Dealing with debt: Counseling helps manage money smartly

Dealing with Debt

Thousands of Sonoma County workers are coping with job loss and wage reductions as the coronavirus pandemic continues. Dealing with Debt is an in-depth series that examines how to manage debt and alleviate financial stress.

More stories:

Resources in Sonoma County to get your finances on track

Advice from money pros on saving, spending

Sonoma County borrowers climb out from under mountain of debt

Here’s a consumer debt breakdown in Sonoma County

Reduction in mortgage debt improves finances for Sonoma County homeowners

Many Sonoma County residents are entering 2021 facing what may be the most perilous assault on their personal finances that they will ever see in their lifetimes.

Nine months ago, the sharpest economic collapse in modern American history flattened entire industries, and every day since has been an unrelenting financial nightmare for many.

Which bills do I have to pay this month? Will my lender work with me? What about my landlord? Can we make it if I stay home to oversee our children in online classes? Should I tap into my retirement savings? Should I refinance? How am I ever going to pay back the money I borrowed from my family? When will this ever end?

“You are not alone. There are answers. We can help,” says Kathy Kane, assistant director of the Community Action Partnership of Sonoma County, which offers and urges financial counseling for its clients.

She echoes a message from a number of agencies and credit counselors who are helping Sonoma County households develop budgets to navigate the financial minefields strewed by the pandemic.

Uncertain months stretch out ahead. But 2020 is receding into the past, and 2021 will surely be better. Credit counseling and a budget are the essential tools to get people down the home stretch, these experts insist.

This downturn was three times worse than any drop since the Commerce Department began tracking gross domestic product in 1947. It’s normal to be stricken with fear. Don’t hesitate to seek financial advice, counselors urge.

A growing number seem to be listening.

“Due to COVID-19 we have people accessing services that have never accessed services before. It’s a whole new world right now,” said Amy Holter, director of Catholic Charities’ Integrative Programs, which include financial counseling and education.

Adela Gomez is thankful she spotted the value of credit counseling before the pandemic hit.

“My savings and financial skills, acquired thanks to Catholic Charities’ courses and services, made a big difference in my family budget and the outcome of my family’s future in the middle of this pandemic,” said Gomez, who participates in the Financial Stability Services program offered by Catholic Charities.

The Windsor mother of three children ages 16, 13 and 4 graduated in August with the Curso de Empoderamiento Financiero certificate, or Course of Financial Empowerment. It’s just the most recent of several services she has used through the Financial Stability Services program. And it’s not going to be the last.

“I feel so much joy,” she said.

She wants to keep “taking as many classes as I can,” she said in an interview through a translator.

Gomez is a part-time dishwasher, seasonal farmworker and full-time homemaker. Her husband has been an agricultural worker for more than 16 years. When she heard about the Catholic Charities programs, through Facebook and, she saw a potential tool that might help her achieve her financial goals.

“My main long-term goal is that my children will be able to study and become a successful professional that will serve within our community,” Gomez said. “I hope my children will have a better opportunity to succeed in college free of debt, and I hope they will be financially fit in the future.”

That was the main reason she signed up for Catholic Charities’ financial services. Since 2018 she has studied budgeting and learned how to open a 529 college savings account, how to save and invest wisely, how to choose a bank according to her family-specific needs and more. Most valuable for her, she said, has been credit counseling and personalized financial coaching that, among other things, taught her how to save and invest.

Then came the pandemic and irregular employment.

“I have not to doubt that my emergency savings were a lifesaver for my family,” Gomez said.

Gomez said she wishes more people understood the value of financial training and “how important it is to be curious and investigate and ask for financial opportunities like the one my family and I took advantage of, so they can acquire the necessary knowledge to maintain a sustainable budget and be financially successful.”

Credit counselors often express the same wish. Too many people don’t want to talk about money, they say.

“It’s the last thing most people want to focus on. It’s surprising to me,” said Cynthia Riggs, a straight-talking Sebastopol business consultant known as the Biz Diva.

But not Rachel Ginis. When Ginis was laid off in May because of the pandemic, she wanted a thorough understanding of her finances. She wanted the facts.

“Despite earning six figures, I was unclear about the details of my financial future,” Ginis said. At 55 she wanted to know exactly what it was going to take to maintain her lifestyle and build the foundation for a stable and secure retirement. “I needed to know where I stood, what I was doing and where I was going.”

Dealing with Debt

Thousands of Sonoma County workers are coping with job loss and wage reductions as the coronavirus pandemic continues. Dealing with Debt is an in-depth series that examines how to manage debt and alleviate financial stress.

More stories:

Resources in Sonoma County to get your finances on track

Advice from money pros on saving, spending

Sonoma County borrowers climb out from under mountain of debt

Here’s a consumer debt breakdown in Sonoma County

Reduction in mortgage debt improves finances for Sonoma County homeowners

So she sat down with Elizabeth Powell, a Santa Rosa financial wellness coach, and they mapped it all out. First they pulled together all of Ginis’ various documents and accounts and entered the numbers in a spreadsheet that made it easy for Ginis to see what her finances really were. With that clarity, she took steps like getting a new job and creating a plan with goals for spending and saving that helped bring her budget in line with her dreams.

“My breakthrough moment was seeing my current bottom line (what my life costs today) and thinking hard about what I need to do to maintain that lifestyle and plan for working less in the future,” Ginis said in a report to Powell.

Ginis is a LEED-accredited residential designer and general contractor whose passion for small housing units has helped revolutionize housing codes in California. She recently started her “dream job” working as a consultant for Hello Housing in San Francisco, helping clients get through the daunting process of building small housing units.

With help from Powell, Ginis enters this new phase with peace of mind.

“It’s so freeing,” she said. “Anybody who has that cloudy feeling, not knowing exactly what is needed and concerned that the news might not be good, all I can say is, ‘It is much better to know!”

A particular hazard at this time in the pandemic is debt, credit counselors said. Some households have been forced to borrow to make ends meet, and that introduces a new level of complexity to money management.

Going into debt is easy. Loans are readily available from eager lenders. But wisely managing debt takes know-how, several advisers told The Press Democrat.

A loan can be a valuable tool to help households build family well-being, improve finances and get ahead in life. It can be a lifesaver in times of crisis. But too much debt can be a bondage that takes years to escape, killing dreams and destroying lives, advisers said.

“It’s one of the underlying issues of our economic foundation, that people in this country are encouraged to believe that being in debt is no big deal, you can have everything you want,” said BizDiva Riggs.

The financial hardship pressuring some families to borrow money follows a decade of dramatic economic expansion that helped Sonoma County households slash their debt levels in half.

At the time of the 2007-2009 recession, household debt in Sonoma County was more than four times household income, according to a Federal Reserve report that compares the balance of all debt owed by consumers in Sonoma County with annual income earned by all workers in Sonoma County. But by 2019, the county’s residents had reduced their outstanding debt to just slightly more than twice household income.

Credit counselors who traveled that tough road with clients say they dread watching it rise again.

Debt is well understood as a sign of financial inequality, because in an economic downturn a low-income household may have no option but to borrow. But debt is less understood as a cause of financial inequality, even though that has been confirmed by economic studies.

For example, people who use debt to go to college, get a car, buy a new outfit or take a vacation are much more vulnerable to being devastated financially by an economic downturn than people who used savings or stock-sale proceeds to pay for college or other purchases. That’s because borrowers still have debt payments to make, even if they lose their car, their home, their job.

That’s a trap credit counselors try to help their clients avoid.

Maria Dalia Villagomez, a financial adviser with Catholic Charities of the Diocese of Santa Rosa, works every day to educate her clients about finances. In her job, she often sees middle- and low-income families with a marginal understanding of finances, no savings, maybe no bank and often burdened with debt.

For example, perhaps the family breadwinner is laid off and has problems applying for unemployment, which is then delayed two to three months. Having no savings, and deluged with calls, texts and mail from what Villagomez calls “predatory lenders,” the family takes out an easily available payday loan or a cash advance from a credit card. Rates on a payday loan can be a usurious 370% and on a credit card cash advance, 25%, according to California’s attorney general and

As the family is only able to make minimum payments, their debt keeps climbing, on this loan and others, sometimes with automatically rising interest rates, Villagomez said. Unemployed and soon forced into a late payment, which can triple the interest rate, the family can end up with $10,000 to $20,000 in debt, with more than half being interest.

If only they had sought credit counseling, to learn ways to budget and avoid high-priced loans, Villagomez said.

"I am so dedicated and passionate about these programs because I commenced my journey as a volunteer with Catholic Charities in Santa Rosa in 2005, and I had the experience of being helped as a client as well. Catholic Charities changed my family's life. That is why it is motivating for me to see how many clients are benefited by joining our programs,” said Villagomez.

Considering the need and the inspiring results, Catholic Charities is expanding its Financial Stability and Housing Counseling program to serve more clients. The benefits can be far-reaching, Catholic Charities Integrative Programs director Holter said.

“If more people were setting up emergency savings accounts, that provides assistance for the family and for our economy,“ said Holter. “Then they can depend on emergency savings accounts instead of having to reach out for other resources.”

Mary Fricker is a retired Press Democrat business reporter. You can reach her at

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