>Okay, yeah. Great. Could you just
>break down the ins and
>outs of budgeting within a
>Black context. For example, last
>night I was listening to
>Morgan State Radio(WEAA), and an
>analyst pointed several reasons why
>it is inordinately difficult for
>Blacks to save and invest.
>Some reasons she gave were:

First thing, don't think about a "Black Context" merely think about your own personal financial context, race may influence it....but so may your gender, personal appearence, or any other number of factors.

Yes, Blacks have "general" financial issues, but when dealing with YOUR money, those aggregate issues have no relevance. Your racial identity and financial situation....although sometimes related, are not wrapped up in each other.

What you basically have to do is to evaluate your own personal financial situation and make your financial decisions accordingly.

-More on that later.

>1. Most Blacks don't know how
>to figure out what their
>credit rating is, even after
>obtaining their three credit reports.

*Chuckles*

A lot of people who work in various parts of the loan/credit granting industry, don't completely understand their credit reports.

Nor do a lot of white people for that matter.

That being said, the problem is that Whites typically have MORE confidence in their credit rating and Blacks have less, so when the loan granter says they have bad credit and charges them a higher rate, denies them, etc, etc...they take it at face value.

I will say that the advantage Whites have with respect to "understanding" credit, is simply understanding the value of protecting it.

I had a Black friend who got turned down for a car loan, he couldn't get one anywhere and got pissed off about it, complaining about the White kids we went to school with who bought cars post graduation......


.....Until I explained that most of them had co-signers and/or kept up with their student credit cards (often without their parents help) and kept up with their student loans, etc....they understood the value of protecting their credit.

Too often I see Blacks letting Bills go, "Eff Visa" simply because they don't understand the value of protecting their credit.



>2. Lending predators take advantage of
>Blacks' notorious financial illiteracy, and
>give them higher interest rates,
>knowing that the Black person
>does not realize that his/her
>credit is not as bad
>as he/she thinks it is,
>which means he/she should qualify
>for a lower interest rate
>on a home or car
>loan, for example.

That's only part of it.

Most Whites are financially illiterate too, one of their advantages is that they have more faith in their credit worthiness.

But their biggest advantage (By Far) is that the credit grantors have more faith in THEM. Even with automated qualification systems, their is still a human making a decision...the deal you get will be affected by what kind of job you hold, the computer may see 80k/year from a State job and 80k/year from freelance work as the same.....but the human has more faith in the individual with the state job. The loan officers are afraid of giving a loan to an individual that may default and having his superiors call his decision into question.....since Blacks are seen as less credit-worthy by a great many prejudiced white individuals.....Blacks don't get the same deals Whites get.

In fact, a Black person going to a Bank to get a loan, has the same chance of getting a loan as a White person who makes 1/2 their income and doesn't have the same credit worthiness as them.

All that being said, the best way to erradicate loan discrimination is to have more Blacks in Sr. Manager and Executive positions....not hire more Black loan officers...when your boss isn't going to question a decision on the basis of skin color, you're more like to be make fair decisions.


>3. Blackfolk help out family members
>and take care of relatives
>more often than people of
>the majority culture, which cuts
>into the family budget, and
>decreases the amount of money
>that would otherwise be available
>for savings and investments.

I don't quite agree with this, mostly because so many Blacks aren't saving and investing anyway and the reason is often one of poor money management, moreso then lack of money alltogether. Therefore, even if these people weren't helping their families, they wouldn't be investing. AND, one of the reasons TO save and invest is to help provide for family members, so the fact that Blacks are helping family members out is just another reason for them to save and invest.

Taking this further, I have a relative (Infant) who I can see that I may/will need to look out for, (even take guardianship of) so I will make provisions for her, but it means that I DEFINITELY have to save and invest....as opposed to me not investing because of this potential responsibility.


Furthermore, based on my own personal observations I see White Families helping out their extended families just as much if not more then Black families, doesn't stop them from investing....

>4. Blacks tend to make less
>money than their majority counterparts,
>thereby decreasing the amount of
>money one has to work
>with from the beginning.

True, BUT a significant portion of the wealth gap is due to poor money management, NOT income. Income does not define your wealth, how you manage that income does.

Case in point, low income (Low income being anyone making under 40k) whites, only have a slightly lower average net worth then Blacks who make more then 50k/yr.

The income thing is an "excuse" a mindset issue that Blacks need to let go, assuming you have enough $ to meet basic needs like transportation, utilities, food and housing, the surplus can be saved and invested.

>SO THE QUESTION IS: In light
>of all of this, what
>would you say the ABCs
>are of budgeting, and how
>does one figure in savings
>and investments into this larger
>scheme?(On Good Morning America, financial
>advise given was to have
>six months' of your monthly
>budget saved up in case
>you ever lose your job.
>If you don't make that
>much money to begin with,
>how could a Black person
>save up a six-month stash
>like that?-That's a second question,
>that I just HAD to
>sneak in there :-) )

Well when it comes to 6 months expenses, it's all relative and is not about income, provided you can meet your basic needs and have *something* left over.

See Above: Income Vs. Wealth

Let's say you have two people, one makes 40k/year the other makes 140k/year, their monthly expenses are different, no? So the issue is whether they have a surplus to save, NOT how much money they make. The issue is ALSO one of money management, because I know people who make 150k/year and spend damn near everything and those who make 50k/year and have tens of thousands saved.

Okay, Budgeting.

First of all, the key is to live BELOW your means.
First of all, the key is to live BELOW your means.
First of all, the key is to live BELOW your means.
First of all, the key is to live BELOW your means.
First of all, the key is to live BELOW your means.

Step 1. You should record each and every penny you spend for at least a month, your major bills/expenses in particular. I'd go ahead and record the info in a spreadsheet.

I have a spreadsheet that I use to keep track of my expenses, I'll even e-mail it to you if you want.

Step 2. Start looking for ways to "Cut the Fat" from your budget, maybe you get more efficient light bulbs, find a cheaper gas station, or place to get an oil change, clip coupons, find cheaper stores to shop at, etc, etc.

When you actually write down where your money goes, you'll be surprised how easy it is to find ways to save it.


Examples:


I'm addicted to Nantucket Nectars, buying them from BJs saves me $50/month...if I invest it for the next 30 years and average a 12% return I could have 200k (In today's buying power) to throw around during my retirement.

A lot better the buying them from Au Bon Pain, no?

I was spending $109.00/month on my cellphone, I did some research on various plans, cut back on my calls and reduced it to about $75/month, another $34/month to invest.

Step 3. Put some "fat" back into your budget, if you make a rigid budget you're unlikely to stick to it. So set aside some "fun cash" every month, even you don't spend it, you know you have money you can be frivoulous with.

Step 4. Read this: http://www.okayplayer.com/cgi-bin/dcforum/dcboard.cgi?az=show_thread&om=2823&forum=DCForumID1&archive=yes#6

Step 5. Read "The New Rules of Money" by Ric Edelman

More tips to come....I'm getting sleepy.





Peace,







M2