Hitting the Money Spot 

Creating Black Generational Wealth

Celebrating Juneteenth

“The very serious function of racism … is distraction. It keeps you from doing your work. It keeps you explaining, over and over again, your reason for being

Toni Morrison

 

Real Estate and Home ownership is one of the ways in which most Americans have acquired generational wealth. Black Americans came to this continent where their bodies were the commodities used  as currency. They were denied access to land and the economic power that it brings. Black people were promised 40 acres and a mule after the Emancipation Proclamation. This promise has never been fulfilled.

 

The proportion of land owned by Black Americans has actually shrunk in the last 100 years. In a 1998 report,  the U.S. Department of Agriculture concluded that Blacks faced discrimination ranging from The New Deal and USDA discriminatory practices dating from the 1930’s to 1950’s . The faced mid century era exclusion from  legal, title and loan resources. Blacks faced terrorism from Whites who would bomb, lynch, rape and murder them if they were perceived as too prosperous. The terror that reigned on Blacks in this country during the Red Summer was just a repetition of what Blacks had experienced earlier but in a compacted period of time. Instead of the terror being disbursed over a 10 year period of time, it was inflicted in less than 5 years.  The  terror inflicted upon Blacks the five years after World War I and World War II was due to Black people returning from fighting a war for this countries independence and demanding to be included in it’s economic success.

 

The Discrimination in home ownership after World War II also impeded the acquisition of wealth. All across America, exclusionary zoning and restrictive covenants in the deeds kept Blacks out of many neighborhoods. In the absence of such legal constraints, real estate brokers, insurance agents and bankers colluded to keep Black people in poverty areas. Black were denied home , home improvement  and business loans due to redlining.  The FHA drew a red line around black neighborhoods. The National Association of Real Estate Boards explicitly instructed their members to keep Blacks out of White neighborhoods. The appraisal manuals told realtors to stay away from inharmonious racial groups. In one group of 67,000 mortgages insured by the G.I. bill less than 100 went to Blacks. 

 

In 2017, the racial homeownership gap was at it’s highest level for 50 years, with 79.1% of White Americans owning a home compared to 41.8% of Black Americans. Black homeowners are suing because their home is appraised at a higher level if the Appraiser comes to the house and believes the owner is a White person.

 

Economists state that intergenerational transfers during the parents lifetime and after their death account for at least half of the average American family’s wealth. Black families need to parlay more of their money into productive assets that build wealth rather than wasting it on assets that deplete resources. Spending money on depreciating assets drains the resources and leaves nothing to pass on to the next generation. 

 

Racism will continue to exist and the new Civil Rights Movement is about Creating Generational Wealth to pass on to the next generation. Real Estate is one of the best ways to do this. When you own your own abode, you can handle life’s ups and downs with less trauma. The key to acquiring real estate is to make the decision that you want to invest whatever funds you have into appreciable assets instead of depreciating assets. 

 

Real Estate is easily transferable to succeeding generations. Set up a trust to hold your real estate assets and upon the death of the grantor, ownership automatically transfers through the trust. Real Estate conveyances at death are much less complicated than other business agreements. Real Estate is a proven commodity. There are years when real estate decreases in value, but in the long term, real estate constantly appreciates and real estate generates consistent income.

 

It is easier in this country to qualify for a $60,000 car loan which is a depreciable asset than it is to qualify for a $60,000 piece of real estate. Black people must learn to persevere and focus on the appreciable asset that will not only serve the current owner but subsequent generations. The other issue which has to be addressed is the upkeep of real estate in order to maintain it’s value. The first step is to purchase real estate as a homeowner and then to acquire real estate as an investor. 

 

 

 

 

 

 

 

Hitting the Money Spot: Creating Black Generational Wealth

 

Creating Black Generational Wealth

The history of Black people and money is a history filled with trauma and terror. If you want to know more about this history, please read the blog Black in Money Recovery. This blog focuses on awareness, acceptance and action as well, but from a behavioral perspective. Byron Allen states that Black people need access to capital which means a strong working relationship with banks.

The First Black Bank was established after the Civil War to serve the needs of the newly freed African Americans. The first Black bank was the Freedman’s Bank established on March 3, 1865. The bank faltered in 1874 and instead of the Federal Government shoring up the bank as it did many times for  banks that benefitted the White community, the all White Board decided to shut the bank down. The records which were kept and the idea of Black financial institutions serving the Black community had been planted and would live to grow again.

 

Black leaders  have advocated for Black banks to serve the needs of the Black Community  since  Emancipation. Most leaders recognized that Blacks would not have access to capital to grow business and achieve financial wellness in non-Black Banks  due to racism. Investing in the Black Community has been perceived as a poor risk for Blacks but not for others. The  Civil rights reforms of the 1960s and 1970’s were needed because systematic racism was proved to exist between the banks, insurance companies and real estate agents . 

 

Banks operated by Black people  help the Black community  build wealth, unimpeded by the prejudice and suspicion of white bankers. Black ownership would further ensure that profits made off of Black money would stay in the community.  Black banks  extend credit to borrowers that the big national banks may perceive as too risky owing to their modest means. Dr. Martin Luther King Jr. stated in the March on Washington that Black people lived on an Island of Poverty in the midst of an ocean of prosperity. Five years later  right before his assassination he encouraged Black people  to pull their money “out of the banks downtown” and deposit it in a Black-owned bank. “We want a ‘bank-in’ movement,” he said.

 

Dr. King stated that America had given Black people “a bad check”. 53 years later some banks are attempting to make that check cashable. One United Bank and Greenwood bank seemed to have taken the lead. There are a number of Black owned banks that are reaching out to the Black community. Many of the Black Credit Unions are building and investing in the Black Community. Some of the major players in the social media market are moving to put their funds in Black banks in order to support Black customers. The goal is to educate Black people regarding access to Capital to build the Black community.

 

 

 

Hitting the Money Spot: Creating Generational Black Wealth by Darleana McHenry Ed.D.

 

Creating Generational Black Wealth

Generational Wealth refers to any kind of asset that families pass down to their children or grandchildren, whether in the form of cash, investments, funds, stocks, real estate, property or even companies. Baby Boomers hold most of the wealth in the United States. White and Asian Baby Boomers have the most wealth which they pass on to their descendants. 

Historically, Black people have been excluded from wealth. We came to this hemisphere as currency for Europeans. We built this hemisphere with our blood, sweat and tears and yet we have never been able to enjoy the fruits of our labor. We are the only group of people who were not given land to settle and build communities. Even in Central America when we were given land, we were not given the resources to make communities, unlike the Spaniards, Portuguese and English who were given supplies and materials to make it happen. 

The end of slavery was suppose to bring about the Independence of Black people and yet Jim Crow proved to be as cruel during reconstruction. Black people were arrested and forced to work on White plantation and farms. Instead of starting free with access to resources, the only option for Black people was debt. This debt would be generational and a debt that we could never pay, no matter how hard we worked. 

The 20th Century brought World Wars and Black men and women served with other Americans. Black men and women risked their lives fighting for all Americans but were segregated and treated like second class citizens even in the military. They had access to the GI bill to get an education as well as adequate housing. However most Colleges and Universities that accepted the GI Bill didn't accept Black Veterans. Most communities where Black people were allowed to live could not be insured by the insurance companies and thus ineligible for loans from the bank excluding Black people from home ownership. Social Security was unavailable to farm and domestic workers.

Black people were the skilled labor on Plantations but when slavery ended, they were excluded from trade skills that taught special skills. They were relegated to physical labor, the lowest paying jobs. Black people had to fight to be clerks in stores. They could cook, clean and do all the jobs that White people didn't want to do. The middle of the 20th Century brought the Civil Rights Movement. Black people chose to fight for polices would bring equity. They fought for access to an equal education, proper housing, medical treatment as well as access to jobs which paid a decent living. 

Dr. Martin Luther King understood the importance of economic equity and access to capital. He understood that Black people lived on an Island of Poverty in an ocean of prosperity. Whitney Young also championed Economic equality in industry and the government. Some gains were made in the later half of the 20th Century. The wealth gap has grown in the last 50 years.

Lower incomes and lack of savings have kept Black people from acquiring generational wealth. The structural barriers to Black Wealth continue to exist. Collectively we can overcome these barriers. We can educate each other to change our habits from spending to investing. We can demand that banks live up to the constitution and practice fair lending. We can educate each other on insurance, real estate, stocks, retirement plans and other financial instruments. We can move forward in a anti-black, hostile world by working together and lifting each other along the way. Welcome to Hitting the Money Spot and join us on our podcasts to create Black generational wealth which is the Civil Rights that our ancestors died for us to achieve.