Credit unions can help calm a financial storm

Even as she racked up thousands in credit card debt, Sheila Jensen thought she knew how to handle money. But shopping was the young Duluth woman’s downfall. It was her recreation, a favorite pastime and her therapy. As her credit card debt mounted to more than she could afford as a licensed practical nurse, she couldn’t make her minimum payments after paying her rent, utilities and other bills.

When her credit card debt hit $13,000 two years ago, she turned to her father for help. He paid off her credit card to give her a fresh start. Closing her account, she planned to do better. But before long, she was overspending with new credit cards and transferring balances to save on interest costs. She soon was $10,000 in debt again. Bill collectors called nonstop. During one three-month period, she accumulated $1,150 in overdraft fees. Her strategy of claiming nine on her tax withholding to get bigger paychecks backfired when she learned she owed $3,000 in state and federal income taxes.

She felt like a failure. But in just a year, Jensen, now 28, has turned her finances around. She credits ongoing financial counseling she has received from Affinity Plus Federal Credit Union in Duluth. Jensen has paid off her credit card debt. She has learned how to budget and handle her money. Her credit score has improved from a dismal 486 to 630, and she wants to better that. With the weight of debt lifting, she’s feeling confident, happy and in control.

“She’s worked really hard,” said Crystal Bosshart, Jensen’s member adviser. “She’s doing well. She recognizes when there’s a potential problem. If she has an urge [to spend], she calls me.” Filling a need It’s help most people don’t expect from a credit union. But Kristina Wright of the Minnesota Credit Union Networks says credit unions — which are similar to banks but member-based and not-for-profit — are known for their service to their members.

“That’s their bread and butter,” Wright said. “Some credit unions have people on staff who are financial counselors, some outsource it. Especially during the recession and housing crisis, some will sit down and try to make things work for members.” Debbie Bruns, an Affinity director of branch services, says most members do quite well financially. But some who are struggling need counseling help. At the Duluth Teachers Credit Union, Bryan Lent said financial counseling is also part of what they do.

“This has always been important but not as important as it is now to help people,” said Lent, assistant vice president of lending. While his staff doesn’t work out budgets with clients, they will do income/debt comparisons as a tool to help people to better budget to build their credit, purchase a car or consolidate their debt, Lent said.

Affinity’s emphasis on members and their needs has heighted during the past 12 years under President/CEO Kyle Markland, Bruns said. It’s why Affinity’s 23 branches in Minnesota have seen its membership grow nearly 6 percent in the last year alone, three times the industry average, according to Affinity’s Brant Skogrand. Although the individual help is free, it can lead to members getting accounts, loans and other services from Affinity.

“Accounts come naturally when working with people,” Bosshart said. The wakeup call At Affinity, Bosshart has worked closely with Jensen for the past year to solve the source of Jensen’s problem: overspending and budgeting. Jensen resolved to turn her finances around when her father was laid off from his job about 14 months ago.

She could no longer rely on him to bail her out of her money problems. Desperate and seeking a solution, she went to Affinity Plus at a friend’s suggestion. “I expected them to just hand over the money just like that,” Jensen said. “I was expecting all the credit cards taken care of with a loan.” That didn’t happen.

“It would have been easy, but it wouldn’t have helped her,” Bosshart said. “She was overspending.” Instead, they started with the basics. Jensen met with Bosshart every week to go over her budget and bill paying. Jensen paid her bills with cashiers checks and automatic withdrawals. To resist spending, she stopped using personal checks. Bosshart helped her deal with collection agencies and set up payment plans for her back taxes.

And each payday, Jensen gave herself a cash allowance to live on. Despite a setback or two, Jensen is consolidating her remaining debt into one loan and is on the road to financial health. “I learned the person that needed to help me, was myself,” she said. “I learned that I can do it, that I can budget. It’s growing up.” –Duluth News Tribune