Posts Tagged debt

>Debt Ain’t What It Used to Be

Posted by on Monday, 19 November, 2007

>“Living with increasingly higher levels of debt has become an accepted normal state of affairs considered an inevitable and likely permanent feature of everyday life.…The social stigma of high debt levels is largely gone,” says Robert D. Manning, PhD, economist and professor of finance at the Rochester Institute of Technology and the author of Credit Card Nation, in a 2005 study commission by

Manning has drawn a lot of attention since then for warning about a basic change in attitude among young consumers that leads many of them down “that slippery slope of financial insolvency.”

Generations ago, debt was a necessary evil at best and an indication of a character flaw at worst. But that was before the economic boom of 50 years ago, which released a demand for consumer goods that had been building steam during the hardships of the Great Depression and World War II.

The children of that boom learned to indulge themselves and passed that trait along to their children. In the process a desire to enjoy in a little luxury from time to time turned into a constant sense of entitlement. Now for example, says Manning, “Many students view the use of consumer credit as a reward for their hard work at school.”

What is particularly troubling is the apparent loss of a reality check on Gen Y expectations. Manning notes, “Relatively high starting and early-career salaries among young adults (who have not experienced major macro-economic fluctuations) have created a heightened sense of optimism about future earnings potential.”

Given that many 20-year-olds don’t make a distinction between what they need and what they want, preaching a sermon of sacrifice is unlikely to make many converts to personal financial planning.

What can a financial educator do to motivate young adults?

>Gen Y Ranks Traditional Services as More Important

Posted by on Thursday, 23 August, 2007

>Don’t go branchless just yet!

See this recent CUNA News Now piece:

“Though often noted as the “tech-savvy” group, Generation Y prefers more traditional banking methods, a recent study indicated.

A study conducted by Javelin Study and Research, based in Pleasanton, Calif., surveyed members of Gen Y to get their opinions on traditional versus non-traditional banking methods. Surprisingly, study participants rated access to ATMs and physical branches as more important than access to online transaction services (MediaPost Aug. 17).”

For completists, the original story is here.

For all the talk about the importance of leveraging technology catering to Gen Y and others (on this blog even), it’s good for a study like this to reiterate the need for the basics.

Aside from providing great service and ATM access, what can credit unions do differently? To start, do you have 18-to-30-year olds working in your branches? How about on your Board? I doubt it – the average age of CU board members is 56… because younger people “lack experience” right? What about the perspectives and insights they bring? You can also put together a separate Gen Y advisory board comprised of 18-to-30-year olds. Any other ideas?

Also, the original story points out rightly:

“[The study] finds that Gen Y is an untapped market for the most part, with bank and credit union marketers focused on ‘short-term goals of gaining an increased share of wallet from their currently more lucrative consumers.’

The study cautions that ‘not planning for the long-term with respect to Generation Y will leave banks and credit unions in the same position they find themselves in today, fighting for short-term profits.’

Untapped market indeed – Gen Y’s population is poised to be greater than any other by 2017, comprised of 91 million potential credit union members.

>What have YOU been doing since the 2006 YES Summit?

Posted by on Thursday, 22 February, 2007

>For those who attended the 2006 YES Summit, we want to know how your experience in San Diego has made an impact at your credit union.

As a result of attending the YES Summit, have you been able to enhance how your credit union attracts and serves the 18-to-30 demographic? What initiatives or programs are being planned for young adults? Have there been additions or improvements to your credit union’s Web site for Gen Y? What challenges and successes have you faced?

Please share your experiences by clicking on the comment link below! Your information will have a positive impact on how other credit unions can better serve the 18-to-30 demographic.

>Innovation by CU Serving Gen Y

Posted by on Tuesday, 6 February, 2007

>There was another interesting and relevant piece in CUNA News Now today:

Colorado State ECU helps young adult out of a jam

DENVER (2/6/07)–A credit union in Colorado is getting praise for responding to a man’s appeal on a blog for help in dealing with his problems at a car dealership.

Melissa Sexe of Colorado State Employees CU, based in Denver, will be featured on a future blog at, a personal finance blog for young adults, for volunteering to contact the man about his options.

The site is hosted by Ramit Sethi, a speaker from the Credit Union National Association’s (CUNA’s) recent YES Summit on marketing to young adults.

A blogger, “John,” wrote that he decided he couldn’t afford a car he had just bought. He wanted to return it to the dealer because of a high annual percentage rate but ran into opposition from the dealer and some stonewalling while the dealer steered him to equally expensive options.

CUNA’s director of young adult services, Josh Jones, put out the word for help. As a result, Sexe sent Sethi an e-mail volunteering to chat with the blogger to go over his options.

“Can you imagine Wells Fargo taking note of this and volunteering to help?” wrote Sethi. “This is one of the reasons I love credit unions.”

More information can be found at Sethi’s blog posts about the story here.

>Gen Y Loyalty to Credit Unions

Posted by on Wednesday, 17 January, 2007

>Hi folks!

I wanted to share the following article from a previous edition of CUNA’s News Now that may be of interest….

Young consumers faithful to CUs–if they belong

MADISON, Wis. (6/22/06)–Consumers age 18 to 35 may not know much about credit unions, but those who do depend on them as their primary financial institutions (PFIs).

Twenty-two percent of consumers age 18 to 35 use credit unions as their PFIs, while 20% of those over 35 use them, according to a survey of 1,000 people by the Independent Community Bankers of America (American Banker June 21).

Studies by Credit Union National Association (CUNA) found that consumers in the 18-29 age group are least likely to be members, least familiar with credit union products and services, but most likely to say they’re eligible to join.

Only 38% of credit union members fall within the 25-49 age group, according to CUNA’s 2006-2007 Environmental Scan (E-Scan). “Young people are less likely to use us, but when they do, they use us a lot,” said Mike Schenk, vice president of economics and statistics.
The young adults who are members and use credit unions as PFIs bring more loan business, such as used-car loans, to their credit union.

The ICBA survey found that younger consumers gave equal weight to cost of fees, interest rates and convenience of service in choosing their PFIs.

Credit unions could very well “sell by cost” the advantages of membership. Including such pertinent information on their websites would help the 30% of this Internet-savvy generation that uses the Internet to research financial institutions.

Other ways to attract this group, according to the E-Scan:

  • No-fee or low-fee checking;
  • ATM/check cards;
  • Electronic bill pay;
  • 24/7 online account access;
  • Convenient ATM locations; and
  • Trust-worthy financial advice.

>YES Summit Takes a Trip Around the Blogosphere

Posted by on Thursday, 11 January, 2007

>Here are a few examples of what is being said about the YES Summit on other blogs:

Matt Dean of Trabian (also a featured speaker at the YES Summit) posted his take on the first day of the YES Summit on OpenSourceCU. Check out what he had to say.

Also, Terrell Meek of Verity Credit Union shares a portion of her YES Summit experience with readers of Verity’s blog. Here is what she had to say.

How about you? What did you take away from the YES Summit? Was there a memorable experience you would like to share? If so, click on the “comment” link below and offer your thoughts!

>Effect of Higher Minimum Wage on Student Workers

Posted by on Friday, 15 December, 2006

>I arrived home Saturday night from the YES Summit foggy after a long flight and still dumb-founded at the student loan debt burden that our future leaders of tomorrow are carrying with them as they begin their contribution to society. Then, to add to all this, I awoke the next day to see the following headline on the front page of our local newspaper the Toledo Blade, “College Kids in Ohio Face Pay Squeeze“.

You see, in November, Ohio voters passed a minimum wage increase intended to help raise the living standards for those in the lower paying jobs such as restaurants and other businesses. The affect on students was not considered. Michigan also passed a similar law.

Many universities and colleges are now scrambling to find funding in their budgets to cover the rising costs of the student workers due to this minimum wage increase. Many simply do not have it. Several anticipate lowering the number of hours the student works that will keep their costs the same or some will not re-hire for positions that will be soon vacated. A few feel they will be able to survive with the rising enrollment or find it elsewhere in their budgets.

Students employed outside the university will probably also be affected by less hours or less jobs available. Students working while attending school, build work ethic and experience that will advance them above others when seeking employment after graduation. With rising tuition costs, what is a student to do? Where can others help?

In Ohio, there is a proposed legislation to exempt the public universities from the minimum wage increase. However, this does not cover the dilemma that the private colleges are facing. Also, Ohio’s minimum wage will adjust annually for inflation. BUT, the US Budget’s funding from the Federal Work Study Program does not. This funding has remained flat despite tuition growing at a pace more than double inflation. This funding needs to be pegged to increase with inflation also or otherwise student work hours will continue to dwindle and students will be accumulating even more debt.

Credit unions and universities need to unite to petition Congress to increase the budget for work study and also petition our local governments as well. We also need to work with local businesses to hire students and be willing work around their schedules as part-time or full-time workers or interns.

What else can we do to help our future leaders? Any suggestions or comment are welcome. I was originally going to discuss dress code and societal changes in the definition of acceptable dress in the workplace but this topic seemed much more important.

>I hate seeing young people’s eyes glaze over

Posted by on Monday, 4 December, 2006

>I want to share some of what I’ve learned from talking to thousands of young people about personal finance. Some of it isn’t pretty, but there’s a huge amount that can be done to educate young people about personal finance.

My name is Ramit Sethi and I’ll be speaking at the YES Summit on Wednesday afternoon. I’m the founder of I Will Teach You To Be Rich, a blog on personal finance and personal entrepreneurship for college students, recent grads, and everyone else. I started it while I was a sophomore at Stanford and it’s grown to have over 100,000 readers/month.

Here are some of the key things I’ve learned that I’ll be covering in my talk.

The message matters. Personal finance can be fun. I made it my goal to make it interesting and engaging. That means I mock people, I point out mistakes (including my own), and I occasionally curse. But I also talk about things that matter to young people: How much do you save by cooking at home? What’s the difference in starting to invest at age 20 vs. 30? Why do I disagree with all the personal-finance pundits who recommend only buying used cars? And is being rich really all about money? (Absolutely not.)

The messenger matters, too. Young people think of personal finance as boring drudgery. And every time they hear about personal finance, it’s either (1) some hyped article telling them “The 10 Hottest Stocks!!!” or (2) someone coming to give them a boring lecture on bond laddering and other irrelevant issues. One of the reasons I started my site was getting frustrated by all the personal-finance education out there. It’s mostly written by old white men for old white men, and young people’s eyes glaze over. I’ll talk about how I avoid this.

Don’t forget about the product. Some banks have tried to slap new marketing on an old product. Young people see right through it. Instead, they’re flocking to banks like ING and Emigrant Direct (which I personally recommend on my site–in fact, I’ve personally referred hundreds of people to ING). Why? Part of it is word of mouth spread by the insanely high interest rates. Young people seize upon the 5% interest (“10x what I’m getting at Wells Fargo?!”) and jump ship. But there are more levers you can pull besides interest rates.

There’s nothing wrong with being a little flashy. I usually write very long essays for my site. But once in a while, I put up images like this:

It’s not as nuanced as a thousand-word essay, but it grabs the attention of certain people who respond to different messages. Could you use video to reach young people? Images? Podcasts?

I’ll go into all these topics (and more) at my talk on Wednesday, December 6, 2006 at 12:40pm. If you have any specific questions you’d like me to think about beforehand, please email me. I’d love to hear what’s keeping you up at night.

You can also read some of my past articles on

>Three Videos You Must Watch

Posted by on Tuesday, 28 November, 2006

What a great way to start the conversation about credit unions and the 18-to-30 demographic before the YES Summit begins!

ABC News recently aired three reports just in time to kick-off this year’s YES Summit. These videos discuss the financial situation of the 18-to-30 demographic, and offer a glimpse into the lives of two young adults symbolic of an age group increasingly known as Generation Debt. The individuals interviewed offer different viewpoints on their situation. These different situations demonstrate the varying attitudes among young adults toward financial matters and the debt they incur.

The video clips are a great resource for anyone interested in learning more about the situation facing young adults today. They are especially important for those of you about to attend the YES Summit.

So, grab some popcorn, click on the links below (which will point your browser to the videos courtesy of ABC News), and enjoy… after a 15 second commercial the report will begin.

After you watch the videos, let everyone know what you think by clicking on the comment link below! Do credit unions have a role in helping this generation? How can credit unions benefit from developing solutions for 18-to-30s with these problems?

>Reaching Young Adults before they are Young Adults

Posted by on Wednesday, 22 November, 2006

>I saw this article on high school branches in the local paper on Sunday, and it made me thing about what a great idea this is for credit unions to not only reach teenagers but an innovative way to reach the 18-to-30 market…before they reach 18.

The idea is to teach them financial literacy – buying cars, saving for retirement, banking, college funding, etc. As a former high school teacher myself, I can tell you that most schools don’t have the resources to teach financial education at all. And some are mandated to teach the subject! High school students have a hard time focusing on learning when they feel as if it’s not relevant to their lives. But almost every student is salivating to reach driving age and to get a car. College-bound students want to know how to get there and everyone wants to manage their money effectively. This a great opportunity for credit unions.

How do you open a high school branch? This article is a good place to start. But this 56-page how-to manual from the Michigan Credit Union League is better.

Opening up a high school branch would be the ideal situation, but what else can you do? One free and easy route is to partner with local schools and teach NEFE. Other resources are here.

Survey after survey shows that credit union members are more loyal than bank members. Thus, being there during a time when young adults are finding themselves is beneficial for both the “future member” and the credit union.