Building Your Savings - The Snowball Factor

07 June, 2017

Many of us have heard of the term “snowballing” and may visualize a gigantic snowball tumbling down a hill, gathering more snow as it rolls. The same metaphor can be used to describe our finances. We know what the debt snowball is –the continuous revolving mass that accrues fees and interest and may seem impossible to pay off… But what about a savings snowball?

We can apply the same snowball concept to the act of building our emergency fund and other savings accounts. For most students, the biggest obstacle to saving is getting started. Students typically work part time hours, making it hard to earn enough money to pay for rent, utilities, food, textbooks, etc. They may feel there is absolutely no room for savings in their budget. We are going to prove that false by showing you how contributing as little as $1.00-$50.00/week can quickly grow into a decent nesting egg.

You’ve heard it before –the recommended savings amount is to have 3 – 6 months worth of your monthly expenses saved up in an emergency fund. As for the students out there, let’s start with a more realistic goal. Let's shoot for having $1,000 – $1,500 saved up total. This is an excellent number to start with, as that money could be set aside to help cover a potential car repair, a last minute textbook, or laptop fix.

Everyone can start a savings plan, even if it means initially putting away a small amount at a time. Yes, it is possible to save up $1,000 in a years time, even while working on a tight budget! First, start by saving $1.00 a week for your first week. (Yep, that’s it! Just one measly buck.) Then, increase your contribution to $2.00 the following week, then $3.00 in the third week and so on. Repeat this pattern every week for an entire year, and you will end up with $1,378! How? This snowball method is illustrated in the graph below. However, towards the end of the year, you'll be putting away about $50/week, so feel free to pull the reigns if that is stretching your budget too much. Depending how many jobs you work, or if you work more hours during the week than some throughout the year, this could still be a realistic goal. 

Week  Deposit Amount Account Balance Week Deposit Amount Account Balance Week Deposit Amount Account Balance    
1 $1.00 $1.00 10 $10.00 $55.00 19 $19.00 $190.00  
2 $2.00 $3.00 11 $11.00 $66.00 20 $20.00 $210.00  
3 $3.00 $6.00 12 $12.00 $78.00 21 $21.00 $231.00  
4 $4.00 $10.00 13 $13.00 $91.00 22 $22.00 $253.00  
5 $5.00 $15.00 14 $14.00 $105.00 23 $23.00 $276.00  
6 $6.00 $21.00 15 $15.00 $120.00 24 $24.00 $300.00  
7 $7.00 $28.00 16 $16.00 $136.00 25 $25.00 $325.00  
8 $8.00 $36.00 17 $17.00 $153.00 26 $26.00 $351.00  
9 $9.00 $45.00 18 $18.00 $171.00 27 $27.00 $378.00  
Week Deposit Amount Account Balance  Week Deposit Amount Account Balance Week Deposit Amount Account Balance  
28  $28.00  $406.00 37  $37.00  $703.00 46  $46.00  $1,081.00  
29 $29.00   $435.00 38 $38.00  $741.00  47 $47.00   $1,128.00  
30 $30.00  $465.00  39 $39.00  $780.00  48 $48.00   $1,176.00  
31 $31.00  $496.00  40 $40.00  $820.00  49 $49.00   $1,225.00  
32 $32.00  $528.00  41 $41.00  $861.00  50 $50.00  $1,275.00   
33 $33.00  $561.00  42  $42.00 $903.00  51 $51.00  $1,326.00   
34 $34.00  $595.00  43 $43.00  $946.00  52  $52.00 $1,378.00   
35 $35.00  $630.00  44  $44.00 $990.00         
36 $36.00  $666.00  45  $45.00 $1,035.00         

It’s up to you where you decide to stash the cash. Traditionally, if you are saving cold, hard dollar bills, you’ll want to purchase a small safe, or keep the money in an old Folgers coffee tin. While the coffee tin idea may be the most cost efficient option, it is probably not the most secure option –especially in the event of theft or fire! In addition, the more accessible you make the money, the more tempting it will be to spend it. It’s a good idea to keep the money in the bank. Students can look into setting up an auto-deposit option with their current bank, too. This is the most secure and preferred method from our standpoint.

Happy ‘Snowballing’ and enjoy these first few months of summer!

New credit score calculation - What you need to know

26 April, 2017

If you’ve heard anything in the news lately about changes to the way your credit score may be calculated, you haven’t heard wrong. This update will now benefit the conservative spenders, but may also affect those who are riskier consumers. Meaning, those with low scores may benefit from the removal of certain items with this new calculation, such as civil judgments, medical debts and tax liens, which are current factors brought into your credit history. 

This new method is being implemented later this year by VantageScore, a company created by the three major credit bureaus –Experian, Equifax, and Transunion. This is different from the more commonly known “Fair Isaac Corporation” aka FICO score, which has been traditionally used by all financial institutions.

What are the upcoming changes?

This method will now be utilizing “trended data” which means credit scores will now take into account the trajectory of a borrower’s debts on a month-to-month basis. Whereas, if you are actively and responsibly paying down your debt, you are now likely to be scored higher than a person who is just making minimum payments and slowly accumulating more debt.

Another big change affects the utilization factor in your credit score. Remember how 30% of your credit score factors in how much you owe on each account, and how much credit you have utilized? VantageScore will now mark a borrower negatively for having excessively large credit limits. The reasoning behind this infers the consumer’s opportunity to run up high credit card debt quickly. If you have an excellent credit score, you may be hurt the most, since you are most likely to have several cards open at a time with larger credit limits.

For example: A person with $5,000 in credit card debt with a $50,000 limit across several cards could score better than someone with $2,000 in debt on a $10,000 limit because of that ratio.

With taking civil judgments (1. is the situation when there is a ruling against you in a court of law pertaining to non-criminal matters, and often includes requiring payment of damages) medical debts, and tax liens out of the equation, people may see a bump in their credit scores by as much as 20 points. However, negative marks such as delinquencies and debts sent to a collection agency will not be removed. In addition, very few mortgage companies are using VantageScore and will still require a FICO score for eligibility.

Some lenders are pulling credit scores for other reasons, for example, when people are applying for an apartment, opening a credit card or applying for an auto loan, the lender may choose to use VantageScore. About 8 billion VantageScore credit scores were used between July 2015 and June 2016, up 40 percent from the year before. This new scoring model also should not affect what consumers are doing to boost their credit score.

While this may seem like a huge change, this new model shouldn’t be met with panic when it goes into effect later this Fall, regardless of your credit situation. As always, you should know where your score stands. You can get your FICO score for free today through Credit Karma! Get started here and get access to your VantageScore as well.

Source :

5 Financial Tips to Prepare for the New Year

28 December, 2016

As the Holiday season is coming to a close, there has never been a better time to start a personal financial checkup and consider what you want to accomplish in the upcoming New Year. A recent study completed by LendEDU determined that over half of Americans (52.85 percent!) consider saving more money as their most important financial resolution for 2017. If you’ve already started thinking about your own New Year’s Resolutions, chances are, a few of those goals are money-motivated! Here are our 5 financial tips for you to consider as you financially prepare for the New Year.

1. Eliminate Credit Card Debt (or other kinds of debt!)
The average American carries $7,000 in credit card debt. You already know that the money you spend on interest is simply wasted money, and that can cause some serious financial stress, especially when debt can prevent us from reaching other financial goals! Make a list of your current credit card balances, with the interest rates for each account to get an idea on what you owe so far, and what debt needs to be tackled first. A good debt management trick is to focus in on the credit card with the highest interest rate first, then work your way down.

While students may typically not be among this group who carry a high amount of credit card debt, make a commitment to pay off other debts you may have, like a high interest rate student loan or a car loan. To make a payment on your student loan, simply register your account with your student loan servicer and designate the bank account you want to make payments from. (There is no penalty to pay early on your student loans!) Find out who your federal loan servicer is by logging into this website with your FSA ID and password. If you have any private loans, you will want to register with your lender through their website. 

As always, the key to being successful with eliminating any kind of debt is to review your monthly bills and spending habits and cut back wherever you can. Yes, it is going to take some diligence and sacrifice but you can do it! After the credit card is paid off, be sure to never charge more than you can pay off in full at the end of the month.

2. Start an Emergency Fund
An emergency fund is an absolute must have when it comes to being financially prepared. This is money that is set aside in a separate savings account to be used for any unexpected expense, like car and house repairs, medical expenses, or a loss of job. Experts suggest having at least 3-6 months’ worth of your normal living expenses saved up in this fund. 

As a student, it’s still important to have an emergency fund established. While the 3-6 month guideline may seem a little intimidating at first, consider starting off with a smaller savings goal. Let's say you want to have $500 saved up in an emergency fund by the start of next Spring semester. Setting aside $42 a month will help you accomplish this goal within a year! 

3. Reduce Monthly Bills
Break out your monthly bill statements and review them for fees or “extras” you didn’t know you were paying. For instance, if you’re paying to rent a router for your internet service, consider buying a used one instead or installing one yourself that may be lying around in a closet. Contact your cable provider to be placed on a more basic package, or eliminate your cable bill all together. (Hellooo Netflix!) Another tip is to scale back on the data plan you have on your cellphone. This is a feasible possibility if you primarily use your phone while connected to Wi-Fi at work or home. Traveling a lot? Apps like Boingo and Devicescape help your phone automatically connect to available public Wi-Fi!

4. Improve your Health
We all know a common New Year’s resolution is to get healthy! Whether it’s hitting the gym more or watching what we eat, a healthier lifestyle can lead to fewer medical bills! During cold and flu season, it’s smart to be extra cautious by washing our hands often, and making sleep a priority. Start thinking of plans you can implement to improve your health this New Year.

5. Set your Goals
Write your financial resolutions down and set 30, 60 and 90 day checkpoints to ensure that you stay on track. Consider rewarding yourself for staying on track and achieving your resolutions –like going out for a Fro-Yo date! (Plus, Frozen yogurt is way healthier than ice cream, right?) There are also great apps out there that can help you track and monitor your financial goals, too.

Apart from being a fantastic budgeting app, Mint has the capabilities to set and track your financial goals. You will first choose a goal from their list (For ex: Pay off Credit Card Debt, Take a Trip, Save for an Emergency Fund, etc.) or you may create your own. Next, you’ll set the goal with either an end date or monthly amount in mind, and you can link your goal to an account so it’s easy to track.

For those students who are looking to save more money this New Year, the app Quapital lets users customize their ability to automate savings transfers. They can set up rules so money is moved into a savings account after a certain purchase or time period, and the app also lets users insert images of what they’re saving for to help them stay motivated. Cool, huh?

What financial resolutions are on your mind for 2017?

8 Things to Consider Before Moving Off Campus

21 November, 2016

You’re not alone in wondering if you can save money by moving off campus. However, it’s important to weigh the costs that go along with renting your very own place. Here is a list of factors to consider before making the big move.

Consider your monthly portion of the rent –whether you’re living alone or sharing with roommates. How does that cost compare to your current housing contract? For example, let’s say you and your roommate currently live in a double Buchanan suite and you’re looking to find a cheaper off campus apartment. The yearly rate for a double suite in Buchanan is $5,732. Dividing that rate by 10 (5 months in a semester x2) will determine your current monthly cost. ($573 a month). In this scenario, finding an off campus apartment and sharing with more roommates could very well be a lot cheaper, but it will depend on where you live on campus.

You will also want to keep in mind that most off campus leases are yearlong leases, meaning they don’t go by the semester and are not paid via your Ubill. If you don’t plan on staying in Ames over the summer, or will be on internship during the semester, be prepared to find a subleaser who can take your spot on the lease until you get back.

In addition to paying your own rent each month, each rental agreement will most likely require you to pay some sort of utility bill –whether it’s gas, electricity, water, internet or cable. Depending on the utility company, you may need to pay a deposit if you’ve never held an account with them in the past. There may be some extra costs that come with paying for your own internet service, such as buying a router or paying a wiring fee if your apartment doesn’t come with sufficient hook ups. Don’t be afraid to ask the previous tenant or the landlord themselves to get an idea on how much utilities typically run for that specific unit.

Now that you won’t be having a meal plan that provided 2-3 meals a day, you will need to factor in the cost of buying groceries and preparing your own meals. While ramen noodles may seem like the perfect college staple, learning to cook also can be a valuable skill! (Even if your version of cooking just means firing up the Pizzazz!)

Security Deposit
When you sign a lease for a new apartment, you will need to be ready to put down a security deposit. This is money you pay the landlord at the beginning of the lease, and is usually the equivalent to one month’s worth of rent. This is money your landlord will keep as collateral to cover any damages to unit they may find when you move out. As long as you keep your apartment in tip top shape and honor the other agreements on your lease, you should receive your entire security deposit back at the end of your lease.    

Credit Report
Your future property manager is likely to run a credit check on you before deciding whether to rent to you. Most students may or may not have a credit history built up yet but the landlord could use a different method to verify your credibility, like your employment history or your most recent pay-stub.

Renters Insurance
In order to protect yourself and your possessions in the event of an apartment flood, fire or theft incident, it is a good idea to get a renters insurance policy. This can usually be added on to any existing policy, such as your car insurance, and is very inexpensive. The average renter’s insurance premium is $12 a month!

If you’re moving to an apartment off campus, you’ll need your own furniture, dishes, cooking utensils and other household items. The list of needed essentials can be long, so it’s always a good idea to check with your roommates first before you commit to buying anything. Thrift stores and sites like Craigslist are a great places to look for affordable furnishings.

Transportation                                                                                                                                                                   Depending on how far away your new digs are, you'll want to consider any transportation costs. With limited parking availability on campus for students, it's best to find a plan to walk, bike or take the CyRide bus. All routes in Ames are free for ISU students!


Mvelopes : The Digital Version of the Envelope Budgeting System

03 November, 2016

We’ve all heard about the envelope budgeting system. For each spending category in your budget, you determine your spending limit and place that cash into a labeled envelope. Once the envelope is empty, you are done spending in that category. Sounds simple, right?

The theory behind the envelope system is that people are less likely to overspend if they are dealing in cash transactions versus debit or credit card transactions because the cash is more tangible. However, in this day and age, carrying around envelopes full of cash does not align with how we typically manage our cash flow. Everything is done online –from completing banking needs, receiving our paychecks, to making online deposits.

Mvelopes is a budgeting app inspired by the envelope system and can help you stay on track with your student budget! Here’s how it works:
Mvelopes connects to your bank account to keep track of income and expenses. You can use the app to set a monthly budget for all of your expenses, plus set up individualized savings goals. 

If you want to try Mvelopes to manage your budget, here’s the nitty gritty:

1. Sign up online at
Or you can download the app for iOS or Android.

2. Add your accounts.
You may link Mvelopes to as many accounts as you’d like. Including checking, savings or even investment accounts. You’ll need your online banking username, password and possibly an answer to a security question.

3. Define your income.
Add the date and amount of any fixed paychecks, or if you are unsure of your income every month, you have the option to add variable income month by month if your income isn’t consistent.

4. Create a budget.
Creating your budget in Mvelopes is similar to creating any other budget. You’ll create envelopes for what you spend money on and assign a monthly limit to each. You should create envelopes for fixed monthly expenses, like rent, car insurance, car payment, utilities or cell phone bill. Then, separate the leftover funds into your variable expenses envelope, like gas, groceries, shopping and other personal expenses.
Mvelopes also reminds you to budget for larger periodic expenses, like car registration, holiday gifts, buying a new car and vacations. This helps you set aside a little for each every month, so you’re prepared when they come up. 

5. Fund your envelopes.
Next you’ll fund your envelopes, which means assigning part of your balance to cover each expense. You’ll do this with each paycheck to distribute your income as needed across your anticipated expenses.
When you “fund” the envelopes, no money is actually being moved around, or in or out of your bank account. Mvelopes just works with your balance to help you keep track of your digital money the way you’d do with hard cash.

6. Get an easy snapshot of your budget.
When you want to know what you have left to spend, you can check the Mvelopes app on your phone or your account online.

This should help you keep your spending in check, but the app won’t do all the work for you. You will have to “maintain” the budgets by making sure each transaction is assigned properly and that you’re watching the spending limit for each envelope.

If you’ve already used the envelope budgeting system to keep track of your cash, and you’re looking for a digital companion, this is a great alternative. Give it a try today!

How to choose the right bank for you

15 September, 2016

Whether you are new to the Iowa State community, or just looking for a more convenient option, finding the right financial institution to fit your needs can be one of the biggest transitions a student makes while in college. Here are some things to consider before opening that new checking or savings account:

Location. Does the bank have multiple branches in the area where you live and work?

ATMs. The ATMs owned by your bank won’t charge you to withdraw cash, but other banks will. ATM fees are a huge budget breaker! Be sure to avoid those by choosing a bank with nearby and convenient ATM options. You may consider getting cash out at the gas station or grocery store instead, as an alternative to paying a fee to withdraw your own money. 

Hours. Sometimes just getting to the bank can be a hassle in itself! Choose a bank or credit union that offers extended hours that are flexible to fit your needs. 

Customer service. Do some research online to find customer reviews, or visit the bank to get an idea on how you are treated personally as a customer.

Online banking. The internet has made it very convenient to keep track of your finances online. If online banking is very important to you, make sure you are easily able to make transfers, check your transactions, and complete other banking tasks without needing to be physically at the bank.

Fees. Be careful to consider any hidden costs associated with opening a new account. The bank may charge fees for writing a check, online wires, overdraws, and even balance inquiries. The charges may be generally small, but can add up in a hurry.

Credit Unions vs. Banks. If you are considering switching from a bank to a credit union, they are different in several ways. Credit unions are controlled by its members and are not for profit, whereas banks are run by a group of investors with capital, and are for profit. You may find that credit unions offer higher interest rates on their savings account options, but a bank might have a wider range of services.

Whether you choose a credit union or a bank, make sure to keep good records on all your accounts. Each month you will receive a statement of the transactions you made, as well as every deposit and transfer. This will come in handy when you are creating your budgets or preparing for tax season. If you need additional resources, a lot of banks and credit unions will also offer online services, like budgeting calculators, loan repayment tips and savings help.

Not ready to let go of your old bank? Switching banks is not always a necessity for students, depending on your bank’s online capabilities, and personal needs. Good luck, Cyclones! As always, give us a call with any personal finance inquiry - 515-294-0677 or 


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