Tuesday, July 25, 2006

How Being Poor Can Cost You

Here's an article from AlterNet on how expensive it is to be poor. I have been poor and many of the examples here are familiar and accurate. This article covers how the poor get squeezed through low balance fees on bank accounts to higher interest rates on loans.

Some problems I ran into:

-I was unable to open a checking account so I was forced to use Western Union to cash my paychecks, for a fee.

-High deposit on a phone

-High interest rate on a used car

-Steep fees on credit cards

-When I had no health insurance I couldn't afford to get a bad tooth operated on at the dentist! Bad times.

Yeah, a lot of my own financial problems were self induced. When I was a wide-eyed college freshman I received credit card applications in the mail. Life was good! I thought the world was going to be my oyster. What I hadn't learned was that it had been arranged to take as much money from me as it could.

Nothing says “you’ve arrived” like charging your next meal on a piece of plastic, right? Soon I was charging all kinds of things. When my old K-car needed new breaks, thank God for my credit card! My ardor died down quickly once I started receiving the bills. I realized that “minimum payments” just meant “running balance” in legalspeak, which, in dollars and cents, meant high interest rates.

Once my rate shot up, and late fees started adding up, the fun was over. And, making about $140 a week in college to live on meant it was going to be hard to pay that debt off any time soon.

So, my debt graduated with me while I added my college loans. Later, when I moved for a job, I tried to close my checking account but I didn't leave enough in the account. The bank didn’t have my forwarding address so I didn’t even know. I found out when I went to open a checking account in my new city. It turns out I was essentially blacklisted and couldn't open a new account anywhere.
I had to cash my checks at the neighborhood Western Union and pay my bills with money orders...all for fees.

Finally, my K-car broke down and I had to get a new car and faced a steep interest rate. The monthly payments, along with my credit card payments, monthly rent, etc, basically strapped me.

I joined the Air Force for the free health care, tax-free purchases, and at least four years of fixed income. I learned some new marketable skills (like programming) and eventually turned my financial life around (the rest is still working itself out). But, damn, I had to go through boot camp to do it! It don't come easy.

I'm absolutely sympathetic to those who are buried in debt, or have no options to increase their income. Someone who makes minimum wage earns about $11,000 a year. How is anyone expected to be able to live in and navigate through a society aligned against them on that?

The system has its ways of nickle and diming those who can't afford otherwise. Some people grow up with enough money to make plenty of mistakes and still recover--I believe our President is living testament. That's the real luxury when you're rich: the ability to recover from mistakes, financial or even physical. We all saw how debilitating poverty can be during Hurricane Katrina. Being poor always costs you, but sometimes it can kill you.

The simple fact is that those who are poor have less options, less freedom than others. Their fate is very hard to escape from. They can't afford the best lawyers. They can't lobby their representative. They can't bribe their city official. It sucks. The poor have less access to health care, education, a proper diet, and they can't even get out of the way of a hurricane. If aliens ever come to take over this planet before they round us up to work in their sugar caves they'll assume that we are already at war with the poor.

I still believe in free choice. I made bad financial decisions when I was younger and I paid for it with plenty of heartache. I just wish the plight of the poor wasn't so easily dismissed. I wish it wasn't so hard to get back to even once you fall behind. How come our Christian society has made it so easy for companies to take your money, and so hard to get them to stop? Have you ever tried to cancel AOL? When you're poor you have to sit on the phone endlessly. When you're rich you can just file litigation.

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