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Authors: Tavis Smiley

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BOOK: Fail Up
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For the first time in my young life, I was in charge of my life. I decided my schedule, my activities, and my food choices, which consisted of lots and lots of pizza. In fact, it was my reliance on the iconic food of Italy and a stupid mistake with my money that really jettisoned me into the grown-up world. Unfortunately, it was an unnerving part of that world that I was ill prepared to enter.

Fortunately, the experience anchored my resolve to never, ever let it happen again. It also opened my eyes to the harsh realities of financial ignorance and helped mold an outreach mission that I still passionately advance in some form or fashion to this very day.

Candy to a Baby

It's no secret that financial institutions target college students. These days (oftentimes with the educational institutions providing access), banks throw credit cards at students with clean credit histories. And, as we know, inexperienced, struggling students often get into long-term financial debt because of access to these cards.

According to a 2009 national study conducted by Sallie Mae, the nation's leading saving-and-paying-for-college research company, nearly one-third (30 percent) of college students put their tuition on credit cards; 92 percent of undergraduate students use their cards to charge textbooks, school supplies, and other “direct expenses.” The higher the grade level, the more heavily students depend on credit cards. The average freshman carries a median debt of $939—nearly triple the $373 documented by Sallie Mae in 2004. Many college students, the study concluded, use credit cards and pay obscene interest rates, not just for convenience, but also “to live beyond their means.” So it's not bad enough that students today graduate with massive debt for their education; they also graduate with massive credit card debt and are unable to find a job to boot.

It wasn't the credit card trap that ensnared this wide-eyed transplant to Bloomington; I was hooked by a checking account offered to newly arriving students by a local Bloomington bank.

I was much too young and ill prepared for such a serious responsibility. I came from a poor family and, like so many others from my background, my parents never talked about money matters beyond basic survival. I knew absolutely nothing about handling money responsibly, and the issuing bank wasn't exactly offering training sessions on balancing checkbooks or using credit cards properly.

My checking account became my credit card. It sounds really sophomoric now, but if I needed something and didn't have the money, I'd write a check. Sure, I'd deposit money into my account on a regular basis, but I knew if I fell short, I'd simply have to pay $15 for any bounced checks.

Don't get me wrong. I didn't write checks for clothes, fancy shoes, music, or even textbooks. My extravagance was pizza—one local pizzeria, in fact: a place called Pizza King. I can still see myself writing those $7.14 checks for a large savory sausage and pepperoni pizza.

My naïve rationale went something like this: “The bank will cover me. Sure, I may not have $15 to waste tomorrow, but I'm hungry today.” It reminds me of Wimpy in the
Popeye
cartoon series: “I will gladly pay you Tuesday for a hamburger today!”

If I had paid more attention to the bank's notices informing me that I was seriously in arrears, perhaps I could have avoided the embarrassing outcome.

Check-Kiter

My suspicions should have gone on high alert when I came home from school one day and my roommate, Chi, told me that “Mark, an old high school friend of mine,” had stopped by our off-campus apartment for a visit.

“Mark?” Neither the name nor the description—tall, white, heavyset with glasses—jogged any memories.

Not to worry, Chi assured me. Mark asked him what time I'd be home and said he'd drop back by around the time Chi had indicated.

A half hour or so after I got home, there was a knock at the door. I was greeted by a stranger who asked with a smile and friendly tone: “Tavis … Tavis Smiley?”

“Yeah, that's me,” I answer, still not recognizing my supposed high school friend.

BAM! Handcuffs are out; demeanor has changed; and a new, unfriendly voice barks:

“You're under arrest. You have the right to remain silent … yada, yada, yada.”

“Un- un- under arrest,” I stammered, “for what?”

“Check-kiting.”

“Kiting? I haven't flown any kites. What's check-kiting?”

“Writing bad checks,” the mysterious Mark responds.

I was totally baffled. It never crossed my mind that I could be arrested for writing checks. I was paying my little $15 fees: I thought I had the process down pat.

Turns out, at the time, the local sheriff's department had launched a
check-kiting sting
. A whole lot of folks in Bloomington, including students, were arrested that day.

Of course, I didn't know all that. As I was trotted out in front of my neighbors, I felt like Quasimodo, the deformed bell-ringer of Notre Dame.

Instantly, I panicked: “Chi, you gotta get me out of jail!” I shouted. Once I was tucked into the backseat of the patrol car, I started asphyxiating, struggling so hard to breathe that the police officer pitied me: “Calm down,” he said, “it's not that serious.”

It was to a kid raised in a strict Pentecostal environment and taught to respect the laws of God and man. It was a very big deal to a college student who had never in his young life had any interaction with the police or jails.

The whole ordeal—driven to the police station in handcuffs, taking mug shots, sweating in the holding cell until Chi arrived with bail money—took about 40 minutes.

Eventually, I paid the fine and was ordered to do so many hours of community service work—cleaning streets, picking up trash, working on a highway road crew—that sort of thing. Because of the service work, the incident was expunged from my records.

Still, that 40-minute initiation into the price of financial illiteracy changed my life forever.

Reformation Man

Three very important personal commitments came out of that arresting experience.

First, unless it was associated with a social issue like protesting against apartheid or unfair immigration policies, I swore that I'd never be arrested again for anything illegal, unethical, or immoral. Second, I vowed to never let money or the lack thereof ever get me into trouble again. Lastly, I decided then and there to help my brothers and sisters avoid falling into any money traps that plague so many people of our hue and circumstance.

For starters, I had to learn how to manage my own money, whatever little bit I had. I learned the meaning of the word “budget”—calculating what comes in and what goes out. Back then, even as a college student, I decided not to live beyond my means. And for the rest of my life, that rule dictated. If I couldn't afford it, I didn't have it.

Since I couldn't afford a brand-new car, I drove “buckets” all my life. The only new car I've ever owned was given to me on my 40th birthday, about seven years ago, as a gift from a sponsor. The furniture in my LA apartment, before I bought my house, was hand-me-down stuff from friends. If they wanted to throw it out, I'd take it in—and this was after I started working for BET.

Of course, I never got rich at BET, but the first thing I did when I started receiving those more handsome paychecks was pay off debt—which was considerable at the time. Although I kept my commitment not to live beyond my personal means in college, I had to make an exception for my family. When I worked for Mayor Bradley, my credit had gotten really crazy due to the fact that, between the years 1987 and 1996, I fell seriously behind on my student loan payments, mostly because I had spent thousands on my siblings' college educations.

There were nine brothers and sisters coming behind me after I went to work for the mayor, and most of them wanted to go to college. My parents were going through a divorce at the time, so I became like a surrogate father. I didn't make a whole lot of money, but, as a single guy with no children, I made enough to help out.

I was determined to get my siblings through school. I made a deal with them: As long as they held better than a Cplus average—I refused to pay for
average
—I would make sure all their school bills were paid.

It was important to me that they contributed something to their education. So, every summer I had my brothers, at least four at a time, come out to California and stay in my little one-bedroom apartment. I arranged for each to have a part-time summer job. Every morning, I'd drive them to work, and they'd catch the bus back home at night. They were allowed a little “get-around” money, but the rest I put into a bank account and applied it toward their education. Whatever was left to pay, I handled from my own funds.

I am proud to say that they made it, graduating from institutions like Hampton, Morehouse, and my alma mater, Indiana University. As I robbed Peter to pay Paul, I relied on a single prayer: “Lord, if you just help me get these Negroes through school, the first thing I'll do when I make it is pay off all of my debt.”

The prayer was answered and the promise was kept.

My employment with BET meant that my salary went from about $30,000 in 1995 to six figures in 1996, if you include the income generated through other media appearances and lectures.

As nice money started rolling in, I carried on as if I had no money, because I had never gotten into the habit of living beyond my means.
Financial security
meant that I immediately hired myself a good accountant (who just recently retired), and we started retiring my student loans and cleaning up my credit record.

In fact, I'm always cautioning people to stop spending money they don't have, buying things they don't need, to impress folk they don't even like. Over the years, I've learned how to save responsibly, spend wisely, and invest properly.

And you can, too.

Exploiting My People?

“Did Tavis Smiley Push Bad Loans to Blacks?”

That bvblackspin.com headline and other 24/7 Internet “news” hits, allegations, and innuendo left me feeling like a man bound in chains and beaten with a bag of bricks.

I found myself in guilty-until-proven-innocent mode after lawsuits were filed against Wells Fargo, one of the nation's largest mortgage lenders, alleging that the company targeted and issued fraudulent subprime loans to Black people. Prior to the lawsuit, I was on a cross-country, free, financial literacy tour sponsored by Wells Fargo.

My role with the “Wealth Building” seminars, as I perceived it, was to help folks become homeowners and invest money wisely. I'd start the sessions by firing up the audience, stressing the urgent need for financial literacy, and building personal wealth—which for most Americans begins with buying a house.

After my keynote speech, Wells Fargo representatives were supposed to sit with attendees, offer counseling, and work to get them loans so they could become homeowners.

The story and its connection to me was amplified a thousandfold when Illinois Attorney General Lisa Madigan filed a lawsuit against Wells Fargo. Madigan accused the lenders of pushing risky, higher-interest loans on Blacks who attended the forums. One of the means the financial giant used to target Black people, Madigan told reporters, was the free financial literacy seminars where Tavis Smiley was the draw.

Financial literacy has always been a big part of my outreach efforts because I take the issue and my commitment to everyday people very seriously. Years ago, I became a victim of redlining and predatory banking practices in South Central, Los Angeles. I hated banks, especially those that refused to lend me money for projects in the Black community. Although I owned other properties, had a nice, steady income (I was still working for BET in 2000 when I started searching for a building) and good credit, for the life of me, I couldn't get a bank to lend me money for my new headquarters.

Fine. I sat with my accountant at the time, Errol Collier, and we figured out a way for me to self-finance the project. My friend and long-time business associate, Denise Pines, found a 6,000-square-foot, abandoned, blighted eyesore in the heart of the Black community. I completely renovated the exterior and interior of the building, adding a 16-person conference room and a state-of-the-art radio broadcast studio where I could produce my radio shows.

In the fall of 2001, more than 1,400 people—among them Hollywood stars, professional athletes, and politicians—came out for the grand opening of my newly renovated building. I could not pass up the opportunity to send a message to the lending institutions that had denied my requests for loans:

“It is my hope that our commitment to stay in the community will demonstrate to other folks the value of economic revitalization as well as show banking institutions that continue to engage in financial redlining and predatory lending the absurdity of their insidious practice.”

The next day, on the
Tom Joyner Morning Show
, I escalated my criticism, actually calling out the names of offending banks. A good friend of mine joked about the number of white bankers folks saw walking down Crenshaw beating a path to my door. All of a sudden, money was available for building or any other project I might have in mind.

My answer was consistent: “I don't need your help now but you can help other black people in this community. Deal with the redlining and predatory lending in this community and seriously help Black people get home or business loans.”

Representatives from Wells Fargo were among the group of anxious-to-lend bankers. But instead of walking away rejected and dejected, they expressed an interest in dealing with the problems I cited.

It seemed that representatives from Wells Fargo and I had mutual interests. They shared the institution's commitment to increase financial literacy in the African American community. We discussed a partnership that focused on building personal wealth and homeownership through educational seminars. It was the assumption that our interests were mutual that led to the Wells Fargo Home Mortgage “Wealth Building” seminars I began hosting in 2005.

BOOK: Fail Up
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