Image via Wikipedia
How expensive it is to be poor.
One of the hardest things about our current economic recession is that with so many people being out of work and looking for new jobs, many people who had previously been firmly entrenched in the middle class are having to join the ranks of the working poor. It is a difficult transition and along the way, many of those same people are finding out that it's really expensive to be poor.
In fact, if you've never had to live from paycheck to paycheck, you will be surprised at all of the ways that being poor is a complicated problem. There are always people who say that you should just work more and try harder, but it isn't always that simple.There are many things built into our way of life that are designed to keep the poor from getting ahead.
Here are 4 things you may not know about being poor:
You will have to pay to use your money - More and more companies are forcing their customers to pay their bills online or over the phone. In fact, many companies don't accept cash at all. In order to pay your bills, you really have to have a checking account. The problem is that the banking system is designed to hurt those people who don't have much money. For example, if you make a small mistake in your checking account, the bank will still let you use your debit card but they will charge a $35 fee for each transaction. Unless you have perfect math, the odds are good that at one time or another, the bank charges will eat up most of your next paycheck. If your poor, there really isn't an option to keep a "cushion" of a couple hundred dollars in your account "just in case". If you decide that you don't want to have a checking account and run the risk of incurring hundreds of dollars in fees, you will have to find another way to cash your paychecks. Currently, even the bank that issued the check will charge you a fee if you don't have an account with them. If you use a check cashing service, the fees average about $8. This means that if you earn minimum wage, you have to give up one hour of pay just to use the money you earned.
Payday loans are designed to keep you poor - I have heard my family and friends talk about those payday loan places and say how much of a rip off they are and that poor people should know better than to use them. The truth is that no one uses those services because they think that they are a good deal. They use them as a last resort. When your gas is going to be cut off and there will be a $200 reconnection fee, or you can't make your credit card payment and the interest will double, a payday loan service seems like the lesser of the evils. Typically, these loans charge $15.00 for each $100 borrowed with a 14 day repayment period. If you can't pay it back in 14 days, they will extend the repayment period, but charge 400% interest.
Not having credit is almost worse than having bad credit - If you decide to skip the checking account, credit cards and loans and just pay things with cash, you aren't doing yourself any favors. Having no credit is sometimes worse than having bad credit. There are places that will give loans to people who have bad credit, with a high interest rate of course. But those same lenders have a much harder time giving loans to people with no credit. In addition, if you don't have credit, things like moving and connecting utilities can cost hundreds of dollars more than if you had good credit.
One disaster can set you back a lot - I know, it's important to save money for a rainy day. When you barely can pay your rent and utilities each month, saving money for emergencies is a luxury you just don't have. But, because your poor, emergencies happen more often. For example, you drive an old car because it was cheap and you were able to pay for it with cash. Then, you can't afford all of the routine maintenance, so you spend most of your time praying that it won't break down. When it does, if you don't have the money to pay for repairs, you can't get to work. This means that instead of being out the money to get the car fixed, you are also out the pay you would have earned during the days you had to miss work and risk losing your job. Or you could get a payday loan, get the car fixed, pay them the money you earn during those days and get to keep your job.
Working is expensive too - For many people who are poor or newly poor, taking jobs in the service industry is a good way to make some money. The problem is that these jobs offer no benefits and no job security. Your hours could be cut at any time and you can't count on earning a certain amount of money each month. If you want a better job, you have to be able to go back to school, pay for books, invest the time (often at the expense of your job), and pay for gas and transportation. Even if you don't need re-training, getting a better job means being able to dress the part before you see the salary. Not only that, even if you were to be offered a better job, you will have to cope with the three week (or more) period between starting the new job and actually getting a paycheck. Of course, once you get paid, you'll be spending the first couple of months just playing catch-up with your bills so you won't really see any of that money. If you are able to cover the gas to get to work during that time, let's hope your company offers free lunch because without getting paid, you won't be able to afford to buy lunch or even buy things to pack for lunch. It's hard to focus on learning a new job when you are weak from hunger.
This doesn't mean that it's impossible to stop being poor. I wouldn't want to imply that at all. The point is that "pulling yourself up by the bootstraps" isn't nearly as easy as it sounds. Getting out of poverty is hard, but knowing what the challenges are makes it a little easier to come up with an effective strategy.
Have you ever been among the working poor? What challenges do you face? Please share your thoughts in the comments.
By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for ManufacturingWorkersBlog and Nexxt. Along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
Become a member to take advantage of more features, like commenting and voting.
Register or sign in today!