July 17, 2001
Kansas City Star
by Paul Wenske

Don't whine to Turner Pettway that you can't save enough to buy a house. He's been there, done that. And he got started with little more than a handful of nickels and dimes.

Six years ago, Pettway and his wife faced emergency debts they weren't sure they could pay. But one day, while pondering the dusty coins spilling from his car's ashtray, he had an epiphany.

"They ought to be in a bank," Pettway, director of home ownership training for the Kansas City Neighborhood Association, recalled saying.

From then on, the Pettways were fervent savers and reluctant spenders. The worst part was giving up his $40-a-month doughnut habit. But in six months they'd saved enough to put money down on a house.

Pettway's story was cited Monday at a news conference in Washington to underscore a survey that concludes more Americans than generally thought have the ability to save for a home.

The study was issued by the Consumer Federation of America and Providian Financial. It is part of the national consumer group's America Saves Campaign that is using Kansas City and Cleveland as models.

America Saves is focused on encouraging moderate- and low-income households to commit to personal savings plans.

Other groups involved locally are Brush Creek Community Partners, Mazuma Credit Union, the Local Investment Commission and The Concerned Clergy Coalition of Kansas City.

The groups, part of the Coalition to Encourage Neighbors To Save - or Make Cents - already have offered savings seminars. But more are planned during the next year. The next local savings seminar is 6 p.m. Thursday at Faxon Elementary School, 1320 E. 32nd Terrace.

Some businesses also are sponsoring in-house savings programs that offer incentives to employees.

So far, about 100 local consumers have committed to savings plans, which include setting a savings goal, making an accounting of household spending and placing money in a designated account. The goal is to sign up 1,000 area savers by the end of the year.

Saving declines

Some economists and credit counselors have expressed concern that the personal savings rate in America has dropped into negative territory in recent months, just as big stock market gains that could offset a continuing spending spree disappeared.

But one of the national study's most striking findings is that most Americans greatly underestimate the extent of affluence in America.

More than half of all households headed by someone older than 45 had net assets of at least $100,000 in 1998, according to the study, which analyzed Federal Reserve data.

Yet respondents to a related survey by Opinion Research Corp. International thought that just over one-third of all households had that much wealth.

Steve Brobeck, Consumer Federation president, said the study proved that by far the greatest source of wealth for even modest households is the value of their home.

The findings, Brobeck said, give hope to other moderate- and low-income consumers that owning a home can be the first step toward affluence in America. Home ownership reached a record 67.4 percent last year.

"This research shows that they can do it," Brobeck said. "Contrary to the belief of many, those with modest incomes can, over time, build wealth."

He said the easiest way to do so is to buy a home. He said more Americans faithfully paying off their mortgages contributes to the underlying strength of the country's economy.

Millionaires

Brobeck said the survey found many other misperceptions about wealth and how it is accumulated.

Americans have a skewed perception of how many millionaires there are, according to the study. Those surveyed believed that up to 15 percent of all households had net assets of at least $1 million.

Actually, only 4 percent, or 4.6 million households, have that much wealth, according to the analysis of Fed data.

The study's sponsors said skewed perceptions about wealth were most common among the poor, minorities and consumers under 24. They faulted the depiction of wealth in television ads and programming.

Of particular concern, Brobeck said, are focus group findings that suggest young people today have unrealistic goals and lack a general understanding of economic realities.

Youths, he said, are more optimistic than middle-aged Americans that they will be millionaires. Even so, they "don't see home building as a way to build wealth," Brobeck said.

He said the survey showed young people consume more and are more prone than their parents to buy on credit.

A first step

A top goal of the America Saves Campaign, he said, is to encourage more realistic perceptions about wealth, and to persuade more people that they can attain a measure of affluence.

"This is a social marketing effort to influence behavior," Brobeck said. "We're hoping it will render a cultural change."

Pettway, a leader in the local Kansas City Saves campaign, said, "We're saying that a house is the first step to building wealth. It's not coming from lotteries and even large salaries."

"People need to start saving earlier in life because then they have more options. We find people who don't have an emergency fund to handle things like the (deductible) on their car if they have an accident."

Without back-up money, they end up piling more debt on credit cards, and end up in bankruptcy, he said.

The Cleveland savings campaign kicked off in March, complete with events, billboards and radio adds.

More than 1,000 Clevelanders have attended seminars and 500 others have committed to work toward a saving goal.

The Kansas City campaign began more modestly in April, and has only lately begun to build momentum, officials said.

Twenty Mazuma Credit Union employees last month committed to the savings program. In return, they receive a newsletter, financial advice and access to savings incentives.

"It fits within our overall mission to help improve the well-being of more people by providing services and education," said Nancy Pierce, Mazuma Credit Union's president.

Pettway recalls the particular day he confronted his own spending habits.

He went home and for the next eight painful hours added up all the money he and his wife had - and how much they spent.

"I found we had more money than we thought, and I was spending a lot more money than I was willing to admit," he said.

To reach Paul Wenske, consumer affairs reporter, call (816) 234-4454 or send e-mail to pwenske@kcstar.com.

Upcoming seminar

The next local Coalition to Encourage Neighbors To Save seminar will be at 6 p.m. Thursday at Faxon Elementary School, 1320 E. 32nd Terrace.