likely to receive subprime loans compared to whites during 2006. About 26% of mortgages for home purchase by whites were sub- prime. For Hispanics, it was 47% and for African Americans, 53%. Whether this is due to discrimination, or bad advice or something else remains a question to be pondered by groups like the Economic Policy Institute (EPI). Recent studies suggest that creditworthiness—alone or in combination with factors other than race—cannot account for these disparities. These studies coupled with the long history of racial discrimination in lending, raise the prospect that discrimination may be a real factor in the high rates of lending for minorities.
As we have seen with the recent mortgage meltdown, these financial issues eventually wind up affecting all of us in one way or another and desperately need to be addressed with more regulation and oversight and more financial literacy programs and education. Personal Finance 101 should be mandatory as a part of every high school education. More information should be made available in Spanish and other languages. Predatory lending should be better regulated. Loans and credit should be made much easier to under- stand and less of a potential mine field. All of this may be true, but ultimately, your financial health is up to you and depends on the choices you make. We live in a credit-dominated society, one that is complex and quickly changing. Even the most financially savvy among us struggle at times to put all the pieces together. However, it is something that every individual must take responsibility for. It is especially important for those who have children and dependent family members. Make a budget, create a plan and educate yourself. If you are already in trou- ble, get help. Ignoring financial and credit problems the worst thing you can do. Take action and take control of your own destiny. Here are a few more reasons to remind you to remain on guard. The National Foundation for Credit Counseling (NFCC) – MSN Money 2008 Financial Literacy Survey (conducted early in the year) revealed these disturbing results, particularly as they relate to Latinos.
Most startling among the findings includes: • Twenty-eight percent, or roughly 6.6 million Latinos, admit to
struggling to pay their bills each month, sometimes skipping month- ly payments, having accounts in collections or seriously considering filing for bankruptcy. • For most households, housing costs comprise the single largest monthly expense. Roughly 1.7 million Latinos reported that they either paid their mortgage late or totally missed a payment in the last 12 months, putting their most important investment at risk.
• You can’t know where you’re going unless you know where you are. Nonetheless, 21 percent of Latinos admit to having no idea what they spend their money on. That’s roughly 5 million people who are ignoring a basic step to financial freedom. • Particularly frightening is the fact that 58 percent, or roughly 13 million, among the Latino population report no savings beyond that which is earmarked for retirement. These people are one emergency away from financial disaster. • Further, 37 percent, which calculates to almost 9 million Latinos, have nothing saved for retirement. Combining these two numbers reveals that several million Latino adults are living on financial thin ice, unprepared for the inevitable emergency or retirement. • Insurance coverage can substantially reduce financial risk. Consequently, having adequate coverage is a key component of main- taining good financial health. Latinos are again in jeopardy, with - Thirty-five percent, or more than 8 million, having no medical insurance.
- Fifty-nine percent with no homeowners insurance. - A whopping 84 percent have no renters insurance. - Sixty-two percent do not have life insurance. That’s roughly 14.7 million who will potentially leave their families in financial distress upon their death.
• Credit can be a double-edged sword, working for you or against you depending on the choices you make. Even though you can pay cash for many purchases, most will need a positive credit report when it comes time to buy a house or a car. In the Latino commu- nity, the following was observed: - Forty percent state that they have no credit card. This means that close to 9.5 million people have no access to credit for an immediate purchase.
- In spite of being able to obtain a credit report free of charge, only 32 percent of Latinos have ordered their credit report. - Although there is no single credit score used by all lenders, it is generally felt that a score over 700 allows the borrower the best available rates. Unfortunately, 32 percent of Latinos reported a score under 700. This subjects roughly 7.5 million adults to paying a higher interest rate and potentially restricts their borrowing power.
One last disturbing fact has a silver lining. Even though 79 percent, or roughly 18.8 million Latino adults, report that they have never received professional advice about financial issues, help is available. “With both English and Spanish speaking counselors, the NFCC stands ready to assist anyone who reaches out for finan- cial help. Additionally, counseling is either free or low cost, with all fees being waived in the case of hardship. We try to remove any bar- rier between the consumer and financial literacy,” said Gail Cunningham, spokesperson for the NFCC. You don’t have to solve your financial problems alone. A National Foundation for Credit Counseling Member Agency is just a call or click away. To begin your journey to financial
freedom, contact the certified credit counselor closest to you by call- ing1-800-388-2227, or en Español, dial 1-800-682-9832. To find an agency online go to
www.DebtAdvice.org or
www.TermineConsudeuda.org.
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