Reply by Laura Smith-Johnson: What I see as issues are that low-income people, although not all, don't have the skills that independent people do. They are fully-capable, smart people who are simply lacking the skills and knowledge to become independent. Some of the problems I have seen personally that support my opinion are listed below.
Many low-income people don't know how to manage money and many live like they are middle-income when they are not. As an example, a person I know buys three or more mochas a day instead of using the mocha machine that we gave them. This person also won't be caught dead in an economical car and instead purchased and chooses to drive a gas-hungry SUV. Instead of taking a nearby bus to school which is offered at no charge, this person chooses to drive 40 miles a day, round trip, in their SUV. As another example, a person I know adopted a Great Dane instead of choosing a smaller dog or no dog at all. Adult Great Dane's, due to their size, eat between 8 and 14 cups of food per day. Both of the people in these examples are low-income and have children yet they don't seem to understand the financial impact of their decisions on not only themselves, but their children and society.
Many low-income people living in houses complain about the cost of food and yet they don't have a garden in which to grow their own food.
Many low-income people complain about the high cost of everything and yet they shop at Walmart, one of the places that helps to keep them poor. And, by the way, it's not so much about the wage that Walmart employees get as it is the lack of hours they get and no flexibility for them to get a second job, but that's a topic for another discussion.
Many low-income people on public assistance don't understand where the money comes from that supports them. They say it comes from the government but, when asked, they don't understand where the government gets their money.
The solution, I believe, starts with educating people. Start with young people, while they're still in school. Add 'Home Economics' back into the curriculum as a required course for both sexes. Adults who fall into the low-income tax bracket, who are of working age and ability, and who receive public assistance should also be required to complete this course.
The course, if designed for today's needs, would include food, nutrition, and health; gardening; personal finance; family resource management and planning; clothing; housing and household management; social economics; technology; education and community services. They will learn everyday living in households, families and communities for developing life skills and developing the potential for growth; to discover and develop their own resources and capabilities; and to facilitate sustainable futures for everyone.
I agree, wholeheartedly! Acting as if one has middle class income, when there is not the money to support that lifestyle, is a road to no where worth having. She makes a good point that low income people buy at box stores such as Walmart, that do not pay living wages. This forces workers to go on welfare, taking from the working middle class. The middle class is already shrinking to undesirable living standards as the Walmarts of the nation take in huge profits and pay proportionately low taxes.
Protection of huge corporations and farms from paying their fair share in taxes, and the lack of education of poor people, work together to cripple the working class and small business.
The answer is NOT to give money to low-income people unless we make changes in taxation policies and education requirements.
Yes, I agree, Walmart should be ashamed that their workers aren't making living wages. Anyone who works for a living needs to be able to support the USA dream.
Walmart and big box stores buy products made by low wages-workers from all over the world, draining resources out of wage-worker communities; then they use underpaid staff to sell to customers. Large corporations make a profit on all the labor of their employees at both ends of the production and distribution cycles. They take the profits out of the communities of both producers of goods and services and those who distribute them on a sales market.
Profits go to support growing wealth for people who had nothing to do with production or distribution. This process has an economic name, "unearned income".
That has to stop.
Raising the minimum wage, and requiring large stores to invest in each employee by contributing to health care, education, and pension funds making it possible for the entire community to thrive. Both the producers around the globe and the sellers benefit, as do their communities.
This strategy will contribute to correcting the nonsense of hiring part time people to escape the extra costs of benefits.
I hear you, Joan. I'm married to a woman who is a shopoholic but her income does not support her lifestyle. (Maybe that is one reason we are separated.)
My daughter makes good money as a nurse, but she is always running out of gas in her car. How in the hell do you do that? This would tend to show mismanagement and she may come up short in other ways.
I'm on social security with limited money. I do work part time, or at least I did last year. My money all comes into one account but I handle it like playing a card game. I give myself a weekly check. On paper I put a little here and move a little there. Before long you discover you have more than one month worth of money, so you go into another month on paper. Keep it up and you are 6 months ahead even if you have no money for emergencies. I'm poor but I live well. Nobody understands how I do this. If I show them one of my papers that I play this "game" on, they cannot figure it out. If I explain it to others, they just do not get it.
Meanwhile, a friend of mine on social security gets paid $1500 on the first of the month, and he is broke less than 2 weeks later. Hey, jackass! That was $375 a week, and this was what you cleared working at that factory. You could live on it then but you cannot live on it now? This doesn't make sense.
Michael, there is an art to living within one's means, isn't there! With planning, setting goals, being disciplined, one can survive ... maybe not in a fancy way, but one can be very happy, with very little. I do have to be careful about gloating over frugal living. I just squandered $88,000 of the insurance company's funds paying for ten months of treatment for cancer. However, I did have the good fortune of having good health insurance. That amount of money would have totally bankrupted me.
Low income or not I know so many people who don't know how, or won't, manage their money. I've had several friends ask me how we do so well on one income (although it's not low income.) They lament about how broke they are, worried about paying bills, etc. When I try and help them it becomes clear they don't want to hear it. They want to keep doing exactly what they're doing, and just magically become solvent.
I'm sure there are low income people who would love to have the skills to get out of debt, and middle income people also. I just know people who refuse to change.
I can't stand owing money, and it feels so good to pay off a debt, or get a bargain and not go over your budget. Sometimes waiting and saving up for something makes you appreciate it more.
I read lots of blogs about frugality, minimalist living,etc. I've done it for years. I can't believe some of the stories of the money trouble people are in.
Hey Booklover sounds like you really know how to manage money. I think many people just don't want to wait for things so buy it quickly and go in debt.
Yeah, I have an aversion to debt. Trying to teach my "kids" to stay out of debt as much as possible. It's great not to be a wage-slave. Working somewhere you hate just because you have a ton of debt would suck. I realize sometimes people have to take a job because that's all that's available, but if you are debt-free it's easier if you lost your job, or want to look for another one.
Right now I have 2 major credit cards and hadn't charged on them in the last 2 years until an emergency came up. That put a little over $300 on one card and I paid it in full once the bill came in. The other day I put $15 on another card just because I didn't trust the Internet site.
My wife is going on a third time around with credit cards. I taught her to charge all month long and then pay the bill in full everytime it came in. I suppose her eyes got greedy. Before long she was paying "most" of the bill, and not all of it. If she doesn't watch it she will have no money left at the end of the month to pay anything. I was trying to show her how to avoid that one.
Then my $25 per hour daughter who runs out of gas all the time is mostly not eligible for a credit card. You have to demonstrate consistency and responsibility to use these things and make them work for you.
As an individual I've never made over $35,000 in my entire life. My goal was always existence and not "keeping up with the Jones." I couldn't give a rat's ass about your posessions and your money! I have myself to worry about.
Exactly Mike! Possessions aren't what make me happy either, and I don't care what the hell the Jones' are doing.
Mindy, I know what you mean, you know your income, you plan and discipline yourself to get out from under paying interest on money, and over time, you not only have a nice lifestyle, you feel content. None of this longing for a fancy home or car or clothes or vacations. That is a guaranteed way to live without contentment.
If a person has $1,000.00 a month income, he/she surely must plan carefully in order to meet all the expenses of living. Pretending there is more money, or using a credit card, or thinking he/she will win the lottery provides an excellent process for misery.
I had to replace my furnace last month and had no problem getting a bank loan to do it. It felt so good to know my credit record is spotless and I have a high rating. Normally, I don't pay attention to such rating, but at my age, not able to take on extra jobs for pay, and still able to have a good credit rating and know my 50 year old furnace isn't kicking out deadly gases any more means contentment for me. Also my bank gave me a 1% loan! Something to do with advanced age.
It was so funny when I saw the old furnace in the driveway. Of course it was huge, and the pieces of metal had holes and burned places that indicated it had worked hard for me for the 40 years I have lived here. Between the excellent care Banner Furnace Company has provided me over the years, and their fine technicians, they now installed a tiny little machine that works better than the old one. It even has day and night temperature gauges on it and a moisturizer for preventing dry winter air to turn the inside of our noses into concrete slabs.
Last week my heart doctor was able to use wireless technology to upgrade my pacemaker and now I have a night setting and a day setting. So between my furnace and my pacemaker, my life runs as smoothly as a Rolex.
There are some points to this, but I can't say as I entirely agree with 100% of the sentiment expressed. There is no question that education, or lack thereof, leads to waste of resources - financial or otherwise. However, the appearance of being in the middle class is, in part, dependent on acquisition and consumption of consumer goods. And, we have seen what has happened to middle class income over the last several decades. It's taken a dive faster than a crooked prize fighter on the Mob's payroll. To cut back on this acquisition and consumption is a sign, to many, that they're slipping out of the middle class and descending onto a lower rung of the economic ladder. Ergo, keep up appearances even though it is economically against your self interest.
There is another factor, which goes along with education. It's advertising. It is estimated that a child will see upwards of 40,000 ads per year. The average adult may see or be exposed to as many as 5,000 ads per day. And, I'm not just referring to TV or radio, though that is certainly included. Take a look at the top banner, right hand column, and bottom banner on this very page, From the moment a person starts developing language in our culture, she/he is bombarded with one simple message - buy, Buy, BUY! It's very difficult for even the most educated and knowledgeable person to be immune to this. Try it without the sophistication of critical and rational thinking.
And, how do those paying for the ads get people to spend beyond their means. Predatory lending. And, it's not just the bad mortgages which lead to the housing collapse and economic crisis of 2008. How many time have you driven by a Car Title Loan shop, or a Cash Till Payday store front, or the ubiquitous Rent to Own stores? Each and every one surviving off of usurious interest rates. And, each and every one approved and sanctioned by the government, just like the balloon mortgages of 2005.
Education is certainly needed. So is regulation of the 'free market' con artists out there.