1.20.19

The personal side of your financial life

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Our guest, Tim Kosak, discusses how money and financial wellness affects you in life, relationships and happiness. When it comes to your finances, honesty is the best policy! Listen today and learn to get comfortable with the uncomfortable and take control of your life.

 

 

Transcript:

Lynne Jarman-Johnson (LJJ): Good day to you. I’m Lynne Jarman-Johnson, chief marketing officer with Consumers Credit Union.

Hey, Money I’m home. That is the title of our show, and I’ll tell you what, we are excited because we want you to participate with us. We’re going to have you ask questions throughout the year, but most important, we’re going to introduce you to people that are going to help you and me go from finance to fitness. I think we can do it. Joining us today so excited a very dear friend of mine, who I also get to work with every day. His name is Tim Kosak, and Tim is our chief lending officer, here at Consumers Credit Union.

Now, that means you… You make a lot of people smile Tim.

Tim Kosak (TK): Good morning Lynne, thanks for having me. Absolutely, we love to kind of fulfill the dreams.

I love the title, the title kind of… Really, it’s a personal title and finances are so personal and that’s just what really got me excited about the podcast, is it’s amazing how much of our business touches the everyday life of our members, and money I’m home just capitulates that, and how personal it is.

LJJ: One of the things we’ve been on a personal journey here, at Consumers Credit Union for financial wellness, but also for financial wellness in your own being, your own body. And we take wellness, to a new level. I’ve been reading some statistics about the fact that people when they’re under stress, that immediately affects a lot of things. That affects their personal life, their work life, blood pressure health. Number one stress issue that’s out there constantly comes back to the forefront is money.

TK: Yeah, number one marital strife.

Absolutely.

LJJ: Tell us a little bit about what you say on a day-to-day basis, on how that affects individuals, and what can we do about it?

TK: Yeah, and it’s funny, as the old adage is money does not buy happiness, but it is amazing at how much money gets in the way of happiness. Isn’t it amazing how much when you’re focused on how to make the next payment to a particular area when you’re trying to figure out how to make ends meet or put money food on the table? That stress level just makes things a little bit more difficult. And definitely the dynamics of the family becoming a challenge as well.

LJJ: Why do you think people are uncomfortable about talking about money, opening up about money and not being transparent to get over the hurdles that they’re facing?

TK: Yeah, it’s interesting, I think there’s a lot of old stigmas about money and status, and prosperity. It’s a measure that a lot of people get stuck on. If I have money, I’ve won, and it just gets in the way of so many different things, that it’s still that stigma of the old… How did I get here, where did I put my investments?

LJJ: I remember we have a pretty big family of six kids, and I remember sitting down one day, when remember when, the crisis, the financial crisis and everybody was really strapped and kind of scratching their heads about what happened to their life and their family and there was stresses all over the place, and we sat down with the kids at that time, and talked about groceries, and became very transparent about how much do you think it costs to feed a family of eight?

TK: Right.

LJJ: And when you’re asking for the things that are the most expensive, or how much do you really think it cost for that gallon of milk that now we just bought three of. It was really eye-opening to me because some of the kids were older and yet it was the first time, I felt that I needed to talk to them about money, and I kind of knocked myself in the head. Why is it that we wait until all of a sudden, we need to talk about it versus starting at the beginning?

TK: I’m always impressed I talk to many of our members who are extremely intelligent, and just extremely successful and still don’t have a whole lot of knowledge about finances themselves. It feels like something we’re expected to know but have never given the tools to understand. And a lot of people I’ve come into contact with a lot of our members who are really intelligent and really smart folks, just haven’t asked some of the easy questions; what next? What happens, where does it go and how does it work?

And so, I think there’s just this real fascinating perception that we’re supposed to just know how to be smart with money, without any of the tools to get there, People are afraid to ask,

LJJ: You know you bring your kid home and you don’t have the book that says here’s what you do parent, you are now a parent. And the same is true for money, right.

We have it, it’s in our day to life. I love the way you say it gets in the way, instead of saying, “You know what, it… Once you have it, you’re great, it gets in the way.

TK: it gets in the way.

LJJ: Yeah. There has been a study about what keeps people up at night, when they’re talking about their finances, and the top three things that really are focusing everyone’s attention are just paying the bills, making sure that you can pay the bills, a health care cost, very scary. And then that unexpected expense. When you meet with members and you said, “Hey one of the easy questions, those are big issues and yet they don’t have to be. What are some of the easy questions? Maybe the top two that we could ask ourselves to get on the right path for Financial Fitness?

TK: One of my favorite questions is really kind of fun with members. They come into us and typically I’m in the position where I see members where they want their next loan. And one of my favorite questions to ask and work with a member on is, what do you want after this loan?

And it’s really interesting to me that a lot of folks just don’t take the time to play through their next choice.

So just take a car purchase, for example, a lot of folks will go out there and they’re really interested and excited about a car purchase, and not so much time focused on what the monthly payment will be, what the insurance will cost, what the next purchase after the vehicle will happen.

And so, let’s say you want to buy a house after the vehicle, did you purchase a vehicle that prices you out of an ability to buy a house later on in life?

Some folks like being car poor.

LJJ: What does that mean?

TK: They want that vehicle that is just the beautiful status. Maybe it’s a large vehicle an SUV and enjoy being house poor or car poor, where they’re putting all their money into one particular item, and they don’t care about some of the other things.

When I grew up, we were house poor, we loved a larger house, more than we typically we could afford, and we drove vehicles that were 125,000 miles on them. They were paid for, they were cash vehicles and everything we had went into the house, so we were house poor.

There’s a lot of folks that like to be car poor. And what’s interesting is it’s really not up to the Credit Union to help make those decisions for an individual. Those are the individual’s personal decisions, but what we can help our members with is making sure that they play those decisions through and find out what next. And so, we see a lot of our members get into those stressful situations because they haven’t thought about the end of what that purchase means. And so, if I want to be a car poor, I’ve made a decision not to have money for other things in the future. And if I decide to do that and make it a plan, I’m in great shape. If it happens by accident, that’s where we see our members get into trouble.

LJJ: And is that kind of where that unexpected or emergency expense comes into play, that if you’re putting a large portion of your money and you chose to into a certain investment, and then all of a sudden something happens that you just don’t have the extra cash to be able to help yourself with. Is that where that snowballs starts?

TK: Right. Budgeting always seems to be kind of the last decision.

LJJ: Versus the first.

TK: And we all do it, and it’s so hard to put that to be proactive about it and put it at the beginning of the conversation, but it’s amazing at the amount of stress reduction that can happen when you ask that question first, as opposed to last. Americans are just really, really naturally not money savers. We’ve got some of the lowest savings rates, and in that cash in the bank is so so powerful. Not only does it help with that next problem and it helps with that next aspiration as well. And so, that’s where if we can bump it up and ask those simple questions, it’s the beginning of a budget.

What do you want to do next?

LJJ: Isn’t it funny how you say the word budget, and people will go ah.

TK: Right.

LJJ: I don’t want to do that, but if you just talk about it in everyday terms, what truly do you want to do next and do you want to live paycheck to paycheck is a really good question to ask, and what would happen if? The practical questions, right?

When you talk about budgeting folks really feel like they’ve got to go back and do a 12-month analysis and look at all their money spending for the last 12 months. There’s easy ways to start on a budget, there’s really, really easy ways. Automatic payments is just a beautiful way to get into habit of looking at your next raise and studying money aside and just taking one step. You take one step this year you take one step the beginning of next year, and soon you’ll have a budget in place.

LJJ: Well Tim, Let’s talk about that next, can you do me a favor, though? Can you give me the best personal advice you ever received about money? Doesn’t matter when it was.

Do you remember it?

TK: For me, it’s been a journey. I grew up in the credit union, I’ve had 22 years with Consumers Credit Union. And the best advice that I’ve really seen is the journey that I’ve learned for my members.

It just never ceases to astound me. Every one of our members had has figured out something smart about finances. And what’s really been a blessing is being able to see how different people use different tools, and there’s a widely known tools the envelope method of putting envelopes and segregating money for different pieces to do my budgeting, putting a little bit in an automatic sequestered account, a Christmas fund.

So really for me, it’s been kind of fun to be able to see the hundreds of thousands of different ways, our members have set aside money, or learn to get to that point of being able to save money and making it kind of a life challenge. So, that’s really to me been the blessing and being able to share that with other members. It is really where I’ve learned.

LJJ: Well, we were excited because you’re going to be sharing lots more here on Money I’m home. Tim Kosak, Consumers Credit Union. Thank you so much!

TK: Thanks for letting me join.

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