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Modest Needs: Legitimate Help for Those in Need

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Legitimate Help for Those in Need

Getting a grant to help pay your bills from perfect strangers sounds too good to be true. Could having someone else handle your unexpected medical bill or car repair costs really be as easy as submitting an application that explains why, even though you’re employed and making money, you don’t have the cash to pay for your bill yourself? Could a charitable donation made online to a stranger really be put to its intended use and skimmed off the top by a bloated company?

With Modest Needs, it seems receiving help or donating to those in need is just that simple. The organization makes grants to people who genuinely need a helping hand during hard financial times. It ensures money from donors goes toward empowering those in need.

What Is Modest Needs?

Modest Needs, also known as modestneeds.org, is a nonprofit organization founded in 2002. The charity aims to provide financial assistance to low-income individuals and families, with the goal of preventing these people from slipping into poverty.

Everything began as the personal project of Nashville, Tennessee resident Keith Taylor. Taylor made his charitable work very personal; he saved part of his own salary each month to give away to those in need. After launching the site to connect with people who needed help – and people who wanted to financially contribute to others – the project snowballed.

Today, Modest Needs assists “low-income workers who are struggling to shoulder the burden of a short-term emergency expense.” The main type of assistance they provide is called a Self-Sufficiency Grant. These funds are given as grants, not loans, meaning the money does not need to be repaid by recipients.

Self-Sufficiency Grants are intended to help people who work and earn an income, but live just above the poverty level and are therefore unable to take advantage of any social assistance programs. These people may be just one paycheck away from financial disaster, and that’s where a grant can help.

Grants are generally made to people who are facing a financial emergency that they cannot afford, or who cannot afford to pay a monthly bill because of a legitimate extenuating circumstance.

How Grants Are Made

Modest Needs requires an application if you hope to receive one of their grants. Applicants must provide proof of income (to ensure they actually need financial assistance) and need to explain the crisis they’re facing that prompted them to ask for help. The organization advises setting aside a half hour to 45 minutes to complete the full application.

Some of the group’s other requirements include having at least one employed adult in the household. In addition, the main source of income for household must come from earnings via employment, child support payments, Veteran’s Benefits, or retirement income. The size of the grant depends on the applicant’s income.

Finally, applications that receive funding are required to write a thank you note to Modest Needs. Donors may opt in to receiving a copy of that note from applicants, as well.

By law, Modest Needs cannot grant funds for expenses including taxes, past-due child support, or fines and fees associated with civil or criminal offenses. As a matter of policy, the group will not provide grants for things like credit card debt or “luxury” goods or services.

If you’re interested in applying for a grant with Modest Needs, then you can find out more information here.

One Catch

Once an application goes live on the site, donors are then given the ability to vote on which grants should be funded. Donors get a vote by making a contribution to Modest Needs. A donor gets a vote (referred to as a point) for each dollar contributed. If you decided to donate $50, then you could put all 50 points towards one cause or spread them around. The points are reflected with a progress bar the following statement: “$ [total voted] has already been given to Modest Needs by donors who’ve recommended this application for funding.” 

However, there is actually one catch. A request needs to be fully funded in order for the recipient to get the money. Modest Needs does not provide partial payment on grants.

For example, Sally needs $1,200 to get her roof repaired but donors only received $800 by the due date, she would not receive the $800.

Information for Donors

Modest Needs is a registered 501(c)(3) (tax exempt) organization (Federal ID #47-0863430). Contribution you make, if you’re a U.S. donor, is tax deductible.

Note that when you do make a donation, you’re not directly and immediately funding the application you entered a dollar amount for. Your donation goes to Modest Needs itself, along with a recommendation of which application you want to see funded. The organization has the final say-so in what applicants receive grants.

Modest Needs requires an application be “fully funded” before executing any grants. If the application you recommended for funding does not reach 100%, your donation is returned to your account and you have the option to recommend (vote for) another applicant with the money you contributed.

Find more information out here.

Legitimate Help for Those in Need

Donors should be able to rest assured that they’re giving to legitimate causes when they fund an applicant on the platform, and donations are tax-deductible. There are no minimum contributions.

When it comes to the applicants on the website, Modest Needs screens individuals to make sure requests are real and legitimate. They also have staff that perform the necessary due diligence and research into each application. Grants are never made in cash; instead, payments are remitted directly to a vendor or creditor on behalf of the applicant.

Modest Needs is a registered nonprofit with the IRS and with the state of New York. Watchdog site Charity Navigator gives the organization a 3 out of 4 star rating and garnered high praise in reviews on GuideStar. The nonprofit also meets the standards set by Give.org.

You can view financial reports from 2005 to 2012, and you can request hardcopies of this information through the website as well. Finding information from frequently asked questions to mailing and email addresses is easy, and it seems the group strives for transparency.

Giving More than a Handout

With the proliferation of personal pleas for assistance on crowdfunding sites like GoFundMe, Modest Needs stands out as a refreshing alternative. Anyone can go on crowdfunding platforms and ask for handouts, with the onus of responsible giving placed on the general public. People asking for funding are under no obligation to use the cash in a particular way; there are no requirements for funded projects after they’ve received money.

Modest Needs, on the other hand, was started and designed as a charity and giving responsibly is ingrained in its stated missions. The organization specifically focuses on helping those who are working and just above poverty level – meaning they’re often making enough to disqualify them from government assistance programs, but making too little to handle a financial emergency.

Some current applications for grants include a Wisconsin woman who lives independently and maintains a job as a housekeeping and laundry attendant, and needs to repair her car* so she can continue commuting to work. Another is from an elderly vet who needs new tires on his car to drive safely through the Colorado winter, while a teacher in Texas needs help to pay an unexpected medical bill.

The requests range in size from large to small – one woman works two jobs to pay all her expenses, but cannot afford to repair her broken washing machine – but all are similar in the fact that they come from working individuals who can cover their regular monthly expenses, but live paycheck to paycheck and struggle to come up with funds for unexpected or emergency costs. You can browse other requests here.

Modest Needs uses donations to fund these types of grants so lower-income, employed individuals can continue on with their lives and avoid having one random, unexpected expense push them into a cycle of poverty that they cannot break.

*Kali Hawlk decided to personally donate to this cause after writing this review.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at Kali@magnifymoney.com

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4 Financial Pain Points for College Students

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Financial Pain Points for College Students

This week, I had the opportunity to visit New York Institute of Technology’s Long Island campus to do a presentation about personal finance basics and student loans. After talking with some students both before and during the session, I figured out that their pain points boiled down to four main categories.

1. Building and Protecting a Credit Score

Credit scores are frequently a section of our presentations that we have to stop and field a lot of questions. There are so many myths out there that cause a lot of confusion, plus a general fear about how to properly use credit cards. I emphasized the fact you don’t need to take out a loan to build your credit score and diligent using a credit card is a free way to get a 700+. Just remember: pay on time and in full!

[6 simple steps for building your credit]

2. Digging Out of Consumer Debt Already Incurred

It’s not uncommon for college students to fall victim to the credit card debt trap. Some students had already started to utilize balance transfers to move debt over to 0% APR. This is a great strategy – but only if you can properly use the balance transfers. I overviewed some of the traps banks are hoping to lure you into with a balance transfer.

[Learn more about balance transfers]

3. Understanding Income-Driven Repayment Programs

Most of the students had federal student loan debt, but hadn’t heard about income-driven repayment programs. These programs, such as IBR, REPAYE, PAYE and ICR can help make payments affordable – especially in the early years after graduation when salaries are likely to be low. The income-driven repayment programs restrict payments to a percentage of discretionary income and then discharge any remaining debt after 20 to 25 years.

[How to set up income driven repayment plans]

4. How to Refinance Student Loans

Not all students can pay for tuition by just using federal loans, which leaves them turning to the private sector. Not only are private student loans likely to come with higher interest rates, but they definitely come with fewer protections and perks. Federal loans offer grace periods, forgiveness, income-driven repayment plans, forbearance and deferment. Private loans lock you in and aren’t always so lenient. However, refinancing does provide the opportunity to reduce interest rates on private and/or federal loans. Students just need to be wary about giving up the protections of federal loans.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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What Poor Kids Don’t Get to Learn About Money

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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I heard someone relate a story about a teacher and a lesson she taught her students. The teacher randomly assigned each student a seat in the classroom. Once the students took their seats, the teacher placed the room’s trash can at the front of the room, under the blackboard.

The teacher asked each student to take a piece of paper, crumple it into a ball, and throw it into the trash can. The students who made the shot were the winners. Those who missed, lost.

The kids in the back immediately pointed out that this wasn’t a fair competition; obviously, the kids in the front rows of the class would have better odds of “winning.” They had fewer obstacles in their way, they had a better line of sight to the target, and they were much closer.

The teacher shrugged and told them it was “fair” because the seats had been assigned randomly and everyone was allowed to throw their paper ball at the trash can. Everyone was allowed a shot at winning.

Reality Check: Privilege Is Real 

The classroom exercise illustrated something very real: some people are randomly assigned a better chance at succeeding than others.

The students in the front of the room were allotted the best chance because they were randomly placed closest to the trash can. The students in the middle of the room had a decent shot, but they had to work a little harder to make it. The students in the back rows faced the biggest challenge.

Were the students in the front of the room the bad guys? Not at all – but they had to acknowledge the fact that they were better set up for success than the students farther away from the target.

The point of this little story is to show us how we don’t all have an equal shot at everything, all the time.

When it comes to money and financial education, we don’t all have an equal shot at learning what we need to in order to succeed on our own in the real world. People with less money often receive fewer opportunities to learn financial principles, practice putting their knowledge into action, and build real wealth from a solid, educated foundation.

And because we tend to think of money as a taboo topic, we don’t have good conversations about finance. And because we don’t include financial literacy in our school curriculum, children from lower-income families don’t get to learn about money in the same way as their more affluent peers who may get financial lessons at home.

The list of what poor kids don’t get to learn about money is long, too long for a simple blog post. Let’s focus on these three big missing money lessons of poor kids to get you thinking about this issue.

Importance (and Know-How) of Investing Money 

Poor kids – or even lower-middle class kids – don’t usually get an opportunity to learn about investing. The best a poorer family can hope for is to put away a few dollars in a savings account. There simply is not enough money in a low-income household to risk losing in a bad investment or volatile stock market.

I can vouch with a personal experience on this money lesson missing from the lives of poor kids. My parents both came from extremely low-income families, and worked hard from an early age to create a better, more affluent life together.

Over the years, they did earn more money and advanced up the socioeconomic ladder. By the time I started school, they were able to purchase a nice home in an affluent suburb with an outstanding school system. Getting a quality education set me up for success later in life; I was the first person in my family to graduate from college.

I was lucky to pick up important money lessons about saving, living within your means, and working hard to earn more money. But I never learned how to invest from my parents with poor backgrounds, because they had no actionable knowledge to give me.

In poor families, there is no knowledge of investing to pass along and share with kids in the home.

Maintaining Good Money Mindsets

Personal finance is personal, and there’s a lot of behavior and psychology involved in being “good with money.” Maintaining a good, positive mindset about money does impact financial success.

When you think positively about money, you’re more inclined to believe:

  • You can work to earn more and increase your wealth.
  • There is enough money to go around; you believe in abundance.
  • You have options in hard times; you can find solutions to financial problems.
  • Money is a tool you can use to create a better life.

But when you have no positive experiences with money, you may feel that:

  • Money is evil and people who build wealth are bad, greedy, or selfish.
  • Money is difficult to possess and hard to manage.
  • You don’t deserve money.
  • You’ll never earn more money and there’s nothing you can do about it.

See the differences here? People who develop a good relationship with finance can feel empowered to seek out answers to their questions and solutions to problems. Those who struggle to make enough money, or have experienced what it’s like to not have enough to adequately meet basic needs, may feel extremely negative towards money.

Poor kids whose families struggle to make ends meet, live paycheck-to-paycheck, or go without proper meals, housing, and clothing have no chance to form a positive relationship with money. They don’t have the privilege to learn about how mindsets and beliefs around finances hold power.

How to Leverage Assets to Build Wealth 

Poor kids may think of all debt as something toxic and negative, but inevitable, if their parents regularly max out credit cards because they have no cash to pay for groceries and receive collections calls each week. They may think that debt is something you’re trapped in with no options for getting out.

Poor kids don’t have the opportunity to learn about how debt can be used to build wealth. This is usually what we think of as “good” debt – but no low-income family will have the luxury to distinguish this from the other bills they’re overloaded with.

Good debt can allow you to borrow money to access an asset you otherwise wouldn’t be able to afford. A mortgage, for example, helps you purchase real estate that you can live in for an affordable monthly cost. You can own this asset while investing cash into other areas, like the stock market. And you have the ability to sell the asset and walk away with a larger cash sum than what you put into it.

Or you could use good debt to borrow money to start a business. Once the loan is repaid, you have an income-producing asset that you own.

Kids who don’t know how to manage debt, evaluate potential assets, or develop their own income streams can’t build wealth in this way.

What We Can Do About It

Things don’t need to be this way any longer. There’s a wealth of free and accessible information on the internet, and that’s a great start. But it helps no one if poorer individuals don’t know it’s there to utilize.

We also need to support financial education and literacy in our schools. We need to foster discussions, provide real-world scenarios where kids can practice what they’ve learned and evaluate the results, and encourage people to ask questions.

This means changing how we think and talk about money on a massive scale, because most of us are taught that it’s “rude” to discuss money openly. But change can start with you, right now.

If you know a thing or two about finance, don’t brush off someone else’s financial question next time they bring up the subject – especially if someone asking you is a child or student. Keep yourself open to the conversation!

Share your favorite resources. Show others where to find personal finance blogs you read, financial podcasts that you love listening to, or books that taught you something important.

Stop thinking of money as taboo and encourage discussion, questions, and education on finances.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at Kali@magnifymoney.com

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The Importance of Financial Knowledge and Discussions

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Greenville-lg

This week, the MagnifyMoney team has been in Greenville, South Carolina. In partnership with the Greenville Chapter of the Rainbow Push Coalition, we are holding a series of workshops and financial literacy seminars with community groups. We have also done the research on the local community banks and credit unions to help people make the best banking choices.

When I created MagnifyMoney with Brian, I had three simple goals:

  1. For people who are already financially literate, we want to have the easiest price comparison website with the best deals. You should never be able to find a higher savings account interest rate or lower credit card interest rate at any other website. And we can do that because we rank products based upon the value to the consumer, not the commission to MagnifyMoney (and we currently receive no commissions)
  2. For the people who don’t feel comfortable making financial decisions, we are designing actionable financial literacy courses and workshops. These are not theoretical classes, filled with equations and tax code. Instead, we help make it easy for you to have the confidence to compare, ditch, switch and save.
  3. For the banks, we have designed a transparency score that rewards the simplest products. And we have a blog that allows us to compliment those organizations that take good care of their customers. But, equally, we are not afraid to shame those organizations taking advantage of people or designing poor products.

To bring number two to life, we committed to spending at least 30 percent of our time out of our offices, and on the road. From classrooms at Brooklyn College to childcare centers in Chattanooga to churches in Greenville, the MagnifyMoney team provides hands-on financial help.

Our Trip so Far

Yesterday, we had a wonderful day with the Upstate Fatherhood Coalition. We hosted a few sessions during the day, and we received a ton of really good questions.

Some of the hottest topics:

  • How to deal with a collections agency, especially for medical bills
  • How to improve your credit score, especially if you are already 35 and don’t have any credit.
  • How to avoid overdraft fees, which hit almost everyone in the room
  • How to get out of payday / title loan traps

We had great conversations, and spent a lot of time talking about Internet-only banks (who have eliminated overdraft fees), and secured cards (which can be really useful for improving credit scores).

We also had the chance to meet with a brand new local credit union. Its goal is to help graduate people from payday loans to non-predatory loans. In order to get the loan (which can charge no more than 18% interest), the borrower has to complete a financial literacy program. Upon successful completion, he or she can refinance up to $5,000 of high interest loans. One woman in particular was moved from a 700% APR payday loan to 18%. And she is paying on time.

But, the best part of this is the mandatory savings element. When her interest rate was reduced at the new credit union, her payments became much lower. However, they don’t let her keep all of that. Instead, they take a portion of the monthly savings and put it into a savings account at the credit union, building the discipline to save.

The manager of the credit union is truly inspirational – and I’m pleased to see these types of efforts at the mico level. The big challenge: how can we scale organizations like this so that a real alternative exists to payday lenders.

Greenville Banks 

Any time we travel, we spend a lot of time looking at the local banks. And this trip is no different. We have reviewed the Top 20 local banks.

Unfortunately, the pattern that we see on the national stage is similar here in Greenville. The average overdraft fee here is $33, similar to the big mega-banks. And, the interest rates paid on deposits are low. The average savings account interest rate is 0.11%.

The Internet-only banks continue to win on fees, interest rates and digital experience.

There is real value – especially for small businesses – to having a local bank. They understand your business and can take care of you when you are in difficulty. But for consumer accounts, the Internet-only accounts just keep winning. I hope to arrive in town one day and become completely surprised by a community bank, but I haven’t yet.

And the city 

Greenville is a beautiful city, with an amazing restaurant culture. The MagnifyMoney team has been well fed by our friends in Greenville, and will miss the real Carolina sweet tea when we head back north.

Greenville_food

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Banking On Our Military: Protecting Service Members from Abusive Financial Practices

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Uncle_Sam_(pointing_finger)

Today we honor the men and women who defend our freedom. In this country, we are extremely fortunate that so many brave Americans volunteer to serve in our armed forces. At incredible personal sacrifice, they go to some of the most dangerous corners of the world to make sure that we remain safe here at home.

My father served in the Army, and I have quite a few extended family members who have also served. I often think about my cousin, who is a nurse in the Navy. I very rarely see her, because she is constantly being sent all over the world. She has served in Afghanistan a couple of times, and often disappears without being able to tell us where she has been. I have so much respect for her willingness to drop everything and do what is asked of her. And, when I thank her, she tells me it is no big deal. And in her mind, it is not a big deal because so many other people who are ready to risk their lives, without hesitation, surround her.

On behalf of the entire team at MagnifyMoney, I want to thank all of the men and women of the armed forces for their service.

Although so many of us show our gratitude for the service of our veterans, there are some people who take advantage of our men and women in uniform, particularly in financial services. Some of the worst offenses include:

  • Debt collectors, who engage in illegal and abusive practices, targeted particularly at service members
  • Payday loan companies, who often use patriotic imagery and set up shop near bases, and charge extortionate prices
  • Banks, particularly targeting service members, with outrageous overdraft fees (a form of payday lending)
  • Mortgage companies (particularly servicing companies) that deny service members the protections that they deserve under the law
  • Large banks that make it too difficult to receive the protections of the Servicemembers Civil Relief Act (SCRA)
  • Any financial organization that doesn’t give our service members the benefit of the doubt

Uncle Bill 2Some businesses make a strategy out of exploiting our men and women in uniform, and their unique living situation. Fortunately, the CFPB has created an Office of Servicemember Affairs, led by Holly Petraeus. If you have experienced difficulties or unfair treatment from a financial organization, you can complain online to the CFPB, by clicking this link. They have a dedicated team that deals with service member complaints, and to-date have helped return $200 million to men and women in uniform.

We will deal with each of the biggest issues below.

Debt Collectors

Service members are uniquely at risk: credit defaults (failure to pay your bills) can result in having your security clearance revoked under the Uniform Code of Military Justice. And collection agencies know that.

Some collection agencies are particularly aggressive, and they will:

  • Contact your chain of command, trying to humiliate you into payment
  • Contact your spouse, making threats
  • Demanding payments from widows immediately, trying to get their hands on the death benefit

This happens far too often, and it is repulsive.

Remember that you have rights, and you do not have to tolerate abusive and illegal debt collection actions. Our recommendation:

  1. Make sure, particularly before a deployment, you have a power of attorney given to someone who can negotiate on your behalf with the debt collection agency. Typically this is a spouse or a parent.
  2. Immediately report any illegal contacts from the agency to the CFPB. Remember: they cannot contact your chain of command. They can only speak to you or someone you designated about your debt
  3. Restrict their ability to contact you, in writing. Below is a sample letter that you can use:

Dear [Debt collector name]:

I am responding to your contact about collecting a debt. You contacted me by [phone/mail], on [date] and identified the debt as [any information they gave you about the debt].

You can contact me about this debt, but only in the way I say below. Don’t contact me about this debt in other way, or at any other place or time. It is inconvenient to me to be contacted except as I authorize below.

You can only contact me at:

[Mailing address if you want to get mail]

[Phone number and convenient times if you want to be contacted by phone]

[If correct, include the following] My employer prohibits me from receiving communications like this at work.

Thank you for your cooperation,

[Your name]

Payday Loans

It is very easy to get stuck in a payday-lending trap. Although a payday loan may feel like an easy solution when you have an immediate need for money, it can become an expensive debt trap that becomes impossible to escape.

Fortunately, there are alternatives for service members. PenFed (a credit union), has a foundation. They have created a program: ARK (Asset Recovery Kit). This is basically a way to escape a payday loan: PenFed will lend you $500 for a $5 fee. No credit report is pulled, no interest is charged, and it is confidential and fast. However, in order to receive the money you need to sit with a consumer credit counselor. I believe this is a good requirement.

You can learn more about this program, and apply here.

Banks – and their Overdraft Fees

Payday lending companies typically charge $15 to $20 for every $100 that you borrow for 2 weeks.

Overdrafts on basic checking accounts can be even more expensive: they can be over $35 per incident. And some of the worst banks are the ones that target the military. When we recently reviewed the fees charged per branch, the absolute worst performer was Fort Hood National Bank, which targets the military. It makes $1.3 million per branch on banking fees – which is outrageous.

Given the mobile nature of a service member’s life, we recommend considering:

  • An internet-only bank, like Ally. They have no monthly charge (with no minimum balance requirement), and completely free ATM usage (including the reimbursement of other bank ATM charges anywhere in the US). In addition, there is no overdraft fee if money is transferred from your savings account to your checking account, and the overdraft fee is capped at $9 per day. You can compare that to other options on our checking account page.

There are certain financial organizations that target the military, and understand your unique needs. However, their overdraft fees are not always good deals, and their ATM networks are more limited.

  • Navy Federal Credit Union: The Active Duty account is great if you can link a savings account or a line of credit. If you link a savings account, there is no fee for an overdraft transfer. And, if you need to borrow money, they offer a reasonable overdraft line of credit that is much cheaper than a payday loan or overdraft at a traditional bank. However, if you don’t have a line of credit or a savings account, you can be charged up to $60 per day in fees, similar to the large banks. In addition, you do receive $20 worth of ATM rebates per month (for active duty). If you go to the ATM 1 time per week, that should cover you.
  • USAA: they also offer decent alternatives. If you have money in a linked savings account, there is no fee for the transfer. However, if you do not have a linked account, there is a $25 overdraft fee and a $29 NSF fee. The ATM network is more limited than other banks, offering access to AllPoint ATMs and select ATMs around the country. USAA refunds up to $15 in other banks’ ATM usage fees each month and does not charge a fee for the first 10 ATM withdrawals. Subsequent transactions will be charged $2.00 each. USAA is also known for their amazing service.

Mortgage Companies 

Here is a common story: your house in underwater (you owe more money on your mortgage than your home is worth), and you receive a PCS (Permanent Change of Station). You feel stuck. When you call your mortgage company, they tell you that you don’t have any options.

They are wrong.

If you are in active duty (or just left), if you or your spouse have been injured in active duty, of if you have received a PCS, then you may be able to qualify for a military hardship on your mortgage.

Fannie Mae has created an entire resource guide here.

Freddie Mac has created a resource here.

I would recommend the following steps:

  1. Tell your mortgage company that you may qualify for military hardship, and you want to talk to a specialist. If you do not receive what you need, then
  2. Contact Fannie or Freddie (depending upon which one owns your mortgage). If your mortgage is not Fannie or Freddie, or you still don’t receive what you need, then
  3. Contact the CFPB Complaint Office.

Don’t wait to reach out. With mortgages, the earlier you reach out for help, the better.

In addition, you have certain protections from foreclosure. If you obtained your mortgage before you entered military service, than the lender is required to get a court order before they foreclose – even in states that do not require a court order. If the lender does receive a court order, and you can prove that you are unable to meet your financial obligations because of military service, the foreclosure must be stopped (or the mortgage adjusted).

Your SCRA Rights

When you join the military, you have certain protections under the SCRA (Servicemembers Civil Relief Act). Namely:

  • Any debt that you had before entering military service (including mortgages, student loans, credit cards and other loans) cannot charge an interest rate higher than 6% while you are in the military. That can be a massive reduction (especially on credit cards), and you should make sure you take advantage of it. Call your lender and tell them you are eligible for SCRA interest rate relief. (Some banks, like Chase, will reduce the interest rate further. Others, like Bank of America, charge the full legal max)
  • You cannot be evicted if your monthly rent is less than $3,047.45 per month.
  • You have protection from foreclosure (as detailed above)

There are some additional rights – which are summarized well here.

Common Decency

Sometimes banks just lack common sense. When my cousin was deployed, she ended up paying her credit card bill a week late. (She couldn’t pay earlier because she was on a ship in the Pacific, called at a moment’s notice). The credit card company charged her a late fee and increased her interest rate. When she explained that she was in the Navy, they didn’t budge.

Everyone is rushing to wave the red, white and blue on Veteran’s Day. But real patriotism is not taxing our service members with obscene charges. That ranges from the small (nickel and diming on late fees) to the outrageous (harassing a widow, illegally, within 24 hours of her husband’s death to collect on a payday loan).

To all service members: I thank you for your service. I encourage you to reach out to us (info@magnifymoney.com) if we can be of any help. And I urge you to complain to the CFPB if you run into trouble. You make too many sacrifices on our behalf; banks and lenders should not have the ability to take advantage of you.

Uncle Sam image taken from Creative Commons.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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MagnifyMoney’s Mission to Increase Financial Literacy

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At MagnifyMoney, we are passionate about increasing financial literacy and financial education. We have been working on developing a basic financial literacy course with Brooklyn College over the last few months, and on Monday I tested out that curriculum on the first 17 students, all of whom are freshman.

I always enjoy getting out of the office, meeting people and listening to their stories. And I had the great fortune of meeting a wonderful group of college students, our financial literacy guinea pigs.

Our course had 5 components:

  • Understanding time perspective, and how that influences financial decisions.
  • Understanding the power of compounding interest
  • Understanding your credit score, and how important it will become
  • How to choose the best checking and savings account, particularly when free does not mean free
  • How to choose the best credit card, and should a college student even get a credit card?

In the class, only 35% of the students had received any prior financial literacy training before our session today. I feel like our education system is not adequately preparing our children for the big decisions that they need to make in college, and I am thrilled to be partnering with Brooklyn College to get them the information that they need early in their college careers.

They have made meaningful financial decisions by selecting a college and a financial aid (or scholarship) package. These student loans will be with them for a very long time, and will influence their financial lives in very meaningful ways. Students should be taught about compounding interest and debt well before they have to make decisions about financing their education.

In addition to student loans, they have become the focal point of bank marketing messages. One student has a checking account from Bank of America, and she opened the account after they arrived at her high school. Yes, banks were marketing at high schools! How can a student decide the appropriate checking account with confidence, if they are not taught about monthly fees, ATM fees and overdraft fees.

Most of the information that I shared with the students came as a surprise. Some of the biggest surprises:

  • Credit scores do not take income or expenses into account.
  • Banks are even allowed to charge $35 for a $6 overdraft. They thought that had to be illegal (and, quite frankly, so do I!)
  • Paying the minimum due will result in nearly 30 years of debt repayment, with the absolute cost turning into more than two times the original purchase price.
  • The power of compounding interest to work towards their advantage. They did not realize how much diligent, early savings could produce for retirement.

From my perspective, I can’t believe how banks continue to use branch locations and tradition (my parents banked there, so I will too) to recruit and keep customers, including the most digitally engaged generation every. The students told me about how they bought books (online), clothes (online), and even food (online). But, when it came to banking and credit cards, they just responded to what was in front of them, rather than price-comparison shopping online.

We need to educate people, starting at a very young age, about the true cost of banking and borrowing products. And we need to build a habit of comparing, ditching and switching. Once the students today realized how expensive traditional banking has become, and how good the other alternatives can be, they committed to behaving differently.

After the lesson, I spent a lot of time answering individual questions. It was great to see their engagement, and I hope I convinced a few people today. But I am excited to take the feedback and make the course even better. For far too long, banks have received far too much for too little. If we can train the next generation to become truly financially and digitally savvy, so much money can be saved.

We have big rollout plans for this course. So, I thank the first 17 for their feedback, and I will write more about our exciting plans soon.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Helping Parents Better Handle Their Money with First Things First in Chattanooga

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Last week, the MagnifyMoney team had the privilege of visiting First Things First, a not-for-profit organization in Chattanooga, TN. FTF strives to improve on the well being of their community and works to strengthen the family unit in the greater Hamilton County area.

Part of the organization’s dedication to family focuses on fathers. FTF notes on their about us page that 77 percent of dads in Chattanooga say fathers should be more active in the lives of their children and nearly 30 percent of the households with children under 18 are headed by women.

In order to help men become, and stay, present in their children’s lives, FTF offers workshops and classes specifically geared toward men. These are men from all walks of life: single dads, married men, expectant fathers, formerly absent fathers, and men who spent time in prison and thus forced to be away from their children.

Not only does FTF teach fathers what to expect from being a parent, but the staff also works hard to ensure success in all fronts. The organization helps men secure jobs, learn coping skills, and figure out how to effectively communicate with their child’s mother.

FTF doesn’t solely focus on men, but also strives to help couples prepare for marriage or deal with difficulty after they’ve exchanged vows.

Our team was given the opportunity to sit down with fathers, mothers and couples to discuss their financial situations and see how we could help make their lives easier.

We found the ingenuity displayed by many of the fathers incredibly impressive.

These men, often tired by being swindled by large banks and corporations, found unique ways to skirt the traditional banking systems in order to keep more money in their pockets. We know it is often those at the lower end of the socio-economic spectrum who are punished the most by bank fees. It’s often the poorest in our communities who are consistently hit with overdraft fees, minimum deposit requirements and monthly account maintenance costs.

We also were touched by a couple who came in to get counseling about how to handle some repairs that needed to be made to their home. The wife owned a home and the surrounding land, which was valued at $175,000. She only had $30,000 left to pay on her mortgage, but was interested in borrowing $20,000 in a home equity line of credit to make some significant repairs to the home, including a new roof.

The wife went on to explain when she started shopping around for rates, one lender tried to offer to her $200,000 when she only wanted $20,000. We applauded her decision to walk away from the massively increased offer because she felt something was amiss. She asked for our confirmation that her gut was correct and how she could secure the a loan without landing herself into a seedy situation.

It isn’t uncommon for a lender to lure a borrower into taking out significantly more than he or she needs, but it also isn’t uncommon for a borrower to jump at the chance to get more money.

Our nearly 10 hours of discussions with mothers, fathers and couples left us feeling more needs to be done to help the unbanked, increase financial literacy and empower every consumer – regardless of their net worth – to feel in control of their money.

We want to give a special thanks to First Things First for letting our team come visit. They’re doing incredible work in their community and proving that a little education and dedication can go a long way to make meaningful changes.

Could people in your community benefit from one-on-one financial sessions? Then get in touch with us via info@magnifymoney.com.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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MagnifyMoney Returns to Chattanooga to Host Financial Empowerment Sessions

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MagnifyMoney Returns to Chattanooga to Host Financial Empowerment Sessions

This week, the MagnifyMoney team returned to Chattanooga, Tennessee. Our original visit in June was inspired by the documentary Paycheck-to-Paycheck, which featured the Chambliss Center for Children. During the documentary, we saw a desperate need for financial education, so we packed up our bags and headed to the Chambliss Center to host financial seminars and one-on-one meetings.

The staff and parents of children at the Chambliss Center were warm, welcoming and shared unbelievable stories with us. So many men and women felt broken by the complex banking system and many had turned to predatory lenders in their hours of need.

During our one-on-one meetings, we provided specific guidance to help people feel empowered and save their money by finding the best financial products for their lives.

We were able to help one woman, we’ll call her Anna, cut her credit card debt by thousands of dollars after we walked her through the process of setting up balance transfers.

Upon our return to the Chambliss Center, we were able to check in on some familiar faces and make some new friends. We were particularly excited to catch up with Anna and see how the balance transfers worked out. Anna walked into the room with a confidence we didn’t see during our last visit. She smiled, joked and shared her enthusiasm that her debt, which just months ago had tipped over $12,000 was now down under $6,000. By utilizing balance transfers, Anna could put all of her monthly payment towards chipping away at the principal instead of just throwing money at interest charged by the bank.

In addition to our time at the Chambliss Center, we were also given the opportunity to provide one-on-one meetings at First Things First, a non-profit dedicated to strengthening families in Hamilton County, Tennessee

First Things First provides a variety of resources for families, but some are focused specifically on fathers who may no longer be with the mother of their children. The organization helps these men learn how to be present in their child’s life, handle child support, find employment and learn the life skills necessary to be a good parent.

We were able to sit down with some of the men and listen to their financial struggles.

Questions ranged from where to bank without being charged fees to how to get a loan from someone other than a payday lender to how do you save money?

We were impressed with so many of the resourceful ways these men, and the women we met, found ways to save money and create strategies for themselves as the underserved and unbanked.

Over the next couple of weeks, we’ll be sharing stories and lessons we learned from our time down in Chattanooga.

We want to thank the staff of the Chambliss Center and First Things First for welcoming us into their communities and a heartfelt appreciation for all the men and women who took time out of their days to come speak with us.

Erin Lowry
Erin Lowry |

Erin Lowry is a writer at MagnifyMoney. You can email Erin at erin@magnifymoney.com

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Inspirational Lessons from the Rainbow PUSH Creating Opportunity Conference

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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A few months ago, I had the honor of meeting Janice Mathis in El Paso, TX. We were both testifying at a CFPB field hearing, where we were arguing for increased transparency in the banking sector. I was incredibly impressed by Janice’s presentation, and we struck up a conversation. By the end of that conversation, Janice had invited me to visit Atlanta for the Rainbow PUSH Creating Opportunity Conference.

I am just one day into the event, but the people and the conversation have inspired me more than you can imagine. I am also reminded of how unfair our society can be to those who have the least. And how much potential our society and our economy could have, if we gave more people opportunity, access and knowledge.

Last night I participated in two events. The first event was at Morehouse College, where we had a discussion about a new paradigm for the digital age. I heard an amazing story from Mary-Pat Hector, who at age 13 reached out to Al Sharpton and by age 16 was the leader of the National Action Network. So many young people (and I was one of them) focus on our own selfish needs and wants. And here was a young woman who took action and started helping others. Nothing seemed too impossible or too difficult.

The Reverend Jesse Jackson gave an amazing speech. (I never thought I would have to follow Jesse Jackson, and that is an impossible task!). There were two parts of his talk that struck me. First, he challenged anyone who wants to do good to get smart. And not just a little bit smart. Deep, expert knowledge is required to make a change. Only when you have the knowledge and the expertise to propose alternatives, can you create a movement. The second part was his insistence upon attitude. He told us that our “attitude determines the altitude.” He lived and fought and was prepared to go to jail for something that seemed impossible at the time. But it was his deep knowledge and intellect, combined with his attitude that helped change the world.

I spoke about the financial system, and how expensive it is to be poor. I started MagnifyMoney because I believe that technology can help provide the knowledge that can arm our working poor, so that they do not have to be victims of extortionate lenders. For the first time, when a financial institution adds a hidden fee or a charge, organizations like ours can let every one know quickly and cheaply. For the first time, we can create marketplaces where a small credit union can compete with a big bank – and win.

I then had the opportunity to attend a service at Salem Bible Church. We heard from members of the legislature and leaders of the community. I once again was given the opportunity to talk about financial education. The message that resonated most with the crowd was the need for them to become demanding consumers in banking, in the same way that they are demanding consumers in any other part of their lives.

This morning, Michael Thurmond inspired me. He grew up on a farm. There were nine children, two parents and no toilet. He used to ride around on his father’s truck, while they ran their daily vegetable route. He told us about a conversation with his father. His dad said, “one day, if you work hard and pray, you can have this vegetable route.” But Michael didn’t want that route – he wanted more. And he got more. He went to college and received advanced degrees. And he ultimately became the first African American in the Georgia legislature. But, when he was campaigning for that seat and going door-to-door, he realized that he was retracing his old vegetable route. And, when he spoke with his constituents, they let him put a sign on the front lawn – not because of him, but because they knew his father. And his father was a good man. And Michael told us that he realized he had in fact inherited his father’s vegetable route.

These have been truly inspiring stories. And they are stories that show the importance of inclusion, of attitude, of knowledge and of action. When I first came to the event, I felt a bit intimidated. Here were these leaders of the Civil Rights movement, and I only had a financial website that is trying to help people save some money. But, after listening to the speeches, I started thinking about overdraft fees. That is $32 billion a year disproportionately hurting the working poor. That is more than 3.2 billion hours of work (at minimum wage) that people are doing across the country. They are spending time and money to enrich undeserving institutions. Credit unions and startup banks have created alternatives: people do not need to spend this much money. If MagnifyMoney can help people compare, ditch and switch their legacy banks – and the result is that we give 3.2 billion hours back to the working poor, can you imagine what they could do with that? If we helped make banking as cheap for the poor as it is for the rich, can you imagine what they could do with the savings?

Events like Rainbow PUSH Creating Opportunity conference are inspiring and influential. I’ve been given the chance to reflect, to challenge myself and to meet people whose stories inspire me to keep going. I just wanted to share these with our readers, because maybe you can get a bit of inspiration from them as well.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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Too Many Companies Take Advantage of Service Members and Offer Poor Financial Advice

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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On Monday, I had the opportunity to attend the Society for Financial Education and Professional Development (SFEPD) conference in Washington, DC.  I presented the results of our study with Professor Zimbardo (on why people make poor financial decisions) to an audience of inspiring educators. But, earlier in the day, I listened to presentations from Holly Petraeus, head of Service Member Affairs at the CFPB, and Richard Cordray, director of the CFPB.

Two big messages came out of the morning session that I wanted to share with our readers:

  1. There are many financial organizations that target and take advantage of our military. The CFPB is working hard to defend them, but I find it so distressing that this problem exists.
  2. The CFPB recognizes the abundance of poor, paid-for financial advice that is flooding the Internet. And they recognize that it is a problem. We created MagnifyMoney because we think price comparison in financial services is fundamentally broken, and I was happy to hear the Cordray’s comments.

Service members

Holly Petraeus leads the Office of Service Member Affairs at the CFPB. That team has three core responsibilities: help with the financial literacy education in the military, monitor financial complaints of the service members and coordinate efforts across multiple agencies.

At MagnifyMoney, we think the ability to complain to the CFPB is one of the great achievements of the post-crisis regulatory world. When you review the complaints of military personnel, you can quickly become sickened by some of the organizations out there that profit from exploitation of the men and women who protect our freedom.

The CFPB has received over 25,000 complaints from service members. Here are some of the biggest areas:

  • Mortgages: service members often have to move at a moments notice. Holly told us that she had moved 24 times during her husband’s 37-year career with the military. Because of the economic crisis, many military find that their homes are underwater. And the mortgage lenders are not forgiving.
  • Debt collection agencies: severe derogatory marks on a credit report can have big implications for a military career, including loss of security clearance. Collection agencies know this, and will push the boundaries of the law and be quite aggressive in collection tactics, preying on their fear.
  • Payday lenders: these companies literally set up right next to military bases. And they often outright break the law. They will lie about protections that members of the service have under SCRA. They will lie about the true cost of the product. And, the products are obscenely expensive.

In one of the worst stories I heard, a collection agency was harassing the wife of a fallen soldier multiple times per day, in breach of the law and absent any sent of ethics or morals.

It is great to know that the CFPB, and Holly, are standing up for our service members’ rights. If you (or anyone you know) has been a victim of an organization that takes advantage of the military, we want to know about it. Please email me at nick@magnifymoney.com

Online Financial Advice

Richard Cordray gave a great speech. The CFPB has helped $4 billion move from the pockets of the banks to the pockets of individuals. And that is just the beginning of the impact that they are having.

However, I was particularly interested to hear his thoughts on how advice is being given on the Internet. We started MagnifyMoney because when you do a search for “best credit card” – or any other financial product, you end up seeing results from people who purely “lead generation” businesses. They want to make money.

Richard said that explicitly, “If you search Google looking for financial advice, you will see 200 firms trying to sell you something. And that is a problem.”

We couldn’t agree more. That is why we created MagnifyMoney – to provide completely unbiased advice that isn’t influenced by the people paying us commissions.

I am happy to see that this is on the CFPB radar – it can only lead to a better industry over time.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at nick@magnifymoney.com

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