Financials

z Do you have debt that you want to get rid of?

New Mexico Project for Financial Literacy (NMPFL) offers a free 20 hour course over 10 weeks to qualify low income residents for Individual Development Accounts (IDAs).

 Curriculum Topics:

v Values and Goals

v Record Keeping

v Budgets and Spending Plans

o    Spending leaks

o    Compounding

o    Emergency Funds

v Credit Management

o    Good debt/bad debt

o    Guidelines for affordable debt

o    Secured vs. unsecured debt

o    Credit and divorce

o    Bankruptcy

v Tax Topics

v Investing in Assets

o    Economics of vehicle ownership

o    Buying a house

o    Education funding

o    Asset allocation

o    Finding money to invest

v Risk Management

o Types of risk

o Strategies for dealing with risk

o Role of insurance

v The Economics of Disruption

o   Divorce

o   Unemployment

o   Disability

o   Role of Emergency Funds

v Retirement Planning

o   Tax deferred accounts

o   SSI Benefits

v   Estate Planning

To register for the next free Financial Literacy class in Sierra County, please contact:

o   Sharon Finarelli at 894-3469 sfinarelli@communityactionnewmexico.org

o   Kim Audette at 740-1988 (kcaudette@yahoo.com)

The New Mexico Project for Financial Literacy:

v         identifies financial literacy training needs and opportunities

v         locates collaborative partners

v         designs and develops programs

v         consults and teams with agencies and NPOs

v         trains the trainers and clients in the tools and techniques of financial literacy.

     An Asset is something of value, that will likely increase in value over the years.  Although “value” is often referred to as how much money an object is worth, there are other types of value.  Learning a skill or trade that will help you secure a job, developing strong financial management skills, and learning how to get the most from community resources are all strong assets that can not be taken away from you.

Assets eligible under this plan are:

z Creation or expansion of a business

z 1st time Home Ownership

z Education (college or trade school)

þ    How do I know if I am eligible to save?

a.  The adjusted gross income of the household falls within 200% of the federal poverty guidelines. 

As of January  2007 – 200% Federal Poverty Guidelines

b.  The adjusted net worth of the household (excluding a home and one vehicle) falls under $10,000.

þ    Why save this way?

These accounts are custodial accounts that will not put your federal or state benefits at risk. 

þ    What if my income goes above the requirements while I am saving?

Once you qualify to open an IDA, you do not have to re-qualify.  If your net income or net worth moves above the requirements you will not be removed from the savings opportunity.

þ    What do you mean by custodial account?

The savings account is a partnership between you and the organization you are working with.  The account will be opened in both your names and will require two signatures for any withdrawals.

þ    Can the organization take my money?

No.  The savings account is your encumbered account. Your signature is required for any action on that account.  You can stop the matched savings plan at any time and remove your money from the account. 

þ    When can I withdraw my funds?

Anytime.  However, in order to receive the match funds as well, the following must be complete:

z   Savings held in the bank for no less than 6 months;

z   Graduate from the Financial Management and Planning Course à prepare a Household Budget and a Family Financial Plan;

z Complete an Asset Plan showing use of funds.

þ    What do you mean by “matched savings”?

Your savings is matched at a 4:1 ratio – a match of $4.00 for every $1.00 you save.

þ    How much will you match?

$4,000 is the most that can be matched to your account.  This means that we will not match over $1,000 of your personal savings, for a total account of $5,000.

þ                Will this affect my benefits?

NO.  The IDA will result in a check that is paid to your goal.  The assets that result do not affect benefits.

þ    What if more than one person from my family wants to save?

It is okay to open up more than one account per household.  No more than $8,000 will be matched within any one household ($2,000 of your personal savings).

þ    What if I have a disability?

The IDA does not affect benefits.  Coaches are available to locate and provide assistance.

þ    What if I want to save more than $1,000?

You can save as much as you like in this account.  Once you reach $1,000 the match (4:1) will stop, however you may continue adding to the savings.

þ    What if I did this already?

It is okay to open more than one account. 

þ    Tell me about EITC.

The Earned Income Tax Credit (EITC) is a tax refund that must be claimed (i.e., you must fill out a very specific form) in order to be received.  If you had an earned income this year and you fall within the income guidelines you may be eligible for this income tax return. 

þ    Where do I go for EITC help?

To find out more call TAX HELP New Mexico: 224-4TAX, Feb 1^st – April 30^th.  TAX HELP has qualified tax preparers throughout New Mexico who will help you file your state and federal income taxes for free.

þ    How do I open an Individual Development Account?

Call 740-1988 for more information or email:  kcaudette@yahoo.com.

Financial Study Groups

     Another benefit of a certificate from the free 20 hour course in Financial Literacy is membership in Financial Study Groups.  There are no income/asset requirements.  Each group has its own agenda. 

These financial groups:

z  study an assigned article on relevant financial matters,

z support each other's financial progress and

z some groups qualify for micro-loans at no interest.