Christina Kahler: Welcome to the vault by FNBO, where we unlock stories that matter. I'm Christina Taylor, your host for today's episode.

April is Financial Literacy Month, and so we're shining a light on something that touches all of us - money and finances. Financial decisions touch nearly every part of our lives, and despite its importance, it can be challenging to have all the tools and skills necessary to make confident decisions. Joining us today is Sam Holman, CEO of Credit Advisors Foundation, an organization dedicated to giving people the tools and confidence they need to navigate credit, debt, and long-term financial planning. Sam's also a great friend to FNBO and partner of ours. We're so glad you're here, Sam. Thanks for being at The Vault.

Sam Hohman: Thank you. Thanks for having me. I love that introduction because it really goes at the, what's at the core of what we do, the Credit Advisors Foundation, and that is really help every single person. Finances impact everybody, whether it's bill paying goal setting. And even if you think, you know, it's Financial Literacy Month, that might not be for me. You know somebody who needs this assistance. It might be a friend, a relative, a coworker. So, I encourage everyone to buckle in and stay listening.

Christina Kahler: We think a lot about financial wellness, and we know it's so important to everyone individually and for healthy and thriving communities. So, we're thrilled to talk with you about this today. To get us started, do you just want to tell us a little bit about your background and about Credit Advisors Foundation?

Sam Hohman: Sure! So, Credit Advisors was started in the 1950s, even prior to credit cards and large consumer debt. But even back then, you had local commercial lending operations. Maybe you'd go down the block and go to a, you know, savings and loan and borrow some money just to make ends meet to maybe get past a hurdle in your life. And so, there was a, there became a need to help people figure out, you know, how should they prioritize their spending, how do you pay something back when it seems like it's an insurmountable debt?

And from there, then we went into how, you know, once credit cards came along, we started helping people with credit card debt, their student loan debt. We now do bankruptcy counseling. Um, there's just a really wide array - as consumer products expand, so do our programs to help consumers with those.

Christina Kahler: Yeah. And how did you individually get involved with the work? Because you've been a real champion for it and kind of driving things forward. So how did that start?

Sam Hohman: So, I actually, I came from a human resources background, which I kind of fell into that. But in human resources, you often see people, your own employees struggling. Maybe they're facing a garnishment, maybe they're missing work because they're having to go, you know, to court over a bill or they're having to go pay a bill. Emergencies come up. And when you see that in, um, in sort of a human resources arena, you, of course, want to help your employees. And I was sitting on the board of Credit Advisors at the time, and they needed a leader and recruited me to, rather than be a board member, be the CEO.

Christina Kahler: Yeah, that's fantastic. And it's such great work and so important in so many ways. So just thinking about the basics. You know, when we talk about Financial Literacy Month and, you know, everybody kind of learning about finances, how do you define financial literacy?

Sam Hohman: Great question. So, financial literacy implies that there are people who are financially illiterate. And that's not really the case. Almost everybody's got a really good idea of what financial literacy is. It's just that, you know, life happens. And when life happens, it throws everything into turmoil. And so sometimes you start making um, decisions that aren't the best. Maybe you are not prioritizing things well. So, we like to think of it as financial clarity.

Christina Kahler: I love that.

Sam Hohman: And there's just, there's three simple steps to financial clarity. One is insight - understanding where you're at, and that's kind of the budgeting piece. What am I spending? What's coming in, what's going out, and what does my credit report look like? Credit reports just like a report card. It's telling the world, Do you care about your finances? Are you, you know, studying? And so, and you can impact it, just like you can impact yours grade point average, you can definitely impact your credit score.

Next step of that then is goals. And goals are the fun part. I mean, you know, the financial, uh, discipline doesn't have to be, doesn't even need the word discipline, literacy, budgeting. None of that sounds like any fun, but goals, goals are a lot of fun. So, goals is what do I want to have happen with those financial tools that I'm going to, you know, apply.

And then finally prioritization. Because a lot of people, I think, think it's two separate tracks in terms of getting out of debt and reaching my goals. Those are on the same rail. You don't have to jump rails. And each step gets you from point A to point B. So, it's what - but you need to know the order. What are the prioritization of the things I need to do to reach my goals financially?

Christina Kahler: Yeah, and you all help people get to that point where they can clearly kind of identify those goals and make a plan.

Sam Hohman: Absolutely. Yeah, that and that's where I said, that's the magic. That's the fun part.

Christina Kahler: That's so great. Okay, so when people are at a point of being stressed about finances, it can be a real challenge, I know. We've all made tough financial decisions or been in a moment where we make a decision that we maybe wouldn't have made otherwise. But what are the mistakes that you see people make most often or those decisions that can impact them?

Sam Hohman: Sure, I think number one is not having some sort of savings. I think initially you called an emergency fund, and studies have shown even just $400. That's it, $400 set aside can get you past a majority of those financial hiccups. But from $400, then make sure you have maybe three months set aside just in case something happens. Maybe you lose your job. Maybe you get sick. Maybe you need to go take care of an elderly parent.

And then your next goal should be, okay, now what am I saving up for in terms of do I need a new car? Do I need a new home? But again, it starts small, just that $400 can make a world of difference.

Christina Kahler: Yeah. Having that as a goal and getting started and putting small amounts into an account just so you have some coverage.

Sam Hohman: Yeah, and, you know, back to this impacts everybody, 87% of people are living paycheck to paycheck. Meaning they don't believe and have $400. That's such a large percentage. That's income agnostic. That's people who make a ton of money. It's also people who don't make a ton of money.

Christina Kahler: Just spending more or spending -

Sam Hohman: Spending up to their - you know their income. And that's an - you know, that's another quick hint, I guess I like to give people. If you get a raise, you've proven to yourself and your family, you can live on that lower amount. Immediately take that entire raise and put it into a savings account.

Christina Kahler: So Smart.

Sam Hohman: You're used to living without it, you don't need it.

Christina Kahler: Yeah, yeah. So smart. So, I think most people can relate to, you know, challenging decisions that we make and then taking steps to get on the right path. Is there anything that you recommend when people are feeling overwhelmed and stressed to take as a first step?

Sam Hohman: You know, talk to people you trust. And that includes maybe you have a trusted banker. Maybe you have a trusted clergy member. Maybe you need to talk to a credit counselor, like, you know, like Credit Advisors Foundation. But talking about it, you know, matter no matter what your issue is, if you talk about it, if you start to feel better about it. Your brain starts to kind of tease things out and sort it out, but not just let it get all bottled up because you will start to make mistakes inadvertently. And sure. And then and then, you know, the snowball effect of just getting into bad cycles happens.

Christina Kahler: And I know when we've talked before, you've mentioned how that snowball can happen, you know, and maybe some decision making around, you know, certain bills over other bills can lead to just more challenges. Can you talk about that a little bit?

Sam Hohman: Yeah, so what we find, um, again, everyone kind of knows the mechanics of what they should do financially, but sometimes in the moment it doesn't make a lot of sense. So, if you're struggling to pay your bills and you're trying to get some little win. You're just trying to make something happen. And so you look, you're like, okay, I can afford my cable bill, but I can't afford my mortgage. And you pay that cable bill. Now you know that makes no sense.

Christina Kahler: Yeah!

Sam Hohman: And yet you do it because you just want, you just want something good in your life, right?

Christina Kahler: Sure - and something done.

Sam Hohman: And something checked off. So, it's very easy to fall into some, add, you know, issues. I won't call them habits because of course you wouldn't do them forever. But, um, but it can snowball very quickly because now you've got a late fee you're dealing with or you're facing collections or foreclosures or garnishments or whatever. All the other bad things that can happen when you don't take care of your finances.

Christina Kahler: Sure, and that's where I think the prioritization is so important. And, you know, talking through things with someone.

Sam Hohman: Communication. I think people fear their creditors sometimes because they're, they're, afraid they won't be easy to work with.

Christina Kahler: Yeah.

Sam Hohman: Um, but prove, prove that out first. Call your, call your creditor, ask them, ask them for forgiveness or for leniency or for a deferment and you'd be surprised so many of them will work with you. But when they won't or when it seems overwhelming, that's when you call a credit counselor.

Christina Kahler: That makes a ton of sense. So, we know that credit and thinking about credit and your finances is so important individually, and we also think about it with communities. And we know it can be especially challenging in communities that may lack resources or be underserved. And so can you talk a bit about how Credit Advisors Foundation really helps in underserved communities?

Sam Hohman: Yeah, so one of the things that under what kind of goes in hand in hand with underserved communities is also lower income. And what income buys a lot of people is time. So, income can buy you time-saving things. When you're in those lower income brackets, your most precious commodity is time. You don't have time to go see a credit counselor. You don't have time to find a babysitter, get on a bus, go cross town or meet with a credit counselor. So, we feel it's really important to be in their communities, embedded either with other agencies that are assisting them or with First National Bank.

Meet the people where they're at so that at the moment they need a counselor, you're right there. They're not having to struggle to figure this out and schedule it.

Christina Kahler: Yeah. So, what does that work then look like? The counseling itself?

Sam Hohman: Counseling itself is, it's really very simple and it's those three steps I mentioned at the beginning. It's giving the person insight. Um, helping them find the trees for the forest, so to say. Going over their budget and saying, okay, here's what your income looks like, here's what your expenses look like. You know, we're not there to say life should be, you know, terrible and you spend too much on coffee. We're there to say, here's where your money's going and kind of open their eyes to that.

Also, the credit reports. Super important because that score is your, is telling the public, and I say the public, but, you know, that's your credit score. That's telling everyone whether you're credit worthy or not. So, you have to be in touch with your credit score.

Once they have that insight, it's very easy to then say, what are your goals? And then we just help them with an action plan. All right, do this, then this, then this. And we have programs that will help you get from here to there.

Christina Kahler: Yes. When it comes to our branches and how this works in our branches, do you want to explain that a little bit?

Sam Hohman: Now, most people, when they have money problems, they don't, the first thing that comes to their brain isn't, oh, I need a credit counseling.

Christina Kahler: Yeah.

Sam Hohman: The first thing that comes to their brain is, I need money and where's their money? There's money at a bank. They go to the bank and they say, I need a loan. And the bank very kindly says, not yet. And hands them off to a counselor who says, okay, let's take a look at why the bank is saying not yet?

Christina Kahler: Yes.

Sam Hohman: Let's get your credit score into a place where it makes sense for them to lend you money.

Christina Kahler: Yes, and then working through those steps and creating an action plan.

Sam Hohman: Exactly. And then it's very supportive because now you have a three-legged stool. They know that, okay, the bank is going to loan me money, or the bank is going to allow me to be a customer, but I just have to do these things and these guys are in partnership together. We're all happy.

Christina Kahler: Yeah. Works really well.

Sam Hohman: Exactly.

Chrstina Kahler: Are there stories that come to mind when you think about this work that bring it to life?

Sam Hohman: We joke around our office because the average longevity of my employees is 18 years.

Christina Kahler: Wow. That's amazing.

Sam Hohman: That's the average. But they love the work because every day there's somebody they've talked to, they've been able to help. So, there's. Sorry, thousands of stories, but one in particular -we had a couple. I'll change their names. Yolanda and Kevin. And they came to us and they were, they were in a world of hurt. He was military. He spent a lot of time away from home. She was not in a good mental space because he was gone so often. Marriage difficulties. They were on the verge of bankruptcy. But when you're in the military and you have certain clearances, that's kind of a non-starter for your career.

Christina Kahler: Sure.

Sam Hohman: So, it came to us. We counseled them and we're like, you guys don't have to file bankruptcy. There's a very easy way. We will work with your creditors. Your creditors are offering great programs to help lower your payments so that there's more room in your budget so you can make that rent payment that you've been missing on occasion. And they were so relieved.

Christina Kahler: Oh yeah. Life-changing.

Sam Hohman: Life changing. So there's the insight, but the goals came. They didn't really have any goals, and that was the problem. Do you have any goals? Well, we want to make sure Kevin can hang on to his job.

Well, we're looking, you pay a substantial amount in rent. Have you ever thought about homeownership? And neither of them had come from backgrounds where homeownership was a reality at all? And they're like, now that's not in our, that's not in our future. It's not been in our past. What are you kidding me? We could be homeowners. Absolutely if you'd get these things into place, They were so motivated after that. Within 18 months, they had raised their score over 100 points. They had socked away money. We found them a down payment assistance program. And they were on their way to homeownership.

Christina Kahler: What a story!

Sam Hohman: And it took 18 months.

Christina Kahler: Wow.

Sam Hohman: Because they became so committed to it.

Christina Kahler: Yeah. Wow, that is incredible.

Sam Hohman: And to think of those stories are every day, literally every day.

Christina Kahler: Thinking that you have to file bankruptcy and then learning that you could become homeowners, right?

Sam Hohman: It's an insight, clarity. Oh, I get it. I don't have to struggle every day at the kitchen table trying to figure out which bill to pay.

Christina Kahler: Right. And you really do, the way that you talk about it presents all of these things as tools and goals and something that's positive.

Sam Hohman: Nobody wakes up and says today I want a budget. Today, I wanna...No, that's not the fun part. The fun part's the goals.

Christina Kahler: Yeah. Absolutely, and then achieving those goals.

Sam Hohman: Absolutely.

Christina Kahler: We know you have a lot of great tools for everyone to access, so we definitely want to share that. You know, thinking about giving our listeners some steps they can take, you know, if they're if they're thinking they could use some help, what would you recommend?

Sam Hohman: First thing I would go onto our website, we have classes that are monthly and they're held live. So, um, every class is different, but we focus - one focuses on credits, called Credit 101, and one focuses on homeownership. And if you, the Credit 101 is like an hour. It's very simple. You just zoom in. You don't have to leave your own home. Once a month, English and Spanish. Um, and then we have lots of other classes if people are interested, but, um, it's a great place to start. It starts to pique your curiosity about what is possible. Lots of helpful hints. Lots of information of things people never even knew. Touch on credit identity, identity theft. Lots of topics. But it's a very painless way to just start poking around the edges.

Christina Kahler: Yeah, and understanding your own situation, using those tools. So, we talked a little bit about credit reports. You know, using it as a tool both to improve your credit, but also just to make sure that everything is, um, as you expected.

Sam Hohman: Sure. You need to look at your credit report and be engaged in it. If you know that you are going to have a large purchase coming up. That's the time to really dig in and say, okay, I want my credit to be the absolute best it can be. Because even a couple of points will make a difference on the rate of that loan. So, in the long run, the higher your score, the less you pay. And it makes your car insurance lower. Which people are like, wait, what? What does that have to do with it?

Christina Kahler: I don't think I knew that.

Sam Hohman: Yeah, it will make your, it'll make a lot of your insurances lower because they're just running numbers and people who have lower scores are interpreted as people who care less. And whether that's correct or not, that's just how the algorithm works. So, they're going to charge you more in interest rates.

It also - it sets you up for the ability to have more financial products as well. The higher your score, the more financial products you have. You get down into those lower scores, and then, you know, that's where the panic sets in because you don't have the option of getting a good loan, maybe not even getting a loan at all.

Christina Kahler: Sure. Very limited.

Sam Hohman: Very, very limited. So, if you're somebody who has no intention, maybe you own your own home, you own the last car you're ever going to don't worry about your credit report. It's not, again, it's there as a tool to determine your credit worthiness. And if you don't need credit. It's not something to regularly worry about.

Christina Kahler: You know, do you think about fraud and other things? Do you do you recommend using a credit report for that purpose?

Sam Hohman: Absolutely, because a credit report's going to show you everything that's not just that you owe money on, but it's also going to show you everything you applied for within the last two years. So, if you get a copy of your credit report, and it shows a bunch of applications for credit, and you never requested that credit, that could be a sign that somebody's got your personal identification information, and they're going to, they're going to keep trying until somebody gives the money or, you know, or even worse, you find that there's a loan or a credit card or something on your credit report that's not yours and you'll want to address that immediately. It's probably a good indication that there's been identity theft.

Christina Kahler: Yeah, really important to take a look at it for that reason, for sure. As people are engaging with the services maybe that Credit Advisors Foundation provides, what should they expect as far as, you know, are there, is it something they pay for, how does that work?

Sam Hohman: So, all of our counseling is free. So, if you call us and we go through your credit report with you and we talk about your goals, all those things I mentioned earlier, the three steps, that's all absolutely free. If it's determined that you need to go like on a longer-term plan, maybe a debt management plan, then we're going to look at what you can afford. We're a nonprofit. It's a sliding scale fee. As we mentioned earlier, our services are for everybody. So, if somebody comes to me in $300,000 worth of credit card debt, they probably have enough income to pay a fee. But if you come to me, you have next to no income and you're barely covering your bills, we're not going to charge you.

So, it's a sliding scale fee, and it's never going to be more than what you were paying before because we're able to get all of your payments lowered.

Christina Kahler: That's great. Is there anything else you wanted to touch on or share?

Sam Hohman: One of our, um, most important products is our debt management plan. So, this is a program where if somebody's having difficulty paying their bills, they come to us, we work with their creditors and we get them to lower the interest rates, lower the payment amount, that creates more room in their budget so that their housing becomes more affordable. And it sort of settles everything until they can get past the hump.

Now, most of us have heard these late night ads that say, if you're $10,000 or more in credit card debt, we have a secret government program for you. And the second they set a limit on that dollar amount, the $10,000, the $15,000, what that actually is is a debt settlement program, which is completely different. It sounds very similar because you make one payment that's affordable for you. But the difference is they are escrowing your money and waiting until you have enough to pay a lump sum. In the meantime, they have sent a cease and desist letter to the creditor. So now the creditor has two choices. I either take a loss on it or I sue them. And the collection process gets very nasty because the creditor has no choice. The consumer, their credit just tanks, like it immediately goes down to terrible, terrible scores. And in the meantime, the consumers got this money doing nothing, it's just sitting in an escrow account. But I just encourage people, if you hear that, $10,000 limit or any sort of limit. We'll work with anybody who has problems. It doesn't matter because. That is debt to them, right? So make sure you understand the difference between a debt management program where you're working with your creditors versus debt settlement where it's going to ruin your credit and it becomes a very adversarial situation with your creditors.

Christina Kahler: Wow, very important to understand that distinction for sure. Thank you for sharing that. So, for our customers who are listening, we do have an easy option for them to get in touch with you as well.

Sam Hohman: Absolutely. We have a toll-free number that is dedicated to First National Bank clients. So, your clients have an inline direct test. That way my counselors know that they have a relationship with you. And they get special treatment.

Christina Kahler: That's great. We'll put the number in the show notes so that everyone can access that.

Sam Hohman: Awesome.

Christina Kahler: Sam, thanks so much for joining us today and sharing about financial clarity. Absolutely love that and all of the tools that you help people learn about to create a better financial future for themselves. You know, we recognize just how important this is to us individually and to us as a community. And we appreciate all the great work that you do.

Sam Hohman: Thank you.

Christina Kahler: Thanks so much for listening. We'll see you next time. Until then, I'm Christina Kahler, and this is The Vault by FNBO.