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Utah Individual Development Account Network available to help low-income individuals raise money, become financially sound

Published: Wednesday, Feb. 1 2012 12:35 p.m. MST

When it comes to saving for a house, education or small business, one Utah group is helping out. Consider it venture capital and education for low-income individuals.

Utah Individual Development Account Network matches three dollars for every dollar someone in need raises. Along the way, they also help people become more financially sound.

"The heart of the program is to give people the financial skills to take care of themselves," said Martha Wunderli, UIDAN state director.

By offering an Individual Development Account, the network helps people who are considered "low income" to meet goals financially. An IDA is a savings account provided to low-income individuals. The individuals put money into the account and their money is matched through the UIDAN program.

About 520 different families have received assistance through the Utah program, said Wunderli. Over 20,000 people have participated in various IDA programs across the country.

Wunderli described the program as a "multi-faceted financial education and match savings program for lower-income working Utahns."

Participants can earn up to 200 percent of the federal poverty level, adjusted to family size. For example, a single person could not make more than $21,660 per year to qualify, but a person who has eight people in their family could make no more than $74,020 to qualify.

Participants in the program must live in Utah. They also must be at least 18 years old and have an income. Those wishing to join the program cannot have more than $10,000 in assets, excluding one car and one house.

Once accepted into the program, participants are required to make monthly deposits with a minimum of $15 and a maximum of $62.50. A participant must be a part of the program for at least one year with a maximum of three years. The program ends when you have saved $1,500.

Those who miss their monthly payment, Wunderli says, are reminded that missing a mortgage payment would result in a late fee.

Participants are required to save every month. They are held to a contract and can be dismissed from the program if they chose not to set money aside.

Several financial trainings, assessments and consultations are required while in the program. Those who meet the eligibility requirement must attend eight to 10 hours of financial education classes.

"It's almost like jumping on a scale at Weight Watchers. It's an initial assessment of where you are with your finances," Wunderli said.

During these classes, personal finance behavior is analyzed.

"A lot of people have the money, they just don't pay their bills on time which gets them in trouble," Wunderli said.

The classes look at basic budgeting, credit use, compound interest and investments.

Once qualifications are met and class hours are completed, participants can apply to the program.

"The program draws people to a financial decision, which we want them to do in terms of budgeting," Wunderli says. "We want them to say, 'This is what fits in my budget and this is what my goal is.'"

UIDAN helps participants come up with a realistic budget in order to meet financial goals.

"We have a really high success-rate because we do an upfront assessment of people, so when they come in (to the program) we've looked at their budget and financial plan," Wunderli said.

Potential goals for the program are first-time home ownership, completing a post-secondary education, owning a small business or helping someone work through assistive technology.

According to a 2010-2011 IDA program survey performed nationally by the Corporation for Enterprise Development, half the people that use the money for an education will attend a four-year public or private university. Twenty percent of the participants will use the money to attend a vocational school. Approximately 30 percent will attend a community college.

Brigham Young University, Salt Lake Community College, University of Utah, Utah State University, Weber State University and others across the region have all seen students attend college by receiving financial assistance from UIDAN.

A new budget and credit report must be submitted once a year. Wunderli says the program encourages people to make their budget a living document. This is the program's way of checking up on personal budgets.

Once money has been saved and matched, UIDAN will write a check directly to the vendor for the goal being met.

"This ensures that funders know we are purchasing an effective asset," Wunderli says.

Prior to purchasing the asset, the participant must complete training specific to that asset. For example, a person wishing to use the money towards a college education would attend a series of classes focusing on student loan debt and the return on investment in their current area of study.

A majority of the participants in UIDAN are between the ages of 20 and 39. However, Wunderli said there also has been a new interest by an older generation concerned about retirement funds.

Fourteen businesses in Grand County have been started because of individual participation in UIDAN.

The survey performed by CFED estimates that new small business owners using an IDA have created 2,757 jobs across the country.

"Their economic development director said we like what you are doing down here. We want more of you," says Wunderli. "So we are really helping rebuild Utah's economy one family at a time."

UIDAN is a program of the Fair Credit Foundation. For more information, visit Email: bcarreon@desnews.com

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