I used to believe that anyone could do what I did – retire early and live the life your soul aches to live. I stand by my assertion for the majority of you reading because I assume that you’re not living in poverty.
The pictures in this article don’t have anything to do with the article.
My sister and I used to play this game: if we suddenly found ourselves penniless and homeless, what could we do to claw our way up? It was all naïvely, unintentionally insulting. Our brainstorming included going to Sam’s Club for the free samples; twirling signs on busy street corners for stores going out of business; picking up dropped change outside drive-through windows and toll booths; walking to work while forgoing soda, cigarettes, romantic relationships, and children; and staying at the YMCA.
We patted ourselves on the backs and figured we’d be thrifty as hell and make our way up in the world by our hard work and our grit and our common freaking sense!
We then developed some empathy and more nuanced common sense and in the latest iteration of our game, we dismissed most of these ideas. You need a paid membership for Sam’s Club. Imitating a sign post in the hot sun sounds rather soul-crushing. I’m not sure how safe the YMCA would be, especially for a petite female. Hanging out on the highway looking for loose change is a stupid idea. I honestly can’t believe that suggestion even made the list.
I’m not going to pretend to understand the cigarette and soda habit, but I know we all need small pleasures, small escapes. My favorite argument – expecting people to forgo children — the whole driving force behind existence — is just not realistic.
This picture makes me sad. The scorpions are still alive.
People in poverty, by definition, don’t have enough money to live on. With so little cash, you have no margin for error. And everyone errs at some point or another. Everyone. That’s why most people in poverty remain in poverty. They’re human.
Mistakes cost money. If you don’t have the money to rectify a mistake, it can ruin your life.
It’s not a character failing to be poor; especially if you were born into a poor family. It’s simply not having enough hours in the day to work if you’re not making much per hour. It doesn’t take much money, but it takes some. Early retirement is a question of what percentage of your earnings you can save. If it’s 100%, congratulations, you’re now working because you like your job. If it’s always zero or close to zero percent, you’re in for a very stressful life.
I know I’m oversimplifying. Poverty has many many faces, but I do the math and wonder. Current minimum wage in the U.S. is $7.25/hour. If I worked 80 hours a week, I would earn $30,160 in a year (before Civilization takes his cut). $30k is more than I aim to live on in a year, but that’s if I worked every single week without ever getting sick or ever taking a vacation. Not to mention the logistics of working two or more jobs with commute time, unaccomodating employers, conflicting schedules and physical toll on the body.
That sounds exhausting. Always trying, but still never getting ahead. Another reason to understand romantic relationships for thriftiness sake – it’s two incomes instead of one. It’s help. It’s more hours in the day.
Coffee cup chair in a metro station in Santiago
There’s a part of me that still wants to believe I could somehow get to early retirement no matter my circumstances, but the more I read about poverty, the more bummed I feel. Research shows that living in poverty changes the way your brain thinks. You can’t plan for what you want long term when you’re worried about making it to payday. Not being able to plan sounds like hell to me.
If you’re hungry, if you’re not sleeping because you’re working all the time, if you’re always in high-stress mode, you simply don’t have any thoughts to spare about your credit score. I’m still learning about life and I don’t have a solution to propose, but this bothers me. Financial literacy makes life so much easier and cheaper. Here’s a list I made.
How good credit and financial literacy make life easier and better and cheaper and happier
- Better interest rates on credit cards
- Better interest rates for mortgages
- Landlords prefer renters with good credit
- Employers prefer employees with good credit
- Payday loan shops with exorbitant, predatory interest rates aren’t needed ever
- Never pay check-cashing fees
- Or other bank fees
- Or late fees because you don’t have the money
- Rent-to-own stores are also never utilized
- Never pay interest (for the harder core)
- Pawn shops are only a curiosity
- Rent-to-own mortgages just leave you baffled. I am sad that’s a thing. Here’s a tip: if you have all the responsibility of ownership, but none of the benefits and all the responsibility of renting, but none of the perks, it’s a really really bad idea.
- Save money on shoes.
The shoe story is the crux of why poor people stay poor. Being poor is expensive.
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”
Argh. Like a pirate. Arrrgh. That’s my frustration sound.
Surprised. Korean character!
I would disagree with you. Too many people make excuses for their circumstances. They focus on their poverty or another handicap. Because of this they don’t try to changes their lives. I have seen this.
Really thoughtful, and I appreciate the Terry Pratchett!
This is my new favorite post from you. You hit the nail on the head. There is a point where frugality is fun when you see your net worth skyrocketing, but the opposite is true when there are only marginal increases over short periods. Dispair is not the answer, but hope is very fragile. There needs to be first a commitment to principles that will lead to freedom. First is recognize you are poor, then avoid going into debt/bondage trying to pretend to be rich. Later steps can lead to early retirement for some, and just retirement with dignity in old age for others. Not everyone is going to be rich, but we don’t have to choose things that ensure an endless cycle poverty.
Look into Barbara Ehrenreich’s book Nickel and Dimed on being among the working poor crowd.
Yes, some poor decisions and habits. But once on the wrong track (like leaving school too early, spending on smoke and dope) makes it many times harder to get back.
Nickel and Dimed is one of the books I linked to as my research on the subject. 🙂
Think Maslow’s hierarchy of needs (being cold, hungry or wet gets in the way of loftier ideas), whether you’ve had the luck of the draw (family, support networks, geography and/or privilege), and the doggedness to pull yourself up by your bootstraps. All of these forces matter.
Great insight into something you have never had to understand and I mean this as a compliment. Putting yourself in a different situation and seeing how hard it actually can be.
Hi,
I have a slightly different opinion. In think, being poor is relative, and it is somehow a state of mind. When I was a child, we used to eat meat only once week, and we had a good warm bath once a week, too. Were we poor? We weren’t. I still remember all of my toys, because I had so few. But I wasn’t feeling poor at all. My parents (and me) had to work far far less then my grandparents, to have a much higher standard of living. For us now, it is absolutely impossible just to imagine doing as much physical labour as they did. And suprisingly they were very happy. Some people would have just said oh we are poor we have nothing and we will never have a chance to have a television, a radio, a car and our children would never get out of this povety, so let’s just give up and smoke and drink. Today, we all tend to act like spoilt children.
Very compassionate and thoughtful post. And I thought as soon as I read the title of Captain Vimes story about the shoes, too. 🙂
Other Problems from personal experience and experience of those close to me:
1) The social safety nets in the US are designed to help people get by (ie eat, roof over head). They are not designed to raise folks out of poverty, as a matter of fact, they tend to disincentivise people who attempt to do so. Benefits are cut for those who start to pull themselves out of poverty, wiping away any gains (and often more) of that hard work.
2) Do not underestimate the power of negative thinking. When one is surrounded with victim mentality in friends, family, and community it becomes EXTREMELY difficult to break free of that thought process. When presented with someone preaching a different tune, the response is often the same those of us shooting for FIRE get from average middle/upper middle class consumer.
I would add the cost of laundry. Extremely more costly per load to use a laundromat if you don’t have your own machines. This in turn affects job interviews, appearance at work and many other social factors that non-poor people can turn into assets.
I agree that laundry is a real problem – but the cost is really less of a issue than timing and needing change, etc. Very busy folks who aren’t good at planning likely end up with laundry emergencies – simple enough to avoid but stuff happens.
The last thing poor folks need is a capital intensive and tough to move washer/dryer. I just moved to a rental without my own machines and find the complexes laundry machines quite reasonable. Amazing how quick the process can be when i get 3 or 4 machines going at a time.
Couple minor notes on post itself – never needed a sam’s club membership to get the $1.50 polish/drink or to browse the samples. And see lots of sign twirlers who seem to have lots of uncrushed soul. I’m guessing you’d be hard pressed to find a safer place to stay than ymca – although I’ve only stayed at the ones in HK and bangkok – very nice places. And don’t worry about minimum wage jobs – both parties seem committed to ensuring there will be fewer and fewer of them anyhow.
I hate poverty. My mom’s side of the family lived in poverty which made me absolutely motivated to save everything I can and never let money be the cause of my troubles. (Also, the first picture you showed, did you visit South Korea?! I’m South Korean :p) I’m saving 55% of my income and looking for ways to earn more so that I can save more. They say money can’t buy happiness but I can assure you that being rich is better than being poor. Great post!
I can’t claim to have grown up in poverty, but when growing up, money was tight. Except for shoes, the clothes were mostly garage sale finds, food was grown in our garden, canning and freezing was typical. The biggest thing that I can credit for having achieved any financial success is education. Stay in school. Otherwise, you will be in a constant cycle of minimum wage, low skill jobs. Also, as Thriftygal has shown, live below your means
I think there are certain levels of poverty where you are never going to get out of it – perhaps your children might. My example, is that here in South Africa we have domestic workers / gardeners who make ~$10 per day of labour. They have some schooling, probably the first 9 years, but have no prospects of ever earning more income, by some estimates there are approx. 4m of such individuals, but they at least have work as there is between 25% and 30% unemployment in SA. So there are so many people looking for this extremely low income, that your prospects of working a 2nd job to earn more just isn’t likely – plus they’ve got to travel 2 hours a day because of the legacy of pushing the poor to the outskirts of the cities.
Their children might have a better chance if they can get support to go to a school and learn a trade. By comparison, the people that they work for have decent incomes and education similar to those in the US – so the income gaps are huge. There is very little that could be done to ever increase their incomes as a group, the only hope is helping some individuals (reminds me of that starfish on the beach story).
It is by complete luck whether you are born into that level of poverty or into a middle-class home, as it has nothing to do with a willingness to claw yourself out of that level of poverty. I hope all the kids have a better future, as there ain’t no quick fixes.
Sendhil Mullainathan has written a good book on the topic, it’s called Scarcity. He explains in the book how scarcity (the lack of time, money etc.) affect our brain. The booked helped me to understand why people make bad choices with their money. I used to wonder why some of my clients would buy a crappy car a few times a year until I realized that they were not in a position to save money for more expensive car that would last longer. It definitely is more expensive to be poor, for example, if you have lost your credit history you may not be able to get a home insurance, a phone plan, or affordable housing.
“A lot of peoples wonder, ‘what is the blues?’ I hear a lot of people saying ‘the blues, the blues,’ but I’m gonna tell you what the blues is. When you ain’t got no money, you got the blues. When you ain’t got no money to pay your house rent, you still got the blues. A lot of peoples holler about ‘I don’t like no blues,’ but when you ain’t got no money, and can’t pay your house rent and can’t buy you no food, you damn sure got the blues. If you ain’t got no money you got the blues, because you’re thinking evil. That’s right. Any time you’re thinking evil, you’re thinking about the blues.” – Howlin’ Wolf
Love this post. Poverty is complex, because humans are complex. I am a legal aid attorney, I help people file bankruptcy. Are some of my client’s choices infuriating to me? Sure. (It should go without saying that this is only some clients. 80k in medical debt when you can’t afford to be insured, and your spouse leaves you with the kids, I would hope we can all be compassionate.) But then I think of the little pleasures I allow myself. I think of how all encompassing advertising is. How hard it is to create frugal choices against the backdrop of advertising. And how much harder it would be as a single mom. And I try to be more compassionate, and gently offer resources which might help them have slightly more control over their lives. Thanks for the post.
Mmm. Just so apt. Thank you for this.
Best book on the subject: Scarcity. Authors Sendhil Mullainathan and Eldar Shafir.
Wow. Great read.