Indianapolis Recorder, Indianapolis, Marion County, 15 October 2004 — Page 32

PACE D2

THE INDIANAPOLIS RECORDER

FRIDAY, OCTOBER 15, 2004

The Indianapolis Housing Agency office recently held a forum to allow Indianapolis landlords to listen to the benefits of Section 8 housing. (Photo/C. Guynn)

Mayor’s Community Service Award Last week, Anthony Wallace of United Water received the Mayor's Community Service Award. During the ceremony are (left to right) Tom Brown, Linda Wallace, Anthony Wallace, Lena Wallace, Amy Minick Peterson, and Mayor Bart Peterson.

In a new age of credit - spend wisely

INSURANCE ► Continued from Page 1 insurance industry, which has resources tocover $25 trillion worth of policies. As of 2002, more than 21 million old burial policies worth $16 billion remained in force, according to the rating firm AM Best Co. But by the 19fiCs, the small policies had become unprofitable and few new ones were being sold. Openly discriminatory insurance rates faded out with them, the insurance industry and most critics agree. “We believe in our heart of hearts that this practice is a thing of the past,” says Jose Montemayor, a Texas regulator who chaired a committee on this type of insurance for the National Association of Insurance Commissioners. The settlements are part of a larger societal discussion over redressinghistoriewrongs against minorities. Courts have recognized the rights of some Indian tribes to land under old treaties. Some newspapers have printed apologies for once accepting slavetrade advertising. And reparations for the descendants of slaves continues to be a hotly debated topic. Jack Dolan, spokesman for the American Council of Life Insurers, a trade group, said the insurance industi^’ settlements are best understood “in the context of America’s complex history of race relations.” Burial insurance, also known as industrial insurance, was originally developed in Britain for sale to factory workers. Introduced in America in 1875, it spread nationwide, taking especially strong hold in Black neighborhoods in the Southeast. There, insurance agents peddled the policies door-to-door, promoting them as a way for people to ease the financial burden that would otherwise fall on surviving family members. Some families skimped on food to pay the premiums, the Federal Trade Commission said in a 1979 report. Typically, agents stopped by weekly to collect the premiums - often a dollar or less. Through these regular visits, the agents could see when families were growing and press to insure each new member. Bessie Jones, 75, a retired domestic worker in Sarasota, Fla., says she bought a policy because “I had no money to bury myself." Eventually, she said, she bought at least a dozen more for her chil-

dren and grandchildren. Instead of consolidating multiple policies into a single one at a better rate, Black customers were encouraged to keep buying individual ones, policyholder lawyers say. By 1955, the high-water mark for burial insurance, American insurance companies held more than $40 billion worth in 155 million policies, according to the Federal T rade Commission. Some industry behemoths, including Metropolitan Life, built their business largely on profits from burial insurance in the late 19th and early 20th centuries, according to government and corporate accounts. That racial bias was built into these policies was long an open secret in the insurance industry. Insurance forms asked the applicant’s race, and Blacks were routinely charged more than whites for the same coverage, the insurance industry now publicly acknowledges. Typically, it was one third more, according to lawyers representing Black policy holders. Throughout the 20th century, an occasional government report, lawsuit, or news article questioned the morality or legality of this practice, but until recently there were no organized challenges. For decades, the insurance industry' defended the discriminatory practice, arguing that Blacks on average didn’t live as long as whites, making them a worse insurance risk. “At that point, discrimination was considered an actuarial science,” says Joanne Stone Morrissey, president of the insurance researcher Firemark Group in Morristown, N.J. However, attorneys for Black policyholders say, many insurers continued the practice long after it became known that it was poverty, poor medical care and risky jobs - not race - that contributed to shorter life spans. That meant Blacks continued to pay more than whites who faced similar risks. In many cases, industry critics say, premiums paid over the years greatly exceeded the payout value of the policies. One couple, for example, spent $585 in premiums for a policy that paid a benefit of only $60, according to one lawsuit. Another policyholder paid $728 in premiums over 20 years for a $500 benefit.

By D. MARCUS RANGER II Electronic Urban Report Forty years ago, debt was almost unheard of. Your parents most likely paid cash for their first homes and cars with family and friends as their financial backers. That was then, debt is now. Today, debt and instant credit are part of our everyday vocabulary. Americans are carrying a total of $683 billion in credit card debt alone according to a recent MSN Money report. That is not the amount charged every month but rather the outstanding unpaid balances on which people pay interest. The case for credit In today’s modern economy consumers are using credit cards as a form of payment for just about everything, from paying your rent to purchasing gas, groceries and fast food. There are many reasons for this trend - first and foremost convenience. Not having to carry cash with you wherever you go is often an easier and safer way to make purchases. Using cards can also be rewarding if you have aligned your card spending with an attractive rewards program that pays you back (perhaps with a cash rebate or with double rewards points) for your purchases. Credit cards also help to establish a history offinancial responsibility and areoften mandatory for certain situations, such as booking a hotel room or renting a car - they are a modern necessity. Those who don’t have any credit cards at all can be denied a loan or credit when they really need it. But knowing that credit cards are now an integral part of our modern financial lives also begs the question - how many credit cards should you have? A good start would be to have far less than the Guinness Book of World Record holder, Walter Cavanagh who has 1,397 individual valid credit cards. Typically, you should consider holding approximately three to six credit cards, but

unfortunately there is no magic number. Every person has his/her unique financial situation and individual credit card needs, depending on their spending habits and lifestyle, business needs and more. Spending wisely - factors to consider • Simplicity - Make sure you can keep track of the credit cards you have and pay them on time. Owning fewer cards may make it easier to have control over your total debt load. You should think twice about having numerous credit cards for individual retail stores and gas stations. These stores often accept the credit cards you already own. Plus, retail and gas station cards tend to charge a higher interest rate than other cards. • Better Credit Rating - The common misconception is that in order to build a good credit rating you need to have more cards with higher credit limits, but having too many cards with high credit limits or having high unpaid balances can limit your access to car or mortgage loans. • Reduce Temptation - The more credit cards you have the easier it is to over spend and get into debt problems. • Rewards - Building rewards through loyalty programs with a few choice cards can build more valuable redemption opportunities if collected on fewer cards. You can redeem points for airline miles, hotels rooms,

and gifts.

Managing your credit cards and debt

important to you? Then find out exactly what your credit limit and interest rates are for your credit cards. Step 2: Pay in Full A good strategy is to have credit cards for convenience and pay the balance each month in full. If you are unable to pay in full each month, make sure to pay more than the minimum each month. Another option is to use a charge card, which is payable in full each month. This can help you stay on budget and because it’s payable in full each month, there’s no interest charges. Step 3: Keep Your Credit Spending in Check A good rule of thumb, to keep your spending in check, is to make sure your credit card payments will not total more than 15 to 20 percent of your current income, after housing costs. Step 4: Canceling a Card If you need to cancel a card do not simply cut it up. You must notify your credit card company that you want to cancel otherwise the card will remain on your credit report. This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. The views expressed may not be suitable for every situation.

Regardless of how r many credit cards you

have it is important to use them responsibly. D. Marcus Ranger II, is an award winTo help, here are some strategic steps for ningpersonal financial advisor with Ameriopening and managing credit card accounts: can Express Financial Advisors in Los An-

geles. Ranger received his business man-

Step 1: Know Your Cards agement degree from the United States Air Before you sign up for a card, ask yourself Force Academy and received his MBA in some keyquestions, such as: Does your credit entrepreneurship and finance with high card have an annual fee? Are there grace honors from the Hilton School of Business periods? What are the penalties if you are late at Loyola Marymount University where he or miss a payment? How valuable is the also completed studies in international busi-

rewards program for the things that are most ness.

DEFICIT ► Continued from Page 1 ing on there either, although our brothers and sisters in Africa and the Caribbean eagerly await the day when we get our act together and start taking care of business. Government purchases? Well, we have a lot of government jobs, if that counts. And finally, our inventories are not much to speak of either as we don’t seem to care much for ownership of’distribution channels,-e.g., the MATAH Network. Now let’s look at consumption. As the definition of GDP tells us, consumption is the largest of its components, totaling roughly two-thirds of GDP. Now we’re talking, right? Now Black folks really make the grade. We have that consumption thing down pat. Two-thirds of GDP? Nah, we

can do much better than a measly 66 percent. Our consumption is as high as 95 percent - and our consumption is from businesses other than our own! No, Mr. Elder, I don’t think we can use Black GDP to show how far we’ve come in America. Quite frankly, it’s embarrassing. I’d be willing to bet that Taiwan and Thailand export a whole lot more than they import; we can look around our homes at labels and tags and see that. Comparing our GDP to that of the Taiwanese, and the rest of those 14 countries, is a real joke, even if we do earn more money than they earn. We may rank 16th, but we’d have a huge trade deficit. Yes, it feels and looks good when we use thatline about Blacks being the 10th, 12th, or the'l6th richest “country” in the world. It’s

balm for our injuries, consolation for our wounded psyches, and ammunition for those who say, “We’ve come a long way, baby!” But what good is it doing us if we consume everythingsomeoneelse makes, fail to save a minimum of 10 percent of what we earn, have no import/export relationships with brothers and sisters who live in Africa, the richest land in the world, and fail to support the one distribution channel we have in this country? What good does it do us to have $700 billion if we are in a constant trade deficit with the other groups in this country, i.e. Koreans, Indians, Vietnamese, Lebanese, et al? What good does it do for us to brag about how far we have come when, relatively speaking, we are no further than our grandparents were two gen-

erations ago when it comes to business and land ownership? The Black trade deficit is way out of balance, and we had better get busy fixing it before we become totally dependent on “foreigners” to supply our sustenance. No one can take care of us better than we can take care of ourselves. We proved it once upon a time; we can do it once again. James E. Clingman, an adjunct professor at the University of Cincinnati’s African American Studies department, is former editor of the Cincinnati Herald Newspaper and founder of the Greater Cincinnati African American Chamber of Commerce. His Web site is www.blackonomics.com. He can be contacted there or by telephone at (513) 489-4132.

LIFE ► Continued from Page 1 most people need anywhere from 5 to 15 times their net income. If you need more coverage, you can either purchase additional coverage through work (most group plans will offer this option) or buy the extra coverage on your own. (3) Via the Internet. You can get instant quotes, apply for, and even purchase policies online, but the better sites won’t allow you to complete the purchasing process until you’ve spoken with a qualified insurance agent. Most‘Web sites only offer term insurance,

not permanent. Ifyou’re about to buy a policy but aren’t sure you’re making the right decision, it’s never a bad idea to run the quotes by an agent in your community. (4) Over the phone or by mail. There are a number of companies that advertise and market almost exclusively via toll-free numbers and/or direct mail solicitations. Ifyou want to buy term insurance and you have a good sense of how much coverageyou need,you may be able to get a good deal by buying directly. Just be aware of the

limitations. Most direct sellers only offerterm insurance, andyou generally won’t have the benefit of expert advice from a qualified life insurance professional. To learn more about the many benefits of life insurance, visit the Life and Health Insurance Foundation for Education’s Web site at www.life-line.org. To find a financial advisor, visit the National Association of Insurance and Financial Advisors' Web site at www.naifa.org.