Tuesday, October 9, 2007

So, how poor is poor?

If rich ain't that rich, how poor must one be to be "poor?" Let's stipulate from the outset that very, very few people in this country are poor by international standards--lacking basic housing and nutrition. And there is a pretty decent safety net for those people. Not perfect, mind you, but OK. A family of 4 is below the poverty line at around $20,000. No doubt, that's poor--but those guys will get medicaid, food stamps, subsidized housing--they'll never be well-off, but they won't starve. (We'll leave for another day why someone would have a family income that low if they actually go to work every day.) But what about the family making double, even triple the poverty line number: 40 to 60k? In my town, If you make $52,000 a year (that's $1000 a week), that'll come out to about $3500 spendable a month. That same family of 4 will pay $800-1100 for rent, or more like $1500 for a small house in this town. You'd think if you make over $50k you'd want to try to be a homeowner. One car payment, plus gas and insurance, and you're down to $1500 left. If you have to buy your own health plan, you can't do that and still feed a family of 4 on that. If your car is paid for, your company buys your health plan, you don't tithe, and you have bought your house back before the market went stupid, you can be pretty comfortable on $50k. But change just one or two of those variables, and the fridge is empty leading up to payday. And forget private schools or vacations. I know my family of 5 would have a very hard time making ends meet on that--and we're pretty frugal. And of course, that family qualifies for no help, even though they may have two earners scratching and clawing every week while the "welfare poor" family may have less than one full-time job. Fair, huh?

Now again, don't get me wrong--I'm not advocating that the family making $50k necessarily get welfare (after all, somebody has to pay for that). But it seems to me that we have a very skewed idea of what constitutes "middle class."


Goode Design said...

"There are families who live on $40k per year who live on less than they make and are making it [Financial Peace] work!!"
~Dave Ramsey

How do they do that?? Well, they don't eat out every other meal. They cook at home. They eat [shudder!] left-overs. They watch DVD's rather than theater movies. They rent conservatively. They also buy used cars.

My wife & I are still doing rice & beans, beans & rice... but my we have learned how to cook it so that it is REALLY GOOD. [but there's a standing invitation for some famous Mike Polutta Chili].

I honestly believe that our "poor" are often pampered too much. When a person is left to go hungry, they tend to get up and do work. Sure, there are those who are incapable of work... but many have a handicap of the will.

But I also find it hard to believe that a person worth their salt can stay at $40k indefinitely. If they work hard and remain/become effective... they get paid more. I honestly think more people in this world should be SELF-employed & business owners. I haven't read the book 48 Days to the Work You Love as I like what I do. But those who have a job they hate... maybe they should look elsewhere.

Kinda like the 2 greatest commands, my dad had 2 pieces of employment advice for me:
"Son, the best time to look for a job is when you've got a job."
The second is like it...
"Son, get a job."

However, here's where we see the migrant worker (legal or no). I'd prefer a person pay me cash to do a project. I have one client that would probably LOVE to just throw some big bills on the table with a handshake and a wink. I have a young man that I pay to do my lawn. I pay him cash. I've also told him that I would happily instruct him how to operate his business better.

"The plans of the diligent lead to profit as surely as haste leads to poverty."
Proverbs 21:5

Paul Murphy said...

posts like this are killing me...

bekster said...

Just looking at the numbers, "rich" and "poor" are based on the ratio of your income to expenses. You are "richer" when your expenses take up a smaller percentage of your income, and you are "poorer" when when your expenses take up a larger percentage of your income. However, some people with higher incomes may chose to commit themselves to higher expenses so that they can have flashier homes, cars, and clothes. These people may look rich on the outside, while people like me who live in cheap apartments and drive paid-for used cars could look poor, but the difference is in the sense of freedom that truly rich people feel. Of course, we know that what really makes us rich is stuff like love and friendship and togetherness and all that, but, financially speaking, if you are living paycheck-to-paycheck, you are most likely not rich. So, I'd say the key to becoming financially rich is to limit your expenses as much as you can (and a big part of that is not getting yourself into debt) and saving what money you can instead of committing to larger expenses. Then, if you are patient, you can have some of the flashier things, but you will actually OWN them and will have earned them. THEN, you will be financially rich, not like these impostors who have all the "right" STUFF, but who risk not being able to pay their energy bills if they take a day off from work. When you don't have as many financial commitments, you have more freedom with your time, which, in my opinion, can be more valuable than simply LOOKING rich. On the outside, I would probably appear to be on the lower end of middle class, but a lot of the time I FEEL rich because, even though the actual AMOUNT of money we have many not be a lot, we have a decent PERCENTAGE to work with. Because our expenses are so low, we don't have any debt, and we have an adequate financial "buffer," we have a lot more freedom than people who make significantly more money, but who are "house poor" or "car poor." And I know I am living like an empress compared to some of the people in other countries, so I really have no room to complain about anything to do with money (but I'm sure I will anyway).