Money Matters 2014/03 — Keith Sessions, Chief Financial Officer
Expenses and savings
It is cold outside and much of the northern states are still covered in snow. If you are a builder, you’re about 80% done with your winter project. If you are not a builder, you’re likely going over your fleet—replacing fuel tubing, checking batteries, and making repairs in preparation for the flying season. Most clubs held elections in November; new officers took over in January and are looking to continue good practices and bring in their own ideas.
The southern states are starting to warm up and flying has already begun. This is a great time of year to review and plan the needs for your club. This month’s article focuses on making the most of a club’s assets, particularly field maintenance and club savings.
Field maintenance is one of the largest expenses for any club. Items needed throughout the year include:
- Equipment
- Fuel
- Fertilizer
- Weed control
- Seed
- Asphalt repair
- Gravel
- Paint
If your club does not already have an equipment fund, I highly suggest you start one. Mowers can be expensive to replace. With proper maintenance, a quality mower can last 10–15 years or more. Saving a little each year is much better than having a large expense all at once. If you need a large piece of equipment, now is a good time to shop—many power-equipment dealers still have new-old-stock at discounted prices.
When buying supplies such as weed control and fertilizer, shop at a co-op instead of a big-box store. Maintaining a large piece of land is different from a typical yard; buying in bulk becomes important. The co-op may not have your favorite brand, but they can help you get exactly what you need.
Take a soil sample to your county extension agent. They will test it and give you a report. Take the report to the co-op, and they will show you the products you need to make your field beautiful.
Club money and savings is another area to review this time of year. As I write, the U.S. Federal Reserve has announced that tapering of quantitative easing will occur in 2014. This means interest rates are expected to rise as the year progresses. Most clubs keep money in checking/savings accounts and CDs. Review these accounts for fees; if you shop around, you should be able to find accounts without fees. For CDs, shop smaller banks and credit unions for the best rates.
Also review who is authorized to withdraw money. You may be surprised to find that officers from several years ago are still on the accounts. Your bank can help you update these authorizations.
I’m all for keeping an emergency fund in a savings account or CD, but it’s important to keep this in perspective and not waste opportunity. Money in a savings account or CD will not keep up with inflation over a long period. That means the $10,000 you’ve had sitting in a CD for the past 15 years is effectively worth less in purchasing power, even if the nominal account balance is higher.
For example, depending on CD rates, the $10,000 might now be worth $12,000–$13,000 nominally. Unfortunately, to buy the same basket of goods that cost $10,000 in 1998, it would now cost $14,298.71.
Because clubs do not purchase the same basket of goods and services used by the government to measure inflation, your club’s real inflation costs may be much higher. Evaluate the club’s savings needs and then hold a discussion about alternatives for any excess funds.
Suggested action items:
- Start or fund an equipment replacement account.
- Shop dealers for discounted new-old-stock equipment.
- Buy bulk maintenance supplies from a co-op when practical.
- Take a soil sample to your county extension agent before purchasing fertilizers.
- Review bank accounts for fees and better rates; consider smaller banks or credit unions for CDs.
- Update authorized signatories on all accounts.
- Discuss alternatives for excess cash given inflation and rising rates.
Please let me know if you have any questions or a topic you would like me to address. I look forward to seeing many of you at the Toledo Weak Signals R/C Expo in Toledo, Ohio.
Transcribed from original scans by AI. Minor OCR errors may remain.
