“Prudential Financial does an African American experience study every two years and the number one goal for people of color was to be debt free and the number one goal for the rest of the country was to build wealth and retirement. That’s a problem because unfortunately, we, as people of color, are shortsighted and so we will say ‘debt free.’ But debt free is not wealth.”
Aliche has been featured in the New York Times, Forbes and MSNBC for her financial smarts, but she was once where many African American students I spoke with are today.
Just five years ago Aliche lost everything. She was close to $300,000 in debt, had $125 to her name and was sleeping on her sister’s couch.
The current “budgetnista” emptied her bank accounts trying to keep up with bills, but said she regrets it looking back as she was focused more on debt repayment (credit cards, mortgage, student loan deferment) than her overall financial health.
“I look back and I wish I had not done that. That is what happens when you think about debt repayment more than you think about your overall financial health.”
Aliche advises all struggling with student loan debt to take a step back and look at the bigger picture.
“Ask yourself, ‘what kind of life do I want to live?’ I think if we stop focusing on just thinking about money but truly looking at money as a tool to make the life you want to live happen [we would do bette]” said the savvy saver.
However, that does not give borrowers free reign to ignore student loans. Aliche recommends all borrowers at least begin paying the interest on their students loans so the principal amount does not grow. The financial coach also noted that relying on deferment does eventually run out, so paying what you can, if you can, is very important.
“Four years ago, my business was making $0 a year to now making over $200,000 a year. Imagine if I had focused on debt? Meanwhile, I still have student loan debt that I am repaying, but I did not focus on the debt. I focused on creating wealth,” declared Aliche.
Wealth is the biggest indicator of financial success in America and the lack thereof is the reason Black students are relying on more student loans. Aliche is a prime example that the American dream is still attainable.
“Focusing on debt and on being debt free – guess what’ll you get? Debt free. But, if you focus on growing wealth, guess what you’ll get? Wealth. So, the shift has to happen. You have to focus on wealth and manage the debt,” Aliche said.
While many Black graduates learn to make this shift, the student loan system must do the same.