Checkpoint Magazine - Spring 2019

COVER

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How to Make Your Financial Goals a Reality I N

Letter from the Executive Vice President

7 Mistakes to Avoid When Buying a Car

T H I S

I S S U E

How to Avoid Travel Troubles on Your Next Vacation

How Much Insurance is the Right Amount?

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SC Telco is passionate about providing service and solutions that exceed expectations. If their members need something—a personal loan, an auto loan, a home mortgage, a debt consolidation loan, an IRA—anything at all, they do everything they can to show a personal, caring commitment to improving their financial lives.

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In the Spotlight

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Letter from the Executive Vice President

MOTOR MISHAPS

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What We Read: Finish: Give Yourself the Gift of Done

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Money Matters with Moxie: The Path to Making Financial Goals a Reality

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Money Management: HOW MUCH INSURANCE IS THE RIGHT AMOUNT?

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TRAVEL TIPS

9 Money Mistakes You’re Teaching Your Kids

SCTelcoFCU @SCTelco_FCU @sctelcofcu sctelco.com This credit union is federally insured by the National Credit Union Administration.

SC Telco is a proud member of the Credit Union Service Center Network. co-opcreditunions.org SM

Copyright ©2019 by SC Telco Federal Credit Union and The Brand Leader. All foreign and U.S. rights reserved.

Contents of this publication, including images, may not be reproduced without written consent from the publisher.

Published for SC Telco Federal Credit Union by The Brand Leader.

SM

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Dear Members, When it comes to goals, there’s a common quote by the French writer Antoine Saint-Exupery that you may have heard: “A goal without a plan is just a dream.”

It’s true—without a time commitment or a plan in place, we tend to not take action, and all those big dreams we have stay dreams. But it’s important to realize that financial discipline is no different than physical discipline—you have to commit, and you have to take action.

LETTER FROM THE EXECUTIVE VICE PRESIDENT

It’s also important to realize that—even with actionable steps—big dreams don’t happen overnight. Nobody goes from living paycheck to paycheck to saving a thousand dollars each month; it takes time and effort to get to that level. So the most important thing you can do—after you commit, of course—is start small. Starting with a plan that is too big will leave you frustrated, and then you’ll stop. But by starting small, you’ll be able to take meaningful steps to making actual progress on your financial goals.

My advice: You can’t figure out where you’re headed until you know where you’re at, so first, examine where your money is going right now.

This isn’t necessarily a budget, but you need to track your expenses so that you understand where your money is going. Divide up those expenses into things you can control, versus spending that you can’t.

Soon you’ll then get down to what’s left—money that’s not allocated to bills but undoubtedly “disappears” each month. That’s the point where you really need to determine where that money is going. Most people are surprised when they see how much they spend on going out to eat, or worse, what they can’t account for.

Brian McKay EXECUTIVE VICE PRESIDENT

Once you’ve narrowed it down and have a good feel for where every dollar is going, you can use some of our Savvy Money tools on the SC Telco website. You’ll be able to look at conditional changes—“If I took that $200 and spent it on my car loan, how much money will I save over the course of the loan?”—and how that can affect your bottom line.

Small changes can make a big difference. But only if you start making them.

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EVENTS & C OM M U N I T Y

Andrea Finley: Making Finance Fun

SC TELCO H O L I D AY CLOSINGS Memorial Day

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It’s Time FR E SHE N U P YOUR FINA NCES

Here are our top three resources for building financial literacy: April marks Financial Literacy month, and there are a lot of ways that you can participate, and a lot of resources out there to help you set your own goals in place. Here are our top three picks for resources that can help you build your financial literacy today.

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Recently, Andrea Finley, Financial Wellness Coordinator for SC Telco, visited Homes of Hope to conduct a Financial Wellness “Game Night” for men in their work program as well as people they serve by providing affordable housing. There, Andrea taught about the basics and importance of credit, and then played the board game “Score!”

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The event went extremely well; people asked so many questions and asked for advice on specific situations, and having a large crowd benefited everyone because we learned from each other’s questions and experiences. It lead to some great discussions and myth debunking. I didn’t realize the impact sharing knowledge about finances would have on someone. It truly can be life changing.”

Plan with Savvy Money.

For a big-picture view of your financial health and what goals you should be putting into place, check out Savvy Money on sctelco.com. The website is specifically designed to help you better understand everything from debt to credit, loans, and much more. And, if you end up with more questions, feel free to stop by your local SC Telco branch. We’re happy to talk you through any financial questions, and help you make plans for the future.

Budget with YNAB. The first rule of budgeting is: You Need A Budget. When the makers of YNAB built their budgeting app, they built it using one of the most success-proven methods out there: the zero-based budget. People who place every dollar they make into their bank account—with or without the YNAB app—are far more likely to stick to a budget and achieve their longterm goals. We love this app because it makes sticking with a zero-based budget simple.

Level up with a Podcast.

Sometimes, the easiest way to learn is to hear how someone else did something, and financial skills are no different. For a quick, easy listen on the way to work or while doing lunch on your own, check out The Tim Ferris podcast, where celebrities, business owners and others all share their best secrets and strategies.

IN THE SPOTLIGH T

IN THE SPOTLIGHT Jeanie Baron | For Jeanie, her work at SC Telco has been a wonderful journey. She is proud to be part of a company that she sees take care of their employees, realizing that she’s had tremendous opportunities while employed there, and noting that SC Telco has become “extended family.” Still, she’s even more proud to be a part of an organization that takes care of their members, and sees both aspects as the reason that SC Telco has grown so much over the years. In fact, her 30 years of success can likely be summed up in a simple statement: she loves the members, plain and simple.

BRANCH OPERATIONS MANAGER

In her own words: What have you learned by working at SC Telco?

There are two things I’ve definitely learned in my time here: SC Telco takes care of their employees and they take care of their members, and I think both are very important to the success of the organization. Creating a great member experience while serving our members—whether on the front line or in the back office—is where my passion for the credit union was built.

Tell us a little more about your family and home life.

I am married to my husband, Philip and have two children ages 24 (Alex) and 21 (Callie). We aren’t quite empty nesters yet, but it feels like it most of the time.

We also have three dogs (too many) named Daisy, Piper, and Charlie.

What has working for SC Telco meant for your family?

I believe that working for SC Telco has given me a tremendous opportunity to learn and grow within the organization that I may not have had somewhere else. But more than that, SC Telco has also become my extended family. They have been supportive through the ups and downs of life during my almost 30 years here. The added bonus was that it also has meant that my children knew the value of a credit union at an early age.

If you could tell our members one thing, what would it be?

I want all of our members to know that they sign our paychecks. If it weren’t for them coming through our front doors, we would not be in existence.

Do you have a story you’d like to share? Send it to Jessica Baker at jbaker@sctelcofcu.org.

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CAR LOAN S

Motor Mishaps: 7 Mistakes to Avoid When Buying a Car Buying a car is often the secondmost expensive purchase you’ll ever make. If unexpected car troubles or an unfortunate auto accident has forced you to find a new vehicle before you were ready, you might be anxious. On the other hand, if you’ve been planning and saving over an extended period, you’re probably pretty thrilled about finally getting to pick out a fresh set of wheels!

Whether you find yourself squarely in one of these scenarios or somewhere in between, it’s important to be smart in your decision-making process. From choosing the right vehicle to finding the best deal, there are many opportunities to make a mistake that could leave you with buyers remorse or cost you additional money.

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Here are 7 common car buying mistakes to avoid:

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Skipping research.

Although it can be tempting to spend most of your time deciding on things like make, model, and color, don’t forget to review details like safety ratings, recall histories, and consumer reviews. The more information you have, the better your chances are of finding the car you want, instead of the one they want to sell you.

Not knowing your trade-in’s worth.

If you’re planning to trade in your current vehicle and haven’t taken the time to find out its current market value, you can be sure of one thing: the dealership knows what it’s worth to them. For an estimate, just visit kbb.com.

Not getting the Carfax.

If you’re purchasing a pre-owned vehicle, a vehicle history report from a company such as CARFAX is crucial. A vehicle history report will help you identify problems with odometer readings, salvage titles, and more.

Counting on dealership financing.

Many auto dealers offer in-house financing as a convenience for consumers. While the one-stopshop concept might save on time, it will rarely save you money. Before you buy, it’s a good idea to shop around for the best car financing option. Banks are a reliable option for auto financing, but the best deals may be found at a credit union.

Focusing on monthly payment.

Too many car buyers approach the financing conversation by asking “How much can I afford to pay each month?” Instead of negotiating the monthly payment, focus on the total price. Once the total price is as low as possible, then you can discuss the term length to get the payment you want.

Folding under pressure.

While salespeople rely on a variety of approaches to convince buyers to sign on the dotted line, high-pressure tactics often yield the most predictable results. You need to go in with your game face on, prepared to encounter “today only” pitches. While dealerships certainly have the prerogative to offer one-time deals on the spot, they’re still in the business of selling cars. If they don’t sell one today, they’ll need to sell it tomorrow.

Not getting an inspection.

Unless you’re buying a brand-new car that carries a manufacturer’s warranty, you owe it to yourself to take the car to a mechanic who doesn’t work for the dealer. A pre-purchase inspection may cost you around $100, but when you may be spending 100 times that amount on the car, a quality inspection is well worth the cost.

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RESO U RC E S

WHAT WE READ Synopsis: From the same author who brought you Start: Punch Fear in the Face, Escape Average and Do Work that Matters, Jon Acuff follows up that bestseller with a direct response in Finish: Give Yourself the Gift of Done. Realizing that starting is the easiest part of any project, Acuff’s focus in Finish is on how to...well, finish...the tasks and projects on your plate.

Why Read It: How many unfinished projects do you have on your plate? 2? 20? How many times have you picked up a new hobby, only to let the investment fade into nothingness as you put off actually doing the thing another day...and another...and another? How many times have you thought—I can’t do this until I finish that—and then never finished (or started) the new thing anyway?

This book is all about the challenge of finishing those projects—about staying true to our big dreams and hearts’ desires. And it’s not just about being able to push something to completion; it’s also about being able to accept something as imperfect and be okay with it anyway.

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So if you have one of these challenges, or simply want to figure out how to get some of your backlog off of the backburner—this book is a great start. (Just be sure you finish reading it, too!)

A Special Takeaway: One of the earliest chapters in the book, Acuff’s focus in “The Day After Perfect” truly spoke to us. Using as an example the day that you don’t execute that plan perfectly (be that a diet, a new project, or keeping up with your blog), he focuses on how your response to a less-than-perfect day can shape your outcome. Will you give up altogether simply because you weren’t perfect (which many people do), or will you pick up the pieces tomorrow and try again?

Your answer tells a lot about you and about how likely you are to accomplish the task set out before you.

The Final Word: If you have projects, resolutions or big dreams that you want to accomplish this year, it’s important to get them started. But the road to nowhere is paved with good intentions and unfinished work, so it’s even more important that you figure out how to finish them, too.

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MONEY MATTERS WITH

GET MORE OUT OF YOUR RESOLUTIONS THIS YEAR

The Path to Making Financial Goals a Reality One of the most common New Year’s resolutions is to get fiscally healthy—to pay off credit card debt, save up for that vacation, or to stop eating out so much. Unfortunately, like most resolutions, most of these will fall by the wayside, never to be seen again, even as you snarf down that pizza you just put on your credit card.

If you set aside some resolutions at the beginning of the year and have already dropped them, don’t feel bad—only eight percent of the population will stick with theirs at all. And, keep in mind: it’s only a failed attempt if you quit altogether. (See our book review of Finish on page 8 for more on this.) If you’re one of those souls who has stopped setting annual goals altogether to avoid failure the easy way, then there’s still hope for you, too.

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First, start small.

What is the ONE THING that you could focus on this year to put you on a more stable financial footing?

Define your path forward.

Do you have high-interest debts? Pay them down with that refund! Start with your lowest balance and pay it off first. Then, move to the next smallest debt. And so on, and so on.

Finally, set a timeline.

Set your own deadlines along the course of the year, and hold yourself accountable to actually get them done.

It’s not too late to get financially healthy, but setting goals is easy; keeping up with them is a bit harder. Still, with a little bit of focus, you can finish the year up in a much better place than you started out.

Learn more & see Moxie in action: sctelco.com/MeetMoxie

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Travel Tips How to Avoid Travel Troubles on your Next Vacation

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t’s almost the time of year when your friends’ exotic vacation photos start sneaking their way into your social media feeds. It’s been a long year at work and a tough school year with the kids. Your family needs a complete getaway.

Americans invest a lot of time and energy into their vacations.

According to a 2017 survey from LearnVest, many Americans report spending as much as 10% or more of their annual income on vacation, and three quarters of those have gone into debt to cover the costs—to the tune of $1,100 on average. So while we might be loving our time away, we are also feeling the effects of some nasty bills on the back end.

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There are some occasions when it might make sense to take out a personal loan or use a low-interest credit card to finance a vacation. Perhaps your sister is getting married in an exotic location (you’re already there and aren’t likely to get the chance again), so you extend your stay for a week. Or, maybe a truly once-in-a-lifetime travel opportunity comes along, and you know exactly how you’re going to cut back and conserve cash flow when you return to get the debt paid off quickly.

Here are a few of our favorite ways to avoid debt while vacationing:

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Start with a budget, and start saving today.

Pick a destination based on your budget.

Instead of paying off a loan or credit card after your vacation, why not cut back and put that same amount, or less, toward saving for a future vacation? Take an honest look at your income and monthly expenses and decide what you can realistically afford to put toward a vacation. Vacation spending should not compromise your savings, your emergency fund, your retirement, or your children’s college savings contributions. Next, consider opening a savings account earmarked for your travels.

This is the part where many folks work backwards. They choose the destination, pay for what they can, and charge the rest. Instead, calculate how much money you will have saved up by your projected vacation date, choose a spot that fits that budget and plan activities accordingly. Consider traveling during the off-season, when things might be cheaper.

Find sneaky ways to penny pinch to pad your vacation savings.

Most of us, if we take a ruthless inventory of our spending, can find a few holes in our pocket where dollars are leaking out. Look for key places to cut back your discretionary spending.

Take lunch to work a couple times a week instead of eating out (in fact, eat out less, in general, while you’re saving). Postpone major purchases like a new refrigerator or car. Stretch the time between haircuts. All these little tricks add up to big dollars toward your getaway.

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HOW TO AVO ID TR AVEL TR O UB L ES O N YO UR N EX T VACAT ION

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Know where to skimp and where to splurge.

Preplan your vacation online.

Your dream destination is not necessarily out of reach if you look for ways to cut costs while traveling.

Stay in a modest hotel—and maybe in a room with an efficiency kitchen so you can prepare some of your own meals. Carry your own snacks when possible. Consider driving instead of flying. Speak with a travel agent about good deals and using points or miles to save on travel and hotel.

Resist the urge to spend big money on needless souvenirs. That five foot stuffed Mickey Mouse would cramp your trip home anyway.

Setting an itinerary before you go will not only help you enjoy your vacation more, it can also help you budget and save money. With so many budgetfriendly travel websites, vacationers can find airfare, rental cars, lodging, and even recreational activities for low prices. Research on sites such as Kayak, Priceline, AirBnB, Groupon, LivingSocial, and StubHub can save you a bundle. You can also research free local festivals and other events that will add a lot to your vacation without upping the price tag if you plan in advance.

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Consider a staycation.

If you’re singing the blues because you realize a getaway is just not in the cards this year, think outside the box—and the beach, or the mountains. Pull together what resources you can, and find ways to create an in-town getaway. There are plenty of ways to take a normal week of living at home and transform it into staying in your own personal AirBnB and playing tourist in your own hometown.

If you’ve never planned ahead for a vacation and you usually find yourself putting them on your credit card, this year is a fine time to start a new tradition, and we can help. At SC Telco, we can offer you superior financial counseling to help you know exactly what steps to take and how much to start saving so that your dream vacation becomes a reality.

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MONE Y M AN AGE M E N T

THE GAME OF LIF E HOW MUCH INSURANCE IS THE RIGHT AMOUNT?

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ow much life insurance do you need? And what type? While there is no one-size-fits-all answer, there is great peace of mind in knowing that your loved ones will be taken care of in the event of your death. These questions are difficult to answer and they will change over time as your family’s needs evolve. Generally, it’s a good idea to review your life insurance terms every 10 years to make sure your policy still makes sense for you and your family.

There are two basic categories of life insurance: whole and term. Let’s walk through the basics of both so you can begin to consider what is the right type of life insurance for you.

Term Life Insurance Term insurance is so-called because it is valid for a limited and specified amount of time. Its primary purpose is to provide replacement income, and can be used by your beneficiaries to pay your mortgage and other living expenses, children’s education costs, or other goals or obligations. It is relatively inexpensive, but once the term is expired, the policy no longer has value.

Anyone who is in their earning years should have a term life insurance policy.

When buying term insurance, it makes sense to choose a term that coincides with the length of time the insured person would otherwise be paying bills. Once your dependents are old enough to support themselves, and your mortgage is paid off, your need to replace your income is significantly decreased. As you age, the monthly premium for a term life insurance policy also increases, and may even become prohibitively expensive or unavailable as an option.

Whole Life Insurance While whole life insurance costs more, the benefit remains in place permanently once the policy is paid for. Eventually, your beneficiaries will receive a payout, regardless of how long the policy has been paid for. In addition to the death benefit, these policies include an investment component or cash value. This value grows over time at a guaranteed rate and is tax-deferred so you do not owe taxes on the policy’s gains while they are accumulating.

In general, whole life insurance should not be seen as an investment—the returns are not nearly as good as other investment products and the fee structure can be complicated. Young people, especially, should stick to term insurance in case of premature death and look at other investment options.

A whole policy is a good investment in a limited number of circumstances.

For example, people who have already maxed out all of their other taxdeferred investments and want to provide money for their heirs to pay estate taxes, funeral costs, or other final expenses may want to consider whole life insurance. It might also make sense for those who have a lifelong dependent such as a child with special needs or in a situation where, say, your family business is being bequeathed to one child but in the interest of fairness you want to leave something of comparable value to other children.

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K ID S & M ON E Y

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Money Mistakes You’re Teaching Your

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here’s an adage in the parenting world that says, “More is caught than taught.” Whether you realize it or not, children are always watching what you do and deciding whether it lines up with what you say. They’re not necessarily looking for subject matter expertise; they’re looking for consistency. This is true in personal interactions, but it applies to money matters as well.

As you look for teachable moments, keep an eye out for the following bad habits that can leave your child frustrated and confused.

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K IDS & MONE Y

1. Avoiding the subject completely If you’re not teaching your child about money, you can be sure somebody is. The average child is exposed to approximately 3,000 advertisements per day—it doesn’t take an expert to know those ads aren’t encouraging responsible financial practices.

2. Assuming they’ll learn it on their own Research has shown that a person’s financial habits may be established as early as sevenyears-old. Leaving children to figure out money management on their own increases the likelihood that they will wind up with a collection of bad habits they’ll need to break later.

3. Paying them for things they should do for free A shiny quarter may be enough to convince a young child to pick up their clothes, but a 12-year-old will probably demand much more to empty the dishwasher. Establish an allowance system unrelated to chores so you can help kids learn the fundamental difference between personal responsibility and financial management.

4. Controlling all their spending If you micromanage every spending decision your child ever makes, not only will they never learn to think for themselves, they’ll probably never experience the negative consequences of poor choices.

5. Underestimating what they can understand Investor Kevin O’Leary puts money in his children’s piggy banks overnight while they sleep to teach them about compounded interest, proving that you don’t have to explain all the intricacies to your children for them to understand.

6. Forcing them to save The benefits of saving and earning interest are substantial, but you’ll do your child and their financial future a favor by encouraging them to set money aside instead of demanding it.

7. Shopping without them Rather than leaving your kids at home the next time you go to the store, take them with you. Comparing products and sharing your budget will help them learn how to choose purchases wisely. And use cash—this old-school practice may be just what your child needs to understand that once you spend money, it’s gone.

8. Failing to teach them about credit and debt Without the proper understanding, a new college student may equate a newfound credit limit with “having money.” Try lending them a small amount of money and setting a time frame for them to pay you back—with interest. The discussion of credit will take on a new significance.

9. Neglecting the subject of generosity Sit down as a family and choose a charity you can support with your time and your finances. When generosity becomes a family trait, your child stands a far better chance of carrying on the tradition when they leave home.

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