tag:blogger.com,1999:blog-6399730406480392183.post7721143999544919268..comments2024-03-27T11:18:34.222-03:00Comments on Viable Opposition: Debt and Savings in Low and Moderate Income AmericaA Political Junkiehttp://www.blogger.com/profile/03342345936277964422noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-6399730406480392183.post-28584560903963912072013-01-29T11:17:12.002-04:002013-01-29T11:17:12.002-04:00I was a part of that group, right down to the '...I was a part of that group, right down to the 'low debt'. The issue, at that level, is living paycheck to paycheck. When I read about people who have kept their expenses well below their income, they typically are those who make 50-60k while living 30k lifestyles. When you already make 30k or less, though, there's not much room to move.<br /><br />In truth, those in low incomes have 'debt' in a way. Instead of a natural debt via a financial institution, they have 'delayed purchases'. The car needs $200 in repairs and has been needing it for months. That tooth should've been treated at the dentist half a year ago ($75). The microwave is half cooking the food($20). The phone has a short and shuts off on people regularly($5).<br /><br />So what happens when the person suddenly has $150 in cash? It goes to replace the microwave, phone and the dentist bill. It's now $50 and there's still the car. <br /><br />Don't spend it then? Go save? Note that such 'unpaid' items have an 'interest' as well. $75 dentist bills turn into $150 deep cleaning bills if untreated. Microwaves that don't work tend to result in going out to eat more often. If that car issue is belt replacement, then you're making a big gamble. <br /><br />This goes on top of inflation, modest wages, unexpected expenses, ext. Still, even if a person learns how to manage money and is able to ride through the traditional money issues, the 'delayed purchases' is a hard nut to crack. The best answer I've seen for most is breaking above the LMI threshold (even $40k seems enough) then somehow learning, FAST, how to manage money in ways you never had to deal with before. It better be fast too, since a few mistakes can ruin you for months, if not years down the line.<br /><br /><br />Btw. I now suspect that, for LMI households, debt loads were never the primary grief causer so much as a combination of layoffs, cut hours, and being unable to compete with those who had made twice their income but now hunt the same jobs, thanks to the job market.Dakariannoreply@blogger.com