Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
Toll Free: 800-234-6575
Savings program available locally
Tuesday, August 20, 2013
By PAUL COLLINS - Bulletin Staff Writer
A state program now available in this area could multiply the savings of “low-wage/wealth” people toward the purchase of a home, starting or expanding a small business or investing in post-secondary education.
That’s according to Lynn Ward, financial capability coordinator for United Way of Henry County and Martinsville, and information about the Virginia Individual Development Accounts (VIDA) program on the Virginia state government website. The following information comes from those sources and literature Ward provided.
People who qualify for the program could turn $2,000 of earned income saved into $6,000 with the maximum VIDA match of $4,000. VIDA provides $2 in match for every $1 in earned income the participant saves.
To be eligible, a person must be a Virginia resident and a U.S. citizen or legal immigrant; be at least 18 years old; have no more than $10,000 in net assets (not including a primary residence and one vehicle); and meet earned income eligibility.
Income eligibility is based on 200 percent of the 2013 federal poverty guidelines. Income eligibility limits in 2013 by family size are: one person, $22,980; two people, $31,020; three people, $39,060; four people, $47,100; five people, $55,140; six people, $63,180; seven people, $71,220; eight people, $79,260. For families with more than eight people, add $8,040 for each additional person. The federal government updates its poverty level guidelines yearly, so eligibility may change.
Participation requirements are:
• Make monthly savings deposits of at least $25. To get the maximum match, a participant would have to save an average of about $83.33 a month.
• Save for a minimum of six and a maximum of 24 months.
• Complete eight hours of approved financial management training and six hours of asset-specific training.
• Maintain regular contact with financial counselor.
VIDA is designed to encourage savings and improve personal financial planning to help low-wage/wealth individuals and families build their assets in an effort to become economically self-sufficient.
It is administered by the Virginia Department of Housing and Community Development (DHCD). Core program partners are the Virginia Department of Social Services (VDSS), Virginia Housing Development Authority (VHDA) and Virginia Community Action Partnership. VIDA receives funding from the VDSS, VHDA and the U.S. Department of Health and Human Services — Office of Community Services’ Assets for Independence Grant.
DHCD works through local service providers (intermediaries) who recruit, determine eligibility of, support and train the savers. Once a saver is enrolled in the program, DHCD opens the individual development account (IDA) on behalf of the saver at one of VIDA’s designated financial institutions.
All savers receive financial management training that includes such topics as improving credit, setting up a budget and savings schedule, and the basics of money management. In addition, they must attend training that is specific to the asset for which they are saving (for example, how to start a small business, buying and maintaining a home, career exploration/college success course).
STEP Inc., a Community Action Agency, and United Way of Henry County and Martinsville are the VIDA intermediaries for the area including Henry, Patrick and Franklin counties and the city of Martinsville.
All savings must be earned income, including wages, salaries or professional fees, and other amounts received as compensation for personal services actually rendered. DHCD considers Earned Income Tax Credit as earned income. Using the Earned Income Tax Credit may help people commit to putting more into their IDA accounts.
The minimum deposit of $25 a month will not yield the maximum match of $4,000 over the two-year enrollment period.
In saving to buy a home, the best use of VIDA funds is the down payment, because it allows savers to triple the impact of their funds on the size of the mortgage and mortgage payment.
Matching funds and personal savings for postsecondary education and training may be used for tuition costs and/or the costs of books and resources required for a course provided by an eligible institution. But tuition payments should be a priority. Eligible institutions are those eligible to receive federal financial aid funds, such as Pell grants, or work with federal student loans, such as Direct Student Loans, and other federal sources to support the costs of attendance.
A participant may save for postsecondary education for himself/herself, spouse or dependent child. But the time frame for program participation is two years from the time of enrollment to the time of asset purchase (for example, payment of tuition). So this option is not meant as a long-term savings strategy for very young children.
For the asset goal of business development, qualified expenses for savers are ad design — initial set-up and development; ecommerce or website development; inventory — for example, tangible products used to carry out the daily operations of the business; and equipment — machinery or other devices necessary to carry out the daily operation of the business.
For more information, contact Ward, of United Way, at 403-5965.