Debt Hater

Sliding backwards into poverty

I read this terribly disturbing article in the Washington Post: "Middle Class Dream Eludes African Americans"

    It's about a study saying that the children of blacks who had been solidly middle-class in the 1960s are dang near impoverished today.

    It scared me because I always thought when you made it out of poverty, your family would never go back. I thought upward mobility was a one-way ticket barring, of course, natural catastrophes, medical disasters, mental illness or drug abuse.

    I've written a lot about how I want to impart better financial knowledge to my future children. I see it both as a goal and as a duty.
    The other day I was dreaming up new ways to teach the children I haven't had yet how to manage their money and build wealth.
    A co-worker who grew up without much money told me that her parents would give her and her siblings a slip of paper and the JC Penney catalog. On it, the paper, they each had a Christmas budget. They could select anything they wanted out of the catalog provided that, altogether, it didn't cost more than they had to spend. Sounds like a good idea to me.
    I thought about putting all big family expenses -- like vacations, big screen TV, a new computer -- on the table in front of the children to brainstorm ways to save for them. Then show them that we couldn't have it until we saved up the money for it.
    I'd have a money talk with them before shipping them off to college. Explaining that they had to create a monthly budget and I wanted to see it. In exchange for their diligence, I would open credit cards in their names (they wouldn't open any on their on on campus) and use them to build their credit histories. But they had to pay for all their stuff in cash.

    I mean, who knows what I'll do, but I think about it often. I think about the things I wish I knew that I want them to know before they make the same money mistakes I did.

    I don't know if there are other reasons why this seems to be happening to black families. The researchers who conducted the study said flat out that they didn't know why this was the case.

    But I know that I will do what I've been doing for as long as I've been alive. I won't become a statistic and I won't fit the stereotypes.

DH

Your perceptions are costing someone else money

    This weekend, Newt Gingrich continued pandering to the radical, racist right in his own attempts to gain the Republican presidential nomination.

    He called Spanish the language of the ghetto.

    And he's cheered by members of the National Federation of Republican Women.

    Gag me.

    The other day, I overheard someone say that he doesn't care for Spanish, but he doesn't mind French. He said this in a conversation about making English the official language of the city. Understand that the Latin population of this region has exploded. There are parts of this area that remind me of Los Angeles.
   
    He prefers French to Spanish? What does that mean? They're both European Romance languages. What?!
    Of course, this all about reading between the lines and deciphering racial code. He, being as dim as he obviously is, associates Spanish with dark, poor Mexicans and other South and Central Americans. He must associate French with wealthy, skinny blond women who enjoy baguettes.
    Hmm. Would he still prefer French if the only people he heard speak it were black Haitian immigrants?
    Of course not!
    And that's my point: People's perceptions hold back the progress of other people -- not permanently -- but it's definitely a wall that must be scaled and all that dang climbing costs people time AND MONEY (not to mention mental and emotional stress).

BUBU -- Banking for Us By Us?

    A cyber buddy of mine sent me a link to OneUnited bank, the world's first (and I'm sure only) black-owned Internet bank. On the top of the page is a savings account offer for an impressive 5.25% APR.
    There's also a recent article here from Black Enterprise Magazine about the bank's growth.
    Their Web site touts a noble mission of "fulfilling the hundred year old civil rights dream of garnering the spending power of our community and channeling it back into our community for economic development."
    The site says the bank has "financed over $350 million in loans, including churches, affordable housing, office buildings and retail stores - most in low to moderate income communities such as South Central, Compton, Liberty City and Roxbury."
    Sounds great! But,not without problems. Single Ma has a post about her nightmare experience with OneUnited, its subpar customer service, bizarre account policies and embarrasing Web presentation (misspellings on the tabs? Come on now!). Read her update post here.
    I'm proud of these people for creating A BANK. It's not like opening a restaurant or something. But the concept of "niche" banking is definitely not new and niche banking based on race isn't either.
    Latinos have for years used Latino credit unions and banks to build their wealth after immigrating to the United States and they still do. The banks tend to be more helpful to people sending money home to relatives in other countries.
    The branches of the military have credit unions for servicemen and women. There's credit unions for teachers. Banks around the world have created entire service lines just for women. I heard a story on NPR months ago about banking just for women.
    But what exactly is the difference between black money, white money, civilian money and military money, male money and female money? There is no difference. Cash is cash and compound interest is a beautiful thing.
    I understand why there might be niche banks designed with certain people in mind. The point isn't to get all blacks to bank with one company or all women to bank with another. The point is to address the needs and issues of a specific group that, frankly, mainstream banks (i.e. created by, run by and originally intended for white men) sometimes miss. Or to invest in people that mainstream banks might redline.
    Do I need a black or black-owned bank? No. Just like I don't need a white or white-owned bank. I just need a good bank. Niche players delivering a quality product to their customers -- whoever they are -- is what matters. Would I be more willing to place my money with a black-owned bank that adhered to a mission I also adhere to? Yes! Just like any person in a free country has a right to do whatever with her money.

    So put your money where you want... just make your money, and your bank, work for you.

The Black Tax #3 -- How about a pay raise?

   Jody Armour, a professor at USC School of Law, wrote that "The black tax is the price blacks (and other minorities) pay in our daily lives because of racial stereotypes. Like a tax, racial discrimination is persistent, pervasive and seemingly inevitable — as in "Nothing in life is certain save death and taxes."

    During American slavery, Africans would do everything they could to save enough money to "buy" their spouses, children and relatives to save them from being sold away or to finally free them. But, of course, money was meaningless when you were a slave. You could save all you wanted to, but the price for your loved one just got higher.
    Life was abyssmal for them and they were paid nothing for their trouble. Even when they had money, it often didn't do them any good.
    Now things are considerably different, but not much better in the finance department. Today, a black high school graduate working full-time from age 25 to 64, will earn $300,000 less than a white HS graduate. A college degree won't help much more. The average black college graduate will earn $500,000 less than an average white college graduate.
    That's a house or two or three depending on the market. That's a college education for two or three children. That's a lovely nest egg to look forward to. All dreams deferred, and denied.
    Despite all this, it doesn't look like we'll ever get our reparations. So, instead, how can black people account for these life disparities in their finances? What if the black tax actually amounts to a 10% premium on African Americans?

    Let's look at this in dollars.

    Black men earned about 78 cents on the dollar for every dollar white men earn. Black women earn about people earn 68 cents for every dollar white people earn (these figures are lower depending on where you look).
    Add a 10% tax to that, and it means that blacks men really only earn 70 cents on the dollar and black women earn 61 cents.
   We'd have to be paid more than white people, on average, just to break even!
   Perhaps whenever we negotiate salary, we should tack on that 10%. Calculate your living expenses and add 10%.
    The next time I go on a job interview, believe I will add that figure into the mix.
    Besides that, we'll just have to be smart and unafraid to take risks with our money -- and I mean real risks like investing or buying a home and not paying Pookie down the block to buy into a stupid pyramid scheme.
    That means paying into the 401k at work and being discplined not to touch it. It means educating ourselves on home buying, budgeting, credit improvement and investing. It means starting our own businesses and building them. It means accepting when we've screwed up our credit (the guilty one raising her hand here!) and doing everything possible to fix it. 
    And it means that when we have stellar credit, sparkling portfolios and enviable bank accounts, we shouldn't horde it, but teach others how to do it too. And spread the wealth, even when you don't have much. We are blessed to bless others.
    We're not going to be paid enough to eliminate the race & wage gap, so we have to save more. We'll have to build generational wealth to account for the "black tax" -- on our health, our spirits and our money -- otherwise it will continue to overburden us and our descendants.

    History teaches us that no one is going to do it for us. They didn't do it for anyone else. And we're the last people on earth who should expect such charity. So, it still goes back to personal responsibility, even when the deck is stacked -- and then some -- against us.

Black Tax #2 -- The High Cost Of Poor Health

    Have you ever had a "black attack?" That's what I call the physical reaction black people have when someone says or does something offensive and you try to remain calm.
    Your heart beats faster and harder. A ripple of heat spreads over your body. Your muscles tighten in your head, jaw, neck, shoulders and chest. You breath shallowly.
    Many times you don't notice it. Sometimes you feel it much later, when you suddenly start panting or feel dizzy.

  I'll never forget the day O.J. Simpson was acquited on murder charges (yes, I'm going to take it there). I hadn't followed the trial with the religious zeal many other people did. I saw the verdict on TV in my dorm room my freshman year. Frankly, I didn't care. I went to class ready to talk about The Odyssey.
  When I got to class, a white student came in wearing a black ski mask, black gloves, and a white T-shirt that he wrote "I did it" on. My chest tightened and my face got hot.
    My professor arrived and was about to get on with the lesson, much to my relief, when a white student put up her hand and said "Can we please talk about this?" and exhaled like she was Marcia Clark and just lost the biggest case of her life.
    The prof started talking and eventually said "A lot of black people feel loyalty to O.J." Then, to my horror, he turned to me and my friends -- three other black women -- sitting in a row in the front of the class. He said our names INDIVIDUALLY and asked us if we felt loyal to OJ. Twenty pairs of eyes landed on us. Two of my friends remained silent as though they hadn't heard the question. My third friend started to speak and then, frustrated, said she wouldn't comment.
    I went off.
  "OJ isn't putting me through college. He ain't putting food on my family's table. No I don't feel loyalty to OJ!" And it was I that spoke for the remainder of the class on behalf of black people everywhere. It took God and every bit of home training in me not to go berserk.
    Even typing about that incident caused the "black attack." I'm hot. My heart is pounding and I can't fully breathe.
    And that reaction might trim precious moments from my life.
  It might seem like everyone has reactions like that, regardless of race, for a host of reasons. But that's only true to a point. A University of Nebraska researcher, Dr. Rubens Pamies, explained that black people are constantly on the verge of "fight or flight." Our bodies surge with the hormones and chemicals the body releases under stress all the time.
    I call it "hypervigilance."
    We have more reasons to be on edge. We might not even know that we are on edge. The slights that cause these reactions might be real or imagined. But the net affect on our bodies (not to mention our minds and yes, our wallets) is the same.
    It explains why college-educated black women, in good health who get prenatal care are still more likely to have low birth weight babies than white women who dropped out of high school and smoked while pregnant, Pamies said. Those black babies are also more likely to die before their first birthdays than the white babies. Sickly babies need more care and that care costs money.
    Hypervigilance may help explain why the suicide rate for black boys and men increased over the last few years while it's fallen for everybody else (among many other factors). It's rage and despair that gets turned inward, because when it goes outward you get arrested or shot and killed... or you shoot and kill.
    The life expectancy for a black man is six years shorter than a white man, mainly because of murder. That disparity lowers the life expectancy for everyone and everyone pays for it in higher taxes and health and life insurance premiums, according to The Tennessean.
  The newspaper found that, in Tennessee at least, murder costs taxpayers $110 million each year. The victims' families and the families of the murderers also cost everyone money because the majority of them need public assitance to make up for the deceased -- or the imprisoned -- person's wages.

    So, just how much is the Black Tax? It seems that black folks aren't the only ones paying it...

The Black Tax #1 -- The intangibles can be expensive

    In the last few Sundays, I've read several news stories about the difficulties black men face in America for no reason other than they are black. For example, The Washington Post began a series called "Being A Black Man" in June. I read another article two Sundays ago about black men just "going along to get along," and how it may or may not work.
    It made me look at the phenomenon -- known as The Black Tax -- from a personal finance perspective.
    Just being black makes it more expensive to live.

    An article from the Associated Press called "Black men quietly combating stereotypes," is about adjusting every aspect of their lives just to break even:

"Every day, African-American men consciously work to offset stereotypes about them — that they are dangerous, aggressive, angry. Some smile a lot, dress conservatively and speak with deference: "Yes, sir," or "No, ma'am." They are mindful of their bodies, careful not to dart into closing elevators or stand too close in grocery stores.
  It's all about surviving, and trying to thrive, in a nation where biased views of black men stubbornly hang on decades after segregation and where statistics show a yawning gap between the lives of white men and black men. Black men's median wages are barely three-fourths those of whites; nearly 1 in 3 black men will spend time behind bars during his life; and, on average, black men die six years earlier than whites.
  Sure, everyone has ways of coping with other people's perceptions: Who acts the same at work as they do with their kids, or their high school friends?
  But for black men, there's more at stake. If they don't carefully calculate how to handle everyday situations — in ways that usually go unnoticed — they can end up out of a job, in jail or dead."

    So, just being black could cost us clients, promotions and income, regardless of our performance on the job.

  I can identify. I'm constantly measuring how I speak. I have a very deep voice and I talk loudly (my grandmother is southern and my mother is a no-nonsense New Yorker. We shout when we talk. That's how we do). I often kick my voice up an octave or two and smile when I speak. I'm over six feet tall and I wear my hair in an afro. When I'm in a suit and heels, I dwarf people. I always try to sit down when I speak to other people or otherwise make myself seem less intimidating. Never mind that I am the least intimidating person I know. My problem is that I'm a cream puff! But I have to go through the motions anyway. It's annoying and frustrating, but it's also a reflex.
    I have gotten the look on job interviews. You know, all the interviewer has is your resume. They like it and you get called in. But then you show up and they're flustered.
    I like to think that they just weren't expecting me to be so beautiful...
  Remember the skit "When Keeping It Real Goes Wrong" on Dave Chappelle's show? He played a young, black executive who was successful and well liked on the job until one of his colleagues said something stupid like "Slap me some skin. You're the man!" Seems harmless and innocuous, doesn't it?
    Well, the character snapped, started shouting profanity at his supervisors, threw up gang signs and chanted "Wu-Tang!"
Next, he was working at a gas station and living at home with his nasty grandmother.
  Silly, maybe, but the point is obvious. People don't understand what we have to put up with and keep smiling like nothing happened. Everybody has their difficult situations and co-workers who drive them nuts, but for us it's ratcheted up a notch. Even if we play it cool, and most of us do, it still hurts us and there's no guarantee that years of good behavior will pay off. We're the only people who worry about losing our jobs or credibility when another black person does something stupid whether we had anything to do with them or not.
    
  I have been very blessed. I have not had a problem getting the jobs I want. I haven't been hindered at work. But I think that makes me an exception, not the rule. You have to start wondering how much more money could you be making if all things were actually equal...

Climbing out of your grandaddy's ditch

    I've said before that nobody knows how to work their fingers to the bone like black folks.
    Too bad we have nothing to show for it.
    The Economic Policy Institute, a think tank in Washington D.C., reported that median net worth for a white family was $140,700 in 2004. Median net worth for all other people was $24,800.
    For those of us new to finance, your net worth is the difference between assets - such as the value of your home, savings and investments - and liabilities like outstanding credit card debt, loans and mortgages.

    You don't have to be a financial genius to see that's a massive gap.

    We all know why this is. Black people have inherited a lopsided economic burden from our enslaved ancestors and those that survived Jim Crow, lynchings and legal segregation, which, incidentally, didn't end that long ago. Many black families have worked hard all their lives, but have no wealth - including houses, land or investments - to bequeath their descendants.
    I started this blog because I knew my financial ignorance would be my undoing. I also finally saw that if I scraped by my whole life, my future children were going to do exactly the same thing.   
    My grandmother is a sharecropper's daughter. She didn't finish high school and she earned a living as a live-in domestic for years. My mom finished high school and has been blessed to work at the same job since she graduated. They raised me in a Brooklyn housing project.
    But I went to college and graduate school. In my lifetime, I'll earn more money than either of them will have ever put their own hands on. That was their goal. That's what they worked for. Yet, in my current financial path, I would have finished my life with nothing to show for it.
    I couldn't do that. That would have been the utmost in selfishness and laziness.
    Unfortunatley, not everyone wakes up to see that fact.
    When you have to figure out where your next meal is coming from or how you're going to buy new shoes for your child and pay the utility bill, your mind is far from thinking about s retirement, health savings accounts, mutual funds and the like.
    But eventually you're going to have to get off the hamster wheel and focus your energy in a different direction.
Americans love the idea of the big idea or the big score that sets you up forever without any hard work. But in real life that almost never happens.
    Black folks in particular believe that they need some kind of windfall, the big payback, getting over, the major hustle that will set everything up. They'll be discovered as a singer, rapper, actor, model, athlete. Somehow, someway a lot of money will suddenly come their way.
    The truth is harder to swallow. It takes generations to build wealth, real wealth. That means a totally different mindset about money. That means financial understanding that is passed on around the dinner table. That means raising children who know how to save and why they should. That means squelching the desire for instant gratification. It means setting things up so each generation starts on a higher rung than their predecessors, not always starting from scratch.
    It is possible for poor people to build wealth, but that hard work might not pay off for a generation. Essentially, we'll have to work for our children.
    True, most Americans are failing miserably to prepare their children financially, regardless of their race, culture, color or class. But generational poverty destroys families' ability to develop the skills necessary to get out of debt and stay out, hold down jobs, pay bills on time and accumulate wealth.
    Look at the Katrina victims.
    Defeating poverty takes a conscious effort by an individual. That person, that couple, that family has to decide that they don't want to live that way anymore.
    They have to further their education. I'm not talking about fancy, overpriced colleges. I'm talking about night school, trade school, nursing school -- anything that will help them get a job with a better salary.
    They've got to get over their fears and read a book about finances. I took a big gulp and started with one book. Now I have a list I want to read. Reading other blogs has taught me simple things I never thought I'd know like how to really bargain for the right price for a car and how to pay off debt. My entire thinking about money has changed.
    And they've got to cut loose anyone who stands in their way -- be they your roll dog, your boy from way back in the day, your best girl or your blood relatives.
    I spoke to a young woman who said when she started going to finance classes and started working longer hours to earn more money, she caught flak from her friends.  A finance professional told me that she's had to counsel people whose families were trying to convince them that they'd never be rich, never have what they were saving for and were wasting their time.
    There are jealous people. There are lazy people who want you to stay lazy. There are also people who simply don't understand that they can change their lives. There are people who are simply afraid of change.
    But we can't be afraid to stop the nonsense. It has to stop somewhere or it will last forever. Look at the median net worth statistic. It doesn't have to be like that.
   I hope to be very comfortable. I don't know if I'll be rich. I don't care. Because knowing what I know now, I know what I will teach my kids. I know that they'll have mutual fund accounts before they emerge from the womb. I know I'll teach them about saving while I teach them to read.
    I'm looking for tools that will help me everyday. Start with your local Housing & Redevelopment Authority. Also check with the local Social Services department. Try local credit unions, which sometimes offer free financial classes. Check out Fannie Mae's Web site -- there's good, free tools on repairing credit, learning to budget and figuring out how to buy a home you can afford.
    Start there. Just start at all. I've met some black folks who had dreams and decided to do something about them. They might not get rich, but their children will never be poor.

The Road to Wealth

    Sick as a dog, I dragged myself from 8 hours of mind numbing work to a financial seminar sponsored by the church I attend here.
    I got there on time, 7 p.m., but no one was there but the instructor. I wanted to go home and go to sleep. But I stayed and we started talking.
    I told him how I had reached the point where I was sick of paying bills, sick of being in debt and sick of being scared to spend money on things I wanted. I told him I was afraid that I was getting started too late and that I'd never achieve true financial independence.
    He smiled. He used to think that too. He told me about how he learned everything he knew about money from his father, who learned all he knew from his father and on up. For us black folks, our father's father's fathers were likely sharecroppers or slaves.
    I feel like nobody knows how to work themselves to death like black folks. The "Sleep 'N Eat," lazy stereotype is so insulting in itself, but put next to our history of backbreaking work it's damn ridiculous. Black folks know how to work.
    But we're still broke.
    "We've been taught how to make money," the instructor said. "But not how to make it work for us." He laid out graphs, papers and transparencies while he talked.
    "My family used to say don't mess with banks. They mess up your money. That's why they didn't  have a checking account," he said.
    I laughed because I knew a guy who worked hard but kept hundreds of dollars rolled in a wad in his pocket. I had a friend who refused to use credit cards and paid cash for everything, cash she kept in bills in her apartment. We both knew black families that worked and saved tens of thousands of dollars, died and had nothing to show for it.
    Our grandparents and ancestors fed whole families, bought houses and paid for college educations as cooks, maids, porters and janitors. We work in investment firms, as professionals and can't afford minimum credit card payments.
    Why?
    We haven't learned to build wealth. If our grandparents knew how to build wealth, we'd be set right now.
    By 7:30, only one other young woman had showed up. So the instructor, who is also a financial planner, told us he'd give us FREE individual financial planning sessions. He'd help us build a financial roadmap.
    I felt terrible physically, but the promise of free financial advice and planning made me feel pretty good.
    I have learned to stop beating myself up about my financial situation. Money was the only thing in my life that made me feel like an idiot (money and relationships... but I got the relationship part figured out good now!). I was a nerdy, book-a-holic, who overachieved and went above and beyond. It's gotten me two degrees from prestigious universities and a steady job, but that's about it.
    I'm not knocking education and I don't wish that I hadn't worked hard. I just wish I had been smarter with the money I earned. I've earned more than $100,000 since I started working, but I'm $16,000 in the hole. What's up with that!?
    But it's okay. Thankfully, money matters are all about attitude. I'm tired of the way things are and I'm determined to change them. A few years ago, you couldn't put a financial book in my hand. Today, I read every one I can get my hands on. Years ago, I believed I would never be rich. Now, I think I can be if I want it bad enough.
    The instructor told us life is all about our ATTITUDE:

    "Attitude, to me, is more important than facts. It is more than money, than circumstances, than failures, than success, than what other people think or say or do. It is more important than appearance, giftedness, or skill. It will make or break a company, a church, a home. ... We cannot change or past. We cannot change the fact that people will act in a certain way. ... I am convinced that life is 10 percent what happens to me and 90 percent how I react to it. And so it is with you. We are in charge of our Attitudes!" -- Charles Swindoll

Try banking on your own trends

My guy is from Jackson, MS and he sent me this article from his hometown paper, the Clarion-Ledger. It's called "Up In My Grillz: New shops attract hundreds putting gold, platinum and jewels where their mouth is."

It's about people, primarily black folks of course, emulating their favorite rappers and athletes by covering their teeth with precious metals and jewels.

You've heard that Nelly song "Grillz," right? I actually like the song though I think it's silly. It's fun. And if people want to "get their shine on" and go out to the club with their teeth covered with bling, I don't have a problem with that. I wouldn't do it and I don't think fronts are sexy. Don't come up to me, grin your shine in my face and then think you're getting my phone number -- Naw player.

But it doesn't bother me. Black people have always created our own styles. It's also only a matter of time before it gets co-opted and adapted by mainstream culture. Black people, especially black men, have always been trendsetters for the USA.

That's not what bothers me. What bothers me is that we don't seem to make money off our own ideas. Instead we come up with a style or trend and then other people make money selling it back to us. How backwards is that!? These grillz cost anywhere from a couple bucks to a few thousand dollars. Go to the Clarion Ledger article and look at the photo of the woman looking at some fronts at the store. Who is standing behind the counter? An Asian woman.

Two stores opened in Jackson selling thousands of people these fronts. Are either owned by black people? I don't know, but I seriously doubt it. Back in my hometown, Brooklyn, NYC, all along Fulton Street Mall are "jewelry stores" and beauty supply shops owned by Asians and Middle Easterners. No blacks. But who's lined up spending their paychecks (recently cashed at the "Check cashing place" down the street NOT the bank across the street) on the big gold medallions, chains and gleaming belt buckles? We are.

I don't understand why we can think all these cool things, but don't always capitalize on them. And why are we willing to spend $400 on mouth jewelry that we only wear on the weekends (like Ms. Blount in the article). $400! How about opening a Roth IRA or something? I know it's fun to get dressed up. I know it's important to people to follow trends. I am not bashing black folks for having fun. But our priorities need an overhaul. Why not open the store selling people grillz and create a little nest egg for yourself? Send your kids to school shining but don't go broke doing it.

That's my two cents.