I entered today a bit mixed up on what would happen. At first, I thought I was going to some big University. “Today, David, you’ll be visiting TVCU with Mr. Jeff Holley.” It sounded like a University. I mean come on, BYU, FSU, LSU, TVCU, right? But no. “And by the way, that stands for Tennessee Valley Credit Union.” Hmm. A credit union. Kind of like a bank. (Actually it isn’t, but I didn’t know it then) It seemed like fun, especially to a guy who knows nothing about a bank (or a credit union, for that matter). Here, let me give you my definition of “banker”.
ban·ker (bang′ker) n. The guy who takes care of all the Monopoly™ money.
So apparently I had a lot to learn, but let me assure you; Mr. Holley taught me enough about a credit union to…to…to write an article about.
We set off around 6:45 a.m. to Chattanooga (that’s where he mainly works) and got there around 7:30. After greeting some of the other employees, Mr. Jeff 
took me up to his office and explained the difference between a bank and a credit union. Basically, a bank is a building where people put their money on deposit, then get interest back from the bank. If a person wants to borrow money, then they pay the bank interest. The problem is, though, if the banks wanted to raise the cost of interest, they had a monopoly on the market. That was when a group of people got together to create the first credit union. Say person A needed $500, and they asked person B for help. Well, B doesn’t have that much, but he does have $250. So then A goes to C for help. C loans A $100. Then person D gets in the act and adds $150. And now person A has their five hundred dollars. That’s basically how a credit union works.
After that little diagram, Mr. Jeff said that the number one thing you need to know about credit unions is that good credit is everything. Not only does it let you get lower interest on your payments, but with some loans, the credit union won’t even give you the money if you have bad credit. One way to get good credit is to borrow a lot of money, but that can get you into debt real quick. The best way, Mr. Holley said, is when you get your first paycheck, give it to the bank. They in turn will “loan” you the money, and–if you make all of your payments on time–that will start to build your good credit.
The next thing Mr. Jeff talked about was the different kind of businesses there are, and the pros and cons that each one has. The first kind of business is a sole proprietorship. Don’t be fooled by the big words; it simply means that
- you alone own it,
- it’s not registered with the government, and
- when you die, so does the business.
The benefits are that there are no taxes from the government, and it is easy to make. The disadvantages are that when you go, the business goes, and if someone decides to sue you, you’re responsible. Basically, if you are just a kid wanting to mow people’s lawns for over the summer, a sole proprietorship is probably the way to go.
The next kind of business is a LLC, or a Limited Liability Corporation. The basics of an LLC are that
- the business stands alone (if you die, the company still goes on),
- the government offers you protection from a lawsuit,
- you have to pay taxes, (which comes out of your own personal pocket) and
- you are registered with the government.
So the benefits are that if someone sues, the government covers, and the business stands alone, but the disadvantage is that the tax money is paid by you, not the company. And that brings us to the third type of company; a corporation.
A corporation is usually what you see as you’re driving down the road. Wal-Mart, K-Mart, Sears, McDonald’s, those are all corporations. The advantages of a corporation are
- the company stands alone,
- the government offers an even better shield against lawsuits, and
- the corporation pays the taxes, not you, the owner.
The only disadvantage to a corporation is that the government makes you pay higher taxes, but like I said before; the money is not coming out of your pocket.
So those are the three different kinds of businesses that you can make. All three have their perks and their downfalls; it just depends on what you like and are good at. Mr. Holley said that TVCU has given out loans to all three types, and that having one kind doesn’t mean you’re more or less likely to get a loan (it just depends on your credit).
When Mr. Jeff was done, I asked him what exactly he did at TVCU. He said that he is a part of a team of three, whose main job is to approve/disapprove loans and to decide whether or not the credit union can lend people the money that they want. It may sound hard, but Mr. Jeff said that there is a very simple way to do it. Say you’re wanting an auto loan to be able to buy a GT Premium Mustang Convertible. First, he finds out your total income for a month. Then, he finds out 40% of that total. That’s how much the credit union can loan you per month. So if each month you make $2,500 , the credit union will loan you $1,000. Then Mr. Jeff multiplies that number by, say, 48 months. Your total is $48,000. The cost for the Mustang is $37,845. Therefore, the credit union will approve your loan. And at the end of two years, TVCU has made another customer, and you’re driving away in a slick car. Cool, huh?
Well, that just about wraps up what Mr. Holley and I accomplished today. I did start an account with TVCU myself, but there isn’t a whole lot to talk about there. I enjoyed myself immensely, and learned a ton. In fact, I don’t think I could have had as much fun if TVCU really was a university.
