@Work business leaders Scott Dobson and Katelyn Huntington join Lynne to discuss the importance of having an emergency savings account, while Vice President of Mortgage Josh Summerfield chats about the current mortgage market and why you shouldn’t be scared to buy if the situation is right for you.

 

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00:00:06.7 Lynne Jarman-Johnson (LJJ): Money, I’m Home. On this week’s segment, we’ve got money experts to talk to us about emergency savings. Do you know how much you should have, could have? Or have you even started planning yet? We’re going to help you out on Money, I’m Home. I’m Lynne Jarman-Johnson. Let’s get right to it. We’ve got Scott Dobson and Katelyn Huntington. They are both our financial experts in finance, education for any age, at any stage. Thanks so much for being with us today. You know what? I took a poll when I was at dinner about a statistic that I read, and it was nearly 60% of Americans do not feel comfortable with how much they have in emergency savings. And at the table, it was 72. Probably 75. But, you know, it’s kind of scary. Here, you know, here many, many of us that were sitting around the table were all ages, all stages. 75% feel a little uncomfortable, emergency savings, and they don’t know even how to start. Katelyn, let’s talk about, a little bit about what you do and why it is that you can help us with our emergency savings.

00:01:10.3 Katelyn Huntington (KH): I am a business development representative here at Consumers, and I work for a program called Consumers @Work, which provides financial wellness and education for employees onsite at their place of work.

00:01:23.5 LJJ: Have you found that emergency savings comes up as not even understanding where to begin, but how much should I even have?

00:01:31.7 KH: Yes, and a lot of employees that I talk to don’t even have one or haven’t even thought about it. Just because they’re trying to pay their bills every single month. But it is an important topic to talk about. Because, ideally, you should be saving at least three months’ worth of bills in your emergency savings fund.

00:01:49.2 LJJ: Like literally having it there sitting. Don’t touch it.

00:01:51.8 KH: Yes.

00:01:52.1 LJJ: Scott, you lead our @Work program and you have found the same thing as you go to companies across the state?

00:01:58.8 Scott Dobson (SD): Yeah, high percentage of our workforce here in Michigan does not have an emergency savings account. Like Katelyn said, experts say have a three-month emergency savings account. A lot of people couldn’t even tell you what that number would be. Say, “Hey, what does that mean to you? Three months’ worth of savings. What’s that dollar amount?” So, not only do we see people like, “Boy, I should have one, I don’t have one. I don’t know what it should be, and I don’t know how to do it.” So, it’s a big statistic of people that don’t have that account. And a lot of people have no idea how to even get started with building an emergency budget.

00:02:30.9 LJJ: Well, let’s start with that. You said the word that some people cringe at and that is budget. But it really doesn’t have to be like an accountant with like huge spreadsheet, does it, Katelyn?

00:02:39.5 KH: No, I mean, the easiest way I like to explain a budget is it’s someone’s spending plan. It is: What are they spending in a month for bills and other things and comparing it to the money they have coming in. And making sure they have enough to cover their expenses for a month.

00:02:55.1 LJJ: So, when you say an emergency fund is three months of expenses, that’s literally taking— Is it that I have to do it three months and then figure it out? Or literally just say, “Okay, here’s what I spent this past month.” And that’s the start.

00:03:08.4 SD: I think the easiest way to start … it’s very difficult for any of us to come up with a full budget. Like if you look back, most of us don’t have receipts for how much we spend in restaurants or grocery stores or gas stations, but we definitely know what our bills are. We know how much our house payment is and our car payments and our insurance. There’s a whole list of those bills that you pay every single month that are going to be there. And they keep your life going, right? Without having those, you don’t have a place to live, and you don’t have a way to get in to work. So at least budgeting those bills, the predictable ones, gives you a good start. So, the variable ones can be tougher, but all of us can start and write down: here’s how my housing, here’s my automobile expense, here’s my insurance expense, my credit card minimum payments. All the things that you have to pay every single month. And at least that can give you a minimum dollar figure of: I’ve got to have at least this much to pay my bills, and as a cushion for that, because you have to eat and buy gas and things like that.

00:04:02.0 LJJ: I know that, Katelyn, you’re also helping any of our retail team. We’ve got these checklists that are very simple to use that you bring to the to the @Work employees that help literally go down line by line to say, “Do you pay this?” And have— and help them one on one.

00:04:18.6 KH: Yeah. So, we have some resources. We have a template of a budget of the monthly expenses that they may incur in a month. And so, we kind of go through: all right, we have housing, transportation, insurance, groceries, gas, things that they use, obviously, every single day. But they don’t think about, “Hey, I should maybe track or know how much I spend in a month, so I can make sure I have enough to get me through for the next month.”

00:04:42.5 SD: And I think it’s really eye opening … for me, even the very first time I sat down, I wrote down: here’s all the bills that I have to pay next month. Here’s my paycheck, here’s all the bills that I have to pay. The difference is what I have to live on, which I have to buy gas and groceries and everything else. So that was a real eye opener just to get that much math done, which took me about 10 minutes, to understand that that variable money, after all the bills that I’ve already promised to pay, is what I had to live on. And if I wanted to earn more money, I needed to reduce those bills that went out every month so I can have more of my own money. 00:05:13.9 KH: And one thing to think about is 50% of your income should be going towards those needs, those type of expenses like housing and transportation and gas. If you want to go by rule of thumb, we recommend 50% when we’re talking about budgeting.

00:05:29.1 LJJ: And when—these are all online.

00:05:33.1 SD: Yeah, absolutely. We have a lot of modules online. If you want to see our budgeting platform where you can go in and say, “All right, yes, to have a house payment, how much is it?” I like to budget by paycheck because I get paid every other Friday, so I take my house payment divided by two. So, I always like to say, “My house payment is this. How much of each paycheck have I committed to the bills that I already have out there?” So that every Friday I know how much money I already have to spend for bills and how much I have for everything else in my life.

00:05:59.6 LJJ: The everything else and inflation. Let’s talk about that, because when we talk about gasoline, all right? Or the things that go up and down and fluctuate, you know, how is it that we can budget that? Because all of a sudden at the end of the month and the gas prices went sky high, and your interest rates maybe on a credit card went sky high, and you didn’t budget for that?

00:06:20.7 SD Yeah, I think the easiest way is to look back historically. I use our Consumers credit card and it’ll give you categories, so it makes it very easy. For— I don’t keep track of anything, but I put everything on my credit card. So, it tells me how much I spend at gas stations. So, I just look back historically and say, “Well, I know how much I spent last year, and I feel like gas prices are going up, so I need to save an extra 20 bucks a month probably to be able to cover that expense.”

00:06:43.7 KH: One thing you want to think about is overestimating when it comes to variable expenses like gas and groceries. So, calculating a little bit more than what you initially used in the last month just to give yourself a cushion is a good idea.

00:06:58.8 LJJ: And when we talk about that budget. And we talk about feeling pinched or feeling stressed, how important is it to be transparent and to be able to say, “Look it, this is truly happening right now and there’s some things that might have to change so that I don’t feel stress in my life.”

00:07:18.3 SD: Especially if you have a significant other or you and a spouse share your finances. It can be really stressful, especially if you have different priorities. So, like any relationship, good communication on where your money’s coming in at, and how it should go out, can be very helpful. If one of you has one idea of how next year should go and one of you has a different idea, you could get yourself into some financial trouble.

00:07:41.6 LJJ: Katelyn, technology is here to help. And so is face-to-face communication, as we said. But the technology truly can be very helpful to keeping you on track.

00:07:51.7 KH: Yeah, so at Consumers, we have … and if you haven’t thought about it, you can open as many special savings accounts with your Consumers account as you want. So, for me, in my budget, I do an envelope system. So, I have about ten special savings accounts and they’re all labeled different things. So, credit card, pet insurance, gas, things like that. So, I can keep on track and make sure that my bills are being paid and I’m moving money personally, because I love the technology piece, and moving money as I get paid into those envelopes and then paying it on its due date. So, I love relying on that and not having to worry about my bills being paid.

00:08:28.8 LJJ: You know, we’ve all been in the situation— at least anyone I’ve ever met— has been in the situation where: oh, my goodness, you wake up one morning and you realize you’re really, like, getting close to the threshold of, you know, not having enough money in your account. It happens to everyone. Scott, can you give us an example? Has that happened to you?

00:08:48.1 SD: Yeah, absolutely. It’s one of those things that you don’t really want to admit that your finances weren’t perfect at one point in your life. But it happens to all of us. And really, I didn’t have a good method. I grew up the education— I got my dad: super solid planner every payday, he had everything. I’m the opposite. And so, I’d get my paycheck and I’d stress about what I was going to pay, and what was due next, and what big bill was coming. And all of a sudden, I’m like, “Man, every time I get paid, I’m stressed out. I don’t have enough money because I haven’t planned ahead any more than just today, and then I’m going to figure it out.” So finally, at one point when it was, you know, the 28th of the month that I did not have enough money to make my mortgage payment, I was like, “I really have to make a change.” So, it was when I was stressed out that I decided I have to do something different, and I have to use technology to help make it easy for me. So, really, I decided at that point to put together a system that wasn’t like getting my paycheck every other Friday and then trying to figure it out from there.

00:09:47.8 LJJ: It was really thinking ahead and knowing where your money had to go in the first place.

00:09:52.9 SD: Exactly, Yes.

00:09:54.0 LJJ: Katelyn.

00:05:54.9 KH: I was in my mid-twenties. I had moved out of the house, and I was in my own apartment and every month, for like two or three months, I was negative, and I kept on incurring like one or two overdraft fees. And I was like, “Where is my money going?” Like, “I don’t know why I’m negative every— at the end of every month.” And it was frustrating because I couldn’t do the things I wanted. But then I also didn’t know where my money was going. And so, I started tracking my expenses, realized I was overspending in a couple of categories, and realizing that I could save half of that and help. Having a budget and tracking my expenses helped me because I was tired of getting overdraft fees and I wanted to know …

00:10:32.1 SD: And neither one of us came into the office to figure it out until we were a mess. So, if you’re coming into the office as a mess, that’s exactly how we were. So, we’re like, “We’re okay. We’ll get you through this.” So, everyone goes through that.

00:10:43.2 LJJ: And you know, the interesting thing that I think is what makes us different at Consumers, is we really do want to hear your story. So don’t be embarrassed or shy, you know, come on in and talk with us. Pick up the phone if you have a question for our hotline. Do that because that’s what we’re here for. 2024 is going to be an up and down year. We know that we’ve watched all of the news segments that are saying that, you know, we’re just not quite sure that we’re over this inflation. The humps that are happening in our way. And it’s a political year. So, it’s time for us to help you succeed in your financial wellness. [music]

00:11:26.0 LJJ: And now it’s time for our Money Minute Expert: Josh Summerfield and our mortgage team. Hey, Josh, tell us about when is the right time to start thinking about grabbing that home? Things still fluctuating a ton?

00:11:37.8 Josh Summerfield (JS): Yeah, lots of movement in the market, as there has been for a while now. You know, when is the right time to buy for an individual person? That’s the million-dollar question, right? Everybody’s got their different needs. So having those conversations with your team around you is important. But now is still a great time to buy. You know lots of opportunity for rates to move down in the future. So don’t get scared away by rates necessarily. So, if you do need to purchase because, you know, your family’s expanding. Or maybe you’re moving to a new market. You know, whatever it is, don’t be scared by the market. It’s still a good time to buy.

00:12:14.7 LJJ: And you know what? It’s a good time for you to check out our website: ConsumersCU.org. We have a great team in place for you to get that new home.

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