Achieving Financial Fitness and Avoiding Potential Pitfalls

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Achieving Financial Fitness(and Avoiding
Potential Pitfalls)
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Can You Survive a Financial Fitness Quiz?
But, first.
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Financial Fitness Pop Quiz

• Q. In 1999, outstanding consumer debt was higher
  on
• Auto debt
• Credit-card related debt

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Financial Fitness Pop Quiz

• Q. In 1999, outstanding consumer debt was higher
  on
• Credit-card related debt, which totaled 595.6
  billion in 1999 whereas, auto debt only totaled
  465 billion

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Financial Fitness Pop Quiz

• Q. Of the 105 million households in the U.S., how
  many had at least one credit card in 1999?
• All of them
• 78 million
• Less than half
• 56 million

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Financial Fitness Pop Quiz

• Q. Of the 105 million households in the U.S., how
  many had at least one credit card in 1999?
• 78 million

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Financial Fitness Pop Quiz

• Q. The percentage of families in the U.S. that
  have credit card debt that exceeds 40 of their
  income is
• 20
• 9
• 13

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Financial Fitness Pop Quiz

• Q. The percentage of families in the U.S. that
  have credit card debt that exceeds 40 of their
  income is
• 13

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Financial Fitness Pop Quiz

• Q. The 1999 average APR on all bank credit cards
  was
• 9.5
• 21.3
• 17.11
• 11.5

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Financial Fitness Pop Quiz

• Q. The 1999 average APR on all bank credit cards
  was
• 17.11

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Financial Fitness Pop Quiz

• Q. The 1999 average amount of credit card debt
  carried by households that do not pay off the
  balance was
• 7,564
• 1,216
• 10,097
• 5,123

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Financial Fitness Pop Quiz

• Q. The 1999 average amount of credit card debt
  carried by households that do not pay off the
  balance was
• 7,564, which is up 5 from 1998

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Financial Fitness Pop Quiz

• Q. How many U.S. households are unbanked?
• None
• Two million
• Six million
• Twelve million

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Financial Fitness Pop Quiz

• Q. How many U.S. households are unbanked?
• Twelve million households
• 80 have incomes under 25,000
• Over 50 are non-white

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Financial Fitness Pop Quiz

• Q. Which statement is not true?
• The national savings rate is now negative.
• 20 of U.S. households have a negative net worth.
• There are 3.5 billion credit card solicitations
  annually.
• Over 2/3rds of the U.S. population hasnt
  benefited from stock market gains.

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Financial Fitness Pop Quiz

• Q. Which statement is not true?
• Theyre all TRUE!

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Personal Savings Rate
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Financial Fitness Pop Quiz

• Q. What was the total number of personal
  bankruptcy filings in 1998
• 500,000
• 1.4 million
• 3 million
• 750,000

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Financial Fitness Pop Quiz

• Q. What was the total number of personal
  bankruptcy filings in 1998
• 1.4 million, which reached an all-time high

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Financial Fitness Pop Quiz

• Q. If you buy a pizza on a credit card with a
  balance, how much more do you pay for it than
  with cash?
• No more
• 10.54
• 32.40
• 5.03

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Financial Fitness Pop Quiz

• Q. If you buy a pizza on a credit card with a
  balance, how much more do you pay for it than
  with cash?
• 32.40

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Pizza Cost Comparison
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Financial Fitness Pop Quiz

• Q. What is the difference for the APR on a
  personal loan from a regulated bank and a payday
  lender?
• 355
• 105
• 250
• 500

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Financial Fitness Pop Quiz

• Q. What is the difference for the APR on a
  personal loan from a regulated bank and a payday
  lender?
• 355

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APRs for Fringe Banking

• Check Cashing 152-365
• Pawn Shop 180-240
• Car Title Loan 264
• Rent-to-Own 180-360
• Payday Loan 391
• Cash Lease 730
• Regulated Bank 36

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Recliner Cost Comparison
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• Financial Fitness Program

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Lack of Financial Fitness

• Many people havent benefited from recent
  economic boom
• 10 of U.S. households dont have bank accounts
• Median net financial assets for households are
  1,000

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Lack of Financial Fitness

• Families lack skills to save and invest
• Explosion of predatory lenders threaten to strip
  away the wealth and assets acquired by lower
  income families

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Financial Fitness Program

• High-quality financial fitness training in 23
  cities nationwide
• In partnership with Providian Financial,
  FleetBoston Financial, Visa USA, Metropolitan
  Life Foundation and Morgan Stanley

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Financial Fitness Program

• Purpose is to help homebuyers achieve home
  ownership and homeowners to maintain ownership
• Incorporation into Full-Cycle Lending system

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Program Components

• Identify curriculum to create national standard
  of at least 10 hours of training
• Deliver training-for-trainers course at NRTI
• Provide funding to organizations to sustain
  program

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Program Components

• Train 100 people per organization per year
• Develop partnerships to promote program and
  create brand awareness

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Program Components

• Evaluate short- and long-term impact
• Develop a clearinghouse of resource materials and
  training tools

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Proposed Principles

• Financial literacy skills can be taught.
• Schools generally dont teach these skills.
• Managing money is first step in creating wealth
  and achieving goals.

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Proposed Principles

• Moving families into mainstream (and away from
  fringe) is key.
• Growing debt burden is a trouble spot.
• Its not about how much you make.

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Recommended Model
10 hours In 1-4 weeks
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• Recommendations for
• financial fitness
• education
• providers

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Recommended Standards

• At least ten hours
• Group and individual counseling
• Certified trainers
• High-quality curriculum
• Face-to-face, interactive training

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Recommended Standards

• Content and format tailored to audience
• Customer satisfaction surveys and evaluations
• Certificates of completion for graduates
• Code of ethics for volunteers
• Referrals to homebuyer education classes for
  potential buyers

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Core Content

• Basic Financial Planning and Money Management
• Saving and Investing
• Banks and Other Financial Institutions

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Core Content

• Credit
• Taxes and Insurance

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Best Practices in Service Delivery

• Match language, materials and instructors to
  audience
• Hold sessions at convenient times and locations
• Offer incentives
• Develop a customer for life mentality
• Use evaluations forms and surveys

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Best Practices in Service Delivery

• Offer classes in a mobile unit in rural areas
• Create a Web site and public computer kiosk
• Use a variety of training methods
• Include tours, field trips and guest speakers
• Design a comprehensive program

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Best Practices in Customer Tracking

• Track progress of graduates with internal
  databases
• Develop an effective intake form

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Best Practices in Content

• Survey audience for needs and interest
• Keep segments short and focused
• Develop a savings agreement form
• Use counseling tools

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