Learn to use relief money wisely

Almost exactly 11 years ago, at the White House signing ceremony for the Affordable Care Act, as then-Vice President Joe Biden was introducing President Obama, he famously whispered “This is a big f—— deal!” — a comment caught on microphone — as Obama stepped to the podium.

Some media outlets teased Biden about the gaffe, but nobody accused him of exaggerating. A decade later, Biden is about to sign his own landmark legislation, a pandemic-relief bill that will, among other things, cut child poverty in America by 40% according to one estimate.

The new law dramatically expands the Child Tax Credit so that low-income families will get $300 per month for very young kids and $250 a month for children over five — with the money sent as monthly payments up front rather than the once-a-year payout of the Earned Income Tax Credit.

That is a big freaking deal, and a huge achievement for any president, especially one who’s been in office only 50 days.

Here in New York, hundreds of thousands of young people will see their lives change dramatically for the better — but only if we take steps to preserve, protect and wisely invest the new bump in income.

“We have a third of New Yorkers who are at or near poverty, so this is a big deal for us,” says David Jones, president of the Community Service Society, who estimates the payments will lift 230,000 city children above the poverty line.

“This is the biggest infusion of money we’ve seen in our lifetime since the Great Society,” Jones told me. “For New York City, it’s a lifeline that’s going to be tremendously important.”

Now comes the hard part: making sure the new resources intended for working families don’t get stolen, squandered, or taken back. Even as you read this, scammers and scoundrels are scheming to get their hands on the cash.

As a first line of protection, state Attorney General Letitia James should issue instructions similar to toughly-worded guidance she issued last year, making clear that relief payments are exempt from debt collection and are not subject to being frozen or garnished by creditors. The point of the program is to help families, not divert cash to collection agents.

The attorney general and the city Department of Consumer Affairs will also need to launch a robust anti-fraud public affairs campaign, warning families not to fall for the scam artists that prey on communities with fake services and false claims. Organizations like the Center for Community Media, which includes hundreds of neighborhood and foreign-language outlets, should be part of the effort.

The city’s consumer counseling programs need to step up, too. For years, the Community Service Society has run a Financial Coaching Corps that trains older adults to help families learn how to budget, save and invest. The group also runs the Education Debt Consumer Project, which offers assistance to the 2.4 million New Yorkers who have student debt: in the year ended 2019, EDCAP held nearly 700 counseling sessions and saved borrowers $1 million.

And don’t forget: Consumer Affairs offers free financial counseling to anybody who wants it; you can sign up for a session by calling 311.

One of the best options out there is the network of nonprofit “people’s banks” around the city: the community development credit unions that offer fully insured savings along with loans and other financial products.

“Credit unions have onsite staff to provide direct, one-on-one advice,” says Deyanira Del Rio, who chairs the board of the Lower East Side People’s Federal Credit Union. “They can provide not just information, but actually have accessible accounts and other tools people need to keep their money safe, avoid predatory fees, and build credit histories.”

The community credit unions have already stepped up to help struggling communities. When COVID-19 hit the city, the Brooklyn Cooperative Federal Credit Union helped move $6 million in loans to small businesses. “We’re in low income and immigrant neighborhoods — exactly the places where people are often blocked from mainstream banks,” says Del Rio, whose institution has $75 million in assets and offers checking and savings accounts and loans.

Families receiving the new benefit should take advantage of the ocean of cheap or free advice on how to organize their finances for the future. Financial coaches like Dave Ramsey and Suze Orman are easy to find online, or on television and radio: they offer very sound tips that families of all income levels should heed.

Create a fund of $500 to $1,000 for emergencies. Get an insurance policy to shield your family from disaster. Save some of every dollar you make in a credit union account, even if it seems too tiny to make a difference.

We’ve got the chance of a lifetime to rewrite the story of poverty in New York. Let’s not blow it.