Get Invested:
How to Make the Best Financial Decisions I N
Letter from the Executive Vice President
Back to School Basics
T H I S
I S S U E
How to Steer Clear of Bad Car Loans
Know Your Retirement Options
dontgetbanked.com
Worried a know-it-all mortgage banker will turn buying your dream home into a nightmare?
. T I N ANK O
B
A mortgage lender who presents all your financing options and keeps you in the loop without talking down to you—is that too much to ask? When their members need a home mortgage or a refinance loan—or a personal loan, an IRA, or anything at all—SC Telco exceeds expectations by providing clear communication, personalized service, and stress-free financing.
dontgetbanked.com ore.
ore— m t c e p x E
becaus
serve m e you de
G T ’ N DO
D E K N ET BA A better way to bank.
contact LOCATIONS
Corporate Office & Support Center
864.232.5553 420 E. Park Avenue, Ste. 100 Greenville, SC 29601
IN THE ISSUE:
Mills Avenue
300 Mills Avenue Greenville, SC 29605
Verdae Office
601 Verdae Boulevard Greenville, SC 29607
Taylors Office
3237 Wade Hampton Blvd Taylors, SC 29687
Spartanburg Office
130 North Town Drive Spartanburg, SC 29303
3
Easley Office
118 Brushy Creek Road Easley, SC 29642
Columbia Office
1025 Pulaski Street Columbia, SC 29201
Member Service Center
Greenville: 864.232.5553 Nationwide: 800.922.0446
MONEYLINK℠ Online at sctelco.com
MONEYLINK℠ Audio Response Greenville: 864.232.3645 Nationwide: 800.633.4364
Events & Community
5
In the Spotlight
6 8 9 10
24/7/365 SERVICE
4
Q3
Letter from the Executive Vice President
Car Loans DEBT DETOUR
What We Read QBQ! THE QUESTION BEHIND THE QUESTION
Money Matters with Moxie BACK TO SCHOOL BASICS
KNOW YOUR RETIREMENT OPTIONS
14
When is the Best Time to Invest?
16
Calculating the True Cost of College for Teens
Visit our website sctelco.com to locate an ATM near you!
FIND US ONLINE 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
1
sctelco.com | (800) 922-0446 Savings are valid for Carowinds or Scarowinds. Offer expires 10/27/2019. Ask an SC Telco representative for more details by calling 800-922-0446.
Dear Members,
I
n our last issue of Checkpoint, I talked about building the discipline needed to accomplish your financial goals. That’s important, because in this issue, we need to discuss what financial goals you should be pursuing.
LETTER FROM THE EXECUTIVE VICE PRESIDENT
Beyond the basics (having basic checking and savings accounts; building a budget; etc.), goals are different from person to person, and they should be. Part of this is understanding what stage of life you are in and what is important to focus on at that point in time. For example, when you are just starting out—maybe just into college or building a career—one of the best things you can do is to start building credit. This doesn’t have to be huge, but do something simple, like get an auto loan and pay it on time. Really, your goals at a young age are to not overspend, build credit, and put money away. Once you start having a family or getting older, it might be time to consider buying a house. Hopefully, you’ve already built up positive credit and now you can focus on putting money away. As your purchases become larger, saving to spend is crucial and two good rules at this stage in life are to keep your credit up and don’t spend money that you don’t have. As life progresses and you begin to think about your next stage— saving for children’s college education or building your retirement— your financial decisions become a lot more focused on the long-term. When you hit this stage, consider this: life insurance is one of those things that can change the course of a family. For most of us, the chances of ever being able to save a few hundred thousand dollars is pretty low. But if I can figure out how to pay $75 a month, that adds up, and when I die, that sum of life insurance is one that can truly change the trajectory of a family line. People don’t tend to think of life insurance as a financial vehicle, but it can make a huge difference.
Brian McKay EXECUTIVE VICE PRESIDENT
Above all, think of your financial goals 10 or more years out; it makes smaller decisions easier. For example, if you know you’re saving for a home, it’s easier to make decisions that will not derail those plans. Thinking long-term will help you focus on what’s important now, and help you build the discipline needed to accomplish your big financial goals.
3
EVENTS & C OM M U N I T Y
20
19
SC TELCO HOLIDAY CLOSINGS
I N D E PE N DEN C E DAY
07/04 TH U RSDAY
L A B OR DAY
09/02 M O N DAY
Congratulations SCHOLARSHIP WINNERS! Each year, SC Telco awards three members each a $3,000 toward their college tuition through the Louis C. Addison Memorial Scholarship.
M EET OUR 20 19 WIN N ER S: Ryan Flynn Ryan is graduating from Shannon Forest Christian School where he is a member of the Student Council, National Honor Society and various varsity sports teams. Ryan plans to attend Wofford College and then pursue his MBA. Blake Turner Blake is graduating from South Point High School in Belmont, NC, where he was captain of the Varsity Basketball team, a member of the Beta Club and the National Honor Society. He plans to attend N.C. State University, where he will pursue his dream of becoming a CPA. Karina Wolfe Karina is graduating from Bob Jones Academy where she serves as Deputy Stage Manager. Karina will attend Bob Jones University and wants to pursue a career with the FBI after earning her bachelor’s degree in Criminal Justice.
SC Telco Partners with Build at the Well Project In their first-ever “Build at the Well” project, Habitat for Humanity’s newest project was in construction on-site at the Bon Secours Wellness arena in downtown Greenville this May. With many different teams and people coming together to make the project come alive, SC Telco served as a financial sponsor of the project to ensure that it could become a reality. “The reality is that Greenville has a very real affordable housing issue and many people are affected by it,” said Brian McKay, Executive Vice President of SC Telco. “Whether it’s through our financial education resources or community projects like this build, we are dedicated to helping the members of our local communities get the resources they need to find the housing that fits the life they want to build.” 4
IN THE SPOT LIGH T
IN THE SPOTLIGHT Sandra Hammack |
SENIOR VICE PRESIDENT OF HUMAN RESOURCES
In her free time, you may
IN HER OWN WORDS:
find Sandra Hammack (or
What have you learned by working at SC Telco?
Sam, as she is known) in her yard working in a garden. It’s something she truly enjoys and finds rewarding—to nurture and care for a plant and then to watch it grow. In her position as Senior Vice President of Human Resources with SC Telco— one she’s been in for about a year now—her job is similar: to care for the employees and help them to grow. Sam, a graduate of Winthrop University and Clemson University, takes that job very seriously. She realizes that her values align completely with those of SC Telco, and finds great
For my entire career, I have longed to work with an organization that exhibits the values that align with my own—respect, integrity, honesty, humility, empathy, and accountability. Until joining SC Telco it was difficult to believe such a culture existed, but I have learned this culture is alive and well here, and it is our employees who exemplify these values and qualities with each other, and with our member community. From the staff that we hire, to the products we offer, to our community involvement, we believe in providing a positive experience for our employees and our members.
Tell us a little more about your family and home life. My passion is my family. My husband Thomas and I will celebrate 36 years of marriage this July, and we have two wonderful children, Rachael and Seth. Although Thomas and I both attended Clemson University, Rachael graduated a Gamecock this past December, and Seth is considering colleges at this time. My fondest times are those spent as a family, whether sharing a meal, a movie, playing a board game, or having a conversation around the fire pit, being together is where I find the most joy.
What has working for SC Telco meant for your family? Throughout my career, my roles have required extensive travel, and as such, I missed many milestones in the lives of my children. SC Telco has provided me with better work/life balance, and the opportunity to be present for and with my family. My husband would tell you that my happiness and satisfaction in my work is evident, and he is relieved to know I work for an employer that has my best interests at heart.
privilege in being able to improve the lives of both
If you could tell our members one thing, what would it be?
SC Telco employees and
SC Telco truly cares about your financial wellbeing—from the employees in each branch to the staff at Park Avenue, you are at the center of what we do every day.
members alike.
Do you have a story you’d like to share? Send it to Jessica Baker at jbaker@sctelcofcu.org. 5
CAR LOAN S
Debt Detour How to Steer Clear of Bad Car Loans
D
o you think that the easiest way to avoid a bad car loan is by not getting a car loan in the first place? If so, you may be in the minority. When it comes to car buying, most American consumers think auto loans are the way to go—85 percent of new car purchases and 53 percent of used car purchases rely on auto financing. While paying cash for a car is always the least expensive option in the long run, the price of a reliable vehicle often puts this option out of reach for the majority of car buyers.
6
CA R LOA NS
W
ith this in mind, many auto dealerships and financial institutions now offer flexible auto financing programs and consumer-friendly promotions that lower the up-front cost of a vehicle purchase and allow buyers to stretch their payments out over several years. However, this flexibility sometimes comes at a heavy price, and many car buyers discover too late that they’re trapped in a car loan they can’t really afford. So, how can you avoid getting roped into a bad car loan? Or perhaps a little more importantly, how can you get out of one that you’re already in? Well, it helps to know what makes a bad car loan in the first place. First, it’s important to know the fundamental parts of a car loan—or any loan, for that matter. When you elect to finance a vehicle, you should pay attention to three key factors: the principal, the interest rate, and the loan term.
1 2 3
Principal Principal refers to the amount you will finance. If you select a car that costs $20,000 and the dealer gives you $5,000 for your trade-in, you will finance $15,000—this is your principal balance.
Interest Interest is the money that a financial institution charges to lend you the money for your vehicle. To apply interest to the example above, a lender might charge an interest rate of 4.99% on the $15,000 principal that was borrowed. Depending on the loan term, the interest rate will determine the total amount you actually end up paying for your car.
Term Term refers to the length of time you are given to repay the principal balance plus the interest assessed. For our example, if the lender gives you a 48-month term, you will pay 4.99% interest on the principal balance of $15,000, which results in monthly payments of $345 and a total repayment of $16,578.
Essentially, a bad car loan is one you can’t afford or that costs you more than it should. Is the car loan example we used above a bad car loan? That depends on your situation. If your budget doesn’t have room for a $345 monthly payment, then yes, it’s a bad loan for you. If you have outstanding credit and could qualify for an interest rate that’s significantly lower, our example could be considered a bad car loan as well. Don’t get stuck on the side of the road by a bad car loan—do your homework beforehand. When in doubt, talk with your local SC Telco specialist, who can lay out a number of options for you, and help you determine what will work best for you.
7
RESO U RC E S
WHAT WE READ
8
Synopsis:
A Special Takeaway:
Whether you run a business, work for someone else, or simply have a lot of day-to-day interaction with others, QBQ! is a great, quick read that you’ll be able to relate to. With a focus on building personal accountability, this book challenges readers with its premise: what questions should you really be asking yourself to “eliminate blame, victim thinking, complaining, and procrastination”?
Because this book is such a quick read (we read it in about an hour), you can start absorbing and adapting principles that Miller discusses within a matter of hours. The “QBQ! promise” provides a practical method for putting personal accountability into daily actions with astounding results: problems are solved, internal barriers come down, service improves, teams thrive, and people adapt to change more quickly.
Why read it:
The Final Word:
There’s no doubt that a lack of personal accountability has affected our society and many business cultures around us. Blaming each other for projects gone wrong, procrastinating on work or other deliverables, or always playing the victim, to name a few. But since you can’t grow or succeed in this mindset, it’s truly important to address the elephant in the room—that big, questioning elephant is prolonging your success.
For a book written over a decade ago, QBQ! is a true talent in forcing the reader to look inward first, addressing the challenges of our own, and then moving on to the business as a whole. We highly recommend taking an afternoon to work through the question behind the question—as soon as you can.
RE SOURCE S
MONEY MATTERS WIT H
BACK TO SCHOOL BASICS:
How to Keep from Getting Overwhelmed Even some of the most fiscally sound consumers can get overwhelmed with back to school season—the
Don’t replace everything. Junior doesn’t need a new backpack every year, and Susie might have plenty of clothes already. Spend a little bit of time really looking at what you already have; you might find that your list shrinks just by taking inventory.
Look for ways to save. Back to school sales abound, and stores compete against each other for your dollar. If you play it right, you can get a ton of supplies on the cheap. For clothes, check out the thrift store—you might find some great, new-ish stuff without the big price tags.
never-ending lists of supplies,
Make room for charity.
replacement items, and piles of
Sure, it’s hard enough to ensure your children will have the supplies they need to start the new school year off right, but take a moment to consider the families who are having an even harder time stretching their limited budgets. Consider grabbing a few extra boxes of those 25-cent crayons or an extra lunch box to donate to a school for a kid in need. A chance to help a family is a great teaching opportunity for the little ones too.
new clothes can mean lots of shopping—and lots of spending. Fortunately, there are ways to save money at this turning point of the year.
With just a few small tricks, back to school can take on a whole new light. Remember to make it fun and that it is just a season.
Learn more & see Moxie in action: sctelco.com/MeetMoxie
9
10
Know Your Retirement Options A How-To Investment Guide
W
hen saving for retirement, is
it better to invest your hard-earned money in a 401(k) account, a Traditional IRA, or a Roth IRA? Unfortunately, the answer may not be quite as straightforward as the question makes it sound.
11
INVEST M E N T GU I D E
W
hile saving money for retirement is critical to your financial stability later in life, it’s essential to structure your saving strategy to provide a balance of short-term savings and long-term investments. Placing your money in a traditional savings account may offer a lower interest rate than a long-term investment, but it provides greater liquidity, which means quick, penalty-free access to your money if you need it. These savings are important, but building a large savings account doesn’t necessarily count as retirement planning. Since they are designed to allow your money to earn interest over time, retirement investments include rules and regulations that reward you for long-term planning and make it costly to withdraw contributions earlier than anticipated. If you place your money in a 401(k), you will incur a financial penalty if you withdraw your money before the age of 55. With Traditional IRAs and Roth IRAs, 59½ is the earliest age you can withdraw without penalty. If you’re planning to invest in any or all of these accounts, it’s best to invest money you can afford not to touch until retirement. After you’ve determined how much to save in short-term savings accounts and how much to invest in long-term retirement accounts, it’s a good idea to know which products will help you maximize your money. While investment laws and regulations can be incredibly complicated, the following overview should help you gain a basic understanding of three of the most popular retirement savings options on the market today.
12
401(k) The basics: Offered by employers, a 401(k) savings plan allows employees to set aside and invest money from their paycheck before taxes are taken out. To incentivize workers to save, many employers also offer to match the employee’s contributions up to a predetermined level. Since funds are automatically set aside before taxes are taken out, saving is effortless, and believe it or not, your paycheck doesn’t drop by as much as you’d think. (e.g., If you direct $300 to your 401(k) each month, your paycheck might only go down $250 because you didn’t have to pay taxes on the $300 savings.) Together with the employer-match programs, pre-tax savings can make it feel like you’re getting free money!
Who it’s for: If you work for an employer that offers a 401(k) plan—especially one with an employer match, you owe it to yourself to take advantage of it. Even if you only manage to save five to 10 percent of your earnings, the tax-deferred growth alone makes a 401(k) too good to pass up. If your employer offers a matching program and you choose not to participate, you’re leaving money on the table.
IN VESTME NT GUIDE
Traditional IRA
Roth IRA
The basics:
The basics:
While there are multiple IRA types, the Traditional IRA is a popular investment account that allows individuals to save money for retirement before it’s taxed and control how the funds within the account are invested. If you open a Traditional IRA, it is your personal account, which means you can determine your own investment strategy. Depending on your investment goals, you can decide whether to keep your IRA with a bank, a credit union, or an investment firm. Like a 401(k), the funds in the account are taxed only when they are dispersed.
When compared to Traditional IRAs, Roth IRAs are the same, but different. What does that mean? It means that while the investments in the account can be managed much the same as a Traditional IRA, Roth IRA contributions are made on a post-tax basis. Because you’re investing funds that have already been taxed, you won’t have to pay taxes on the money when you withdraw it in your retirement.
Who it’s for:
Who it’s for:
While IRAs are generally a wise investment option, a Traditional IRA makes the most sense if you think your current tax rate is higher than what it will be when you retire. As a general rule, Traditional IRAs are an excellent option for investors who can afford to let their money remain in the account until at least the age of 59½, as disbursements before that age incur a 10 percent penalty in addition to being taxed as income.
Who it’s for: Since contributing post-tax money allows investors to pay current tax rates and withdraw funds tax-free when they retire, Roth IRAs are ideally suited for investors who believe their tax rate at retirement will be higher than their current tax rate.
No matter where and how you choose to invest, what’s most important is that you start putting money aside for later on in life. As you start the planning process, get to know your options, consult an expert, and start saving! 13
MONE Y M AN AGE M E N T
BEAR OR BULL
WHEN IS THE BEST TIME TO INVEST?
14
MO N EY MA NAGE ME NT
S
hould you invest when the market is down? Yes. You should also invest when the market is up. And don’t forget to invest when it holds steady as well.
Noticing a theme? Investing is a great idea, no matter when you do it. Whether you focus on simple retirement accounts or aggressive mutual fund portfolios, investing for the future is smart. Leveraging the power of compound interest is a powerful way to build a stable financial foundation. When you’re developing your personal investment strategy, it’s important to remember that market downturns are normal, or even expected. But depending on who you ask, you might hear drastically different opinions on whether or not it’s wise to continue investing when the market dips. One school of thought advises against “throwing good money after bad.” Usually offered as a warning, this saying cautions against spending extra money to address an unfixable problem or recoup frustrating losses. In the down market scenario, this could mean doubling down on riskier investments to try to make up for temporary losses in others. For those who want to play it safe, the best course of action appears to be slowing investment activity and riding out the drop. Of course, there’s also a contrasting view built around the idea of “buy low, sell high.” When the market falls, your portfolio may drop, but so do stock prices. For those who see the proverbial glass as half full, this can look like an outstanding opportunity to snag some shares at bargain prices. But there’s always the chance that a plummeting stock may be falling for a reason. While there’s certainly money to be made by investing during a down market, this strategy requires additional research and a healthy dose of caution. As a general rule, it’s safer to double down and invest when the market as a whole is down instead of trying to snatch up individual stocks that are bottoming out. Down markets offer a unique blend of risk and reward. But as any savvy investor will tell you, market conditions should not dictate investment strategy. Neither type of market is the time to make hasty investments or spend money you hadn’t planned on investing. A sound, long-term investment strategy that’s built to weather the effects of change regardless of market volatility involves several basic steps: set your goals, minimize your costs, establish your risk tolerance, diversify your investments, and invest consistently. It can be tempting to find your favorite investment product and put all your savings into something you understand. Unfortunately, this is a realworld example of putting “all your eggs in one basket.” To diversify your investment portfolio, consider some of the investment and savings options offered through SC Telco. We can help you along the way.
15
TEENS & M ON E Y
for
Calculating the True Cost of College
W
ith the cost of higher education rising at a steady pace, prospective students are taking a closer look at the value of a college degree.
However, despite the fact that college can be expensive, the US Department of Education still estimates that roughly 70 percent of students who complete high school immediately enroll in college. While enrolling in a college or university remains the most popular post-secondary choice for high school graduates, the significant rate of students who leave college after one or two years suggests views may be changing when it comes to the value of a college education.
16
TEE NS & MONE Y
If you are trying to decide whether higher education is worth the investment for yourself or your child, there are many factors to consider. The first—and arguably most important—aspect to examine is the true financial cost of a college degree.
What is the economic value of a college degree? To determine the overall value of a degree, start by calculating all the educationrelated expenses. Remember, too, that most college students receive financial aid of some kind. For the real economic value of a college degree, compare your overall expenditures with your expected career earnings. If you earn a college degree and enjoy a career earning potential of $2 million—roughly twice what you could expect to earn with a high school diploma—and your total educational costs add up to $100,000, it’s safe to say that is a sound investment.
What about community colleges? Maybe you’re sold on the value of a college degree but still digging for more affordable options that will help you stretch your educational dollar. This is an area where community colleges can often provide incredible value. While community colleges traditionally have lower tuition costs (typically range from $45 to $125 per credit hour, compared to $325 at the typical public university), you can still apply for financial aid.
What is the opportunity cost? Before you decide to get that degree, it pays to look at something called the opportunity cost, or “the loss of potential gain from other alternatives when one alternative is chosen.” To calculate the opportunity cost, compare the results of an alternate plan (i.e., getting a job right out of high school) to the decision to spend the next few years pursuing your degree. In many cases, college graduates can expect to earn higher starting and long-term salaries than those without a degree.
So, after all of this, maybe the question isn’t so much “what is the value of a college degree?” but “What is the value of a college degree to you?” With so many factors to consider and so many options to weigh, a college decision isn’t one to take lightly.
17
SM
®
PO Box 10708 Greenville, SC 29603 sctelco.com