Collaborative helps under-resourced people in St. Louis achieve financial independence
“Smart Women, Smart Money.” “Home Buying.” “First Time Homebuying.” These are the titles of three upcoming classes being held at the local financial services and education non-profit Prosperity Connection. The organization works to help under-resourced people in St. Louis escape from under the weight of high-interest payday loans and achieve financial independence. Classes, such as those listed above, are one way the organization achieves this.
Founded in 2009, the organization “helps individuals and families earn economic independence through financial education, community services and low-cost banking options,” said the organization’s Executive Director, Paul Woodruff. These services are provided for free.
The organization’s education arm consists of three “Excel Centers” in St. John, Old North and in Pagedale, where classes are held to help clients work toward attaining their long-term financial goals. The organization also partners with local banking service providers to make sure the needs of economically stressed communities in St. Louis are being met.
“Nobody wants to take out a payday loan, they want to be on sound financial footing, but for us, what we can do, is bridge that trust gap to meet with representatives to talk realistically about buying home or paring down credit,” Woodruff said.
Alex Fennoy, Executive Vice President and Community & Economic Development Director at Midwest Bank Centre, said his bank, located in the Normandy School District’s 24:1 area, was brought in as a service provider four years ago through its relationship with Beyond Housing.
“We look at it as financial empowerment,” Fennoy said. “All financial institutions try to go out into the community and give of themselves and be advisors of the community, but one thing we found was that when we opened the doors and asked people to come to our banks, you’d be preaching to empty chairs. We got smart as an institution and started working with others. People like Prosperity Connection and Beyond Housing, they can get people in the room.”
Mike O’Brien is the President of RedDough Money Centers, a service of Prosperity Connection, which is directly trying to combat the impacts of payday lending in the community — by offering similar services without the high interest. Started in February 2016 in Pagedale, the non-profit provides low-cost check cashing, short-term loans, bill-pay, reloadable debit cards and other services to those who don’t qualify for a bank account.
“There are so many people out there using payday lending services, that are stripping wealth right out of their household and we wanted to provide a low-cost alternative to those folks and put them on the pathway to economic independence,” O’Brien said.
The non-profit is able to keep their prices below market value and also gives people six months to pay back up to $500. With a short-term payday loan, people generally have to pay back funds in 14 days or turn it over into a new loan that may even double the amount owed.
RedDough still has a higher-than-normal interest rate on those short-term loan, 36 percent, but O’Brien said that would equate to $60 over the course of a six month loan “as opposed to hundreds on a normal payday loan.”
Woodruff said that educational offerings are offered in group settings and people can also meet one-on-one with the organization’s coaches to take classes on credit, budgeting, home buying and other big financial investments.
“Our philosophy is that it is important to impart knowledge,” Woodruff said. “We all need to know about the basics of credit, we all need the skills to build a budget. One of the things that under-resourced communities face in St. Louis and nationally is a fear of being judged. Finances are very personal. Finances are the root of relationship issues. It is the root of where we can get a job, where we can live.”
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