Sunday, November 4, 2012
Money Doesn't Fix Poverty
Has anyone else out there read John Cheese’s article on “The 5 Stupidest Habits You Develop Growing Up Poor?” I highly recommend it, particularly for those of us who grew up never knowing when the electricity was going to get shut off (hopefully not when a friend was visiting) and/or were taught how to dodge collection calls from the time we first learned how to use a telephone.
Cheese’s theory is that those of us who grew up poor developed a certain mindset that stays with us, even after we land good jobs and have the ability to stay on top of our bills. I have always wondered whether poverty is hereditary, and I have come to believe that it is. Not because money eludes us, even after we grow up, but because money does not fix poverty. I’ll give you some examples from my own family’s experience.
When I was growing up, my family was constantly in a state of financial crisis. It always seemed to surprise my father when the electric bill came in the mail, or when my mom had to spend money at the grocery store in order to feed us.They never planned out a monthly budget, and paying bills seemed to be a luxury that we could only rarely afford (every three months or so, once utilities were on the verge of being cut off and substantial late fees had already been incurred). And yet, almost every summer we went on vacations, and my dad would always buy my mom something expensive whenever he received a windfall of any kind. I never enjoyed going on vacation because I knew we couldn’t really afford it (how could we when just weeks earlier, we all had to take cold showers because the gas had been turned off?). Growing up, I never dreamed about owning a yacht or being a world traveler someday. I dreamed about having my own apartment and paying my utilities on time.
When I was in high school, my dad declared bankruptcy for the first time. The months leading up to it were some of the scariest of my life. He had been sued by a number of creditors and had default judgments against him. He never filled out any of the financial disclosures that are routinely ordered when a judgment is entered, so when he finally had to go to court for contempt hearings, he would warn us that he might not be coming home that night since the judge had the power to put him in jail for ignoring court orders. By that time, my mom had left so it was just me and my sisters. I remember my stomach was constantly in knots at that time, since in addition to being sued, the landlord had threatened eviction because my dad was months behind on the rent. I lost a lot of weight and people became concerned that I had an eating disorder. In reality, my body just couldn't digest food. After he filed bankruptcy, things seemed to improve. The collection calls stopped, but the money problems didn't. I wasn't surprised when, years later, my dad filed another bankruptcy, once he was statutorily permitted to discharge his debts through a Chapter 7 once again.
These days, we are all grown up, but poverty has remained with me and my sisters in many ways. For example, one of my older sisters makes $70K at her job, and my brother-in-law makes about the same. Together, with their combined six-figure income, they should easily be able to handle their two thousand dollar mortgage and other monthly bills. And yet, because they both come from families that mismanaged money and were always a couple of missed paychecks from bankruptcy, my sister and my brother-in-law are constantly on the verge of foreclosure and they never seem to have enough money to pay their phone bill or other utilities. But they do seem to have money for expensive trips and new clothes. I feel sorry for my niece because I know she is going through the same things I went through as a child – she has a few nice material possessions, but absolutely no sense of security. She’s got a tough road ahead of her. The reality is, money has not fixed poverty for my sister and brother-in-law.
Another one of my older sisters just declared bankruptcy with her husband. They live a bizarre lifestyle. They own a nice boat, but they live in a trailer. My sister wears Chanel sunglasses, but regularly asks to borrow a few hundred dollars here and there whenever she and my brother-in-law get into a “cash crunch.” She inherited my dad’s approach to finances, which was to spend as much as possible on luxury items before the debt collectors came calling. Money has not fixed poverty for them, either. If it had, the money that purchased the boat and the Chanel sunglasses would be sitting in an emergency fund or an IRA.
My younger sister has never worked a steady job, and she lives on the floor of my sister’s house. Literally, she sleeps on the floor in the living room, with no plan of getting a job and moving out. Did I mention she is now over thirty years old? She seemed to inherit my dad’s approach to work, which was to perform odd jobs while trying to get his business off the ground (she’s got the odd jobs part down, but doesn’t actually have any entrepreneurial aspirations). When she does receive income of some sort, do you think she uses it to pay rent to my sister or save it for a security deposit on her own place? No. She uses it for cigarettes, alcohol, and clothes. Money never fixes poverty for her.
And then there’s me. I have never been able to escape my insecurities surrounding money. I have always paid my bills on time (except for some medical bills I incurred in my late teens and early twenties), but I am always waiting for the other shoe to drop. When my sister (the one with the Chanel sunglasses) asks for a loan, I oblige. My husband sometimes balks, but I tell him it’s good karma. What if that’s us someday? I’d want someone to help us out of a jam. He insists that wouldn’t happen because we budget every month. But what if something happens? I argue.
I suppose that’s why money has not fixed poverty for me. Because I grew up never knowing when utilities would be shut off or why exactly my parents could afford Disneyland but not hot water, the root of my family’s financial troubles remained a mystery. So it seems entirely possible to me that something equally mysterious could come out of the woodwork and trap us in a financial corner someday, rendering us helpless and asking family members for spare change. Even once all of our debt is paid off and we have our emergency fund tucked away, I wonder if I’ll ever really achieve that sense of security I craved so much as a child. It’s funny, my husband thinks I have always just been very responsible with money, but the truth is, I have simply been acting out of fear. And fear can be a great motivator, but it can also lead to loneliness. I often feel different from people who had seemingly “normal” childhoods, and I envy those who can enjoy family holidays without having to worry about getting cornered in the pantry by a brother-in-law looking for a short-term loan.
As someone who grew up poor, John Cheese’s list makes sense to me, but do you agree that poverty is a mindset? Can you think of any other stupid habits that should be added to his list?