Op Ed states: "If you stay poor, you're to blame because it"

[Crossroads Inc.]

From the following So called 'News'

No one can blame you if you start out in life poor, because how you start is not your fault. If you stay poor, you're to blame because it is your fault. Nowhere has this been made clearer than in Dennis Kimbro's new book, "The Wealth Choice: Success Secrets of Black Millionaires."

Kimbro, a business professor at Clark Atlanta University, conducted extensive face-to-face interviews, took surveys and had other interactions with nearly 1,000 of America's black financial elite, many of whom are multimillionaires, to discover the secret of their success. Kimbro's seven-year study included wealthy blacks such as Byron E. Lewis, Tyler Perry, Daymond John, Bob Johnson, Cathy Hughes and Antonio Reed. Kimbro says that many of today's black multimillionaires started out poor or worse. So what were their strategies?

"The Wealth Choice" argues that wealth (millionaireship) is not a function of circumstance, luck, environment or the cards you were dealt. Instead, wealth is the result of a conscious choice, action, faith, innovation, effort, preparation and discipline. Or, in the words of billionaire W. Clement Stone, founder of Combined Insurance, whom Kimbro met with and mentions early in the book, "Try, try, try, and keep on trying is the rule that must be followed to become an expert in anything." He also said, "If you cannot save money, the seeds of greatness are not in you." Saving is necessary for investment and wealth accumulation. Therein lies much of the problem for many black Americans.

Kimbro gives us some statistics to highlight some of the problem. The median net worth, or wealth, of white households is 20 times that of black households. In 2009, 35 percent of black households had no wealth or were in debt. Twenty-four percent of black Americans spend more than they earn, compared with 14 percent of all Americans. Thirty-two percent of blacks do not save at all, compared with less than 25 percent of all Americans. To underscore these statistics, Earl Graves Jr., CEO of Black Enterprise magazine, said that blacks are six times as likely as whites to purchase a Mercedes-Benz and that blacks who purchase Jaguars have an income one-third less than whites who purchase the same vehicles.

Some, but not all, of the explanation for the wealth differences between blacks and whites has to do with inheritances. Slavery, poverty and gross discrimination didn't create the conditions for inheritances. But slavery and gross discrimination cannot explain today's lack of saving and investing. Nobody's saying that marshaling the resources for wealth is easy. Gaining wealth is a challenge, as singer Ray Charles lamented in his hit song "Them That Got": "That old saying 'them that's got are them that gets' is something I can't see. If you gotta have something before you can get something, how do you get your first is still a mystery to me." But as John Harold Johnson, who rose above abject poverty and racial discrimination to build a publishing empire, said, "if you want to know how people feel about themselves, look at their bank account. ... Wealth is less a matter of circumstance than it is a matter of knowledge and choice."

"The Wealth Choice" suggests several disciplines that can be only summarized here. Among them are: Be passionate, and focus on unique strengths; develop clear, delineated goals. Then develop strong work ethic. Recognize the power of ideas, and never consider the possibility of failure. Be thrifty and frugal in nature. My stepfather put Kimbro's list of self-disciplines in another way. He said: If you want to be successful at anything, you have to come early and stay late.

When Dr. Kimbro graciously sent me a copy of "The Wealth Choice," he included an 18-minute video, titled "In Conversation with Dr. Dennis Kimbro." On top of putting together an excellent book, he reveals himself as an excellent motivational speaker who should be speaking to young people regardless of race.

So there you have it people!
The answer to the long mystery of why people are poor!.
Its because they are LAZY!
Likewise if you have no money in your savings account, it is evidently NOT Because you are struggling against crushing debt, or overwhelming bills, or trying to pay for a family all on your one. No no no, it is because you just aren't TRYING hard enough!
Now go out there you lazy bums and become Millionaires!

[SpaceMarine93]

Has that guy ever heard of "Cycles of Poverty"? Link 1, Link 2

[salm]

The problem with this article is that it uses such absloute terms.
The skills mentioned (strong work ethic, ability to save money for later investments instead of blowing it for useless crap) are extremely usefull for becoming rich or at least well off. But it forgets that there are plenty of other factors to consider and for some reason feels the need to set a completely unnecessary focus on racial differences.

[Grumman]

Likewise if you have no money in your savings account, it is evidently NOT Because you are struggling against crushing debt, or overwhelming bills, or trying to pay for a family all on your one.

But why are you in crushing debt? Was the debt accrued through no fault of your own, or is it because you bought a Mercedes-Benz?

[Broomstick]

About what I'd expect from a politically conservative (on the US scale) publication originally started by the Heritage foundation. Did you catch the headline about the awful fate supposedly in store for preppers?

[mr friendly guy]

http://www.youtube.com/watch?v=ijX1CkmMjDE

Watch the youtube interview. Before long it starts going on into stuff which would make the Secret proud, only with Biblical rather than mystical karma bullshit.

His ideas about saving money etc are good, but why does he have to couch it in mystical bullshit about poverty being an illusion and it can be changed if you believed hard enough?

[salm]

Likewise if you have no money in your savings account, it is evidently NOT Because you are struggling against crushing debt, or overwhelming bills, or trying to pay for a family all on your one.

But why are you in crushing debt? Was the debt accrued through no fault of your own, or is it because you bought a Mercedes-Benz?

But why did you buy the Mercedes Benz?

[Crossroads Inc.]

Likewise if you have no money in your savings account, it is evidently NOT Because you are struggling against crushing debt, or overwhelming bills, or trying to pay for a family all on your one.

But why are you in crushing debt? Was the debt accrued through no fault of your own, or is it because you bought a Mercedes-Benz?

I work in the banking industry, and every day I talk to a great deal of people struggling with money and being in debt, some of them 'Are' poor and others make a lot of money.
One of the things I tend to notice is a rather glaring difference in terms of WHAT people spend money. Often it is people who actually make MORE money who tend to have more overdrafts and huge amounts of debt. Someone making 5000 a paycheck seems to have no problem spending 5500 a paycheck. Meanwhile 'poor' people that I work with seem to often been more thrifty and save MORE with their money. A lot of people I see living on small paychecks seem to do a better job managing their money then richer people.

[Iroscato]

Likewise if you have no money in your savings account, it is evidently NOT Because you are struggling against crushing debt, or overwhelming bills, or trying to pay for a family all on your one.

But why are you in crushing debt? Was the debt accrued through no fault of your own, or is it because you bought a Mercedes-Benz?

I work in the banking industry, and every day I talk to a great deal of people struggling with money and being in debt, some of them 'Are' poor and others make a lot of money.
One of the things I tend to notice is a rather glaring difference in terms of WHAT people spend money. Often it is people who actually make MORE money who tend to have more overdrafts and huge amounts of debt. Someone making 5000 a paycheck seems to have no problem spending 5500 a paycheck. Meanwhile 'poor' people that I work with seem to often been more thrifty and save MORE with their money. A lot of people I see living on small paychecks seem to do a better job managing their money then richer people.

I absolutely agree. Often my paycheck can swing wildly from fairly decent to peanuts week to week, and it's more often than not the bad weeks where I save a little and squirrel it away. It's most likely linked to the same thought process that makes you stretch a task out to however long you've been allocated to do it. I guess I'm fortunate to be able to save even a small amount here and there.

[Siege]

So there you have it people!
The answer to the long mystery of why people are poor!.
Its because they are LAZY!

The article did not say that at all. What it says is, and you even bolded and italicised this, that "saving is necessary for investment and wealth accumulation", and for example that "thirty-two percent of blacks do not save at all". It then essentially suggests that a spendthrift mentality is at least partially to blame for a great many poor staying poor (while still acknowledging that there are also historical factors to blame for the wealth differences between blacks and whites).

I'm frankly suspicious that the article (and by extension the book on which it is based) might be cherry-picking its statistics, but at the very least it doesn't say anywhere that the poor are poor because they are lazy; instead it makes the case that the poor are poor because of poor decision making. And if the stats about Jags and Mercs are accurate and representative of a greater trend (which admittedly is a very big "if") then the author very well might have a point. There'd still be plenty of other reasons why the poor often stay poor (the aforementioned cycles of poverty, etc.) that the article completely ignores but that doesn't necessarily mean that there isn't simultaneously a subset of the populace that's in dire financial straits mainly because of particularly poor saving/purchasing habits (indeed you even refer to such poor habits in your last post yourself).

What I know of the social situation over here (which is a far cry from that in the USA, but even so) seems to confirm this at least partially. Not all poor people are spendthrifts, obviously, not nearly. If you're just genuinely barely getting by paycheck to paycheck then clearly "just save money you dummy!" is useless advice. But there does appear to be a subset of the less-well-off that's never been taught to save, be frugal, plan ahead, or other basic financial common sense. It's quite useless to blame them for this, which is where I think the article goes wrong: if people have never been taught these "seeds of greatness" or whatever you want to call them it doesn't reflect poorly on them, but rather on the system in which they were raised, and it is definitely something worth looking into and hopefully correcting.

[xerex]

[quote="Crossroads Inc."
One of the things I tend to notice is a rather glaring difference in terms of WHAT people spend money. Often it is people who actually make MORE money who tend to have more overdrafts and huge amounts of debt. Someone making 5000 a paycheck seems to have no problem spending 5500 a paycheck. Meanwhile 'poor' people that I work with seem to often been more thrifty and save MORE with their money. A lot of people I see living on small paychecks seem to do a better job managing their money then richer people.

its the trap of the middle class.

It costs a lot to look middle class.

[Crossroads Inc.]

That is a good ay of putting it.
There are a LOT of people in the US who are desperate to "seem" far more affluent then they really are.
A big part of the housing crash was middle class people buying HUGE houses far far beyond their means.

Last week I was trying to help someone who was months beyond on his monthly mortgage payments. The monthly bill was over 2000 per month, and from what I could see, his paychecks were between 2200 to 2800 per paycheck. That is something I see a LOT, middle class buying houses, cars, clothing etc. I chalk it up to the "lie" of the American Dream. People in the US have been spoon fed the lie that ANYone can become super rich, so the moment they feel they have "made it" they have this need to show off, buy a MacMansion and a Corvette.

Of course there is just as big a 'Trap' for the poor as well, and it usually involves things like small loans, payday loans, and paycheck advances. There are a lot of people out there that get into a trap of getting loans, and the payments will cause them to overdraft, amking it harder and harder to pay back what they owe.

What I know of the social situation over here (which is a far cry from that in the USA, but even so) seems to confirm this at least partially. Not all poor people are spendthrifts, obviously, not nearly. If you're just genuinely barely getting by paycheck to paycheck then clearly "just save money you dummy!" is useless advice. But there does appear to be a subset of the less-well-off that's never been taught to save, be frugal, plan ahead, or other basic financial common sense. It's quite useless to blame them for this, which is where I think the article goes wrong: if people have never been taught these "seeds of greatness" or whatever you want to call them it doesn't reflect poorly on them, but rather on the system in which they were raised, and it is definitely something worth looking into and hopefully correcting.[/ut]

That is a big factor in what I find with those that are often poor and in SERIOUS money trouble.
The US Educational system seemed to have basically stopped teaching any form of "Basic Banking" for at least the past 20 years.
Things like balancing a budget, or balancing a checkbook, or even understand how checks 'Really' work, are all things that I routinely find people utterly devoid of understanding.
A great deal of people in the US these days have no concept of how to save or put money aside, because quite frankly most American schools don't teach it. Which goes back to the whole cycle of poverty.

People who are poor, often grow up poor, and don't have good education or good chances in life. Obviously that is a HUGE generalization, but one I find fits quite often.

[mr friendly guy]

Hang on a minute, the US doesn't teach primary and high school students about budgeting? WTF?

[The Vortex Empire]

Hang on a minute, the US doesn't teach primary and high school students about budgeting? WTF?

Not where I went. No civics and nothing about budgeting.

[Raw Shark]

Hang on a minute, the US doesn't teach primary and high school students about budgeting? WTF?

They briefly touched upon it when I was in high school, but that was eighteen years ago. Guess refusing to stimulate the economy with every penny you acquire is unpatriotic now.

[Broomstick]

Hang on a minute, the US doesn't teach primary and high school students about budgeting? WTF?

They certainly didn't teach it when I went to school... and I graduated from high school about 30 years ago.

I learned personal finances/budgeting from my parents. Which works OK if your parents know how to do those things but if they don't, watch out. My parents made a LOT of mistakes on their own, but learned from them and passed the wisdom on to us. Some people don't learn.

[mr friendly guy]

A quick google search seems that there are plenty of budgeting software online for people to use. Of course if people use windows office, just use excel to help with budgeting.

I am sure the US will have their own "financial gurus" who will teach people about basic financial management, since apparently your schools don't want to teach it any more. There are a few I know of for the Australian market, but they are obviously orientated to my country.

For American audiences I can only recall John Reed namely though for his criticis of frauds other financial gurus, but he specialises a lot in real estate.

But ultimately it boils down to

1. Spend less than you earn (via budgeting)
2. To ensure the first point happens, sometimes you have to force yourself to save some portion of your income, then spend the rest.
3. If you have debt, it might pay to pay them off first, particularly credit card debt as they attract a higher interest than what banks typically give you.

For further help

4. Put the savings in some high interest account (once credit card debt is paid off) - in Australia we have the option of internet accounts which cost the financial institution less money to set up, so they offer higher rates. Plus they are not fixed deposits, so you can take them out any time.

5. Once you build a deposit, CONSIDER whether its worth investing in things which may give higher return, eg stockmarket, property funds, managed funds (mutual funds in the US) etc.

[Panzersharkcat]

Hang on a minute, the US doesn't teach primary and high school students about budgeting? WTF?

In California, at least about nine years ago (I graduated high school in 2008), it was touched on for maybe about a week or two in my freshman year and a day or so in my senior year, IIRC. Given how easily students forget things, it's seriously nowhere close to enough. I've personally forgotten practically all of what I was taught beside the really common sense stuff.

[phred]

When I went to high school,we had a course called Consumer Maths... or , something like that. It taught things like how to balance a checkbook, how to read a tax return, and other things like that. It was one of the remedial math courses though.

[salm]

What I know of the social situation over here (which is a far cry from that in the USA, but even so) seems to confirm this at least partially. Not all poor people are spendthrifts, obviously, not nearly. If you're just genuinely barely getting by paycheck to paycheck then clearly "just save money you dummy!" is useless advice. But there does appear to be a subset of the less-well-off that's never been taught to save, be frugal, plan ahead, or other basic financial common sense. It's quite useless to blame them for this, which is where I think the article goes wrong: if people have never been taught these "seeds of greatness" or whatever you want to call them it doesn't reflect poorly on them, but rather on the system in which they were raised, and it is definitely something worth looking into and hopefully correcting.

That´s why further above I asked why someone would buy the Mercedes.
For people like the articles author this is where the discussion stops. He simply gives the answer "Hey, idiots, don´t buy Mercedes, lol.", points the finger and is happy to have found someone to blame.
But actually this is where the discussion actually starts or at least the interesting and difficult part of it. The part where you want to find out why so many people feel the need to spend too much and how to counter the problem.

[Broomstick]

Having lived as a poor person, I also feel compelled to ask how OLD is that "Mercedes"?

I discovered some reasons at least some poor people buy Cadillacs that aren't immediately obvious:
1) Because they were a decently built car, older Cadillacs can still be obtained used, and there are enough junkers to supply parts when needed.
2) They purchase an old car that needs work at a low price
3) The car is old enough that a shade-tree mechanic can get it running and keep it running without specialized tools
4) In many locations a car past a certain age doesn't need to pass emissions tests

So if it's a brand new luxury car yes, I have to wonder, but if it's 20 years old it might actually be a more reasonable choice.

But there are other reasons some people make what appear to be counter-intuitive choices. For example, a poor person might spend more time at the hair dresser or barber than someone not poor not simply because of style or some sort of social pressure but because for some communities the local hair shop also functions as a community center/networking place where they can meet others and exchange information.

There are also ways to obtain status symbol goods at lower prices than you might think. A lot of designer knock-offs can be bought at flea markets. And a surprising amount of actual designer goods can be obtained at thrift and second-hand stores. My current profession sees a steady stream of people coming in with slightly damaged high-end goods (purses, shoes, etc.) purchased at thrift stores people are asking us to fix up and restore to as near as new as possible.

Now, obviously, this does not apply in all cases but essayists such as in the OP often seem entirely unaware of these strategies or heavily discount them.

[mr friendly guy]

In my primary school in South Australia we were taught savings in conjunction with the Commonwealth bank. If you search youtube you can find the old "Dollarmite" commercials which involve puppet aliens known as Dollarmites to get kids interested in savings. I still vaguely remember the comic where the Dollarmites are sent to earth to teach humans how to save.

In high school at Western Australia (around year 9) we learnt about budgeting, tax returns in a curriculum called "money matters."

In year eight social studies, er I mean social sciences (snigger) we learnt about mortgages and basic finance stuff. I remember an assignment where we were tasked in choosing a homeloan from a bank and explaining why we would want this particular product. Of course there are quite a few other homeloan products which are better now like line of credit type things (if used properly), but still... we did learn about it.

In year 9 maths involved money as well, although since it was maths it was mainly relating to profit, and useful skills like how to work out when you deposit would double at a certain interest rate (way before we learnt how to do it with logarithms). That is we used the rule of 72 -> still a useful skill, and I once got told by a youtuber that I couldn't do maths when I pointed out that a country with consistent 8% GDP growth will double their GDP in 9 years. I thought it was just they were an idiot, but now I see it may very well be because they weren't taught simple things relating to money in high school.

[Metahive]

Wow, rhetoric right from victorian Britain, what a fresh breeze of novelty! What's next, suggesting workhouses for the poor so they stop being lazy? Smug social darwinism at its finest.

[whackadoodle]

I chalk it up to the "lie" of the American Dream. People in the US have been spoon fed the lie that ANYone can become super rich, so the moment they feel they have "made it" they have this need to show off, buy a MacMansion and a Corvette.

I can't speak as to the Corvette, but one of the first things American's purchase when they see a significant bump in income is a better class of neighbor. McMansions are built in part to price poor/lower middle class families out of that school district.

[Elaro]

I disagree with Crossroads. The author isn't saying that you stay poor because you're lazy, you stay poor because you aren't saving enough money. Obviously, the failure of the author is that he didn't realize what happens when you don't have enough money to save.

Also the fact that he only interviewed successful millionaires. What about failed entrepreneurs? What about all those other people who failed to become millionaires? It doesn't say whether or not Dennis Kimbro has studied the failed cases, so I don't know if he's actually done the research. If he hasn't, well we can't exactly say he knows the difference between failure and success now, can we?