How to Break the Cycle of Living Paycheck to Paycheck

Discussion in 'Group Discussions' started by LeMignon, Jan 16, 2020.

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  1. LeMignon

    LeMignon Sith Lord
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    As a Black Gay Male Space, we have discussed some interesting topics--our coming out stories, what attracts us, relationship advice, if our nephews/family members are gay, anime, dating ideas, porn, clothing, movies, actors, etc. However, I'd like to use this space to discuss a more general topic--

    The Cycle of Black Poverty, and, more importantly, how to break out of it... Even how to do well for yourself and gain wealth.

    The paycheck to paycheck lifestyle is very common for Black households. So I'd like to discuss what y'all think are the solutions to it. I remember reading a certain post or article on here on how Gay Black men have more disposable income and appear to be better off than our straight counterparts. Do you agree?

    What do y'all think can get someone out of the cycle? Any personal stories or testimonies. I'm very interested in what @OckyDub & @Nick Delmacy have to say about this topic.
     
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  2. Jai

    Jai Being strong minded.
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    Still waiting to see what Ocky and Nick have to say....
     
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  3. Nick Delmacy

    Nick Delmacy is a Verified MemberNick Delmacy Da Architect
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    I don't think there's any question that gay men have more disposable income than many straight people. We usually don't have children at a young age, if at all.

    The aspect of living check to check, however, spans across all sexualities and income levels. I've seen people who make over $150k a year still live check to check, sometimes in so much debt from living above their means that the guy making $10/hr objectively has more cash on hand than them.

    So if your question is why is this the case in the Black community, I would argue that it's the case in most communities. Population wise, there are more White Americans living in poverty (17m) than Black Americans (9m). That's not to say that Black poverty isn't a problem, especially since there are fewer Black people here than Whites. And of course certain systems and bigotries are in place to make it harder for non-white people to gain wealth.

    But I would say money management and financial planning is a problem for most Americans. This monologue from the opening episode of Ozark kinda sums it all up:

     
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  4. OckyDub

    OckyDub is a Verified MemberOckyDub I gave the Loc'ness monstah about $3.50
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    *I was tipsy when I initially responded so I needed to update*

    So I wanted to just copy and paste links to my older posts/ threads but while it shows my feelings its not an answer or solution.

    The first step in a possible solution is mindset. Unless folk can change their mindset, whatever cycle that is causing them financial strife, they will continue in it.

    I'm not a baller but I don't want for anything. I don't live check to check and my credit score is a few points from 800. I have tax debt and credit debt but also savings and investments that are fruitful.

    Nonetheless there was a point in my late 20s when I asked myself the question, "If I want to be better off financially 'X' amount years from now, what am I going to change today to reach that point?"... that shift in my thinking set things in motion to my present day response.
     
    #4 OckyDub, Jan 18, 2020
    Last edited: Jan 19, 2020
  5. OckyDub

    OckyDub is a Verified MemberOckyDub I gave the Loc'ness monstah about $3.50
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    I love this topic so I'm open to answering questions and I solicit @RolandG's (who is financially savvy) input as well.
     
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  6. RolandG

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    I didn't answer originally, because I feel like I go through this with friends and family quite often and they NEVER take my advice. It's very frustrating because having broke friends and family definitely puts a dent in my ability to do some of the things that I enjoy doing. I don't think there is this big secret to getting out of the the cycle of living paycheck to paycheck. SAVE YOUR MONEY!!!!

    Although not exclusive to black folk, we tend to have money that burns holes in our pockets. In the eyes of almost everyone I know, what's the point of having money if you aren't spending it. This is fiscally irresponsible to the tenth degree. Almost everyone can afford to save something from their paycheck even if it's only $10 yet we don't do it. Think of the shenanigans that goes on when people get their income tax checks. It goes straight to Wal-Mart, Best Buy and Side-of-the-road car lots.

    I believe @OckyDub wrote about it before, but he invested small amounts to start. That's exactly what I did. First, started my 401k off the bat then I took advantage of purchasing my company's stock at a discount when it was offered to all employees and then I kept buying more and more. This was back in 2004 so as you can imagine, that stock has ballooned beyond my wild imagination.

    Also, because I was single with no kids, I created a personal budget for myself that included investing. A percentage of my paycheck went into buying more stock/bonds and another percentage went into a savings account for emergencies. To this day, I have not withdrawn a dime from any of these accounts.

    There's a famous saying that goes something like, "If you want to hide something from a black person, put it in a book." We don't like to read. I had to read and study up on investing to feel comfortable doing it in the beginning. Even though today I have a FA(Financial Advisor) that helps me manage my money, I like to know enough to keep an eye on what he's doing.

    Live BENEATH your means!!!!! I have a very nice car but it's not a Range Rover or BMW. I don't need those expenses. Remember, the extra money can make me money instead of being parked in my driveway depreciating. If you can afford a $2000 mortgage, get one for $1600. @Nick Delmacy was correct when he said there are people making six figures living paycheck to paycheck because people feel that the more they make, the more they can spend.

    Unfortunately, our parents have very little to zero financial literacy so there is no one to teach us about these things. It's going to take initiative to learn it starting with this generation. One thing I can say is when you have money in the bank and other investments, it certainly takes a lot of pressure off living and trying to enjoy life.
     
  7. LeMignon

    LeMignon Sith Lord
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    These takeaways I got from you are GOLD! I think if you have a decent job that pays the bills and some money left over, this kind of mindset and course of action will create financial freedom. I believe that, and I think it'll also help you not to fall for the common pit traps (payday loans, unnecessary expenses/debts, etc).

    But @RolandG what advice would you give to someone who is trapped financially? Payday Loans/student loans/Credit Card debt/More Bills than Income trapped. What's your opinion on Bankruptcy? I don't wanna ask too many questions, but you seem like the Man on this topic! Lol

    That's wassup! I know you mentioned investments just now and I remember an older post where you talked about buying your favorite stocks, if I'm not mistaken. But what kinda timeline did it take to get you where you are today? I guess my question is, what was your journey like and how long did it take you to get to this financially well off position? Or has this kinda always been the case? ... And did you fall for any traps along the way?

    @OckyDub & @RolandG I don't want to pry too much, but y'all seem to be the experts!
     
  8. OckyDub

    OckyDub is a Verified MemberOckyDub I gave the Loc'ness monstah about $3.50
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    It took me 10 yrs but I still have a ways to go before I get on RolandG's level.
     
  9. RolandG

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    There is no easy fix to escaping debt besides hitting the lottery or obtaining a job that pays substantially more than you've ever made. Paying people to "fix" your credit score is a scam straight up. If you have considerable debt, understand that it's going to be a journey to get back on the right path. Still, you have to start with paying off your debts or waiting several years before they are expunged from your credit report.

    There is this thing called Austerity Measures and a lot of governments have used these to reduce debt and curb spending. This can be valuable for individuals as well if followed through. Essentially, you have to give up pretty much most things that are bare necessity to survive and use any funds to pay down debt. This means you may not be able to take a vacation for three or four years, no matter how cheap the vacation is. Think of everything we humans believe to be necessary to survive today that aren't truly necessary such as cable tv. How about keeping your Iphone 7 Plus instead of getting the new iPhone Pro. No eating out, clubbing, $20 movies etc. Only live on the things you NEED and then take all of the extra money you're saving to pay off your debt. You would be surprised at how much you waste on things you don't need and how quickly that money can pay down debts. I've never had debt but I sorta lived like this in my early to mid-twenties in order to have extra money to invest and it's benefiting me more now.

    Last, you do know that there is no law against investing even if you have lots of debt. People think that all of their money has to go to debt and it doesn't. Start paying off your debt but invest at the same time, no matter how little. It takes 7 years for bad debt to be expunged from your credit on average so it's a long road either way.
     
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  10. LeMignon

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    Once again, I really appreciate your wisdom! I think a lot of people get into bad situations financially without thinking about the later consequences of it. This applies to credit card debt, pay loans, and even student loan debt to a degree. Though I feel that many students don't understand and aren't correctly taught about student loans, nor about scholarship opportunities. However, your advice is golden and I will use it! It also kind of reminds me of Dave Ramsey's Baby Steps. And too, that method requires living bare bones to get out of debt. But what I love is your advice on investing and saving as part of your monthly budget.
     
  11. acessential

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    Unfortunately, breaking the cycle of poverty often involves obtaining a college degree which leads to student loan debt. Student loan debt is a substantial hinderance to economic progress especially because you can't declare bankruptcy on it. #FeelTheBern
     
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  12. mojoreece

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    That!.... I think that needs to be discussed more. Like how does our ppl actually start making more money. Like if ur in dept it can really be hard if u dont make much money. Or have the right skills for the job market. Most high paying jobs require some type of education specificity ie doctor, lawyer, engineering.

    Also student loans and bankruptcy. Many ppl think thats true but i heard on npr that says sometimes judges will reduce the amount for you u just have to get the right attorney to fight 4 u.
     
  13. acessential

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    Yeah, I know a lot of folks advocate for trade school as a way to get training for a job while incurring minimal debt. It's a great option. My problem with it is, the training is very narrow. What happens if the industry changes and your skills are no longer necessary? Or what happens when you simply want to move to a different field? Do you go to trade school again? A lot to think about.
     
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  14. BlackguyExecutive

    BlackguyExecutive Je suis diplomate
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    One of the things that I implemented a couple of years ago was the practice of paying myself first over anything else. At first, I was taking $75 from each paycheck and saving it in a high-yield online savings account. Now, and my husband I both contribute $150 each out of each paycheck into that high-yield savings account.

    I would also recommend understanding credit and the use of credit cards.

    At the end of the day, people need to make a budget, save more, and look for cheaper alternatives (shop around).
     
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