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Fall 2001 American America Saves Saver KANSAS CITY SAVER You C


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									Fall 2001

   America Saves
                                  Saver    KANSAS CITY SAVER
                                                                                      You Can Build Wealth

   Campaign Expands                        Getting disciplined to save
           merica Saves continues to

   A       enroll new savers and expand
           into new communities. By the
   end of September, Kansas City           B
                                                 eth Mayes wasn’t looking for
                                                 financial help when she went to
                                                 her local police station earlier
                                                                                     always try to think about how I can
                                                                                     save money. It’s just a discipline
                                                                                     thing. I think, where were you all
   Saves had signed up more than 200       this year. She needed to report her       these years that you didn’t know to
   savers, and Cleveland Saves was         license plates stolen so her car would-   do this?”
   nearing the 1000 mark. Broad coali-     n’t be ticketed.
   tions in Indianapolis, Charlotte, and       But while she was waiting, a
   Gadsen County, FL had begun plan-       poster for Kansas City Saves caught                      I always try to
   ning campaigns in their communi-        her eye. “I thought, this is good for                    think about how
   ties. And organizers were beginning
   to build coalitions in Northern
                                           the neighborhood,” she said. So she                      I can save
   Wisconsin, Seattle, and Phoenix.        took down the information and start-                     money.
         Like the programs already         ed attending meetings.                                   Beth Mayes
   underway in Cleveland and Kansas            Ms. Mayes was ready for the mes-
   City, these new campaigns are           sage Kansas City Saves had to offer.           Kansas City Saves also helped her
   intended primarily to assist the        “Two years ago, the Lord put it on        with budgeting, keeping better track
   financially vulnerable -- those who     my heart to save,” she said. At the       of her check account balance, and
   have lost jobs or suffered cata-        time, she had been building up credit     making a monthly priority of setting
   strophic expenses, those who are        card debts, shopping first and worry-     money aside. Just as important,
   over-loaded with debt, and those        ing about how to pay for it later. “I     though, has been the support and
   with little or no savings.              had too many credit cards, and I          encouragement she’s gotten from the
         The national program of                                                     program. “It was a good feeling
   America Saves is also taking off.
                                           used them more than I should.” She
   Non-profit credit counseling agen-      carried over her debt, making mini-       knowing I could call someone who
   cies and Cooperative Extension          mum payments, and shifted debt            said, ‘yeah, you’re doing the right
   offices each are developing cam-        from card to card. “It was like a         thing.’” She also enjoys the sense of
   paigns for their members.               dependency.”                              companionship it provides. “I want
         The program got a big boost in        When she started attending            to be around people who are saving
   July, when Providian Financial          Kansas City Saves meetings, she had       money and living within their
   announced a two-year, $200,000          already made a start toward paying        means.”
   grant to support local and regional     off those debts. The meetings gave             Last year, Ms. Mayes managed to
   campaigns. All of the money from        her useful tips on how to save money,     pay off, and cut up, two of her credit
   Providian will be passed on in grants   like saving her extra change in a jar,    cards, and her goal is to cut up
   to help in the organization of these                                              another two by the end of the year.
                                           cutting out the unneeded services on
         Using funding from an earlier     her telephone bill, and cutting down      When she gets her debts paid off, she
   Bank of America Foundation grant,       on pay tv.                                has no intention of going back to her
   Consumer Federation of America,             Since joining Kansas City Saves,      old ways.
   Consumer Credit Counseling Service      she has taken that message and run             “Ten years down the road, when
   of Northeast Ohio, and WECO have        with it. Instead of eating her lunches    it comes time to retire, I don’t want
   provided technical assistance,          out, she takes a brown bag lunch to       my children to have to take care of
   including many site visits, to the      work each day. She’s also cut back        me. I want my money saved. I want
   new campaigns. They have also           on entertainment expenses, shops          my money invested. I want to be
   developed an organizing manual that     more carefully at the grocery store,      taking care of myself, with my own
   any community can use to plan and       and has decided she and her husband       money.”
   operate a campaign..
                                           can get by without a second car. “I

            B u i l d                        W e a l t h                       N o t              D e b t
                                         Savings Strategies
                                         Managing Consumer Debt
                                             Can you only afford to make mini-       services or shifting credit card debt
                                         mum payments on your credit cards?          from card to card. That can make your
                                         Do you worry constantly about finding       situation much worse.
                                         the money to make monthly loan pay-              Even refinancing consumer debt with
Financial Market
                                         ments? Do you borrow more money to          a mortgage loan is often a mistake.
                                         pay off old debts?                          While your loan rate may be lower, you
                                             If so, your debts are out of control.   are spending the savings you have accu-
    October 2001                         But there is hope. With some discipline     mulated in your home — savings that
    Money market                         and some patience, almost anyone can        you will almost certainly need later in
    account      1.39%                   reduce their debts and start to accumu-     life. And, most people who refinance
    1-year CD    2.52%                   late wealth.                                debts with a home equity loan continue
    5-year CD    4.10%                                                               to accumulate consumer debts — a sure
                                         WHY PAY OFF DEBTS?                          recipe for financial disaster.
    U.S. Savings Bonds                        Americans spend more than $75
    EE Bond        4.50%                 billion a year just on interest and fees
                                                                                     HOW TO REDUCE YOUR DEBTS
    I Bond         5.92%                 on their credit cards. That’s more than          The first step in getting out of debt
                                         $750 per family — $750 that buys            is to stop borrowing. That may mean
    Mortgage Rates                       them nothing in the way of food or          cutting up your credit cards or, at least,
    30-year fixed rate                   clothing or health care.                    locking them away in a safe place.
    mortgage           6.64%                  Those who make only minimum                 To stop borrowing, you have to stop
    15-year fixed rate                   credit card payments or who roll over       spending more than you earn. So, make
    mortgage           6.10%             high cost payday loans fare far worse.      a budget and cut out any expenses you
    1-year adjustable                    They can end up paying much more            can. While you’re at it, figure out the
    mortgage           5.57%             just in interest than the amount they       most you can afford to pay each month
                                         originally borrowed.                        to reduce your consumer debts, and
    Sources: The New York Times,
    “Data Bank,” pg. BU 13, October           But the costs of debt are more than    make those payments religiously.
    21, 2001. U.S. Savings Bond rates    just financial. Debtors say they lack            If you have debts on more than one
    from www.savingsbond.gov,                                                        credit card, either pay off the card with
    October 22, 2001.
                                         peace of mind. They feel financially
                                         insecure all the time. And debts put a      the highest interest rate first and work
                                         strain on families. Money is the number     your way down to the lowest rate card,
                                         one topic of family arguments. Large        or pay off the smallest loan first and
Family Wealth
                                         debts can turn those arguments into a       work your way up to the largest.
                                         family crisis.                                   Once you’ve paid off your debts,
                                                                                     avoid the temptation to start spending
                                                                                     again. Instead, take that monthly pay-
    Average Household                    WHAT NOT TO DO                              ment and begin to save it. That should
    Consumer Debt                            The solution to debt problems is        give you a cushion the next time an
    All consumer debt*                   not using commercial credit repair          emergency strikes.
    (6/2001 est.)      $15,000
    Credit card debt
    (6/2001 est.)        6,300            Where to Get Help
    Households Seeking                        In most communities, there are agencies that can help you manage your
    Relief from Debts                     debts. The most helpful and available are non-profit Consumer Credit
                                          Counseling Services (CCCS). CCCS counselors can work with you privately to
    Bankruptcy filings                    help you develop a budget, outline options, and negotiate with creditors to repay
    (6/2000-                              your debts. Call 1-800-388-2227 to locate the office nearest you.
    6/2001)            1.4 million            In many communities, Cooperative Extension offices offer workshops, home-
                                          study courses, and other services to help people manage their money, including
    Credit counseling                     their consumer debts. Cooperative Extension offices are listed in the blue pages
    clients (2000)    1.1 million         of the phone book under county government.
    *Excludes mortgage debt.                  If your debts are too large, you may want to consider bankruptcy.
    Source: Federal Reserve Bulletins,
                                          Bankruptcy can give you a fresh start, but it is a serious step that can damage
    American Bankruptcy Institute,        your ability to get credit for years. Call your Legal Aid or Legal Services office
    National Foundation for Credit        for advice. If you don't qualify for their services, ask them to refer you to a
                                          bankruptcy attorney.
A Quarter Saved
    is a Quarter Earned
                                                             Take advantage of “90-day

       o one knows better than                                                                                   Send your savings tips to:
       Savers how to find the extra                      same as cash” deals, but only if                        American Saver, c/o Consumer
       dollar here and quarter                           you have the cash on hand to pay                        Federation of America Foundation, P.O.
there that, over time, add up to                         for the item. When you make the                         Box 12099, Washington, D.C.
substantial savings. Here are a                          purchase, put money for the pur-                        20005-0999.
few of their savings tips.                               chase in a 3-month CD and let it                             If we select your tip for publication,
                                                         collect interest. At the end of the                     we will send you a $50 EE Series
    I repaid a loan with automatic                       three months, you can use the cash                      Savings Bond (initial value $25). Please
payments deducted from my direct                         plus the interest to pay off the                        include your name, mailing address, and
deposit paycheck. Instead of stop-                       item.                                                   phone number so we can contact you to
                                                                                                                 arrange for your savings bond.
ping the deductions when the loan                                                      HAROMMA DICKERSON
was repaid, I have the amount                                                                KANSAS CITY
directly deposited into a savings                            The best way to save money is                          Save a couple of dollars (or
account. This is my emergency                            to make sure that it starts in your                    more) per month by packing sand-
fund, and I don’t miss the money                         savings account. Get your pay-                         wiches and chips for lunch in
as much as I would if I were mak-                        checks via direct deposit. It is too                   reusable containers. Plastic sand-
ing the deposits myself.                                 easy to ask for an “extra” twenty                      wich bags cost about $1.50 for 50
                            ESTER E. CRAWL-BEY,          dollars cash when you deposit your                     bags. If I use four per day (for two
                                      CLEVELAND                                                                 children), I would be buying two
                                                         own paychecks. If your employer
    When washing windows, use                            doesn’t have direct deposit, ask                       boxes per month — at a cost of
newspaper to wipe them clean.                            why. It may be for lack of interest.                   about $36 dollars per year. I can
Newspaper eliminates streaks,                                                                    JERRY MUNK     buy a four-pack of reusable con-
leaves windows sparkling, and                                                             SILVER SPRING, MD     tainers for about $3 total.
saves the money you would spend                                                                                                                  LISA PIERCEFIELD
                                                             To save money, shop at thrift                                                        COLUMBUS, IN
for expensive paper towels.                              stores rather than department stores.
                                    GAIL KEEGAN                                                 LITA PRESTAMO
                                    MENTOR, OH                                                      CLEVELAND

Q. What do most experts consider to be a risky level of consumer debt for
   a family with an income of $50,000?
   (a) More than $5,000 (b) More than $10,000                                                                    American Saver is the quarterly newsletter of
   (c) More than $20,000 (d) More than $30,000                                                                   the America Saves campaign, a national pro-
   A. More than $10,000. Most experts think that a consumer debt to income ratio of 20 percent is risky. That    gram to encourage and assist Americans to
   debt would include credit card debt and installment loans, but not mortgage debt.                             save and build wealth more effectively.

                                                                                                                 The campaign is coordinated by the non-profit
Q. If you made only the two percent minimum payment on a $2,000                                                  Consumer Federation of America Foundation
   credit card debt (at a 15.04% interest rate), how many months would                                           (CFAF), supported by the Bank of America
   it take to pay off this debt completely?                                                                      Foundation and other funders, and advised by
   (a) 13 months (b) 38 months (c) 84 months (d) 169 months                                                      dozens of non-profit, government, and busi-
   A. 169 months, and you would end up paying more than $2,200 in interest on top of the $2,000 borrowed.        ness groups.

                                                                                                                 Questions about how to start a local savings
Q. If someone rolls over a $100 payday loan for a year, how much inter-                                          campaign in your area should be directed to:
   est are they likely to owe?                                                                                   Nancy Register, America Saves, c/o CFAF,
   (a) $30 (b) $60 (c) $120 (d) More than $300                                                                   P.O. Box 12099, Washington, D.C. 20005-
   A. Since payday loan rates typically range between 300% and 400% (and are as high as 1000%), a
                                                                                                                 0999; 202-387-6121 (phone); 202-265-7989
   borrower would be likely to owe more than $300 in interest.                                                   (fax); nregister@consumerfed.org.

                                                                                                                 American Saver Editor: Barbara Roper

News    F R O M       L O C A L      C A M PA I G N S

ClevelandSaves                               KansasCitySaves                           OtherSavingsCampaigns
     In the six months since its official         Kansas City Saves continues to            Dozens of organizations are
kick-off, the Cleveland campaign has         expand its outreach efforts with new      participating in monthly working
really taken off. By the end of              partners and programs.                    group meetings in Indianapolis,
September, the campaign had held                  The Local INvestment Com-            and task forces have been set up
56 workshops, attended by 1,133              mission (LINC) — an area-wide             for detailed planning in such areas
people, and signed up 900 Savers.            community organization — has              as education and organizational
     Both the Inter-Continental Hotel        begun promoting Kansas City Saves         recruiting. The campaign will
and the Counsel for Economic                 in the many neighborhoods where it        begin program testing this fall in
Opportunities of Greater Cleveland           has Caring Community sites and has        preparation for a spring 2002
include Cleveland Saves workshops in         incorporated the program into its         launch.
their new hire orientation programs.         training for people who want to offer          Since beginning planning
Cleveland Savers have been featured          at-home child care services.              meetings in May, Gadsen Saves has
in the local media. And Savers at                 In October, the Church               drafted a service plan, developed a
three area employers have organized          Community Organization (CCO)              brochure to use with potential
themselves into Savers Clubs.                invited Kansas City Saves to make         partners and members of the pub-
     Many Savers have taken advan-           its brochure available at an event        lic, and received early publicity in
tage of popular free services offered        that brought together 700 individu-       the local newspaper.
to by the campaign, including a 30-          als from different denominations.              Charlotte Saves has organized
minute phone fiscal fitness check-up              Central Bank has run a promo-        a broad coalition of non-profits,
with volunteer financial advisers and        tional campaign in local newspapers       government agencies, and busi-
the opportunity to participate in free       encouraging area residents to deposit     nesses to plan a savings campaign.
technical office software training           their federal tax rebate checks rather    The president of Bank of America
classes offered by the Cuyahoga              than spend them. The bank offers          of the Carolinas is a key leader of
County’s Workforce Investment                $50 to those who enroll as Savers,        this effort, which plans to test
Board.                                       attend a seminar, deposit the check       services next spring and launch the
     All this activity is building           in a Savers account, and leave the        campaign that summer.
toward recognition of the Cleveland          money there for six months.                    Initial planning meetings have
Saves 1000th Saver at a community                 As a result of its efforts, Kansas   been held in Phoenix, Seattle, and
savings celebration scheduled for            City Saves had enrolled 217 Savers        northern Wisconsin. In addition,
November 17. At that event, several          by the end of September.                  Louisville, Reno, Las Vegas, and
savings bonds will be given away, as                                                   Jacksonville are exploring develop-
will game tickets donated by the                                                       ing campaigns.
Cleveland Indians.

         B u i l d                          W e a l t h                        N o t              D e b t
                                                                                                               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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