Money Coach Tells How To Avoid Personal Need For 'Bailout'

The shaky financial picture has everyone thinking about their own personal predicament, wondering what to do to make sure their budgets and financial plans are in place. Money coach Alvin Hall gives advice on personal bailouts, and ways to handle them.

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MICHEL MARTIN, host:

I am Michel Martin, and this is Tell Me More from NPR News. Coming up, the Mocha Moms are back this week and they're talking about spanking at school and in the home. Is it effective discipline or a form of abuse? And it's almost a cliché that black women give and give until it hurts. But, now a new study says that stereotype may be rooted in truth with serious financial consequences for black women. We'll tell you about it. But first, we're going to continue our conversation about the failure of the president's bailout plan and what it means for you. Our money coach Alvin Hall is with us. Hi, Alvin.

Mr. ALVIN HALL (Money Coach, Author): Hi, Michel. How are you today?

MARTIN: I'm OK. I understand that you're in London and you're of course aware...

Mr. HALL: Yes I am.

MARTIN: The Dow plunged, was a record one-day drop, and then overnight the Asian markets slid, and Moscow had to shut down the stock exchange. Why do you think that is?

Mr. HALL: Because all the world markets are looking for leadership from the U.S. and they're not finding it. They're finding the discussions in Congress, the reactions of the Republicans and their phrase "hurt feelings" quite unusual. And they're looking for the U.S. to come up with the solution. And the U.S. seems to be dragging their feet. In the studio, we were talking here and everybody was quite amazed that Congress won't meet again until Thursday with this crisis looming. And, that happens to be the same night as the debates. And the world is disappointed. I think the world is looking at this and saying, I can't believe this is happening with America.

MARTIN: There's yet another bank takeover, also, that Wachovia was acquired by Citigroup. They will now become, what, the third largest bank.

Mr. HALL: Yup.

MARTIN: What's going on there?

Mr. HALL: It's going on because Wachovia had so many deposits. And they decided they would take over the banking operation of Wachovia in order to expand their presence in the U.S. and also to give the depositor there a sense of security. Importantly, they did not take over the brokerage operations division of Wachovia, which was made up of several firms including AG Edwards. That seems to be a separate issue. And I wonder what's going to happen to that part of the company. But apparently, Wachovia had so many bad loans on its books like all the other companies that were just teetering on the verge of going under. So the best thing it could do was to run under the protective umbrella of Citibank.

MARTIN: Now, obviously how you react to these events is going to depend on who you are, how much you have invested, if you have any major purchases planned like college tuition or something of that sort, how close you are to retirement, you know, all of those sort of variables.

Mr. HALL: Yes.

MARTIN: But, you know obviously people are picking up their newspapers this morning, they're looking at the headlines. How do you think people should react to this news? Are there any specific steps that most people should take right now?

Mr. HALL: Absolutely. This is the time to get to know your financial landscape totally. Sit down with you partner, your husband, your spouse, whatever and get to know every expense that's in your life at this moment, because if this market continues to contract, chances are one of you will get laid off or something will happen where the amount of money that you earn will be reduced. You need to know in this moment of semi-calm, how far you can cut back, where can you make changes in your life so that if things get really bad and you have to, you have a plan in place so that you can deal with this without being completely and totally freaked out and panicked.

MARTIN: In a moment, we're going to dig into some data about a particular group, African-American women. There's a new survey by the ING Foundation that - we're going to hear more about it, but appears that many of these women, I guess women like me - I have to say, I'm African-American.

Mr. HALL: Yes.

MARTIN: Are not responding to market data. They continue to give to family members, they're continuing to lend to family members disproportionately to people from other ethnic groups, and they're continuing to spend. They say they're continuing to buy whatever they want no matter what the economy does. What do you make of that?

Mr. HALL: I think part of the family relationship is that black women have always been the safety net for the family. When a son could not get a job because you know, as a black male you have the highest rate of unemployment in the United States, or a husband got laid off and became so depressed. A black woman could always, it seemed, go out and find some job to save the family, to keep everybody going. So I think your sisters, your aunts, your grandmothers become those backstops for everybody when it comes especially to money, especially grandparents. Everybody turns to them. But I also think that black women buy into a certain degree of belief that maybe they are a little bit exempt from some the downturns in the economy because of this past experience. I think we're in a new day, and I think that black women need to learn how to protect themselves and secure their positions. Sometimes, you have to recognize that maybe that nephew or that cousin you have needs to fall down on their face, in order to - quote Donnie McCorkle (ph), "to be able to pick themselves up again."

MARTIN: And...

Mr. HALL: And I think that black women need to protect their own financial situation in this world.

MARTIN: And finally, does this - is this kind of behavior unique to black women. I mean, you deal with all kinds of people all over the world. Is this unique to black women in your experience?

Mr. HALL: No. I see it among Italian women also, actually, who will do anything for their children, loan money, you know take it - even borrow against the family's house. And I see it in Britain too, where people feel they have to give this amount of love to their children. You know, there's beneficial love to a point and then when it becomes - I hate to use the word, predatory. That's when tough love is needed. I tell everybody when I talk about this in groups that the one thing you can do to protect your family is to protect yourself.

MARTIN: All right.

Mr. HALL: You need to secure your own position on the financial ladder so that through thick and thin you're not giving to the point that you're going to fall off.

MARTIN: All right, Alvin, our tough love guy.

Mr. HALL: Thank you.

MARTIN: We can always go to you for tough love, right?

Mr. HALL: Yes you can always.

MARTIN: Alvin Hall is our regular contributor on issues of personal finance. He joined us from London. Alvin, thanks so much.

Mr. HALL: Glad to be here today.

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