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“Your Credit Counts” Literature is displayed by seminar primary speakers (L to R) Dr. Tom Rains, and John Saddler.

Spend a day. Buy a house.
Of course, nothing is quite that simple, but Compass Bank, the Alabama Council on Economic Education and New Hope Community Credit Union have teamed up to offer a series of day-long financial literacy workshops in Birmingham. Your Credit Counts teaches people to take charge of their finances today, save for tomorrow and, yes, achieve their dreams of home ownership.

To help make home ownership a reality, Compass participates in a grant program for down payment assistance—up to $5,000—to those who complete the workshop and qualify for home loans. “Home ownership is a real step up, because a home lets you accumulate wealth that can be tapped for college or retirement,” said Joy Braasch, Senior Vice President, Corporate Compliance, Compass Bank.

Who should attend? “Do you spend more than you earn? Do you know how to budget? Do you know how to establish a relationship with a credible financial institution? Do you understand credit? Should you buy or rent a house?” asked Dr. Tom Rains, Executive Director of the Alabama Council on Economic Education. “If you want answers to any of these questions, you should attend. Financial literacy is lacking in many families, but it is particularly important when resources are limited.”

Other topics taught include: mainstream versus alternative financial providers; credit scams and schemes; managing credit; recovering from bad credit; obtaining financing; buying a home; and predatory lending.

“In short, we give people the information they need to make choices,” said John Saddler, Vice President of the New Hope Community Credit Union. “You can choose to buy a $1,000 plasma TV screen from a rent-to-own store, pay $20 down and take it home today—of course, you’ll be paying $20 a month long after that set is in the junk yard. Or you can choose to save the money, pay cash and let all of those $20 interest payments help put the kids through college.”

“We also talk about fixing errors and correcting bad credit,” said Rains. “A credit report is the ‘text book’ for this particular lesson—and after Dec. 1, any individual can apply to any of the three major agencies and get one free. Meanwhile, we work with sample ‘John Doe’ reports—and give them toll free phone numbers and web sites for pulling their own.”

Check 21 was a big topic of discussion at the October session. The Check Clearing for the 21st Century Act (commonly referred to as Check 21), which became law on Oct. 28, 2004, lets banks substitute electronic images for paper checks. “While Check 21 will cut down dramatically on payment time, that can take some getting used to for folks who have relied on float for years,” said Braasch. “For example, if you used to write a check at the grocery store on the day before payday, your paycheck would be in the bank in time to cover that check. But now, the grocery store can deduct your check from your account immediately. That could result in an overdraft. People need to understand that.”

“We talk about avoiding expensive debt – credit cards, payday loan shops, etc.,” said Saddler. “We encourage people to open a checking account at a bank, have their paychecks deposited directly into the bank, and avoid running up debt on plastic. Spending plastic does not feel like spending money.”

He shared a personal experience about payday loan shops. “Once, my daughter, who lives in Detroit and makes a good salary, borrowed $300 from a payday loan shop. When she was late with her payment, she learned the hard way that the shop charged a whopping $90 in late fees—per month—for that $300 loan. Oh, you don’t know how angry I was when she called me for help!”

Then there was the question from an attorney whose client had nearly $50,000 in credit card debt. The attorney asked: “How do I tell him how to get out?” Rains responded, “I’m not being flip, but when you’re digging a financial hole for yourself, the first thing to do is ‘Stop Digging!’”

The first workshop was held in Birmingham, on Oct. 23, 2004. Participants gave leaders high marks for coaching them about the benefits and intricacies of setting goals, budgeting, establishing or repairing credit, and moving toward home ownership. Additional workshops were conducted on Nov. 20 and Dec. 18, from 8:30 a.m. to 1:00 p.m. at the New Hope Baptist Church, South Avondale, 4022 4th Avenue South, in Birmingham. The free cost included lunch. Call 205-941-1800 to participate in future workshops.