Friday, October 29, 2010

What Goes Down Must Come Up……Eventually

One thing about the Credit Union coffee shop, you usually know when something is on the minds of NSFCU members. I had a really interesting conversation yesterday with a member who was very interested in local property values. Like many members, he has a considerable amount of his net worth tied up in the value of his home, and is naturally hopeful that the decline in property values is over and that the value of his home is rebounding.

Sometimes it’s hard to be friendly and honest at the same time.

Because mortgage lending is a big part of what we do, we’ve done considerable research on sale prices of properties sold in the last year or so. The results are kind of surprising: sale prices are lower than most people think and there aren’t that many sales. The result is kind of a back log of available properties for sale.

Time to use our econ 1001 again: the laws of supply and demand. If supply and demand is in balance, the result is stable prices, no increases or decreases. If supply exceeds demand, prices fall until that balance is achieved. Likewise, if demand exceeds supply, prices rise until the balance is achieved. Obviously other factors influence this equation and it takes time to work itself out but the basic premise is true.

By applying this principle we see that, generally speaking, sale prices (property values) will not increase again until the excess supply is absorbed and the demand for homes exceeds supply. In our area, my guess is that is going to take a while - as in years not months.

What will cause this to happen? I have already offered up my thoughts on that in this blog post from a while back. Reminds me how long this has been going on.

The good news is that there is activity in the local real estate market and it is generally better than last year. The economy is slowly getting better which gives me hope that by next spring / summer / fall the real estate activity will really pick up. It’s important to a lot of people.

All of this is sure to happen…….eventually.

Mark

Friday, August 20, 2010

Another Step Forward……

Tuesday morning was a very big day at NSFCU as we rolled out our new website and Internet Teller on-line banking product. We have been working with software developers for nearly two years to create a customized product that suits the needs of our members the best.

There are so many new features to the website that it will take some exploring on your part to become familiar with them all. Here’s a small sampling: more account details, customizable screens, great new savable search options and sorting features, easy to use bill payment and more. Like anything new, it will take a little time to get used to but I am very confident that our new product is a significant improvement over the previous version.

The best part is that we have just begun. We anticipate adding a substantial new feature every month for the rest of the year, and longer. The first will be next week as we add a single sign on feature for your NSFCU Visa card. When you log-in to Internet Teller, you will have also logged into your NSFCU credit card account with no further steps. Other features coming soon include Quicken download capability, customizable pages (you create the page you would like to use as your default), archived electronic statements at your fingertips, mobile phone compatibility and much more.

One of the new features is a more secure log-in process. This requires setting up three security questions the first time you log-in to the new version of Internet Teller, and then answering one of the security questions you selected every time you log-in subsequently. I’ll be honest here: we’ve received some complaints about this new process – some people think it is a hassle.

I am also going to be completely candid in expressing my view on this subject: in today’s world of identity theft, fraud, internet phishing, etc. it’s crazy not to have beefed up security measures protecting your account. It’s also a federal regulation but that is beside the point. The new, more secure log-in procedure will soon become second nature and you will have the tremendous benefit of the most security possible for your account.

Please take some time and poke around on the new website. I think you will find that it is a great product and will make your experience with your Credit Union even better.

Mark

Monday, July 26, 2010

You Gotta Like Those Credit Unions....

Here is a link to an interesting article about Credit Unions and why they are such a good deal, especially now.......

http://www.aarp.org/money/credit-loans-debt/info-06-2010/credit-unions-versus-banks.1.html

Enjoy,

Mark

Monday, July 19, 2010

Feeling Appreciated, redux

This week is Member Appreciation Week (already) which is always fun but also a sign that our summer is moving right along. Check out our website for the list of activities in all three of our offices including the famous brat cookout (yes, you can have one well done).

New this year for the kids is a Bounce House. We've secretly planned this to coincide with the cookout as we thought it would be great to have the kids stuff themselves with a couple brats and wash it down with some pop, followed by 20 minutes in the Bounce House. Buyer beware on this combination.

I'm always amazed at the number of people that I know and don't know in our membership area. If we've never met, feel free to come up and introduce yourself - I'll be the greasy one behind the grill.

Don't forget to sign up for the Grand Prize and all the other prizes going on all week - fun for the whole credit union family.

Mark

Friday, April 30, 2010

Building a Better Mouse Trap, version707.Office Hours.....

Starting Monday, May 3rd, we will be substantially expanding our office hours in all three of our offices. It’s a pretty straightforward formula:

Drive Up hours of 7:30 a.m. until 5:30 p.m. Monday through Friday
Lobby hours of 8:00 a.m. until 5:00 p.m. Monday through Friday

** Please note that our second drive up lanes are always open the posted drive up hours. I encourage you to use them as much as possible.

Like a lot of improvements we make to our operations, we studied this, gathered input, did a member survey, crunched the numbers and came up with, hopefully, the best solution. There’s more to this than meets the eye because expansion of our business hours can be a pretty costly proposition if not done carefully and properly. The trick is to offer the hours that members need and will utilize; anything else is a waste of money (read: Patronage Rebate).

Our goal here was to offer the option for most of our members to be able to go to the Credit Union either before or after work and not on their lunch hour. Honestly, the lunch hour has been a bugger for us at times because it has always been a popular time for members to conduct their business and, of course, our staff has to eat as well. No matter how clever you are with the schedule, it is always crunch time. Hopefully, the expanded hours will give you, our members, a better alternative than to use your lunch break to get your Credit Union business done.

Let me anticipate a question here - we considered Saturday hours. The results of our member survey indicated a desire for Saturday hours from some of our members but not in large numbers. From a scheduling standpoint, it was much more costly and difficult to offer this option than to expand hours during the week. Ultimately, we decided to invest that money towards our commitment to technology that allows you to do your business electronically 24 / 7 (more on this in my next post).

Anyway, give the new hours a try – come early, come late, whatever works for you. I hope the new hours give you better options and make things a little easier for you all the way around.

Mark

Wednesday, March 24, 2010

Opportunity Cost: Why the Twins Should Have Traded Joe Mauer.......

OK, so if you have been reading my sporadic blog posts, you know what a fan I am of Joe Mauer. Since the last time I professed my complete amazement at his remarkable abilities in a blog post, he has added another batting title and a Most Valuable Player award. Oh, I almost forgot, and his second Gold Glove.

You would have to be living under a rock not to have heard that our guy Joe was to be a free agent at the end of this coming season and was in line for a new contract from somebody. This contract decision was momentous for the small market, spendthrift Twins club. Monday, it was announced that our hometown hero signed an 8 year contract for $184 million. (Just a side note here: the entire “value” of NSFCU is about $110 million – hard to comprehend.)

So, here’s the logical conclusion that this baseball loving economist has come to: the Twins were crazy to sign Joe to this contract. The reason is the economic principle called opportunity cost. In a nutshell, opportunity cost can be defined as the total value of everything you could have if you didn’t make a given financial decision. In theory, this can be financial and non-financial. So, let’s assume the Twins said, “No thanks, Joe”, traded their slugger and withstood the wrath of their fans. The Twins would have likely received three to four young, starting caliber players in exchange for Mauer. Young is the key word here as players with less than 5 years experience “only” make $1-5 million per year. Let’s assume they received 4 players and each player earns an average of $3 million per year. This means they would spend $12 million per season instead of $23 million for Joe. Now, with the $11 million per year they still have left over, they could go out and sign one other top quality free agent to shore up any remaining weak spots, say third base or they could just save the money which, even with a meager rate of investment return, would be worth at least $120 million over the life of the contract. So the opportunity cost of signing Joe could be described as 4 excellent, young, starting ball players which would give them one of the best teams in baseball plus another top notch free agent or $120 million. Which scenario wins more ballgames?

Opportunity cost is very important for you to understand in your everyday finances. Consider the following scenario: you worked hard to pay off your credit union car loan in 5 years. Even though your car runs fine and could be driven for another 4 years, you are considering a new car for $30,000 because it is a good deal.

What’s the opportunity cost here? Let’s make a list:

Cost of the vehicle: $30,000
Tax and license: $2275
Interest on a 4 year car loan: $3070
Higher cost of insurance over 4 years: $2000
Increased license fees over 4 years: $800
Lost investment income on $30,000: $5000

Total: $43,145

(The lost investment income assumes that you save and immediately invest the monthly payment you would have made for the new vehicle.)

So, this purchase really doesn’t seem like such a good deal after all when you examine the true opportunity cost. Suddenly the new car smell just isn’t so important.

Opportunity cost is a handy idea that can be used for nearly any important decision, financial or otherwise. Hmmmm.......maybe the Twins should start reading this blog……..

Mark

Monday, March 8, 2010

I'll Let Someone Else Do the Talking.....

If you've kept up on this blog at all, you know that I am proud of credit unions in general and really proud of NSFCU in specific.

This time, I'll let someone else do the talking. Just click this link:

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/converts-sing-praises-of-credit-unions.aspx