I’ve never been wealthy but I’ve never been truly poor either— until the crunch in 2008. I never understood how anyone could become homeless with so many opportunities available. But I do now. I learned the hard way and I have had a clear lesson in why the poor get poorer.
You see I’ve generally had enough money in the bank to pay my bills on time and avoid overdraft fees. Several things happened as I got older. When I retired from nursing, I started my own therapy practice. Then I became a caregiver for my 91-year-old mother. Soon after that I cared for my fiance who was dying from Lou Gehrig’s disease, I had to close the practice. When the extensive period of caregiving ended, my finances were depleted and I had passed the age of being employable.
My son and I started working together and were quite successful until the economic crunch came in 2008. We lost a major account and with it our primary source of income which we were unable to replace. I am now back on my feet but I want to share with you the lessons I learned about why the poor get poorer.
Here’s what I have learned:
Banks are not interested in your story—only in your money
This is, of course, mandatory for them—this is their business. However, there are times when it seems that greed takes over. We lost our major contract, I was late paying my credit card balance which was at a 7% interest rate. Because I was late they raised my interest rate to 18% and gradually moved it up to 25%. The bank told me that if I paid on time for six consecutive months they would adjust the rate back down to 7%.
I had a perfect payment record for 8 months and repeated my request for a lower interest rate. Then I was told that the government had stepped in and they weren’t allowed to lower the interest rate. The bank received a bailout but I did not. The interest rate stayed at this higher rate in spite of my perfect payment record over a two year period. I continuously requested a lower rate. Eventually, I couldn’t pay at all. I wasn’t the only one caught in this kind of bind.
Our financial picture worsened and we implemented every money saving opportunity we could find. I decided I could save gas by changing my bank account to a bank within walking distance. Unfortunately, the timing was off and a check which was supposed to change banks in November changed in October to the new account and there was not enough money in the old bank to cover the bills.
When I realized what was about to happen, I immediately went to them and asked for help in dealing with the situation. All they would do is issue a new debit card. I spent an hour with them trying to get them to help me divert the problem but no help came. Then they wondered why I was not in a rush to pay the negative balance. My son had the same thing happen with his account in another bank and they immediately closed the account and helped him deal with the situation. That’s all I had asked of my bank.
It is the same with a computer company. I had purchased four computers from them and paid for each of them in full. The economic crunch caught me with a fifth computer that I had purchased and still had payments for. They raised the rate to 24% which made catching up almost impossible. I paid more than the computer was worth but the amount kept building because of the interest rate and my inability to pay.
I learned what it is like to have the phone ring incessantly with the calls of bill collectors who are ruthless, threatening, rude and tenacious. Also, I know what it is like to do without medicine that costs $140 per month because I have to pay utilities instead. Further, I know what disconnect notices look and feel like. I have learned lessons about problems I didn’t even know existed. The lessons will not be wasted.
There are a lot of us who have come to a clear understanding of what the poor have always experienced.
Does it make any sense at all that when someone is struggling financially that raising the interest rate will help them get back on their feet? Somehow, I just don’t get the logic of their thinking. The federal government spends billions of dollars to help the banks but until people can pay what they owe, the situation will not improve and the higher they raise the rates, the more behind people will get in their payments. It is a vicious cycle.
My son and I are now o .k. but until greed is no longer the motivating factor for corporations and banks, the working poor will never get ahead and the newly poor will never recover.
It’s always interesting to me that that banks and corporations give hundreds of thousands of dollars to charity and make a big media splash while in their operation they are raising rates on the very people they purport to help. Go figure.
I would love to hear from any of you about what you’ve experienced or any suggestions you can give to make it easier for people to get back on their feet after a financial loss.
Editor’s note: I first published this in December of 2011. It seems quite relevant still. We send millions of dollars overseas. Should we not be helping our poor here get back on their feet? How do people get ahead when they work at 2 or 3 jobs and still can’t pay the bills? And, no, most of them don’t overspend. They under-earn.