What's it like to live paycheck to paycheck, unable to gain access to the everyday financial tools that most people take for granted?
Yesterday at the South By Southwest (SXSW) music, film and interactive conference in Austin, Texas, filmmaker Davis Guggenheim tackled the subject, previewing his latest documentary, "Spent: Looking for Change."
Guggenheim is known for addressing social causes through his works, with notable films like "Waiting for Superman" and "An Inconvenient Truth." With "Spent" he has trained his lens on the unbanked and underbanked population in America.
Consumers classified as unbanked or underbanked are those who do not rely on traditional banking services, and typically forgo a checking or savings account, opting instead for alternative financial services like check cashing and payday lending as their primary methods for accessing personal funds. In 2011, the FDIC and US Census Bureau surveyed 45,000 households and found that 20.1 percent, or 1 in 5 households, were underbanked, while 8.2 percent, or 1 in 12 households, were unbanked. For most of us, it is hard to imagine how one could not have a basic checking account to manage our daily transactions, but the reality is that despite the availability of banks, the arrangement is simply not financially feasible for some consumers.
Tiffany Richardson knows what it's like. In 2008, she was in good shape financially. She earned a steady income working as a nurse in Houston and contributed regularly to her company-sponsored 401(k). She enjoyed dining out, shopping and traveling. But everything changed when Richardson's mother was diagnosed with multiple myeloma.
As the cancer advanced, Richardson was forced to take increasing time away from work to tend to her mother, and the multiple absences eventually led to a mutual parting of ways with her company. Richardson decided she could afford to take time off to care for her mother full-time and return to job-searching afterwards. "I had a nice nest egg saved for a rainy day, and I think this was kind of a rainy day that turned into a tsunami," Richardson said.
After depleting her savings to cover the cost of cancer treatments, drugs and hospital bills, she began searching in vain for work in 2009, just as the financial crisis was underway. With no full-time positions in sight, she picked up temporary jobs where she could but it wasn't enough. Eventually, she lost her home, moved to a rental apartment and filed for unemployment. With bills mounting, payment became a game of haphazard selection. "You're spinning the bottle: what to pay next, what to pay when," Richardson said. Despite a relationship with her bank stretching back to 1990, her checking account was closed for being overdrawn past 30 days.