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If you are in the market to purchase a home and are wondering about VA loans, you’ve landed in the right place. A VA loan is available through a program with the United States Department of Veterans Affairs and is designed for service members, veterans and eligible surviving spouses. Read on to learn more about VA loans and the difference of getting a VA loan through Elevations Credit Union.

Benefits of a VA Loan

The VA sets the qualifying standards, dictates the terms of the loan and guarantees a portion of the loan. A VA loan doesn’t require mortgage insurance, however they do have a funding fee. This funding fee can be built into the loan, and may be waived if the Veteran is receiving disability benefits. VA loans also don’t require a down payment, which can be a significant benefit for borrowers.

In addition to the benefits above, there are other major advantages to choosing a VA loan. These include: competitive rates, no prepayment penalties and low closing costs. VA loans may also be assumable with lender approval, meaning a homebuyer can take over the seller’s mortgage loan with little to no change in terms.

Who Qualifies for a VA Loan?

Most active-duty military and veterans may qualify for VA loans. This is also a viable option for spouses of military members who lost their life in the line of duty or as a result of a service-related injury, or who has been deemed MIA or POW. You may also qualify after six years of service in the National Guard or Reserves. Note that VA loans are only available when purchasing primary residences.

How are Elevation Credit Union’s VA Loans Different?

At Elevations, our local underwriting team helps you get the best VA loan possible by working directly with the United States Department of Veterans Affairs. Our mortgage team acts in the best interest of our membership, which means we make sure your VA loan is the best fit for your unique situation. Depending on the circumstances and background of the homebuyer, we may be able to offer you a loan up to the home’s appraised value and also offer low to zero down loan options.

Loan and Property Types Available Through Elevations

At Elevations, we offer a variety of VA loan options to our members to ensure the loan is the best fit. These include fixed rate mortgage loans for new purchases or refinances. We also offer VA Streamline Refinance Transactions, also known as an Interest Rate Reduction Refinance Loan (IRRRL) and no appraisal is needed.

Elevations is equipped to assist with loans for all types of properties, including single family, condos, new construction and manufactured homes.

Bottom Line

If you’re in the market for a new house, make sure you understand your loan options and work with a mortgage professional who has knowledge of all types of loan programs. Mortgage loans from Elevations are available throughout Colorado. 

If you are considering your loan options and want an expert opinion, please contact our mortgage team. We are here to help. You may also try our mortgage affordability calculators or sign up for a complimentary seminar.

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If you are self-employed or own a small business and haven’t established a retirement savings plan, what are you waiting for? A retirement plan can help you and your employees save for the future. Plus, a retirement plan can have significant tax advantages:

  • Your contributions are deductible when made.
  • Your contributions aren’t taxed to an employee until distributed from the plan.
  • Money in the retirement program grows tax-deferred (or, in the case of Roth accounts, potentially tax-free)
Which plan is right for you?

With a dizzying array of retirement plans to choose from, each with unique advantages and disadvantages, you’ll need to define your goals before attempting to select a plan. Here are five key considerations:

  • Will your plan be funded by employer contributions, employee contributions or both?
  • Will your plan allow you and your employees to make pre-tax and/or Roth contributions?
  • Will your plan have the flexibility to skip employer contributions in some years?
  • Will you choose a plan with the lowest costs? Easiest administration?

The answers to these questions can help guide you and your retirement professional to the plan (or combination of plans) most appropriate for you.

Types of plans

Retirement plans are usually either IRA-based (like SEPs and SIMPLE IRAs) or “qualified” (like 401(k)s, profit-sharing plans, and defined benefit plans). Qualified plans are generally more complicated and expensive to maintain than IRA-based plans because they have to comply with specific Internal Revenue Code and ERISA (the Employee Retirement Income Security Act of 1974) requirements to qualify for their tax benefits. Also, qualified plan assets must be held either in trust or by an insurance company. With IRA-based plans, your employees own (i.e., “vest” in) your contributions immediately. With qualified plans, you can generally require that your employees work a certain number of years before they vest. Here, we take a look at five types of retirement plans.

1. SEPs

A SEP allows you to set up an IRA (a “SEP-IRA”) for yourself and each of your eligible employees. You contribute a uniform percentage of pay for each employee, although you don’t have to make contributions every year, offering you some flexibility when business conditions vary. For 2019, your contributions for each employee will be limited to the lesser of 25 percent of pay or $56,000. Most employers, including those who are self-employed, can establish a SEP.

SEPs have low start-up and operating costs, and can be established using an easy two-page form. The plan must cover any employee aged 21 or older who has worked for you for three of the last five years and who earns $600 or more.

2. SIMPLE IRA plan

The SIMPLE IRA plan is available if you have 100 or fewer employees. Employees can elect to make pre-tax contributions in 2019 of up to $13,000 ($16,000 if age 50 or older). You must either match your employees’ contributions dollar for dollar — up to 3 percent of each employee’s compensation — or make a fixed contribution of 2 percent of compensation for each eligible employee. (The 3 percent match can be reduced to 1 percent in any two of five years.) Each employee who earned $5,000 or more in any two prior years, and who is expected to make at least $5,000 in the current year, must be allowed to participate in the plan.

SIMPLE IRA plans are easy to set up. You fill out a short form to establish a plan and ensure that SIMPLE IRAs are set up for each employee. A financial institution can do much of the paperwork. Additionally, administrative costs are low.

3. Profit-sharing plan

Typically, only you, not your employees, contribute to a qualified profit-sharing plan. Your contributions are discretionary — there’s usually no set amount you need to contribute each year, and you have the flexibility to contribute nothing at all in a given year if you so choose (although your contributions must be nondiscriminatory, and “substantial and recurring,” for your plan to remain qualified). The plan must contain a formula for determining how your contributions are allocated among plan participants. A separate account is established for each participant that holds your contributions and any investment gains or losses. Generally, each employee with a year of service is eligible to participate (although you can require two years of service if your contributions are immediately vested). Contributions for any employee in 2019 can’t exceed the lesser of $56,000 or 100 percent of the employee’s compensation.

4. 401(k) plan

The 401(k) plan (technically, a qualified profit-sharing plan with a cash or deferred feature) has become a hugely popular retirement savings vehicle for small businesses. With a 401(k) plan, employees can make pre-tax and/or Roth contributions in 2019 of up to $19,000 of pay ($25,000 if age 50 or older). These deferrals go into a separate account for each employee and aren’t taxed until distributed. Generally, each employee with a year of service must be allowed to contribute to the plan.

You can also make employer contributions to your 401(k) plan — either matching contributions or discretionary profit-sharing contributions. Combined employer and employee contributions for any employee in 2019 can’t exceed the lesser of $56,000 (plus catch-up contributions of up to $6,000 if your employee is age 50 or older) or 100 percent of the employee’s compensation. In general, each employee with a year of service is eligible to receive employer contributions, but you can require two years of service if your contributions are immediately vested.

401(k) plans are required to perform somewhat complicated testing each year to make sure benefits aren’t disproportionately weighted toward higher paid employees. However, you don’t have to perform discrimination testing if you adopt a “safe harbor” 401(k) plan. With a safe harbor 401(k) plan, you generally have to either match your employees’ contributions (100 percent of employee deferrals up to 3 percent of compensation, and 50 percent of deferrals between 3 and 5 percent of compensation), or make a fixed contribution of 3 percent of compensation for all eligible employees, regardless of whether they contribute to the plan. Your contributions must be fully vested.

Another way to avoid discrimination testing is by adopting a SIMPLE 401(k) plan. These plans are similar to SIMPLE IRAs, but can also allow loans and Roth contributions. Because they’re still qualified plans (and therefore more complicated than SIMPLE IRAs), and allow fewer deferrals than traditional 401(k)s, SIMPLE 401(k)s haven’t become popular.

5. Defined benefit plan

A defined benefit plan is a qualified retirement plan that guarantees your employees a specified level of benefits at retirement (for example, an annual benefit equal to 30 percent of final average pay). As the name suggests, it’s the retirement benefit that’s defined, not the level of contributions to the plan. In 2019, a defined benefit plan can provide an annual benefit of up to $225,000 (or 100 percent of pay if less). The services of an actuary are generally needed to determine the annual contributions that you must make to the plan to fund the promised benefit. Your contributions may vary from year to year, depending on the performance of plan investments and other factors.

In general, defined benefit plans are too costly and too complicated for most small businesses. However, because they can provide the most substantial benefit of any retirement plan, and therefore allow the largest deductible employer contribution, defined benefit plans can be attractive to businesses that have a small group of highly compensated owners who are seeking to contribute as much money as possible on a tax-deferred basis.

As an employer, you have an essential role to play in helping America’s workers save. Now is the time to look into retirement plan programs for you and your employees.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The credit union has contracted with CFS to make non-deposit investment products and services available to credit union members. For specific tax advice, please consult a qualified tax professional.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

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Elevations Business Online Banking provides members with quick and easy access to manage their accounts. Here are six frequently asked questions from our business members to help you make the most of this tool.

1. How do I transfer funds from my business account to my personal account?

If your business structure is a sole proprietorship or a single-member LLC, you may transfer funds from your business account to your personal account. In order to set this up, the names of the owner(s) of the personal account and business account must match, and we will need to verify ownership of the business. If you’d like to set this up, please contact us at 800.429.7626.

2. How do I reset my password?

To reset your password, visit elevationscu.com/login. With the “Business” tab selected, click “Forgot Password.” Enter your username. If you don’t know your username or if your account is locked because of too many failed password attempts, please contact us at 800.429.7626.

3. How do I find my business account number?

To find your number in Business Online Banking, log in to your account and select the appropriate account. Select “Details” to view your account number.

To find your number in the Business Mobile App, log in to your account and select the appropriate account. Select the information “i ” icon to view your account number.

You can also find your 13-digit business account number at the bottom of your business checks.

If you have questions, please contact us at 800.429.7626 or log in to online banking and start a secure chat. 

4. How do I send a secure message?

To send a secure message, please log in to Elevations Business Online Banking and select “Contact Us.” Then, click “New Conversation.” You can also click “Chat Now” to start a live chat in Business Online Banking.

5. How do I change my address in Elevations Business Online Banking?

To change your address in Elevations Business Online Banking, log in and select “Preferences.” Click “Address Change.”

After you’ve selected “Address Change,” select one or more accounts to update the address information. Click “Submit” when finished.

6. What is the Elevations routing number?

The Elevations Credit Union routing number is 307074580. Elevations does not have a Swift Code, IBAN or other international routing code for wires coming from outside the U.S. You are able to wire funds to your Elevations business account without this information.

To learn more about Elevations Business Online Banking, please visit our website. And be sure to download the Elevations Business Mobile App for Apple® devices or AndroidTM devices to easily access your accounts.

If you can’t find what you need, we’re always happy to help. Please call Elevations Business Services team at 800.429.7626 or visit one of our branches.

Android is a trademark of Google LLC.

Apple is a registered trademark of Apple Inc.

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Elevations Credit Union by Elevations Credit Union - 1M ago

In honor of the Fourth of July, we’re taking a look back at Boulder’s incredible parades of the past. While Boulder no longer celebrates Independence Day with a parade, for many years there was a large parade down Pearl Street. Thanks to our friends at the Museum of Boulder for sharing their archives with us!

The first year that a parade was photographed in Boulder was in 1887. This photo was taken on the 1400 block of Pearl Street looking west.

Photo courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

The annual tradition typically involved bands, like the Winona Drum Corps, pictured here in 1896 on Pearl Street.

Photo courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

Creative floats built by local organizations and businesses were a highlight as well, like these two from 1933 featuring Valentine’s Hardware and the Curran Theatre.

Photos courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

Throughout the years, spectators would pack the sidewalks of Boulder to see floats, horses and bicycles. This crowd gathered for the Fourth of July Parade in 1933 at the 1300 block of Pearl Street looking northeast.

Photos courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

Other parades of note include the Floral Parade, held on July 6, 1905, as part of the City’s Fourth of July festivities. This special parade had elaborately decorated automobiles and horse-drawn carriages.

Photos courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

In 1912, the Grand Army of the Republic (a veteran’s group) paraded down Pearl Street to celebrate Memorial Day.

Photo courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

The City celebrated the end of World War I in 1918 with yet another parade down Pearl Street that included returned soldiers.

Photos courtesy of the Carnegie Library for Local History / Museum of Boulder Collection

This blog was written by the Museum of Boulder in partnership with Elevations Credit Union. All images were provided by the Carnegie Library for Local History and the Museum of Boulder. To learn more about Boulder’s fun and exciting past we encourage you to visit the Museum of Boulder!

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Elevations is known for the good work we do in our community, whether it’s supporting Elevations Foundation’s community grants and scholarships, partnering with local nonprofits or sponsoring events in the community. We actively reinvest in the places we all call home. Our Volunteer Time Off program for employees is one arm of that much bigger initiative. Giving Elevations employees volunteer time off in addition to their paid time off is just one way we make a positive impact in our communities.

At Elevations, full-time employees receive 16 hours of paid volunteer time off each year, and we encourage our employees to utilize every hour because we want to ensure our members and our communities thrive. Our employees can choose to use their VTO with any of our eligible organizations. We do this to ensure that we are effective with our goals and align with our strategy.

We’re always trying to increase our impact in the community. In 2018, Elevations employees volunteered more than 2,500 hours, and we hope to surpass that milestone in 2019. In fact, we’ve planned a whole month of volunteering this June for our employees with area nonprofits in Broomfield, Boulder, Louisville, Loveland and Fort Collins. We’re calling this initiative Prosperity Month!

Our goal is to give back 1,000 volunteer hours to our Front Range communities with our Prosperity Month initiative, and we are well on our way to that goal. You can even join us as we volunteer from June 3 – 29. We have established specific volunteer times and dates with five of our nonprofit partners:

  • A Precious Child
  • Community Food Share
  • Cultivate
  • Food Bank for Larimer County
  • Poudre Education Association in conjunction with the Poudre School District

We want to invite our members to sign up to volunteer with us. You can check out all the dates and sign up to volunteer during Prosperity Month here. We hope we see you in June! If you want to find out more about the good work Elevations does in the community, please read our Prosperity Report.

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Massive computer hacks and data breaches are now common occurrences — an unfortunate consequence of living in a digital world. Once identity thieves have your information, they can use it to gain access to your bank and credit card accounts, make unauthorized transactions in your name, and subsequently ruin your credit.

Now more than ever, it’s important to safeguard yourself against identity theft. Here are some steps you can take to protect your personal and financial information.

Check yourself out

Review your credit report at least once a year and ensure all the information in it is correct. Every consumer is entitled to a free credit report every 12 months from each of the three reporting agencies: Equifax, Experian, and TransUnion. Besides the annual report, you may be entitled to an additional free report under certain circumstances.

If you find an error in your credit report, contact the appropriate credit reporting agency to let it know that you are disputing information on your report. The agency usually must investigate the dispute within 30 days of receiving it. Once the investigation is complete, the agency must provide you with a written result of its investigation and remove/correct any errors. You can generally file your dispute with the agency either online or by mail. However, it may be more helpful to dispute the error in writing with supportive documents, preferably by certified mail. That way you’ll have a paper trail to rely on if the investigation does not resolve the disputed error. If you believe that the error is the result of identity theft, you can also file a complaint with the Federal Trade Commission at identitytheft.gov.

In addition to checking out your credit report, you should regularly review your bank and debit/credit card accounts for suspicious charges or account activity. If you discover signs of unauthorized transactions, contact the appropriate financial institution as soon as possible — early notification not only can stop the identity thief but may limit your financial liability.

As you monitor your credit report and financial accounts, keep an eye out for the following possible signs of identity theft:

  • Incorrect personal and account information on your credit report, including suspicious credit inquiries
  • Money that is missing from your bank account, no matter how small the amount 

  • Missing bills or other mail from financial institutions and credit card companies
Consider a fraud alert and/or security freeze if necessary
  • If you discover that your personal and/or financial information has been exposed to identity theft, you should consider placing a fraud alert and/or security freeze on your credit report.
  • A fraud alert requires creditors to take extra steps to verify your identity before extending any existing credit or issuing new credit in your name. To request a fraud alert, you only have to contact one of the three major credit reporting agencies, and the information will be passed along to the other two.
  • A security freeze prevents new credit and accounts from being opened in your name. Once you obtain a security freeze, creditors won’t be allowed to access your credit report and therefore cannot offer new credit. This helps prevent identity thieves from applying for credit or opening fraudulent accounts in your name. Keep in mind that if you want to apply for credit with a new financial institution in the future, open a new bank account, and even apply for a job or rent an apartment, you will need to “unlock” or “thaw” the security freeze. In addition, you must contact each credit reporting agency separately to place a security freeze on your credit report.
Maintain strong passwords
  • Most of us have a large amount of personal and financial information that’s readily accessible through the internet, in most cases protected by nothing more than a username and password.
  • A strong password should be at least eight characters long, using a combination of lower-case letters, upper-case letters, numbers, and symbols or a random phrase. Avoid dictionary words and personal information such as your name and address. Also create a separate and unique password for each account or website you use, and try to change passwords frequently.
  • If you have trouble keeping track of all your password information or you want an extra level of password protection, consider using password management software. Password manager programs generate strong, unique passwords that you control through a single master password.
Stay one step ahead

The best way to avoid becoming the victim of identity theft is to stay one step ahead of the identity thieves. Here are some extra precautions you can take to help protect your sensitive data:

Consider using two-step authentication. Two-step authentication, which involves using a text or email code along with your password, provides another layer of protection for your information.

Think twice before clicking. Beware of emails containing links or asking for personal information. Never click on a link in an email or text unless you know the sender and have a clear idea where the link will take you.

Search with purpose. Typing one word into a search engine to reach a particular website is easy, but it sometimes isn’t enough to reach the site you are actually looking for. Scam websites may look nearly identical to the one you are searching for. Pay attention to the URL, which will be intentionally misspelled or shortened to trick you.

Be careful when you shop. When shopping online, look for the secure lock symbol in the address bar and the letters https: (as opposed to http: ) in the URL. Avoid using public Wi-Fi networks for shopping, as they lack secure connections.

Beware of robocalls. Criminals often use robocalls to collect consumers’ personal information and/or conduct various scams. Newer “spoofing” technology displays fake numbers to make it look as though calls are local, rather than coming from overseas. Don’t answer calls when you don’t recognize the phone number. If you mistakenly pick up an unwanted robocall, just hang up.

Be on the lookout for tax-related identity theft.

Tax-related identity theft occurs when someone uses your Social Security number to claim a fraudulent tax refund. You may not even realize you’ve been the victim of identity theft until you file your tax return and discover that a return has already been filed using your Social Security number, or the IRS sends you a letter indicating it has identified a suspicious return using your Social Security number. If you believe that you are the victim of tax-related identity theft, contact the Internal Revenue Service at irs.gov.

We are committed to helping you protect against identity theft and scams. Learn more about how we help keep your financial information secure here. Elevations’ team of CFS* Financial Advisors is also here to assist you with questions about building and protecting your financial assets. Please give us a call today at 303-443-4672 x2240 to set up a no-obligation appointment.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The credit union has contracted with CFS to make non-deposit investment products and services available to credit union members. For specific tax advice please consult a qualified tax professional.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

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The decision to refinance your mortgage should be taken with careful consideration. If you’re thinking about making the shift, be sure to work with an experienced and knowledgeable professional who will help ensure a refinance is truly in your best interest. 

There are two types of refinances: rate-and-term and cash out. Here, we look at the differences between the two types and how to figure out if a rate term refinance is in your best interest. Plus, we explain the current rate environment and why all of these considerations are relevant right now.

Rate-and-Term versus Cash Out Refinance Rate-and-Term Refinance

A rate-and-term refinance means replacing your current mortgage with a new one that has more beneficial terms. For example, these advantageous terms could be a lower interest rate, going from an adjustable rate mortgage (ARM) to a fixed rate or even a shorter term (for example, going from a 30-year mortgage to a 15-year). A rate-and-term refinance can include the payoff of a second mortgage IF the second mortgage was used to purchase the home. This loan amount is limited to the payoff of the current mortgage and closing costs. Rate-and-term refinances generally have more favorable interest rates and allow for higher loan-to-values than cash out refinances.  

Cash Out Refinance

Another option is a cash out refinance. A cash out refinance also replaces a current mortgage with a new one, but it’s coupled with a higher loan amount that allows for cash to be pulled out from the equity in the home. This additional money can be used for home improvement, debt consolidation, college tuition or other borrower needs. Since loan-to-value increases with a cash out refinance, it is considered a riskier loan. For this reason, interest rates are generally higher, and there are stricter qualifying requirements than rate-and-term refinances.

Is a Rate-and-Term Refinance in Your Best Interest?

Obtaining a mortgage costs money – fees to the lender, appraisal fees, Title Company costs and so on. These fees can add up to thousands of dollars and increase your mortgage balance. A refinance should only be done if it is truly in your best interest.

A cash out refinance’s main benefit is the ability to use the equity in your home for another purpose. When this purpose is debt consolidation, a home equity loan or line of credit might be a more beneficial option, depending on the amount. On the other hand, interest rates are often more favorable with a mortgage than they are with a credit card.

It’s also important to evaluate the cost of refinancing versus the realized savings. For a rate-and-term refinance, a small decrease in interest rate may not be worth the cost. For example: If your current mortgage is $300,000 at 5% interest, the principal and interest payment is $1,610 per month. If you refinance to a new mortgage of $300,000 at 4.75%, your new monthly payment is $1,565/month. That’s a yearly savings of $540. The cost of refinancing can be $3,000 or more, which means it will take over five years to realize the benefit of refinancing. 

When doing this calculation, it’s important to compare apples to apples. If your current mortgage is a 30 year fixed, but you’ve been paying on it for 5 years, a new 30 year fixed extends the payoff term by 5 years – a longer period with interest payments.

An instance that almost always benefits the borrower is removing mortgage insurance, or MI. If you have an FHA mortgage currently and your financial situation has improved, a rate-and-term conventional refinance might reduce the MI amount or remove it altogether. If you have a conventional mortgage with MI currently and the equity in your home has increased sufficiently, a rate-and-term refinance will remove the MI requirement.

The Relevance of the Current Rate Environment Above: US 30 Year Mortgage Rate Chart (source: ycharts.com)

2019 has seen a modest but steady decline in the average 30-year fixed mortgage interest rate. Rates shifted from a high of 4.94% in November 2018 to under 4.25% in April 2019. Although it’s impossible to predict what interest rates will do, rates may resume the slow increase started in early 2018 at some point. 

If you are considering your refinancing options and want an expert opinion, please contact our mortgage team. We are here to help. You may also try our mortgage affordability calculators or sign up for a complimentary seminar.

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The death of a child is every parent’s worst nightmare. That terrible tragedy is compounded when the young person is a victim of suicide. Since 2012, Elevations Foundation has been proud to support Second Wind Fund of Boulder County as the organization saves lives by making mental health services available to young people in crisis.

Second Wind Fund of Boulder County - Who We Are - YouTube

Second Wind Fund of Boulder County is an affiliate of Second Wind Fund, Inc., an organization that grew out of just such a tragedy. In 2002, four students at a Jefferson County high school took their own lives over the course of a nine-month timeframe. In response, Second Wind Fund, Inc. was born with a mission to decrease the incidence of suicide in children and youth by removing the financial and social barriers to treatment.

Second Wind Fund of Boulder County carries on that mission locally by providing services in the Boulder County School District and the St. Vrain Valley School District. The organization matches children and youth at risk for suicide with licensed therapists in their communities. When financial or social barriers are present, Second Wind Fund of Boulder County pays for up to 12 sessions of therapy from one of their specialized network providers. Over the last 10 years, they have been able to provide a safety net of direct counseling services to over 470 youth whose families lack the financial means to access appropriate mental health services.

“After 30 rejections and extreme desperation on my part, the first response from the individual answering the phone at Second Wind was, ‘We will help you. We will get your son the help he needs right away. We will help you through the referral process with the school. We are here for you.’” 

– Parent Testimonial

Second Wind Fund of Boulder County will hold their Emerge 5K on Sunday, May 5 at Boulder Reservoir. We encourage you to join this fun-filled day (including a performance from Kutandara) to support their life-saving work.

 Learn more about Second Wind Fund of Boulder County and all of Elevations Foundation’s 2018-19 grantees here.

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At Elevations Credit Union, we have kept close ties with the University of Colorado Boulder since being founded on the steps of Macky Auditorium in 1953 as the U of C Federal Credit Union. Elevations’ roots at CU Boulder run deep, but our relationship with CU Boulder is not nearly as longstanding as the Miles family.

Elevations member Elise Miles, who is set to graduate in May 2019, is the 5th generation in her family to matriculate from CU. Elise and her older brother (who graduated from CU Boulder in 2015) are the first 5th generation graduates in the University’s history.

“Being a member of the CU community makes me feel not only connected to my fellow Buffs, but also connected to my family. In a way, the CU community becomes extended family.” – Elise Miles 

Elise with her grandfather and uncle, three generations of Buffs,
at Folsom Stadium for a football game.

The Miles family’s connection to CU dates back to Elise’s great great great aunt, Lucinda M. Garbarino, who graduated from CU in 1901. Lucinda went on to teach at CU for over 30 years, and she was the second woman to teach there after Mary Rippon. Elise’s great grandfather, Martin B. Miles, graduated from the CU Medical School in 1931. Her grandfather, Martin J. Miles, received his bachelor’s degree and then his master’s degree in 1967. Elise’s uncle, Martin W. Miles, received his Ph.D. from CU in 1992.

Left to right: Lucinda Garbarino 1901, Martin B. Miles 1931, and Martin J. Miles 1967.

Not only do the Miles family ties to CU go generations deep but so do their ties to Elevations Credit Union. The Miles family has been Elevations members for over 32 years. Elise herself has been a member since 2006.

“I like being a member at Elevations because they have great customer service, I trust them, and they treasure their members.” – Elise Miles 

Elise at the University Memorial Center (UMC) Elevations Credit Union Branch

Elise will graduate with her Bachelor of Arts degree in ecology and evolutionary biology (EBIO). After graduation, Elise will work at Easterseals Rocky Mountain Village in Empire, Colorado. She plans to work for a few years and then pursue a doctorate degree in occupational therapy.

Elevations is proud to serve our incredible members like Elise and her family, and to support the University of Colorado Boulder students and faculty. If you are an Elevations member who would like to share your story with our community, please send us an email at social@elevationscu.com.

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In the first installment of this blog series, we learned about the critical role the balance sheet plays in managing a high-performing company. Then we looked at what good inventory management looks like. This month we’re sitting down with Mike Thomas, CEO of Alpha Widgets, to see if there is anything we can teach him about accounts receivable. After just a few minutes, it’s pretty apparent that Mike has always looked at Alpha’s steadily-growing A/R as a good thing, commenting that from his perspective, it’s the natural result of growing sales and seems like a very safe, readily-liquid asset. While this perspective is not a surprise at all given that most business owners see A/R exactly the same way, the reality is that of all the assets a business could hold, A/R is among the worst.

I know, you and Mike Thomas are both thinking this sounds completely absurd, and while he is madly thumbing through his contacts looking for a new banker, you’re probably wondering if it’s even worth reading the rest of this post. In the hope that it helps change both your minds, I’d like you to consider just a few facts about accounts receivable.

Fact #1: 100% of the Time, A/R Depreciates in Value

Ben Franklin famously said, “Nothing in life is certain except death and taxes.” With all due respect to Mr. Franklin, he forgot to include the fact that 100 percent of the time, accounts receivable will do nothing but depreciate in value. Yes, it’s true that other assets like inventory and equipment may also depreciate over time, but unlike A/R, at least they are an investment in future sales. On the tail end of the sales cycle representing sales already made, A/R does nothing but decrease in value while it remains uncollected.

Every day a dollar sits out there as accounts receivable is a day that dollar is not working for your business (in fact, it’s actually working for your customer’s business as a payable). It cannot be invested back into your company’s growth or pay for needed staff. It cannot pay off debt or pay for systems that could drive operational efficiency, and it cannot be distributed to the company’s shareholders. It is not a piece of equipment that churns out items to be sold at a profit, and it can’t pay for a building that saves the company rent and build long-term equity. It is dead weight, and your goal as a business owner should be to drop it as quickly as you possibly can.

We can easily calculate how quickly a dollar tied up in A/R loses value over time. As an oversimplified example, if Alpha Widgets earns a 15 percent annualized return on every dollar invested in its growth, uncollected A/R will lose 1 percent of its value after only 26 days. Thanks to the power of compounding, it takes only 24 more days to depreciate 2 percent (which happens on day 50) and 23 more days to hit 3 percent.  

Would you want to invest your money in an asset guaranteed to do nothing but lose value every day?

Fact #2: A/R is Just a Fancy Word for a Risky Loan

At the end of the day, A/R is an unsecured loan that your business makes to its customers at 0 percent interest. You deliver your goods and services in advance, and trust your customer to pay you for them at some point in the future. Of course, as a prudent business owner you make sure to extend A/R only to customers who you deem creditworthy, but can you ever really be sure they won’t default on your “loan?” 

Just for fun, let’s do a little comparison. Commercial banks are in the business of making loans to small businesses, and there is a plethora of publicly-available data out there on them. According to data from 1985-2018 by the Federal Reserve, banks charged off an average of roughly 1 percent of their non-real-estate commercial loans. This means that for every $100 loaned out, $1 was written off as uncollectable.

If the experts in the business of commercial lending are writing off 1 percent of their loans, what should the typical small business expect? Unless your company is underwriting its customers to the level of a commercial bank, securing its A/R with collateral and regularly monitoring the financial performance of its customers, a 1 percent loss rate is probably wishful thinking. In fact, data shows that on average the typical small business writes off 4 percent of total sales in bad debt. For a company generating $5 million in revenue, that’s a $200,000 expense! Your goal as a business owner should be to get those 0 percent unsecured loans to your customers paid off as quickly as you possibly can.

Fact #3: Unlike a Fine Wine, A/R Only Gets Worse with Age

The longer you carry a receivable, the more risk you expose your company to. And to make matters worse, that risk increases not on a linear basis, but exponentially. If you think about it, every day that goes by where one of your customers owes you money is a day that customer’s financial health could be negatively impacted by any number of factors. Simply put, the longer it takes for your customer to pay you, the more reason you have to wonder if they ever will.

While the typical small business offers its customers 30-day payment terms, the reality is the average small company’s sales outstanding is 67 days. That means that on average, small businesses have over two months of sales sitting out there uncollected, more than half of which is past-due.

When a receivable ages to 90 days past invoice date, statistics published by the U.S. Census Bureau show that on average 26 percent of the total amount will have to be written off. Bump that up to 180 days and the uncollected amount climbs to 70 percent. At 12 months, it increases to a staggering 90 percent. Perhaps it’s time to start paying more attention to those aging receivables!

I want to be clear that I am not saying that accounts receivable is all bad. It serves some important functions, and offering customers payment terms by carrying A/R allows a company to make sales that it likely could not otherwise make. But when you look at A/R in its entirety, you can see why it is a bad investment of your company’s capital. Therefore, your goal as a business owner should be to constantly seek to replace it with a lower-risk, higher-returning asset as quickly as possible.

Rather than seeing it as a badge of pride or a relatively safe bet, perhaps it’s time to start looking at A/R as what it is: a necessary evil.

Our team of Business Bankers at Elevations are highly-trained in financial analysis and would be happy to advise you or help explain accounts receivable and your other options. In fact, helping our business members optimize their financial performance is exactly what we do, and it’s how we set ourselves apart from the competition!

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