Innovative solution to financial problems

When talking to friends and family, a topic is taboo almost everywhere.

No, it doesn’t necessarily have to be sex or politics, although either could cause some uneasiness in some circles.

The biggest problem, according to researchers, is money, specifically your finances or financial health.

But failing to talk about finances can have devastating effects on someone’s life. A local nonprofit recognizes the devastation that poor financial health can have on an individual or family and is doing something about it.

Why is money such an uncomfortable and emotionally charged topic for many of us?

Maybe we didn’t save on purpose or don’t believe we have the ability to save. Feelings of shame and embarrassment can be overwhelming.

We may compare our financial situation to others or what we assume others are making and assign a value to ourselves based on those assumptions.

The resulting embarrassment and shame can cause a person to suffer unnecessarily or make foolish financial decisions, such as moving away. B. resorting to payday loans or credit cards, which simply worsen the financial situation.

Aware of the incredible financial strain some families are facing, Catholic charities in central and northern Missouri have stepped in to find a path to better financial health.

For some of these families, the financial burdens are passed on from generation to generation.

Kathy Frese, the financial stability specialist at Catholic Charities, said she has been impressed by the financial lessons parents have given some of their clients. Customers were essentially told that after a certain age they were adults and should manage their own finances.

A “sink or swim” approach doesn’t work for people trying to get their finances in order, she said.

“We want to put them on the road to success,” said Frese. “We don’t want to put them in a position where they fight.”

Setting her up for success focuses on a financial wellness program the nonprofit launched over the summer. Modeled after a similar program run by Catholic charities in Northeast Kansas, it aims to break a cycle of predatory lending.

The program is designed to help families gain control of their daily and monthly finances, gain the ability to absorb financial shocks (or overcome emergencies that cause financial stress), get on track to meet financial goals, and create financial freedom to make decisions that allow them to enjoy their lives.

A donor to the Catholic charity helped establish a partnership with Mid-America Bank, which could lend to qualified customers and repay existing payday loans or credit cards.

How bad can the situations be?

One family helped through the program was matched with a high-interest payday loan with an interest rate of 300 percent.

“When I went to pay off the loan last week, it was clearly visible on the counter – 300 percent interest,” Frese said. The current key interest rate is 7 percent. “Our program is Prime plus 3 percent. That’s quite a significant amount if you want to get that rate.”

The partnership enabled the family to refinance the loan at a lower interest rate and with a defined loan end. This is a better path to financial health.

But the program doesn’t stop once the customer gets the chance to get the loan. Clients participate in monthly case management with Frese during the loan program.

Sometimes, she said, it can take just a few hours for a person to think about a financial decision to decide if they have alternatives.

This program is successful on so many fronts.

It acknowledges the personal shame the person feels and identifies how they got into this situation; it relies on turning to someone you can trust to help; and it sets out a strategy that achieves the goal of reducing financial stress while building the person to make better financial decisions.

Taboo topics like personal finance only have power when we avoid or hide the topic. By bringing the issue up and talking about it, we gain power over it and can solve the problems it causes.

Catholic charities and their partners in the Financial Wellness program have set a great example of how we can help people with financial difficulties find a better way.

– NewsTribune