At this successful financial education class, money takes back seatby Jessica Mador, Minnesota Public Radio
St. Paul, Minn. — A Minneapolis non-profit is helping to steer folks away from some of the financial decisions that landed many people in trouble during the economic crisis.
The program puts participants through a rigorous course of financial education and counseling and is about to graduate its first group of students. Organizers said the program's success comes from its focus on everything but money.
On a Saturday morning in the basement of the Minneapolis Urban League in north Minneapolis, David McGee led several dozen adults in an inspirational chant.
"Can we say that together?" McGee said to attendees. "I'm never going to be broke another day in my life. I'm never going to be broke another day in my life. Starting today there is no more brokenness."
McGee sounded more like a minister than the financial expert he is. A few years ago, he took his decades of banking knowledge and founded his own non-profit called Build Wealth Minnesota.
Part of his goal was to help mitigate the effects of the financial crisis. He said he felt it was his calling.
"I'm on a mission to help edify each and everyone in here and not just you, but your families, so get ready for the ride," he said. "It may get a little churchy in here."
McGee told the group that his two-year program will help them stabilize their housing and create lasting wealth. Before they get started he asked each of the group members to introduce themselves.
One by one, people stood up and told McGee why they were there. The group was a mix: they're married and single, white collar and blue collar, young and old, homeowners and renters.
Some participants were hoping to gain financial knowledge they never had before, while others were trying to save their house from foreclosure. Another woman said she wanted to learn how to rebuild after bad financial circumstances.
"Well, through this class that will never happen again," McGee said. "Because there is no way you are going to sit here and allow somebody to give you a stack of papers this big and you walk out of there talking about 'I didn't know what they did.' That is no excuse. We are not going to have any excuses anymore."
Hands shot up when McGee asked how many people have experienced lean times.
"You're stuck on the same ferris wheel over and over and you're like a rat running around in this circle," he said. "Can you guys feel where I'm coming from? This is where we find ourselves. Our minds have to change."
RELATIONSHIPS, NOT MONEY IN FOCUS
To get off the financial treadmill, McGee told them they'll have to do something that might seem unorthodox -- think less about money.
McGee said they'll have to adopt a new mindset where money is just a tool, not an end in itself. Instead, relationships will take center stage.
"As I put more emphasis on that love and that unity of my family then I have a clearer vision on the steps in being diligent and vigilant about getting things that are necessary to feed my family and clothe my family and educate my family," McGee said.
McGee promised that prioritizing values over material things will help couples get on the same page and stop arguing over money.
Over the next two years, many of these people will dig out of debt, learn to save and invest for the long term.
The program also helps well-qualified people buy homes with down payment, renovation and other assistance.
Most participants pay a $60 entrance fee and $108 per year for the course, but nobody is turned away if they can't afford to pay. McGee works with a tight network of non-profits and housing groups. Some students enter Build Wealth through these outside programs.
Build Wealth gives a lot, but to stay in the program participants are expected to give 10 percent of their money or time to a cause of their own choosing. McGee said that's because giving to others builds what he calls "social wealth" and helps the whole community.
SUCCESS IN NUMBERS AND MENTAL WELL-BEING
The University of Minnesota has been tracking Build Wealth's results. Housing Studies professor Lyn Bruin said this holistic approach -- and McGee's focus on "social wealth" -- makes the program successful.
"We measured success by how they improved their credit scores; we measured success by how they felt about it, by are they meeting their individual goals," she said. "The other thing is that he does a knowledge-based test to see that they are improving their knowledge of skills over the two years."
So far, more than 90 percent of the first 142 families in the program completed the full two years. The average family decreases its debt by more than $2,400.
Families also build up thousands of dollars in emergency and non-emergency savings and put money away for retirement. At least 80 percent of the families are teaching their children to save or budget.
Researchers estimate that each mortgage modification and averted foreclosure also has a positive ripple effect that saves neighborhoods, cities and states thousands more dollars.
After weeks of classroom instruction, each family is paired with a personal financial coach to put what they've learned into action.
Samantha Eubanks, 32, is working with her financial coach on a plan to expand her small child care business. When she started the program she was in debt.
"Nothing in collections," she said, "but we had maxed all of our credit cards -- and we had 14 credit cards."
She has since cut up all of those credit cards and plans to finish paying them off in the next year.
"We also learned to have an emergency savings through this program. We didn't have that built up so we didn't know... We didn't plan for a rainy day," she said.
Researchers found the program helped the average family boost its credit score by 58 points. And a recent survey found that participants weren't daunted by the prospect of committing two years of Saturday mornings to the program. In fact, many people said that's the reason they signed up.
Rebecca Nathan, 35, said the length of the course is what attracted her.
"I felt like a longer term approach to getting my finances together is what I needed because I kind of find myself in the same place over and over again," Nathan said. "A weekend workshop or a week thing -- I've done those things before but it doesn't seem like it's enough to make real substantial changes," she said.
She is planning to bring her kids to the classes so they can begin learning to manage money and hopefully avoid some of the mistakes she's made.
Assistant teacher and Pastor Stacey Jones, 36, and his wife already own a home. He said he signed up for Build Wealth Minnesota to learn how to better manage his money after growing up in a home where finances were rarely discussed.
"There were a lot of things that I didn't know and I had to learn the hard way," he said. "I made a lot of mistakes and I just want to walk out of this class being better, to improve my credit, gain the ability to invest my money and just stop living from paycheck to paycheck and also be in a position to sow into others lives and their missions and their organizations."
As the class broke up, McGee pumped the crowd up. He told them to get ready for two years of hard, but rewarding work.
"Who is coming back next week?" he said.
In unison, the students all said they'll be back.
Build Wealth Minnesota is at capacity with a waiting list. Organizers said they hope to raise enough money to expand and help more families gain stability.
- All Things Considered, 01/28/2011, 5:20 p.m.