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RENEE MONTAGNE, host:

If you go to certain neighborhoods in any city, you'll find places that do business behind a thick, plastic screen.

(Soundbite of cash register)

Unidentified Man #1: Five-ninety.

Unidentified Man #2: There it is.

MONTAGNE: They serve poor people mostly. Pawn shops, payday lenders, check cashers.

Unidentified Man #3: There's twenty, thirty, one, two, and thirty-three dollars.

MONTAGNE: Short-term loans and high fees are just one more penalty of poverty, but some organizations have found a way for low-income people to save money, then build on those savings over time. As we continue our series on getting out of poverty, NPR's Greg Allen reports from Tulsa, Oklahoma.

GREG ALLEN reporting:

On the corner of Pine and Lewis(ph) in North Tulsa, Jennifer Crush(ph) has brought her daughter shopping for a stereo at the pawn shop. Across the street is a payday loan store. But Crush says she's learned that those kind of short-term loans can carry a very high price.

Ms. JENNIFER CRUSH: My mom got herself in that situation for a little while. She had needed to buy some medications. She had to have the money right then. That loan came due and she had to pay the interest for quite some time until they wouldn't let her do it anymore. So then we had to get a different loan from somewhere else and, you know, before you're out of it, you're neck-deep in loans.

ALLEN: Do you use a bank?

Ms. CRUSH: Not yet. There was never enough money after the bills to worry about putting anywhere.

ALLEN: Here in Tulsa, some people have found a tool to avoid that sort of trap.

(Soundbite of knocking)

ALLEN: Hi, is your mom or dad here?

Unidentified Child: Oh, yeah, come in. Mom!

(Soundbite of running)

ALLEN: Dawn and Mike Ferrill live in a small three-bedroom house in Tulsa.

(Soundbite of slamming door)

ALLEN: And their four kids, all home-schooled, a dog and a cat, make their house seem even smaller.

Ms. DAWN FERRILL: You need to take it outside.

ALLEN: It's a household that today is hectic but comfortable. But back in 1997 they were struggling. Mike Ferrill had recently started his own appliance business and his wife, the family budgeter, was trying to make ends meet on just $300 per month. That's when they heard about a program for people with low incomes that was too good to ignore, almost too good to believe. It would match, dollar for dollar, savings used for things like buying a home or building a business.

Mr. MIKE FERRILL: For people that didn't make much money, it was kinda like a poor man's 401K. If we could put $62.50 per month away, they would match it dollar-for-dollar.

Ms. FERRILL: But it was just really hard. I mean $62 doesn't sound like very much money, but when you're living off of peanuts, it's a lot of money. It's real hard. I mean, I didn't even have enough money to buy clothes at the thrift store. I had to beg friends, do you have any clothes that, you know, don't fit your kids anymore? So to scrape $62.50 was really, really hard.

ALLEN: By scrimping just a little more, the Ferrills were able to begin putting the money away, and opened something called an individual development account, which gave them the dollar for dollar match. After more than a year, they had enough money to rent a big ad for his appliance repair business in the yellow pages.

Mr. FERRILL: The telephone started ringing more.

Ms. FERRILL: Yes. And it seemed liked within the first year we tripled our income. It went from about $300 to $900 per month, yeah.

ALLEN: Today, with an income of about $30,000 for their family of six, the Ferrills are far from wealthy, but they say they're managing. Another important change: they've learned to save. Mike Ferrill says they recently bought two new vehicles, using $7,000 in cash they'd saved up over many months.

Mr. FERRILL: Now, also, all the kids have a personal savings account. We'll go to the store and the cashier will say, this is your money? Yeah, I want to buy this because I saved this money in my personal savings account. And it just blows the people away.

ALLEN: The Ferrills were part of a demonstration project conducted in 13 cities across the country. It looked at whether, with incentives, low-income people could be encouraged to save money and use the savings in ways that would improve their lives. In Tulsa, the program was run by a non-profit group called Community Action Project. CAP director Steven Dow says the results were encouraging. More than a third of the people who enrolled were able to save money, get the match, and use the funds to build assets.

Mr. STEVEN DOW (Executive Director, Community Action Project, Tulsa, Oklahoma): The notion of living beyond our means has been demonstrated by the federal government and by middle and upper-income families all across this country. Even in the face of that as a national culture, poor people could and would say they are so eager to have a different future for themselves that they will do what the rest of us are not doing.

ALLEN: Hundreds of organizations and more than a dozen states are now using individual development accounts to help clients buy homes, set up businesses and save for school. Right now, there are about 50,000 IDA accounts around the country and that number may grow. President Bush has budgeted money for a federal program and a bill currently in Congress will provide more than a billion dollars to set up some 900,000 IDA accounts.

But as promising as IDA's are, they don't always work. Studies have shown they've been used most effectively by people with steady jobs and who are strongly motivated. And the programs are expensive. Along with the money needed to match savings, IDA's are costly to administer, requiring close supervision by caseworkers.

But for people like Dorie Simmons, a little help getting started can make a big difference. Today she and her three kids live in a spacious home in one of Tulsa's nicer suburbs.

Ms. DORIE SIMMONS: Now, this is what I'll be watching, Entertainment Tonight. When I get a chance to get home, this is my thing. I need to know how the other half lives.

ALLEN: Eight years ago, she was struggling to get by. A single mom living in Section 8 housing, when she heard about Tulsa's asset building program. The dollar-for-dollar match made it worth her while to save.

Ms. SIMMONS: One of the ways that I would save money is, like, when you'd go to the grocery store at that time, food stamps were paper stamps, and so that change that I'd get back, I would hold that change, like, in a little jar or something, instead of maybe taking that and going to the pop machine and dropping that 50 cents in or something like that. That became the priority.

ALLEN: Eventually, she was able to buy a small home, and since then she's gone on to finish college and buy an even larger home.

Ms. SIMMONS: But if you look back 16 years ago, I was 14 years old and pregnant. I had a child at 15, 18 and 20. I shouldn't be here. You know, statistics say I should be five miles down the road at the Section 8 housing complex with no education, trying to figure out how I'm going to make it at a minimum wage job.

ALLEN: Today Simmons is proud that she's made it into the middle-class.

(Soundbite of refrigerator door ice dispenser)

ALLEN: She shows off what is, for her, a tangible sign and sound of her success.

Ms. SIMMONS: When I wrote a check for my stainless steel refrigerator with water in the door, I knew I had arrived.

(Soundbite of refrigerator ice dispenser)

ALLEN: Dorie Simmons is even more proud of the opportunities she's giving her kids. Her 16-year-old daughter Dianna, a new driver, has just taken the family car out on an errand. When Dianna is ready to go to college, her mother says, she'll be ready, too, with equity built up in the house and money in the bank.

Greg Allen, NPR News.

MONTAGNE: Details about how people build assets and the earlier stories in our series on poverty, go to NPR.org. Over the spring and summer, we'll hear more stories about getting out of poverty.

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