How You're Wasting Money, Or 10 Ways Poor People Get Screwed
Spending a little extra up front can go a long way.
My friend Cecilia sat me down at breakfast – a breakfast she paid for – and said, “You have to stop talking about how poor you are in front of the kid. It’s going to affect her mindset.” It isn’t that I hadn’t thought the same thing to myself, but more that I am so constantly overwhelmed by how expensive life in New York is that I find myself talking about how poor I am as frequently as homeless people ask for change. Of course, you don’t have to live in an overpriced metropolis to know what saying “no” when your child asks if you can go out to dinner feels like or to feel like no matter how hard you work, you’re struggling to make ends meet. What Cecilia made me realize at breakfast that day is, it’s not that I’m poor, it’s that I’m broke. I make okay money, but it goes so quickly on basics.
But here’s something interesting, something I think all of us who feel pinched in the purse instinctively know but feel helpless to fight: many of the things we do to try to save money actually cost us more money in the long run. Here are my versions of these ten examples of things you do to save money that end up costing you more, courtesy of Lifehacker. I do 8 out of 10 of these things on a regular basis and have done 9 out of 10 at least once, so I can tell you with great assurance that doing these sorts of things will backfire. The question is, can you afford not to?
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Not having health insurance/avoiding the doctor
I am one of the many millions of Americans without health insurance. When I was married, I had health insurance and did not go to the dentist for ten years. Why? I don't know. Because I'm an idiot. (And my teeth, it turns out, were fine.) I go to the dentist every six months now and I pay out of pocket. I had a pinched nerve in the spring and had to visit the emergency room. I'm still trying to pay that bill. Low-cost health insurance may not offer great coverage, but it's probably better than no coverage in the long run.
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Buying on credit
Lifehacker explains just how easy it is to misuse store credit cards, each of us having the potential to become "a credit card revolver who is paying hefty interest charges." Saving that 10% at the register can cost you in the end.
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Doing your own taxes
I used to do my own taxes (when I was very young and single and during my marriage as well). Not only was I told our taxes were done wrong on more than one occasion, resulting in us owing more than we thought we did, I want to emphasize Lifehacker's more important point that hiring an accountant for a few hundred bucks will get you maximized deductions and more money in return.
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Not having a retirement or savings account
To quote Whitney Houston, "I have nothing." I don't have a 401K, I don't have a savings account and I don't have an "emergency fund." Lifehacker says it's essential to have one, but that a 401K or similar savings plan is even more important, "although how anyone does that in this dire economy, with pay raises not meeting inflation and massive unemployment, is something of a miracle."
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Buying cheap sh*t
We've all done this. "Buy cheap, buy twice," Lifehacker says. SO TRUE. I already have to buy a new vacuum to replace the one I bought in April because it's broken. I was trying to save by spending less on a cheaper unit. #suckingfail Need I say anything about Payless Shoes?
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Not feeding the meter
I am so guilty of this. "I'll be right back!" Yes, I will be right back, with a ticket on my windshield. Take it from one who knows: get enough tickets and your car gets towed. That can cost you over $1000. Keep a roll of quarters handy. I've learned my lesson.
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Going bogo
My friend Jenny and I used to laugh with delight when it was BoGo time at Payless. And then we each had two sh*tty pairs of shoes. Hooray?
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Driving around for gas/cigs
Lifehacker explains exactly why mathematically you lose money driving around for gas, but I'll just add that I know lots of people who drive to local Indian Reservations to buy cigarettes, and here's why you're losing money there in the long run: cancer treatment is expensive. Especially if you don't have health insurance.
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Not taking care of your car
Guys! This is the one thing on this list I have never done! So proud right now. Get that oil change! Lifehacker says, "Take care of your car, and it will take care of you."
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Stocking up on groceries that rot in your fridge
Lifehacker describes this category as "Buying Food in Bulk and Then Throwing Half of It Away," which is probably the suburban version of what happens to us urban dwellers all the time. You spend $100 at the grocery store but eat out 3 days that week. When you're ready to cook the green beans you purchased, they're covered in mold. It's called meal planning! (And I'm terrible at it.)
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Visit Lifehacker for more money saving tips
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I sometimes buy cheap shit, and I agree that it’s not the best way to go. Sometimes you sort of have to, though, unless you have enough in the moment to buy a higher quality version. And sometimes you don’t need to spend too much. I bought my vacuum cleaner on sale for $69, and it’s still working perfectly 3 years later.
I am also guilty of occasionally letting food go bad in the fridge, but have improved a lot there.
There is no excuse for not taking care of our car… but sometimes we don’t.
That’s exactly why I subtitled this post “why poor people get screwed.” Because if you need a pair of shoes for a wedding, let’s say, but you can only afford the $20 ones at Payless, you’re going to need new shoes the next time you get invited to a wedding, but what can you do about it? Start a wedding shoe fund? Oy.
We don’t do credit cards, at all. Don’t have a single one. This forces us to have to wait to buy the things we want because we have to have the money to buy stuff. We’ve been lucky to find a few things like a couch and chair in amazing shape from a friends parents when they redecorated (and they sold them to us for $50 instead of the $150 because we had small kids) but it’s been about 10 years since I bought our good quality mattress set and plunking down $1000 is going to be very hard for us (we’re a paycheque to paycheque family with irregular tiny windfalls when my biz makes some money).
“paycheque to paycheque family with irregular tiny windfalls when my biz makes some money” sounds exactly like my life. I have a steady writing gig (thank you, Babble) and then get performance pops here and there (thank you, Viacom). Certainly I can get better at budgeting (I am putting effort into that and have been since I got divorced) but I think no matter how perfectly I behave in regard to my finances, I sometimes can’t imagine actually getting ahead to the point where I have savings. Need to learn to imagine it, because as a friend of mine said, “Thoughts become things!”
Sounds like you are faulting poor people for getting screwed. This doesn’t make sense. If you have limited cash flow, of course you have to buy on the cheap, even if you know it won’t last, rather than spend money you don’t have (or run up high-interest debt) on something better. That is a rational decision, Carolyn. It is also evidence of how being poor is actually very expensive — but I wouldn’t characterize it as being because of bad decisions. Another example is overdraft fees or check-cashing fees. They hit poor people disproportionately, but you can’t say it’s their fault.
You don’t have to tell me twice! I’m not faulting poor people, or broke people, I think the financial/capitalist system is flawed in so many ways. But I can see also where my own behavior as a poor person (or perhaps someone suffering from a “poverty mentality”) has cost me money I didn’t have to begin with, which is the point of the Lifehacker piece.
@MICHELLE, I actually think that was CC’s point with the post. Some things, though, can be somewhat mitigated. For example, instead of buying 3 or 4 pairs of cheap shoes in special colors or different styles, a person could plan and buy one more neutral pair that goes with more things. I think CC’s perspective on this is spot on.
Yeah, I definitely think Carolyn is saying that these things are sometimes unavoidable, but should be avoided when possible.
I think lack of ethics in business, beginning in the 80s, has really allowed for businesses to specifically exploit low income families and individuals. 50 years ago, you could survive on a low income. In our modern society, however, so many people have forgotten basic life skills and given into to rampant consumerism that encourages throw-away culture and instant gratification. If you wanted a TV, by gosh, you saved for 3 years to buy that thing. You carefully chose a model that would last and then you babied it. Today, if you can’t afford a TV today, you can just get it on store credit or credit card. Don’t pay for a year! And, if some wire is loose inside and causing the screen to mess up, just junk it and buy a new one! People ALWAYS made food from basic, real food items. You bought a bag of onions, a bunch of carrots, celery and a bag of potatoes and that was the basis of every meal you made. You had simple fruit or a small slice of simple, home made cake. You bought a roast of beef and stretched it into 3 or 4 meals. The same with a chicken. And even though you might have just worked 8 hours AND had to take care of your kids and your home, you still spent an hour prepping and cooking dinner. Because that’s just how you made every little penny you earned stretch through the weeks. Ironically, people spend less on food today than they did 50 years ago, and yet the amount we spend on processed and fast food is killing us and our health. Hmmm, I guess I have a pet peeve, eh?
So, poor people are not at fault for being poor, but they certainly play a large roll in the quality of that life being poor.
I also don’t think she is faulting anybody! Reading this made me realize I NEED to stop being SO cheap at times I don’t have to be! Both, my good friend & even my boyfriend have told me more than once that I spend too much time talking about not having money and how I have become so cheap since I’ve had my son. For me, it’s also a matter of wasting precious time…This maybe another topic or a form of OCD, lol but I will stay in a store or on amazon way too long, comparing what the ‘better’ cheap item is! It’s insane how much time & money I waste just to end up with crap that I need to replace anyway. I’m really glad I read this. Thanks so much for sharing these tips!
I have dress shoes from Payless that are still holding up very well more than a year later. I wouldn’t buy my everyday shoes from there because I’d need new shoes more often, but I don’t see the problem in buying dress shoes that I’m only going to wear once or twice a year at Payless.
But I agree in some form or another with all the rest of the points made.
I grew up in a working poor family in NYC and trust me, it wasn’t easy. While we didn’t go w/o the basics, my mom worked extremely hard to make sure we didn’t feel like we had less than others. She taught me to be the master of shopping for everything, know what you need, find the best price, and try to get it whenever possible. If you can’t, find the best alternative, but try your best to not buy “cheap” b/c it’s like throwing money away. For example, if we needed special dress shoes, many times it was easier to go to the thrift shop, get a used pair of really good quality shoes and send them off the local shoe maker to tidy them up. Most times, this was far cheaper than going out and buying “cheap” brands that never quite fit right, caused tons of foot pain/blisters, and would wear out right away while the used shoes would last for yrs to come. It really comes down to knowing how to spend your money wisely and most efficently. But for those who are truly poor, sometimes you just have to make the best of what you don’t have.
There is nothing wrong with doing your own income tax. Modern tax programs are very instructive. I always had to pay in when I used an accountant because accountants aren’t necessarily interested in getting the best outcome, their just interested in getting done and getting your fee!
I have to agree about doing your own taxes. When I use an accountant all they do is spit out the information I give them. They use the same tax software I do. Rather than spend $800 (or more) on an accountant, I’ll buy the software and figure it out myself. Now, if you do it by hand on the printed forms you might miss out. But the software these days walks you through it step by step. The accountants I’ve dealt with have never done anything more than take the information I give them and put it in the appropriate boxes. I can do that myself.
Why are we constantly bombarded by articles where the so called writer knows nothing about the subject and copies 90% of the content from another source? Most of this is common sense anyhow.
was doing well with my budget back in 2008. Lost my job at 65 and went on disability. Worked out another budget thinning it out. Took to doing the hard work myself. After my unemployment ran out, was too sick from chemo to worry. Now feeling better and want to go to work but who looks at a retired person who is recovering. Again revamped my budget. Got a Mortgage modification, got rid of unneccessary bills, by canceling or paying it off. Monthly bills are most of my Social Security check Have food stamps worth $12.00 a week. You do the math. My Visa card will not work with me to lower the interest rate. Their problem! When it is a choice to eat or pay them guess who wins! Sometimes it is very hard but you have to do the work even when they say no. Persistance can and does work. Shop at discount stores and use coupons if the stores I shop takes them. Supermarkets are my nemisis, as they have ambiguous pricing. OBGOF is safe even though item single price is increased but stay away from Pay one price get second at half price or two for one price where you only can use one before it goes bad. Just found this out about 6 months ago at my favorite store. Hold on to what you can. If you don’t they will be glad to take it.
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I was raised by depression era parents. We never went without what we needed but were frequently told ‘no’ for our wants. My mom could stretch a buck and sewed my school clothes. I learned to save my money and while there have been stretches where I ran up my credit cards too far or had to sweat paying the rent, they didn’t last long. I traded having a ‘fun’ job and a lot of flexibility for one with benefits that have allowed me to live comfortably, enjoy my free time and save for retirement. I thank my parents. My dad worked hard at a job that wasn’t always rewarding and taught me responsibility. My mom taught me to buy quality that lasted. It makes a huge difference, even when you don’t have much to start with.
My wife and I live cheap in aliment matters, we live on: veggies, lettuce, seeds such as rice and beans (including its variations), fish, fresh pork and tea, whole wheat products and whole wheat pasta mainly, we never go out to fancy restaurants and never pay more than 40 bucks in a dinner, we never go for processed food or expensive ingredients, we live healthy lifestyles, use jogging apparel till it is fairly worn, no kids and no dogs, drink tea and never soda, alcohol to us is a bottle of Jagger or Whiskey, no Malibu or over sweeten Malibu or Sheridan´s. We got some extra money from a bonus or an special work I did? what to do? go to a nice hotel? buy a new car? a motorcycle? clothing or perhaps that 42 ” I saw in a good price in Walmart? NO, pay debts, cancel total of credit cards, new tires or a lot of free medications and tools. Last year during a heavy rainy season We had to buy an used dryer…couldn´t be happier with it, satisfied, have worked like a charm, love it, I bought some used dumbells for training and my girlfriend suddenly stopped cravings for sugared fruit cocktails, we become cheaper persons yet rich in spirit.