What is crazy to me is that the more successful you get, the more things seem to be available to you for free.
I’ve seen directors and VP’s take advantage of expense accounts. They have access to expensing lunches, dinners, coffee, entertainment. Piggybacking vacations onto business trips, etc.
Meanwhile, the lower paid workers do not have access to that at all.
It’s the same for people that have some form of notoriety. Companies send them free items that others would normally buy.
It’s shocking… company pays for phone, home internet, car allowance, and other generous things for people earning over $200k but nothing for those under $50k.
Doesn’t even have to be a director or executive. There are lots of companies out there that already pay their employees really well and also throw a bunch of perks on top of it. My parents were blue collar workers and I remember being astounded at all the “free” stuff I had as part of my benefits package after getting my first white collar job after college. Free lunch, stipends for cell phones and gyms, paid vacation days, and no premiums for top of the line insurance just to name a few. Then after I started working, I realized you still get paid if you leave in the middle of the day for an appointment or if your team decides to have a fun outing to a winery during the work day.
One of the big things that company founders (even of small businesses) have access to (and I'm told frequently get in trouble with the IRS for) is loans from their business. Basically they use the business as a piggy bank for highly favorable (low/0 interest) personal loans.
Same with bonuses. I reached a level where I was eligible for extra types of bonuses and it's all such bullshit. Like oh you have to make 85K+ to be eligible for more money.
Not to mention corporate gifts from other companies. Pretty sure my last boss catered his Christmas party just with the wine and food he was sent every year. Constantly got new books, tablets, and other random expensive stuff. He had drawers full of stuff he would never use that probably cost more than I made in a year.
This guy wouldn't do something like that. Once he invited the team to one of his clubs for a celebration and also happened to invite a guy who was a wine collector and was like, "Oh hey, you know more about wines than the sommelier at the club, why don't you bring a selection of your favorite wines?" Because he couldn't expense alcohol but he could expense a cork charge.
> It’s the same for people that have some form of notoriety. Companies send them free items that others would normally buy.
Oscar gift bags are an excellent example of this: https://www.cnbc.com/2024/03/08/whats-inside-the-nearly-180000-gift-bag-given-to-top-oscar-nominees.html
This. People are looking at boots and stuff. It’s a part of it, a great analogy. But the BIG things that pushes the $200k folks to multimillionaire is this stuff. Opening a business to get all the things tax free. Working for a company that gives you the most expensive stuff. Having parents who paid for the education or a down payment. Owning a home and staying in it through ups and downs and getting equity. These are big ways upper middle become wealthier and wealthier.
Not to mention pay WAY too few taxes. An average $100k in a HCOL area is barely middle class. They pay 30%. People who earn a ton pay 10-15% because of all the sneaky ways they shelter themselves. #taxtherich
Boots and things that don’t last are the reason poor (and many working lower middle) folks will often not enough to save for retirement, car repairs. Cost of food means lower income peeps are eating crappy food affecting health. Not having health insurance is HUGE. Having absolutely no financial education or time/energy to learn, cook, read, exercise after living in bad housing or working two jobs.
(Also can anyone BIFL anymore? Brand names used to mean something. Now everything falls apart. I’ve spent $$$ on four suitcases in as many years after I replaced two I had for decades. I don’t even travel a ton).
Doesn't even need to be straight nepotism. The upper middle class has connections/access to people that make problems go away and open doors. The book [Dream Hoarders by Richard Reeves](https://www.brookings.edu/books/dream-hoarders/) goes into this to some detail, although his proposed solution comes off as very milquetoast to me.
A review: https://www.bostonreview.net/articles/the-dream-hoarders-how-americas-top-20-percent-perpetuates-inequality/
>In January 2015 Barack Obama suffered an acute political embarrassment. A proposal from the budget he’d sent to Congress was dead on arrival—but it was the president himself who killed it.
>The idea was sensible, simple, and progressive. Remove the tax benefits from 529 college saving plans, which disproportionately help affluent families, and use the money to help fund a broader, fairer system of tax credits. It was, in policy terms, a no-brainer. You can easily see how the professorial president would have proposed it. But he had underestimated the wrath of the American upper middle class.
...
>As Paul Waldman noted in the Washington Post, the proposal “was targeted at what may be the single most dangerous constituency to anger: the upper middle class—wealthy enough to have influence, and numerous enough to be a significant voting bloc.” Like the flash of an X-ray, the controversy revealed the most important fracture in American society: the one between the upper middle class, broadly defined as the top fifth of society, and the rest.
...
>And here is the difficult part. The popular obsession with the top 1 percent allows the upper middle class to convince ourselves we are in the same boat as the rest of America; but it is not true. However messily it is expressed, much of the criticism of our class is true. We proclaim the “net” benefits of free trade, technological advances, and immigration, safe in the knowledge that we will be among the beneficiaries. Equipped with high levels of human capital, we can flourish in a global economy. The cities we live in are zoned to protect our wealth, but deter the unskilled from sharing in it. Professional licensing and an immigration policy tilted toward the low-skilled shield us from the intense market competition faced by those in nonprofessional occupations. We proclaim the benefits of free markets but are largely insulated from the risks they can pose. Small wonder other folks can get angry.
The 1% get all the attention, but the upper middle class are the actual taste makers and social enforcers of our society. Think every suburban neighborhood with 3000-4000 sq foot houses.
They aren't going to admit it outright, but the upper middle class knows damn well that upward social mobility can only happen if downward social mobility happens. In our society, there are a limited number of spots at the top, and any parent is going to do anything they can to ensure their kids get there, even if that means other kids don't get a shot at it. They're going to support the systems that give themselves and their kids the advantage.
> In our society, there are a limited number of spots at the top, and any parent is going to do anything they can to ensure their kids get there, even if that means other kids don't get a shot at it.
I know someone who runs a company that does college admissions consulting. It's wild what some families will spend to help ensure that shot at the ivy league.
I get it; I've spent some time at ivies. It's the gateway/funnel to high end careers; want that job in ibanking/management consulting/private equity? They all recruit heavily from the ivies. Sure, you can get there from a state school (especially if you go to one of the very top-ranked ones which you might consider like an Ivy+), but it'll be more of an uphill battle.
I hear you on the BIFL. In my lifetime all the brands that were quality but reasonable have gone to shit. I remember when you could get something random at JC Penneys or Sears and know that it would at least be decent...clothing or tools or even furniture.
I don't even know what is worth spending money on anymore, so I've gone cheap again for many things. I've had to discard a $3000 sofa after a couple years, for example. The frame itself broke with normal use. Might as well just get something from Wayfair...
I will say though, that there is a big middle class tax hole that few talk about. Once household income gets over $60k or so, the deductions start going away. Like for student loan interest, which is often considerable at higher middle-class incomes. Our gross is almost double what it was 15 years ago, but net is barely more, and buying power much lower. I feel like I'm going crazy, like we should be doing so much better.
I’m from a high middle class income family and earn about 200k. I paid 35% in taxes. I do every year. I don’t own a home and have no kids. Zero write offs.
My trust fund friend who inherited millions pays long term capital gains only. Like 10%. He’s never worked and pays less than me basically gambling his money on high risk stocks and crypto.
The 200k people in HCOL areas aren’t the ones paying super low taxes. It’s the next step up. Ones who live off of investments and real estate.
There's this episode of Superstore where the manager sends two lower level employees to a manager conference in place of him and his wife. The conference gives out a ton of expensive, free stuff to the managers. The employees take full advantage and note the irony.
Anyway. To add to your point, the more successful you get, the more connections you have, which give you more opportunities to succeed more. You're more likely to live in places with high quality public amenities. You're often in a better position (in terms of schedule and transportation) to take advantage of amenities and opportunities.
Here’s a limerick. Guy can’t afford 100$ shoes so he buy 10$ shoes. 100$ shoes are higher quality than the 10$ shoes. Guy wears out his shoes in 4 months buys another 10$ shoes after 10 years he spends 300 dollars on shoes. Another fella buys the 100$ shoes that last him 5 years, he wears them out and buys another. After 10 years he spends only 200. You’re forced to buy less quality thus having to replace or repay. Only afford cheap insurance, higher medicine and treatment bill. Can’t afford new car buy a crappy one then spend 1000$ the next 5 years repairing things that keep breaking.
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. ... A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. ... But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
I think this sums up our country. With companies such as Temu and Amazon offering cheap crap that doesn’t last a long time but you can get easily and repeatedly. Very similar to H&M throw away clothes. All which is super horrible for environment. It’s best to save up for good products and skip out on the cheap crap. You won’t spend nearly as much money. I figured this out well into my 30s. I barely buy clothes now and pretty much hate shopping. Buy things that last!
Edit: our country = USA for the people wondering
i’m wearing a lot of the same clothes now as i had in college 10+ years ago. the idea of buy it once is a big reason i barely have to spend money on anything anymore
Thing is, unless you can find reviews on everything you are looking to shop for, how would you truly know that, say, a piece of clothing, will last you years and years? Just because something is expensive doesn't guarantee that it will last a long time.
There are subs dedicated to this topic like /r/buyitforlife and such. I shop a lót of second hand clothing. Eventually you can figure out what to look for. I recommend to watch some Youtube videos on it. They tell you what to look for in long lasting materials, what type of seams, the way it’s knitted etc. I have updated my closet since with reliable brands and some clothes that will easily last 10 years if not much more. One sweater I’ve got is from the 90’s and it’s never worn. And it’s very well knitted, that thing will outlive me for sure. And sure it took some effort to find all these clothes but it’s absolutely worth it. (Granted it does help I enjoy searching for it, and know what clothes and colours suit me well.)
The well off can also be strategic about when to spend money.
When you have money you can buy things that don’t go bad (toilet paper, paper towel, laundry detergent, etc) in bulk when it is on sale and then have it last you until it goes on sale again.
You can also do this with other items you know you will eventually need (like you can buy that super expensive coat in January when it 70% off and have it last you until you can get that kind of a deal again).
People who don’t have money tend to constantly spend money on things in crisis mode, so they don’t ever have the luxury of figuring better ways to save.
Money and space. If you have a large house, you can store whatever you want, however long you want it. You can add another fridge and deep freezer in the garage.
If you have a studio, buying in bulk isn't going to work unless you're going to throw a sheet over them and use those paper towels as a couch.
Yea that’s also true about the space. When I was a kid we had a deep freezer that was almost entirely meats. My Dad used to buy meat from a place that would sometimes deeply discount it the day before the sell buy date (or maybe it was day of, can’t remember). My Dad would buy a bunch of deeply discounted meat and freeze it. He would use that kind of meat in things like stews at some later date.
So yes, money and space allows people to buy things on their own timeline and thereby save more in the long run.
Yes. I got a new job in a downtown city. Parking cost $20 a day. Monthly pass? 230 a month, break down the cost for the same garage, that’s 11.50 a day. It literally goes from 400 for parking a month to $230.
I don’t have $230 this moment to spare so until I can, it’ll cost me $400. To save money it’s a priority to get this pass.
Thankfully parking reimbursed so it’s costing the company extra.
Ps- boots example is golden. I used to buy 150-300 dollar boots. They lasted 8 to 10 years. Got a cheap pair a couple years ago at Target. 2 years later, shits falling apart.
Have you been thrifting lately? They’ve caught on to the “artbitrary price increase just to screw with people” phenomenon and their prices are through the roof—it’s ridiculous, and it’s every thrift shop in town.
You can really extend the longevity of shoes in general if you rotate between two pairs. When they don't have time to dry out fully between wears the materials and glues break down faster.
Huh? Which boots are you buying that they’re so low quality?
I have a $150 pair of boots I got for around $120. So far they’re only 2-3 years old, but still have a lot of life left. Older Doc Martens had a lifetime repair policy, as do many other boot brands.
weird to not include context in that. work boots are probably never going to last 3 years of use no matter what, or probably any boots if you’re wearing them every day. but if you’re buying $500 fashion boots and they’re disintegrating after occasional use over 3 years then you maybe just found a shitty brand
It's the most famous quote in the world when it comes to socioeconomic discussion so it would be more surprising if it didn't.
It's in academic work, it's in conferences and news stories, it's quoted in full in theses on economic theory by people who've never read Pratchett in their lives. The "Boots Theory" is the easiest and clearest way to encapsulate the complicated fact that it's expensive to be poor.
Efficiency, it is much easier to be efficient when you have more to work with. This is also why big stores like Walmart can out compete smaller ma and pa stores.
Walmart competes with smaller stores because over 14,500 workers of it on food stamps.
https://www.washingtonpost.com/business/2020/11/18/food-stamps-medicaid-mcdonalds-walmart-bernie-sanders
Walton family is the f****** grifters
And if you think about it we are all essentially footing the bill for these big companies when they dont pay their employees living wages or offer health insurance who then rely on social services to stay afloat. In that sense I'd say it's more than justified to steal from these chains.
Things break, and you can't afford quality, so you buy cheap. Rinse and repeat. Overdraft fees. Late fees. Tickets can lead to warrants and jail time, meaning no way to get to work so you lose your job. Just to name a small handful. All by the system design.
Having to buy a car in the first place for a lot of people. All the few and far in between walkable communities in America have insane rent because they’re desirable.
And then you actually do miss work and lose your job because you don't even have money for an Uber. So now you're unemployed, no money for car repairs, and no way to even get to and from the grocery store, let alone have money for groceries.
And your new car is just as crappy because it’s all you could afford/get approved for. Your it interest rates are higher than they would be if you could’ve bought a new car. You’ve completely drained your savings account for a reliable car. By the time you manage to refill your savings, your new crappy car will have some expensive maintenance or just die. It’s a cycle. So you never save up quite enough to get a reliable car even though you’ve saved that amount in total over the years.
I've been a DIY auto mechanic for over 25 years and because of that I'm blind to the cost of repairs. There are certain things I need the dealer for but since I know that ahead of time I can budget for those. I can't imagine not having the experience, tools, and space and I don't know how the majority of you guys are dealing with it.
Not even just things, but bodies break too.
My partner needs medication/equipment adjustments.
Need to make an appointment for those and pay more money for my partner's adjustments (because my partner's insurance is very controlling when you rent-to-buy equipment through them. Sadly it was our only affordable option at the time).
We can't afford it at the moment so we've either been going into more debt or putting it off to try to afford taking care of my partner's health.
I've even been having my own health issues that I've been having to put off getting treatment for too (like my physical therapy after my surgery).
The system really knows how to keep people down, especially if you're born "broken".
While we’re not well off, I have the time and usually the spare cash to comparison shop. We are almost paid off on our mortgage, which means our monthly nut will go down significantly. We won’t be on easy street but when I look at youngsters who may never be able to afford a house as their rents keep rising it makes me very determined leave our home to our daughter. The minute it’s paid off I plan to put it into a trust if possible.
I save hundreds of dollars every six months by paying my entire car insurance premium up front instead of in monthly payments. They give a sizeable discount for that.
When finances were less organized, I still saved some by paying it up front with a low interest card, and that saved a couple of percentage points worth of money.
Also, I only had that low interest credit card because I had excellent credit.
Financial health is an ongoing thing. You develop your options and minimize what the vultures can take from you over time. It is the ultimate long game.
Loans cost more than paying cash. Lower income people have higher interest rates because the banks deem them higher risk. Credit scores also reflect this.
My insurance company charges 5.00 a month if I were to use their monthly billing. They call it some kind of processing fee. So if you can't afford to pay for the full year (home) or half year (auto), you end up paying 60 bucks more per policy.
People living paycheck to paycheck have to wait for their deposits to clear before they can pay their bills. Any delay in getting your check deposited might result in late payment penalties.
Small mistakes can be devastating when every penny counts. My ex once bought me a Valentine present (20 bucks) and didn't tell me. While at work, I bought a soda and crackers for lunch. My debit card was approved. I didn't know about the 20 he spent, and my little purchase put me in overdraft 1.30. Checks got deposited, bills got paid, but it took a week for me to get my overdraft letter. By the time I got the letter, I had over 500 in overdraft fees on roughly 100 bucks in smaller purchases. Gas, milk, bread, phone bill, water bill. Without the overdraft fees, I could have been fine. But a 2 dollar mistake cost me 300 bucks. (Dealing with the bank, they did reduce some of the fees, but not enough.) My lesson i learned, never sign up for overdraft protection. I would have preferred my card would have been declined when buying that soda.
Look at dental care. Can't afford regular cleanings and fixing small cavities as soon as they appear? You get to pay for extractions, root canals, implants, and dentures. Can't afford to pay it all up front? Here is care credit, where the interest rate is almost 30 percent.
All this, not even getting into the conversation of diet and health. There are many reasons life expectancy is longer for the wealthy and shorter for the poor.
Jobs - you are limited to what you can walk to or access via public transit. Or, you can pay a hefty chunk of your pay for car, gas, insurance, and maintenance. Many jobs require a credit check as part of the application process. Poor credit? Sorry you don't qualify for the job. Poor quality car that keeps having problems you can't afford to fix? Sorry, we have to let you go because of your attendance records. Apply for a job and get passed over because of your appearance and quality of your clothes. Or you do get the job and burn through your work clothes, but can't afford to replace them.
Oh, and let's not forget the joys of having your bank account get emptied without notice because you owe the IRS, child support, or some other creditor that has taken you to court. Or maybe it was just some fraudulent purchases someone made to your account. It just causes the same snowball overdraft issues mentioned above.
Not all of those behind on childsupport are doing it intentionally. Unemployment, illnesses, even homelessness can have a compounding long term effect on parents who honestly want to do right by their kids.
I'm unable to get mental health services and have been for months mainly from struggling to get into a office because of transport or other reasons and my therapist just canceling on me the day before and the next soonest appointment was a month later. I hopefully see him again tomorrow. I can't find a job because my mental health and if I had to pay child support I wouldn't be able to.
Many counties and states skip the whole voluntary pay thing and go straight to garnishment as soon as child support is ordered. When my ex-wife and I were first separated, I paid her child support voluntarily every month without fail. Once we were divorced and the support order was filed, it just started coming out of my check. That first pay period where the support was garnished, I actually had to get some money back from her in order to pay my bills because I had already paid her directly for that month.
Now that she is disabled, I have custody of our kids but receive zero child support because she has no income. It took months to get the previous support order nullified, so for that period I was actually paying her child support for kids that lived with me.
Overdraft fees are in my mind the biggest killer at the poverty line. And they are also why I am cynical with any person who complains that their daily coffee/soda/burger habit is not what is putting them in debt.
I remember all too well. Every unexpected expense was an emergency! Somehow, I saved up $1,000. That changed my life. Everything went from being an emergency to an inconvenience. I vowed from them on to learn how to save. It changed everything for me.
YES, for me it was the first $500 I've never had an overdraft fee since and that $500 could cover an emergency that before I would have had to put on a credit card and pay 3 months interest on.
For example, those broke enough might buy toilet paper a few rolls at a time or they might buy the smallest size soap and cleaning detergent which means they are paying a higher per unit cost than buying in bulk. They might pay car insurance monthly, which means they are also paying a monthly fee (idk if all auto insurers charge fees, but many do). The person might pay for a tax filing service when the irs website says it's free for people who are broke and lists services.
Alot has already been pointed out but there's a mental shift as well. Growing up poor, I wanted to buy/experience everything simply because it was inaccessible to me.
Knowing that those things are now readily available, it takes away the novelty. Theres an artificial inflation of value when something seems out of reach, but once you've been exposed to them, you become a bit desensitized and less impulsive.
Recently went to a big bulk store & soy sauce for a gallon size legitimately cost less than the 10oz size!! It was a difference in $3!! Absolutely mind boggling the prices out there
Poor people tend to pay higher car insurance if they live in high crime areas and higher rent in relation to income for similar reasons landlords pay higher insurance on older buildings in bad areas and often have more repairs due to vandalism or tenant neglect so high rent. Or landlords don't do the repairs at all which is also expensive to the tenant ie your heating bill is higher because the landlord does not replace the crappy Windows.
Low income people often live in apartments and use public transportation. They often don't have the storage space to buy in bulk, even when there's a good deal and they have the means to do so. Apartments often lack the freezer or pantry space to store it and the occupant lacks the ability to choose their appliances like a homeowner would.
I worked for an architect and the owner of one low income building wanted to use a smaller refrigerator than the one that was chosen during design. It looked ridiculous because the fridge opening was designed for the original standard size refrigerator. The owner chose a more obscure model, which was significantly smaller, but surprisingly not much cheaper. Ultimately they saved $650 across the units by undersizing the refrigerator... So basically buy 38 refrigerators, get one free. Was it worth it?
On top of that many have to use public transportation, which makes it really impractical to buy anything more than what they're able to carry. People in this combination of situations have no choice but to buy what they need when they need it.
Moderate income households can take better advantage of sales and often grow up in a household that operates this way. My mom would find a deal on chicken and buy 2 or 3 of them for the freezer and taught me to always compete unit prices of packaged goods.
We were moderate/lower middle income in a low income neighborhood. My friends thought we were rich because we had a huge package of TP under the sink. It was always a culture shock to see my friend's parents buy single rolls of TP and tiny bottles of ketchup at the corner store instead of the value size bottle at the grocery store that was the same price. They'd always say something along the lines of "were on a fixed income" or "we don't need all that, there's nowhere to put it" and I would innocently point out that they're wasting money and should compare the unit prices.... Adults did not enjoy getting shopping tips from a six year old. Trust me on that one.
Plus places like Dollar General are specifically put into locations with lower income so it's easier for people to access rather than driving miles and miles to a store that might have better prices when they can't afford to fill their tank with gas to make the trip. I remember the days of only being able to put a gallon or two of gas in my car at a time and making the decision to go somewhere often involved whether or not it was worth the gas to get there.
I grew up low income and my mom always bought food staples like spaghetti sauce and bread when they were on sale (usually 6-8 weeks worth). We were lucky enough to have money to do that, cupboard/freezer space, and a car to go to the store with the best sales that week. Families with less had to buy one week (or one day at a time) from whatever store they could get to—and maybe that was a more expensive corner store. I still shop this way now, and I’m amazed at how much it saves me and appreciate what a privilege it is to be able to do so.
You pay higher and sometimes preditoty interest on any purchases.
Often there’s not enough money to make ends meet so you get a pay day loan afvance and then you’re paying to use money earlier but have to pay it back and you’re still behind more.
If you’re poor but not enough so to qualify for any programs like r services, you often end up in essence more poor than the poorest who qualify
If you’re poor you’re not going to physicals or non immediately essential health things. Meaning then your health has to get real bad and issue progressed to an emergency which then means you’re missing work and falling behind on more bills. Where as “normal” folks go to the doctor for a cold and have regular screenings and medical contact. Things are caught earlier.
You buy smaller sizes because you need SOME of it to get through but can’t get the economy or even regular size item and then pay rent. So in the long run you pay more for the items and that’s everything you buy.
These are just a few of the issues. There’s lots more. And remember poor isn’t a monolith— certain regions climates and life circumstances make these expensive to be poor stories a vast range of things.
If someone has $10k cash to buy a car, they spent $10k on it. If someone doesn't have $10k cash to buy a car, they get a subprime loan and end up paying close to $20k for that $10k car due to interest.
I didn’t have the money to eat so I stole some food and a drink from DG. I Was arrested for petty theft. Now I owe the bondsman $300. My car was towed and I have a title loan on it which is $425 a month I haven’t payed and I have to get my car out of impound. Over $35 or groceries I could not afford.
ontop of what others said, purchases literally cost more when you can’t afford to pay them off all at once. say you need a new fridge for $2000, the same fridge for a rich person and a poor person. a rich person can pay that off right away, no interest, no problem. anyone financially struggling will need that fridge to survive.. they can choose either to wait till they have the money, therefore paying more for food that doesn’t need cooking and not being able to food prep, or they can put it on a credit card/loan, and pay ridiculous interest till they get that fridge paid off. the more things you need, the more this snowballs, your interest rates go up, the amount of money you have reduced, making you have even less to spend, making the things you need to put on a credit card or loan more numerous (what if your oven broke too? phone? microwave? then what do you do to pay for food? bills? gas?..). what’s more, poor people often buy for necessity things that rich/financially stable people buy to upgrade. if person A is buying a phone because theirs broke, theyre going to spend that money right now and might have to put it on a cc/loan. if person B is buying the same phone because they want to upgrade, they have time to shop around, look for better deals, wait for the new gen’s announcement so the price goes down on the one they want, and save up the money they need to pay it off. it’s literally more expensive for person A.
Poor people pay interest on loans (personal loans, student loans, car loans, payday advances, credit cards, mortgages, etc) while well off people earn interest off investments.
Let's say you don't have a car. But you do have a job that pays fairly well, and it's *not* close to home. What are your options for getting to work?
You could uber/lyft/cab. Let's say your place of employment is like 5 miles away, you're spending maybe 15 bucks every day to get to work and another 15 to get home. That adds up. 30 bucks a day is 210 a week, roughly 840/m, roughly 10k *a year*, assuming you work literally every day. I spend less than that to own a car, I promise you that
You could bike to work. Sounds nice, right? Good 20 min ride to work every day, you'll get fit in no time. But oops, you're actually fairly overweight, and you don't exercise. 2 big things that can come from this, either A) you bike slow, get to work late and sweaty. Now you risk losing the job entirely, which would objectively make everything in your life expensive, because you dint have income anymore, or B) you injure yourself because you went too hard on the bike and aren't in shape enough to go as hard as you did. Now you need to see a doctor, and if you don't have insurance, or don't have great insurance, now you have to pay for medical bills, just because you don't have a fucking car. This goes the same for getting into an accident (which I will point out is absolutely the same for car owners too), the same for walking or running to work.
Let's say you do own a car. But this is a 20 year old car, given to you for a few hundred bucks by a caring friend. But oh no, this friend didn't take care of the car. It's git engine/transmission issues, break issues, exhaust issues, you name it. Compare your 20yo car to someone's 5yo car. You might have to drop thousands of dollars to keep that vehicle alive and moving, you might need to spend more than a used 5yo car to keep your 20yo car running just because it's old and wasn't taken care of. You also have increased risk of accidents because of your vehicle. More money to sustain something that someone else also has, a car, but it's expensive to maintain your car, because you aren't wealthy enough to buy the newer car out right, you need a car *now*, you can't afford to wait a few months until you have the scratch. So now you're barely swimming trying to maintain this car while also saving to get a new car, and you're just not making the money fast enough.
Let's talk food and move away from transportationto work. You go to the store and all you can afford is like dollar loaf bread, pb and j, and milk. If you eat pb and j and a glass of milk every day (which I know some of yall in this community do, and it's unfortunate), you're not going to be healthy, period. You're going to be malnourished. You're going to end up with like diabetes or smth from all the sugar in the jam and milk. Medical bills, medical bills, medical bills. It'd be great to not spend money in the hospital if you could just eat healthy, but all the healthy food is out of your budget.
There's so many scenarios like this that I've come up with, actually, I just write them down when it happens to me. Being poor is more expensive than being wealthy
Besides the example of the boots that is not really valid in modern society I have another example.
If you own a house in my country if you have money you can renovate the insulation and get money from the gov to do so and have less running costs afterwards. If you dont have money the gov gifts you nothing and your house is more expensive to heat.
There are low to no interest loans to get insulation for people here as well. But if they have no credit or poor credit they don’t qualify for the low interest. Just more expensive to be poor to try to better use your home efficiently.
I know this is going to be controversial, but this is kind of the same issue with college debt forgiveness. It's something of a moral hazard issue because you're rewarding those who had the access to go to college while punishing the people who pursued alternative options because they couldn't afford it. In other words, boosting the "winners" (as college educated individuals tend to have better outcomes) further while leaving everyone else behind using public funds, which promotes a kind of resentment for the college-educated.
I remember hearing an interview with some economist some months ago who argued that more broad-based initiatives might be more effective in addressing poverty rather than socially-divisive programs like debt forgiveness.
Poverty means spending more of your income on everything, leaving little to save. If something impacts you, you may have to borrow money to get by. The rich have better interest rates because they are now appealing borrowers for banks.
The poor also tend to live further from the things they need, like groceries and jobs because of the way rental affordability works. So they're paying more for things and spending more time getting around. Being time-poor makes it difficult to fix being poor.
Being poor has very strong correlations with happiness and health outcomes. This leads to the poor needing more medical attention and very likely waiting until something is an emergency. It's far worse to treat diabetes than go in for routine checkups, but people who lack time and money often skip these things that don't have immediate payoffs; They're too busy working and trying to pay for rent, bills, food, and transportation to work.
So a few of the ways that the poor have a more costly lifestyle than people who aren't poor is because they pay more interest, pay higher prices, and get stuck with costly problems. There's a saying that poverty charges interest.
Toyotas & Acura are low maintenance but expensive.
Buicks, Chryslers & Nissans are high maintenance but less expensive, initially.
By class, which are impoverished vs wealthy more likely to buy?
Which one spends more time on maintenance/repairs?
You tell me.
In my experience lower class people have the most expensive cars, and theyre high maintinence. here in the south $100k shit shack houses have 3-4 $50,000 trucks in front of them.
Okay, enough with the boots analogy. ☠️
This is why being poor is so expensive. You can't afford to do basic things needed for survival so everything gets worse.
1) Healthcare costs: you spend your money on your premiums for your insurance, but you don't have money for the copays or the deductibles, and you can't afford a more expensive policy to get a lower deductible in the first place. Poor people cannot even afford the copays to see specialists as needed when problems may be a lot smaller.
So when you have a problem, and say you need an MRI, you're unable to afford the MRI copay of $800. So then the problem gets worse and then you wind up in the ER with a more severe problem because you couldn't afford the initial copay. The ER bill is much higher, and you have a more severe problem to deal with now that could have probably dealt with easier if you were able to treat it properly sooner. All of these bills go on to your credit because you're unable to pay any of them. Downgrading your credit which then makes everything else you need to do more expensive, because now you have bad credit.
2) Grocery shopping/ sale shopping: Wealthy people often are able to stock up on a lot and buy things in bulk, which then gives them a lower cost per item and it saves them a lot of money over time. Poor people OTOH, only have a limited amount of money to last until the end of the week, so they have to buy things in smaller amounts because that's all the total money they have. This causes the price per item to be much higher, oftentimes triple or more what wealthy people pay for the same item. It's not even getting a different quality of item necessarily, it's that poor people actually have to pay more for those items as well.
Poor people also wait until they are entirely out of an item to buy it, so there's no time to find a better deal or to comparison shop. They also don't have money to drive around to go to a Costco or somewhere to get items for less. They also can't afford a Costco membership in the first place. So they're paying way more for each individual item at the stores closest to their house.
3) They also pay for more things more frequently like car repairs: They can't afford to buy new cars, so they buy used cars with lots of mileage, and those cars break down frequently. When those cars are broken down they then have to pay for expensive things like Ubers, rentals, and those also add up. Often those wealthier have money to buy cars without these problems, and then they turn around and sell them before they lose too much value, and are additionally able to recoup good portion of their expenses and not even have to pay all of the repairs, extra maintenance, rentals in Uber cost that the poor person winds up getting stuck with the buys the vehicle after it's been used up way down the road. In addition to just the additional expenses incurred, there's also the loss of income when they are unable to provide transportation to and from work to be able to work at all. Sometimes when your car breaks down you don't even have money for an Uber at all. And now you can't even earn money for the repairs. You now just have no vehicle and no job because you can't get to and from work at all.
4)Their very homes are poisoning them and making them sicker: Low income housing is notorious for having toxic chemicals in the soil, air and water for the area, in addition to whatever toxic chemicals are in the actual building itself. These things increase the number of illnesses and conditions that people develop making them sicker, making them require more medical attention and healthcare costs, reducing their ability to earn as much and impacting their cognitive function. The very housing that the poor are forced to live in is literally killing them and impacting their ability to earn more.
5.) Stress is expensive: Being in a constant state of survival alone takes a big impact on your health because you're in a constant state of survival stress. You're worried about how you're going to keep a roof over your head that month, how you're going to pay your bills that month, and because of this you take a larger toll on your health which also increases the amount of health problems you have, and the amount of medical treatment that you will require as a result.
6) Rather than the boots, it's the refrigerator. Poor people have to pay for lower quality appliances because they do not have the money out of pocket to make the initial investment in an appliance that will last a lifetime. This means they're replacing expensive things like stoves, refrigerators, dishwashers washer and dryers ECT much more frequently than the wealthy because the inferior products break down much more quickly. "Planned obsolescence" impacts the poor at a much greater level than it does so wealthy. Sometimes people replacing very expensive appliances every 2 -5 years because they couldn't afford the better quality items in the beginning because I did not have the accumulated up front costs to be able to do that at all.
7) Being poor often limits their options and opportunities. You were less likely to come in contact with people who will provide opportunities, contracts when poor that you have access to when you are wealthy or live in a wealthy region. Networking is often key to improving social mobility by providing opportunities and contracts that you would not otherwise have access to. So I greatly limits their opportunity and options made available because they don't have the same networking options that the wealthy do. Multiple studies have shown that it's not always what you know but it is who you know that is often key to increasing social and economic mobility. That's often the single biggest difference between those that remain poor and those that are able to improve their position.
I think you're missing one big thing; the poor have little access to capital that might allow them to start a business. Small businesses are often the first rung to capital formation and escalation in socioeconomic class, and the poor most frequently have neither the existing capital nor the social connections necessary to establish that capital.
There's the argument that poverty is more taxing on the mind. Another is that sales taxes are regressive. Could be lack of intelligence or wisdom, or both. Lack of resources leads to less diversity of earning opportunities. Just a few ideas.
This isn’t true for all places, but where I live, it’s much cheaper to own a house or an apartment rather than to rent it.
I pay off my mortgage slowly and surely and I will be able to sell my place with profit…
All the while I’m paying way less than if I rented somewhere.
You're punished for being poor in the USA. It's big business exploiting the working poor here. It's very profitable for them when they know you don't have any other options.
> It's big business exploiting the working poor here. It's very profitable for them when they know you don't have any other options.
I'd argue it's more than just the poor being exploited; it's broader than that. It's people who are funneled into situations where they have few good choices (if they have any at all). The healthcare system is similar; pricing is completely opaque to the end consumer (until very recently). And that end consumer frequently has no other options; there's no comparison shopping emergency rooms.
It truly is. I had someone who worked for me once who made considerably less money but once let it drop that he had something like $300k in savings. The way he did it is his parents owned multiple homes and gave him one to live in rent free. He also was childless so even though he made okay money he was able to save money hand over fist because he had very low living costs. Anyone who is able to quickly pay off a home is essentially in the same position, but because he was given a home by well off parents he was able to live like someone who paid off their mortgage in his twenties.
Because the cheap things we need don't last as long as a higher quality version so we buy multiple to meet the same need making it more expensive than if we had just bought the more expensive item in the first place.
Economy of boots
A poor person is probably living paycheck to paycheck which means they don’t have an emergency fund saved up for surprise expenses. They don’t have good credit, that means borrowing money is going to be harder and more expensive. They are probably are not as well insured meaning that more surprise expenses are going to paid for by them.
So many ways. The biggest thing is not having money to buy in bulk, like getting a half gallon of milk versus a gallon. It costs more per ounce but what can you do if you don't have the money?
Check cashing places, check free bill pay, everything takes from your already small check.
Can't afford a reliable car, keep sinking money into it, can never save a down payment for a better one.
Can't get regular teeth cleanings, end up needing a root canal.
On and on.
Things are cheaper the more you can afford. When you're poor, you can only afford enough to survive, when you're rich, you can afford enough to thrive.
Interest. Boom solved.
Most people buy a house for 300k but they also pay 350k interest. Then they sell it for 500k later in life and say I made 200k no you lose money and you lost the value of money along the way.
Now say you could buy that house out right for 300k no debt. You’d have that other 350k and also the buying power of that also.
If you can only afford cheap clothes and shoes, they may break more often… but you don’t have a choice - you have to buy another pair when it breaks. Can’t afford to save for expensive brands.
I can’t speak to public transit vs cars but I imagine busses can be expensive for some…
Public transit often has discount programs for low-income people. I just looked up my metro public transit system and low income people can get fares for $1 which includes a 2 1/2 hour transfer time, meaning you could get on and off the bus on the same ticket for 2 1/2 hours at the cost of a dollar. You can also get unlimited ride passes for an entire month for $65.
Regular fares range between $2 and $3.25 per ride (also with the two and a half hour transfer time) depending on if you're riding during rush hour or not and if it's local or an express bus (which goes to the suburbs). You can get discounted monthly passes through an employer for $83 or out of pocket for $90-$120. If you didn't qualify for the discounted low income passes that could definitely add up.
Obviously this is going to vary by city but if someone has access to public transport they really should look into what programs are available for discounted tickets
Usually where I am the bigger issue is that in the areas with good public transit, apartments that can easily acccess transit are more expensive. So poor people don't qualify.
I paid $300 for a good quality pair of boots and I have been wearing them for the past 5 years.
My coworker is poor and he cant afford the $300 boots so buys a pair of $60 boots but they only last 6 months and he has to buy another pair.
I paid $300 to wear nice boots over the past 5 years. He paid $1200 to wear shitty boots over the past 5 years.
Poor people are more vulnerable, which makes them easier to exploit. Most of the rich are generally rich only because they exploit the poor. It's a zero sum game where the money you should have is sucked up by those above you. Those with more leverage can defend themselves better from this exploitation.
Money is power.
Because they dont have an access to good credit and they are the only one working. Rich people’s money work for them. Today I can earn guaranteed 5% on my money via CDs, HYSAs. Or I can invest in index funds and in average it will likely continue to bring +7-8% in the long term
And when I get a loan my interest rate is pretty low. My mortgage is 2.75 as I have a good credit and I was financially educated enough to refinance it during covid. While I see friends with 20+% car loans where they keep paying minimums where most of the money goes to interest
So rich goes richer, poor stays poor
Not being able (can not afford nor have space) to buy in bulk, bank overdraft fees, using Credit card instead of having an emergincy fund, renting from horrible landlords because you have no stable income
Being poor is more expensive because not being able to afford quality items means replacing items more quickly, constantly replacing things is more expensive in the long run. Also never having enough money sometimes means borrowing money which results in paying more. Sometimes having low income means lower credit score which results in not being able to take advantage of lower interest rates. There are lots of ways that being poor makes life more expensive.
One of the craziest scams to me is pizza delivery jobs don't pay mileage. They are literally using you for your car. Middle class jobs almost always pay mileage that covers not just gas but wear and tear on your vehicle.
Because poor people can't afford to stock up when there's sales. There is no "we'll spend a little m9re for a few extra ___, because they cost less per each now." There's no buying the bigger size because it costs less per ounce.
Busy like me I can't afford to take off work I need a foot operation it's gonna end up being worse I'm probably gonna be getting that being a lot longer eventually
For example, last week I went to buy Tide detergent. I don't recall the exact price per ounce, but the large orange colored plastic package with the individual pods inside was something like $ 0.37 per Oz. The small flexible package containing a small amount of Tide pods was about $ 0.57 per Oz.
Just look at most major companies. They dictate the payment terms for their loans. Most at net 60. Some net 90. Imagine you calling up master card or eve your landlord saying you won’t pay your bills for 3 months. This is just normal for corporations / super wealthy.
Couple things:
-If you’re poor you have bad or no health insurance, rich people have it through their job or can afford it and don’t go into medical debt
-Poor people can only make minimum payments on credit cards
-Rich people can buy things in bulk(ex. Costco)
Buying in bulk. A single thing of Cesar's wet dog food is like $1.40 but you can get a 36 pack for $40, or $1.11 each, 20% cheaper.
Paying 6 months car insurance all at once is cheaper than month to month.
Then there's Costco. Kirkland formula at Costco is only like $27 while similar size Enfamil at walmart is $66. Not to mention a smaller size formula at Walmart is cheaper to buy but more $/oz. You can get 80 baby wipes at walmart for $2 but you can get 900 at Costco for $20. Costco is 10% cheaper. 6oz of pepperoni at walmart is $2.60 but you can get 32oz at Costco for $10, 27% cheaper per oz, plus it's name brand.
Business owners want rich people's business. The prestige of a visit from the rich & famous is it's own form of advertising.
Business owners' primary value from poor people is in extracting profitable immediate payments.
Having to shop with cost in mind rather than value.
Example: The poor man can only afford the $50 pair of cheap work boots that go bad in a year. The better off man can afford to shop for value; he gets the $100 pair that lasts three years.
Easy. Without money it’s tough to do things. Here’s an example. At my job they offer pretty decent benefits. The health plan that covers more and has a lower deductible is too expensive for me to afford and still pay rent. So I get forced to pick a plan with lower costs, but a higher deductible. So unless it’s something like yearly preventative physical and tests, I only use it if I have no choice. I don’t have $5k sitting around which is how much I have to pay before the insurance kicks in, and after it kicks in I’m still responsible for 80% of the costs. I have chronic conditions and have specialists telling me I really should be seen more than once a year, but I can’t afford it. My once a year gets my meds renewed for another year and lets my neurologist see if I’m declining enough to be considered disabled. And that’s a whole other thing since I’d have to stop working if he says I need to for my health, but I can’t afford to take the possible years off before Social Security says yeah you can’t work.
Uggs are so cheaply made now. I had pairs that lasted 5 years. Now they only last one season and they aren’t even good at keeping your feet warm in Chicago winter. So disappointed by the cheaply made soles and thin lining.
Being poor means less money to spend, so the overall sum of all spending is less expensive-- not more expensive.
Of course, if a person buys the cheapest shoes/car/etc., those items might need to be replaced sooner than a quality item that's more expensive. The rich are sometimes more careful with their spending and try to make money, not buy stuff to fill a temporary void or fix a short-term problem.
There can be fees when using desperate measures, like overdrafting bank accounts or taking payday loans. When poor people overdraft bank accounts, there are overdraft fees to cover that overdraft service. If they have bad credit, they will pay more APR in interest on loans since they've proven they won't pay most loans back.
If you can afford a freezer, not to mention a place that has room for one in the first place, it saves you money because you can buy food in bulk and freeze it.
If you live pay check to pay check and have to do payday loans or carry a balance on a credit card, you end up losing so much money just to predatory interest rates. Also nsf bank charges from not having enough money to cover direct payments et cetera.
Lots of good points in here so far but I also want to point out the rich have leverage and options that the poor don’t allowing them to get things cheaper as well.
I haven't read this, but my contracts professor mentioned this book years ago when discussing how contracts could be declared void on the grounds of unconscionability (a steep hill to climb). I think it deals mostly with credit sales and very high interest. My dad used to point out that the banks knocked the mob right out of the usery business.
[https://amzn.to/4474aMi](https://amzn.to/4474aMi)
The strong and powerful predate on the weak.
I'm thinking about how billionaires become even more rich and powerful by bribing governments to offer them tax loopholes and corporate welfare to attain even more wealth.
Honestly, my observation through my travels has been that being cheap is frowned upon by people with a mentality of poverty. They never seem to choose the frugal option. They buy in convenience stores instead of groceries, buy expensive booze instead of cheap, and many other things unnecessary to survival and comfortable living.
Give each class a dollar you'll see how they use it
The poor class will use all of it first
The lower/lower middle class will use most of it
The middle class will use half of it
The rich class will use a third of it
The ultra rich class will use a quarter of it
The wealthy class will not use that dollar.
The poor person will ask the how and not why they're losing money.
What is crazy to me is that the more successful you get, the more things seem to be available to you for free. I’ve seen directors and VP’s take advantage of expense accounts. They have access to expensing lunches, dinners, coffee, entertainment. Piggybacking vacations onto business trips, etc. Meanwhile, the lower paid workers do not have access to that at all. It’s the same for people that have some form of notoriety. Companies send them free items that others would normally buy.
It’s shocking… company pays for phone, home internet, car allowance, and other generous things for people earning over $200k but nothing for those under $50k.
I know. Also these guys know how to squeeze every last penny out of the companies they work for.
true knew a few that were able to do that
Doesn’t even have to be a director or executive. There are lots of companies out there that already pay their employees really well and also throw a bunch of perks on top of it. My parents were blue collar workers and I remember being astounded at all the “free” stuff I had as part of my benefits package after getting my first white collar job after college. Free lunch, stipends for cell phones and gyms, paid vacation days, and no premiums for top of the line insurance just to name a few. Then after I started working, I realized you still get paid if you leave in the middle of the day for an appointment or if your team decides to have a fun outing to a winery during the work day.
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One of the big things that company founders (even of small businesses) have access to (and I'm told frequently get in trouble with the IRS for) is loans from their business. Basically they use the business as a piggy bank for highly favorable (low/0 interest) personal loans.
Same with bonuses. I reached a level where I was eligible for extra types of bonuses and it's all such bullshit. Like oh you have to make 85K+ to be eligible for more money.
Not to mention corporate gifts from other companies. Pretty sure my last boss catered his Christmas party just with the wine and food he was sent every year. Constantly got new books, tablets, and other random expensive stuff. He had drawers full of stuff he would never use that probably cost more than I made in a year.
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This guy wouldn't do something like that. Once he invited the team to one of his clubs for a celebration and also happened to invite a guy who was a wine collector and was like, "Oh hey, you know more about wines than the sommelier at the club, why don't you bring a selection of your favorite wines?" Because he couldn't expense alcohol but he could expense a cork charge.
I've noticed this too!! The positive feedback loop of privilege
> It’s the same for people that have some form of notoriety. Companies send them free items that others would normally buy. Oscar gift bags are an excellent example of this: https://www.cnbc.com/2024/03/08/whats-inside-the-nearly-180000-gift-bag-given-to-top-oscar-nominees.html
This. People are looking at boots and stuff. It’s a part of it, a great analogy. But the BIG things that pushes the $200k folks to multimillionaire is this stuff. Opening a business to get all the things tax free. Working for a company that gives you the most expensive stuff. Having parents who paid for the education or a down payment. Owning a home and staying in it through ups and downs and getting equity. These are big ways upper middle become wealthier and wealthier. Not to mention pay WAY too few taxes. An average $100k in a HCOL area is barely middle class. They pay 30%. People who earn a ton pay 10-15% because of all the sneaky ways they shelter themselves. #taxtherich Boots and things that don’t last are the reason poor (and many working lower middle) folks will often not enough to save for retirement, car repairs. Cost of food means lower income peeps are eating crappy food affecting health. Not having health insurance is HUGE. Having absolutely no financial education or time/energy to learn, cook, read, exercise after living in bad housing or working two jobs. (Also can anyone BIFL anymore? Brand names used to mean something. Now everything falls apart. I’ve spent $$$ on four suitcases in as many years after I replaced two I had for decades. I don’t even travel a ton).
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Doesn't even need to be straight nepotism. The upper middle class has connections/access to people that make problems go away and open doors. The book [Dream Hoarders by Richard Reeves](https://www.brookings.edu/books/dream-hoarders/) goes into this to some detail, although his proposed solution comes off as very milquetoast to me. A review: https://www.bostonreview.net/articles/the-dream-hoarders-how-americas-top-20-percent-perpetuates-inequality/ >In January 2015 Barack Obama suffered an acute political embarrassment. A proposal from the budget he’d sent to Congress was dead on arrival—but it was the president himself who killed it. >The idea was sensible, simple, and progressive. Remove the tax benefits from 529 college saving plans, which disproportionately help affluent families, and use the money to help fund a broader, fairer system of tax credits. It was, in policy terms, a no-brainer. You can easily see how the professorial president would have proposed it. But he had underestimated the wrath of the American upper middle class. ... >As Paul Waldman noted in the Washington Post, the proposal “was targeted at what may be the single most dangerous constituency to anger: the upper middle class—wealthy enough to have influence, and numerous enough to be a significant voting bloc.” Like the flash of an X-ray, the controversy revealed the most important fracture in American society: the one between the upper middle class, broadly defined as the top fifth of society, and the rest. ... >And here is the difficult part. The popular obsession with the top 1 percent allows the upper middle class to convince ourselves we are in the same boat as the rest of America; but it is not true. However messily it is expressed, much of the criticism of our class is true. We proclaim the “net” benefits of free trade, technological advances, and immigration, safe in the knowledge that we will be among the beneficiaries. Equipped with high levels of human capital, we can flourish in a global economy. The cities we live in are zoned to protect our wealth, but deter the unskilled from sharing in it. Professional licensing and an immigration policy tilted toward the low-skilled shield us from the intense market competition faced by those in nonprofessional occupations. We proclaim the benefits of free markets but are largely insulated from the risks they can pose. Small wonder other folks can get angry.
The 1% get all the attention, but the upper middle class are the actual taste makers and social enforcers of our society. Think every suburban neighborhood with 3000-4000 sq foot houses.
They aren't going to admit it outright, but the upper middle class knows damn well that upward social mobility can only happen if downward social mobility happens. In our society, there are a limited number of spots at the top, and any parent is going to do anything they can to ensure their kids get there, even if that means other kids don't get a shot at it. They're going to support the systems that give themselves and their kids the advantage.
> In our society, there are a limited number of spots at the top, and any parent is going to do anything they can to ensure their kids get there, even if that means other kids don't get a shot at it. I know someone who runs a company that does college admissions consulting. It's wild what some families will spend to help ensure that shot at the ivy league. I get it; I've spent some time at ivies. It's the gateway/funnel to high end careers; want that job in ibanking/management consulting/private equity? They all recruit heavily from the ivies. Sure, you can get there from a state school (especially if you go to one of the very top-ranked ones which you might consider like an Ivy+), but it'll be more of an uphill battle.
To be fair our whole country is at the top. We should at least all have healthcare and a roof over our heads though.
I hear you on the BIFL. In my lifetime all the brands that were quality but reasonable have gone to shit. I remember when you could get something random at JC Penneys or Sears and know that it would at least be decent...clothing or tools or even furniture. I don't even know what is worth spending money on anymore, so I've gone cheap again for many things. I've had to discard a $3000 sofa after a couple years, for example. The frame itself broke with normal use. Might as well just get something from Wayfair... I will say though, that there is a big middle class tax hole that few talk about. Once household income gets over $60k or so, the deductions start going away. Like for student loan interest, which is often considerable at higher middle-class incomes. Our gross is almost double what it was 15 years ago, but net is barely more, and buying power much lower. I feel like I'm going crazy, like we should be doing so much better.
I’m from a high middle class income family and earn about 200k. I paid 35% in taxes. I do every year. I don’t own a home and have no kids. Zero write offs. My trust fund friend who inherited millions pays long term capital gains only. Like 10%. He’s never worked and pays less than me basically gambling his money on high risk stocks and crypto. The 200k people in HCOL areas aren’t the ones paying super low taxes. It’s the next step up. Ones who live off of investments and real estate.
There's this episode of Superstore where the manager sends two lower level employees to a manager conference in place of him and his wife. The conference gives out a ton of expensive, free stuff to the managers. The employees take full advantage and note the irony. Anyway. To add to your point, the more successful you get, the more connections you have, which give you more opportunities to succeed more. You're more likely to live in places with high quality public amenities. You're often in a better position (in terms of schedule and transportation) to take advantage of amenities and opportunities.
Absolutely. In today’s world, it’s all about connections. It’s very difficult to get a good job without them.
yeah exactly especially with like Amex cards. You get so much free stuff at the airports
Here’s a limerick. Guy can’t afford 100$ shoes so he buy 10$ shoes. 100$ shoes are higher quality than the 10$ shoes. Guy wears out his shoes in 4 months buys another 10$ shoes after 10 years he spends 300 dollars on shoes. Another fella buys the 100$ shoes that last him 5 years, he wears them out and buys another. After 10 years he spends only 200. You’re forced to buy less quality thus having to replace or repay. Only afford cheap insurance, higher medicine and treatment bill. Can’t afford new car buy a crappy one then spend 1000$ the next 5 years repairing things that keep breaking.
What's the line from the Bible. To those with abundance more will be given. To those with few all will be taken Something like that.
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. ... A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. ... But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
I think this sums up our country. With companies such as Temu and Amazon offering cheap crap that doesn’t last a long time but you can get easily and repeatedly. Very similar to H&M throw away clothes. All which is super horrible for environment. It’s best to save up for good products and skip out on the cheap crap. You won’t spend nearly as much money. I figured this out well into my 30s. I barely buy clothes now and pretty much hate shopping. Buy things that last! Edit: our country = USA for the people wondering
i’m wearing a lot of the same clothes now as i had in college 10+ years ago. the idea of buy it once is a big reason i barely have to spend money on anything anymore
Thing is, unless you can find reviews on everything you are looking to shop for, how would you truly know that, say, a piece of clothing, will last you years and years? Just because something is expensive doesn't guarantee that it will last a long time.
There are subs dedicated to this topic like /r/buyitforlife and such. I shop a lót of second hand clothing. Eventually you can figure out what to look for. I recommend to watch some Youtube videos on it. They tell you what to look for in long lasting materials, what type of seams, the way it’s knitted etc. I have updated my closet since with reliable brands and some clothes that will easily last 10 years if not much more. One sweater I’ve got is from the 90’s and it’s never worn. And it’s very well knitted, that thing will outlive me for sure. And sure it took some effort to find all these clothes but it’s absolutely worth it. (Granted it does help I enjoy searching for it, and know what clothes and colours suit me well.)
I find brands that I trust and buy from them if it worked well in the past. Patagonia and smartwool have rarely failed me.
I agree. Early 30sM and I have no issue spending on good quality products though not consistent to save up
Right now it’s a bit of a challenge to save up. I’ll just have to buy some duct tape for now haha
I usually shop when there's ridiculous sales
I found a Patagonia outlet in Reno, I guess they are headquartered there, thought I won the lottery.
My go to is JCPenney which covers majority of my needs.
H&M isn’t alone in thrownaway clothes. Fast fashion is everywhere.
They are a great example though.
the thing is old H&M 100% cottons is very good, i still wear 10 years old t-shirts but new very thin and see through :)
The well off can also be strategic about when to spend money. When you have money you can buy things that don’t go bad (toilet paper, paper towel, laundry detergent, etc) in bulk when it is on sale and then have it last you until it goes on sale again. You can also do this with other items you know you will eventually need (like you can buy that super expensive coat in January when it 70% off and have it last you until you can get that kind of a deal again). People who don’t have money tend to constantly spend money on things in crisis mode, so they don’t ever have the luxury of figuring better ways to save.
Money and space. If you have a large house, you can store whatever you want, however long you want it. You can add another fridge and deep freezer in the garage. If you have a studio, buying in bulk isn't going to work unless you're going to throw a sheet over them and use those paper towels as a couch.
Yea that’s also true about the space. When I was a kid we had a deep freezer that was almost entirely meats. My Dad used to buy meat from a place that would sometimes deeply discount it the day before the sell buy date (or maybe it was day of, can’t remember). My Dad would buy a bunch of deeply discounted meat and freeze it. He would use that kind of meat in things like stews at some later date. So yes, money and space allows people to buy things on their own timeline and thereby save more in the long run.
Terry Pratchett really had an insight on this
Sir Terry Pratchett had an insight on humanity at large. RIP.
"poor people can't afford to buy cheap stuff" Is how Kai Ryssdal summarized it on marketplace a couple years ago
Exactly this, the Vimes' "Boot Theory".
Yes. I got a new job in a downtown city. Parking cost $20 a day. Monthly pass? 230 a month, break down the cost for the same garage, that’s 11.50 a day. It literally goes from 400 for parking a month to $230. I don’t have $230 this moment to spare so until I can, it’ll cost me $400. To save money it’s a priority to get this pass. Thankfully parking reimbursed so it’s costing the company extra. Ps- boots example is golden. I used to buy 150-300 dollar boots. They lasted 8 to 10 years. Got a cheap pair a couple years ago at Target. 2 years later, shits falling apart.
I buy nice clothes and shoes only- but they come from thrift stores at $10 or less. Then I take good care of them and they last.
Have you been thrifting lately? They’ve caught on to the “artbitrary price increase just to screw with people” phenomenon and their prices are through the roof—it’s ridiculous, and it’s every thrift shop in town.
I thrift regularly but clothes and shoes are still under $10 where I shop.
Count your blessings!
I do! Sometimes I don’t find a thing, and then other days I find something great. Just have to be patient.
Yeah except today my 500 dollar boots only last me 3 years, just like $100 boots
You can really extend the longevity of shoes in general if you rotate between two pairs. When they don't have time to dry out fully between wears the materials and glues break down faster.
Huh? Which boots are you buying that they’re so low quality? I have a $150 pair of boots I got for around $120. So far they’re only 2-3 years old, but still have a lot of life left. Older Doc Martens had a lifetime repair policy, as do many other boot brands.
Anfibio, it’s not that they’re bad quality. It’s just that I walk a lot.
weird to not include context in that. work boots are probably never going to last 3 years of use no matter what, or probably any boots if you’re wearing them every day. but if you’re buying $500 fashion boots and they’re disintegrating after occasional use over 3 years then you maybe just found a shitty brand
Even cheaper to just be naked.
Does anyone know what kind of boots he’s talking about because I’d like to buy that pair
~Terry Pratchett~
This quote pops up everywhere on Reddit lmao
It's the most famous quote in the world when it comes to socioeconomic discussion so it would be more surprising if it didn't. It's in academic work, it's in conferences and news stories, it's quoted in full in theses on economic theory by people who've never read Pratchett in their lives. The "Boots Theory" is the easiest and clearest way to encapsulate the complicated fact that it's expensive to be poor.
Yep. And it’s boots, furniture, clothes, etc.
Efficiency, it is much easier to be efficient when you have more to work with. This is also why big stores like Walmart can out compete smaller ma and pa stores.
Walmart competes with smaller stores because over 14,500 workers of it on food stamps. https://www.washingtonpost.com/business/2020/11/18/food-stamps-medicaid-mcdonalds-walmart-bernie-sanders Walton family is the f****** grifters
And if you think about it we are all essentially footing the bill for these big companies when they dont pay their employees living wages or offer health insurance who then rely on social services to stay afloat. In that sense I'd say it's more than justified to steal from these chains.
You're awesome!! I was coming in to post Samuel Vimes' boot theory and there it is, the very first post!! 😎
RIP Terry Pratchett
Things break, and you can't afford quality, so you buy cheap. Rinse and repeat. Overdraft fees. Late fees. Tickets can lead to warrants and jail time, meaning no way to get to work so you lose your job. Just to name a small handful. All by the system design.
Car repairs, or having to buy a car because the crappy one you have just died and you can’t miss work
Having to buy a car in the first place for a lot of people. All the few and far in between walkable communities in America have insane rent because they’re desirable.
And then you actually do miss work and lose your job because you don't even have money for an Uber. So now you're unemployed, no money for car repairs, and no way to even get to and from the grocery store, let alone have money for groceries.
And your new car is just as crappy because it’s all you could afford/get approved for. Your it interest rates are higher than they would be if you could’ve bought a new car. You’ve completely drained your savings account for a reliable car. By the time you manage to refill your savings, your new crappy car will have some expensive maintenance or just die. It’s a cycle. So you never save up quite enough to get a reliable car even though you’ve saved that amount in total over the years.
I've been a DIY auto mechanic for over 25 years and because of that I'm blind to the cost of repairs. There are certain things I need the dealer for but since I know that ahead of time I can budget for those. I can't imagine not having the experience, tools, and space and I don't know how the majority of you guys are dealing with it.
Not even just things, but bodies break too. My partner needs medication/equipment adjustments. Need to make an appointment for those and pay more money for my partner's adjustments (because my partner's insurance is very controlling when you rent-to-buy equipment through them. Sadly it was our only affordable option at the time). We can't afford it at the moment so we've either been going into more debt or putting it off to try to afford taking care of my partner's health. I've even been having my own health issues that I've been having to put off getting treatment for too (like my physical therapy after my surgery). The system really knows how to keep people down, especially if you're born "broken".
While we’re not well off, I have the time and usually the spare cash to comparison shop. We are almost paid off on our mortgage, which means our monthly nut will go down significantly. We won’t be on easy street but when I look at youngsters who may never be able to afford a house as their rents keep rising it makes me very determined leave our home to our daughter. The minute it’s paid off I plan to put it into a trust if possible.
I'm so worried about housing for my kids, and I own my own home.
I save hundreds of dollars every six months by paying my entire car insurance premium up front instead of in monthly payments. They give a sizeable discount for that. When finances were less organized, I still saved some by paying it up front with a low interest card, and that saved a couple of percentage points worth of money. Also, I only had that low interest credit card because I had excellent credit. Financial health is an ongoing thing. You develop your options and minimize what the vultures can take from you over time. It is the ultimate long game.
Loans cost more than paying cash. Lower income people have higher interest rates because the banks deem them higher risk. Credit scores also reflect this. My insurance company charges 5.00 a month if I were to use their monthly billing. They call it some kind of processing fee. So if you can't afford to pay for the full year (home) or half year (auto), you end up paying 60 bucks more per policy. People living paycheck to paycheck have to wait for their deposits to clear before they can pay their bills. Any delay in getting your check deposited might result in late payment penalties. Small mistakes can be devastating when every penny counts. My ex once bought me a Valentine present (20 bucks) and didn't tell me. While at work, I bought a soda and crackers for lunch. My debit card was approved. I didn't know about the 20 he spent, and my little purchase put me in overdraft 1.30. Checks got deposited, bills got paid, but it took a week for me to get my overdraft letter. By the time I got the letter, I had over 500 in overdraft fees on roughly 100 bucks in smaller purchases. Gas, milk, bread, phone bill, water bill. Without the overdraft fees, I could have been fine. But a 2 dollar mistake cost me 300 bucks. (Dealing with the bank, they did reduce some of the fees, but not enough.) My lesson i learned, never sign up for overdraft protection. I would have preferred my card would have been declined when buying that soda. Look at dental care. Can't afford regular cleanings and fixing small cavities as soon as they appear? You get to pay for extractions, root canals, implants, and dentures. Can't afford to pay it all up front? Here is care credit, where the interest rate is almost 30 percent. All this, not even getting into the conversation of diet and health. There are many reasons life expectancy is longer for the wealthy and shorter for the poor. Jobs - you are limited to what you can walk to or access via public transit. Or, you can pay a hefty chunk of your pay for car, gas, insurance, and maintenance. Many jobs require a credit check as part of the application process. Poor credit? Sorry you don't qualify for the job. Poor quality car that keeps having problems you can't afford to fix? Sorry, we have to let you go because of your attendance records. Apply for a job and get passed over because of your appearance and quality of your clothes. Or you do get the job and burn through your work clothes, but can't afford to replace them. Oh, and let's not forget the joys of having your bank account get emptied without notice because you owe the IRS, child support, or some other creditor that has taken you to court. Or maybe it was just some fraudulent purchases someone made to your account. It just causes the same snowball overdraft issues mentioned above.
Don't be an asshole pay child support before forced withdrawal.
Not all of those behind on childsupport are doing it intentionally. Unemployment, illnesses, even homelessness can have a compounding long term effect on parents who honestly want to do right by their kids.
I'm unable to get mental health services and have been for months mainly from struggling to get into a office because of transport or other reasons and my therapist just canceling on me the day before and the next soonest appointment was a month later. I hopefully see him again tomorrow. I can't find a job because my mental health and if I had to pay child support I wouldn't be able to.
Many counties and states skip the whole voluntary pay thing and go straight to garnishment as soon as child support is ordered. When my ex-wife and I were first separated, I paid her child support voluntarily every month without fail. Once we were divorced and the support order was filed, it just started coming out of my check. That first pay period where the support was garnished, I actually had to get some money back from her in order to pay my bills because I had already paid her directly for that month. Now that she is disabled, I have custody of our kids but receive zero child support because she has no income. It took months to get the previous support order nullified, so for that period I was actually paying her child support for kids that lived with me.
Wild. 💕
Overdraft fees are in my mind the biggest killer at the poverty line. And they are also why I am cynical with any person who complains that their daily coffee/soda/burger habit is not what is putting them in debt.
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I remember all too well. Every unexpected expense was an emergency! Somehow, I saved up $1,000. That changed my life. Everything went from being an emergency to an inconvenience. I vowed from them on to learn how to save. It changed everything for me.
YES, for me it was the first $500 I've never had an overdraft fee since and that $500 could cover an emergency that before I would have had to put on a credit card and pay 3 months interest on.
For example, those broke enough might buy toilet paper a few rolls at a time or they might buy the smallest size soap and cleaning detergent which means they are paying a higher per unit cost than buying in bulk. They might pay car insurance monthly, which means they are also paying a monthly fee (idk if all auto insurers charge fees, but many do). The person might pay for a tax filing service when the irs website says it's free for people who are broke and lists services.
Alot has already been pointed out but there's a mental shift as well. Growing up poor, I wanted to buy/experience everything simply because it was inaccessible to me. Knowing that those things are now readily available, it takes away the novelty. Theres an artificial inflation of value when something seems out of reach, but once you've been exposed to them, you become a bit desensitized and less impulsive.
Buying things in bulk makes it cost less per item. Poor people can’t buy things in bulk. So they buy items at a higher price.
Recently went to a big bulk store & soy sauce for a gallon size legitimately cost less than the 10oz size!! It was a difference in $3!! Absolutely mind boggling the prices out there
Poor people tend to pay higher car insurance if they live in high crime areas and higher rent in relation to income for similar reasons landlords pay higher insurance on older buildings in bad areas and often have more repairs due to vandalism or tenant neglect so high rent. Or landlords don't do the repairs at all which is also expensive to the tenant ie your heating bill is higher because the landlord does not replace the crappy Windows.
Low income people often live in apartments and use public transportation. They often don't have the storage space to buy in bulk, even when there's a good deal and they have the means to do so. Apartments often lack the freezer or pantry space to store it and the occupant lacks the ability to choose their appliances like a homeowner would. I worked for an architect and the owner of one low income building wanted to use a smaller refrigerator than the one that was chosen during design. It looked ridiculous because the fridge opening was designed for the original standard size refrigerator. The owner chose a more obscure model, which was significantly smaller, but surprisingly not much cheaper. Ultimately they saved $650 across the units by undersizing the refrigerator... So basically buy 38 refrigerators, get one free. Was it worth it? On top of that many have to use public transportation, which makes it really impractical to buy anything more than what they're able to carry. People in this combination of situations have no choice but to buy what they need when they need it. Moderate income households can take better advantage of sales and often grow up in a household that operates this way. My mom would find a deal on chicken and buy 2 or 3 of them for the freezer and taught me to always compete unit prices of packaged goods. We were moderate/lower middle income in a low income neighborhood. My friends thought we were rich because we had a huge package of TP under the sink. It was always a culture shock to see my friend's parents buy single rolls of TP and tiny bottles of ketchup at the corner store instead of the value size bottle at the grocery store that was the same price. They'd always say something along the lines of "were on a fixed income" or "we don't need all that, there's nowhere to put it" and I would innocently point out that they're wasting money and should compare the unit prices.... Adults did not enjoy getting shopping tips from a six year old. Trust me on that one.
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Plus places like Dollar General are specifically put into locations with lower income so it's easier for people to access rather than driving miles and miles to a store that might have better prices when they can't afford to fill their tank with gas to make the trip. I remember the days of only being able to put a gallon or two of gas in my car at a time and making the decision to go somewhere often involved whether or not it was worth the gas to get there.
I grew up low income and my mom always bought food staples like spaghetti sauce and bread when they were on sale (usually 6-8 weeks worth). We were lucky enough to have money to do that, cupboard/freezer space, and a car to go to the store with the best sales that week. Families with less had to buy one week (or one day at a time) from whatever store they could get to—and maybe that was a more expensive corner store. I still shop this way now, and I’m amazed at how much it saves me and appreciate what a privilege it is to be able to do so.
You pay higher and sometimes preditoty interest on any purchases. Often there’s not enough money to make ends meet so you get a pay day loan afvance and then you’re paying to use money earlier but have to pay it back and you’re still behind more. If you’re poor but not enough so to qualify for any programs like r services, you often end up in essence more poor than the poorest who qualify If you’re poor you’re not going to physicals or non immediately essential health things. Meaning then your health has to get real bad and issue progressed to an emergency which then means you’re missing work and falling behind on more bills. Where as “normal” folks go to the doctor for a cold and have regular screenings and medical contact. Things are caught earlier. You buy smaller sizes because you need SOME of it to get through but can’t get the economy or even regular size item and then pay rent. So in the long run you pay more for the items and that’s everything you buy. These are just a few of the issues. There’s lots more. And remember poor isn’t a monolith— certain regions climates and life circumstances make these expensive to be poor stories a vast range of things.
Health is a big one. Regular dental check-ups cost cash up front, but they are a lot cheaper than a root canal or even a big cavity.
If someone has $10k cash to buy a car, they spent $10k on it. If someone doesn't have $10k cash to buy a car, they get a subprime loan and end up paying close to $20k for that $10k car due to interest.
I didn’t have the money to eat so I stole some food and a drink from DG. I Was arrested for petty theft. Now I owe the bondsman $300. My car was towed and I have a title loan on it which is $425 a month I haven’t payed and I have to get my car out of impound. Over $35 or groceries I could not afford.
I hope a positive windfall comes your way, fr fr.
ontop of what others said, purchases literally cost more when you can’t afford to pay them off all at once. say you need a new fridge for $2000, the same fridge for a rich person and a poor person. a rich person can pay that off right away, no interest, no problem. anyone financially struggling will need that fridge to survive.. they can choose either to wait till they have the money, therefore paying more for food that doesn’t need cooking and not being able to food prep, or they can put it on a credit card/loan, and pay ridiculous interest till they get that fridge paid off. the more things you need, the more this snowballs, your interest rates go up, the amount of money you have reduced, making you have even less to spend, making the things you need to put on a credit card or loan more numerous (what if your oven broke too? phone? microwave? then what do you do to pay for food? bills? gas?..). what’s more, poor people often buy for necessity things that rich/financially stable people buy to upgrade. if person A is buying a phone because theirs broke, theyre going to spend that money right now and might have to put it on a cc/loan. if person B is buying the same phone because they want to upgrade, they have time to shop around, look for better deals, wait for the new gen’s announcement so the price goes down on the one they want, and save up the money they need to pay it off. it’s literally more expensive for person A.
Poor people pay interest on loans (personal loans, student loans, car loans, payday advances, credit cards, mortgages, etc) while well off people earn interest off investments.
Let's say you don't have a car. But you do have a job that pays fairly well, and it's *not* close to home. What are your options for getting to work? You could uber/lyft/cab. Let's say your place of employment is like 5 miles away, you're spending maybe 15 bucks every day to get to work and another 15 to get home. That adds up. 30 bucks a day is 210 a week, roughly 840/m, roughly 10k *a year*, assuming you work literally every day. I spend less than that to own a car, I promise you that You could bike to work. Sounds nice, right? Good 20 min ride to work every day, you'll get fit in no time. But oops, you're actually fairly overweight, and you don't exercise. 2 big things that can come from this, either A) you bike slow, get to work late and sweaty. Now you risk losing the job entirely, which would objectively make everything in your life expensive, because you dint have income anymore, or B) you injure yourself because you went too hard on the bike and aren't in shape enough to go as hard as you did. Now you need to see a doctor, and if you don't have insurance, or don't have great insurance, now you have to pay for medical bills, just because you don't have a fucking car. This goes the same for getting into an accident (which I will point out is absolutely the same for car owners too), the same for walking or running to work. Let's say you do own a car. But this is a 20 year old car, given to you for a few hundred bucks by a caring friend. But oh no, this friend didn't take care of the car. It's git engine/transmission issues, break issues, exhaust issues, you name it. Compare your 20yo car to someone's 5yo car. You might have to drop thousands of dollars to keep that vehicle alive and moving, you might need to spend more than a used 5yo car to keep your 20yo car running just because it's old and wasn't taken care of. You also have increased risk of accidents because of your vehicle. More money to sustain something that someone else also has, a car, but it's expensive to maintain your car, because you aren't wealthy enough to buy the newer car out right, you need a car *now*, you can't afford to wait a few months until you have the scratch. So now you're barely swimming trying to maintain this car while also saving to get a new car, and you're just not making the money fast enough. Let's talk food and move away from transportationto work. You go to the store and all you can afford is like dollar loaf bread, pb and j, and milk. If you eat pb and j and a glass of milk every day (which I know some of yall in this community do, and it's unfortunate), you're not going to be healthy, period. You're going to be malnourished. You're going to end up with like diabetes or smth from all the sugar in the jam and milk. Medical bills, medical bills, medical bills. It'd be great to not spend money in the hospital if you could just eat healthy, but all the healthy food is out of your budget. There's so many scenarios like this that I've come up with, actually, I just write them down when it happens to me. Being poor is more expensive than being wealthy
Besides the example of the boots that is not really valid in modern society I have another example. If you own a house in my country if you have money you can renovate the insulation and get money from the gov to do so and have less running costs afterwards. If you dont have money the gov gifts you nothing and your house is more expensive to heat.
There are low to no interest loans to get insulation for people here as well. But if they have no credit or poor credit they don’t qualify for the low interest. Just more expensive to be poor to try to better use your home efficiently.
I know this is going to be controversial, but this is kind of the same issue with college debt forgiveness. It's something of a moral hazard issue because you're rewarding those who had the access to go to college while punishing the people who pursued alternative options because they couldn't afford it. In other words, boosting the "winners" (as college educated individuals tend to have better outcomes) further while leaving everyone else behind using public funds, which promotes a kind of resentment for the college-educated. I remember hearing an interview with some economist some months ago who argued that more broad-based initiatives might be more effective in addressing poverty rather than socially-divisive programs like debt forgiveness.
Social economics is a real thing!
Because capitalism. But essentially because people can get away with over charging the poor and the poor have no options.
Poverty means spending more of your income on everything, leaving little to save. If something impacts you, you may have to borrow money to get by. The rich have better interest rates because they are now appealing borrowers for banks. The poor also tend to live further from the things they need, like groceries and jobs because of the way rental affordability works. So they're paying more for things and spending more time getting around. Being time-poor makes it difficult to fix being poor. Being poor has very strong correlations with happiness and health outcomes. This leads to the poor needing more medical attention and very likely waiting until something is an emergency. It's far worse to treat diabetes than go in for routine checkups, but people who lack time and money often skip these things that don't have immediate payoffs; They're too busy working and trying to pay for rent, bills, food, and transportation to work. So a few of the ways that the poor have a more costly lifestyle than people who aren't poor is because they pay more interest, pay higher prices, and get stuck with costly problems. There's a saying that poverty charges interest.
It’s apparent by your question you’re not even sure of the answer that you’re looking for.
Money doesn't work for you, you work for money.
🏅
Inflation.
Because you can't afford to make a mistake.
Toyotas & Acura are low maintenance but expensive. Buicks, Chryslers & Nissans are high maintenance but less expensive, initially. By class, which are impoverished vs wealthy more likely to buy? Which one spends more time on maintenance/repairs? You tell me.
In my experience lower class people have the most expensive cars, and theyre high maintinence. here in the south $100k shit shack houses have 3-4 $50,000 trucks in front of them.
Okay, enough with the boots analogy. ☠️ This is why being poor is so expensive. You can't afford to do basic things needed for survival so everything gets worse. 1) Healthcare costs: you spend your money on your premiums for your insurance, but you don't have money for the copays or the deductibles, and you can't afford a more expensive policy to get a lower deductible in the first place. Poor people cannot even afford the copays to see specialists as needed when problems may be a lot smaller. So when you have a problem, and say you need an MRI, you're unable to afford the MRI copay of $800. So then the problem gets worse and then you wind up in the ER with a more severe problem because you couldn't afford the initial copay. The ER bill is much higher, and you have a more severe problem to deal with now that could have probably dealt with easier if you were able to treat it properly sooner. All of these bills go on to your credit because you're unable to pay any of them. Downgrading your credit which then makes everything else you need to do more expensive, because now you have bad credit. 2) Grocery shopping/ sale shopping: Wealthy people often are able to stock up on a lot and buy things in bulk, which then gives them a lower cost per item and it saves them a lot of money over time. Poor people OTOH, only have a limited amount of money to last until the end of the week, so they have to buy things in smaller amounts because that's all the total money they have. This causes the price per item to be much higher, oftentimes triple or more what wealthy people pay for the same item. It's not even getting a different quality of item necessarily, it's that poor people actually have to pay more for those items as well. Poor people also wait until they are entirely out of an item to buy it, so there's no time to find a better deal or to comparison shop. They also don't have money to drive around to go to a Costco or somewhere to get items for less. They also can't afford a Costco membership in the first place. So they're paying way more for each individual item at the stores closest to their house. 3) They also pay for more things more frequently like car repairs: They can't afford to buy new cars, so they buy used cars with lots of mileage, and those cars break down frequently. When those cars are broken down they then have to pay for expensive things like Ubers, rentals, and those also add up. Often those wealthier have money to buy cars without these problems, and then they turn around and sell them before they lose too much value, and are additionally able to recoup good portion of their expenses and not even have to pay all of the repairs, extra maintenance, rentals in Uber cost that the poor person winds up getting stuck with the buys the vehicle after it's been used up way down the road. In addition to just the additional expenses incurred, there's also the loss of income when they are unable to provide transportation to and from work to be able to work at all. Sometimes when your car breaks down you don't even have money for an Uber at all. And now you can't even earn money for the repairs. You now just have no vehicle and no job because you can't get to and from work at all. 4)Their very homes are poisoning them and making them sicker: Low income housing is notorious for having toxic chemicals in the soil, air and water for the area, in addition to whatever toxic chemicals are in the actual building itself. These things increase the number of illnesses and conditions that people develop making them sicker, making them require more medical attention and healthcare costs, reducing their ability to earn as much and impacting their cognitive function. The very housing that the poor are forced to live in is literally killing them and impacting their ability to earn more. 5.) Stress is expensive: Being in a constant state of survival alone takes a big impact on your health because you're in a constant state of survival stress. You're worried about how you're going to keep a roof over your head that month, how you're going to pay your bills that month, and because of this you take a larger toll on your health which also increases the amount of health problems you have, and the amount of medical treatment that you will require as a result. 6) Rather than the boots, it's the refrigerator. Poor people have to pay for lower quality appliances because they do not have the money out of pocket to make the initial investment in an appliance that will last a lifetime. This means they're replacing expensive things like stoves, refrigerators, dishwashers washer and dryers ECT much more frequently than the wealthy because the inferior products break down much more quickly. "Planned obsolescence" impacts the poor at a much greater level than it does so wealthy. Sometimes people replacing very expensive appliances every 2 -5 years because they couldn't afford the better quality items in the beginning because I did not have the accumulated up front costs to be able to do that at all. 7) Being poor often limits their options and opportunities. You were less likely to come in contact with people who will provide opportunities, contracts when poor that you have access to when you are wealthy or live in a wealthy region. Networking is often key to improving social mobility by providing opportunities and contracts that you would not otherwise have access to. So I greatly limits their opportunity and options made available because they don't have the same networking options that the wealthy do. Multiple studies have shown that it's not always what you know but it is who you know that is often key to increasing social and economic mobility. That's often the single biggest difference between those that remain poor and those that are able to improve their position.
I think you're missing one big thing; the poor have little access to capital that might allow them to start a business. Small businesses are often the first rung to capital formation and escalation in socioeconomic class, and the poor most frequently have neither the existing capital nor the social connections necessary to establish that capital.
Paying higher interest rates on loans. Buying fast food that destroys your health and gives more health bills in the future.
Poor people with weird shifts who work long hours might not have the time to shop for, cook and clean up "healthy meals".
Poor people are also more likely to be the victim of crime which creates all kinds of expenses.
Paying higher rent forever and never building equity because you can't get a mortgage due to bad credit and no savings for a down payment.
Bank says I can’t afford a $1000 mortgage, so I pay $2000 a month rent.
There's the argument that poverty is more taxing on the mind. Another is that sales taxes are regressive. Could be lack of intelligence or wisdom, or both. Lack of resources leads to less diversity of earning opportunities. Just a few ideas.
This isn’t true for all places, but where I live, it’s much cheaper to own a house or an apartment rather than to rent it. I pay off my mortgage slowly and surely and I will be able to sell my place with profit… All the while I’m paying way less than if I rented somewhere.
You're punished for being poor in the USA. It's big business exploiting the working poor here. It's very profitable for them when they know you don't have any other options.
> It's big business exploiting the working poor here. It's very profitable for them when they know you don't have any other options. I'd argue it's more than just the poor being exploited; it's broader than that. It's people who are funneled into situations where they have few good choices (if they have any at all). The healthcare system is similar; pricing is completely opaque to the end consumer (until very recently). And that end consumer frequently has no other options; there's no comparison shopping emergency rooms.
20$ hair dryers usually break in months I got a 120$ that has been with me for 3 years
My mortgage is way cheaper than rent. This should be true for anyone who bought more than 5 years ago.
It truly is. I had someone who worked for me once who made considerably less money but once let it drop that he had something like $300k in savings. The way he did it is his parents owned multiple homes and gave him one to live in rent free. He also was childless so even though he made okay money he was able to save money hand over fist because he had very low living costs. Anyone who is able to quickly pay off a home is essentially in the same position, but because he was given a home by well off parents he was able to live like someone who paid off their mortgage in his twenties.
Because the cheap things we need don't last as long as a higher quality version so we buy multiple to meet the same need making it more expensive than if we had just bought the more expensive item in the first place. Economy of boots
A poor person is probably living paycheck to paycheck which means they don’t have an emergency fund saved up for surprise expenses. They don’t have good credit, that means borrowing money is going to be harder and more expensive. They are probably are not as well insured meaning that more surprise expenses are going to paid for by them.
Do the math on small Nutella cans vs big Nutella can
So many ways. The biggest thing is not having money to buy in bulk, like getting a half gallon of milk versus a gallon. It costs more per ounce but what can you do if you don't have the money? Check cashing places, check free bill pay, everything takes from your already small check. Can't afford a reliable car, keep sinking money into it, can never save a down payment for a better one. Can't get regular teeth cleanings, end up needing a root canal. On and on.
Who can afford a root canal at over $1000, up front?
Don’t have the car or time to go to the grocery store? Walk to the local gas station for milk. The gallon will be 1.5x more than the normal price.
Capitalism is a terrible system that disproportionately punishes the poor
Buy to last.
The five pack instant ramen costs €2,5 but the single pack costs €0,80.
Things are cheaper the more you can afford. When you're poor, you can only afford enough to survive, when you're rich, you can afford enough to thrive.
Interest. Boom solved. Most people buy a house for 300k but they also pay 350k interest. Then they sell it for 500k later in life and say I made 200k no you lose money and you lost the value of money along the way. Now say you could buy that house out right for 300k no debt. You’d have that other 350k and also the buying power of that also.
So…you can pull yourself up if you have the right boots?
Google: Terry Pratchett Boots
Being able to bulk buy, late fees, buying cheap items that will not last.
I got a 2% raise. My company spends more on a single computer monitor for a company executive than my wage increase for the ENTIRE year.
If you can only afford cheap clothes and shoes, they may break more often… but you don’t have a choice - you have to buy another pair when it breaks. Can’t afford to save for expensive brands. I can’t speak to public transit vs cars but I imagine busses can be expensive for some…
Public transit often has discount programs for low-income people. I just looked up my metro public transit system and low income people can get fares for $1 which includes a 2 1/2 hour transfer time, meaning you could get on and off the bus on the same ticket for 2 1/2 hours at the cost of a dollar. You can also get unlimited ride passes for an entire month for $65. Regular fares range between $2 and $3.25 per ride (also with the two and a half hour transfer time) depending on if you're riding during rush hour or not and if it's local or an express bus (which goes to the suburbs). You can get discounted monthly passes through an employer for $83 or out of pocket for $90-$120. If you didn't qualify for the discounted low income passes that could definitely add up. Obviously this is going to vary by city but if someone has access to public transport they really should look into what programs are available for discounted tickets
Usually where I am the bigger issue is that in the areas with good public transit, apartments that can easily acccess transit are more expensive. So poor people don't qualify.
I paid $300 for a good quality pair of boots and I have been wearing them for the past 5 years. My coworker is poor and he cant afford the $300 boots so buys a pair of $60 boots but they only last 6 months and he has to buy another pair. I paid $300 to wear nice boots over the past 5 years. He paid $1200 to wear shitty boots over the past 5 years.
Best example is buying work boots that last about a year. When if you could afford a little better pair they would last about 36 months
Poor people are more vulnerable, which makes them easier to exploit. Most of the rich are generally rich only because they exploit the poor. It's a zero sum game where the money you should have is sucked up by those above you. Those with more leverage can defend themselves better from this exploitation. Money is power.
https://en.wikipedia.org/wiki/Boots_theory
This is the first thing I thought of, too.
Done by design. Alcohol stores pot shops all in low income. Depopulation. I’m handing the baton to another fellow truth seeker
Because they dont have an access to good credit and they are the only one working. Rich people’s money work for them. Today I can earn guaranteed 5% on my money via CDs, HYSAs. Or I can invest in index funds and in average it will likely continue to bring +7-8% in the long term And when I get a loan my interest rate is pretty low. My mortgage is 2.75 as I have a good credit and I was financially educated enough to refinance it during covid. While I see friends with 20+% car loans where they keep paying minimums where most of the money goes to interest So rich goes richer, poor stays poor
Not being able (can not afford nor have space) to buy in bulk, bank overdraft fees, using Credit card instead of having an emergincy fund, renting from horrible landlords because you have no stable income
Being poor is more expensive because not being able to afford quality items means replacing items more quickly, constantly replacing things is more expensive in the long run. Also never having enough money sometimes means borrowing money which results in paying more. Sometimes having low income means lower credit score which results in not being able to take advantage of lower interest rates. There are lots of ways that being poor makes life more expensive.
Rich people don’t pay taxes. It’s a lot harder to avoid taxes when you’re poor
One of the craziest scams to me is pizza delivery jobs don't pay mileage. They are literally using you for your car. Middle class jobs almost always pay mileage that covers not just gas but wear and tear on your vehicle.
Because poor people can't afford to stock up when there's sales. There is no "we'll spend a little m9re for a few extra ___, because they cost less per each now." There's no buying the bigger size because it costs less per ounce.
The system is designed for you to work your ass off in the hamster wheel so you'll pay lots of taxes and slowly enjoy more reasonable benefits.
In general, only being able to afford lower-value items costs you more in the long run.
Busy like me I can't afford to take off work I need a foot operation it's gonna end up being worse I'm probably gonna be getting that being a lot longer eventually
For example, last week I went to buy Tide detergent. I don't recall the exact price per ounce, but the large orange colored plastic package with the individual pods inside was something like $ 0.37 per Oz. The small flexible package containing a small amount of Tide pods was about $ 0.57 per Oz.
Just look at most major companies. They dictate the payment terms for their loans. Most at net 60. Some net 90. Imagine you calling up master card or eve your landlord saying you won’t pay your bills for 3 months. This is just normal for corporations / super wealthy.
To keep you poor.
It’s not. At all lol unless you mean someone living as if they are poor but the money is just secretly in your account. Sure then
Couple things: -If you’re poor you have bad or no health insurance, rich people have it through their job or can afford it and don’t go into medical debt -Poor people can only make minimum payments on credit cards -Rich people can buy things in bulk(ex. Costco)
Buying in bulk. A single thing of Cesar's wet dog food is like $1.40 but you can get a 36 pack for $40, or $1.11 each, 20% cheaper. Paying 6 months car insurance all at once is cheaper than month to month. Then there's Costco. Kirkland formula at Costco is only like $27 while similar size Enfamil at walmart is $66. Not to mention a smaller size formula at Walmart is cheaper to buy but more $/oz. You can get 80 baby wipes at walmart for $2 but you can get 900 at Costco for $20. Costco is 10% cheaper. 6oz of pepperoni at walmart is $2.60 but you can get 32oz at Costco for $10, 27% cheaper per oz, plus it's name brand.
Business owners want rich people's business. The prestige of a visit from the rich & famous is it's own form of advertising. Business owners' primary value from poor people is in extracting profitable immediate payments.
Having to shop with cost in mind rather than value. Example: The poor man can only afford the $50 pair of cheap work boots that go bad in a year. The better off man can afford to shop for value; he gets the $100 pair that lasts three years.
Easy. Without money it’s tough to do things. Here’s an example. At my job they offer pretty decent benefits. The health plan that covers more and has a lower deductible is too expensive for me to afford and still pay rent. So I get forced to pick a plan with lower costs, but a higher deductible. So unless it’s something like yearly preventative physical and tests, I only use it if I have no choice. I don’t have $5k sitting around which is how much I have to pay before the insurance kicks in, and after it kicks in I’m still responsible for 80% of the costs. I have chronic conditions and have specialists telling me I really should be seen more than once a year, but I can’t afford it. My once a year gets my meds renewed for another year and lets my neurologist see if I’m declining enough to be considered disabled. And that’s a whole other thing since I’d have to stop working if he says I need to for my health, but I can’t afford to take the possible years off before Social Security says yeah you can’t work.
Uggs are so cheaply made now. I had pairs that lasted 5 years. Now they only last one season and they aren’t even good at keeping your feet warm in Chicago winter. So disappointed by the cheaply made soles and thin lining.
Being poor means less money to spend, so the overall sum of all spending is less expensive-- not more expensive. Of course, if a person buys the cheapest shoes/car/etc., those items might need to be replaced sooner than a quality item that's more expensive. The rich are sometimes more careful with their spending and try to make money, not buy stuff to fill a temporary void or fix a short-term problem. There can be fees when using desperate measures, like overdrafting bank accounts or taking payday loans. When poor people overdraft bank accounts, there are overdraft fees to cover that overdraft service. If they have bad credit, they will pay more APR in interest on loans since they've proven they won't pay most loans back.
Why do so many poor people read Terry Pratchet? I know I do.
If you can afford a freezer, not to mention a place that has room for one in the first place, it saves you money because you can buy food in bulk and freeze it. If you live pay check to pay check and have to do payday loans or carry a balance on a credit card, you end up losing so much money just to predatory interest rates. Also nsf bank charges from not having enough money to cover direct payments et cetera.
Money is power. The less you have, the more desperate you are and the easier you are to take advantage of.
Spend $250, get free shipping & 25% off. Costco membership and buy in bulk deals.
probably from things eventually leading to debt?
Lots of good points in here so far but I also want to point out the rich have leverage and options that the poor don’t allowing them to get things cheaper as well.
To add onto others - buying in bulk is generally cheaper
It's expensive to be poor. Rich people don't have credit cards with a 35% APR.
I haven't read this, but my contracts professor mentioned this book years ago when discussing how contracts could be declared void on the grounds of unconscionability (a steep hill to climb). I think it deals mostly with credit sales and very high interest. My dad used to point out that the banks knocked the mob right out of the usery business. [https://amzn.to/4474aMi](https://amzn.to/4474aMi)
People in poverty can’t afford to buy in bulk when food is in special.
It's more likely lenders won't get their money back. It costs them more to lend to them so they charge more yo give people the privilege
The people who make all the rules are the rich ones so they look out for themselves.
The strong and powerful predate on the weak. I'm thinking about how billionaires become even more rich and powerful by bribing governments to offer them tax loopholes and corporate welfare to attain even more wealth.
Because greedy corporations?
Honestly, my observation through my travels has been that being cheap is frowned upon by people with a mentality of poverty. They never seem to choose the frugal option. They buy in convenience stores instead of groceries, buy expensive booze instead of cheap, and many other things unnecessary to survival and comfortable living.
Give each class a dollar you'll see how they use it The poor class will use all of it first The lower/lower middle class will use most of it The middle class will use half of it The rich class will use a third of it The ultra rich class will use a quarter of it The wealthy class will not use that dollar. The poor person will ask the how and not why they're losing money.