
Why it costs so much to be poor in America - d99kris
https://www.washingtonpost.com/news/posteverything/wp/2018/01/25/why-it-costs-so-much-to-be-poor-in-america
======
techsupporter
Yep. I, and I'm sure a lot of others here, have been on both ends of this
spectrum. I remember having to roll quarters to go to the city to pay the
water bill (they wouldn't accept loose change and a money order from the
corner store was $1.49 which was often 5% of my water bill at the time) and
then wait under the clerk's wary gaze while the coin rolls were counted and a
couple of random rolls were verified.

The worst was the electric bill. I've been in the exact situation described in
the article, past due by under $100 and service remotely cut off. TXU Energy
wanted a grand total of $793 to restart service, including the past due
balance, a reconnection fee, and a deposit (plus a fee for taking such a large
deposit). Fortunately, at least at the time, Texas' deregulated energy market
rules didn't prohibit a subscriber from switching companies even when owing a
balance to a previous one, so I was able to get my mother to co-sign on my
having service with Texas-New Mexico Power.

These days, two jobs and many salary rises later? My water/sewer/garbage bill
is direct debited from my checking account, same for the gas bill. Seattle
City Light, CenturyLink, T-Mobile, and every other bill? Automatically charged
to one of a handful of credit cards I have with >$20,000 limits. The house
where I live ran into a medium-sized electrical problem that cost about $5,300
to fix. Instead of panicking, I charged the bill to a credit card and then
used a 0% balance transfer on another one to make it be an interest free loan
for 18 months.

I spent more in one year on overdraft fees ($1,550) back in the early 2000s
than I spend on mobile phone service ($1,200) this year, to say nothing of all
of the costs for payday loans and late fees and all of that. Being poor in
America absolutely sucks ass and, the worst part is, I'm pretty sure virtually
every one of our societal and financial systems is engineered to enforce that
feeling of helplessness, not to make it better.

~~~
alsetmusic
I spent months repeatedly buying disposable dishes because I couldn’t afford
real ones. Ironically, I couldn’t save the meager amount to purchase real
dishware because of the perpetual cost of disposable dishes. My brother once
told me that he had a similar situation with candles eating into his paycheck
when his power had been shut off.

If your current paycheck doesn’t take you far enough to solve the problem, you
have to pay for substandard stop-gap solutions in between. This serves to
prolong the time it takes to accumulate the capital needed for a permanent
solution.

~~~
philipov
This reminds me of how constantly rushing to fill the client tickets and
accumulating technical debt eats into a development team's ability to ever
address the core problems in their software.

~~~
WillReplyfFood
Industryautomation here: It always takes two. One to tackle customers
complaining and keeping the system running, one two actually diagnose and fix
the problem.

------
tyingq
Had a similar experience with a relative that did some time in prison.

The conditions of parole required weekly visits to a far off parole officer
visit that had no public transportation access.

So, no prospects to get a job because of (now almost universal) background
checks. So, no income. And a defacto requirement to either have a car, or have
money for a 15 mile Uber trip every week.

It basically means that if you are a parolee, you beg friends and family, or
violate and return to prison for longer than your original sentence. The trip
is a 3 hour commitment, so begging doesn't work well unless you have a really
flexible friend or relative.

Oy. Guess what cycle that creates? People turning down parole just to not have
that monkey on their back. Trading 5+ years of their lives because they can't
satisfy an impossible ask. All for drug addict type issues... possession,
shoplifting, public intox, loitering, driving with no insurance, etc. No
violence, no real palpable victims other than themselves. US problem if you
didn't guess already.

~~~
electricslpnsld
> possession, shoplifting, public intox, loitering, driving with no insurance,
> etc. No violence, no real palpable victims other than themselves

I'm with you on all but one of these -- driving with no insurance seems like a
seriously bad idea, and should have consequences. Two tons of steel, even at
moderate 35mph speed, is a lot of damn momentum and can do some real damage,
and most certainly should be insured.

~~~
crooked-v
If you have no money, how do you pay for insurance to drive so you can get a
job so you can have money?

~~~
ilammy
How do you buy a car in the first place if you have no money?

------
macintux
Yeah, barely scratching the surface.

Can't afford a car or taxi/Lyft/whatever? You're going to lose hours _every
single day_ trying to get around. Hard to work two jobs to make a decent
income when you can't get to either one expediently.

Don't have a job? Good luck getting to interviews on time. Good luck when they
ask whether you have reliable transportation. And heaven forbid you have a
felony on your record. And whatever you do, don't twist your ankle walking to
the grocery store, because miss too much time from work and you're fired.

Oh, you do have a car? Good luck paying for decent tires, or gas, or the tow
bill when it inevitably breaks down, or to replace the glass when someone
breaks into it, or the insurance, or...

Money begets money. Poverty begets poverty.

~~~
virmundi
I sympathize and agree with your general points. I do wonder about the general
idea that there is nothing you can do. People can get bus fare for $1 [1].
They can scrounge money from people they know or total strangers to get more.
They can move, even as a transient to a larger city. They can get housing in
the new city with public support. They can live in shelters overnight until
the support comes through. They can get jobs within walking distance in the
city. They can do all of this on their own or with a little help from their
fellow humans. Humanity has done this for thousands of years.

Would I want to do any of that? No. Would I if necessary. Yes.

1 - [https://us.megabus.com/](https://us.megabus.com/)

~~~
macintux
In my city, you can use the bus system and still lose hours each day getting
around. And try moving as a transient with young children. Or other family who
needs you. Or as a rehabbing drug addict.

~~~
macintux
I also suspect that moving to a new location and throwing yourself at the
mercy of the locals worked a lot better when there were fewer people.

(Warning: unsupported speculation follows.)

The more crowded our environment gets, the more we feel that helping someone
in need is someone else’s problem, and the less likely it is that the random
person who might be able to lend you a room, for example, feels confident the
community will back _them_ up if you turn out to be trouble.

The kind of charity you need as a transient is harder to come by at an
individual level than it used to be. You’re more reliant on institutions, and
that’s a thin safety net to rely on to throw yourself across the country.

~~~
kaycebasques
> The more crowded our environment gets, the more we feel that helping someone
> in need is someone else’s problem

This reminded me of the Murder of Kitty Genovese, AKA the Bystander Effect.
However, I just looked it up, and it sounds like recently researchers have
questioned the validity of the original story, claiming that NYT exaggerated
the number of witnesses.

[https://en.wikipedia.org/wiki/Murder_of_Kitty_Genovese](https://en.wikipedia.org/wiki/Murder_of_Kitty_Genovese)

------
alistproducer2
It was only a few years ago that almost all of this article applied to me. I
remember before the cfpb forced banks to make overdraft "protection" out-in
and being charged $35 instead of the card being declined. I remember biking
across town at 5in the morning to make $35/day at a day labor place then
giving 2 of those dollars to a check cashing place. Unless you've been poor,
you really have no idea how hard it is to get out of that position. And if you
have anything on your record, you can forget about not being poor. A record is
a lifetime sentence of poverty in America unless you have connections or
family wealth.

------
ebikelaw
Why does anyone have an account at Bank of America or Wells Fargo? There is a
community bank in every town in the country.

~~~
nfriedly
Agreed. Bank with a local credit union. It's a better deal in general, and,
when you hit an issue, you can talk to a human who a) gives a shit, and b) can
actually do something to help you.

~~~
AdamJacobMuller
I spent about 6 hours in a local credit union finalizing a loan for a new car
I purchased early last year.

They had made some mistakes, specifically saying they could extend the initial
certification beyond 30 days when they could not, and couldn't disperse the
funds without having the loan re-certified by a loan officer. Unfortunately,
it was a Saturday and there were no loan officers on-hand. Double
unfortunately, they needed the _original_ bill of sale (pink carbon paper) to
certify the loan.

Every single bit of the process of getting this loan was like pulling teeth.
That said, they pulled it off even on a Saturday. They realized they had made
a mistake, they called in a loan officer who came to the branch on a Saturday
and certified the loan. They even stayed open about two hours late so we could
drive to the dealership and get the pink-slip and drive back.

While the whole process was kafkaesque compared to dealer financing, unlike
dealer financing these people were friendly and genuinely seemed to want to
help and they did genuinely everything in their power to actually help.

And, I got a crazy-low interest rate on my loan too.

If they just spent a bit more time on their process, say, a PDF with a list of
information on what you need to provide for a loan and when and things like
approval expiration timelines they could make the process so much more
pleasurable.

In any event, A+++ would credit union again.

------
brudgers
_If you do not have it, the alternative is a low-end hotel where you can pay
by the week, which lacks the upfront cost but costs much more over time — for
the room itself but also increased food costs and life complexity._

This ignores hotel taxes which often run 15-20% with the revenue earmarked for
attracting tourism/convention traffic. In some ways, hotel taxes may be the
most regressive commonly imposed tax scheme in the US.

~~~
smelendez
A friend of mine who was having a hard time was doing a mix of squatting,
camping outside, crashing with friends and staying in a cheap hotel when she
had the money.

The hotel itself charged refundable deposits that were 20% of nightly rent,
and looked for ways not to refund them (checking out two minutes late, letting
another guest come in your room). Meanwhile, prostitutes and drug dealers more
or less only visit rooms in the high end hotels less than a mile away with
nobody batting an eye.

------
rbcgerard
On the banking side, some of it is fairly straight forward - the estimates
I’ve seen say it cost ~$100-$500 for a bank to administer a checking account
annually. The current net interest margin banks earn on your money in the US
is 3.15%.

Which means if a bank charges no fees - and it costs them $315 to administer
your account - you need to maintain a $10,000 balance for them to break even.

Once you understand that dynamic - you understand that banks that want to
offer low balance free checking - need to either make it up on fees or on
cross selling opportunities...

~~~
Anechoic
_the estimates I’ve seen say it cost ~$100-$500 for a bank to administer a
checking account annually._

Is that an average or an actual cost per account?

~~~
supermarine
And what is the breakdown on that? What's actually costing the banks that
much?

~~~
rbcgerard
I don’t know the breakdown, but it’s: banking software, mailed account
statements, debit cards, phone support centers, websites, bank branches,
compliance, ATM networks, check processing etc.

Obviously some of these costs scale very cheaply, but there is quite a bit
that goes into a modern bank account+ some customers are costlier than others
(lost of call center calls/lost debit cards for example)

------
technics256
This is why I left the United States. I live in Germany, and while every place
has its drawbacks, I feel safe, have affordable housing, and don't have to
worry about healthcare and predatory things like this if things go south.

------
beilabs
Single serve items like shampoo, candy, soap are readily available in
developing countries like Nepal, they cost much more than the normal sizes we
receive in the developed world when you adjust for the quantities. Much worse
for the environment over here as well, have seen so many plastic fires in the
city with the single serve packaging being utilized as fuel.

Being broke sucks, capitalism at its finest.

------
dkersten
Being poor always costs more. Rich people can shop around for better deals on
pretty much everything, if they want to (eg lower interest rates, lower taxes,
etc). Many options that are available to the rich are definitely not available
to the poor, and that doesn’t even factor in the charges talked about in the
article. It doesn’t surprise me one bit, sadly.

------
ahdroit
"and, the worst part is, I'm pretty sure virtually every one of our societal
and financial systems is engineered to enforce that "

------
analyst74
I can sympathize with some of the poor people who had accidental expenses that
they could not have planned for. But I'm really having trouble understanding
how this article makes it seem those fees are hard to avoid as poor person.

When I was living under $1000 budget, overdraft fee was unheard of, because
when you have very little money, it's easy to manage, you only need a few
hundred dollars in your account for daily spending. And bigger purchases
(>$100) are planned so they can be actually paid for. I also never knew there
were consequences for paying electricity late, because renting my own place is
out of my budget.

Funnily, I only ran into those "poor people" issues like expensive credit card
interest, overdraft fees, predator car loans after getting my first full-time
developer job, because I stopped managing my expenses.

~~~
tyingq
It's the unexpected stuff. Parking tickets when you honestly didn't mean to do
anything wrong, your car unexpectedly dying, roto rooter for the pipe that
blew in your shitty mobile home, the surprise tax bill because you filled out
your W2 wrong, the unexpected 2x bump for your bottom end heath insurance,
your car's catalytic converter dies and it won't pass inspection, your Mom
that suddenly has Alzheimer's, lease renewal comes up and your neighborhood
has been gentrified and is suddenly 2x the original cost, right sizing and
layoffs, etc. Maybe you can work out a paycheck to paycheck strategy, but
chaos theory gets you eventually.

I lived this, and got past it, but luck was a big part of it. Right place,
right time, and some hero[1] gave me a chance. Not everyone is this lucky.

[1] Big thanks Gene, if you're still out there.

~~~
EADGBE
Don't forget the toll it takes on your psychologically. That's the worst part.
Still haunts me.

The Genes out there are rightly heros.

~~~
tyingq
Good to hear from a fellow "survivor". I'm stunned to have gone from living in
my car to being a middle class dope. Lost touch with Gene, I hope he did well.

------
tabeth
How much money do you have to have to eliminate this?

-> How much money do you need to start a bank?

-> How much money do you need to start a school?

-> How much money do you need to start an organization such that regular people can join and said organization can provide health care benefits this country really needs?

-> What does it take to start an organization that can attract talent to be sustainable and simultaneously have a structure such that it can provide the above benefits?

~~~
kaycebasques
Go for it, and report back to us.

------
hadriendavid
Take money where it is: in poors’ pockets! They do not have much but they are
so many!

------
hadriendavid
Take money where it is, in poors’ pockets: they do not have much but they are
so many!

------
hprotagonist
_“The reason that the rich were so rich, Vimes reasoned, was because they
managed to spend less money.

Take boots, for example. He earned thirty-eight dollars a month plus
allowances. 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. Those
were the kind of boots Vimes always bought, and wore until the soles were so
thin that he could tell where he was in Ankh-Morpork on a foggy night by the
feel of the cobbles.

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 the 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.

This was the Captain Samuel Vimes 'Boots' theory of socioeconomic
unfairness.”_

~~~
loorinm
The boots is just the beginning. Through financial products, the rich actually
get paid simply for having money, while the banks charge fees to customers
simply for being poor.

Banks charging customers simply for being pior is just the tip of the iceberg
of how our society is designed to increase the stratification of rich and
poor.

The more you already have, the more you can make money just by having more
than other people. It’s exponential increases on returns the richer you get.

The poorer you get the harder it is to make even slight progress toward
bettering your situation.

But we as “normal people” are to blame for this. We all agree to play by the
rules of a few mentally ill sociopaths and that’s really on us.

~~~
21
> But we as “normal people” are to blame for this. We all agree to play by the
> rules of a few mentally ill sociopaths and that’s really on us.

That it's true.

But I've also seen in a lot of countries poor people voting for policies which
will actually make them poorer.

Poor people arguing against universal health care. Arguing against taxes for
the rich and regulation.

Typically because they are tricked to fight against other poor people (other
religions, other ethnicities, other backgrounds)

~~~
burfog
I know it is easy to assume that people are tricked. Perhaps the obvious
alternative is that they are evil. If you want to understand these people,
consider that they instead have different values which do not derive from a
fight against other poor people.

People will vote against government benefits for many reasons, even if at
first glance it seems to hurt them.

One reason is self-respect. Many of these voters feel terrible if they are
getting government help. They might feel a need to take it if offered, but
also feel that it isn't right. It can feel like stealing and it can feel like
being treated as a child. Some people value independence and do not want to be
tempted with dependence.

Another reason is a concern for the economy. If a bit of welfare is good, then
lots of welfare must be extra-good... but then nobody works (except under
treat of arrest) and you have an economy like that of Venezuela. So if that is
what we'd get, voting to go the other way is the safer choice.

Some people feel a religious opposition to taxing the wealthy:
[https://en.wikipedia.org/wiki/Prosperity_theology](https://en.wikipedia.org/wiki/Prosperity_theology)

~~~
sgift
> One reason is self-respect. Many of these voters feel terrible if they are
> getting government help. They might feel a need to take it if offered, but
> also feel that it isn't right. It can feel like stealing and it can feel
> like being treated as a child. Some people value independence and do not
> want to be tempted with dependence.

Which is a perfect example of what people have been tricked to believe and
then it got repeated as often as possible to make sure it gets burned into
peoples brain to make them believe "that's just the way I am"

------
dropit_sphere
I was thinking about just this today. There's an interesting corollary,
though: just as it can be a vicious cycle downwards, it can also be a virtuous
cycle _upwards_.

~~~
thephyber
> just as it can be a vicious cycle downwards, it can also be a virtuous cycle
> upwards.

Hrm. I see how the two are _options_, but they aren't in equal proportion.

Did Wells Fargo take the fees earned from the millions of accounts they
created during their sales-quota scandal and use it to subsidize other poor
account holders? More likely than not, they simply used it to pay into their
capital reserves and redistribute to shareholders.

I have the strong suspicion that there are mental blocks that prevent people
from addressing their low balance (in addition to not being flush with cash).
My father kept getting a very noticeable "overdraft fee" postcard in the mail.
I offered to help him keep a floating balance just to keep him from paying the
$25-50 per overdraft. He declined and continued to get a few per month. It was
simply mentally taxing for him to move his money from one checking account to
another in time for his checks and other payments to clear.

I hope all of the {Facebook, Twitter, *gram, etc.} A/B testing programmers
retire from "growth hacking" social media websites and start putting those
psychology-manipulating skills to non-profits that help people train
themselves to lose less money. I suspect one of the reasons many people are
poor is because they simply haven't learned to "life hack" the small things
that prevent you from losing money (as opposed to making more).

------
tedunangst
Direct deposit frequently just means ACH transfer, which can even be from your
own account at another bank. Need $250 in direct deposit? Transfer $125 in on
the 1st, out the 7th, in the 15th, out the 22nd.

~~~
lykr0n
No. Most banks can see the difference between an ACH and direct deposit. M&T
doesn't, but Chase does for example.

~~~
tedunangst
Oh? Chase was actually the bank I was thinking of, since they waived the fee
on my account as a result of transfers from another account. Been a few years
though.

