Handle With Care

How well are you handling your money today? It may surprise you, but in North America “normal” is broke –or at least financially stressed– resulting in what some call “affluenza.” Here are some frightening statistics:

  • • Only 32 percent of Americans would be able to cover a $5,000 emergency with cash without going into debt. Source: Gallup/Bankrate.com survey
  • • A Parenting magazine poll indicates that 49 percent could not cover even one month’s expenses if they were to miss a paycheck.
  • • Bankruptcies in 2010 totaled 1,530,078.  Of those, about 71 percent were Chapter 7 bankruptcies. Source: U.S. Bankruptcy Courts
  • • Fifty-three percent of Americans have less than $25,000 in retirement savings. Forty-three percent of those people are over 55! Thirty percent believe they only need $250,000 or less in total retirement savings.  Source: Retirement Confidence Survey

One of today’s most popular financial advisors, Dave Ramsey, has developed a program called Financial Peace University. While much of Ramsey’s advice has to do with personal finances, most if not all can also be applied to business.

For example, on his website, DaveRamsey.com, you can learn more about what Ramsey describes as “EntreLeadership,” including a very interesting story of two workers –Harry and Larry– and how their life choices impact their performance at work.

It might surprise you how the personal financial literacy of not only you, but your employees, can have an effect on your bottom line.

At Telhio Credit Union, we have several employees who have completed the Financial Peace University Dave Ramsey Counselor Training, who can talk with groups or individuals about how to examine one’s financial situation and take the seven baby steps to financial peace recommended by Ramsey:

1. Take $1,000 to start an emergency fund: An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.

2. Pay off all debt: List your debts, excluding the house, in order. The smallest balance should be your no. 1 priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first.

3. Save three to six months of expenses in savings: Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all your “extra” money into investments quite yet. It’s time to build your full emergency fund.

4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement savings:  When you reach this step, you’ll have no payments, except the house, and a fully funded emergency fund. Now it’s time to get serious about building wealth.

5. Fund college for your children: By this point, you should have already started Baby Step 4—investing 15 percent of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.

6. Pay off your home early: Now it’s time to begin chunking all your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments.

7. Build wealth and give: It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. It’s really the only way to live!

For more information about how you and your employees can take these steps to financial peace, visit DaveRamsey.com or contact Telhio Credit Union and ask to set up a consultation with one of our trained counselors.

Telhio Credit Union is open to everyone who lives, works, worships or attends school within Franklin County and surrounding communities. Founded in 1934, originally as the credit union for the Columbus Telephone Co., Telhio is a not-for-profit financial cooperative where its members are also its owners. Driven by its philosophy that members come first, Telhio is committed to the highest standards of responsibility and conduct.

Telhio offers a variety of innovative programs, services and products to support its members’ financial needs. Telhio offers seven branching offices throughout central Ohio and nearly 4,000 shared branching locations nationwide. Additionally, Telhio participates in the highest level of combined federal and private share savings insurance available, insuring deposit accounts up to $500,000.*

* Federally insured by NCUA. Additional coverage up to $250,000 provided by Excess Share Insurance Corporation, a licensed insurance company.