Don't Let Inflation Wreck Your Plans with Special Guest Laura Hawthorne

Ever wondered how to shield your wallet from the sting of inflation? Join us as we dive into an insightful conversation with Laura Hawthorne, Chief Consumer Lending Officer at Centric Federal Credit Union. Laura unpacks the complex dynamics of inflation, revealing the forces behind rising costs in groceries, housing, and the car industry. Understand the intricate balance of supply and demand, and discover how inflation is affecting loan and savings rates. Don't miss Laura’s expert advice on how to navigate these turbulent times with practical strategies, including Centric's car buying program designed to help you make smarter financial decisions.

Ready to make your money work harder for you? This episode is packed with actionable tips to help you maximize savings despite soaring prices. Learn the benefits of loan repricing and adjusting payment frequencies to lower your interest costs. Laura also emphasizes the critical distinction between needs and wants in your budget, and the role of financial counselors in streamlining your expenses. From investing in high-yield certificates to leveraging the security of NCUA insurance, we cover all bases. Plus, discover how building a robust credit score can pave the way for better borrowing terms in the future. Tune in and equip yourself with the tools to stay financially resilient!

Transcript

Kelli Green: 0:00

Welcome to another episode of the Live Better Podcast. We are proudly presented by Centric Federal Credit Union, and I'm your host and Centric's Marketing Senior Vice President, Kelli Green. Today we are delving into a subject that just about everyone can relate to inflation. In today's episode, we'll explore practical strategies and expert insights to safeguard your financial future amidst inflationary pressures. Whether you're worried about increasing grocery bills, housing costs, or the overall impact on your savings, we've got you covered. L Tune in as we break down complex economic concepts into easy to understand advice empowering you to make informed decisions and stay ahead of the inflation's curve. Don't let inflation derail your dreams. Let's tackle it together. So, whether you've been a loyal listener or you're joining us for the first time, tune in as we break down complex economic concepts into easy to understand advice empowering you to make informed decisions and stay ahead of inflation's curve. Well, I want to welcome all of our listeners to another episode of the Live Better podcast. Today, we are joined with my dear friend and our chief lending Officer, Laura Hawthorne. Before we get started, Laura, really do you mind just telling our listeners a little bit about yourself?

Laura Hawthorne: 1:13

Sure, thank you for having me on the podcast today. As you mentioned, I'm the Chief Consumer Lending Officer. I've been with Centric for 25 years and primarily my role is to collaborate with our staff to provide solutions for our M members.

Kelli Green: 1:29

Yeah, you're really good at finding solutions, aren't you?

Laura Hawthorne: 1:31

I try really hard.

Kelli Green: 1:32

Yeah?

Laura Hawthorne: 1:33

Y eah

Kelli Green: 1:33

Well, in this, the state that we're in, and really in the topics of things that we're talking about today overall inflation and what that looks like sometimes a solution may seem like it's really out of reach for families. Their paycheck is being stretched more so than ever, but yet we still have the same needs and we're still spending like crazy.

Laura Hawthorne: 1:55

Yeah, so people really have to work to identify areas that they may be able to cut back on that. There is not so much a particular need while we get there this season of life and, um, you know, once the economy changes back a little bit or pricing adjusts itself, so that you know people can continue to make purchasing yeah, um, a priority, then go back to spending money and the thing is, this is not we're not immune to it.

Kelli Green: 2:23

This is not new to us. It's not the first time that we've experienced this time of inflation. This is something that you know. You look back over history. It's an ebb and flow and something I feel like, and if we didn't work in the financial industry, I don't think necessarily that I would really even know what that means and what causes it. Help us understand really what happens. How do we get to where we are with this level of inflation we're experiencing today?

Laura Hawthorne: 2:52

Well, I'll say this I think a really common misconception about inflation is just that prices increase, and I think that if you've lived any type of life, you realize that prices are always going to increase. That's just part of its naturalness. But it's not just a price increase alone. It's also the demand of the same supply of goods that really causes inflation. So you have more people looking at the same item and those coupled together is what causes the inflation, because the supply is not there to meet the demand, which further increases the price of the cost.

Kelli Green: 3:31

Oh, yeah, and we see that a lot in here at the credit union o ur loan rates have increased a bit. And then you also think about too because we've got borrowers and savers, so you think about that too, from a savings standpoint, the savings rates have increased. They have increased right, and so normally when you see one, you know one goes up, one comes down, and where we're at right now is that you know we've had some interest rates that have continued to go up from a lending standpoint and then from dividends or savings, they haven't come down to too much.

Laura Hawthorne: 4:05

No, and I really don't know that they're going to come down in the short term very much at all. I mean, we have to work really hard to balance those rates so that we can continue to pay our savers right to have their money with us and and, at the same time, continue to make lending and loans affordable for members that really need them, especially those that are looking to purchase vehicles so that they can travel back and forth to work and, you know, support their families and do all the things.

Kelli Green: 4:38

You know something that we were talking about when you mentioned just the vehicles having a vehicle to get you to and from. You know something that we're talking about. You mentioned just the vehicles having a vehicle to get you to and from going to work. That's how we pay for the things that we have. But you know how really and truly has inflation impacted the car industry.

Laura Hawthorne: 4:53

Well, for a long time, specifically, you know, coming out of the COVID era, the supply for, for all kinds of reasons, you know, chips was a big one at the time, but used cars were hard to find, which forced the prices of the used car industry to increase higher than we had ever experienced it before. And now you couple that with the rise in interest rates because again we're having to match those deposit rates and monitor what the Fed makes changes it really makes searching for affordable vehicle with an affordable payment that much more of a challenge, and so we really have to work with members and car dealers to really match those two up.

Kelli Green: 5:39

I love what you said, that we have to really work with our members and help educate them on, one, what they can afford and, two, we have relationships right with different vendors different, you know, could be anyone throughout our state. But more importantly too, is that we really want to look at a car buying program for our members. Absolutely yeah, and so do you want to take us through that? Like, what if I were looking for a vehicle and understanding with inflation, I know I've got an idea of what I want to spend on a vehicle. How might I go about this as someone that might be a new buyer or maybe even with a trade in? What do I do?

Laura Hawthorne: 6:19

Where would I start? Well, I would say the very first thing you need to do is talk to your loan officer. If you don't have a loan officer, we have plenty. I can introduce you to some fabulous young people who would be more than happy to work with you. But you really want to understand what that's going to look like once you get into a vehicle. You want to talk about prices that you can afford, what payment is comfortable for you and your budget and your family's budget, and you want to talk about what that rate's going to be.

Laura Hawthorne: 6:46

Where does your credit stand? How can you make improvements to your credit to qualify for a better rate, because that does matter as well. Yes, but once you're able to establish kind of that pre-approval and you know what you're really looking for, you can then begin to shop for a vehicle that fits into that type of criteria or those types of limits for you, and we have several avenues. I mean, there's a we have a page on our website that lets you search through used car, new car inventory at dealerships that participate in the program that we offer, as well, as we have some really great connections just from the loan officers themselves who develop relationships with car dealers and they're more than happy to direct you to someone that they trust and that they work with often. That knows that you are going to get a good deal, a fair deal, and I think that's really important.

Kelli Green: 7:42

I think you've hit the nail on the head. I just want to recap, for our listeners too, is that if they are really searching for a vehicle, the first stop really should be your financial institution Absolutely, and I think that when you're comfortable with your loan officer, they retrieve a credit report and understand if you have a relationship with them, they're going to know what your expenses are maybe things that don't show up on the credit report and help you, as the buyer, understand what you can afford.

Laura Hawthorne: 8:09

Well, in almost all of our cases, all of our loan officers are certified financial counselors, so they don't just have a background in lending and underwriting, but they also have some history and some education in budgeting as well. Yeah, and right now I think, especially in this inflationary period, that's vitally important, because it's not just about what debts you owe. You have a lot of other things that don't you know. Go into that debt ratio calculation.

Laura Hawthorne: 8:36

That you have to be mindful of Car insurance is at an all-time high. That's really important. That you have to be mindful of Car insurance is at an all-time high. That's really important. And part of the car buying and shopping process is understanding what that's going to look like when you finally do purchase that vehicle that you're looking for. You know, gas right now seems to be reasonable, right, we've seen a little bit higher, but I can't complain too much about that that. But then you have, you know, groceries you have to take and consider if you have children, you have child care needs, those types of things, so they can really work with you and understand you know, if you need help in the budgeting area, where that payment is going to impact you and your family.

Kelli Green: 9:12

Oh, yeah, because when you're adding on a new debt or increasing a payment, you know, when you're maybe necessarily paying off a vehicle and you're getting ready to purchase another one, there could be an increase in payment. And what does that look like for you? You know I love that. So come visit, you know, visit with a loan officer, seek that preapproval before you hit the lot. And one of the things that I love that we offer here is really talking with them. Because once you get on the car dealer, you know, at the lot, you know we don't want to speak negatively of them, but they too, you know, have an ability to finance and they are going to want to run your credit. And that's multiple inquiries on a credit report. That could really have negative impact it could.

Laura Hawthorne: 9:58

Um, and then one thing I'd also to like to mention that we offer here at Centric is, you know, while interest rates may be a little on the high side right now, once we come out and the interest rate market starts to kind of decrease a little bit, you know your loan here at Centric and if you've worked to maybe improve your credit if it was kind of lower at the time that you made your purchase, we're more than willing to rework with you and help reprice your loan, which will then also help decrease your payment and make it a little bit better for your budget.

Kelli Green: 10:31

When you mention repricing your loan and this is something I think especially when families are really trying to manage inflation, they're looking at ways to save money and repricing your loan can do a couple of different things. Absolutely, you can change your payment frequency, which really it lowers your payment from an initial say. If you're making a large one-time payment, splitting that up into multiple payments has significant benefits.

Laura Hawthorne: 10:57

Oh, absolutely. One of the things I like about that is you're able to pay down the principal balance faster, which means you're going to pay less interest over the life of the loan.

Kelli Green: 11:09

Yes, and that's the goal is to get this car paid off so that you, you know, relieve yourself of that payment. And a lot of times people don't realize that you can do the same thing we hear a lot of times with if you pay an extra mortgage, can do the same thing we hear a lot of times with if you pay an extra mortgage a year, that can actually reduce X number of months from your mortgage. But when you think about this, in anything that you're making a payment towards and it's interest, you're paying interest on those loans. When you can split up those payments and really make those multiple payments one, it's not such a huge hardship on that single large sum, that payment that you're making, but you're cutting down on the interest and people don't realize that I mean what other financial institution is going to.

Laura Hawthorne: 11:52

How can I help you pay me less, right? You know? I just think it's a feel-good thing yes For us. It brings us joy to help our members live better. Feel-good thing yes For us. It brings us joy to help our members live better, and I think that teaching our members how to pay less in interest and earn more in dividends is at the top of what we do.

Kelli Green: 12:08

Absolutely, Because when you're able to put money down, you're financing less, which means overall it's going to cost you less, and when you're paying, you know you're making your regular payments, timely payments. That's going to increase your credit score and that is going to save you an interest because your rates will be lower.

Laura Hawthorne: 12:26

Future buying power is critical, yeah, critical.

Kelli Green: 12:30

It really, really is. So something I want to ask about this too and just kind of wrapping up what we're talking about here. But overall budgeting and spending. So you mentioned this earlier, touched on it a little bit, but how should I really adjust my budget to account for rising prices? Do you have some tips maybe for managing expenses during periods of high inflation?

Laura Hawthorne: 12:51

Well, I really think that evaluate all the things that go into your budget. What are areas of need and what are areas of maybe wants for now Is that something that we can push off until there's a better time financially to be able to go back to participating in those types of things? Our financial counselors can really help narrow down that budget and understand where your dollars are going and how you can rearrange those to put a little bit more back into your savings account during these critical times.

Kelli Green: 13:30

And one of the things that you mentioned when you're talking about putting money back into your savings accounts. Something else that we actually offer here at Centric and I think are priced really well and it's really advantageous for borrowers, are certificates.

Laura Hawthorne: 13:43

Absolutely. Right now, if you have excess funds, that's earning a minimum. I think some banks pay like less than you know 0.2 percent. Yeah, it's very low. 20 basis points is what they call it. Yeah, I think that right now, I mean you can get a 12-month certificate for 5. 15%.

Laura Hawthorne: 14:07

That's unheard of I mean or you know, and it's secured, that's the thing. Yeah, and it's secured, and it's locked in for a specific amount of time, and 12 months right now is a really good term, because you don't know in 12 months where we're going to be as far as what rates are offered. So if you can lock it in at a 5% rate, why not Let us pay you?

Kelli Green: 14:29

And there's no risk to that. We are insured by the NCUA up to $250,000. There's opportunities here that abound, and if you're, you have a question, you've got excess funds of $250,000. Well, let's talk about that. What are some ways in which we can ensure that you will be insured? And so I just think that there's opportunities for everyone, whether you're, you know, just starting your savings account, you know, with $10, we can find ways to help you really maximize that. So I think the sky's the limit when you bank with Centric. Absolutely, yeah.

Kelli Green: 15:05

Well Laura, thank you so much for coming in and chatting with us today. I really appreciate your insight. You're an expert and been here for how many years?

Laura Hawthorne: 15:13

25.

Kelli Green: 15:14

25. And you started working here when you were what? Just five years old?

Laura Hawthorne: 15:17

Absolutely!

Kelli Green: 15:17

Y eah Well. Listeners, I just want you to know how grateful we are for you and it's a real privilege for me to sit down with our expert of 25 years here. She's been my long-term friend for over a decade and I'm just so grateful for your insight and I just appreciate your dedication. So, L laura, thank you.

Laura Hawthorne: 15:35

Thank you, I appreciate you, too.

Kelli Green: 15:37

Yeah, that brings us to the end of the episode of the Live Better podcast, and we hope you found today's conversation about inflation to be insightful. In the world of personal finance, knowledge is your greatest asset and Centric remains your steadfast partner in that journey. If this episode resonated with you, we kindly ask you to show your support. Please hit the subscribe button, share this episode with your friends and family and take a moment to leave us a review. Your input is invaluable in shaping the content that addresses your financial interests and needs. And, of course, let's stay connected on social media. You can find us on Facebook, at CentricFCU, and on all other platforms under MyCentric Facebook at CentricFCU and on all other platforms under MyCentric. Stay in the loop regarding the latest financial insights and resources tailored to your unique financial aspirations. Until our next episode, always remember that Centric is right by your side as you navigate your financial journey. Thank you for tuning in to the Live Better Podcast.