Racial Wealth Gap...

If a large part of a household's net worth is their housing equity, then it's all on paper and can't easily be transformed into spendable income. White families, with less proportionally riding on their homes' value, probably have more in real money: more everyday money in the bank, more money in retirement accounts, more money in non-tax advantaged savings. A decline in value of the home doesn't really matter much if the homeowner has no plan to move, but it will show up as a decrease in net worth.

But for black and Hispanic families who have put a large portion of their savings into their home, and don't have much other savings to back it up, that decline in their homes' value really hits hard.

Around where I live, many Hispanic families like to buy homes large enough to house three generations, and/or extended families, so they tend to have larger homes and larger mortgages in relationship to their income than do white families who are looking to house only one or two generations, and only the nuclear family.

In part I blame the home ownership push that you couldn't escape over the last decade or two. People who rented were told they were "throwing their money away," which really isn't true. So many people bought homes who really couldn't afford them, assuming that real estate values would always go up. Now people who can't afford their mortgages and can't sell their homes for what they paid are in a real bind. Talk about throwing your money away - having to bring money to the table to sell your house is a real hit.
 
Beach girl said:
If a large part of a household's net worth is their housing equity, then it's all on paper and can't easily be transformed into spendable income. White families, with less proportionally riding on their homes' value, probably have more in real money: more everyday money in the bank, more money in retirement accounts, more money in non-tax advantaged savings. A decline in value of the home doesn't really matter much if the homeowner has no plan to move, but it will show up as a decrease in net worth.

But for black and Hispanic families who have put a large portion of their savings into their home, and don't have much other savings to back it up, that decline in their homes' value really hits hard.
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This kind of reinforces my point. Placing the majority of your savings into one investment vehicle is just poor financial planning probably due to lack of knowledge/education.
 
Well, yes, in a nutshell. Still, to be fair, everyone and their brother was writing about how you just HAVE to buy a house. It would be very, very easy to be taken in by that.
 
If a person is upside down on a mortgage, it's time to consider strategic default.
 
Warped said:
This statement doesn't make sense. How are the unskilled profession being punished? They don't have any skills thus are easily replaced. If a maid demands a higher wage, the maid would be let go, and replaced by someone who provides the same quality of work at cheaper rates. It's basic business practice.

Basic business practice and society's acceptance of such is exactly what creates the cycle that punishes unskilled employees.

I would agree with what dogmom said about the first question. The 2nd, I have no idea how to encourage more minorities to obtain degrees or increase their skills/knowledge. I was just trying to explain my opinion why there's such a huge disparity in wealth, not offer solutions.

The solution is not necessarily dependent upon minorities obtaining degrees or increasing their skills or knowledge.


I would prefer to say, perhaps the blacks/hispanics doesn't have the access or opportunity to learn how to generate more value.

And why is it that they don't have that opportunity? This much of a disparity in wealth is indication of a dysfuntional society.

Your article stated that Asians had more wealth than whites prior to the recession. A difference in investing philosophy due to cultural differences exposed them to more risk? I have no idea, but my general point is Asians/Whites pursue higher education more than the minorities and as result, are at the top of the wealth ladder, and much further than the minorities.
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That is only the surface. There is a reason that the things you observe occur. That reason is what is creating the environment that allows such a wide disparity to exist.
 
I recall reading a long time ago that there are four things one must do to avoid poverty:

1) Graduate from high school
2) Do not get pregnant while in high school, preferably not before marriage, definitely not before age 21.
3) Eventually, get married to a stable partner, and stay married.
4) Do not abuse alcohol or use illegal drugs.

That's it. Those four behaviors are highly correlated with staying out of poverty. And the reverse is true: the more an individual does the opposite of those four things, the higher the chance that individual will be poor.

Of course that doesn't account for the various tragedies that can happen in life: serious illness or disability in the family, premature death of spouse, etc. Still, it was quite surprising how much those behaviors helped people, of all races and even from poor backgrounds, get out and stay out of poverty.
 
Warped said:
This kind of reinforces my point. Placing the majority of your savings into one investment vehicle is just poor financial planning probably due to lack of knowledge/education.
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You are missing the point. Cultural differences and inequities in opportunity mean that providing a home for extended family is a priority for many. It isn't like they have lots of disposable income to diversify their investments. Talk to most of these people about diversifying their investments, and they will look at you like you came from another planet. They have more pressing concerns to deal with. Refer to Maslow's heirarcy of needs.
 
Warped said:
This kind of reinforces my point. Placing the majority of your savings into one investment vehicle is just poor financial planning probably due to lack of knowledge/education.
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Day-um, things are peachy keen and I never knew it. :lol:
 
sallylou said:
If a person is upside down on a mortgage, it's time to consider strategic default.
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Not necesssarily, not at all. It depends on your overall plans and how seriously you're underwater. As an example: we bought our house in the late '80's, at what was then the peak of the market. In the early '90's, housing values dropped again, and for a while we would have taken a significant loss if we had sold.

But it was irrelevant. We liked the house and the neighborhood, and we had bought below our means in the first place, so we could easily continue paying the mortgage. In time, property values rose again.

Right now, even with values again in a decline, our house is worth about 2 1/2 times what we paid for it. And it's paid off now. It would have been very short-sighted to have sold into a declining market, just because it was declining. No point to that at all, since neither our needs nor our income had changed any.

Patience is a virtue in real estate, so long as you bought appropriately in the first place.
 
Beach girl said:
I recall reading a long time ago that there are four things one must do to avoid poverty:

1) Graduate from high school
2) Do not get pregnant while in high school, preferably not before marriage, definitely not before age 21.
3) Eventually, get married to a stable partner, and stay married.
4) Do not abuse alcohol or use illegal drugs.

That's it. Those four behaviors are highly correlated with staying out of poverty. And the reverse is true: the more an individual does the opposite of those four things, the higher the chance that individual will be poor.

Of course that doesn't account for the various tragedies that can happen in life: serious illness or disability in the family, premature death of spouse, etc. Still, it was quite surprising how much those behaviors helped people, of all races and even from poor backgrounds, get out and stay out of poverty.
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If only it were that simple, this country would not have so many high school graduates who are married and didn't have children early, nor do they abuse alcohol and drugs listed in the catagory of "working poor".

This also assumes that race and ethnicity does not play a factor in the stratified make up of our society.
 
jillio said:
If only it were that simple, this country would not have so many high school graduates who are married and didn't have children early, nor do they abuse alcohol and drugs listed in the catagory of "working poor".

This also assumes that race and ethnicity does not play a factor in the stratified make up of our society.
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Not at all. Anyone of any race or ethnicity can easily do those things. No one is stopping them.

Interesting article in today's Wash. Post about black professionals moving in and "gentrifying" Anacostia, a part of D.C. that was known as poverty-stricken and drug-riddled in the 1980's.

"http://www.washingtonpost.com/lifestyle/style/black-professionals-leading-the-charge-of-gentrification-across-anacostia/2011/07/15/gIQAbHM6cI_story.html?wpisrc=nl_buzz"

That's something else that helps young people stay out of poverty -seeing successful people of their own race and background in their own neighborhood, interacting with them, and seeing what those people do, how they behave, and what their lives are like as a result.
 
also, you gotta have intelligence to budget. if you don't know how to budget, you're screwed.
 
Beach girl said:
Not at all. Anyone of any race or ethnicity can easily do those things. No one is stopping them.

Interesting article in today's Wash. Post about black professionals moving in and "gentrifying" Anacostia, a part of D.C. that was known as poverty-stricken and drug-riddled in the 1980's.

"http://www.washingtonpost.com/lifestyle/style/black-professionals-leading-the-charge-of-gentrification-across-anacostia/2011/07/15/gIQAbHM6cI_story.html?wpisrc=nl_buzz"

That's something else that helps young people stay out of poverty -seeing successful people of their own race and background in their own neighborhood, interacting with them, and seeing what those people do, how they behave, and what their lives are like as a result.
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No one is stopping them? Okay. Maybe I am completely off target, but the disparity in wealth and opportunity appears to be a stop light to me.

Well, the problem of seeing others succeed, yet encountering obstacles that prevent an individual from suceeding is part of the reasoning behind Confict Theory. It actually creates more of a cycle of poverty.

And keep in mind, we are talking about minority populations as a whole. There are always a few exceptions to anything, but what really matters is the effect on the whole.
 
jillio said:
No one is stopping them? Okay. Maybe I am completely off target, but the disparity in wealth and opportunity appears to be a stop light to me.

Well, the problem of seeing others succeed, yet encountering obstacles that prevent an individual from suceeding is part of the reasoning behind Confict Theory. It actually creates more of a cycle of poverty.

And keep in mind, we are talking about minority populations as a whole. There are always a few exceptions to anything, but what really matters is the effect on the whole.
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Just because Oprah Winefry is a billionare doesn't mean that others of her race aren't having problems.
 
Wirelessly posted (droid)

It really depends on whether you have a non-recourse loan and the laws of the jurisdiction. Creditors would like you to believe that you're better off paying, but that's not always the case, especially when facing unemployment.
 
deafskeptic said:
I don't think I have read any of his works but I have heard of his book The Jungle.
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It is an older novel, but it illustrates concepts regarding the poor and their willingness to put everything into owning a home to provide security for extended family that is very pertinent to some of this discussion.
 
jillio said:
It is an older novel, but it illustrates concepts regarding the poor and their willingness to put everything into owning a home to provide security for extended family that is very pertinent to some of this discussion.
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I should check it out.


I was going to suggest Grapes of Wrath but I checked it again and since we're taking about Racial wealth gaps and Wrath is more of a class rather than racial struggle, I didn't think it would quite apply here.

For some hispanics and blacks, I would think it's both a class and racial thing though. :hmm:
 
jillio said:
You are missing the point. Cultural differences and inequities in opportunity mean that providing a home for extended family is a priority for many. It isn't like they have lots of disposable income to diversify their investments. Talk to most of these people about diversifying their investments, and they will look at you like you came from another planet. They have more pressing concerns to deal with. Refer to Maslow's heirarcy of needs.
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I wonder why the bolded part is?? Because they never bothered to learn how to plan their finances for purchasing their homes? Again, education/knowledge is the most important factor in those circumstances. You can argue society is preventing them from learning if you want.

I understand that some might not be fortunate enough to earn tons of money, but that just means it might take them a bit longer to save up to an appropriate amount to handle the purchase of a home. Providing a home can still be a priority and have a good sound financial plan focused on increasing one's wealth or preventing it from turning to zero.
 
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