b&b 219: How the racial wealth divide affects your wallet Part 1

Music Featured in This Episode:

The Buy In by Hech Rhymes

Advocate by Spoken Phor

overstand FT. Rswift by Overcome

In part 1 of Financial Resilience and The Racial Wealth Divide Pam and Dyalekt dig into the five steps to financial resilience:

  1. Buy In
  2. Systems
  3. Habit
  4. Advocacy
  5. Values

Episode Highlights:

Dyalekt: I know it starts getting messy and emotional already not only talking about money, but now we’re talking about race. There has been a lot of effort to obfuscate the racial wealth divide and its impact on America. It’s something when you hear people talk about well you know just work hard and pull yourself up by your bootstraps, and I was able to get through college with the summer job and pay it all off and all this kind of stuff. People like to throw out this anecdotal stuff to cover up the actual data that shows the path of how we got here.

Pam: I think it’s very important to talk about the difference between stats versus stories, right? Because we have the stats, we have the numbers and then we have the other element of it; how people actually interpret these stats. The thing about the racial wealth divide is someone can very easily look at the stats and be like oh, that’s because of systemic oppression, that’s because of institutional racism.  

Pam: We found this Instagram post for instance that concludes that, so the stat is that the average single women net worth of black women ranges from $5 – $10 the average single women net worth of Hispanic women ranged from a $100- $300 and the average single net worth of white women ranges from $30,000 – $40,000.

Pam: So, Just taking this demographic of single women and breaking it out you clearly see the racial wealth divide in the stats.

Dyalekt: By the way the data is not entirely accurate.

Pam: It’s not accurate but its close enough. Their conclusions to this, and this is a verbatim, studies say an average black woman looks good from head to toe and very flattering, but only worth ten dollars or less because they live above their means.

Pam: And this is how they’re interpreting this racial wealth divide. Hispanic women struggle just as hard as black women but are more willing to live within their means and work together as a family. Which is why they have 95 more dollars than black women? Is that the conclusion here? And then as for white women has a median wealth of $40,000 reason is because they are more open to talk about financial debt and make the right financial decision.

Dyalekt: Which you know, those conclusions they came to is that available on the data at all?

Pam: Not at all!

Pam: So we bring this up when we talk about stats because it’s very important to understand where the stories have come from. Our thesis is that the racial wealth divide was perpetuated by art, media, and culture to tell us hey, it’s your fault of this racial divide exist, it has nothing to do with the system, it has nothing to do with these institutions. It’s your fault, it’s on you, it’s your personal responsibility. And then it’s the personal responsibility of collective race at this point. Which, when you stop and think about it the idea that an entire race of people is acting a certain way and that’s what has led to wealth or poverty literally makes no sense.

Dyalekt: Well I mean it’s not something that’s backed up by data. You can’t find that in other historical phenomena, there’s it’s not a thing that’s happened. What you can accurately track, you know, which is great event about a year ago where they talked about how you can’t track race using science, but you can track racism using science. That’s the thing you can track how groups of people have been treated and how that has led to where they are not only economically but also in terms of more behavioral patterns.

Pam: Generational poverty is very much a systemic thing and also the mindset around it has been passed on as well to keep us in the cycle.

Dyalekt: When Pam says mindset because that’s also tends to be a loaded word, we mean that generational trauma is something that is genetically passed down as well as something where well, you know in terms of PTSD, people who grow up poor have their brain patterns irrevocably  changed and people who are in dire situations start making decisions that take care of themselves in the moment that aren’t necessarily great for them in the long term. That’s something that is very hard to break once you get very used to saving and hope on yourself like that.

Pam: Our whole goal and really learning about all of this stuff and really understanding where it’s coming from is, what can we do about it. Because these stats are overwhelming, the concept of generational trauma is overwhelming. This idea that it will take multiple generations to rebuild generational wealth and come out of poverty.

Dyalekt: By the way the real answer to all of that really is reparations, but I you know, I don’t see that happening.

Pam: Yes, so that is the real answer. But for now, what can we do right because these systems still exist. We still live within them. I think one thing that we’ve learned is when people do not feel like they have any financial agency and they don’t feel like they have any financial self-efficacy then the idea of thinking about policy, thinking about research and thinking about the stats just like is not possible. There’s no head space for it.

Pam: So today we’re gonna talk about the racial wealth divide and financial resilience and how you can build up your own financial resilience so you are in a place where you feel financially stable enough to be able to start wrapping your head around this stuff. To be able to think beyond your own finances, to not feel like you’re hiding from your finances or that you feel impaired by your finances so that you can, in your own community, build up what’s going on there.  Pam: We’re gonna talk through the five steps to financial resilience with the context of the racial wealth divide. The five steps we’re gonna go over is 1, Buy in. So what do you need to buy into the process of actually managing your finances and paying attention to your finances. 2, Systems. Understanding how the financial systems work. how the financial systems have oppressed marginalized groups things like that. The third thing when it comes to financial resilience is habit. So tracking our decisions and recognizing what habits you need to build, what habits you need to shed, things like that. The fourth step to financial resilience is advocacy. It’s learning to advocate for yourself and also in turn learning how to advocate for others when you feel empowered to be able to say, hey that’s not right or hey, you shouldn’t have done that to me that’s a huge step in financial resilience. The final step with financial resilience is values. Defining your values and living by them. It may take doing all of the other steps and it usually does for you, again, to have the head space to think about what do you actually care about. First, we can get you the stability and then to figure out okay, this is what I actually care about now because now I have the time to think.

Pam: So the question that we want you to think of as you are examining your personal finance in the context of the racial wealth divide is, what do you need to buy into the process of getting your finances together? So many of us have been beaten down by the financial system in general and often we blame ourselves. There’s a lot of shame, there’s a lot of embarrassment there’s a lot of hiding and fear around money in general. There are so many people who I meet with for brunch who I’m the first person they’ve ever talked about money with. They don’t talk about it with their friends, they don’t talk about their family, there’s this feeling that we need to do this alone. There’s this stigma against talking about money.

Pam: It’s this weird culture around money that has developed and has only really benefited the few people who want to take our money from us.

Pam: The thing about buying is, we want you to figure out for yourself what you need to do to engage or re-engage with your finances again. Because what we found is with a lot of people it’s just like, well the money goes in and the money goes out and maybe not all of it goes out and that would be nice.

Pam: When it comes to buying, we want you to figure out what you need to do to be more proactive with your finances. It can really be small things. It can really be just like checking your bank account balance every day and doing that for a month. It can be opening a savings account because you’ve only had a checking account for however long. It can be these little steps.

Pam: Really the first step to building financial resilience is looking and awareness and taking away some of the fear in any way that you need to. I will say that this buy in process is gonna be continual process and it’s gonna be a straight line.

Pam: The reason why we call it financial resilience and not financial literacy is because we know these systems are designed to keep us where we are. To maintain the status quo. And to do that they need to keep us feeling like we’re treading water all the time and they need to keep us feeling like we need to rely on the system and it’s our responsibility to understand it.

Pam: Figuring out how to continue to buy in even when shit goes wrong because really a bad day doesn’t have to equal a bad month.

Pam: When it comes to systems, we mean understanding how financial systems work and how they oppress marginalized groups. Systems have been going on for an incredibly long time. Again, the stat that we want to share from the racial wealth divide initiative at Prosperity Now is that black families would not reach the same amount of wealth as white households until the year 2241. Which means that black families will not reach the same amount of wealth as white households for 228 years. I believe slavery ended 217 years ago. So, things match up.

Pam: Well, and if white families stop accumulating wealth today. Yes, but how do we find wealth parity? That that’s the phrase of the racial wealth divide initiative used. How do we close the racial wealth divide without stopping people from moving forward?

Dyalekt: What often gets confusing is whenever we bring up things like exceptionalism. People say well, hey, well, yeah black families have to do better but what about Jay-Z, he’s a billionaire now and he started with nothing and that’s you know, really good for him to have changed his station like that. But you shouldn’t have to be one of the most prolific and well-known creative artists of your time to be able to change your station.

Pam: I remember actually, a black studies professor told me that she will know that there is equity in universities when there is as many mediocre black professors as they are mediocre white professors.

Dyalekt: Yeah, that’s the thing that I want in to. We have so much pressure on people of color and especially in the black community, they always tell you got to work two times as hard to get half as much. This pressure to be this excellent, better than everyone thing. We will know when we get parity is when folks get to be aight.

Pam: We’re going to start all the way back to Bacon’s Rebellion in 1676. Bacon’s Rebellion invented the concept of black people and white people in America, straight up. The economical concept of black people versus white people was invented during Bacon’s Rebellion. White indentured servants and black slaves actually got together and said, hey, there’s more of us and there are of them, let’s rebel.

Pam: The rebellion was not successful but it definitely spooked the slave masters and so what they decided was to prevent this from happening again they said well, we can’t really tell the white indentured servants from us but we definitely know the difference between us and the African slaves. So, they made a law that African slaves were going to be enslaved in perpetuity from generation to generation and indentured servants could gain their freedom and from that freedom also getting citizenship and status and potentially own lands and things like that.  That’s where they first made the distinction between people who could become citizens, white people, and black people who were going to be forever enslaved. And it was purely an economic decision by the slave masters because they know they needed this system to continue and to perpetuate because this is where they were making their money from.

Dyalekt: It’s super important to remember that all of this race stuff in this country is a cold, calculating business decision that is not meant to benefit any one group of people but a small smattering of greedy folks.

Pam: We are seeing the effects of that today with the widening racial wealth divide and the world divide in general. The Bacon’s Rebellion policies really led to the 1790 Naturalization Act, which meant that free white persons could become natural citizens automatically and only citizens were allowed to vote, serve on juries, hold office and hold property.

Dyalekt: When people talk about white supremacy and the systems of white supremacy, they’re talking about policies, like these that are held up by the common sense of folks deciding that those policies and the statistics based on the results where the fault of the people who’ve been kicked around.

Pam: Yes, exactly and then let’s move on to the 1830 Indian removal act where indigenous people who are non-white were forced to move off of their land to make room for white settlers. Then we have the 1862 Homestead Act., I think this one is super important in terms of the crux of the idea or the idea, a lot of the wealth in this country comes from owning land and property ownership and literally in 1862 white people were just allowed to take it for free.

Pam: So way back in the day Chinese people were considered black people in this country. There was the Chinese Exclusion Act of 1882 and the Immigration act of 1917. Because It seemed like Chinese immigrants were taking people’s jobs, they had a law in this country where Asian immigrants were not allowed to come into the United States. Sound familiar y’all?

Dyalekt: Ben Franklin you know, everybody loves made a rousing argument against Germans and their swarthy dark skin to the country and messing everything up.

Pam: Then once slavery technically ended, we moved into the Jim Crow era.

Dyalekt: Jim Crow laws were these laws where they were basically doing their best to keep slavery going, or to keep the effects of slavery going but be a little bit slick with it. I think this is where we really started beginning to see people building racism in a way where they couldn’t say well black people just can’t do this stuff and they started taking away writes by giving them requirements, they didn’t have access to. Like they had literacy tests for you to be able to vote hmm and folks had just been freed from slavery, we were not allowed to learn how to read. Very few of us could read, so very few of us could vote. They had poll taxes, again, we just got out of slavery ain’t nobody had no change in their pocket. So, it was about making sure that people did not have voices and were kept from being able to move up in station.

Pam: Then we have the GI Bill limitations in the 40s because technically anyone who served, any veteran white or black, whatever your race could access the GI Bill. The problem was that the people who gave you access to the benefits of the GI Bill were racist as fuck.

Pam: Americans Samoa is a territory, they are not US citizens they are US nationals, so they don’t have the rights that US citizens have but, they can join the military.

Pam: So, the problem with the GI Bill was black veterans were more often pushed towards vocational schools than universities and colleges that was a big thing. And then the access to homeownership, which was a huge benefit of the GI bill, the VA loan meant that you didn’t have to put any down payment on a house. In the summer of 1947 right after World War II, 3000 VA home loans were issued in Mississippi and two of them were granted to black veterans.

Pam: Then speaking of homeownership because the lack of homeownership in communities color, especially in black and latinx communities also was contributed to by redlining and the redlining happened for a long ass time. Tt happened between the 30s and the 70s officially and it was started by the government. The federal housing administration basically said that they would not subsidize any housing divisions if they allowed black families to buy homes in that subdivision.

Dyalekt: Again, this was not a hate-based decision, this was a cold and calculated one because they saw that when black people moved into white neighborhoods property values went down.

Pam: Yes, so they literally drew red lines on maps and said if you allow black families to move into these neighborhoods, we will not issue FHA loans. We will not subsidize the cost to own a home and then fast forward to today because red lighting ended right Dyalekt?

Pam: So digital redlining was something that Pro-Publica unveiled. They did an investigative report. Facebook has this thing called affinities, racial affinities. The way that it works is let’s say if you like boba tea and if you like math, and Hello Kitty, then you might get put in an Asian American affinity on Facebook.

Pam: So, what happened with these affinities was mortgage lenders and realtors were excluding black and latinx affinities from their Facebook ads, digital redlining.

Dyalekt: So, and it’s even worse because again we’re talking about how like it doesn’t matter what background you are a racial wealth divide is bad for you. You can just like stuff that black and latinx people do right and you will also be excluded from buying a home. There you go white guy who grew up in the suburbs playing basketball, listening to R&B records and eating soul food, you can’t have a house either.

Pam: So this system that exists was built on hundreds and hundreds of years of history and so when we talk about your financial habits and behavioral change and things like that it’s all coming from a system that was designed for us to not have good financial habits and for us to feel shitty about ourselves.

Pam: When it comes to habits, it’s about really examining your habits that serve you and your habits that detract from you to be able to build financial wealth. The question that we want you to ask yourselves is, are your habits helping you survive or are they helping you thrive?

Dyalekt: So many of our habits are based in us purchasing things because they’ve been curated as such people, give you social cues that allow you to do this kind of stuff.

Pam: The thing about habits is that habits become traditions, and traditions become truth. There is a stat that is estimated that 70% of wealthy families lose their wealth by the second generation and 90% of families will lose their wealth by the third generation and it’s because families may have figured out how to accumulate wealth but they haven’t figured out how to pass down habits that allow their progeny to actually maintain that wealth.

Pam: And the skill set to maintain wealth is not easily passed down from people who had to accumulate it in the first place. Very, very different habits and very different skill sets.

Pam: Step four is advocacy and it’s about learning how to advocate for yourself and learning how to advocate for others.

Dyalekt: It takes a long time for a lot of us, especially people who want to advocate for others, to realize that you also have to advocate for yourself.

Pam: That leads into the concept of imposter syndrome. A big reason why it’s hard for us to advocate for ourselves is because of impostor syndrome. Imposter syndrome basically means we don’t feel like we belong in the room.

Dyalekt: It’s doubt but it’s doubt that’s often curated by the social cues and often by gatekeepers who tell you, naw you actually don’t belong.

Pam: When it comes to impostor syndrome, this is where we feel like we’re not allowed to speak up we’re not allowed to advocate for ourselves and it can be as simple as they sent me the wrong order and I don’t want to send it back into the kitchen.

Pam: And then it leads to oh they gave me a charge that I wasn’t supposed to get charged on my bank account or my credit card, but maybe I did deserve that. Or oh, I got this job and I know I should have gotten more money but I don’t know, I’m just grateful they gave me this job. It bleeds into so many aspects of our lives that all of a sudden you wake up and you’re like, I don’t know how to speak up for myself.

Pam: When it comes to advocating for yourself, it’s very important to consciously recognize when you’re not doing it and start small. I usually like to start with people who need to dispute a charge and you’ve never called a company and ask them to reverse a charge, ask them to give you a refund on something that they should have and they didn’t then it’s very worth it. Because to do that is very small stakes, you call a customer service person they say no, you hang up you call again because it’s a different customer service person who might have a different response. And if it doesn’t work the first time and you don’t call again that’s fine also because you know, there’s no consequence.

Pam: I’m just gonna leave you with this stat, in 2017 banks collected $34 billion in overdraft fees.

Dyalekt: And a lot of that was folks who shouldn’t have gotten those fees, but they let it stand because they think they did something wrong.

Pam: The final step is values, and this is also the hardest step, I will say. Define your values and live by them. I’ve said this on the show, where you spend your money is a representation of what you value, but what does that mean?

Dyalekt: I mean, yo, I don’t love oil and I don’t think that they’re great, but I will still stop at a BP when I need to put gas in my car.

Pam: When it comes to values the first thing that I want you all to do is to start to question things. To start to question the conclusions that people come to. To start to question the stories that are built around these stats and these studies.

Pam: The marshmallow test, it’s a really adorable test where they put a five-year-old in a room and they put a marshmallow in front of them and they say hey, you can eat this marshmallow now or if you wait five minutes and don’t eat the marshmallow I’m going to come back and give you a second marshmallow, right? The thesis of this study was to see if five-year-olds were able to delay gratification and what that meant for them in terms of their future success in life. What they came to the conclusion of is why did some children eat the marshmallow right away when others could wait for the second marshmallow? It was this idea of delayed gratification leading to greater personal responsibility, which leads to greater success in life.

Pam: The Atlantic did an article that found that that whole thing was a myth. What they found was that the marshmallow test was not a predictor of personal responsibility but actually predictor of socio-economic class what ended up happening was that the kids who ended up eating the marshmallow it’s not that they had a problem with delayed gratification is that in their life people promised them things and then they didn’t get them.

Pam: When it comes to defining your values the first step is to figure out where they actually came from where the values you have now came from. It’s gonna be a lifelong journey and it’s gonna be a process but really when it comes to financial resilience, understanding and being able to sit in your values is going to be one of the biggest ways that you’re able to build your financial resilience.

Dyalekt: Especially because the whole thing is we’re trying to get it so that you’re able to sleep at night which can be difficult because I know a lot of corporations do a lot of terrible stuff and they own all the companies that do all of the things that you want and the things that you need in life, so we have to navigate and we have to decide what are the battles that we’re ready to fight? What are the hills that we’re gonna die on?

Pam: I think that’s really what it comes down to when you’re defining your values as you’re never going to be a hundred percent. Values are not about creating rules for yourself that you end up breaking and feeling bad about. Values are about really understanding in the big picture why you’re doing all of this.

Dyalekt: I think one thing that’s really important when it comes to getting your own financial freedom and your community’s financial freedom is to decide what are the things that you can give up, what are the things that you can let go?

Dyalekt: The racial wealth divide, overall economic inequality, is everyone’s problem, all of our problems and while there are systems who created the machinations for them and those systems are not us we do have some ability, some responsibility to take it down. And the responsibility is just your ability to respond.

Dyalekt: Financial literacy is I’m able to understand and financial resilience is I’m able to overcome.