by Cedric Muhammed
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The recent airing of MTV Cribs featuring the expensive and expansive homes of many of rap music's premier stars provided just the latest example, in public, of the mentality and habitual behavior that Black entertainers and Hip-Hop artists, in particular today, are conditioned and pressured to accept. Unfortunately, the past history shows that the lifestyle of the rich and famous, far too often, for Black entertainers ends up becoming the lifestyle of the "poor and once famous" as Black athlete after Black entertainer spends more than they have earned and can no longer borrow to make up the difference.
Those who believe that Hip-Hop music breaks the mold in this regard should reconsider. The biggest rappers in the world are following a path that has been well trodden - excessive and wasteful spending on a lavish lifestyle is nothing new; only the names and faces are new.
The confluences of forces that go into the poverty development of a rap star are complicated, in many cases, but there are several elements that are consistently visible in the process. First, there is the decision made by the artists that their sudden explosion in cash flow means that they are "rich". This definition of "rich" of course, is not the one accepted in the rest of the world of plenty. For starters, a high income does not equate to wealth. The average rap star who pulls in close to a million dollars in yearly income has usually just achieved that income. Yet, they immediately assume a spending clip that is on par with individuals who have been bringing in one million dollars annually for over a decade. At times, these Hip-Hop artists are even spending more money in their first 2 years of millionaire status, then those who have been raking in tens of millions, for years.
And of course the purchases being made are some of the worst, in terms of their utility and maintaining their value. At the top of the list of purchases made by most of the millionaire rappers that we know about and those featured on MTV Cribs are jewelry, custom made cars and luxury homes. Of the three, we consider the homes to be the best purchase, in concept, but by the time the artists has finished shaping their massive homes, the real estate has lost much of its attractiveness to others in the marketplace and we have heard stories of artists in a liquidity squeeze who have been forced to sell their homes at a price that is less than half of what it was purchased for and redesigned.
For years beginning in the mid 1990s we worked with Hip-Hop artists on protecting and saving their wealth. In most cases, but not all, we found artists who were simply overwhelmed and unaware of how much dough was coming in and at times, ignorant of how much was leaving.
Quite often their was an unsavory business manager or accountant who was behind much of the confusion and disappearing riches, but in most cases, the artists was responsible for the problem by not taking sufficient interest in their finances. And it was almost necessary to twist an arm in order to persuade an artist to audit their chief source of income - the record label - much less their accountant or business manager. We are pleased to have learned, of late, of a few artists who are taking back control of their financial status through audits and lawsuits against accounting firms and dishonest business managers.
But the problem can be solved with a new mindset that places a premium on wealth creation and disciplined spending which places an emphasis on the formulation of long-term financial goals and which gives in less to short-term wants. Such a strategy can be developed with the help of financial advisors and professional investment help, but wealth creation and disciplined spending begins with a personal decision made by an artist that he or she will live according to a set of values and principles and will establish their spending priorities accordingly. Unfortunately, because many Hip Hop artists don't value their lives as they should (as further demonstrated by the development of drug dependencies), many find it difficult to think in terms of a long life or in terms of a lifestyle that seeks luxury, money and good-looking homes as well as healthy relationships with family, friends and loved ones.
Of course, not all artists are losing their money because of wasteful spending divorced from morality. In fact, we have seen several artists go through tens and hundreds of thousands of dollars due to their efforts to financially support childhood friends and family members. But the efforts usually fail and bring the artists balance sheet down with them because the help to family members is not the best and most affordable form of assistance that could have been provided.
We have seen artists literally give members of their entourage ten to thirty thousand dollars in one summer, in cash. The money ends up going toward a variety of causes - good and bad - but the artists and the individual(s) have little or nothing to show for the expense or gift because it was not attached to an activity that would empower the recipient of the charitable giving. Instead of an investment like a college education, vocational school tuition, barber's school and license or computer training class, which would have allowed the individual to move into real economic activity, the cash simply burns a whole in the pocket of the usually less-skilled entourage member.
There are a few artists that we know who don't have the conspicuous consumption lifestyle. We were always impressed with RZA, of the Wu-Tang Clan who actually buys producing land and who has a diverse portfolio of investments. We also are impressed with artists like Redman who are known to do as many as 200 shows in one year and who are legendary for their penchant for saving their money.
When we were actively in the business we encouraged our artists to save their money and invest it in a variety of ways ranging from real estate and gold and silver coins all the way to the latest initial public offerings (IPOs) in the stock market. Some artists listened and some didn't but we at least, exposed them to a different mentality then that which was pulling them to the new car lot to spend almost as much on custom embroidery, rims, electronic accessories and a stereo system as they did on a new vehicle.
Hopefully, at the upcoming Hip-Hop Summit hosted by Russell Simmons, the serious issue of wealth protection and creation and the poor spending habits of artists will be addressed.
For all of the talk of the surveillance that the FBI and law enforcement have the Hip-Hop community under, and for all of the discussion of Hip-Hop being culture being controlled by the major distributors, we think considerable attention should be given to the mentality, practices and pathologies that make Hip-Hop artists their own worst enemies.
Conspicuous consumption is near the top of the list.
May 25, 2001
The FNV Newsletter
written by Davey D
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