I just sat down and wrote this post for a client of mine about whether renting vs. buying will make you happier, coming off a day where I went and looked at 3-4 houses for sale and was generally disappointed with the whole experience. That post I just linked has a bunch of inconclusive research where the decision ultimately varies by person and financial situation, so if you read it, you’ll learn a lot but won’t learn anything to help you make a decision, because that’s going to come from your gut and emotions. We live in a belief-driven world that we pretend is a data-driven one, remember.
After writing that article just now, I came over to Wharton’s website and found this article on “flipping the inequality pyramid.” That’s a big topic these days, and I wouldn’t say this article is very good. It says all the other things that these articles say, and in terms of work and compensation, no executive would up and do it. People don’t want to raise salaries. They barely want to raise salaries for their lieutenants, who make the lines of business run. For some peon in Ops? Absolutely not. That money is likely headed to R&D, not you.
But, in the context of the broader American (global?) discussion on race these days, which eventually became a discussion about protesting and the demise of urban cores because it’s an Election Year, the authors of this Wharton article talk about “700 Credit Score Communities” and broader financial literacy, while noting that only 6% of financial advisors in America are black.
Money is power. That’s almost indisputable now. And if the movement of money is essentially white guys advising other white guys, which I think we’ve long thought but now there’s a stat around it, well … what can we do?
First off: beyond race, financial literacy kinda sucks
I certainly don’t have it, and a lot of people I know barely do either, and mostly just regurgitate stuff their grandparents taught them, even though it’s a much different time. Or maybe they watch CNBC periodically and “get it.” I dunno. I think it’s all kind of fake.
Generally, I think we have crappy financial literacy because it’s gauche to discuss money, and so many parents don’t really arm their kids with how to do it properly. Also, a chunk of many people’s income is their salary, and salary transparency is horrible, and it’s usually an “asymmetrical information” situation where the employer holds most, if not all, the cards.
So all that stuff transcends the idea of “race.” I think white people, Hispanics, etc. all face some of these challenges around how to have these discussions. Some people are woke hustlers and go get it and learn all this stuff, and I applaud them. I was never that guy. I’m almost 40 so maybe I should be / will be, and that actually moves into my next point.
Intersecting education with all of this
I’m going to take this as a white male who struggles but has resources first, then I’m going to pivot it.
Yesterday I’m looking at some houses with my fiancee. OK. Let’s say there’s a potential we eventually have a kid. We look in this area that’s semi-close to her parents, and I would say most things are around $315,000, but the school zoning is absolutely trash.
So if I could get $315,000, which seems possible, cool … I have a house. But in 5-8 years, if I had a kid going to kindergarten (outside possibility but still one), I wouldn’t want them going to that elementary school.
So now I could rent said house (logical) or try to sell said house for a dime (also logical). But what if interest rates are way up, which seems logical? If I wanted to make $75,000 on the house, who can really get into a shitty school neighborhood for $390,000 with a high interest rate?
It’s kind of a trap zone in many respects. Makes you lean towards renting. And let’s not even get started on “Well, we moved for Johnny’s education,” which is a great thing for your family but a semi-racist thing to say overall that does nothing to bolster education in general. But again, most people make decisions at the familial level, and claim they did it for the societal level. That’s life.
OK, so I texted my friend about all this, privilege dripping off me, and he responded with “Imagine if you were black and looking at those houses.”
“Black Lives Matter”
This whole thing became political and it’s such a shame, and now I see people every day on IG sharing memes that explain what BLM is supposed to mean … and then you have the Facebook Barca-Lounger Crew, guys in their 60s downing drinks after dinner and posting rampantly about AOC (who they want to see naked) and “far left anarchy,” who shout it down.
The cops vs. blacks stuff is very complicated. It’s bad, but it’s complicated, and data can be melded to fit your position.
I look at this whole BLM thing along these housing terms. Owning is a path to wealth for many. People called the GI Bill “a magic carpet ride to the middle class.” When I was researching the above article I linked (first link in this post), I found a 2002 study that homeowners have an on-paper net worth 30x higher than long-term renters. Got it. It’s an asset and makes sense.
But very few African-Americans have this pathway, whether it’s microaggressions about “Look at this neighborhood over here instead…” or some white financial advisor named Lars is lecturing them and not listening to them, or just the fact that oftentimes black salaries are a percentage of $1.00 that a white dude earns. The pathway isn’t there.
That’s where lives seem to matter. Obviously I do not want a black man to die in the street at the hands of a cop, but beyond that, I would like to see mixed neighborhoods — which would help us with understanding and diversity in general — and I’d like to see stronger pathways to minority homeownership and 700 credit scores, of course.
Do I know how exactly to do that? Not really. And I know that right now, polarization is essentially fully at scale, as is confirmation bias, and many people I know want a mostly-white neighborhood where people look the same, think the same, have the same backgrounds, attend the same schools, etc. That’s the whole in-group vs. out-group thing.
I get it, and I know it’s hard to change, but I’d like to see some more pathways therein. Maybe we could start by finding more African-American financial advisors, or mentoring those who might want to be?
Thoughts?
