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The shame and judgement placed on the woman for being both poor and in possession of a Mercedes really demonstrates a disconnect that people have between the si

The shame and judgement placed on the woman for being both poor and in possession of a Mercedes really demonstrates a disconnect that people have between the signals of wealth and actual wealth... The "2003 Mercedes Kompressor" talked about in the article could be one of two models: Model $(2003) $(2014 CPI) 2014 Value C230 Coupe/Sedan ~$28k ~$36k ~$5k SLK230 Convertible ~$40k ~$52k ~$7k On their combined income (~$120k), my suspicion is that it was the C230 and not the SLK... Note that both are worth very little today. They're just old, crappy cars like any other. Your old Honda may in fact have fewer mechanical issues at this point. People revere the badge even on older vehicles where it no longer means much. If the middle-aged Mercedes they had was running and reliable, they were prudent to keep it. The cost of trading down to an unknown car with potential unknown mechanical issues would likely not save them any money. It's possible it could end up costing more. When you are cash flow poor, reducing out-of-pocket expenses is the first priority. Liquidating assets to raise cash is a quick one-time fix, it's being done at a time when you have no leverage with which to get maximum value out of those asset sales, and does nothing to resolve the larger problem of income < expenses. It is unfortunate, I think, that however prudent and reasonable their choices, the cognitive dissonance created by the sight of the "luxury" car at the food stamp offices is going put them at odds with public opinion.

kamaal 12y ago
Wealth signals matter. By wealth signals I mean a person's standard of living. If you are driving a Mercedes you will be perceived as rich. I don't know much about the culture in US, but in my country(India) there is no way you will be considered poor or even middle class if you own a car. Let alone own a Mercedes. Why? That's not very difficult to understand. If you own a car, which falls between the big money and small money its generally an indication that you are doing this on top of your existing savings. Any reasonable person when they first start working should aim to do the following things in order. Try and eliminate any outstanding debt, Save enough money for the rainy days, and then comes the next most essential commodity- a house and if you are done with that- a car. They way I see, a lot of poverty issues in the US seem to arise from mismanagement of one's money. If you don't have a home, and don't have a large cache of savings and have debt on top of all this, buying a luxury car on debt again comes out straight as mismanagement of money.
- OrwellianChild 12y ago
  You have to appreciate the context of the situation the author came from... The procedure you describe is conservative but sound for someone who is starting with nothing and building wealth. The shocks to lifestyle when you already have some wealth and lose your income look very different and require a somewhat different approach. The author began 2008 with dual-source, six-figure income, a modest house, and a couple of cars, and no kids. Within the year, the couple had twins, had lost the greater of their two income sources, and had the audacity to hope that they could recover from their sudden and not-at-all-expected fall from grace. This is not poverty born of mismanagement of funds, irresponsible spending, or negligence. It is temporary poverty born of bad luck. It's also the sort that the assistance programs in the U.S. are designed to help, and the fact that the author's family was able to recover with that assistance makes this a success story.
  - kamaal 12y ago
    Agreed, I one lesson I take out of this for my own good is if I'm having a good run, I'm going to use that to save/invest and not spend. Until the trend moves to becoming permanent and becomes the norm I'm not going to assume it will last forever. Lifestyle pitfalls are difficult to climb out of.
  - pdkl95 12y ago
    [There are, of course, quite a few different assistance programs (and variations) in the U.S. - I'm sure the following generalization fails in various specific cases] Your comments about assistance for temporary bad luck nicely describe how many assistance programs should work. Unfortunately... > It's also the sort that the assistance programs in the U.S. are designed to help ...this is not even remotely true for almost all of the assistance programs in the U.S. Unless you have literally no other choice, you will be rejected. This what we get after decades of rhetoric about "welfare queens" and related fears that someone could be scamming the system. Do you still have at least ~$30 in your wallet? A lot of programs will reject you for too much cash. Own anything?[1] Sell it first. Have a pittance in a retirement package that you're not allowed to touch for 30 years? Take the 90+% penalty to cash it in first. Unfortunately, we have effectively optimized most of our welfare/assistance programs in exactly the wrong way. I suspect we could save quite a bit of money if we dropped the suspicion and helped people early, while they still had a job. [1] A single "used-econobox" tier car (YES, they check models and current market price) is often excluded, in the theory that you can't actually get most jobs without it.
xrange 12y ago
Since their problem cropped up in 2008, I'd like to see the value of the car in 2008, compared to the value 6 years later in 2014.

kamaal 12y ago

Wealth signals matter. By wealth signals I mean a person's standard of living. If you are driving a Mercedes you will be perceived as rich. I don't know much about the culture in US, but in my country(India) there is no way you will be considered poor or even middle class if you own a car. Let alone own a Mercedes. Why? That's not very difficult to understand. If you own a car, which falls between the big money and small money its generally an indication that you are doing this on top of your existing savings. Any reasonable person when they first start working should aim to do the following things in order. Try and eliminate any outstanding debt, Save enough money for the rainy days, and then comes the next most essential commodity- a house and if you are done with that- a car. They way I see, a lot of poverty issues in the US seem to arise from mismanagement of one's money. If you don't have a home, and don't have a large cache of savings and have debt on top of all this, buying a luxury car on debt again comes out straight as mismanagement of money.

OrwellianChild 12y ago
You have to appreciate the context of the situation the author came from... The procedure you describe is conservative but sound for someone who is starting with nothing and building wealth. The shocks to lifestyle when you already have some wealth and lose your income look very different and require a somewhat different approach. The author began 2008 with dual-source, six-figure income, a modest house, and a couple of cars, and no kids. Within the year, the couple had twins, had lost the greater of their two income sources, and had the audacity to hope that they could recover from their sudden and not-at-all-expected fall from grace. This is not poverty born of mismanagement of funds, irresponsible spending, or negligence. It is temporary poverty born of bad luck. It's also the sort that the assistance programs in the U.S. are designed to help, and the fact that the author's family was able to recover with that assistance makes this a success story.
- kamaal 12y ago
  Agreed, I one lesson I take out of this for my own good is if I'm having a good run, I'm going to use that to save/invest and not spend. Until the trend moves to becoming permanent and becomes the norm I'm not going to assume it will last forever. Lifestyle pitfalls are difficult to climb out of.
- pdkl95 12y ago
  [There are, of course, quite a few different assistance programs (and variations) in the U.S. - I'm sure the following generalization fails in various specific cases] Your comments about assistance for temporary bad luck nicely describe how many assistance programs should work. Unfortunately... > It's also the sort that the assistance programs in the U.S. are designed to help ...this is not even remotely true for almost all of the assistance programs in the U.S. Unless you have literally no other choice, you will be rejected. This what we get after decades of rhetoric about "welfare queens" and related fears that someone could be scamming the system. Do you still have at least ~$30 in your wallet? A lot of programs will reject you for too much cash. Own anything?[1] Sell it first. Have a pittance in a retirement package that you're not allowed to touch for 30 years? Take the 90+% penalty to cash it in first. Unfortunately, we have effectively optimized most of our welfare/assistance programs in exactly the wrong way. I suspect we could save quite a bit of money if we dropped the suspicion and helped people early, while they still had a job. [1] A single "used-econobox" tier car (YES, they check models and current market price) is often excluded, in the theory that you can't actually get most jobs without it.

xrange 12y ago

Since their problem cropped up in 2008, I'd like to see the value of the car in 2008, compared to the value 6 years later in 2014.