WHERE DO WE GO FROM HERE?

Friday March 28th, 2014 marked the inaugural Summit On Educational Excellence For African Americans.  This PHENOMENAL event was put on by the White House Initiative For Educational Excellence For African Americans.  They partnered with Ebony Magazine (Amy DuBois Barnett) and Morehouse College (Dr. Wilson, President) to bring dynamic thought leaders to Morehouse’s Ray Charles Performing Arts Center for two days of intense conversation about how to close the achievement gap among African American Males.  Just to name a few of the heavy hitters on the panels: Dr. Arlethia Perry-Johnson, Dr. John Eaves, Al Dotson Jr., Jim Shelton, Otha Thorton, and Dr. Ivory Toldson.  There were many more!  The main moderators were Jeff Johnson ( award winning journalist) and David Johns (Executive Director of Initiative) who throughout the conference made sure the panelists gave honest direct answers that would push those of us in the audience toward action!

The topics discussed by various panels were “Challenges and Opportunities Facing Young Men of Color”, “Black Male Success in Higher Education”, “The Benefits of Education and Education Reform”, “College and Career Readiness”, “Cost and Consequence of Gun Violence”, and more.  The reason that I drove five hours down to Atlanta, GA is because after discovering @AfAmEducation on Twitter I have been engaged in their mission of closing the gap for African American Children.  More specifically their priority of increasing the number of African American students who successfully obtain a postsecondary degree, credential, or certificate that leads to a successful career.  The motivation for me traveling all over the country speaking to college students about Financial Literacy is because I know the success that comes with not just getting into college, but crossing the stage at graduation!

The first panel by far was my favorite and the reason that I wrote this blog post.  The first panel should have been titled “This Is Why We Are Here, This Is Our Future!” because on the panel were two high school students Miles Ezeilo (9th grade), Keith Slaughter (10th grade) and three college students Thabiti Stephens, Otha Thorton III, and Joshua Young.  These young men fueled my fire to bring Financial Literacy or more specifically behaving with money into the conversation at the Summit!  Although there was not a panel discussing how money behavior could alleviate or even eliminate a lot of these problems, the first panel brought it front and center.  Morehouse senior Thabiti Stephens who is an entrepreneur himself and the owner of Steps By Stephens a shoe company who donates a portion of its’ sales to help with food insecurity in the Atlanta area actually said the words “Financial Literacy” in one of his comments.  I was already going to ask a question to the panel about the importance of Financial Literacy, but once he said it I understood the need for the subject to be a part of this summit.  This young man along with the other four represent the “dreamers” I speak to across the country.  Students who have ideas that can help others in their community or around the world, but fail to bring those dreams to reality because of financial issues (debt).  Debt or irresponsibility with money could have kept StepsByStephens.com a dream and the money for the food insecure an illusion!  That is why Financial Literacy has to be a part of the conversation when talking about closing the gap and NOT the usual talk about Financial Literacy where people teach students and adults that the credit score is important and a credit card is a tool!  I am talking about showing people how to behave with money.  Showing students and their parents that when you pay off debt you can make money work for you!  When you don't owe the bank money you can save for your child’s college education, you can save for retirement, you can start that business, you can give to that charity that provides quality daycare for low income children, YOU CAN!  Those talented young men were only the beginning.

The next panel consisted of Dr. Perry-Johnson, Dr. Toldson, Dr. Shaun Harper, Dr. Bryant Marks, and Morehouse senior Timothy Spicer Jr. and their task was to discuss “Black Male Success In Higher Education.”  They debunked the common myths about African American male achievement and the true percentage of African American males in college, but what truly caught my attention was a statement made by Dr. Marks.  He said, “what HBCU’s need from alumni is to write checks!”  What made this statement so profound is that first, it’s true, but more importantly the Deputy Director of the White House Initiative On Historically Black Colleges and Universities Dr. Toldson was sitting on the same panel.  The universities that the initiative represents are in dire need for alumni to give back!  Take for example Morris Brown College which is a five minute drive away from Morehouse has at the present time 35 students enrolled and is more that $30 MILLION in debt!  The college is going to have to sell majority of its’ land to stay open!  There is also Bennett College which like Spelman College is an all female HBCU and it is in financial hot water to the point that it had to close one of it’s buildings last Fall.  There are not many all female colleges left, let alone HBCU’s that are all female so it is a situation that needs close attention.  Lastly, there is Howard University and Morgan State University who last Fall seen a drop in students because of changes in the PLUS loans.  Hundreds of students found themselves threatened with dropping out of college because they didn’t have the money to cover the balance they owed.  There were seniors in their last year who had to go home!  These are just a few examples of Higher Ed institutions that are having financial issues and HBCU’s are not alone there are institutions all over the United States going through the same thing.  If Higher Ed institutions want any alum to write a check they should show that alum while they are still in undergrad how to behave with money!  The average student loan debt that a person graduates with is now at $29,000, so these students are grabbing diplomas in red deficit ink!  They go out on their own not understanding delayed gratification which leads to more debt (car loans, house loan, credit cards, etc) and all of a sudden they are up to their eyeballs in debt and have no money to give back to their alma mater who needs it!  I am sure there are plenty of people who have been out of college for over a decade still paying back student loans.  Some critics may say “not everyone graduates with loans.”  They would be right, and I am one of those people!  I graduated debt free and still racked up $48,000 in debt because I didn’t know how to behave with money.  I paid the debt off in 2 1/2 years, but that was lost money for retirement, an emergency fund, or donations to my alma mater South Carolina State University!  An alum who is debt free is an alum who writes checks and writes BIG ONES!  

The last thing that I will touch on from the Summit is the need for more African American male teachers.  A project that Jeff Johnson one of the moderators is the Jeff Johnson Institute For Urban Development which has a goal to recruit and develop 80,000 African American male teachers in 5 years.  Throughout the Summit the same statement was being said “we need more teachers that look like our children especially the male ones.”  The great news is that more and more African American males are going into teaching, but what I fear just like with any other teacher of any race is that the amount of money that they are paid will not keep them in the profession for the long run.  Teachers have an extremely difficult job and they get paid nothing!  I’ve had numerous teachers tell me that they can not get ahead financially because of their salary.  There are groups all over the country fighting for higher teacher pay, but in the meantime show those majoring in education and those who are already teachers how to pay off debt they have and build an eight month emergency fund.  Doing this is not to take the pressure off of lawmakers to do what is right and increase pay, but it is to take the financial burden off that teacher so that they can come to class with a peace of mind and give their best to that student they love to serve!  

I know that this post was much longer than usual, but this event was to important not to show how real Financial Literacy could make a positive impact in majority of the topics discussed.  This Summit was about recognizing the issues, but it also was about ACTION!  My first action was to write this blog post and my next action is to email as many of the over 100 HBCU Presidents to discuss the importance of implementing Financial Literacy (Financial Behavior) at their institutions.  Not just to benefit their undergraduates, but also to benefit their longterm survival!

A special thank you to Dr. Wilson and Morehouse for opening your doors to this event!  A supersize THANK YOU to David Johns and EVERY individual behind the success of the White House Initiative For Educational Excellence For African Americans and @AfAmEducation!

www.Dreamgirlspeaker.com

Don’t Leave Home Without It!

This blog post was going to be on a completely different subject until my daughter decided to enter this world three weeks ahead of schedule.  All the events that led up to her coming early got me to thinking about personal health insurance and how important it is to have for every individual no matter what age.  The reason that I recommend health insurance for everyone is that one of the most common reasons for bankruptcy is overwhelming medical bills.  Overwhelming can span from a few thousand dollars to tens of thousands of dollars and when people don’t have health insurance they are on the hook legally for every cent.  This second pregnancy with my daughter was filled with extra doctor visits, multiple sonograms, and a maternity emergency room visit two days before she was born. 

Today I received the benefit statements from all of the extra visits excluding the ER visits and they totaled close to $600 and these were all office visits in the last month!  Thank goodness for health insurance because I did not have to pay a dime.  I have yet to receive the bill for the ER visit and her birth, but I know because of the insurance that I don’t have to pay the entire bill, but maybe a tenth of it.  If I didn’t have health insurance her birth alone would cost me at least $10,000!  That type of money you can’t come up with overnight and the hospital expects to be paid as soon as possible for any service and when people don’t pay up the hospital ends up suing and winning.  Eventually the person will end up filing for bankruptcy because they can’t pay.  As far as health insurance goes the age group that goes without it the most are the younger generations ages 18-35 mainly because young people think they have a long time before chronic illnesses hit their body.  They would rather save the monthly insurance premium and use the money elsewhere.  That is a big mistake!  If you can’t afford health insurance currently as a young person it is time to re-evaluate your priorities.  If you have a cell phone, or home internet, cable, etc you may want to cut one of those services off or all of them off and pick out some health insurance because it is to dangerous financially not to have insurance on board. 

In the past two years I have known four people under the age of 32 who have had either a stroke, heart attack, or cancer and I don’t know what their insurance coverage was at the time, but if they didn’t have it they could easily be in the bankruptcy stage by now.  For example the cost of treating a heart attack is $40,000 and that does not include the treatment that it will take such as more doctor visits and extra medication that will follow for the rest of that person’s life.  The cost of treating cancer is even more so there is no reason to take the chance of not having health insurance.  Remember DON’T LEAVE HOME WITHOUT IT!

If you don’t have insurance what are you risking financially by not having it?

I Can’t Do That!

You would be amazed at how many people say that sentence when it comes to getting out of debt.  They say “I CAN’T” save an emergency fund, “I CAN’T” pay off my student loan, “I CAN’T” pay off my car loan, “I CAN’T” stop eating out or going on vacations. I CAN’T, I CAN’T, I CAN’T!  Every time I hear someone say those two words I think back to my childhood tennis coach David Lash who use to always respond when I said “I can’t” with the question “are you American?”  Confusingly I would say “yes” and then he would continue with “you need to understand as an American you are an Amer-I-CAN!”  It was simple, but it made sense.  He always instilled in me that I can do anything if I put my mind and energy into it. 

I recently learned of a single mother who had an annual salary of $21K and she paid off $17K in eighteen months!  This woman obviously erased “I Can’t” from her mindset and instead buckled down, cut back, and put all her extra money towards the debt.  She got to the point that she said to herself “ENOUGH IS ENOUGH” and she made a life altering change to her finances and as a result she is DEBT FREE!  People who don’t want to change their financial situation usually come up with all kind of excuses.  Excuses such as I don’t make enough money, I deserve a vacation because I work so hard, I don’t have time to cook so I need to go out to dinner, so on and so on.  What is really happening here is that the person has not reach the point of ENOUGH and they continue to pile on debt and when ENOUGH does come, the reality will set in of the opportunity lost because they continually said “I can’t”. 

I use to be one of those closet “I can’t” people when it came to my finances, but then I was slapped in the face with a lay off from my career.  Right then and there I had to grow up and realize that when I use to say “I can’t” I really was saying “I don’t want to” because in my mind it was an inconvenience to the life I was use to living.  I would have to stop eating out, buying new clothes, new shoes, going on vacations, etc if I wanted to truly get out of debt and live a prosperous life.  Everyone has a choice to make when it comes to their own finances and the first decision has to be to stop saying “I can’t” and replace it with “I CAN!”

If you are still in debt, after reading this will you move from “I can't” to “I can” and change your financial future?

When Will We Ever Learn?

I am sure you have heard the definition of insanity, but in case you have not the gist of it is “doing the same thing over and over again and expecting a different outcome”.  Between the years of 2000 and 2008 America was flying high above the rest of the world and everyone was prospering, at least it appeared that way.  The prosperity that majority of Americans were displaying was actually an illusion.  The reason is simple and complex at the same time.  During this time there was a housing boom and everyone who could breathe or spell their name was able to qualify for a mortgage.  Credit was flowing freely from banks and individuals as well as companies could borrow to the max.  If people had equity in their home they would cash it out to buy cars, go on trips, pay for college, start businesses, etc.  All majority of Americans did for these eight years was spend money they didn’t have and live the illusion of the “good life”.  Want to know what Americans didn’t do in those eight years?  SAVE!!!  During the same period there were times when the savings rate was in the negative meaning that people were spending more money than they were bringing home in income.  Everyone thought this illusion of prosperity would continue, that their home values would continue to rise, and that banks would continue to lend, but then 2008 arrived and the magician revealed that the past few years was all a trick and the unfortunate treat was upon us.

In 2008 the economy collapsed and a snowball of catastrophes hit America from all sides.  The “why” behind the collapse is complex, but a broad overview would be this: Banks were like the Americans giving out more money than they had on hand and dealing in risky business practices.  Banks gave mortgages to people who eventually would not be able to afford them.  Homeowners mortgage rates started to rise and as an added insult companies were laying off people left and right and so there was no income to go to paying for the mortgages that these banks were so carelessly handing out earlier in the decade.  The banks being so heavily invested in these mortgages started dropping like flies, the most famous one being Lehman Brothers.  I still remember the night I was looking at CNBC watching the employees coming to empty out their offices, such a sad sight.  Americans were losing their jobs, homes, cars, retirement savings, and families.  As a result of all this loss behavior started to change.  People went from spending all they had to saving everything they could. In fact the savings rate was at an all time high of 4.2% (of disposable income) in December 2009 and it appeared that Americans had learned their lesson and had turned away from habits of the past.  You can say that the insanity had disappeared, but not so fast as of February 2012 the savings rate is back in decline (3.7%) and Americans are heading right back to the habit of spending more than they bring home in income.

  

I am sure you are asking the question why would people go back into this insanity?  Why would people go back to car loans, buying expensive shoes, going on trips, taking out home equity loans, etc?  The only answer that I can come up with is that people are starting to feel safe again, because the economy is improving and jobs are coming back, but that does not mean that you should run right back to the edge of the cliff with your finances.  We all have to learn our lesson from how we felt in 2008.  That uncertainty made us change our habits and we have to resist the urge to go back.  When the economy went off a cliff in 2008 a month later I was laid off by Pfizer and my family was in $48,000 worth of DEBT.  We had to change our behavior towards our finances or become a casualty of the economy and another statistic.  That is exactly what we did, we stopped borrowing money and paid off everything.  We also built up an eight month emergency fund of expenses because we are determined to never let the American economy affect our personal economy again.  If the economy ever decides to take a nose dive again we will be ready this time.  Insanity is NO LONGER welcomed at our home!

Have your finances become a victim of insanity?

IN CASE OF AN EMERGENCY, BREAK GLASS!

Most individuals do not know what to do if an emergency came into their life.  They tend to break the glass and use whatever is inside?  Usually what is inside is a credit card or a bank loan because the individual is not ready when life happens.  The problem with this tactic is that it leads to an endless cycle of debt that keeps the person from achieving generational wealth.  The main reason that someone would have to turn to debt to cover an emergency is because they were not prepared in the first place.  An emergency fund is essential in building wealth because it turns potential catastrophe into an inconvenience and it erases stress from the situation. 

I always advise clients to have at least an emergency fund of $1000 if they are trying to get out of debt and four to six months emergency fund if they are out of debt.  Once I make this request I usually get the following request, “How am I going to find $1000 to put into an emergency fund?”  Once I have this push back I have to point out to the individual that it is not going to be simple and they will have to sacrifice to get this emergency fund fully funded.  If they are serious about getting out of debt they soon realize that life as they know it has to change temporarily in order to get ahead.  I must admit that it is a fair question that they put before me about the “HOW” and so I make sure I give them various money finding options to get them started.

Journey to $1000:

   1. Sell everything and anything: I am actually about to list a living room set on Craigslist for $1500 and if it sells I would have my emergency fund with one sell if I was in debt.  Also most households have more televisions than people living there.  SELL THEM! You get the picture sell, sell, sell.

   2.Cut off some services: house phones are ancient so if you have a cell phone cut the house phone off and add the savings to your quest for $1000.  Cable TV is also not a necessity when you are getting out of debt so cancel that service and save over $100 a month.  Haven’t been to the gym in the month? Get rid of the membership!

   3.Don’t eat out at all.  I am talking about all restaurants big and small.  No McDonalds, Burger King, Wendy’s, etc.

   4.The shopping mall and retail store are not your friends if you are in debt.  Wear the clothes and shoes you already have in your closet and don’t buy new items!

    5.Have multiple yard sales.  It is unusually warm right now so why not get an early start on selling some items out of your home.  If this weekend is too soon start getting out the items that you would like to sell and put them all together so that they are ready to sell in the summer months.

These five suggestions are just scratching the surface of what an individual can do to get the emergency fund fully funded over the next couple of months, but in order for this to be possible the person has to be sick and tired of being sick and tired and is ready for a change.  It won’t be easy, but I promise it will be worth it!

How would you come up with a quick $1000?

Till next Wednesday!