I was awestruck by how his automotive creations start out as a sketch on a sheet of paper that is then transformed into a 3-D model using the Alias software program. From his office I could see designers creating life-size models using clay that is shaped and molded using a heat gun. This process is how he created the 2011 Hyundai Sonata.  Although much of the tour was top secret—we were only allowed access to parts of the building using sensors that read Andre’s thumbprint—I lived in his remarkable creative universe for a day. Firsthand, I witnessed how design steers innovation. Who would have thought that a kid from Colorado who used to sketch cars on his school papers could channel that passion into developing one of Hyundai’s best-selling vehicles?

What also excites me is that as members of BE Next—outstanding professionals and entrepreneurs between the ages of 21 and 35—Hudson and others represent the emerging leadership of global business. Their example motivated me to produce this article because design has increasingly become critical in companies large and small. A product’s design can make a lasting connection with consumers, brand a vast array of products, and drive significant revenues.

In the cover story, “Driven by Design,” I profile a new cadre of innovators using their talent and vision to position industries for a 21st-century environment that heavily relies on creativity of thought, production, and execution. These qualities are on display in the profiles of Hudson and the other four subjects. Natischa Harvey applied her skills to fashion, expanding a small shoe boutique into an international business. Another, Jason Mayden, has taken design to the max—producing digital design solutions for Nike apparel and retail operations. Twin brothers Teman and Teran Evans have used their degrees in architecture to create a blueprint for entrepreneurial advancement through their own interior design firm and jewelry line as well as roles as brand consultants for Starbucks Coffee Co. and some of the country’s largest luxury retailers.

It’s hardly an overstatement to say that such imagination is required to assume the advantage in a hyper-competitive world. And these subjects all serve as appropriate models for an issue in which BE Editor-In-Chief Derek T. Dingle charged us with finding professionals and entrepreneurs, especially at the early stages of their career, not only thinking out of the box, but redesigning it.  Other features in this issue—such as “Selling Without a Store,” which offers entrepreneurs inventive, new venues to build businesses and generate revenues, and “Create Your Own Recovery,” with its focus on self-directed financial and career reinvention—tie into this same theme.

The designers that I had the privilege of interviewing will serve as catalysts for this revolutionary thinking. In terms of designing business leadership, they got next.

Making a living recording, editing, and mixing music requires a discerning ear. For Araica, her early training in audio mixing came long before her introduction to Pro Tools, a digital audio workstation used for editing music. She was just a kid when she began tinkering with her father’s stereo system, adjusting the EQ (equalizer) and wondering how she could change the sound of a record. “I was curious to see how something would sound at, like, 60 hertz.” Today, Araica is one of the most highly sought sound engineers, mixing for some of music’s top hit makers.

Salary: “It is quite a big range. An engineer can earn anywhere between $50 an hour to $125 hour, or your day rates can go anywhere from $500 to $1,500 a day. Mixes can go anywhere from $2,000 to $6,000, it just depends on your level and your résumé—it all takes part in what you can command.”

Education: Araica graduated from Full Sail University’s Recording Arts program in Winter Park, Florida, in 2002. She was one of five women in a class of roughly 170 students, graduating with honors and receiving the Advanced Recording Engineer Award that is bestowed upon one student each semester. “I definitely had a couple of people who really tried to discourage me along the way, and it was almost like they made a point to say this is a very male-dominated industry and it’s really tough. For me, that was almost like fuel to get me to go even harder.”

Internship: “I started my internship at the Hit Factory in Miami as a general assistant. I did everything from running food, to cleaning, to painting walls, and blowing leaves out of the parking lot. About two months into my internship I got a call from the studio manager. He said, ‘Missy Elliott just called. She’s on her way here in 15 minutes, and I don’t have anyone to be the second engineer in the room. Do you think you can do it?’ I went from all that grunge work to working with Missy. She took a real liking to me, and from that first session on she requested me as the second engineer. Be ready, because you never know.”

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Philanthropy: Araica launched the Red Bottoms Foundation to support the growth of women in the music industry through internships and scholarships. She also awards annual scholarships to female students at her alma mater. “I try to do as many panels and speaking forums as I can, and let them know that they shouldn’t be discouraged by people who say women don’t do this or do that. Don’t be discouraged by what is ‘normal.’ It’s really important to think out of the box, that is what I attribute my success to. I see myself as a trendsetter. When I’m in the studio mixing I try to find that next thing. I ask myself what hasn’t been done or what can I do to really bring this song a unique sound that people are going to be talking about—like I left a footprint, my trademark. It’s not just a job, it’s a legacy. I see myself as a pioneer in what I do, being one of the very few women out there doing it.”

Favorite Part of the Job: “The engineer is a big asset in the equation of creating a record. People just think it’s the producer and an artist, and then a record comes out. But the mixing process is the final stamp on the song through sounds. You can spend anywhere between 6 to 8 or 15 to 24 hours, or maybe two days or more, on a song just making sure that everything is in its right place, from levels to the effects that you want to put on vocals, to the type of kick that you’re using and EQing. It’s very intricate, but that’s my favorite part of the job because to me, it’s like painting a picture. You’re really painting the whole story behind [a song] through sound.”

“I had had a long day, didn’t feel well, and felt frustrated with the whole process of school, and just got on my knees and prayed,” says Chisholm of how she came up with the concept. “I wanted to teach young people the skills that I was learning about leadership, money management, college success, and entrepreneurship. I realized how much easier college would have been had I known certain information before I started.”

Launching the first annual retreat with about 12 students and approximately $1,000 in 2002, the now 10-year-old organization hosts up to 50 high school juniors and seniors each year at its Revolution Leadership Retreat. Its mission is to equip young people with the skills and financial confidence they need to succeed in college, business, and leadership. The 501(3)(c) nonprofit also provides year-round educational leadership programs, interactive workshops, SAT/ACT training, and college tours. Additionally, a scholarship funded primarily from private donations and grants is awarded to one student each school year; award amounts vary. In 2010, Revolution Leadership received a grant from Enterprise Holdings Foundation, the charitable foundation for Enterprise Holdings Inc., parent company for car rental and leasing company Enterprise Rent-A-Car. Its operating budget for 2011 was $3,000. Because its staff is made up of volunteers, all donations are put toward the scholarship, program expenses, and annual retreat. More than 1,100 students have participated in the year-round programs and retreat since its inception.

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Chisholm says the program attracts both top-performing and “middle of the road” students who are serious about their future and just need help getting there. “A lot of college scholarships are only available to students who have a 4.0 and a perfect résumé,” says Chisholm. “Our scholarship doesn’t focus on your GPA—we don’t even ask for it. We’re looking for students’ leadership aptitude.” Community involvement is another criteria considered by Revolution Leadership’s scholarship committee.

This year’s recipient was 19-year-old Treasure Leach. The University of Central Florida health sciences major used her $1,000 award for books and used the balance to purchase a laptop. “It would have been easy to go shopping but Revolution Leadership changed my mindset about money. I learned that whether it’s scholarship money or grants, it’s important that I put money aside to continue funding my college education.”

Alison Jones, 18, attended the retreat in 2011 and says Revolution Leadership taught her how to take her business to the next level and get into the school of her choice. Jones launched her business, Adelaide, in 2010. A clothing and accessory line, the business helps cover her school supplies, which cost about $900 a year at Daytona State College. “Since attending I have gotten business cards, commissioned my merchandise in stores, and even started an online store.”

Starting a business in college is something Chisholm highly recommends and something from which she personally benefited. She started her apparel company, AKH Apparel L.L.C., while in law school at Florida Agricultural and Mechanical University and it allowed her to graduate debt free [The estimated tuition and fees for FAMU Law is $75,000 for a full-time student.] Starting off as just a collegiate apparel line in 2005, it grossed $11,000 its first year. With continued growth, the company has expanded into a national custom apparel business.

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College junior Shardy Camargo didn’t start her own business but says that the retreats taught her how to scour for scholarships as a means of graduating debt free. The estimated 2011-12 tuition for an in-state student at the University of Central Florida is $14,700. Camargo says she hasn’t paid a dime. “I didn’t think I would be able to go to college because of my financial situation, but the retreat taught me about all the scholarship websites and how to present myself in the best way.” She has been awarded numerous grants and scholarships, both academic and merit based, through websites such as Fastweb.com and including a private scholarship from Coca-Cola for $20,000 over four years; The Prudential Spirit of Community Scholarship, a one-time scholarship in the amount of $5,000 for school and $5,000 to the charity of her choice; the UCF Minority Scholarship in the amount of $10,000 over four years. Additionally, she was selected for the KFC Colonel’s Scholar Program, and an internship with Bank of America’s Neighborhood Excellence Initiative as a student leader where she earned $10 an hour and used the money for books and other supplies. She has translated her lessons on leadership to her campus by continuing her advocacy work for the homeless as a campus homeless and hunger volunteer coordinator, organizing  volunteer opportunities at food banks and shelters. She also mentors homeless youth.

Revolution Leadership Inc. is no stranger to receiving accolades. It was awarded a certificate of Special Congressional Recognition by the United States House of Representatives for its work in the community in 2009 and the Orlando Magic Maker Award, which recognizes people in the community who strive to make a difference in the lives of others, in 2010.

“This is certainly my life’s mission. Regardless of where I am in life or what I am doing, I am committed to giving back and making a difference in the lives of students. I believe it is my calling in life.”

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How She Did It

• Get registered as a 501(3)(c). “Make sure you’re legally compliant,” says Chisholm. “A lot of people don’t realize how that one credential allows you to compete with the best organizations in the nation. It shows that you are legitimate and meet IRS standards.” You can start by visiting www.irs.gov and downloading Form 1023. Chisholm recommends finding an attorney who will work pro-bono to make sure you fill out the fundraising and solicitation licenses and proper addendums to prevent being denied. It can take several months just for the IRS to review your form, so you want to make sure you get it right the first time, she says. Filing fees start at $400.

• Recruit a good team. Find others who believe in your vision and can provide valuable services. Chisholm says that her volunteers offer professional services valued at more than $100,000 a year. “We have graphic designers, Web designers, photographers, and folks with all types of professional and financial skills that donate their professional service to help us accomplish our goals,” she says. Step outside of your circle and share your story with anyone you know to create a diverse team. Do your due diligence by creating a volunteer entry inquiry form, interview applicants, and run a background check, especially if you’re working with youth.

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• Find mentors or groups with a similar purpose. Before starting Revolution Leadership, Chisholm sat on the board of a nonprofit and made valuable contacts, such as the former president of the New York Stock Exchange, and was able to take those skills and experiences and implement them in her organization. “I was able to say, ‘This is how we can best serve our demographic and really make an impact.’” It will give you ideas on how to structure your nonprofit and give you access to other professionals who can assist you when you hit a road bump.

• Bounce back from failure: “People starting out for the first time don’t think failure’s involved,” says Chisholm. “When I first started the retreat I heard so many no’s. Everybody that I went to and asked for money said no. You have a choice. Are you going to say this wasn’t meant to be and just leave it alone, or are you going to continue pushing to find another way? You have to be willing to push through it. You’re going to encounter resistance but you have to be willing to not abandon it. We need those ideas and we need more quality nonprofits that will reach the community, but the only way you can get there is when you push through.”

Kason Davis (Photo by Joe Abraham)

Sure, putting money toward your retirement may not be as exciting as purchasing a new car or taking a lavish vacation, but taking stock of your financial future will help you set the tone for being able to afford and sustain such items later, in some cases twice over.

Just ask today’s retiring boomers whose retirement plans have fallen short. Even for those with Social Security, pensions, and savings, most 401(k) or IRA participants appear to have insufficient savings, according to the Employee Benefit Research Institute.

Facing shortfalls, many people are postponing retirement, working a part-time job, traveling less, and facing foreclosure. Moreover, roughly a third of both workers and retirees who participated in the EBRI study said they had to dip into their savings last year to pay for basic expenses. But besides the economy playing a role in dwindling retirement funds, some started saving too late or suspended contributions when they lost their jobs; others didn’t realize that contributing 5% with a 3% company match would not sustain them during their retirement years.

“We know from previous surveys that far too many people had false confidence in the past,” says Jack VanDerhei, EBRI research director and co-author of the report. “People’s expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.”

Today more workers than ever have been pessimistic about their retirement outlook. According to a Prudential research study, African Americans recognize that they are behind in retirement planning and saving, and less likely than the general population to feel that they will meet their financial goals (21% vs. 34%). A study by Ariel/Hewitt of nearly 3 million employees further notes that regardless of age or income, African American and Hispanic workers have lower participation rates and contribute less to 401(k) plans than their white and Asian counterparts. As a result, their 401(k) account balances are negatively affected and chances for a comfortable retirement are significantly compromised.

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The stark reality is that you simply can’t rely on Social Security, play a guessing game, or hope to hit the Lotto. Saving for retirement takes careful planning, setting realistic goals, and, most importantly, time. For many young workers entering the workforce, retirement may be the last thing on their mind, but at black enterprise we believe that you can never start too early. Use the following examples to help you get on the path to a bountiful retirement.

INVEST, EVEN WHEN YOU’RE NOT ELIGIBLE
Growing up in a single-parent home on a tight budget, the principle of saving was strictly enforced in Kason Davis’s household. Though at the age of 14 Davis could not grasp the concept of saving and would have preferred buying a pair of the newest Air Jordans or video games, his mother’s lessons now prove beneficial to him.

“My mother always told me that it was more important to purchase necessities and put aside a set amount of money in savings,” explains Davis, now 28. “She would always say the more I saved now, the quicker I could retire.”

Davis was reintroduced to the concept of saving and retirement planning during the summer of 2003 as an intern at Procter & Gamble. “During our intern orientation one of the employees spoke briefly about the importance of 401(k) investing and retirement planning,” says the Houston resident. “Although I wasn’t eligible to invest as an intern in the company 401(k) plan, we were eligible to invest in the company’s stock through its shareholder program.”

After interning with the company for three summers he invested a total of $3,000 in company stock and reaped a $700 gain.

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“That’s when I realized the growth potential that retirement savings provided,” he says. “I calculated on my intern salary that if I contributed that same amount each year and continued to get $700 every three years, I had the potential to earn $7,000 in interest in 30 years.”

Saving for retirement became his first priority when he joined Caterpillar—the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines—full time in 2006 as an electrical engineer. The 28-year-old has come a long way since saving $3,000. Working for just five years, Davis has more than $70,000 in his 401(k).

His strategy: Davis invests 10% of his monthly paycheck, or $674, and his company matches 6%, or $405. He currently holds 30% in company stock and 50% in an aggressive mutual fund in his 401(k). “I know this is overexposure to company stock and high-risk mutual funds, but I prefer a riskier portfolio while I am young and plan to slowly reduce my exposure to risky holdings as I get older.”

Outside of his 401(k) he also invests in a Roth IRA, which currently holds $11,584. He and his wife also run their own website design company, AQUE Consulting, and contribute revenues from the business to their IRAs and other investments, having added $3,000 so far this year.

“I opened a Roth after I started investing in my 401(k) because it’s important to look at other forms of investing for retirement, and the Roth allows me more flexibility in my investing options.”

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Davis says that based on his current goals he would like to retire early. “Ideally I want to retire from corporate America at age 55 and concentrate on something I truly enjoy,” Davis says of how he envisions his golden years. “If I can pull $7,000 from my account each month I would be comfortable.”

INVEST, EVEN WHEN YOU HAVE DEBT
After graduating from college, Jennifer Tyus, a law school student at Washington University in St. Louis, and April Tyus, a medical student at Saint Louis University, both had hefty student loan bills. For many recent graduates, retirement is placed on the back burner when debt and new living expenses put competing demands on a paycheck. But these St. Louis sisters knew their retirement savings didn’t have to suffer while they paid down their debts.

“My father taught us a different way of looking at our 401(k),” says Jennifer. “It wasn’t money that I would be missing out on, but actually it would put me in a lower taxable income bracket and would be compounding over the years.”

Their father, Jerone, retired from his accounting position at the age of 58 and is now traveling the world and enjoying the fruits of his 38 years of labor.

“People think they’re missing that money from their paycheck and are so focused on the money that they don’t realize the tax advantages,” says Jennifer, who has chosen to aggressively save for retirement in her company’s 401(k) plan.

Since joining her firm at the age of 25, the now 32-year-old maxes out her 401(k) each year contributing the maximum allowable by the IRS, which is $16,500. Her company currently matches 60 cents on the dollar of her contribution.

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Her sister, April, has been just as diligent. “I started investing with an IRA because my company didn’t have a 401(k) at the time.” April invested about $10,000 into her Roth IRA over three years until her job set up a 401(k) plan in 2007. Through automatic payroll deductions she maxes out her contributions each year and has more than $66,000 in her 401(k), along with a 3% match from her employer, and $13,600 in her IRA.

Many people, start too late because they think they don’t make enough, but April says, “You can still put something away. Do the best you can. It’s better than putting nothing away. And the interest is going to compound over the years.”

She adds: “You can’t just live for today. Don’t put it off and say ‘I’m going to do it later,’ because time passes by quickly. The earlier you start investing, the better the position you’re going to be in in the future.”

INVEST, EVEN IN A DOWN ECONOMY
In the early 1980s, 401(k)s were just being introduced to the American workforce and Robert A. Jacobs, who was 30 at the time, was among the first group of workers to participate.

“I thought it was a great thing because one of the huge benefits of the 401(k) at the time is that the company contributed 6% to it, and that’s just free money,” says the Oakland, California, resident.

Prior to the introduction of a 401(k), he invested 10% of his pay into high-yield savings accounts. By age 30, he already had $30,000 in savings. Jacobs has accumulated close to $700,000 in his 401(k) and nearly $300,000 in mutual funds and about $20,000 in individual stocks.

Even after being laid off in 2008 after nearly 20 years with Oji Ilford USA, a photo supply manufacturer, and left unemployed for 14 months before starting his own consulting firm, Jacobs chose not to suspend his contributions. “One of the basic rules is that regardless of the situation you are in you should still try to save something; put something away from whatever income you get,” he says. Although less than he was saving while employed, he’s still committed to allocating 5% to his retirement savings.

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Jacobs first converted his 401(k) into a traditional IRA, which consists of a series of no-load mutual funds in addition to a small percentage, less than 4%, of individual stocks. Jacobs says he has been successful in saving for retirement by learning and applying the asset allocation model, diversification strategies, dollar-cost averaging, and starting early.
By following these models, he and his wife, Josephine Lee, have been able to protect their assets from market fluctuations.

“During those rare occasions when I was able to anticipate market declines, I shifted our asset allocation from a fully invested position to a much more conservative 40% stocks, 30% bonds, and 30% cash allocation. This not only helped ensure we had cash available to reinvest near the bottom of market decline cycles, but it also helped to minimize but not prevent losses,” explains Jacobs.

They now hold about 70% in stocks, 30% in bonds, and very little cash, which is a fairly aggressive position for his age and one he does not recommend for others close to retirement or who have very little experience in investing.

The layoff and the birth of his son five years ago have pushed back Jacobs’ retirement goal of 62. But due to careful planning in the past, in addition to his home, he and his wife combined have more than $1.2 million in liquid assets and a total net worth of about $1.7 million.

1. I Don’t Make Enough Money.

“This is certainly true for some people—probably anyone earning less than $20,000 per year. Otherwise it is a matter of priorities. Tracking discretionary spending for only one week will show that substantial amounts are being spent on unnecessary items,” says Benna. “Someone who does this should be able to identify items to eliminate that will enable at least 1% of pay to be saved.” Of course, that is far from the amount that you need to save, but it beats not saving anything. The goal should be to move up from there in workable increments.

2. My Employer Doesn’t Match.

“The greatest benefit for most workers of a 401(k) plan isn’t the tax break or the employer match. It is the fact that savings takes place automatically each pay period,” Benna says. “Very few workers have the discipline to save outside the plan what they would be able to save through the plan.” Whether it’s a 401(k), Roth, or traditional IRA, retirement savings offer immediate tax deductions, tax-deferred growth on your savings, and usually a matching contribution from your employer.

3. I Have Too Much Debt.

“Set up a budget and stick to it if you don’t have one. Do not continue adding to your debt; get your debt load down to a level where you can contribute at least the amount that is matched by your employer ASAP,” says Benna. “If you have a match provision it’s a no-brainer; it’s 100% return,” says Harris. If you do not have a match it may behoove you to focus on the high-interest nondeductible debt first, but it’s imperative that you speak with a professional who can help you create a strategy to pay off your debt and secure enough funds for your golden years.

4. My Job Doesn’t Have a 401(k)

If you have your own business and are self-employed with no employees, Harris recommends an SEP IRA, which allows you to make contributions based upon the earnings from the business. If you have employees, Harris recommends a Simple IRA account. If you’re not self-employed, Harris suggests a Roth account first because contributions can  be withdrawn tax free at age 59¹/₂. If you can’t do a Roth, go with a traditional, says Harris, but go with some type of vehicle that allows the growth to be tax deferred. If you choose to invest in an IRA, Benna suggests considering automatic monthly withdrawals from your checking account into your IRA if you have a tough time coming up with lump sum contributions.

NOTE FROM THE EDITORS: Some retirement plans have fees that can impact your performance over time. Review your plan with a professional.

Continue reading more excuses on the next page (and learn how to get over them)

Ted Benna, Wiley Press

5. The Economy Is Bad.

“Saving for retirement is for the long term, and a down economy is just a part of the business cycle,” says Benna. Even during market fluctuations it is important not to suspend your contributions; instead make sure your assets are diversified to protect you against market fluctuations. “The fact that the economy is bad now should not prevent you from contributing to your retirement, provided you have at least a seven-year period before you need the money,” says Harris. “The goal is to buy low and sell high.”

6. Retirement Is Decades Away, I Can Wait.

“Time is the most critical element,” says Harris. “Regardless of how much money you have, it is so important to start as soon as possible with any amount you can. Time is more important than how much you put away, because time has much more of an impact.” Benna agrees. “The sooner you start the greater the amount that will come from investment income. The longer you wait, the more you will have to contribute from your pay later to reach your goal.”

7. Social Security Will Provide.

Social Security was never designed to be the sole source of retirement funds. It was designed to supplement. Right now the average benefit is $1,153 a month, which is less than $14,000 a year, explains Harris. “That’s right above the poverty line. Is that enough to maintain your lifestyle?”

For more, read “Too Young to Think About Retirement? Think Again!” in the October 2011 issue of BLACK ENTERPRISE.

For many consumers the lure of a 0% introductory rate can be enticing to purchase big-ticket items, but after 18 months McKinley says those rates shot up to 24.99%, leaving him with more than $4,000 in debt across three cards. It didn’t help that in December 2003, he also lost his job working at a local casino.

With no income or emergency fund at the time  McKinley relied on his credit cards to survive. He did this for three months  before finding employment with a national bank in Philadelphia. But by then, the 36-year-old divorced father of two was knee high in debt—$21,000 worth to be exact. “I thought to myself, ‘This has got to stop, this is crazy.’” His situation instantly reminded him of his late mother, Denise McKinley, who had accumulated and maxed out more than 20 credit cards. She eventually filed for bankruptcy.

But unlike his mother, he decided against bankruptcy. “I made the debt, and I need to pay it,” he says. First he transferred the balances from his three store credit cards to his Chase and Discover credit cards, which offered lower interest rates. He used the bonuses he received from his new job with the Department of Homeland Security as a supervisor for the Transportation Security Administration and his salary increase to aggressively attack the debt. He has also found ways to curb spending. For example, as a TSA employee he receives free monthly public transportation cards from the federal government. By taking the train to work he saves, on average, $120 per month, an amount he also applies to his debt.

But even with all his efforts he soon realized that his strategy for digging himself out of debt wasn’t making a dent. “What I was paying was only going toward the interest. Every time I would get a new statement it would be higher than what the previous statement balance was,” explains McKinley.

McKinley reached out to his lenders for help, asking for lower interest rates or a payment plan option to reduce his monthly bill. His requests were denied. Frustrated, he researched ways to reduce his debt and came across a debt solutions company that negotiates with lenders on a debtor’s behalf for a $45 monthly fee. He enrolled in the program in August of 2007. Within a few months McKinley says he noticed a change. His Chase credit card interest rate was reduced from 31.99% to 6%; Discover 14.99% to 12.99% (later increased to 15.64% after canceling the debt management program); Bank of America 19.99% to 9%; Zales 24.99% to 9.9%; and his Midas card stayed the same since the balance was low.

Today, McKinley has paid off $17,500 of his debt. Now, he has just about $3,500 outstanding and is proud of how far he has come. But he also feels that he has put so much emphasis on attacking his debt that he has neglected other areas of his financial life. As a result, his retirement contributions are way behind schedule, he has minimal funds in his emergency savings account and has not developed  a plan to pass on generational wealth to his children.

McKinley has less than $300 in his checking and savings accounts, $350 in an emergency fund, and a little more than $3,000 in his retirement account. “I’m living paycheck to paycheck. I’m turning 37 next year and I need to start thinking about retirement and securing my future,” he says.

The Advice
Black Enterprise and AXA retirement planning specialist Ilyas Akbar reviewed McKinley’s financial situation and offered the following advice.

Start investing for retirement. McKinley has forfeited approximately $18,000 in employer match dollars by not contributing 5% to his retirement account since he started in 2004. “Minimally, he should increase his contributions to at least 5% of his salary to take advantage of his employer match,” says Akbar. Based on his current take-home pay, McKinley should contribute approximately $310 per month into the plan, which is about 7% of his pay. With his employer match of 5%, this will help put him on track for retirement.

Finish paying off debt. For McKinley to really secure his financial future, he must commit to a savings and investing plan and not incur any new debt. Akbar recommends that he use the $2,000 Financial Fitness Contest winnings to pay down his highest interest debt (Discover Credit Card; $3,395 at 15.64% APR). After applying the $2,000 toward that debt and with continued payments of $150 a month to the remaining balance ($1,395), he can pay off his balance in about nine months. McKinley also has a medical bill for about $1,394, toward which he pays $120 monthly. He should continue making those payments and will have that bill paid off in 12 months. Akbar then suggests that he redirect the $270 toward his retirement and savings. McKinley should continue his $305 monthly payments toward his automobile loan.

Build an emergency fund and curb spending. Akbar suggests that McKinley focus on building at minimum three months, but preferably six months, of emergency reserve funds for regular monthly living expenses. Taking public transportation saves McKinley $120 a month, which he should apply toward his emergency savings. McKinley estimates that he can reduce his monthly cable bill from $145 to $85 by switching to basic cable. Once his contract with his cell phone carrier ends in January, he plans to change service providers. His bill is currently $90 a month and a new plan under MetroPCS will be $50 a month. be suggests he apply these monies toward his emergency fund. Once he reaches his six month goal he can then funnel that money into his high-yield savings account.

Get life insurance and an estate plan. McKinley has life insurance through his employer, in which $8.40 is deducted from his paycheck per pay period. Akbar suggests that McKinley obtain term life insurance to protect his two children. Term insurance will allow McKinley to obtain a higher level of death benefit with less impact on his budget. This is especially important since his 6-year-old son has special needs. He should work with an insurance professional to determine the amount and length of the term contract. McKinley should also have a will prepared by an attorney and explore a supplemental needs trust for his son with special needs. Life insurance can be used as a funding vehicle for this trust. He should also look into long-term disability since there is no employer-provided long-term disability benefit. This will protect his earnings and savings in the event of a prolonged disability.

Plan for his children’s education. McKinley has two sons, ages 6 and 16 (for which he pays $668 a month in child support). Once he has adequately addressed savings, retirement, life insurance, and develops an estate plan, he can consider utilizing a 529 plan to save for his youngest son’s education. The 529 consists of after-tax contributions, but offers tax-free growth and tax-free withdrawals for qualified educational purposes. Since his oldest is just two years shy of enrolling in college, be recommends that he apply for grants and scholarships. He should also consider staying in state, since local colleges generally have lower tuition and fees for residents.

Monitor credit annually. After closing four of his five credit cards, McKinley’s FICO score took a huge hit. be suggests he get a copy of his credit report from the three national credit reporting agencies every 12 months at www.annualcreditreport.com. Make sure that the information in the report is accurate and up to date. Any errors should be addressed with the Federal Trade Commission. He should beware of credit repair scams and use resources such as the Federal Trade commission’s site to learn how to improve his creditworthiness and to find legitimate resources for low or no-cost help (ftc.gov/credit).

Think seriously before signing on the dotted line (Image: Thinkstock)

According to the Federal Trade Commission, “Of the co-signed loans that default – 75% of them have to be repaid by the cosigner.” What that means is that if you decide to co-sign on a loan for someone, there is a three out of four chance that YOU will end up paying back the loan and NOT the borrower.

So, what should you do if someone asks you to co-sign on a loan? Dorethia Conner, owner of Conner Coaching, which offers personal and business financial coaching, cautions, “Don’t do it!” There is some questionable financial misinformation out there about co-signing so Conner spoke with BlackEnterprise.com to help bring some clarity to the issue and answer some key questions.

What does it mean to co-sign?

When somebody co-signs on a loan they are legally agreeing to make the payments (including late fees and attorney fees) should the loan go into default. It’s a legally binding document; that’s why it’s so hard to get out of explains Conner. Please understand that co-signing is not a reference, a favor, and you are not just a back up; you are legally responsible. Bottom Line: Never co-sign on a loan for anyone unless you are prepared to pay back the entire amount on your own.

What does it mean when a borrower needs a co-signer?

“When you need a co-signer that signals that you don’t need to be borrowing any money,” says Conner. Essentially it indicates that the borrower does not have any credit history, poor credit history, or a history of not paying bills on time. This is why almost all states require a co-signer to be told in writing of the risks of co-signing for someone; the co-signer is being asked to guarantee the debt.

Does co-signing affect my credit?

Yes! When you co-sign on a loan it will show up on your credit report. For example: If you co-sign on a car or a home and the car is repossessed or the home goes into foreclosure, that will appear on your credit report for seven years. But Conner says that it is important to understand that just because you are the co-signer, does not mean that you are part owner. Therefore you cannot push the sale of the home or car to get the funds to pay the lender because you don’t own it. You are simply a guarantor of the debt.

How do I say no?

Most people who co-sign do it for an emotional reason explains Conner. Saying no to family and friends can be tough but Conner suggests being honest and upfront. Here is an example of how you can respond: I believe that you will be able to make these payments but if you don’t, I can’t. This is not something that I feel comfortable doing because if there is a month or two you can’t make the payments, I know they’re going to come after me. Conner also suggests sharing some of your financial goals with the borrower such as trying to buy a house in the next year or so, purchasing a car, or hitting a savings goal.

What if I already co-signed? Am I stuck?

For some of you, this information may be coming a little late. But don’t fret, Conner says that if it has been two years and the person has made their payments on time you can ask the borrower to refinance and take your name off the loan. Also, if you’re already in it or plan to co-sign (which we don’t recommended) you can also have an attorney write up an agreement or contract stating what your responsibility is and what the borrower’s responsibility is as well as what steps you will take in the event that they don’t pay back the loan. You’ll still be required to pay back the loan should the borrower default but at least now you can go after them in court and get your money back, Conner says.

Continue reading on next page for what to do if you decide to move forward as co-signer

(Image: Thinkstock)

Tips from the Federal Trade Commission:

If you do choose to co-sign on a loan, the FTC warns that you should consider this information:

• Be sure you can afford to pay the loan. If you’re asked to pay and can’t, you could be sued or your credit rating could be damaged.
• Even if you’re not asked to repay the debt, your liability for the loan may keep you from getting other credit because creditors will consider the cosigned loan as one of your obligations.
• Before you pledge property to secure the loan, such as your car or furniture, make sure you understand the consequences. If the borrower defaults, you could lose these items.
• Ask the lender to calculate the amount of money you might owe. The lender isn’t required to do this, but may if asked. You also may be able to negotiate the specific terms of your obligation. For example, you may want to limit your liability to the principal on the loan, and not include late charges, court costs, or attorneys’ fees. In this case, ask the lender to include a statement in the contract similar to: “The cosigner will be responsible only for the principal balance on this loan at the time of default.”
• Ask the lender to agree, in writing, to notify you if the borrower misses a payment. That will give you time to deal with the problem or make back payments without having to repay the entire amount immediately.
• Make sure you get copies of all important papers, such as the loan contract, the Truth-in-Lending Disclosure Statement, and warranties — if you’re cosigning for a purchase. You may need these documents if there’s a dispute between the borrower and the seller. The lender is not required to give you these papers; you may have to get copies from the borrower.
• Check your state law for additional cosigner rights.

Photo by Greg Kiger

One of V. Kenneth Johnson’s most pressing goals in life is to “break the cycle of passing on ‘lack’ from one generation to the next.” For him, wealth preservation is key.

Johnson’s father, Gilford, made great strides in his own life. He owned and operated a dry cleaning store (part of a chain owned by his brother-in-law) and was a great saver. But after many years in business, Gilford closed the shop in the late 1970s, missing an opportunity to use the family enterprise as a way to jump-start the wealth-building process for his son. “My father did not understand generational wealth,” says Johnson. “Back in those days, most didn’t understand. No one talked to us about insurance policies, 401(k) plans, mutual funds, or tax advantaged or estate planning.”

A recent survey by U.S. Trust, Bank of America Private Wealth Management reports that 27% of even the wealthiest Americans “have never discussed intergenerational wealth transfer with their adviser.” Moreover, 37% “have never discussed their legacy goals,” and 44% “have never discussed their philanthropic” goals with their adviser.

Learning financial management skills and teaching those principles to children isn’t a duty reserved for the rich. Johnson believes that even working-class and middle-class parents who don’t have the means to offer an inheritance of stocks, bonds, real estate, or a family business can leave their children a legacy in the form of a life insurance policy.

Johnson, 55, is a 22-year agent with the New York Life Insurance Co. in Creve Coeur, Missouri, who oversees more than $100 million in life insurance policies. He has ensured that some 30 family members purchased policies that provide total coverage of about $15 million. “I’m so proud that we started with our family and to see the legacies that are being created as a result of the work we’ve done together,” says Johnson.

Johnson, along with his wife, Marsha, and 24-year-old son, Justin, each have more than $1 million worth of coverage made up of a combination of whole life, variable universal life, and term products. (Whole life and variable universal life, in addition to providing the death benefit, have cash value accumulation features that can be accessed on a tax-favored basis. Term insurance, which does not provide a cash value accumulation feature, usually costs much less, though the premium will generally increase at some point in the future.)

“We first addressed income replacement and then embraced the attractiveness of cash value accumulation within the life insurance contracts,” says Johnson. “The cash value buildup was an effective source for paying college tuition on a tax-favored basis.”

Johnson admits he hasn’t always been so savvy about protecting his assets. At 33, with a wife and newborn son, he had mounds of consumer debt and no life insurance. “No one ever approached me about it. I was doing fairly well as a district manager with Capital Credit Corp. in Los Angeles. Sometimes people will look at you from the outside and think you’ve got it all together. That wasn’t the case with me.”

With the encouragement of his wife, Johnson met with her agent and devised a plan to build generational wealth for his family. He started with the purchase of $250,000 in coverage, his first policy. The purchase also spurred his new career and passion.

“I started building this business with those closest to me,” says Johnson. “It wasn’t until I got into the business that my family, both immediate and extended, started to understand the value of life insurance and financial planning.”

Although the family dry cleaning business wasn’t passed down, Johnson made sure he put a succession plan in place so that his insurance business will be left to his son. “My father is always trying to make things better for those that follow,” says Justin, a financial services professional with New York Life who joined the company in 2009.

Like his father, Justin also started by advising those who were closest to him, seeking out members of his fraternity, people in his community, and peers. “About 80% of my clients are under the age of 35,” says the Southern Illinois University graduate. But pitching life insurance to young people who think they’re invincible can often be a struggle. “A lot of young people get a distant feeling when you talk to them about life insurance. They put it off and say, ‘I have time.’ But what if you don’t? I tell my clients to think ‘when,’ not ‘if.’”

But getting the cold shoulder from young potential clients doesn’t deter Justin. His personal goal is to make purchasing life insurance “something that’s cool to do” by the time he’s 30. His logic: “When you’re younger, you’re the healthiest you’ll probably be in your life. So why not lock it in right now? Age and health dictate premiums. Even if you purchase term you can convert it later when your budget permits or as your life changes—for example, you marry, have a child, or start a business. Usually, if you wait, premiums and other costs increase.”

To help reinforce his point and appeal to younger clients, Justin developed a website (www.justinmjohnson.com) that includes articles, electronic seminars, several financial calculators, a comprehensive glossary of financial terms, and a library of tax resources. Justin also hosts quarterly financial talks for members of his community and his clients.

“I want my clients to be educated consumers,” Justin says. “I have had to call clients who were declined for life insurance. That’s a hard call to make. Getting insured is not guaranteed. There is a risk when you wait, so why wait?”

Age: 14

Hometown: Monmouth Junction, NJ

School: South Brunswick High School

Business: The Honeybunch Kids

Mission: To provide quality literature that entertains and educates children between the ages of 7 and 12. To launch a literacy campaign that will one day change the way children think about reading. To inspire children to set goals for themselves.

When you think of an author, the term entrepreneur doesn’t necessarily come to mind; but more book writers are beginning to realize that being an author takes a certain entrepreneurial spirit if you really want to move volumes. Just ask 14-year-old Chental-Song Bembry, who sold more than 500 books last year and is aiming to double that with the release of her second book this fall.

The teenpreneur has the hustle it takes and attends trade shows, events, conferences, writing camps, and holds book signings at her church to market her book. Bembry, a high school freshman, authored and illustrated The Honeybunch Kids, which follows three African American friends–Desire “Dizzy” Williams, Chauncey a.k.a “Cheeks” and Stewart–through their everyday adventures and the strict scrutiny of their teacher Ms. Hodgebottom. The story also shares funny life lessons that kids identify with. “If I can write a book that kids can relate to, they’ll be more inspired to read.”

Bembry provided these 8 tips on how to publish and promote your book:

Find your ‘Why’: For Bembry, she took queue when she noticed African American children were not performing to their potential in school. “Just because you come from a certain background doesn’t mean that you’re not smart,” says Bembry. “I wanted to encourage them to reach for the sky. If you put effort into your education, you can achieve anything in life.”

Choosing a Publisher: The first step is writing the book. You’ll need to show the publisher and/or literary agent excerpts from your book to be taken seriously. In Bembry’s case, Xlibris, a division of Random House, asked for a minimum of 20 pages. The self-publishing company doesn’t turn any author away, including teens. You can find an agent to work with by sending a query letter detailing what your book is about and why they should be interested in it. Tell them about the characters, their personalities, and submit pages of your work. Your query letter should be a few paragraphs—brief and straight to the point.

Have Web Presence: Creating your own website is a great because people will really take you seriously. If you have great product but no website to promote your product people will forget about you. I used Godaddy.com because it was most convenient to me at the time. It allows you to choose a template and can add tabs text, and photographs. BE recommends checking out WordPress.com, Intuit’s web building software, and Squarespace. (Tech, June 2011 issue: Building a Better Website)

Throwing down the pitch: When telling someone about your product its really important how you come off during your delivery; it’s the first impression they’ll have of your business so make sure it’s a good one (you’ll generally have a short window of time to explain your business—like 60 seconds). Be sure to include all the key words and phrases such to show how your product is different from everything else in the marketplace and how it will inspire your intended target audience. If allowed, also have props to people can visualize [your product]. Most importantly, speak loud and clear so people can understand what you’re saying. Bembry recently won $10,000 at the BLACK ENTERPRISE Teenpreneur Conference for her elevator pitch and plans to use the money to enhance her website.

Continue reading on next page

Expand your network (Image: Thinkstock)

Network: Attend events, conferences and workshops and tell people about your business. Find other people who are successful in your desired industry and as them how they got started. Most people are generally happy to help.

Educate Yourself: Bembry is a freshman at South Brunswick High School and is currently enrolled in an introduction to business course, where she is learning the tenets of business including finance, economics and what it takes to run a business as well as the different types of legal structures for your business (sole proprietorship, LLC, Partnership). Next year she is registered to take a business-marketing course where she’ll get an in depth look at how to reach your target market and promote your product. If a business track is not available at your school, BE also recommends courses such as Youth About Business at Columbia University in New York, The BLACK ENTERPRISE Annual Teenpreenuer Conference, and the Kidult Youth Leadership Conference just to name a few.

Tap Into Your Network: Bembry sold 500 books in 2010 and hopes to sell double that this year. As a member of First Baptist Church of Lincoln Gardens in Somerset, NJ Bembry’s pastor gave her three book signings and also put her book in the church book store. This proved vital to the overall sales of Bembry’s book, which sold out at all three of her signings. She also capitalized on other events such as college reunions and events that allow vendors to sell their products. “You need to push yourself to get out there. If you don’t no one will notice you. Approach as many people, schools, and events and sell your product.”

Advice to other Teen CEO’s: Think about a problem that you can solve. Think about something that is missing and try to improve it or fill the needs. People are waiting for the next big thing and they’re waiting for somebody to create something so don’t sit around and let someone else create it. Stick to your goal and don’t get sidetracked. Don’t let other people tell you that it can’t become anything because those are the people—they really admire your idea but may not want to say it.