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Common Cents: The Richest State is Also Poor


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New report shows 1/3 of Marylanders are one crisis away from financial devastation. The Maryland CASH Campaign is here to help. Courtesy photo

New report shows 1/3 of Marylanders are one crisis away from financial devastation. The Maryland CASH Campaign is here to help. Courtesy photo

Published on: Thursday, February 20, 2014

Maryland CASH Campaign, Special to The Sentinel

 

More than one-third of Maryland households are one crisis away from financial devastation. 

Despite an improving national economy, 34.8 percent of Marylanders are in a persistent state of financial insecurity, according to a recent report released by the Corporation for Enterprise Development (CFED). The number of households who have little or no savings to cover emergencies or to start building a better life has barely budged from last year’s 35.6 percent level, despite the fact that the report  found  Maryland’s state policies are helping to improve the financial security of Maryland residents.

Financially insecure residents are defined as “liquid asset poor,” which means they lack adequate savings to cover basic expenses at the federal poverty level for even three months in the event of an emergency such as a job loss or health crisis. Included among Maryland’s “liquid asset poor” are a majority of those who live below the official income poverty line of $23,550 for a family of four, as well as many who would consider themselves middle class. These figures are one time higher for single women, two times higher for households of color, and three times higher for single parent households. Even among households most would consider to be affluent, fully 14% of households earning between $77,857 and $125,940 annually have less than three months of savings (i.e., less than $5,887 for a family of four).

CFED’s 2014 Assets & Opportunities Scorecard evaluates how residents are faring in five different issue areas—Financial Assets & Income, Businesses & Jobs, Housing & Home-ownership, Health Care, and Education.  Despite having the third lowest rate of income poverty in the nation, Maryland still receives a “C” in Financial Assets & Income, meaning many residents are not building wealth or achieving economic security. The average Maryland borrower is carrying around $12,651 in credit card debt (ranked 45th) and 4.31% of borrowers are 90 days or more overdue on debt payments (ranked 42nd), a sign of severe financial distress.  And to make things worse, for the first time as a nation, student loan debt actually exceeds credit card debt.

Additional data from the Internal Revenue Service shows that Prince George’s County is leaving significant money on the table that could help individuals and families to be more financially secure. As discussed in the last column, the Earned Income Tax Credit is a refundable tax credit for working individuals and families. Prince George’s County residents claimed over $155 million in federal credits, money that allowed taxpayers to pay off bills and debt, secure childcare, cover basic expenses, and save for their future. Unfortunately, there is an estimated additional $42 million that was left unclaimed last year. Many taxpayers may not realize that they are eligible because they are not required to file taxes annually or the credit is missed during tax preparation. With EITC available by both the federal and state governments, taxpayers are encouraged to talk with their taxpreparer and to file back taxes or amendments if needed. Taxpayers can go back up to three years to claim the credit, potentially worth thousands of dollars.  

What is Maryland doing to help raise this “C” grade?  According to the nonprofit Maryland CASH Campaign, overall, Maryland has done a good job at passing legislation that can help improve the financial security of its residents, but there is not enough funding invested to fully implement that legislation. The Maryland CASH Campaign is working hard in Annapolis to pass legislation aimed to lessen the financial burdens of Marylanders.  Their 2014 Policy Agenda includes improving the transparency of financial aid packages so that parents and students can compare between colleges, reducing the state income tax for those who have defaulted on their mortgage or student loans, increasing the state Earned Income Tax Credit, and many others. More information can be found on their website at www.mdcash.org and on Twitter @Maryland_CASH.  And remember…use your “Common Cents” to create assets, savings and hope.

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