Intelligent Borrowing


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Money, I’m Home! Lynne speaks with Tim Kosak, our vice president of consumer lending, about an intelligent borrowing process for credit cards, loans and savings accounts.  Listen now!





00:07 Lynne Jarman-Johnson: Welcome in, Money, I’m Home. We’re bringing you finance to fitness, from Consumers Credit Union. I’m Lynne Jarman-Johnson, Chief Marketing Officer. And I’ll tell you what, we have an honor for you today. Thank you so much for joining us. Tim Kosak is our Vice President of Consumer Lending. Tim, thank you very much for being with us today. What a pleasure.


00:27 Tim Kosak: Hi, Lynne, very happy to be here.


00:28 LJJ: I’ll tell you what, we have got a great topic that I think is so important. Because, you know what? I make a lot of dumb moves. I think that I’m doing something really smart and I’m very excited about it. And when you’re talking about money, sometimes that shiny bright object is out there. I’m one of those “grab that shiny bright object” people. And I know there’s a lot of people out there that are. Today though, we’re really going to talk about smart moves and smart borrowing. Thank you so much, what a great topic.


01:00 TK: Thanks for having me. It’s funny, we’re all of that nature, right? We all see that item, it’s convenience purchases for a reason. We’re all looking at those aisles shopping, and just have to have the next best thing.


01:12 LJJ: Well, and you know in marketing, obviously, [chuckle] I want you to have the next best thing. Right?


01:17 TK: You’re the one putting it out there.


01:17 LJJ: Yeah. You like to… You just see all those glitzy ads and you’re like, “Oh my gosh, I’m going to look great in that.” Or, “I’m going to purchase that for somebody.” And then all of a sudden your budget’s out of whack. So tell us a little bit, when you talk about smart moves and making smart money habits… I know you, and I can tell that it geeks you out. You’re like, “Okay, this is a topic that I love. It’s near and dear to my heart.”


01:42 TK: It is. It’s fun to see how folks can do it in the right way and use it as a tool to help them succeed, as opposed to something that gets them into a trap. It’s funny, you were talking about the convenience purchases, and that’s just one of the easy ones that you can hear the… The specialists will always tell you, “Take a breath. Go home, sleep on it, come back, make the purchase if you really want it. But don’t pick up something that you weren’t planning on picking up.” And it’s fun because you can actually take that method and apply it towards borrowing as well. You just have a minute to think about, “Am I fitting the right product, the right loan, with what I’m trying to accomplish?”


02:24 LJJ: So when you’re looking at our members, and I love… Tell us first about your background because you have been helping members for years here get on that path, and also really think about, “What is it that I’m doing right?”


02:39 TK: Yeah. Financially, it’s kind of fun. I grew up in Consumers Credit Union. I’ve been here for the last 22 years. And I started off for half of that career in the offices working and learning from our members. And that really was my education in finance. My education in finance was learning from our members that have done it successfully, or trying to get it done successfully, and watching them succeed. And unfortunately, sometimes seeing some folks that have not had success with it as well. And so my journey has really been looking at how members have been able to fit the right borrowing need with the right purpose. And there’s just some easy examples out there, and one of my favorites is a Christmas account. We’ve set up Christmas savings to help members get an advance on the Christmas season, but we’ve all taken out those small Christmas loans.


03:31 TK: And it’s interesting because a member will come to me and they’ll ask for a Christmas loan, and they might want to take out a portion of money and then take it over a period of two years. And it’s kind of fun because if you bring that back and just ask the simple question, “What happens next year?” that really gets members thinking about…


03:47 LJJ: All of a sudden two years, two years…


03:49 TK: Right? Every year I’m increasing my debt, if I take out a loan for two years and I’m taking out a Christmas loan, Christmas does happen next year again and I might be increasing my debt over a period of time, as opposed to taking out a one-year loan, to make sure that I’m back on track or even better yet, setting up that Christmas savings account, so I can get in front of it.


04:09 LJJ: Tell us about the Christmas saving account. Because this kind of reminds me of the envelope method in some respects where you can actually create savings accounts for very specific needs. I know that Christmas is something that you… You know what I want to say I’m not going to over-spend the money. And then somehow invariably it just seems to happen.


04:32 TK: Well and it can turn one of the most joyous times of the year into one of the most stressful times of the year. We don’t want to be stressing about the money that we’re going to be able to come up with, provide the gifts that we want to, or are we budgeting our money in the right manner? But that Christmas savings account really makes it easy. It’s an automatic feature you can set it aside out of your payroll, you can set it up as an automatic transfer, and you’re just budgeting how much you want at the end of the year to be able to spend, and so that Christmas savings account, just becomes a nice feature. And what I love about Consumers is we allow you to do that with many other purposes. You could set up a savings account for car repairs, if you wanted to. And again, you come back to that envelope method, but you’re doing it electronically, and easy and conveniently.


05:18 LJJ: You mentioned electronically, do you have to know technology to start these accounts or is it just easier and we can teach you?


05:25 TK: Goodness, no, yeah we just… You call us up, you stop in an office, go online, these are really tremendously easy to set up and you’ll be able to visually see your buckets, you can name these accounts, and it just becomes a very, very easy process, for our members.


05:41 LJJ: I have a daughter who is like a gem at this… And I think she probably has 70, I’m not exaggerating, she loves her very specific accounts and it… It made me smile when she said it changed her life when she learned how to make sure she saved for certain things that they were looking for as a family.


06:01 TK: Oh, it’s so fun too to… We just had a member that was setting up the 50th birthday account, and so, this member is a couple of years in advance of their 50th birthday, and is just really starting to dream big about what they can do for this big 50th birthday and you can just imagine how much fun that member is going to have on that trip when it comes to pass, and they’re going to be prepared for it.


06:24 LJJ: That is great, what’s another smart idea, smart move for when you decide you really do want to take out a loan?


06:31 TK: Well, one of my favorites is to really talk about credit cards. A lot of folks don’t really think about what the purpose of a credit card. I don’t know that a lot of members have asked themselves, “Why do I have a credit card? What would I use a credit card for?” And credit card’s become kind of the trap, the easiest trap. Credit cards are designed for a very low monthly payment.


06:53 TK: It’s a float, a credit card is a float. So there’s a lot of folks that use it for a short-term debt and that’s where our members, if they think… And kind of put a little bit of thought into what they want to do next and what they want to get out of that loan, they can really start planning a little bit better in terms of how are they going to pay off that loan. If you put a $5000 vacation onto your credit card, what is your plan to pay that off? And when do you want to go on your next vacation and will that balance be paid off when you want to meet that next financial goal. If I put a large purchase on my credit card and let’s be ridiculous and say, “I’m going to put a vehicle on my credit card, the credit card style is built in a manner where it’d be very low monthly payments, and that vehicle might die before the credit card is paid off.


07:46 TK: And so, if a lot of folks kind of focus on smart borrowing, it’s fitting the right tool with the right job at that point.


07:54 LJJ: It’s interesting because when you hear credit cards, I know young people that I’ve talked to when we have our financial education summits and it’s interesting that they don’t think of credit cards as a loan. It’s almost like, “A loan? No, it’s a credit card.”


08:12 TK: Right.


08:13 LJJ: But a credit card is a loan.


08:15 TK: Yes, yep, you’re borrowing funds and you have to pay it back at some point. And what it can do is just very easily creep up on you, it’s just very, very easy to imagine. And many of us have been in that spot, as have I, where you put a large purchase or you put some purchases on your credit card, and then you add to it. And it’s very hard to discern what was this for, what was that for? And all you see is that growing balance. And sometimes, it’s better to take out for a vehicle on as we talked about before, I would certainly take out a vehicle installment loan that I would try and match up with the age of the vehicle, the miles of the vehicle and how long I’m going to take that vehicle out so I don’t end up in a spot where I’ve got negative equity.


09:00 LJJ: Right, right, and what did they say? You drive a car off the lot and it’s…


09:04 TK: It’s yeah…


09:05 LJJ: It’s bye bye.


09:06 TK: It’s already worth much less than what you paid for, absolutely.


09:08 LJJ: You know when you look at a credit card and you hear this over and over again, but how important is it to really understand that the minimum payment isn’t helping you, it actually could be hurting you if you’re not really looking at what interest fees are. And should you be paying the whole amount off every month if you can? Is that the goal?


09:30 TK: Right, right, yeah and there’s two components to that that are really fun to talk about. One is, is having somebody that you can work on your finances with. There’s all sorts of advice that you can get from our certified prepare, and a lot of our folks that the offices can help with a lot of those simple loan questions about what’s the next right move for me in terms of borrowing, but it’s about positioning yourself in a spot where you can meet your next financial goal not only with the one you’re trying to accomplish, but your next financial goal.


10:03 TK: And so, I really recommend the benefit I’ve had personally out of my financial personal advantages is listening to our members and seeing how they’ve done it and then copying different ways. And that’s what’s really neat about our staff is, is that they sit there all day long and talk with our members and not only are they giving advice, but they’re also learning from our members and then they can pass that on. And it’s just a very, very personal experience, but it’s also one that if you talk it through, becomes so much less stressful.


10:39 LJJ: You know, you mentioned personal, money is personal…


10:43 TK: Very personal, it touches so many…


10:44 LJJ: And it’s sometimes hard to talk about.


10:46 TK: Pieces of our life. Yeah, and that’s what’s nice, too. Sometimes it’s nice to talk to somebody outside the family, and that’s what our staff do just a remarkable job about. It’s kind of fun to talk to a non-interested third party, and bounce ideas off them. And I really recommend that where you find somebody that you can trust, and really open up to and sometimes it’s not a matter of getting advice sometimes it’s just a matter of saying it out loud and it’s amazing what an advantage that gives you and what power that is to say, “I’m thinking about buying a vehicle,” and it kind of comes back to that first conversation we had about those convenience purpose… Purchases. And if I say it out loud, and talk it through, I don’t need anybody’s advice. I heard myself say it, and I can just self-correct.


11:34 LJJ: Right. What do you think when you’re looking at deciding on a big purchase, what do you think are some of the things that you should do, you mentioned pausing, what other things that are out there that you should kind of in the back of your mind, is there a checklist that you use Tim to say, with anybody that comes to you and say, “Hey here are some of the basic questions that you really should be asking.”


12:01 TK: Yeah, and the checklist varies from purchase to purchase. But my favorite phrase is play it through, play it through. A lot of folks think about a large RV purchase, how does that change how our family expenses are going to be used over the next five years? Are we truly an RV family or should I go out and rent an RV for this weekend and then give it back?


12:27 LJJ: Right.


12:28 TK: It really becomes fun when you start thinking about… Hobbies are a really good example and you can apply this in, it’s like… Do we want to be a vacationing family, do we want to be a hotel family, do we want to be a camping family? And when you start playing those purchases through you can see how they affect your next financial goal.


12:49 LJJ: It’s really true, it is, and home ownership, that’s an interesting focus too because you really look at when you’re thinking about a home versus renting, and many people will say, “Well, if you can rent make sure… You should be really getting your money into homes.” But the questions that you just asked are very important.


13:09 TK: And it comes back to the checklist you’re talking about. So if I look at home purchase, now I’ve got think about trash, water, gas, electric. I’ve got to think about insuring the property. It comes back to another question, do we want a house with a pool? If I want a house with a pool, are we going to be able to pay for the chemicals and the upkeep of the pool and winterizing it and…


13:29 LJJ: Maintenance, maintenance, maintenance.


13:31 TK: Maintenance, maintenance, maintenance.


13:33 LJJ: So true, so true.


13:34 TK: Yeah, and it comes back to those checklists. So there’s definitely some folks that can help out with a specific checklist, but if you just kind of back up and look at the big picture of it and talk about, I’m going to play this through, if I make this large purchase what will my life look like in two years’ time?


13:50 LJJ: Right. Well, I’ll tell you what, you’ve given us such great thoughts about, “how do we make those smart moves” and I can’t thank you enough. Money, I’m home, we’re bringing that money home.


14:01 TK: Thanks for letting me join this, this has really been fun.


14:03 LJJ: Thanks Tim.




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