Wondering if you'll ever do more than just get by?

The answer might be an "individual development account," or IDA, a savings plan that kicks in $2 or $3 for every dollar saved so lower-income Americans can:

• Buy homes.


• Start small businesses or expand existing ones.


• Go to college or trade school (or send children there).

In return, you must take financial-education classes and deposit at least $20 a month, up to $2,000. That means you can get up to $6,000 for free. Sort of.

"It wasn't just a handout. You had to earn it," says Christen Poe, a Virginia mother of two who works for a county health agency.

She and her husband, a corrections officer, went through 14 hours of IDA classes (complete with homework) at Beans and Rice, a Pulaski, Va., economic development organization for low- and moderate-income families. At the time, their "home" was a one-bedroom apartment over a family member's garage.

"We both work our tails off, but we could just not get ahead," Poe says. Wages of $8 an hour are pretty standard in their area.

Now they have a four-bedroom house. Without the IDA program, they'd probably still be in living above the garage. "Nobody would look at us to finance because we had no down payment," Poe says.

"Lower income" doesn't necessarily mean impoverished. A single person earning $21,660 is eligible; so is a four-person family living on $44,100.

If you make a little too much to qualify for an IDA, you can still find ways to save. "An emergency fund out of thin air" and "9 sneaky tips for saving more" both give techniques for squirreling away the lucre. For a jump-start bonus, see "Get free money from banks." If funding retirement is your goal, remember the tax benefits of the saver's credit.

Are you eligible?

Individual development accounts were created under the federal Assets for Independence Act in 1998. Under the law, about $24 million a year gets distributed to more than 200 community-based nonprofits and government agencies. Many of these programs also get state and private funding.

You can apply if your adjusted household income is equal to or less than 200% of the federal poverty level and if you have no more than $10,000 in assets. Home or car ownership does not necessarily rule you out, and student loans and consumer debt are included in your total assets.

Although you must be employed to apply for an IDA, it doesn't necessarily have to be full time. "I've had people who had odd jobs who qualified," says Brendan Wilbur at Alternatives Federal Credit Union in Ithaca, N.Y.

Adrianna Hirtler, 34, has several jobs. During summers, she works at Yosemite National Park; the rest of the year she's a substitute teacher in Ithaca and occasionally runs training classes for overseas workers.

Determined to start her own business, Hirtler enrolled in Alternatives Federal's financial-education program two years ago. The classes taught her to think about money "in a more efficient way" and required her to create a business plan for what became Place Odyssey and the Art of Walking, a company that conducts specialized and gourmet walking tours in the Finger Lakes area of upstate New York.

Thus far the $3,000 from IDA has paid for an upgraded computer and printer plus the software to design a Web site and brochures.

"I'm able to print my own fliers and materials, which really (would otherwise) cost quite a lot of money," Hirtler says.

Getting better at managing money

An individual development account isn't just about the money, though. "It's about establishing behaviors about money," says Eric Bucey, a spokesman for Beans and Rice. "In America — and you see this across income backgrounds — we're not very good at managing our money."

Along with basic budgeting, an IDA course might include topics such as credit cards, insurance, retirement, mortgages, taxes, debt repayment and setting financial goals. Such topics aren't always taught in school or at home.

Depending on the program, it may be possible to skip a month or two, or even to withdraw and restart later. But an IDA participant cannot earn matching funds without completing coursework and savings requirements. If you drop out for good, you'll get back only the money you put in.

Once you complete the program, the money is paid out in ways that specifically support your goal — for instance, college tuition, the down payment on a mortgage, rent for your new hair-braiding salon.

The result, Bucey says, benefits society at large as well as the individuals. College or vocational educations tend to bring higher salaries and, as a result, more taxes paid into the system. Successful small businesses support the local economy and may create jobs. Workers in troubled industries can reinvent themselves. People with strong money management skills will need fewer, if any, social services.

Eric Norris, 36, has worked a variety of jobs since leaving the military, most paying less than $10 an hour and none with benefits. "(Employers) tell you they'll pay you minimum wage plus 50 cents. And if you won't take the job, somebody else will."

At times, the Virginia resident and his wife have received food stamps and subsidized health care for their two daughters. "Barely afloat" is how he describes the family's financial situation.

Beans and Rice matched his $2,000 with an additional four grand; Norris is using the money to pay for paralegal training. His wife is also in school, finishing up a teaching degree. Once they're both working, they expect to pay off consumer debts and her student loans within three years. Otherwise, "it would probably take us closer to 10 years."

"I would like for us to stop treading water," Norris says.

'My attitude was ready'

Not everyone can stick with an IDA. The Earned Assets Resource Network in San Francisco has a 20% attrition rate; EARN spokeswoman Amanda Byrd says some programs lose upward of 60% of participants.

Child care and transportation are perennial problems (some programs offer help with these). Some participants aren't willing to do the coursework. Others find it tough to set aside even a few dollars a month from their minimum-wage paychecks.

"It's very challenging for a person making $20,000 a year to save $2,000. That takes some doing," Byrd says.

In 2006, Adrian Green was a single working mother living in public housing in the San Francisco area. The rough neighborhood made her fear for her daughter's safety. She dreamed of having her own place but had no idea how to get it. Everyone she knew rented.

"My attitude was ready, but I wasn't ready because I didn't know what I was doing," says Green, 31. "That's where the (EARN) classes came in."

Initially, she was skeptical. "It just seemed far-fetched — free money?" But Green, who provides in-home care for seniors, started depositing $20 every payday. The classes taught her how to clean up her credit, set a budget and search for mortgage financing. Watching her bank balance grow, she "got really serious" and went for the maximum $6,000.

A program for first-time homebuyers netted Green an additional $15,000, and a small bequest from a grandmother "closed the gap." She now lives in a four-bedroom home near San Francisco with her 8-year-old daughter and 3-year-old son.

Now Green is encouraging her friends to consider the IDA program. They're as skeptical as she once was, but she urges them to "have a little faith" in their ability to reshape their lives.

"Three years ago," the homeowner says, "I was a single mom in the projects."

Getting started

To look for IDA programs in your region, use this project locator.

Here are a few more tips from those involved:

• Double your investment. Get your spouse or partner to enroll, too, and you'll have twice as much capital. With the matching funds, Christen Poe and her husband wound up with $12,000.


• Don't be embarrassed by need. Face it: Not everybody has had the same opportunities. An IDA is your chance to level the playing field a little bit. "When you're stretching that distance to a place where you've never been before, it's best to take the help," Green says.


• Life happens. Suppose the car dies or your kid breaks his glasses. Don't just skip classes or deposits; call the program manager and explain what's going on. There might be a way around your problems, such as an emergency loan or a short leave of absence. "We try whatever we can to keep (people) in the program," says Wilbur, of Alternatives Federal Credit Union.


• Keep that savings habit. Once you've met the matched amount, continue to put money aside. "It always going to be helpful to have a cushion," notes central New York resident Kat Hauger, whose Alternatives IDA account helped her buy her own home at age 50.


• Follow through. Show up for class, do your assignments and make your deposits. "We make it as flexible as possible to do this, but you need to do it," EARN's Byrd says.

Save money today

Control your cash: Take a "money day" to get your finances in hand, suggests Smart Spending blog partner J.D. Roth of Get Rich Slowly. His guest post on Smart Spending, "10 steps to financial success in 2010," lays out some basics.

Are you covered? Usually the words "extended warranty" make frugalists back away slowly. But "5 reasons to buy gadget protection" suggests there are times when warranties make sense.

The frugal tube: Cable television rates are likely to keep going up. Trim the fat with help from "How to cut your cable bill now."

Related Links:

5 more ways to earn more from your bank

5 extreme ways to save that actually work

How to start an emergency fund