Color of Money Live: Talking with author Shomari Wills about Black Wealth

Feb 22, 2018

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

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So glad you could join me today. 

My guest is Shomari Wills. His book was the Color of Money Book Club pick for this month. 

It's a great read. 

"Black Fortunes: The Story of the First Six African Americans Who Escaped Slavery and Became Millionaires" 

Please welcome him with any questions about his research. 

Let's get started.

I wrote in awhile ago about how my husband manages finances and investing, while I get the most bang for our buck while managing our household (I'm a homemaker). We've started the cross-training you recommended. After a conversation and some very boring reading, I know how much is left to go on our mortgage, what we have in assets, where our money is invested, and how to take a long view and not panic when the market dips. My husband knows how much we spend on groceries a week, how to look for sales and stock up, and how I meal plan to overlap ingredients and eliminate waste. I'd also like to bring him to the market with me sometime for comparison shopping and bargain hunting. We're not trading jobs anytime soon, because we each have our own talents and we don't want to micromanage each other. But it's great to know we can back each other up, and I have a new appreciation for my husband's talents. (Seriously, anyone who can read a prospectus and not keel over from boredom deserves a medal. Though I'm guessing my husband would say the same about me poring through grocery circulars and cookbooks.)

I LOVE, LOVE this testimony. It should be required reading for every married and engaged couple!

It shows how you can play to each other's talents but how important it is to know how to do each other's jobs in the household. 

Great work. And so glad you took my recommendation. 

Good Morning - I was inspired by the chat last week to make a contribution to max out my HSA for 2017. I plan to do the same for 2018. Question: what do you think about putting my HSA funds into investments? My account offers this option, but I've never done it because I've never felt I had enough money in the plan. But now I'll have several thousand dollars, plus my medical expenses have always been low so I don't expect to need to use a lot of the funds. Thanks!

When it comes to investing, I always ask myself will I need this money in 5 years or less. If I do, I don't invest. Too much risk for me. So you might try the same thing. Ask yourself if you'll need the money in the short term. If you have a lot of health issues, you might answer yes. If not, you might be comfortable with investing for growth. But also keep in mind this is money you need to be there in full should you have a health care issue. 

What inspired you to write "Black Fortunes?" And how do you connect your research for the book with the conversation today about black wealth or the lack thereof? 

Hi Michelle -I was inspired by the lack of narratives about black economic power. So much today focuses on black folks and lack. Poverty and disparity are a big issues, but to me the narratives around those issues can border on nihilism. I wanted to tell a story about the financial architects and pioneers of the black community and try to help make sure their contributions were remembered.

I know you've covered this before, but how do I go about finding a fee- based planner to tell me if my portfolio is on track or not?

I never have a problem repeating information. It's not a bother -- ever. You can start your search for a fee-only planner by going to the website for the National Association of Personal Financial Advisors (NAPFA) at napfa.org 

From the recent article about saving: I don't feel like we're saving enough, but we're well above your recommendations of 10%-20%. We do have an emergency/life savings fund. We're in our mid-30s. 10% a month goes to retirement, 2.5% gross income goes to a 529 plan, and depending on extracurricular activities (occasional eating out, movies, fun stuff with the kid, etc.) an additional 15-20% gross income to pay off principle on the debt (we have a mortgage, a car payment, and a HELOC for remodeling our house). The debt is being paid down, but we still feel like it's too slow and not enough (at this pace, the car and HELOC will take a good 4 years to pay off). But at the same time it seems unrealistic to give up all the "fun" extracurricular activities just to pay off debt??

Read Michelle's column: How much should you be saving?

It's enough. You need to live and have fun too. I mean that. 

I've spent my whole life worrying I wasn't saving enough. And that worry often kept me from spending when I could have or spending without guilt. You are doing the right things, saving while also paying down debt. 

If I were inclined to tweak your plan, I might have you pull back some from retirement savings and be more aggressive with the debt payoff but you idon'thave to. A four-year plan isn't that long. 

Just be sure to keep the fun in check since I do want you to get rid of that debt soon. 

Do you have a particular budget template that you like to use? I am looking for something to use on my computer.

Just about any works really. The key is you not the tool. 

We use a template my husband and I created. Search for "21 day financial fast" and Michelle Singletary. On my web page at the bottom you'll see a few templates you can use. 

We live in a city where there are many successful Black and White Americans. What are some suggestions you have for the two groups to work together to enhance the success of younger generations of Black entrepreneurs, educators, medical professionals, social service personnel, factory workers and farmers?

I think business can build bridges. I think we need to find a way to bring angels, consultants, inventors, entrepreneurs and workers together in the US of all colors. One way to maybe do this is through large churches with diverse congregations. They can host entrepreneurial mixers and seminars and invite other congregations. Churches are underrated entrepreneurial platforms. In my book I write about black millionaires Hannah Elias and John Nail and how they bought up Harlem and integrated it through their pastor Rev. Hutchens C. Bishop and their church. 

http://www.blackpast.org/aah/nail-john-e-1883-1947

Why did you decided to only focus on prior slaves versus added free people of color who were also highly financially successful?

They were not all former slaves, but all came out of  the slave period in some way shape or form. One of the people in my book Mary Ellen Pleasant was free. So was Jeremiah Hamilton who is also in the book. Bob Church and Alonzo Herndon were slaves. Annie Malone, O.W. Gurley and Hannah Elias were either born in the last years of slavery or just after. I really tried to cover the first generation black millionaires as comprehensively as possible. 

Do you have any advice on when is the best time to looking into long-term care insurance. I encouraged my mom to look into purchasing a policy. I don't have the ability to care for her if she gets sick and needs constant care and she would not want to go into a nursing home. She is 70 and my father is 76. Is there a time when it is too late to get a policy?

The long term care insurance industry is going through something right now. The pricing is crazy. And it's crazy because the insurance companies guessed wrong on how long folks would hold on to policies and frankly how long they would live.

But to answer your question at 70 and 76 you'll find the policies very expensive. And if they have any major health issues they may not be able to even get a policy. Experts say the sweet spot to get it is in your 50s. Maybe early 60s. When you start to get 65+ and more likely to need the policy the prices become cost prohibitive for many people especially if you add an inflation rider, which you'll want to do.

If you still want to help your parents pursue the insurance do a lot of reading.  And make sure that once purchased they can keep up with the payments. 

If they can't afford the policy now is the time to have an honest conversation of what they can expect from you and how they will manage should they need long term care. 

I am in a similar situation with an HSA that allows investments above $2K. I had a fee-only planner advise that I max the HSA contribution out, don't use it (unless you have to), and invest what you can. The idea here is kind of equivalent to a 401K (only more so), because the HSA is tax free, the interest is tax free, and you don't pay taxes on withdrawal (assuming qualifying expenses). Also, that if you keep receipts from what you pay using non-HSA dollars on qualifying expenses, you can get reimbursed for those expenses at a future date. So you sort of have a backup bank that continues to grow interest tax-free.

Thanks for sharing. But again, be careful about investing money you may need. The market has been good -- well up until lately -- so people get a false sense that it goes up in a straight line. You don't want to be down when you need the money for health expenses. 

I have to say I was sadden to read in the Epilogue this "As fate would have it, the nominal wealth of most of the individuals profiled in this book faded after their deaths."

Why was that? (I know but many of the readers may not). I was particularly struck by this because we are seeing this trend now -- wealth isn't being kept for generations after someone had money. Is this a black thing or an American thing?

It saddens me too, but their contributions remain. They funded abolition, anti-lynching and suffrage. Redlining and government neglect of black areas for example destroyed the real estate wealth of many early black investors. Early black bans on Wall Street have prevented black folks from developing a culture of investing, though that is changing. Small black banks we depended on for generations closed after the crash of '08 and many black folks just don't trust the big banks like we did our own. In my book the characters lost a lot of their wealth fighting back against the attacks against them, with the exception of Robert Reed Church and Madam CJ Walker, the characters in my book didn't have surviving children to manage their estates. Balancing business and family has always been tough it seems. 

I know my question is off topic but I'm sure the answer will be helpful to others. When choosing an advisor, how critical is it for him/her to have certifications ie, CFA, CFP etc? Thanks very much.

There are a lot of credentials for financial planners. The CFP is considered a gold standard. The key is to do a background check. 

Do a search and read how to do a background check on a potential planner. And then do it. 

Can also be found on the Financial Planning Association's web site: http://www.plannersearch.org/?_ga=2.60765997.141883443.1519320569-253515503.1517508427 :-)

Thanks. Them too. 

Hi Michelle, Years ago, my hubby and I set up Roth IRAs. We stopped contributing for various reasons. I want to get serious about it again. My questions: 1. What is the amount that we can contribute yearly? We're 50 and 53. 2. Can we make contributions for 2017 still? In a lump sum amount? Thank you!!

Since you both are 50+ you can contribute up to $6,500 a year. But you also have to make sure you meet the income limits. Make too much and you can't contribute. And you can still make a contribution for 2017 up to the April 18 tax deadline. 

Here's a link for an article in NerdWallet with more information 

Hi Michelle, My question is this: would it be OK to temporarily reduce my 401K contribution percentage to beef up my cash savings so I can buy a house with 20% down (thus avoiding PMI?) Background: I have been savings the IRS maximum of $18K (now $18.5K) for a few years now, and then my company matches 3% on top of that. My 401K balance is ~$120K. I am 29 years old (I started working straight out of college and have always hit the 401K hard but only recently received big enough raises to be able to do the full $18K). I want to buy a house in the DC area and as you know, the prices are high. I really want to be able to put 20% down but I'm about ~$7-9K short of the price range house I'd like. The really shrewd answer would be to just buy a cheaper house, but the difference in what you get is quite significant so I'm trying to find a way. I would reduce the 401K percentage so it worked out that I'd still be contributing $10K/year and I'd put it right back up as soon as I bought the house. Thoughts?? Thank you!

I like your plan. You have my seal of approval.

And here's why. You are young and you have a lot of time to hit retirement hard before you retire. You are a proven saver so I have no doubt you'll jump right back into saving for retirement. 

Also, avoiding PMI will save you a lot of money. Plus, with 20% down you'll likely to get a better rate OR you might be able to get a 15-year mortgage that you can easily handle.

Must read your book - its sounds amazing! I'm a historian and have been looking into the history of cosmetics. Over historical time, beauty industry was a great vehicle - one of the only vehicles - for women to gain economic power. This seems to be especially true for women of color - and I notice you have two in your book. Care to discuss ways that were more open to women of color to gain economic power, back in the day and what they can say to modern women of color and women in general?

Thanks! It would surprise you, but cosmetics and hair care were male dominated businesses too at first. I wish I could say there were businesses that were more open to women, but that was seldom the case. The women in my book made their own lane and once they did, it was the men that had to keep up with them. Speaking of hair and cosmetics, black women are not as dominant in that area as they were 100 years ago. So much of hair business is dominated by Asian companies now who make hair extension and straighteners. However, black hair entrepreneurs are making a come back with the natural hair movement, which is dominated by black women.

It is very, very late to look into it at 70 and 76. Time to talk to them about you going with them to talk to their attorney about Medicaid trusts in their state. I think they are evil (Medicaid is for poor people, not middle class people who have access to lawyers to make them look poor to preserve their children's inheritance), but they are no illegal. Also, you need to be sure they aren't planning to do something really awful (reverse mortgage that kicks the surviving spouse out of the house if the first one dies, for example). My parents are moving to independent living this spring. My brother and I are so relieved that they are doing it outside an emergency situation. Not quite on their terms as they would have liked to stay where they are for a few more years, but mom is getting frail and dad needs the back up.

I agree they are probably too late for long term care insurance.

But also be very, very careful about trusts and efforts to shield money to qualify for Medicaid. They rules are very strict and there are all kinds of look back provisions. 

However, we agree again about the need to have an honest and open talk to your parents about how to finance any health issues. By the way if both spouses are on a reverse mortgage the bank can't kick out the surviving spouse.

Not saying they should or shouldn't get a reverse mortgage. Thankfully there is a requirement for counseling before taking out such a mortgage. And it's needed because they are not for everyone. 

I thought I’d seen it all but I was wrong. You don’t get to tell your parents to get long term care insurance. Unless you are executor on their trust or will—and you really shouldn’t be since kids as executors can get messy—anyway—that policy or lack of one is not your concern. My parents got that coverage decades ago when they were in their mid-forties since my grandparents had the coverage. That is thinking ahead.

I actually think you are right and wrong. I don't believe the poster was saying he will demand they get insurance. I think he was saying he wanted it to be an option because he's not in the position to help financially. 

Where you are somewhat wrong is that it's none of his business. It is. Because should they need care even if they have the money or the insurance, it's the adult children who may have to help out. And if so they become part of the decision making about future long term care needs. 

Is there any common ground shared by the black millionaires who pulled themselves up from slavery, and the "everyday" black millionaires of today? By "everyday" I mean the people who might be worth one or two million bucks, and got there through regular investing, home equity growth, ect.

Well because of inflation the millionaires in my book would be more akin to multi-millionaires or billionaires today. They were some of the richest people in the country. My great-great uncle John Drew was a millionaire in the 1930's. His brother my great-great grandfather Simon Drew is more akin to what you're talking about. He was wealthy but not uber wealthy. He owned real estate and a local oyster bar. I think he understood the power of property ownership, saving and service.

Hi Michelle, Do you know how many years of service and/or at what age federal employees can retire and take health benefits with them? Thank you!

I believe there is an age and number of years working for the feds to meet the retirement requirement. 

If you are a federal worker take advantage of the retirement sessions the gov't offers. The section on retirement is invaluable. 

Hi Michelle, First, a testimony! I've been feeling discouraged about my finances, as I'm in my mid thirties, single, and in one of those chronically overworked and wildly underpaid professions. However, I was looking back on 2017 and realized that in one year, I increased my tithing to 10% of gross, fully funded my Life Happens account, used Life Happens funds to meet a couple of big expenses, started building up my emergency savings, and continued contributing 8% of gross to my employer-sponsored retirement accounts. I'm not where I want to be, not by a long shot, but I look at everything that changed in 2017 and I feel much better. Reading your columns and chats has been hugely helpful. So thanks!! Now a question: what do you think of finance tracking apps? I've tried writing everything down old school, tried using my credit union's budget tool (which works great when I use my debit card, but is clunky for everything else), but I haven't yet found a system that lets me see at a glance precisely where and what I'm spending. What do you think of apps like Mint, Wally, and the like? I'm a little worried about having all my financial information in one digital place, but I really want to be able to have a big picture view of everything at once. Any thoughts? Thanks!!

Thank you for your testimony. And I'm so glad you stopped to take a perspective of where you are and found out you're doing better than you thought.

As for apps. Really any of them are pretty good. My daughter uses Mint and really loves it.

I'm paranoid so I don't use any app. We use quicken and a budget template we created for the 21 day financial fast.

But really, mostly what I do is regularly review my savings, expenses and retirement by just looking at my accounts. I've set up alerts on all of them so I get a constant reminder of when I'm spending. My retirement, kids' college funds are on auto pilot so don't to do but just check in in it. Takes me about 5 to 10 minutes a day to do a check of everything. Then I'm done. 

I'm glad your guest wrote such an inspiring book. There are success stories among many ethnic groups, including black Americans, and they certainly deserve publicizing. If anything, it's far easier to become a millionaire today than it's ever been - in part because a million dollars isn't what it used to be, of course - but also because with the various 401(k) and the TSP for government employees, just investing your money from the day you start working until the day you retire, you should be able to make it. I hope people can take the message that financial success can come in many ways, but it rarely drops down out of nowhere without a lot of had work and sacrifice along the way.

Thank you! I certainly wasn't easy for the characters in my book they were shot, chased from their homes, and slandered for their success. Luckily, we don't face such obstacles today. A big part of their lives was giving back to their community. I hope folks are inspired by their stories to do the same, as you build your own fortunes.

PBS News Hour ran two segments recently about the continued bias against African Americans & Latinos in getting loans. In Philadelphia banks are aiding the increase of whites at the expense of people of color. The percentage of loans for people of color is extremely small. I doubt this can be fixed with this administration. Just saying. BTW--I'm white but I want banks to be fair to everyone.

This is why smaller community banks and black banks are crucial. I think the crash and some of the changes to banking rules and fiscal policy may have had some unintended effects on black home ownership. I doubt this admin will fix too, but we should still make noise about this issue.

I also recommend sitting down with your spouse and making sure you know where the accounts are (especially any of those small legacy 401Ks), what any passwords are, where the life insurance is, the number for your HR department if you're still employed, and the name of a co-worker or two who might be able to help point you in the right direction if needed.

Great advice. My husband and I regularly review accounts together and we have passwords for everything, even our individual computers and cell phones. What I know, he knows. What he knows, I know. 

Shomari, what surprised you most about the black millionaires? And do you think black wealth-building is currently trending up or down?

What surprised me was how connected they all were, even though they were in different parts of the country. Most of them were friends with either Booker T. Washington or Fredrick Douglass. Booker T. had an organization called the National Negro Business League. A lot of the characters in my book came together at  the NNBL conventions.

I just looked at my TSP account. They tell you how much you and your employer have contributed to date. Over the last 15 years, my account has almost trippled above what my own contributions are. I also looked at a ROTH my parents set up when I worked in high school. While that is really small (I didn't make much in HS), it has probably grown 8X over those (many) years. So, rather than look at the total (which has gone down), I try to look at how much I'm growing my money just by putting it into the account.

Really good reminder! And did you guys know there is a growing number of 401 (k) and TSP millionaires. It's not large in comparison to the groups overall but still growing. And when I talk to such millionaires the universal thing about them all is that they started investing 20 or 30 years before retirement. And they did it regularly every month increasing their contributions as they earned more money. 

Health Savings Account. Find out how much service fee they charge for you investing. With the one my Employer sponsors, it's about $50 a year. Just something to keep in mind.

Thanks for sharing this tip.

My little sister lives at my parents for free, and is saving all of her money in a savings account for grad school. While she does have a job, she doesn’t have employer-sponsored health insurance or a 401k. I finally convinced her to get her own health insurance, but she still doesn’t have a retirement account and she’s 27!! What is the best step for her? I’ve been working on her for years, but she takes so long to do things and I’m concerned about her future financial health.

I think for now if she's going to need all her savings for graduate school she's okay that she hasn't started to save for retirement. If she wants to shave some of the savings she could invest in a ROTH. But again, I love that she's committed to paying in cash for your grad degree. So let her be for now. You've done a great job but don't push her too hard.

Trust me, at 27 she still has plenty of time to save for retirement. I rather see her NOT get into education debt. 

The insurance company wants to make money on every policy. They know they won't since some people will get sick enough to qualify to for benefits and then live for a long time while collecting. But they WANT to make money on all policies. So they aren't going to insure anyone who looks to buy when they are already pretty old, because their assumption is that anyone who wants to buy the insurance at that time is pretty sure they are going to need it.

Very true.

But I just did a quick calculation. Starting with what I have in there now and adding in my current (max) contributions and the employer match and assuming ZERO investment increase (absurd, but this was quick) I'll be up to $880K by the date I assume I'll retire. Presumably, it will be more than that. No investment returns over 18 years just isn't going to happen.

What a great amount to take into retirement. Keep up the good work! And share the wealth :)

What was the one or two traits you saw for the black millionaires you profiled? And how can we all get some of what they had?

Thanks so much to Michelle and your readers for having me.  The biggest traits they shared were fearlessness and resiliency. Mary Ellen Pleasant, a gold rush millionaire, became a gun toting member of a militia to protect escaped slaves. She famously said "I'd rather be a corpse than a coward". When Bob Church started his first business he was attacked and shot. He survived and rebuilt bigger and better and became a real estate titan.

Thank you all for joining the discussion today. We got to most of your questions. And I saw your question "aging in place." I'm going to put it out to some planners I know to see what they say. So look for an upcoming column with the answer. 

Again, loved having Shomari Wills. Get the book. It's a great read.

Take care and see you next week. 

In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

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Shomari Wills
A writer and journalist, Shomari Wills has worked for CNN and Good Morning America, and has contributed to the NY Carib News and Columbia Journalism Review. He received a BA in English from Morehouse College and an MS in journalism from Columbia University, where he was named a Lynton Book Writing Fellow.
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