Wealth Patterns Among the Top 5% of African-Americans

Credit: Black Enterprise

Credit: Black Enterprise

This is a share of a recent report by Brandeis University that shows huge insight on the racial wealth gap.  This report, which focuses on the top 5 percent of African-Americans by net worth, asks some telling questions: What are the key drivers of wealth creation among this group? What makes the investment choices of this group distinctive? What brings about these distinctions?

The results are striking: For example, the report observes that wealthy blacks own few high-reward portfolios containing stocks, bonds, and mutual funds and more low-reward portfolios containing CDs, saving bonds, and cash-value life insurance. And meanwhile, whites of similar high wealth steer clear of such low-reward investments.

As a result of these potentially unintended choices, wealthy blacks end up with annualized returns of 1 to 2 percent whereas wealthy whites end up with annualized returns of 7 to 10 percent.

Before we get to that point though, we have to get over the extreme gap in current wealth.  For instance, only 5 percent of black households have $360,000 or more in net wealth while 28 percent of white households have $360,000 or more in net wealth.

Black Wealth

For more details of the full report click here: https://iasp.brandeis.edu/pdfs/2014/Top5.pdf

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5 Toys Bought on Black Friday That Don’t Work by Easter

If you were as oblivious as I was as a kid, you didn’t really understand the connection between Black Friday and the number of toys under the Christmas tree from Santa Claus.  But by 8 years old (*cough* 12 years old *cough*), the gig was up.  Not only did you understand, but you were helping your folks find the best discounts in town.  As knowledgeable as you had become though, you were still powerless to stop the plight of toy deterioration.  It wreaked havoc every year without mercy, but we’re grown-ups now and can put an end to this madness.

So to continue my 30th birthday blog-a-thon and help us all help ourselves, here is my list of the 5 toys that are bought on Black Friday but don’t work by Easter.

No. 1 – Toy Jeeps

Whether it was a Barbie Jeep or a Tonka Truck, these miniature vehicles were the talk of the neighborhood—until about St. Patrick’s Day.  That’s when the batteries would die.  For some strange reason, adults would never take the effort to buy a new battery or recharge the existing one.  So by the time Easter arrives, kids are having to take turns pushing and driving the car.  By the Fourth of July, the car is a bonafide yard ornament.  The only thing is does at this point is grow algae and mushrooms.

barbie-jeep

No. 2 – Video Game Cartridges / Discs

I never had this problem at my house because I knew if I broke something no one was gonna buy me a new one.  But at other kids’ houses, I witnessed this all the time.  When we had cartridges, kids would get food and other junk in the games, and the cartridges wouldn’t work.  In later years when we had discs, the discs would always be scratched up and completely unplayable.

In fact, on that note, I let one friend borrow a game from me once (“NFL Blitz 2000” on Playstation).  He returned it with the case broken, the owner’s manual missing, and the disc scratched up.  Luckily the disc still worked, but I learned a valuable: never loan anything valuable to friends if you’ll be mad if they lose it or damage it.

No. 3 – Tape Players / CD Players

I’m not talking about the good ones that your parents would have.  I’m talking about the cheap knockoff Walkman or Discman that you got for Christmas.  No matter what you did, the mechanisms in your tape player would eventually eat up a cassette tape that you spent hours recording radio music to.  No matter what you did, your CD player would go haywire for no apparent reason.  Of course, neither of these two incidents would ever happen within the 90-day warranty.  They’d always happen a few months afterwards.

No. 4 – Barbie Dolls / Action Figures

Have you ever seen a decapitated Barbie?  I have.  And it’s not a pretty sight.  Sure, when your G.I. Joe action figure’s arm gets eaten by the family dog, you can still make that toy disability work within your imagination.  Unfortunately, your sister or your cousin’s decapitated Barbie just leaves you somewhat uncomfortable.  It’s even worse if Barbie’s head is still around and the hair has been trimmed to the scalp.  Yikes.

screws-rusty-airborne-1024x576

No. 5 – YoYo

I don’t know why, but such a simple toy always had a lot of problems.  Most of the problems came from poor maintenance and harsh care by the kid who owned the yoyo (i.e. not oiling the metal in the yoyo).  A tiny sliver of the problems came from parents who bought dreadfully cheap yoyos.

Did I miss anything?  Drop a comment below and share this post on your social media outlets.

Follow me on Twitter @Ben_Baxter or on AL.com here.

Teacher Uses 75% of His Paycheck to Become Debt-Free

More often than not, people of the internetwebs are sad, depressed, and uninspiring. Those adjectives, however, do not describe the couple you’re about to meet.

Credit: Hoyt Family

Credit: Hoyt Family via CNBC

Bobby Hoyt and his wife, Coral, are a different breed.  They’re the type of couple that likes to keep it real with themselves when it comes their personal finances.  That personality dynamic is why they decided in 2012 to become a debt-free family.  Don’t take that lightly though because that decision came with plenty of sacrifices.

To become debt-free, that meant the Hoyts had to vanquish $40,000 worth of student loans.  As school teachers with school teacher salaries, that was a heavy load for them to lift.  Fortunately, they quickly learned how to lighten their load.

Whether it was renting from the in-laws to driving an old clunker to wearing old clothes, they got rid of as many unnecessary expenses as possible.  At their peak, they were putting 75% of Bobby’s salary towards student loan payments.  And that’s pretending as if taxes didn’t negate a huge chuck of his gross pay during that time.

At the end of the day, the young millennial couple ended up paying off the $40,000 in a whopping 18 months.  Now that the debt is completely gone, Bobby quit being a teacher and has become a full-time blogger.

So the next time you’re feeling hopeless, just remember: if two young school teachers can change the trajectory of their lives, then you can too.

Follow Ben on Twitter @Ben_Baxter or on AL.com here.

NYC Wife Shocked by Husband’s 401(k) Balance

I recently ran across an article about the couple below that left me completely irritated about millennial marriages and marriages in general when it comes to financial communication.

business-insider-article

The highly attractive couple shown here were recently featured in Business Insider via Yahoo Finance.  In the feature, the wife recounted the time she realized that her husband saves a much higher percentage of his individual income than she does her individual income—three times higher to be exact.

After coming to this realization, she finally gets her bearings and decides that she will up her 2 percent retirement contributions to 8 percent with the eventual hope of reaching the 12 percent milestone that her husband is currently at.

This may seem like the end of the story and a happy ending, but I can’t help but wonder why her husband was so oblivious to this massive miscommunication problem as it relates to their long-term financial future.

Other than purchasing a house (the reason for his wife’s great discovery happened), the husband in this relationship has done nothing to truly unite himself with his wife.  He’s done nothing to visibly prepare his marriage to last the long haul, at least in terms of finances.

Given that the number one reason for divorce in North America today is money fights and money problems, I hope this couple really improves their financial communication.  As a fellow millennial, I want their marriage to thrive financially.  Not just for the wealth, but for the dreams.

As a world-famous John Maxwell says, “Teamwork makes the dream work!”

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Share Retirement Dreams for Chance to Win Free Book

Let’s dream a little bit.  Most people think more about their next vacation than they ever think about retirement.  But I believe that’s mostly because people get sidetracked by the numbers and forget the dreams.

So leave a comment and share what your retirement dreams are.  For your participation, one lucky commenter will win a free copy of the #1 New York Times Bestselling book, Retired Inspired.

Follow me on Twitter @Ben_Baxter or on AL.com here.

Retire Inspired Giveaway

There Are Only 3 Types of Homeowner Personalities

Every neighborhood has them.  Every friend group has them.  They’re everywhere like gnats in the summer time.  But can you quickly identify the three types of homeowner personalities if you encountered them? Have no fear.  The answers are here.

The Nit Picker Personality

NaggingThis is your former roommate.  Don’t you remember him?  He was always complaining about how your apartment was not as good as someone else’s.  It was quite annoying while you were in a lease together, but now you’re stuck together in the same poker group.

Things haven’t changed too much except the item of ridicule isn’t an apartment anymore—it’s a house.  Ironically, your old buddy is in the house of his dreams—from two months ago.  Ever since moving into the house, he hasn’t said a positive word about the place.

End Result: He will take the negative-equity hit and move into a “better” house.

The Delusional Personality

DenialThis is the lady that sits next to you at work.  She and her husband live in a house with a mortgage that consumes way too much of their monthly take-home pay.  And that’s not including electricity, maintenance, and other house-related things that cost money.

Unfortunately, they won’t sell the house because they are holding on to hope the husband will get another high-paying job again.  He got laid off 3 years ago and has never really fully-recovered.  Don’t worry though.  That doesn’t keep them from using debt to give off the impression that everything is still okay.  After all, the kids are in amazing school district where they are now.

End Result: She will eventually be punished with a foreclosure.  To make matters worse, her husband cheated on her with a neighbor down the street.

The Contented Personality

contentmentThis personality is rare.  It is so rare and silent that you simply may not have noticed it.  The person is the assistant manager of your favorite local fast food restaurant.  In fact, he or she comes home smelling like fries every single day.

Despite the smells, this person makes the best of every situation.  He or she may not have all the perks imaginable, but that doesn’t stop creativity from happening.  He or she is quietly becoming a millionaire right in front of your eyes.

End Result: This person will not move very often, but when he or she does move, it’s with a purpose.

Follow me on Twitter @Ben_Baxter or on AL.com here.

Delayed Gratification is not Set in Stone

More often than not, delayed gratification is viewed as a four-letter word that means permanent denial of happiness.  That’s not a healthy definition or an accurate definition as delayed gratification is actually a temporary experience.  If it lasts forever, then it’s not delayed gratification.  That being said, it’s not hard to see why delayed gratification or healthy discipline gets a bad rap.

Hebrews 12:11

No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.

There are multiple applications for this verse: financial discipline, sexual discipline, athletic discipline, educational discipline, and etc.  If we want to be successful in any area of our lives, it will require some level of discipline.  There’s no way around it.

Fortunately, it becomes easier to live out Hebrews 12:11 if we don’t put all of our focus on the first sentence of the verse.  We get so caught up in the pain of discipline that we overlook the harvest of righteousness and peace.  Simply correcting that shortsightedness will change our lives forever.

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Delayed Gratification

Getting Tax ‘Refund’ No Reason to Quit Work, Buy New Car

Look.  I get it.  Eight out of 10 filers nationwide received a refund during last year’s tax season.  In the state of Alabama specifically, refund-eligible filers received $2,821.  That’s more money than most of us have at any given time, but it is not enough money to start making rash decisions with.  Unfortunately, this wisdom is not as widely known as it should be, and the absence of this virtue leads to the following common tax-season blunders.

Quitting a Job

Believe it or not, this happens a lot.  This is surprising too since 62 percent of Americans have less than $1,000 in savings and 21 percent have no savings.  But as mind-boggling as that is, workers quit in droves during tax season.  And many of these same workers aren’t immediately looking for a replacement job.

I’m not sure why many of us believe we can truly survive on $2,821 long-term.  The math just doesn’t add up.  Try as one might, one can probably only live on $2,821 for about 2 or 3 months.  And that’s only if one’s expenses are extremely low.   So word of advice on this: don’t quit your job.

Buying a New Car

If we are just buying a cheap used car to get you back and forth to work, this would be fine.  However, most of us who do this already have a decent commuter car; we just want a newer car with a monthly payment.  That’s a sign of lack of contentment and will keep us broke forever.  Let’s put a stop to this bad habit once and for all.

Follow @Ben_Baxter on Twitter.  Or find him on AL.com and TouchdownAlabama.net.

tax-refund

Resist Urge to Panic about the Stock Market

Please sit down.  Take a deep breath and look at the accompanying chart.

Standard and Poors Jan 1950 - Dec 2015

Standard and Poors Jan 1950 – Dec 2015

 

If you are even remotely good at reading a graph, you know this represents the stock market.  More specifically, it is a graph of the S&P 500—the gold standard for measuring the health of the stock market and the economy as a whole.

Look at the chart closely. What do you see? If you are being honest with yourself, you see that the stock market as a whole has a long-term track record of positive growth.  As a result, if your personal investment portfolio is diversified enough, it will also mirror the positive growth of the stock market.

If your personal investment portfolio is not diversified (i.e. all of your eggs are in one basket), then you are probably asking for trouble.  Get a great advisor and make a change today.

Ben Baxter is editor for Baxter & Friends.  Follow him on Twitter @Ben_Baxter

Stop Blaming Churches for Your Financial Problems

With each passing day, another pastor (usually a mega-church pastor) gets vilified in the media.  Most of the time, it’s because the pastor in question is being ridiculed for showing signs of having too much wealth.  Since wealth is often misconstrued for salary, the smoking gun almost always points back to pastors making too high of a salary.  This negative sentiment rings true on a national stage and eventually makes its way down to the local level.  The hater-ation runs deep.

Unfortunately, this mud-slinging is unwarranted because pastors in general are not hoodwinking the public or robbing from the poor.  In fact, for the amount of talent and skill pastors have, they are living pretty meagerly and sometimes near the poverty line.  But let’s not take my word for it, let’s look at the research.

rich-wilkerson-jr

Rick Wikerson, Jr – Celebrity Pastor

According to the Barna Group, 60% of protestant churches have less than 100 adults in attendance while only 2% of protestant churches have more than 1000 adults in attendance.  In addition, according to Leadership Network’s 2014 Large Church Salary Report, per capita giving goes down as church size goes up.  I will get more into that later.

Within this same Leadership Network report, it is measured that for mega-churches (churches with attendances from 1,000 to over 30,000), senior pastor salaries tend to represent only 3.4% of a total church budget.  For example, if a church’s total budget is $2 million, then the senior pastor makes $68,000.  That salary may seem pedestrian at first, but when you consider that the average pastor works 50 hours per week and 35% of pastors work more than 60 hours per week, that salary is paltry.  In fact, many pastors regularly sell items on eBay and Craigslist to make ends meet.

Let’s go back to congregational giving though.  Remember how the media likes to paint a picture that poor people are being robbed to prop up silver-spooned pastors? Well, that’s a load of hogwash.  Look at these figures on giving:

  • American Christians give 1.5 – 3.1% to their church and other charitable organizations. That number has dropped more than a percentage point in the past 10 years.
  • 4 out of 10 church attendees give nothing to their local church.
  • Only 1 out of 10 regular church attendees give a consistent percentage of their income to their local church.
  • Currently only 4% of church-attending Christians tithe (give 10% of their income) to local church.

In summary of those statistics, we can’t get robbed if we are essentially keeping all of our income. So let’s stop perpetrating this robbery myth.  That’s just a smoke-screen to cover up the fact that many of us feel bad for not giving a cheerful amount.

Why can’t we give a cheerful amount? Mostly because we don’t read our Bibles very often.  Even a brief analysis of scripture would show us that financial matters are spelled out pretty bluntly.  If we adhere to scripture, we will financially be better off.

Pastors know this.  They read their Bibles daily like it is recommended.  Supernaturally and practically, pastors gain wealth even if they have horrible salaries because they live below their means and then some.  And in doing so, they can financially help all of the haters who think pastors are their enemies.

Follow me on Twitter @Ben_Baxter