By: Vanessa Romo
June 24, 2011
If you're unemployed or have a job but are living pay check to pay check, Seattle's City Council wants you to think of them the next time you're in a financial jam.
Nearly 30% of Seattle residents - and a quarter of King County residents - live on the verge of falling off a financial cliff. And they're rapidly losing their foothold for regaining financial stability. These are people who don't have enough savings or other assets to meet basic needs for three months were they to lose their primary income, according to a new study by the Corporation for Enterprise Development.
Those bleak numbers moved Councilmember Sally Clark to hold a brainstorming session with other city leaders to talk about ways the City of Seattle can help people get out of debt and begin building a financial safety net.
Here's the problem, as Clark sees it:
"We have way too many people in Seattle who would not be able to get by for 3 months. They would end up homeless. They would certainly end up much worse off than they are now. And the goal is, how do you build that cushion and how do you build a culture of building wealth and building sustainability?"
The session included speakers from New York City and San Francisco, who laid out strategies those cities are using to pull people out of poverty. In their experience, the speakers said, it's imperative to start with the basics, such as making it easy for people to set up a bank account.
It turns out almost 10% of Seattle residents lack both a checking and savings account. So on pay day they use check-cashing stores, which can charge high fees for simple transactions. And if the need arises to get a loan, they turn to pay-day loan services, which are notorious for charging up to 300% in interest.
Clarke said the program that most inspired her is one New York City has already implemented - help centers for people who are heading underwater.
"Rather than respond to some random 800 number that purports to help them consolidate their debt, they can actually go to this community based financial empowerment center and work with somebody who's legitimate," Clarke said.
Clarke said that's a program she'd like to implement in Seattle, but funding it would be tough in a city that just went through another round of budget cuts.