AFI Case Study Meet A Few AFI Project Participants
A growing number of individuals and families with low incomes are learning about money management and planning for a stronger financial future through the Assets for Independence (AFI) program. Families who participate in this program have access to special bank accounts called Individual Development Accounts, or IDAs, where their savings are matched by a combination of Federal funds and nonfederal contributions. Participants use their savings and the match funds to save for a long-term economic asset such as a first home, pursue postsecondary education or training, or start or expand a small business.
There is no "average" participant in this program: each differs in background, skills, and challenges. What they do share is a determination to make the most of a few dollars from each small paycheck. They also share an intensive educational process designed to increase their knowledge of finances and money management. By the time participants purchase an asset with their IDA savings, they are well on their way to being economically self-sufficient for the long-term. This is good for them and great for their communities.
The following are just a few of the individuals who have participated in the AFI Program and used an IDA—and their knowledge of money management—to secure their families' economic futures.
Hard work, and a love of flowers, kept Tammey Faford's florist business going—barely. The ALU LIKE matching savings program, "Kahiku," helped it flourish. That's where she learned to do a business plan and invest in her business.
For 16 years, Tammey had worked for another florist before she and her husband Carl began growing and selling their own plants. The work was arduous and yielded little money. "My husband and I would work for two or three days for each farmer's market, but the most we would ever make was $100," Tammey says. Even an invitation to sell her flowers and leis at the local K-Mart did not bring in enough to meet the needs of three children tackling college and the daily expenses. The small jobs kept coming for weddings and other events, but lack of space, refrigeration, and a suitable delivery van stunted the business.
From ALU LIKE—a nonprofit offering AFI-supported matched savings since 1999—she learned that IDAs could be used for expenses to grow her business. And ALU LIKE could help her learn more about running the business. Tammey says, "I had no idea how to write a business plan." Annette Creamer, Kahiku representative on the island of K'aui, helped her analyze costs and potential income, product pricing, equipment needs, and marketing. Annette also helped Tammey think through how to build the capacity to take on larger jobs. Even before completing the IDA program, Tammey was able to secure the space, by setting up a trailer, and the refrigeration, by repairing a cooler discarded by another florist.
Although the family had always been careful with money, especially while Carl was injured and out of work, Tammy still benefited from financial education, an IDA requirement. She learned about budgeting, using income wisely, and avoiding debt. She had no difficulty making her savings goal each month. By the time she enrolled in the IDA program, Carl was working again. They just set aside the money from his paycheck. They also cut back on buying things they didn't need.
By 2001, Tammey's Flowers and Gifts was blossoming. With more room to work and more refrigeration space, she was able to take advantage of membership in the Kaua'i Wedding Professionals Association. Tammey says, "Another wedding coordinator met me and tried me out. She let everyone know how pleased she was with my flowers. Before you know it, word of mouth spread. I now have about 10 wedding coordinators that I work with. I have found my niche."
Lack of an adequate delivery van was still holding Tammey back, however. Using her husband's small truck meant she sometimes had to make more than one trip for a delivery and couldn't leave the arrangements intact during transit, risking damage and lost profits.
In 2003, Tammey put into action the last part of her business plan, using her IDA funds to purchase a delivery van. She says, "Having the van has allowed me to take on more business. Otherwise, I would have to limit the amount of weddings I could do." The van is tall enough so that large arrangements fit inside, and many arrangements can be delivered at once.
Although there were losses in the early years, Tammey reports that by 2004 the business had taken off. She says, "Annette told me that the business might experience losses at first, but it will get on its feet. She told me not to give up, to hold on and stick with it." Now, Tammey has cornered the wedding market in her area: she is the only florist within 20 miles.
With their mother's success before them, Tammey's three children have dreams of owning their own businesses some day and have used IDAs for education or training. She says, "They feel that if mom can do it, they can too."
Looking back on the growth of her business, Tammey says, "Sometimes I would wonder if things would come together. But then you see it happen, and you know it is possible to be successful. It gives you hope. I saw my dream come true."
Scarcely a greater contrast can be found: between a crowded refugee camp in Ghana and a modest home in Louisville, Kentucky. A 16-hour flight and more than a decade separate the two.
Today, David Kuegah-Toyo shares a home with his large extended family. Kuegah-Toyo is a 37-year-old native of Togo , a small country in western Africa. Eleven years ago, however, he and his mother, sister, wife, and four children fled civil strife in Togo to the relative safety of a refugee camp. A small communal garden supplied the camp with most of its food, while fishing supplemented meals part of the year. The family gathered brush from the forest for fires each evening and slept under a thatch roof. The Kuegah-Toyo family came to the U.S. after intense interviews for a place in a United Nations resettlement project.
Though far from home, David and his family were not alone in their new country. Steve and Susan Bell, residents of Louisville, saw the Kuegah-Toyo family on a Web site seeking sponsors for resettling refugee families. The Bells got members of their Episcopal Church of the Advent to step up for the job. The church helped the family settle in Louisville and identified affordable housing and employment opportunities for David.
A hard-working man accustomed to struggling for his family's basic survival, David soon secured full-time employment at a local hotel at $5.75 an hour. Just weeks after arriving in Louisville, he signed a lease for two adjacent two-bedroom apartments to shelter his seven-member family. Eight months later, he took a second full-time job paying $7.65 an hour at a local aluminum factory. He put in at least 16 hours of work each day for over three months, eventually landing another factory job paying $8.50 an hour with a quick start wage program, which jumped $2.00 an hour after just two weeks. Conditions were better, but David's sister had recently resettled to Louisville, and his wife was pregnant with their fifth child. The two-bedroom apartments were getting crowded, and the rent and utilities were becoming challenges.
This is where Assets for Independence enters. Chris Shull, a case manager with Kentucky Refugee Ministries, told David about the Common Wealth Individual Development Account (CWIDA) Project. CWIDA is a project of the Economic Success Program of the Center for Women and Families. Other key partners are the Louisville Metro Housing Authority and Republic Bank. The project offers participants a structured savings program with matching dollars, and the skills and support necessary to continue to save toward asset acquisition. Additionally, the CWIDA Project offers economic education to prepare participants for life-long independence. David contacted an IDA counselor, applied, and began saving toward the purchase of his family's home. He continued putting in overtime at work and deposited much more than the $20 monthly minimum into his IDA savings account. With the help of the Earned Income Tax Credit (EITC), David was able to make several extra deposits into his IDA account totaling more than $1,000.
Perhaps the CWIDA Project's most diligent saver, David participated in budget and savings courses above and beyond the requirements. A man of few words, David listened intently during classes. Although still learning English himself, David often translated course content for his sister, who also was a participant. After several months of quiet observation, David raised his hand during a budgeting course discussion. Capturing a central point of financial management, he said, "It is good to meet the needs of the family rather than to worry about the wants." He further explained, "Many people worry about the wants of their children and families, even borrowing money to do so, but then they must work six months, eight months, a year to pay that money back. That harms them more."
David made saving a family affair, sharing his budget with his children each month and showing them how he was spending the family's money.
Three years later, on April 23, 2004, David and his family became homeowners. "Having our own home means a whole lot for our family. It gives us freedom and space," He says. David and his wife continue to save toward other goals, which include postsecondary education for David and their children. David does not expect success to come easily. He knows that most things worth having require hard work and commitment and that people—like the Common Wealth IDA Project—are often there to offer support and encouragement.
Darcy Densmore had been doing carpentry since she was a child, helping her father and brother around their shop. After working primarily in fast food restaurants, she decided to return to her roots. She attended the local vocational college, earned her carpentry certificate in 2000, and began working for a construction company that fall, building anything from cabinets to houses.
But Darcy had a bigger dream. Married, with two children, she wanted to work from home so she could spend more time with family. In 2002, Darcy opened her custom-cabinetry business, Triple D Cabinets. She began from the ground up, literally, with a work crew of family and friends who helped raise a workshop next to her house. Sales grew in the first six months, but Darcy couldn't handle enough projects to turn a profit. She needed an additional dust-free workspace to produce in volume the custom cabinets customers wanted.
Darcy approached the Arkansas Women's Business Development Center (ARWBDC), a partner in Asset Builders, an AFI project managed by the Southern Good Faith Fund, which serves low-income individuals in the Arkansas and Mississippi Delta. Asset Builders was ideal for Darcy, who enrolled in 2003. Her goal was to save enough to buy materials to add a painting and finishing room to her workshop, without taking out a loan. While she was saving in her IDA account, she also took the program's six-part economic skills training, which includes financial education and asset-specific training.
The Densmore family did not have problems with poor credit and had been using a budget to manage their financial matters since they married. Regardless, Darcy found the economic skills class helpful. "I learned ways to get more value for your money," she says. "After taking the class, I watched our family spending more carefully. It also helped me to shop wisely when buying materials and supplies for my business."
Darcy saved $120 per month with no problem. "I added the $120 into our family budget, and the money designated for the IDA was treated like any other bill," she says.
Like many independent trades people, Darcy was skilled in her craft but knew little about the financial aspects of running a business. Through a subcontractor, alt.Consulting, Asset Builders also connected her with technical assistance to implement a financial management system. Darcy describes the support she got from alt.Consulting, as "fantastic!" She says, "I learned about computer programs that are available and how to use them. Andrea made sure I knew how to do the book work and helped me make changes to the business to ensure that I was making a profit. I also learned a lot about how to do advertising for the business."
In January 2004, Darcy used her IDA savings and match funds to purchase materials and—turning again to family and friends—added a painting and finishing room to her workshop. It took about two weeks of evening and weekend work. Darcy says, "Before I had the additional space, I could not start on the next job until the last one was done. Now I can complete jobs faster, and I'm not at the mercy of the weather. Without the support of the IDA, it would have taken about twice as long to save the money for the additional workspace."
Darcy's business continues to thrive, going from a net loss in 2002 to a net profit of $12,807 in 2003, allowing Darcy to hire two part-time subcontractors. Darcy projected comparable profits for 2004.
Darcy is very thankful for the support she received from Good Faith Fund's Asset Builder program. She says, "They are wonderful people to work with. They will help you in any way they possibly can." She also loves her life as a business owner. "Anytime you can start your own business and do well at it, it's better for you and your family. I can't be more satisfied with my progress. I love being able to stop working when I need to and attend a program at the children's school."
Will there be another generation of successful carpenters? Darcy says, "It's nice to have a business that my kids could choose to take over when I retire."
New carpeting or new windows? A car or a home? Keep this job or find a new one? Choices like these are new for Donna Leisinger. But, until the long-time resident of public housing in Cuyahoga County, Ohio, learned about Individual Development Accounts and the Assets for Independence initiative, she could only fume. "I was tired of not having a driveway, a basketball hoop, or a backyard." Fed up with "throwing money away" on rent, and "remodeling someone else's home," Donna jumped when a friend told her about a new program the Cuyahoga County Metropolitan Housing Authority had developed to help Section 8 recipients save money to buy houses.
Donna contacted the housing authority's partner, WECO Fund, Inc. a nonprofit, community-based organization in Cleveland. Any money she saved could be matched four to one. She was thrilled.
"When I started in the program, I started packing for my new home," remembers Donna. Her home was the big prize, of course, but she also says the financial education, a program requirement, was "the best thing." Donna learned to improve her credit score and to prioritize expenses. Every day brought new choices for the family: they stopped ordering pizza and started cutting back on Christmas presents.
"I knew I wanted to get a house, and I let the kids know. Once they saw I wasn't going to bend, it wasn't hard to get them to buy in," Donna says. The older children also pitched in by caring for their younger siblings so their mother could attend the classes and appointments necessary to complete the IDA program.
Some choices were more difficult. When Donna started her IDA, she had other goals, such as a new car. "But they told me I had to wait until I had my home" she says. Whether to seek a new job presented another tough choice. WECO staff, however, emphasized the need for stable employment to get a mortgage and maintain payments. So, Donna recommitted herself to her position as an administrative assistant to ensure she had regular income.
Every step in the IDA program brought new knowledge, as well as new choices. In homebuyer training, for example, Donna learned how to choose among different kinds of financing. She says, "I knew nothing about buying a home before. They mapped it out for us: seven steps to homeownership."
Now Donna and her children live in a quieter, safer place. There are no run-down properties, and neighbors regularly commune about yard work over weekends. "We care because we own, and it shows," Donna says with pride. Jumping into neighborhood issues, she has circulated a petition to make the street one-way to cut down on traffic. Living only a few miles from her former apartment, Donna feels as if she is in a totally different world.
The monthly total for her mortgage, interest, taxes and insurance is less than her previous rent in Section 8 housing, and Donna now has something to show for her money. When asked how this experience has changed her life, she says, "I've been independent my whole life, but now I feel like a successful individual because I can say we own a home."
In July 2004, Donna and her children celebrated one year in their new place. She's now able to turn to goals she had deferred. She has already purchased a new car—her first ever—and has started saving for a new garage.
In addition to a home, Donna feels she has given her children something even greater. "Now they know you can achieve a goal if you set your mind to it."
When Jose Edward Peña's wife told him how he could double his savings with something called an IDA. He didn't believe her. She had the same doubts the first time she heard this promise, years ago, when she was a Section 8 tenant with the Des Moines , Iowa , housing authority. Later, when she was considering a return to school, Maria came across an IDA flyer. Though still skeptical, she contacted Iowans Save!, the local IDA program operated by the Institute for Social and Economic Development (ISED).
Their training, and the IDA, was a better fit for Maria than going back to school. "They put me into classes. The first class was money management. Homeownership training came later," she says. And she could take her children with her: "They sat with me, and we studied together."
This is when Jose Edward re-entered the scene. After three-plus years in prison and drug rehabilitation, he had an eye toward re-establishing his family's economic base. He got a job working at a car dealership but wasn't making enough to realize his dreams for Maria; Abigail Joyce; Jose, Jr.; and Kendra Jeannette. "You come to a point in your life when you have to do something not only for yourself but for your family and kids. I wanted to leave something for them," Jose says.
Jose worried about how Maria was investing her money. While in jail, he had learned about lots of scams. Nevertheless, he got interested in IDAs at a free EITC tax preparation site he and Maria used. There, an Iowans Save! staff person explained the program. The credibility of their partner organizations helped him decide to participate.
Maybe the IDA was the piece they needed.
"Looking back," Jose says, "everything fell into place, but at first I was not sure how to use my savings." He did know he wanted to earn more and have more independence and so took out a loan for a three-month course in driving big rigs. School was five hours a night while working full-time. Jose says, "I needed something now, not in two to four years"
Obtaining his commercial license did allow Jose Edward to more than double his earnings—but not right away. He was offered the best-paying jobs in trucking, the long haul, cross-country trips, but those weren't good for being around much as a father for the children, then ages 15, 9, and 6. So Jose Edward kept searching for a local position, kept saving in his IDA, and finally landed a full-time job driving a cement mixer for Mannattes, a local highway construction firm. His earnings jumped to about $900 a week. "I had made my first goal, which was to make at least $100 a day," he says, room enough for some saving and paying regularly on his school loan, which also helped boost his credit rating.
But Jose Edward thought the work might drop off during the winter, so he told his Iowans Save! counselor he wanted to use his IDA savings to start a small business. Years before, he had managed convenience stores. From Iowans Save! he had learned how to do taxes, track costs and income, and do a business plan. With that, and six months of IDA saving, he made a down payment on a small truck to do snow removal. As luck would have it, his temporary employer already had contracts and asked him to be a substitute, giving him a foundation of steady work.
Meanwhile, Maria Peña was steadily saving in her own IDA. She had a better job as well and, between them, the Peñas had two savings accounts and steady income. Says Jose Edward, "Bankers were glad to talk to me about the truck loan and then later a home mortgage."
A home was their next goal. Maria was saving about $250 a month by not buying clothes and staying home. She says, "I told the kids we didn't have any money." Neither Maria nor Jose Edward had serious credit problems, though they did have some very old debts to settle. Part of their tax refunds went to debt and part for their savings. In October 2004, the Peñas moved into an older home on a large lot. "The kids and I love to garden, but we didn't have enough sun or space before," Maria says. "It already has a garden with tomatoes and apple trees." There are even climbing roses. "When I started the money management class, we wrote down what we wanted to accomplish," said Maria. "It actually did work out."
That's how Shawn Turnley describes her life: like a dessert. In a single year, she was elected to the honor society at Delgado Community College, bought a home and a car, and became a landlord—all while working full time. So many plans were realized, so quickly, belying her struggle: from homeless shelter to home owner, recovering addict to full-time employee. Add to that the title of head cheerleader.
[Post-Katrina update: Shawn was able to collect insurance and pay off the mortgage on her damaged home. She has renovated the rental side and has a tenant. Though temporarily located in Texas, she's looking forward to renovating her side of the double shotgun and coming home to New Orleans.]
Shawn says that several years ago she prayed: "I'm a Christian. I know things take work. But I don't want to leave the shelter and rent. I want to be a homeowner." Her journey illustrates what helps: networks of people who share common goals, resources, and opportunities. Staff from five community-based organizations played key roles in the successes of this IDA graduate.
At the shelter in New Orleans, an old friend told her about a homeownership program. That one didn't work out, but it led Shawn to another homeownership training opportunity. There, she met Mike Furlow, a housing counselor with Acorn Housing, and Letisha Foley, a real estate agent who taught one of the homebuyer classes. She also heard about the Individual Development Account (IDA) Collaborative of Louisiana. Acorn Housing was one of more than 50 member organizations in the statewide collaborative. They were recruiting participants for their Assets for Independence-funded IDA initiative.
But Shawn had some ground to make up. She needed to enroll in Financial Fitness, the Collaborative's financial education component. More importantly, she had to leave a negative relationship and build savings.
Shawn feigns disbelief when asked if it was hard. "I don't understand how people could think it's so difficult. Take some classes for two or three months! Save $1,000! How could that be difficult?" she wonders aloud.
Shawn was fortunate. She didn't have serious credit issues, had never fallen into the hands of predatory lenders, and was already paying back old student loans so she could go back to school. Her will power meant she passed on buying clothes and spending on entertainment. "I got real focused. What's going to be important?" she asked herself. Shawn jokes that she took full advantage of New Orleans ' abundant offerings of free festivals and music.
Shawn saved about $50 a month but was not able to save tax refunds because she owed back taxes. She did, however, take advantage of free tax filing services coordinated by another group, the Central City Asset-Building Coalition, which is closely linked to the IDA Collaborative through common staffing and several member organizations.
At one point, Shawn was juggling Alcoholics Anonymous and Narcotics Anonymous meetings, a full-time job and school. She says, "There were times when I'd get on edge and nervous. I'd ask myself, is this really going to happen?"
Looking back, though, Shawn says the program requirements were not the greatest challenge. "They lay it out for you like a buffet. What are you going to eat from first? It does take discipline and commitment," She says. Rather, for Shawn, it was managing family relationships. "I had to come to see my position truly. I told them, 'I can't fool with you now because I have to do something. I believe in myself, even if you don't.'" The Collaborative did believe and so hired her part-time to build up other participants. "I told them, 'Been there, done that'" says Shawn. "If I could do it, you can do it."
Combining state and city housing funds with her IDA savings, in 2002, Shawn purchased a double on Dumaine Street, which begins in the fabled French Quarter. She gets income from a Section 8 renter in the second unit and thinks her tenants are likely candidates to follow in her path: plan and save up for their futures.
Two years after completing the program, Shawn says, "I look at money differently and handle it differently now. I would get excited about a credit card offer or an offer to refinance the house. Now I read the fine print." Shawn is still saving about the same amount per month, to buy another property, for investing, and for the inevitable "rainy day." Her sister has since started an IDA, as have some of her friends, encouraged by Shawn.
Next steps? Shawn cut back to 50 hours per week at work and is studying for her real estate license. She'll return to school to continue her business degree, while keeping her job at Touro Hospital . Her advice to others thinking about an IDA? "It's not about the money. It's about how you live."
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