Educating Youth on Money Matters

by Milt Sharp, Senior Homeownership Specialist, NeighborWorks America

When I was younger, my grandfather would often tell me, “Son, an ounce of prevention is worth a pound of cure.” Educating youth as early as possible about the importance of finances will better prepare them to navigate complex financial decisions later in life. As today’s market has shown, making poor financial decisions can have a tremendous impact on individuals and the communities in which they reside.

To this end financial literacy programs across the country are reaching out to youth in a variety of creative ways to promote economic achievement. These programs use approaches that understand and appreciate youth involvement, youth popular culture, and positive peer influence. Role playing of real life situations — such as someone making the choice to use a check cashing facility as opposed to a bank; or a scenario where an individual needs to choose between saving or purchasing from a rent-to-own outlet — brings the issue home in a way that makes a lasting impression. Inner city youth are faced daily with predatory financial services and need knowledge beforehand to avoid being caught in “money traps.”

Good programs should, of course, cover the standard core content of savings, investing, credit, taxes, insurance and personal money management. But they should also include the influence of advertising. With today’s consumer culture of immediate gratification, it is important to emphasize advertising’s influence on youths’ buying habits and even their self image. Financial literacy can no longer focus just on increasing financial knowledge and skills but should also look at adjusting financial attitudes and behaviors.

Community Development Corporations and banks are natural financial literacy partners to schools in teaching youth on money matters. Many schools offer after-school programs and therefore provide excellent opportunities for financial literacy to be taught at the school by financial service providers and nonprofit organizations. Many banks offer youth savings accounts and savings clubs and also participate in supporting Youth Individual Development Accounts, programs providing a dollar match for a youth’s savings earmarked for post secondary education, small business development, and in some cases purchasing an automobile. Teaching youth about money management while offering savings incentives, can be a powerful combination for getting youth on a sustainable financial path.

Resources:

• Powerpoint presentation on financial literacy for youth
• Jump$tart Coalition: http://www.jumpstart.org/
• Junior Achievement: http://www.ja.org/
• National Endowment for Financial Education: http://www.nefe.org/
• Network for Teaching Entrepreneurship (NFTE): http://www.nfte.com/default.asp

NeighborWorks America Observes Financial Literacy Month by Offering Tips to Get Your Financial House in Order

With slow economic growth, persistently high unemployment, and the foreclosure crisis continuing to make headlines in 2010, NeighborWorks America is observing Financial Literacy Month (April) by offering tips to help consumers strengthen their financial know-how: create a realistic budget, save, cut expenses, and tackle debt.

“Many families are struggling to make ends meet in these challenging economic times,” said Ken Wade, CEO of NeighborWorks America. “Financial education provides consumers with the information and practices they need to take control over their finances, create and manage a monthly budget, pay down debt, and build a financial cushion. Educated consumers also are better able to protect themselves from loan scam artists who are preying on homeowners in today’s tough economy.”

NeighborWorks America’s Financial Fitness Tips include:

• Create a budget. Examine your most recent bank statement. Create a budget spreadsheet armed with information about your wage(s) and how much you spend each month. Categorize your spending. Expense categories can include: Rent or Mortgage, Gas, Groceries, Utilities, Insurance, Car Payment, Credit Card Payment, and more. After you see how much you are making, how much you are spending and where your money is going, you will be better able to create a budget that works for you.


• Cut expenses. Daily expenses like going out for lunch or dinner and frequent trips to the coffee shop add up. After creating a budget and examining your spending over the last month, you will likely see expenses that can be cut, which may add up to monthly savings in your bank account. Instead of buying a daily cup of coffee, make a cup at home. Bring your lunch instead of buying it everyday. And, cook dinner at home with your family or friends instead of meeting up a few times a week. The combination of making coffee at home and a bringing a bag lunch a couple of days a week has the potential to save more than $50 each month.


• Tackle debt. Once you cut unnecessary expenses, you may find a little extra money that can be used to tackle any debt you may have. To be truly financially fit, work on paying down and eventually eliminating your debt by paying more than the monthly minimum payment. Paying the minimum each month could take more than a dozen years to pay off the debt. By paying even a little more than the minimum each month, you are working your way toward financial fitness.


• Build an emergency fund. With each paycheck, make an effort to contribute to a savings account separate from your checking account. Each contribution, no matter the amount, builds a cushion for emergencies down the road.


• Enroll in a financial fitness course at a nonprofit NeighborWorks organization in your community. Financial fitness courses can teach you money management skills that can help put you on the path to decreasing debt and increasing resources. Financial literacy can also help you become more aware of common financial pitfalls – including loan modification scams and predatory lending schemes – and how to avoid them. To find a NeighborWorks organization near you that offers financial fitness courses, visit www.nw.org/network/nwdata/financialfitness.asp.


• Avoid being scammed. If you are facing foreclosure and aren’t sure where to turn for guidance, seek help from a nonprofit HUD-approved housing counseling organization. Avoid companies or people that promise to stop foreclosure or get your loan modified. Avoid companies or people that as for fees in advance to work with your lender to modify, refinance, or reinstate your mortgage. And avoid companies or people that advise you to stop paying your mortgage company and pay them instead. Nonprofit organizations have your best interest at heart and will work with you one-on-one to remedy your situation. The old adage, “You get what you pay for,” does not apply with reputable nonprofits. To find a NeighborWorks organization or other nonprofit HUD-approved housing counseling organization near you, visit www.findaforeclosurecounselor.org. To learn more about loan modification scams and how to avoid them, visit http://www.loanscamalert.org/.

New Campaign Empowers Rhode Island Homeowners to Combat Loan Modification Scams in 2010

For the growing number of Rhode Island homeowners who face the possibility of foreclosure, a new public education campaign is providing vital information to guard against loan modification scams, find trusted help and report illegal activity to authorities.

The national foreclosure rate has reached an all-time high of 8.85 percent, and millions more foreclosures are expected in coming years. In the first quarter of 2010, there were more than 6,413 Rhode Island homes in foreclosure and another 11,728 threatened by foreclosure, an 8.5 percent rate according to analysis of Mortgage Bankers Association Data.

“It’s unfortunate that people who are already struggling financially are being targeted again by fast talkers looking to cash in on their troubles,” said Richard Godfrey, executive director of Rhode Island Housing. “Scammers know that people who are in danger of losing their home are vulnerable and looking for ways to get out. It is important for homeowners to know how to find an agency that is truly acting in their best interest and how to protect themselves from those who are looking to exploit them.”

Funded by Congress during the summer of 2009, NeighborWorks America was charged with coordinating a “Loan Modification Scam Alert” campaign nationwide through its 235 community-based affiliates and other local, state and national partner organizations, including the Federal Deposit Insurance Corporation (FDIC), Department of Housing and Urban Development (HUD), the Federal Trade Commission, the U.S. Department of the Treasury, Fannie Mae, Freddie Mac and the Lawyers’ Committee for Civil Rights Under Law.

“Our campaign is designed to inform borrowers so that they have the information to fend off scammers who are trying to rob them of precious resources and educate others who may be in the position to give advice to those in financial distress,” said Marietta Rodriguez, director of Homeownership Programs at NeighborWorks America.

“An educated consumer is often the best defense. Knowing the warning signs is important for avoiding loan modification scams because the bad guys aren’t always easy to spot. They don’t lurk in dark shadows or operate out of a back alley. In fact, many times, these brazen scammers openly advertise their services and appear to be legitimate business people,” said FDIC Board Member and NeighborWorks America Chairman of the Board Thomas J. Curry.

Information, resources and reporting capabilities are now available around the clock at http://www.loanscamalert.org/ and by calling 1-888-995-HOPE (4673).

The NeighborWorks newsroom as more information about the campaign launch in Rhode Island.

NeighborWorks America Salutes Top Producers With 2010 CEO Award

NeighborWorks America today announced the 2010 honorees for the NeighborWorks America CEO award for outstanding performance in homebuilding, rental housing development, residential rehabilitation, housing counseling, homeownership promotion, volunteering and resident participation.

“These organizations exemplify the high caliber work that all of the more than 235 organizations in the NeighborWorks network do each day to create strong, vibrant and sustainable communities,” said NeighborWorks America CEO Ken Wade. “We are proud of their accomplishments and thankful for their exemplary contributions to NeighborWorks America’s mission to create opportunities for people to live in affordable homes, improve their lives and strengthen their communities.”

Nine NeighborWorks organizations received the CEO Award. Learn more about them in the NeighborWorks Newsroom.

HUD Expands Abandoned and Foreclosed Definitions Under NSP

HUD has announced changes to its Neighborhood Stabilization Program (NSP), which helps communities acquire, rehabilitate and re-sell foreclosed and abandoned properties more quickly and help prevent further decline in hard-hit neighborhoods.

Effective immediately, HUD will classify a property as “foreclosed” if the owner is at least 60 days behind on the mortgage or is 90 days or more delinquent on tax payments. HUD is also expanding the definition of an “abandoned” property to include homes where no mortgage or tax payments have been made for at least 90 days. A property is also abandoned if a code enforcement inspection has determined that the property is uninhabitable and the owner has not taken corrective action within 90 days.

HUD says these expanded definitions will increase the reach of NSP by allowing more properties to qualify, remove existing barriers caused by market conditions, and help state and local grantees to meet a Congressional requirement that they obligate all of their NSP1 funding by September of this year.

More information is available on HUD’s Web site.