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  • Writer's pictureJames Veal

Top Ten Reasons Why Black People Are Drowning in Debt

One of the main reasons for people not being adequately prepared for retirement is that they are drowning in debt and don't feel that they have the resources and tools they need to fulfill their current financial obligations while also saving for their future. Let's take a closer look at why many people are drowning in debt:

1) Reduced income/same expenses. Goods/Services increase but salaries & income stay the same. Since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have barely risen, growing only 0.2% per year.

2) Divorce. More than half of us do it, some more than once. Duel income use to be helpful for African Americans but now only 30% of Black people are married.

3) Poor money management. Without a monthly spending plan, you”ll have no idea where your money goes. You'll be surprise how much money you waste. Take time out, look at your receipts and see how much you actually spend eating out, buying clothes, watching cable, etc.

4) Underemployment. Underemployment is a close second, but unemployment has always been a serious issue for Blacks in America. Education is solely not enough. We need to create and build businesses to make it today.

5) Gambling. It is America’s new entertainment but it can be addictive and hard to stop. Some people take their paycheck and head straight to the casinos. It is ridiculous to live life by chance. Gamble and buy stocks and mutual funds instead.

6) Medical Expenses. Gaps in coverage, lapsed policies and costly alternatives are serious issues. That's why people fight hard for jobs that provides adequate health/medical benefits. So, let's try to eat right and exercise to limit those expenses.

7) Saving too little or not at all. “Pay yourself first.” Do it and it will grow and be there when you need it. Have at least 2-3 months of income tucked away in case of a rainy day. Most Americans lives paycheck-to-paycheck. The only way out of this is to live below our means and stop trying to keep up with the Joneses.

8) No money – communication skills. If your spouse is a spender and you are a saver, this could cause a problem. Money challenges is another big factor that leads to divorce. Invest in yourself and your probability of a raise, promotion, or starting your own business will increase.

9) Banking on a windfall. Spending tomorrow’s money today is tempting but what if it doesn’t come in on time. Stop living by chance playing the lottery, buying scratch offs, and going to casinos.

10) Financial illiteracy. To me, “this is the biggest problem in the country today.” We need to learn, understand, and master money! This is our only hope for financial independence.
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