It's already tax time again!

Wow, where did the year go? KaiPerm can help you start preparing for the 2009 tax season. There is good news and some tax breaks to consider for 2009. Check these suggestions out. And, of course, talk with an advisor first before making any tax related decisions.

• First time homebuyers - The first time homeowner tax credit has been extended. Just keep your new home (primary residence) for three years and the credit does not have to be repaid. Talk with your tax preparer for specifics. Note: See KaiPerm for your home loan. Your credit union has competitive rates and super service. With home prices low, it may be a good time for you to buy.

• Unemployment benefits - If you received unemployment benefits in 2009, the first $2,400 is exempt from federal taxes.

• Use your KaiPerm credit card to make a charitable donation in 2009 even if you don't pay the bill until 2010.

• Medical expenses are deductible if they exceed 7.5% of your adjusted gross income. If you are close to the 7.5% threshold, consider scheduling and paying for the necessary medical procedure before December 31, 2009.

• Cash gifts - You can give up to $13,000 per person to any number of individuals in 2009 without having to file a gift tax return. The limit is $26,000 if you are married and the gift is from you and your spouse. Talk with your tax advisor to make sure you do it right. Note: Why not use a credit union account to set up the gift deposit?

• College expenses - Are you a parent with college students? You can claim up to $2,500 a year to cover higher-education expenses. Note: Now is a great time to open a checking account for your college student.

401K tax tips - don't cash out

• It has been reported that forty six percent of workers who changed or lost their jobs took cash from their 401K plans. An employee who cashes out a $5,000 retirement balance at age 25 would receive a check for $3,500 after taxes and penalties. If left in the account, the $5,000 may grow to $75,000 at normal retirement over 40 years at 7%. A recent study stated that 17% of workers who changed jobs and took money from their 401K spent it on items like cars, boats or everyday expenses.

It's official. President Obama has signed a bill that extends the tax credit for first-time homebuyers (FTHBs) into the first half of 2010. This program had been scheduled to expire on November 30, 2009.

In addition to extending the tax credit of up to $8,000 through June 30, 2010, the extension measure also opens up opportunities for others who are not buying a home for the first time.

So Who Gets What?
The program that has existed for FTHBs remains intact with the one exception that more people are now eligible based on an increase in the amount of income someone may now earn.

Additionally, the program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Deadlines
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Higher Income Caps in Effect
The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.

First-Time Homebuyer Tax Credit – Frequently Asked Questions
Here are answers to some commonly asked questions about the tax credit.

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual's primary residence.

What is the tax credit for first-time homebuyers (FTHBs)?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is eligible for the FTHB tax credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible. This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How do I claim the credit?
For those taking advantage of the tax credit in 2009, you may choose to either apply for the credit with your 2009 tax return or you may apply for the credit sooner by filing an amended 2008 tax return with Form 5405 (http://www.irs.gov/pub/irs-pdf/f5405.pdf).

Can you claim the tax credit in advance of purchasing a property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a taxpayer claim a credit if the property is purchased from a seller with seller financing and the seller retains title to the property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Examples of this would include a land contract, contract for deed, etc. According to the IRS, factors that would demonstrate the ownership of the property would include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property.

Are there other restrictions to taking the credit?
Yes. According to the IRS, if any of the following describe your situation, a credit would not be due.

·       You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild.

·       You do not use the home as your principal residence.

·       You sell your home before the end of the year.

·       You are a nonresident alien.

·       You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)

·       Your home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)

·       You owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2009, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2006, through July 1, 2009.

Can you buy a home from a step-relative and be eligible for the credit?
Yes. Provided the person you are buying a home from is not a direct blood relative, the purchase would be allowed.

Can parent(s) who will not live in the property cosign for a mortgage for their child and the child that is a qualifying FTHB still be eligible for the credit?
Yes.

Can a separated spouse who has not owned a home for four years qualify for the FTHB tax credit if the spouse has owned a property anytime in the last three years?
No. However, the spouse may be eligible for the repeat buyer credit. The best path to take in any situation regarding income taxes is to speak with a professional tax preparer or CPA.

If you have any questions that fall outside the situations here, give me a call and if you do not have an accountant to speak with, I can refer you to one.    

All of the information above I have pulled from sources I deem reliable, but I am not an accountant or an attorney.  As always, you should advise a professional when it comes to your taxes.  I am however here for all your real estate needs.  Keep me in mind if you know anyone looking at either selling or buying real estate in SW Washington.  I greatly appreciate your business and continued referrals! 

Bank overdrafts . . . .
another good reason for doing business with KaiPerm.

Overdraft programs are a standard product offered by all financial institutions. Several major banks (Bank of America, Chase, US Bank, Wells Fargo), however, are being pressured by Congress to change the way they charge customers for overdraft items. Consumers have had enough!

These banks are now limiting the amount they'll charge you and how they pay overdrafts. Well, it's about time. But why do business with a financial institution which program is still COSTLY and that has been overcharging you for years?

Overdrafts occur when a checking account is accidentally overdrawn . . . . it happens. Not all overdraft programs are bad. You just need to know the difference between overdraft programs. After all, no one wants to be embarrassed at the check register when their check or debit card is not honored.

Now is a good time to move your accounts to KaiPerm. You become an owner so you know you will be treated fairly. And you can talk with a real person who will provide you a host of options if you are having financial challenges.

Make the move to KaiPerm today. Do business with a full service financial institution that treats its members right the first time!

Financial overview
for August 2009

The National Credit Union Administration (NCUA) regulates all federally insured credit unions throughout the United States. The agency recently mandated that natural person credit unions (like KaiPerm) contribute to the bailout of so-called wholesale or "corporate" credit unions. The corporate credit unions provide services such as taking natural person credit union deposits, wire transfers and check clearing. The corporate credit unions are also regulated and insured by the NCUA.

Unfortunately, the corporate credit unions invested in mortgage backed securities (also known as sub prime loans). As a result, the corporate credit unions suffered large investment losses. Natural person credit unions are being mandated by NCUA to contribute to the financial bailout of the corporate credit unions.

Beginning in July 2009, NCUA is requiring us to set aside $6,243 each month for the corporate credit union bailout. The expense is deemed a "special assessment" by the NCUA. It is similar to what banks are paying to the Federal Deposit Insurance Corporation (FDIC) for the recent bank mergers and loan losses they are experiencing.

The bailout of the corporate credit unions is very frustrating. Your Board of Directors and management are upset by the NCUA's actions. First and foremost, your credit union is prudent in managing your funds. We make sensible loans and investments and we watch our expenses. At the same time, KaiPerm is doing all it can to maintain the highest level of service and competitive products for our members.

From a financial perspective, your credit union is well capitalized with net worth above 8.00%. KaiPerm has more than adequate loan loss reserves to protect our members. Delinquency is a low .50% and our charge off ratio year-to-date is less than .50%. Both these ratios exceed regulatory guidelines and are well below national averages. Dividend rates remain competitive. The credit union is operating with a positive bottom line and we are continuing to build net worth.

Now for the good news . . . . .

Your credit union has plenty of money to lend! We're anxious to make real estate, auto and VISA loans. Our service level is top notch, too. Our purpose is to help you improve your financial well being. Please feel free to contact our staff or myself with any questions.

Ed Waite
CEO
503-813-3258

Women in the work force; where do you stand in retirement?

     The US Census Bureau provides some interesting facts;

• There are approximately $154 million people (16 and over) employed in the US; approximately 82 million men and 72 million women.
• 7.5 million women hold down two jobs.
• 22 million female workers are employed in educational services, health care or social assistance.
• Approximately 70% of workers have access to medical care.

So what does this mean to female employees in the workforce and planning for retirement;

Here are some suggestions to get you started or improve your situation;

• Plan for retirement now. Set you goals and stick with a fixed percentage of your pay into an IRA, 401K or savings plan at the credit union.
• Get rid of your debt, especially credit cards. The average middle aged woman (45-59 years old) had nearly $12,000 in credit card debt. Yikes!! KaiPerm can assist you with a bill consolidation loan.
• Nearly 20% of women 65 years and older live in poverty. In addition to retirement funds, you need to budget for a rainy day savings account.
• Know your financial situation. If you are married, it is imperative that you know where the money is and where it goes. Talk to your spouse and make sure the two of you are on the same page financially.
• If you are divorced, then set up a plan immediately and take an inventory of assets and debts. Talk with a close friend about your plans and goals; ask for feedback.
• Setup a simple spreadsheet or fact sheet with names and account numbers. There are several software programs you can use to budget and keep track of assets (things you own) and liabilities (debt you owe). Set annual goals.

More help;

Go to these websites

• www.SMARTMONEY.com. This is a great website to get started. It will increase your financial literacy.
• www.WIFE.org The Women's Institute for Financial Education is the oldest non-profit organization dedicated to providing financial education to women in their quest for financial independence.
• www.Miserlymoms.com . This will help you control spending and show you how to shop for bargins.
• www.Mymoney.gov. More good information to help you manage your money. Your credit union has several options that you may not be aware of.

Need financial counseling? Call KaiPerm. We can you get started, set up a plan and help you reach your financial goals.

Good luck!

June 2009 Financial Statements.
July  2009 Financial Statements. 
August 2009 Financial Statements.

Kaiperm NW Credit Union is dedicated to:

                                             Growing your financial health plan, together!

We've all laughed at the saying "I'm from the government and here to help you". But in the case of the Social Security Administration, it is true.  And for women, there is especially great news.  The agency has a separate website just for you!

First of all, you need to have a basic understanding of what this federal agency can do for you.  Social security has provided a great handbook titled "Social Security: What Every Woman Should Know".  It is a good primer with back to basics information.  Go to the Social Security Administration website www.socialsecurity.gov/pubs/10127.html to print a copy.   Or go to your nearest social security office to pickup a copy of the 23 page booklet.  It is extremely helpful.

Did you know . . . .

• Nearly 60% of the people receiving Social Security benefits are women
• If you are 25 years old and working you receive an annual Social Security Statement
• If you are a victim of family abuse, Social Security may be able to help
• Most people need 10 years (or 40 quarters) of work to qualify for benefits
• If you have not worked or do not have enough Social Security credits and you are married, you many be eligible for benefits as a result of your husband's work
• If you are a caregiver, have limited income, your husband is deceased, you are divorced, or you don't have enough social security credits, Social Security may be able to help.
• Women are more affected than men by certain aspects including death of a spouse, changing your name for marriage or divorce purposes
• Because women live longer than men, you are more likely to receive survivor's benefits.

More information . . . . Social Security for Women

Go to:  www.socialsecurity.gov/women

Articles include:

 Don't outlive your retirement savings

• Celebrate your marriage
• Plan your retirement
• Pros and Cons on when to retire

We are all too aware of the current economic challenges. Everybody, including the credit union industry, has been impacted. But the point we want to make very clear: your money in the Kaiperm Northwest Credit Union is solid and secure. We are a sound, stable institution with deposits that are fully insured up to $250,000 per account, and we have never invested in mortgage-backed securities or similar ‘toxic' investments.

Not all credit unions have been so cautious. Several "corporate" credit unions did invest in mortgage-backed securities and derivatives just like a lot of other financial institutions and Wall Street investors. But these are not ordinary credit unions. They are specially designated operations that exist to provide critical back-office functions such as check processing and lending between credit unions throughout the country.

We are now being asked to bailout the corporate central credit union system! The National Credit Union Administration (NCUA*) has mandated that every U.S. credit union contribute to this corporate central credit union network bailout. In our particular case, we are required to contribute approximately $457,000 to comply with this mandate.

Are we pleased with this? Absolutely not. Your management and board have written letters to Congress and our regulator expressing our disappointment and offering alternatives to using credit union funds for the bailout.

We are, in fact, very conservative in managing your credit union. We always take a prudent approach with members' money; whatever we don't loan out to members is invested (usually short-term) in insured certificate of deposits. And we are big supporters of the credit union cooperative philosophy of people helping people.

Please look on our website www.kaipermnw.org to keep abreast of breaking information. Also, please attend our Annual meeting on Thursday, May 14 where this topic will be the subject matter of the evening.

Contact Ed Waite, our CEO, or Mark Moisan, Board Chair, with your questions and comments. We look forward to hearing from you.

Ed Waite         503-813-3258              edw@kaipermnw.org
Mark Moisan    503-318-3738              mark_moisan@hotmail.com

Notes:

* The National Credit Union Administration, the regulatory agency for all credit unions (much like the FDIC for banks), insures all credit union deposits in the United States. There are 7,900 credit unions across the U.S. representing 90 million members. KaiPerm has a 7.8% capital ratio, which indicates we are a stable credit union

Some Questions You May Have

Why This Note?
Your credit union board and management believe in full disclosure and transparency. We want our member-owners to know that the regulator's actions, which are substantial, will have a minimal affect on how we do business with you.

How does this situation affect me?
KaiPerm is still strong and competitive. We try to keep loan rates low, savings rates very competitive and fees at a minimum. Contrary to many of the banks, we are making loans to members; in fact, we would like very much to make more. Our operations and our people are unchanged. You can enjoy the same level of quality products and excellent service you have come to expect from us.

Are my deposits safe?
Your deposits are backed by the full faith and credit of the US government. Members having deposits greater than $250,000 can have multiple accounts. For example, a family of two can keep $750,000 at KaiPerm, all of which is insured. IRA accounts are insured with an additional $250,000 per account coverage.

Is there anything we can do to prevent or mitigate this?
The NCUA is requiring all credit unions to contribute to the corporate bailout. The regulator provides the deposit insurance and has issued rules and regulations that all credit unions must follow. To date, the credit union industry has not pursued any further action against the corporate central management or board.

What is the bottom line impact? What will be different?
The credit union's earnings will be reduced in 2009. Your management and board is consulting with our external auditors and other industry experts to determine the best methods to account for the bailout money that will be paid out. KaiPerm has nearly $4.2 million dollars in equity after the payments required by our regulator. The regulator is also considering a plan to allow credit unions to make "monthly payments" to reduce the immediate affect of the payout. Your board and management decided to immediately take the write-downs in order to move forward and focus on our members.

Maintaining your good credit rating is hard work. It is especially difficult during the troubling economic times all of us are experiencing.   

If you have bad credit, it is challenging, but not impossible, to repair your credit.  You need a plan and lots of discipline.  In time, you can turn your credit rating around.

Let’s talk about your credit and credit card debt . . .

Good credit

Having good credit is great.  Contrary to what you read in the papers or hear, credit is available for housing and major purchases such as autos, appliances or electronics for members with good credit.  

In today’s economy, however, it is best to payoff debt as fast as your can.  Why?  Well, your credit rating is influenced, in large part, by your credit card loan balances relative to your card limits.  It is OK to have high credit limits; just keep the balances low or better yet payoff your cards monthly.

Keep your revolving accounts or credit card balances less than one-third of your credit limit.   Low balances indicate that you have plenty of room to borrow if you need. It also validates that you manage you credit appropriately.  There is nothing wrong with having two or three active credit cards.  Keeping your older “seasoned” cards open is a good idea, too. It indicates stability and credit depth.   Remember to keep your balance under control and always pay off higher interest rate cards first. 

Thinking about a debt consolidation loan?  Be careful, it takes discipline not to go back to the convenience of using your credit cards.  Get rid of unnecessary credit cards; cut up unused cards and notify the card company in writing to close out your account. A second debt consolidation loan is frowned on by creditors and you will probably be turned down. 

It is estimated that 30% of your credit score is based on how you well you manage your “plastic”. 

Bad credit

Members with bad credit are easy prey for credit card companies.  Card companies take liberties with members having credit difficulties.  When you have poor credit, the card companies can cut off your credit lines or increase your interest rate with very little, or any notice!

So what can you do when you have poor credit and plenty of credit card debt?

Your first priority is to make sure you and your spouse are on the same page. Talk to ymoney.tner or close friends about your finances. While it may seem You will need to sit down and discuss what is important to each of you; your priorities and the sacrifices you need to make to improve your credit.    If you are single, write down what you intend to do to pay on all debt, particularly your credit card debt.  You might want to talk with a close friend, too.  No one wins when you won’t talk about money challenges.  Establish a budget and timeframe to payoff your plastic cards. Prioritize your debts and payoff the highest interest rate card first.

If you are have difficulty making monthly payments or don’t have enough money to make full payments on your credit cards, there is still hope to turn your credit around.   First, stay in continuous contact with each creditor.  Tell them that you want to make regular and timely payments but that the payments will be smaller.  The credit union can help by establishing an electronic payment system for you.  Card companies like knowing that you have a plan and that the credit union is helping you.  Your action gives the impression to creditors that you are serious about resolving past due payments and that you have a plan.  Keep you account current and over time your credit rating will improve.

Dealing with bill collectors;

Typically, when a merchant has an account that is more than 60-90 days past due, it is assigned to a collection agency.  Collection agencies are in business to collect money. Agencies are paid on commission so they are less apt to want to work with you but if they believe you are trying to pay you obligation, the agency will do a workout plan with you. 

Your first step is to develop a plan and present it to the collection agency.

Request that the collector agree to remove the collection notice from your credit report after the bill is paid.  Make sure the agreement is in writing.

Avoid debt schemes or “out of debt quick” programs or so-called debt relief programs

Ask the collector if he will accept a settlement for less than you actually owe.  No money?  Perhaps a family member can help out.  It could save you big dollars.

Your best advice . .  . talk with the credit union. 

KaiPerm loan officers are experienced at helping members with credit problems.  We help members every day with the challenges of staying afloat during these turbulent economic times.

GOOD GRIEF! Could anyone have even guessed how fast the economy has slipped in the past few months? The country is witnessing a meltdown of gigantic proportions; a once in a life time phenomena.

With all the uncertainty, what action should credit union members take? First, closely scrutinize your budget and treat your money like it is a business. No one knows how long the recession is going to last. One thing's for sure; you'll need to tighten your belt. Start by reviewing your spending habits with your spouse. Make sure both of you are on the same page financially.

If you are single or a single parent, there should not be any sacred cows as you go through your budget. You are the only source of income for your kids. Let them know if you have to cut back on spending.

You can also search KaiPerm's website for helpful and trusted resources that can help you improve your planning and show you how to save money.

Cash is King! So take a look at your current debt. You may have an opportunity to reduce interest rates on your loans. Check your loan paperwork and check the interest rates on your auto, credit cards and even your residence. Some experts are expecting that 30 year mortgage loans may drop another full percentage point.

KaiPerm's 15 year home equity loan rate is a fixed 4.50% (as of January 6). Also consider a US Department of Agriculture loan. The agency has money available for low/no down payment loans for home purchases outside the designated urban growth boundaries. It's a great way to buy your first home. There are some income restrictions. FHA is also making 95% loan to value loans.

Keep your credit rating up. Many credit cards accounts can (and do) increase your interest rate if you miss even one payment on other loans you have. If you have a few extra dollars, make sure you payoff your high interest rate debt first. You will save money and avoid the expensive of high over limit fees and exorbitant late charges.

Do you have student loans? Make sure you know when interest is going to start up. Defaults on student loans can harm your credit rating.

Check out our website; go to Financial Resources then click Identity Theft, a webinar that will help you further protect your money from fraudsters.

Do your borrowing, saving or purchasing needs with reputable and well established businesses. Be cautious for getting "a steal" from a new or unproven business.

Buying opportunities are out there. It is a very good time to be buying from retailers such as electronics firms or a new/used car dealers. Retailers are ready and willing to "make a deal".

But don't expect a dealer to take your existing car in trade or even give you anything remotely close to its value. The new/used car market is devastated. You'll be lucky to even get an offer to buy it from the dealer. Many new car dealers have lost their reputable financing outlets. If your credit score is less than 700, you may not be able to go through a financing outlet.

KaiPerm has plenty of money to lend - get pre-approved before buying an auto. We lend money to fellow members and place more emphasis on character than credit scoring. And think about selling your car privately or donating it.

Last, don't give up hope. Will the economy get better? Sure, it will, but some experts think the economy will be depressed for at least one year and probably longer. That's why you need to talk with us to help you through the difficult times. KaiPerm is here, we have great savings rates, low borrowing rates and a strong desire to be the most trusted financial resource you have.

Do you need financial counseling? Give KaiPerm a call. We can and want to help you. My direct number is 503-813-3258.

Happy New Year