Why It’s More Expensive To Be Poor

Most people are not super wealthy, but we all have
an idea what it might be like to be a wealthy person. We watch them on TV, we follow them
on Instagram, we read their blogs and autobiographies. Unfortunately, that awareness of how the other
half lives doesn’t happen much in the other direction. Though many of us have probably
described ourselves as “broke” or “poor” at one point or another, very few have an
understanding of what real poverty feels like. And it’s not just a matter of having less
money. Once you get below a certain threshold, a whole new set of rules apply that actually
make day-to-day life more expensive. If you’ve never struggled with real poverty, you might
not be aware of the many hidden costs and financial traps that conspire to keep poor
people poor. It’s very hard to make your way through
modern life without access to basic financial services like checking accounts, ATMs and
personal checks. But the less money you have, the more these things will cost you. That’s
because banks make their profits by accruing interest on your money. So if your account
balance is too low, usually under $1,500, they won’t consider you a profitable client
anymore, and they’ll make you pay for their basic services in the form of a monthly fee. And heaven help you if you go below zero–each
overdraft incurs a charge of about $35, and many banks will deliberately reorder your
transactions for the day–from biggest to smallest–to drive you into the red more quickly
and rack up as many overdraft fees as possible. If a bank is willing to extend you credit
at all, the terms will be much less favorable than for someone with a rosier financial history.
You’ll pay more money in interest every month, and any late payments means more penalties
and fees. Even cash can be more expensive if you don’t
have much of it. If you withdraw $100 from an out-of-network ATM, that $3 fee equates
to a 3% service charge. But if you can only afford to take out 20 bucks at a time, you’re
essentially paying a 15% charge to access your own money. Taken together, this means that a poor person
might end up paying hundreds or thousands of dollars a year for services that wealthier
people virtually enjoy for free. It’s no wonder, then, that a lot of low-income people
avoid banks altogether–but even that comes at a steep price. Cashing a paycheck without
a bank account costs money. Buying a money order to pay your electric bill costs money.
And if that bill is due in just a couple days? Well, you can either get hit with a late fee,
or fedex it–an extra expense that someone with a debit card and an internet connection
never has to worry about. If you think that dealing with credit card
debt is bad, thank your lucky stars you’ve never dealt with a payday or car title lender.
These businesses are often the only recourse for people without credit cards, and their
interest rates reach upwards of 800% annually! Not only does it cost more to borrow and spend
money, but what you spend it on is often more expensive! If you have to feed a family on
a tight budget, buying in bulk at a supermarket is usually the best option–but one not available
to many poor people. Even if they had the cash on hand to buy weeks’ worth of food
in one trip, how is someone who depends on public transportation supposed to get it home?
On their lap on the bus? Big food retailers–ones with enough purchasing
power to offer low prices–are notorious for avoiding poor neighborhoods, and people who
live in these so-called “food deserts” often lack the mobility to cruise around town
bargain-hunting. Instead, they’re stuck with local convenience and corner stores,
where prices are much higher. Or they rely on fast food, which can seem cheap in comparison,
but is actually more expensive than cooking at home, to say nothing of the long-term health
risks. Rent can also be more expensive. Most landlords
require a security deposit between $500 and $1000 to move in–an impossible sum for people
barely scraping by. In that case, your only option (other than homelessness) might be
a low-end extended stay motel, which typically don’t require deposits, but cost way more
than an apartment in the long run. And they often lack amenities like kitchen appliances
and laundry that save apartment-dwellers time and money. They say “time is money,” and the less
money you have, the more time you have to spend on everyday tasks. Waiting at the bus
stop, waiting at the laundromat, waiting at overcrowded clinics and public offices. This
leaves much less free time to take care of one’s family, pick up extra work, or strategize
a way out of poverty. It gets worse. Inflation, the general increase
in prices, tends to hit things like food, gas, and rent the hardest. The lower your
income, the greater percentage of it goes to those costs, so a poor person will see
their year-over-year expenses go up at a higher rate than a wealthy person. All these pressures take a toll on one’s
psyche that only makes things worse. Imagine having to constantly make tough decisions
about where to spend your last few dollars: Pay the water bill or buy food for dinner?
Put gas in the car or see the doctor? This relentless burning of mental energy leads
to a deterioration in the quality of one’s judgement–a phenomenon psychologists call
“decision fatigue.” It’s why someone might visit a payday lender when they know
it’s a bad idea–they’re so exhausted that they’ll settle for a quick fix even
if it will lead to more problems down the road. Closely related to decision fatigue is the
“scarcity trap,” which is our tendency to fixate on the resources that we have the
least of, to the point that we lose sight of the big picture. Running low on diapers,
for instance, can create a feeling of panic that compels a poor mother to buy 6 months
worth of Huggies–only to realize afterwards that she didn’t set aside enough money for
rent. Some might think that poor people just need
to work harder and spend smarter. And while it’s true that improving your financial
situation requires these things, it also requires having at least a little bit of extra cash
to move around, and access to decent spending options. If you can’t choose where you shop, where
you live, or where you bank, you become a captive customer to predatory businesses.
If you don’t have any extra money to save, invest, or budget, you can’t make a financial
plan. And when are you supposed to think about tomorrow when you’re constantly putting
out today’s fires? Next time you describe yourself as “broke,”
remember that having just a little bit of wiggle-room is infinitely better than none
at all. It can make all the difference if you’re trying to improve your financial
situation. So if you do have that wiggle-room, be thankful
and don’t waste it! And that’s our two cents! Missing one payment can quickly spiral into a pit of debt. Has this ever happened to you and were you able to escape it? Share your story in the comments.

100 thoughts on “Why It’s More Expensive To Be Poor

  • My mom and I actually live like this, our saving grace was a good landlord not kicking us out and waiting until she got tax refunds back and God honestly. Missed half a year worth of rent and only could afford a electricity plan And we had food stamps while I’m in school…. and that was Stretched chicken every other day.Wearing flats in the winter time to school and her wearing sneakers that talked to work Everyday and she got her feet wet or the heavy man boots that where to big …. to any one reading this, lend a hand to someone like yesterday and appreciate your life and privilege Because hood life isn’t fun and can be depressing. Appreciate your family, Safe Home And Neighborhood And Helping Family. To many this is a day to day and year to year reality…. if it wasn’t for gods grace me and my family would be homeless and hungry. Help Someone and don’t pass judgement on poor people…pray for them

  • The first half of the video can almost all be avoided by using a credit union instead of a chain bank, and then the end just tried to make people feel bad if they have less than their normal, because there's always someone out there doing worse than you. How did this video help anyone lol

  • I pay no monthly fees for my checking account. I had to have $100 to open it up, but I can keep $1 in there and they don’t charge me. And I have a debit card. If I need cash, I take it out at Walmart or Aldi. Lots of those places don’t charge you to take out cash as long as you make a purchase. Even a pack of gum !

  • You got dumb parents who never learned basic finances and they have kids and they don’t teach them and so on and so on. Met a girl the other day. Just turned 18. Has a 6 month old and pregnant with the second one. Guaranteed to stay poor !!! Ugh !!!

  • You know, I’ve heard plenty of poor people say they can’t pay their water bill but apparently have no problem throwing $5 on a pack of cigs !!! Well off people don’t have babies in high school. They finish high school, they don’t smoke as much as poor people and they don’t blow money on lottery tickets !

  • Most people who are poor are poor because they spend way too much money unnecessarily, dont save up and dont invest. It doesn't matter who much you make, it matters who much you save and who much you invest. Dont spend money when you dont have to, people spend too much money on expensive clothes, phones, and more.

  • I tried to get a H.A.M.P. modification loan in 2006 since my house was "underwater" but I also needed to be three months in arrears on my payments to qualify. Being "underwater" was not enough. Something the tv commercials never mention.

    You probably already know that during the H.A.M.P. application process I was foreclosed on by someone who supposedly bought "my loan" and didn't want to modify my loan but instead foreclose on it.

    This group that bought my loan is called "Deutsche Bank National Trust Company, DBNTC." I looked them up on my "Secretary of States" website to find their address so that I could personally negotiate with them and when I get to the address it turns out that DBNTC's legal address in Florida is a closed private mail box in a private mailbox business.

    I get a lawyer and he doesn't want to hear anything about my discovery and he gives me several reasons why.

    Eventually I realize that my lawyer is not working in my best interest so I fire him and represent myself thereby giving me the right to speak directly with my accuser by-passing his attorney. So I asked opposing counsel to give me the legal registration information for their client and the contact information for their clients lawfully required "Registered Agent." so that I know that I am speaking with the true DBNTC. To which they refused to give their clients information.

    A lot of stuff happened after that that the details of would take days to write. The main point I am sharing here is that neither Deutsche Bank National Trust Company nor Wells Fargo N.A. are legitimate or even real entities. They exist solely on legal documents as schemes or artifices to defraud the American people of their property.

    These lawyers (liars) took the names Deutsche Bank and Wells Fargo and added a little something more to it and invented a client for themselves to use to take people's homes.

    If you don't believe me; try and find out where DBNTC is legally registered and if it really exists their and even easier, try to find out who is DBNTC's legally required "Registered Agent" because according to US law a trust company is required to have a registered-agent.

    I couldn't pin down Wells Fargo N.A. like I did DBNTC with the registered-agent thing because unlike the "law" clearly stating that a trust company is required to have a registered-agent, there is no law regarding a "not applicable" company. N.A.

    Seriously, none of the above is fiction.

  • I've been a volunteer at the local food bank for 5 years now. I go in every Thursday for 2 hours. I pack the food items people select and help them carry out to their vehicles. Come in and work with me a couple of times and you will see what poor really is.

  • You become rich by exploiting people and making them poorer. Making one person rich makes many people poorer. So, if one more person becomes rich it makes more people poorer.

  • It is better to live out of your car then to use pay day or title loan lenders. Shut off your TV, radio and all gaming if you have debt and don't turn any of that stuff on until you are out.

  • Banking system in US is really scary for me, as Indonesian, i could say living here is much much more comfortable and almost worry free if you have a job that pay minimum wage..

  • why do ppl even borrow money on interest ? and if they dont pay back smaller loans nothing happens. never repay the bank better if you have very less connections to them , they are not in your interest.

  • Banks and financial institutions are the biggest heartache. It's really demeaning to take money from someone that are struggling financially. The banks are not your brother, and if you need to borrow money to meet financial obligation s, it's more likely they'll refuse, unless there is asserts. So it's gaining control of your money. Then comes the payday loans, they really are an eyesore on debt. People get into these situations because of choice they've made, or had to make. My sister made the mistake with credit and store cards and at the time she didn't need them! So there is a way to manage money. Priority bills, such as rent and tax, these can cause the worst effect, then utilities and then spending food ect. Here Britain it's a different perspective and you get some assistance. Such as utilities have to give you an option for payment meter (normally on a tariff). Water can't cut your supply because of health environment issue. In some situation you can get payday and loans frozen for a duration. However it's saying that you won't attempt to attain credit. A lot with poverty trap is getting a plan to stop accumulating debt. If there is a minimum wage then it's more control, America seem more aggresive with sales ect, but it makes people live beyond there means. There is the zero hour contracts here that cause irregularity in people's income.

  • So don't be stupid with money? Pretty easy to get out of homelessness if you're trying. I managed to do it only making $10/hr. It's called priorities.

  • Just a couple of issues with this video. Firstly, there are banks that have no monthly fees and only require 25 dollars to open a checking account. Secondly, if there is a library, everyone has access to the internet to pay their bills online. When I was dirt poor I lived off of beans and rice. A majority of poor people are poor because of their poor spending habits.

  • open 2 bank account at two different successful bank . control it virtually by internet. you never pay extra fees anymore and you dont need credit card to be wealthy. watch Dave Ramsey show. you dont need to be wealthy to eat healthy (are you kidding me ?) look how vegetables are cheaper than meat or any fast foods. lets say you like fast food and can not control yourself you can buy frozen meal which is way cheaper. there are a few skills that is essential for living in this world and if you dont learn it you will suffer for rest of your life here.

  • Do you honestly think I don't know the difference between broke and not, I probably know better than you, but there is a difference between broke and stupid, their are other options, like foodbanks, that are only open one day a month and only give enough food to actually make say dinner for one day, if you have a house full of hungry children in addition to yourself, in which case it's still not enough to make dinner for everyone, it is effective at stopping dumpster diving for food though. Rich people are found of saying poor people are actually greedy, well it does cost them more to survive, but that's not the same as being greedy, and their are good rich and bad rich people, most are actually greedy though, it's as simple as my brother put it, at the end of the day no matter how rich you are, you have a choice, try to help everybody out and become the next poor, or prioritize your own family, and possibly encourage the hate of many, you might not actually realize that this is exactly the choice of feelings that the evil rich, and the bankers want to drive forward, if it was possible to balance the equation, no one would need them and their evil amount of interest. Not convinced? I still remember when we had 5% intrest across the board, or even 1% across the board, right before they changed to dormancy fees, or hate raping you for your business, that was by design, it was my brother in law, a business owner who went on record on news channel 4 to say "I was trying to teach my children the value of saving money, but I guess something has changed" indeed it has, now, how would some rich American like exclusive access to a big and profitable business, I bank a credit union, because they actually do pay out interest at 5%, it's my only account now, but only below $500. I would like to get out of the hole, think you can start an account that pays out for amounts over $1500. And get every American off of the credit card trap? Just don't call yourself a bank, it's a four letter word.

  • I was poor betw. 76-78, around 82-84 and somewhat around the mid-90's. It sucked and what drove me was my anger, my rage. I remember banking, if I could only have the minimum amount, then I wouldn't have to pay monthly fees. I remember my weight dropped into the 90's. I remember dumpster diving and donating blood plasma twice weekly for a damn cookie, an OJ and some cash. Two things that helped me, I found a book somewhere with tips on how to live on pennies per day and I found an old tattered cookbook from the Great Depression with simple 3 to 4 ingredient recipes; and there was LUCK, lots and lots of luck and hard work. I got into the habit of tracking expenses, savings and investing, and stock piling food so as to be prepared for the next emergency; because it's always around the next corner.

  • Mant banks if you direct deposit your payroll check have no interest.
    There are online banks that pay better interests and reimburse for foreign ATM fees. If you somehow think it's unfair that you pay more interest than someone who has a higher free cash flow then waa. People in poverty get food assistance EBT cards getting to spend money that they did not earn. Section 8 housing where you don't even get charged for utilities. There was a time where I was unemployed without a car and had to use a Food Pantry there were at least four Escalades parked outside getting free food Cry Me a River

  • Sorry but STOP eating out, buy none NAME/expensive brands, merchandise only buy what is needed… cook at HOME stay away 4rm credit cards unless u need costco or samsclub… Ride a bike or bus, stop going out… Go exercising, don't need cable, internet or luxury B.S monthly cost…

  • Poor people get free health care, food stamps, housing, entertainment, education, cell phones, and internet access.

  • Yet, there are plenty of sjw who criticize and critique poor people and roll their eyes at how funds are spent. Even if there is a reason for deciding to purchase chips and soda….. people who do nothing to help the "poor class" needs to actually LIVE in poir peoples SHOES!

  • This is exactly why we need to eliminate illegal immigrants in the US. They are taking hard working Americans tax money that the US keep giving away.

  • Feels good to be European, virtually no bank fees, debit only (no credit for everyday spendings), cheap farmer's market, free bill payments and you can can live solely on cash just fine. Some of the advices in the video still applies though.

  • That's why I voted for Andrew Yang for president in 2020. Donald Trump can go to hell he'll belong!

  • U yanks get fucked by the banks. In the UK banking is free for visually everyone (unless your homeless), no minimum balance required, no ATM charges (in very rare occasions there will be) and laws limiting payday loans interest…. Land of the free… More like Land of the fee 😂

  • I am a foreigner… I go to the poor areas of my city here in the USA and constantly see either a satellite dish on a barely livable box of a house/apartment or, usually, a Dodge Challenger in the driveway. The poor and their spending habits…

  • Personal finance should be mandatory from 7th grade and keep adding to the education until 12th grade.
    Not to mention personal taxes.

  • The reason interest is higher for people with worse credit is because of higher risk. I learned this first hand when I opened a lending club account. My loans to lower credit score people defaulted more often, negating the benefit of a higher interest rate.

  • Go to 99c stores where even non-bulk items are low.

    Find a decent motel with weekly rates, present yourself like non-troubled, maybe put in a quiet week and then ask the manager if they have better monthly rates.

    Many loopholes out there are completely "off-internet." Many places have secret favoritism of someone who shows up clean shaven and with no baggage, or drama. I participate and benefit from it every day. It's called discrimination. It's not fair—

    So keep your tats and doucheface beard
    Keep me rich, keep you weird
    Don't like it there's the door
    I'll pay less, you'll pay more
    Boo fucking hoo hoo
    Is the only thing you can do.

  • Damn. I NEVER realize how good I truly had it. Bank accounts that don't charge me monthly, access to places like Costco, not needing to shop at the corner store for some shit quality food that cost twice as much. I need to count my blessings

  • Let me preface this by saying that I’m not rich, not even anywhere close, and I don’t typically waste my time arguing with randoms on the interwebz, but there seems to be so much applause for this video about how it unearths some hidden truths about how our society is designed to keep people poor or something that I felt compelled to offer an alternative view.

    Poor people are (generally) poor because of consistently bad financial decisions, not because American society is keeping them that way. Let me tell you why this video is bullshit.

    Minimum balance fees:

    Minimum balance fees are easy to avoid, or low if you have to pay them. Currently, Bank of America (the second largest financial institution in the US) offers a checking account with an opening deposit minimum of $25. There is a $5 monthly maintenance fee that can be avoided if you are under 24 years old and enrolled in high school, college, university, or a vocational program. There is also another checking account option with a $100 minimum opening balance, if you can gather up that cash, where the monthly fee is waived if your employer offers direct deposit. You need to direct deposit at least $250 per statement cycle (basically once per month). This $250 minimum direct deposit should be EASILY met, even if you only have a part time job.

    I understand that dirt poor people probably don’t have the money to attend college or university, but vocational programs (e.g. paid apprenticeships for trade skills) are eligible for the waiver. I also realize that someone so poor may not be able to come up with $100 to open a checking account of the second type. But guess what, as of this writing BoA is offering $100 to open a checking account with them. That should cover your maintenance fees for a year and a half on the first type of account. I understand that these promotional offers may also vary be region, but I’m near Detroit, (a very poor area, if you are living under a rock) so I doubt it’s much different in other poor regions.

    Some people in the comments have also mentioned using credit unions to avoid fees, and while I don’t have any experience with credit unions, I can say that if you are not shopping around for the financial institution with the lowest fees, and simply paying whatever your current institution is charging you without knowing what else is available, then you are making bad financial decisions that are keeping you poor. This is not anybody’s fault but your own.

    Overdraft fees:

    Know what the best way to avoid overdraft fees is? Know how much money you have in your account and don’t spend more than that. Online banking makes it so easy to check your balance from your home or phone that there hasn’t been a need to learn how to balance a check book for a very, very long time. The other way to avoid overdraft fees is to not spend your money on stupid shit like shown in this video. The contrived list of expenses shown as an example in this video is completely laughable. If you are spending $6.50 on a sandwich and $2.50 on a magazine when you are this poor, then you have absolutely zero sense of financial responsibility and, quite frankly, you deserve to be poor. $62 for a phone bill? I pay less than $6 per month for cell phone service through Tello that gives me unlimited text messages and 100 minutes per month, and that’s on one of the major carrier networks. Again, if you’re not shopping around for the lowest prices on these things, you’re doing it wrong. And $85 for a grocery bill? If I were that poor, I’d be eating nothing but 49 cent ramen noodles for breakfast, lunch, and dinner to make sure I saved enough to pull myself out of debt. But eating cheap doesn’t have to mean eating unhealthily. Fruits and veggies are dirt cheap as well. What’s expensive is the prepackaged, preprocessed shit that everyone is accustomed to eating that they could do without, but probably just don’t want to give up. And you don’t have to “buy in bulk” to save money at a supermarket. The video makes it seem like unless you spend hundreds of dollars in one trip to a supermarket, you’re not saving money, and thus it makes more sense to constantly shop at convenience stores. What??? Where is the logic in this? Who says you have to spend a lot of money at once in order to take advantage of the lower prices at supermarkets vs convenience stores??? I also love how they put Whole Foods as a supermarket that offers low prices, LOL. I’ve never shopped at Whole Foods but I’ve frequently heard it dubbed “Whole Paycheck” because that’s how outrageous the prices are. This only leads me to further to believe that the people in this video have no idea what they are preaching about.

    ATM fees:

    Simple solution: don’t take out money at an ATM that charges you fees. I use bank of America only as an example because I use them and am familiar with them, but they have locations literally EVERYWHERE, and they don’t charge any fees for using their ATMs if you have an account with them.

    Most of this stuff in this video is based on the assumption that poor people don’t have a bank account because it’s “too expensive”. But what’s more expensive, paying a $5, or $12 (Chase, the LARGEST financial institution in the US, has a $12 monthly maintenance fee, BUT as of this writing they will pay you $200 to open a checking account with them) maintenance fee, or being charged ATM fees, check cashing fees, money order fees, overnight delivery fees, late fees for late checks, etc?

    It’s just a no brainer that banks save you time and money, even if there is a maintenance fee. And if you don’t recognize this, then guess what? It’s your own fault. It’s not the big bad corporation’s fault that you overdrew your account, either. I can’t speak to the comment about them rearranging your daily transactions, because I’ve only overdrawn my account like once in about 25 years, because I know how much money I have and I know that I’ll get charged a fee if I spend more than that.

    So open a damn checking account for $5 a month and stop spending more money than you have and you just negated like 90% of what this video says keeps you poor. Because guess what happens when you don’t spend more than you have? Your credit rating goes up, negating the other part of this video that says poor people have higher interest rates. It’s like some sort of magic or something, I dunno.

    Anyway, to top it off, in spite of everything I’ve said, if you still can’t make ends meet, there are still government assistance programs that will help you financially as well. Take advantage of them (as in, use them, not defraud them when you don’t really need them) and take some damn responsibility for your actions and stop blaming society and the government and big bad corporations and everyone else but yourself for your poor financial decisions.

  • This “capitalistic system” wants to keep people poor! You have to be financially educated nowadays or else you’re screwed in today’s fast paced, money hungry, fake lifestyle for social media modern world 💵💵💵💵💯💯💯💯

  • I swear banks with their overdraft fees and monthly account keeping fees are the biggest scammers in the world…. 💯

  • Thank you so much for using your platform to show the reality facing the poor, and for reminding the better-off to have compassion.

  • My two cents:

    I think more people should at least attempt to get into the military. If you don’t like it, you don’t have to stay in. It’s a great way to get out of the area you live in and get something on your resume and maybe even get you in an entry level government position when you get out and go back home.

    I did a term and it really turned my whole life around and got me out of the “log splitting, car fixing, hunting and farming lifestyle” all my ancestors have lived before me.

    I’m now just about to leave for Kuwait for a year to pursue my dream job as a Gunsmith. (71k/year, apartment paid for, 401k, company transportation to and from work)

    I’m finally doing something different with the life I’ve been given and I feel incredibly lucky.

    (I also highly suggest holding off on getting married and having kids until you’re financially stable enough to support yourself four times over)

  • This is hitting me hard …. and am even work am a student. This is my biggest fear to end up in such a situation. Can you please make a video in how to avoid this and better oneself

  • Exactly. Most people didn’t grow up in a household where their great grandma made under 10k a year while raising two great grandsons. In one of the poorest and the MOST crime ridden neighborhood in Florida for decades. I always tell people they don’t know what poverty is like. When you’re used to roaches crawling over you at night as a child. You just swat em off and roll over back to sleep. That’s poverty. The apartment wasn’t dirty. Roaches are natural critters to the lands of Miami and South Florida. Infrastructure in a lot of poorer neighborhoods were never built to keep them out. I grew up in what would be considered an infestation anywhere else. Most poorer people in Miami did.

  • its not more expensive to be poor. Its more expensive to be stupid. Financial stupidity is the problem here. People refuse to educate themselves at a time when we have nearly unlimited access to information. They are watching total trash.

Leave a Reply

Your email address will not be published. Required fields are marked *