Debt Management with Banzai

Today we are once again joined by Alex Kay, CEO at Banzai, a financial education partner with First United. Alex discusses the topic of debt management and how you can use helpful tools like Banzai to better manage your debt. Listen in for more and find these powerful financial education tools at MyBank.com/education

Transcript

Announcer: Welcome to the “What Matters Most” podcast presented by First United Bank & Trust. That’s MyBank. Visit us today at mybank.com.

Eric: Hello, and welcome to “What Matters Most,” the podcast all about finances, community, savings, and security for you, your family, and your business. This podcast is brought to you by the helpful folks at MyBank, First United Bank & Trust. I’m your host, Eric Nutter. And in today’s episode, “What Matters Most” is debt management. And for this helpful discussion, I am thankful to be joined once again, remotely today by Morgan Vandagriff, CEO at Banzai, a financial education partner with First United. Hey Morgan, how are you doing today?

Morgan: Great, Eric. It’s good to be back.

Eric: Yeah. No, I appreciate you joining me yet again. We have tons that we could talk about, so I’m sure if you’re open to it, you will be frequent guest, Morgan Vandagriff. So today…

Morgan: Thanks. It’s fun to be here.

Eric: Yeah. Well, like I said, I really appreciate you, and thank you for joining. So today we’re going to talk about debt management. And why don’t you start us off by just what’s the situation in our country right now? I know that debt has always been…you know, you hear in the nightly news from time to time about how much debt households within the country hold. The pandemic certainly didn’t assist in that, I’m sure. But I think that in some ways, people started saving a little bit more and maybe their credit card debt went down but other debt went up. So tell us a little bit about the situation. Paint us a picture right now, what are we dealing with in this country?

Morgan: Yeah, I will tell you, Eric, it reminds me a little bit of how, you know, the novel, “A Tale of Two Cities” starts. Depending on where you stand and what your perspective is, it’s the best of times or it’s the worst of times. You know, a lot of interesting statistics out suggesting that for some American families, their personal balance sheet has never been stronger. And there are many others that…you know, for whom the pandemic has brought endless financial suffering to them, to say nothing of, you know, of, you know, the suffering that the illness and the isolation has brought.

It’s really been kind of a two-headed situation. And you hear lots of people talking about a K-shaped recovery, you know, suggesting that part of America is headed up and part of America is headed down. And it’s an interesting time to be around, and for many folks, a scary time.

Eric: Absolutely. Yeah. And so as a financial educational partner with First United, Banzai is uniquely structured to be able to offer some assistance, you know. So I guess a question for you would be how can people better manage debt? Are there any tips or tricks that you would recommend in times like this?

Morgan: So as a financial education provider I have to admit, Eric, we kind of shy away from, you know, the world of tricks, you know, the one weird trick you can do to get out of debt. Now, there are lots of purveyors of those, and some of them kind of work for some people in certain situations. But the philosophy that we’ve taken, you know, our heritage is actually educating kids in schools. And it was after doing that for a number of years that we recognized, “Hey, there are lots of adults that didn’t have a proper, you know, financial education. How can we take some of our resources to them?”

But I think possibly because of that heritage, we’re really inclined to focus on what we look at as the basics. It’s really difficult to know, you know, which approach to debt management is right for you. I mean, there are so many of them. They’ve got names, like debt snowball and other things but our stance on it is, and I think we’ve got a lot of experience that proves this out, is that you really can’t evaluate, you know, which method is correct for you until you know where you stand. And that is such an obstacle for so many people, for a host of reasons. It’s really an emotionally fraught topic.

I mean, you come home after a hard day of work, you know, you’ve got other…you’ve dependents, you know, in your family that need you, and then, you know, finally, at the end of the day, you have a little time to yourself, like, you know, what do you want to use that time doing? Do you want to watch Netflix, or do you want to get out your credit card bills? And, you know, almost uniformly, you know, what we see is, you know, you want to watch Netflix.

So just getting people over the hump to get started and to like assemble a picture of where they are today and, you know, and what that means for them.

We look at that as the overlooked step in, you know, helping folks to manage their debt because once you really understand and have a…you know, once you have a real good picture of your own personal balance sheet and what that means, there are a lot of other things that become…that come into clearer focus. It’s not hard…it’s not as hard at that point to recognize, you know, what type of approach you need. You know, some folks might need to take an approach of, you know, speaking with somebody who can, you know, at a local bank, who can help consolidate their debts. Other folks, and this is a little less common, but other folks might, you know, fill up the review and find out, you know, “Really my debt’s manageable. I don’t need to worry so much about it.”

And there are, you know, of course, a few people on the margins that will discover they need to take more drastic action. You know, and what that action is can vary from person to person. But without that clear picture of where you stand today, our experience is that it’s really…it’s almost pointless to talk to people about all the specific strategies that they could use. Okay, pay off your credit card first, you know, or do something strange with your mortgage to, you know, to be able to clear up some of this other debt. I mean, those are conversations that can be had but they have to be had down the road and…

Eric: Right, once you know the full picture.

Morgan: That’s right. And most Americans don’t know the full picture. And so that’s what we really focus on in the resources that we provide through our partnership with institutions like First United Bank & Trust.

Eric: Yeah. Well, it’s really important. I mean, we’ve had previous episodes where we’ve talked about that. When it comes to something like budgeting, just knowing what you are spending your money on, where is your money going, and where is it coming in is half the battle. Because once you know that, you can make intelligent decisions on whether you should cancel Netflix so that you’re not watching it instead of looking at your credit card statement, that sort of thing.

Morgan: Absolutely. Yeah, I feel like we’ve all stood…had the experience at some point or another of standing behind the person in the grocery line who, you know, they’re getting out their different envelopes of cash. They’re paying for different parts of their grocery bill out of these different budget categories and thinking, “Man, that person has it together.” Like, “Oh, that’s amazing.” And it’s true. I mean, that is amazing. Like somebody who’s doing that, they’re demonstrating a real commitment to, you know, financial management and budgeting. But, you know, for the person standing behind that individual in line, it can be very discouraging.

It’s like, you know, “How on earth could I ever get there?” And it’s answering that question that we find to be the most rewarding at Banzai. There are plenty of other people that will…you know, after you’ve kind of gotten the basics down with us, there are plenty of other resources that will, you know, help you to understand how to put your cash in different envelopes or how to use different debit cards or whatever approach you take, you know. But our…the thing that we find most rewarding is helping people get the basics down and understand, “This is where I stand. You know, this is how much money is coming in. This is how much money is going out. This is what that means for me.”

Eric: Yeah. And on the Banzai toolkit, which you can find at mybank.com/education, there are things like budget calculators and tools that will allow you to kind of start to get a handle on some of that, and I find that so…I think that, to your point, it can be challenging for a person because it feels like an insurmountable mountain to climb. And when you realize just putting just a little bit of effort toward it will go a long way because you can start to bite off small chunks of it, and you’ll start to better understand your situation. So even a little bit of effort is better than no effort.

Morgan: Yeah, that’s exactly right. You know, we try to make it as easy as we can. You know, we obviously don’t have any, you know, special magical insight into what your financial situation is. But if you’re willing to provide just a little bit of information, just the basics, and, of course, you don’t have to provide any identifying information, we’re not here to harvest private aspects of your personal information, and I know nor is your bank, Eric, but if you just provide us with some of the basics, then we can help to start illustrating, you know, what that means for you.

Eric: Exactly.

Morgan: You know, one of the things I like are our calculators that we have, for example, to…you know, surrounding buying a home or maybe refinancing a home. I suspect a good number of your listeners, Eric, are in that position of perhaps looking to buy a first home or maybe they own a home already, they’ve heard so much about, you know, where mortgage rates are going and they’re asking themselves, “Should we refinance?” That’s the type of basic question that we excel at answering in a way that is hopefully, you know, as low stress as possible to people and as upbeat and hopeful because, you know, the fact of the matter is, it is…you know, it’s never great to be in too much debt.

But I’ll tell you, in a world with interest rates, as low as they are right now, this is certainly a better time to find yourself in that situation than, say, 1980 when, you know, interest rates were 20% plus, you know. And so it’s our hope that in partnership with institutions like yours, you know, we can use this unique time to make…you know, help people make a lot of progress towards their financial goals.

Eric: Exactly. Well, you know, and one of the other thoughts that I had while you were talking about the calculators and the tools that are available through Banzai at mybank.com, is that it dawned on me that in the past, prior to these existing or me knowing about these kinds of tools, if you were to just do a simple Google search and try to find something, oftentimes it would lead to you getting a lot of requests from random companies trying to sell you something because you were filling out this form. And tools like this eliminate that because it’s sort of just…like you said, there’s not a lot of personal information.

You’re just trying to get a picture and the tool is there to help you. It’s not to try and sell you something. We just want you to understand where you stand in life with your finances and try to help you move forward.

Morgan: Yeah, that’s exactly right. I mean, how many of these tools, you know, you enter your personal information in, and then they say, “Okay, now before we provide you, you know, the graph or the chart that you’re looking for, or the answer that you’ve asked for, would you give us your name and phone number?”

Eric: “And when is the best time to call you?”

Morgan: Right. That’s definitely not the model that we’ve established. You know, we work with more than 800 community-based financial institutions like First United Bank & Trust who, you know, really, you know, to an institution are, you know, you folks have taken the long view and recognizing that, you know, a world full of responsible consumers who have a handle on their finances, you know, that type of person makes a better long-term customer for any bank than somebody who does not have a grip on, you know, on their finances.

I think sometimes there’s an unfair characterization out there, you know, that banks want their customers to fail. And that’s not true. I mean, Eric, you can, of course, you know, confirm this. It’s when customers succeed that everyone, you know, including the bank is able to, you know, have the most satisfying relationship. And, you know, the tools that we provide are designed to help people succeed, you know, in a way that we hope is non-intrusive and low stress.

Eric: Absolutely, absolutely. The more support that we can provide and the better situation we can put our community and our customers in, the better off we all do. And that’s what we’re in this for is to help, to help people. Last time we had you on, Morgan, we talked about some of the courses, and, of course, we focused mainly on those that were designed for kids, whether it was the Banzai Junior or the Banzai Teen.

But you have a Banzai Plus, which is for adults. Can you talk a little bit about that class and how that might assist in the debt management angle?

Morgan: Yes, that’s right. So the Banzai Plus, I want to be careful, Eric, because I recognize, you know, we’re talking about…you know, we’re on a podcast for people who are interested in personal finance. So the Banzai Plus course that we offer through mybank.com in our partnership with you, it is designed to, you know, provide, you know, a basic introduction to budgeting and other financial concepts. So it might be a great fit for some of the folks listening in to the podcast, especially, you know, for those individuals that are, you know, just starting their journey into financial education.

But for, you know, some of the folks who, you know, if you’ve got eight different…you know, personal finance podcasts you listen to including this one, that’s the type of course that might be useful for, you know, your high school senior or…

Eric: Yeah, it’s like a starter.

Morgan: …you know, your college student child. But there are plenty of resources including the courses to assist and help people all across the spectrum of financial preparedness and financial…you know, how far along they are in financial education. You know, we’ve got about 50 employees in our company, Eric, and, you know, we are a financial education company, so my hope and expectation is that our employees are quite financially literate themselves. And we still have broad use of the tools that we put forward by our employees who find them really useful to help keep track of where they are, where they stand.

“Does it make sense for me to refinance my mortgage?” is the comment we made before, or, “What kind of car can I reasonably afford to buy?” those are the types of questions that we are well-positioned to answer through the calculators. And then we have a whole series of articles that address a really broad suite of questions.

Eric: Yeah, that’s one of the things that I find most exciting about the Banzai tool is the coaches’ courses. It’s essentially just an answer to a question. You know, “How do I get out of debt?” “How do I create a budget?” “What’s the cost of a wedding or the cost of, you know, the first year because I’m expecting a new baby in the family?” And helping a person through some of that thought process is really powerful and helpful. Even if you are an expert in some areas, maybe there’s something…you know, one of these topics that you’re not as familiar with, and then it could help you think through, how that’s gonna…you know, how you can help yourself.

Morgan: You know, I’ll give you a little insight, Eric, into how some of these are created. Of course, we’re trying to create as broad of a library as we can, covering as many different life circumstances but there are, you know, a number of articles, a number of coaches in our system that arose out of a personal need that somebody at Banzai felt, you know. So this time of pandemic interestingly has led to a bit of a baby boom among the employees at Banzai be them, you know, fathers of first children or expectant mothers working for us.

You know, and so things like, you know, preparing for a baby, or how much will it cost, you know, me to have this child, that’s the type of resource that we provide that spring out of a very personal need that some group of our employees felt. And, you know, it’s sort of a situation of, they created a tool to scratch their own itch. And my experience, at least, is that, you know, tools created out of that sort of necessity are some of the best things that are created, you know, because it’s created by somebody with a deep personal interest in the topic. So, you know, I’m grateful that we’ve got a sufficient diversity of employees with…you know, going through different life experiences to give us lots of grist for that type of new material.

Eric: Absolutely. Yeah. I think it’s really powerful and I’m excited for our listeners to check it out. And again, you can find that at mybank.com/education and click on the Banzai tool to go and explore and see what works best for you. So Morgan Vandagriff, CEO at Banzai, do you have any final thoughts before we sign off for today?

Morgan: Yeah, I think I would just say, you know, and this may be old hat to some of your listeners at least but, you know, to use a perhaps overused phrase from a television network in the 1980s, knowledge is definitely power. You know, and for those of you that are stressed out and, you know, thinking you can never dig yourself out of the hole that you’re in or can never get ahead, you know, sit down, use our tools available through mybank.com/education and figure out where things really are. You may find that they’re not as bad as you think or you may find that, you know, you need to make some pretty significant changes in your life to get to where you want to get to.

But I can guarantee you that, you know, you’ll be better off after having, you know, used the suite of educational tools that the bank provides. You’ll be further along, you know, in the journey that you want to have, you know, than if you’re simply sitting around and letting it cause you sleepless nights. There’s just no reason to do that, you know. I think I’d leave it there. And I think that would be what I’d want people to know, Eric.

Eric: Well said. Morgan, thank you again for joining me. I really appreciate it.

Morgan: Thank you.

Eric: Well, that brings us to the end of our show. You can always find more episodes by visiting mybank.com/podcast or on your favorite podcast app. And we’re on basically all of them so find your favorite and hit follow, and so that you can get more information like we’ve provided here today. You can also always leave feedback, ask questions, or request a topic for us to discuss by sending an email to podcast@mybank.com. Thanks again for listening. We’ll be back next week with more helpful content but until then, we wish you the best in focusing on what matters most to you.

[00:21:31]

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[00:21:49]

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Eric: Recording is for informational purposes only. Any references in this recording to any person, organization, product, or service does not constitute or imply the endorsement, recommendation or affiliation with First United Bank & Trust. First United is not responsible for your use of the information mentioned within this podcast. Please consult legal or tax professionals for counsel as needed.

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