equity loans were used primarily to pay off $34 billion in credit card debt.
Consumer debt has gotten so out of hand that civil rights leader Jesse Jackson teamed up with superinvestor Warren Buffett (the third wealthiest American, with a net worth of $31 billion) to save the next generation. Speaking to a group of high school students, Jackson warned them to “break the cycle of the debt culture. Don’t be lured to use credit cards instead of money.”
THE CASE FOR INVESTING
So how have African Americans fared in this invest-and-spend economy? At no other time in history have blacks been as heavily invested in the stock market. However, they still lag behind their white counterparts. For every Oseola McCarty, the late retired laundress who scrimped and saved enough earnings over 75 years to donate $150,000 to the University of Southern Mississippi, or Mat Dawson Jr., the autoworker whose savvy investment practices enabled him to give about $1 million in scholarships, there are scores of African Americans drowning in debt or who have yet to pony up a single cent for investments of any kind. In fact, some have put their house on the block in order to get out of hock. “Too many of us are still enamored by spending with credit card debt,” says Iris D. Atkinson-Kirkland, who has worked in financial services for more than 20 years. “We have to learn how to rip up those unsolicited credit card offers as soon as we get them in the mail. There is no reason why we have to have more than one credit card. It is especially important for the young to start getting in the practice of sound credit management or they will learn the hard way that it will keep them from getting everything from a home to a job.”
African Americans also need to embrace the practice of investing in the stock market. It’s true that legions of blacks-especially African American women-are attending wealth-building seminars led by organizations ranging from nonprofits to sororities and fraternities. But judging by the recent blackenterprise.com survey of financial health, African Americans have missed much of the greatest bull market in history (see selected survey results). While 88.2% of the respondents save and invest money in addition to the funds they set aside for their retirement, 21% of that group saved and invested less than 5% of their funds. Factor in 11.8% who did not bother to put a dollar in a savings or investment program, and you find that a whopping 32.9% of all those surveyed did not or were unable to set aside 5% of their discretionary income.
In terms of priorities, fully 74.3% of the respondents who invested their money maintained that their goals were to build personal wealth, 69.5% sought to amass funds for retirement and 42.5% wanted to pay for Junior’s education. But, for the most part, the respondents haven’t used the stock market to maximum benefit. Although 77.7% have placed some dollars in stocks, 25.4% have been