I have several acquaintances that are chronically poor/chronically broke. Their common characteristic is that they do an extremely poor job of managing their personal finances. They spend money on things they don’t need, and don’t have money left over for necessities.
As just one example… a friend of mine is a truck driver. He’s always whining about being broke. Yet he smokes 3 packs of cigarettes a day, drinks beer every night, eats nothing but takeout foods, and recently leased a car. And guess what? He’s always behind on his rent. I don’t feel sorry for him.
Of course not. But I’m not saying there’s any sure way of getting ahead, either.
<snip Great American Story>
Ooh, you had cable!
Well, yes and no.
You had the opportunity to live off your savings for three months. That’s partially lucky and partially good finance. You now own a profitable business after 20 years. I’m happy for you, but you know you’ve been lucky as much as you’ve been good. After all, your three-month, several thousand dollar gamble ended up well for you.
One major huge problem, like others have said here, is few people in the situation you were in have learned how to manage their finances. It’s obvious that spending $20 for a night at the movies is a bad investment when you only have $200 spare in a month. It’s obvious that pizza is not a good investment (unless it’s a Totino’s pizza on sale for 89 cents and you only eat half at once).
But these things are small. What’s twenty bucks? What’s ten bucks? What’s five bucks? It’s a number that adds up over the month, and knowing this logically is different from applying this knowledge.
A combination of low pay, poor financial decisions, and the inability to buy quality products will keep people poor. That said, there are ways to combat this. I would call for mandatory credit counseling for anyone on welfare and maybe even government-subsidized payment plans for higher-quality necessities.
My parents own a general store in one of the poorest suburbs in Melbourne. Their groceries can often be double the prices at the big supermarkets (not gouging - they pay more wholesale) but people still pay because they don’t have a car, or need to wait until payday to fill it up. Additionally people with money can afford to make a weekly or monthly trip to the supermarket, but if you’re poor you need to buy your groceries bit by bit and you can’t afford to drive all that way just to pick up a couple of items.
There have been studies showing that the poorer suburbs (ie. those the furthest away from the city centre) are disproportionately affected by rising petrol prices. (link is to an article summarising the study, not the study itself)
The only other thing I could think of is that the poor don’t have the same safety net as the wealthy or even the middle-class. If my fiance and I are irresponsible or unlucky financially our parents are able to bail us out. “The hot water system exploded and you spent all your money on pez? Here’s a couple of thousand, just pay it back when you can.” Events that could be devastating financial setbacks like missing mortgage payments or having an oopsie baby are mitigated by that safety net.
I was just going to agree with this - I’ve heard it referred to as ‘false economy’ buying cheaper lower quality goods which are more expensive in the long term as they need to be replaced so frequently.
It has always been true, that the poor pay more for basic services and food. what puzzles me-education is the path out of poverty, but you see many in the ghetto REJECTING education. So, the poor continue to be exploited-can it be that politicians WANT it this way? Though many denay it, the politicians have a vested interest in keeping the poor poor. Take the "education; lobby-they want to keep themselves in business-hence the proliferation of federally-funded “programs” to “improve” education. or the HUD bureaucrats-who keep funneling cash to builders-who throw up jerry-built housing projects (which become slums-requiring teardowns and rebuilds-got to keep the graft flowing).
yep, we have spent over $1 trillion “fighting” poverty-and the poverty industry is alive and well! Lyndon Johnson didn’t realize what a gold mine he was launching, with his “War on Poverty”!
In college, I saw a suburban branch of a regional grocery chain that was 10 minutes from a “next to downtown” location of the same grocery chain. This was Durham, North Carolina, in 1998.
A $3 box of off-brand pop tarts was $3.50 if you drove to the store in the black neighborhood.
I saw cereal prices higher, milk prices higher, oatmeal, meat… take your pick.
One of my favorite supermarkets is in Detroit’s west side (I think they call it that; I just call it Mexicantown). It’s admittedly “upscale poor” as the residents are good at grabbing their bootstraps and making good for themselves versus other parts of the city with much more of a victim mentality. Despite the higher operating costs versus the suburbs, I find the price for most items to be substantially cheaper than at my local megamart. Granted 95% of what we buy is unprepared food, so I don’t have a metric for Pop-Tarts and things of that ilk, but if you’re poor and on a budget you shouldn’t be buying prepared foods anyways (a subject of previous SDMB threads), and if you’re rich you should appreciate the quality of fresh ingredients anyway.
Oh, yeah, just saying that (1) prices aren’t always necessarily higher in the poor areas, and (2) cheap, good stuff isn’t necessarily unavailable, either.
Given that the CEO was paid over $1.4 million last year, CC must be making a ton only paying their employees $500 a year. I mean, less than 25 cents an hour, you couldn’t get illegal migrant workers to work for that. :dubious:
Or is it that he makes 3000 times as much as the $22,000 a year worker? $66 million of the company’s $140 million net income last year went to the CEO? :dubious:
Or maybe you ballooned the fact that the CEO makes 63 times as much as the regular employee up to 3000? Sorry, got no sympathy for you when you pull shit like that.
Mangosteen, you’ve hit on the solution to poverty. If only everyone had your skills and education, nobody would have to stock shelves, drive trucks, pick up your garbage, or wait on your tables.
Next time you go to a restaurant, write down your quit-your-job-and-work-at-a-startup recipe for success. In the long run, I’m sure your waiter will be thankful.
In other words, the exact ones whose experience and knowledge of the merchandise and customers could have helped raise the job of “store clerk” to a professional level.
Maybe I can get this in before this is moved to GD or the Pit.
Poor areas of town also are often high-crime areas as well. Thus local stores and businesses have extra costs for security, and theft and vandalism losses.
There used to be a grocery store across from my folks’ church. They organized a protest because prices there were higher than in the suburbs. The management actually met with them and tried to explain the discrepancy. Nobody listened, they organized a boycott, and the store closed. So the neighborhood set up a co-op.
It closed within a year. They kept getting robbed, and shoplifting ate up all the revenue.
Stocking shelves, driving trucks, picking up garbage, waiting on tables, etc. are jobs for young people on their way up while they are training to be an auto mechanic, A/C repairman, etc. or getting an education so they can get away from these jobs. No one starts out as a CEO. And there is nothing wrong with these manual labor type jobs for young people. They are great places to learn how to show up on time, follow instructions, be responsible for getting things done correctly and on time, etc… And there will always be new young people to take these jobs as people leave for better paying jobs.
When I see a waiter at a restaurant, I do hope that they are getting an education during another part of the day and are getting ready to quit their waiter job soon.
That’s one of the things the impresses my about the store I mentioned above – they’re not afraid to put of pictures of people that pass bad checks, steal Similac, or otherwise do bad things in the store onto the entry and exit doors. Their carts also have “Value $100.00” on the push-handle so that people are reminded about what they’re worth. I’ve never seen anyone take one, but then again I don’t hang out there. I’m really not in tune with real markets in inner cities anywhere in the world but this one, but I’m impressed with how it’s run. I have read newspaper reports about other stores in Detroit proper with owner sob stories about everything they have to face to stay in business (this in articles about sanitation violations and expired product), but I don’t see that happening here. If the scene is as bad as everyone makes it out to be, then this place really is a model enterprise for stores in not-so-nice areas.
Gotta’ ask you, have you checked out wages for over-the-road tractor trailer operators in recent years?
Note:
“In 2002 the average hourly earnings of american truck driving jobs was almost $16 per hour. The high wage variance comes in that the middle 50% earned between $12.51 and $20.01 per hour. The highest paying job sector for heavy truck and tractor-trailer drivers was for general freight trucking which weighed in at a little over $17.50 per hour.” http://bigrigjobs.com/Truck-Driving-Blog/?sectionid=4
I would submit that quite a healthy number of folks consider those to be grown-up wages.
I work down the street from a check cashing place. The beginning of every month I see people get their welfare checks cashed there, then go down to the convenience store and buy cigarettes and lottery tickets. Worse, there’s a ShopRite grocery store four blocks down from the convenience store that sells cigarettes cheaper, but heaven forbid these people should have to walk four blocks to save money! They often buy cigarettes two or three at a time for 50 cents eash ($10/pack).
There is actually quite a bit of academic research on this topic. Some books include Assets for the Poor, Michsel Sherraden; Assets and the Poor, Shapiro and Wolff; and Owning Up, Michelle Miller-Adams. In general, the research finds quite a bit of support for the OPs observation: there are costs associated with poverty. Not surprisingly, neither simple solutions nor abject despair find much support.
Well, there is a correlation between education level and income. I’m not going to tell people to figure out a way to “earn more”. I get it. There are some people too unmotivated, stupid, unskilled, mentally locked into their class or simply unlucky to ever rise any higher in life.
Rent to own, check cashing stores, the lottery, ARMs (adjustable rate mortgages) and such are designed to target the penny-wise and pound (or dollar if you prefer) foolish. It feeds into a short-sighted mentality of “I want to be satisfied now”.
I have a couple of theories:
They don’t establish a connection between education and financial success. The people who appear to have money are the drug dealers and gang bangers. Their role models are rappers and professional basketball players.
They would rather have a little money now than more later. By choice or by circumstance, many people choose to drop out of school in favor of making a few extra bucks in what will end up being a dead end job.
They view education, banks, government, corporate jobs - the very things that will provide them a way out of poverty - as the enemy, the man, the guy who comes to collect their rent or fire them for slacking off
They’re simply lazy and stupid? Let’s face it, not everyone’s cut out to be a brain surgeon. The world needs ditchdiggers too.
I think we’ve pretty much covered the ‘yes, it costs more to be poor’ thing. Let me just add another couple of things anyway.
You don’t need to be poorly educated or unmotivated to be poor. The current lending policy of financial institutions, coupled with the marketing of firms who use these policies to sell their goods, encourages reasonably solvent people to take on debt to the point that they become effectively poor. You don’t need to have a low income to be poor.
Unless you’ve been there you simply won’t understand how hard it is to get out of the poverty trap. It’s called a trap for a reason. Once these financial institutions have managed to lend you enough that you are almost bankcrupt, there are others waiting in the wings to prey on your new found poverty. Got to get the car fixed now so you can drive to work? Kid needs shoes? No savings to fall back on and every penny of your pay check accounted for? Well, there’s always payday advances. 2000% APR. Seriously, 2000 fucking percent. Of course when payday comes you won’t be able to afford to take the hit of the repayment so you need to get another one for the next month. Next thing you know you’ve got a big chunk of your pay going on interest.
Scrimped and saved for the last three months to get that loan paid off? Good for you. Now watch while the boiler packs up this month and youre back to square one. As soon as you find yourself without savings to fall back on you’ll find it incredibly hard to ever start saving again. It easy to fall into the trap and very hard to get back out even if you do maximise your earning potential.
On another point, there are so many reasons that living in poverty makes it harder to better yourself. Even if you could save the money for education, can you afford the time? If you can, do you have the energy? If you haven’t been there you’ll never know how tiring worrying about money each and every waking moment is. And that’s really how it can be. Constantly wondering how to make that cash stretch. Afraid to answer the phone or door in case it’s somebody looking for cash. It’s easy for depression to take hold when you seem to have little good going on and nothing but years of hard work to look forward to before that changes.
Regarding the ‘stupid’ shopping habits, yeah you’re probably right. No sympathy for those that spend all their cash on alcohol or tobacco? Or buying brand name products. Where’s the motivation to do otherwise? For many this probably seems like the only pleasure’s they can afford. If you are poor you shouldn’t be buying prepared food? What if you are working 3 jobs to make ends meet, have you got the time to prepare your own? That’s assuming you actually have the means to prepare food anyway. When your cooker breaks, you get a new one right? What if you can’t afford it? It’s take away until you can or cold food, what else you gonna do?
Bottom line is that the only way out is to make the best of yourself you can and to manage your finances as best you can. That i agree on. But don’t make the mistake of thinking it’s easy and looking down on those that are still struggling. The ‘well make something of yourself, it’s your own fault’ attitude really pisses me off.
Let’s clarify one thing. Financial institutions and companies don’t make anyone do anything. They take advantage of people’s greed, vanity, sense of entitlement and ignorance on financial matters.
The trap is once you settle down the path of working 5 jobs to make ends meet, you no longer have the time, money or energy to get an education. And it just gets harder to do so as you get older.