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I thought this for the longest time. An embarrassingly long time. Then I volunteered with a program that helps people who qualify for EITC to prepare their taxe

I thought this for the longest time. An embarrassingly long time. Then I volunteered with a program that helps people who qualify for EITC to prepare their taxes and budget how they’ll use their tax return to “get them out of their situation”. Person after person came in, we did their taxes, and then we went over their expenses and each case was a frustrating puzzle that was impossible to solve. There just wasn’t enough money for all of the basic necessities let alone even a bit of savings. And these are folks who worked full time. I was a student at the time and I remember being annoyed that not once had this situation come up in the personal finance classes I’d taken. It really changed my whole perspective. It was honestly the first time I’d ever even considered the possibility that someone could do everything “right” and still be poor. There’s a myth that you can financial-plan your way out of economic hardship but it’s simply not true.

Vespasian 5y ago
The ability to save money relies on the ability to "reduce your lifestyle costs" by cutting certain expenses (raising income is oftentimes not realistic. Poor People in general are not lazy) Below a certain limit there is no way to do that without loosing more money like getting rid of your car. And it's not only the obvious things. An acquaintance of mine was a single mother (ex-husband in prison) and had to decide whether she could afford to allow her children to take a bath in the bathtub. People underestimate how much such forced decisions can damage mental health and the ability to work. Many wealthy-but-broke people still have assets (like significant equity in a house) that give them runway (sometimes years) to sort things out and make life impacting decisions (such as moving far away to reduce expenses or contacting a friend from before to find you job).
- wpietri 5y ago
  > Poor People in general are not lazy Exactly. I grew up poor and my teen employment was bust-your-ass jobs like factory and restaurant work. I was once on a contract for a large company, and throughout the day I'd watch the office employees enjoy quiet, pleasant days with plenty of chatting with coworkers. The most strenuous thing they'd do was occasionally rush from one meeting to another. They'd all be gone by 5 and I'd stay working. Then I'd see the cleaning contractors come in and zoom through the office, working hard and never taking breaks. It always made me a little mad that most people there never even saw the hardest workers in the building, let alone appreciated them.
  - prepend 5y ago
    > hardest workers in the building It took me a while to understand that work is not paid based on difficulty, but on labor supply and demand. The reason why many very hard jobs pay so low is because there’s lots of people who will do them. There’s an axiom about smart work > hard work but I think that oversimplifies too much. I did manual labor for a few summers and it didn’t pay very well. I just didn’t understand why my work was so hard and paid so little and it frustrated me. But understanding how wages work at the macro level gave me some mental peace.
    - mandmandam 5y ago
      "The reason why many very hard jobs pay so low is because there’s lots of people who will do them." There's a hell of a lot more to it than that. From hiring bias, to school bias, to class bias, to name bias, to area bias - from sheer propaganda to straight up coercion. From lobbying, to perverse subsidies, to externalization of costs, etc, etc, ad nauseaum. "Understanding how wages work at the macro level gave me some mental peace." Are you quite sure that said mental peace isn't blissful ignorance... Because ignorance is only blisfful to the ignorant. America's wages at the macro level are deeply, catastrophically, even systematically unjust, in horrifically short-sighted ways.
      - prepend 5y ago
        Macro factors in all those things you mentioned. Of course there are micro instances with particulars to a situation, but the main driver for wages is supply and demand. The reason the janitorial service only gets $12/hour is not a result of all the biases you mentioned, even though it’s hard work- unpleasant, time constrained, shift work hours. The wage is low because many, many people are capable of doing the job. I’m not sure why you would think America’s wages are unjust. But that can exist at the same time as supply and demand issues. Perhaps it is unjust that people make too little, but the reason isn’t that the universe is an asshole. The reason is that lots of people are capable of doing jobs that are hard, so it’s easy to pay less. So the injustice is because people need more skills and are only capable of taking jobs that lots of other people can do, and few demand. But again, wages aren’t set based on difficulty, or value, or the intrinsic need for human dignity of the people performing them. Wages are set by supply and demand.
- mlac 5y ago
  There’s also the fact that people making decisions about whether their kids can afford baths are spending energy and time on that decision, and not using that energy for recreation or other work. Tons of these decisions are non-factors for those who have enough to just have their kid take a bath without worrying about it. Another example are those who can fill up a gas tank when they stop, because they’d rather minimize the number of stops at gas stations and don’t need to worry about whether they will over draw or be able to eat if they fill up their tank).
tialaramex 5y ago
> There’s a myth that you can financial-plan your way out of economic hardship but it’s simply not true. And if the situation was some people cannot escape this hardship, and there aren't spare resources allocated to other people, then we could say OK, our basic premise must be wrong, it's just inevitable that some people will suffer this hardship. I think it's plausible this was sometimes true in a middle ages farming community during famine. If we re-allocate food from the "wealthy" with plenty to eat to those with none, some might starve anyway, there just isn't enough food. But in our society that's not the case, we have tremendously wealthy people and these people in hardship, therefore I argue the fact you discovered is a failure of policy and it is worthwhile to contemplate whether politicians you consider supporting are addressing this failure, or whether they instead believe (or pretend to believe) the myth or perhaps in fact they consider hardship for others a desirable outcome, ie they are despicable people.
mynameishere 5y ago
Okay...but on /r/personalfinance, people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing. 120/month cellphone, 400/month doordash, Dodge Charger with a 600/month note. And so on. each case was a frustrating puzzle What puzzled you? The necessities should never be a puzzle. If the rent, the food, the utilities, the insurance, and the day care add up to less than the income, then everything else could be saved if you dispense with luxuries. If the necessities are more than the income, you either have to cut back on something important or work a second job. That's not fun, but it's also no puzzle.
- foepys 5y ago
  I'd argue that the people posting anonymously on the internet are not the same people who mustered up the courage to seek help in person and talk face to face, sometimes (often?) with children in tow.
- LocalPCGuy 5y ago
  Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others). And a lot of people literally do not know any better. They've never had someone teach them how to manage money and potentially had bad role models growing up. So its easy for you to say, with the knowledge it seems like you have, this is what you need to do. It's much harder to put into practice. Especially when you consider there are many folks that do manage their money well, don't splurge on non-essentials, work multiple jobs and still cannot make ends meet.
  - gruez 5y ago
    > Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others). Where does "psychology of decision making when poor and struggling" stop and personal responsibility begin? Can every suboptimal decision be excused because of "psychology of decision making when poor and struggling"?
JKCalhoun 5y ago
I found out when my mom kicked me out at 18 that there's a Catch-22 in the U.S. — a car costs money, you need a car to have a job. Actually you don't, of course. I had a 10-speed bike (remember those?) and a minimum wage job at a restaurant. I rented a room for $100/mo. from a young woman (maybe I was helping cover her rent?). I was able to swing tuition at a local community college. Man, I still remember riding the 10-speed in the midwest snow to the community college in the morning as cars threw up sleet speeding past. It was a delicate balancing act to "bootstrap". And this was in the 80's. I don't think today's rent or college costs would make it repeatable today.
- ygram 5y ago
  If you are injured or get sick in that situation you can fall into a hole that you never get out of.

Vespasian 5y ago

The ability to save money relies on the ability to "reduce your lifestyle costs" by cutting certain expenses (raising income is oftentimes not realistic. Poor People in general are not lazy) Below a certain limit there is no way to do that without loosing more money like getting rid of your car. And it's not only the obvious things. An acquaintance of mine was a single mother (ex-husband in prison) and had to decide whether she could afford to allow her children to take a bath in the bathtub. People underestimate how much such forced decisions can damage mental health and the ability to work. Many wealthy-but-broke people still have assets (like significant equity in a house) that give them runway (sometimes years) to sort things out and make life impacting decisions (such as moving far away to reduce expenses or contacting a friend from before to find you job).

wpietri 5y ago
> Poor People in general are not lazy Exactly. I grew up poor and my teen employment was bust-your-ass jobs like factory and restaurant work. I was once on a contract for a large company, and throughout the day I'd watch the office employees enjoy quiet, pleasant days with plenty of chatting with coworkers. The most strenuous thing they'd do was occasionally rush from one meeting to another. They'd all be gone by 5 and I'd stay working. Then I'd see the cleaning contractors come in and zoom through the office, working hard and never taking breaks. It always made me a little mad that most people there never even saw the hardest workers in the building, let alone appreciated them.
- prepend 5y ago
  > hardest workers in the building It took me a while to understand that work is not paid based on difficulty, but on labor supply and demand. The reason why many very hard jobs pay so low is because there’s lots of people who will do them. There’s an axiom about smart work > hard work but I think that oversimplifies too much. I did manual labor for a few summers and it didn’t pay very well. I just didn’t understand why my work was so hard and paid so little and it frustrated me. But understanding how wages work at the macro level gave me some mental peace.
  - mandmandam 5y ago
    "The reason why many very hard jobs pay so low is because there’s lots of people who will do them." There's a hell of a lot more to it than that. From hiring bias, to school bias, to class bias, to name bias, to area bias - from sheer propaganda to straight up coercion. From lobbying, to perverse subsidies, to externalization of costs, etc, etc, ad nauseaum. "Understanding how wages work at the macro level gave me some mental peace." Are you quite sure that said mental peace isn't blissful ignorance... Because ignorance is only blisfful to the ignorant. America's wages at the macro level are deeply, catastrophically, even systematically unjust, in horrifically short-sighted ways.
    - prepend 5y ago
      Macro factors in all those things you mentioned. Of course there are micro instances with particulars to a situation, but the main driver for wages is supply and demand. The reason the janitorial service only gets $12/hour is not a result of all the biases you mentioned, even though it’s hard work- unpleasant, time constrained, shift work hours. The wage is low because many, many people are capable of doing the job. I’m not sure why you would think America’s wages are unjust. But that can exist at the same time as supply and demand issues. Perhaps it is unjust that people make too little, but the reason isn’t that the universe is an asshole. The reason is that lots of people are capable of doing jobs that are hard, so it’s easy to pay less. So the injustice is because people need more skills and are only capable of taking jobs that lots of other people can do, and few demand. But again, wages aren’t set based on difficulty, or value, or the intrinsic need for human dignity of the people performing them. Wages are set by supply and demand.
mlac 5y ago
There’s also the fact that people making decisions about whether their kids can afford baths are spending energy and time on that decision, and not using that energy for recreation or other work. Tons of these decisions are non-factors for those who have enough to just have their kid take a bath without worrying about it. Another example are those who can fill up a gas tank when they stop, because they’d rather minimize the number of stops at gas stations and don’t need to worry about whether they will over draw or be able to eat if they fill up their tank).

tialaramex 5y ago

> There’s a myth that you can financial-plan your way out of economic hardship but it’s simply not true. And if the situation was some people cannot escape this hardship, and there aren't spare resources allocated to other people, then we could say OK, our basic premise must be wrong, it's just inevitable that some people will suffer this hardship. I think it's plausible this was sometimes true in a middle ages farming community during famine. If we re-allocate food from the "wealthy" with plenty to eat to those with none, some might starve anyway, there just isn't enough food. But in our society that's not the case, we have tremendously wealthy people and these people in hardship, therefore I argue the fact you discovered is a failure of policy and it is worthwhile to contemplate whether politicians you consider supporting are addressing this failure, or whether they instead believe (or pretend to believe) the myth or perhaps in fact they consider hardship for others a desirable outcome, ie they are despicable people.

mynameishere 5y ago

Okay...but on /r/personalfinance, people show up all the time with a litany of complaints and a litany of awful, awful budget mistakes they have no interest in fixing. 120/month cellphone, 400/month doordash, Dodge Charger with a 600/month note. And so on. each case was a frustrating puzzle What puzzled you? The necessities should never be a puzzle. If the rent, the food, the utilities, the insurance, and the day care add up to less than the income, then everything else could be saved if you dispense with luxuries. If the necessities are more than the income, you either have to cut back on something important or work a second job. That's not fun, but it's also no puzzle.

foepys 5y ago
I'd argue that the people posting anonymously on the internet are not the same people who mustered up the courage to seek help in person and talk face to face, sometimes (often?) with children in tow.
LocalPCGuy 5y ago
Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others). And a lot of people literally do not know any better. They've never had someone teach them how to manage money and potentially had bad role models growing up. So its easy for you to say, with the knowledge it seems like you have, this is what you need to do. It's much harder to put into practice. Especially when you consider there are many folks that do manage their money well, don't splurge on non-essentials, work multiple jobs and still cannot make ends meet.
- gruez 5y ago
  > Have you looked at the psychology of decision making when poor and struggling? It might open your eyes as to why people don't make the optimal choices (financially or others). Where does "psychology of decision making when poor and struggling" stop and personal responsibility begin? Can every suboptimal decision be excused because of "psychology of decision making when poor and struggling"?

JKCalhoun 5y ago

I found out when my mom kicked me out at 18 that there's a Catch-22 in the U.S. — a car costs money, you need a car to have a job. Actually you don't, of course. I had a 10-speed bike (remember those?) and a minimum wage job at a restaurant. I rented a room for $100/mo. from a young woman (maybe I was helping cover her rent?). I was able to swing tuition at a local community college. Man, I still remember riding the 10-speed in the midwest snow to the community college in the morning as cars threw up sleet speeding past. It was a delicate balancing act to "bootstrap". And this was in the 80's. I don't think today's rent or college costs would make it repeatable today.

ygram 5y ago
If you are injured or get sick in that situation you can fall into a hole that you never get out of.