ½ if you earn income
Provides a tax deduction on contributions
Must meet eligibility requirements – visit the IRS website for details
Earnings grow tax-deferred with funds being taxed only when they are withdrawn. To remain penalty free, withdrawals may begin after age 59 ½. In most cases, your tax rate will be lower in retirement, making this tax-deferred type of IRA a sound choice for many people.
Distributions must start by age 70 ½


Roth IRA – Federal tax benefit later

Contribute as long as you earn income
No tax deduction on contributions
No eligibility requirement
Earnings grow tax-free and qualified post-retirement distributions are not taxed
Does not require distributions to begin by any particular age


For more information, call an IRA specialist at (888) 858-6878.


Pacific Service CU cannot give financial or tax advice. Please consult your tax advisor or www.irs.gov.

Sep 20


Financial advisors agree that you should reduce or eliminate debt and save for your future. But, how do you know what to tackle first? Use the four steps below to rank your loan obligations and start yourself on the road to living without debt.


First things first – you must commit to no new debt. Live within your means.


Next, rank your debts using these four steps:


Start small. If you have small debts that will be quick to pay off, you should list those first – no matter the balance or APR. Checking a loan obligation off your list early will eliminate monthly payments and give you a sense of pride and accomplishment, which can help keep you committed to your goal of a debt-free life.


Know your rates. Rank your debts in order of their interest rates – highest to lowest. Using the interest rates, prioritize the order in which you should pay them off. Sort your obligations by variable and fixed rates. Variable rates should be given a greater priority than fixed – in most cases.


Consider the term. Rank open-ended obligations above fixed-term loans. For example, an auto loan typically has a fixed term. If you make your scheduled payment – you will pay off the loan within the prescribed timeframe. A credit card, however, has no term. Your payment is a percentage of your balance. Therefore, making only the minimum payment could costs you years of interest payments.


Tax Benefits at the Bottom. Typically loans like mortgages, home equity or student loans may offer a tax benefit. Paying those down should be a lesser priority that paying debts like credit cards or car loans. Put those towards the bottom of the list.


Now that you have your prioritized list – start at the top. The first obligation on your list should receive your maximum debt payment. Pay the minimums on all your loans below number one. Once you’ve paid off your first obligation, congratulate yourself and move to the next item on your list. Continue paying your maximum debt payment to your top loan and work your way down the list until you reach your first mortgage, if applicable.


Now the hard part – continue living within your budget. Those debt payments just became your savings deposits! Start with employer-sponsored savings, like a 401k if you have that option. Then move on to IRAs, Certificates and Money Market accounts.


Saving money is often viewed as a luxury for those with “extra” money; however, the consistency of putting away money is how smart investors grow their money effortlessly. Stay focused and remain committed. You can achieve a healthy financial future. Good luck!


by Jenna, Vice President, Operations

Jan 11


Kristin, Vice President, Marketing

If saving or spending less money tops your 2011 resolution list, we’re here to help. Here are my top 10 tips to get started:

  1. 1.  Set a budget. Start by listing the money you spent and what you spent it on over the past three months to get a monthly average. Compare that to what you bring home. You should be spending less than what you earn, with a healthy chunk (think 20%) dedicated to a retirement plan, an emergency fund and paying off any debt. Cut, trim and shave your non-essential expenses to make your money work hard for you.

2.  Move more. If you’re like 75% of Americans, losing weight or getting fit also made your resolution list. Remember that being healthy can be a very budget-conscious move. You don’t have to join expensive gyms to get in shape, especially in California where we have a more moderate climate. Meet friends at a local park, lake or trail. Exercising with a group is a great way to get motivated and get outside!

3.  Pay yourself first. You are your most important asset. This year, try increasing the contribution you make to your 401k or other tax-advantaged savings account, like an IRA. Increasing your contribution by even 1% makes a small difference in your paycheck, but your retirement will thank you. Next year and every year thereafter, do the same. Your savings will grow quickly.

4.  Eat cheap. Cooking at home and choosing healthy options can be very pocket- and family- friendly. Be adventurous and find new recipes online that are simple and healthy! You may even have food leftover to pack for lunch, saving you even more money. At $5-10 a day, brown bagging could save you nearly $2,000 a year!

5.  The rolling vacation. This year instead of traveling by airplane and staying in hotels, my family is renting an RV and heading to the mountains! We’ll spend money on gas and the rental, but save money on hotels, airplanes and eating out.

6.  Automatic Transfers. Using BranchLine, you can schedule automatic transfers to a savings account with Pacific Service CU or at another financial institution. Set it and forget it to see your savings add up quickly.

7.  Date night exchange. Instead of paying that babysitter, how about a date night exchange? You can swap nights out with another couple. Your kids will love the adventure and at today’s babysitting costs, you’ll save a bundle.

8.  Rent it. How about a movie rental instead of the movie theatre? The movie kiosk rentals (like RedBox) offer rentals for as little as $1. Better yet, have you been to your local library lately? For a very minimal cost, you have a year’s worth of books and movies for the whole family – even books on CD!

9.  Reuse It. Invest in a stylish $5 water bottle and refill it instead of using a plastic bottled water. It’s not only budget friendly, but environment friendly, too. And, you look good doing it!

10.  Stop impulse spending. Sounds easy, right? I know it’s not. Try to avoid using your credit card for routine small purchases in order to pay down your debt without adding to it. Sit down with your three-month assessment and see where you can trim. Cutting costs doesn’t have to be dramatic. Small cuts to your expenses can add up to big savings. Do you need that magazine subscription or second latte? How about that gym membership you don’t use? Could you cut down your energy bill by shutting off lights, your computer or turning your thermostat down a couple degrees?

With a little effort and a lot of commitment, you’ll see positive changes in you and your wallet in no time. Happy New Year and good luck!

Sep 22


Kristin, Vice President, Marketing and her son Ryan

It’s that time of year again.  Meeting new teachers, stores filled with pencils and backpacks and wondering where the summer went.  If you’re like me, you’re also concerned about the future cost of education and what’s the best way to save for your child.


Pacific Service CU can help you organize or open accounts to benefit your dependents and you. We offer ways to prepare and protect your investments for the future of your children or grandchildren.


Here are a couple ways we can help:


Living Trust Accounts
A living trust allows you to direct how your assets will pass to your heirs. One of the benefits to a living trust is that the trust assets may not be subject to probate — potentially saving thousands of dollars. You must have your trust agreements established before we can set up your trust account.


Coverdell Education Savings Account (ESA)
The Coverdell Education Savings Account (ESA), often called an Education IRA, allows individuals to save money for a child’s education on a tax-favored basis. Members can deposit after-tax contributions up to $2,000 per child, per year depending on their income. Contributions and earnings are tax free when withdrawn to pay for qualified education expenses for that child.


Gift to Minor
Another flexible and cost-effective way to save for a child is a Gift to Minor account. We can set up a custodial account which allows you to gift assets to a minor during your lifetime. You can give up to $12,000 per year ($24,000 per year for a couple) without having to pay federal gift tax. Other adults may also contribute to the account (hello Grandma!) as much as $12,000 per person per year free of federal gift tax.  While the minor is below the legal adult age, a custodian must be appointed to the account. All withdrawals must be for the benefit of the child until after the child reaches legal age. Upon reaching the legal age, the minor gains control of the account. Withdrawals can be used for any purpose.


Auto Transfer and Direct Deposit
Ask your employer about having part of your paycheck deposited automatically into your child or grandchild’s Education Savings Account or Gift to Minor account. Or, set up automatic transfers using BranchLine. With systematic deposits, the accounts will grow maintenance free.


Products, Services & Education
We know that each stage of your child’s life brings new and exciting challenges. That’s why we’ve designed products, services and financial education with a younger lifestyle in mind. We offer the tools to help you help your child navigate through the world of financial services and are committed to helping our young members grow into financially-responsible adults.


Please consult a tax advisor or attorney to determine if any of these accounts are appropriate for you.  For more information about any of these services, please call one of our friendly member service representatives at (888) 858-6878, ext. 6231.


Pacific Service CU cannot give members financial, tax, or legal advice regarding Living Trust Accounts, Gift to Minor Accounts, or Education IRAs. Please consult a tax advisor or attorney for more information about these accounts and to determine if any of these accounts are appropriate for you. Stated contribution limits are for 2009 tax year and may change for future tax years.

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