Financial Counseling Certification Program (FiCEP) Sixth Edition Review

Flashcards based on the Financial Counseling Certification Program (FiCEP) Sixth Edition textbook, covering terms related to counseling processes, credit, debt, and financial planning.

Financial Counseling Myth #1

Counselors can provide instant relief. Reality – It will take time to restore balance to members’ finances.

Financial Counseling ROI

Return-on-investment for credit unions often ranges from $100\%$ to as high as $300\%$ or $400\%$ based on reduced charge-offs and delinquencies.

Employee Counseling Confidentiality

Achieved by holding meetings off-site, omitting names when tracking appointments, and storing records in areas inaccessible to other coworkers.

Empathy

The ability to imagine how it might feel to be in a member’s situation to build trust, while refraining from excusing poor financial practices.

Sympathy

Loss of objectivity by feeling so strongly about a member's plight that it excuses behaviors and may prevent the member from perceiving the need to change.

Open-Ended Questions

Questions or statements that invite detailed answers, such as 'What would you like to accomplish today?' or 'Please tell me more about that.'

Values

Deeply held principles or standards of behavior and judgments of what is important in life; they are relatively stable and influence attitudes.

Attitude

The way one thinks and the feelings one has about something; it is subject to change in response to learning.

Perception

A way to understand or interpret something; providing information can change this even if the events or facts do not change.

Essential Obligations

Needs the member must fulfill; defining these is the first step in weight options for a spending plan or movement to a smaller residence.

Force-Field Analysis

A method used to view all forces in favor of or against a plan, where forces are rated for ease of change and degree of importance.

Cost-Benefit Analysis

A technique where members determine possible solutions, list the costs and benefits for each, and rate the likelihood of success and seriousness of failure.

Scaling

A rating system used to assign numerical rankings, like $1$ to $10$, to needs, goals, or levels of motivation.

Reframing

A technique involving looking at something differently, such as looking at the other side, amplifying what is said, or exaggerating the situation.

Future Pacing

Moving members into the future by helping them envision things as they could be to motivate adherence to spending or debt plans.

Money Worship

The belief that money is synonymous with happiness and success and holds the solutions to all problems, potentially leading to compulsive spending.

Spending Cycle 4

Earn/Save/Spend: A group that has learned to 'pay yourself first,' prioritizing saving to meet long-term goals and create financial stability.

Paralanguage

Language defined by the manner in which words are said, including timing and emphasis.

Pacing

Creating a feeling of connection with a member by matching physical characteristics like posture, energy level, and breathing.

Blending

Displaying communication patterns that match a member’s, such as speech rate, tone, and vocabulary, to build rapport.

Remedial Counseling

Helps members cope with debt they cannot afford or poor money management, often required during financial emergencies.

Preventive Counseling

Helps members with good habits manage challenges due to life changes or prepare for large purchases.

Productive Counseling

Helps members identify the best ways to use resources to improve financial status, often when one suddenly acquires assets.

Five C's of Credit

Character, Capacity, Capital, Collateral, and Conditions.

Debt Ratio

A comparison of total debt to annual income used to show if a member can afford new debt.

Expected Family Contribution (EFC)

The dollar amount students and their families are expected to pay for college as calculated by the FAFSA.

Rule of 72

A formula to learn the years required to double an investment: divide $72$ by the current interest rate.

Prequalification

A basic analysis of affordability based on borrower-provided info; it does not include a credit report review and is not a loan guarantee.

Preapproval

An intensive credit review and income verification that provides a letter with an exact preapproved loan maximum.

REVERSE MORTGAGE (HECM)

A loan for seniors where the balance does not need to be repaid until the last surviving homeowner moves out or dies.

SCRA (Servicemembers Civil Relief Act)

A federal law capping interest rates at $6\%$ and protecting active-duty personnel from being sued while in service.

MLA (Military Lending Act)

Protects active-duty members and dependents from predatory lending by capping the MAPR at $$36\%22

Probate

The legal process to prove the validity of a will and properly settle a deceased person's estate.

Indemnification

An agreement to reimburse someone for the loss or expenses incurred as a result of an insured loss.

GAP Insurance

Guaranteed Auto Protection insurance covers the difference between the car's value and the amount owed if the vehicle is totaled or stolen.