Debt is a common issue for families from all backgrounds, but statistics prove it can be a unique and broader issue in particular for Black families. According to a National Library of Medicine report, Black families have a 50 percent higher debt-to-asset ratio than their white counterparts.
Black borrowers are also less likely to fully repay loans, which can, in turn, maximize financial burdens.
Here, Finurah offers a closer look at some challenges Black families face regarding debt, sprinkled with a bit of financial wisdom from industry great Cedric the Entertainer.
Comedian Cedric the Entertainer has been in the entertainment game for years, including through the popular 1990s show “The Steve Harvey Show” to movies such as “Johnson Family Vacation.” Recently, he shared his own money management skills in which he explained he would create a fund with $25,000 for his family to use for emergencies like paying off their mortgage payments or bills.
“I definitely know how to say ‘no’…I say ‘nay,’ I’m past ‘no,’ ” the comedian said during an interview on The Breakfast Club earlier this month when asked about family borrowing. He was on the show to promote his new book, “Flipping Boxcars.”
He had a method to lending to his family. “I used to have a whole fund for the family, every year, $25,000 for whatever it is. You can get it if you qualified…not getting it for nonsense, but if you needed school money…” he said. He added that his sister safeguarded the fund and that family members could only get a portion; one person could not get the entire $25,000.
Eventually, he said he stopped the fund when some entitled family members began asking for more. Cedric explained “some people wanted bigger and bigger checks.
Like many families, Black families use debt to reach financial goals like homeownership, entrepreneurship, or financing higher education. For many, it’s a tool, but it does come with life-altering risks. In fact, 25 percent of income earners have more than 50 percent of household debt.
Cedric the Entertainer’s approach to financially stabilizing his family shows the importance of having a financial safety net. His dedication to supporting his family is a struggle many high earners in Black families face.
But for the common person, who isn’t an industry elite but simply trying to help out, financial literacy and education are key to debt and money management. Learning to budget and invest wisely can be the difference between dealing with debt and making informed financial decisions.
Cedric the Entertainer’s experience serves as a reminder to be financially prepared and responsible for protecting a family’s future. Often, addressing the root cause of financial disparities can help people understand how to make a more equitable reality for themselves and others.