Credit Basics
Neighborhoods Inc. Seminars To Focus On Financial Fitness
Friday, November 07, 2003
Sonya Bernard-Hollins
Battle Creek Enquirer
Just as a dieter watches his weight, those overweight in credit debt have to do the same to obtain financial fitness.
That's the focus of Neighborhood Inc.'s money management seminars, Financial Fitness Education. Neighborhoods Inc. will host a free, five-week training program to help residents get a handle on their finances to work toward becoming financially fit. Participants will develop a family budget, set a plan to pay debts, become more self-conscious spenders and avoid predatory lending.
Where spending habits begin
Neighborhoods Inc. education coordinator Yvonne Cooper said what she has learned in conducting money management seminars for adults and students is that habits of money spending start early.
"Many of us didn't go over our bills with our parents. We didn't know how to budget and maybe some of our parents didn't know either," Cooper said.
She noted that once out in the real world, young people don't realize how to spend money. A recent survey stated that 30 percent of high school students didn't realize credit cards meant they were borrowing money with high interests. Not knowing the difference between spending money on what is needed, compared to the wants is another way spending and credit gets out of hand.
When it comes to money management, Cooper says families should learn together.
"They aren't going to learn in school. It has to be something we teach at home. But we have to learn it ourselves," Cooper said.
Financial planning assistance
Valetta Sellers-Evans was told by a financial planner that she was in such debt that bankruptcy would not be a bad choice. By filing bankruptcy, she could "erase the slate" and start fresh. But, that was not an option she wanted to choose.
Evans, who works professionally in finance, found it easy to monitor her employer's departments in regards to their spending, but lacked control of her personal spending habits. Credit card debts took over.
"I would work hard for my money and when I saw something I wanted for me or my kids I'd say, 'I want that.' It was the immediate gratification I got with charging that led me to become overwhelmed by debt," said Evans, a single parent of two children.
She turned to her church, Mount Zion Baptist Church in Kalamazoo, and began attending its weekly finance workshops. The spiritual direction she and more than two dozen other parishioners were given by the Rev. Addis Moore was coupled with life application worksheets given by the church finance director.
During class parishioners also share of their blessings in finances, encourages each other and pray together.
"It's been an excellent class for me," said Evans. "It encouraged me to see that, God sees the way out of my debt as long as I'm responsible with the 10 percent I tithe to the church, and the other 90 percent."
While many churches have adopted financial planning as part of their service to parishioners, credit counseling services are on the rise.
For the past 11 years, Consolidated Credit Counseling Services in Grand Rapids has worked with more than 50,000 people who want to get their finances back on track. April Lewis-Parks, its director of education, said many people have come to counseling for various reasons. Their clients have been impacted by high unemployment rate, backlash of the tourism industry in response to the September 11 attack on the World Trade Center, retirement funds not stretching as inflation and many other issues. Parks' office gives free consultation for those who may qualify for their loan consolidation program.
After agreeing to terms, such as to not receive any new credit cards, the program will allow customers to send in one flat rate each month to Consolidated Credit Counseling Service, which would be distributed to their creditor. A fee of up to $29 a month could be charged for the service according to income. They set a deadline for the client to become debt-free within three to five years.
"We educate our clients, hold workshops and give materials to help them," Parks said. "Once they are successful going through our program, many remain debt free."
Watching for risks
Parks' office does not provide credit report monitoring, credit scores, consolidation loans, debt settlement or legal negotiations. It works with creditors to help lower interest and payments in order to resolve the debt.
Parks said many of their clients come to them with $10,000 to $16,000 of credit card debt. She said those in financial trouble should be cautious of programs which offer to help resolve debts through a home equity loan to resolve this type of debt.
"Taking unsecured debt and tying it to their home, a secured debt, can be detrimental," Parks said. "For some people it's fine, but what happens if you lose your job and you can't pay the loan for your unsecured debt. You not only have a loan you can't pay, but you can lose your home because you used it as collateral for the loan. Before your credit may have been ruined, but at least you still have a house."
Benefits of financial freedom
Being able to purchase a home or car at a reasonable interest rate is a benefit in financial freedom. Putting money away for college or retirement is an ultimate goal.
Through Cooper's training sessions, she hopes she has prepared participants to establish good credit, avoid consumer scams, create a savings plan and prepare for home ownership or other goals.
Overall, learning how to make money work for and not against, takes time.
"It's like anything else you work at," Cooper said. "If you want to be successful in something, you have to study and put it into action. Your finances are no different."
