Saving in Sin City: Report calls Nevada ‘least financially literate’ state

The statistics on getting out of debt are sobering: About 18 percent of Americans say they will never get out of debt, according to a survey by creditcards.com, and 43 percent of those with debt expect to remain in financial dire straits util they are 61 or older. Of those who are 61 or older with debt, 31 percent said they will never get out from under.

WalletHub's report, "2015's The Most & Least Financially Literate States in America," found that Nevada ranked 50th — the worst — in the percentage of people who spend more than they make; 40th in those having a "rainy day" fund category; 32nd in unbanked households; 49th in people borrowing from non-bank lenders; and 48th for the percentage making only minimum payments on credit cards.

For the full report, visit tinyurl.com/mhsy2yr.

Why save?

In 2012, MIT economist James Poterba did a study that found that many Americans die with "virtually no financial assets." His study also found that 46 percent of Americans had less than $10,000 in financial assets in the last year of their life.

To help such people become self-sufficient, Goodwill of Southern Nevada offers various services. Roughly 70 to 80 percent of the people they assist are unemployed, and the majority have no savings, said Elizabeth McDaniels, director of mission services for Goodwill.

Last year, it helped more than 2,300 people find jobs. Clients are followed for a year to ensure they're doing well.

McDaniels said that even a year after they get a job, clients often are living paycheck to paycheck. An unexpected cost, such as a medical emergency, throws them "into a tailspin" and can threaten to put them in the hole again, she said.

Case in point is "Ellie," who asked that her real name not be used. She moved to Las Vegas last year with her 11-year-old son. A single mother since his birth, she held two jobs in California to make ends meet. Goodwill helped her get a job within a month of arriving in the valley. Up until mid-April, she had no vehicle.

"We were living paycheck to paycheck (in California), and we still are," Ellie said. "It was so tiring, having to make certain sacrifices. There were times when I didn't have the money to get to job interviews. … It's definitely scary because you never know what can transpire, and as a single mother, you want the security for your child."

Goodwill's financial literacy program covers topics such as budgeting, saving for a rainy day and the differences between a necessary purchase and an unnecessary one. Experts from various banking institutions — Wells Fargo, Capital One, Bank of America — come in to teach the financial aspects of the program.

"That's the time you want to talk to them about those things because once they have a job, they think less about that," McDaniels said. "But while they're struggling, they really are concerned about how not to struggle anymore, how to get themselves out of it. … It's important they think about how much money they need to pay for things in order to get themselves out of the hole they've gotten into."

The program also teaches financial literacy to youths up to age 21 through its ELITE (Education, Leadership, Independence, Training and Employment) program. When the youths complete the program, they are issued a $50 check with which to open a checking account. Visit goodwill.vegas/elite.

Some Goodwill clients jump at the first job they find. It's not always the best fit. McDaniels told of one woman who was poised to take a job, but further scrutiny revealed that she'd need to spend more on transportation and child care than the paycheck could cover. People also need to add medical coverage costs into the equation.

Nearly three in 10 Americans say they have no emergency savings, according to a survey released by bankrate.com. It also found that an additional 21 percent have less than three months' worth of expenses saved.

Why credit is important

"Everyone always seems surprised to learn about how important credit is and why they need to make attempts to (pay it off)," McDaniels said. "One of the things we talk to them about is chipping at your debt — whether it's making an arrangement to pay it off $5 a month or $10 a month, you've got to start eliminating the debt you already have because you've already buried yourself into a hole. That's difficult to act on when you're living paycheck to paycheck."

She said employers will look at a prospective employee's credit when considering them for a job.

"Your credit can make or break you being offered a job," she said.

McDaniels said that after being unemployed for a long time, even after getting a job, one can still be living paycheck to paycheck.

Beginning July 1, nearly $7.75 million in federal funds from the Workforce Innovation and Opportunity Act was being awarded to local nonprofit agencies to train and employ a ready workforce in Southern Nevada. Recipients include HELP of Southern Nevada, which will receive $1.5 million; Nevada Partners Inc., which will receive $1 million; and Goodwill of Southern Nevada, which will receive $600,000.

Successful now, but struggled before

Even high-profile Las Vegas residents have faced tough financial times. Clark County Commissioner Susan Brager recalled a time when she struggled as a single mother raising three children. There was no money left at the end of the month for extras, and sometimes the gas bill was paid but the electric bill was paid a little later. She said she uses financial author Dave Ramsey's advice of having envelopes for monthly expenses.

"About three or four years ago, and I was not heavy in debt, but my goal was toward having $1,000 in emergency money," Brager said. "I used envelopes. You didn't go out to eat unless you had money in that envelope. You learned what your grocery (allowance) was and didn't go to the grocery store just for the sake of spending."

She said she pays more on her car payment to pay it off faster and save on financing charges. Ten years ago, she started an Individual Retirement Account even though she could put in only $20 a month. After a while, when she was 45, she was able to increase what she put in, but the $20 increments were what were fueling the growth, as IRAs rely on time to grow. It's now worth more than $30,000.

She works in real estate and said she sees people bedazzled by new homes.

"I counsel my clients all the time," Brager said. "Don't buy what you want, buy what you can (afford), so your future is comfortable. Look at what payment fits in your budget."

Doing better now

Six months into her position, Ellie was able to secure a car. She also is taking online courses to finish her bachelor's degree. There's still no money for Little League or activities outside of school for her son, but she tries to give him a night out as often as she can.

"I'll take him to a movie or bowling, something fun," she said. "We can only afford to do it, like, once a month, if that, because there's always a bill that needs to be paid — rent, the car payment — and food. I've got a son whose appetite is growing."

She said she thinks about her finances every day. Her biggest challenge is to find a way to budget on her current income.

As far as savings, her goal is to get to the point where she can save $500 to $1,000 a month. Getting there will be a challenge, as child care costs run about $1,200 each month. Ellie said once she finishes her degree next year, she'll be in a position to get a better job and earn more money.

Half the battle, she said, is staying positive.

"You have to keep a good outlook," Ellie said. "Stay strong, and (you'll) get through it."

— To reach Summerlin Area View reporter Jan Hogan, email jhogan@viewnews.com or call 702-387-2949.