By John Cheese
Foul Language Sanitised by [Annonie-Mouse]
Being poor is like a game of poker where if you lose, the other players get to [take advantage of] you. And if you win, the dealer [takes advantage of] you. A bunch of you reading this are among the 45 million “working poor” in America, and if you’re not, you know somebody who is. Like me.
I’m not blaming anybody but myself for getting into this situation and I’m not asking for anybody’s sympathy. What I am saying is that people are quick to tell you to pick yourself up by your bootstraps and just stop being poor. What they don’t understand is the series of intricate financial traps that makes that incredibly difficult.
If you’re not poor, that’s awesome. I’m not mad at you, or jealous. Hopefully you’ll never find out that …
#5. You Get Charged for Using Your Own Money
This is the future, where many businesses no longer accept cash as payment. That means you are required to have a checking account to function in the economy. And if you’re poor, that means at some point you’re going to get bank-[taken advantage of].
Because having a checking account while poor doesn’t just mean you have to be responsible and good at math — you have to be perfect. Meticulous, flawless record keeping is the difference between surviving and having the bank seize your next paycheck.
Let’s say you’re running late for work and hurriedly stop to get gas, paying with a bank card. In your haste you forget to write the $55 down (gas being $4 a gallon, you know). So while you spent the last week until payday thinking you had $50 in your account to absorb minor purchases, you actually were $5 in the red.
So payday comes. You go to the bank to deposit your check, at which point the bank takes it, sticks it in their pocket and says, “Thank you very much! I’m buying myself a new pair of shoes with that [money]!” They then inform you that your account was at -$200 at the moment you deposited your check.
The bank can hit you with a $35 fine for every charge that comes in while you are in minus territory. The bank will not tell you they charged you this money. You will have no idea anything is wrong.
It’s a silent chain reaction in which every charge that comes through during those few days before payday draws the $35 fee. The $8 you spent at the gas station for cigarettes, the $24.99 that automatically comes out for your Internet access … for each, the bank silently zaps out the charge and $35 on top of it, until your next paycheck is gone. Five seconds of oversight gave the bank the right to take away a week’s worth of your labor.
Some of you are saying, “Fine, just tell the bank to go [jump in a lake]. Walk out the door and just do everything by cash or money order.” Ah, but now when you get paid, you have to go somewhere to cash your paycheck — and businesses charge up to $8 to do it. If you’re working in the service industry, congratulations — an hour of your labor just vanished … just so you could use your own money. Some describe this as a “poverty tax.” Others refer to it as [explicitaves]
The one piece of advice I can offer here is that you’ll be surprised how many businesses will give you some leeway if you just call them and beg. Banks are run by human beings (as of the writing of this article) and if you get a person on the phone you can get them to waive overdraft fees, particularly if it’s a first offense. Even businesses waiting on a payment will give you an extra week or two if you call and explain it. In this economy, they’re so used to people just taking the money and disappearing that they’re happy to hear you’re operating in some kind of good faith.
Otherwise, you’re going to be in a bind. And this is when you’ll find out …
#4. There is an Industry That Profits by Keeping You Poor
Think you’re too smart to ever use one of those shady “payday loan” places? Well, you should know that nobody thinks they’re a good deal. People go there because they’re choosing between which [Service] provides the [Least downside].
Say the gas bill is a month past due, and they’re threatening to turn it off (if so, it’s $150 to get it reconnected). Or you’re about to be late on a credit card payment (which would be a fee and a doubling of your interest rate). Or your favorite [TV] broke, and [a Sesame Street TV Marathon] is coming up. That is when you find yourself swallowing your pride and heading to the payday loan place.
A standard 14-day “payday” loan charges $15.50 per $100 borrowed. So a $500 loan ends up being $577.50 (or 1.5 tanks of gas in interest). But if you don’t have it after 14 days, that’s fine — they offer to extend your loan to 180 days. It makes the payments minuscule. Oh, and you’ll be paying back $1,275 at 403.10 percent APR.
Yes, you got [taken advantage of], in the name of your financial [institution] avoiding the credit card company’s [more harsh financial penalties]. And it’s a [heck] of a lot better than going over on your checking account again and starting up their infinite circular [financial catch 22].
All right, let’s say you wised up. You save and cut back. You resist an offer to, say, buy a computer on Best Buy’s finance plan, because you’re too smart to take on more debt. And no monthly cell phone payments for you, oh no. You’re not going to put yourself in a hole again!
Congratulations. You just did. It turns out …
#3. No Credit Can be Just as Damaging as Bad Credit
On the spectrum of financial responsibility, from “that billionaire who drives an old Dodge Dakota” down to “MC Hammer,” you’d think that the next step up from being overdue on a bunch of bills would be to have no bills at all. Don’t buy it if you can’t afford it, right?
You’ll find out the problem the next time somebody does a credit check — having no credit will stop you from getting a loan or an apartment just as fast as having bad credit. And more importantly, if you have old bad credit due to a bunch of previous [unfortunate financial decisions], simply vanishing off the credit map doesn’t do anything to fix it.
t took me six months to find a place to rent after applying for every property that appeared in the paper across five towns. I was denied each time. It was my lack of credit due to years of me and lenders deciding to just stay out of each other’s hair, like those old sitcoms where roommates would draw a line down the middle of the house. I even used a prepaid cell phone where I’d just be buying minutes off the shelf rather than get locked into a contract with all those termination fees and [stuff]. When I needed something big, like a computer upgrade or furniture, I’d wait for a windfall, like a tax return, and pay cash. It’s called financial responsibility, [people]!
Nope. It turns out that to a business, a customer with no credit is like a girl giving you the silent treatment — they assume something is wrong.
And everybody checks your credit — if I want to get Direct TV, I have to pay $310 worth of startup fees (the size of your up-front payments/deposits depends on your credit history).
Utilities are even more — which means trying to move to a new place costs hundreds of dollars in deposits (remember the $150 to get my gas turned on). If I need a new car, well, let’s just say I need to show up at the dealership with a shoebox full of cash.
So repairing credit means opening accounts (having a cell phone plan is a good one, having your utilities in your own name — as opposed to the landlord’s — is another) and, you know, making sure to pay your [finacial] bills on time. And don’t bother trying to shortcut the system by saving the shoebox full of cash, getting a loan, then paying it all off the next month. Length of credit is part of your credit score. They want to know your ability to make steady, long term payments without missing a month or being late
#2. Your Next Expensive Disaster is Always Around the Corner
[Stuff] happens, always at the exact worst time. A tire blows on my car and, without a spare, it instantly becomes a paperweight. There’s $80 for a new tire, $50 for a tow. Now, it’s a good idea to have a separate bank account set up specifically for these situations because they are unavoidable. It’s also a good idea to have a [winning lotto ticket in yout back pocket]. It’s not that simple.
You get the same domino effect with sudden financial disasters as you do with the bank fees. For instance, I worked a [undesirable] service industry job, which meant I got paid by the hour, and didn’t get paid unless I showed up — no paid time off. But I couldn’t physically get to work because of the [unfortunate] flat tire. It’s a rural area, no subway or buses. So it’s double [unfortunate] — not just lost work time, but lost time that is spent paying for a tow and a tire. And if I didn’t happen to have that money sitting around, it meant waiting until payday, and missing work until then.
Which meant my next paycheck would be short. By the time I get it fixed and add in the missed work time, that $80 tire just turned into a $250 [problem]. That’s life in a world with no financial margin for error. It’s like trying to climb out of a [hole and only falling deeper in].
Years ago, we bought a house with the help of our in-laws. You know, because owning property is the responsible adult thing to do. The very first [glorious] night of moving in, we got a massive water leak. I couldn’t just call the landlord — I was the landlord. I couldn’t call a plumber because we didn’t have the $150 to pay the guy, not until payday. So the leak was allowed to run until we could put the money together to pay one. So two weeks later, we hand the guy $150. And then, a week later, the water bill arrives.
You find yourself thinking, “Man, we could get caught up if this bad [stuff] wouldn’t keep happening!” Then it finally hits you that bad [stuff] happens like clockwork. Not because God hates you, but because you’re poor and you’re using cheap [things] that break. Maybe you don’t pay the $150 for a plumber, but have a handy friend fix it for you for $50. Awesome, you saved $100! Then six months later you have a leak again, because it turns out he fixed it with rubber bands and Fruit Roll-ups.
Everything in a poor person’s life is a cash vampire. My truck has 170,000 miles on it and the MPG is so bad that every time I start it, the ghost of an Indian appears in the passenger seat and cries. About twice a year, something under the hood grinds to a halt or melts — always another $500 on a tow and repairs. And that was the money I was saving to get a more reliable car.
[Heck], even my own body does it to me. I lost my last job because of chronic back pain, losing my health insurance in the process. Which means I can’t treat my chronic back pain. Can’t afford to get dentist check-ups, so more expensive problems are allowed to grow and fester. And so on.
#1. You’re Always in Survival Mode
There’s a phrase in the working world that drives me crazy. One guy says, “The money’s not great, but I love my job.” And somebody responds, “Hey, happiness is all that really matters.”
To be clear, that’s probably true for people at a certain level of income. If you aren’t struggling to pay the bills, then happiness is indeed a pretty [darned] awesome extra. But you know those movies like American Beauty, about the guy with the unfulfilling career who abandons it to live life to its fullest? Yeah, don’t forget that after quitting their jobs they still come home to houses that look like [Cape Cod].
But down here, at this level, you take what you can [be fortunate enough to] get. Fantasies about holding out for that dream job will ruin you.
For instance, long before reading to this part, some helpful commenter has surely skipped down and chimed in with, “Why don’t you just get a job, you lazy [person]!” Wait, did you think I was unemployed? [Heck] no, it’s been years since I was out of work for any long period of time. I’ve always had jobs. [Lousy, Lousy] jobs.
A huge chunk of this economy runs on shitty jobs now. Recently, McDonald’s held a job fair with 50,000 openings. They got more than 1,000,000 applications. Tens of millions of you will wind up in one of these jobs, it’s sheer math.
These service jobs pay hourly, they give you little or nothing in terms of benefits and there is nothing in the way of security even from week to week — your hours could get cut at any time, for any reason. Sure, you can take a second part-time job. Though, that’s assuming you can find one that works around your primary job’s schedule — just mentioning that you have another job in an interview is often enough to stop that interview mid-sentence. Why hire you when there are 30 guys in line behind you with completely free schedules?
So in answer to the inevitable, “You need to dream bigger, and strive forth to get a new career for yourself!” Hey, I totally agree. But now we’re back in the Catch-22 poverty [situation]. Once you’re in this tier of jobs, getting out isn’t just hard, it’s expensive.
Sure, you can take classes at night at a community college or something. Maybe you’ll even get financial aid or loans to pay for your books or tuition. What they will not pay for is the time you missed at work while you were in classes or for a babysitter or for transportation. And you sure as [heck]better be certain that you have some kind of aptitude for whatever you’re studying (which, by the way, you won’t know until you’ve spent a year or two studying it) because that’s the only chance you’re going to get.
You can do it the old-fashioned way, by working your way up the corporate ladder from within whatever [lousy] job you have. But that is also expensive because promotions often require you to move. I got offered a promotion at my [lousy] service job (washing semi trucks with high-pressure hoses, the job that eventually destroyed my back) that would have required me to move several hours away. And moving costs money — remember what I said about the cost of getting utilities turned on? And how landlords check your credit?
And then there are the intangible costs. I would be abandoning my children, for instance — I share custody with my ex-wife, who obviously was not going to be moving with me. How many visits would I get in before my car broke down? And moving away from friends and family also comes with a cost — think of the favors you do for each other (i.e. the friend/brother/uncle willing to fix the truck for free, because you helped paint his porch, etc).
It’s not impossible, but it’s taking a huge risk. And if the new job doesn’t work out after you bet all of your chips, you’re triple [unfortunate]. And at that point the world will wag its finger at you and tell you how irresponsible it was to move when you were so poor. “Ha, you poor people are always doing stupid [things] like that!”
And on and on. People do get out of this situation — I got paid to write this, for instance. All I’m saying is that the journey is something like trying to go from the Earth to the Moon.
** WARNING: Original link contains significant amounts of language that is NSFW. **
http://www.zerohedge.com/news/2013-06-13/guest-post-5-things-nobody-tells-you-about-being-poor
No comments:
Post a Comment