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Episode #2120
Gaining Financial Fortitude
Voiceover: Have you been thinking about making a plan to get rid of debt? Or do you want to buy a home, but not sure you’d qualify for a loan. Well a new project in the Triangle aims to help you become better prepared for life’s financial challenges. We’ll talk with some women involved with the project next on Black Issues Forum.
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Voiceover: Quality Public Television is made possible through the financial contributions of viewers like, who invite you to join them in supporting UNC TV.
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Brown: Hello, and welcome to Black Issues Forum. I’m Natalie Bullock Brown. According to national statistics African Americans tend to have less wealth and more debt than their white counterparts. In fact, in 2001 African Americans who were 13% of the US population, owned only 3% of the assets. And only 47% of black folks were homeowners, while 74% of white families owned their homes. And 11% of African American families had a net worth lower than zero, which meant that they had more debt than assets, compared with only 6% of white families. Now those statistics may sound dire, but a new project spearheaded by Delta Sigma Theta Sorority Incorporated, in partnership with Genworth Financial has organized the Panhellenic Financial Fortitude Challenge, a joint effort to educate African Americans about ways to create personal wealth, and build financial security. The kickoff event was held in March, 2006 at North Carolina’s Central University. Here are some of the highlights from that event.
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F: Promised a day of education on how to get of debt and how to create wealth, many turned out for the first in a series of financial education workshops offered through a partnership of Delta Sigma Theta Sorority and Genworth Financial.
Watts: ‘Cause if you’re not healthy, you can’t use all that. But today you’re going to get a lot of information that will give you the financial health that you need.
F: Right along with the rate of unemployment and cost of living, so has risen America’s concern for financial security.
Gibbs: You are hired today, and laid off this afternoon. We live in a society where personal income and earning power is rapidly declining. It is probably possible, to those of you who are in your twenties, the demise of Social Security is a real possibility.
F: Interactive workshops on debt elimination, goal setting, investing and more, were conducted by bankers and financial planning professionals. And the day featured remarks by author Juliette Fairley, host of the Discovery Channel’s reality TV show, Cha Ching, Money Makers, and the author of four personal finance books.
Fairley: People always think wealth is like, you know, you’ve got tons of money and it is, but there is also a more simple, basic foundation of wealth which means that you are paid up. You are paid up, not for just this month, but you are paid up for next month, and possibly even the month after that.
F: Although most of those who turned out were women, many of those members of Delta Sigma Theta Sorority, organizers say the event is intended for all. As the issue of wealth creation and debt elimination is a universal concern.
Robinson: We work with all kind of women. Women who have been on welfare. Who ----- have helped teach how to get a house. Can you see what I’m saying? So it’s not like just helping the educated with it – no, we help those who need – how to budget. You know I’m on Food Stamps, and I’ve got four children, and nobody cares about me. Help me.
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Brown: And now I’d like to introduce our guests. With us today, we have Lori Jones Gibbs, Vice President of Affordable Housing Industry Affairs at Genworth Mortgage Insurance Company. We also have with us Andrea Harris, Executive Director of the North Carolina Institute for Minority Economic Development.. And last, but not least, we’re pleased to have with us Dr. Burnadette Watts, Chair of the Durham Financial Fortitude Campaign, sponsored by Delta Sigma Theta Sorority. Welcome to the show ladies.
Let’s start off by just first understanding why this sort of initiative is so important, and I’ll start with you, Ms. Gibbs.
Gibbs: When you look at the statistics that you mentioned earlier, it’s more about educating our people what the opportunities are in the financial world. I like to say that it’s what we don’t know that we don’t know, that makes us not make an informed decision. So, financial fortitude is about making sure that African Americans are in-the-know to make the right choices.
Brown: And, Ms. Harris, what sort of things do you think African American s are lacking in their knowledge about how to manage their money, how to eliminate debt, how to grow wealth?
Harris: Well, I think, particularly in this time when we’ve reached a point when credit scores are so so important to the cost of credit and the access of credit. It’s extremely important that we help people better understand how is credit determined, how is a decision made about how much you are going to pay for access to that credit: whether it’s a credit card, whether it’s a loan, whether it’s a commercial loan, a consumer loan, whatever. As well as the fact that now your credit score has a lot to do with whether or not you can even get a job in some industry sectors. In the insurance industry, in financial industry, you know whatever that is, you know, you may not even be able to get a job. as well as just the cost of just everyday kinds of needs. So we think it’s extremely important that people have the information because we believe that the more informed you are, the better decisions you can make in the future.
Brown: Dr. Watts, once people hear this sort of information, what’s the likelihood that they’ll really be able to take it and transform their lives in terms of how they think about their money, what they actually do with it, and making changes for the better?
Watts: Well we’d like to say that our kick-off event, that was held in March, was an umbrella of awareness of many different components, different topics. What we wanted to do was to make sure that it wasn’t just a one-time event. So for the next nine months, in the Durham community, at the Durham Alumni Delta House, the fourth Tuesday of every month, we’re having follow-up sessions, where our participants can interact very closely with some of those very-same presenters. And that makes it real to them, they learn from those presenters as well as others that are there, because it is in a safe environment. We’re trying to move people from one point on the ladder to another, and helping them to fulfill their some of their goals and achieve those as an individual, as a family, and certainly as a community.
Brown: Well Ms. Gibbs, having been at the kick-off event and witnessed how people responded to the information that was presented, what’s the hope for the scope of the whole program? I mean do you think that people are really going to be able to take this material and move forward?
Gibbs: Oh, first of all, definitely, most definitely. But the hope is as we start, first of all, with understanding what our budgets is and realize that the basic principle of growing wealth starts with home ownership. We all have to have some place to live, so we might as well pay ourselves, instead of a landlord. They know me as a homeownership tsar.
[LAUGHTER
Gibbs: I’ve been fortunate enough to have the support of the company I work with, Genworth Financial Mortgage Insurance. We did the National Homeownership Initiative that is ongoing, that we partnered with the Delta Sigma Theta on. And we’re happy to say we’ve been able to track more than 400 African American families, who thought they could never be homeowners become homeowners. When we start with homeownership, then we can move to investments, we can move to other insurance obstacles, and that’s what we all need to think about. We all have aging parents, long-term care is very important to us, we must learn to invest our dollars wisely so that we will have a paycheck that outlives us.
Harris: There’s so much conversation around prosperity and wealth-creation. That really, the two most common means of creating wealth are home ownership and business ownership. What’s in greater reach for more consumers and individuals and anyone else is home ownership. So getting the information on the front end, that helps you understand that home ownership is within your reach. And here’s the information and here are some of the tools and support and resources that can help you get there is extremely important. Particularly for a community that over-all, and as a whole, has no net worth.
Brown: I’m so glad you said that Ms. Harris, because Dr. Watts, what I want to ask you is why do the issues of lack of home ownership, more debt than wealth, and all these issues that sort of hamper African American s from becoming more financially secure, why do they hit us as a people so hard?
Harris: Well, I think you heard this whole thing about the education cycle. For many of us it has been lack of financial information, or this financial literacy. We have in some instances, been at a point of things being introduced to us and, I’m not saying greed takes over, but it does – since it’s easy, and there’s a cost to anything that’s easy to acquire. When you don’t know the true information relative to payback, and what does this do, as you already heard about credit and credit scores. I think too as African Americans, we have sometimes been denied opportunities to get in on learning more about financial education kinds of things, across the board. We in Delta Sigma Theta, and I want to say, this is a national initiative for which we are trying to fulfill the goal as set by our national president, Dr. Louise Rice. So, across America, and certainly across North Carolina, we are trying to at least start with approaching this and involving others, a collaborative effort, and involving the, we call the Pan Hellenic, the African American Sororities and Fraternities. Because everybody has an economic component in their fraternity or sorority and we know we need it very, very much.
Brown: Ms. Gibbs, I’d like for you to answer the same question. Why are blacks more susceptible to debt and lack of homeownership and all the things that keep us from being financially secure?
Gibbs: I think we’re consumers instead of investors. We are renters instead of homeowners. So part of it is changing the mind-set. I often say, what is a rite-of-passage for a 16 year-old? Most people will say, getting a drivers license and getting a car. Well, the Gibbs kids had a different rite-of-passage, at sixteen, before they could get their license, or a car – I knew, and my husband knew, that they would be going off to college. They had to determine which institution had the best student checking account. They had to do that because we felt they need two years to understand how to clearly balance a checking account, because whatever we were going to put in that account is what they need to learn what to live with. But that’s different, we don’t do those things. And we don’t do them, just as Dr. Watts says, because this is a newness to us. When you think of us as a people, we understand the importance of education. We understand the importance of voting. But this beat is a new beat for us, and a new challenge. We finally have people in positions who understand it and can share it.
Harris: But I’d also add that also, we come out of a history that placed us in a position as a people where the opportunity to build net-worth was limited. Even today, if you were to look at how people normally create and build that net-worth, sometimes there is still some barriers there in terms of how a house might be valued in one community as opposed to another community, etc., you know. There’s one of the issues there and it’s not necessarily all been about an absence of desire or want, or interest in building that asset. We have become more aware, and it’s educational now – how do you build net-worth, and what is net-worth. People with the most net-worth in America inherited their net-worth. They didn’t build it, they didn’t just start out with – this is new, it is new to us as a community. So we have more net-worth today than we’ve ever had before. We have particular challenges in the South. If you look at the Financial Fortitude Initiative, it’s starting out with a major focus through out the Southeastern part of the country. Because of a real need to build home ownership, to build the education and awareness. I want to also add that one of the other pieces that we’ve added to this with the support of Genworth Financial and Delta Sigma Theta doing this, is a focus on making sure that college students are at this table, because today we look at the college students – one of the first things they get when they go to school is a credit card. So you take that credit card and then some of them now, because living expenses can be a part of your student loans – then many of them use that and they live off campus and they end up with jobs, they end up with lots of debt. They have so much credit card debt that by the time they leave school it will take them 18 years to just get rid of that credit card debt. One of the things that we all want them to understand is when you charge that pizza on your credit card, how long are you going to have to pay for it? So it’s across the board in terms of wanting to educate everyone in the community and partner at all levels to make sure that we can build that awareness.
Brown: Dr. Watts, what is more important or do they work hand-in-hand and it seems that they would, debt elimination or trying to save and create wealth?
Watts: Wow. Well, for some it is going to be an individual decision depending on where you are in this lifecycle as we just talked about. For some it’s how then do I develop a budget? Okay, here’s income, here are basic expenditures, not the the wants and the fluff, the basics. And in that basic has to be some mode of saving for, we call it the rainy day fund or there can be other crises and that rainy day could be loss of job, sickness which creates a short term or long term disability. Or there may be, let me just say, divorce or some other tragedy. We look at the Katrina issue, you know, that wasn’t something that—so it could be that. In that whole schema we would hope that the principles that one would employ with budgeting and saving, then they will gain some value in a scheme of wanting them to say look at goals, this homeownership, looking at comparative shopping. Saying no with some discipline. Not being so persuaded by, I am going to say collegial peers as well as other people, keeping up with the Jones’s and time you think you have caught up with the Jones’s they have up and moved, you see. You’re still behind the Jones’s.
Brown: Right. But let me just jump in. How do you get someone to actually change their mind? I mean, because that is the sort of mindset that develops over time.
Watts: It is, it is.
Gibbs: I like to say when you make it real to a person they can understand. The example I use is, in the Raleigh/Durham area if you want to live in a decent area, a two bedroom unit is going to cost you about $1,000 in a nice neighborhood. $1,000 multiplied by 12 is $12,000 for one year. The average person rents for seven to 10 years. So that the math is easy. Without an increase which we know the landlord is going to increase the rent you have now spent $120,000 in rent and what do you have to show for it? When you put it in those types of contexts people then sit down and understand, “Well, wait a minute. You mean I got all that money going out of the window? I could have taken that $1,000 bought a house for $135,000 or $150,000 and on market which is still a nice home at a 30 year mortgage, put down 3%, use mortgage insurance, and guess what? My mortgage payment with tax insurance is still going to be less than that $1,000.” So it’s about making sure you show an example that they can feel.
Brown: And the people, the sort of people renting the seminars that you guys are hosting, what kind of backgrounds do they have and what sort of—because that is a great example of the sort of information that perhaps our people don’t always think about. So what are some other examples or nuggets of information?
Harris: For example, within the institute some of our staff are very much involved. Natasha Bess Getty [ph] is very much involved in this initiative and she just happens to be a Delta. [LAUGHTER] And she is director of education and training. And one of the things she has done, she grew this initiative in our office out of just some of the experiences she was having as she tried to package loan requests and needs for small businesses and we kept seeing, you know, these credit issues. Here are these debt issues. What is really happening? And as you talk to people like Lori and others you find out that we need to do something about this. So we have people who do similar type work everyday and reviewing people’s credit scores and educating and this is really just so complementary so that they get other partners involved and we can expand our efforts and try to make some difference. So it’s really been something that has been extremely exciting to have people are investing, people who are really engaged in the types of information and they are sharing it with others, themselves, so if I am in an investment group I can share the information about investing. If I am helping people to package loans and become homeowners or get loans for businesses then I can share that information because when I looked at the people that showed up, for example, for the workshop and sessions at North Carolina Central University, I have seen all types of workshops and participated in all levels of workshops. But when you have to create other, you have to go get other space, because you have a traffic jam in the halls with people not just getting into the first series of sessions but the second series and the third series. Whether it was investment, whether it was home ownership, whether it was debt elimination and debt management, it says people want the information. People want information. And the good thing was this was, the timing was good, on Saturday mornings it is easier for people to get to facilities. So it’s about where do you do it? Who are the individuals and clearly demonstrated that the information is really something that people would like to have access to.
Gibbs: One of the things we made sure with the presenters, I know at Genworth if you are in our insurance division you have to be licensed. So we made sure we had licensed presenters who were knowledgeable. We were also very fortunate to have a presenter who also happens to be Dr. Sylvia Stoffel who also works at North Carolina A&T University. So what we wanted to do with our presenters is make sure not as Andrea said, make sure that they knew the business, were licensed and we eliminated predators. We dealt with a real issue. We were not going to act like predators do not exist in our community. So we did the due diligence to make sure. And we were fortunate enough to do that with not only the sponsorship of Genworth but we had sponsors and local lenders like First Citizen’s Bank. It really helped us.
Brown: That’s great.
Watts: And also I was just going to share, she mentioned First Citizen’s and we had Chase Bank also was a supporter and in looking at these individuals and the fact that it was pure education, it was an opportunity to say we will be back and these follow up sessions in Durham we will have several of these collaborating partners that will be doing some of the various topical sessions. So we appreciate that and being that my background is adult education, we look at trigger events that happen in people’s lives. For many of the individuals there and of course we had them across the age span but when you have been denied credit or you want things for your family and you can’t get it, the trigger event hits. I need help. And this was a free public program for which they could at least get the beginnings and they got tools, other materials and we are looking forward to continuously following them.
Harris: Nobody was standing there saying to you at the end, “You have to sign up here for x amount of dollars we are selling you this…” There was no ulterior motive other than we need to figure out ways to build the asset base in our community.
Brown: Right. And I want to stress that it wasn’t just Delta although you guys spearheaded it. But there were other sororities and fraternities from the area that were partnering in this effort as well. I just want to in the few minutes we have remaining, I want to see, is it too early to hear about success stories? Have we heard back from the field about how people are taking the information that you have been putting forth and using it in their lives and actually transforming them?
Gibbs: Well, yes. We have had some successes. We have had a number of people who have talked to our lending partners who are already signing up to do mortgage loans. We also know that we had a follow-up, our very first workshop follow-up at the Durham Alumni House last month in April the 25th that was attended by about 40-45 people on a Tuesday evening at 6:30. And they could not stop congratulating Delta for doing this and saying we will be at every event. So we think that those are successes. When we can help educate people to make an informed decision and then they make a statement to do that, that is great. And this is so important for us because if you read the Urban League, the National Urban League report this year, on the state of African Americans they say we are worse off this year than we were in 2004. That we have a $6,166 net worth compared to white Americans which is $67,000. We have got to fix that.
Harris: And it is particularly challenging for us in the South because we have a lower net worth than African Americans overall which would suggest that in the South our net worth is a negative. We have no net worth. So this information is very important for our total communities because if we can’t figure out ways to build a quality of life for everybody then we all suffer because of that. And all of us, we have gotten follow up from some people who attended the March workshop wanting information on can you help me pull my credit report, help me read the credit report. What type of counseling do I need? So we have had people do really call with an interest in taking steps to try to rebuild and repair their credit.
Brown: We are going to have to leave it right there but I thank you so much, all of you, for being here. And if you would like to get in touch with our guests or obtain a copy or a transcript of tonight’s show, visit us online at unctv.org/bif. And when you visit be sure to give us your comments and program suggestions. You can also call us on the BIFline at 919-549-7167. Join us each and every Sunday afternoon at 4:30 for Black Issues Forum. I’m Natalie Bullock-Brown reminding you to be encouraged no matter what. Have a good one.
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