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The Importance of Financial Knowledge and Discussions

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Modest Needs: Legitimate Help for Those in Need

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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4 Financial Pain Points for College Students

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.