Avoiding Holiday Debt

Holiday Shopping Tips To Keep You Free Of Debt Stress

As retailers move into the holiday shopping season earlier and earlier, it is more important than ever for consumers to avoid getting caught up in the hysteria and instead heed some money and credit management advice to keep the holiday season happy and free of debt stress. With this in mind, we are offering the following information and advice on how to avoid overspending and maintain good financial health during the upcoming holiday season:

  • Develop a spending budget. Write down household and personal expenses for November and December. For each month, subtract the total amount of expenses from your monthly take-home pay. The amount left over each month becomes a starting point to gauge how much you can afford to spend. Make a list of purchases from gifts to decorations.
  • Make a list. Follow Santa’s example. Make a list of all the people you need or want to buy gifts for, including small gifts for babysitters, teachers, newspaper deliverers, etc. These small gifts can add up and are often the cause of going over your gift budget. Include money you’ll spend on Christmas cards, postage, holiday parties, decorations, holiday entertainment, etc.
  • Consider creative gift-giving. When it comes to gifts, some people still believe, it’s the thought that counts. Consider gifts that have a personal touch, such as hand-made and homemade gifts like tapestries, quilts, pastries or other prepared foods. Don’t forget about fruit baskets, which are both economical and healthy.
  • Look for shopping deals. Check out retail sales, special discounts and coupons in circulars or newspapers and deals online. Consider purchasing holiday decorations in-bulk and splitting the costs with friends and family members. These deals can add up to substantial savings.
  • Avoid last-minute shopping. Shopping under stress can lead to more spending. Plan your shopping trips in advance and shop as early as possible before the December holidays.
  • Pay with cash when possible and spend wisely. Stick to your spending limit. Pay with cash when possible and leave your checkbook and credit cards at home to avoid temptations for unplanned and unnecessary purchases. If using credit is a must, limit purchases to one card. Use the credit card with the lowest interest rate and don’t use more credit than you can afford to pay off in 90 days or less. Remember, credit card debt amounts to a short-term loan. The longer the length of the loan, the more you will pay.
  • Avoid the post-holiday debt hangover and don’t overspend. Tally the receipts from all holiday expenses, including gifts, postage, meals, entertainment and decorations. Once you’ve completed your shopping list, stop shopping! More mall time can amount to more spending.

How does a start-up Real Estate Development firm obtain capital?

By Contessa Petrini, MBA, PhD

I was asked this question this morning by a client and have been asked several times in the past. It depends on the type of capital and the type of development. The initial funding to conduct a thorough due diligence investigation and feasibility study is the smallest amount, but ironically the hardest to come by. Your source of funding for those items, as well as entitlements, will likely be the same.

Traditional lending sources, such as banks, pensions, and insurance companies, are more likely to finance during the acquisition closing and construction phases. You should build into your budget the reimbursement of the early soft-cost items with the equity and debt you secure for the acquisition and construction phases.

Other areas of financing include: Seller financing, conduit lenders, tax credits, tax exemptions, local government / semi-goverment agencies, federal government programs, tenant/occupant financing (build to suit projects), mezz and bridge lenders, JV’s with other development companies and vendors, TIC’s, high net worth individuals/families, wealth managers, public and private REIT’s.

Lastly, you should consider your own equity position and control in the development as a source of equity. Can you defer your development fee for back-end returns? Can you tie up the property with options or a long contingency or closing period?

If you need a consultation please contact B.I.M. Investments today.

We are changing gears…

B.I.M. is looking to move from being an investment club to an investment group or even a private equity firm. With the coming change in the political climate and perhaps global investing we have look beyond the local investment community as the foundation of the group. Here are some key differences between private equity and investment group. Let us know your thoughts and how you can become a part in the comments section.

Barriers to Entry

Private equity firms invest funds from wealthy individuals, as well as large endowments and pension funds, to purchase promising companies. Most investment groups, from small investment clubs to larger corporate interests, have much lower barriers to entry. Smaller investors who see the potential in a firm can pool their money and buy into the company, while private equity funds buy the entire company in an effort to sell it at a profit at a later date.

Industry Expertise

Before they purchase a company, private equity funds often hire industry experts, usually veterans in that company’s industry, to investigate the target firm’s performance. These analysts examine fluctuations in the target’s bottom line over the recent past, as well as how it stacks up against its competitors. While many large investment groups also conduct such research, some smaller agencies may not have the time or resources to carry out due diligence procedures.

Goals and Objectives

The goal of a private equity firm is to purchase a company, invest in its growth, then turn a profit for its investors by selling the entire firm to a larger interest. An investment group also seeks to grow a company and make a profit. However, these groups may not always buy the entire company, but purchase shares (majority or minority) and see their profits through the firm’s improved operations rather than its sale.

Management Changes

When a private equity fund buys a company, they often seek to replace upper management with their own people. These new managers operate under the direction of the fund and may not share the previous management’s vision. An investment group may choose to keep the current management if they see promise in the company’s progress. The group may also have long-term goals for the company and wish to promote stability, rather than turn a quick sale.

HOW DISRUPTIVE PHILANTHROPY CAN SAVE BLACK COMMUNITIES

By  | September 1, 2016

IMPACT INVESTING CONTINUES TO GROW

The Global Impact Investor Network (GIIN) defines impact investing as, “Investments made into companies, organizations, and funds, with the intention to generate social and environmental impact alongside a financial return.” As such, these transactions involve banks, pension funds, wealth managers, foundations, private investors, and development finance institutions. According to GIIN, there were $60 billion in impact investments under management in 2015, and roughly 70% met and 19% exceeded, respectively, expected returns for such vehicles.

Watson and her team structured discussion areas based on the most pressing social concerns and emerging business trends, ranging from the advancement of America’s urban hubs to access to tech entrepreneurship.

MAYORS UNITE TO SERVE COMMUNITIES OF COLOR

In this powerful session, Columbia, South Carolina Mayor Steve Benjamin and Minnesota Mayor Betsy Hodges maintained the critical need for greater philanthropic efforts and public-private partnerships to improve America’s cities. For example, Benjamin shared the fact that 312,000 black and brown children subsist 200% below the poverty line, while the alarming rate of infant mortality has risen throughout the state. “You have a 50% chance of making it to your first birthday, if you’re a black boy born in South Carolina, versus a white child. So, if you’re born in Cuba, Botswana, or Bolivia, you have a greater chance of making it to your first birthday,” he said.

As a result, Benjamin says the city and its partners have invested heavily in youth programs, including camps, safer parks, and summer jobs. “We cut our jails’ budget and scaled it up, so we could fund 1,000 jobs for our kids to work in the field of their choice, ” he asserted.

He also cited that the number one cause of death for young, black men between the ages of 10 and 12 continues to be homicide. While Benjamin addressed such violence among youths, he maintained that the city has taken a data-driven approach to police department oversight, as a means to ensure that “those who are in power to protect our children, are not killing our children.”

Hodges told the attendees the solution to such challenges, in part, can be found in the expansion of minority entrepreneurship. “Minority entrepreneurs hire people of color. They’re more likely to invest in their neighborhoods. They get it,” he said.

TECH: THE PATHWAY OF BUILDING A BLACK AND BROWN WALL STREET

Another session focused on investors making an impact on the diversification of the tech sector through the funding of startups founded by African American and minority innovators. Brian Dixon, a partner with Kapor Capital, the venture capital investment arm of Oakland-based Kapor Center for Social Impact, told the group to apply to change the face of tech, while developing new models of wealth creation. He offered four options to achieve this:

  1. Help to fund accelerators.
  2. Become a fund limited partner.
  3. Directly invest in firms as a VC.
  4. Become an angel investor.

Dixon used Kapor Capital–which invests in financial tech, education, healthcare, and POT (People Operations Technology)–as a model for investors identifying early-stage investment opportunities and making a difference. For one, it represents a rarity in Silicon Valley, as a venture firm in which 60% of its portfolio includes companies with founders who are either people of color or women. Additionally, only two percent of firms with such diverse ownership have gained overall VC financing.

To ensure that it is truly diversifying the industry, Dixon says the 81 portfolio companies of Kapor are focused on mitigating workplace bias, and they have signed a commitment that says they will build a diverse and inclusive workforce.  The criteria includes setting diversity goals, applying POT, and volunteering with underrepresented communities.

Said Dixon, “If you’re in a position [to] invest in entrepreneurs, it’s the most transformative thing that you could possibly do.”

Crowdfunding

New Crowdfunding Rules Help Black Businesses Access Up To $1 Million In Seed Money

Title III regulation crowdfunding portion of Jobs Act is in effect

B.I.M Investments is going to roll out its own crowdfunding platform early 2017. We will offer real estate deals, business deals and angel investing deals on the platform. Please read below to learn more of how crowdfunding can help you make a small investment stretch into a large short or long term investment.

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May 16th, it became easier for startups to bring a wider pool of new investors into the fold under new federal rules.

Access to capital for black business owners  significantly changed, since small firms and startups can now solicit anyone, regardless of their location or wealth status. So, a store owner could potentially offer ownership stakes to his or her most supportive customers or loyal clients.

Essentially, non-accredited investors or individuals with a net worth or annual income of less than $100,000 can put up cash in startups under the new rules, which make up Title III of the JOBS Act. They can invest $2,000 or 5% of their annual income or net worth, whichever is less. Companies can now raise up to $1 million across state lines without prior approval from the Securities and Exchange Commission.

[Related: Black Businesses To Have More Access To Capital]

“Historically, small and emerging companies did not have access to traditional capital-raising methods such as bank debt, angel financing, or venture capital funding. We believe that every startup should have the opportunity to grow,” notes StartEngine Capital L.L.C. Executive Chairman and Co-founder Howard Marks. “StartEngine provides an alternative way to finance. With Regulation Crowdfunding going into effect, access to capital through equity crowdfunding will be groundbreaking and will allow for faster innovation and growth for privately-owned businesses of all sizes, especially smaller and early stage companies, he adds.

An equity funding portal, StartEngine has been registered with the SEC and approved for membership by the Financial Industry Regulatory Authority. StartEngine connects early-stage and growing companies seeking capital with investors seeking new investment opportunities. With this approval, StartEngine can operate as a funding portal for offerings under Regulation Crowdfunding and begin posting security offerings.

Regulation Crowdfunding was created pursuant to Title III of the Jumpstart Our Business Startups Act (known as the JOBS Act) of 2012,which established an exemption from the securities registration requirements of the Securities Act of 1933 for companies to raise up to $1 million within a 12-month period. These offerings must be conducted by a funding portal, like StartEngine, or broker-dealer that is registered with the SEC and a member of FINRA.

Related Story: 10 Things Black People Need To Know About Crowdfunding

“The SEC was mandated to regulate crowdfunding, and it did so in a way that allows us to serve up-and-coming business owners and help them meet their capital needs,” said StartEngine CEO and Co-founder Ron Miller. “There are thousands if not millions of investors interested in investing in companies getting off the ground. Regulation Crowdfunding enables our funding portal to help these companies connect with investors to grow their businesses.”

StartEngine was selected as one of the finalists to participate in the Washington, DC Crowdfunding Demo Day on Capitol Hill demonstrating Miller’s leadership and innovation in the industry. StartEngine reportedly has more than 50,000 registered users with one company raising more than $16.9 million on the site.

SOLUTIONS FOR BLACK AMERICA: INVESTMENT CLUBS

By: ASAD MALIK

Despite the gains made in civil rights over the past few decades, the latest Bureau of Labor Statistics reveals that Black America is currently experiencing double the unemployment rate of the nation’s overall jobless rate – a rate that hasn’t changed since Martin Luther King JR was still giving speeches.

And much to our discredit today, Black wealth here in America has melted from 25% of what white wealth was in the 1960s to only 6% of what white wealth is today. It is for these reasons that solutions like investment clubs should be leveraged and promoted as a means of Black economic empowerment.

WHAT IS AN INVESTMENT CLUB?

An investment group or investment club is a group of family members, friends, co-workers, or like-minded individuals who pool a regularly invested dollar amount into a common banking account for the purpose of purchasing stocks, bonds, mutual funds, businesses, property, or other assets. There is no limit to the number of members your group can have, but as the African saying goes; “many hands make light work”. The more capital that is pooled, the bigger the ventures that your group is able to involve itself in.

According to The New Black Magazine; “Investment clubs and groups promoting good money habits among young African-Americans are spreading across the country, global financial crisis notwithstanding. From grade schools to Facebook groups to seminars by hip-hop stars, the message is clear: it’s time for young blacks to get smart about the green, especially in such an uncertain financial climate.”

The National Association of Investors Corp. (NAIC), established in 1951, has set forth guidelines for running successful investment clubs. It urges members to:

  • Invest money regularly, regardless of market conditions
  • Reinvest all dividends and capital gains
  • Buy stock in companies that are growing faster than most of their peers
  • Diversify investments, not putting all invested funds into one basket
An investment group is different from a sou-sou since every member of a sou-sou pays a fixed amount of money regularly, and one of the subscribing members takes the entire amount for his or her own personal use at a pre-determined interval until every member has taken a pot. (For more, read SouSou and the Path to Economic Empowerment). Investment clubs, however, invest money at regular intervals in the form of dues, and that money is then used to make more money. Investors are paid from the profits or capital gains of the investments made, and the principle remains invested.

THE BENEFITS OF INVESTMENT CLUBS

The benefits of belonging to a good investment group can mean extra income and financial literacy for the individual, and lower unemployment, and higher investment in Black entrepreneurs and businesses for our community as a whole. Members of investment groups learn and practice a host of business and investor- related subjects, including:

  • Personal Finances Skills/Techniques
  • How to Invest and Understand the Stock Market
  • The Importance of Maintaining a Diversified Investment Portfolio
  • Prepare and Understand Basic Financial Statements
  • Prepare and Understand Basic Tax Returns
  • Leadership Skills
  • Public Speaking Skills/Selling Techniques
  • Learn how to operate a corporation by running their own business

Investment clubs work. The longest-running investment club in the country, according to the National Association of Investment Clubs (NAIC), is the Hamilton Trust of Boston, which is now 120 years old. According to Better Investing’s 2005 membership survey, the average investment club has a portfolio worth $97,441, and members join for reasons ranging from increasing their financial literacy to complete financial sovereignty.

If you think an investment club is too complicated, consider Mr. Williams. Damon Williams joined a stock investment club to eventually put his children through college. Unlike many members of investment clubs, Damon is just 11 years old.

After six years of investing, the ambitious Chicago seventh-grader has a portfolio of more than 30 companies worth more than $18,000 — $4,000 of that profit. He is one of the estimated thousands of children in investment clubs nationwide who sacrifice an occasional Saturday to sharpen their financial strategies.

“I want to pay my own way through college, buy real estate and see my children graduate from college also,” Damon said.

At the rate he’s going, he just might do it. (From African American Empowerment)

CNN also reports that “At the Oregon State Penitentiary, groups of inmates have studied investing in a financial-responsibility class. Some convicts, according to a spokesman, are already members of the NAIC. The interest in investing makes sense, he says, because “most of the people are here due to financial issues of some form.” Hmmm, maybe he has a point. Just this past January, five convicts in the East Jersey State Prison finished third in a statewide stockpicking contest.”

If an eleven year old and an inmate can become successful members of an investment club, so can you.

INVESTMENT GROUPS FROM A PAN-AFRICAN PERSPECTIVE

Lets say that you, a few family members, and some other men and women from the community decide to form an investment club. You start out with a very small monthly investment and you use that money to buy a few stocks and a T-Shirt business. After 6 months, the group is producing enough income to purchase a tax lien on a small multi-family building with a large backyard. Your group turns the backyard into a small community garden, and renovates the building to rent out to members of your group. These group members pay a reduced rent, and that rent money goes back into the group until the building and land can be purchased outright.

With no mortgage, your group owns the property free and clear, and the rent money from that project (along with capital gains from stock purchases and profits from the T-Shirt line) can now be used to acquire more buildings and land. You remember reading about vertical and horizontal integration, and so your group launches a building renovation company, and urban gardening company, and informational products and income producing websites to teach others how to do the same.

You continue to acquire larger and larger properties using the same strategies that your group had learned from its first apartment building, until you are producing more than enough income, food, and shelter for all of the group members and their families.

Members of the group are now free to leave their jobs, declare their economic sovereignty, and meet the needs of the community at large. Non-profits can be built to help our people in time of need, group members have the time freedom to volunteer their efforts to nation building, nutrient – dense food is being produced that can feed the community, and the group is no longer forced to beg white-owned banks for loans, nor are they forced to beg white business owners for jobs. The group is also able to become Angel Investors for other Black entrepreneurs who may not have the capital or credit to receive loans from big banks.

That is how we go from complete dependency to doing for ourselves collectively.

If this seems unrealistic, consider the group we mentioned above; the Grass Roots Investment Group. The group was profiled by Black Enterprise in July 2002. At the time, the group consisted of only a handful of energetic, innovative investors who were relying on their individual expertise to improve their profits. Phillipe Tatem, founder of GRIG told the magazine that “we have people who are in law school, who are engineers, some who work for Internet companies, who own their own businesses, as well as some in banking and sales, and we lean on those individuals”. Since 2000, the group has turned a collective investment of $118,000 into a portfolio worth more than $1.3 million that includes equities, real estate, and business operations such as a car wash and detailing franchise.

THAT IS POWERNOMICS IN ACTION!

Election and Investment Strategy

Does this sounds familiar: Your Facebook news feed has blown up with messages like “The sky is falling! If my chosen candidate doesn’t win, the markets are doomed and so are my investments!”

Elections  bring out the more emotional side of our personalities. A presidential election year, especially, can cause excitement or despair, depending on your side of the aisle.

Market returns during an election cycle tend to be lower than years immediately preceding and following an election year. That shouldn’t come as a surprise. We tend to be guided by our emotions, and the time during an election is when emotions are going to be most tied to election results. What we historically see after the fact, though, is a return to normalcy once emotions have time to settle down. History reminds us that emotional investing is not the safest approach. Successful investing begins with a plan that accounts for goals, time horizons and risk comfort levels.

The first step in planning accordingly, then, is to determine what the economy is doing right now. Eight years since the 2008 crisis, our economic situation isn’t all good, but it isn’t all bad, either. Let’s consider the pros and cons.

Some pros:

  • Oil prices are low. Oil prices may have climbed back to around $50 a barrel after falling below $27 a barrel in February, but they are still low compared to the prices of 2008, when they climbed above $140 a barrel.
  • Interest rates are low. There was some concern when the Federal Reserve raised interest rates in December, but the yield curve has remained relatively steep.
  • Valuations are not euphoric. In the 21st-century markets, bubbles seem to rise and pop with increasing regularity, but the markets of 2016 have not been characterized by such euphoria. We’re not in a situation of Alan Greenspan’s “irrational exuberance” theory, where the markets are unfairly overvalued. Market valuations right now are well within long-term averages, especially given the current rate of growth. While it appears that everything is fairly valued, even small troubles can “spook the horse” in an election year with heightened emotions.
  • Inflation is low. Inflation has remained around 1 percent through 2016, which is low.

Some cons:

  • Growth is slow. Fewer jobs have been reported so far this year than expected, and retail sales have been disappointing. The United States’ gross domestic product growth in the first quarter of 2016 was also at its lowest in two years, at a rate of 0.5 percent.
  • The first stage of the Fed tightening its rates always comes with heightened volatility. The Fed increased its rates in December. A month later the markets celebrated the new year with a bad start. The first two weeks of January were the worst for the S&P 500 Index in history, as it had a return of -4.96 percent.
  • This particular presidential cycle has produced two of the most widely disliked candidates in history. We’ve seen that election years historically post lower returns than in the years before and after an election cycle, but this year is unique in that both candidates are viewed so unfavorably. The lack of unity around each presumptive nominee means we may see further emotional instability surrounding the markets during this election cycle.

If Clinton wins, expect something similar to the markets under President Obama — more of the slow grind of policy-making. That’s not necessarily a bad thing. Clinton is more of a centrist candidate, and if the GOP retains control of Congress, it’s possible she could cooperate with a Republican Congress and balance the budget the way her husband did in the ’90s.

In case you didn’t realize it by now, Trump as president carries a lot of uncertainties. For example, he’s talked about imposing tariffs on foreign goods. But beyond all the rhetoric, this will probably translate to “more of the slow grind of policy-making.” However, Trump could wield his “art of the deal” expertise and broker some pretty popular, nonpartisan solutions. We expect many of the same scenarios and arguments, which we’ll figure out as they happen.

Here’s the key takeaway: If you invest with a long-term, balanced and consistent approach, neither presidential candidate is likely to have a dramatic effect on your investments.

Collective Economics

As the founder of B.I.M. Investment Group I will share knowledge concerning economics, investing, and collective economics as it as important to our community on a daily basis. This is dear to my heart because according to statistics from The State of Working America, African Americans made up about 12 percent of the population in the United States in 2015. With that being said, African Americans are also among the poorest races with 27.5 percent of them living in poverty. What’s even more disturbing is that 45.6 percent of children aged 6 and under live in poverty.

African Americans over the age of 18 make up 39 percent of Master Card holders. Of that 39 percent, many spend their limit monthly and seldom have the money to pay the balance in full at the end of the month. Essentially we are spending money that we don’t have and won’t have at the end of the month. This trend of building never ending debt is partially why our poverty numbers are so high.

After centuries of slavery, we must realize that they are behind with regards to having generational wealth. We must fight to create the wealth where we will have trust funds for our children or wealth that can be passed down. Too many black people tend to only worry about themselves and the money that they have in the moment. As a race, we need to build for the future and get out of that mindset of the now.

Wealth is not everything, however, it has been proven that with it, you get better educational opportunities and a better environment for children to develop and go on to become well-functioning members of society. Change needs to come, black people, this is something we have control over so no more excuses. I am here to help foster that change.