Who Is Keeping it Rich?

I’ve been writing a lot for Black Enterprise magazine and Essence magazine in the last few months about people who are doing a great job of keeping it rich. It inspired me to write this entry. Often times wheImage Detailn we think of being rich, we think of people with fur coats, yachts, and diamonds. But I don’t. I believe keeping it rich is a mindset defined by the individual. Rich for me may not be rich for you. I’m good with a house, some grass and a good public school system. That’s rich for me. But I’m fortunate to interview people who keep it rich with much less than me and those who keep it rich with a great deal more than me.

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Middle Class Prepaid Experiment- Month 2

I reloaded my prepaid debit card for the second time today, yes on Easter Sunday. It’s the 4th of the month and I already saw myself pulling out my bank’s debit card way too much already. So, I thought it was about time to put a limit on it.

For the month of March, I put $300 on it and we spent $100 by the first week. We tried to pump the breaks but since we were so used to endless discretionary spending in previous months on fast food, gifts and lunches out, it was a little hard to work in a limit of $300. So, by the 3rd week of March, I was starting to pull out my personal bank’s debit card to cover our lifestyle.

For the month of April, I have increased the limit to $400. I think this is fair. After all, the card is for ‘discretionary’ or ‘miscellaneous’ un-budgeted items like eating out and buying birthday gifts for my kid’s friends. In addition, it’s the shared account between me and the hubs. This is where you would think the big issue comes in, but no. I must say hubs was pretty good with the card for the first month. He uses it more for gas and lunch. This is because he deposits such a large share of his paycheck into our household account that he doesn’t have much left and often finds himself asking me for $20 during the week. NOT! I hate that. I hate being nickeled and dimed. So, the prepaid debit alleviates that. Also, he is now empowered to manage some of the discretionary funds without me worrying about him going overboard and bouncing a check in the regular bank account, or worse, running up major balances on the credit card.

So, let’s see how far this $400 gets us. BTW, I now have one other friend working this shared prepaid debit card experiment with me. It’s always good to have support. I will continue to let you know our lessons learned.

Please read “The Prepaid Debit Experiment” before you try this at home. It is not for everyone. There are fees associated with it and there are predators in this space.  

Keeping It Rich,

Sakina

We Can Do Better Than $100

Don’t be alarmed by the recent news that African American women only have a median net worth of $100. I’m actually glad to see that it wasn’t in the negative. The reality of the situation is that too many people define themselves based on income. Many say ‘I make six-figures,’ or ‘I need to be in a two-income family.’ This is senseless talk. If you are not saving or investing that income in a place that will create true wealth, you are headed for a three-figure future.

When I discuss what it means to be rich at seminars, I explain that the vision is different for everyone. But the one constant is that you will need to have wealth to achieve that rich vision. There is a simple formula for net worth; it’s assets minus liabilities. Please note, INCOME is nowhere in this equation.     

I commend the Center for Economic Development for conducting a study of the wealth gap between women of color and white women. Perhaps, now more women will get a wake up call and start to do the following to change the picture.

How to Build Wealth

A) Find Out Where You Stand

1) Add up all your assets, i.e. everything you own or are borrowing-to-own (like a house, car, jewelry that’s paid for on a Zales credit card, etc.)

2) Subtract everything you owe, i.e. credit card balances, car loans, mortgages, student loans, etc. Do not include utilities because that is not a debt, you can turn that off and the bill goes away. Unless of course, you have to still pay for months that have already passed (as in overdue bills).

3) Get your outcome number from applying steps 1 and 2. This number is your net worth. Don’t panic or be alarmed if your number is in the negative. This is very common for the first time you apply this exercise.  My  number was like -$30,000 or something the first time.

Knowing and accepting your situation is the first step to overcoming any situation. I once interviewed a women for a 2008 April Essence magazine story, “The 30 Day Debt Diet.” The subject said she actually got diarrhea after she realized her financial situation was so bleak. But imagine what she would have gotten if she didn’t correct the situation. She was about $20,000 short every year for her basic living expenses, which was making her credit card debt mount and continue to ruin her net worth. But after she realized it, she got a job making more money and she is now living quite pretty. She actually lives close by me and she is doing quite well for herself with her million dollar home. You can read more about her and others in this type situation here.

B) Do Something About It

Apply these 5 Keys to Keeping It Rich:

1) Define You must define your rich life for yourself. If you are shopping all the time and the bills are running up, its because you have not defined a better life for yourself. Decide where you really want to live, vacation, eat out, etc. then…

2) Invest in your newly defined lifestyle. Figure out how much that house or vacation costs and then start to save your money accordingly. Once you get 3 months worth of living expenses in the bank, then ask your bank advisor or a friend’s financial advisor about CDs or mutual funds. The options for growth will continue to grow as you grow.

3) Build Your Credit. In America, you can’t do much without credit until you truly fall into the upper echelon classes of Carlos Slim Helu or Oprah Winfrey. Get your credit report from www.annualcreditreport.com and call your debtors and work out a plan.  See “A Perfect Score” I wrote a bit ago for Black Enterprise to learn more about building credit.

4) Own a home or a business. This is where the true net worth building will come into play. The value of a home (although some can’t tell today, but it will change) or a small business adds true worth to a net worth statement. Trust me. I’ll tell you my story at another time to convince you.

5) Hire professional advisors for insurance, financial advice, taxes, etc. Also, you will need to hire staff for your businesses. You will never become as large at Carlos Slim Helu or Oprah (they are my picks for today apparently) by doing all the work yourself.

Ok, I gotta run. I hope this helps you deal better with the news of black women and their net worth. Tweet me your Qs at www.twitter.com/keepingitrich 

Keeping it rich,

Sakina

 

Keeping It Real and Rich: I need cash today

Being that I am a personal finance expert, it would probably be best for my image if I act as if I am never late on a bill. Well, fortunately for my readers and viewers, I don’t play much into that image. As I said in my previous blog, keeping secrets is what got most of us in the poor money management habits many have today. So, that said, let me tell you about this money pinch I have found myself in and more so, let me tell you how I plan to get out of it.

Let’s get something straight first. I am in no way broke. I just need to get my hands on some cash. I stash money in a variety of places to make sure I can’t get to it too easily. I give myself a certain amount of money every month once I get paid from clients. I pay consultants who may have helped me provide a service to a client and then I save or invest the rest. When I get in a pinch, I have a standby account or an emergency fund. Today, on the last business day of the month, I am about to transfer funds from that emergency account. This is because I have a client that has not paid me for services rendered since September. I had a cash reserve and some payments from other clients that has floated me for the last 3 months or so. But now, I have to hit the transfer funds button. It pains me!!! It pains me so much that I am writing this blog about it, instead of doing it.

An emergency fund is just that– an emergency fund. It should pain you to take money out of it, even if it is to pay your rent or your child’s daycare.  OMG! This is so painful, I don’t know if I can even post this blog. Is this really happening?! Ok, Ok, let me pull myself together. I can not go 30 days late on a bill, so yes, I must push the transfer funds button! I will pay it all back as soon as I receive the check from my outstanding client.

Lessons learned here are:

1) We must have a safety net; we must stash money for an emergency or loss of income because it will happen to all of us.

2) We must be very disciplined about not touching our emergency fund.

3) We must set criteria for when we can use our emergency fund, i.e. when rent, mortgage or a bill that is reported to the credit bureaus is about to fall 30 days late.

4.) We must earmark funds that are to replace the monies borrowed from the emergency fund, i.e. $200 from each next paycheck, etc.

Ok, gotta go. The pain in my chest will feel better once I pay a few bills. And it will disappear completely once I repay my emergency fund in a couple weeks. Standby…

Keeping it rich,

Sakina

Keeping It Real and Rich: Why I talk so much

Sakina  speaking at UVA

The talk at the University of Virginia went very well, in my opinion. It’s always a good session when the audience talks back to me. I want to learn about you and I want you to learn about money. So, I will tell you  all I need to about how much money I got, how I got it and how I plan to get more of it. I will also tell you the ugly of the situation. It ain’t all green and rosey, of course. My spouse and I differ on money matters. We have been married for 9 years and I have learned to love him for who he is and how he has come to view money. More importantly I have learned to continue to view money the way I do despite (much harsher word than necessary here, but can’t think of anything more gentile in the rush of writing this) his views.

After my session last night, one of the students commented that they were surprised at how much I divulged in my Keeping It Rich with Sakina personal finance talk about me and my husband’s differing views. My answer lies in some basics. The reason why it’s called ‘with Sakina’ is because you get a lot of me! I explained to him that me, my family, friends and especially my husband all know and love the fact that I am intense when it comes to saving money and building credit. And they also realize that I believe that one of the main reasons why so many are ignorant to how money works is because they believe it’s a secret (kept from them). I don’t want anymore secrets about money being kept from college students or minorities. If someone would have told me some of the secrets that I share, then I would be so much further along today. I’ve come a long way, but imagine where I could be if I had a five or ten year head start on saving my money.

So, if you hear me say that me and my husband have no shared accounts, don’t be alarmed. If you hear me say that my mom didn’t teach me anything about money, don’t be alarmed. It’s true. I’m keeping it real and rich at the same time. It doesn’t mean I don’t love the people in my life because I’m in touch with a few things and act accordingly. I just want you to get in touch with a few things and act accordingly too.

Keeping it rich,
Sakina

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