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Photo by Sharon McCutcheon on Unsplash

My Good Financial Decisions Couldn’t Save Me

According to a 2019 Bankrate.com survey, only 40 percent of Americans have enough in their savings accounts to cover a $500 or $1,000 emergency. And that’s pretty bad news, because 36 percent of Americans say their largest unexpected expense last year was more than $5,000. Even worse, about 80 percent of Americans have debt.

There’s definitely overlap among these groups. Countless Americans have no savings and are struggling with debt. And before you quickly dismiss the problem as too much splurging motivated by incessant advertising, only 41 percent of that debt goes to non-essential expenses, and credit card debt is only 25 percent of our total debt.

That’s because a lot of our debt comes from so-called “good debt,” such as mortgages and yes, student loans. These fixed-amount debts can actually be good for your credit, because you pay on time (right?) and show that you’re a responsible borrower.

But credit card debt is “revolving debt,” and will get you. If you use more than 30 percent of it, your credit score goes down. Financial advice gurus are quick to say that you simply need not spend more: use it on monthly expenses and then pay it off at the end of the month. Simple! They conveniently ignore what happens when you have to charge those emergency expenses — or basic costs of living — and go over 30 percent.

Indeed, a lot of financial advice articles are laughable — and inconsistent. This article recommends simply not watching TV or going out. This article recommends starting a blog (note: very few of us bloggers earn enough to live on, let alone pay down debt). This article recommends that college graduates spend 30 percent of their income on splurges and only 20 percent on high-interest debt and savings and only save $500 for emergencies. This article recommends just ditching the credit cards! How easy!

All these articles ignore the debt burden that afflicts many Americans. The problem is so large and common that it’s clearly not due to people simply spending willy-nilly — it’s systemic.

I made all the smart financial decisions trumpeted by gurus. I opened a savings account, a low-balance credit card that I paid off every month, and I packed my lunches and made coffee at home. It didn’t make a lick of difference because despite my hard work and my college degree, I couldn’t find a job that paid more than $7.50 an hour. I’d entered the workforce during the Great Recession. There weren’t even higher-paying jobs being advertised — I saw maybe one or two in my field every two months. And because I was poor, I couldn’t afford to move to a city with a better economy. Meanwhile, costs of groceries, utilities, and rent were rising. Eventually, I had to start using my credit card to cover basic expenses. The credit companies saw that I was an active user and pounced. They sent me offers, which I begrudgingly accepted because I was following the advice of those dear gurus — I’d read that having multiple accounts with low balances would be good for my credit score, that using a 0% balance transfer card could help alleviate the debt burden. Both seemed like ways out of the hole.

Unfortunately, life got in the way. I had a couple of hospitalizations, a couple of car breakdowns, I got laid off, and so on. Believe it or not, you do not get enough from unemployment or food stamps to live on, so I had to keep using my cards until I had proper income. By then, it was too late. I was burdened with debt and unable to come to the surface. I’ve remained that way for years despite earning more money. That’s how the credit industry is designed to work. And so skipping Starbucks didn’t really make a difference in my life. Saving $20 a week didn’t do much in the face of thousands of dollars of credit card debt, plus student loans.

Now, I had bad luck. But my point is that I did everything the financial advice articles said, to no avail because I wasn’t being paid enough to pay down my debts. People are quick to judge minimum-wage workers, but fact is that about 11 percent of working Americans don’t work jobs that match their education or skill level. This phenomenon is called , and it arguably also applies to people who make low wages despite having what should be high market value, e.g. multiple degrees or decades of experience. Many people get laid off and have to take underpaying jobs until they find something that better matches their talents. When you see a McDonald’s worker, it’s bigoted of you to assume that they simply have no education or skills. It may very well be someone trying to make ends meet while looking for a job that meets their skills. The living wage movement aims to protect these people from being unable to afford their expenses due to these circumstances that are no fault of their own.

Making good financial decisions is no guarantee of financial health, and that’s strange — there are few parallels in other aspects of your life. In general, if you eat healthily and exercise regularly, you’ll reduce your risk of many diseases. Were you to die in a freak accident, you’d still be healthy up until that point. If you follow directions in a recipe, it will generally turn out delicious. And so on. Yet finances are where we’re doomed if we do, doomed if we don’t. Financial gurus are speaking from a place where nothing goes wrong in one’s financial life, where splurging on that $500 purse is the only risk. For many Americans, such a splurge is out of the question. Yet gurus and judgmental politicians alike are quick to say that people simply shouldn’t “splurge” on things like car repairs or, you know, food. They’re also quick to suggest people sell their non-essential items, but poor people simply don’t have items with high resale value lying around. I mean, I guess they could sell their microwave for $10…

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Oh my, such luxurious living.

As many have pointed out, these savings tips are also ableist. It’s easy to say that you can pack a lunch or cook at home, but some people aren’t capable of doing those things. They rely upon delivery or takeout to survive. And the median income for someone with a disability is only $20,000 per year, compared to $30,000 for those with no disability. If part of their limited income must go to eating out, they’re already experiencing a greater cost burden than the people who can afford eating out and simply choose not to.

Money-saving articles are also classist. They place the burden of responsibility entirely upon the consumer’s shoulders by suggesting that behavioral changes can eradicate their money woes. As the Fox News screen caps above show, poor people are apparently expected to adhere to Dickensien lows of poverty in order to justify being poor.

Now, I get that most financial gurus don’t mean to simplify poverty, and truth be told, plenty of people would benefit from cutting down their spending. The difference is that those people who save an extra $100 per month by skipping their afternoon latte are going to be able to invest that money or go on a nice vacation, while America’s poor will apply the $100 to an overdue bill, only to be met with the hefty interest tacked onto their debt the following month.

I’ve learned a lot about financial wellness through trial and error, but I’m simply not able to get over the hump and stop living paycheck-to-paycheck. As we get older, our expenses increase, and that’s definitely true for me. Now, I’m prioritizing paying down debt, saving, and investing. And yet I still have to skip meals to achieve that. All my good financial decisions and all my sacrifices simply aren’t enough because I’m not paid enough, and the burden then falls on me to continue seeking higher- and higher-paying jobs. I, however, am enough to do that; many people don’t even have the opportunity, and it remains a race against the ever-rising costs of rent and milk.

So the next time you hear someone complain about being poor, don’t be so quick to offer money-saving tips. Question the system that favors stagnant wages. Question the companies whose CEOs make $13,000 per hour. Question why you think poor people need to meet your standards to justify your sympathy. And reevaluate that latte if you’re saving for your next vacation. Me, I won’t get one.

Written by

Writer by day, circus artist by night. I write about art, media, culture, health, science, and where they all meet. Join my list: http://eepurl.com/gD53QP

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