Financial Coaching holiday schedule

Financial Coaching will be closed for the holidays from Saturday, December 21, 2012 to Saturday, January 5, 2013.

We hope you enjoy this time with friends and family.  We look forward to another wonderful year in 2013.

Randolph Brooks Federal Credit Union

RBFCU not only offers a credit builder loan to help clients establish or improve credit, they also offer membership to Foundation Communities' staff and volunteers.  Check out www.rbfcu.org or pick up materials at the Community Financial Center for information about:

• The Credit Builder Loan for Financial Coaching clients:  The money borrowed is secured in a savings account for the term of the loan and dividends are paid on the money while clients are establishing credit.  Once successfully paid in full the money becomes available in their account.  Maintaining scheduled payments for a minimum of six months will allow the payment history to be reflected on their credit report.
• Credit Union membership for you, Foundation Communities' volunteers:  Free cash back checking, RBFCU credit card, online and mobile device services, auto and mortgage loans, and much more.  If you do not live or work in the RBFCU membership areas, you can still become a member because you are a volunteer with Foundation Communities.

Money Habitudes

In October, our Continuing Education gathering (which will be referred to as Featured Resource gathering from now on) focused on practicing coaching.  In conjunction, we debuted our newest resource:  Money Habitudes, a fun, non-threatening activity that helps us explore our habits and attitudes around money.  Money Habitudes cards are availble by request only, as we have a limited supply.  But if you wold like to try the activity yourself, or with clients, we will be happy to let you use them.  Please see the Money Habitudes story below.

How It Started

People unexpectedly began sharing their stories and secrets about money with Syble Solomon, creator of Money Habitudes, during coaching sessions and workshops on life transitions. They ranged from wealthy executives to single parents living on a shoestring. Many were very financially savvy and were saving and investing for the future, including some people living on minimal incomes. Unfortunately, more often seemingly rational, intelligent men and women would confide their irrational behavior related to money. Even though they knew better, they would continue to make poor money choices or never followed through when they had a plan.

Questions Raised

Why would people do this? And why would they suffer shame or guilt, get angry with themselves or accumulate unmanageable debt when they knew they had other options and could have made better choices? Intrigued, Syble decided to research the financial, psychological and behavioral economics literature to see if there were answers. In fact, the relatively new science of behavioral economics studies the patterns of thinking and decision making as it relates to irrational financial behavior. In their book, Why Smart People Make Big Money Mistakes and How to Correct Them, Dr. Thomas Gilovich of Cornell University and Gary Belsky state, “…in the main, we are blissfully ignorant of the causes of most of our monetary missteps and clueless as to how we might correct them.”

Themes

Examples of recurring themes related to problematic money behavior that surfaced in workshops and were repeated in the literature are:

• Having little or no communication about how money decisions are made. 
• Keeping debt, gifts, spending, earnings and investments a secret from a spouse. 
• Knowing there is a need to save and invest for the future but not doing it. 
• Ignoring their financial reality to live a more expensive lifestyle. 
• Living frugally but going into debt for a wedding. 
• Giving generously with no thought about the personal consequences. 
• Having no interest in managing their money and being totally clueless about their finances. 
• Making risky investments or totally avoiding all financial risk. 
• Taking the Challenge

Given the above, Syble became determined to find a way to help people break the taboo of not talking about money and to get them thinking openly and honestly about their relationship with money. Based on her background in education, she knew her solution needed to be interactive, quick and fun. It also had to be non-threatening, non-judgmental and, of course, effective.

Development

After extensive research, Money Habitudes cards were developed as a familiar game-like activity associated with a positive social experience: playing cards. The categories, statements and interpretations were based on the most common themes found in financial, psychological and behavioral economics research as well as popular publications. After being tested on multiple diverse focus groups, the revised cards were reviewed by professionals around the country including consumer educators, financial planners, accountants, psychologists, counselors, personal and professional coaches, military personnel, career counselors, human resource professionals and leaders of financial associations and community programs. They were introduced in 2003.

Matched Savings Program

September’s Continuing Education gathering brought in Alice Gray, our IDA program coordinator, to explain the requirements and opportunities with regard to opening a Matched Savings account with Foundation Communities. As you may (hopefully) know, the Matched Savings (or IDA) program offers select clients the chance to open a savings account in which every $1 that they deposit will be matched by Foundation Communities with $2. The clients have a chance to put this money toward: 1) starting or expanding a business; 2) buying a home; or 3) paying college expenses. For more details on the process of opening an account and the requirements that the clients need to meet, visit the volunteer resource page, and take a look at our featured resource.

During the gathering, Alice also shared with us the story of one of her clients, Veronica, who used her account to open her very own salon. Before entering the program, Veronica rented a chair in an existing salon, but she was unhappy with the owner, whose behavior was inappropriate enough to scare away customers. She had little say in the reputation of the business, and her clients were disappearing due to problems that were out of her control.

Hoping to leave the unprofessional work environment behind, Veronica secured a lease in a different building and put her matched savings toward some of the overhead costs associated with having her own space. After Veronica attended Foundation Communities’ Money Management classes and took the required business classes, she created a business plan, then used her matched savings to bring it to fruition. Veronica effectively paid for only 33% of the costs involved with:

1)      Having the interior freshly painted

2)      Hiring an electrician to install outlets at each ‘station’

3)      Having a new floor installed

4)      Purchasing 2 brand new barber chairs (her husband works as a barber at the salon!)

5)      Purchasing an “Open Sign”

6)      Paying for a year’s worth of insurance on the building (required by the landlord)

7)      Paying her first month’s Gas bill for the building

Even after these expenses, Veronica still had about $260 of her own savings and $520 in matched funds, leaving a total of $780 left to use for the business. She was able to retain some loyal customers and is now developing marketing materials to draw the crowd to her clean, comfortable salon. With time, we hope to see that removing these start-up costs will help her business become self-sustainable.

Clients such as Veronica are being given the chance to make positive change for their financial future, and need to know the support that is available to get them off the ground. If your client matches the basic requirements and is looking to make progress on one of the three qualified goals, you can inform them of this no-risk option. Help spread the knowledge, and help spread the wealth.

Payday Lending

During August’s Continuing Education gathering, we discussed recent findings the Pew Charitable Trusts’ “Payday Lending in America.” Analysis of payday lending statistics has given us a broader understanding of the environments that lead to borrowing, the true costs of these “short-term loans,” and how state legislation affects borrowing patterns. Of the 5.5% of adults who have taken out a payday loan, those with household incomes under $40,000 made up 72% of borrowers. With the income limit for the Financial Coaching Program capped at $50,000, it is safe to say that our clientele is hit the hardest, and most often, by these loans.

The data both returned and implied some interesting inconsistencies about the marketing of payday loans, and the truth about its consumers. While industry advocates claim that these “short-term” loans are meant to be used in cases of emergency only, the research has shown that an average borrower takes out eight loans, and is in debt for an average of five months. In fact, a customer only becomes profitable to the lender if it takes out multiple loans. So while these loans are purportedly meant to be used for emergencies, it comes as less of a surprise to find out that 69% of borrowers use their first payday loan for a recurring expense (rent, utilities, etc.), with subsequent loans often taken out to cover the first. Instead of seeking other means to cover these regular expenses--81% of respondents claiming that they would cut back on expenses if payday loans were unavailable--these borrowers get trapped in a cycle of debt.

Usage of payday loans is shown to have a correlation with some predictive factors, the strongest of which being: renting (as opposed to owning) housing; earning less than $40,000 a year; lacking a 4-year degree; being separated or divorced; and having a minority racial/ethnic background. Most of our clients fit at least one of these criteria, and are thus more vulnerable to payday loan usage.

Another factor that leads to borrowing is a lack of understanding around opaque interest rates. Some of Pew’s respondents verified a confusion between the fees accompanying payday loans with the APR that would normally accumulate on credit-card debt. If a particular lender is charging $15 for every $100 borrowed, many customers will see this as a 15% interest rate, and choose this option over a credit card that charges an interest rate of 23.99 APR. However, the study showed that the typical payday loan has an APR of 391%. Texas, being one of the most permissive states in payday loan regulation, allows for incredibly high fees on each loan. For the same loan that would cost $55 in fees in Florida, a Texan would spend $100.

Our Small Business Coaching Coordinator Lance McNeill has written a brief narrative of the most susceptible borrower, to show how these numbers play out in reality:

Let’s take a look at the scenario of one lady; let’s call her Betty Borrower. She is part of the demographic most likely to be a payday borrower: she’s African American (African Americans are 105 times more likely to use payday lending than other races/ethnicities), she’s 28 years old, divorced, making under $25,000 a year, she never graduated college, and she rents an apartment. Betty didn’t budget very well this month and she has come up short on funds just before her car payment is due. She remembered seeing that fast-quick-easy loan place on the corner, just down the street, so she headed there, passing a few other payday lending retailers along the way. In no time, she walks out of the fast-quick-easy with $375 for her car payment – whew, just in time!

Two weeks rolls by before she knows it and it’s time to repay her loan. Betty owes the $375 plus $56.25 in interest (In 28 states, including Texas, this is perfectly legal). The bind Betty has put herself into isn’t difficult to deduce. Because of the payday loan, her car payment basically went from $375 to $431.25 in the course of a month. Now, she’s coming up short for her rent, which is due in a couple of days, so she has to renew that loan – and the vicious cycle begins. As I mentioned previously, the average borrower rides this cycle 8 times each year! If and when Betty Borrower is finally able to pay off the loan and interest without having to seek out an additional loan just to make ends meet, she will have paid $520 in interest on a $375 loan in the course of a year! For anyone curious, that’s 391% APR and yes, this is entirely legal in 28 states, including Texas.

Many of our clients fit the profile of this repeat borrower, or fall into place with other target demographics of the most susceptible consumers. It is important for our coaches to know the facts about payday loans in order to stem their use among clients, and help them to see the alternative ways to meeting bills. However, it’s often too late in terms of preventative measures. In an attempt to alleviate the burden of overwhelming interest rates, we offer our Financial Coaching clients a chance to reduce that 391% rate to a flat 8% by taking out our Fresh Start Loan. This loan will pay off the clients’ current lender in a lump-sum, transferring the debt, with all payments due to Foundation Communities. We ask that our coaches familiarize themselves with the criteria that the client must meet in order to be considered for the Fresh Start Loan, and to be aware of this as a possible solution to some clients’ situations.

We encourage you to read the entire Pew study for an in-depth view of the study’s results. This month, our Featured Resource on the volunteer resource page is a quiz meant to test your knowledge of Payday Lending.

Child Support for College

THE CHILD SUPPORT FOR COLLEGE PROGRAM

In the Child Support for College Program, program participants have the opportunity to earn up to $500 in incentives for opening and contributing to a child's college savings account. Besides earning incentives, program participants also actively participate in Foundation Communities' Financial Coaching Program.  More information for clients is available on our web site.

Limited time offer:  Starting August 1, 2012, the first 15 people who open a college savings account through the Child Support for College program get a $25 HEB gift card!

More information for Financial Coaches:

If you are working with a client who receives or is paying child support, feel free to tell them about the Child Support for College Program.  We currently have a dedicated Investment Coach who is helping clients choose and open their college savings accounts (only the Texas Tuition Promise Fund and the Texas College Savings Plan are eligible for the incentive).  Since these types of accounts are regulated, it is very important that the rest of us refrain from giving advice regarding choosing an account or the options within the account.  The client can look through their options on their own and decide, or they can meet with our dedicated Investment Coach to help them decide.  

If a client is interested in participating in the Child Support for College Program, they will:

• Fill out additional paperwork for the Child Support for College Program (ask the Financial Coaching staff for the forms)
• Meet with an Investment Coach, who will help the client decide on which of the two qualifying college savings accounts is appropriate for their family
• Open a college savings account, with the Investment Coach's help, if needed

More details about the program are included on the web page, as well as additional resources for those considering saving for their child's education.

Child Support Contacts

Chris Giangreco from the Attorney General's Office visited the Community Financial Center to give coaches and staff an overview of Texas' Child Support laws. The presentation covered many of the questions that our coaches encounter with their clients, including information about collection and disbursement.  We now have, for clients and coaches alike, a list of hotlines that can explain the rights and procedures concerning child support. These resources can provide the assurance and knowledge needed to take action.

Child Support Program

(800) 252-8014

Access and Visitation Hotline

(866) 292-4636

Family Violence Legal Line

(800) 374-4673

Family Law Hotline

(800) 622-2520

Get Child Support Safely (for families who have experienced family violence)

(800) 799-7233

This list will also be on the bulletin board in the coaching office.

As always, let us know if you have any questions.

More Resources!

Hi everyone,

I'd like to share a few more resources that we have added to the blog and the Financial Coaching office:

FINANCIAL CALCULATORS
In the links section of the blog, you will now see a link to "Financial Calculators from Certified Tax Coach."  The calculators can be really helpful in our work with clients.  For example, there is a budget analyzer, a couple of debt repayment tools, a college savings planner and lots more.  Take a look!

INFORMATIONAL BROCHURES FROM CONSUMER ACTION
We have lots of great brochures from an consumer advocacy organization, Consumer Action.  They are over a variety of financial topics, such as tracking expenses, repairing credit and preparing to buy a home.  They will be in the Client Forms drawer in the Financial Coaching office.  Feel free to read through them and give them to clients!

Thanks coaches for all you do! 

Erika

Program Update 4/9/12 - Free Life Insurance, Free webinars

Hello Financial Coaches,


NEW Featured Resource on our Volunteer Resource Web Page!  MassMutual's LifeBridge Program.  


Under the program, MassMutal pays all the insurance premiums for a $50,000, 10-year term life insurance policy. That insurance policy gets issued to a trust at no cost to the insured individual. But if an insured parent or legal guardian passes away while the policy is in force, the trust pays $50,000 in education costs for the deceased person's children. And your children have up to 10 years after your death, or until age 35 (whichever is later) to use this educational benefit.

To qualify for the insurance, you have to meet these criteria:

• You must be between the ages of 19 and 42
• You must be the parent or legal guardian of one or more dependent children under the age of 18
• You must be a permanent, legal U.S. resident
• You must be employed full or part-time and earn between $10,00 and $40,000 annually
• You must be the only parent or legal guardian in your household who has applied for the insurance
• You must be in good health as determined by MassMutual's underwriting guidelines

Consumer Credit Counseling Services offers 100 Webinars in April

During April, Financial Literacy month, Consumer Credit Counseling Services will offer 100 webinars focusing on 27 different personal finance topics, ranging from credit scores and getting out of debt to buying a home and preventing foreclosure. Included in the topics will be six new webinars:

• Student Loan Affordability

• Life After Foreclosure

• Building Wealth

• Asset Protection and Insurance

• The 4 C's of Credit

• Alternatives to Pay-Day Loans

A full schedule is available at www.cccs.net.  

Participants can register online to attend the free webinars which start as early as 8:30 a.m. CT and are offered as late as 10 p.m. CT Mondays through Saturdays. Please feel free to forward this information to others who may benefit from this opportunity.  

Happy Financial Literacy Month everyone!

Program update March 16, 2012 - Payday Lending Ordinance; Austin RISE Week

Understanding the CREDIT ACCESS BUSINESS ORDINANCE (Ordinance against predatory lending practices) and How to File a Complaint

As of January 1, 2012, the Credit Access Business Ordinance is in effect to protect consumers from certain predatory lending practices. Credit access businesses typically offer payday and auto title loans. 

The entire ordinance can be read here: http://www.ci.austin.tx.us/edims/document.cfm?id=157368

Sections of the ordinance that would most affect our clients would be:

-      A credit access business cannot offer a payday loan that exceeds 20% of the consumer’s gross monthly income.

-      For motor vehicle title loans, the loan may not exceed the lesser of:

o   (1) three percent (3%) of the consumer's gross annual income; or

o   (2) seventy percent (70%) of the retail value of the motor vehicle.

-      There are now restrictions on the number of times a client can renew/extend their loan:

o   All loan payment extensions may not be payable in more than four installments. Proceeds from each installment must be used to repay at least 25% of the principal amount of the extension of the loan. An extension of consumer credit that provides for repayment in installments may not be refinanced or renewed.

o   Lump sump payments of consumer credit may not be refinanced or renewed more than 3 times. The minimum payment due to refinance or renew an extension of consumer credit must reduce by at least 25% of the principal amount of the extension of consumer credit so that the extension of credit is paid in full after a maximum of three renewals or refinances.

o   An extension of consumer credit that is made to a consumer within seven business days after a previous extension of consumer credit has been paid by the consumer will constitute a refinancing or renewal.

-      If a client requests an extension of consumer credit, the credit access business (lender) must provide a referral list with consumer credit counseling services available through non-profit agencies.

If your client or someone you know has a payday or auto title loan and you feel that a credit access business has violated this ordinance, please file a complaint.

TO FILE A COMPLAINT:
Please contact the city by phone, email or in writing at:
City of Austin
Telecommunications & Regulatory Affairs - Credit Access Business Program
P.O. Box 1088
Austin, Texas 78767
Telephone: 512-974-2999
Email:  tarainfo@austintexas.gov

Austin RISE Week 2012: March 26-30, 2012

RISE Week offers entrepreneurs a combination of interactive learning sessions, inspiring keynotes, unique competitions, funding opportunities and celebratory networking events. The online platform makes it easy to navigate the choices and manage your busy schedule.

There are TONS of amazing opportunities for small business owners, self-employed, and non-profits (social entrepreneurs) and all FREE**!!!

**You will be asked to provide credit card information for any event you RSVP for, but it will only be charged if you no-show or cancel within 24 hours of the event. If you attend the event or cancel with more than 24 hours notice your credit card will not be charged.

Check out all the events here:

https://www.riseglobal.org/sessions/day/2012/03/26

All Financial coaching clients who indicated that they are self employed received this information as well, but if one of your clients is self employed, remind them of this great opportunity!

Program Update March 7, 2012

THANK YOU

There aren’t enough words to say how much we appreciate all of you. 

We called on you to post your availability on My Volunteer Page, and the next day, we had full availability again! Many of the clients on the list have appointments scheduled and we are continuing to schedule the rest of them, as well as new clients.  Your availability has made all the difference in our scheduling process.

We asked for your feedback regarding client follow-up and you had some great ideas!  We have a volunteer dedicated to conducting follow-up this spring and he will incorporate some of your ideas into the plan.  We are currently participating in a national demonstration, which is why we are particularly interested in getting responses from all participants who are willing to give it. Your ideas will help make that happen!

We asked for your comments regarding a new scheduling system and your concerns and comments let us know that we are on the right track - we can all agree that My Volunteer Page is not ideal for scheduling!  We will have training for Appointment-plus soon (see below).  For now, I would like to address a couple of the concerns you had:

• Concern:  I'm concerned that clients would not utilize the system. Perhaps allowing coaches to directly schedule appointments with clients would be more helpful.
• Solution:  Clients will be able to self-schedule online, but that is not the only way appointments can be scheduled.  Staff and volunteers can also schedule appointments if the client is not comfortable or unable to do it themselves.

• Concern:  I think it would be important that coach contact info is not given out.
• Solution:  Clients will be able to schedule an appointment directly with their existing coach without having access to any of the coach’s contact information.  All notifications and reminders that clients receive will come from my email address.

APPOINTMENT PLUS DEMONSTRATIONS

We will hold three 30-minute demonstrations on how to set up and use Appointment-Plus.  They will all be virtual, so you can join the presentation from anywhere you have a computer with internet access and a phone.  The demonstration is optional.  You will receive a user guide, which has all the Appointment-plus setup information in it, but if you would like to see the process, feel free to join us at one of the following demonstrations. Sign up for a session on My Volunteer Page.

Tuesday, March 20, 10-10:30 am

Wednesday, March 21, 12-12:30 pm (this will replace our monthly continuing education gathering)

Thursday, March 22, 5:30-6 pm

Thank you again!

Erika Leos

Financial Coaching update January 4, 2012

Happy 2012 everyone!  It’s going to be a great year!

We need your help on Saturdays 9am to 1 pm

During tax season, we ask for some additional support from Financial Coaching volunteers.  We need volunteers to be at the reception desk at the Community Financial Center to greet and direct clients and volunteers, give Financial Coaches their clients’ files, collect the files at the end of the sessions, and answer basic questions where possible.  If you are available one or two Saturdays a month between January 14 and April 14, we would greatly appreciate your help.  You will get all the information you need to do this work and will have the support of the Community Financial Center staff and volunteers.  Please email me if you would be interested in helping out on Saturdays.

Savings Bonds and incentives for clients

Clients of the Community Tax Centers who allocate a portion of their refund to purchasing a savings bond are eligible to receive a $25 HEB gift card thanks to grants from Opportunity Texas and the City of Austin. For more information on savings bonds and how clients can claim their $25 gift card, please click here.

Don't forget, the nine Community Tax Centers open between January 13 and January 30.  See the full schedule on the Community Tax Center web page.

Employer sites no longer available

Over the last year and a half, in partnership with United Way, we have offered financial coaching to the employees at select employer sites (such as Dresser Wayne, LifeWorks and SafePlace). That project has come to an end, and we will only have Financial Coaching sessions at the Community Financial Center.  Thank you to those of you who participated (and those who offered to participate) in helping interested employees. Through this project, we were able to help 90 employees. Any employees who want to continue meeting will be directed to the Community Financial Center.

Thank you for all you do!

Erika Leos

Financial Coaching Coordinator