Friday, February 26, 2021

Things to Consider Before Purchasing a Boat or RV This Year

With spring almost here, are you thinking about summers on the lake or a road trip to the mountains? 

Purchasing a boat or RV can seem like a confusing and intimidating process to navigate. You may know you want a new vehicle for the water, or an RV to take out on the road, but where do you go from there? Before you go and make a spontaneous purchase, research and ask yourself the right questions to help determine the perfect vehicle for you. 

RV’s and boats come in a variety of sizes with various features at a range of prices. Though one option may seem better than the other, that doesn’t necessarily mean that choice is right for you. Here are some of the biggest things to consider before buying a boat or buying an RV: 

  • Lifestyle/Type of Vehicle. Considering your lifestyle may help you determine what kind of vehicle to purchase. Are you taking your RV to national parks, or are you planning on using an RV for a weekend camping trip?  Both trips may require a different type of RV. Similarly, if you’re buying a boat, where can you dock your boat, and where/how are you planning on using it? A boat for leisure versus a boat for water sports requires different types of boats. Additionally, consider how many people you’re planning on accommodating to help you determine the size of boat or RV you need to purchase.    
  • Features. Once you’ve landed on a consensus of what type of RV or boat to buy, think about the kinds of features you may want your vehicle to have. A big thing to consider for RV’s, for example, is the addition of air conditioning inside the cabin, especially if you’re planning on traveling during the hot summer months. Likewise, how long will you be using your RV or boat at a time? If you’re planning on traveling for a long time, you may need to look at vehicles with a full bathroom so you can shower and bathe. 
  • Budget. Figuring out the type and size of your vehicle, as well as the features you want and need in your boat or RV will massively help you decide on a budget for your purchase, and the price range that you’ll be looking at. Deciding on a budget will also help you answer the question: should I buy new or used? Though new boats and RV’s certainly have the appeal of factory freshness and warranty, a pre-owned vehicle may help you stretch your budget more, especially if you find a vehicle in great condition. Just make sure your pre-owned vehicle is thoroughly checked out. 
  • Where/When to Buy. Now that you have a clearer picture of the vehicle you’re looking to purchase, it’s time to start looking at places to shop! Working with a dealer can help you determine the best vehicle for you. Go beyond the options you’re seeing online and take the time to find a dealership near you so you can see, touch, and feel the boat or RV in person. And ask your friends and acquaintances who have gone through the buying experience for advice! They might know a great dealer for you that you weren’t aware of, or give you bargaining insight you didn’t know. Also, consider the time of year you’re looking to buy. Some times of year are better than others to buy a boat or RV, which will ultimately save you more money in the end. 
  • Financing. It’s no secret that an RV or boat is a large purchase that you may need help financing. From the price of the vehicle to added expenses such as insurance and registration fees, accessories, and safety gear, the final cost can really add up!   Let McHenry Savings Bank turn your dream into reality. Our loan services can help you make that large purchase such as a home, boat, or RV a reality by creating a financial plan that works for you.

Start your secure online application today or give us a call at 815-385-3000.


Sources:

https://www.discoverboating.com/buying/boat-buyers-guide

https://koa.com/blog/the-beginners-guide-to-buying-an-rv-purchasing-an-rv/

Tuesday, December 29, 2020

How the CARES Act Impacts Your Taxes, IRA & Retirement

IRA Folder McHenry Savings Bank

Perfect vision. That was supposed to be the theme for 2020, especially when it came to planning and saving for retirement. But in the first quarter of the year, the novel coronavirus hit, and that created confusion and uncertainty when it came to our personal finances.

In March 2020, Congress overwhelmingly passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act - better known as the emergency stimulus package. This over $2 trillion economic relief package was designed to protect the American people from the public health and economic impacts of COVID-19. If you or your family were affected financially by the coronavirus, the CARES Act made it easier for you to withdraw money from your  Individual Retirement Arrangements (IRAs) and workplace retirement plans. This relief program also brought about changes in IRA rules, including tax implications for certain retirement account withdrawals and expanded loan options.

 

Here’s a quick overview of how the CARES Act impacts IRA holders in 2020:

  • The required minimum distribution (RMD) is amount of money that must be withdrawn from your traditional IRA or Simplified Employee Pension (SEP). The CARES Act suspended all RMDs from retirement accounts in 2020. This allows these accounts (and you) more time to recover from the stock market downturns. Retirees who can afford to leave their retirement accounts alone earn a tax break as they will not be taxed on mandatory withdrawals.

  • If you took a distribution (up to $100,000) between January 1, 2020 and December 31, 2020, due to COVID-related events, you are not subject to the additional tax on early distributions.

  • If you took a distribution (up to $100,000) between January 1, 2020 and December 31, 2020, due to COVID-related events, you can recontribute to your retirement account or pay back tax over a three-year period.

 

Now that you have an overview of how the CARES Act affects your IRAs, here are some strategies you can use to take advantage of these changes.

  • Reduce taxable income to be eligible for any future stimulus payment. If your adjusted gross income (AGI) is more than $198,000 for joint filers or $99,000 for single filers), you are not eligible to receive a stimulus payment. However, if you withdraw funds from your Roth IRA or other after-tax assets in 2020 - instead of your traditional IRA - you may be able to lower your AGI enough to qualify for a stimulus payment.

  • Complete an IRA rollover. If you already took your RMD for the year but didn’t need to, you might be able to return the monies to your account by completing an IRA rollover. By rolling over, you’re saving for your future and retirement while your money continues to grow tax-deferred. Refer to IRS Notice 2020-51 to complete your rollover.

  • Take a distribution and repay over three years. If you have a COVID-related financial need (need being the key word), you have the option to withdraw funds from your IRA or other retirement accounts. Once your financial situation improves, you can recontribute to your IRA or pay taxes over a three-year period. For example, if you took a $15,000 COVID-related distribution in 2020, you could claim $5,000 in income on your next three federal tax returns (2020, 2021, and 2022). However, you do have the option of claiming the full amount on your 2020 return.

 

Withdrawing funds from your retirement accounts is not a decision that should be taken lightly. Taking funds out early can negatively affect the health of your investment portfolio and may require you to adjust your retirement goals. Consult with your financial advisor before embarking on any of these strategies.

 

At McHenry Savings Bank, trust is earned. We seek to understand your financial needs and goals. We provide financial solutions designed to meet the needs of our customers - including investment products and services. Visit McHenry Savings Bank to learn how you can save or speak with an expert to discuss your personal financial goals by calling 815-385-3000.

 


Sources

https://www.irs.gov/newsroom/relief-for-taxpayers-affected-by-covid-19-who-take-distributions-or-loans-from-retirement-plans 

https://www.irs.gov/newsroom/coronavirus-relief-for-retirement-plans-and-iras 


Monday, November 23, 2020

Being Prepared for an Emergency Pays Off

Fire McHenry Illinois

They say by failing to prepare, you are preparing to fail. This is especially true when it comes to preparing for an emergency such as storms, tornados, fires, or even something a little closer to home, the loss of a job, or health crisis.

Nobody likes to think of the worst-case scenario but being prepared has a myriad of benefits according to a new report by Bankrate.com. The report, based on telephone interviews with more than 1,000 adults, reveals that just 23 percent of Americans have emergency savings to cover six months of expenses. Here are some tips from FEMA to help at least get you thinking about what you need in the case of an emergency. 

  • Put money aside for an emergency — Start saving today, and add to your emergency fund with each paycheck. 
  • Cash is almost always accepted — ATMs and credit card machines may not work after a disaster, so keep some cash on hand.
  • What types of insurance do you need? — Floods, earthquakes, and landslides are not usually covered by homeowners insurance, and in coastal states like Texas hurricane winds also may not be covered. Look into supplemental policies to cover floods (www.fema.gov/nfip), windstorms, and other perils. Renters can get flood insurance as well.
  • Be a record holder — You may need your insurance policies, deeds, leases, passports, medical information, and other documents after a disaster. Keep them in a fireproof, waterproof box and store electronic copies on an external drive or website.
  • Sign up for direct deposit — Mail service can be delayed for weeks by a natural disaster. Don’t let that stop your paychecks or benefits like Social Security. Federal benefit recipients can sign up at www.godirect.gov/gpw/ or 800-333-1795.
  • Snap some pics — Having photos and/or video of your valuables, including your furniture, can help the recovery process get started quickly and efficiently.
  • Learn more — The Emergency Financial First Aid Kit is full of information, checklists, and forms to help you prepare for the unexpected.

McHenry Savings Bank has been serving the banking needs of the residents of McHenry County since 1955. In 2002, we celebrated our grand opening of our McHenry Financial Building at 353 Bank Drive in McHenry, IL. Member FDIC. Equal Housing Lender. NMLS #630527. Visit us online today to learn more and don’t forget to follow us on Facebook



Sources:

https://www.moneyunder30.com/compare-average-emergency-fund-savings#:~:text=But%20not%20everyone's%20ready%20for,cover%20six%20months%20of%20expenses.
https://www.fema.gov/news-release/20200220/evaluate-your-readiness-during-national-preparedness-month

Monday, September 14, 2020

Don’t Bet the Farm! 3 Ways Refinancing Farm Mortgage Can Benefit You Now

In today’s volatile markets, there are precious few ways to materially reduce expenses on the farm or ranch without impacting production levels. However, today’s financial environment provides you a unique and valuable opportunity to improve the cash flow of your farm while simultaneously reducing risk and uncertainty. 

As the Federal Reserve has attempted to stimulate economic activity by increasing the supply of money in the economy, interest rates have fallen to levels not seen in several generations. For the farm or ranch owner, these remarkably low rates come at time when payment terms for farm mortgages are attractively flexible, making the refinancing of farm mortgages a great opportunity for virtually all owners of farmland. Whether an existing mortgage is close to its maturity date, or there are still several years remaining, it is important to act now to take advantage of the lower rates and longer maturities currently available. The sooner you can lock in these rates and terms, the sooner you can benefit from the improved cash flow from the lower payments. 

There are 3 benefits to refinancing your farm mortgage now. 

1. Rate Reduction: While this is an obvious benefit, it seems few people are aware of the magnitude of change available. Today 7 year fixed rates are available to strong borrowers at rates around 3.65%1 , and 15 year rates are available around 3.9%1 , which are approximately 1% below equivalent rates as recently as January of this year, and well below rates of a year ago or more. 

2. Repayment extension: In addition to the overall decline in rates, longer term rates have actually fallen more than short term rates, providing an opportunity to lengthen the repayment period (maturity and/or the period the payments are calculated over). The cash flow effect of the rate decline can be “supercharged” by lengthening the time over which the principal payments are spread and reducing each payment even further. The amount of this benefit in cash flow will be determined by the terms of the debt being refinanced, as today’s farm mortgages can have amortization terms as long as thirty years. 

3. Target important objectives: While many borrowers will want to use this favorable refinancing environment to maximize the cash flow benefit of reduced mortgage expenditures, some may instead want to use the range of payment structures available to target specific planned life events. For example, if current earnings are good, a borrower who wanted to retire debt free at a specific date may want to choose a payment structure with an accelerated payoff calendar targeted to that date. Alternatively, if the borrower planned on selling the land within a few years, they could choose a longer term amortization with a shorter term maturity in order to minimize current cash flow costs prior to the planned sale. 

Uncertainty has always been the nemesis of the farmer. From weather, to insects, to government policy, the value of production is subject to forces beyond our control. However, the financial structure of your farm has never offered as much opportunity for improvement as it does today. Technology has even made the process quicker and more efficient than in the past. Now is a great time to take control of your financial future and review the opportunities and alternatives for refinancing the mortgage on your farmland.

A good lender should be able to listen intently to your objectives and help you select the loan terms that best permits you to take advantage of today’s exceptional rates and structural alternatives. While many banks may not be able to offer the full range of long-term fixed rates currently available, McHenry Savings Bank, through its relationships with FarmerMac and other leading farm lenders, can provide a full menu of attractive financing alternatives. Please feel free to contact me to discuss your situation or address any questions you may have.

Tuesday, August 18, 2020

How to Save for Retirement

Retired Couple McHenry Savings Bank IL
 

Whether you’ve just started in the workforce or have been working for decades, we all know the importance of saving for retirement. Despite this knowledge, a majority of Americans have not created or contributed to their nest egg. According to the National Retirement Risk Index (NRRI), nearly 50% aren’t saving enough to maintain their standard of living during their later years and 21% aren’t saving any money at all. 

Saving for retirement is easier than you think, but it will take discipline and a change in your financial habits and mindset. The financial experts at McHenry Savings Bank have compiled some simple yet meaningful ways you can save for your retirement:

When you get a raise or bonus, increase your 401(k) contribution. This is the easiest and most effective way to boost your savings potential. For example, if you receive a 3% raise, increase your plan contribution to 1.5%. Adopting this habit will help you save more and result in a larger paycheck, as contributions are taken out pre-tax. 

If you’re fortunate enough to receive a bonus, many employers will allow you to contribute at a higher rate for that pay period as long as you don’t exceed the annual contribution limit. In 2020, the IRS raised the contribution limits to $19,500 and the catch-up contribution limit (for those 50 and older) to $6,500. The catch-up limit is in addition to the annual contribution limit.

Capture all of your employer’s match. There is no better investment than taking advantage of the matching 401(k) contribution dollars your employer is willing to give you….for free. According to a study by Alight Solutions, nearly 20% percent of United States workers are not saving enough to receive the full match offered by their employer.  The same study indicates that these same workers are within 2% of receiving the full match. Simply put, they can receive the full match if they increase their contribution by 1% over the next two years. If you’re unsure about how much you are contributing or the current match percentage, check with your human resources department. 

Make IRA contributions. An Individual Retirement Account (IRA) is another retirement saving strategy - especially for those who have maxed out the contribution to their employer’s 401(k) or whose employer does not offer a 401(k). Both a Traditional IRA and a Roth IRA offer tax breaks for saving as well as tax-deferred growth on contributions. However, the benefits vary between the two types: 

  • Traditional IRA. To qualify for a Traditional IRA, you must have earned income. There is no income maximum, but tax-deductions my phase out at $65,000 gross income for individuals and $104,000 for married couples filing jointly. For 2020, the maximum contribution limit is $6,000; $7,000 for those 50 and older. Contributions  may be deducted from your income taxes provided you don’t make more than these amounts. However, the monies grow on a tax-deferred basis until they are withdrawn. When you reach age 59-½ funds can be withdrawn without penalty. If you withdraw money prior to age 59-½, the amount taken out will be taxed as income and be subject to a 10% penalty. After age 72, minimum distributions are required. 
  • Roth IRA. Like its counterpart, you must have earned income. The maximum income is $124,000 for individuals and $196,000 for married filing jointly, but the contribution limits are the same as the Traditional IRA. The difference is that with the Roth IRA you can invest money post-tax and the money grows tax-free. Contributions to the account can be withdrawn tax-free, but earnings may be taxed as income and be subject to a 10% penalty. After age 59-½ both contributions and earnings can be taken out tax-free. 

From a Roth or Traditional IRA to Certificates of Deposit and interest-bearing savings accounts, McHenry Savings Bank has a variety of products to meet your savings and retirement needs. With branches in McHenry, Richmond, and Johnsburg, we are a full-service financial institution with personal, commercial, and investment services. For more information or to schedule an appointment, email us at customerservice@mchenrysavings.com  or call us at 815-385-3000.


Photo from Canva 


Tuesday, July 21, 2020

First Steps for First Time Home Owners

First Time Home Owners holding boxes


Buying your first home is part of the American dream and a big life step! If you’ve made the decision to become a homeowner you may be tempted to hit up every open house you can and find new listings on the web. Before you start your search to find your dream home there are some important first steps you should consider first.

Preapproval
There are a lot of challenges when it comes to purchasing your first home. By obtaining a pre-approval from the lender of your choice you can show realtors you are committed to purchasing and have the funds to back it up. Here are some commonly requested items you will need for the process, according to the Home Buying Institute
  • Social Security number
  • Proof of employment
  • Proof of income (typically your past two pay stubs)
  • Tax documents (typically for the past two years)
  • Current place of residence
  • Bank account statements
  • Credit information (if you have it; they will also run it as well)
  • Purchase agreement
  • Gift letters (if family members are going to provide funds to help you cover your down payment).
  • Monthly expenses (insurance, phone, car, student loans, etc.) 
  • Self-employment documents 
Use online tools
Unlike the past, these days you can use numerous tools to help you narrow down your perfect home based on what you can afford. A mortgage calculator has fields for home value, down payment, loan amount, interest rate, terms, HOA, PMI and credit rating that will easily give you an estimate within minutes of entering the field.

Avoid opening new lines of credit 
When it comes to purchasing your home, your credit score is taken into consideration. Opening new store cards or taking out a loan for a vehicle is not a good idea until you’re established in your new home. 

Have an emergency fund set aside
Nobody likes to think of worst-case scenarios but emergencies do happen. On average, lenders recommend having 3-6 months of net salary set aside for unexpected emergencies such as a car repair, loss of a job, or medical emergency so you are still able to cover your mortgage payments. 

Take advantage of first-time home-buyer programs
In the past, you may have needed 20% down for a home purchase. Today there are many first-time homebuyer programs available that require considerably less. If you have dismissed the thought of owning a home because you don’t have 20% down, talk to your lender to see if you qualify for a residential home loan program that is best suited for you. 

McHenry Savings Bank offers loans to fund your major purchases and make your dreams a reality. Are you ready to purchase a home, or refinance your existing mortgage? We can customize a financing plan to your specific needs using a variety of loan options including:
  • Fixed Rate Loans
  • Adjustable Rate Loans
  • Construction Loans
  • Jumbo Loans
  • Vacant Land Loans
Due to increased call volume, please call 815-385-3000 or email loans@mchenrysavings.com directly for assistance. We are working to respond to all of our clients as quickly as possible during this time.

Friday, June 19, 2020

Money Markets: Great place to stash excess cash

Graph of Future McHenry Savings Bank
If you’re researching how to grow your savings without putting it at risk, then you will find more than a few options out there. As you navigate the different plans, programs, packages, and products available, you may start to see a familiar name: Money Market. So what is a Money Market account and why should you consider one over a standard savings or checking account?

One of the key advantages of a Money Market account is typically earning more interest on your money than you would in a traditional checking or savings account.  Below are some of the highlighted benefits of a Money Market Account.

Rate of Return Usually is Higher
Generally, the amount required to open and earn interest in a Money Market account is usually higher than a typical checking or savings account. And the interest you earn on that money is also higher.  McHenry Savings Bank (MSB) offers two types of Money Markets: the traditional Money Market and the Indexed Money Market. 

The difference typically lies in the minimum amount needed to open an account and the interest rate.  At McHenry Savings Bank a traditional Money Market account requires an initial $1,000 deposit to be opened, whereas an Indexed Money Market account requires an initial deposit of $10,000 to open. 

Banks like MSB will also offer competitive variable interest rates that reward you - yes, reward you - for saving money in a Money Market account. The higher the balance, the higher the rate your money earns. For the Indexed Money Market, the interest rate is instead tied to the weekly average 4-week Treasury Bill secondary market rate, also known as the Constant Maturity Treasury Rate (CMT). 

Secure and Insured to Protect You from Loss
Investing your money in stocks, bonds or other investment strategies may carry a high risk of loss or no loss protection at all for the initial amount you fund.  A Money Market account can carry a lower risk profile when you open your account with an institution insured by the FDIC like MSB.

Easy Access to Account
The benefits of MSB’s money market accounts -includes account features you are familiar with using in checking or savings accounts, like access via checks and online banking (e.g. checking) and  limited transactions per statement period of six (6) debits including checks, automatic or pre-authorized transfer or payments (e.g. savings).

Piggy Bank McHenry Savings Bank

Looking for a liquid savings plan for emergency needs or just a good return on your money? McHenry Savings Bank can offer you a competitive variable interest rate. Our Money Market Account and Indexed Money Market Account reward you with higher interest rates for higher balances, with an added convenience of limited check writing and online banking. As your balance grows, your account automatically moves to a higher tier.

Now more than ever, McHenry Savings Bank is committed to protecting our customers and their money. Whether you are a small business or a local family, MSB is here to help you save. Learn more about how you can save some money for a rainy day while actively grow with MSB. Call us today at 815-385-3000 or visit our website at https://mchenrysavings.com/. Member FDIC.

Sources: