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Blog Archive October 2019



The Billion Dollar Market Trend Fueled by Generation Z

A group on Millennials looking at their smart phones.

Generation Z, those born between the mid 1990s and 2015, constitute about 26 percent of the population. As one of the most numerous demographic groups, retailers and brands are especially interested in their preferences and tastes. Generation Z is next in line after the millennial generation, but with very different mindsets than their predecessors.

Generation Z values several key ideas including environmental sustainability, positive peer reviews and cost-effectiveness. These three concepts lend themselves towards a huge incline in the resale market. Recently, sustainability has become a factor of relevance when considering a purchase, especially for younger generations with buying power. Eco-friendly habits and ways of reducing our carbon footprint are part of our culture and the way of the future. In fact, Generation Z members will easily boycott a brand, service or product if the company behind it represents values that do not align with their beliefs. With this in mind, many companies have revamped current practices that lead to excessive waste for improved processes that reduce their overall discard.

Companies that have altered their values and perspectives to respect environmental issues have maintained footing in the marketplace. However online resale brands and shops which have always carried that purpose have flourished. In the same light, re-purposing and re-using clothing, sporting goods, kitchen items and anything else that can be used more than once, reduces landfills from overflowing as well as the long-term impact on the environment. Purchasing just 15% of the United State’s yearly average consumer clothing sales from a resale shop rather than new reduces the amount of accumulation added to a landfill by 2 million tons! Generation Z is definitely on the right path for a healthier earth. Reducing the amount of sales derived by new products also sends manufacturers the message to reduce production, therefore decreasing worldwide pollution caused by manufacturing.

As a generation that lived through the most recent recession, most from this group truly value financial stability and the value of a dollar. For this reason, high-end brands offered at full price hold little appeal for most from Generation Z. Rather, they would prefer the cost effectiveness of a gently used version of a luxury brand purse, musical instrument or clothing item at a fraction of the original retail cost.

Generation Z has never existed without access to the internet. In fact, an average Gen Z member spends about 3 to 5 hours per day combined on a phone, tablet or computer. They value interaction and social media opinion more than a marketing tool when deciding whether to make a purchase. A website that offers reviews and surveys will have a better response from this generation of buyers. Incredibly popular websites exist for this purpose alone. The resale of gently used luxury items through an online marketplace is an extremely popular market trend. Websites and apps that offer such services are Thred Up, Poshmark, Depop, Rebagg, Tradesy, Grailed, OfferUp, eBay, GOAT and Facebook’s Marketplace.

Reports show that resale rates are increasing faster than retail sales, having gone up almost 50% from 2017 to 2018. Clothing holds the largest percentage of the resale market, currently generating sales of about $20 billion dollars. Market trends predict that the resale market will reach sales of over $40 billion dollars by 2022, primarily from online transactions. At least one in three adult women have shopped resale in the past year, compared to the years prior, confirming resale shopping as a conventional shopping trend.


Useful Terms for Home Buyers

Happy in our new family home. Close up of baby crawling with parents nearby while unpacking boxes.

As a potential home buyer, the process of purchasing a home is stressful in itself. Trying to choose the perfect home with the ideal location, schools, square footage, layout, yard, neighborhood, taxes etc. that falls within your budget seems like an impossible task. Once you’ve managed to find your perfect home, you must still navigate through the home buying process. There are several steps and a bit of paperwork to complete before you can unlock the door to the next chapter in your life and the terminology used might be slightly intimidating if you’re unfamiliar with it. Let’s breakdown the meaning of the most commonly used verbiage you’ll be hearing in the home buying process so you can feel like a pro instead of a fish out of water.

  1. APR – Annual Percentage Rate: This is the annual rate charged for borrowing and represents the actual yearly cost of funds over the term of a loan. Use the APR as the base to shop and compare lenders. The lower the rate, the less you will be spending over the course of the loan.

  2. Mortgage Affordability: Do your research and analyze your finances to determine what the right housing budget is for you. Just because you can afford a higher priced home necessarily doesn’t mean you should buy it.

  3. Pre-Approval: Having pre-approval means you apply for a loan, without having a specific property identified. The lender will pull your credit information to review your credit history and obtain all the financial information required to underwrite a loan. In turn, the lender will provide you with a written letter stating the amount they would be willing to lend you to purchase a home.

  4. P&I  - Principal and Interest: This part of your mortgage payment accounts for the money you borrowed to pay off your home. P& I is typically the majority of your payment, but not all of it.

  5. ARM – Adjustable Rate Mortgage: An ARM usually offers reduced initial payments that increase after 3, 5 or 7 years, at which point the interest rate adjusts to a higher rate.

  6. ACV – Actual Cash Value: In reference to homeowner’s insurance, this is the fair market value of your property before any damage occurs.

  7. UPB – Unpaid Principal Balance: An average monthly mortgage payment applies a portion to the principal balance and a portion to interest. The interest is based upon your UPB. The amount of principal left to be paid on the loan is called the UPB.

  8. Market Value: The amount your home would sell for in the current market.

  9. LTV – Loan-to-Value: This sum is determined by the amount of money borrowed divided by the home’s appraised value. The meaning of this term conceptualizes the percentage of your home that you own compared to how much you still owe on it. Banks and lenders use LTV to evaluate risk and decide on terms.

  10. PITI – Principal, Interest, Taxes and Insurance: Together, all of these total to create your monthly mortgage payment. This determines the true cost of owning a home.

  11. FRM – Fixed Rate Mortgage: The most popular type of mortgage is a fixed rate mortgage because the rate of the loan doesn’t change over the course of the loan. No matter the length of the loan, even 15 to 30 years, your mortgage payment will remain the same.

  12. DTI – Debt-to-Income: This is a tool used by lenders to understand a borrower’s ability to manage payments and the likeliness of debt repayment. Debt-to-Income is the percentage of income that will be allocated towards debt.

  13. PMI – Private Mortgage Insurance: Borrowers that do not apply a down payment that is equal to, or more than 20% of the purchase price of the home are required to have PMI. This insurance protects lenders from a potential loss if the borrower cannot pay the mortgage. The payment for PMI is added into the monthly mortgage payment.

  14. Home Equity: A homeowner’s interest in a home or property. This can increase over time if property values increase or if the debt on the loan is lowered.

  15. Escrow: When you obtain a mortgage loan from a bank, you may be required to establish an escrow account for your property taxes and homeowner's insurance premiums. Even though these costs are paid on an annual basis, your bank will require you to pay a monthly fraction towards each cost and accumulate the balance in your escrow account. This ensures that these expenses get paid on time every year.


Use Technology to Simplify Your Money Management

Close up of woman's hand holding a smart phone with Pan American Bank & Trust Mobile app on screen in a coffee shop.

Apps have become a significant part of any smart phone user’s lifestyle. They can monitor all aspects of a person’s life from personal to business, offering reminders, tracking progress and accumulating information. The potential of having such accurate data continuously at your fingertips is a great motivator to not lose sight of goals. For this reason, using apps is a great way to manage finances. There are several available that offer various ways of facilitating the management of money or the breakdown of goal progress.

In order to utilize the app that will be the most beneficial to you, first determine exactly what your financial goals are so you can search for an app that offers guidelines to reach them. You may need more than one app to have all of the information you need at your disposal at all times. Some of the most effective apps will provide the information you need while others will be intuitive, tracking behaviors and offering notifications if discrepancies are discovered. A few will even go so far as to offer solutions for situations that are leading you off course from your goals.

The Pan American Bank & Trust App offers clients all of the information they need regarding their accounts, as well as the tools they need to quickly facilitate transactions such as:
  • Bill pay
  • Wire transfers & ACH’s
  • Positive Pay
  • Person to Person payments
  • Deposit checks by picture

In addition, transactions can be tagged with spending categories or even a note or picture of a receipt can be added to facilitate organization. All banking done through the app is secure, allowing you to access statements 24/7 and be completely paperless.  It takes only a few clicks to set up a balance transfer, set up SMS Text alerts or operate two way SMS Banking. The app also allows clients to find a Pan American Bank location, even offering maps, directions, hours of operation and ATM/drive-up information.

When searching for an intuitive app to compliment your informational app, you may want to look for the following types of capabilities:
  • Does it monitor your credit score, budget and spending habits?
  • Does it offer information to guide you on ways to improve your cash flow patterns and savings habits based on the information it has tracked?
  • Does it allow you to ask detailed questions regarding your finances? Ex. “Do I have enough equity in my home to borrow $50,000 for a renovation?”

Once you’ve chosen the apps best suited to you, be sure to utilize them to their fullest potential. Aside from the detailed information the app offers, be sure to check out the overall summaries of progress typically provided periodically. These are a great way to determine your financial standing.

You may need additional apps for temporary periods of your life when you are facing short-term monetary situations for which you would appreciate guidance. Perhaps you are purchasing a home and would like to tap into a nationwide network of realtors or lenders. You may have decided to participate in the stock market and found apps to help you keep track of your investments. If you started a new business you may need an app to initially track new clients, inventory or sales.


The Importance of Life Insurance

Close up of man wearing a tie holding a hand drawn illustration of a family. Life Insurance.

Many avoid or do not realize the importance of discussing the topics of life insurance and finance with their loved ones. The concept of structuring one’s finances for long term and unexpected events is paramount. Not doing so can lead to difficult situations such as experiencing financial hardship as a senior or forcing your family into debt due to untimely death.

One should periodically assess finances to determine the breakdown of earnings and savings, in relation to future goals. The questions that should be asked are simple. How much do I need to earn? How much do I need to save to live the lifestyle I desire? What do I need to reach my retirement goals? Once you determine those numbers, assess the difference between your actual finances and your ideal financial situation. Consider where you can reduce spending or increase income to meet those goals. If the difference is too drastic, re-assess your goals or evaluate your current sources of income to consider other options.

Once you’ve taken the steps to become financially responsible, you will realize that life insurance is a must. Many do not consider like insurance because they assume it will be too expensive. However, once they actually consult with a provider, many are surprised by how economical a worthwhile policy can be.  For instance, a $250,000, 20-year term policy is typically about $150 per year for most. When the worst case scenario happens of a young parent dying, a family is shattered in so many ways. A life insurance policy can ensure that the children will still be able to go to college and that the family home and vehicle will not be lost. The family would be able to focus on healing rather than the burden of financial stress. Life in so many ways will change but at least the day-to-day routines of buying groceries and paying for utilities will not be an issue.

Implementing life insurance is smart no matter your net worth. For those that would like to provide their family with more than their estate allows, life insurance proceeds provide the possibility to do so. Individuals with a higher net worth can use life insurance payouts to pay for taxes your heirs will be due to pay when they receive your inheritance.

There are two types of life insurance, term insurance and permanent. Permanent policies are more costly than term insurance. A term policy only pays a death benefit during the term for which it was set which could be 10, 20 or 30 years, for example. For this reason, the premiums are less than a permanent policy.  A term insurance policy should be a consideration for those whose risk is temporary.

A permanent insurance policy covers the insured for life. This type of policy can also provide cash value to the insured at a designated year point in the policy. Policies can be structured to raise in value over time or remain the same for life. 

Term life insurance can be converted to a permanent policy. Premiums will increase when this occurs. Depending on the type of term policy you start out with, a portion of the policy or all of it may be switched to a permanent policy. It is highly recommended to choose a term policy that can be converted so one always has the option to do so. This is typically done when your financial situation has increased significantly and it is more economical to switch the policy you currently have rather than add another.

Discussions with your loved ones and your financial advisor should be a priority to determine the best options to protect your assets and your family.


Successful Mom Entrepreneurs that will Inspire You

Mother holding baby on her hip in office with two female employees.

Pursuing the dream of a successful career for a woman that is also a mother is slightly more of an uphill battle than it would be for others. There are assumptions in the workplace that mothers are less productive and dedicated due to their personal responsibilities. This fact is so prevalent, that research proves that mothers are consistently offered a lower salary than non-mothers for the same position. Nothing could be further from the truth. In fact, motherhood is a huge motivator for women to succeed. Women want to provide an example to their children of a good work ethic and of how to balance all of your needs including personal, career and family.

All of the following women initiated their companies after becoming mothers, with the foresight of filling a need or solving a problem.  Each of these companies designates a useful purpose other than just having profit as a goal. Hard work, motivation and sacrifice have made these companies a success today, all while their CEOs remain dedicated mothers. These are only a few examples that prove the bias against women with children in the workplace is unfounded.

Mom Corps – Founded by Allison O’Kelly, is a national staffing organization for mothers looking for flexible or virtual employment while still being able to cater to the responsibilities of their families. This is a perfect fit for the busy mom that has professional skills she’d like to utilize from home.

Bundle Organics – Kwany Liu started this company while she was expecting her first child. She wanted to provide an assortment of organic juices and teas for pregnant and nursing moms to help alleviate the symptoms commonly associated with those periods.

Playfully – Cofounders and Stanford graduates Sonia Chang and Manisha Shah developed an app to assist parents in their child’s brain development through play. Knowing 85% of the brain is formed by age 3, Chang and Shah designed the app to guide parents through games and activities to increase brain development at a young age.

Home Remedies – Debra Cohen realized there was a need for pre-screened, reliable home improvement professionals when she found herself home alone with young children and needing such services. She created this network of referrals as a solution in 1997.

Habbi Habbi – Cofounders Hanna Chiou and Anne-Louise Nieto left their high level corporate jobs once they became mothers to start a company dedicated to educational, childhood development. Their focus is to create products that will make a difference in children’s lives.

SafetyTat – Michele Welsh had the brilliant idea to create temporary tattoos, labels and stickers with the parent’s phone number and information to use on their child or child’s belongings. This has helped countless children that have gotten lost at amusement parks, crowded malls, airports, etc.

Clementine – Founder Kim Palmer created this app while on maternity leave to alleviate her anxiety. Realizing her stress level was extremely high and after searching for remedies to calm herself, she developed an app to have them readily available. Clementine offers short, guided sessions to boost confidence, reduce stress and improve sleep.

The Simple Folk – Jamie Morea and Abigail Brown founded The Simple Folk after their frustration in trying to find clothing for their newborns that wasn’t produced cheaply and damaging to the planet. Their clothing line offers soft, minimal, organic and sustainable fabrics made only in conditions that are fair, ethical and eco-friendly. They are inspired by the fact that they are making a difference in the world.
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