Month: January 2025

Scam Alert: QR Codes from Unexpected Packages 

You’ve just received a package from an unfamiliar sender addressed to you. Inside, there’s a note featuring a QR code instructing you to scan it for more information. Exercise caution, as this could be a scam aimed at stealing your personal data! 

If your curiosity led you to scan the QR code, it’s crucial to act quickly. This code might have directed you to a phishing site designed to capture sensitive information such as credit card details and passwords, or even install malware on your device, granting hackers access to your phone. 

If you have scanned the QR code and provided your information, change your passwords immediately. Opt for a strong password and enable two-factor authentication. A secure password should be at least 12 characters long and can be a memorable phrase made up of random words. Ensure you incorporate a mix of lowercase and uppercase letters, along with symbols. 

If you’re worried that someone may have obtained your information, monitor your accounts and statements for any unfamiliar names or transactions. You can also access a free credit report weekly. To learn more about credit reports, visit https://www.annualcreditreport.com/index.action.  

Additionally, consider taking further measures to safeguard your identity, such as freezing your credit or placing a fraud alert on your credit report. Familiarize yourself with phishing emails and text messages and regularly update your computer and phone software to ensure you have the latest security updates. 

What I Wish I Learned in School 1 of 12: Compound Interest

If there’s one financial concept that has the power to change lives, but is underappreciated, it’s compound interest. For most of us, compound interest wasn’t covered in school, leaving us to stumble upon its magic later in life. And it’s sometimes too late for us to fully benefit from its power. Here’s why understanding compound interest early could make all the difference.

What is compound interest? 

Compound interest is the process of earning interest on both the initial principal of an investment and the accumulated interest over time. In other words, your money makes money, and that money makes more money, too. Compound interest has tremendous potential to grow wealth when applied consistently over time.

An example of compound interest

Imagine you invest $1,000 at a 5% annual interest rate. If the interest is simple (not compounded), you earn $50 annually. After 10 years, you have about $1,500. But, with compound interest, you earn interest on the $1,000 in year one, then on $1,050 in year two, and so on. After 10 years, your $1,000 grows to $1,628.89 — not because the rate is higher, but because of the compounding effect.

Why timing matters

Compound interest thrives on a single crucial element: time. The earlier you start saving or investing, the more exponential the growth.

For example, investing $200 a month at age 25, with an annual return of 7%, will net you nearly $480,000 by age 65. If you start the same plan at age 35, you’ll only have approximately $227,000 by age 65,

Lessons on compound interest you wish you’d learned in school

Here are the most important principles of compound interest:

1. Start early, even with small amounts. Compound interest needs time to work its magic, and even a small amount of investing early in life could lead to significant returns over time.

2. The Rule of 72. Divide 72 by your annual interest rate, and you’ll get the number of years needed for your investment to double. Learning this trick early can inspire better saving habits.

3. Compounding works for debt, too. Credit card debt, for example, compounds at alarming rates, turning small balances into financial nightmares.

4. Harness the power of automation. Setting up automatic transfers to savings or investment accounts ensures consistent contributions and removes the temptation to spend.

Why understanding compound interest can be life-changing

Understanding the concept of compound interest can truly be life-altering. Here’s why:

  • Increased financial freedom with robust investments.
  • Less stress in emergencies, thanks to fast-growing savings.
  • Early start on retirement savings, ensuring years of growth.

How to make up for lost time

It’s not too late to start harnessing its power. Here are a few steps to get going:

  • Open a high-yield savings account or start investing.
  • Take advantage of employer-matched funds in retirement accounts.
  • Automate your savings to ensure consistency.
  • Educate yourself to better understand how compounding works.

Learning to harness the unique power of compound interest can make all the difference to your financial health.

Don’t Get Caught In a Paper Check Scam!

Don’t get caught in a paper check scam! Here’s some info, and how you can stay safe.

What is a paper check scam?

There are several variations of paper check scams. The most common forms include:

  • Forged checks. Fraudsters forge the signature of the account holder to write unauthorized checks.
  • Counterfeit checks. Fake checks are created to mimic real ones; complete with fabricated account and routing numbers. Scammers then use these bogus checks to pay for their purchases.
  • Altered checks. A legitimate check is stolen and altered to change the payee and/or amount.
  • Overpayment scams. Scammers send a fraudulent check for a higher amount than what’s owed, asking the recipient to refund the difference.

How to spot a fraudulent check

Identifying a fake or altered check can be challenging, but there are warning signs:

  1. Unusual payer information. Look for spelling errors, mismatched fonts or incomplete payer details on the check.
  2. Check number discrepancies. Legitimate checks have sequential numbering. A check with a low or no number, or one that doesn’t align with the issuer’s checkbook, can be a red flag.
  3. Poor print quality. If the check feels flimsy, has blurry text or looks off in any way, it could be fake.
  4. Too good to be true. If you get an unexpected check, especially for a large amount, be skeptical.
  5. Suspicious sender. A check from an unknown source, especially with vague instructions or additional requests, should raise alarm.

Protect yourself from paper check fraud

Here’s how to stay safe from check scams:

  • Verify your check’s authenticity. If you receive a check from an unknown sender, call the issuing financial institution to confirm it’s legitimate.
  • Secure your mailbox. Use a locking mailbox or take checks directly to the post office to prevent theft.
  • Use check safeguards. Write checks using pens that have permanent ink to make it harder for fraudsters to alter.
  • Switch to digital payments when possible. While checks are sometimes necessary, online payments with trusted services are often safer and faster.

If you’ve been targeted

If you believe you’ve been victimized by a check scam, report it to your credit union or bank as soon as possible. If the fraud involves a forged or altered check from your account, inform the original payee or issuer as well. Next, file a police report, especially if significant financial harm has occurred. You’ll also want to file a complaint with the FTC. Finally, if your personal information was stolen, monitor your credit for unusual activity.

Stay safe!

The Hidden Costs of Buying a Home

Buying a home is a big milestone, but there are many hidden costs that can quickly add up, catching many first-time homebuyers by surprise. Here are some of the hidden costs of buying a home.

1. Home inspection

    Cost: $300-$500

A home inspection isn’t always a required part of the homebuying process, but having your future home inspected by a professional can save you thousands of dollars in future repair costs by identifying problems before you close.

2. Appraisal fees 

    Cost: $300-$600

Most lenders require an appraisal to confirm that the home is worth the purchase price. If the appraisal comes in lower than the agreed purchase price, you may need to renegotiate the price or cover the difference out of pocket.

3. Closing costs

    Cost: 2-5% of the home’s purchase price

Closing costs might be the most substantial hidden expense in the homebuying process. They include various fees, such as:

  • Loan origination fees. Lenders charge this fee to cover the administrative work that’s involved in processing your loan.
  • Title insurance and title search. Title insurance protects both you and the lender from potential ownership disputes. The title search is conducted to ensure there are no existing claims on the property.
  • Recording fees. Local governments charge these fees to make your ownership official in public records.
  • Escrow fees. An escrow company manages the transfer of funds and important documents between buyer and seller.

4. Property taxes

   Cost: varies

Property taxes are an ongoing expense that can vary significantly depending on where you live. While most people understand they’ll pay property taxes, it’s easy to dismiss how much they can cost each year.

5. Private mortgage insurance (PMI)

    Cost: 0.3-1.5% of the loan (annually)

If your down payment is less than 20% of the home’s purchase price, most lenders will require you to pay for private mortgage insurance (PMI). PMI protects the lender if you default on the loan, and it typically costs between 0.3% and 1.5% of the loan amount annually.

6. Homeowners insurance

    Cost: $800-$1500 (annually)

Homeowners insurance is a necessary expense that protects you in the event of natural disasters, theft, or accidents. Many lenders require buyers to pay for the first year’s premium upfront at the time of closing.

7. Professional cleaning

    Cost: $120-$325

Most sellers will deep-clean their home before putting it on the market, but they may not be as detailed when they actually move out. Real estate contracts generally require the home to be “broom-clean” before the seller moves, but this only means a very basic cleanup, with floors swept and trash removed. You may choose to have your home professionally cleaned and sanitized before you move in for a real, fresh start. Be sure to budget for this cost.

8. Immediate repairs

    Cost: Varies

Unless you’re buying a new construction home, your new house will likely need some repairs. From a fresh coat of paint, to new window treatments and light fixtures, to replacing carpets and appliances, this can cost just a few hundred dollars to several thousand or more.

9. Moving

    Cost: $500-$3000

The cost of moving itself is often overlooked, but can add up quickly, especially for long-distance moves or if you need professional movers. Moving expenses include packing supplies, rental trucks or a moving company. The cost of this can run anywhere from a few hundred to several thousands of dollars.

Don’t let the hidden costs of moving take you by surprise! Use our guide to be prepared for the true cost of moving.

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