Animal Allies wins February ATM Charity Challenge; March contest has begun!

Park State Bank Animal Allies logo 01-17-2015Congratulations to Animal Allies Humane Society, winner of the February Park State Bank ATM Charity Challenge, with 274 logo “likes” on our Facebook page. Animal Allies will receive a $250 donation from Park State Bank, representing one day of bank proceeds from our ATM network. As a previous winner, Animal Allies will rotate out of the contest for one month, but please vote for your favorite local charities in the March contest on the Park State Bank Facebook page. And don’t forget to “like” our page!

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What’s the best way to spend your tax refund?

Park State Bank logoBy Dale Lewis

It’s tax season, and if you believe the advertisements of the tax preparers, we’re all getting a refund.

Many of us will, indeed, receive a refund when we’re done with our state and federal tax forms. A refund can make a big difference in the health of our personal finances if we spend it right. By the same token, spending a tax refund on less-than-optimal options not only can squander a great chance to enhance our personal finances but it also can waste good chunk of money.

In the end, each of us must be the judge of what constitutes good and not-so-good spending. But from my perspective—that of a banker who spends a lot of time reviewing the finances of people trying to achieve life goals—the best way to use a one-time windfall such as a tax refund is to spend it on needs that will make a difference. And remember, a refund this year is not a guarantee of a refund next year or down the road.

It makes sense to use a refund to pay down high-interest debt, especially the kind accumulated from credit card purchases. Credit-card debt, and the high interest that comes with it, is one of the fastest and most dangerous ways to damage one’s personal finances. Letting credit card debt linger only compounds the problem. That’s why using a one-time windfall to reduce or eliminate high-interest debt tops my list of good ways to spend your tax refund.

Similarly, a refund is a great way to pay down or eliminate debt from minor financial emergencies incurred in the past year. Did your refrigerator or car need repairs, forcing you to go into debt or dip into savings to buy a replacement? Did an unforeseen medical problem for you or a relative rack up a bill at the hospital or with the doctor? Unforeseen medical expenses, even small ones, are one of the biggest reasons that people get into financial difficulty and struggle to get out.

A tax refund is one way to recover from such a jolt. It’s also a great way to start a “rainy day” savings fund that allows you to more easily handle future emergency spending should that be necessary. I strongly endorse setting up a savings account like this as a “buffer zone” for your long-term savings accounts.

But remember that if you do this, be serious. Put your money in an interest-bearing account at a bank where it can grow and where it will be protected by deposit insurance as well as somewhat shielded from temptations to raid this account for less-than-vital needs.

Another great idea is to use your tax refund to start an Individual Retirement Account or to add to one you’ve already established. All of us will need retirement savings at some point. Starting sooner allows the saved amounts to grow over a longer period. Retirement savings also may afford a deduction in the next tax year, and this could enable you to receive another refund, or a larger one. In many ways, saving in an IRA is a gift that keeps giving.

What uses might not be the best for your tax refund? Beauty, of course, is in the eye of the beholder—or the spender in this case. But in encouraging you to take a long-term view, I suggest not spending your refund on a big-ticket purchase, especially one that obligates you to future payments.

I also don’t recommend using a refund for an expensive vacation or to enjoy the quick-fix of a tax-refund loan. Both of these options can put you further in debt instead of allowing you to step up and perhaps out of debt with your refund. In addition, I suggest that vacations should come out of annual income because your refund is not perpetual but your vacations should be.

Remember that a tax refund is money you have now. It’s not a promise of a refund in the future. Don’t assume that your work, personal and financial situations will be the same and that you’ll receive a windfall again next year, much as that may seem likely now.

Paying down high-interest debt, saving for a rainy day or setting aside funds for retirement with your tax refund may not seem as exciting as a tropical vacation. But in the long run, these choices can greatly improve your financial health and your peace of mind.

Dale Lewis is president and CEO of Park State Bank in Duluth. You can reach her at or 218-722-3500.

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Join the Park State Bank ATM Charity Challenge!

Park State Bank logoWe have so many wonderful nonprofit organizations doing important work in the Northland. That’s why we’re starting 2015 by honoring them with the Park State Bank ATM Charity Challenge.

Each month, we will donate a full day’s proceeds from our ATM network to the charity that receives the most “likes” on its logo in our contest gallery, posted on our Facebook page. To participate, simply go to our Facebook page, click on the gallery and “like” the charity you like the most. At the end of each month, the charity with the most “likes” wins.

We’ve started our first round of the contest with six local nonprofits. It will conclude Feb. 28. Between now and then, you can vote and also increase the size of our donation by making your cash withdrawals from ATMs in the Park State Bank network. The more ATM activity, the bigger our donation!

Thank you for participating and helping us honor the good work of excellent charities in the Northland!

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Here’s how to enjoy financial health this holiday season

Park State Bank logoBy Dale Lewis

The holidays are officially here, as if the snow wasn’t a big enough hint.

We each have our own meaning for this season. It’s easy to understand what the season means to retailers. They have been telling us since before the election was over. It’s also easy to get caught up in the holiday hype of spend, spend, spend. Sometimes, it seems as if the shopping frenzy is a competition to see who can give the most or who can secure the best discounts.

Here are some tips for avoiding the enjoying the holidays as they were intended and entering the New Year in good financial health:

Set a budget: It’s familiar financial advice, but it’s timeless for a reason: It works. I’m not suggesting that you put a damper on your holiday spending. But set realistic limits for gift-buying, decoration purchases, meal planning and gifts for yourself—then stick to your plan. When you have a plan, you’re much more likely to control purchases, avoid impulse buys and respect reasonable limits. When the holidays are over, you’ll be thankful you set a budget and stuck to it.

Avoid the credit card: Use your debit card, checks or cash for purchases and do everything you can to avoid the credit card. That way, you’ll avoid paying what could be double-digit interest charges on your purchases, especially smaller purchases. Believe me, those stocking-stuffer socks will look a lot less jolly when you realize you’re paying 18 percent interest on them.

Pay off credit card balances: If you don’t stick to the cash method entirely, remember to pay off the borrowed money balances as soon as you can after purchase. You want to have those credit card purchases paid before the Fourth of July! Make this part of your budget plan. Don’t let the debt hangover get control of your New Year’s resolution

Consider tapping home equity: For larger holiday purchases, such as a snowmobile, ATV or even a new car, finance directly. Shop for the best interest rate as hard as you shop for the best deal on the item. Consider using a home-equity loan instead of putting the item on a credit card. Interest rates for home-equity loans are by far a much lower than rates offered by most credit cards, so financing costs less. You also may reap some tax benefits using your home equity.

Make an extra payment: One of the best gifts you can give yourself is to make an extra payment on your outstanding loans. Be sure to earmark any extra payment amount to reduce the principal balance on your loan. Making what sometimes is called a 13th monthly payment to reduce the principal can help you more quickly pay off your loan and reduce your overall expense.

Be careful: Be extra vigilant against credit card fraud and identity theft during the busy holiday season, when all of us tend to be distracted. Watch your bank account and credit card statements to make sure unwanted purchases don’t appear. Double-check store receipts to see that you received the items you purchased at the correct prices. And be careful to protect your PIN when withdrawing funds from ATMs or at the checkout terminal. Remember, signature-based transactions are always the safest.

Segregate online purchases: Online purchases present a higher level of risk to your data. At a time when more of us are buying online, it makes sense to set aside one credit card exclusively for online purchases. This way you can keep a better eye on what you’re buying and make sure that nothing on your statements was purchased by anyone else. Having one card for online buying also helps you easily organize your purchases, and you can cancel the card quickly if you suspect something is amiss.

As we enter the holiday season, our wish for you is health and peace—physical, emotional and financial. Following these simple tips are some of the best ways to enjoy the peace of this special time while staying in shape financially. Enjoy the season!

Dale Lewis is with Park State Bank in Duluth. You can reach her at or 218-722-3500.

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Prequalify for a loan as the first step to buying that house

Park State Bank logoBy Dale Lewis

It may not seem that way, but now is a great time to buy a house in the Northland.

Yes, temperatures are getting cold and winter is on the way. But that motivates home sellers. Why pay to heat and maintain an empty home all winter when they can get it sold?

VIDEO: The smartest step in buying a home

Add to that one of the best environments for home lending favoring the buyer, with historically low rates, and you have a wonderful combination of factors lining up in favor of home purchasers.

But there’s one task all serious home buyers should have on their to-do lists if they want to benefit from this: Get prequalified for a mortgage loan.

When you hear banks talk about prequalification, it sometimes sounds like a pitch for business. Yes, we’re in the business of providing home loans. But that’s not why it’s important.

When you are prequalified, you have a firm understanding and confidence about how much you can spend on your new home, factoring in all of the variables: the purchase price, the down payment, the monthly payments and the escrows for property taxes and homeowner’s insurance.

There’s a lot more to buying a home than the purchase price. Banks have many loan options to help you achieve your goal of home ownership while respecting your budget, now and in the future.

Most important, you likely don’t know what kind of home you can buy, price-wise, until you sit down with a lender, work through the details and obtain a prequalification. It’s not a lot of work, and it gives you peace of mind knowing that when you hunt for a house, you’re searching in the right territory. There’s nothing worse than to find the perfect place and then realize that the house is out of your price range.

Prequalification also is important for the home seller. When buyers appear without a prequalification from a credible lender, the seller and his or her agent have no assurance that they are doing anything more than wasting their time showing the house.

Is the buyer serious? Does he or she really have the ability to buy? Will the next step in the conversation turn to a negotiation about price and closing date or an endless and frustrating series of responses about needing more time and not being sure?

What’s the best way to get the price you seek for the home you want to buy? Show the seller you’re serious about buying. And the best way to do that is to arrive with a prequalification letter that says, “We’re ready and able to close the deal.”

In my experience, a prequalification letter is the best way to get a seller to take notice and start working with you. Indeed, many real estate agents won’t show homes of sellers they represent unless the prospective buyer has a prequalification letter. It’s just not worth their time.

With a prequalification letter, you’re not committed to taking out a loan. But you get all of the benefits of having a strong financial partner in your corner. Your lender will be available to ask questions, to work with you on the numbers and to adjust if needed.

Prequalification letters don’t expire quickly. Once you have been prequalified, you’re usually good to go for the duration of your house hunt, unless market rates move dramatically or your employment situation changes.

Getting prequalified for a mortgage loan is one of the most effective and easiest steps you can take to achieving your dream of home ownership. And with winter coming and sellers motivated to strike a deal, now is a great time to make your dream a reality.

Dale Lewis is president and CEO of Park State Bank in Duluth. You can reach her at or 218-722-3500.

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