Thursday, June 7, 2018

Moving mountains in the Appalachians

How it's happening. Why it matters

One working mom loses her job when she can’t overcome the hurdle of a $600 repair for her run down car. This is Central Appalachia – without a decent set of wheels, it’s tough to keep a job. Another mom turns to an innovative hardship loan program operated by her rural Kentucky employer, Appalachian Community Federal Credit Union (ACFCU) and a non-profit partner. She keeps her job, builds her credit score and accesses expert financial coaching that will help her money move mountains, even at her modest income.

One family of modest income goes to a paid tax preparer and pays $400 so they can get part of their $6,000 refund (minus the fee) the next day. By late spring they are strapped, with little to show for their windfall. Another family gets its taxes prepared for free thanks to an innovative partnership between Tusculum College and ACFCU, but they leverage their advantage far further than $400. They utilize the credit union’s financial coaching to develop a budget. They pay down debt and exchange predatory debt for fair, affordable debt, saving significantly on interest. The credit union introduces them to its grant-funded, $10,500 down payment assistance program, and to a partner in the affordable housing space. The next year at tax time, they are homeowners. In one year, their money has moved mountains. Thanks to partnerships and hard work by the people those partnerships serve, ACFCU repeatedly finds itself at the center of life-changing progress for families.

This is not a personal finance blog, though personal finance and occasional tips will come into it.  It isn’t an advocacy blog that will be filled with strident calls for regulatory or political change. Nonetheless, commentary may appear about the political, cultural and financial industry dynamics that daily and deeply affect the financial lives of Central Appalachians – particularly those who are low and moderate-income or underserved.  

Foundationally, this blog is about people – the good,hardworking people of a region that’s often stereotyped and misunderstood – and the financial challenges they face as they strive for a decent life. It’s also about partnerships, with peopleorganizations and businesses, that counter a prevailing approach to finance gripping our country today, one that leaves many families vulnerable to predatory lending (see photo at right, which contains a personal offer to me -- 36 percent interest). That approach may be legal and make sense from the perspective of risk-based pricing and profit margins. It may be perfectly viable for a segment of our society, and it may be justifiable to shrug one’s shoulders and murmur “c’est la vie” upon hearing that someone hasn’t managed to use that approach to his or her benefit.

The letter of the law and the prevailing approach to financial services leave wide swathes of people underserved, underinformed or at high risk of crippling financial difficulty. Blamecasting, whether against the consumers “who should know better” or the institutions, laws and regulations “who should act better” doesn’t change anything. So, ACFCU is on a journey as a mission-driven, socially responsible financial cooperative. That mission is to use community and economic development to improve the financial health of people and businesses who lack adequate access to capital, high quality financial services and financial coaching in Southeast Kentucky, Northeast Tennessee and Southwest Virginia. The credit union’s designation as a “Community Development Financial Institution” (CDFI) has opened doors to funding opportunities, partnerships and other resources that help ACFCU pursue such a daunting, expensive mission.

Along with a small number of other CDFI credit unions pursuing this mission, ACFCU must balance its financial safety and soundness with the mission at hand. The national credit union motto of “Not for profit, not for charity, but for service” rings true here. Through ACFCU’s purpose statement of “Building Financial Relationships One Member at a Time” (and through service to non-members) the credit union’s staff and partners are striving to “teach people to fish” as opposed to simply giving them fish. Mmmmmm… fish.

I am very privileged in my communications role at ACFCU to gather and share the underlying stories that the credit union is part of thanks to its work and that of its partners. My work in that realm, as a financial coach and in community relations, also exposes me to the issues and concrete challenges facing us, our partners and, most importantly, the people we serve. The links throughout this post lead to a few of those stories. Member impact stories will remain an important part of this blog. Along with broader observations and important facts about maneuvering our financial system so that your money can move mountains, I look forward to sharing them with you.


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