A recent posting, titled "
The American Family's Financial Turmoil," provides disturbing visual evidence of the desperate financial circumstances that many Americans find themselves in. From living check to check, having huge amounts of debt, and even lacking access to a basic checking account, the statistics cited demonstrate how many people across the board are struggling simply to make ends meet. Although the current economic downturn has definitely exasperated the problem, this situation has been festering for years.
As is the pattern, what has a negative impact on the American population as a whole, generally has a far more devastating impact on the black population. This fact has been stated numerous times by various commentators, however it bears repeating: A significant portion of the black population has been suffering through Great Depression-like unemployment and economic insecurity for the past several years. This includes those who have been living in poverty for generations, and a disturbingly large number of people who at one time were middle-class but regressed due to job-loss and other factors.
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10 Urban Money Myths
Money Myths That Just Won't Die
There is an awful lot of bad advice out there when it comes to managing your personal finances. Like rumors, these myths get told and retold as if they were true and spread like wildfire even though they are flat out wrong.
Click through our gallery to see 10 urban money myths that you would do best not to believe.
(To see the 10 myths, mouse over the photo at left and click on the right arrow.)
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BlackVoices.com
10 Urban Money Myths
Money Myths That Just Won't Die
There is an awful lot of bad advice out there when it comes to managing your personal finances. Like rumors, these myths get told and retold as if they were true and spread like wildfire even though they are flat out wrong.
Click through our gallery to see 10 urban money myths that you would do best not to believe.
(To see the 10 myths, mouse over the photo at left and click on the right arrow.)
10 Urban Money Myths
Money Myth No. 1: This is a Great Opportunity to Buy Stocks
If you believe that, I have some real estate in Florida (with just a little water on it) that's also a great buy. If your financial advisor is telling you that now is the time to buy, fire your broker. Are you kidding me?!
We know that you are desperate to make back some of your investment losses, but buying stocks in this environment isn't the way to do it. The bottom is nowhere in sight right now, and this is no time to invest new money -- don't let anyone tell you otherwise.
10 Urban Money Myths
Money Myth No. 2: Everyone Needs Life Insurance
Think the insurance agents are behind keeping this money myth alive? Here it is in a nutshell: If you have someone who really DEPENDS on your income -- then, yes, you likely may need life insurance to help them maintain their standard of living if you're gone.
If you're single, retired or part of a dual income household with no dependents, you may not need life insurance at all. And, please, don't count on life insurance as a savings plan or as a source of "emergency money" that you can cash in down the road.
10 Urban Money Myths
Money Myth No. 3: Credit Counseling Will Hurt Your Credit Score
No, no, NO! We're going to scream this one from the rooftops till we get through! Credit counseling will not affect your credit score one iota.
In fact, Fair Isaac (the company that calculates credit scores) does not factor enrollment with a credit counseling service into their scoring criteria. However, some lenders will see that "in credit counseling" notation on your credit report as a red flag, so you may have trouble getting new credit while you are in counseling.
10 Urban Money Myths
Money Myth No. 4: Money Markets are FDIC Insured
A money market mutual fund is most certainly NOT FDIC insured. However, a money market DEPOSIT account -- which earns interest at a rate set (and paid) by the bank -- IS FDIC insured.
The fact that the names of these two vehicles sound similar may be the source of the confusion. Just suffice it to say that, basically, any deposit-type of account where your bank pays you interest is probably insured (but double check!) That includes any traditional type of bank account -- from checking and savings to CDs and IRAs. All of these are insured by the FDIC up to the limit of $250,000 per qualifying account.
10 Urban Money Myths
Money Myth No. 5: You Get What You Pay For
Despite overwhelming evidence to the contrary, this money myth won't die.
While it's true that sometimes there IS a link between price and quality, more often than not, you can get a great product at a great price if you shop around and/or know what to look for.
Take generic drugs, for example. They often use the exact same ingredients as their higher-priced name brand counterparts, and many are considered to be just as effective when stacked up against the big names. So why pay more?
10 Urban Money Myths
Money Myth No. 6: Co-Signing a Loan is No Big Deal
Think co-signing a loan for a friend or relative is "not a big deal"? Think again.
Your signature is essentially telling the lender, "Sure, come after ME if my loved one defaults ... or even misses ONE payment. I'll take care of it!"
And, yes, this even applies to your own children. We know of one couple who co-signed a loan for their grown son -- one day, he just stopped making payments. Guess who's now making those car payments for him ... to avoid ruining their own credit?
10 Urban Money Myths
Money Myth No. 7: You Don't Need a Will if You're Leaving Everything to Your Spouse
More than half of Americans die without leaving one. Big mistake.
Don't make the all-too-common assumption that your spouse will automatically get everything -- the house, the car, your investments -- upon your death. Without a will, there's no guarantee. That goes especially if you have children and/or surviving parents. The law in most states will award one-third to one-half of your property to your surviving spouse and divvy up the rest between your children and your parents, if they're still living.
10 Urban Money Myths
Money Myth No. 8: Your Debts Will Be Wiped Out When You Die
It's a sad fact: Your debts may live on long after you do. Sure, some of your creditors may choose to forgive your debts, but more often than not, they'll try and collect from your estate.
If you have a trustee, that person is legally obligated to contact and pay off any debts before distributing money or property to your heirs. But, even if you don't have a trustee, your creditors can still stake a claim against your estate.
10 Urban Money Myths
Money Myth No. 9: You Need a Certain Amount of Money to Start Investing
Don't let this money myth rob you from investing in your future. Even if you can only invest a few dollars every month, you still have plenty of options.
As a first step, you can open an online savings account that pays interest. Or you can buy stock directly from a company, though a Direct Stock Purchase plan. You can also pick up a low-cost mutual fund for as little as $50.
10 Urban Money Myths
There are many factors that contribute to this ugly picture. Focusing on the individual level first, many of us who are employed could make better decisions with our finances, whether it be saving, spending, or investing. Many have probably already read the
stories regarding the lack of net wealth amongst single black women, and the black community in general. Also, many of us who have the finances to do so often don't invest wisely or at all, which is one of the main ways in which wealth is accumulated. And, although the issue is often exaggerated by those with ulterior motives, far too many black people (like many Americans in general) spend too high a percentage of our monthly income on frivolous 'wants', things we don't need and really can't afford.
All of these points could be valid contributing factors to partially explain the plight of some black people. However, the reason that black people are suffering so much more than the general population is not all due to personal failings. Personal failings do not explain why, even in good economic times, a black applicant is 60% more likely to get denied a home loan than a white applicant with the same credit rating. It doesn't explain
why a black man without a criminal record is still generally less likely to find employment than a white man with a criminal record. It doesn't explain why even black people with excellent credit ratings were steered into sub-prime home loans. It does not explain why both black men and women make less than their white counterparts in the same jobs. That is not personal failure, that is systemic racism, institutionalized racism, white privilege, racial discrimination, etc. Whatever terminology you prefer to use, it is a barrier to financial (and overall) equality for black people in America.
What many Americans are now experiencing as "financial turmoil" has been the everyday existence of numerous black people for far too long. We must do what we can individually to make sure that we are in the best possible financial position; beyond that, we must still fight to address the persistent injustice and inequality that we face in various areas of American society, including those areas that affect our ability to accumulate and pass on wealth to our generations to come.
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Comments: (12)
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By: Beezeeles on 5/07/2010 10:02PM
Amen!!!! I appreciate articles like this because it makes me feel that my current situation is not necessarily a personal failing, but also due in some ways to circumstances beyond my control. Still, I need more tangible advice. How exactly do we put ourselves in the best financial position, especially in times like this? I'd love to save money, pay down my credit card debt, invest, etc., but without a job (and being jobless for over a year) those things seem impossibly out of reach.
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By: Stare k on 5/07/2010 10:16PM
The bottom line is blacks can have Degrees & They still hire white people over us . I know I have a Daughter , with (2 ) B.A & a MASTER .They look out for their people . In the inn GOD HAS THE LAST SAY.
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By: Beezeeles on 5/07/2010 10:26PM
I have 2 degrees as well, graduated a year ago. Sadly, it seems that all that hard work and $$$ were for nothing. I agree that there is definitely a huge gap regarding wages and employment between whites and blacks who have the same training, education. From my view, it all comes down to the connections and networking. If we don't know the right people (usually the right white people), then we stand less of a chance of securing employment compared to our better connected white peers. I'm thinking that entrepreneurship seems like a good option, but this is extremely difficult without ready access to small business loans, a network of mentors, etc.
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By: Redheels on 5/08/2010 8:21AM
That's the very reason why it's so critical that when WE, Black People, obtain DECISION making positions, WE, Black People, MUST mentor, promote and HIRE US! And so on, and so on, etc.
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By: Richard on 5/11/2010 8:38AM
Beezeeles here is a opportunity that we have not tapped into because a lack of understanding. Check out these web site and you can change your situation; www.explorefreedom.com/rrsk
http://exincome.info www.success4u.millionairex7.com
These web site help change my situation because I was un-employed.
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By: sandra on 5/08/2010 1:43AM
It's past time we start creating our OWN opportunities, personal failings or not. I'm sure that when Martin was marching and Malcom was lecturing, they didn't do so just so we, in 2010 AND with a Black president, can continue to BEG for jobs from other people. It's not like we don't have the resources. And as the article above stated, we need to make better investment choices and stop spending our money on a bunch of frivolous wants, maybe start taking some of that money and starting our OWN businesses.
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By: KeepinItReal on 5/08/2010 8:55AM
Racism is...and has always been... alive and well. White people are hired and promoted regardless of the fact many lack the qualifications to do their jobs and the intelligence to figure it out. That's why this country is going broke. You have CEOs (white) of major corporations who have NO CLUE. Throughout all aspects of industry....doctors who cheated through medical school have contributed to alot of medical malpractice. The financial downturn caused by incompetent white people who had no clue. Think about this. How dumb can white people be if, for 400+ years, this country benefitted from free slave labor and in a few decades are close to financial ruin? That's like saying a Fortune 100 company has tens of thousands of employees...pays no salary and still goes bankrupt. That's a "special" kind of stupid". Don't believe the hype.
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By: M. Alexander on 5/08/2010 11:57PM
It's no secret that unemployment rates for Blacks especially Black men is always higher than it is for Whites ! That's not a secret ! It's also no secret that Blacks more often than not are always given the worst job a company has to offer often times for very little pay !
My dad worked at a local DuPont plant in the mid ti late 1960s and I recall growing up hearing him tell stories that he and other Black men who worked would train White guys new of the street for jobs that they weren't allowed to get because of racism !
It's no secret that Black men in America have been and are under siege so it's nothing new !
It doesn't matter how far you advanced, you are still viewed as a n***** and a thug !
Look at the crap Obama has put up since taking office President ! I doubt if any other sitting President in this country's history has had to endure the disrespect that this mad has endured by Whites who simply refused to acknowledge that he's the sitting President and for some Whites that very fact burns them to their core !
As far as finances go, we have to start educating ourselves about money, interest rates, investing etc etc etc !
If it sounds too good to be true then it probably is and if the interest rate seems a bit high then do not make a purchase !
With the all information that we have at fingertips thanks the internet, there's not too many excuses for making ill advised financial decisions !
Another thing we need to do is stop settling for less ! Far too often I hear relatives of mine who seem content with making $30,000 a year and while having a job is important, we also have to keep in mind that we are now living in a time when employers have shifted the burden of health insurance and retirement to its employees and as such if we aren't diligent about saving for our golden years we might just find ourselves working all the time to the grave !
Instead of paying $500-$600 per month for that car or suv we really don't need, shave some money off and stash it in your 401 or similar retirement plan !
There are some things we can do to help ourselves if we take the time to find ways to do so !
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By: tom on 5/10/2010 8:13AM
BUSH DID IT
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By: porpeoinvent on 5/10/2010 6:32PM
I have been saying for a long time, America want Americans to think "ALL MEN ARE CREATED EQUAL".
That statement is to make you look lazy is the eyes of society why Blacks need the welfare provided by government. America no matter how far it has come still think blacks should work for free or very little. And it must be an inside secrect to give BLACKS EQUAL RIGHTS, BUT NO MONEY!! And as long as black people with money don't agree with reparations government will keep compensating every other claim but Black Peoples.
Because it is true that: "man was created equal, TO DIE". Which should tell you as Blacks what you think, what they want you to believe, and how Truth is Not a Lie until it is explained
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