Explain the "poor" mentality to me

In My Humble Opinion
41

The asset limit for most public assistance is $2000-2500, not $5,000. Maybe if people were allowed a $5k emergency fund more poor people on assistance would have them (and admittedly a lot wouldn’t, but some would, which is arguably an improvement).

Back when I was recently destitute, a couple years ago, some friends pitched in an bought us a new air conditioner to replace our dead one. When Public Aid got wind of it we were immediately audited and subjected to questioning about how much more we were hiding, were we employed by these people, how much a month were they giving us, demands for signed statements from every contributor this was a one-time charitable donation and not a regular payment to us…

It was horrible, really - some friends doing a nice thing by getting us an air conditioner worth about $300 tops not only almost got us throw off food stamps and our medical coverage but subjected us to accusations of fraud and threats of jail time. Fortunately, we got it straightened out in about a week but it was a week of stress we all could have done without.

It’s not that all poor people are clueless about emergency funds, it’s that the system does not allow it. Should you achieve $3k in funds you are cut off all aid until you “spend down” again, and getting back to $3k, much less $5k, is nearly impossible. It is, in fact, far easier to as a person on aid to finance $10k over 10 years than to save $5k as an emergency fund. Debt payments are something the system “understands”, but being responsible and saving - or accepting a gift - can get you booted out entirely and accused of wrong-doing.

But let’s say you DO get a $5k windfall - assuming you report it promptly and you’re believed (meaning you can prove you won the lottery, a relative died and left it to you, etc.) you now go from have some assurance and security - that food stamp account being filled every month, for example - to living on dwindling resources. If you can use the windfall to jump-start to the next level that’s great but really a couple thousand isn’t likely to do that… so it trickles out the door, nothing really changes, and at the end you have to get back on aid, re-navigating the bureaucracy, perhaps spending time on waiting lists to get back to where you were before the windfall arrived.

This creates a perverse incentive. Unless you can leap over the finance zone where you’re too "wealthy’ to qualify for aid but too poor to ever get ahead there is no incentive, and perhaps disincentive, to improve. Funny, when wealthy people reject a deal that is bad for them we call them wise. When poor people do the same thing - reject a deal that, long term, is not in their interests - we call them unpleasant names.

42

So is that a “no” then?

43

Ha-ha-ha - at least a couple days a week. I’m trying to claw my way back up to middle class.

Actually, quite a few of us Dopers are like me - this week was the first time in several years I could afford to buy something at Target rather than Goodwill or Salvation Army (or underpants from the dollar store). The furniture I own was all purchased years ago, and about half of it dates back to my college years, nearly 30 years ago. I rent in a building with severe issues that, on occasion, I have had to help the landlord repair (he’s not doing so well either these days). I did get off food stamps about two years ago, yay, but almost fell back onto them when my (now former) employer simply decided to not pay anyone for six weeks. Out of season produce? Please - I grow most of our vegees from seed and buy whatever fruit is cheapest at the store. Unless I can’t afford fruit at all that week. Vacation? Please! The only “time off” I had in a three year stretch was the two months I took care of my dying mother. THIS year I managed to get away for a week to Buffalo to visit my dad, but even then he paid for us to get new brakes on the car and the gas and tolls to make the trip. Retirement fund? My retirement savings are gone because we need the money NOW to pay for things like medical care for an infection when we had no insurance, or my spouse’s diabetes medication when we had no insurance, or car repairs.

There was a time when being on the internet was a sign you were at least middle class but a LOT of us out here are poor.

The thing is, I remember being well off. Hell, I used to fly airplanes as a hobby while keeping money in the bank, saving for the future, and so on. Totally middle class, maybe a little better than that. I have quality stuff from back then, great coping skills, financial literacy… and I STILL find myself lapsing the poverty bad habits and mindsets
John Cheese blogged about. Someone who had been poor all their life? Who didn’t know anything different?

Yeah, when I say “clawing my way back up to the middle class” that what it fells like, pulling yourself up a rock wall by your fingertips while your nails split back to the quick and you’re terrified of falling.

It’s one of the reasons I get pissy when people advocate that poor people live on tasteless sludge and have no entertainment or luxuries. It’s the little things that can keep you sane, like buying your favorite kiwifruit instead of bruised grapes, or having access to the internet for entertainment instead of staring as stained, cracked walls all the time, or having a pretty coat or shirt instead of a patched cast-off from Goodwill that, while functionally adequate, makes you look like a bum and has the Mysterious Stain of Unknown Origin blazoned across it or just a decent haircut so you look decently groomed. It can be the difference between paralyzing despair and having the motivation to actually keep trying, keep flinging your bruised self against the obstacles between you and a better life.

44

Me too. I’ve managed to get out of poverty (and, with all sincerity, you have my sympathy and I wish you great luck) and it’s almost impossible to understand just how grinding and draining it is unless you’ve lived it. Poor people have it so shitty, and then you have the other classes just constantly dumping on them and insulting them and making it all worse.

I’m not saying we shouldn’t talk about it. We absolutely should! It’s a conversation we need to be having as a nation, in my opinion. But if you start with the mindset of, “why don’t they just…” I’m telling you, you JUST. DON’T. GET. IT. If poverty was easy to escape, people would do it. Like I said earlier, when one person can’t raise themselves up, it might be them. But when whole segments of society can’t get out of this cycle, it’s something else.

45

I wonder if that’s a bigger factor than we suspect; I mean, I went to college partially on an academic scholarship, partially on Mom and Dad’s nickel, and partially paid for by myself.

I had a job lined up when I got out (it was 1996 and I had a computer science BS, so it wasn’t particularly hard at the time), but what was most helpful in getting myself off the ground and at cruising altitude was that I lived with my parents for the first 5 months after I graduated, and saved almost all of my first 10 paychecks for getting myself my own apartment. This meant that I could get a TV, a VCR, dishes, glasses and silverware (some new, some from garage sales), a couch, and some other stuff that I wouldn’t have been able to afford right when I graduated without putting it on the credit card.

So 5 months after graduating college, I had a fully furnished apartment (not all new, but decent enough) and all the accoutrements, and no debt. That went a long way toward getting a jump on saving money.

46

I’ve run into more than a few people who seem to have absolutely no conception that there are people out there for whom “just ask mom and dad for help” is a complete non-option. It’s like, no matter how hard life got for them or how shitty their finances became, there was always that safety net lurking in the background: “Well, if all else fails, I’ll just call mom and dad.”

Yeah, well. When mom and dad are also digging through the couch cushions to try to find money to make this month’s rent, you’re kind of up shit creek.

Most – not all, mind you, so don’t bother swooping in with your “I make $500k per year and I started with nothing and my parents are DEAD” story – but most people I know who are financially well-off were able at some point in their careers to take a big risk. Starting a new business on their own, or going back for more education in their 30s, or quitting a well-paying job with benefits to take a less-lucrative one that held more long-term promise. People without a safety net can’t take those risks.

47

There are plenty of people who think they’ve done it all on their own, with no help from anyone and no lucky breaks. But all of them are wrong.

48

There are really two questions here–the first is “why are people that make no money so poor?” The answer to that is pretty fucking obvious: they don’t make any money. That seems to be mostly what people are pointing out here. Another, more interesting, question is “why are people that make pretty good money so poor?” Because there are a lot of these. I mean, I am a teacher. I make $50-$60K a year. Right now, that supports me, my husband, and our son, and we do all right. No debt. We’ve had our share of advantages, no doubt, and our share of bad luck–nothing horrific, but normal life emergencies. Most everyone I work with makes within 10% of what I make, and I can’t tell you how many of them are broke–as in check-kiting at the grocery store, can’t afford new tires, can’t go to the doctor because of the co-pay broke. We have to schedule work happy hours around payday because towards the end of the month, too many people can’t afford it. And most of them have working spouses, so you are looking at household incomes in the low six-figures in TX–a fairly cheap state.

This, to me, seems more interesting of a question because these people are not generally stupid or lazy, but they make really weird decisions about money. I used to make those same decisions, and it wasn’t easy to learn a new normal: I was in my 30s before I figured it out, and I have trouble articulating what I figured out. But it seems to me that this is an area where real useful improvements could be made, where generational poverty can be stopped in it’s first iteration–because this good-money-making poor are setting their kids up to be no-money-making poor, because they won’t be able to help or support them.

49

What weird decisions are they making? If you don’t mind sharing.

50

The ones I see the most are the ones I talked about above, before the thread shifted direction.

ETA: I would also add that I think our general social taboo about talking about money and income and such is a big problem.

51

Keeping up with the Joneses is a problem, too. As is the way things are sold.

At one point the spouse and I were looking into buying a house (obviously, this was before I lost my lucrative job in 2007). We had a specific square footage (1,000-1,500 sq ft) and specific price range ($50-75k which was reasonably for what we wanted in our area at the time, the late 1990’s). I can not tell you how many times real estate agents told us we could and SHOULD “buy more house”, insisted on showing us homes in the $150k range and double our planned square footage, pushing, pushing, pushing in some cases to the point we simply got up and walked away. Well, that’s us, but how many people cave to that pressure, and to the pressure to own in general? (We wound up renting, which turned out to be a good option for us.)

Likewise, cars - when we bought our Echo we were laughed at (literally in two cases), told we could and SHOULD “buy more car”, and so forth - nevermind that the Echo exactly filled our needs (and, for that matter, still does 11 years later). How many people cave to that pressure that comes not only from the dealer but also their friends and co-workers?

It happens over and over and over - we’re told we can and we SHOULD buy more. What we should do is learn to set priorities, draw up a budget, and stick with it. The difference between the “poor” middle class who are living paycheck to paycheck on $150k a year and the poor family on Public Aid making $15k a year is that the $150k year folks are bringing in enough money monthly to smooth out the bumps. That’s it. Because they are largely making the same sort of mistakes over and over again.

Now, good financial habits - living within your means, minimizing debt, saving at least a bit every paycheck you can - not only enable you to live VERY well at $150k a year, but if you do fall into poverty it will also improve your life there. You’ll be maximizing what resources you have.

But, like I said, having $150k a year allows you to engage in financial idiocy long term, which you can then pass on to your offspring.

52

Two other habits I see in “high earning poor”

  1. This idea that you can’t leave a store without buying SOMETHING. This is really surprisingly reflexive for a lot of people: once they step into Target or Safeway or the mall, they won’t leave empty handed.

  2. The idea that it’s horrifically rude to turn down social invitations because of money unless you genuinely don’t have it. Friend comes in from out of town and people are getting together at a steakhouse to meet him? You HAVE TO go. Work people ask you to join them for lunch? Command performance. It’s not a bullshit excuse to spend money–they really feel like there is no choice.

  3. Fucking Christmas. Seriously. If the one thing the “high earning poor” all do, it’s way way way overspend on Christmas. There’s this weird idea that if you aren’t spending money you don’t have on you, it’s “selfless” and therefore okay, even admirable: “I love my kids SO MUCH that I found a way to make Christmas special”. Yes. You won’t be able to send them to college now because you are paying 22% compound interest on stupid crap that will be broken by Valentine’s Day. And it’s not just for the kids: the weird tangle of family obligations people create lead to them spending thousands. It’s insane. It also reinforces the notion that they are the only people without money because hey, all these other people could afford to buy us gifts!

53

I had that problem when I bought my house in 1991 too. My budget was $68k. The ‘family friend’ REA kept showing me houses in the 75-85k range. We both kept getting irritated with each other as I kept telling her to show me stuff in the 60-65 range and she kept showing me more expensive stuff and waving it off as “well you can negotiate!” (not that much, I can’t!) Eventually I fired her, and then found the house I ended up buying all on my own. For $65k.

When I worked Security at the urban cellphone store back about 5 years ago, I could not believe the number of poor people who would come in, in junker cars, but carrying the latest and greatest smartphones, and paying HUNDREDS of dollars every month for their plans. It absolutely blew my mind, being one of the working poor at the time. I could not imagine how I would be able to pay that much every month for a fucking PHONE, or why I would want to. But to some degree, it was a status thing for people.

54

A big factor is that poor people can’t afford the resources that they’d need to stop being poor. Let’s say a poor person has all of the skills needed to run his own business. But anyone will tell you that small businesses don’t start out profitable - you usually need a year or two before you’re actually earning money from your business.

Now a middle class person might have enough money in his savings account to live off of for two years while he starts up a business. And in ten years, he’ll be better off than he is now. But tell a poor person he’ll need to live off his savings for the next two years and you might as well be asking him to swim across the Atlantic. So ten years from now, that poor person will be in the same place he is now.

55

Snipped the rest, but the whole post is right on the money for many people who are not officially poor, just a pink slip (their own, their spouse’s, their child’s) away from it. There is many people who have an uncanny-to-me ability to spend any money that touches their hands. Their basic mindset is “why not?” and “how was I going to say ‘I cannot afford it’?” is a trigger for spending money that they really, really should not have spent. Another good one is “but it was so cheap! How could I resist!”

56

“It’s ok, I’ve done loads of overtime this month, so I’ll be getting loads of money next paycheck! I can afford this!”

“It’s not worth just saving £10- I thought we deserved a treat, we can start saving next month!”

twitch

My housemate seriously believes that ‘I can’t afford to get that’ means ‘I cannot physically get my hands on enough money’.

I’ve tried and tried to explain that yes, I do have a small emergency fund in my bank account, but no, the desire for a takeaway does not constitute an emergency, and offering to lend me the money is not in any way a helpful gesture, but she really doesn’t get it.

My ex boyfriend (third generation living off part-time jobs and/or benefits), once got genuinely angry at me for ‘hiding’ a £10 note, in an attempt to save up. If I’d spent it on something he wouldn’t have minded at all, but the idea of saving money just because we didn’t need to spend it, when it could have got either of us some momentary pleasure, was actually offensive to him.

Saving meant saving up to buy something, and that was it.

57

I’m a trifle surprised he got as far as “saving up to buy something” - I know a lot of people who buy on credit whether or not they need to do so. Such people are flabbergasted when the spouse and I make a major purchase and pay for it up front. HOW can we do that? You mean you just paid for an $800 car repair in cash? (check, actually) But… you could have had really small payments! No thanks, I like writing the check and having it done with.

58

Different background cultures, IME the “just use the card” mindset is a lot less common outside the US, although becoming more common. One of the scary things about the bubble years was seeing quick-loan places pop up, it’s something which had disappeared about 100 years ago and now they were back. This time, you didn’t need to leave your good clothes as security, they’d just take your flat.

59

Related to that are people who consider the car payment right there with the electric bill–as a sort of immutable fact of life. They go to the dealer and negotiate the payment, not the price: they finance a car for 84 months, because that lets them get a nicer car. And they trade in and up when they can because the idea of a perpetual payment is so automatic to them that they don’t think anything of it.

60

I think that economic level doesn’t make one immune to poor decision making.

The world is full of rich people who made a lot of bad economic choices and ended up losing their shirts. I think the mentality of those people is more telling than that of those who were never rich in the first place. The ex-rich had a lot more options, sources of advice, etc., and yet they made in many cases really horrendous decisions.

And I’m not just talking about pro athletes from poor backgrounds or lottery winners who burned thru their money as fast as they could. But there are a lot of people who were raised in fairly-to-extremely well-to-do circumstances, good educational opportunities, etc., who just blew millions in ridiculous ways.

I, unfortunately, also know several middle class folks who have been seriously hurt by the recent depression. One family, who have lived in our neighborhood nearly as long as us was recently foreclosed on. We, OTOH, have owned our house clear for a while. They made different decisions and faced different personal crises than we did.

All my grandparents were chronically poor for a long time. Farming does that. My own parents started out fairly poor. But everybody eventually ended up doing fairly well. Just because someone is poor now doesn’t mean that they are making bad decisions that will keep them poor forever.

In short, I object to the OP’s “poor mentality” limitation on the question. Anybody can be make multiple bad decisions over many years. Income level seems to have nothing to do with it.