Why it costs so much to be poor in America

Yep. I, and I&#x27;m sure a lot of others here, have been on both ends of this spectrum. I remember having to roll quarters to go to the city to pay the water bill (they wouldn&#x27;t accept loose change and a money order from the corner store was $1.49 which was often 5% of my water bill at the time) and then wait under the clerk&#x27;s wary gaze while the coin rolls were counted and a couple of random rolls were verified.<p>The worst was the electric bill. I&#x27;ve been in the exact situation described in the article, past due by under $100 and service remotely cut off. TXU Energy wanted a grand total of $793 to restart service, including the past due balance, a reconnection fee, and a deposit (plus a fee for taking such a large deposit). Fortunately, at least at the time, Texas&#x27; deregulated energy market rules didn&#x27;t prohibit a subscriber from switching companies even when owing a balance to a previous one, so I was able to get my mother to co-sign on my having service with Texas-New Mexico Power.<p>These days, two jobs and many salary rises later? My water&#x2F;sewer&#x2F;garbage bill is direct debited from my checking account, same for the gas bill. Seattle City Light, CenturyLink, T-Mobile, and every other bill? Automatically charged to one of a handful of credit cards I have with &gt;$20,000 limits. The house where I live ran into a medium-sized electrical problem that cost about $5,300 to fix. Instead of panicking, I charged the bill to a credit card and then used a 0% balance transfer on another one to make it be an interest free loan for 18 months.<p>I spent more in one year on overdraft fees ($1,550) back in the early 2000s than I spend on mobile phone service ($1,200) this year, to say nothing of all of the costs for payday loans and late fees and all of that. Being poor in America absolutely sucks ass and, the worst part is, I&#x27;m pretty sure virtually every one of our societal and financial systems is engineered to enforce that feeling of helplessness, not to make it better.

Had a similar experience with a relative that did some time in prison.<p>The conditions of parole required weekly visits to a far off parole officer visit that had no public transportation access.<p>So, no prospects to get a job because of (now almost universal) background checks. So, no income. And a defacto requirement to either have a car, or have money for a 15 mile Uber trip every week.<p>It basically means that if you are a parolee, you beg friends and family, or violate and return to prison for longer than your original sentence. The trip is a 3 hour commitment, so begging doesn&#x27;t work well unless you have a really flexible friend or relative.<p>Oy. Guess what cycle that creates? People turning down parole just to not have that monkey on their back. Trading 5+ years of their lives because they can&#x27;t satisfy an impossible ask. All for drug addict type issues... possession, shoplifting, public intox, loitering, driving with no insurance, etc. No violence, no real palpable victims other than themselves. US problem if you didn&#x27;t guess already.

Yeah, barely scratching the surface.<p>Can&#x27;t afford a car or taxi&#x2F;Lyft&#x2F;whatever? You&#x27;re going to lose hours <i>every single day</i> trying to get around. Hard to work two jobs to make a decent income when you can&#x27;t get to either one expediently.<p>Don&#x27;t have a job? Good luck getting to interviews on time. Good luck when they ask whether you have reliable transportation. And heaven forbid you have a felony on your record. And whatever you do, don&#x27;t twist your ankle walking to the grocery store, because miss too much time from work and you&#x27;re fired.<p>Oh, you do have a car? Good luck paying for decent tires, or gas, or the tow bill when it inevitably breaks down, or to replace the glass when someone breaks into it, or the insurance, or...<p>Money begets money. Poverty begets poverty.

It was only a few years ago that almost all of this article applied to me. I remember before the cfpb forced banks to make overdraft &quot;protection&quot; out-in and being charged $35 instead of the card being declined. I remember biking across town at 5in the morning to make $35&#x2F;day at a day labor place then giving 2 of those dollars to a check cashing place. Unless you&#x27;ve been poor, you really have no idea how hard it is to get out of that position. And if you have anything on your record, you can forget about not being poor. A record is a lifetime sentence of poverty in America unless you have connections or family wealth.

Why does anyone have an account at Bank of America or Wells Fargo? There is a community bank in every town in the country.

<i>If you do not have it, the alternative is a low-end hotel where you can pay by the week, which lacks the upfront cost but costs much more over time — for the room itself but also increased food costs and life complexity.</i><p>This ignores hotel taxes which often run 15-20% with the revenue earmarked for attracting tourism&#x2F;convention traffic. In some ways, hotel taxes may be the most regressive commonly imposed tax scheme in the US.

On the banking side, some of it is fairly straight forward - the estimates I’ve seen say it cost ~$100-$500 for a bank to administer a checking account annually. The current net interest margin banks earn on your money in the US is 3.15%.<p>Which means if a bank charges no fees - and it costs them $315 to administer your account - you need to maintain a $10,000 balance for them to break even.<p>Once you understand that dynamic - you understand that banks that want to offer low balance free checking - need to either make it up on fees or on cross selling opportunities...

This is why I left the United States. I live in Germany, and while every place has its drawbacks, I feel safe, have affordable housing, and don&#x27;t have to worry about healthcare and predatory things like this if things go south.

Single serve items like shampoo, candy, soap are readily available in developing countries like Nepal, they cost much more than the normal sizes we receive in the developed world when you adjust for the quantities. Much worse for the environment over here as well, have seen so many plastic fires in the city with the single serve packaging being utilized as fuel.<p>Being broke sucks, capitalism at its finest.

Being poor always costs more. Rich people can shop around for better deals on pretty much everything, if they want to (eg lower interest rates, lower taxes, etc). Many options that are available to the rich are definitely not available to the poor, and that doesn’t even factor in the charges talked about in the article. It doesn’t surprise me one bit, sadly.

&quot;and, the worst part is, I&#x27;m pretty sure virtually every one of our societal and financial systems is engineered to enforce that &quot;

I can sympathize with some of the poor people who had accidental expenses that they could not have planned for. But I&#x27;m really having trouble understanding how this article makes it seem those fees are hard to avoid as poor person.<p>When I was living under $1000 budget, overdraft fee was unheard of, because when you have very little money, it&#x27;s easy to manage, you only need a few hundred dollars in your account for daily spending. And bigger purchases (&gt;$100) are planned so they can be actually paid for. I also never knew there were consequences for paying electricity late, because renting my own place is out of my budget.<p>Funnily, I only ran into those &quot;poor people&quot; issues like expensive credit card interest, overdraft fees, predator car loans after getting my first full-time developer job, because I stopped managing my expenses.

How much money do you have to have to eliminate this?<p>-&gt; How much money do you need to start a bank?<p>-&gt; How much money do you need to start a school?<p>-&gt; How much money do you need to start an organization such that regular people can join and said organization can provide health care benefits this country really needs?<p>-&gt; What does it take to start an organization that can attract talent to be sustainable and simultaneously have a structure such that it can provide the above benefits?

Take money where it is: in poors’ pockets! They do not have much but they are so many!

Take money where it is, in poors’ pockets: they do not have much but they are so many!

<i>“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.<p>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.<p>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&#x27;d still be keeping his feet dry in ten years&#x27; 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.<p>This was the Captain Samuel Vimes &#x27;Boots&#x27; theory of socioeconomic unfairness.”</i>

I was thinking about just this today. There&#x27;s an interesting corollary, though: just as it can be a vicious cycle downwards, it can also be a virtuous cycle <i>upwards</i>.

Direct deposit frequently just means ACH transfer, which can even be from your own account at another bank. Need $250 in direct deposit? Transfer $125 in on the 1st, out the 7th, in the 15th, out the 22nd.