What we can learn from how rappers spend their money

Do you remember getting your first salaried job, and then later, your first paycheck? Do you remember what you did with that paycheck, and the next few paychecks that followed?

We'd love to be able to say that we diligently put those paychecks away in our bank accounts, and budgeted accordingly, but if we know anything about Americans it's that we're a nation of spenders. Just take a look at the record amount of money we spent on Black Friday, or the collective $11.66 trillion in consumer debt we currently hold.

This is due in part because what many of us did when we got our first paychecks was celebrate. We bought a thing that we wanted to reward ourselves with our sudden new influx of cash. Once the initial excitement died down, we returned to our usual mode of operation: trying to control our spending and being financially responsible adults.

In the new issue of XXL Magazine, Writer Seth Colter Walls looks at the phenomenon of young rap artists receiving their first taste of success and the large paychecks that follow. You've probably heard about these rags to riches stories, but you probably haven't heard about the tax troubles, bankruptcy and deep debt that follows.

Here are famous rap artists with significant money problems that Walls mentions in his reporting: Young Buck, MC Hammer, Crime Mob member Diamond, Big Boi, Chamillionaire, and Ja Rule. As Walls points out, rappers aren't required to take financial management classes like the athletes in many professional sports leagues. This may be on purpose: Record companies want rappers to be indebted to them so that they'll be require to put out more albums to earn the money needed to pay off their financial obligations.

One rapper, Killer Mike, is intensely aware of how quickly money goes away and offers one recommendation to keep the money flowing:

“You could sell cereal, milk, cheese, and you rent a store for $500, $600 a month,” he says. “You could open a small bodega. You could do what I just done: You can open up a barbershop.

“I should have opened my barbershop 10 years ago. I actually started seeing return on my money. I would encourage people, for financial literacy, to seek out small businesses. Big Boi started selling pit bulls, and that turned into a thousand dollars per pup. Some years, 100 puppies he sold; some years, 200 he sold… Do something that can put a few hundred dollars back in your pocket weekly.”

It's common sense, right? Take the money you earn and use it to earn more money for you. Average Americans won't be earning enough money to open up their own small businesses on the side (or a clothing company and record label like Jay-Z), but they can invest in individual retirement accounts, savings bonds and other wise investments.

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