Here Are 15 Ways How Poverty Is a Financial Responsibility. It Is Costing You Money Everyday.
Aluxers, the poor man pays twice. It’s not enough to just be poor, that would be easier to accept if you were paying for things according to your earnings, but that’s not how it goes.
When you’re poor, everything costs more, and we’ll explain how and why.
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With that added, let’s move on to the first heading of the day.
Ignoring Small Expenses Becomes Massive Bills When Left Too Long
Aluxers, let’s start off with an all too common scenario. You feel that your tooth is a little more sensitive than it should be, and you know that it’s due for a filling. But choosing between getting a filling or filling up your tank with gas is a no-brainer. The gas wins hands down.
So, you leave the niggling tooth. Fast-forward a few months and your tooth is aching. Your mouth is swollen and you need root canal surgery.
Now the bill is 10 times the amount that you would have paid if you had gone for the filling straight away.
Same applies for car problems, healthcare, leaks and any situation where preventative measures could ensure that huge, unnecessary costs are avoided down the line.
Rich people can fix a problem right away, poor people do not have that luxury.
Getting to Work Costs More
In many cities, housing further away from the city centre is more affordable. However, one might save costs on rent or the purchase price of the property but getting to work will cost a lot more.
Owning a car is something that many poor people can’t afford. There’s fuel, insurance, wear and tear, services and sometimes major repairs needed.
So, using public transport is often the only way to get around. And if you’re poor and living far away from your job, getting there is going to cost more than someone else who lives closer to their place of work.
Public transport can also be unreliable, causing a ripple effect. You’re late for work, you get a warning, or you’re not considered for promotions because you’re considered as unreliable as your transport.
Which brings us back to our main point, being poor is also expensive.
Groceries and Purchases Cost More
There are a few factors to consider here. Without access to a vehicle, it’s very difficult for poor people to take advantage of specials. Poor people can’t hop in a car and drive from store to store to buy the TP at one spot, Clorox at another and diapers at a bargain at another store.
It’s just not possible. So poor people must make do with getting everything at one place, regardless of the cost involved.
Suppliers often drive up the price when they know there is a lack of resources to outsource the items at better prices.
Here’s an example. In South Africa, you can head to a place like Fruit and Veg City and purchase 2 cabbages for roughly a dollar. Those living in informal settlements need to pay around $2 just to get to a Fruit and Veg City, then buy their fruit and veggies and pay another $2 to get home again.
The time it takes to walk to catch the public transport, then wait until it’s full before it drives, then the reverse, will add a few hours to a quick and easy task done by the wealthier.
So, they’re forced to purchase a cabbage inside the informal settlement, and 1 cabbage will cost $2. Sellers know they can up the prices, because people can’t afford to get their food elsewhere.
And here’s where the next factor comes in. Because poor communities are in rural, hard to reach areas, the transport to get the goods there, costs more – increasing the cost of supplies.
So, whichever way you look at it – the poor are paying more for basic necessities.
Poor People Can’t Buy in Bulk to Take Advantage of Savings
So, while we’re at the store – let’s speak about buying bulk. After having a baby while struggling financially, a close friend shared her frustration. She couldn’t afford to buy diapers in bulk and was buying them in packs of 10 whenever a little money came in.
She was paying triple the price for diapers because she couldn’t afford the bulk diaper packages.
Here’s how buying in bulk saves you, taking her situation as an example. Buying diapers at Pampers, Swaddlers or Target would cost around $0.25 per diaper. Buying them from Sam’s works out to $0.21 / diaper. The saving doesn’t seem like much at first but works out to roughly 12 diapers a day over 12-months, and it’s $175 a year!
And Aluxers, that’s just for diapers. Now, what about when we add wet wipes, toilet paper, canned foods, frozen foods, etc. How much are we saving a year when we buy in bulk? A significant amount.
Balance.com states some experts claim you save around 20% when you buy in bulk, while others go as high as 83%!
And again, we are back to our reality, poor people don’t have the cash flow to buy in bulk and therefore lose out on the potential savings.
Loans Are Taken to Make It to Month End
When you’re poor, having enough cash flow to last you till month end is merely a dream. Something that only happens to other people. And the only way that poor people can make their payments, and not even all of them, is taking a loan from usually unscrupulous lenders.
These lenders charge exorbitant interest rates, which just builds up and the cycle is repetitive.
Loaners are never able to fulfil their financial obligations and the debt keeps piling up.
It’s like taking 1 step forward and 5 steps back!
Late Fees Are Penalized
African American writer, James Baldwin once said, “Anyone who has struggled with poverty knows how extremely expensive it is to be poor.”
We’ve just mentioned how poor people live from check to check, and how loans are taken just to survive until month end, but even with that loan check, many monthly expenses will not be covered.
Most debit orders and monthly subscription services will penalize you for not paying the fees on time. So, again, debt just keeps accumulating when you’re poor and it’s a very difficult hole to get out of.
Aluxers, we highly recommend listening to, “Hand to Mouth, Summary and Analysis of Linda Tirado’s “Hand to Mouth: The Truth About Being Poor in a Wealthy World” on audible.com. The summary answers the question, why do poor people do things that seem so self-destructive? Remember to use our code: alux.com/freebook.
When You Buy Cheap Things, They Break Earlier, and You Must Buy Again
We completely understand that it’s one of those caught between a rock and a hard place sort of situations. Poor people can only afford the cheap items, yet they don’t last as long and need to be replaced sooner.
However, forking out a huge sum of money to buy the quality / name-brand item is not even a possibility when there are hungry mouths to feed.
Sadly, items that are affordable for the poor are low-end. They’re a cheap variant made from the worst components and ingredients and assembled with little care or concern for the buyer. Products are often defective, with the knowledge that the poor won’t even bother returning it, because it’s just not worth the time or energy.
Banks Favour Rich People Over Poor People
Who is a more lucrative customer for a financial institution? A poor person struggling to make ends meet, desperate for a loan? Or a rich person that will bring more business into the bank? Obvious answer, so banks try and deter poor people from using their services, or rather to look elsewhere.
The poor must pay to bank, while the rich get paid to bank.
Many banks require a minimum amount to be left in the account. If that minimum amount is not there, the bank charges you for keeping the account open. That’s just one small example.
Getting a loan is impossible when you don’t have a good track record and ultimately, you are a risk to the bank. Poor people don’t have substantial assets for lender liquidation.
The late William Harold Greider, American journalist and author once said,
“The rich nations of the world are acting like ancient usurers, lending money to the desperate poor on terms that cannot possibly be met and, thus, steadily acquiring more and more control over the lives and assets of the poor.”
Eating Nutritious Food Is Unaffordable
Aluxers, in our video, 10 ways poor people think they save money, we spoke about junk food and why poor people gravitate towards buying it. We said, “the obvious reason is that it’s cheaper but there’s the not so obvious reason; making fresh healthy food from scratch is time-consuming. Poor people are often working several jobs to make ends meet, trapped in a financial, mental and emotional crisis that requires every ounce of energy to survive the day. So by the end of it – it’s a case of buying whatever is convenient.
It’s just not an option for poor people. The rich, on the other hand, can consume avocados to their hearts content, buy their almond milk and pop blueberries like candy!
Next up, a frightening fact affecting poor people in America!
Owning a Home Is Impossible, and Landlords Take Advantage of That
We all know how expensive it is to own a home. Besides needing a bank balance the size of Asia, you also need to jump through hoops to prove that your income is steady and you’re a secure, financially stable person.
It’s hard enough for middle class people, let alone poor people.
The alternative to buying a home is renting. Researchers Matthew Desmond and Nathan Wilmers discovered a frightening fact affecting poor people in America. They confirm that, “American landlords derive more profit from renters in low-income neighbourhoods.”
They add that landlords exploit the poor and have “staggeringly high profit margins.” To conclude their findings, they confirm that “the poor, and especially the minority poor, experience the highest rates of housing exploitation.”
We highly recommend you listen to “Evicted, Poverty and Profit in the American City” by Matthew Desmond read by Dion Graham, available on audible.com
Access to Healthcare Is More Expensive for Poorer People
Here’s a simple equation for you:
Money = quality healthcare = healthier and longer life.
Ok, so what happens when you don’t have money? Quality healthcare goes out the window and life expectancy, well let’s not go there!
Healthcare inequality is a problem and studies have found that poor people are more likely to be ill. Causes are rooted in political, social, and economic injustices.
Marginalized groups often don’t have access to information that can prevent many illnesses, have limited access to decent hospitals or doctors are not in close proximity, medical expenses are too high, poor living conditions means that germs or bacteria are more likely to spread and often family members have to quit a job to take care of a sickly relative, losing an income for an already struggling family.
If you ever drive past a low-cost healthcare facility, you’ll also notice the long lines of people waiting to see a medical professional. You will never see that at doctors’ offices that rich people have access to.
Poor People Don’t Have Time for Investments
In Donald Glover’s “Atlanta” and “Why the Poor Stay Poor”, a guy needs quick money, and he wants to trade in his phone. A friend suggests trading up a few items until he gets a far greater return, and even though that’s a good start, on a micro scale, he can’t afford that because he needs money right now.
The friend is trying to do him a solid, by showing how with time, he could make 6k by trading up his phone. However, like the poor guy says, “See I’m poor, and poor people don’t have time for investments, because poor people are too busy trying not to be poor.”
The point was that often poor people must pass up on good long-term goals for short term gain. It’s a luxury they cannot afford and the reason why the poor, remain poor.
As Dutch American abstract expressionist artist, Willem de Kooning aptly said, “The trouble with being poor, is that it takes up all your time.”
If the sound of “investment” is beginning to light your heart up, then let “real estate” be your training ground. Here are 15 Reasons Why Real Estate is the Best Investment.
Being Poor Leaves You With Limited Choices
Aluxers, being poor isn’t just about not being able to afford sh*t, but it also means having limited options available to you.
Here’s an example. A poor person finally scrapes together enough to buy a small car. So, with $250, how many cars is that poor person going to find? Not many, we assure you, and if he or she does find one or two options, neither are going to be pretty.
Whereas a rich person can choose any car and not have to stress about paying off the monthly fees and insurance for it.
Next, how poor people easily lose their money.
The Poor Are Easy Prey for Scamsters
In our video, 15 Things You Should NOT Spend Money On, we highlight the problems with these “get rich” quick schemes. And that’s what they are… schemes.
But when you’re desperate and need to get out of a bad financial situation, poor people opt for these in the hope they can turn the tables on their financial woes.
As we said in that video, “People are always looking at ways to make a quick buck, and there is so much noise online promising a great return on a “small” investment. To the untrained eye, it would seem like the opportunity of a lifetime – but sadly – they don’t usually pan out the way you hope.”
Poor People Are Socially Excluded
Aluxers, often our big breaks in life come from being in the right place at the right time. Someone you know put in a good word for you, and the next thing you know, you’re working the job of your dreams.
Perhaps you’ve gone to a new trendy restaurant and you’ve bumped into an old friend that’s doing really well, and Bob’s your uncle, the following week you’re on an expedition to the Congo to see the gorillas!
Poor people don’t have these “random” opportunities. They rarely get “big breaks” and the only movement upwards is in an elevator.
So, Aluxers, if you’re able to afford an opportunity to someone that is considered “poor”, do it. You could be breaking a poverty cycle for an entire family.
What do you think costs more when you’re poor? We value your input in the comments below.