Winter 2010 Newsletter
In this issue...
- Recession and Beyond
- How Long Will You Pay For the Holidays?
A Little Knowledge Changes Everything (Hornets)
- Scholarship Applications
- Holiday Closings
Read this newsletter online at http://www.piedmontcu.org/content/winter-2010-newsletter
Recession and Beyond
How did the recession of 2008 & 2009 affect Piedmont Credit Union? This is a question that we still get from time to time. Fortunately, Piedmont Credit Union did not suffer like the banking industry. The credit union does not invest money in anything riskier than a certificate of deposit. All deposits are in federally insured accounts under the maximum insurable amount or in government bonds. Stocks and sub-prime securities are simply not an option for most credit unions because it is the mandate of a credit union to be prudent with its members' money and not to take risks with it. That said, the credit union is not immune to the effects of the sluggish economy even though it has by and large made all the right decisions regarding investments.
- Whatever affects you, affects your credit union. Even though there are positive signs emerging about the national economy, many of our members are still feeling the effects of the recession. Eighty percent (80%) of the credit union's total income is from interest collected on loans. Loans, as they are repaid, make the credit union grow. So if fewer of our members are borrowing today, that represents a future reduction in income.
- Past due loans and charge offs. If our members are going through a job loss, layoff, or other crisis that hinders their ability to pay their credit union obligations, that represents a current loss to the credit union. Simply put, nothing hurts the credit union more than when our members are unable to pay their loans.
- Corporate credit unions. Corporate credit unions only serve other credit unions, not individuals. There are two very large corporate credit unions which have suffered during the recession because their income is primarily from investments. If you have looked at your 401K or other retirement plan over the past two years you have no doubt seen the effect that the recession had on investments. To help stabilize the corporate credit unions, the almost 8,000 natural person credit unions across the country have essentially provided the funds to "bail out" the corporate credit union financial system. Piedmont Credit Union was required to participate in proportion to our size.
What does the future hold? Keep in mind that your credit union will only be as successful as you, our members, are. If you need a loan, please consider your Piedmont Credit Union first. If you've lost your job or had a significant reduction in income please come and talk it over with us. The credit union may be able to reduce the amount of your payments to fit your new income level.
Right now the future looks very positive! Piedmont Credit Union has made all the right decisions concerning its investments. Overall, the last two quarters of 2009 showed great improvement over the previous two. As a result we're in a position to come out of the recession very strong. In 2009 we celebrated our 40th year of serving our members. Looking ahead, 2010 will be a great start to the next 40 years of serving our members!
How Long Will You Pay For the Holidays?
It's not uncommon for people to take anywhere from three months to a full year to payoff the debt accumulated during the Holiday Season. Some never truly pay it off as it just gets moved around becoming part of a seemingly endless pile of debts. If you are wondering how you will ever get your Holiday debt paid off, there is hope! However, as with many wise decisions, there is some sacrifice involved.
First if you have borrowed money against credit cards or high interest personal loans, move that debt over to a Christmas Loan at Piedmont Credit Union instead. They will be available through the end of February. The interest rate is only 9.5% and the loan will be set to payoff in about 12 months.
The second step is the most important. Start a Christmas Club! The best way to break the cycle of Holiday debt is to start a cycle of Holiday savings. Once you have saved some money for next year, you won't need to borrow as much next time around. With lower debt payments the following year, you'll be able to save even more. After one or two years the need for Holiday debt will be gone as you will have moved to a system of Holiday savings.
This is, of course, more difficult than it sounds. You have to set a clear, attainable goal and remind yourself to stay focused on why you are saving. Here is the mathematical reason for saving instead of borrowing:
- If you save $176 per month over 12 months you will have about $2,115.
- If you make loan payments of $176 per month over 12 months you would have only borrowed $2,000.
When you consider all the bad things that excessive debt can cause (such as stress, conflict, and the feeling that you can never get ahead), the emotional and intangible benefits of saving money are crystal clear as well.
Featured Savings Story
In each issue of coins we'll feature a Savings Story from our website. You are invited to shrea your very own stories and experiences relating to money & savings at www.piedmontcu.org/savingsstory.
A Little Knowledge Changes Everything
Last Summer I noticed some big, mean looking hornets buzzing around near our drive-thru. Not wanting to find out how bad their sting could be, I stopped parking on that side of the lot and began steps to eradicate them. First I tried to find their nest, unsuccessfully. Since they didn't come close enough to really bother anyone using the drivethru I let them alone until our monthly visit from Four Seasons Pest Control. Tim from Four Seasons knew just what they were. They weren't hornets at all! They were Eastern Cicada Killers. As their name suggests, they live on the East Coast and kill cicadas for food, but they are virtually harmless to humans.
Here's how all this relates to money. A little knowledge changes everything. Once I knew what the bugs were and that they posed no real threat to me, my outlook on them completely changed. I was no longer afraid of or intimidated by them. It's the same when we're faced with financial challenges. When we're in the thick of the situation our perspective is all off. When we get the input from an expert, in my case Tim from Four Seasons, we learn the truth about our actual condition and can begin to take the right steps to fix the problem. The problem starts to shrink as your newfound understanding of it dispels the fear and intimidation that once paralyzed you.
So don't be afraid or embarrassed to ask for help when dealing with financial issues. Ask people who are successful in their finances for advice and help. You might find that your problems aren't as menacing as you think they are, or that you can accomplish more than you think you can!
-Shared by Dan V. - Member Since 2003 (PCU Employees Since 2006)
- Mealie Scott, 8 years
- Teresa Tuck, 4 Years
- Stacey Saunders, 4 Years
Welcome Alice Ann!
Piedmont Credit Union is pleased to welcome Alice Ann Crowl as our new accountant! Alice Ann has several years of experience at three other credit unions and has already proven to be a wonderful addition to the PCU family.
Scholarship Application Now Available
The 2010 Dr. Harold Henry Scholarship Application is now available on our website or at our office. Any Piedmont Credit Union member who will be attending college on a full time basis next school year is welcome to apply. Further details are found on the application. Scholarship applications will be due by March 31, 2010. This is a little sooner than last year so as to allow enough time for the scholarship recipients to be recognized at their school.
Visit http://www.piedmontcu.org/scholarship for more details and to download an application.
Our office will be closed on the following days:
- New Year's Day - Friday, Jan. 1, 2010
- Martin L. King, Jr. Day - Monday, Jan. 18, 2010
- President's Day - Monday, Feb. 15, 2010
- Easter Monday - Monday, April 5, 2010