TEACHING FINANCIAL FITNESS

(Article published in HWW Nov 2005)

By the time Jacqui has paid for her family’s food, household expenses, clothes, and other absolute essentials, there isn’t one cent left over. She keeps asking the question: How can anyone save money -- in fact, how can anyone avoid going into debt -- if their income isn’t big enough to cover their expenses?

Or take Sylvia who uses a credit card to buy clothes and just about anything else she wants. Suddenly she loses her job. Paying that debt is the last thing on her mind because she’s in survival mode. She needs to pay her rent. So the debt just sits there and gets bigger and bigger. Then one day she wants to get a job -- or an apartment -- and she can’t because she has bad credit. While Sylvia wasn't looking, that $200 debt has grown to $2,000. Multiply that by five credit cards and you can imagine what she’s facing.

Awilda Velez, financial counselor, hears stories like this every day. She tells her clients how to take control of their finances and their future. And they listen because she is drawing on her own life experience to teach others.

Awilda Velez describes herself as a "high school dropout and former welfare mother who was homeless and bankrupt" before she took control of her own life. A single mother of four, she went back to school and graduated with a Masters Degree from Lehman College. In 2001 she founded a consulting business and two years ago formed a not for profit organization called Cultural Renaissance for Economic Revitalization (CRER) to educate low and moderate income New Yorkers in ‘financial fitness’."

One of her newest projects is teaching "financial fitness" at a city-sponsored HomeBase program for New Yorkers in danger of becoming homeless.

"Financial fitness ," she says, "is a tool that changes lives because it teaches people the importance of setting goals, tracking expenses, developing a financial fitness plan, and taking action in order to meet your goals."

"The worst mistake people make with their money is they don’t track what they spend. If you don’t track it, you can’t control it."

"The first step in money management is getting all family members to sit down together and agree how to manage their money."

She suggests starting with a 4-week project. Keep a page for each week and keep a written Expense Record of family spending (see an example below). You might keep a little notebook or tape a bag on the fridge into which you stuff receipts for everything you buy. With most categories of spending such as food, clothing, household products, personal grooming, and transportation, you can choose -- whether to spend more or less.

After four weeks, add it all up. Subtract the total from your income and you’re ready to take control of your finances.

"I guarantee," she says, "If you keep track for a month you will come up with at least $50 to $100 in savings. You’ve converted spending into savings."

Awilda often recommends what she calls an "envelope system." You make an envelope for each major spending category: Food, clothing, household products, and so on. Now that you know what you have been spending each week on each category, put that amount of money in its envelope and you don’t spend any more than that.

Then, the next step is to decide to reduce the amount you spend. Say, you’re spending $30 a week on household products. You can decide to cut that back to $20. You are converting $10 in expenses into savings.

"I did it myself about ten years ago," she explains. "I realized I hadn’t been able to afford to take the children on vacation. We decided to make a plan. I made an envelope for everything I spent. The kids became accountable for their lunch money and transportation. I found I was spending way too much on household products and groceries so I cut back. I stopped buying fast food so often. I started cooking for two days. I minimized some foods like chips and donuts. Instead of buying $80 worth of groceries I cut it to $40."

Awilda smiles with pride, "So I was able to take my children on vacation to Virginia to Busch Gardens."

"I have not met one person who wasn’t surprised at how much they spend."

If you would like to reach Awilda Velez, call 718 823 2572 or 917 545 0738 or e mail her at awildavelez@msn.com.

Debt is the single biggest obstacle to taking charge of your money, Awilda says. She urges her clients to call for a credit report to avoid identity theft and be sure bad credit doesn’t stand in your way of the job or apartment you want. You’re entitled to a free credit report once a year. Call any of the agencies listed here:

TransUnion
PO Box 2000
Chester,
PA 19022

800 916 8800

Experion
PO Box 2104
Allen,
Texas 75013

888 397 3742

Equifax
PO Box 740241
Allen, Atlanta,
GA 30374

800 685 1111