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Going into debt has different meanings in this country. It's almost a given that you finance your house and car. For the 99% of us, that's a reality. Wages just haven't caught up in the past ten years. And they are saying it will take another 10 years for things to return to normal. That's scary for anyone who wants to buy a house. Let alone with cash.
As far as cars and debt are concerned, that's another necessary evil unless you have no one depending on you for transportation, I guess you can ride public transportation or invest in a scooter. But for most people, they usually don't save up cash to buy a car. As far as luxury cars are concerned, it's all what you feel you'll be able to live with. For me, I love driving, so, I wanted a car that could handle my spirited driving and would be reliable and run for a long time. We take our vacations and drive most of the time. So this is important to me. So, I pay a premium for that. Others may just need something to get across town in. So, they don't put so much into a car.
Don't be scared of debt. it is manageable. businesses manage it. The trick is, having enough cash flow and credit to mitigate that debt and render it negligible. For example, if you want to buy a house, get one well within your means and get a 15 year loan at 5%. If you need a car, you're perfectly capable of getting a new car within your means with a.9% interest rate and paying it off in 3 years. That's managing your debt well.
What's scary is getting the 30 year mortgage at 8% and a car at 19% for 5 years while living paycheck to paycheck with credit card debt on top of that.
This.
Outstanding post, you're on point in this thread.
There's nothing inherently wrong with a car payment or with having debt provided you can service it, and one relatively "minor" emergency doesn't wipe you out.
Also like how you talk about how you're willing to pay a premium on a car. Some people will, some won't. Neither is wrong.
Also for me, I don't like frugal for frugal's sake, or endless savings. This is when you reach the other extreme from irresponsible spending. Life is to be enjoyed man, it's actually ok to try or enjoy some pleasures, it's not a sin. Money shouldn't be something one is obsessing about (and yes if you're monitoring your expenditure to the dollar per day, unless you're on a financial recovery program, that's a little...well, psychotic. Just IMO. )
It's funny I'm saying this as I myself am a minimalist.
It's funny I'm saying this as I myself am a minimalist.
I'm certainly of this variation as well.
That being said...with the foreclosure crisis. It's not a white/black thing. Whites across the country are foreclosing left and right...especially out in the West Coast...or really anywhere where prices for housing far exceeded people's salaries.
The housing bubble created an environment where housing prices were going up more and more everyday...and it felt like if you didn't get on it right than and there, you'd never be a homeowner. Plus, all the experts were talking about how you can sell your home six months later and make 50K from it.
In short, I don't think there is much anyone could do about the situation they are in now, based on the housing climate of our recent current era.
Even for myself, with strong minimalist tendencies...I was actively looking at housing somewhere in the States...even though I have and had no money whatsoever.
It didn't help much that when I went back to the States to visit, and went into a bank to cash a check, they'd quickly ask me if I wanted to borrow a half a million for a home! Crazy times indeed.
I'm actually surprised more of the DC metro area doesn't have more of those problems.
Last edited by Tiger Beer; 06-17-2011 at 09:29 PM..
Great thread. Something to consider is that if your job is a Lawyer, Marketing, Real Estate, etc, you need to be selling yourself as much as your product. To that extend the trappings of wealth are a very important selling point to your customer. You want to look your best, drive a car that shows you are making money at your job, and live in a house that again "shows" that you are successful. I don't advocate living above your means, but in some jobs investing in yourself is a key to continued success.
As for Brooks Brothers shirts, hell yea! They last forever and they actually fit! I am a skinny white dude with a big wingspan and it is nearly impossible for me to find shirts that fit at department stores. Either they billow like tents around my torso, or the sleeves barely cover my forearm. Never had that problem at Brooks Brothers.
My, my , this conversation is covering a lot of territory.....
In no particular order of importance....
1) Re: the original article: I am SICK TO DEATH of news stories and articles that always have to point out or separate out some factoid or generalization -- which may not even BE a fact and likely might be so general as to be meaningless -- about black people. Whether it's blacks have the worst this, or tend to do that...I'm sick of it. IF it's true that PG county has the worst foreclosure rate in the state, WHY did they feel the need to point out the county is mostly black -- or the most affluent black county in the country -- so what. Just deal with it being the worst, without the racial element. Couldn't they have written the article without that?
2) As for what people spend their money on those things are so varied, have so many factors affecting financial decisions it's too general to even put into a racial context. Generalizations about how blacks spend money on this or that are an exercise that signifies nothing. Any comments about Blacks 'having to' or 'tending to' show off by buying status symbols, 'fronting' like they have more money than they do are meaningless generalizations.
3) Other than a roof over one's head, food and clothing -- most EVERYTHING else is a want NOT a need. And even how much one spends -- or how one CHOOSES to spend one's money -- on those basics is still subjective. One can have a roof over one's head (rent or buy) in Seat Pleasant, buy food at Aldis, and buy clothing at thrift stores -- just as one can rent or buy in Potomac, buy foot at Harris Teeter, and buy clothing at Nordstorm's.
What one can AFFORD? That's another fairly subjective question. Does buying something on credit mean you can't "afford" it, or that you don't want to take money out of saving to pay for it, when you can get it at 18-months same as cash/no interest, allowing your savings (money) to work for you by staying in an investment account.
4)RE:
Quote:
This is not indicative of all black people. I learned a long time ago not to be inclusive when speaking about a group of people. What some people call luxuries, other people see as quality of living. For example, I don't buy Brooks Brothers dress shirts because I'm trying to impress anyone. They are good shirts and they last a very long time. So, I'm not buying cheap shirts every 6 months. I drive a BMW not because of status, but because it's a good quality car. I have done my research and the 3-series ranks in the top 10 year after year. I also love to drive and I drive sporty. So, it seemed like a good fit. I could care less about status. A car is a car. and I bought one that I would enjoy for years to come. I don't buy shoes to impress people. I buy New Balance because they last the longest and are the most comfortable. I wear Kenneth Cole shoes because of the craftsmanship and durability of good leather. I shop at organic food stores because I value what I put in my body. I'm not trying to impress anyone because my beef cost twice as much as the beef in Safeway or Giant. I choose to eat good quality food.
True but there are also QUALITY items that aren't such 'cache' brand name items. I don't know whether you're into "designer labels" or not, and certainly, I'm sure Brooks Brothers, Kenneth Cole and New Balance must work for you or you wouldn't spend that kind of money for those items. I'm just saying there are less expensive 'good quality cars' than a BMW, and good quality shoes that cost less than Kenneth Cole shoes.
You're example points to the very reason some discussions about spending, earning, affordability, and financial RESPONSIBILITY have so many variables involved. Two people making the same amount of money, would spend that money totally differently, on different things, and various price points. One might save nothing, the other save 40 percent of his/her income.
5) Speaking of incomes, I presume we're all talking about people who make more than enough to scrape buy, a 'decent living' to begin with. But who is to say what THAT amount is. One person may stretch their 50-thou as far as another person's 70-thou.
6) As for the mortgage crisis: predatory lending is just an excuse, I think it's more greed (all a whole lot of people's part) and stupidity, ignorance if you MUST be nice about it. I don't care what a bank says a person can afford, THAT PERSON should know what he/she can afford.
7) Does living paycheck to paycheck not saving a dime mean your financially irresponsible? Whether we live 'paycheck to paycheck' or have money to burn -- we should all have as much savings as possible. If you have 3 months living expenses save more, if you have 6 months living expenses save more. Hell, in this economy if you have a YEAR's living expenses SAVE MORE!
(Disclosure: I have debt and have been even more in credit card debt than I am now. But I've also been blessed NOT to have had any unexpected tragedies or major expenses WHILE I was in debt. I believe there's a 'happy medium of enjoying some 'treats' today AND saving for a rainy day. I also TRY not to judge other people TOO harshly, because 'there for the grace of God, go I." I saw TV segment about a young man who was now in his early 30's who decided at about age 20 that he'd be a millionaire by 30. He lived in NYC, with several roommates, went to bakeries for their day-old bread, went to happy hours and other events for free food, wore his clothes threadbare, ate ramen noodles, hot dogs, spaghetti, and peanut butter and jelly for a decade -- but he did it. And he didn't work on Wall Street. He was a millionaire by 30 -- and not working. Many of us COULD do that. The issue is WOULD we do it. He saw it as a game, with his goal ALWAYS in mind. Deny one's self conveniences -- severely -- for 10 years -- and be financially secure with the freedom and options that provides...or......work like the rest of us I wish I could do it. I've thought about trying it. But.....I just don't know.....
1) In the words of Cornel West "race matters". For a variety of reasons recessions, depressions, financial crisis, etc hits Black folks harder than any other demographic. I think it is important to point out how Black people take the hit harder than anyone else. I also wish people would become more
outraged about this issue and hold the banks accountable. If people really cared about this issue they would abolish TARP, FHA, and vote for non-recourse measures.
2,3,&4) Come on let's be real. Again we as Black people have a tendency to bite off more than we can chew when it comes to debt and perpetuating a false image of wealth we don't really have. It's annoying and frustrating to talk about but worth a discussion none the less. I remember when I was in High SChool a lot of kids (with the permission of their parents) would miss/skip a day in school to buy the new Jordan's before the store was sold out. Again lets be real and not pretend these issues are not a problem. True everyone indulges in wants but we have a tendency to take it to the extreme.
6) I blame the banks more than anyone else for this crisis. I still say make the banks accountable. No more TARP, FHA, Fannie/Freddie, no artificially low interest rates, and make loans non-recourse. That means if the bank makes a risky loan and the owner defaults the bank gets the house back and nothing more.
7) I agree with you 100% but I'd also recommend investing in precious metals to protect against inflation. I have a few years of income saved up because I know of a lot of people who have lost their jobs and have been unemployed for years.
...we as Black people have a tendency to bite off more than we can chew when it comes to debt and perpetuating a false image of wealth we don't really have. It's annoying and frustrating to talk about but worth a discussion none the less. I remember when I was in High SChool a lot of kids (with the permission of their parents) would miss/skip a day in school to buy the new Jordan's before the store was sold out. Again lets be real and not pretend these issues are not a problem. True everyone indulges in wants but we have a tendency to take it to the extreme.
And I think that's too much of a generalization. Blacks are too diverse in social economic experiences and upbringing to make that statement meaningful. Maybe many black families where you lived did that.
Quote:
6) I blame the banks more than anyone else for this crisis. I still say make the banks accountable. No more TARP, FHA, Fannie/Freddie, no artificially low interest rates, and make loans non-recourse. That means if the bank makes a risky loan and the owner defaults the bank gets the house back and nothing more.
OK, but banks don't HAVE to lend money on mortgages at all. There are other ways for them to make money. People are complaining now about how even those with good financials can't get loans. If there's no recourse they'd tighten lending even more than it is now. So if you want us to be like Europe where (I now about Italy) where almost all houses are paid for in cash. OK, but let's see.... in the DC area it would take how long to save up 250-thou CASH for a house?? And to be honest in this area that amount is the LOW end of neighborhoods where I'd even consider living. Hell, some people don't have that much at retirement, let alone when they're younger and raising a family. But owning a home isn't the be all and end all in life. It's been sold as the "American dream."
Quote:
7) I have a few years of income saved up because I know of a lot of people who have lost their jobs and have been unemployed for years.
Excellent! Just curious is that cash, or does that include 401-K and IRAs. My goal is 2 years expenses saves in addition to retirement accounts. I'm way short of that but at least it's a goal. But as a said I struggle with how much to deny myself now, in favor of a more distant' and 'less immediate' goal. That's why I have to say, I admire the young NY man who lived like a miser for 10 YEARS, in order to be a millionaire at 30. Talk about a lifestyle change....He SAID he was able to make it through by keeping his goal in mind. I just don't think I'd ENJOY life living like that, millionaire goal or not.
And I think that's too much of a generalization. Blacks are too diverse in social economic experiences and upbringing to make that statement meaningful. Maybe many black families where you lived did that.
OK, but banks don't HAVE to lend money on mortgages at all. There are other ways for them to make money. People are complaining now about how even those with good financials can't get loans. If there's no recourse they'd tighten lending even more than it is now. So if you want us to be like Europe where (I now about Italy) where almost all houses are paid for in cash. OK, but let's see.... in the DC area it would take how long to save up 250-thou CASH for a house?? And to be honest in this area that amount is the LOW end of neighborhoods where I'd even consider living. Hell, some people don't have that much at retirement, let alone when they're younger and raising a family. But owning a home isn't the be all and end all in life. It's been sold as the "American dream."
Excellent! Just curious is that cash, or does that include 401-K and IRAs. My goal is 2 years expenses saves in addition to retirement accounts. I'm way short of that but at least it's a goal. But as a said I struggle with how much to deny myself now, in favor of a more distant' and 'less immediate' goal. That's why I have to say, I admire the young NY man who lived like a miser for 10 YEARS, in order to be a millionaire at 30. Talk about a lifestyle change....He SAID he was able to make it through by keeping his goal in mind. I just don't think I'd ENJOY life living like that, millionaire goal or not.
No need to beat the dead horse on the first issue.
Regarding the housing crisis a home in DC wouldn't cost $250k if the prices were not artificially driven up by fake low interest rates, fannie/freddie, fha, etc. I'm perfectly fine paying cash for a house if the prices were not inflated by these welfare programs for banks (supported with tax dollars). Historically home prices would cost 1.5x the annual income of the buyer. More people could buy homes cash and mitigate the risk of being under water if the banks didn't have so much protection in making irresponsible loans.
Regarding investing I have most of it in cash and some in precious metals. I don't buy any luxury items and am fairly frugal. I trade stability for flash. 401k's are mostly a joke tied to the Dow which has performed horribly vs precious metals in the past 10 years.
So besides adelphi_sky who stated his theory, I want to know what does everyone else think is the reason for foreclosure crisis to be happening here and not in surrounding communities. I mean there has to be some conclusion(s) that we can draw about this county that is making this an issue here. I hear people down playing living beyond our means in the African American community, but how can we just completely ignore that when culturally that is what we are predisposed to. Why do you think we have so may check cashing places in our communities? Why do we have so many people getting bad interest rates on mortgages? There has to be something that we can draw from what is happening in this county. To suggest that we are some how living life just like everyone else doesn't explain why we are struggling at a higher rate? I don't believe everyone in this county has a problem, but when you look at the big picture here, SOMETHING IS SERIOUSLY WRONG!!!!
My, my , this conversation is covering a lot of territory.....
In no particular order of importance....
1) Re: the original article: I am SICK TO DEATH of news stories and articles that always have to point out or separate out some factoid or generalization -- which may not even BE a fact and likely might be so general as to be meaningless -- about black people. Whether it's blacks have the worst this, or tend to do that...I'm sick of it. IF it's true that PG county has the worst foreclosure rate in the state, WHY did they feel the need to point out the county is mostly black -- or the most affluent black county in the country -- so what. Just deal with it being the worst, without the racial element. Couldn't they have written the article without that?
Normally I would see you side on this, but to me, I don't think you can talk about this county and money without mentioning that it is the wealthiest black majority county in this country. We gloat about it when we get AAA ratings, add new shops to the National Harbor, or whatever, but then when something negative comes out, we're offend? I don't necessarily think mentioning that is a stretch at all. I think we need to stop being so defensive over this county and our issues and deal with the problems. Are these things true? That's what matters. Yes we are the wealthiest black majority county. Yes we have a ridiculous foreclosure rate. These are things we cannot hide. You have to take the good with the bad.
One of me boys one time said people on top who have big money have big money because they drive the Honda or the Toyota. I think one of the big problems in the black community is not thinking of the big picture. You may laugh at the brother driving the old Honda but in 5 years he may have a few thousand in the bank b/c he had no car note and no big repair bills like luxury European cars usually have. Lesson here, have your money make money.
that's what helped me start my own business. the money i was spending to impress people with nice cars, clothes, trips, etc. was the money that i learned to save to invest in myself. that change didn't happen over night. it took some time for me to really be honest with myself. it's hard when you're a young guy (regardless of race) in the dc area, women around here want the wealthy, connected, flashy guy. instead of faking it until i made it, i decided to bite the bullet and save, save, save.
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I wish I could do it. I've thought about trying it. But.....I just don't know.....
