Before the economy crashed in 2001, Michelle Sotelo didn’t think much about the roof over her family’s head.
She worked in property management, and her apartment came at a cut-rate price as part of her compensation.
Then her husband, Avelino, lost his drafting job. Then she lost both her job and her home when the property was sold to a new owner with its own management team. The couple and their four children suddenly found themselves in bankruptcy and on welfare after exhausting their savings.
Fast forward to today.
The Sotelos celebrated Thanksgiving in their own home this year, a 2,100-square foot townhouse in Everett with three bedrooms and 21/2 baths. They worked hard to repair their credit. And they’re saving money each month.
What switched them from being on housing assistance to owning their own home?
Avelino Sotelo was able to find another job and to get the family off public assistance. But Michello Sotelo credits a new program of United Way of Snohomish County for helping the family buy its own home and, more importantly, providing a financial education that should hold the family in good stead.
“It was really a godsend,” Michelle Sotelo said of the United Way’s Individual Development Account Initiative.
The program, designed to help people save and to make intelligent financial decisions, has 22 enrollees who were nominated by area housing groups or nonprofit agencies. Michelle Sotelo is the first graduate.
Dennis Smith, the executive director of the program, said it originated at Washington University in St. Louis during a discussion about how to improve the welfare system.
“In the old welfare system, there are no incentives for low-income people to save,” he said. “They are discouraged to save.”
The United Way program, originated with a grant provided to King and Snohomish counties, encourages enrollees to save for goals such as buying a home or starting a small business by a triple match of what they save up to $2,000.
More importantly, they look to area businesses and nonprofit groups to help train employees to be successful in meeting their goals.
“It was the best thing we could have done to buy a house,” Michelle Sotelo said. “Along with the savings, we got a lot of training and education to help us with home buying. We learned how to improve our credit, how to save and how to budget.”
In Michelle Sotelo’s case, she got counseling from professionals at Washington Mutual, a free savings account from Cascade Bank, advice on loan programs and home buying from Homesite, a nonprofit housing agency and lots of support from other members of the program.
Michelle Sotelo said it took the family about six or seven months to clean up its credit report and make sure it was accurate. Two years after the bankruptcy, the family was eligible for a Federal Housing Administration loan.
She said the family also got good advice on what type of home to purchase.
Many of her friends kept telling her to buy a place with a big yard. But the Sotelos ultimately bought the townhouse, which has only a small yard, because they wanted to spend their money on a bigger home for the six family members.
Michelle Sotelo said the family had originally saved about $40 a month and now is up to about $110.
“We figure we’ve got to keep saving because we’ve got maintenance now,” she said. “The program reminded us how important it is to think about saving for specific goals.”
She said the family has credit cards to build credit, but rarely uses them.
Before she makes a purchase, she said, she asks whether the item is “a need or a want”.
“If we need it, then we ask if there’s a way to do it cheaper,” Michelle Sotelo said, adding, “We’ve always wanted to buy. We never knew how to take the steps.”
Both Sotelo and Davis agree that the program’s value goes way beyond the home-buying assistance.
“It’s the education about saving that changes lives,” Davis said. “You can get an influx of cash but if you don’t know how to handle the money … that’s what makes the difference.”
“In my opinion, it was the perfect arrangement,” Michelle Sotelo said. “I don’t think that without it we would be able to do anything and to do it the right way.
Mike Benbow: 425-339-3459; benbow@heraldnet.com
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