Monday, February 10, 2014

Privacy breaches offer ‘teaching moment’ for financial education

By Pam Bailey, NeighborWorks America blogger

One of the most effective ways to stay relevant to your community, build support and attract positive attention is to tie your services and message into “hot topics” in the media and around the kitchen table. One of those hot topics these days is the security of personal data, triggered by the theft of credit and debit card numbers and the personal information — including names, email addresses, phone numbers and home addresses — of as many as 70 million Target customers.

This conquest of hackers of corporate America made big news. However, while it was indeed one of the biggest such breaches of privacy in U.S. history, it was only the latest in an increasing trend. Also last year, the Barnes & Noble bookstore chain reported that someone had planted software in PIN-pad devices at 63 of its stores in nine states, stealing data from cards’ magnetic stripes when swiped. And it’s not just chain stores that are at risk. In January, the U.S. district attorney in Manhattan announced indictments of 13 people for installing Bluetooth-enabled, banking-data-gobbling skimmers at gas stations.

Financial coaching is offered by NeighborWorks Blackstone River Valley both individually and in classes.
Participants listen closely in one of NBRV's financial-
education classes. 
NeighborWorks Blackstone River Valley (Woonsocket, RI) recognizes a “teaching moment” when it sees one. Drawing on the expertise of its financial-education coaches, it responded with a list of tips for preventing identity theft on its website and in its e-newsletter, which it sent to its 1,000-plus subscribers as well as to more than 1,000 clients. Readers are directed to contact the NBRV team for a personal credit analysis. (Now, that’s a newsworthy call to action!)

“How to protect personal data has always been an important part of our counseling program,” says Ainsley Morisseau Cantoral, director of resource development and communications for NWBRV. “But with identity theft in the news, our homeownership staff and I saw an opportunity to reach out to a broader audience.”

Cantoral is passionate about her organization’s outreach programs because she knows what it feels like to be faced with a financial crisis. Several years ago, someone stole her Social Security number and used it to obtain a credit card, putting her into serious debt. Her family also had experience the foreclosure crisis firsthand.  Working to promote NWBRV's Homeownership Center is an ideal “match” for her.

Ten years ago, NWBRV was among the first NeighborWorks network members to open a homeownership center.  A credit review was a standard element of the coaching the organization provided potential homeowners. However, four years ago, NWBRV began broadening its financial-education services in response to a worsening economy in which credit was becoming more difficult to understand and improve for a broader population.  And in 2011, the Local Initiatives Support Corporation (LISC) chose NWBRV as one of the partner agencies to run a state Financial Opportunity Center. Through the center, residents can access employment counseling, personal financial-management assistance and help in accessing public benefits such as food stamps and health care insurance. Recently, to serve a greater number of residents, NWBRV decided to supplement the center’s four-week-long financial-management series with six, stand-alone, one-hour workshops on specific topics such as improving your credit score.

“When we were brainstorming, it became clear that our clients’ needs are very diverse, and the series couldn't do justice to them all,” explains Cantoral. “For example, in one series, the participants might include a homeowner facing foreclosure mitigation, someone transitioning to rental unit from the local homeless shelter, and another individual preparing to buy a home for the first time. Their financial coaching needs are very different but our curriculum was trying to be ‘everything to everybody.’"

Data security will be among those topics, as NWBRV continues to adapt to respond to the changing needs and concerns of its community.

Sunday, February 2, 2014

Tax time is ideal platform for financial-education outreach

It's the time when residents across the country think about preparing their tax filings -- and that often translates into stress for a lot of people, especially new homebuyers facing the task of itemizing for the first time. For organizations that offer financial education and counseling programs, it's an ideal opportunity to build your community visibility and reach new clients. The op-ed below was issued nationally by NeighborWorks America, but could easily be adapted for placement in local media, newsletters, etc. 

Don't be 'taken' this tax season

By Marietta Rodriguez, vice president of mortgage programs for NeighborWorks America

Marietta Rodriguez
All of the data aren't in yet for 2013, but it's safe to assume that hundreds of thousands of people became first-time homeowners last year. Becoming a homeowner also means that many people for the first time will find it beneficial to itemize their tax returns. The advertisements about using a paid, professional service for completing and filing tax forms are filling the airwaves, newspapers and other media. Most of these advertisements promise friendly and fast service. But few if any of these ads disclose the cost.

According to a study by the National Society of Accountants, the average cost of tax-preparation services in 2012 individuals without itemized deductions was $143 for a 1040 form and an accompanying state tax form. The same survey found that the cost to have a longer, itemized tax return completed -- required by most homeowners -- was $246.

To put those costs in the context of everyday household expenses, $246 is slightly above the average monthly winter utility bill forecast by the U.S. Energy Information Administration.

How to avoid the cost of tax preparation fees

But taxes are complicated, especially for consumers who have never itemized deductions before, which is usually the case for first-time homeowners. So, isn't using a professional tax preparer a good idea?

It is a good idea to seek trained help, especially if it is available at little to no cost. And that kind of help is available for many people, especially those with low- and moderate incomes, whether homeowners or not.

More than dozens of NeighborWorks organizations and their local partners are ready to work with taxpayers on their forms. NeighborWorks organizations and other community-based nonprofits offering tax preparation services typically do so as part of the Internal Revenue Service's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. The VITA program is limited to people who make less than $51,000 -- about the median income in the United States -- while the TCE program is limited to filers who are 60 years or older.

In 2012, more than 92,000 people volunteered to help and more than 3.3 million returns were filed by all VITA sites around the country-- all at no cost.

The attraction of 'fast-money' tax services

Many advertisements for tax-prep services also promise fast refunds – a prospect that is particularly alluring to low-income individuals and first-time homebuyers. However, these refund advances or loans should be avoided.

The truth is, refunds from tax returns filed electronically are available  within a week or two, making the fees charged for on-the-spot "advances" of highly questionable value. According to an analysis of 2012 refund programs by the National Consumer Law Center, the average annual interest rate charged for a quick refund loan exceeds 100 percent. No homeowner would be willing to pay such a rate for a mortgage, and there's no reason anyone should pay that kind of  fee just to receive the money they earned.

So collect your W-2 and other financial documents for 2013 and head over to one of the hundreds of locations that offer free tax-prep services.  A list of locations can be found on the IRS website. It's worth it.