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Rich And Regular
Episode 123
Episode Guide
Episode Summary:
Episode Timestamps
ChooseFI Podcast Episode Show Notes
Episode Title: Exploring Financial Independence in the Black Community
Episode Summary:
In this episode, hosts Jonathan Mendonsa and Brad Barrett welcome Jillian and Kirsten from richandregular.com to discuss the unique challenges faced by the Black community in pursuing financial independence. The conversation highlights historical barriers, the importance of financial literacy, and the narratives that empower individuals to create change.
Key Takeaways:
- Understanding Financial Independence: Financial independence is achievable for everyone, but disparities exist due to historical and systemic factors.
- Historical Context: The legacy of Jim Crow laws and the absence of generational wealth has created a gap in opportunities for the Black community.
- Financial Literacy: Engaging in open money conversations can break down barriers and foster financial empowerment.
- Community Engagement: Achieving financial independence can enable individuals to contribute positively to their communities.
Timestamps:
- Podcast Intro:
- Introduction to Financial Independence: Discussion on why financial independence isn't a level playing field for all.
- Origin Stories: How Jillian and Kirsten began their journey in personal finance and why they decided to share their narrative.
- Overcoming Debt and Managing Finances: The importance of budgeting and tackling debt as a couple.
- The Importance of Money Conversations: Strategies for having open discussions about finances in relationships.
- Unique Challenges in the Black Community: Understanding systemic inequalities and their impact on financial independence.
- Building Community Through Financial Knowledge: The role of financial literacy in empowering the community.
Actionable Takeaways:
- Engage in open conversations about money with your partner or family .
- Write down your financial goals and start a budget .
Key Quotes:
- "Empowering everyone with the tools for financial independence makes the world better."
- "You should enjoy the things."
- "Understanding the realities of economic disparities is crucial."
- "The legacy of Jim Crow laws still impacts today's wealth gap."
- "Basic financial literacy is essential for understanding personal finance."
Related Resources:
Action Items:
- Write down your financial goals and start a budget to track progress toward financial independence.
Discussion Questions:
- What systemic barriers exist in your community that may affect financial independence?
- How can you foster more open dialogues about money?
Episode Mentions:
- Reference to previous episode /100, "Starting Your Journey to Financial Independence."
Conclusion:
This episode sheds light on the unique financial journeys of the Black community and offers insights into fostering conversations about money that can lead to greater empowerment and financial independence.
Podcast Extro:
- Podcast Extro: "You've been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time."
Understanding Financial Independence in the Context of the Black Community
Achieving financial independence (FI) is a transformative journey that can empower individuals and communities alike. However, for many in the Black community, historical and systemic barriers present unique challenges that necessitate a tailored approach to personal finance. Drawing insights from the conversation with Jillian and Kirsten from richandregular, this article highlights essential strategies and mindsets needed to navigate the financial independence path effectively.
The Importance of Financial Literacy
Building a Strong Foundation
Financial literacy is the cornerstone of financial independence. Understanding how money works—saving, investing, budgeting, and making informed spending decisions—is crucial. Here’s how to enhance your financial knowledge:
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Educate Yourself: Engage with personal finance blogs, podcasts, and workshops. Resources like richandregular.com provide valuable insights catered to your specific experiences and challenges.
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Know Your Rights: Familiarize yourself with the financial products available to you. Understanding loan structures, credit scores, and banking services can prevent instances of being taken advantage of.
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Discuss Money Openly: Encourage conversations about money within your family and community. Open discussions can dispel myths and enhance collective financial literacy.
Overcoming Historical Barriers
Recognizing the historical context of economic disparities is vital. Generational wealth gaps and systemic challenges require a conscious effort to address them. For instance:
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Acknowledge Your History: Understand how historical injustices, such as Jim Crow laws, have impacted wealth accumulation in the Black community. This awareness can help frame your financial goals.
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Plan for Generational Wealth: Focus on strategies that facilitate wealth building and transfer to future generations. Create a budget that includes savings plans to invest in property or funds that can generate passive income.
Strategies for Debt Management
Tackling Debt Head-On
Managing and eliminating debt is crucial to achieving financial independence. Here’s a structured approach:
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Create a Debt Repayment Plan: List all your debts, organize them by interest rate, and decide whether you’ll pay off high-interest debts first or tackle smaller debts for psychological wins.
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Celebrate Milestones: As you pay down debts, celebrate small victories. These positive reinforcements help maintain motivation.
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Seek Professional Help: If you find yourself overwhelmed, consider engaging with a financial advisor who understands your community’s unique challenges, or join community organizations focused on financial wellness.
Cultivating a Money Mindset
Shifting Perspectives on Spending and Saving
A healthy relationship with money is indispensable. Transform your mindset around spending and saving with these tips:
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Mindful Spending: Reflect on your purchases. Ask yourself if they align with your values and financial goals. Prioritize experiences and needs over material possessions.
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Focus on Enjoyment: Life is about enjoying what you have. Adjust your purchasing logic from merely 'affording' something to examining its impact on your long-term happiness.
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Embrace a Growth Mindset: Understand that financial literacy is a journey, not a destination. Celebrate incremental progress and remain open to learning from experiences and setbacks.
Community and Collaboration
Building Wealth Collectively
Wealth building isn’t just an individual endeavor; close community engagement can produce significant positive impacts.
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Attend Networking Events: Join local financial workshops or seminars that cater to the Black community. Building relationships with like-minded individuals can open doors to new opportunities and shared experiences.
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Support Black-Owned Businesses: Investing in your local economy not only stimulates growth but also creates a robust network of financial support. This reciprocity fosters a thriving community.
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Mentor Others: As you advance on your financial journey, consider mentoring someone from your community. Sharing your experiences can inspire others and drive collective growth.
Real Estate as a Pathway to Wealth
Investment Property Strategies
Real estate has proven to be a solid avenue for wealth accumulation. Consider the following actions:
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Education on Homeownership: Learn about homebuying processes, current market conditions, and financing options. Consider workshops or consultations focused on first-time homebuyers from diverse backgrounds.
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Invest in Rental Properties: If financially viable, consider acquiring rental properties. This form of passive income not only builds wealth but can also provide housing solutions in underserved areas.
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Utilize Community Resources: Seek out local grants and programs that assist first-time homebuyers and investors of color. Many cities offer resources intended to foster economic mobility.
Conclusion
Navigating the journey toward financial independence within the context of systemic barriers, especially in the Black community, requires understanding, resilience, and action. It involves embracing financial literacy, engaging in open money conversations, managing debts wisely, and investing strategically. By cultivating a supportive community and sharing knowledge, we can all contribute to closing the wealth gap and empowering future generations. Remember, financial independence is not just a personal achievement; it is a transformative movement that can elevate entire communities.
Empower yourself and others on this journey and remember—every step counts toward a financially secure future.
Today Kiersten and Julien from Rich and Regular talk about the specific challenges that the black community faces on their journey to FI. Recognizing the fact that not everyone starts from the same spot is important, so we are diving deep into the differences today.
[elementor-template id="143609"]Where Did Your FI Journey Start?
The couple met at work back in 2012. Early in their relationship, they stumbled onto an uncomfortable conversation about money. With one spender and one saver, their financial goals seemed to be at odds. Julien even told Kiersten that he might have not started a relationship with her if he had known about the credit card debt! However, the real issue was a different mindset towards money.
Over time, the couple worked to understand each other's money story and build a future together. As they went through this process, they started to audit their experiences to understand what made them happy. The idea behind the audit may have stemmed from Julien's MBA experience. It became a way to decide how they were going to spend their time and money.
They built a solid financial foundation and started to explore blogs and podcasts. However, they realized that their story wasn't being told. They were inspired to found Rich and Regular to reach a new audience.
How Do You Approach A Conversation About Your Partner's Debt?
With Kiersten's high amount of credit card debt, Julien had to broach "the conversation" with her. Julien knew that he did not want to build a relationship that had money problems. Although his opening line that he may not have started a relationship if he had known about the credit card debt is probably not a good place to start, it did open up the conversation.
Kiersten felt shamed about her money choices with this opening line but it forced them to start talking about money.
We went through a period where we would, sort of, audit every experience. We would go out to dinner and have, maybe Chinese food, and Julien would say, "ok, did that experience make you happy?" And it was like "yeah, sure." And he was like "ok, if we did that three more times every week, would that make you happier?" Like it is a true static happiness or is it just in the moment? Trying to define our, or at least my, joy and where I derive my happiness from without attaching money. It was this exercise and we had to take it bite by bite with every dollar spent.
The couple worked through their separate money backgrounds by talking about it on a regular basis. It will require a lot of deep conversations to get on the same page as your partner about money. Make it a point to start talking about money and never stop!
Listen to the full episode here.
As you talk, be forgiving and give your partner the flexibility to change your mind. Instead of becoming entrenched in the idea that you are always right, have a truly open discussion. Be delicate around this topic, but always be honest.
In the end, they talked through their different money stories and made a plan to tackle their debts. The couple made it their mission to pay off debt as quickly as possible.
I'd say for other couples in [a simlar situation] have a lot, a lot, a lot of conversations, and if you have to have a lot of conversations over a couple glasses of wine then that's fine. But talk a lot, talk early, talk often. And I'd also say, be forgiving of eachother. Give eachother flexiblity to change your mind.
Now, they are moving forward towards FI together. With a focus on building passive income, they are steadily working closer to that goal. In fact, they plan to be FI in July 2021-ish.
Related: How To Get Your Spouse On Board With FI
What Are The Differences?
It seems like their story is very similar to others in the FI community. However, they face unique challenges.
Career Opportunities
The unfortunate reality is that as an African American, neither has ever felt secure in their job. When Julien looked up the corporate ladder, he saw fewer people of color in those top positions. He feels that there was little reason to believe that there was an opportunity for long-term growth in his company. Due to that feeling, he has focused his efforts on building passive income through real estate instead of growing his career. The goal of this effort is to protect him and his family.
However, it is difficult to convince others in his community to fall out of love with 6-figure salaries and in love with passive income building because of "the talk."
Julien knows that most black professionals have been told that they are going to have to work twice as hard to earn half as much. Many take that to heart and work extremely hard but eventually realize that they are not being given the same opportunities to grow as their white counterparts.
Instead of choosing to climb the slippery corporate ladder, this couple has decided to build their own wealth.
Historic Roots To The Wealth Gap
In America, African Americans were disproportionately affected by the way business started here. The sad truth is that we are not that far removed from the Jim Crow laws that crippled the community's ability to build wealth. The initial wealth builders were whites that had the benefit of owning land, voting, and better educational systems.
With that unequal start, the racial divide has been a problem ever since. African American families do not benefit from generational wealth that provides a safety net for their white counterparts.
The total financial experience for black Americans is just very different than white Americans.
For many decades, African Americans were unable to purchase homes in growing areas due to racial stigmas and systemic barriers that made it possible for whites to build wealth quickly.
Other wealth-building investments like the stock market are made inaccessible to the black community due to a lack of disposable income and an inadequate financial education. Additionally, general distrust in banks based on the past injustices of the system leaves many African Americans to face a mental hurdle of trusting a bank to respect their money.
There is also an implicit distrust of systems and institutions, and things like banks that we have to overcome. So you'll see a lot of us in the space just working on basics, financial literacy to help people understand how this stuff works because if you go back to our grandparents or our parents they've been taken advantage of by these same systems that we are now coming in and saying "Yes invest. Give to banks. Give to institutions." and it's like "I don't know if I trust that."
Finally, building a business is a great opportunity for black Americans to build wealth because you are no longer relying on someone to promote you. However, there are still challenges. Banks are less likely to lend you money, especially if you are relying on the black community that has significantly less wealth.
Is It Getting Better?
Although one can hope that things are getting better, the wealth gap and inequality are systemic issues that can only be resolved at a macro level. Without policy level changes to institutionalized problems, there is a limit what can be done.
How To Overcome These Hurdles
You can choose to build your own financial situation with the spending choices that you make on a personal level. The purpose behind starting Rich and Regular was to empower others to take control of their personal finances. By building a new picture of black wealth, there is an opportunity for the black middle class to build wealth for the future.
Opportunity usually comes through education. Instead of going to school at all costs, look for opportunities to reduce student loan debt. Many people are coming out of school with so much debt that they cannot possibly earn themselves out of it.
The best way to spread the FIRE movement in the African American community is to teach by example. Instead of judging other people's spending habits, just answer their questions when asked. People are usually intrigued by this movement, so use that as a springboard to empower people on their own journey.
The Outcome Of FI In The African American Community
Julian and Kiersten are excited to spread the FIRE through Rich and Regular to the black community. If just 10% of the community chose this path, imagine the powerful benefits in our society. Not only would FI achievers be able to volunteer at social activism causes but also pass on the benefit of generational wealth to the next generation.
How To Connect
You can connect with Kiersten and Julien at their blog, Rich and Regular, or through social media @richandregular.
The Hot Seat
Favorite Blog: A Purple Life.
Favorite Article: Letter to Middle-Class Black America on Rich and Regular.
Favorite Life Hack: Buying a new food every week because it is an easy way to challenge yourself to try something new.
Biggest Financial Mistake: At 24, Kiersten leased (and eventually bought) a luxury car at $34,000 on a $40,000 per year salary. That translated to a $600 car payment for around 10 years but she still drives that car today!
Advice you would give your younger self:
Kiersten: Don't over-tweeze your eyebrows. And your money can work way harder than you can.
Julien: Start a business as soon and as often as possible.
Bonus! What purchase have you made in the last 12 months that has brought the most value to your life? A gift from his mother-in-law, the Kamado Joe Grill.
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