the high cost of being poor

Document Sample
the high cost of being poor Powered By Docstoc
					                          the high cost
                          of being poor
                          in washington state
food | transportation | housing | financiaL services
How to address the higher prices faced by Washington’s lower-income families




                COMMUNITY VOICES
                       —
               PrOPOSEd SOlUTIONS
                focus group and community
                      survey findings
                            research team
                             brenda anibarro
                                mina yoo
                              anjulie ganti
                                soya Jung
                               bob watrus



              research funded with grants from
                   the paul g. allen family foundation
                      the annie e. casey foundation



                       anchor organizations
 associated ministries of tacoma             center for the well-being of
                                                africans in america
    Lummi ventures program
                                         nw native asset building coalition
       voices of spokane
                                         statewide poverty action network
    refugee women’s alliance



                       member organizations

annie e. casey foundation • children’s alliance • church council of greater
    seattle • city of seattle office of civil rights • oneamerica • making
   connections, seattle-King county • paul g. allen family foundation •
 refugee women’s alliance • seattle-King county asset building coalition
  • united indians of all tribes • united way of King county • washington
    budget & policy center • washington state asset building coalition •
   ywca clark county • council for the homeless • vancouver church of
christ • winter hospitality overflow shelter • st. paul’s Lutheran • columbia
   Legal services • seiu 775 • salvation army • opeiu 8 • benton/franklin
  county community action council • washington state commission on
         equity & fairness • La clínica • pasco multicultural network




       riding sound transit photos, cover and page 9: matt Lutton
                the high cost of being poor
                    in washington state

                                           Community Voices
                                                  —
                                           Proposed Solutions



                                                     Contents



INTrOdUCTION.................................................................................................... 4
FINdINgS ................................................................................................................ 5
    Food ..................................................................................................................... 6
    Transportation ................................................................................................. 8
    Housing ............................................................................................................10
    Financial Services ..........................................................................................13
rESEArCH APPrOACH ANd dEMOgrAPHICS .........................................20
                                                        more and more
                                                        families in washington
                                                        state are finding
                                                                                   the high cost
                                                        it difficult to meet
                                                        basic living expenses.
                                                                                   of being poor
                                                        adding insult to injury,   in washington state
                                                        many families living
                                                        on lower incomes who are already financially strapped may end
                                                        up paying more for healthy food, automobiles, insurance and
                                                        housing. with limited options to juggle day-to-day obligations,
                                                        some are forced to turn to alternative financial services such as
                                                        high-cost mortgages or payday loans, and become trapped in a
                                                                                                   cycle of debt.
                                                                                                  what are the impacts
                                                                                                  for people living on
                                                                                                  a lower income in
                                                                                                  washington state? in
                                                                                                  2008, seven community
                                                                                                  “anchor” organizations
                                                                                                  in seattle, spokane,
                                                                                                  tacoma, the tri-cities,
                                                                                                  vancouver and the
                                                                                                  Lummi nation near
                                                                                                  bellingham partnered
The High Cost of Being Poor in Washington State




                                                                                                  to ask about the
                                                        effects of things costing more when living on a limited income
                                                        in washington, and about the difficult economic choices families
                                                        make to have enough to pay for basic needs.
                                                        we found that when things cost more for those with less to
                                                        spend, families living on lower incomes struggle with increasingly
                                                        precarious economic situations. this report highlights our
                                                        findings illustrating these day-to-day challenges, and also makes
                                                        policy recommendations for mitigating the high cost of being
                                                        poor in washington state.



                                                  ––
        the high cost of being poor
            in washington state
Do everyday necessities actually cost more for people who can least afford
to pay it? Our focus groups and community survey found that people
struggling to make ends meet pay a higher price for the same goods
and services. It is no surprise that limited income translates to limited
purchasing power, but our findings show that these price disparities
intrude into key areas of daily life.

                         nutritious food is not readily available at affordable
            food        prices for many families living on low incomes.
                         market selection is limited, prices are high.

                         for many, cars are closely tied to employment
                         security, and some people can only get to their low-
transportation 
                         paying jobs by paying a premium for insurance and
                         higher prices for vehicles.

                         mortgage rates may be higher for houses in
                         lower-income neighborhoods, and paying an
                         unsustainable portion of income toward the
         housing 
                         american dream of homeownership puts families at
                         risk for future economic precariousness. for many,
                         buying a home is out of reach altogether.



                                                                                        The High Cost of Being Poor in Washington State
                         Lower-income families are forced to juggle financial
                         commitments to pay for day-to-day necessities.
        financiaL        since having less money may limit access to
          services      traditional banking options, people end up using
                         alternative financial services to pay bills—and get
                         trapped in a cycle of high-cost debt.


All data in this report, unless otherwise noted, is drawn from community
survey respondents. All quotations are directly from focus group
participants.




                                                                                  –5–
                                                                      FOOD               Lower-income neighborhoods often lack
                                                                                          a decent supermarket. people struggle
                                                                                          to find affordable, convenient sources for
                                                                                          nutritious food for their families.
                                                        Some low-income families—particularly those in rural areas—live in a
                                                        neighborhood without a grocery store at all and must depend on overpriced
                                                        convenience stores. While 83 percent of community-survey respondents reported
                                                        that they have adequate access to grocery stores, some attribute discrimination—
                                                        both race and class—to the condition of the store itself and the quality of the food it
                                                        carries.

                                                                                                                        “High prices. Poor
                                                                                                                        quality of food,
                                                                                                                        especially the
                                                                                                                        produce... If you drive
                                                                                                                        just a couple miles
                                                                                                                        down the road...
                                                                                                                        outside the black
                                                                                                                        community...the
                                                                                                                        prices and the food is
                                                                                                                        different.”



                                                          nutritious food, including fresh produce, is more expensive.
                                                           some families are forced to trade off nutrition to save money.
The High Cost of Being Poor in Washington State




                                                        Many people expressed frustration that they can’t afford the food they would
                                                        choose to feed their family.

                                                           “Get some hotdogs, pork and beans, and bread, water, there will be no milk tonight
                                                           because that 10 dollars is already gone... Tighten your belts kids. Got to go pay
                                                           the light bill, to keep the power on so you can cook something. When we can get
                                                           something to eat, you gotta have a stove to cook it on.”

                                                        For those who have family members with health challenges or on special diets,
                                                        forgoing the more expensive, more nutritious food may not be negotiable:

                                                           “For us, that’s been a big challenge because our son has to have it, so we didn’t pay
                                                           our electricity bill.”


                                                  ––                                                                              FINdINgS—FOOd
  free or subsidized meals for children
   may help make ends meet—but may
   not meet parents’ nutritional standards.
Parents with school-aged kids may have the option
of free or reduced-priced meals—but the sacrifice is
nutrition:

   “I really can’t make a lunch for 40 cents. But then I don’t
   want them to eat the school lunch, because it’s all
   processed, packaged food that they reheat. There’s no
   nutritional value.”

  the quality of food is worse than in wealthier neighborhoods.
The discrepancy in the quality and availability of stores forces many to leave their
neighborhood to access the foods they want, at increased cost.

   “It’s like a gallon of gas just to get [to a better supermarket]. And when I’m there, I’m
   struggling to afford it, to get it all together. I just want to be able to go to my local
   grocery store and buy the same nutrition.”


                                       FooD:
                                  ReCommenDations
     › offer tax incentives to grocery stores that locate in low-income
       neighborhoods.
     › expand federal income guidelines for food stamps.


                                                                                                     The High Cost of Being Poor in Washington State
     › strengthen child-nutrition initiatives by offering reduced-cost or
       free school lunches and a summer lunch program.
     › increase availability of locally grown fruits and vegetables at food
       banks statewide.
     › invest in grocery delivery programs for homebound seniors and
       people with disabilities who cannot otherwise gain sufficient
       access to groceries and food banks.




   FINdINgS—FOOd                                                                               –7–
                                                                  tRansPoRtation
                                                          people need reliable transportation to get to their employment,
                                                           but cars come at a steeper
                                                           price for those with less
                                                           money to spend.
                                                        People living on lower incomes are
                                                        more likely to pay more for the vehicle
                                                        itself, pay a higher finance rate, and
                                                        pay a higher insurance rate—but
                                                        many must have a car to get to their
                                                        workplace or to get their children to
                                                        childcare so parents are able to work.

                                                           “I financed, but...had to get a friend
                                                           to co-sign. [Then] my car broke down and I couldn’t get a loan to get the repairs
                                                           made, so I was able to find a credit union to lend me the money, but with a lot of
                                                           stipulations on it and a high monthly payment.“



                                                                                               without cash to buy a car outright, either new or
                                                                                               used, people are forced to finance. Finding a loan
                                                                                               for a new (more
                                                                                               expensive) car
                                                                                                                          Financed their car
                                                                                               may be easier              purchase through:
                                                                                                                                                   Percent
                                                                                               than buying
                                                                                               used, even                             dealership    42%
The High Cost of Being Poor in Washington State




                                                                                               though terms                                 Bank    23%
                                                                                               may be more                         Credit union     30%
                                                                                               than they can                         Credit card     2%
                                                                                               afford. Some           Other (family, friend, etc.)   3%
                                                                                               have to find a
                                                                                               co-signer, and still pay very high interest rates because of
                                                                                               poor or minimal credit.

                                                                                                “I sometimes have to just pay half of my car
                                                                                                [payment] and then pay the other half as soon as
                                                           I can to be able to buy food for the house and gas for the car. But I always catch up. I
                                                           have to keep that car.”




                                                  –8–                                                                   FINdINgS—TrANSPOrTATION
 public transportation is
  not a viable choice for
  many respondents.

 “You’d have to leave at like 4 o’clock
 in the morning. And they don’t run
 that early.”

 “Not with the type of jobs we
 have. I would love to use public
 transportation, but I can’t take clients with me on public transportation.“

 “We have tried to figure out how we could carpool but there’s no way when we’re
                                        going to meet with families and different
                                        sites. And the transportation system...is
                                        really narrow... I would have to walk 15
                                        blocks to the bus and then transfer twice to
                                        get to work.“

                                                       tRansPoRtation:
                                                      ReCommenDations
                                          › expand community-based programs
                                            that promote automobile-ownership
                                            opportunities for low-income
                                            residents by offering competitive


                                                                                             The High Cost of Being Poor in Washington State
                                            pricing and reasonable financing
                                            options.
                                › encourage banks and other
                                  traditional financial institutions to
                                  develop automobile loan options
      tailored to the needs of people living on lower incomes.
   › engage government with private insurers to develop low-cost
     or below-market-rate insurance pools for qualifying low-income
     drivers.



 FINdINgS—TrANSPOrTATION                                                               –9–
                                                                › change the funding
                                                                  distribution formulas to
                                                                  devote a higher proportion
                                                                  of existing federal dollars to
                                                                  mass transit.
                                                                › develop and implement
                                                                  transportation planning
                                                                  policies that encourage
                                                                  transit-oriented
                                                                  developments, and
                                                                  increase connectivity
                                                                  among neighborhoods
                                                                  and communities for all
                                                                  transportation modes.




                                                                       HoUsinG               homeownership builds
                                                                                              wealth, is an investment
                                                                                              for the future and provides
                                                                                              security and stability—
                                                               but for many buying a home is out of reach financially.
The High Cost of Being Poor in Washington State




                                                           Buying a home is often a family’s largest lifetime purchase, but mortgage and
                                                           insurance rates may be higher for people buying a home in a lower-income
                                                           neighborhood. Most people agree that homeownership is the “American dream”—
                                                           and for respondents who do not own their home, it is their hope for the future, even
                                                           if currently financially out of reach:

                                                              “Homeownership, for the average joe, is the number-one tool for building wealth.
                                                              For some of us, it’s the only tool for building wealth.”

                                                           Beliefs about homeownership increase the financial risks people are willing to take
                                                           to own a home. Many respondents equate homeownership with not just financial
                                                           stability, but also family stability:




                                                  – 10 –                                                                       FINdINgS—HOUSINg
   “I like the idea of
   owning a home,
   because it not
   only gives me a
   sense of security,
   but for my kids
   and grandkids
   that there’ll
   always be some
   place that they
   can stay if need
   be.”



Forty-three percent of community-survey respondents had either been homeless
themselves in the past, or had a family member who had been homeless.

  bad credit or lack of credit raises interest rates and mortgage
   payments.
In the quest for homeownership, people may enter into alternative arrangements
that may be financially precarious in the future, especially when full information is
not disclosed.

   “I didn’t have any credit...so I’m paying, but it’s in my son-in-law’s name. .. The
   [lender] told me I’d be able to refinance within a year...but we already went, and
   we couldn’t put it in my name, and we couldn’t refinance it, and the payments are


                                                                                                  The High Cost of Being Poor in Washington State
   getting higher.”


  families living on lower incomes are much more likely to be sold
   a high-cost mortgage, and lenders are less willing to negotiate
   better terms when selling high-cost mortgages.

   “When we finally were able to buy a house...we didn’t have a down payment, but
   they gave us a 100% loan, which was a much higher interest rate ... [S]o our house
   payment right now for a less-than-800-square-foot house is higher than when I
   lived in...a 3000-square foot house.”




   FINdINgS—HOUSINg                                                                      – 11 –
                                                                                                          mortgage-assistance
                                                                                                           intervention comes too late for
                                                                                                           families struggling to make ends
                                                                                                           meet every month.
                                                                                                     Twenty-two percent of respondents
                                                                                                     believe they are in danger of losing their
                                                                                                     home because they cannot meet housing
                                                                                                     costs. Respondents were frustrated with
                                                                                                     mortgage-assistance programs, which
                                                                                                     they felt were not proactive and came too
                                                           late: after a homeowner has already missed a mortgage payment.

                                                            when purchasing a house, differences of even a few percentage points in interest
                                                            rates can translate to thousands of dollars. Using a higher percentage of income
                                                            for housing is not sustainable for earners up to $60,000 annually, putting them at risk for
                                                            foreclosure.
                                                                                 monthly housing costs as percentage of income
The High Cost of Being Poor in Washington State




                                                             renting translates to lack of autonomy. owning your own
                                                              home gives you the freedom to make improvements, including
                                                              boosting energy efficiency to cut costs.
                                                           Respondents who rent expressed frustration that they did not have as much control,
                                                           including the ability to make energy-efficient improvements that save money in the
                                                           long term.



                                                  – 12 –                                                                             FINdINgS—HOUSINg
   “I think if I owned my own home and didn’t rent, I’d be able to take care of some of
   the insulation problems. My winter bills for [heat] top out at $600 a month. “



                                     HoUsinG:
                                 ReCommenDations
     › ensure that foreclosure-prevention programs are available before
       crisis or eviction is imminent.
     › promote responsible home-mortgage lending through
       partnerships with financial institutions.
     › encourage private lending institutions to create low-cost
       mortgage-market alternatives that can “crowd out”bhigher-
       priced lenders.
     › provide home-ownership counseling and financial education
       to help people avoid unnecessary high-cost mortgages and
       predatory-lending practices.
     › establish a task force or committee to negotiate with lending
       companies to eliminate predatory features of home-purchase
       agreements. city ordinances and the support of large loan
       funders such as fannie mae can offer leverage for this type of
       negotiation.




                                                                                                   The High Cost of Being Poor in Washington State
                                                                        FinanCiaL
  people prefer to use traditional
   financial services, but not every                                    seRViCes
   option is available to those living
   on limited incomes.
People with less money to spend end up paying a disproportionate amount of
their income on high-priced financial services—such as check cashing, payday or
refund-anticipation loans—rather than utilizing lower-cost banking or credit union
accounts. Most of the people we surveyed who don’t have a bank account are unable


   FINdINgS—HOUSINg                                                                       – 13 –
                                                           to use a bank or credit union because they do not
                                                           meet the requirements for having an account,                          Annual           Percent
                                                                                                                                 Income           Banked
                                                           or have been denied because of past banking
                                                           history.                                                                         $0      20%
                                                                                                                                   $1–$10,000       53%
                                                                                                 income level may              $10,001–$20,000      76%
                                                                                            determine bankability.
                                                                                                                               $20,001–$30,000      93%
                                                                            Higher incomes corresponded to higher
                                                                                                                               $30,001–$40,000      96%
                                                                            bank-utilization rates, with 88 percent of
                                                                          community-survey respondents reporting               $40,001–$50,000      93%
                                                                           they hold a checking or savings account.            $50,001–$60,000     100%
                                                                                                                               $60,001–$70,000     100%
                                                                                                                               $70,001–$80,000     100%
                                                           Sixty-seven percent of those who report using
                                                                                                                               $80,001–$90,000     100%
                                                           alternative financial services also have an account
                                                                                                                             $90,001–$100,000      100%
                                                           at a bank or credit union, and 45 percent use
                                                           multiple alternative financial services.                                 $100,000+      100%


                                                              “I would prefer to use my bank, any day. [But
                                                              because of unpaid medical bills] I couldn’t even get a secured loan through my
                                                                                      bank... And so really, my last option I had was to go a payday
                                                                                      loan place. I knew that was dangerous, and I really didn’t
                                                                                      want to do it, but I really didn’t want my kids sitting in the
                                                                                      dark and cold. [But it’s] going to throw me into such a loop.”
                                                                                        “[Because of past credit challenges] I have to go to the
                                                                                        payday places and they take out whatever they want for
                                                                                        cashing [my checks].”

                                                                                 Respondents cited distribution of misinformation or a lack
                                                                                 of culturally competent services. One respondent, whose
                                                           mother did not understand the system because of a language barrier and incurred
The High Cost of Being Poor in Washington State




                                                           unreasonable overdraft charges, suggested:
                                                              “What the bank needs to do is maybe have writing in our language to explain...
                                                              before opening an account, this is what is going to happen when this happens...
                                                              [Banks] are ripping people off who [don’t] understand the language.”


                                                             reason for not having a bank account      Percent   past experiences can also be a barrier
                                                                                                                 to utilizing traditional banking. While
                                                               lack of identification/documentation      6%
                                                                                                                 not everyone has the option to open a bank
                                                                                        Credit score    24%      account, some respondents avoid banks
                                                              Account closed by bank or credit union    26%      because they feel uncomfortable discussing
                                                                   To prevent garnishment of wages      12%      their financial history, or distrust banks and
                                                                       Previous negative experience     23%      choose not to give up control of their assets.


                                                  – 1 –                                                                  FINdINgS—FINANCIAl SErVICES
  many families must constantly juggle financial obligations just
   to have enough money for basic needs, and limited banking
   choices may lead to an
   inescapable cycle of debt.
   “You have to have milk. You have
   to have bread. What are you
   going to do? You have to borrow it
   somewhere...but once you start doing
   it over and over and over, you’re just
   juggling. Really juggling. Somebody is
   always up in the air.”

Many respondents depend on high-
interest credit cards, or negotiate with creditors for extra time:

                                       “Creative financing is what I do. I live from
                                       paycheck to paycheck, so sometimes I have
                                       to juggle and call on a bill and say I’ll pay next
                                       month because something else, either food or gas
                                       or something else is more important than paying
                                       my heat bill. “


                                       “[Sometimes I overdraw my account because] I
                                       have to feed my kids. ...[The fee is] $24, but my
                                       kids have food.”

                                       “That’s what I have to do, rob Peter to pay Paul.



                                                                                                           The High Cost of Being Poor in Washington State
                                       Go get that payday loan, pull it back out, go to
   the bank, put it right back in, minus [what] you have to pay for the cost for the loan.”


      once people get behind, they enter a               Consumers of alternative
                                                                                        Percent
                                                          financial services used:
    cycle that is nearly impossible to break.
   Respondents recognized that using alternative                         Payday loan     51%
   financial services is a poor decision in the long                   Check cashing     36%
   term, but were forced to turn to these services                        Pawn shop      32%
           because of unforeseen expenses—like                direct-deposit advance     26%
     medical bills—or because they could not get             refund-anticipation loan    18%
               money from a bank or credit union.                        rent to own     12%




   FINdINgS—FINANCIAl SErVICES                                                                    – 15 –
                                                                                                          reason for using payday loans     Percent
                                                                       financial obligations are
                                                                       overwhelming for many                                    Utilities    41%
                                                                       families. They go into debt                    rent or mortgage       45%
                                                                      to pay for daily necessities and                         gasoline      48%
                                                                        then get further into debt to                         groceries      49%
                                                                        cover their original debt and                      Medical bills     13%
                                                                        their continued basic needs,
                                                                                                                  Household necessities      14%
                                                                                  which are constant.
                                                                                                                              Bank fees      28%



                                                                                                    “I figured out, I spent $600 last year in fees
                                                                                                    [for payday loans]. But I can’t get out of that
                                                                                                    cycle... We just don’t make enough money
                                                                                                    [to cover basic necessities], even though I’m
                                                                                                    working full-time.”


                                                                                                           use of alternative financial services
                                                                  Living on a lower
                                                               income means less
                                                             access to mainstream
                                                                 financial services.
                                                            Using alternative financial
                                                             services can trap families
                                                                     into a vicious and
                                                                  expensive cycle that
                                                             hijacks precious financial
                                                                             resources.
The High Cost of Being Poor in Washington State




                                                             people’s family history
                                                              strongly affects how
                                                              they view and manage
                                                              money as adults.
                                                           Many respondents who were not
                                                           exposed as children to discussions
                                                           about money wished they had
                                                           been:




                                                  – 1 –                                                                  FINdINgS—FINANCIAl SErVICES
   “With my family, there wasn’t a whole lot of discussion about money... I remember
   talking with my friends...about getting an allowance. And it was like, what’s that?
   We never wanted for anything, but we never discussed anything either... I feel like
   I’m behind the curve on some things because if I had had that education earlier in
   my life, I would certainly be doing things a little differently than I am now.”


           Where people get their                     Plan for
                                               Now
            financial information                     Future
                                                                 people wish they
                        Friends and family     62%     37%       had better sources of
           Community-based organization        20%     29%       financial information
                      Bank or credit union     40%     35%       than are available. Many
                         Financial advisor     14%     46%       agreed that young people
                       Financial education     8%      25%       should receive financial-
                                    Internet   42%     31%       consumer education,
                                Television     25%     17%       particularly about credit,
                                 Brochure      19%     14%
                                                                 before leaving high school.
         Other (newspaper, magazine, etc.)     11%      9%



  people need better access to education and information about
   money and credit.
Common barriers to getting good
financial information included difficulties
understanding the language or financial
terminology (37 percent), not knowing
where to start or whom to ask (46 percent)
and concerns about confidentiality (18
percent). Many also cited a lack of trust in


                                                                                                        The High Cost of Being Poor in Washington State
the information available, prohibitive cost
of paying an advisor, and shame or guilt
when discussing financial matters.


              Percentage with a credit card    59%

       Average monthly payment for those
                                               $988
      who pay off their balance each month
        Average monthly payment for those
                                               $310
                             who do not




   FINdINgS—FINANCIAl SErVICES                                                                 – 17 –
                                                             credit is a “necessary evil” and people feel defined by their
                                                              credit scores.

                                                              “I think credit is unfair, but it’s a necessity. I don’t think you’ll ever get what you really
                                                              want out of life without playing the game.”

                                                              “[Growing up] I was told credit was not a good thing—stay away from credit cards.
                                                              My understanding of credit now is that in order to participate in the dominant
                                                              culture that we live in, we need to have credit... I look at it as a necessary and useful
                                                              tool, but...a very dangerous, very risky proposition. “

                                                              “It’s sad that we can’t be judged on the “content of our character” to quote Dr. King,
                                                              we’re judged by the content of our credit report. And what if you’ve had an issue, or
                                                              you’ve had a medical problem, and now your credit’s down the toilet because you
                                                              had to go to the doctor. But up until then, you always paid your bills. There should
                                                              be a way that people can tap into something else that shows your willingness to
                                                              pay your bills.”


                                                                   lack of credit or damaged
                                                                   credit negatively affected   Percent
                                                                   applying for:                            the need for credit is unassailable,
                                                                                Employment        7%        and the negative effects of bad
                                                                               Car insurance     16%        credit are difficult to overcome. You
                                                                                   Mortgage      16%
                                                                                                            need credit to open a bank account, set
                                                                                                            up utilities, get a cell phone, buy a house
                                                                            Automobile loan      21%
                                                                                                            or car. Respondents expressed a mixture of
                                                                                 School loan      6%
                                                                                                            respect, fear, anger and resignation about
                                                                                  Credit card    31%        how credit affects their lives.
                                                                              rental housing     16%
The High Cost of Being Poor in Washington State




                                                                               Bank account       8%
                                                                                  Healthcare      2%
                                                                        Other types of credit    15%



                                                           People will go to great lengths to preserve their credit score:

                                                              “I choose paying my bills over buying food because it just seems like the way you
                                                              look on paper is way more important than the way reality really is.”

                                                             without good credit, purchasing and borrowing are limited—
                                                              and prices, insurance and mortgages are more expensive.


                                                  – 18 –                                                                    FINdINgS—FINANCIAl SErVICES
Credit scores limit choices for borrowing and purchasing. This is especially true for
purchasing cars and homes, usually people’s largest financial commitment. One
participant summed up many others’ sentiments when she remarked on the irony of
the credit score/interest rate/income relationship:

   “And it’s frustrating, because you need a lower interest rate because you’re poor, but
   instead, you end up paying four times the amount...”

                                 FinanCiaL seRViCes:
                                 ReCommenDations
     › encourage banks to hire and retain staff with cross-cultural and
       second-language skills.
     › expand community-based credit unions (where members may
       help others build credit by depositing money as loan option).
     › support policies that cap interest at a reasonable rate and require
       payday lenders to operate under the same consumer-protection
       laws as all other lenders.
     › expand loan options for people who don’t quality for traditional
       loans.
     › work with the state to develop an alternative credit index,
       connected to financial education, to assist consumers with low
       credit scores.
     › expand free tax-preparation services to offer financial counseling
       outside of tax season.



                                     ConCLUsion                                                      The High Cost of Being Poor in Washington State

With a fuller picture of the real-world burdens that people across Washington
state shoulder as a consequence of living on a lower income, policymakers have
the opportunity to implement targeted initiatives that mitigate these unfair costs of
being poor, and offer lower-income families the chance to keep more of their hard-
earned money to invest in a healthy future for their family.

        We gratefully acknowledge the generosity of the 738 people across
      Washington state who were willing to share their stories for this report.



   FINdINgS—FINANCIAl SErVICES                                                              – 19 –
                                                                                                rESEArCH APPrOACH

                                                                                   In-depth Focus groups (8)                   Community Survey
                                                                                Participants shared their personal
                                                                                                                        Anchor organizations distributed
                                                                                    experiences of dealing with
                                                                                                                          surveys to their constituent
                                                                                 financial institutions, managing
                                                                                                                      community members asking about
                                                                                credit and handling their finances
                                                                                                                      financial experiences and attitudes.
                                                                                    to meet basic living needs.
                                                             participants                       72                                         666

                                                                                                                        Surveys included 40 questions,
                                                                                      Focus groups lasted
                                                                                                                        submitted in writing or online.
                                                                                 between 1½ and 2 hours each,
                                                                  format                                                 responses were anonymous;
                                                                                 were recorded, transcribed and
                                                                                                                           results were tallied and
                                                                                 analyzed for common themes.
                                                                                                                             analyzed for trends.

                                                           Anchor organizations acted as hosts, served as community liaisons, recruited focus-
                                                           group participants and supported the research team in refining survey instruments
                                                           for their respective community members. Focus-group researchers asked in-
                                                           depth questions of low- to moderate-income African-American, Native American,
                                                           Urban Native, Vietnamese, Latino, East African and Caucasian communities. For
                                                           the Vietnamese and Latino focus groups, a bilingual native-speaker facilitator
                                                           conducted the discussions in the appropriate language.

                                                               community-survey respondents live in 23 counties across washington state.
                                                                       The average age is 41 years; 73 percent are female, 17 percent male and
                                                                                      10 percent declined to specify gender.

                                                                       Annual
                                                                                         Percent
                                                                       Income
                                                                                    $0    <1%
The High Cost of Being Poor in Washington State




                                                                                                                     race/ethnicity                 Percent
                                                                            $1–$10,000    10%
                                                                      $10,001–$20,000     13%                          African-American/Black         6%
                                                                      $20,001–$30,000     12%                  Alaska Native/Native American          2%
                                                                      $30,001–$40,000     10%                            Asian/Pacific Islander       3%
                                                                      $40,001–$50,000      9%                                             latino      6%
                                                                      $50,001–$60,000      7%                                             White      67%
                                                                      $60,001–$70,000      7%                                         Multiracial     6%
                                                                      $70,001–$80,000      5%                              declined to answer        11%
                                                                      $80,001–$90,000      4%
                                                                     $90,001–$100,000      2%               For more about information about the
                                                                            $100,000+     10%              community survey, contact the Statewide
                                                                    declined to answer    13%              Poverty Action Network at 866/789-7726.




                                                  – 20 –

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:18
posted:7/26/2011
language:English
pages:20
jizhen1947 jizhen1947
About Thosedocs come from internet,if you have the copyrights of one of them,tell me by mail zhenweda@163.com,and i will delete it on the first time Thank you!