Business and Economic Development Center, Midland College

Savings for Independence is an Individual Development Account (IDA) Program designed to help individuals and families achieve long-term financial goals of home ownership and business ownership. The program will achieve its goal by providing personal finance classes; assisting participants to establish a habit of saving; and matching the participant’s savings.

What is an Individual Development Account (IDA)?

IDAs reward the monthly savings of families who are working towards purchasing the financial assets they need to achieve the American Dream - first time home ownership or assets to start or expand a small business. IDAs are emerging as one of the most promising tools to help families and individuals of modest means establish a pattern of regular savings, build assets, and enter the financial mainstream.

How do you define first time home ownership?

You are considered a first time home buyer if any of the following apply to you:

You have not owned a home in the past three years,
The home you own is a mobile home, or
In the past three years the home you owned was with a former spouse.

What is a "savings match?"
A "savings match" is a promise to match your savings deposits at a specific rate. The Savings for Independence program has a 2-3:1 savings match which means that for every dollar you save from your earned income, you will have another 2 or 3 dollars added to your total account balance. Participants may deposit as much as they like in their accounts, but no more than $1,000 of their savings will be matched.

Why would anyone give away money like that?
Savings matches are not "giveaways." You earn savings matches by saving your own hard-earned dollars and taking other steps to prepare for the future, like attending financial education classes.

Is there more to this program than just savings matches?
Yes. Most people need more than just cash to become successful homeowners or entrepreneurs. For this reason you will be asked to attend financial education classes. These workshops are designed to help you acquire or polish the personal and financial skills that are essential for long-term success. Skills like long-range planning, household budgeting, credit repair, and savvy consumer habits will be taught.

What do I need to do to earn the savings match?

You earn the matching funds by:

establishing a habit of saving at least $10 a month in an IDA account;
completing Money Smart, or a comparable financial literacy training program; and
attending asset specific training.

What is asset specific training?

Asset specific training is designed to prepare the individual for the asset they plan to purchase. IDA participants who are saving for home ownership will participate in the Texas Statewide Homebuyer Education Program provided by Midland Community Development Corporation (MCDC). IDA participants who complete Habitat’s Homeowner College may use that training to fulfill their homeownership-training requirement.

Individuals participating in the IDA program who are saving to start or expand a small business will receive free individualized business counseling and assistance with the preparation of the business plan in English or in Spanish from the Midland College BEDC.

Is there a cost to join the Savings for Independence Program?

No, there is no fee involved. The program, all of the training and the savings account are all provided at no cost. Free child care is provided during the Money Smart classes at Casa de Amigos on a first come basis.

Where are the savings deposited?
The IDA savings accounts and the matching funds will be held in FDIC insured accounts at Community National Bank. Savings for Independence IDA accounts will not be assessed any monthly service fees and will earn interest.

How is the asset actually acquired?
Your savings match dollars are paid directly to the asset provider (e.g., to the mortgage provider or the business asset provider). Matched funds will be made available to participants when they are ready to purchase an asset.

What about making withdrawals?
Because Smart Savings Accounts are intended to help people purchase productive assets, withdrawals for non-asset uses are strongly discouraged. However, in certain emergency situations, program participants may withdraw some or all of their savings before they are ready to purchase their chosen asset goal. Such withdrawals would not include savings matches. And, of course, participants are always free to close their accounts, withdraw from the program and receive all of their savings and earned interest.

Can you explain more about how I can use the money?
Homeownership: A Smart Savings Account can be used for the down payment and/or closing costs of a house to be used as your primary residence.
Business Development: A Smart Savings Account can be used to purchase assets for a new or existing business.

Can I buy any house I want?

You can purchase any new or previously owned home in Midland County, Texas as long as it is not more than 120% of the median purchase price of a home in Midland.

What kind of business assets can I buy?

You can buy tangible items for a new or existing business. You may not use the IDA for operating expenses such as office rent, salaries, fees, fines, or taxes. Some examples of allowable tangible business assets are: portable pressure washer (mobile car wash business), deep fryer, dining room furniture, dishes, cooking utensils (restaurant business), lawn mower (landscaping business), margarita machine (frozen drink equipment rental), vending machine (vending machine business), inflatable jumper (kid party rental), computer equipment and/or software, cash register, manufacturing equipment, etc…

Can I save for both a home and business assets?

You may only have one IDA and you must choose to save for either a home or business assets.

Can family members save for the same asset?

No, family members can not save for the same asset or for assets for the same business. Family members may save for different assets. For example, you may save for a home while your spouse or parent saves for business assets. Two family members may save for assets for different businesses.

What if my income goes up, or I become unemployed, after joining the program?
The Midland College BEDC certifies your eligibility for the Savings for Independence Program at the time you apply. You can remain in the program even if your income goes up or if you become unemployed, as long as you can continue to follow the program guidelines.

What happens when I save enough to buy my asset?
You meet with us and tell us you want to make a withdrawal for one of the recognized purposes. Together, we'll review your participation in the program and verify the details of your asset purchase. Then we'll withdraw your own savings and the match money by means of a check made payable to the vendor from whom you are purchasing your asset. Simple!

I already have a savings account at another bank. Can I use that account to make savings deposits? No. The IDA program requires a specific bank account to be opened at Community National Bank on Florida Street.

Is there a minimum or maximum age to participate? The minimum age is 17. Individuals aged 17 will be required to have their parents, or legal guardian, sign IDA program agreements. There is no maximum age for participation.

Can anyone apply?

We welcome all qualified applicants. To be eligible for the IDA program you must meet all of the following criteria:

Participants must be a US citizen or eligible non-citizen who resides in Midland County, Texas.
The household gross income must be in the moderate to low income range, as defined by HUD’s annual income limits for Midland, Texas. (updated March 19, 2009)

Members in Household/Family	Maximum allowable income
1	$33,700
2	$38,500
3	$43,350
4	$48,150
5	$52,000
6	$55,850
7	$59,700
8	$63,550

What is a eligible non-citizen?

An Eligible non-citizen is a US permanent resident with a Permanent Resident Card (I-551).

Can I participate if I have bad credit?

There are no credit requirements for individuals purchasing assets for a business. If you are purchasing a home, you will need to qualify for a mortgage or be accepted into the Midland Habitat for Humanity program. We will be happy to help you address any credit issues you have.

Can I participate in any of the program if I do not qualify for the IDA program?

Yes! You are welcome and encouraged to participate in the free Money Smart program which is held at Casa de Amigos. You are also welcome to participate in the free business counseling offered by the BEDC. Please call the BEDC office to schedule an appointment with a business counselor or to place your name on a list to be contacted for additional free seminars and activities that will be offered.

The BEDC is located at the
Midland College Cogdell Learning Center
201 W. Florida | Midland, Texas 79701
(432) 684-4309
bedc@midland.edu