Ways to Work: affordable loans with impact

Program helps low-income people stop simply spinning their wheels

By Scott Hewitt, Columbian social issues & neighborhoods reporter

Published:

 

Ways to Work

Learn more about Ways to Work and Metropolitan Family Service at:

http://www.metfamily.org/family-support/

or call Abby Wood at 503-232-0007 ext. 103

The world is a better place because Jenny Rund, an itinerant personal caretaker and Certified Nursing Assistant, has affordable wheels.

"I really need a reliable car," Rund said — and she's not the only one. Her elderly and disabled clients rely on Rund's new(ish) 2004 Kia Rio to get them to their doctor appointments. She also takes them on essential grocery and pharmacy runs as well as social outings and thrift store visits — which may be less crucial but seem plenty important to Rund. Otherwise, she said, these folks rarely get out of the house, see anybody or do anything pleasurable at all.

Closer to home, she added, her minor son and her disabled boyfriend, who doesn't drive, also depend on Rund and her car for connections with the outside world. Plus, she said, one of the two jobs that she cobbles together into a reasonable full-time income also comes with health insurance.

"Without this car I wouldn't have my agency job. Without my agency job I wouldn't have health care," she said. Clearly, a whole bunch of lives depend on Rund's Kia Rio.

"It's a real champ," Rund said of her shiny little car. Her pride reflects the hard work she's put in to gain financial literacy, repair her formerly crummy credit and qualify for the extremely favorable car loan that leveraged her back onto the road after her old beater of a Buick, a 1993 LeSabre, gave up the ghost.

Because her credit wasn't the best, she first qualified for a towering car-loan rate of 34 percent, with the bulk of each payment going to interest, not principal. Rund managed to talk the loan company down to 29 percent, but her monthly payments still would have eaten her alive, she said. She calls such lenders "legal loan sharks."

So Rund was thrilled to connect with a helpful new arrival in Clark County: a program called Ways To Work, offering financial education classes and credit coaching to low-income working families. After completing the financial education component, participants are eligible for low-interest car loans of 8 percent.

Rund is one of the first Clark County graduates of the Ways to Work program, which Portland-based Metropolitan Family Service brought to Clark County via a $30,000 grant from the Community Foundation for Southwest Washington. The plan is to get 80 local people graduated from the program and to issue up to 40 loans.

The cost to Rund: one initial $10 money order. "It was the best $10 I've ever invested," she said.

However, when the program started, she was "mistrusting," she said. "I haven't even started and they already want money," was her attitude.

Her mistrust quickly melted. The $10 payment was to prove her dedication, she realizes, and now: "I've learned all about principal and interest, I've learned about credit and how to repair it, how to build it, what's a soft credit check and what's a hard credit check. I've learned about paying on time. And I've learned a lot about tracking my spending. I haven't been as frugal as I should be," has been one important realization, she said.

And, in the end, she qualified for an extremely affordable $6,000 car loan. She's paying just over $200 a month, and most of that is reducing the principal, she said. Plus, Ways to Work took over and retired her previous "loan shark" loan.

"I can't tell you the number of ways it's helped me," she said. "When one of my clients passed away and my hours decreased, they deferred my payments for two months. They have been amazing to me."

Baggage release

It's all part of a broad strategy by the Community Foundation of Southwest Washington to end the cycle of "intergenerational poverty" by releasing families from baggage, such as debt and bad credit, that keeps their interest rates high and hurts their cash flow and their ability to save. Ways To Work aims to get those families affordably mobile — on their way to jobs, schools and other opportunities — while also freeing up other funds that they can use to afford a better quality of life, according to MFS program manager Abby Wood.

"A lot of participants are working in the health care field," just like Jenny Rund, Wood said. "For a lot of those jobs, transportation is key. You may not be working normal hours. You may need to take your patients from place to place. Those are good, stable jobs that some people can't get because they don't have transportation."

The financial education piece starts with a two-hour class, Wood said, but after that "we work one on one because everyone's case is so different. We provide that throughout the life of the loan. If you're having a hard time, if you want to meet with us and rebudget, we're there for you."

The program reports to credit rating agencies, she said, so participants who make their payments and do well with the program watch their credit score continue to improve, she said.

Plus, Rund's success in the program qualified her for a further opportunity: an Individual Development Account, which saves $2 on her behalf for every dollar Rund stows in a restricted savings account. That account will be untouchable until the whole thing has grown to $6,000 and can be used for a down payment on a home. That's a program of Share in Vancouver, but it was Wood who first sent Rund to check it out.

"We work closely with Share, and they had some slots available and I knew she'd be a great fit," Wood said. "She really seized that opportunity."

No waiting

Wood said Ways to Work is a national program developed decades ago by the Alliance for Children and Families; local nonprofits can "pick it up" and operate it where they are.

"It was originally created to help families facing barriers to unemployment and school because of transportation issues." If you work a complicated schedule or live out in the country, urban public transport may be of no use to you.

"Everyone in this program is a parent and everyone has a job — that's one of the requirements," Wood said. "But a lot of times people are just hanging on, making it work with bikes, or begging rides, or taking the bus if they can. But that really limits the opportunities parents have for employment. You can't take a sudden swing shift if it's offered. And you can't take any job that requires a vehicle."

People who have poor credit or no credit history at all "can't get a loan at an affordable rate," Wood said. "These lenders say, `Sure, we'll give you a loan, at 35 percent interest.' We find these families who are earning a decent enough wage but not enough to cover a car payment of $300 to $400 every month.

"Our interest rate is 8 percent. Everyone who goes through the program gets exactly the same rate. For many people it's cutting their payments in half. They're not stuck in a $5,000 loan where they're actually paying $15,000 when you add the interest."

Wood said the program, which just started in Clark County, has room: "We have capacity. There isn't a long wait list. How many programs can say that?"