Breaking the circle of poverty

Encouraging financial literacy in Georgia

By Paul Jeffrey

Published in response magazine in 2016

Life was good for Sonnet Pichardo. Until it wasn’t. After going to college, giving birth to five children, serving several years in the military, including two tours in Iraq, all of a sudden she had to flee her marriage. She filed for divorce, and soon she and her kids were homeless, sleeping on the floor of a cousin’s house in Texas.

Ms. Pichardo had grown up in generational poverty, and suddenly faced economic challenges she was ill-equipped to confront. Yet she didn’t want to return to the housing projects she had known as a child.

“When I was growing up, my mom’s emergency fund, her way of getting out of a pickle, was to play bingo. She was really good at bingo. That was her safety net. I tried it. I wasn’t any good. So if that’s not my niche, how could I help my family? I could only do it by working hard,” she said.

Yet working hard often isn’t enough, as millions of “working poor” in the United States have learned.

Ms. Pichardo came back to Columbus, Georgia, where she had served a stint at a military base, and got a minimum wage job. She and her kids stayed in a shelter. Then one day someone from Open Door Community House came by to talk about a new program called “Circles,” which offered a pathway toward financial stability. Providing a spectrum of community support, Circles is designed to help families marshal the resources they need to move out of poverty. Although a new program at Open Door, it fit well in a community-wide ministry that emerged from the work of two Methodist deaconesses in the 1920s in response to suffering among workers’ families in Columbus, then largely a mill town.

Ms. Pichardo wanted to immediately sign up for Circles, but to be eligible she had to first be living in her own house or apartment. With financial assistance from the state, she and her kids finally moved into an apartment, the first time in months they weren’t sleeping in a shelter or on someone’s floor. She enrolled her children in a magnet school for the arts.    

Then Ms. Pichardo signed up for Circles. After a four-month initial training period, Open Door staff partnered her with two “allies,” community members who worked with her to put together the resources and decisions to move her toward financial stability. The three are called a “Circle,” with the person trying to get out of poverty the “Circle leader.” With other Circles, they met together every Thursday evening at Open Door.

“Going through the Circles program gave me the knowledge I needed to change things. I never learned from my mom about how to get a checking account, but I did in Circles. And the kids have a curriculum, too. They came with me to Circles meetings and went off to their own class where they learned about the importance of saving. They learned with me that dreaming is a good thing, but you’ve got to develop a budget for getting there,” she said.

“I learned I had to get my ducks in a row to get credit. I needed to get savings in an emergency fund. I had to not be afraid of looking at my credit report, of understanding it and figuring out what I had to clean up.”

Debt was a problem. In college, Ms. Pichardo had binged on a credit card until she had to dig herself out. Later, while in the military, she went to a payday lender when her car needed repair. “It seemed easy. I only had to pay them ten percent of what I owed. But that was just the interest. I paid $50 every month on a $300 debt, but the $300 never went away. I couldn’t get them off my back,” she said. “The payday lenders preyed on people in the military. I decided to quit giving them my money and eventually paid them off.”

“Two dollars is a lot”

Although she was working at $7.35 an hour in Columbus, Ms. Pichardo knew she needed more and jumped at every opportunity to show her employer she was capable of greater responsibility. When a truck driver quit, she volunteered that she had driven trucks in the military. Later she was promoted to assistant manager, and after two years was earning $11.50 an hour. It still wasn’t much compared to her family’s needs, but Ms. Pichardo made the most of everything.

“I was paying rent, car insurance, gas, and child care. I finally got some help with child care costs, and that allowed me, as I budgeted, to get my head above water rather than coming up and gulping. I wanted to reduce what I spent on gas. I thought of switching schools so the kids could use the bus, but they had switched schools a lot, which made it hard to keep friends. I wasn’t going to do that to my kids. I clipped coupons like mad. I tweaked my car insurance a bit and got discounts for my kids’ good grades. I was busting my tail doing whatever I could.”

Open Door’s adoption of the Circles program is part of the Arkansas-based program’s rapid expansion to more than 70 communities in 23 U.S. states and parts of Canada. In each place, it pushes the need for financial literacy.

“I’ve learned how to best use the money I have. If you’re not financially literate, you buy things that you might have the money for today, but you can’t afford them in the long run,” Ms. Pichardo said. “I keep rereading the book we used. And it reminds me of the importance of little decisions. Some days I want a coffee or some food at McDonalds. Spending two dollars there doesn’t sound like much. But it does matter. Two dollars is a lot. It matters to my kids. It matters to my future.”

Ms. Pichardo says she and her children now talk regularly about money, and help hold each other accountable.

“We talk every day about finances. We have a notebook where we write everything down, and once a week we have a family meeting about money. We talk about holidays, for example, and what we want to do as a family and how much it will cost, and look for alternatives that are less expensive,” she said.

Another Circle leader, LaSaundra Surrency, took her daughter along to the meeting every Thursday. But sometimes it was the other way around. “She liked Circles, and had a Circles t-shirt she loved. There were times when I was tired and didn’t want to go, but she would pester me until we left for the meeting,” she said.

Part of the Circles experience is called the “Big View,” an organized approach to community issues that contribute to poverty. Ms. Pichardo and other Circles leaders decided they needed a cheaper source of quality food, so they formed Friends and Neighbors Network (FAN), a food cooperative for the poor that mixes fresh produce and other foods with classes on nutrition and how to cook on a budget. Ms. Pichardo says they’re now looking at how to address other pressing community issues, including a dysfunctional public transportation system.

A foot in the door

Circles is as much about social capital as it is about money. Part of the allies’ job is to help Circle leaders–most of whom are women–make the connections they need to make to get ahead.

“Most of the people I’ve encountered in Circles don’t have the resources that middle class people have. They don’t know where to go, they don’t have the connections in the community. They don’t have a way to get their foot in the door to use the resources that exist. The program puts them in touch with people who do have their foot in the door,” said Cathy Henry, one of Ms. Pichardo’s two allies.

Ms. Henry, who was working as a quality control manager in the biotech industry, came to Open Door to volunteer in its shower program, which provides homeless families with an opportunity to clean up and eat a healthy breakfast. But Open Door asked her to be an ally in Circles.

“I was apprehensive because it sounded like a big commitment. And it was. And it’s uncomfortable in the beginning because you don’t know what your role is. Then you realize you can do anything. You can make things happen and you can help someone else make things happen. You become friends. You call them. They call you. You spend time with them. It becomes easy and natural,” said Ms. Henry, who has since quit her job and signed on as a full-time coach for the Circles program.

According to Meg Olive, who coordinates the Open Door Circles program, a common problem that poor people share is that they have no friends who aren’t poor.

“Circles is about relationships. Most of our families don’t know anyone who is not living in poverty. And if you don’t know them, you don’t know how they would do things differently,” she said.

“Once in a Circles meeting we were talking about budgeting. One of our allies is a university president, and he was talking about how he uses a spreadsheet to budget for his family. One Circle leader asked him why he budgeted if he had so much money. He explained how among other things he had to decide how much money he could spend on his European vacation every year. A light bulb went off for the woman who had questioned him. She had thought budgeting was something you had to do just because you were poor, not something that all adults need to do.”

Another Circle leader was invited to an ally’s house to go swimming in their pool. She took along her two daughters, and one of them was intrigued with the idea that there were two adults–a man and a woman–who lived in the home. “The mom explained to her daughter that they were married to each other, but for that six-year old, whose immediate environment had no stable marriages, that concept was an eye-opener. She later told her mom that she wanted to get married when she grew up,” Ms. Olive said.

Social capital

Although Open Door has been working for decades with poor families in Columbus, Kim Jenkins, the organization’s executive director, says Circles has provided them a new approach to poverty.

“A few years ago we began to take a harder look at what we were doing. Inspired by the book Toxic Charity, we took a new look at scripture and what God was calling us be in this community. We began trying to focus more on long-term solutions to poverty rather than, ‘Here’s your sandwich, see you tomorrow.’ That led us to Circles, which for some people can be a solution over time to their poverty. But it is also helping us to change the texture of what we’re about in our other ministries,” Ms. Jenkins said.

Circles isn’t for everyone. You can’t become a Circle leader if you’re homeless or abusing drugs or living in a situation of domestic violence. Those are factors which work against stability, and being poor is already hard enough.

No money is allowed to change hands between the Circle leader and their allies, Ms. Olive says. “That’s how we’re used to fixing things, but it doesn’t solve anything in the long run. Circles is about knowledge and social capital and the imbalances of power that need correcting,” she said.

With financial support from the Call to Prayer and Self-Denial of United Methodist Women, Circles provided participants a special course on credit, in which each Circle leader was required to sit down with a credit counselor to understand their own credit report and how to improve it. United Methodist Women also funded a special loan program, allowing Circle leaders–after six months in the program–to borrow up to $1,000 interest free. One borrowed money to send her kids to summer camp. Another got her teeth fixed so she’d have an easier time getting a job. Ms. Olive says all but one of the loans have been paid back.

Ms. Surrency got one of the loans. She had left her abusive husband and was living with her sister. She had a job and a vehicle, but was burdened by paying off debt she had incurred with her former husband. So she borrowed money to pay the deposit and two months rent on a new apartment so she and her daughter could live on their own. She paid the loan back at $50 a month.

Ms. Jenkins said that local United Methodist Women groups have long been supportive of Open Door. “Our connection to United Methodist Women is super special. They volunteer. They provide financial support. They pray for us. We know they have our back,” she said.

Barbara Rouse, a member at Pierce Chapel United Methodist Church in Midland, Georgia, is one of several United Methodist Women who serve as Circles allies in Columbus.

Ms. Rouse, a retired teacher, said she learned firsthand about the importance of connections when a Circle leader for whom she was an ally shared her sixth-grade daughter’s report card. “Her math scores weren’t very good, and I said I knew of a special week-long math summer camp. I asked about it and found out there were scholarships, so we got one for her daughter,” Ms. Rouse said. “People who worked with her there said she was very bright, and when school started up again she got an A in math. Her mother said the camp gave her the confidence she had needed. But the girl wouldn’t have gone had her mother not known someone who knew about the opportunity.”

Ms. Rouse says working with Circles has changed her own life.

“I didn’t grow up with a lot but my husband and I have worked hard and have a stable and comfortable home. Watching how these women struggle each month just to pay their power bill, or to keep food on the table for their children, has really impacted me. It has made me look at poverty and homelessness in a new way,” she said. “I get upset when people say the poor just need to go get a job. I understand now why that’s not always easy to do, or the best option for someone. One woman got a job at Home Depot and her food stamps got cut off immediately. She was struggling because she hadn’t received her first pay check. She had no chance to catch up before that support was taken away. Bam. This experience has really made my heart go out to women and their struggles.”

Financial literacy

Women in the coastal city of Savannah, 250 miles east of Columbus, also received help developing financial literacy because of a grant from the Call to Prayer and Self-Denial.

The Women’s Center of Wesley Community Centers has long served poor women in Savannah, providing adult education, child care, emergency food assistance, a clothing closet, spiritual counseling, and educational camps for children during spring break and in the summer.

The Women’s Center also provides crisis intervention, which often involves helping women with rent or utility support, stepping in to help avoid eviction or having the utilities shut off. But the problem is more than just a lack of money.

“Many women fall into a hole because they’re mismanaging money. By learning how to save and work with a budget, women can avoid overspending on some things and then not having enough for others. We’ve made developing financial literacy an essential part of our crisis intervention,” said Valeria Flowers, the Women’s Center director.

In a series of four classes, women learned the basics of financial management, including how to keep a budget. At the conclusion of the course, the Women’s Center provided an initial deposit of $25 to each of the women to open a savings account at a local bank. The bank waived the minimum balance requirement for one year.

“The amount you’re saving isn’t as important as the principle of saving something every pay day,” said Ms. Flowers.

Valencia Hollis took the course. She and her two small children moved to Savannah four years ago. “The Women’s Center helped me develop my skills, put together a resume and look for jobs,” she said. “I now send people there when they need help.”

Ms. Hollis says the financial literacy course got her started making a budget and saving money.

“They don’t teach stuff like that in school. We learned algebra instead. They told us to save but didn’t teach us how. In the class at Wesley, we learned all the hows of cutting costs and saving money,” she said.

“I now have about $300 in my savings account. I had more but I took out enough to cover the deposit on my new apartment. I never had any savings before. I’m proud of myself. And it’s a good example for my children. They have their little piggy banks. They always want to spend it, but we talk about whether it’s something they really need or just something they want.”

The course was taught by Stephanie Johnson, a community development manager at SunTrust, an Atlanta-based bank. She says it provided a friendly space for clarifying what can be a confusing or fearful environment for some. Being uncomfortable with banks can drive people to cash checks in liquor stores, for example.

“We want people in the class to ask all the questions they might feel uncomfortable asking in a traditional bank setting,” she said.

“We want to encourage people to be educated consumers, to understand banks and feel comfortable dealing with them. There’s a lot of distrust among low- and moderate-income communities about financial institutions. In the class I try to break some of those stigmas and barriers,” said Ms. Johnson, a member of New Covenant Church, a United Methodist congregation in Savannah.

“From paycheck to paycheck”

Participants came from a variety of economic backgrounds. Some women were homeless. Others, like Nikki White, needed to reinforce their economic stability.

“My husband and I had just bought our first home, and the class helped us understand the need for having a long-term financial plan, and to develop an emergency plan. In the Black community, we weren’t taught to have a plan. We live from paycheck to paycheck. The class helped us undo that dysfunctional way of thinking about money and the family.”

Ms. White says their emergency fund came to the rescue when their plumbing broke and they needed to have it repaired. “We’ve learned how to take funds from our budget each month for savings. And we have a meeting every week as a family to talk about money, including what bills need to be paid. We’re learning how to distinguish between our wants and our needs.”

Tammy Mixon, the executive director of Wesley Community Centers, said some people have more resistance to trusting banks.

“Older African-American women often refused to put their money in a bank because someone was going to take it. There was fear that someone was going to swindle them,” she said. “With the exposure they got to banking in this course, they could see how a banker could be their friend. You could have a relationship, and know you could go to them for guidance when you have a problem.”

Elizabeth Reid says her grandmother kept her money in her mattress or buried in jars in the backyard. “But she knew times were changing, and when I was five she took me to the bank to open my first account,” she said.

Ms. Reid took the course, not to overcome a fear of banks, but because she needed help with budgeting the limited income she receives. She lives on monthly disability check–she suffers from a bone disease–while waiting for a pension from her decades of service in the military and as a police officer. She’d been successful, and after paying all her bills has been able to travel to visit friends in nearby states.

“The class helped me be more conscious of how I make decisions about money, and encouraged me to keep being frugal. I brought some other women to the class with me, and we get together to clip and trade coupons, then go shopping together. We don’t have a lot of money, but we encourage each other to use wisely what we do have.”

Paul Jeffrey is a photojournalist and senior correspondent for response. He lives in Washington State.