Sharing in the American Dream
Share program triples savings for low-income earners with goals in mind
Saturday, March 2, 2013
Share’s Individual Development Accounts
To learn more, visit sharevancouver.org and follow the Programs link to “IDA Program.”
Or, call Laryn Dole at 360-952-8204.
Penelope Lane Royce has no idea yet what she's getting into: a family home.
By the time you read this, the already-named baby girl may have been born to Rebecca and Ian Royce -- and their 10-year-old daughter JayLynn, and Rebecca's dad Ray -- and welcomed into their house on Northeast 114th Street, east of Highway 99. When The Columbian visited on Thursday night, Rebecca was basically due "any minute now," she said.
But she wanted to show off the house that she and Ian bought last year with savings bolstered by an Individual Development Account via Share, the local nonprofit agency that tends to the homeless and hungry. Share is famous in Clark County for operating shelters, hot meal service and even weekend food distribution to hungry families via school
children -- but it also works behind the scenes to steer people at risk of homelessness, or stuck in poverty, out of the danger zone and toward a better future.
In the case of the Royces, that meant saving up for what turned out to be a few short months in order to afford a $6,000 down payment on a short-sale house that offered 2,300 square feet and a two-car garage plus a spacious yard on a quiet suburban loop. They gladly left behind their 700-square-foot duplex rental and its alleyway near Grand and 29th streets.
"We really needed this," said JayLynn, who offered good cheer and many opinions during the interview. Her new bedroom, she said, has a couple of advantage over the old one: it's twice the size, and she got to paint it purple.
"It's a great experience to be able to provide a home and the stability that comes with a home," said her mom, Rebecca, 35. All the family had to do, they said, was get really serious about scrimping and saving -- and put that savings away in an Individual Development Account. The account tripled their money.
"We never would have been able to save up for enough money for a down payment" without the IDA, Rebecca said. "It would have taken years instead of months. It would have put off our dreams for quite a while."
As the Great Recession of the last several years resulted in widespread layoffs and foreclosures, the vulnerable underbelly of the American Dream became obvious: we don't save much.
According to a 2012 survey released last month by America Saves, a project of the Consumer Federation of America, two-thirds of Americans have sufficient "emergency savings to pay for unexpected expenses like car repairs or a doctor visit," but only half of working Americans regularly contribute to a retirement plan, and just under half are saving enough to expect to enjoy a "desirable standard of living." Just 43 percent said they were saving enough to achieve their goals.
Last summer, CNN reported that half of all Americans don't have enough savings to cover three months of expenses, and one in four Americans has "not a single penny" saved. America Saves' new report also says that "key savings indicators" worsened or stayed the same over the past three years. The recession may have prompted some Americans to pay down credit card debt, but it didn't help them stash away precious resources for the long term.
Rebecca Royce was fully employed by Clark County, but her rate of pay as an office assistant sure didn't speed her family toward their goal of a home to call their own. Her husband was unemployed and her father-in-law was renting nearby. It was Rebecca's colleagues at work who urged her to check out the IDA program.
Although IDA is administered by Share, you need not be homeless and destitute to qualify, said program manager Laryn Dole. In fact, you can't be: this is an "asset-building" program, Dole said, for people who are earning an income -- up to 200 percent of the federal poverty rate, or $22,980 for one person or $47,100 for a family of four -- and can commit to putting away at least $50 a month. They also have to take 10 hours of financial education through the Community Housing Resource Center, a sister nonprofit.
Applicants need to provide proof of income and tax returns as well as a specific goal to save toward -- education, a small business or a home. Cars and personal computers used to qualify too, Dole said, but not anymore.
"We develop a personal budget, and that helps us decide whether the applicant will be successful or not," said Dole. Applicants who wind up most months in the red generally get turned down, she said, but many others are easily approved. Share opens a "restricted account" at Pacific Continental Bank, Dole said, and clients start making monthly deposits. Their money, up to $2,000, is matched two-to-one -- in other words, it's tripled -- by Share, drawing on a $500,000 grant from the U.S. Department of Health and Human Services as well as other sources.
"It's like $4,000 of free money," said Dole. "I'm getting steady calls about this all the time." Approximately 120 households have enrolled in the program since it started in 2008; approximately 50 have graduated successfully and went on to purchase homes, vehicles, education, personal computers or to start their own businesses; 35 more have withdrawn from the program.
Why? Because of emergencies, or they overestimated their cashflow and ability to save, Dole said. If they have to pull out, their savings are returned to them -- without any match.
But three specific types of emergencies are covered: if you face an eviction, a job loss or a medical emergency, you can borrow your money back, as long as it's replaced within one year, Doyle said. Share will write a check directly to the payee -- the doctor or landlord, for example -- to cover the expense, but never hands emergency money over to the client, Dole said. Car breakdowns, utility problems and other sorts of troubles don't qualify, she said.
Nickels and dimes
Right now, Dole said, nearly 50 households are busy saving up in the program: 24 to buy homes, seven to start business and eight for school. (Seven more are at the "tail end" of saving for cars, Dole said, but that goal is no longer accepted for new applicants.) Since other sources of assistance are available for home down payments, some homebuyers use their IDA money for closing costs and those other "last-minute costs, the assessor, the title company, all those things that really add up," said Dole.
Dole said she encourages people in the program to roll their tax refunds right into their IDA accounts. "Especially with the earned income tax credit and the child tax credit, you can put a good chunk in the bank," she said.
That's exactly what Rebecca Royce did: save her tax refund. She also saved chunks of the student loans she took out while a studying business administration and human resources at Washington State University Vancouver. All those dollars were tripled. But it didn't stop there, the Royces said: the discipline of savings really begins with nickels and dimes, not big checks.
"It was just a matter of keeping on top of it," said Ian, 37, who was unemployed then but now pulls in a few dollars a week helping out at the nonprofit Arc of Southwest Washington. "Every time we had a chance, we'd save rather than spend."
"You stop eating out. You save a lot by buying your own groceries," said Rebecca. The family cut back on grabbing fast food two or three times a week -- which sure was convenient for Rebecca, given her overbusy schedule of work and schooling -- to maybe once per month. They also worked out a deal with Rebecca's father, Raymond Legall, to come share their dream house in return for financial help.
Legall, 69, once owned his own home, but said he's been renting for the last several decades. Now, he's looking forward to watching the daffodils he planted come up in his own front yard.
The 1971 home the Royces bought was a definite fixer-upper, and they managed to buy it for well under its appraised value because it was a "short sale" -- that is, encumbered by the previous owner's debt. Ian said he's been learning a whole lot about the constant responsibility of being a homeowner.
But that's OK, he said. It's great that his 10-year-old daughter, JayLynn, can ride her bike on quiet streets in a safe neighborhood; it's great that his second daughter, Penelope Lane Royce (a k a Penny Lane, a guaranteed Beatles fan even before birth, Rebecca said proudly) will grow up in her very own home.
"The really neat thing is, when you're saving up they send you statements that say, here's your two-to-one match," said Rebecca. "You can see how fast it's growing. It's very encouraging."