Your Money, Your Goals: Using the tools


Welcome to Your Money, Your Goals – a financial
empowerment toolkit for social service programs. This is a webinar training designed for financial
empowerment trainers to help prepare them to train potential users of “Your Money, Your
Goals,” case managers and other staff from social services agencies and other organizations
that work with individuals and families with low income or limited resources. This is Webinar
3: Using the tools: An explanation of how the tools are covered in the training. If you are viewing this webinar, you’ve probably
already viewed the first two installments: Webinar 1, which was “Getting to know Your
Money, Your Goals – An Overview of the CFPB Toolkit”; Webinar 2, which was really an overview
of the training. And now we’re actually going to be moving into using the tools, an explanation
of how the tools are covered in the training as well as the toolkit. As has already been covered in the other two
trainings you’ve viewed, the purpose of this training is to provide you with an orientation
to Your Money, Your Goals -the CFPB’s financial empowerment toolkit; to provide you with an
overview of the training for case managers and other frontline nonprofit staff; and finally
to provide you with the tools, knowledge and confidence to provide this training to your
constituency or in your community. The objectives for this webinar are the same
as they were for the other two but they’re, of course, worth mentioning. So, by the end
of this entire webinar series including the one you’re viewing today, you will be able
to describe the key functions of the CFPB and its rationale for developing Your Money,
Your Goals. You already have great sense of this probably. You’ll also be able to define
financial empowerment and differentiate it from other terms used such as financial capability,
financial education, and financial literacy. You’ll be able to describe or explain the
overall organization and content of Your Money, Your Goals. And this was, as you remember,
the key focus of the first webinar. You’ll also be able to list and describe your
responsibilities as a trainer for Your Money, Your Goals. Something that we also covered
in the first webinar. You will-you will be able to explain the tools
or resources you have to plan and implement the training as well as the overall flow of
the training, including key activities and methodologies used throughout the training. So that’s really the objectives for the overall
webinar series. Today, we’re really going to focus on what happens in each content module. This is something you may remember seeing
from the last webinar. It’s a snapshot of the overall flow of the training that you
will be providing either to case managers or to the constituency that you’re training. If you may recall, the training itself kicks
off with an engaging opener activity called “Money and Me.” While it doesn’t relate specifically
to a module within the toolkit, it reflects a lot of the information that’s covered in
Module 4 which has to do with the emotional and cultural influences on financial decision
making. You’ll then move into an overview of the training
and introductions. Again, that’s something that’s covered in the toolkit itself but an
important part of any training. The rest of the training actually pretty much follows
the toolkit in the order that it’s presented. And what we’re really going to be focusing
on today is starting with assessing the situation and starting the conversation all the way
through to protecting consumer rights. So we’re going to begin with Module 2: Assessing
the Situation. Module 2 contains two assessment tools. The first tool is the “Financial empowerment
self-assessment for case managers.” We know that some case managers find the idea of providing
financial empowerment overwhelming. Many case managers feel like they just don’t know enough
about it. The truth is, no one knows everything there is to know about financial empowerment.
Since it covers such a wide range topics, it can be hard to know to where to start if
you do want to learn more – identifying what you know as well as what you don’t can be
a place to start. First, they may see they know more than they think they know. And second,
they will find the areas where they can benefit from a little bit more information or know
how. In the training you’ll ask the participants to complete the financial empowerment self-assessment
which has three sections. Then you’ll review the answers with them and have them in pairs
discuss the reflection questions that you can see on the slide before you. You should
note that the answer key to the self-assessment is actually immediately following the tool
in the toolkit. Be sure to ask participants to not look ahead when completing Assessment
One. Here is an excerpt of the first section of
the Case manager self-assessment which includes knowledge-based questions. The case managers
will be asked to respond “true” or “false” to a series of statements. The next section of the “Financial Empowerment
Self-Assessment” actually has case managers rank how they feel about different aspects
of financial empowerment. So for example, the first statement says “I am satisfied with
the amount of money I save.” They would then rank that as “does not apply” or “strongly
disagree,” “disagree, “agree” or “strongly agree.” This is the third and final section of the
Case manager self-assessment and it basically asks case managers and other frontline nonprofit
staff taking this self-assessment to think about their experience with different financial
products, services and situations. The second assessment tool in Module 2 is
the “Client goals and financial situation assessment.” Rather than presenting on this
tool in the context of the training, you’ll run a role play. You’ll have participants
get into groups of three, each will select a role. One role will be the client and that
person will pretend that they are a client in the context of a case management meeting.
The second role is that of the case manager; their job is really to start a discussion
with the client, kind of following the client’s lead and then introduce the assessment tool
when appropriate. The third role is that of the observer and they’ll watch the discussion
and take notes using a form or questions that you provide. Here are the questions that you might post
for the observer or turn into a form that they can use during the observation of the
role play itself. This is an excerpt of the actual “Client goals
and financial situation assessment.” And you can see it’s designed to be very simple in
terms of the responses, even though the responses give you a lot of information. So for example,
the first question “Do you have financial goals and know how much money you need to
reach them?” – “Yes,” “No,” or “I don’t know.” “Are you in danger of losing your housing
or car because you cannot make payments?” – “Yes,” “No,” or “I don’t know.” Using the responses provided by a client as
well as the answer key, a case manager or other non-profit staff using this tool can
figure out which module or tool to target to start off with. So for example, if someone
answered “no” or “I don’t know” to “Do you have financial goals and know how much money
you need to reach them?” – they could go straight to Module 6. If, for example, looking at question number
five, which asks “Do you have money set aside to cover emergencies or unexpected expenses?”
– if they answer “no” or “I don’t know,” they can start with Module 7 which is “Saving for
the unexpected, emergencies, and goals.” Or go to Module 13 which focuses on financial
products and services. So that’s really how the assessment tool is
set up based on the answer, you know where it is to kind of start with different clients
based on the responses that they provide to the assessment. Because there are other strategies for bringing
up the financial empowerment topic with clients besides the assessment, there are two options
for continuing this dialogue in the context of the training. One is to have tables brainstorm
specific opportunities for beginning the financial empowerment conversations with clients. The
other is actually to act out a skit using the scripts that are provided in Module 3
and having participants react to those skits. So again there are two different options for
continuing this conversation of how do you bring up financial empowerment when working
with clients in the context of case management. Now we’re going to turn to the content modules
and we’re going to start with Module 6 which is “Setting goals.” “Setting goals” is actually the shortest section
of the toolkit as well as the shortest section of the training itself. To begin with, you
want to just talk about the reason for goal setting in the context of a financial empowerment
toolkit. And, of course, that’s goals are all about participants or clients work towards
making a better future. They can help individuals – clients – prioritize how money is spent
so that it goes towards the things that really matter. Goals, when they’re set (especially
using the “SMART Goal” framework) can help individuals track their progress towards getting
the things they want. Then, of course, it just gives a sense of pride when you achieve
things that you set out to achieve. As was just mentioned, the “SMART Goal” framework
is used in this module of the toolkit. SMART means that the goal itself is written in a
way that is specific. A specific goal has a much greater chance of being met than a
general goal. Measurable – which means that someone should be able to their track progress
towards meeting the goal. Able to be reached. Relevant -which is a goal that matters to
the individual writing it as well as time-framed and this just means that a goal has a clearly
defined deadline. Another thing that you’ll teach in the context
of the training is how case managers can help clients figure out how much money to set aside
each week for goals that require money. And this is a very simple calculation: it’s just
the total amount needed to reach a goal (which in some cases may require some research),
divided by the number of weeks to reach that goal. So that’s just counting from now until
the deadline that’s written in the goal to reach that goal. Divide that and that’s the
amount to set aside each week. The reason it’s each week rather than each
month is that the many people with limited resources actually think about their money
on a day-to-day or week-to-week basis as opposed to month-to-month and also because a lot of
people get paid on a weekly basis. And finally, so that this calculation works nicely with
the cash flow which really looks at budgeting on a week-to-week basis as well. In addition to having a form for writing out
the goals and ensuring that they’re SMART goals and calculating the amount to set aside,
there’s also an action plan included with this tool in Module 6. And that’s really taking
the goal and then breaking it down into small steps that someone can achieve as well as
the resources they need to achieve each step, the date to complete each step and when to
complete. And so when all the steps are taken – and if all – they’re achieved as is planned,
the goal should be reached. So for example, say my goal is I want to pay
my bills on time every month starting August 1st. Assuming that lack of money is not the primary
reason my bills are not being paid on time – here are some steps that I might sketch
out in my action plan: * First would be to collect my credit card
statements, my loan payment statements, my utility bills, phone bills, and documentation
of other payments that I make each month. So that would be step one.
* Step two would be to actually go through those and highlight payment amounts and due
dates. * Step three would be to maybe go into one
of the other modules and grab the bill paying calendar tool and set that up so that I have
a visual as to when my bills are due and how much are due.
* The fourth would be to consider using automatic payment methods for some recurring bills or
online bill payment. And so on. So that’s just really about taking a goal
and breaking it down into steps. And it’s a really important part of the goal setting
tool as well as module. The next module is “Module 7: Saving for the
unexpected, emergencies, and goals”. You will want to make sure that you take time to acknowledge
at the outset of this section of the training that for some very low-income clients, saving
may not be their main goal. But you will also want to emphasize that saving even in small
amounts can matter and make a big difference for clients. So you’re actually going to kick this particular
section off with a discussion about what savings is. So you’ll ask participants to share their
own definition of savings and then you’ll share the definition of savings using this
slide. After that, you’ll actually ask participants
[to] list examples of unexpected expenses or emergencies in small groups on a flip chart.
After they brainstorm for a few minutes, you’re going to have them go back and circle those
that they think could be handled with $1,000 or less. You’ll ask them to post their flip charts
and share what they found cumulatively and then you’ll be able to see how many different
kinds of emergencies or unexpected expenses can actually be managed with $1,000. This is really to contrast this idea of emergency
savings with the conventional wisdom that advocates 3 to 6 months’ worth of living expenses.
For many people, that feels like an impossible goal so they don’t even try. $500 to $1,000
does seem possible for many more people -they can imagine it and it can make a very, very
big difference. And, as will be demonstrated by this activity, they’ll see that a lot of
different emergencies or unexpected expenses can really be handled by $1,000. By working
towards that, rather than this large goal right at the beginning, people will be able
to create some emergency savings and then be able to hopefully avoid taking on debt
to cover some of these expenses or emergencies when they arise. Once you go through that activity, you’ll
actually then define what an emergency fund or rainy day fund is and then talk about its
importance in a savings plan as well as an overall financial plan. Not only is it there
to help people cover expenses as they come up, especially those that are unanticipated,
but it’s there to help prevent people from going into debt. In the training, there’s another activity
to help people further understand the benefits of emergency savings and that’s the “Cost
to replace spark plugs on your car” example. It’s in the toolkit as well as in the training
as already mentioned. What you’ll ask participants to do in pairs is [to] look at the information
contained in this chart and then identify both the monetary and non-monetary costs and
benefits of each approach to covering this unexpected or emergency expense. So all of that important introduction information
leads to the first tool which is the savings plan. The savings plan itself is a document
that actually outlines the reasons that someone is saving; the amounts they need to save;
how they’re going to find that money to save; as well as where they’re going to put that
savings – a place that is hopefully safe and secure. Here’s an excerpt of the “Savings plan” with
an example filled in. One really important concept to talk about with case managers is
what to do with money that’s not spent in the effort to generate savings. Not spending
does not necessarily generate savings – it’s just money that hasn’t been spent. In order
to for it to actually be savings that money that hasn’t been spent has to be moved into
either a jar or a shoebox or a savings account or even onto a pre-paid debit card to count
as savings. Often financial education curriculum emphasize the need to cut back to generate
savings but don’t talk about that important step of taking that money and putting it somewhere
to actually set it aside so it doesn’t get spent on other things – that’s how savings
is generated. Another concept you’ll want to talk about
in tandem with savings plan is the Earned Income Tax Credit. This tax credit can actually
be used to jump start savings. It’s actually a benefit for working people who have low
to moderate income. It reduces the amount of federal income tax owed and may result
in a tax refund. And in fact, it does result in a tax refund for many people and it’s one
that they count on. This tax refund is based on income and filing status and information
is outlined in the toolkit. The “Benefits and asset limits” tool is another
tool that has been provided in this module of the toolkit. The reason this tool has been
provided is to make sure that people are aware of the fact that there may be asset limits
when they are trying to save money. Asset limits are thresholds of the amount of assets
or including savings that someone can have without jeopardizing the benefits they receive.
While this information was accurate when the toolkit was published, it’s important to review
it with case managers and add to it any information that they may have from their day-to-day work
as case managers. The third tool, “Finding a safe place for
savings,” has clients examine the benefits and risks of different places to put savings.
A benefit is something that provides an individual with an advantage while a risk is any chance
for loss. Rather than coming out and saying that everyone should put their savings in
a bank or credit union account, this tool has people examine different options for putting
their savings whether it’s a in jar or under a mattress or in an account at a bank or credit
union, or on a pre-paid debit card, or with a family member or friend – all are examined
from the perspective of benefit and risk. Other information you’ll cover in the context
of training associated with Module 7 are: direct deposit and savings – in fact, there’s
a section in the toolkit in Module 7 about this; as well as bank and credit union insurance.
This is obviously included to help people understand that their money is safe and secure
in an institution that is insured either by the FDIC or the NCUA; as well as banking history
reports – a lot of people are familiar with “Chexsystems”, there are other banking history
reports and these can sometimes be a barrier to opening something like a savings account
at a bank or credit union. Now we’re going to move onto Module 8 which
is “Managing income and benefits.” In the training, you’ll actually kick off
this module with a discussion about income – regular income versus irregular income versus
seasonal income versus income that’s a one-time occurrence – much like the Earned Income Tax
Credit that we just talked about. You’ll also talk a little bit about benefits
and how they’re different from income but should be counted as a financial resource
coming into the household and something that should be planned with and budgeted for, as
well as wage garnishments. Wage garnishments are rights given to creditors, including the
U.S. government, to collect money directly out of someone’s paycheck. This can generally
only happen with a court order but there are some exceptions and you’ll use the information
that’s contained in the toolkit itself to explain wage garnishments to the case managers
that you’re training. The first tool that you’ll talk about, not
surprisingly, is something called an “income tracker.” And this is really just a way to
help people understand and categorize as well as document their income on a weekly basis
– not only from their job, which they probably are pretty clearly aware of, but other sources
of income that they may have. It’s pretty common in families with limited resources
that they have multiple sources of income and financial resources that make a patchwork
of income coming into the household. And this – the job of this tool – is really to sort
of break that out and help people understand when that income comes in and how much they
can expect from week to week. The next tool in this module is called “Increasing
cash and financial resources.” And rather than just presenting this tool, you’ll ask
the participants to analyze this tool in pairs. What you’ll ask them to do is circle those
strategies that they think are potentially feasible for their clients; identify strategies
that are missing; as well as think about strategies that are listed that may not be feasible for
their clients. It’s important to acknowledge that some strategies may not be applicable
for the people that they serve and to focus on those that may be feasible for the clients
that they serve. Here you can actually see an excerpt from
tool number 2: “Increasing cash and financial resources.” And this is again, just an excerpt
so there’s a lot more to this tool. For example, there are one-time activities listed, such
as holding a yard sale or garage sale or selling items online or claiming tax credits. There
are examples of ways to increase regular income, such as seeking a raise or additional hours
at a current job or seeking opportunities for training or education that would increase
wages at [a] current job. And so on. The next tool or “Tool 3” actually is called
“Understanding the risks and benefits of cash, paychecks, direct deposit, payroll cards,
and EBT.” And it really looks at the different risks and benefits associated with the different
ways that someone can receive income. Here’s an excerpt of that tool and you can
see “cash” is actually the example. So the definition of cash is included as well as
the benefits associated with it. It’s accepted everywhere and its not subject to garnishment
or other collection – as well as the risks – it could be lost or stolen, some find it
easier to spend cash when they have cash in hand, it’s more difficult to track for personal
budgeting or tax purposes and not all bill payments can be made in cash. And the thing that really makes it a tool,
besides the simplicity of the information and its accessibility is the check boxes:
“This is a good option for me. And where can I get more information?” or “This is not a
good option for me.” The next module is Module 9: “Paying bills
and other expenses.” Module 9 actually begins with that “vote with
your body” exercise that we talked about in the last webinar. To begin with, you’ll actually
define what spending is and then differentiate “needs,” “wants,” and “obligations.” Prior
to this actual section of the training, you’re going to hang up three signs around the room.
You’re going to want them close but not too close. One sign will say “Need,” one sign
will say “Want,” and one sign will say “Obligation.” And then, you’re going to actually read off
a list of different things that people could spend their money on such as paper towels
or a cell phone with data plan or getting your hair cut professionally. And after each
example of an expense that you read, you’ll ask people to go and stand underneath whether
or not they believe that that is a “need,” “want,” or “obligation.” And then you’ll facilitate a discussion because
people will be split on some things. Some people will see, for example, paper towels
as a need, others will see it as a want. And then the purpose of the discussion is really
to help case managers understand the point very clearly that needs and wants are subjective
to a certain extent. And because this is a financial empowerment curriculum, we want
to honor those things that sometimes people identify as needs even if, from where we sit,
they may not be. The first tool in this module is the spending
tracker. What you see before you is a list of the categories used in this tool. (It’s
actually half of the list and it continues on the next slide.) This tool is set up to
be an easy way to track spending on a day-to-day basis and includes categories such as: savings,
debt payments, housing, utilities, household supplies and expenses, groceries, eating out,
which includes meals and beverages. The categories continue on and look at transportation,
health care, personal care, childcare and school-related expenses, entertainment, court-ordered
obligations as well as gifts, donation and other expenses, which is really the catch-all
category. In additional to tracking spending on a daily
basis, participants or clients should be encouraged to do this over a week, a couple of weeks
or even a month. Following the actual tracking, there’s then an analysis section of the tool
so that people can look at where they are spending and where they might want to make
some changes. The next tool in this section is the “Bill
paying calendar.” And it’s meant to be a visual reinforcement of when bills are due. This
avoids late fees, cancellations as well as re-establishment of service fees – all of
which can be very, very expensive. So just as in the last module, there was a
tool for increasing cash and other financial resources – this module has the sister tool
– “Strategies for cutting expenses.” As well as the same process for reviewing it in pairs,
you’ll ask participants – the case managers that you’re training – to review the tool
by thinking about their clients and circling strategies that they think are most feasible
and identifying strategies that missing as well as well as those they think might not
be very relevant for the people that they serve. Here is an excerpt of that tool. So you can
see the first category is “Cutting back on regular or recurring expenses such as: television,
internet, phone, cell phone plan. And this tool actually goes on for three pages. So
rather than having people just come up with, off the top of their heads or by looking just
only at their spending tracker, ways to cut back, this tool is designed to help them get
a jump start on thinking about different creative ways that they may be able to cut expenses. The final tool in this module has to do with
when cash is short, prioritizing bills and other spending. And rather than starting off
with a list of how to do that there’s an exercise that has case managers – the people that you’re
training – examine the consequences of skipping bills. Sometimes people have to make hard
choices about missing payments all together or being late in order to make ends meet.
But it’s also important for them to be aware of the consequences of those actions. And so what you’ll do is have your participants
divide up into four groups. If you have a really large group, you’ll have one or two
or three “Group 1’s,” one or two or three “Group 2’s,” etc. And you’ll basically have
them examine the consequences of, for example, paying rent late versus the consequences of
missing multiple rent payments; the consequences of making a car payment late versus the consequences
of missing multiple car payments; and so on. And this is really a lead in into the actual
tool itself. Tool 4 “Prioritizing bills and spending” has
been included to help clients develop a short-term plan for when their income cannot cover all
of their needs, obligations and wants during the month. People often pay the creditor that
demands payment the loudest or the most frequently. If, and only if, clients cannot pay all of
their bills they need to come up with short-term plans to avoid the long-term consequences
associated with not paying some bills or expenses that result in losing a job, their shelter,
key assets or having legal consequences of not paying obligations, especially those that
have been court-ordered. This tool has been designed to help case managers ask questions
decisions to help clients take those first steps to building that plan. And that brings us to “Module 10: Managing
cash flow.” This particular section of the training begins
with a discussion about what a cash flow budget is. And you’ll basically ask participants
to share what their definition of a cash flow is and it’s basically a projection of how
you’ll get and use cash and other financial resources. You’ll also ask them to contrast
cash flow to a regular monthly static budget by asking “How is a cash flow budget different?” The basic difference boils down to timing
– the timing of income and spending – and this is really key. The reason this is important
is that it’s often the timing of money – not only the amount – but the timing of money
that can sometimes cause people to fall short in a month. And that can be masked in a monthly
budget which is why a cash flow budget can be so useful especially with people with limited
financial resources. You’ll then go through the steps of creating
a cash flow. The first thing will be keeping track of both income and spending for a week
or two weeks, or a month. And we’ve actually just covered two tools to help you do that
from the previous two modules. Then you’ll analyze your spending using Tool
1 “The spending tracker” from Module 9. Finally, you’ll use this information to create a cash
flow budget either using Tool 1, “The cash flow budget template” which is a spreadsheet
format or Tool 2 which is “The cash flow calendar.” You can see that a cash flow budget begins
with the beginning balance for the week. The beginning balance for a week is actually the
ending balance from the previous week. Then it looks at all of the different cash or other
financial resources anticipated for that particular week and you end up with a “total sources
of cash and other financial resources.” Then we look at the spending or the expenses or
the bills that are due that particular week – that gives you the “total uses of cash and
other financial resources.” And then when you subtract that from total
sources of cash and other financial resources, you get your ending balance for the week.
So in this example, you can see that in week one there that the individual is anticipated
to be in balance and have a surplus of $142 which, again, is carried over and becomes
the beginning balance for the next week. And in week two, their budget is also in balance. To ensure people really master this concept
of cash flow budgeting, because for many people it will be new – they’re used to that static,
monthly budget format. We go with an example. And the example is a scenario around Raphael
who is a single parent with two children. You’ll go through these particulars of his
situation and then you’ll actually share with people the example cash flow. Ideally, you
would print this out prior to the training so each person or each team has a printed
copy of the cash flow statement. The cash flow statement, the example of Raphael,
is not in the toolkit. So here is the actual cash flow budget for
Raphael and you can see just quickly that there are some weeks that he actually runs
out of money. When you actually do the scenario analysis, or have the participants themselves
do the scenario analysis, this was one of the things that they’ll be discussing with
their partner is: “What can Raphael do if he anticipates these shortages?”, “What are
some things that can be done to keep the cash flow from going so out of balance on some
weeks?” Here are the questions that you’ll actually
share to help the participants guide their cash flow analysis. After going through the scenario analysis,
you’ll basically share with people that when cash flows don’t balance there are basically
three things that can be done: they can increase their sources of cash, income, or other financial
resources – we’ve already talked about the tool that helps people identify different
ways to do this; they can also find ways to decrease their spending or uses of cash and
other financial resources – and again, in Module 9, there’s a tool designed to help
people think through this. The other strategy is to figure out ways to
match the timing of sources and uses of income where possible – which isn’t always possible
but sometimes it may be. And the third tool in this module looks at
just that – strategies for improving cash flow. The first group of strategies on smoothing
out cash flow are really about timing. Specific strategies include negotiating new due dates;
splitting a monthly payment into two smaller payments; or avoiding large, lump sum or periodic
payments by making monthly payments rather than quarterly or semi-annually. This may
increase their cost but it may make it more feasible in terms of covering that payment
on a monthly basis. This, again, is just an excerpt of this checklist
– there are many other strategies that case managers can look at with their clients if
cash flow is an issue. The next module is one that case managers
will probably find themselves referring to quite a bit and that’s “Dealing with debt.” This section of the training actually starts
with a facilitated discussion about: “What is debt?” Debt is often conflated with the
term “credit” so you’ll also talk about how debt is different from credit as well as the
differences between secured debt and unsecured debt. And of course, in the facilitator notes
all of this is spelled out very clearly in case you yourself aren’t completely clear
about those differences. This is all a lead into an activity – the
“Good debt, bad debt” activity – which uses the methodology “Stand Up or Sit Down.” Basically,
you’re going to want to start this section of the training off with an explanation that
some people think about some debt as “good” debt and some people think about some debt
as “bad” debt. The purpose of this activity is really to
sort of challenge the common wisdom and really identify the fact that debt is debt – debt
is when you owe somebody money – and that there are “bad” aspects of all debt as well
as “good” aspects of all debt and I say that with quotations around “good” and “bad.” And
so really that’s the reason for doing this exercise. And so you’ll basically one at a
time show each one of these debts and have people stand up if they think that the debt
is a “bad” debt and stay seated if they think it’s a “good” debt. And then after each one,
you’ll facilitate a discussion: those that are standing up – “why do you think this is
a “bad” debt?”; if they’re seated – “why do you think this is a “good” debt?” For example, “loan from a family or family
member or friend.” A lot of people will identify this as being good debt. Why? Well, it will
likely have flexible terms; it may be a low or no interest loan; missed payments are not
reported to a credit reporting agency; so those are all good aspects of that kind of
loan. Well, there are some bad things – it can create family conflict or conflict with
friends if that loan isn’t paid as agreed or is never paid. And it also cannot be used
to build credit history so if it is a debt that you’re on time with because you want
to make sure that you’re honoring a debt with a family member or friend, you’re not in any
way improving your credit history. So again, it’s just designed to help people think about
the conventional wisdom around “good” debt and “bad” debt and recognize the fact that
debt is debt and it has different characteristics – some of which are positive, some of which
are negative – and it’s important for people to understand that. The first tool that you’ll introduce in this
section of the training is the “Debt management worksheet.” In this worksheet, people will
basically account for all of the debt that they have. This is something that they’ll
need to collect all of their bills for, get them all in one place, in order to complete.
And the worksheet itself basically has people list in table format the business person or
organization they owe money to, the amount they owe, the amount of their monthly payment,
as well as the interest rate they’re paying and other important terms. This is just so
that they have a realistic idea of the debt that they owe. The second tool in this particular section
of the toolkit – as well as in the training – that you’ll introduce is the “Debt-to-income
worksheet.” The debt-to-income ratio is basically a simple calculation that shows you how much
of your income is going towards paying debt. It’s a good measure of how much income is
basically obligated to debt. So for example, if a debt-to-income ratio
comes out as 40%, that means that 40 cents out of every dollar earned is going to pay
for debt and that 60 cents is left over to pay for things like taxes, food, rent, gasoline
and so on. You’ll explain how to calculate it and it’s
really quite a simple calculation. The hardest thing is coming up with the total monthly
debt payment which is the amount of debt that someone pays per month. So it would be what
the monthly auto loan payment is; it would be what the payment is to the credit card
company each month; it would be what the monthly student loan payment is – all added together
and that is the total monthly debt payment. Divided by gross income – not net income but
gross income. For people to understand debt-to-income ratio
a little bit better, there’s an example provided in the training – not in the toolkit but in
the training – and this is the example. And you’ll have people, again, either with a partner
or in groups of three calculate the debt-to-income ratio for “Shawna” in this example based on
the information provided on this slide. And then have a judgment – they’ll make a judgment
as to whether or not they think that she can afford this new loan as described in the exercise,
given her debt-to-income ratio. This is the slide that provides the analysis
or interpretation of the debt-to-income ratio. This shows the level of debt that clients
may want to consider as the maximum level to ensure that payments are sustainable for
them. It’s divided into renters and homeowners because renters don’t have a mortgage and
therefore don’t have housing debt that homeowners do. So in other words a renter may want to
consider maintaining a debt-to-income ratio below 15% or 20% to ensure that their debt
levels are sustainable. Tool 3 is the “Debt reduction worksheet” and
there are two primary methods for reducing debt outlined in the “Debt reduction worksheet:”
the High Interest Rate Method as well as the Snowball Method. And one of the things that
the worksheet does is highlight the pros and cons of each. So the High Interest Rate Method basically
says if you are paying on all of your debts, if you have any money left over – put that
to paying off the debt that has the highest interest rate first because you’re paying
a lot more for that debt. Versus the Snowball Method which says you
should identify the debt that has the smallest amount owed in total, irrespective of interest
rate, and pay as much as you can to eliminate that debt as quickly as possible. Once that
debt is paid off, you continue to make that payment but obviously not to the creditor
that you’ve already fulfilled your obligation with. You take that same payment and now you
lump it in with the next smallest debt until that one is eliminated. And then you take
that total payment and apply it to the next smallest debt so you’re basically creating
a snowball running down the hill – it continually gets bigger – and you apply it to each debt
as they get bigger. Tool 4 is the “Student loan debt” tool and
it basically looks at the different kinds of student loans that are available, specifically
federal student loans versus private student loans, and then it goes through an explanation
of the different options for repaying student loans as well as some of the key terminology
around student loan debt. One of the things you’ll want to be sure to
highlight in this section of the training is the “Paying for college” tool on the CFPB’s
website. This tool provides information as well as
resources and tools to help prospective students as well as current students research schools,
fill out the FAFSA, choose a loan, compare financial aid packages and college costs across
more than one school, manage money while in school as well as, again, options for repaying
student loans. If you have an internet connection where you’re
training, it would be great to pull this up during the training and actually explore the
tool online with the case managers that you’re training. There’s another exercise for this section
of the training and it basically looks at not only the debt-to-income ratio, but strategy
for debt reduction or elimination. And this is really meant to be sort of a capstone exercise
around this debt module. Because there’s so much information, the example
actually goes over multiple slides so you’ll have to go over it with case managers sort
of slide-by-slide. Ideally, you would actually photocopy these slides and hand them out if
you’re going to choose to do this exercise with the case managers. The last tool in this module is “When debt
collectors call” and it basically looks at your rights and responsibilities around debt
collection. It also includes example letters to write to creditors or debt collectors specifically
asking them to verify or prove debt that’s owed or even to ask them to stop contacting
you. The next module is Module 12: “Understanding
credit reports and scores.” The first thing you’re actually going to do
in this section of the training is define and differentiate the different sections of
a credit report. One of the things to remind the case managers that you’re training is
that while formats vary among different credit reporting agencies, or consumer reporting
agencies more specifically, that they all have these five sections in common even though
they may show up in different orders within the credit reports or maybe be called slightly
different things, depending on the formats used. Within the toolkit you’ll actually see there’s
an example credit report and it is a generic example. While it’s based on some elements
of all three major credit reporting agencies, it does not represent any one of them and
so it’s meant, again, to just give practice in looking at the kind of information that’s
contained in a credit report. And to do this, rather than again just presenting
or talking through the example credit report, you’ll have them sort of go on a scavenger
hunt into that credit report by finding the information that’s listed on this slide within
the example credit report. And, of course, the examples are included in the facilitator
instructions of the training slide deck that you’ll receive. One of the things you’ll want to be sure to
cover with case managers is the reason that credit reports and scores are important. And
that has to do with who actually uses them in decision-making with respect to consumers.
So the first is that a bank or credit union will use them to decide whether or not to
give someone a loan. A lender may also use them to decide what interest rate someone
will pay for a loan, if they are approved. A credit card company will use credit reports
and scores to determine whether or not someone will get a credit card and again, the rate
they may pay. Other service providers like cell phone companies and utility companies
may use them to screen people for deposit levels as well as cost of service. An insurance
company may use reports and scores to determine whether to give someone insurance coverage
and the rates they will actually pay for that coverage. A landlord may use reports and scores
to determine whether or not to rent an apartment to somebody, and again, what level of security
deposit may be charged. Finally, a potential employer may use reports to determine whether
or not someone will get a job. You’ll also want to cover the three major
credit reporting agencies – Equifax, Experian and TransUnion – as well as the way to get
the free annual credit report as a result of the FACT Act at www.annualcreditreport.com. Be sure to inform the people that you’re training
of imposter websites – people get tripped up with imposter websites if they Google “free
credit report” or “free annual credit report” – it’s really important to go directly to
this website. You’ll also want to explain how people actually
get their credit reports through this website – that it’s not simply just pressing a button.
That in fact, you’ll go to this website, you’ll be asked to enter some personal information
and then you’ll be asked to choose – “Do you want your Equifax report, your Experian report,
your TransUnion report?” And then you’ll have to go through the process for each of the
credit reporting agencies separately to get the credit reports from them. So it’s not
a “one-click” process. You’ll also want to explain that credit reports
are generated from information that is provided to them by information furnishers. Information
furnishers are all of the same organizations or businesses that use credit reports to make
decisions. So banks, credit unions, credit card companies, the student loan providers
– are all organizations that provide information to credit reporting agencies and it’s that
information that’s used to actually create the credit reports. So the first tool is obviously going to be
“Getting your credit reports and scores” and it’s a step-by-step in, again, table format,
on how to order your credit report. And again, it’s very straight forward and simple to follow
and there’s also a recording section so that people can keep track of when they ordered
their report and when they received it. Because best practice is ordering and reviewing credit
reports at least once a year from each of the three major credit reporting agencies:
Equifax, Experian and TransUnion. One of the things that will be really important
in this section is to talk about how credit scores are created. And because there are
multiple, different credit scoring models out there, we chose to go ahead and have you
focus on the FICO score because that’s the one that’s most commonly used – between 85
and 90% of the time – when it comes to decision making. And basically, you’ll use the notes
from the facilitator instructions to explain the composition of the FICO score itself,
which you can see in this pie graph in front of you but there’s much more explanation in
the facilitator instructions themselves. So the tools in Module 12 are really meant
to be used together. The first tool has to do with ordering credit reports and scores.
The second tool, the credit report review checklist, will be used to actually review
that credit report that’s ordered. And finally, Tool 3, has steps and tips for improving credit
reports and scores. The thirteenth module is “Evaluating financial
service providers, products, and services.” To be clear, the financial empowerment toolkit
does not focus on banks alone – it looks a financial service providers more generally.
And you can see from this list that financial service providers are many. There are obviously
banks and credit unions but there are also department stores, automobile dealers, check
cashers and payday lenders, online companies, mortgage companies and so on. There are many
different financial service providers that operate within our economy and that’s an important
point for case managers to understand. The first tool in this section has to do with
selecting a financial service provider. And it’s actually something that you’ll have the
participants complete in the training. Rather than prescribing a specific financial product
or service, the toolkit takes the approach of matching need or goal with financial products,
service and provider. And that’s really the purpose of this tool. So as has been explained, this tool was designed
to identify what the client wants or needs to do. And based on their response, they can
begin to identify product or service that meets their need as well as where to get that
product or service. This is the second part of Tool 1 and it’s
basically an answer key for the rankings for what someone did in the first part. So for
example, if someone ranked that they want a safe and secure place to keep their money,
they would learn from this tool that a bank or credit union has savings accounts, checking
accounts or certificates of deposit as secure places to keep money. Or they could go to
a retailer, check cashing store, or online and get a pre-paid debit card – ideally one
set up so that the individual funds are fully insured. This is a financial empowerment approach
to financial products and services – it matches need with product and service with provider. The next tool basically has a list of all
of the different financial products and services that are commonly available at banks and credit
unions. And again, rather than present on this, you’ll actually have people get into
groups of two and you’re going to give them a product or service explanation template
and they’re going to fill it in using these instructions. Here’s an example of what that template looks
like. So they’ll come up with a definition, where someone can get that product or service,
when someone would use this product or service, as well as the benefits and risks associated
with it. They’ll use information in the toolkit as well as from their own experience to fill
this in. And once you give people about five to ten minutes to complete their information
template, each pair will then present their information to the entire group. So it’s a
teach back using these templates. The final tool in this section of the training
is “Opening an account checklist.” And you’ll actually kick off the introduction of this
tool with a facilitated discussion about whether or not anyone can open an account at a bank
or credit union as well as should everyone open an account at a bank or credit union.
The first one is fact-based -“Can anyone open an account?” The answer is no. Someone may
have a negative ChexSystems rating, a poor credit report or they may not have the money
to open an account at a bank or credit union. “Should everyone open an account at a bank
or credit union?” will be an interesting discussion that will really help you understand some
of the opinions of the case managers that you’re training. The checklist itself then
covers all of the things that are needed to actually open an account including the types
of identification banks and credit unions accept for opening accounts. The last module has to do with protecting
consumer rights. The first tool in this section of the toolkit
is identifying red flags and the way you’ll animate this in training is actually using
skits. You’ll actually have people act out different skits where they use some of the
different red flags that someone may encounter with different financial products or service
providers. And the group watching the skit will actually try to identify the red flags
they’re observing by actually using the tools. So this gets them familiar with the tool in
a way that is hopefully fun and engaging. Here are some of the different red flags,
for example, that could be used within a skit – and this is for skit one: steering and coercing,
prepayment penalties, and mandatory arbitration are examples. The second tool in this module of the toolkit
is protecting your identity. And it has a checklist of all of the information as well
as the documents that people should strive to protect. It also includes a list of the
signs of identity theft. The next tool, or Tool 3, is “Submitting a
complaint to the CFPB.” This slide shows the process that a complaint goes through when
it is submitted to the CFPB. Consumers can submit complaints about financial products,
services or providers. They can do this either online or by calling a specially designated
number from the CFPB. One thing important to note about this process is that an individual
can submit a complaint on behalf of someone else. This is what the actual interface looks like
on the CFPB website and again you can see that you can actually submit a complaint on
behalf of oneself or on behalf of someone else. The fourth tool in this section is a summary
of key consumer protection laws. And again, rather than a presentation, groups are invited
to actually read about and then summarize back to the large group, a presentation about
the particular law or regulation that their group has been assigned as well as why that
particular law matters to the clients that they serve. One of the things already mentioned in the
earlier webinars is the resources available at the CFPB’s website. So you’ll want to go
ahead and share this with the case managers throughout the training itself. It’s actually
listed in the toolkit multiple times and again at the conclusion of the training – the general
CFPB website as well as where to go for a complaint. The final thing that you’ll do in the training
is the closing activity as well as administration of the post-training assessment, if that’s
something that you’re choosing to do with your training. Again, the purpose of a closing activity is
basically to provide closure to a training. What we have provided is basically two questions
that you can ask people to respond to using round robin format – which means you go around
the room in an organized fashion, giving everyone the opportunity to speak one more time. You
can of course feel welcome to substitute your own closing activity at this point in the
training. So now, “congratulations” are in order! You
have not only completed Webinar 3-“Using the tools: An explanation of how the tools are
covered in the training” but you’ve actually completed the entire “Your Money, Your Goals:
Training for Trainers.” So now you’re all set to go and train case managers in your
community or your constituency on using Your Money, Your Goals.

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