Thursday, February 4, 2010

Prosperity in River East: Part 2 - Wealth Creation and Debt Avoidance

Hello Friends,

This is the second installment of black Prosperity in River East. Earlier this week, Michelle Singletary, syndicated personal finance columnist with the Washington Post, delivered a Black History Month presentation at my agency. The title of her presentation was “Are you in the Black?” Her points were so powerful that I will share some of them with you in this post and incorporate my observations in River East. To put this blog post in perspective, please let’s refer back to Dr. King’s Mountaintop Speech April 3, 1968:

“Individually, we are poor when you compare us with white society in America. [But] Never stop and forget that collectively we are richer than all the nations in the world, with the exception of nine. Did you ever think about that? After you leave the United States, Soviet Russia, Great Britain, West Germany, France, and I could name the others, the American Negro collectively is richer than most nations of the world. We have an annual income of more than thirty billion dollars a year, which is more than all of the exports of the United States, and more than the national budget of Canada. That's power right there, if we know how to pool it.”

The problem: 42 years after Dr. King's speech, us black folks STILL haven't figured out how to pool our money and create wealth! Here are some suggestions:

1. Stop Attending Colleges we Can't Afford

We all want to show off and challenge ourselves by attending old guard private universities. Unless you're independently wealthy, chances are your mama took out loans, your grandmama took out loans, and you worked part time jobs to make ends meet. Nonetheless you still graduated with $50,000 in undergraduate debt. In my opinion, it's not worth it. We need to encourage our younger brothers, sisters, cousins, and proteges to keep it real and attend a school he/she can afford with scholarships.

2. Stop Spending Money on Dumb Shit

We, especially black women, spend too much money on dumb shit. Dumb shit includes, take-out food, acrylic nails, fake eyelashes, cash checking fees etc. Like Dr. King said, we're poor people independently, but collectively we have enormous buying power. But of course, instead of creating wealth within our own community, we're making non-River East business owners like nail salon owners and CashPoint proprietors filthy rich! Don't let the dilapidated storefronts fool you. These folks are laughing all the way to the bank while we remain at the bottom of the economic ladder for another 42 years!

Here's an example of how cutting back on dumb shit can help us build wealth: many of my girlfriends get their hair and nails done every two weeks. The chart below uses very conservative figures. Let's assume the hair appointment costs $45 and the full set of acrylic nails costs $20 for a total of $65. As you can see, if my girlfriend continues with these personal grooming exercises every two weeks, after 40 years, she would have spent $63,960! If she passed on the grooming and saved the $65 in a basic savings account at 1%, she would have earned $79,348. If she invested the $65 in a money market account at 5%, she would have earned $208,852.41! This doesn't mean we cant treat ourselves to a new doo. But it does suggest we stop doing things that don't add value to our lives or our bank accounts. I get my hair and nails done once a year. Once. And I think I look OK. I'm sure we all would look just as beautiful (or even more beautiful) without spending money on all the dumb shit.

3. Stop financing cars.

We actually believe "our job is our credit." Dr. King would roll over in his grave if he saw this tomfoolery! I don't know about you, but I'm driving my hooptie till the wheels fall off! Proverbs 22:7 says, "Just as the rich rule over the poor, so the borrower is servant to the lender." For every dollar black folks owe creditors, that's another dollar we can not save for our children's education, give to our church and community, or donate to earthquake relief in Haiti. We may not be slaves on the plantation anymore, but we are voluntarily slaves to Visa, Easterns, and Marlo Furniture - and we can't blame the white man for that (even though I'm sure Marion Barry would find a way to do so)! LOL

4. Stop buying things we can not afford to impress people who are just as broke as we are.

This clip from Saturday Night Live says it all! -- takes a second to load but it's worth it!


1. I will not allow my siblings or cousins to become slaves to the Student Loan Corporation by attending colleges they can not afford.

2. I will not spend money on dumb shit.

3. My job is not my credit. I will not pay interest on depreciating assets.

4. I will not buy things I can not afford. I don't have to impress my linebrother because he's just as broke as I am.


The Advoc8te said...

I LOVE IT WHEN YOU WRITE! Reading you Ms. Myra write "shit" and "tomfoolery" is worth the price of admission.


One of the best books I ever read was "Smart Women Finish Rich" - if it wasnt for that book I wouldnt have been financially prepared to be unemployed for 16 months (I go back on Monday). Black people need to get their money right.

Braveheart said...

@Advocate - I'm fired up, so you'll have to pardon my language LOL

I learned "tomfoolery" from you last year, and I've been stuck on it ever since!!!

I will look for the book on Amazon tonight! CONGRATULATIONS on the new gig! I hope it doesn't divert you too much from RE initiatives! We've developed a dependence on you!

LittleTortilla stays in DC said...

This was a great post. So simple.

Congrats on the job Advo8te.

Dave Murphy said...

Prince George's County, if you're reading, you could stand to follow the same advice! Excellent post.

Froggie said...

Sounds a lot like good ol' fashioned financial sense, which unfortunately there is too little of these days. Good post.

Los said...

Very true ... I so wish we could collectively pool that 30+ billion for our own good ... instead of ascribing to that old adage "we can't work together" ... just a cop out, in my opinion. Other races use us as ECONOMIC FODDER ! For real ! IE put up carryouts in "opportune neighborhoods". It's concerning that we can't do that after 40+ years, like who's gonna break the cycle, but we can do it.

Alice M Thornton said...

Great post! I get a lot of ribbing about not owning a car, but I still follow my dad's advice: It's hard to drive a house, but it's no picnic to sleep in a car. I chose the house. I live in a city; there's public transportation.

On the college side, I'm attending college right now (Trinity); I pay out of my pocket and deduct the costs from my income tax. If we encourage our children to get good grades in school, the scholarships will come. I did the same for my oldest daughter (no loans) and will do it again for the youngest when her turn comes. In our family, that's what we get for HS graduation presents: money for college, NOT cars.

Braveheart said...
This comment has been removed by the author.
Braveheart said...

@Alice - I like your style! Congrats on living student loan debt free!

Legend of Chat said...

The SilverBack African Yard Apes have once again destroyed a community that they have migrated into. History has shown that they always do this to a neighborhood,so what can be done to these animals?!, they are animals you see-drinkin- humpin- murderin and drugging. They have to be caged that is the only way. Congress Heights was a wonderful neighborhood till they trashed it -the goddamn low life sub human race