Black MBA - Winter 2008/2009 - (Page 25)

weight belt but you still have to box every day, you have to defend the title.” GETTING BACK TO BASICS In getting back to the basics, there’s one fact no one can ignore, and we all know what it is – we’ve just chosen to ignore it. “If you spend more than you earn, you will always be broke and in debt,” Khalfani-Cox says. “I don’t care how much money you make, the math doesn’t work.” Most American families spend $1.22 for every dollar earned, she notes. So as you cut back on spending and work on developing a budget, you must make sure that you’re not spending more than you make. And it’s not just an adjustment for now – it requires an overall change in thinking. “You have to be smarter about your spending habits,” Khalfani-Cox says. “It’s almost like we turn a blind eye. We know what we’ll have to pay, but we’re not breaking it down and thinking about it properly.” There are some things you should definitely be doing in the current situation. One of the first steps in getting back to basics is to pull back on spending and pay down your debt. Take stock by writing down everything you owe – and not just the large amounts, but small ones, too. “I really do think people have to face reality when it comes to their satiation,” Khalfani-Cox says. “Writing down all your bills and putting it in black and white is important. People tend to guestimate about the debt they have.” It’s akin to dieting – until you step on the scale, you don’t know exactly what you’re looking at. With debt, until you know the tally, you won’t know what it takes to get you to zero. And while looking at your full debt picture can become paralyzing, Khalfani-Cox says most people look at it as a wake-up call. “They’re going to get serious about debt and tackle the problem head-on,” she says. “It’s the resolve you need to say, 'I got myself into this problem I can get myself out of it.'” NEGOTIATE TERMS Resolving to take charge of your situation is a good first step. Now you have to get on the phone and start negotiating, Khalfani-Cox says. “People don’t think they have any leverage when it comes to dealing with creditors, but banks send out six billion credit card offers each year to consumers like us,” she says. So instead of paying off the card at 18.9 percent interest, shop around and find a lower interest offer that can lower the total amount you have to pay. And use the offers to ask your card provider to reduce your current interest rate. Even with lower rates, you still have to pay it off. Now that you’ve reduced the overall amount you’ll have to pay, Khalfani-Cox suggests taking advantage of it and using unexpected money – holiday gifts, windfalls, even stimulus checks – to pay off debt. Next, it’s time to increase what you’re paying. “You need to double or triple your minimum payments,” KhalfaniCox says. “If you’re just making the minimum payments, you’re in a trap forever.” YOU NEED A BUDGET You might be trying to avoid it, but you can’t get away without making a budget. “A budget allows you to control your money so your money isn’t controlling you,” Khalfani-Cox says. “People think budgets are about deprivation – what you can’t do, can’t buy and can’t experience. But that’s not the proper way to look at a budget.” The bottom line is that you do have to make tough choices and if it were easy, everyone would do it. Some choices are easy – changing from Whole Foods to Wal-Mart or Target, visiting the library instead of buying books, clipping coupons, etc. But for most people, making a significant lifestyle change, on top of everything else, is much too difficult. “People do not like to change their lifestyle,” Khalfani-Cox says. “But with whatever you want to buy, you should ask yourself one question, which is, ‘Can I get this cheaper?’” Beyond small habit changes, Khalfani-Cox says the key to success with a budget is that you have to leave something in the budget, whether it’s $20 or $250, for what you like. “It has to be something of value to you – something that will allow you to sustain your spending at a healthy level over time,” she says. “What do you want to spend money on?” By building in something that allows you to spend money on what you like, there’s a much better chance you’ll stick to your budget, Khalfani-Cox says. Otherwise, it’s like dieting – you’ll eventually get to a point where you just binge and bust your budget. You still can’t spend more than you earn, but if you build something into your budget to give yourself some satisfaction every month and make sure it’s important, Khalfani-Cox says that within a couple of months, most people start to change their thinking about buying what they want versus what they need. “You have to decide you’re not just going to be lured into this thing where buying more stuff and having more things makes your happier, more successful, more popular or a better person,” she BlackMBA • Winter 2008/2009 25

Table of Contents Feed for the Digital Edition of Black MBA - Winter 2008/2009

Black MBA - Winter 2008/2009 Contents Preserving Dr. King’s Legacy: Harry E. Johnson is Six Years and $100 million into his First Fundraising Effort Online: www.nbmbaa.org and www.blackmbaonline.com Up Front: Inauguration Takes Over D.C. From the President: Connecting With the Basics The First 100 Days – Already in Progress Back to Basics: Finances 101 Is the Middle Class Disappearing? – Your View From Medals to MBA Conference Highlights Market Forces: The Job of Trying to Find a Job in a Tight Market Applying to an MBA Program?: Avoid Making these Five Critical Mistakes How They Did It: Catching up with the Winning Teams from NBMBAA’s 2008 National Case Competition Change It Up: If a New Job is at the Top of your New Year’s Resolutions, it’s Time for Careful Planning and Preparation Bull Market: Now is the Time to Take Advantage of Web 2.0 On the Move: Member News, Promotions and More Backstage at BET: NBMBAA’s Leadership Institute Takes on BET’s Case for Growth Toronto Rising: NBMBAA’s Toronto Chapter is on a Progressive Track, Building Strong Partnerships and Exposure as Membership Climbs NBMBAA® Chapters: Find Your Local Chapter Here Do What You Love: Turning Your Passion into a Successful Business Requires Patience, Planning and Plenty of Hard Work Above and Beyond: Meet the Winners of the 2008 Wells Fargo/NBMBAA Entrepreneurial Excellence Award Decorating by Design: Michelle Rider Leaves Corporate Life for Entrepreneurship Culture Shock: Black Museums Nationwide Appeal for Greater Support from the People whose Heritage they Strive to Preserve Gear Up for 2009: Books to Herald Success in the New Year Advertiser Index: Who’s Who in the Issue

Black MBA - Winter 2008/2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.