[audio:http://www.wdde.org/wp-content/uploads/2015/01/moneyschoolintv.mp3|titles= Delaware Public Media's Tom Byrne interviews Delaware Financial Literacy Institute Exec. Director Ronni Cohen.]
Derrick Lightfoot was newly divorced, with a stack of bills that kept him up at night.
He had a bachelor’s and two master’s degrees. But he had never learned how to manage money.
Lightfoot was in his mid-50s when he enrolled in The Money School, the signature program of the Delaware Financial Literacy Institute (DFLI). His first class: Kiss Debt Goodbye and Other Credit Tips.
“It was the beginning of my financial education,” he says. “Since then, I have learned to make money a tool that can help me, not a weapon that can hurt me.”
In the last 10 years, Lightfoot has taken dozens of courses, all free and taught by volunteer faculty members at various public venues throughout New Castle County. Topics include such varied subjects as understanding mutual funds, finding money to invest, developing a workable budget, saving for retirement, understanding your credit report and avoiding fraud.
More than 10,000 individuals in all three Delaware counties have taken courses since the program was founded in 1999, says Ronni Cohen, executive director of the not-for-profit organization.
Lightfoot, a senior planner with the City of Wilmington, compares his financial transformation to “getting out of the pit. If there isn’t a ladder, you need to make handholds to climb out.”
He embraced change, challenging himself to find ways to achieve his dual goals: paying down debt while saving for the future.
“The first step came when I did not have money to pay for my lunch and I was two days away from pay day,” he recalls. “I had bread at home and bread, no jelly. So I had lunch, hot tea and peanut butter sandwiches, instead of going out and charging lunch on a credit card.”
He found a cheap apartment and bought a bus pass to avoid parking, reducing his commuting costs to work to 66 cents each way. He went without cable television for nearly a year.
Today, at 64, Lightfoot has nearly $100,000 in savings plans, including four Individual Retirement Accounts he will use to supplement his city pension after he retires.
“I have tools and I know how to use them,” he says. “Once you catch the financial literacy bug, you start applying the skills you have learned to garner greater benefits.”
Pragmatic approaches
Quadia Muhammad, program director at DFLI, says consumer input helps shape the curriculum.
“We receive a lot of telephone calls and emails from people who are looking for help increasing their credit scores and saving for retirements,” she says.
Pragmatic approaches to saving and generating extra income also resonate with students. Recent courses on couponing and selling on eBay attracted standing-room-only crowds.
“I don’t buy without a coupon,” says Regina Ross, an enthusiastic student. “I buy something because I need it, not because I want it.”
In a sour economy, Ross retired in her early 50s, earlier than planned from her job at a communications company. She lost half her pension to her husband in a painful divorce. When she was unable to pay her mortgage, the bank foreclosed on her house.
She learned about the program in 2012 through a brochure distributed at the Newark library. Her first course: The Secret to Attracting Money.
More Coverage: The Money School
“Attending these classes made me realize my situation was not the end of the world,” she says. “There are a lot of people like me out there.”
Her biggest hurdle was adjusting to life without a paycheck. For Ross, each payday brought a new outfit, often a suit she would wear to work.
These days, she buys gently used clothes at thrift shops. When she doesn’t need clothes any longer, she consigns them. Her preferred method of payment: cash, not plastic.
“Credit cards are very tempting,” she says. “When you buy with cash, you can’t spend more than you have.”
Ross already had a financial planner when she began taking courses. After she learned more about managing money, she changed advisers. She became an active partner in mapping her financial course.
“I needed someone with more experience,” she says. “Now I talk to my financial adviser the first Wednesday of every month. I know exactly what my investments are doing every month.”
The next class she will take is for prospective homebuyers.
“I have great hopes that I will be able to purchase a home in the future, possibly within a year,” she says. “That is a wonderful feeling.”
Illness, divorce and job loss are three common causes of financial problems, Cohen says. Often an unforeseen event will upset the delicate fiscal balance of individuals who are living on the edge.
“You are going along, doing OK, and then the roof leaks or the car breaks down,” she says. “Then there is that extra bill to pay.”
About 70 percent of the students who sign up for classes are women, many of them single heads of household. Most are over age 40.
DFLI is working for ways to engage younger consumers and is in the process of producing 3-5 minute YouTube videos on such topics renting, banking and managing credit cards, directed at viewers age 18-30.
“They are not necessarily the people who are going to take a class. They are attached to their smartphones and mobile devices,” Cohen says. “We need to hit them when they first get jobs and go out in the world.”
A former second-grade teacher in the Brandywine School District, Cohen believes financial education should begin in childhood.
“Many children grow up without every having a lesson in personal finance,” she says. “Yet kids as young as 18 months can learn about making financial decisions during a trip to the grocery store. Do we buy this or do we buy that?”
DFLI has partnered with Junior Achievement to host a family night, in which students are assigned a career and a salary and then asked to make a budget.
“When we talk about the things you need to pay for to run a household, it fills an entire blackboard,” Cohen says.
DFLI supports making financial education mandatory in Delaware public schools. So far, one course, “Keys to Financial Success” is now a half-year elective for high school students. The group also is pursuing a grant to pay for a summer program to train teachers who want to teach financial literacy.
Ross has invited her young adult daughter to attend classes with her. She also has become an active volunteer, registering participants at DFLI events and putting together information packets.
“I’m very grateful that the financial literacy institute was there at the right time in my life when I had to start fresh, brand new,” she says. “They were always there to give me a helping hand—and sometimes a little push.”