Six Tips to Better Business Tweeting
1. Engage your followers and influencers. Tweeting is about building relationships. So, take time to retweet or reply to the posts of your followers—and the people you follow. Look for opportunities where you can offer help or advice. “Just because people are following you doesn’t mean they are engaging with you. Tweet resources that customers would find valuable,” suggests Richards. Also, “create Twitter lists for your customers. Be a curator of information.” Don’t overlook the back end of Twitter, adds Richards, so e-mail influential Twitter users to introduce your business or to keep them abreast of what’s going on to strengthen relationships and help generate business leads.

2. Mix it up. Your tweets should consist of links, status updates, breaking news, industry tidbits (especially about high-tech items, for example, the smartphones, monitors, of point-of-sale system you use), replies, and announcements about new products, services, or events, says Richards. Also, use Twitter to offer special discounts or run contests to attract and retain customers.

3. Use hashtags to promote events. You want people talking about your event. Also, ask to be the person being discussed in Tweetchats (Twitter conversations). Every Twitter conversation has a topic with a hashtag (#) and a time. Search for an industry-related topic. You can favorite tweets as well.

4. Use status update schedulers. It’s important for small businesses to get a tool that manages their social media communications, says Richards. Take advantage of status update schedulers for Twitter, LinkedIn, and Facebook. HootSuite.com and CoTweet.com let you manage and monitor your social networks. Richards suggests releasing your tweets according to the schedule most bloggers follow: 9 a.m., 11 a.m., noon, 3 p.m., and 6 p.m. (Eastern time).

5. Tag your tweets. Ideally there should be one account used for your company, says Richards. Each tweet should be tagged with the sender’s initials so customers know who’s speaking—someone from marketing or sales and not just the person who manages the company’s Twitter account, she says.

6. Use twitter.com/search. Search what people are talking about in real time using keywords and phrases. Also, use Google Trends. To see what topics are trending in Twitter, go to Hashtags.org.

Black Enterprise December 2011 cover

Alicia Keys Presents Stick Fly reads the marquee on Broadway’s Cort Theater. The 14-time Grammy Award-winning singer-songwriter and the play, written by African American playwright Lydia R. Diamond about a well-to-do black family vacationing on Martha’s Vineyard, are newcomers to the Great White Way. As a co-producer, Keys didn’t just invest money or lend her name to Stick Fly’s marketing strategy. She has been instrumental in bringing the play to the Broadway stage.

Since its 2006 theater debut, the critically acclaimed play has enjoyed successful regional productions in Chicago, Los Angeles, Boston, and Washington, D.C. “A colleague saw the play and said it was an amazing piece,” says Keys. “When I read it and when I saw it, I was moved.” Keys joins Tyler Perry’s longtime producing partner and casting director Reuben Cannon on Stick Fly’s production team.

Keys has expanded her creative wings by scouting for film, television, and other projects. This fall she made her directorial debut with “Lili,” part of the short film anthology Five, about breast cancer survivors. It aired on the Lifetime network. “One of my goals is to help bring forth stories that have variety to them, stories that you don’t often get to hear,” Keys says. With a $2.9 million budget, Stick Fly will need an audience capacity of about 60% during its run to recoup its production costs.

Sparks of color are shining on the Great White Way this winter with shows such as Stick Fly. Among roughly 33 plays and musicals to open during the 2011–2012 season, five feature prominent African American characters, actors, or storylines. There’s The Mountaintop, written by Katori Hall, with Hollywood A-listers Angela Bassett and Samuel L. Jackson; and The Gershwins’ Porgy and Bess, Suzan-Lori Parks’ reimagined version of the folk opera starring four-time Tony Award-winner Audra McDonald. In the works for spring productions are a multiracial revival of A Streetcar Named Desire and Magic/Bird, about NBA legends Earvin “Magic” Johnson and Larry Bird.

This current season may be historic because three African American female playwrights—out of six shows by women—have high-profile productions. Both Hall and Diamond are making their debuts (Parks is the third). Lynn Nottage, an acclaimed author of several plays, is yet to have her work produced on Broadway, but now there’s talk of taking her off-Broadway production, By The Way, Meet Vera Stark, starring Sanaa Lathan, to the main stage next year.

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The pool of hands-on black producers of Broadway shows remains shallow. But among them is actress and ABC’s The View co-host Whoopi Goldberg, who has produced the Broadway musicals Sister Act and Thoroughly Modern Millie, and August Wilson’s play Ma Rainey’s Black Bottom.

While more African Americans behind the scenes translates into more diverse material and casting, it also represents potentially boffo box office sales by attracting multicultural audiences and generating increased revenues.

Stephen Byrd is one producer who’s been able to develop such productions. Byrd, a former investment banker, and his producing partner, Alia Jones, has carved out a niche on Broadway by casting classic Tennessee Williams plays with African American actors. Their 2008 revival of Cat on a Hot Tin Roof starred James Earl Jones, Phylicia Rashad, and Terrence Howard. Their latest production, A Streetcar Named Desire, features Blair Underwood and Nicole Ari Parker.

George C. Wolfe is the only African American writer-director-producer to dominate Broadway over the past two decades. His portfolio includes Angels In America; Bring in ’Da Noise, Bring in ’Da Funk; Topdog/Underdog; Caroline, or Change; and The Wild Party.

It was Kenny Leon, the African American director of Stick Fly who distinguished himself through his work in regional theater and on Broadway, that brought Keys in as a producer.
Leon also stage-directed Keys’ “As I Am” concert tour. Besides directing regional productions of Stick Fly, Leon has directed the revival of Lorraine Hansberry’s A Raisin in the Sun starring Sean “Diddy” Combs and Phylicia Rashad, and three of August Wilson’s plays on Broadway: Gem of the Ocean, Radio Golf, and Fences starring Denzel Washington and Viola Davis. Leon also directed Katori Hall’s much talked-about The Mountaintop.

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Leon called on award-winning film, television, and Broadway producer Nelle Nugent, who is white, and in turn Nugent brought on her friend and colleague Reuben Cannon. The pair had worked together on the film adaptation of Master Harold … and the Boys. Thanks to Leon’s urging, Keys also agreed to compose the score for Stick Fly. “I am definitely looking to be part of Broadway,” says Keys. “I want to do musicals, I want to write, I want to compose. If I find the right piece, I might even act.”

Cashing in on Celebrities
The role of Broadway producers varies, industry insiders say, but typically the lead producer spearheads the charge, raising the initial capital, selecting the director, and bringing on interested partners. Co-producers may have a hand in the marketing, advertising, and publicity of a production. “In the end, it’s really about producing  a successful, entertaining  show that will have a lasting emotional  effect and a long run on Broadway and beyond,” says Cannon.

Raising funds is a huge challenge in mounting any Broadway show, and it’s said that only one show in five ever earns its money back. This makes investing in black shows even riskier. On average it costs between $1.5 million and $3 million to produce a play, and anywhere from $5 million to $13 million to mount a musical. A lead producer may bring on investors (often other producers) who invest from $10,000 to $300,000 or more.

So when they need to raise the profile and viability of a show, producers approach celebrities. It took nearly 10 years to bring The Color Purple to Broadway. But after producer Scott Sanders, who is white, managed to raise $10 million upfront, national media icon Oprah Winfrey called and offered to help. Besides contributing $1 million, the billionaire entrepreneur agreed to have her name displayed on the marquee. The show ran from 2005 to 2008, and recouped its $11 million initial investment in its first year before going on tour, grossing more than $100 million and reaching nearly 1.5 million theatergoers.

At the time of his death in 2005, the two-time Pulitzer Prize-winning playwright August Wilson was one of the country’s most esteemed dramatists, though his plays have had mixed commercial success. The 2010 revival of Fences starring Denzel Washington grossed more than $12.9 million. To date, Fences is Wilson’s only play to make a profit.

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Stick Fly’s cast includes television stars Mekhi Phifer (ER), Dulé Hill (Psych), and Ruben Santiago-Hudson (Castle, Law & Order). It also features Condola Rashad, the daughter of Phylicia Rashad. “Casting TV stars gives it a hip factor, especially among young people,” says Leon.

The Mountaintop’s producers, Sonia Friedman and Jean Doumanian, who are white, are banking on the star power of Angela Bassett and Samuel L. Jackson to attract huge New York audiences. But it’s about more than celebrities, says Friedman. “We thought this was an original play that would resonate with American audiences.”

The Mountaintop is the fictional account of an encounter between Dr. Martin Luther King Jr. (played by Jackson) and a chamber maid (played by Bassett) in Memphis the night before his assassination. One of the most highly anticipated plays this fall, The Mountaintop is an import from London’s West End, where it won the Olivier (West End’s equivalent to Broadway’s Tony Award) for Best New Play.

Investors in the London show also invested in the Broadway production. The Mountaintop is already making money: In its first seven weeks of previews and performances, Hall’s play has reached 83% to 98% of audience capacity, according to the Broadway League, a trade group of producers and theater owners.

Because of the limited time commitments of many actors, some plays have limited runs, 13 weeks compared with 52. “The casting process is crucial to the potential box-office success of a play,” says Cannon. “While it doesn’t guarantee it, casting well-known, talented actors goes a long way toward marketing, publicity, and ticket sales.” A coveted Tony Award win or nomination can also bump up box office sales and potentially extend a show’s run or save it from closure.

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Actress Tamara Tunie

Producing for Passion and Profit
African American producers aren’t just taking on black shows. Tamara Tunie, best known from the NBC series Law & Order: Special Victims Unit, has deep connections to the Broadway stage as a performer in shows, including the revival of Julius Caesar starring Denzel Washington. Tunie was also one of the Tony Award-winning producers of the Broadway musical Spring Awakening and an investor in Legally Blonde, The Musical. She also produced August Wilson’s Radio Golf, the final work in the playwright’s epic 10-play cycle chronicling 20th-century African American life.

When Tunie signed on as a producer for the 2007 Broadway production of Radio Golf, she committed to raising a considerable portion of its $2.1 million budget. She enlisted the help of Wendell Pierce (HBO’s The Wire), making him the second African American on the producing team. Pierce had co-produced Wilson’s Jitney off-Broadway. After an 11-week run Radio Golf grossed $1.8 million.

“For Radio Golf my goal was to get more black folks into the theater, and I did that,” says Tunie. “For me, it’s not just about the money.”

First-time producers Stephen Byrd and Alia Jones broke all the rules with their 2008 star-studded production of Cat on a Hot Tin Roof. Their initial budget was $3 million, but they came in under budget, at $2.1 million. Byrd and Jones targeted high net worth individuals who were willing to take risks. It took 13 years to bring the show to the stage because of delays in acquiring the cast, a director, and a theater.

The audience makeup was 60% black, 40% white, says Byrd. In the end, Cat grossed $12.6 million after its limited run, among only five shows to recoup their investment during the 2007–2008 season. The duo repeated their success in 2009 when they took the all-black production to London’s West End theater district. “Normally shows are imported to Broadway from London,” says Byrd. The move paid off. Cat brought home the Olivier Award for Best Revival.

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Byrd and Jones maintained most of their investors for A Streetcar Named Desire. “Most of our original investors came back, except for one,” says Byrd. To produce Streetcar, $2.5 million has been raised.

Capitalization isn’t the only concern. “Finding a show that will keep my interest is my biggest challenge,” says Whoopi Goldberg.” I became a producer because I am interested in seeing certain things. I figured, ‘Well, if you want to see it, you are going to have to do it yourself because your sensibilities are a little quirky.’”

Goldberg’s first production, Thoroughly Modern Millie, was a musical she loved as a child. It won six Tony Awards in 2002 including Best Musical, and grossed $75.6 million before touring. It was Sister Act’s lead producer Joop van den Ende who sought out Goldberg as a producer. “I was taken aback because three years prior when some other people had the property, I said I would love to come on and help. They basically told me to get lost.”
Goldberg didn’t simply attach her name to Sister Act. “Literally from London to here we changed the book, taking out some things I thought were wrong with the piece. We changed the dialogue. We changed the feeling of Deloris. We changed some of the characters, because they were a little cliché.”

There is no formula for what makes a Broadway show a hit. “It’s a crapshoot,” says Goldberg, who is working on a documentary and a solo show about African American stand-up comedian Moms Mabley. “It can be the greatest book, the greatest musical, and nobody wants to see it. I always say to people if you are passionate about the piece do everything you can for it, but keep in mind that because theater is so subjective, no one knows if it will work, no one knows if it will last.”

Taking Stock and Ownership
Broadway has 40 theaters ranging in size from about 600 seats to 1,900, with 80% of these houses owned by three entities: Shubert, Nederlander, and Jujamcyn.

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(Photo: Lonnie C. Major)

Producers encounter problems licensing a Broadway theater, especially when so many are dominated by long-running productions, because theater owners don’t just rent space, they also have a financial interest in a show’s success.

“Owners get a percentage of the box-office receipts, and if they think a show isn’t going to make money, you aren’t going to get that theater, even if you have the money,” says Woodie King Jr., who in 1970 founded the New Federal Theater on New York’s Lower East Side.

King says young black playwrights and producers no longer have mentors and champions like the late Joseph Papp, who helped Ntoshake Shange’s For Colored Girls Who Have Considered Suicide/When the Rainbow Is Enuf transition from King’s New Federal Theater to Papp’s own Public Theater to Broadway’s Booth Theater. “I was 33 when I produced For Colored Girls, written by a 25-year-old Shange. One person put up all the money to bring the show to Broadway,” says King, who also produced and directed the play Checkmates with Denzel Washington on Broadway in 1988.

As producer at the Public Theater (1993-2004), George C. Wolfe moved Topdog/Underdog to Broadway. The Pulitzer Prize-winning play by Suzan-Lori Parks was her first to appear on the Great White Way. “I was interested in taking shows to Broadway that in theory didn’t belong there and proving that they did belong,” says Wolfe. “So, let me take this tap dancing show centered around young black men to Broadway, which was Bring in ’Da Noise, Bring in ’Da Funk.” He notes that at the Public he had the advantage and the artistic vision to “bring to Broadway plays and musicals that didn’t necessarily adhere to a prescribed commercialized vision of what a Broadway show was supposed to be.” Wolfe also directed and wrote the 1992 Broadway musical Jelly’s Last Jam.

There is growing investor interest in Broadway, where box-office revenues reached a record $1.1 billion during the 2010–2011 season. Attendance was up more than 5% compared with the previous season, when overall attendance was down more than 2%. From Fela! to Fences, several productions featuring a black cast were nominated for a record number of Tony Awards.

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“I think one of the reasons we broke so many records is that we have such diverse offerings on Broadway,” says the Broadway League’s Executive Director Charlotte St. Martin. “There used to be three kinds of shows: musical, comedy, and serious play. Now, there’s something for every audience. The number of black productions has grown and continues to grow. This season is a strong reflection of that.”

Diversity is also reflected by a growing number of productions in recent years that aren’t traditionally black shows but cast black actors and draw black audiences, such as Race and The Motherf***er With The Hat, starring comedian Chris Rock. Even the 2011 Tony Award-winning The Book of Mormon, about Mormon missionaries in Uganda, features a significant black cast. The Tony Award-winning musical Memphis, about 1950s rock and roll and race relations, has attracted large diverse audiences.

“Any producer, general manager, or theater owner I talk to is in favor of more diversity in general, including diverse stories and audiences,” says Sharon Jensen, executive director of Alliance for Inclusion in the Arts, an organization that promotes diversity and inclusion in American theater, film, and television. “Things are changing, though nobody thinks we’re where we ultimately need to be. Do we need more producers who are diverse?” “Absolutely.”

Overall, about 76% of Broadway theatergoers are white, while the remaining 24% are people of color. Broadway attendance among black audiences increased between 1999 at 2.4% and 2007 at 6.7%, the highest to date with a season lineup that included The Color Purple. The percentage of black theatergoers dropped by the end of 2009, representing 2.4% of 12.2 million ticket buyers, as did overall attendance affected by the recession.

Byrd believes there is a Broadway audience out there between Tyler Perry and August Wilson that has not been addressed. Donna Walker-Kuhne, president of Walker International Communications Group, says, “People want to see shows that reflect their interests or culture. It also depends on how they’re being engaged and marketed to.” Her organization specializes in strategic marketing and audience development, and Stick Fly is one of her clients.

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Black theatergoers will be critical this season. No doubt, from investors to producers to theater owners all eyes will be on the numbers—how many seats are sold at shows like The Mountaintop, Stick Fly, Porgy and Bess, and Streetcar. The commercial success of these productions could open up doors for even more African Americans behind the scenes as writers, directors, producers, and composers.

“There are huge opportunities for African Americans to become more involved with the business side of Broadway,” says Leon. “Yes, it is a gamble, but when you do make your money back, you do very well.” He suggests that investors diversify their investment pool among three or five shows to minimize risks and maximize profits.

“The black community must take responsibility in terms of how our culture is preserved and how we curate it,” adds Walker-Kuhne, also a co-founder of Impact Broadway, a nonprofit that engages multicultural young people around theater. “We must be willing to take risks and take ownership on Broadway.”

Here’s a behind the scenes look at the December 2011 Black Enterprise cover shoot

The driving force behind our cover story, “The Business of Broadway,” was my desire to spotlight an elite group of African American producers and directors who work backstage, paving the way for a greater diversity of faces, voices, and stories onstage. We also decided to focus on the new face of Broadway, Grammy Award-winning songstress Alicia Keys, who is a co-producer of Stick Fly. Keys is following in the footsteps of other black entertainers who have signed on as investors and producers of Broadway shows. In 2009, Shawn “Jay-Z” Carter, Will Smith, and Jada Pinkett Smith came in as backers of the musical Fela! And The Color Purple went on to gross more than $100 million during its run from 2005 to 2008.

But it was hip-hop mogul Sean “Diddy” Combs who first proved that black shows aligned with black stars could draw huge black audiences—and net profits to boot. Combs starred (and reportedly invested) in the 2004 revival of A Raisin in the Sun. Acting coach Susan Batson, who prepared him for the role of Walter Lee, was one of Raisin’s 13 producers and the only African American. Propelled by an audience that was 80% black, the play recouped its $2.4 million initial investment, grossing $7.9 million.

Black Broadway productions mounted by white producers are nothing new. Black plays going back to Raisin and musicals such as Sophisticated Ladies always had white producers and white audiences, says former Goldman Sachs investment banker Stephen Byrd, co-producer of the all-black cast revival of the 2008 hit Cat on a Hot Tin Roof and the upcoming A Streetcar Named Desire. “When it came to black plays, black audiences didn’t go outside of their comfort zone past the Beacon Theater.” But Byrd asserts that there is an underserved audience out there for shows that fall between Tyler Perry and August Wilson.

We hope this story will also serve as a call to action for more African American businesspeople, entertainers, and athletes to step up as Broadway producers and investors to get such shows made, utilizing resources such as the Theatrical Index (www.theatricalindex.com) to learn about plans for productions. It’s time for us to move down stage front and center.

Despite barriers to entry such as capital and tightly controlled theater space, a successful commercial mount on the Great White Way could be a long-term investment. “At the end of the day, it’s about real estate, if you can afford to live in that house, you get to rent it. As long as your play makes money you can continue to live there,” says director-producer extraordinaire George C. Wolfe.

Just as with the limited real estate on Broadway, there’s more great content than we could fit on these pages. Visit BlackEnterprise.com to view galleries on black-oriented Broadway shows. And watch the one-on-one interview with Keys on Our World with Black Enterprise.

The flip side is that discounts also tend to attract customers who are strictly bargain hunters. So, while group-buying sites such as Groupon and LivingSocial may offer exposure to a broader audience, they do not necessarily help with up-sell or generating repeat customers, marketing experts say.

Running your own coupon campaign puts you in control, not to mention saves you money on hefty commissions since sites such as Groupon keep up to 50% of the revenues from each coupon deal. It’s about leveraging your business for a profit, not running a campaign at a loss, says Luke Knowles, founder of Kinoli Inc., an Internet marketing firm.

Entrepreneurs must determine if coupons are the right tactic as part of an overall marketing plan along with how they are using Facebook, Twitter, Google AdWords, and so on. When crafting your coupon, remember that consumers look for specific deals, says Knowles.

Here are some tips that will let you make a deal that’s right for your business.

1. Offer a percentage or dollar amount off each purchase. Instead of promoting a particular service or product, promote a dollar amount, says Knowles. In other words, offer $50 worth of services for $25.

2. Run coupon deals online. eMarketer estimates that 92.5 million Internet users (48%) will redeem digital coupons in 2012. This can include having a small clickable banner on your website or offering a discount via e-mail that is redeemable online or in your store. CouponFactory.com lets businesses create and track coupons.

3. Tweet discount codes and daily deals. Offer special discount codes to your Twitter followers. Make them good for one day only, or do flash sales—25% off anything in your store for, say, the next three hours. Or offer a discount code for every 10 retweets.

4. Use your Facebook fan page for discounts and flash sales. It’s an effective way to engage new and existing customers at a very low cost, says Knowles. Also, put links to offers on your website.

5. Include mobile marketing. According to a study by ForeSee Results, 11% of visitors to top e-retailer sites made a purchase using their phone during the holiday rush last year. Knowles says entrepreneurs can try submitting their coupons to mobile sites such as CouponSherpa.com and Foursquare.com.

With the restaurant generating annual sales north of $600,000 (last year’s sales reached $1.4 million), Nash understood the value of customer demand and quality products. In 2006, taking $30,000 in savings, he formed Lefty’s Spices L.L.C., a division of Lefty’s Barbecue Unlimited, which operates the family-owned restaurant and catering business in Waldorf, Maryland. Nash is CEO of Lefty’s Spices, which manufactures barbecue sauces, rubbed meats, dry spices, and fish and chicken seasonings for distribution.

But the transition to producing food items for mass consumption wasn’t speedy. “During the first two years, I really spent time putting everything together, including the packaging and labeling, to bring the seasonings and sauces to market.” Nash had to find manufacturers who could faithfully reproduce his family’s recipes. After a series of sample tastes and tests, he finally went with those manufacturers who could meet his product specifications and make the best product at the best price. Nash also selected manufacturers who could meet demand over the long haul. For a small business to get a large order from a client and not be able to fill it on time is the worst thing, he says. All Lefty’s Spices items are produced at half a dozen or more manufacturers.

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In 2008, Lefty’s Spices generated only $24,829 in revenue. Nash grew the company by partnering with a major distributor. It was Nash’s friend, Fred Lankford, CEO of Lankford-Sysco Food Services, who facilitated his entry into servicing other restaurants. Sysco Corp. (parent company of Lankford-Sysco Food Services), with 400,000 customers, 180 distribution locations, and $37 billion in sales for fiscal year 2010, is the largest food service distributor in North America.

To snag clients, Nash also made use of industry trade shows. At a 2009 food show sponsored by DPI Specialty Foods, Lefty’s Spices attracted the attention of Giant Food Stores, which now carries Lefty’s barbecue sauces and seasonings. “That was how we got into grocery retail,” he says.

Lefty’s sets itself apart from other seasoning and condiment manufacturers by offering meats rubbed with its sauces—beef and chicken barbecue and its popular North Carolina pork. That part of the business resulted from a meeting with a buyer from Smithfield Foods, the world’s largest pork processor and producer.

The key to Nash’s success, he says, has to do with solidifying personal relationships and partnerships with food service distributors, including the U.S. Armed Forces, wholesale distributors such as Supervalu, major corporations such as Sam’s Club, and retailers such as Lowes Foods. Last year, Lefty’s Spices grossed $459,602; for 2011, Nash projects gross revenues of $700,000 by the end of the year. “A lot of major corporations are looking for minority vendors to satisfy their diversity inclusion efforts,” says Nash, who did road shows for Sam’s Club.

Nash no longer has to hunt for clients. Today, he has three full-time employees plus five brokerage firms that acquire and maintain new business.

LEFTY’S SPICES L.L.C.
Owners: Walter Nash Jr. (25%), Walter Nash Sr. (25%), Margaret Nash (Mother) (25%) LaTanya Nash (Sister) (25%)
Location: Waldorf, MD
Founded: 2006
Number of full-time employees: 3
What it does: Manufactures hot and mild barbecue sauces, rubbed meats, dry spices, and fish and chicken seasonings
Revenue Model: Outsources manufacturing and utilizes large channels of distribution in North America that encompasses wholesale distributors, food service companies, and retailers
2009 Revenues: $286,596
2010 Revenues: $459,602
2011 Projections: $700,000
How they made it: The success of the restaurant, Lefty’s Barbecue, and customer demand for the eatery’s recipes, sauces, and mixed seasonings helped to propel the distribution and sales of Lefty’s Spices. Nash solidified relationships and partnered with major corporations, large wholesalers, retailers, and giant food service distributors.

Whitehead was approved through the federal Home Affordable Modification Program, or HAMP. Under the terms of the modification, her monthly mortgage payment was reduced from approximately $1,000 to $700, and her adjustable rate mortgage of 7% was converted to a 30-year fixed rate at 3.8%. In addition, her servicer, Wells Fargo, reduced the principal by $31,000, which included $14,000 in arrears, bringing her mortgage to $125,000. Although she paid $154,000 for her condo in 2005, it’s now worth only about $60,000.

Whitehead fell behind on her mortgage when her dream to become a doctor was delayed after a series of events including a breast cancer diagnosis. “I was in medical school when I bought my house,” she says. “I was approved for a no-doc mortgage by the loan officer with the understanding that once I became a doctor I would be able to afford the mortgage.” Whitehead graduated from medical school in 2006, but without a medical license her various part-time jobs generate $30,000 a year.

Like Whitehead, roughly 58% of homeowners facing foreclosure and seeking counseling services from the National Foreclosure Mitigation Counseling Program report that the primary reason is unemployment or underemployment. Many are also trapped with homes that are underwater, properties that have dropped in value leaving them with negative equity. Various options are available to struggling homeowners, such as forbearance, refinancing, and loan modification, says Mechel Glass, director of education at CredAbility.

The Atlanta-based nonprofit credit and debt counseling agency also participates with the congressionally funded NFMC (http://findaforeclosurecounselor.org). More than 1.2 million homeowners have received counseling through NFMC counselors, with many clients receiving modified loan payments that were reduced by as much as $500 a month.

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“A loan modification is a restructuring of a loan. It can include changes such as a reduction in the interest rate and/or principal amount,” Glass explains. “Other changes that may be made in a modification include extending the period of the loan (from 30 years to 40 years), moving any delinquency to the back end of the loan, or converting it from an exotic type loan (interest-only) to a conservative one (30-year fixed).”

There are caveats: If you are put on a trial payment plan, whereby you make a reduced mortgage payment, it will adversely affect your credit until the modification is officially approved. Also, if the modification isn’t approved, all arrears on the mortgage will be due immediately and the foreclosure process will proceed. Your eligibility for a home loan modification depends on your specific circumstance, says Glass.

Applying for a loan modification or restructuring can be extremely stressful, says Stephfan Nurse, CEO of Tampa, Florida-based Consumer Education (www.consumereducationonline.com).  “This process can be rife with mistakes and bureaucratic snafus. But if you take steps to reduce the opportunities for errors, you’ll have a much better chance of being approved,” says Nurse.

Sabin D. Blake, Dealer Organizational Manager, Northeast Region, General Motors Corp. (Photo: Lonnie C. Major)

Sabin D. Blake, 34, has navigated the professional obstacles of being African American and gay throughout his career. Blake, a dealer organizational manager, Northeast region, for General Motors Corp., is no longer in the closet. That hasn’t always been the case though; for years, he lived a double life using non-gender specific pronouns such as “they” to describe individuals he has dated during casual conversations with colleagues.

“Being a double minority you choose what you present. I could hide being gay, I definitely couldn’t hide being black,” says Blake who kept his sexual orientation hidden for several reasons including fear for his personal safety. “I had these relationships with people where I would be going to dinner with their families. I was involved in their lives but I wasn’t being who I really was.”

Once keeping the secret became too disheartening, Blake made the decision to gradually reveal his sexual orientation to fellow GM employees and business associates. “It was hurtful not being authentic. And my energy was being sucked away,” he says. But each time he told someone he was gay it became easier for him. “It freed me. It allowed me to be more productive, more creative, and more innovative at work,” he says.

Blake attributes his level of comfort to GM’s workplace and the high visibility of gay senior-level executives and straight allies. “I know that GM has strong language in their anti-discrimination policies and very strong support of their employee network groups.” His experience resonates with African American corporate executives who identify themselves as lesbian, gay, bisexual, or transgender (LGBT). For those who choose to “pass as straight,” they expend a great deal of time and energy covering up their personal lives or avoiding certain colleagues and company events.

A survey commissioned by the Human Rights Campaign found that out of 761 LGBT participants, only 25% of African Americans revealed their sexual orientation on the job. African American LGBT employees have unique challenges and experiences associated with being a minority because of their race, gender, sexual orientation, and gender identity.

Coming out in the workplace is an ongoing process especially when you are in high-level positions, says Yvette C. Burton, Ph.D., CEO of the Arcus Foundation, an LGBT social justice organization. “Business is driven by relationships, where it is quite natural for people to want to get to know you; it relates to how trustworthy you are as a professional. Whether it is a new job opportunity around the world, a new team, or a new boss, it requires a new set of conversations about who you are,” she adds.

Many African Americans that are part of the LGBT community don’t live in the closet but tend to live in private, maintains Sharon J. Lettman-Hicks, executive director and CEO of Washington, D.C.-based National Black Justice Coalition, a civil rights organization dedicated to empowering the African American LGBT population. There are graduated levels of “being out,” she says, so even if many don’t deny being LGBT they choose not to call attention to their sexual orientation. Says Lettman-Hicks: “They don’t desire to open themselves up to public scrutiny.”

There’s also the fear factor. Racial discrimination in the workplace is prohibited by a number of federal and state laws, but gay rights activists say anxiety around denied promotions, dismissal, discrimination, and harassment for being gay is all too real since there’s no federal law that protects LGBT individuals on the job except in the federal workplace. According to the Human Rights Campaign, on the state level it is legal in 29 states to discriminate based on sexual orientation and in 37 states to do so based on gender identity or expression. (If the employer is in a city or state whose laws prohibit discrimination based on sexual orientation, then that employer must adhere to those laws.)

Yvette C. Burton, Ph.D., CEO, Arcus Foundation (Photo: Lonnie C. Major)

Rosalyn Taylor O’Neale thinks she was fired in the early ’80s because she was a masculine-looking lesbian. “When I first entered corporate America I was in my ‘boy days,’ meaning I had short hair and wore pantsuits with ties.” O’Neale, 61, acknowledges progress has been made since then. Today, she serves as vice president and chief diversity and inclusion officer for Campbell Soup Co. in Camden, New Jersey. Still, for some LGBT people, being out in the workplace can range anywhere from uncomfortable to a downright dangerous proposition.

Such issues have become increasingly important to corporations as part of their diversity initiatives and efforts to gain greater market share. Take Black Enterprise’s 40 Best Companies for Diversity, in which firms were measured against four key categories: the percentage of African Americans and other ethnic minorities represented among employees, senior management, and corporate board members, as well as the percentage of total procurement dollars spent with businesses owned by African Americans and other ethnic minority groups. We found that 23 companies on this year’s roster are also included on the Human Rights Campaign’s 2011 list of the Best Places to Work for LGBT employees.

Last year’s legislative repeal of “don’t ask, don’t tell” in the military, and prominent professionals such as CNN’s Don Lemon coming out publicly, have placed a spotlight on gays in the workplace. (See sidebar on Lemon.) Despite this, African American LGBT executives can still find it tough as a double/triple minority to gain acceptance from corporate colleagues as well as within their own community.

Fight for a More Inclusive Environment
Research shows that there are between 2 million and 6 million people who are treated unfairly at work because they are LGBT, says Kimberley McLeod, media field strategist for Communities of African Descent at GLAAD (Gay & Lesbian Alliance Against Defamation). She says it’s not enough to establish policies to protect LGBT employees in the workplace. “Employers must also provide an inclusive environment where people feel safe to be their whole authentic selves. Fragmented employees who feel

they have to leave a part of themselves at home when they come to work will constantly hide or lie about details of their personal lives,” McLeod says. “They will be afraid to have conversations at the water cooler about their partner or to have a photo of their partner on their desks.”

While more companies have policies that protect LGBT workers, there needs to be improved inclusiveness and sensitivity training, especially for transgender workers, McLeod says. A survey by the National Gay and Lesbian Task Force found 90% of transgender employees reported harassment at work. Research by the Williams Institute, which works to advance sexual orientation law and public policy, shows that between 15% and 43% of gay and transgender workers experience some form of discrimination on the job solely because of their sexual orientation or gender identity. Additionally, 8% to 17% have been passed over for a job or fired because of their sexual orientation or gender identity; 10% to 28% received a negative performance evaluation or were passed over for a promotion because they were gay or transgender; and 7% to 41% were verbally or physically abused or had their workplace vandalized.

Ironically, even companies that have strong diversity policies, including protections and benefits for LGBT employees, are challenged with consistently upholding these values. Recently, several major corporations were called out by civil rights organizations such as Garden State Equality and the Tennessee Equality Project for failing to oppose legislation—lobbied for by The Tennessee Chamber of Commerce & Industry—that repealed Nashville’s ordinance prohibiting discrimination based on sexual orientation and gender identity. Garden State Equality rescinded awards to KPMG, Pfizer Inc., and AT&T based on their non-action. Several major national corporations also have representatives on the Tennessee Chamber board including Nissan, FedEx, Comcast, DuPont, Blue Cross Blue Shield, Caterpillar, Whirlpool, Alcoa, and United HealthCare.

CNN anchor Don Lemon thought twice about the professional ramifications of coming out.

Michigan is one of the states where workers can be fired for being LGBT with no legal recourse, says Adam Bernard, chairman of GM Plus, the automaker’s LGBT employee resource group. In 2007 GM—which is on both BE’s 40 Best Companies and Human Rights Campaign’s Best Places to Work lists— joined a coalition sponsored by the Human Rights Campaign to support the Employment Non-Discrimination Act (ENDA). The legislation is being debated in Congress to determine whether to enact a national law that provides basic protections against workplace discrimination on the basis of sexual orientation or gender identity, Bernard explains.

Since its inception in 1993, the 200-member GM Plus has actively campaigned for equal treatment and safe, acceptable working conditions for all GM employees. Sexual orientation was added to GM’s non-discrimination policy in 1999 and GM, Ford, Chrysler, and the United Auto Workers (UAW) jointly announced the auto industry’s first same-sex domestic partner healthcare benefits a year later. In 2003, GM started targeting the LGBT community as part of its marketing efforts. The automaker added policy protection for employees based on gender identity and gender expression in 2006. Such internal and external efforts of corporations such as GM have provided open, inclusive, and supportive environments that have made it less daunting for LGBT workers and managers to be “out at work,” Bernard says.

Now, hundreds of companies have enacted policies protecting LGBT employees. As of March, 433 (87%) of the nation’s 500 largest corporations had implemented nondiscrimination policies that include sexual orientation, and 229 (46%) have policies that include gender identity protections. In addition, the majority of the nation’s largest employers now provide benefits to same-sex partners and spouses of employees. About 25 of the top 100 companies have removed discriminatory language from health insurance plans to allow coverage for transgender-related medical treatment.

When the Human Rights Campaign’s Corporate Equality Index launched in 2002, 13 companies received its top rating of 100%. In 2011, 337 companies earned a 100% rating, up from 305 in 2010, including Ford, Bank of America, and IBM—all on this year’s 40 Best Companies for Diversity list. The top three industries for employers rated 100% are law firms; banking and financial services; and retail and consumer products. Forty-seven companies scored 0%.

Finding the Right Support System
Colleen Taylor has spent her 21-year career working at three financial institutions (JPMorgan Chase, Wachovia, and Capital One) that have been inclusive and supportive of both LGBT and African American employees and their communities. “I have been out for 20 of those years,” says Taylor, an executive vice president and head of treasury management and merchant services with McLean, Virginia-based Capital One Bank.

Taylor, 43, one of BE’s Most Powerful Women in Business, made a conscious decision to come out to family, friends, and colleagues. “Anyone who knows me knows I’m gay. And I’m black. And I’m also a woman. It’s just part of who I am,” she says. While it has not been her experience, Taylor knows others in despair because they are not out at their workplace. “African American LGBT employees need to feel comfortable about showing up at work being who they are,” says Taylor, who points out that leadership sets the tone. “CEOs and senior executives need to be committed around a true sense of inclusion and diversity” by verbalizing it and reinforcing it with policies and programs.

Early on in his career, Curtis Pate III, 33, worked at financial services companies absent of openly gay senior executives—and definitely not any person of color. At that time, he believed coming out at work would have been detrimental to his career. “I would often hear comments about gays and lesbians that were off-putting.” Since coming to work for

Curtis Pate III, Global Training Manager of Finance, American Express (Photo: Lonnie C. Major)

American Express two years ago as global training manager of finance, Pate says he is now in a welcoming corporate environment for a black gay man in a highly visible role. He shares a home near Philadelphia with his partner of 13 years, who works for a major insurance provider. “We are getting to a point of comfort where we can talk with our colleagues about wanting to have children and wanting to get married,” he says.

Pate is involved in the LGBT and African American employee resource groups at American Express, which is on BE’s 40 Best Companies list and the Human Right’s Campaign’s Best Places to Work roster. “All of our employee networks have a common ground which is built on mutual respect. They also partner with each other,” says Pate. “There are a good number of members of the LGBT group that are members of the African American group. That alone helps bridge some of the gap.”

Over the past three decades, employee resource groups (also called affinity groups or business networks) were started, mainly as social networks to provide a safe space for women and minority employees. At the most basic level, such groups focus on employee retention but can also support business opportunities with LGBT consumers and other initiatives. Today, employee resource groups are used for diversity recruitment, promotion, leadership development, supplier diversity, and increasingly for business development, says Orlan Boston, a principal with Deloitte Consulting L.L.P. and chief diversity officer for Deloitte Consulting. Having such groups not only indicates an investment and commitment to challenges facing LGBT and African American employees, but it also demonstrates a bottom-line impact, adds Boston, who is Hispanic, African American, and gay.

There are issues beyond the control of even the best companies that have philosophical practices and principles around diversity and inclusion. This is why it is important that

companies collaborate and partner with major LGBT organizations, explains Burton, 45, who for more than a decade served as a global business development executive for IBM and also served as an expert witness before the U.S. Senate in support of the federal adoption of domestic partnership benefits for federal employees.

Boston maintains that companies must improve policy development efforts regarding fertility coverage for lesbian couples, surrogacy benefits for gay male couples, and unfair taxation of domestic partner benefits. “On average, domestic-partner couples incur an additional $1,500 annually in taxes whereas if they were a married heterosexual couple they would not pay,” he explains. Only five states legally recognize same-sex marriage and another six states (plus the District of Columbia) validate some form of civil unions. Nationwide, which is on BE’s  40 Best Companies list and the Human Rights Campaign’s list, has restructured its benefits package to be more LGBT inclusive. “We have had a very forward-looking approach to our benefits,” says Candice Barnhardt, the company’s chief diversity officer. “We have been active around the tax equity act so that the taxation of domestic partner health plan benefits is treated more fairly.”

Smart, aggressive companies are also targeting their marketing and advertising campaigns to reach the LGBT consumer market, which has estimated buying power of $835 billion. Aaron Walton is co-founder and co-CEO of Los Angeles-based Walton Isaacson (No. 8 on the BE Advertising Agencies list with $12 million in revenues), which has helped develop campaigns for Dove, Courvoisier, Harrah’s, and Maytag to reach this growing segment. “Black gay consumers and employees have a different perspective on LGBT marketing because they have lived with being a minority within a minority,” says Walton, who is openly gay and has been with his partner for 24 years. “We make sure brands understand that being inclusive is not going to hurt their general market efforts. It will actually bring in new consumers and help build their business.” He further states that roughly 85% of general market consumers don’t care if a brand they prefer has also been targeted to the LGBT community.

Colleen Taylor, EVP and Head of Treasury Management and Merchant Services, Capital One Bank (Photo: Lonnie C. Major)

Companies are doing a much better job around diversity and inclusion today than 10 years ago, says Pate. “But what is going to drive the workplace is the politics and community outside of that,” he adds.

Gaining Acceptance in the Black Community
Research shows African Americans face greater challenges coming out in their own communities where homophobia is prevalent. “African Americans overwhelmingly turn a blind eye to the existence of LGBT persons. We function like ‘don’t ask, don’t tell’ within the African American community. We don’t acknowledge our black LGBT with the respect and dignity they deserve,” says Lettman-Hicks. “We prefer to use stereotypical or derogatory references instead of uplifting a valuable sector of our society. Politically, black folks see gay rights as a white America issue.”

There is the added social pressure for African American LGBT workers in part due to the historical relationship between the black community and the black church, which often sets the climate and tone of political and social movements. Walton, whose mother is a minister, says Julian Bond is one black civil rights leader who has spoken eloquently about the gay rights movement. Bond also has repeatedly acknowledged the contributions of openly gay civil rights activist Bayard Rustin, who was a friend of the Rev. Dr. Martin Luther King Jr. and the chief architect of the 1963 March on Washington.

It’s not just religious institutions. “We have to also look at institutions of higher learning, especially historically black colleges and universities, in fostering inclusion,” says Lettman-Hicks. This past May, nine historically black colleges and universities held a summit at Spelman College (funded by the Arcus Foundation) to address issues facing LGBT students, breaking the silence on a subject considered taboo on most black college campuses.

The same can be said for black fraternities and sororities, says O’Neale, who is a member of Alpha Kappa Alpha. LGBT brothers and sorors aren’t usually comfortable bringing their partners to the “big dance,” such as national conferences and social events, explains O’Neale, who has been with her partner for 20 years and is one of the 18,000 legally married couples in the state of California. “The African American community has always had mixed emotions about the LGBT community. There is a history of excluding and marginalizing LGBT individuals.” In addition, LGBT African Americans can feel invisible within the general LGBT community, she says.

The Next Phase of Activism and Advocacy
The tide is changing with the next generation, says Boston. The experience of an LGBT baby boomer is very different from that of a Gen-Xer or Millennial. “We actively recruit LGBT students and candidates on college campuses. They are asking about domestic partner benefits, anti-discrimination policies, affiliations with national LGBT organizations, and the number of openly gay people on the board or the executive committee,” Boston says. “A good number of those asking these questions aren’t even LGBT, but they consider themselves straight allies who care about fair workplace practices for all employees. We never would have gotten those questions 10 years ago from job seekers.”

For more of our coverage on the triumphs and challenges of Black LGBTs in the workplace and beyond, visit blackenterprise.com/blacklgbt

If McLeod’s position isn’t renewed, finding full-time employment will be a challenge. Given the state of the job market, on average it takes six months to a year to find work. When she does locate a new position, she may find it difficult to replace her annual salary of about $77,000.

The Baltimore resident admits that the biggest impediment to saving is her shopping habit. “I am buying everything from clothes to household items. I recently spent $130 at a Rite Aid. Who does that?”

Her bad habit isn’t new. McLeod left college weighed down by $11,000 in debt spread across seven credit cards. But over the years, she faithfully paid down the balances using her discretionary income. “Once the spending gets out of control, I start cutting the credit cards up.” She recently cut up her last credit card which has a balance of $4,800. In spite of her splurging, she has always maintained a good credit profile; her credit score is 775.

McLeod is also hauling a heavy load of $70,000 in student loans from her three degrees: an associate degree in early childhood education from Baltimore City Community College, a bachelor’s in journalism from Norfolk State University, and a master’s in mass communications from Towson University. In 2009, McLeod received a forbearance reduction to $100 on her monthly loan payment. Her forbearance status lasts until September, at which point her payments revert to $473 per month unless she can get an extension.

In addition, she owes $17,000 on a used car she purchased in 2009. Her monthly car payment is $400. With gas prices averaging around $4 a gallon in Maryland, what’s really drained her cash was the $500 a month she paid for gas to commute to work just outside Washington, D.C. Now she’s using a public transportation subsidy offered to federal employees, which saves her around $350 a month.

As for her retirement savings, McLeod withdrew $10,000 from her 401(k) to make a down payment on a three-bedroom, single family row-home which she purchased for $130,000 in 2006. She was able to take advantage of tax laws that allow first-time buyers to withdraw up to $10,000 from their retirement account penalty-free. But that withdrawal left her with $3,200 in her employer sponsored retirement account to which she is contributing 7% of her salary.

McLeod has also been investing in individual stocks outside of her 401(k). She has purchased shares of companies including Pfizer, General Motors, and General Electric. She uses an ING ShareBuilder account, to which she contributes $30 biweekly. Her cash reserve funds are modest at about $6,000 in savings and money market accounts.

The Advice
McLeod needs to reduce expenses and increase her emergency savings. She is upside down on her car and home, and has a negative net worth. black enterprise and Walt L. Clark, president and CEO of Columbia, Maryland-based Clark Capital Private Wealth Management, created a plan to help McLeod better manage her finances.

• Eliminate credit card debt. McLeod needs to get rid of her $4,800 credit card balance. She is contributing about $400 a month toward that debt. By September she can pay down the debt using the $350 a month that she will save on gas. By eliminating this short-term debt, she can begin to add more capital to her savings.

• Kick spending habit. “She needs to find other places to spend time such as going to a park; somewhere she won’t be tempted to spend money. When she does go to the mall she needs to not bring any credit cards and bring little cash,” says Clark. be recommends that McLeod register with Shopaholics Anonymous, which assists with recovering from compulsive spending.

• Boost cash reserve. In the few months that McLeod has until she finds out if her job is renewed, she needs to get serious about saving. She has the potential to create an emergency savings of more than $10,000 by September. She must first consolidate her money market and savings accounts ($5,680). Then she must commit to putting $500 into this account each month, which is doable once she curbs her spending. Clark also suggests she put the $2,000 Financial Fitness Contest winnings into the account. If her job is renewed, McLeod should continue with this plan and save at least a year’s worth of living expenses.

• Cease stock contributions. Clark says McLeod should stop contributing money to her stock account for now. “She doesn’t have the capital to lose to invest at that level,” he says. Investing properly in individual stocks is time consuming. You need to have the time and the drive to do the necessary research to make well-informed stock selections. “The best approach for her to invest is through exchange-traded funds [ETFs] because the expense ratios are less than mutual funds,” he explains. Once she has job security she can begin to look to sectors such as global, international, S&P 500 index, and NASDAQ 500 index ETFs. She needs to get exposure in large-cap and growth-oriented investments. “This reduces her risk,” Clark says. If her current job is secured come September, McLeod can resume contributing to investments outside her retirement funds as well as explore ways to invest inside her 401(k) account to ensure she has a diversified portfolio, Clark adds.

• Seek mortgage assistance. McLeod is up-to-date on her mortgage, which is $1,166 a month, but her mortgage is underwater, which means she owes more on her home loan than the home is worth. If she beefs up her emergency fund she should have enough reserve to pay all her expenses, including the mortgage, for four months if she indeed finds herself unemployed by year-end. But should her unemployment linger and she falls behind on mortgage payments, she should seek help from groups such as the Neighborhood Assistance Corporation of America or through government programs. Another option would be to rent out one of the bedrooms to help offset costs and supplement her income.

Lee, 42, has $14,000 in an IRA and $12,000 in a 401(k). Tayo, 38, has $36,000 in retirement savings. According to T. Rowe Price, couples and individuals should expect to live on about 70% of their preretirement annual income during each year of their retirement. The couple has a combined income of $105,000, which means that they should aim to save enough to live on about $73,500 a year in retirement. Unfortunately, based on their contributions and current savings and assuming they plan to retire at about 65 and will live off their retirement savings for 30 years, they will be able to replace only 12% of their annual income—six times less than what experts recommend. This means they will have only $12,600 per year to live on.

The Fergusons are far from unique. According to the Employee Benefit Research Institute, 29% of Americans say they have less than $1,000 in their retirement plans. In total, more than half of workers (56%) report that the total value of their household’s savings and investments, not including the value of their primary home and any defined benefit plans, is less than $25,000. The sour economy has made saving more difficult. Families, in particular those that have suffered a job loss, are often forced to borrow from their retirement savings to cover living expenses.

Employment has not been an issue for the Fergusons. Lee works at Charter Communications as a sales supervisor, earning $72,000 a year; Tayo is a customer service representative for Verizon, earning an annual $33,000. However, the couple has had a hard time controlling their monthly cash flow. Ideally, they should have $2,000 in discretionary income every month. Their combined take-home pay is roughly $5,000, and their expenses add up to about $3,000. The couple can’t always account for their money, though they sometimes face unexpected costs associated with Tayo’s rheumatoid arthritis. Tayo’s son from a previous relationship, 22-year-old Jatone Bryson, lives at home, but he is mostly self-sufficient.

The main reason the Fergusons are off-target: They aren’t saving enough of their monthly income. Borrowing against their 401(k) plans two years ago to help finance their wedding didn’t help matters either. Lee borrowed $4,000, and Tayo took out $10,000. Last November, the couple also used some of their savings on their first home, a four bedroom, three-and-a-half bath newly constructed house, that they purchased for $258,410.

Lee and Tayo have paid less attention to saving because of their commitment to paying off their debt. Tayo has $4,000 in credit card balances and Lee has $6,500, plus a $3,000 student loan and a $7,000 car note on a ’99 Lexus. “Once we get the credit card debt paid down, I will be really happy,” says Lee. “I feel that we can save more money,” adds Tayo. “We hope to have all the debt paid off in the next year and a half.” To reach their goal, they are making extra payments on their credit card debt.

The Advice
Reducing debt is one of the Fergusons’ important personal goals, but their priority should be boosting their savings and creating a plan to protect their money and pass it on. To accomplish that, they’ll need to establish a budget, draft their wills, and acquire life insurance. Michelle E. Oliver, a financial adviser with Virginia Asset Management L.L.C. in Midlothian, Virginia, and black enterprise designed a plan to help the Fergusons grow and safeguard their assets.

• Adhere to a budget to reduce overspending. Lee and Tayo don’t stick to a budget, and one of their biggest money wasters is random grocery shopping. “They both go to the grocery store two or three times a week, which means they’re blowing some of their discretionary income just by not planning ahead,” says Oliver. They need to create a budget and set limits on their monthly grocery bill. They also need to take advantage of coupons, using sites such as Smartsource.com and Coolsavings.com. If they use coupons effectively (by matching store sales with manufacturers’ coupons), they could potentially see immediate savings of 50% to 75% in their weekly budget, says Oliver. As a result of Tayo’s condition, the couple faces additional and variable costs for medications, which can be expensive. Tayo should look into patient assistance programs such as the Partnership for Prescription Assistance and RxAssist.org, which offer free or low-cost medications to eligible patients.

• Reduce debt more efficiently. The Fergusons are paying more than the minimum due on their credit cards each month, to accelerate paying off their total debt and to pay less in interest. However, Lee is paying more on the balance of his credit card with the lowest interest rate—13%. Instead, he needs to apply more money toward the balance of his highest interest rate card, which is at 29%. Oliver recommends that he pay just the minimum to the card with the lowest rate. “Once those debts are paid off, apply more money toward the cards with the next highest rate, and so on, until all the cards are paid off.” To save money and accelerate paying off your debts, the key is to pay off the credit card with the highest interest rate first, Oliver says.

n Boost retirement savings. Right now some of the $300-plus the couple contributes to their 401(k) accounts every month is going toward paying off the money they borrowed. Lee should continue contributing to his IRA, especially since his company only matches his 401(k) contributions according to its profitability. If the couple can get their spending in check, they should be able to come up with an additional $100 or $200 a month, which would allow Tayo to contribute to an IRA account, suggests Oliver. The couple should avoid tapping into their retirement accounts for loans in the future and instead rely on emergency savings. They should use the $2,000 Financial Fitness Contest winnings to start that fund.

• Increase 401(k) contributions. Lee and Tayo contribute 3.5% and 6% respectively to their employer-sponsored retirement plans. They should increase their contributions to at least 10% each as long as it does not exceed $16,500 each, per year. Since they’re both behind, at the age of 50 they should make catch-up contributions, which will let each of them put $22,000 a year into their retirement accounts.

• Draft two wills and form a trust. Because the couple has a minor child, each of them should draw up a will, the only document by which one can nominate a legal guardian, says Lori Anne Douglass, partner, trusts and estates at Moses & Singer L.L.P., a law firm in New York. In their will, the Fergusons can set up a trust into which they put all their assets, and name 5-year-old Sanai as the beneficiary. Since minors can’t inherit assets outright, the Fergusons must also appoint a financial guardian for their daughter. (The legal and financial guardian can be the same person or two different people.) The designated beneficiary on their retirement and other financial accounts can be the surviving spouse, but an alternative must be named in the event something happens to both parents. The couple must appoint alternative executors and can designate more than one trustee—as many as three—to provide checks and balances. Douglass also recommends that each of them execute financial powers of attorney and medical directives, or healthcare proxy.

• Obtain life insurance. Both Lee and Tayo should purchase term life insurance policies. Tayo’s medical condition may require her to pay higher premiums—if she’s insurable. All the more reason for Lee to have at least a 20-year term life insurance policy worth at least $2 million. Even though the rule of thumb is that adults should be covered for 10 times their annual salary, Lee needs essentially income replacement equivalent to 14 years, or until his daughter is 18. The coverage should factor in additional funds to cover his daughter’s college education should he die prematurely, Douglass explains. If Tayo can purchase coverage for herself, she should secure a term life policy worth $1 million.

• Sell one vehicle. Since the family rarely uses their ’94 Acura Legend, they should sell it and put that money in their emergency fund. Since the car is in good condition, they should expect to get at least $4,000, according to Kelley Blue Book.

Debts aside, things were going well for Norman in other parts of her life. She was awarded a full scholarship to attend law school at St. John’s University. While she didn’t need to borrow money to cover her graduate studies, she did take out student loans during her last year to pay off the credit card debt and to cover living expenses. “I wanted to concentrate on graduating from law school and passing the bar without having to work or worry about my lack of income,” explains Norman. After law school, she turned down a number of lucrative employment offers to take a public defender position at Queens Law Associates PC. Her annual salary is about $55,000.

Norman’s debt struggles are typical of many young college graduates. The misuse of credit cards on university campuses has become so problematic that last year the federal government enacted a law banning companies from issuing credit cards to anyone under the age of 18 without an adult cosigner. Recent studies show that the average college student graduates with about $4,100 in credit card debt and $24,000 in student loan debt. Norman has $19,000 in student loan debt, toward which she pays $300 a month (at an interest rate of 6.8%).

Over the past two years, the 27-year-old attorney has taken great pains to rebuild her credit. She uses a secured credit card, which has a $700 credit limit. Norman plans to apply this year for a traditional unsecured credit card that may offer her a higher limit and lower interest rates and fees.

While Norman’s debt problems aren’t unusual among twenty-somethings, her skill for investing money is uncommon for someone her age. In 2008, with the help of her uncle who is an economics  professor, Norman invested $10,000 of her savings in a handful of carefully chosen stocks. “I’ve made a few great moves and a few not-so-great moves, but I am learning more and more every day about how to research my investments, how to invest intelligently, and how to be patient when investing long term.” To date, her individual stock portfolio is valued at $14,000; she has another $13,000 in a money market account.

In spite of her less-than-perfect credit history, Norman realizes that she is ahead of the curve compared with many of her peers who have newly minted graduate degrees and careers. “I have relatively minimal debt, a secure job that I love, and the potential to realize continued financial success with few setbacks.”

The Advice
Jennifer Norman is on the right path to accumulate wealth, but she needs to diversify the types of investments she makes. Doing so will help maximize her returns and reduce her tax obligations. To help Norman get to the next level, black enterprise and Ivory J. Johnson, director of financial planning at Scarborough Capital Management, devised the following strategies to help Norman manage her finances and grow her assets.

• Use digital apps to budget. Norman often finds herself halfway into a pay period clueless about where her money went. She estimates that her total monthly expenses are $1,800 and her take-home pay is $2,800. Plus, she brings in an average of $1,000 a month doing private legal work. Between her regular paycheck and income from the side gig, she should have nearly $2,000 in discretionary income.

Norman needs to create a budget and follow it, says Ivory J. Johnson. Within that budget, she needs to include a line item or set amount that she will contribute each month toward savings and investments. There are dozens of highly rated budgeting apps she can use. For starters, Johnson recommends iBearMoney, Toshl, HomeBudget, and ProOnGo.

• Open a SEP IRA account. Norman needs to save money in a tax-efficient way, says Johnson, especially since she’s single with no children and lives in the high-cost New York metropolitan area. Norman can continue saving for retirement in her existing 401(k) and use the $2,000 contest winnings to open a SEP IRA to further diversify her investments which will allow her to put aside 20% of her net self-employment earnings. If, for instance, she nets $20,000 from her private practice, she can contribute $4,000 to the SEP and reduce her overall tax liability for that given year. “Invest in some alternative asset classes like precious metals or gold mutual funds, which don’t move in concert with the stock market,” Johnson advises. “Add mutual funds to the asset mix to help balance out the individual stock portfolio.”

• Increase 401(k) contribution. Norman has been contributing only 5% of her salary to her 401(k) plan since she began working in August 2009. It’s currently valued at $2,000. Johnson recommends that she increase her contribution to 10% (or $1,800 a year) and focus on investing in small-cap and mid-cap funds, since the companies within those categories are taking advantage of new technology, tend to be more innovative, and are more nimble in tough economic times than larger companies, explains Johnson.

• Diversify and safeguard equity portfolio. Norman’s stock account consists of six companies mainly in biotechnology and media/entertainment industries. Johnson suggests that Norman broaden her holdings by looking into agricultural stocks, taking advantage of rising food prices and changing global demographics. Although Norman has done a good job building a stock portfolio with the help of her uncle, she also ought to consider mutual funds as a less risky, more diverse way to invest. And she needs to protect her portfolio from possible future loss. Johnson suggests that she set sell-stop orders on her individual stocks to prevent deep, sudden losses. For instance, she can place an order to automatically sell a stock if its price drops 10%.

• Rebuild credit. Norman’s current credit score is 690. Once she has established a new credit history with a new card or two, and begins to pay those bills on time, her credit score will improve into the 700s within a few years. “Call the three credit rating companies (Equifax, TransUnion, and Experian), and get a free credit report for review,” says Johnson.