The High Cost of Being Poor

Doug Tschauder - Managing Attorney, St. Joseph Office

I’m going to make an assumption. 

If you are reading this, you are likely in the middle class or higher. You have come to expect certain benefits of, ahem, your position. When you go to buy a new car, you will get the rebate and the finance deal. If your credit card isn’t giving enough cash back or free hotel nights, they won’t keep you for long. Bank fees? What’s that?

Unfortunately, not everyone gets these breaks. If you are poor in America, not only don’t you get the special deals reserved for the haves, you are hit with the poor tax. 

The cost of most everything is higher when a person is struggling. 

Take bank fees. If you don’t keep a $2,000 balance, you get to pay the bank about 8 bucks each month for the privilege of keeping your money. If you bounce a check, the bank gets another $35. If that causes an overdraft, add another $35, plus $2 each day the balance is negative, which will probably be next payday. A couple of hiccups can cost $100 very easily. 

You could go unbanked. In the best case, a cash card or Wal-Mart will only charge a couple bucks each check, If you need money orders, add another buck per. 

If you have a money emergency, like a car or appliance repair, you may be lucky and have a credit card that only charges 25.99% interest, if you aren’t already at your limit. For those who don’t have funds available on the credit card, look out. Payday loans are available, but they charge that 25.99% every couple weeks, not per year. That assumes it gets paid off. A title loan may be a little cheaper, with the added incentive that they will take your car if you miss a payment. 

Transportation is more expensive. That buy here/pay here place will sell you a car for $99 down, but your $300 per month is buying a ‘04 Taurus with 160,000 miles. And, it needs new tires soon. What about the brake issue? Sorry, as is. Of course, you can take the bus. With a bus pass, it is downright reasonable, as long as you don’t mind having to walk several blocks to the bus stop and another couple to your job—in the rain. 

Food gets more expensive. There is often no grocery store nearby, so you have additional transportation costs to get there. If you do go to the local convenience store, everything is higher, and there is practically no produce. Even in the supercenter, produce is more expensive than canned and pre-packaged food, so cheaper wins out. 

If you rent, you are likely paying more for less. Many landlords don’t like to make repairs, especially if you have been late with your rent in the past. Even if you keep a clean place, if the neighbor has bugs, so do you. If you are lucky, there is a coin laundry in the building, otherwise, that can be a trek.

You don’t even think of many other costs. As an hourly worker, you don’t get paid time off to go to the doctor, so you don’t go as often. The insurance you had to buy has a $5000 co-pay, so good luck with that. 

Then there is a psychic cost – the stresses of the situation, the fear of crime around you, the burden of being a single parent. There are social costs as well.

The poverty level for a family of three is $1,674 per month. If you have a full time, minimum wage job, you make just over $1300 per month. Most minimum wage jobs are under 32 hours so the employer can avoid paying for health care. 

 I could keep going, but the reality is this: the poor pay for being poor, and we all pay as well.