Social Justice Archives - Page 18 of 20

A Terrific, Terrifying Article About Poverty

Today, I happened upon a wonderful article about what poverty is like. After reading it, I knew I needed to share it with you all. Poverty, debt, and working till you drop are all terribly interlinked. The following are a few highlights:

Rest is a luxury for the rich. I get up at 6AM, go to school (I have a full courseload, but I only have to go to two in-person classes) then work, then I get the kids, then I pick up my husband, then I have half an hour to change and go to Job 2. I get home from that at around 1230AM, then I have the rest of my classes and work to tend to. I’m in bed by 3.

Nobody gives enough thought to depression. You have to understand that we know that we will never not feel tired. We will never feel hopeful. We will never get a vacation. Ever. We know that the very act of being poor guarantees that we will never not be poor.

I make a lot of poor financial decisions. None of them matter, in the long term. I will never not be poor, so what does it matter if I don’t pay a thing and a half this week instead of just one thing?

Poverty is bleak and cuts off your long-term brain.

Read the article in its entirety here (it’s worth a read): Why I make terrible decisions, or, poverty choices.

The Dark Side Of That Terrific Paycheck

By Frugaling 14 Comments

Money Scrabble Picture Flickr — *Photo: PT Money*

This is a contribution from Syed of The Broke Professional! He runs an up and coming personal finance site for working professionals. On top of that, he’s a practicing doctor. Thanks for the article, Syed!

Personal Finance Is Simple, Right?

The ability to manage and master your finances is based on two factors: what you bring in and what goes out – income versus expenses. Though this may seem like an oversimplification, everything financial boils down to this equation. If you spend more than you earn, this puts you in debt and leads to a precarious financial situation.

This is the unfortunate truth for many in America today, as the allure of easy credit and excessive consumption keeps many in debt. On the other hand, earning more than you spend puts you in a position to save, and saving enough will help you weather almost any financial storm or life-changing event that comes your way.

Your Paycheck’s Hidden Costs

Getting that first job after college and seeing all those numbers that represent your yearly salary can be exciting at first. It’s usually more money than you have ever seen before, so it can be an exciting time. But appearances can be deceiving. Though that nice big round number may look nice, you’re not going to get all of it. If you’re not careful, you might not even get half of it.

There are many associated, and often times hidden, costs for any job. Knowing what these costs are will help you determine your real hourly wage – what you make per hour after all of the associated work expenses are accounted.

The biggest factor people usually associate with jobs is the commute. Whether it is driving or taking public transportation, there is going to be some cost of commuting to your job, unless you work from home. Most of us would just calculate how much we spend for gas and be done with it. But there are other hidden costs to commuting such as wear and tear on the car which can lead to increased trips to the shop, money spent on tolls, and increased frequency of oil changes due to driving every day.

Another big factor for some is money spent on food. From eating out to that daily coffee we get from Starbucks on the way to work, “rewarding” ourselves with a treat after a stressful day, and money spent on take-out when we are too tired to prepare dinner at home. Work can hurt your budget by leaving you with little time to think, prepare, and make wholesome spending choices.

The list can be endless: hiring outside help such as yard workers, maids, tutors, and money spent on entertainment to de-stress from work. Let us go through a simplified example to see how much having a certain job can actually cost you, and what your real paycheck ends up being.

Analyzing Paychecks

Let’s say you have a friend who makes $20/hour. They’re struggling to make ends meet, but not sure why. You ask him how much he makes per week. He simply multiplies 20 dollars an hour by 40 hours per week to get 800 dollars per week. But knowing what we know about job associated costs, we go deeper and find out what he is actually making.

We calculate that with money paid for gas, tolls, and wear and tear on his car, he is spending an average of 100 dollars per week on commuting-related expenses. We then move to food and find out that with his daily latte, occasional lunches, and eating out with co-workers, he is spending an average of $50 a week on food. Then, we find out that he has a habit of seeing a movie with a co-worker after a long day of work and rents movies weekly to de-compress after work. This comes out to 30 dollars per week.

His job also has a dress code of a shirt and tie, and sometimes he has to wear a suit to meetings. This newer wardrobe can cost a couple hundred dollars, and require purchases further down the road.

He also takes a yearly vacation just to get away from it all, which averages out to $40 over the year.

Last but not least, he also hires a cleaning service because he has no time to thoroughly clean his apartment. This comes to about $25 a week. There are other associated costs but these are the ones that stick out so let us work with these.

Our friend said that he makes $800 per week. After applying just these associated costs we went over, we find out that he is making 480 dollars per week. This means after associated costs, he is actually making 12 dollars an hour in possible savings!

What Does It All Mean?

Though this example had simplified numbers and categories, it shows that job-related expenses can really take a bite out of your bottom line. By looking at the real hourly wage, you can better evaluate the consequences on your budget and well-being. We can also use this information to examine our destructive money habits and try our best to change them.

In this example, if our friend made coffee at home and stopped going to the theaters after work, he could easily save $30 a week. Making little, positive changes here and there can really add up and help to improve our situation.

Finally, this exercise can show us how important it is to spend our money on the things that matter most. If we know that our real hourly wage is 12 dollars an hour instead of 20, maybe we will think twice before we drop down 20 bucks for a movie ticket and popcorn for 2 hours of fun or 40 bucks for a video game we will only play once in a while. Instead of spending money on frivolous things, maybe we can save it, spend some time exercising, learn a new skill, and spend time with family.

Successfully graduating with a bachelor’s or any advanced degree takes a lot of work. It is vital to find the job that suits you and your life, rather than going for the first big salary you see and realizing you’re not making as much as you thought.

Why I Can’t Sell My TV – Yet

By Frugaling 11 Comments

Television was left on, like a running tap, from morning till night.
–Aldous Huxley, Brave New World

My Mom likes to say I live in squalor. The exposed cinderblock makes my apartment look like a bat cave; albeit, without the glamour of Bruce Wayne’s accessories. The lighting is harsh in some spots, and ironically, dull where I need it. Poorly insulated walls leave me exposed to Iowa’s elements – both hot and cold extremes. The reality is that this is my home, for now.

While I won’t leave the cold walls of my oh-so-humble abode (affordable housing from university), I’m reevaluating the things I own. What do I need and what could I sell? I started with my car (which is still for sale). Then, like a lion on the prowl, I stalked my apartment for things to sell. It felt like there was little left – I had already done so much paring down.

I thought about needs and must-haves versus wants. As I focused on this, my television stuck out like an eyesore. It was lurking in the corner and cost me $400 after all was said and done. Do I need a TV? Does anybody? My television is the most expensive, optional item in my home, and I hardly ever use it. Should I sell my TV?

Broadcasts were designed in a different era. The word “tune” actually meant something. To have a TV meant being connected with the world around you. Nightly news and programs were shown at certain times and channels.

Maybe it’s purely generational. Maybe it’s technological. Either way, televisions are dying off in favor of computers and tablets. This epoch includes the Internet. Instead of watching at a certain time, you can watch what you want, when you want.

But there’s a reason I can’t part with it just yet. The television can be a social avenue in the right circumstances. How many times do you lean over to your iPhone-carrying friend and ask to watch with him or her? These portable devices that we now accept as commonplace are strangely isolating when it comes to sharing content (they were only ever designed for individual consumption).

A television, on the other hand, is designed to be open and viewed by many. Whether it’s the Presidential debates, a sports broadcast, or a movie with someone special, TVs are still the best option.

That black box takes up a precious corner in my apartment, normally dormant (I don’t really watch “TV”). Maybe it’s time to invite some people over? Or, maybe it’s time to sell it?

Why Dave Ramsey’s Advice Won’t Work With Millennials

By Frugaling 22 Comments

The Times Are Changing

The world is phasing out paper currencies for digital, plastic forms. Credit, debit, and secured cards are increasingly occupying wallets. Despite recent declines in the 18 to 21-year-old demographic (due to the CARD Act), 78 percent of Americans have credit cards (Link). We have voted against the greenback, and replaced it with digitized numbers that represent the possibility to spend. But, this is placing us at risk for increased debt and instability.

Various financial counselors recommend cutting up your beloved cards to control spending. These advocates argue for a cash-based budgeting system. Usually, a series of envelopes represents the different domains of life (rent, car payment, groceries, etc.).

Dave Ramsey is the largest proponent of “cash flow” systems to managing your debt and money:

Grandma’s way to handle money still works. People used to always use cash envelopes to control their monthly spending, but very few do in today’s card-swiping culture. (Link)

Scientific research supports this system:

Credit helps to anesthetize the pain of paying, and it caused tightwads to nearly catch up to the spending levels of spendthrifts. (Link)

Their study found that subjects paid more when they were instructed to use a credit card rather than cash. In fact, they found that they were willing to spend up to 100% more with plastic. (Link)

Carefree & Cashless

The reality is that cash is slowly being phased out. Even if cash currencies still exist, the availability and acceptability may shrink. Businesses and consumers generally prefer the streamlined approach to cashless transactions.

Starbucks is a perfect example. Whether you have a credit or gift card, Starbucks’ iPhone app allows you to store your card information for purchases. All you have to do is swipe your phone and that steaming beverage is yours.

The ease of the cashless world is both tantalizing and horrifying. We can minimally travel, without bulky cash filling our pockets. A thin card gives us all the purchasing power we need. But we also risk spending more, going into debt, and suffering usury interest rates as punishment (try 25% or more penalty rates).

Unfortunately, the current financial gurus may be behind the technological times. The younger generations demand fungible, diverse transaction assistance (e.g., Bitcoin to PayPal to the iPhone’s Passbook). As noted, cash is dying. The old advice is dying. The conflation could be destructive to us all.

What’s The Solution?

Opinions are cheap; mine included. But, as a Millennial, credit card user, and cashless-cabin-aficionado, I believe we need to begin searching for viable solutions. As the masses segue to destructive spending patterns and digitized spending that distances us from the dollars depleting, we will suffer.

Forced spending control and scheduled punishments for poor purchases may be the last viable solution. Whatever happens, I hope we act before this bubble bursts.