What we would tell the Morehouse class of 2019

Last weekend a wealthy black man broke the internet.  Before we go any further, do you have any idea how much pride is beaming in those nine words?

Honestly, these days anytime a black man goes viral it’s either because he’s said some crazy shit, did some crazy shit or had some crazy shit happen to him.  But not this time.  This time, billionaire entrepreneur and philanthropist Robert Smith went viral for all the right reasons.  Now unless you’re money nerds like us, you probably had no idea who Robert Smith was and we certainly don’t fault you for that.  His name is so generic you could literally guess any profession and rest assured there was a Robert Smith doing it.

But we definitely know who THE Robert Smith is because he is the wealthiest black man in this country.  He is also a major donor to the African American Museum of History and Culture which opened a few years ago in Washington D.C.  In other words, the man puts his money where his values are and his pledge to pay off the student loans of the 2019 graduating class of Morehouse is just the latest example of his generosity.

Honestly, the moment we saw the article and video clip of this incredibly generous act, we nodded our heads in affirmation for about an hour straight.  THIS is precisely what is needed in a world of such vast inequality.  THIS is is what it looks like to use money as a tool to immediately improve people’s lives.  THIS is the narrative that should be told about wealth building instead of glamorizing possessions and power.  THIS is rich & REGULAR personified. 

If Robert Smith was sitting in a barber chair next to you, chances are you would think he was a clean cut pastor from out of state somewhere. That is, until he flew off in a matte black helicopter with 14k golden blades in which case you would know he was a pastor from Texas.

The internet was buzzing and the overwhelming response was positive.  Of course, there were a few corners of the innanet where people had ridiculous opinions on what Mr. Smith should’ve or could’ve done with his $40 million gift.  Others went on to say how messed up it is that some students wouldn’t build the necessary “tough skin” that is only developed when you pay back what you owe. 

Honestly, we’re not even gonna go there.  We know too much about the history of injustice done to black men, the struggle of Historically Black Colleges and Universities and the suffocating burden of the student loan debt crisis for African Americans to entertain that kind of thinking.  Just being black in America is a high price to pay so any and all forms of relief is welcomed in our book.

Instead, we’ll focus energy on the 2019 graduating class of Morehouse.  
If you know any of those lucky gents, please forward them this post. Actually, if you know anyone who is graduating debt free or close to it this year, the same message applies. 

While we’re sure every single one of those men will be sat down and told how much of a blessing this was, we’re not so sure of what will be said afterwards.  So rather than hope someone provides these guys with some financial advice, we’ figured we’d just give it to them. Here are two things we’d say to those recent graduates.

A note on ‘paying it forward’

By now, you’ve heard at least fifty different versions of the same spiel.  All of them can be boiled down to a simple and common phrase ‘pay it forward‘. We’re not questioning the intent of any of the people who have said these words but we’re pretty certain you’re feeling the pressure.  Sure, one could argue that if anyone is well equipped to deal with that pressure, it’s a Morehouse man. 

But in those quiet moments, when the maroon and white pride aint quite cuttin’ it, you may very well be feeling a not so subtle nudge to perform your own version of magic. Here’s what we want you to do. Take that feeling, write down all the words you can come up with to describe that feeling on a sheet of paper and throw it in the trash.

Young man, you don't owe anyone anything more than what you committed to do the minutes before Mr. Smith made his pledge.  Click To Tweet

Sure your load may be lighter and it was provided to make soaring high easier for you, but make no mistake; it was a gift.  One of the worst things you could do is replace the burden of student loans with the burden of guilt disguised as gratitude.  Similar to the debt we all owe our parents, it is one that you may likely never pay back.  You just have to be ok with that.

Now that we got that out of the way, let’s talk about money because that’s what we do around here. The average student loan debt payment is about $400 a month.  For Morehouse graduates, it may be a bit higher but for the sake of simplicity, let’s assume your payment mirrors the average.  Here’s what we want you to do…

Pretend it never happened

We know you will never forget the day Mr. Smith uttered those words.  After all, it was picked up by almost every major news outlet and is doing numbers on social media.  But from a financial perspective, we can’t even begin to express how powerful it would be if you pretended like it didn’t happen.

That’s right.  As you get out into the workplace and begin earning money we want you to pretend like you’re still on a college student budget.  With the same $400 that you would’ve spent to pay down your student loan balance we want you to invest in low cost index funds. 

Now assume you’re 21 years old and it would’ve taken you ten years to pay off your loans (that’s aggressive BTW). We want you to make that same commitment and monthly contribution into your future.  So instead of sending $400 to Sallie Mae, you’ll be investing $400 a month.  By 2029, you’ll be 31 years old, having saved $48,000 and a projected balance of just under $70K due to compounding interest working for you…not against you. 

If, after 10 years you decided to keep playing pretend for another decade, by 2039, you’d be 41 with a balance of $209K.  After 30 years, this little project will have you sitting on just under a half million and this wouldn’t include any other savings, investing, pre-tax contributions, pensions or cash windfalls.  This is also assuming you don’t decide to invest more than the measly $400 you’ve now grown accustomed to shelling out.

This is simply the act of doing what you would’ve done anyway by parting ways with your hard earned money and putting that money to work.  Sure, it’ll suck sometimes but if Mr. Smith hadn’t cleared this debt, wouldn’t you have had to suck it up anyway? Wouldn’t you have considered putting your payments on auto pay as soon as you knew you made enough money to cover it every month? Now imagine putting your investments on auto pay. Let that sink in bruh.

Notice we didn’t ask you to earn an advanced degree, take Mandarin classes, enroll in an expensive course or certification program.  The simple act of investing in index funds will make you the proud shareholder of almost every major publicly traded company in the United States of America.  That means every brilliant, hard-working person in the USA that is employed by one of those companies is also working for you. 

Oh and by the way, when you’re 31, your net worth will be 7 times larger than the average black family in today’s dollars.  

That’s what we did.

We pretended we didn’t have what we had and when more money came in, we put that money to work so that one day we wouldn’t have to ‘work’ for it.  Now, years later, debts eliminated, multiple homes purchased and many shares invested we’re in a position to live the life of our dreams which by the way, includes giving.

Look Mr. r&R didn’t go to Morehouse and Mrs. r&R isn’t a Spelman woman so you may be wondering why you should listen to us.  Well, if you must, consider that the greatest graduate of your school Dr. Martin Luther King Jr died fighting for the dream that we now live.  Before he passed, Dr. King began to set his sights on fighting poverty and unfortunately today, it’s a fight our community is losing.

So don’t do it because we told you so.  Do it as a way to breathe new life into Dr. King’s last great battle.  Do it so that you might be able to send your children to the school of their choice without taking out loans at all.  But most importantly, do it for yourself so that you instead of receiving handouts, you may someday have the privilege of giving them.