The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include taxes, the housing crisis, prepaid cards, public benefits reform, prize linked savings, economic mobility and inequality, and education.
Tax Time is Here
Tax time is officially here. You may have noticed forms beginning to arrive in the mail, and while many folks wait until April 14th to dive in, people that organize and volunteer at free tax preparation sites will tell you that business booms starting in late-January. That’s right, there are (actual) free tax preparation sites, overseen by the IRS and geared toward helping lower-income tax filers. MarketWatch ran a piece last week featuring non-profit organizations across the U.S. who run these tax clinics and can help people file returns correctly. The IRS encourages people to file electronically, which can pay off with a speedy return of a refund via direct deposit. This is the last year that people can receive refund anticipation loans, something consumer advocates are hailing as a consumer protection victory. As David Rothstein wrote last week, the ins and outs of what constitutes “free” tax prep can be a little murky – especially when companies advertise services in misleading ways. The IRS has a site to help people find a free tax preparation site in their area and the National Community Tax Coalition maintains an extensive database of free tax prep providers as well. Be sure to check if you qualify for these services. If you are in the D.C. area, you can check out the Capital Area Asset Builders or the Maryland Cash Campaign for help.
Transcripts released from conversations that took place internally in 2006 at the Federal Reserve demonstrate an “embarrassing lack of foresight” about the “glaring signs” of the impending housing crisis according to this piece from NPR. One million affected borrowers may get help with their mortgages, reports MarketWatch, in a piece that outlines a forthcoming “robo-signing” settlement with five major banks. Homeownership has also been a hot topic for the Republican primary, as this piece from South Carolina illustrates.
Suze Orman’s Prepaid Card
Suze Orman’s prepaid card continued to grab attention and not all of it was positive. Felix Salmon wrote about his concerns over trusting her financial advice now that she has a vested interest in the industry. Another piece at Reuters contemplated the usefulness of this product for unbanked consumers and found “something troubling about an avowed consumer advocate who plugs a product that charges $3 "maintenance" fees (the first month's fee is waived) and even restricts deposits.” Ultimately, the consensus seems to be: read the fine print, with this or any other financial product.
Changes to Public Benefits
The Miami Herald reports that California Governor Brown has proposed new work requirements and more stringent time limits for families receiving welfare, explaining "this is not nice stuff, but that's what it takes to balance the budget." As we noted last week, Pennsylvania Governor Corbett is pushing for asset limits in the state's food stamp program. The Philly Inquirer has continued to follow the story, including this piece which quotes an exasperated Representative Brady (from Philadelphia) pointing out the way a $2000 limit disincentivizes savings: "you save a lousy $2,000 and then you're off food stamps?" Another Inquirer editorial fleshes this argument out further: Food stamp recipients need to save money, too.
Prize Linked Savings
People in the financial services, asset building, and savings world have diverse opinions on the merit of prize linked savings, as this news from Nebraska illustrates. Nine Nebraska credit unions are offering customers a chance to win prizes in an effort to incentivize savings. As we’ve written about in the past, this is a creative approach, but not everyone (including the Iowa bankers’ lobbyist quoted in the piece) thinks it’s a great idea. That said, Americans are, quite frankly, terrible at saving, as this MSNBC piece points out. Maybe a little creativity on how to help Americans save is just the thing. Without mechanized and structured opportunities to save, many Americans simply don’t. One approach to this widespread lack of saving is highlighted by Sheldon Garon, a proponent of postal savings accounts. Check out this post on his ideas to learn more.
Economic Mobility and Inequality
In a well-titled piece (“The Income Gap: Unfair, Or Are We Just Jealous?”) NPR dissects some of the latest discussion on income inequality, including Mitt Romney’s remarks that anger on this issue stems from envy. Scott Winship engages Miles Corak on the twin issues of inequality and mobility in this lengthier article.
Education and Youth
Good Magazine has a piece about the role financial literacy education plays in putting high schoolers on the path to post-secondary education. Relatedly, we released the third in a series of reports on children’s savings and college attendance this week called “We Save, We Go to College.” Check out this post for more details and read the first and second reports in the series as well.