America Saves News 202 by gabyion


									Winter 2002

   America Saves
                                   Saver    CLEVELAND SAVER
                                                                                       You Can Build Wealth

   Launches Website
           merica Saves announced in
                                            A Feeling of Trust
   A       March that it was launching

           an interactive website and              ike many Savers, Tony                   Currently, his goal is to save to
   offering individuals free member-               Carmen’s story starts with         help support his current semi-retire-
   ships in the national campaign.                 debts — lots of them. During       ment, which includes playing in a
   Located at,         four years of unemployment, he’d          band that plays Dixieland and big
   the website offers a guide to            relied heavily on his credit cards.       band music. Although he is 69, the
   enrolling as a Saver, information and    Eventually, he said, “the credit card     idea of full retirement is unappealing,
   news about the campaign, tips on                                                   he said. “Retire to what? Four walls
                                            companies caught up with me and
   how to save and build wealth, infor-
                                            took me to the cleaners.”                 and the rent is paid? There’s more to
   mation on how to organize a local
   campaign, and, eventually, links to           Feeling overwhelmed, he turned       life than that.”
   websites for local campaigns. The        to the local Consumer Credit
   site also includes a Personal Wealth     Counseling Service. They helped him
   Estimator that allows individuals to     develop a plan for paying off his                         They put me in
   track their savings.                     bills. “They put me in a comfort                          a comfort zone.
         The America Saves membership       zone,” he said. “I felt this great
   program offers a way for individuals                                                               Tony Carmen
   outside the areas served by local        weight lifted off of me of not know-
   campaigns to enroll as Savers. They      ing what to do.”
   can do so either through the website          About a year ago, Mr. Carmen
   or through an enrollment form that is    paid off his last balance, ahead of
   part of the free Build Wealth Not        schedule. He attributes his success to        He’s also exploring a new busi-
   Debt pamphlet. (To obtain a copy of      two factors — his own personality         ness opportunity. Once that takes off,
   the pamphlet, send a self-addressed,     and the help he got from the credit       he plans to put more focus on devel-
   stamped envelope to America Saves,                                                 oping an investment plan, using the
   P.O. Box 12099, Washington, D.C.
                                            counseling service. “I’m a persistent
   20005-0999.)                             guy,” he explained. “When I have to       financial counseling available
         To become an American Saver,       tackle a problem, I jump on it right      through Cleveland Saves. “Because
   an individual must develop a simple      away.” The credit counseling service      the trust has been established, I
   plan to achieve a wealth-building        helped him get started by developing      would be interested in talking to a
   goal. After submitting their plan, the   a plan for tackling the problem, he       financial counselor. The decisions will
   Saver receives free information          said.                                     be mine.”
   about savings options and strategies                                                   Meanwhile, Mr. Carmen is an
                                                 Because of the faith he had devel-
   as well as a free subscription to this
   newsletter.                              oped in CCCS, Mr. Carmen was              enthusiastic advocate of the services
         The Bank of America                ready to take their advice again when     CCCS and Cleveland Saves can offer
   Foundation supported the develop-        they suggested he enroll as a             individuals seeking to get out of debt.
   ment of these two services. It has       Cleveland Saver. “The bottom line         “Let them draw a picture for you of
   also funded development of a cam-        for me is trust,” he said. “They did      where you’re at and then show you
   paign database, technical assistance     everything they said they were going      how to pay off your debts. It gives
   to local campaigns, development of       to do. I didn’t feel there was any-       you a sigh of relief.”
   an organizing manual that any com-
   munity can use to plan and operate       thing going on there that would be
   a campaign, and publication of this      against my benefit. It gave me a
   newsletter.                              good feeling of trust to go ahead.”

             w w w . A m e r i c a S a v e s . o r g
                                       Savings Strategies
                                       Paying Off a Home Mortage
                                           At the beginning of the year, more      mortgage interest has the effect of low-
                                       than two-thirds of American house-          ering mortgage rates even more.
                                       holds owned their own homes. These              The housing industry has done its
                                       homes not only provided a place to          part mainly by lowering the down pay-
Financial Market
                                       live, they also made it possible for        ment to three percent or less, even for
                                       homeowners to build significant per-        less affluent households. These low
                                       sonal wealth.                               down payments greatly reduce home
    March 2002                                                                     purchase closing costs.
    Money market
                                       AN IMPORTANT SOURCE OF WEALTH                   To obtain a mortgage, however, home
    account               1.09%             For low- and middle-income             purchasers must have a good credit score.
    1-year CD             2.10%        Americans, home ownership represents        Only those who have held a credit card or
    5-year CD             4.24%        the single most important source of         taken out a loan have a credit score, and
                                       wealth. Homeowners build wealth as the      only those who have used credit responsi-
    U.S. Savings Bonds                 value of their property grows — on aver-    bly have a high score. To earn a high
    EE Bond        4.07%               age, five percent a year in the 1990s —     score, make credit payments on time and
    I Bond         4.40%               and as they pay off their mortgage.         do not carry outstanding balances on
                                            This home wealth is called home        many credit cards.
    Mortgage Rates                     equity. It is simply the current market
    30-year fixed rate                 value of the house minus all mortgage       KEEPING A HOME CAN BE HARD
    mortgage           6.82%           debts. Even before the mortgages are            Homeowners experience two major
    15-year fixed rate                 paid off, this home equity represents an    types of problems that could cause
    mortgage           6.32%           important financial asset that can be       them to get behind on mortgage pay-
    1-year adjustable                  borrowed on fairly cheaply.                 ments or even lose their home. First,
    mortgage           5.24%                When all mortgages are finally paid    because they make very low down pay-
                                       off, two good things happen. First, the     ments, their monthly mortgage pay-
    Sources: The New York Times,       homeowner has a substantial asset. The      ments are relatively large. In the cur-
    “Data Bank,” pg. BU 15, March 3,   average home value for all homeowners       rent economic slowdown, payments
    2002 and,
    March 3, 2002.
                                       is close to $150,000. Second, with no       that seemed affordable before may not
                                       mortgage to pay, living expenses drop       be covered by lower incomes.
                                       considerably. This makes it possible for        Second, consumers have been
                                       many retirees, whose incomes are often      increasing their purchase of high-rate
Family Wealth                          lower than before they retired, to have     subprime first and second mortgage

    Home Ownership Rate
                                       more money to spend.
                                       BUYING A HOME IS EASIER
                                           The federal government and the
                                                                                   loans. Compared to current conven-
                                                                                   tional loan rates of around 7 percent,
                                                                                   subprime rates almost always are
                                                                                   greater than 10 percent and can have
    (2001)                             housing industry have made it easier        effective interest rates well above 20
    All households             68%     than ever before to afford a home. The      percent. These predatory loans that
    Under 35                   42%     Federal Reserve Board has helped            are frequently refinanced “strip” equity
                                       lower mortgage rates to historically low    from homes, thus increasing mortgage
    Over 65                    81%
                                       levels. The tax deductibility of this       debt and even threatening foreclosure.
    African American           49%
    Hispanic                   49%
                                        Where to Get Help
    Home Equity (1999)                      Housing counselors can offer advice if you want to buy a home, if you are
    All homeowners $ 89,500             facing foreclosure, or if you need help making your payments on your mortgage.
    Under 35      c $ 50,000            To locate a housing counselor in your community who has been approved by the
                                        U.S. Department of Housing and Urban Development, call 1-888-466-3487.
    Over 65            c.$110,000
                                            In addition, many state and local governments have programs designed to help
    African American $ 59,700           people purchase their first home. Contact your local or state housing finance agency
    Hispanic             $ 70,000       to see what programs are available in your community.
                                            Fannie Mae Foundation offers a free Home Buying Guide. You can order a copy
    Source: U.S. Census Bureau;
                                        by calling 1-800-611-9566. If you have access to the Internet, you can learn more
    American Housing Survey.            at or at
                                            Your local Legal Aid or Legal Services office may be able to offer assistance
                                        if you are facing foreclosure on your home. Contact your local office and ask if
                                        they provide foreclosure prevention services.
A Quarter Saved
    is a Quarter Earned
                                                          Reassess the deductibles on

       o one knows better than                                                                      Send your savings tips to:
       Savers how to find the extra                   your insurance policies. If you can           American Saver, c/o Consumer
       dollar here and quarter                        afford to raise the deductibles,              Federation of America Foundation, P.O.
there that, over time, add up to                      your premiums will drop.                      Box 12099, Washington, D.C.
substantial savings. Here are a                                     MALIK DICKERSON-MCKINNEY        20005-0999.
few of their savings tips.                                                        KANSAS CITY            If we select your tip for publication,
                                                                                                    we will send you a $50 EE Series
                                                          Save several dollars per month
    Buy your children’s clothes at                                                                  Savings Bond (initial value $25). Please
                                                      by removing unnecessary features              include your name, mailing address, and
department stores’ end of season                      on your telephone. If you remove
clearance sales. In other words,                                                                    phone number so we can contact you to
                                                      Caller ID, at about $9 per month,             arrange for your savings bond.
buy winter clothes in the Spring.                     call waiting at about $3 per
Just estimate what size your child                    month, 3-way calling at $3 per
will wear next year and store the                     month, and automatic call back at               If you get a raise, put the extra
clothes until the appropriate sea-                    $3 per month that adds up to a               money in your 401(k).
son. By doing this, you can save                      total savings of $18 per month or                                        MARY ANN FARGO
50 to 70 percent or more on the                       $216 per year.                                                          MAPLE HEIGHTS, OH
regular retail price of clothes.                                                LISA PIERCEFIELD
                                     LAURA C. FAZIO                                                    Look for ways you can trade
                                                                                 COLUMBUS, IN
                                     CLEVELAND, OH                                                 services with your friends and
                                                          Save on a night at the movies.           neighbors to save the money you
    Transfer some of your money                       Many theaters have lower admis-              would have to pay a professional to
from your checking account into a                     sions prices one night a week                do the same job. If you can fix the
savings account (where you are                        (often on Tuesdays), and they may            neighbor’s car, and she can paint
less likely to spend it on day-to-                    even throw in a free small popcorn.          your bathroom, do it.
day expenses).                                                                DEBBIE PAVLESCAK                                     VALORI SANDERS
                                    GALINA ROZINA                           FAIRVIEW PARK, OH                                         KANSAS CITY
                             MAYFIELD HEIGHTS, OH

1. What are major barriers to home ownership?
      a. Low credit score
      b. No savings
      c. Large consumer debts
      d. All of the above                                                                           American Saver is the quarterly newsletter of
                                                                                                    the America Saves campaign, a national pro-
2. What are good reasons to have paid off a home mortgage by retirement?
                                                                                                    gram to encourage and assist Americans to
      a. Dramatic reduction in living expenses
                                                                                                    save and build wealth more effectively.
      b. 100 percent ownership of a major financial asset
      c. Financial peace of mind                                                                    The campaign is coordinated by the non-profit
      d. All of the above                                                                           Consumer Federation of America Foundation
                                                                                                    (CFAF), supported by the Bank of America
3. What are the characteristics of a subprime mortgage loan?
                                                                                                    Foundation and other funders, and advised by
      a. Interest rates usually over 10 percent
                                                                                                    dozens of non-profit, government, and busi-
      b. Higher fees than on a conventional mortgage loan
                                                                                                    ness groups.
      c. Prepayment penalties
      d. All of the above                                                                           Questions about how to start a local savings
                                                                                                    campaign in your area should be directed to:
4. Among those who refinance credit card debt with a mortgage loan, what
                                                                                                    Nancy Register, America Saves, c/o CFAF,
   percentage run up additional credit card debts?
                                                                                                    P.O. Box 12099, Washington, D.C. 20005-
        a. 15 percent
                                                                                                    0999; 202-387-6121 (phone); 202-265-7989
        b. 50 percent
        c. 70 percent
        d. 85 percent                                                                               American Saver Editor: Barbara Roper

Answers: The answer to all four questions is d.
News    F R O M     L O C A L    C A M PA I G N S
                                        207 individuals. Of those, 52 had         The campaign has decided to form
     With a year under its belt since   enrolled as Savers by the end of          its own 501(c)(3) organization, with
its official launch in March 2001,      February. As a result, the campaign       members of the planning committee
Cleveland Saves has held 76 work-       has reached the halfway point in its      serving on the board of directors.
shops, attended by more than            initial goal of enrolling 1,000 Savers.        Northwoods Saves has held
2,200 individuals, and enrolled              As part of its continuing outreach   organizing meetings in three north-
1,300 Savers. Those Savers have         efforts, the campaign has signed up       ern Wisconsin communities. They
made an average monthly savings         45 of its active partners to offer        are beginning to develop marketing
commitment of $60.                      workshop for members of their             material and hope to begin their test
     The campaign is currently con-     organizations. Kansas City Saves will     this Spring.
ducting follow-up calls with Savers     get the program started by presenting          Gadsden County Saves has a
to determine how they are pro-          two of the Department of Labor’s          new coordinator. Dr. Henry Grant is
gressing toward their savings goals     four workshops for Women’s History        the cooperative extension educator at
and to encourage them to continue.      Month. The first will be the motiva-      Florida State University. In January,
     Approximately 60 Cleveland         tional speech about Kansas City           the organizing committee received
Saves sites have been established.      Saves, and the second will focus on       training on how to deliver the moti-
The campaign is launching an            the opportunities and advantages of       vational workshop.
effort to increase that number by       home ownership.                                Milwaukee Saves has held
targeting several types of institu-          The campaign is also busy plan-      organizing meetings that brought
tions with messages on the benefits     ning a Home Buying fair March 23,         together nonprofits, financial institu-
of hosting a Saves Campaign for         which it is sponsoring with the           tions, funders, and government
their constituency.                     Fannie Mae Foundation. The day-           representatives. A working group
     Last November, the campaign        long event is being held in conjunc-      has been established and has begun
held a successful celebration for       tion with the local home show.            campaign planning.
Cleveland Savers, their families,                                                      Arizona Saves continues its
and campaign volunteers that drew       OtherCampaigns                            planning efforts with monthly
about 250 attendees. The event               Indianapolis Saves is planning       advisory meetings. They are
combined financial education with       its official launch this Spring. Plans    currently focusing on services and
fun and fellowship.                     are being coordinated with the city’s     financial products to be provided
                                        mayor, who wants to enroll as the         as part of the campaign.In addi-
Kansas CitySaves                        first Indianapolis Saver.                 tion, campaign organizing efforts
    Kansas City Saves has gotten             Charlotte Saves is beginning         are underway in Seattle and are
the new year off to a good start,       the test phase of its campaign this       beginning in El Paso and
offering 11 workshops attended by       month. It hopes to launch in June.        Philadelphia.

                 w w w . A m e r i c a S a v e s . o r g
                                                                                                            PRSRT STD

       AmericaSaves                                                                                       U.S. POSTAGE
       You Can Build Wealth                                                                             WASHINGTON, D.C.
                                                                                                         PERMIT NO. 8772

       P.O. Box 12099
       Washington D.C. 20005-0999

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