Financial Empowerment [The Bright Side 19]


We find that personal finance is no longer
taught in school as a part of the curriculum, and a lot is lost in our society by not having
the knowledge to make informed decisions. 77 million Americans don’t pay their bills
on time. So another piece of evidence that says how important financial education and
literacy is. With those emergency needs, they may go to
a payday lender. Two, three, four hundred percent interest essentially. That’s a very expensive way to solve your
problem, and we found that a lot of our members were doing that. And we thought, hey, we’ve
got to come up with a solution. So much of what we do with finances is on
the back end. You know, we collect taxes. And we have the FDIC, an insurance group so
that if the bank goes bad, you’re protected. But we don’t have a whole lot on the front
end. We don’t have a whole lot to be proactive. And that’s what the financial empowerment
center was all about. My goal is to purchase my first home and my
other goal is to pay off my vehicle. This is our fifth annual Show Me the Money
Day event. It’s a kickoff to the tax season. And we were just chatting about the children’s
savings accounts, and Megan’s like, “You know, this would be a great thing to do in
a rural community.” And I said, “Gee, I happen to know one!” Some people say, “Well gosh, kindergarten
is just too early for kids.” Kids understand money. Are you excited about the piggy bank? YEAH! Everybody that walked through our front door,
they came because they didn’t have their own resources to solve their problem. And so if we continue to just help people
subsist and provide them the income they need to get by for a short period, we’ll never
quite empower them to get ahead. So financial empowerment is about arming people with the
information and tools they need to actually create their own financial stability. Today we’re at Show Me the Money Day here
in Muskegon. Today is Show Me the Money Day. We were at the Show Me the Money event in
Nashville. This is our fifth annual Show Me the Money
Day event. And what did you win today? A $250 gift card! Thank you Jesus! So the Show Me the Money event is a statewide
event that is used to kick off tax season as well as provide information to residents
of the area. So we have financial institutions there telling about some of their products,
as well as different nonprofit organizations that provide services or have programs that
can be helpful. Today’s event features the financial resources
fair with food, prizes, and financial workshops. Oh, we’ve got a lot of different workshops
going on. We’ve got everything from manage your credit and build better credit to landlord
tenant issues. There’s also information on financial aid for school so that you can
go to post secondary school. I wanted to find out about the home improvement
because I need some new windows and doors, and then also I wanted to talk to Habitat
for Humanity because my grandson needs a ramp on his house. He has cerebral palsy and I
wanted to find out if they could do that. And he will be eligible. So I’m happy about
that. A slew of people ended up showing up and they
were outside the door, so it’s been an amazing day. There’s a lot of vendors here that gave
out a lot of helpful information. Chemical Bank, for instance. They had the information
about how to go about getting the grants for home repairs. Consumers Energy had the CARE
program. Metro housing was here. H&R Block. The healthcare… VA was here. We are here to explain to people what Legal
Services can do for them. We do some family law and we intake all senior citizens, so
that’s really important. Regardless of what the issue is, we want to do intake for all
of our seniors. We are the electric provider here in the Muskegon
area. We’re giving information on how you can save money on your light bill and also
the various assistance programs that many of the people who are coming through here
may be eligible to sign up for. One of the programs that we’re featuring
today is our Helping Neighbors program. We go into the home, show them where they can
save money, and actually install a new thermostat, flow reducers for the faucets, compact fluorescent
light bulbs. We’re here today to just talk about our
checking account products, maybe offer those to folks who may not have a bank or are looking
to switch banks. I loved today’s event. I was very excited
after today’s event. We did something a little different, so the Hastings one last
year and this year we have on Saturdays at the library. And both events are open to the
public. Well, in Nashville we decided to do it overlapping the food distribution time,
and we were right across the alley from the food distribution program. The Show Me the Money event, which is something
we are very proud of because of what it does by informing our residents and our congregation
and the community alike about programs and assistance that’s available to them to enhance
their homes and enhance their lives. Didn’t want to miss it! And I’m glad I
didn’t. I enjoyed it. I really did. I enjoyed it and
I learned a lot of information. Healthcare and everything. Financial Empowerment is about taking what
you have and getting yourself to where you want to be. By being able to organize my money, what little
bit of it I have, through the Financial Empowerment Center, they helped me get on a budget. They
helped me look at issues that I hadn’t even though about, like credit ratings and bank
accounts and all that. It’s just phenomenal. I’m really thankful. I was just having some trouble with a mortgage.
Like most people, old mortgage, very high interest rate. I think it was 12% or something
like that. And I got talking to Jim, and he sent me to a bank. And now my mortgage is
2.5%. The Financial Empowerment Center allows individuals
to come in to an office, have a private one-on-one counseling session with a financial empowerment
coach. The goal of the Financial Empowerment Center is to just help people overall improve
their financial household. How do you budget? How do you pay your bills?
How do you get ahead? I’m a financial counselor for the Lansing
Financial Empowerment Center who will help you be financially stable and free. So talk
about credit, debt, anything. We ask people to call to make an appointment.
Our initial appointments usually last between an hour and an hour and a half. We sit, we
chat, we get to know each other a little bit. We go through income and expenses. We assign
a spending journal to people. And then we start to focus in on what matters. If you
were brave enough to call and motivated enough to call, there must be something on your mind
and what is it? And how are we going to work on that together? I ended up developing a spending log. An every
day spending log, to the point where I would tell my son. It’s like he wants to go get
McDonald’s or whatever. I’d be like, Kailen, it’s not in the budget! [laughs] So it’s
like my middle name became budget. And it kept me on my budget, which is really really
good. It’s actually liberating when you can actually
go to the savings account and pay for that car repair yourself. We just paid our car payment off in June of
this year. And we’re looking to pay other debts to be hopefully in a year from now debt
free. I originally came to the Financial Empowerment
Center basically because upon graduation, I want to be financially responsible as possible.
I intend to get a good job and I want to know what habits to have financially. We have not, until the Financial Empowerment
Center came to be, we did not spend much time at all on the individual unit. The family
unit. The individual, and say, how can we build financial health before a crisis? How
can we create stability? That’s what the Financial Empowerment Center is all about. This particular program was actually launched
and designed under Mayor Bloomberg in New York. And it’s proven to be incredibly effective.
So we’re pleased to be one of the sites that’s able to launch this particular model. The purpose of the grant is to bring together
a government partner like the County Treasurer with a nonprofit organization like JVS to
provide for financial empowerment of the families of Oakland County. My responsibility is to collect delinquent
property taxes. What we’ve found is with the Financial Empowerment Center, if I can
get them in, have them do the interview, they’re able to help those people get applications
completed and actually then keep their property. Help them budget so that they’re not spending
money that they really don’t have, or help them find dollars that really are available
that they could have access to but they don’t understand that they can get it. We had a client who was involved in a payday
lending situation cycle, and then her financial counselor at the Financial Empowerment Center
sent her to a credit union who approved her for a loan to pay that off. But she said,
“I never had any idea I could have been approved for that.” Within six months, Morice was able to achieve
all six possible outcomes. He has established savings, which he contributes to every month,
paid down debts, negotiated with creditors, and increased his credit score by 110 points. I’m grateful for the program because it
was definitely definitely beneficial and I’m just grateful to be a part of it. And to be
able to share and help others. If someone was considering going to the Financial
Empowerment Center but unsure, I would say, “Go!” [laughs] The starting premise is that, as we know,
money does not come with instructions. As a bank we’re uniquely positioned to provide
advice to our customers about financial education, financial literacy, budgeting, planning. Citizens Helping Citizens Manage Money is
our program that provides financial literacy to our customers and consumers in our communities.
Some of the things that consumers and our customers can do on our site is to run their
numbers. So they can look at budgeting. They can look at home affordability and home prices
that they can afford. They can work on savings plans, setting up budgets for their family. Additionally, our Citizens Helping Citizens
Manage Money program provides funding to nonprofits, which are really the cornerstone and really
critical link to the community where that funding goes and can get to many many people
out there that need this education. A specific example would be our association
with Junior Achievement for Southeast Michigan, where we’re providing funding for youth
to learn more about entrepreneurialism, saving, and working toward growing a business. We’re
providing services and funding for free workshops for financial education and free tax preparation
services. Customers that are better educated about financial
literacy are going to make more informed decisions as it relates to housing, spending, and their
overall position. Customers rely on Citizens Bank and banks like us to provide not just
products and services, but also advice. And so it’s critical for us to provide that
education that in turn allows our customers to be better educated and in turn helps our
economy. My name is Heather Harris, and I’m a VITA
volunteer. I was in the air force and I saw a sign, and
it said, “Learn how to do your own taxes.” And all you have to do is volunteer four hours
a week. .
Just the volunteer part of it. It really feels good to help others who need your help. The value of VITA is huge. It’s huge. When
you have people who would not have their taxes prepared if we weren’t there. Or if VITA
didn’t exist anywhere. I was looking for some volunteering to put
on my resume. I heard about VITA and so I signed up for the volunteer training and really
enjoyed that, and I started volunteering. It was that easy. Through the connections that were here, I
was invited to the CATA station. They had a bunch of networking people there, and while
I was there I submitted my resume. I came with my resume just in case. And got called
and offered a job! My experience with a payday loan was mine
was an installment loan, which meant that I was paying $130 every two weeks. Every time
I got paid, I had to make a payment. Payday lending is a method of borrowing in
which you can get money very quickly, but at a very exorbitant interest rate. So we
are not talking interest rates of 25%. We are talking interest and fees that equate
to 200-300% or more, and what makes that an issue in Michigan right now is they really
prey upon people who can least afford to pay it. So if something happens, you get a flat tire,
or your refrigerator goes out, you need some extra money and your credit score isn’t
going to support a loan. You don’t have anything saved. What are you going to do?
The only opportunity they have is to go to a payday lender. It’s beyond dangerous. It’s… for many
people it just keeps them in poverty long term. What I borrowed was $800. Two years later,
I still had $800 that I owed on that loan. And I was paying $260 a month. The cap on a payday loan is $600, so they
should not be loaning anyone more than $600 on a payday loan event. But beyond that, it
is illegal for anyone to have been issued more than two payday loans in the state of
Michigan at any time that are still open and active. Back in October, we really wanted to dig into
this issue and see what we were seeing with our clients. And so what we found was that
we had 48 people who had these loans, but 61 loans total. Three of the forty-eight had
three loans or more. We expected that there would be no loans in the system that were
over $600, plus the fee of up to $76 that they can charge. So we expected to see a lot
of $676’s and below. And we did to some extent. So the first were $676 or below. But
the other 20 were more than that. And there were some in here that were in the thousands.
So we had 2 loans that were for $2,000 each, and one that was for $8,000. And these are
all from payday lending institutions. So what’s interesting about that is we know
that’s illegal in Michigan! How is this even happening, how are they getting away
with this, and certainly how are these three clients getting a third loan when the other
two are still open and active? And what we’re learning is that there’s a lot of ways that
payday lending companies try to get around this., and one of them is to be virtual. The company that I took the loan out of was
from another state. They were charging even more because it wasn’t even a Michigan based
company and they could get away with it. It’s horrendous the way people are preyed upon
with these types of things. There’s just no way to get out of it. We wanted to help them get out of that at
a lesser interest rate because what they were paying was not… there was no way out of
that. This is a pilot program. We’ve provided
49 loans to families who were either involved in a payday loan or were contemplating getting
a payday loan as a result of their personal financial situation. The only way that we can’t work with a family
is if there’s an inability to repay the loan. But what we can do is work with them
to determine how to increase their income. We have everybody come through financial education,
financial coaching individually. And then we assist them to get to the point where they
can qualify. For ICCF, we see this as a critical component
in our mission to promote family responsibility and independence, freedom from that debt trap
that is so prevalent with payday loans. You know, in terms of the payday lender, they’ll
kind of start going through a cycle where they’ll take out another payday loan to
pay off the first one and it really snowballs. With out loan program, it really is the opposite
of that. It’s a fixed term rate loan. They pay it off, and then because of the Savings
for Success program, they’re walking off with $240-$520 in a savings account. The loan program really originated out of
a conversation at one of our Lakeshore Employee Resource Network meetings. Each of the companies
was discussing as we were coming out of the economic downturn the number of 401k loans
that they were being requested from employees, or employees coming in for hardship purposes
because of payday lending, transportation, or utility issues. Instead of an employer
trying to create an internal program, we decided to partner with a credit union locally. It’s the Bridge Loan and Savings plan, and
it’s designed to help individuals who maybe have damaged credit or have a life circumstance
that comes up where they need access to reputable lending – to help them keep going to work,
so it’s not interrupting their ability to get to work. A mom was out on maternity leave. The maternity
leave got a little bit extended. During that time period, she’d gotten behind on some
utility bills. I said, “We could explore a loan,” and her response was, “No we
can’t!” We talked about our Bridge Loan program and
she was like, “I don’t think you understand. My credit is so bad that I won’t be able
to get this.” And I had told her that we didn’t look at credit, and it just did not
connect with her. A loan was not part of her vocabulary. And I said, “Really? Because
you’ve been here multiple years with this company and you’ve got a good reputation
here. That will serve in lieu of your credit score.” It requires that they sit down with a success
coach and look at the affordability of the loan as opposed to just giving a loan without
looking at the ability to pay it back. The loan that we provide has a savings element.
If your payment is $25 every two weeks, $10 is required as added to that amount. That
$10 goes into a savings account. It’s frozen. It cannot be accessed until the loan is paid
off. We’ve found that most people actually continue
to save after the loan is paid off. We have members who started back in that early
2012 who now have several thousand dollars in savings. And these were first time savers.
So there’s just this huge reward in seeing people realize that, “Wow. I can save money.” And so each of the ERNs that we have – there
are eight in the state right now – they all have a loan component in partnership with
a local credit union or community bank. So we’re a community development credit
union. The people that we try to serve are the ones that are a little bit more disenfranchised.
About 75% of our members have less than $500 on deposit with us, total savings relationship. We came up with this product called MyPay
Today, which is an alternative to payday lenders. It costs about 80% less than if you were doing
those same transactions at a Check N’ Go. So it’s a remarkable savings. It’s like
$600-$700 per person per year. So we have an annual fee – sort of like
a credit card has an annual fee – of $70, and then 18% after that. The way it’s designed
is you come in, you get your $500, and then instead of having to pay it back on your next
pay day (which is less than two weeks) you have two months to pay it back. We also report
it to credit bureaus. So while you’re paying your loan back, you’re also improving your
credit score. We did a study on our sustainability. Our
loss ratio on this product is 15%. So if you’re looking at the rate that we charge, which
is 18%, that’s only a spread of 3%, which really isn’t sustainable all by itself.
And that’s where the annual fee comes in, and that helps us to pay for everything else
that goes along. In the end, it is sustainable. But, again, we don’t make that much. For us, it was worth it because it’s very
popular with our members. There are credit union products that are being
developed that will be alternatives to payday lending. There aren’t a lot of them though. If you have found yourself in a position where
you have one of these predatory products, we really do want to help. And that’s what
the Financial Empowerment Center is here for. We area a partnership with the City of Lansing
city government and Capital Area Community Services, which is your local community action
agency. We are a free service. We absolutely never charge for anything. It’s very safe,
confidential, professional, and you can come in and talk with one of our counselors about
this issue or any other issues you’re having with your finances. 365 very excited Lansing kindergartners were
the first recipients of a free education savings account. We are the first community in the nation that
actually has a permanently endowed fund that will forever give a kickstart to career for
every kindergarten student in our country. Is school fun? YEAH! Yeah! The credit union is hoping that we can
help you with some savings so that you can go to college. Does that sound like fun? Keep
going to school? YEAH! [clapping] So Lansing SAVE is the first universal and
automatic college savings platform in Michigan. And then in the fall of 2015, we actually
have another community, Barry County, will be launching. Once the account has been established, then
the parents will get letters that tell them all the activities of this child’s savings
account, where it’s held, how the account will be in the child’s name and the child
will be the beneficiary of the fund. And we’re working with a local community bank, so first
of all, that’s something different. I know in Lansing they’re working through a credit
union. Right now the MSU Federal Credit Union has
started the seeding of these accounts with an initial $5 deposit. That savings is then dedicated for college,
so the accounts are deposit only and the student account holders will not be able to withdraw
fund until they graduate from high school and enter into college or another post secondary
education or training opportunity. Thank you! You’re welcome! He goes to Cumberland Elementary School. He’s
been going there for about a couple years now. Enjoys it, loves it. Is then he going to plan to go to college? I would hope so. I want him to. He needs to. We need more of our young people with access
to higher education, and that’s what this is about. Less than 1/10 students from low income families
will graduate by age 26. When they have a college savings account in their name, they’re
actually 4x more likely to graduate. We’ve given them piggy banks today. But
we also gave them an account. We also gave them a link. We gave them a line to a financial
institution. For many families this might be the first line, their first link to a financial
institution, and that is vital. We know that some families may not need that
assistance, but we want this to be fair and equitable for everyone. We don’t want this
to be a program that only the needy can apply for or qualify for. We want this to be right
across the board. We also know that there are other families
that have never really had that experience of making savings. So the conversations we’re
having right now with curriculum directors and with our superintendents and our education
network is how can we incentivize good behaviors? And we know that when they’re kindergartners
it’ll be probably basic, but as they get older, they can really learn some important
things. Understanding FAFSA, understanding what signing your name on your student loan
actually means for you after you complete your degree. In addition to financial education, we are
working with University of Michigan and University of South Carolina to connect the future college
bound identity to your current activities and engagement in school. So I’m doing things
academically today so that I can achieve my college bound future, but I’m also doing
things financially today by saving in my account to achieve my college bound future. Are you excited about the piggy bank? It’s amazing when you think about all the
really cool things that have worked in other places. And we’re not ashamed at all to
network with other successful programs. We’re reaching the students, but we’re
reaching the families and we’re connecting them to a leading financial institution here
in our community that can make a huge difference in that family’s future and I think it will. As a church we believe in that wholeheartedly,
in the existential and the tangible needs of people being met, and so we are excited
about having the various vendors who are here today. It’s been fantastic. This is my first time
here in Nashville. All new people, wonderful people that’ I’ve been able to talk with
and it’s been very exciting. About ten years ago, we really took a look
at who we were trying to serve. At that time we were trying to serve everybody. And we
realized then that it was the people at the low end of the economic pyramid that needed
us the most. I guess that’s just part of the general
philosophy of a credit union is people helping people. And we believe that everybody deserves
good banking. So investing in financial empowerment has
always been a huge cornerstone of our bank. The most beneficial thing is when people have
that A-ha moment that they can be in control of their finances. The plan that they put together, I’ve been
following it tremendously so I have noticed a great difference. And I’m happy. I think it’s just the best thing that you
can do for anybody, is to give them that sense of I’m in charge of my life. And so financial empowerment is about extending
opportunity within the financial system to all people in our country and our state. Oh, this art will be famous! [laughs] It will. I’m Reverend Byron Moore. The… we got
a photo bomb back there, so we’ve got to start over! [laughing] We think financial literacy is the beginning
and the foundation of providing fi- um. [laughs] Cut!

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