Monday, July 12, 2010

Poverty Cycle- Part 1

A few days ago, I read Frugal Babe's post called "The Luxury of Frugal Thinking" that really got the gears in my head churning. She posits that most frugal people today are frugal by choice, and poor people don't have the option or ability to be frugal like the rest.
I dunno.
Poor people are sometimes the least frugal of them all. Why, just thinking about it makes me quite sad.

Like the person who is living off of 200 dollars a month going to a professional salon for a hair styling, manicure and pedicure on a regular basis, or the suddenly income-less family who kept their maid for a year and a half before deciding that it was time to let her go. Granted, these two examples are people who lost their riches and became paupers, so t was hard for them to give up the clear luxuries to which they'd grown accustomed.

But the formerly rich aren't the only ones. I know a poor family (that has always been that way) who insists on constantly lighting up their house like a Christmas tree at every second of the day and having every appliance plugged in and running, even when it's not being used. Or the person $60,000 in debt who goes on a yearly trip abroad "because the kids need it".

Yea, sometimes poor people are the least frugal of them all.
I disagree with Frugal Babe though that these people aren't frugal simply because they cannot be. These people have a choice, and they blow it.

Perpetuating Poverty

Poor people sometimes make foolish mistakes that helps perpetuate the poverty cycle; these things are within a person's control. 
I will admit that there are definitely certain things that put poor people behind in the game. When a person grows up poor, there usually are factors that play into the poverty cycle that makes him more likely to grow up and continue to be poor, and raise his children in poverty who in turn will raise theirs in poverty, etc, etc.
People who grow up in poverty are usually disadvantaged certain ways that they cannot change, which makes it harder for them to rise above that poverty and move forward in life.

Bad examples. Kids learn from their parents. If parents have unwise spending habits, the child will usually mimic those spending habits and repeat the same mistakes.

No college. Either because parents don't value education, have no money to pay for college, or needed their child to go into the work force and assist the family financially, often people from poor families end up with no college degree. A lack of a higher education usually means fewer job options available, and those available jobs usually are ones that don't pay as well, thus perpetuating the cycle.

Small weddings, few wedding gifts. Certain friends of mine usually suggest dipping into the savings from my "wedding gift money" when times are tough. These friends probably don't realize that because of lack of funds, I had quite a small wedding with very few guests, most of whom were also not well off financially. Our wedding gift money amounted to no more than a few hundred dollars, light years away from the sizable savings accounts my friends have from their wedding gifts. People like myself from less well to do families often start off their marriage a leg behind the wealthier simply because they don't have that wedding money savings account that people from wealthier backgrounds have.

No down payments. Renting stinks. You have to deal with landlords who may decide to leave you with no hot water, double your rent in the space of 3 years, and are simply awful people. (No offense to all those great landlords out their- our first landlord was simply hellacious.) And for what? Nothing. All that money is down the drain.
But unless you have money to start off with, money to put towards a down payment of a home, you're stuck throwing money into the black hole of "rental money" for the rest of your life- or at least until you're able to scrounge together enough money to actually have a down payment. (My friends' mortgage for their apartment cost half of what we were paying rent for that same sized apartment. And we had nothing to show for all that extra money we were spending monthly!)
Not having help with a down payment definitely puts you behind in the game and makes your financial situation much more difficult than those who's wealthy parents provide them with a down payment, free of charge.

No help. I try not to get envious when I hear about my friends' parents either supporting them financially regularly, or giving them large monetary gifts on a regular basis, with which they live a luxurious life. Forget not being able to pay the electric bill- their parents buy them all their heart desires in addition to helping them with their day to day living. So no debt for them, and no loans and interest rates. Whereas people without the mommy bailout need to borrow money and pay back the loan, plus interest, to simply have enough for groceries.

Whew, that was enough griping and petty jealousy on my part for those who grew up in wealthy homes. If I sound jealous, it is because I am. It is hard not to be envious when I struggle hard daily, cut back in so many ways just so we can make ends meet when others are never even put in that situation because they come from more privileged backgrounds.

I have to admit, for all that there are definite factors over which we have no choice that affect our starting point in life, it is heartening to realize that there are certain mistakes that poor people make that contribute to their poverty that can and should be changed. Knowing that situations are fixable, that poverty is not quite the caste system this post makes it out to be, at least adds hope into my life, a promise for a better future.

Yes, those of us from less well to do families do not have the same opportunities as those from wealthier families, but there's no need to give up hope.

Tomorrow's post addresses the topic of "Mistakes poor people make" and what can be done to change it.

Poverty Cycle Series
Growing Up Poor- how it affects your lot in life.
Mistakes Poor People Male- and how to change them.
Stopping the Poverty Cycle- how we're making sure our children have a better future.

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