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Classes help immigrants tap wealth they’re sitting on

Wed, Jan 23, 2013

Before his immigrant constituency can fulfill his dream of receiving micro loans from banks to start home-based businesses that could lift their communities, they will have to take their money out of their shoeboxes and mattresses, says Dale Asis.

That’s why Asis, who is executive director of the Coalition of African, Arab, Asian, European and Latino Immigrants of Illinois (CAAAELII) is grateful to be part of a new financial literacy program funded by City of Chicago Treasurer Stephanie Neely.

“Newly arrived Chicagoans are often among our most vulnerable citizens,” Neely said at the press conference last month for the Financial Literacy Program (FLIP) funded by adult bilingual education grants from her office. “As City Treasurer I want to make sure that what they don’t know about banking doesn’t end up costing them big bucks.

“Money does not belong under a mattress or stuffed in a shoebox,” said Neely, a 20-year banking veteran and a former vice president at Northern Trust. “Either because of a lack of knowledge, lack of trust, language skills or proper documentation, many new Americans end up spending a large part of their earnings on costly wire transfers and check cashing services.

“We want to change that: we want these families to hang onto every hard-earned penny, and to understand how opening a bank account can save them money and keep that money safe,” Neely said.

The request for proposals (RFP) from Neely’s office last year said that immigrants contributed to almost $6 billion in local spending in 2001 and that 35 percent of Chicagoans did not use traditional banks. Even among bank account holders, 30 percent used check cashing services, according to a 2001 study from the University of Illinois at Chicago’s Center for Urban and Economic Development cited in the RFP.

Through a competitive open bid, CAAAELLI (better known as Ki-yelli) will offer the free classes in banking, budgeting and overall financial literacy classes to between 300 and 500 immigrants in six neighborhoods. Its partner agencies will include:
• Chinese American Service League (CASL) in Chinatown
• Hanul Family Alliance and Korean American Community Services (KACS) in Albany Park
• Midwest Asian American Center (MAAC) on Devon Avenue in West Rogers Park
• Instituto del Progreso Latino in Pilsen and Little Village
• Vietnamese Association of Illinois (VAI) on Argyle Street in Uptown

Some immigrants are afraid of banks, not only because of the 2008 meltdown in the United States but because of history in their home countries, Asis said. He referred to Mexicans who lived through its banking collapse of the late 1980s and early 1990s.

Second, he said, there is the myth that you need a lot of money to open an account. And third, they don’t speak the language very well.

One of his own family members, for example, a recent emigre from the Philippines, used to cash his check at Western Union and split the money between his wallet and his mattress, Asis said.

“I told him every time he cashes a check, it’s $10 and I don’t think the banks charge that much,” Asis said. “But the stereotypes remained. He thought he needed a lot of money and his English was not that good so my mother had to go with him to open the account. Now he has all his money on a debit card that he is using.”

Dale Asis, Executive Director of the Coalition of African, Arab, Asian, European and Latino Immigrants of Illinois

Sionie Sales, another of his cousins, however, said one relative closed his account after three months because the bank required a $200 minimum balance to avoid penalties and he needed the money for food and other bills. He didn’t mind currency exchange fees of $2 or $3 because their lines were shorter than the bank’s.

Sales, a caregiver, recently opened a new account required by her employer for direct deposit of her paychecks. She has to fill out a form that the bank will bring to her agency, which will then return it to the bank.

“I am like a ball passing from bank to agency,” Sales said. What she dislikes most is that she must call a 1-800 number to learn the amount she is to be paid each week, then show the money card and ID. She could be penalized for getting it wrong. What she really misses is her savings passbook from years ago in the Philippines. “You can see how much you deposited and the interest.” And the bank cashiers always had time to give her the itemized report, she said.

The FLIP program will partner with local community banks, which Asis said, “have more patience and time and might have staff that speak their native language.” Popular Community Bank, for example, will work with the Instituto del Progreso Latino program in Little Village and Pilsen while Hanul is paired with the Foster Community Bank two blocks away, where many of the staff speak Korean.

CAAAELII has also won incentives such as $125 for starting an account from Popular Community Bank and free checking for life from Devon Bank, Asis said.

Immigrants need a lot of handholding, in terms of financial literacy, budgeting, creating a better business plan and even social capital: knowing which people on whom to connect, he said.

“These are things that a person from mainstream society can connect with that are not automatically given to you in the immigrant community,” he said. “That’s the role that CAAAELII plays, to serve as that bridge to provide that social capital. Being here for awhile gives you that connection.” Established in 1996, CAAAELII is a coalition of 32 ethnic community-based organizations serving 16 different ethnic communities in 13 neighborhoods across Chicago. Its mission is to strengthen their multi-generational voices by developing grassroots power to impact public policy.

The FLIP curriculum is nearly 200 pages, divided into eight lessons:
• budgeting
• living within a budget
• managing your money
• banking
• credit
• loans
• home buying
• building wealth

Spiral-bound, its big type and graphics drive home simple points, whether the amount of net income you need to buy a home or how to distinguish a predatory loan: “if it seems too good to be true or is not similar to others you have seen, avoid it.”

There’s a case study with “Mary Moneymanager” that rings true for single moms. She has two young children that she supports on take-home pay of $2,450 plus $350 in child support from her ex-husband and $100 a month in food stamps.

“Mary’s” monthly expenses, however, include $1,200 for a two-bedroom apartment, $200 for a neighbor to watch both children until she gets home from work, $300 to her family in her home country, an additional $375 on groceries and $80 a month on student loans. She would like to go back to finish her bachelor’s degree. Workbook exercises make it obvious that Mary should not go over budget on toys for her children.

Later on, the curriculum explains the difference between “good debt” and “bad debt.” Good debt is “smart debt” such as a home mortgage, student loan or business loan, that helps you create wealth, it notes. In contrast, bad debt such as car loans or credit cards can prevent wealth.

City of Chicago Treasurer Stephanie Neely

The Indo-American Center at 6328 N. California Ave. also operated a financial literacy curriculum last quarter with a grant from Neely’s office. Every quarter for a year, the center will repeat its six core workshops: on budgeting, debt reduction, navigating the US system of banks and credit unions; the importance of maintaining an emergency fund; credit do’s and don’ts; consumer fraud and identity theft. Two classes are offered monthly and participants can receive a certificate when they have completed all six classes over the year. Partners include North Side Credit Union and two non-profits, Family Credit Management and Ladder Up.

The goal of the program is to get unbanked immigrants into the formal banking systems, but they are receiving information about credit unions in case that better suits their needs, said Tanvi Shah, workforce development coordinator at the Indo-American Center. Like the Mexican woman Asis mentioned, Shah described a man with no confidence in banks because he had lost money to supposedly safe banks in Pakistan. She said that she described the Federal Deposit Insurance Corporation, which backs individual depositors up to $250,000 in the United States; she hopes that hearing the message often enough will eventually reassure him. About half the program participants did have bank or credit union accounts.

In the first quarter they were offered, classes averaged eight to 10 clients. Consumer fraud and identity theft was an issue, not in the usual sense where a credit card was stolen but where the customers thought they were buying from legitimate vendors and were swindled. Participants learn to protect themselves by shredding credit card offers that come in the mail and by ignoring emails reputedly coming from financial agencies, Shah said.

A page taken from CAAAELII’s Financial Literacy Curriculum, funded through the City Treasurer’s Office

Unemployment or just working survival jobs since the recession means that participants want to learn how to make their money last until the end of the month, Shah said. “Starting financial literacy worked hand in hand with workforce development because as our clients were seeking employment to support their families, they needed to be wise in spending whatever income they had.”

One of the last workshops described 100 ways to save. Tips included calling up cable companies for lower packages, brown-bagging lunches, never going to the grocery store on an empty stomach — or without a list– and ordering prescriptions for three months at a time to save on co-pay.

A few people who had managed to save were interested in whether they should continue to rent apartments or to buy their homes, so the class will bring in a professional, Shah said.

Talking about budgeting and the need to have an emergency fund are discussions that participants have never had with any family member or some outside party who could advise them, she said. This month, Ladder Up and Family Credit Management will provide free one-on-one coaching, helping the people create their personal budget plan, “providing as many options as possible so they can make the right decisions,” she said.

Although the programs could bring new money into community banks and new insight into consumer demands, their real focus is education, said Kant Desai, chief of policy for the City Treasurer’s office.

“We’re identifying gaps in information or whatever sort of impediments new people to America might face when trying to become part of the financial mainstream,” Desai said. “Maybe it’s just a language barrier in terms of getting a mainstream bank account or managing credit. We’re just trying to set a baseline for integrating yourself into wider society. These are things you need to know to be financially stable.”

Written by Suzanne Hanney,
StreetWise Editor-In-Chief

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