Money Monday: “If You Can’t Pay Your Bills, Stop Making Bills”

Financial Advisor Ryan Mack shares steps to achieve financial freedom.

Posted: 05/30/2011 11:26 AM EDT
Filed Under budget

Whether it’s the new car, new handbag, new shoes or new something, there’s no doubt that Black folk will stay sharp, but at what cost is it to keep up with the Jones?

 

It may not cost anything the moment the purchase is made, but billions of dollars from African-Americans are going into the pockets of credit card companies every year.

 

In fact, studies show that African-Americans are much more reliant on credit cards and an alarming eighty-five percent of African-American households hold a balance on their credit cards in comparison to fifty-four percent of white households.

 

“We don’t know where the leaks exist in the boat,” says Ryan Mack, a CNN contributor and president and founder of Optimum Capital Management LLC, a premiere financial planning firm.

 

He says that debt has Black Americans in a boat attempting to make it to the other side of the river− to financial freedom. But, every time one tries to get across, their boat starts sinking and they have to swim back to the other side, or back to debt.

 

A solution? Budgeting.

 

“Budgeting is the central crux, the engine of the entire financial plan,” he tells BET.com.

 

“The tower that we’re trying to build is financial freedom –making sure that we can retire, that we can start a business, that we can go to school, that we can be financially free and independent. But how are you supposed to build that tower if you don’t know the costs that it’s gonna take to complete it, or how long it’s gonna take to get there?” he said.

 

Mack’s book, Living in the Village: Build Your Financial Future and Strengthen Your Community, outlines how to build a strong financial future.  Within the book, budgeting is one of the initial steps when trying to establish financial freedom.

Mack outlines three simple and essential steps to budgeting:

1. Estimate: When estimating your budget, Mack suggests writing down all of your expenditures. Websites such as Mint.com help to facilitate an estimate of how much you are spending. Mint.com even has a phone application.

If you’re not tech savvy, don’t worry; simply write down what you think your expenditures are on a spreadsheet-style piece of paper. That works too, Mack says.

2. Keep a Diary:  For 30 days record through Mint.com, or write down what you are spending. “Every time you put a penny in a well, you write it down. You don’t spend a single dollar without marking it down,” says Mack.   

He admits that for some it can be a tedious process, but a 30-day-diary assists in making sure, at least for thirty days, that you are attentive to how much you are spending.

“I spent 100 dollars on that date? I can’t believe it” Mack mimics of single guys dating and keeping record of their tabs. 

 

3. Actualize:  Analyze your 30-day diary and start making cuts.  “My motto is, if you can’t pay your bills, stop making bills,” he says.

 

One expense Mack suggests to cut is cable. “Many of those shows you can watch on television, you can watch online. So why do you have a cable bill?” he asks.

 

The financial advisor also suggests for some to stop paying for work-out facilities, “You jog every morning and do push-ups and sit ups at home, so why are you paying $80 for a gym membership?” he questions.

 

Mack has a mission to fix financial illiteracy, Black unemployment and mass incarceration. He has traveled to eight cities in the past four weeks trying to help people strive toward financial freedom.

 

In response to audiences confessing that they’ve thought about committing suicide because of their financial situation, and to individuals saying that they would feel better in prison, Mack says that he is committed to help change the financial landscape for so many African-Americans.

 

“I feel it,” he says. “I feel what’s going on and this stuff is bigger than what we see.”

(Photo: Stelios Varias/Reuters)

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