Optimism may be the exact economic stimulus we need
Nov. 14, 2008–Yes we can! Regain our financial footing! It’s the new rallying cry for black people on the short end of the sagging U.S. economy.
The election of Barack Obama has given us the audacity to hope for a brighter future. While the new administration is facing one of the most challenging economic times in this nation’s history, the shift in attitudes in people of color may be just the personal stimulus package that many of us have been missing.
Theresa Kelly works at the Harlem office of Operation HOPE. The nonprofit provides financial counseling and lending services. The number of people signing up for the center’s various financial counseling programs has more than tripled over the last month! In addition, Kelly says people now say things like, "I’m going to own a home one day," and "It’s only going to get better for us."
Over the years, as I’ve researched why people make the financial choices they do, I’ve ended up talking to as many psychologists and sociologists as financial experts. In one form or another, the same three forces are at work in all of our financial behavior:
Early role modeling: The way we saw money handled and discussed (or not) when we were growing up.
Social messages: Social pressures to "keep up," as well as social stereotypes about gender, ethnicity and race.
How we see ourselves: "I’ll never be rich." "I’ll never get out of debt." "One day I’m going to make it, I don’t have to save now."
The change in the ways black people see themselves and their futures as a result of the Obama presidency will add an interesting—and potentially positive—new layer of influence to these other powerful forces.
"I absolutely believe that this will allow minorities to see themselves differently," says Dr. Ted Klonz, who specializes in financial behavior and is contributing author of Chicken Soup for the Recovering Soul. "Money attitudes and beliefs will change with that ‘seeing.’ People got their hope back. When we’re not feeling so good about ourselves, it is difficult to listen. When we feel good about ourselves, we can hear. This could change everything if the right message is promoted and people are given the help they need."
Neel Kashkari, the Treasury Department’s interim assistant secretary for financial stability, recently testified to members of Congress that some preventable foreclosures were occurring because homeowners were reluctant to contact their lenders. He called this the "hardest part" of the industry’s efforts to help people change the terms of their loans.
If people are feeling more empowered these days, more of them will likely work up the courage to make that call and try to save themselves from foreclosure. Roper Public Affairs & Media found that 57 percent of this country’s late-paying mortgage borrowers don’t know their lenders even offer alternatives to help them avoid foreclosure. That’s something that needs to change. And lenders need to step up to the plate and help their customers better understand their options.
I think Sen. Chris Dodd of Connecticut’s response to Kashkari’s remarks really grasp what it means to be serious about creating an educated consumer. He said, "Why can’t the lender make that call? They know they have a customer, a borrower in trouble."
It is unlikely that the industry will step in and willingly take the lead. But they are feeling the pressure to act. If consumers have the courage to ask questions and advocate for our best interests, we may find that it’s not so difficult to work together.
United for a Fair Economy estimates that this mortgage crisis will cost people of color $213 billion, the biggest loss of wealth in history.
Forty years ago, just before his death, Dr. Martin Luther King Jr. was about to expand his focus into something called "the poor people’s campaign." The campaign was about moving poor blacks, Hispanics, Asians, Indians and whites into the economic mainstream.
Dr. King knew that the best way to achieve social justice was through economic parity. To use his words, "The developed nations of the world cannot remain secure islands of prosperity in a seething sea of poverty. The storm is rising against the privileged minority of the earth, from which there is no shelter in isolation and armament. The storm will not abate until a just distribution of the fruits of the earth enables men everywhere to live in dignity and human decency."
For many of the people Dr. King had in mind, that storm is named Barack Obama. Now we have to take the hope that we feel and translate it into empowerment, education and action in our own financial lives.
Stacey Tisdale is a veteran on-air financial journalist. She’s the author of "The True Cost of Happiness: The Real Story Behind Managing Your Money." She is also a board member of nonprofit financial literacy organization, Operation HOPE.