New Start for Financial Success: Wrapping Up a Signature Program
By Sharon Seiling
"Empowering people with new information is what New Start is all about."
Nancy Hudson, retired OSU Extension educator
The New Start program is a basic money management course that was developed by OSU Extension educators to respond to the need for such a course that bankruptcy filers could take in their home county or a nearby location to fulfill a requirement of the bankruptcy law of 2005. The course was built upon the basic requirements outlined by the Department of Justice which emphasized spending plans, money management, wise use of credit and obtaining consumer information. From years of honing their money management expertise, OSU Extension educators wrote the course and created tools to help guide class participants in raising their financial literacy.
OSU Extension began offering New Start classes in 2006, and it later became one of six Signature Programs. At the end of 2012, New Start will “step off the stage” as a Signature Program in Ohio, providing an opportunity to highlight other outstanding programs. At this time, fewer people are choosing to come to in-person classes and many other agencies are offering the program in local communities. Those factors along with retirement of many financial management specializing educators have led to a drop in number of participants.
Responses to New Start Course and Instructors
Even as numbers have dropped, the participants’ responses to the course remain extremely positive. A large majority of the 238 New Start participants completing evaluations between 2009 and early 2012 were pleased with the classes and the instructors. According to one participant, the instructor “pointed out a lot of ideas to better our lifestyle,” and another said that “[she] was easy to understand and informative.” More than nine out of ten reported that the teacher was well prepared (98%), was interested in helping him or her (94%), showed respect for persons taking the class (97%), related the class to real-life situations (96%), gave clear explanations (98%), answered questions clearly (94%) and presented information that would help them (96%). One New Start participant stated it succinctly: “You set me straight on financial matters. Thank you very much.”
New Start Participants
Participants in the New Start classes were somewhat more likely to be female (55%), married (61%), a high school graduate (89%), white (92%), and over 40 years of age (54%). About three in ten were 60+ years old. Most households contained two adults (60%), and about half of them had children in the home. With regard to employment, 45% were hourly wage workers, 23% were retired and 19% were unemployed. The participants tended to be of moderate income at the time of the bankruptcy: 69% had annual incomes between $10,000 and $39,999.
When asked about their reasons for filing bankruptcy, New Start participants gave the following reasons: job loss (32%), disability (7%), medical expenses (36%), inadequate insurance (6%), divorce (8%), and overuse of credit (51%). Often the overuse of credit happened when expenses were greater than income following job loss, divorce or medical treatment.
Impact of the classes on participants
"I think what I’ve learned will change my way of living."
Shelby County New Start participant
Not everyone who files bankruptcy is ready to make major changes in their financial management, however, many are ready to learn new ways of doing things and make plans to manage their money differently. After participating in a New Start class, 238 participants answered questions about their behavior before taking the class and what they planned to do in the future. Instructors always hope there will be a change in planned behavior. Indeed, the participants reported that they planned to do things differently across the spectrum of financial behaviors we evaluated. The biggest change was the plan to keep their consumer debt below 20% of take home pay. This long-standing guideline is one that helps many borrowers stay out of trouble, but a lot of people have never heard of it. The next biggest change came in the plan to establish an emergency fund of 3 to 12 months worth of income to pay for unexpected expenses. One way many people fall into a debt trap is having to charge a good or service on a high interest credit card and then having the total cost balloon before it is paid in full. Those charges can jeopardize one’s financial well-being. The third biggest planned change was saving toward a goal. This will set participants on a path to more solid financial footing in the future. Other important changes involved developing a plan to reduce debt, adjusting spending to match income and setting aside money for occasional expenses such as quarterly insurance or tax payments. A few participants submitted follow-up surveys, indicating how they were using the class information. Their responses included “Changed spending habits,” “I try to put a little aside for emergency – pay with cash only,” and “It really helped us a lot to get our lives and money in order. We do use your plan.”