Subprime Lending Debacle Knocks Women Of Color Harder

The New York Times reports that Baltimore Finds Subprime Crisis Snags Women:

The foreclosures threaten the neighborhood's fragile stability. And they highlight a broader dimension of the housing meltdown: subprime mortgages, which are driving the foreclosure rate, have gone disproportionately to women.

Single women have been among the fastest-growing groups of homeowners in recent years, and in Baltimore they accounted for 40 percent of home sales in 2006, twice the national average, according to the National Association of Realtors. Nearly half of these mortgages were subprime, National Community Reinvestment Coalition found.

...

The findings support earlier research by the Consumers Union, which attributed some of the disparity to instability in women's credit status because of divorce or family medical emergency. Women also have less wealth than men, which increases the likelihood that they will get subprime loans.

Increased homeownership has been the principal means for women to close this wealth gap. But the disproportion of subprime loans, advocates said, makes it harder for women at all income levels to build wealth by paying off their mortgages.

"The striking thing is that the disparity between men and women actually goes up as income rises," said Allen J. Fishbein, director of credit and housing policy for the Consumer Federation of America. Among high earners — defined as people earning twice the median income — black women are as much as five times more likely to receive subprime mortgages than white men.

Quick Hits Tuesdays #2

Mombian ("Sustenance for Lesbian Moms") has some choice words for TurboTax and their treatment, minimal as it is, of same-sex couples. Writes she, "TurboTax's marketing images and options for indicating our relationships are just another reminder—like we need one—that the law and tax codes treat same-sex families differently from others, even when we supposedly have equal rights within our state." Way to drop the ball, TurboTax. Actually, Mombian is pretty great, see addition to the blogroll at right.

Her Every Cent Counts observes, "Vibrators are expensive and they break easily." Luckily, cheaper options are out there. I'll note, too, that by using rechargable batteries, one can really cut one's ongoing operational costs.

Meg at The World of Wealth addresses the question of who should pay on a first date. I agree with her general proposition that the asker has more responsibility than the ask-ee, and that at least offering to pay for part wins big brownie points. But adding gender into the mix confuses it. Aside from outright rudeness to service workers or kicking adorable puppies, there is nothing I find more offputting on a first date than a guy adamantly insists--no really, I know how to treat a woman right!--that I am not allowed to pay. I get it, you wear Magnums. Ugh.

Good maternity leave is hard to find, especially if you're still a high school student. So students at a Denver High school are asking the school board to grant students who have just given birth a measure of maternity leave. Currently at East High, if post-partum students don't return to school the day after leaving the hospital, they start racking up unexcused absences. The students are saying that with no on-site day care, this policy is forcing them to choose between letting their bodies heal and bonding with their infants versus continuing to diligently pursue their high school diplomas. Geez, and you wonder why teen pregnancy correlates with low high school graduation rates?

Political Violence And My Microloan

In November 2006, I made a $25 loan through Kiva.org to a Kenyan woman who took out a $1,700 loan to transition from maize farming to dairy farming by purchasing two diary cows. This is one of several loans I've made through Kiva. I don't make any money in interest, and I don't loan huge amounts of money, but I intend to keeping the money I currently have loaned through Kiva circulating to other Kiva clients because microlending is such a powerful tool for improving people's lives. The impact on the lives of women is especially remarkable. Microlending organizations have documented that microfinance extended to women is more likely to benefit family nutrition and children's education than loans made to men, and that loans to women are more likely to be repaid, allowing for the money to be lended to another client and further widening the circle. Many of the women whose loans I have funded through Kiva have been restuaranteurs or retail entrepreneurs. The loan to this Kenyan woman was my first agricultural loan, and as a fan of programs like Heifer International, I was especially interested in watching this woman's progress.

I get periodic e-mail updates about my various loans from Kiva and their partner organizations, the local groups responsible for administering Kiva's loans. Today I received an update from the Ebony Foundation, who administer this particular loan, describing the impact of the recent political violence on the Kenyan entrepreneurs repaying Kiva loans, and I wanted to share some of it with you:

The impact of the riots is most felt in the micro and small business
sector. Over 1 million small businesses were looted and or burnt down destroying the only source of income to millions of Kenyans. Most of the fighting and destruction occurred in slum areas in Nairobi, Mombasa, Nakuru and Kericho in Rift Valley. These regions are home to over 70% of Ebony Foundation’s clients and as you can imagine almost all of our clients in these regions have been affected by the riots. Only one region- (Mount Kenya) which is home to about 20% of EbF’s clients was spared the violence. The economy in this safe region is now getting stretched as the residents have to now house the displaced population.


We have recently completed auditing the riot’s impact on our clients and as of yesterday about 4,900 of our clients had been badly affected by the riots:

-- About 1,532 of our clients were displaced and both their homes and business premises burnt down. This population is currently housed in church compounds and police stations.

-- Another 2,479 clients had their business premises burnt down or looted leaving them with no source of income at all.

-- 833 clients had their homes looted or burnt down and about 56 clients are missing and feared dead or critically injured.

We arrived at these figures through a survey being administered at holding grounds, police stations, and through reliable reports from groups and community leaders.

Of course I've heard news coverage here in the states about the political violence in Kenya, and clucked and fretted about how it sounded terrible and very sad. But receiving this email made it seem more immediate to me, and more personal. This is a set of impacts I had not thought about in much detail before, but it seems obvious to me now that political violence would have wide-ranging and potentially long lasting effects on the economic lives of the victims. I don't know yet whether "my" farmer was among those affected. The Ebony Fondation update talks only of loan clients in the aggregate. I hope for the best for all of them.

Tell Your Credit Card Company You're Not Paying Them

Have you ever made a purchase you later ended up returning, or made a payment for a service you never received? Maybe the shoes were the wrong size and you sent them back, or maybe decided to cancel your order for a new air conditioner after putting up a down payment. If you put these expenses on your credit card and your statement cuts before your refund has processed, you have two choices. You can pay the whole bill, including paying for expenses you are no longer responsible for, with the expectation that your next month's statement will reflect a credit after the refund has cleared. Or you can call your credit card company and tell them you're not going to pay the $XXX charge from Zappos because you've returned the item and are expecting a refund to your card any day now. If you're nice about it, the customer service rep you're talking to will make a note on your account and tell you what your payment is without the disputed charge so that you can make a timely payment on your account without having to fork over extra cash.

I much prefer this second course of action. It's easier on my cash flow, and I don't tie up liquid funds for a month just so I can "get it back" next month with a statement credit. It's especially helpful if, say, you've ordered multiple sizes of an item online and plan to keep only the one that fits best, or multiple outfits for an event and plan to keep only the one that's most flattering. Rather than pay for four different items when you never intended to keep three of them, you can just pay for what you've ultimately bought.

I have had great success with this tactic. In fact, I plan to use it again this month if the wedding dress (read: gorgeous cocktail dress I ordered to wear to my wedding--it was the wrong size, sadly) I returned isn't refunded by the time my January statement cuts. The only time I've had any amount of hassle doing this is when I was trying to get a refund for an adult education class I'd enrolled in and paid for before learning the class had been cancelled. The class had cost several hundred dollars, and wasn't something I was planning to cashflow. Paying for it would require me to take money out of savings. Because the class had been cancelled in advance, I was at first told by the CSR that I would have to wait until the first day of the scheduled class, and only when the class didn't happen could they consider it a service paid for but not rendered. When I explained that I'd received a letter telling me there would be no class, ever, because the sponsoring organization was in financial trouble, the guy I was talking to got it. He told me I could pay my credit card bill as though that charge were not on the statement, and that he'd mail me some processing paperwork that I should return with a copy of the letter cancelling the class, and he would help me work around the policy. By the time I got the paperwork and filled it out, the refund initiated by the class's sponsor had already posted to my account. Success! I never had to pull the money out of savings and it could keep earning interest.

I use my credit cards for everything, because they have such better consumer protections than cash, check, or debit cards. I pay off the bills in full every month, so consumer debt is not an issue for me. It's features like this that make me appreciate the convenience of credit cards.

Carnival Love: Carnival of Personal Finance #135

This week's Carnival of Personal Finance, hosted by Plonkee, is up. My post Roth 401(k) For Women is included--my first carnival ever. I think I'll have a cupcake to celebrate!

Plonkee did a great job organizing. There were a number of really interesting posts in this week's carnival. Plonkee featured Lynn's post from Being Frugal, How I Taught My Preschooler The Value Of A Dollar, which is a fantastic idea. And Madison at My Dollar Plan posts about the math behind Deal Or No Deal. Head on over and check out the whole thing.

Non-Financial Financial Goals, 2008

Since number-related goals will be the focus of next week's State of the Union conversation with sweetie (and the focus of Chapter 3 of Smart Couples Finish Rich), I won't tip my hand in that respect yet. Also, I have slacked off on my 2008 goals and have not set any yet. So instead, here's my list of goals for 2008 that are about money, even though they aren't explicitly about money at all:

(1) Floss. Oral health leads to heart health, and health is wealth. Look it up.

(2) Read one "classic" book each month, either off my own shelf or from the library. Now that sweetie and I have combined our libraries, I've now got a whole stash of great books I've never read just a room away. This is "free time" in the sense that I'm not spending money to read, and when I'm reading I'm not spending money on something else. I have yet to figure out what my list is, it may take me a while to narrow down!

(3) Maintain a high-quality blog. I doubt I'll see much traffic, but what the heck. It'll make me proud, will give me a great push to keep learning and will give me space to reflect about, er, finance and feminism.

(4) Build a pergola with sweetie over the back deck. We'll have to spend money on materials to do this, but we'll keep costs down by doing the work ourselves. A pergola will increase the value of our house, and we'll end up with a nice shady place to sit outside and away from the AC.

Smart Couples Finish Rich Chapter 2: Our Values

Sundays are State of the Union days in our house, when sweetie and I sit down to talk about how we're doing relationship-wise. Sometimes they're quick check-ins, sometimes we get into a little more depth, depending on what we've got going on. In this year leading up to our wedding, we've decided to make finances a central part of our State of the Union talks. Over the next couple of months, sweetie and I will be reading Smart Couples Finish Rich by David Bach and discussing the latest chapter at SOTU.

This Chapter aims to help couples figure out what the purpose of money is in their lives. Bach asks us to each name our top five values we want to focus our time and energy on in the coming year. It's harder than it sounds, in part because so many of the values that came to mind for me are interrelated in some way. What is security, after all, if not the ability to meet the needs of yourself and your nearest and dearest--so should you really call it "loved ones?" Are "marriage" and "family" different enough values to warrant a separate listing? When you say "job," do you have in mind a particular career or set of skills ("My true calling is to be an actor" or "Particle physics gives my life meaning"), or is the thing you ultimately value be better termed "giving back" or "having fun" or "stability" in the form of a hefty paycheck?

Here's how things shook out for me:

1) Stability/security: I need to feel confident I'll have a place to live, food to eat, and all my obligations met. Knowing that even if my life goes to shit, I've got something of a buffer between me and real need is a huge chunk of sanity for me.

2) Flexibility: I have worked jobs I hated before, and that is a soulsuck I don't need. I like my job now, but with personnel changes, mergers, clients coming and going, present happiness is not a guarantee of future job satisfaction. Flexibility means having options in the event that I decide I hate my working life: quitting and regrouping, taking a more satisfying job that pays less, reducing my hours, or what have you. Since leaving school and being responsibile for student loans, mortgage, career, and the like, I am feeling a real lack of flexibility in my life these days and that's something I would really love to figure out how to change.

These days I think of flexibility mainly in terms of my job, but it's really broader, too. Should my parents ever need assistance as they grow older, particularly if they ever become very ill, I very much hope I will be in a position to help. Does this mean taking large amounts of unpaid leave on an ongoing basis? Moving states to be nearer to them? It would certainly mean some sort of lifestyle adjustment, as they live a day's drive away right now.

3) Marriage/Primary Partnership: This one's a new addition for me since the last time I worked my way trough one of David Bach's tradmark-laden books, back in the day when I was rolling solo. Since sweetie is the only immediate family member I expect to ever be able to pick myself, he gets special billing. I broke out marriage specifically rather than relying on the more generic umbrella of family because (a) the cats don't take that much work, and I didn't think their feelings would be hurt at being excluded--with no kids in the picture, I didn't think the broader term applied as well; and (b) even if sweetie and I do have kids someday, the families I most admire had parents who put their relationship first--a healthy balance seemed to flow from that. And if I ever change my mind about that, it's not like I can't revise the list.

4) Fun: Because otherwise, what's the point, right?

5) Giving Back: At first I was thinking about this as "career" but then I realized that although I love the law, and like the work I am doing as a lawyer, the real thing I enjoy about my work is feeling like I'm helping people. If I ever began to doubt that the work I was doing was, on balance, a social good, I'd find a different position or a different line of work altogether.

Sweetie's list was very similar. In fact, we had all items in common, except that he included "loved ones" as being rolled into "stability" with the rationale that his connections with family and friends are a big part of what make him feel grounded, and that instead of "giving back" he included "career." The way he explained it to me, that seems to be much less about his current industry or company or even professional field and more like "feeling useful" or "vocation." His example was that if he were to become a stay at home dad, or an entrepreneur, those roles would fill the same purpose in his life as his current job by giving him something to focus his productive energies on and allowing him to feel like he was accomplishing something.

We each made our lists independently before coming together to talk about them. It's a comfort to know that we're so much on the same page at this stage of the game.