Real Tips for Real Life | PT 2.

Introduction

Danielle 00:00
Well, welcome back to the A Plus You podcast brought to you by Affinity Plus Federal Credit Union. We are on part two of our financial education episodes. We still have Anthony in studio or Tony. We kind of switch back and forth.

Anthony 00:18
It was fun.

Amber 00:17
It's okay, he said so.

Danielle 00:21
He said so. We did get permission. Amber, you have a fun activity to start the second episode.

Financial Tip: Pay yourself First

Amber 00:28
Well, I was just wondering if we could all share maybe a quick financial tip that maybe we use in our lives or have learned just with financial education being our topic and Financial Literacy Month. I think we all have little tips and tricks in our sleeves. So I don't know, who wants to go first?

Anthony 00:47
I'll go. I would say: pay yourself first. So when your paycheck hits your account, if it's all going into one account, I guess, put money in your savings first. Pay yourself first before you pay anything else, just to make sure that you're following through on savings goals.

Amber 01:00
Ooh, I like that. Is there a particular amount you should save?

Anthony 01:04
Anything is okay. That's where the budget comes into place. I will say it again, but don't worry about the amount. Just put something in there.

Financial Tip: Start Saving as early as possible

Amber 01:11
Okay, good idea. Danielle?

Danielle 01:14
So I would say it's along the same lines of the pay yourself first, but if you can start saving for retirement long before you think you need to, it just makes it easier as you get older, and because when you're 21 you're not thinking about retirement, but as you get older, you're like, oh, I don't want to work forever. I would like to retire someday. And the earlier you start saving, the earlier, I think it just or the the earlier you start saving, the the less stress. I think it is in the long run.

Amber 01:50
Well, I think take advantage of, like, work plans too, like if you're able to do something in that, something is better than nothing. I think it aligns with yours. Tony too, of pay yourself first. But also, if there's a job that you may have that contributes to your retirement, however large or small it may be, take advantage of it, because will add up in the long run.

Financial Tip: Name your accounts

Danielle 02:12
Amber, it's your turn.

Amber 02:13
My tip? I learned this actually from a member when I started at Affinity Plus, and it was to name accounts what you want to spend your money on. So I have like, eight different savings accounts, which is a huge benefit to me, but I name it. So every time I get paid, money goes into those accounts, and money goes out of those accounts. And I don't have to think about it. I account for mortgage. Money just goes in, and then the mortgage is paid, and it's like magic, and I don't have to feel it in my checking account every - every time I get paid, it's like it's gone. And I don't have to think about it.

Anthony 02:51
Love it. That I would tie that in with mine. If you set up your paycheck to disperse into the savings, then you really don't even have to think about it. That's right. If it goes into the checking account. I think we often give ourselves the green light to spend it, if you if your goal is to save just if you can work with your employer to have a portion of your check go in there. I love that. That's fantastic.

Danielle 03:08
And that goes into my tip. And we keep going round and round. But truly, I mean, like, my money goes into retirement accounts, like, I don't even see it, so, like, you know, if someone gets paid $5,000 a paycheck, you know, but you only see 3000 of that because, you know, whatever the math ends up being, into other accounts or whatever, like, just doesn't exist to you.

Amber 03:25
Exactly.

Debt Payoff Strategies

Danielle 03:35
Isn't that the truth? Um, well, we did touch on this just a little bit in the first episode, but I thought we could kind of expand it on it in this one. Tony, can you tell us a little bit about kind of debt payoff strategies as we're thinking about, you know, all the different kinds of debt there are a couple specific strategies that you had mentioned in the first one, and I just thought maybe you could tell us a little bit more

Anthony 04:03
Yeah, so debt strategy is kind of the bulk of what a lot of the stuff we do, because a lot of the hardships, if that's what it is, or just budgeting stuff, will be centered kind of around the debts. Because oftentimes those are gonna be roadblocks for our members or for us to reach our goals that we have set. So there's generally, like, two schools of thought for how you can approach debt. You have your snowball method or your avalanche. I think they're coincidentally, just titled with snow themes there, but generally

Amber 04:32
Because we're in Minnesota

Anthony 04:33
Though I don't, I don't have the evidence to say they were developed in Minnesota... Snowball would generally take, if you laid out all of your obligations, you would take your smallest balance, whatever that overall balance is on the loan, and you would aim to pay that off first. So when you're developing your budget and you say, Hey, I have allocated this much money to pay towards my debts, you'll pay minimum essentially on all of your loans, or all of your debts, with the exception of that specific loan - the lowest balance - and any extra funds that you have budgeted for debt payment would go towards that. And then when that payment is completely wiped off, that payment that you've been paying to it will then snowball to the next lowest balance. It's the most often, most common one that I use for members the Avalanche method is similar kind of strategy, except rather than prioritizing your smallest balance, you're going to prioritize highest interest rate. Now this is an okay strategy, but oftentimes for us, it's not something that's viable because usually we have a cash flow issue and generally the Avalanche method, it's for someone that's so focused on what they're paying in overall interest. So it doesn't necessarily mean you're paying less per month or anything, but you're trying to target the highest interest debt just to avoid the overall interest that you're paying. So both will work fine. You're paying off debt. You're generally going to be on a more aggressive path with both, but you'll have to kind of review budget and see what one makes the most sense for you.

I think oftentimes with the credit cards and stuff, it is, when we have so many different payments, it's easy to see a 24% interest rate and say, Well, I got to get this paid off. But if that's the highest paid balance, when you look at your statement, you see how much of your payments going towards interest. Unless you can chunk that pretty aggressively, you're going to still be paying on that for probably several years. So if cash flow is an issue, generally, the snowball method is going to be the best route to go. But this would be, again, something that we would work with the member. What's your values? What's your goals? What are we trying to accomplish? What does our budget look like? I personally use a snowball for anything. I mean, you could even for student loans, is what I actually used it for last because it's kind of the only other thing I had aside from the mortgage. But all these student loans have different rates and stuff. So if I can try to pay different amounts to the higher interest ones or the lowest balance, get those paid. That's what I've been doing. It's a tool that I use religiously with my members, even if they're not a coaching client, if it's someone that I'm working with on an auto loan and I see opportunity for them, maybe they have a few credit cards, and I kind of ask like, hey, how do you generally pay on these? And most common, you'll say, I usually throw 100 or 200 bucks at it. There's no, like, concrete plan, and that's what we see so often. We're just throwing random numbers and hoping it works. I'll usually type in all these debts real quick, while they're not even really paying attention what I'm doing. I'll throw, you know, 24% interest rates on those, and then I'll just show show them kind of a plan that they could utilize to pay those even more efficiently. And usually, when that happens, you'll see like, oh my gosh, I didn't even realize we're gonna pay that much in interest. And that's I didn't realize I could be debt free that quickly if I just applied a little bit of strategy to it. So great tools to work with, just definitely would come down to what you're prioritizing and what you can feasibly afford to pay towards those loans, so.

Amber 07:34
And I think you just covered it again. And that's like the resounding theme, like, knowledge is power without the knowledge. How would anyone know that? And even just knowing that, there's different strategies to pay down certain obligations that you have, like, how would you know unless someone helped or told you.

Anthony 07:52
Yeah, agreed. What ends up happening, as we know, let's say you have three credit cards, and you have high interest rates on all of them, you're paying the minimum. Might be 50 bucks. You pay 100 bucks, but you get discouraged because out of that $100, $60 goes to the interest, and only $40 goes to the balance. Right? We're throwing all this money at these cards. The balance isn't going down. Internally, we feel discouraged because it's like; I'm paying extra. I'm doing what I feel like I'm supposed to be doing, the minimum is only 45 or 50 bucks. Like, I'm paying double not understanding kind of how those those credit cards and how the Interest is calculated, how it accrues. So just oftentimes, we're not even adjusting how much they're paying. It's just strategizing and prioritizing specific payment methods. So same dollar in, dollar out for the member, but we're actually paying - making progress on these, on these loans. So it's a cool moment when you see it click, and they're like, oh my gosh. Because then, generally, what happens? They see progress, and then they get they want to get more aggressive with it. So it's just, it's so fun. And I love using that. I have it almost every day pulled up on my computer, so...

Amber 08:53
Well, yeah, you kind of get to see, like, the light at the end of the tunnel, like it feels good. That's awesome.

Danielle 08:59
I know. I'm just thinking about how every day. Your life, your job so rewarding!

Anthony 09:04
It is. I love it. So every day is different, and it's you meet so many cool people, and we're helping them with something that's so important with their lives. So I take a lot of pride in it.

Financial health in different Life Stages

Danielle 09:15
Well, that's a great segue. Thank you so much. You know, thinking about like our members lives and the vast, you know, I would say range of members that we have. We have members that are children, and we have members who are retired, and everybody else in between. So thinking through kind of like life stages, you know, how do we support like or, how would you support a member, kind of working through like, different life stages and their like financial health.

Anthony 09:47
So one of the first things we'll often do, again, we talked about values - I'm sorry to keep repeating myself, but along with that, what are our goals? And we will create new goals, obviously, for their financial picture. But I like to ask that just on a personal level. Like, do you want to have children? Do you want to be a homeowner? Do you plan on living where you live now? Or do you want to move somewhere? Or what do you want to do for work? Do you want to go get more education, potentially go to college or go to grad school, whatever that might be. And then talk about kind of what their plan is currently with, how they're going to get to that point. And then fill in the gaps, because you might have a member sometimes that's just dialed in, they have the plan already in place, and then there might be opportunity for us to kind of fine tune that. And those are always great because maybe, maybe their plan is solid, but there's just a little bit of opportunity things that we can tweak that'll get the plan just more efficient. And other times, you'll have the member, you ask them these questions, and it's kind of a thought provoking question, because they're like, I guess I haven't thought about that yet. So we think of something like fresh out of high school, maybe that individual is going to college, right? How are they paying for that is a great question to ask, because it's one that I didn't it was just go get student loans. That's what it was. Nowadays, I think, I think the newer generation is so much more cognizant of that. You know, you hear about it all the time and in the time and in the news and media about student loans and things, but I think the the kids going into college now are just way more aware of that than my generation and previous ones were. But what are your plans after school? You know, you and your partner, or do you plan on living together? Do you plan on buying a house? Do you know what that would entail? Do you know what you might need to have? Family planning? I mean, I got to learn this over the last few years. It's very rewarding. It's the best gift I've ever had. It's also very financially taxing, because now, instead of just myself and my wife, I have two other dependents, right? And they are expensive. Not only bringing them into this world, but also just letting them grow up. And, you know, my values obviously change. I think, like most, when they become parents. So I used to just have things about me and my wife, and now it's just about the kids. So my financial plan, if you compared it from four years ago, it's totally different now, because the values have slightly changed, because now my priority is the children and security for them. But I think for everyone going through that. You know, everyone's gonna go through these stages at different times, and you have to be okay with that. I think we get two in this linear track where, if you don't do this, but it goes ABC, go off the beaten path, do what you want to do, but you need to have a plan for that. So again, budgeting, savings, all of these things are going to be involved in all of those decisions. And the worst thing is, when we have people that are motivated, they want to be a homeowner, and they come in and and they don't understand, like credit and how important that is right now in America, when you buy a house and how much you need that. That's that's kind of the one thing that you can't really have a lot of wiggle room with. And working with those members - and it's not that I'm bringing bad news to them. You want to be yes men and tell them, hey, we're good to go on this. But sometimes you do have to have those tough conversations of being like, hey, I don't know if we're there yet, but this is how we can be there. So those are tough conversations. Those are tough realizations for a lot of people, when they go through them, but the plan and what our goals are at Affinity Plus is; okay, it might be a no today, but how do we get it to be a yes in the future? And that's where we tie all this back together, and that goes for anyone, any age, whatever their plan is. But yeah, I hope that answered your question.

Danielle 13:06
Yeah, absolutely. I love your comment about things not being on this linear track, and how we're all kind of in a different place, in a different time, and how everybody is so unique in their own financial journey. And there's just, there's so much uniqueness in it. And you were talking about coupling, like, my brain is like, rapid firing, but it's just so different for everybody, and that's okay, like, my husband and I, like, we share a bank account, and that's just how we decided to do our finances. And I have friends who, she's, like, I would never share a bank account with my husband, but they work. I mean, they've been married forever. And and they can, they can make it work, you know, so it's just so... I don't think people realize how personalized and how different it is for everybody. Like, it's so it's such a personal choice. I mean, it's like, like, I don't know it's so personal. And I think a lot of people think it's so not.

Amber 14:06
It's like buying a pair of pants. Because every time you go to buy a pair of pants, find something you like, and you find something you don't, and then you wish you had something a little bit different on this one pair of pants that they don't have. And it's not one size fits all.

Danielle 14:22
It's not at all, no matter what they tell you.

Anthony 14:25
And we're always we're always compared like again, we live in an age where everything's at our fingertips. We're always comparing our situation to what we see, social media, TV, all those things, whether we know it or not, we're always kind of doing that. There is no right or wrong answer, by the way, of if you or your spouse should share a joint bank account.

Danielle 14:42
There's not!

Your finances are going to be different from anyone else

Anthony 14:42
Just so, you know, no, that's a fun one that always gets brought up, but yeah, I think you're spot on. It's... I just, I hate when members come in and they're discouraged and they're they're anxious to open up, because we do have to get information so that we can help them to the best of our abilities. And because of so many other things out there. They're embarrassed, or they're anxious, or they're discouraged because they believe in their mind that they're doing it wrong and they're they don't want to admit that. They don't want to acknowledge that they might be wrong, but oftentimes you just got to tell them like you're not doing anything wrong. Your situation is vastly different than the rest. My, again, values, my budget, all everything about my finances is going to be different than every other person's. So it's just, I don't like to use blanket generalizations for anything, because we're all individuals. We're all different, so we have to recognize that, and that's not going to change, especially not with our finances. So even if you're a parent and I'm a parent, we all know that it's totally different. It's going to look different on us, and that's okay.

Danielle 14:45
It's like your house. Everyone's house is a little bit different.

Amber14:54
Everyone's house. Let's build our house again.

Anthony 14:56
Mine has a road running right through it, apparently. My house isn't, not gonna look the greatest, but.

Amber 15:03
But in the house reference, remember from episode one, we're talking about all of the things that go into financial knowledge and things to be aware of. But also, I think even if you don't have children, I think that's important to acknowledge, too. Is your budget is going to look different, your path is going to look different. How you spend your funds is going to look different. And maybe - not "maybe," just how you do things will be different. And that's okay too, because there's no wrong answer: Is what I'm gathering from what you're saying

Anthony 16:18
It's the way it should be. The way I mean, it's, it's the fact of how it actually is. So, yeah, I just... People get so discouraged and upset when we compare. It's easy to do that, but your story should be different than everyone else's, and that's what makes it your story, so...

Danielle 16:33
Absolutely

Amber 16:34
So with the house reference, where are we at now? have we built this house, yet.

Anthony 16:39
Yeah, my house. It was like, I got Jumanji and I rolled and now the house is, yeah, my, I got off to the bad foot with that one. But I think, I think we left off on the roof that we decided, or I decided, I should say, I'm not gonna throw you guys under the bus.

Amber 16:52
You decided, yup: You built this house.

Anthony 16:54
Yeah, I'm kind of rethinking how I have it layered, because I like those walls, because we didn't talk about, I think where we left off was investment, retirement, etc. So like future planning, which I think would be probably better suited as the roof. But again, I will see -

Amber 17:08
Is that the roof, or is that the road? Who knows? Because every picture is different, Tony.

Anthony 17:15
I'm gonna sit this one out.

Amber 17:18
No, you can't. You're still building me a house.

Anthony 17:21
I'm worried how it's looking. To me, it looks beautiful and it's the right house. But again, my house,

Danielle 17:26
That's that individualization.

Amber17:27
Yes!

Anthony 17:28
We just, we just, I just unintentionally did. I won't take credit for it

Amber 17:32
All right. So Tony, I know we built this house. Yours looks different than mine. And, like I say, investments in retirement is like the road, because it's, it's outside of, like, my immediate needs right now, like my savings, my debt management, my budget.

Danielle 17:33
Oh I like that.

Amber 17:42
It's pretty cool, because I'm building this house and it's all different.

Anthony 17:55
I love it.

Amber 17:56
So, like, how does that play into like, like the financial picture? Like, if you're thinking about financial literacy month, like, what role does investments and retirement play in that?

It's all about planning for your future

Anthony 18:06
It's all about just planning for your future. You're saving for your future. Whether that's tomorrow, a year from now, five years, twenty, whatever, we're putting something away so that we have something to come to when, when that time comes. I think I love, I love with the synergy we have with the investment center as our financial coaches, lot of referrals that we send that way. They're great professionals. So definitely, if you need to review that or discuss that, have that conversation. But just it's about planning all the possible outcomes of something, getting yourself so that when you get to retirement, or whatever age you're gonna call it quits from the work life today, you get to enjoy and live the life that you wanted to, so.

Amber 18:46
And you would say any of those resources- well, you just did; Our Investment Center at Affinity Plus is a resource. There could be other resources out there too, but, I mean, that's something that's outside the scope of the coaches, in particular. So thank you for building this lovely house with me, Tony. I'm glad mine looks different, because I really want a reading nook. So I'm going to figure out how that plays into my financial picture, but I'm going to make one, and that's that, so.

Danielle 19:15
oh, now I'm-

Amber 19:16
I know I'm not going to like, go put pen to paper after this and draw out how I feel my finances should look in terms of a home. I don't know, I'm gonna be a future architect.

Danielle 19:26
I think it's a great visual. And I like the, I like the analogy of, you know - I mean, we talked about foundations and roofs and stuff like that - but that's kind of something that everyone can relate to in some type of, like, structure.

Amber 19:40
Absolutely, I think so.

Rapid fire questions

Danielle 19:42
Okay, so we started the episode with a little bit of fun, and I think we should end the episode with a little bit of fun. So we're gonna play a little game.

Amber 19:49
I like games.

Danielle 19:50
Me too!

Amber 19:51
Tony, do you like games?

Anthony 19:52
Are we eating the cake or what are we doing?

Danielle 19:53
Oh, well, that's coming. Don't worry.

Anthony 19:56
I'm kidding.

Amber 19:57
No, you're not.

Anthony 19:59
That's all I've been thinking about, so.

Danielle 20:02
Um, okay, so we're gonna do rapid... Have you ever seen friends? Like Rapid Fire questions?

Anthony 20:07
Love friends, yes.

Danielle 20:08
And if you lose...

Anthony 20:10
Is there a lightning - is this the lightning round?

Danielle 20:12
Yes, yeah, you're gonna lose the apartment if you lose the lightning round.

Anthony 20:17
Deal.

Danielle 20:18
All right, okay,

Anthony 20:19
I'm good with it.

Should I pay off debt first, or save for retirement?

Danielle 20:22
Okay. Ooh, these are gonna be hard, based on our conversation today, but you just gotta go: Should I pay off debt first or save for retirement?

Anthony 20:30
So; "pay off debt or save for retirement." I would ideally do both at the exact same time. I think generally, as a more blanket, I would say, pay off the debt, specifically higher interest debt. So obviously your mortgage, likely you're not going to be trying to pay that off before contributing to retirement, low interest car loans, etc. If you can do both at the same time, I would do that. Otherwise, pay as much as you can towards any credit card or high interest debt, get that paid off and then do your retirement.

How do I start saving if I don't have a lot of money?

Danielle 21:00
Okay, how do I start saving if I don't have a lot of money?

Anthony 21:04
I would say, if you're an Affinity Plus member, you should utilize our stash or cash feature, which links your checking account to your savings and will deposit the difference from all of your transactions with your debit card into your savings account each day. So if you spend $550 getting gas, that 50 cents will be rounded up to $6, and deposited into your savings. So it's a way to save without actually consciously thinking about it. From a base level, I would say, don't be so worried about the specific dollar amount you're saving, even if it's $1 a day or $1 a month, start somewhere and build from there.

Danielle 21:33
All right. Do you have one?

What money tip would you give your younger self?

Amber 21:37
Well, I was just gonna say; if you could give yourself - your younger self - a money tip, what would it be - outside of being 18 and not taking out a credit card?

Anthony 21:46
Well, I'm okay with it. I never missed a payment, so I got credit age from it. But no, I think just thinking about being cognizant of the future. Like not living so much in the present. I think I have to have having more balance with that, because I could have done a lot more for future self at the early age, but that would have been the one thing I think I would have put a little more focus on.

What's one financial habit everyone should adopt right now?

Danielle 22:04
What's one financial habit everyone should adopt right now?

Anthony 22:10
Budget. Right now. But no, seriously, realistically, it is the foundation. I've said it 100 times, but it's that important. It's that valuable. Go online, type in budget worksheet you can print or find something for free and just start filling it out. It doesn't need to be perfect. It's never going to be completed. It's always going to be an adjusting, revised document. But you need to start somewhere. It's the core of everything we do financially. We need to know where every dollar is going. So budgeting and then, like, like I just stated; every dollar that we spend, let's have intention behind it. If we're saving it, if we're investing, if we're spending it, we have intention so that we have empowerment with our finances. That would be the biggest tip I could offer.

Danielle 22:50
Well, I can't think of a better way to end this.

Amber 22:52
Well, and I love that you said empowerment too, because I think that's the other thing. Is finances are emotional, but also, once you understand your own finances, of what's coming in and what needs to go out each month, you feel empowered to make decisions that are right for yourself, your family and future self, as well. Because I always I think about it as like we just talked about your younger self and your current self, like you have to kind of look at those stages of life and be able to balance it out. And it is really empowering once you get down to the nitty gritty of it and looking at a full budget. And budget's not a scary word.

Anthony 23:30
It isn't.

Amber 23:31
That's the other thing.

Anthony 23:32
No.

Danielle 23:33
Not at all.

Amber 23:34
It was at one time, but it's okay. Setting the budget and being disciplined, I think, is the scary part.

Danielle 23:42
It is, it is, it's, it's, it's daunting, but, yeah, I mean, just like you said, I mean, you feel empowered once it's all set and you are able to kind of reap the rewards of that. Well, Tony, thanks for making the drive down from Bemidji.

Outro

Anthony 23:58
Yeah, thank you for for inviting me. This was fun.

Amber 24:01
I repped my Bemidji today.

Anthony 24:03
And I did not, so I'm sorry. I wa,s I should have wore my my green and white beavers jersey. So I apologize, but love to Bemidji branch. No, I'm happy to be here. Thanks for having me.

Danielle 24:14
It was so fun, and you're welcome back anytime you want to come hang out with me and Amber.

Anthony 24:18
I probably won't bring cake next time, just because, but I'll take you-

Amber 24:23
Ice cream.

Danielle 24:25
"Treats with Tony."

Amber 24:26
Yeah. New Segment; "Treats with Tony."

Anthony 24:27
I think no more treats. I think I can't be that guy, I don't think, so.

Danielle 24:31
Well, thank you so much for listening today, and hopefully you listened - If you didn't catch episode one of our financial education episodes, please go back and listen to episode one, and don't forget to come back next time for the next episode of A plus You.

Affinity Plus is federally insured by the NCUA.