Saturday, December 13, 2014


The majority of people in the United States use either credit unions or banks for the majority of their financial needs. I will outline for you the 7 basic differences between them. There are other resources that people use for finances. The two groups of financial institutions are safe, and for the most part your funds are insured.

Let’s take a look at 9 main differences between the two:

1.   Credit unions are not-for-profit cooperation’s owned by their membership. Banks are for-profit, generally family owned or shareholder owned companies.

2.   Credit unions can and do generate earnings (profits).This money is returned to the membership in the form of lower loan rates, higher dividends, fewer fines and better service. Banks make the majority of their money on fee income. Because credit unions are member-owned cooperatives, they don’t have to generate profits to appease shareholders.

3.   Credit unions are run by volunteer boards, and Committees Members elect the Board of Directors, rather than hiring the Board. The Board of Directors represents the credit unions members in making decisions and upholding polices.

4.   Each credit union member has the opportunity to vote for the board members at the annual meeting. The banks have no process like this.

5.   Member vs. customer. At a credit union you are not just another account number. Each member has equal ownership, whether $5 or $5000. Unlike banks, credit unions have a somewhat limited field of membership. Some are broader than others. This field of membership has been expanding the past several years.

6.   Many people fear that their money in credit unions is not insured as well as money in banks. In both instances your money is insured to $250,000. The money in the bank is insured by an agency called Federal Deposit Insurance Corporation (FDIC) and your money in Credit Unions is insured by an agency called National Credit Union Administration.

7.   Credit unions do not try to compete with each other as do banks. This is one of the perks of being non-profit. Credit Unions work in tandem and form alliances, which benefit the membership. An example of this is that an ATM Card from one credit union can be used at any other participating credit union’s ATM without paying a fee.

8.   There is a rule in credit unions that you must have savings account to be a member. This rule is taken care of when you are required to deposit $5 in a savings account when you join.

9.   To finance a bank’s operations, they issue stocks and bonds.  Credit unions do not.  They only have money that is deposited by their members.

Stock is money (capital) raised by a business or corporation to start their operation. Once the stock is sold, it no longer belongs to the company, but to the individuals or organizations who bought it. For example, AT&T has over 10 billion shares outstanding; some are owned by other organizations. If you bought one share of AT&T (cost about $35), you would own about 1/10 billionth of the company. Do not be concerned if you do not fully understand this as we will come back to it at a later time.

A bond is where you loan money to a company or government for a defined period of time at fixed rate of interest. Bonds are used by municipalities, companies, states, USA and foreign governments to finance a variety of projects and activities.

The next issue will be on income.


Wednesday, December 3, 2014


Rule of Thumb

Without a road map, you cannot reach your destination.

Every individual and family have different plans for the future. Think what you want for yourself and your family in the short term. What about the long term. If you are like most people, some of these wants will involve money. You will need money to buy a new car, pay for home improvements, send your child or children to college, and pay for additional education for yourself.

Many people feel that their life is out of control and to pay for the above items is a difficult thing to achieve. How would you like for your life to be different and achieve many of the things that you want out of life to become a reality?

A very useful tool to achieve needs is called goals.

The process of determining where you want to go in life and knowing how to achieve it is part of goal setting.

After you begin working on your goals you may find that they are no longer what you want, and so reset your goals to meet new needs and desires. 

 Setting goals is a powerful process for thinking through your ideal future and finding ways to your vision into reality. It will help you turn your dreams and desires for the future into something solid that you know how to achieve.

Setting and keeping goals is a very hard task. Many of the people that I have worked with over the past 20 years are very good about setting up the goals, but have a very hard time keeping them. If you remember, in an earlier part of my Blog, I said that everything in life is work and you must stay focused on what you are doing and don’t expect instant gratification.

Setting goals helps you:

·        Work toward making your future better;

·        Prioritize how you spend your money so that it goes toward things that really matter to you ; (always remember you earned the money and it is under your control, do not let anyone take money away from you unless you completely agree to allow this to happen);

·        Measure and track your progress toward getting the things you want out of life;

·        Take pride in bettering your life and the lives of your children,

You may set any time line that you want to achieve your goals:

·        Short term goals- usually 6-7 months in duration.

·        Medium term goals: usually 1.5 to 2 years in duration.

·        Long tern goals: may last for the rest of your life.



1.   Specific—Who? What? Why?

2.   Measureable—how much? How will I know if it is done?

3.   Able to Reach—how will I do this? Is this a goal that I can actually reach?

4.   Important to me—is this something that I really want? Is now the right time to do this?

5.   Time — when do you want to reach this goal? In 3months, 6months ,

 a year, 5 years?

Now let’s put this all together. As we progress through the Blog, I will bring up subjects that will probably help with your goals. This is one of the hardest issues that you will come across in your personal finance, GOOD LUCK!!!!!

Next chapter in my Blog will discuss Banks and Credit Unions.