In This Issue
Quick Links

Win $50!
There are two member numbers spelled out within the text of this eNewsletter. Find your number and give us a call at (888) 387-3875 to claim $50!
Dates to Note
May 25, 2015:
All branches will be closed in honor of Memorial Day. We will return to regular business hours on Tuesday, May 26th, 2015. 
Connections eNewsletter

*Referred person must be 15 years of age or older, eligible for membership with Contra Costa FCU, present a completed referral form when they apply, and become a member for referring member to receive the $25 deposit into their share account. Current members may refer up to 4 new members. Offer ends June 30, 2015.
PresidentsCornerPresident's Corner

The average recent college graduate has $30,000 in student loan debt. The average medical school graduate has student loan debt the size of the average mortgage balance in California. 70% of U.S. college graduates have student loans totaling over $1 trillion. These are staggering numbers.

 

Those with student loans have no doubt had some sleepless nights. At least when a borrower has auto or real estate debt, they can see their tangible asset. With a student loan, the borrower sees nothing but a large liability they have to pay off. I had $7,500 in student loans after graduate school and thought it would never be paid off. With my starting annual salary at a CPA firm (in 1981) at $15,000, it took an inexpensive car, a roommate, lots of Top Ramen, and most importantly, a long-term financial and career plan to pay off the loan.

 

Many of our members at all age ranges we meet at financial counseling sessions are buried in student loan debt. What we have found is that these members are taking college classes without a long-term career plan and seem to be funding their living expenses with student loans. For many of these members, their "plan" is to keep taking classes to keep deferring repayment.

 

Here's another sobering thought: 80% of all student loans are guaranteed by the federal government which are not dischargeable in bankruptcy. Defaulting on these loans means lower credit ratings and less of an opportunity to finance a car or home at reasonable loan terms.

 

Here are some suggestions to reduce student loan debt:

  • Establish a budget. List every expenditure, including the ones in cash. Do without the daily lattes, and focus on the debt. Establish a savings account for your loan payment, and don't withdraw it for any other reason. Successful people sacrifice instant gratification to focus on their craft.
  • Make biweekly payments. An extra payment per month will save thousands of dollars in interest.
  • Work part-time during college. If you're taking classes part-time, work part-time in the field you're interested in pursuing which will provide real-world experience translating into a better paying position after graduation.
  • Share your salary increases with your loan. When you earn a salary increase, take 50% of it to pay down the loan. You're not sacrificing what you already have while keeping your eye on the financial ball.

Paying off student loan balances is not a sprint, but a marathon. Thinking in terms of paying off an achievable percentage per year makes the debt easier to digest and less overwhelming. I would be interested to hear your student loan payoff success stories. Of course, your Credit Union is always here to help.

 

 

David M. Green

President/CEO

[email protected] 

(925) 335-3802

StatoftheMonthStat-of-the-Month

How much attention do you pay to this factor? 

 

by Jason Vitucci, CFP and Gene A. Schnabel

 

Will you pay higher taxes in retirement? Do you have a lot of money in a 401(k) or a traditional IRA? If so, you may receive significant retirement income. Those income distributions, however, will be taxed at the usual rate. If you have saved and invested well, you may end up retiring at your current marginal tax rate or even a higher one. The jump in income alone resulting from a Required Minimum Distribution could push you into a higher tax bracket.

 

Prior to retirement, investors would do well to study the tax efficiency of their portfolios as some investments are not particularly tax-efficient. Both pre-tax and after-tax investments have potential advantages. (SEVEN ZERO ZERO THREE ONE ZERO ZERO) 

 

What's a pre-tax investment? Traditional IRAs and 401(k)s are classic examples of pre-tax investments. You can put off paying taxes on the contributions you make to these accounts and the earnings these accounts generate. When you take money out of these accounts come retirement, you will pay taxes on the withdrawal.2

 

Pre-tax investments are also called tax-deferred investments, as the invested assets can benefit from tax-deferred growth.

 

What's an after-tax investment? A Roth IRA is a classic example. When you put money into a Roth IRA during the accumulation phase, contributions aren't tax-deductible. As a trade-off, you don't pay taxes on the withdrawals from that Roth IRA (providing you have followed the IRS rules for the arrangement). Thanks to these tax-free withdrawals, your total taxable retirement income is not as high as it would be otherwise.1

 

As everyone would like to pay less income tax in retirement, the tax-free withdrawals from Roth IRAs are very appealing. Given the huge federal deficit, the pressure is on to raise tax rates in the coming years - and in that light, after-tax investments look even more attractive.

 

It is also possible to convert a traditional IRA to a Roth IRA, so many investors are considering paying taxes on a Roth conversion today in order to get tax-free growth tomorrow.

 

Certain tax years can prove optimal for a Roth conversion and you should work with someone who has experience in both tax planning and financial planning to help guide you through the process.

 

Smart moves can help you reduce your taxable income and taxable estate. An emphasis on long-term capital gains may help, as they aren't taxed as severely as short-term capital gains (which are taxed at the same rate as ordinary income). Tax loss harvesting (selling the "losers" in your portfolio to offset the "winners") can bring immediate tax savings and possibly help to position you for better long-term after-tax returns.

 

If you're making a charitable gift, giving appreciated securities you have held for at least a year may be better than giving cash. In addition to a potential tax deduction for the fair market value of the asset, the charity can sell the stock without triggering capital gains.

 

The annual gift tax exclusion gives you a way to remove assets from your taxable estate. In 2015, you can gift up to $14,000 to as many individuals as you wish without paying federal gift tax. If you have 11 grandkids, you could give them $14,000 each - that's $154,000 out of your estate. The drawback is that you relinquish control over those dollars or assets.2

 

Are you striving for greater tax efficiency?

In retirement, it is especially important - and worth a discussion. A few financial adjustments could help you lessen your tax liabilities. The team at Retirement Solutions is here to help with that.  

 

As a valued credit union member, you are welcome to attend any of our financial planning workshops or come in for a complimentary financial planning meeting. For more information, please call us or visit our website. 

 

Bay Area Retirement Solutions 

1330 Arnold Drive, Suite 249 

Martinez, CA 94553 

(925) 370-3750

 

Securities through First Allied Securities, a registered broker dealer, member FINRA/SIPC. Advisory services offered through First Allied Advisory Services, Inc. Registered Investment Advisor. Investments not FDIC or NCUA/NCUSIF insured, not insured by Contra Costa FCU, may lose value. Products offered are not guarantees or obligations of the Credit Union, and may involve investment risk including possible loss of principal. Contra Costa Federal Credit Union, Bay Area Retirement Solutions and First Allied Securities and all separate entities. Gene A. Schnabel CA Insurance Lic.: 0663016, Jason Vitucci CA Insurance Lic.: 0F59894


Citations:

1: denverpost.com/business/ci_27383286/ira-vs-401-k-which-is-better [1/25/15]
2: accountingweb.com/article/how-make-most-federal-annual-gift-tax-exclusion/224201 [12/18/14]

 

Prepared by Marketing Pro

80187.VN031215 

AutoLoans  

3When balance transfer or cash advance takes place in a Contra Costa FCU branch.

InsuranceTipInsurance Tip
Why You Should Consider Personal Umbrella Insurance 

Although your Home and Auto policies can provide extensive coverage, there is always the possibility of that unfortunate and unexpected incident that could easily exhaust the limits provided by those policies. Imagine:
  • You severely injure or cause the death of one or more persons in an auto accident.      
  • You are out walking your normally very friendly dog and he nips and injures a stranger.
  • Your child has a friend over after school and is injured while swimming in your pool.
  • You are a landlord, there is a fire where your tenant is injured and claims that the smoke detector never went off.

Are you prepared for what comes after your Auto or Personal Liability insurance runs out? You are, if you have a Personal Umbrella. If not, it could come from your assets or future earnings.

 

The purpose of a Personal Umbrella is to provide Liability coverage over and above your Auto, Home, Boat, Rental Property and any other Personal Liability coverage you have already. It comes in increments of $1,000,000 and policies start at around $200/year. This goes a long way to protect your personal net worth against judgments and claims related to accidental issues. Shouldn't you look into a Personal Umbrella today?

 

As an added benefit of your Contra Costa FCU membership,
we at Lou Aggetta Insurance will help you review the things that are important to you and provide you with
options for reducing risk in your life. We are an independent insurance agent and can provide you with home, auto, life, health, business and many other types of insurance coverage.

 

Contact me today to schedule your free review.

 

Denia Aggetta Shields

Lou Aggetta Insurance

2637 Pleasant Hill Road

Pleasant Hill, CA 94523

(925) 945-6161

[email protected]

 

Like us on Facebook at Lou Aggetta Insurance

Follow us on Twitter @LouAggetta

FinancialCounselingFREE Financial Counseling
Are you in need of financial counseling?
Contra Costa FCU is here to help. Timely and honest debt advice is available to our members at no cost or obligation. Learn how to manage your finances.

Make your appointment TODAY!

Just a reminder, you can annually request FREE Credit Reports from all 3 credit reporting agencies online by going to:
For FREE Financial Counseling, don't hesitate to contact:

Shelley Murphy
Sr. Vice President of Lending & Collections
(925) 228-7550 Ext.824

websiteupdateWebsite Update
In order to better serve our members, we have redesigned our website (check it out: www.contracostafcu.org). We know that managing your finances isn't always easy. This update provides a straight-forward, user-friendly experience when visiting us online. You can access information about all of our products and services, as well as learn about who we are and why, as a credit union, we're truly here for our members. (EIGHT ZERO THREE TWO)

Don't worry!
You can still access your accounts online, right from our home page.
VideoCheck us out!
Check us out on YouTube!