Do you have student loans, a job, a car loan, or a new Mortgage? In other words, are you a millennial? Congratulations!! You are the New Slaves of the United states of America. Please line up to get your SSN branded.
History can account for the America supporting slavery for over 400 years. Instilling an ideology of “black vs white” that in 2015 we still can not manage to shake. The color of discussion here however, is GREEN. Today’s society does not use whips and chains to keep people in bondage. The “wealth gap” involves a variety of systems that will ensure, those who did not inherit wealth, can not obtain it. One of those systems is Borrowing.
First we must understand the difference between earning potential and owning potential, and why it is important.There difference is income inequality versus wealth inequality.
When the top 20 percent of earners rake in over 50 percent of the total earnings in any given year , or when the richest 10 percent of American households earns about 28 percent of the overall income, is income inequality. Your earning potential.
By contrast, when the wealthiest 10 percent of U.S. households have captured a whopping 76 percent of all the wealth in America, it is wealth inequality. Your owning potential.
Wealth is the value of what you own minus debts. Wealth inequality is the difference between “earning” and “owning” This kind of inequality has been highlighted in the Organizations for Economic Cooperation and Development new report: wealth inequality.
Main sources of Wealth
• Property/ Land (Home or Home Equity, Businesses)
• Other Property (Cars, Boats, artwork, Jewelry)
• Assets (stocks, bonds, 401(k)s and of course cold, hard cash)
New York University economist, Edward Wolff, calculated and parsed out the nation’s wealth. The top 1 percent own about 35 of wealth in the U.S and the bottom 40 percent have no wealth at all. They may have Jobs, a house, and a degree but no wealth. The bottom 40 percent actually have a negative net worth. Meaning they owe more money than they own, and they probably owe that money to somebody that is in the top 5 or 10 percent.
Where does slavery come in? Like being born in captivity, millennials were born to work for the extremely wealthy. Every mall, fast food restaurant, retail store, etc will cater to your class schedule, basketball practice, or dance class, as long as you are a part-time employee and will not require benefits.
Because millennials aspire to earn more than the average cashier at your local drugstore, they go to college. A college education can be a double edged sword, because it sets students up to earn and owe. The average undergraduate students owes about $30,000 to $70,000 after graduation.
If a millennial is coming out of college owing $70,000, it becomes harder to own land, businesses, cars, and other assets, because there is already a huge outstanding bill. The average college students start out making a modest $40,000, just to repay mostly interest and minimal principal on their student loan. It’s like sharecropping, beneficial in that you can earn enough to eat and pay back but slim chances of ownership.
This system of borrowing more than you are worth becomes cyclical. Millennial’s start with a student loan, and add a car loan, and aspire to one day owe $100,000 in a home loan. This is servitude, with no alternative.
Big deal right? You owe a few bucks, you pay it over 50 years, and die having had a home, 2 cars, a wife, 2 kids, a dog and made 80,000 annually. Not bad, except in that lifetime you, your spouse, and your children, are susceptible to every recession, natural disaster, disease, politician, energy crisis, and the list goes on and on. Freedom equals ownership.
Realistically, we have to borrow. So here are some tips on responsible borrowing, for those who are just starting out. This will give you the power to owe less and own more.
• Establish a line of credit while in college or even in high school. Always make payments on time. (Ask parents for help until you are able to pay on your own)
• Your credit score is determined from your credit history. No history often times will mean a high interest payment of no loan.
• Do not borrow more than you earn or will earn.
• Look for every scholarship possible. Public colleges are less expensive than private colleges, and do not dismiss the in-state-student benefits. And if your grades weren’t the best, go to the community college major in something you like and excel in. Equipped with an associate’s degree and good GPA you will find a better deal.
• Save to put 25 to 30 percent down
• student loan, car loan, or home loan this will keep interest payments low and terms short.
• Use a cosigner or get a loan with a trusted family member or friend for that home or that business.
• The risk of a default on a loan with multiple people is lower, and therefore interest rates are lower.