Emergencies don’t have to be financial disasters; start saving now!

You’re laid off at work. Your car needs a new transmission. Your furnace blows. These are all costly emergencies that can’t usually be anticipated and cannot be avoided once they occur. Without a fund set aside just for such emergencies, they can trigger even greater disasters.

Last year, NeighborWorks America released the findings of its third annual consumer finance survey. Chief among them is the alarming fact that nearly a third of adult Americans (29 percent) have no emergency savings. Ninety-one percent of those with incomes of $100,000 reported holding emergency savings, compared to just 30 percent of who earn less than $20,000, 63 percent of those with incomes below $40,000 and 78 percent of those with incomes between $40,000 -$50,000.

There also were significant differences by race and education. The highest percentages of households without any emergency savings at all were reported by African-Americans, adults with lower incomes, and among those with a high school education or less.

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A good rule of thumb is to have enough funds set aside to cover three to six months (some say four to seven) of living expenses. This will give you enough time, for instance, to find a new job or supplement your unemployment benefits until you do. However, anything in the bank is better than nothing — and $500 will get you out of many scrapes that would otherwise put you in the hole. In other words, start small if you have to, but start.

Here are a few tips:

  • Set up a savings account just for this purpose. Separate it from the accounts you tap into on a regular basis so you’re not tempted to dip into your reserves. Do not get access to it via debit card. And if you are issued a checkbook, hide it.
  • Arrange the automatic deposit of a portion of your paycheck into that savings account. Most employers allow direct deposits into multiple accounts. This is the most painless way to create a regular savings habit; you won’t even notice it! But make sure you’ve created a realistic budget. Otherwise, you’ll be pulling money out of savings regularly to pay bills, defeating the purpose.
  • Keep the change.When you get $1 and $5 bills after breaking a $20, drop some in a jar at home. When the jar fills up, move it into your savings account. And if you have money left after paying your bills at the end of a pay period, move some into your emergency fund.
  • Save your tax refund. The average refund is in the thousands, which can give a good boost to your emergency savings. When you file your taxes, consider having your refund directly deposited into your emergency account. Alternatively, adjust your W-4 tax form so that you have less money withheld, and direct the extra into your emergency fund.
  • Cut back on costs.If you’re still falling short on saving, track your spending for a month to find discretionary expenses you don’t really need. Meals out, stops at coffee shops, drinks with friends all add up fast, but you may not realize how much you’re spending in total until you’ve put it on paper.

Remember: Expenses you should be able to anticipate, such as holiday gifts and annual auto insurance payments, are not emergencies! One of the most common problems people have with emergency funds is forgetting to plan for one-time expenses each year.

St. Ambrose is a member of the NeighborWorks America network of nonprofit housing and community-development organizations and we have staff that are trained and certified to offer financial education and coaching to help you follow these guidelines. Our financial coaches can help you realize your goals, encourage you along the way, and hold you accountable on your journey. Emergencies are upsetting enough. Don’t allow them to turn into financial catastrophes as well. If you’re interested in meeting with a financial coach, call us at 410-366-8550 ext. 235 or check our webpage: https://www.stambros.org/pages/financial-coaching.html

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Leslie and Rosalyn, proud graduates of our “Invest in Your Future” workshop series

Home Matters: Renting and Owning

The MacArthur Foundation published a recent report that indicates that Americans are not totally convinced that the ‘housing crisis’ is over and many, while still adhering to the dream of homeownership, are willing to wait awhile before embarking on that effort.

”  A strong desire remains among Americans to own their own home – in fact, greater than seven in 10 renters aspire to own one day.  However, the overall appeal of renting versus owning is changing.  Fifty-seven (57%) of adults believe that “buying has become less appealing,” and by nearly the same proportion (54%), a majority believes that “renting has become more appealing” than it was before.”

Lifestyle changes, as evidenced by a more mobile younger population who are willing to relocate for work, account for some of the shift.  However, increases in rents charged and historically low mortgage interest rates remain factors in this major financial decision.  To read more about this subject visit: http://www.macfound.org/programs/how-housing-matters/

Homebuyer education as foreclosure prevention

homeownershipNew research has been released on the effectiveness of pre-purchase housing counseling and education – a core service available at St. Ambrose Housing Aid Center. The research found that homebuyers who received counseling were one-third less likely to fall behind on their mortgages 90 days or more, two years after taking out the loan, compared to homebuyers who did not receive similar counseling and education. The research was done for NeighborWorks America, a national nonprofit affiliated with St. Ambrose Housing Aid Center, by Neil Mayer and Associates and Experian, and is based on approximately 75,000 mortgage loans originated in 2007, 2008 and 2009.

Read the Executive Summary here >>

Read the Full Report here >>

The research findings have important implications for St. Ambrose Housing Aid Center and the entire housing counseling and education industry.  While we have long known anecdotally that pre-purchase housing counseling and education provided by certified professionals at St. Ambrose is effective at helping to create homeowners who are less likely to default, this research provides significant backup.

The NeighborWorks America research shows how a small investment up front that finances the availability of pre-purchase housing counseling and education can help homeowners avoid financial losses by potentially staving off serious delinquency that has a good chance of extending into foreclosure, help prevent disruption of family life, and help keep communities stable that might be hurt by home foreclosure.

Estimates vary, but total losses due to foreclosure borne by local governments, servicers and households can exceed $50,000 per foreclosure, according to a report from the Joint Economic Committee of the U.S. Congress.

According to the Mortgage Bankers Association National Delinquency Survey for the fourth quarter of 2012, the percentage of residential mortgage loans 90 days or more past due across the country was 6.78 percent, and 3.74 percent of homeowners nationwide were in foreclosure. By providing NeighborWorks pre-purchase housing counseling and education to more consumers, it’s likely that tens of thousands of the more than 1.5 million homeowners who received a default notice in 2012 may have been able to avoid entering foreclosure.

Repeat Homebuyers

Interestingly, the NeighborWorks America research shows that even repeat homebuyers benefit from receiving NeighborWorks pre-purchase housing counseling and education. According to the report, repeat homebuyers who received the services also are about one-third less likely to fall 90 days or more behind in their mortgages than repeat homebuyers who didn’t receive NeighborWorks pre-purchase housing counseling and education.

“More analysis of the data is required to determine the factors for the repeat homebuyer results,” said NeighborWorks America CEO Eileen Fitzgerald. “But one thing is clear from the data: housing counseling is effective, even if you’ve been a homeowner before.”

Home Matters™ Launch Is Today!

Today, in Washington, DC, National NeighborWorks® Association joined (NNA) with a coast-to-coast coalition to launch a unique national movement called Home Matters. Home Matters™ aims to build public support for the essential role that Home plays as the bedrock for thriving lives, families, and a stronger nation. As it expands, Home Matters™ will go beyond housing and illuminate the connections between stable housing and other important facets of American life such as:

  • Individual Success: Home recharges adults and children alike for the day ahead.
  • Education: Children in stable homes learn and achieve more in school.
  • Health: Healthy habits take root more easily in stable affordable homes.
  • Public Safety: Stable homes make communities safer.
  • A Strong Economy: By having a Home that is affordable, people of all income levels have more to spend and support the economy.

Participating in the two-day launch, today and tomorrow, are leaders of more than 150 local and regional housing and community development organizations from across the nation – many of them NNA members – as well as national entities including NNA, Citi Community Development and Wells Fargo. Members of the U.S. Senate and U.S. House of Representatives will join us this evening, and U.S. Secretary of Housing and Urban Development Shaun Donovan will speak with the coalition tomorrow. Please visit the Home Matters™ website (www.HomeMattersAmerica.com), share your insights, tell your colleagues and friends about the movement, and connect to it through Facebook and Twitter. It’s time for the crucial roles that Home plays to be more broadly understood.

Homeownership Counseling – 2013 Workshop Dates Released

Homeownership Director Anthony Parran leading a workshop at St. Ambrose.
Homeownership Director Anthony Parran leading a workshop at St. Ambrose.

St. Ambrose’s Homeownership Counseling Program has released the dates for workshops in 2013.  These FREE workshops last 6-hours and count toward meeting HUD’s 8-hour counseling requirement for first-time home buyers.

The workshops and follow-up counseling sessions can also qualify new home buyers for special grants and closing cost assistance programs; for example, Wells Fargo’s CityLIFT incentive in Baltimore.

To register, email Pamela Petty at PamP@stambros.org or call Pamela at 410-366-8550 ext. 222.  Registration is required; continental breakfast and lunch provided.

2013 Workshop Dates:

January 19

February 16

March 16

April 20

May 18

June 15

July 20

August 17

September 21

October 19

November 16

December 15