4 ms·

// your making $7.50/hr and have no capital to invest, then it's pointless. Not pointless at all. It makes a difference whether you enter a vicious or virtuou

// your making $7.50/hr and have no capital to invest, then it's pointless. Not pointless at all. It makes a difference whether you enter a vicious or virtuous cycle. Imagine - Bob and Alice bothake 7.50. Bob is financially illiterate and doesn't have a bank account, so he pays a ridiculous fee to a check caching place every time. He also doesn't know to file his taxes so that he can get essentially all his taxes back since he makes so little. So let's say Bob makes $6 after taxes and the check cashing fee. Alice meanwhile is savy enough to have a bank account and file a tax return so she keeps all 7.50 of it. At the end of the year, Alice has an extra $3,120 compared to Bob assuming 40 hours a week for 52 weeks. If she then saves it or invests it, she'll start making some return on it. Compared to Bob who has nothing. My mom and I were very poor when we came to the US and we saw many people live like Bob but we recognizes that with a little thinking we can do much better than that. My wife grew up wealthy-ish and never had to learn this stuff. She's a hard worker and always made more than she spent and she never really had to learn how to be smart and efficient with money. But if you are poor, you HAVE to figure that stuff out or you are dead. Financial literacy matters.

Broken_Hippo 5y ago
Only... it isn't like this at all. Bob messed up his math some time ago and now can't get a bank account: Alternatively, most banks in his area charge fees to poor people - enough that it pays to have a prepaid card because the fees are lower than a bank. Heck, it might even be through the employer because more and more employers have stopped offering paper checks. Bob probably pays someplace like H&R block for his taxes. It is really, really difficult to miss that it is tax return time if you are poor, so most folks will file if they think they are getting some back. People finally get their cars fixed and are able to go to the doctor or finally buy some shoes. Or Bob might not. If Bob and Alice do not have children, they won't get much back in taxes, assuming they make minimum wage and work 35-ish hours a week. They might even owe if they are married - assuming that two full time jobs will still put the couple in a higher tax bracket. (Unless, of course, they have fixed this in the last decade, but I doubt it). If Bob avoids filing, it is probably because either he owes or doesn't think he'll get enough back to pay the folks to do it. Alice might make similar choices due to fees and things. Or she might find herself in a similar situation simply because she got sick and lost pay or lost a job - especially if she wasn't taught how to deal with being poor. It doesn't always matter if something is better long-term if you are struggling month to month, and you don't always get a say in how vicious your cycle is.
- xyzelement 5y ago
  Broken_hippo, your response seems illogical to me. I am comparing a savvy person (Alice) and an un-savvy one (Bob) to show an example how even in a hard situation, being thoughtful about your finances is worthwhile. You respond with a list of generic hardships but the points remains that one can navigate them poorly or well. For example: > Alternatively, most banks in his area charge fees to poor people One example of being savvy is being aware of things like that. The fact that most banks do X doesn't matter as long as you have the savvy to use one which does not. So 99% of people might go for these rip-offs but the 1% of the people who doesn't is better of. That's the point I am making - being poor but able to navigate this puts you at a massive advantage compared to others, all other things equal.
  - oblio 5y ago
    Which banks don't charge anything for having a bank account?
    - kirubakaran 5y ago
      https://www.google.com/search?q=no+fee+checking+accounts https://www.google.com/search?q=no+fee+checking+accounts
  - Broken_Hippo 5y ago
    I'm pointing out that your examples just aren't based in reality, and aren't describing things that are "savvy" and "un-savvy". These also aren't massive advantages: The folks with tax checks are generally folks with children, and they aren't generally getting an advantage others in a similar situation aren't getting: Pretty much everyone knows about tax refunds. Childless folks don't get much, though, so it isn't really a massive advantage. None of it is. Even when "All other things equal". Unfortunately, what actually IS often a massive advantage is luck of circumstance. Somewhere to stay so you can get back on your feet, for example, or lucky enough to qualify for help paying for your medicine or your child's private school tuition. Lucky enough to be poor in an area you can walk to stores and work or lucky enough to live somewhere with a robust safety net. Lucky enough to be healthy, lucky enough to avoid getting pregnant, lucky enough to be able to buy birth control.
giantg2 5y ago
Except neither of them make enough to pay rent, so that 'extra' never gets invested.
- xyzelement 5y ago
  > Except neither of them make enough to pay rent, so that 'extra' never gets invested. The only way to properly compare things is on an "all else equals basis" and focus on changing the variable you're discussing. In my example, Bob "makes do" with the $6/h he gets to keep. Alice can chose to live a lifestyle identical to Bob despite "making" $1.5/h more due to her smart finance management. She can then invest (vs, if she was unsavy like Bob, she would be forced into the $6/h lifestyle anyway and not have the option to invest.) You can tell yourself whatever you want, but there are lots of poor people who are no longer poor (or at least have some savings) because they DON'T allow themselves to think like you're suggesting.
  - TuringNYC 5y ago
    I like to think what youre saying is true, but my gut tells me -- both end up losing it all anyway. The problem with saving $3,000 or something like that a year, especially with a family, is that there are numerous things that you really need that arent covered, so the $3,000 means the difference between really poor and destitute. Some examples that come to mind, from my own former life -- medical co-pays, medical co-pays, medical-copays, medical co-pays, emergency dental work, dental co-pays (esp for urgent issues), schools stiffing you on aid you are owed but dont get due to "system says otherwise", bank fees (sometimes unjustified but try fighting it), fines for stupid stuff that you're not connected enough to fight. The most devious of these are medical-copays and pharma co-pays. Even stupid things like here is a real example: doctor gives you a prescription (at the front desk, not in their office.) You get the prescription and "use generic isnt checked" -- but now the doctor is gone. Front desk wont let you speak to the doctor again. You try and fill the Rx, and the Pharmacist says $300 copay because a generic is available, but Rx doesnt say you can use the generic. Now you need the meds, so you're down $300. Or you go see the doctor again to clarify and you're down $40 on the copay. Welcome to being poor. You get screwed around every corner. Note, this doesnt happen to me anymore because I have a pretty decent doctor reachable via email and msg, but not one I could afford when I was poor.

Broken_Hippo 5y ago

Only... it isn't like this at all. Bob messed up his math some time ago and now can't get a bank account: Alternatively, most banks in his area charge fees to poor people - enough that it pays to have a prepaid card because the fees are lower than a bank. Heck, it might even be through the employer because more and more employers have stopped offering paper checks. Bob probably pays someplace like H&R block for his taxes. It is really, really difficult to miss that it is tax return time if you are poor, so most folks will file if they think they are getting some back. People finally get their cars fixed and are able to go to the doctor or finally buy some shoes. Or Bob might not. If Bob and Alice do not have children, they won't get much back in taxes, assuming they make minimum wage and work 35-ish hours a week. They might even owe if they are married - assuming that two full time jobs will still put the couple in a higher tax bracket. (Unless, of course, they have fixed this in the last decade, but I doubt it). If Bob avoids filing, it is probably because either he owes or doesn't think he'll get enough back to pay the folks to do it. Alice might make similar choices due to fees and things. Or she might find herself in a similar situation simply because she got sick and lost pay or lost a job - especially if she wasn't taught how to deal with being poor. It doesn't always matter if something is better long-term if you are struggling month to month, and you don't always get a say in how vicious your cycle is.

xyzelement 5y ago
Broken_hippo, your response seems illogical to me. I am comparing a savvy person (Alice) and an un-savvy one (Bob) to show an example how even in a hard situation, being thoughtful about your finances is worthwhile. You respond with a list of generic hardships but the points remains that one can navigate them poorly or well. For example: > Alternatively, most banks in his area charge fees to poor people One example of being savvy is being aware of things like that. The fact that most banks do X doesn't matter as long as you have the savvy to use one which does not. So 99% of people might go for these rip-offs but the 1% of the people who doesn't is better of. That's the point I am making - being poor but able to navigate this puts you at a massive advantage compared to others, all other things equal.
- oblio 5y ago
  Which banks don't charge anything for having a bank account?
  - kirubakaran 5y ago
    https://www.google.com/search?q=no+fee+checking+accounts https://www.google.com/search?q=no+fee+checking+accounts
- Broken_Hippo 5y ago
  I'm pointing out that your examples just aren't based in reality, and aren't describing things that are "savvy" and "un-savvy". These also aren't massive advantages: The folks with tax checks are generally folks with children, and they aren't generally getting an advantage others in a similar situation aren't getting: Pretty much everyone knows about tax refunds. Childless folks don't get much, though, so it isn't really a massive advantage. None of it is. Even when "All other things equal". Unfortunately, what actually IS often a massive advantage is luck of circumstance. Somewhere to stay so you can get back on your feet, for example, or lucky enough to qualify for help paying for your medicine or your child's private school tuition. Lucky enough to be poor in an area you can walk to stores and work or lucky enough to live somewhere with a robust safety net. Lucky enough to be healthy, lucky enough to avoid getting pregnant, lucky enough to be able to buy birth control.

giantg2 5y ago

Except neither of them make enough to pay rent, so that 'extra' never gets invested.

xyzelement 5y ago
> Except neither of them make enough to pay rent, so that 'extra' never gets invested. The only way to properly compare things is on an "all else equals basis" and focus on changing the variable you're discussing. In my example, Bob "makes do" with the $6/h he gets to keep. Alice can chose to live a lifestyle identical to Bob despite "making" $1.5/h more due to her smart finance management. She can then invest (vs, if she was unsavy like Bob, she would be forced into the $6/h lifestyle anyway and not have the option to invest.) You can tell yourself whatever you want, but there are lots of poor people who are no longer poor (or at least have some savings) because they DON'T allow themselves to think like you're suggesting.
- TuringNYC 5y ago
  I like to think what youre saying is true, but my gut tells me -- both end up losing it all anyway. The problem with saving $3,000 or something like that a year, especially with a family, is that there are numerous things that you really need that arent covered, so the $3,000 means the difference between really poor and destitute. Some examples that come to mind, from my own former life -- medical co-pays, medical co-pays, medical-copays, medical co-pays, emergency dental work, dental co-pays (esp for urgent issues), schools stiffing you on aid you are owed but dont get due to "system says otherwise", bank fees (sometimes unjustified but try fighting it), fines for stupid stuff that you're not connected enough to fight. The most devious of these are medical-copays and pharma co-pays. Even stupid things like here is a real example: doctor gives you a prescription (at the front desk, not in their office.) You get the prescription and "use generic isnt checked" -- but now the doctor is gone. Front desk wont let you speak to the doctor again. You try and fill the Rx, and the Pharmacist says $300 copay because a generic is available, but Rx doesnt say you can use the generic. Now you need the meds, so you're down $300. Or you go see the doctor again to clarify and you're down $40 on the copay. Welcome to being poor. You get screwed around every corner. Note, this doesnt happen to me anymore because I have a pretty decent doctor reachable via email and msg, but not one I could afford when I was poor.