When it comes to talk about personal finances, many of my friends have surprised me by asking, “Why do you bank with a Federal Credit Union?” First, it is clear their underlying question is they simply do not know the differences between a credit union and a bank, and there are many differences. So I’ll rewind past all my prior conversations and start at the beginning because if you understand the key elements of how credit unions and banks are structured, your choice is fairly clear as to which will serve your personal needs best.

Most banks are called “commercial banks” and as the name implies, their purpose is to serve commerce. Therefore their primary customers are businesses leaving private individuals as somewhat of an afterthought, (in fact banks account for 81% of industry revenue nationally). Most banks are led by boards of directors and must answer to shareholders with the expectation to make large profits. A bank’s depositors create those profits with every transaction they make. Even with a profit structure, for everyone who followed the news over the past year, it was the banking industry that was brought into the spotlight about their operations and need for a taxpayer bailout. (Did you see any credit unions under fire? No!)

So if banks have stockholders, what do credit unions have? Members. (So who do you think will serve your individual needs best?)

Credit unions were created specifically to serve individuals offering various accounts from savings to checking, in addition to credit cards, mortgages and, on occasion, home business accounts. Credit unions are federally regulated ‘non-profit’ organizations owned by their depositors, (that would be, should be you!). That’s why deposits are called shares versus deposits. Due to their structure and purpose, credit unions have remained well capitalized and remained the most viable option for home loans throughout the economic downturn. As consumers become more knowledgeable on the differences between banks and credit unions there has been an influx of families making the switch to who will serve their personal needs best, (and I think you know who that is).

So get moving to your locally depositor-owned and operated Federal Credit Union today!

Also learn more about youth accounts offered by Credit Unions. It’s a safe environment for teenagers to learn about money. Check out the GTE Federal Credit Union youth checking account for 12 to 22 year olds at www.U224U.com, because learning about money is important, no matter what your age.

Hello All!

Last year’s presidential election drew the attention of my teenagers for the first time, giving them a full lesson in the political process. Maybe it was their age, perhaps the state of the economy. Nevertheless, (and regardless of political party affiliations), I saw this as an important step towards being a responsible adult.

Since the election, we’ve seen government push forth for a program that would educate our youth on finances. As Business Week put it earlier this month, “When it comes to financial matters, Americans are functionally illiterate.”

So while the intent to educate has been alive for over a decade, those behind the financial literacy program say that during a strong economy many assumed we knew what to do with our money (other than spending it). Let’s reflect back on my previous blogs, ‘Teens Top 10 Money Myths’, obviously that assumption was not accurate.

As the Business Week article reported, “President’s Advisory Council on Financial Literacy issued a 57-page report in January just before President Barack Obama took office. Among other recommendations, the council said states and the federal government should mandate financial education from kindergarten to grade 12, and require college students to take a financial literacy course before taking out student loans.”

It seems our government leaders are seeking to correct our economy from both ends – what caused it (in part, financial illiteracy), as well as the other factors we’ve read about in the news. So I dove into learning more about the proposed Financial Literacy programs for our youth. One of several bills in Congress addressing the issue would devote $250 million per year to financial education, with the money split between K-12 schools and colleges. I love the thought of this program as my kids try to dodge me in my continued quest to educate them on money matters. (However, I have seen the results of my efforts in their savings accounts!)

A major benefit I’ve come to realize as a parent who is trying to educate my kids, is that our kids may soon be educated on finances within the schools from kindergarten through college. So educating them on saving, spending and investing will be unavoidable!

So there’s still a long road ahead in putting a Financial Literacy program into effect. I think we can all agree that with a program like this, we all win.

Learn more about a GTE Federal Credit Union U22 checking account for 12 to 22 year olds. Because learning about money is important no matter what your age!

Gift Giving Challenges at the Holidays.

Buying for tweens, teens and young adults can be incredibly challenging. Seems like it’s almost impossible to figure out what’s in style, what are the latest trends. Sometimes I’m almost certain I got it right with my kids just to find out “thanks mom but that was soooo yesterday!”

However, one gift that is always in style is a gift card from one of their favorite stores. They seem to provide a sense of freedom, an opportunity to do their own shopping and buy exactly what they like. Now maybe for you, gift cards seem a little impersonal but it got me thinking about what they really like about gift cards. Freedom! Independence!

Freedom and independence can come in many packages and money never goes out of style. Now, I don’t want to sound like a pitch person, but opening the GTE U22 account with my own teens has proved to be an important step towards their financial independence. While I can contribute to their accounts as well as monitor their spending and balances, I mostly sit back and watch them manage their money all on their own. (I’ve been quite impressed!)

So I’ve decided to do what may seem a little predictable and gift wrap a few U.S. Savings Bonds and U22 deposits because I’ve seen firsthand the rewards of educating my kids on money matters.

(Hopefully they won’t read my blog or it’ll ruin the surprise!)

Visit www.U224U.com for more information on GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. Because learning about money is important no matter what your age!

Kathy here!

Did some investigating recently and found some rather ingenious educators who have been developing new methods of learning, using creative curriculum that really engages today’s teen generation. They’ve made learning fun, including learning about financial responsibility.

By fun, I mean that they’ve developed hands on learning and video games with an educational message. Brilliant I say! I did my due diligence on a number of these video games and found some impressive sites that feature the essential money saving, credit-building message.

First, check out a really clever game, “Celebrity Calamity” which was featured in Fast Company magazine and many others. It’s a real hit with tweens, teens and young adults because they have to manage the money of a celebrity. I love the beginning where it’s raining money and clothes for you to catch! www.celebritycalamity.com

Then there is Moneytopia. More than just a clever name, this video game takes you through 40 years of financial decisions including where to live, what clothes to buy, where to invest and what bills to pay. You can use cash, credit cards or high cost payday loans. The game even throws in an occasional surprise such as a wedding or birth. This game really offers valuable know-how to teens on how to manage money, (and what its like to be an adult, a parent).
http://www.saveandinvest.org/Military/manageMoney/managingCredit/P037943

For younger kids, I love “The Great Piggy Adventure” which is a collaboration between Disney and T Rowe Price Associates. The game’s lessons are about setting goals, saving and spending wisely, inflation, etc. Anything involved in Disney hits a home run with kids, so this game excels in teaching kids 8 to14 about money.
www.piggybank.disney.go.com

I learned that many teachers recommend these and other online games for “real world” learning! So, check em’ out!

And always remember to visit www.U224U.com to learn more about GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. Because learning about money is important, no matter what your age!”

Build Credit. Fix Credit. Start Saving.

I’m sure this comes of no surprise to all of you, there are two personalities when it comes to money: Spenders and Savers. If there was a race, the savers would clearly be in the lead. Sometimes I wonder if all teenagers are born spenders (and grow into one category or the other).

We all know the “spenders”… covered in labels from international designers, driving the super sports car with a wallet bursting with showy credit cards. It’s a lifestyle that teens see in music videos and movies. But it’s not real, not smart and the consequences can be life changing. Today’s economy has presented a perfect opportunity for teens and young adults to learn from the mistakes of overspending. As I say it: “Spenders survive, Savers thrive”.

Build Credit. Fix Credit.
Establishing good credit is the message, but sometimes that requires a few fixes along the way. No one likes to suffer the consequences of doing something you didn’t know was wrong (or you did know but were too young to understand). Life catches up with all of us, especially when it comes to credit.

Sometimes our teens or college-aged kids sway from their fiscal responsibilities, so share with them the basic 5-step process for improving their credit. Perhaps if they have to do the work to fix their credit, they’ll get back on track and stay there!

• Step 1: Get your credit report. Everyone is entitled to one free credit report a year. Visit www.AnnualCreditReport.com and order one from Equifax, Experian, or TransUnion.

• Step 2: Categorize the negative items. Create two categories: items that are legitimate and those that are mistakes. It’s reported that 80% of credit histories have at least one error.

• Step 3: Deal with the mistakes. With identity theft on the rise, your teen may find accounts they never opened and charges they never made. Contact the credit reporting agencies; it may be a hassle but it’s worth the pain in rebuilding credit.

• Step 4: Try overturning legitimately bad items. Skip the credit repair companies; your teen can do this on their own. They made mistakes and got behind, so now it’s time to ask for forgiveness. In some cases a creditor may be willing to waive or remove a negative item for those who been an otherwise excellent customer.

• Step 5: Think beyond FICO. There are alternative credit scores out there where they can build credit by paying their rent on time and doing other responsible things that aren’t included in traditional credit scores. While the alternative credit scores won’t make a huge impact on the overall score, they can give a more accurate picture of a borrower.
Start Saving.

First ask your teens and college kids, “What are you saving for?” Independence? A computer? A car? Or even better, “A luxurious lifestyle?” Dreams are the first step in establishing goals. Once you have them, you need to draw a clear path on what it will take to accomplish them.

Sit with your kids and help them evaluate their own income whether they have a part time job or an allowance. From there, simply make note of all the large to small expenses they are responsible for. Do the math, set aside some fun spending money and portion for savings. If they train themselves early to save a fixed portion of each paycheck, your teen will find that spending is more controlled. This is a money saving habit I like to call “out of sight, out of mine (and mind)”.

I read about a 12 year old that bought a used lawn mower for $10. In one summer he saved $10,000 from his profits! He later turned his lawn mowing business into a successful landscaping business and now makes more than a six figure income.
A six figure income can translate to a lot of fun like vacations, cars, computers… what else did your teens have on their list? Here you can see how saving creates stability, less worry and more purchasing ability. What a great concept!

Visit www.U224U.com to learn more about GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. “Because learning about money is important, no matter what your age!”

One day, not too far off, Gloria, my eldest, will most likely be heading off to college. Beyond the liberating and exciting stuff college has to offer, like dorms, new friends, parties (don’t even want to think about it) and college sports, graduates are faced with the real world reality of how to pay for it all and student loans and credit cards are usually in the mix. Now, in today’s tough economy, for our kids in college, once they are 18, their credit history plays a huge part in their future success. You can have the grades, extracurricular activities, internships and a great personality, but if you’ve been irresponsible in the money arena, it can prevent you from starting a career. Graduates are faced with the real world reality and challenge of trying to find a job in a jobless market. Talking to your kids about managing money while away from home is more important than ever; a poor credit history is just one less obstacle they will have to hurdle. Check out these scary stats:

According to the National Association of Colleges and Employers, in 2009 only 19.7% of college graduates have found a job – that’s just 1 in 5 – compared to 51% in 2007.

The average college senior owes $21,000 in student loans upon graduation.

What are the statistics for young adults without a college education?

Unemployment is 20.6% for those with just a high school diploma according to the U.S. Bureau of Labor Statistics. (If that isn’t a statement for the value of a college education what is?)

These are harsh realities that need to be discussed. So, I set out on my continuous quest for knowledge about teens and money by visiting the local bookstore.

First, I encourage you to check out The Motley Fool Investment Guide for Teens. This clever book gives sound advice for teens to see how saving and investing can be fun. It’s filled with pages of work sheets, information in the credit card department and real world investment advice. Best of all, they talk the language of teens.

A few topics to expect from this book:
- How to gain financial independence
- Ask questions when it comes to managing your money
- Save cash for college, for investing and for fun
- Dodge the spending and savings pitfalls that have trapped many adults
- Get started with investing today
- Discover and learn how to identify up-and-coming businesses that could be future blue chips (what’s a blue chip? That too is explained in the book).

Fast forward to young adults and I found another great book, GradSpot.com’s Guide To Life After College.
This book helps twenty-somethings take a step into the real world with advice on finding a first apartment, first job, office politics, managing finances, paying taxes and so much more.

The book’s authors create a punchy comparison between college antics and fiscal responsibility pointing out there are those mistakes you can make now that won’t affect you when you’re older… and there are those that will. As they so aptly put it, “Between credit scores and compound interest, the American financial institution is designed to reward long-term saving and responsibility. So while a booze-soaked week in Acapulco hopefully won’t be held against you when you’re 65, your money and the people you owe it to are the proverbial elephants in the room. They are big, powerful, and have very good memories.”

I couldn’t have said it better myself. Buy the book or visit the website www.gradspot.com for great advice by college graduates for college graduates.

Here’s a real world tip… get started today! Visit www.U224U.com to learn more about GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. “Because learning about money is important, no matter what your age!”

More than blogging about the 10 Teen Money Myths, I’ve also been speaking to many parents while out at football games and school events. The response is the same, stirring great concern about their misguided beliefs especially in regards to credit’s affect on getting a job.
Over the years some important changes have been made to how financial institutions issue credit and loans, establish interest rates and report to credit bureaus. Some changes are good, some not. This is where knowledge is key!

Myth 2: Bad Credit Can’t Keep Me from Getting a Job
Do you see that security camera up there in the corner? Have you read the news? At work crime has risen each year, therefore more employers are expanding all security measures including background and credit checks.

If your teen seeks a career in accounting, finance, fundraising, politics… basically any position in which they will manage money, their credit will certainly play a role in whether or not they are considered for a job. The state laws vary; however in general employers can legally deny a position based upon your credit but are required to show their source of information to the rejected job applicants.

Myth 3: All Loan Companies Have the Same Rates
Just as individual as you and I are, so are loan rates especially when comparing credit unions to banks. First, we all know your credit score is their first consideration. Gone are the days when you could obtain a loan regardless of your credit, (much of the reason behind today’s economic strife but that’s another day, another blog).

I reminded my teens that great credit earns the better interest rates whether you seek a loan at a bank or a credit union. Following that I share with you a basic comparison of banks to credit unions. Simply put, banks are “for profit, often publicly traded companies” vs. credit unions which are member-owned, not-for-profit organizations. Just the mere words “not-for-profit” and as banks are “for profit” clearly states how revenue flows within an organization and how much the customer pays for their operations.
Being member-owned, they have a stated goal of providing services to their membership resulting in fewer hassles and more competitive loan rates. I read an interesting survey that appeared in Consumer Reports lauding the top credit unions for their customer service, rates and fees.

Myth 4: It’s OK To Make Minimum Payments on Credit Cards
There is a credit card balance calculator that I discovered at www.bankrate.com that gave a frightening example that really hits home with why minimum payments are a bad idea.
First, if you are in debt, any financial planner will tell you to pay off your high interest rate debt first. That would be the balance on your credit cards!

So I broke it down with this example:
With a credit card balance $2,000 (by the way this is below the national average)
Interest rate 12%
The minimum payment would be $39.80

It will take you 169 months (16 years) to be rid of your debt. In that time, you will have paid $1,557.62 in interest! See for yourself at: http://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx

To top that most people rotate their debt by making new purchases which add to the balance and therefore never pay off their debt. Imagine, since half of each payment goes to interest it’s much like paying double for every purchase you make on a credit card (if you pay only the minimum).
For once, my kids saw my point. That in itself was a golden moment.

Visit www.U224U.com to learn more about GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. Because learning about money is important, no matter what your age!”

Hello parents,

It’s me again, Kathy – a mom blogging about money and teenagers. Conjures up thoughts of trips to the mall, first new cars and other expenses large and small. You can relate right?

I was saying to my kids the other day that conversations about money shouldn’t always be about “spending it”. I prefer to talk about saving money and building good credit. (I find I have to have these conversations with them often to find what clicks and connects with them. Perhaps if I were to text them I could get their attention.)

Back to my point, I was reading the other day on WalletPop.com about the Top Ten Money Myths Held By Teens & How To Change Them. First, the article stated:
“Thanks to the fact that most teens rely on their uninformed peers to answer their pressing financial questions, there is plenty of misinformation passed around which makes it even harder for teens to get the straight facts about money and other personal finance topics like credit scores and banking.”

The Consumer Federation of America gathered some data that provides some valuable and surprising insights that will grab your attention.

Top 10 Money Myths Held by Teens:
1. I don’t have to worry about credit at my age.
2. Bad credit can’t keep me from getting a job.
3. All loan companies have the same rates.
4. All credit cards are alike.
5. The job of financial advertising is to tell the truth.
6. It’s OK to bounce a few checks.
7. It’s OK to make minimum payments on a credit card.
8. Paying late occasionally can’t hurt my credit.
9. Fine print isn’t important.
10. Young people don’t have credit scores.

Additionally, CFA stated only 73% of parents feel “very capable” of teaching their teens about money.

Well allow me to address number 6, which surprisingly came out of Gloria’s mouth the other day when I was paying some bills after dinner. So, here’s my advice… First, explain what a bounced check is – you write a check that you don’t have enough money in your account to cover. Next, let your teen know that bouncing checks not only can result in the closure of your account but they will appear on your credit report. Once reported it will remain for up to 5 years warning lenders and even potential employers that you could be a credit risk. Today, more employers are conducting comprehensive background checks including credit reports to protect both the company and their customers.

I will answer more of these myths in my next blog, but I simply cannot overlook mentioning the importance of the fine print! This is where all the claims credit card companies make in their advertising are clarified as often “to good to be true”.

Well I’m certain by presenting you with these Top Ten Myths I have provided a few surprises… I invite everyone to visit a few helpful websites and have some real one-on-one time with your kids about money!

Helpful websites:

“Visit www.U224U.com to learn more about GTE Federal Credit Union’s U22 checking account for 12 to 22 year olds. Because learning about money is important, no matter what your age!”

Also visit:
www.walletpop.com
www.msnmoney.com
www.fightdebt.com

Hello Moms and Dads!

Well, today I was having yet another discussion with my daughter Gloria, now 15, about a driver’s permit. Since we opened her U22 account, she has committed to helping save for a new car, so the minute she turns 16 . . . ugh . . . she’ll be able to drive. Now, when we opened her GTE Federal Credit Union U22 account, Gloria was given a U22 debit card, which the parent inside of me was super excited about – it’s plastic in her eyes, and yet has limits and control at the same time, which is golden in my eyes.

In my research, the debit card is mentioned as a great prerequisite for a credit card in a lot of the articles I read. Gloria is managing her own money and feeling good about having her own account, but she doesn’t run the risk of getting into debt. To me, debt is a very scary word, but to Gloria, it just doesn’t have much impact yet. So to better convey why a U22 debit card is perfect for her right now, I switched gears and put the whole credit card, debt thing into terms she would understand – how credit could affect her CAR aspirations. More poignant still – how BAD credit could affect HER future car loan. Here’s how it went . . .

Parents, feel free to use this – here is how I explained credit – in car terms.
- Getting a credit card is the first step in establishing good credit, or the first step in putting dents in it.
- When you get a credit card, it’s like a permanent record; everything you do, or don’t do, will be noted and possibly judged, so if you get in to debt, and can’t make your payments, it can follow you around for a very long time.
- Car loans refer as far back as 7 years, so when you turn 22, Gloria, and want a new car, the credit card payments missed when you were younger could hurt you.
- Credit ranges from 850 to 300. Let’s say by the time you’re 22 and your credit rating is around a 650 – about average. You may qualify for around a 7% annual percentage rate or APR (The amount of interest you would pay per year on your auto loan for the money that is lent to you).

AVERAGE CREDIT SCENARIO:
So, you want to buy a $17,000 car and you have no money saved for a down payment?

The total amount you will pay for your $17,000 car would be $18,530.

BAD CREDIT SCENARIO:
That same car with bad credit, can mean that you’re denied a loan or must have your parent co-sign on the loan. For the few that are able to get a loan, you could pay as high as a 25% APR. The math now?

That’s over $14,000 MORE than if you qualified for 7% with decent credit!

By, the way, the first thing Gloria said to me when I used a $17,000 car for an example was “But, the Mercedes I want is over $35,000.” I was thinking in my mind – 22 with a Mercedes? Good luck with that, but at least she has big dreams right?

Anyway, I went on to explain that a debit card is a great way to ease into “plastic.” And, although her GTE U22 debit card only lets her buy what she can afford, because she has to have the funds actually in her savings account to pay right then and there, she’s already on her way to establishing good credit just by creating an account history.

Here are some other great articles I found that helped inspire this blog:

Ehow.com: How bad credit can affect a car loan
http://www.ehow.com/how-does_4565415_bad-credit-affect-car-loan.html

MSN.com: How Teens Get Sucked Into Credit Card Debt http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/HowTeensGetSuckedIntoCreditCardDebt.aspx?page=2

Edmonds.com: Auto Loan Calculator
http://www.edmunds.com/apps/calc/CalculatorController

So, I am excited to report, I’ve been doing some homework preparing for my first official GTE – U22 blog! My topic of choice? How young is too young to try and start your children on the path towards making smart decisions with money? According to an article I read at KidsHealth, a good time to start giving your kids an allowance is at 10 years old. We were a bit ahead of the curve and gave our two kiddos an allowance starting at age 8. They still earn an allowance for doing chores but now they are teenagers and have outgrown many things including their pink piggy banks! I want to start teaching my kids the value of saving versus the joy of spending and to make sure they are on the road to financial responsibility well before adulthood.

I recently read an article in the Wall Street Journal that stated:

“Roughly one-third of graduating high-school seniors feel unsure or unprepared to manage their personal finances, according to a survey of 500 students conducted by Capital One Financial Corp. And only 27% say their parents are a primary resource for financial guidance.”

Wow! So, coinciding with my commitment of financial education, I decided that it was time to get more involved. After all, if I don’t teach my children how to be responsible with money, who will?

And, here’s my little pitch, which I promise I won’t do too often, but it’s a good one! GTE Federal Union has a product that is specifically tailored for young adults, so it’s not the stiff bank account that I use, but something they may enjoy and appreciate – the GTE U22 account – visit www.u224u.com for more information. This particular program has a lot of features that I like, such as the ability for me to set daily spending limits for my kids, and alerts when the balances get low. They get their own debit card and earn points towards cool stuff. This type of tailored credit union account is a good way for my kids to get a taste of financial responsibility without having to leap into the commitment (and possible fees!) of a regular checking account.

Also, if your kids are like mine, they will make mistakes from time to time. One of the benefits of the U22 account is that once a month, should they overdraw from their account, the penalties are forgiven. I find this to be especially important given that Americans paid over 16 BILLION dollars in overdraft fees in 2006.

I’m excited about this big first step that we have taken by opening a U22 account, but I realize there are many more lessons to be learned. I’ll be sure to chronicle them along the way so that other parents can learn from my failures and successes. With GTE Federal Credit Union and the U22 account, together we can raise a more fiscally responsible generation of young adults! Go us!

www.u224u.com