Five Easy Ways to Never Be Poor Again
Author: Nick
Category: Money
Topics: education, family, frugality, happiness
I used to be poor.
I mean, not starving-on-the-streets poor, but more like are-we-going-to-pay-all-the-bills-this-month poor. Our checking account balance never exceeded three digits, and every dime of income my family made was already ear-marked for rent, food, or bills. It would have been very easy for myself and my family to incur a lot of debt while I was growing up, but we managed to eak out a humble existence and keep ourselves out of the red.
Now that I’m starting my own family and handling all of the financial aspects that go along with it, I’m realizing there are some simple things my family could have done better while I was growing up to move us closer toward middle-class living.
- Complete college. Getting a college education is the #1 way to break the cycle of poverty, and it’s something neither of my parents completed. While it’s commonly known that college graduates earn far more than those who just completed high school, few people know that the average income of non-college graduates is dropping every year. So do whatever it takes to get that degree–night or weekend school, community college, work study (and you should be able to do it without student loans).
- Own your home. I’ll make this brief. Renters are throwing their money away. Stop paying someone else’s mortgage and start paying your own. Turn that roof over your head into an investment instead of an expense and you’ll be on the road to a better life in no time.
- Put whatever money you can in savings. Put $100 a month in a 5% APY savings account and you’ll have over $15,000 in just 10 years. Do it for 20 years and you’ll have over $40,000. Invest in stocks and you’ll likely earn even more.
- Wait to have children. If you are barely supporting yourself, you do not want to bring a child into the world to share your meager lifestyle. Do the first three things on this list, and once you’re in a financially stable situation with an optimistic long-term outlook, then start having kids. And if you’re poor and already have kids, don’t have more. And yes, that means stop having sex because that’s where babies come from. The only pleasure you should be getting is through hard work, study, and watching your savings account balance grow.
- Swallow your pride. This is one thing my family did right. If you’re trying to start a better life for your family but the expenses of living on your own are keeping you from making any progress, there’s nothing wrong with moving back home with your parents (if they’ll have you). Even if you contribute to their rent or mortgage, it’ll still be much less expensive than paying it all yourself, and you’ll have a couple of years to build or rebuild your financial well-being. Just don’t fall into the trap of staying at home forever; keep working hard, get that degree, and save money.
If you ever find yourself living somewhere between starvation and subsistence, you’re probably not doing at least one of these things. Once you start doing all five–and if I can do it, anyone can–chances are you’ll never be poor again.
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72 Responses »
1.
Lawrence Salberg
January 29th, 2007 at 1:54 pm
When are we going to stop seeing these same tired arguments? These don’t guarantee “not being poor”, and some of them are perhaps destructive.
Going to college does not in anyway make you “not poor”. For many people, who take the “go to college to be successful” mantra a bit too seriously, they end up pursuing not their dreams, but the career market, and typically wind up in way more debt than they can pay off with their whopping $33,500/year salary out of school. College should be for those who want to go – not an entitlement or some kind of career strategy. Many people are college poor after 4-5 years of school – more so if both husband and wife are paying off loans.
Owning a home isn’t necessarily a quick path to not being poor. Most people are told this advice you give at a young age and go buy a home because of that pressure – and of course, they overbuy. Few people “over-rent” because landlords and property managers don’t work on the same “quantum math” that mortgage companies do – many of whom are financially failing as you pointed out recently. And, at least in Florida, where I’ve rented successfully for 20 years (with a family – gasp!), many of my friends are struggling with their homes due to astronomical increases in insurance premiums and property taxes. Some of them literally couldn’t sell (i.e. which means “move”) if they wanted to. I can rent anywhere tomorrow. Renting isn’t always bad – and it certainly doesn’t make you poor.
And lastly, for pete’s sake, stop repeating the mantra about having children later. Children don’t cost a ton of money – except in the minds of people who don’t have any – or in the minds of weak parents who let their children run all over them. And I will tell you this assuredly: For every child who is bankrupting his parents, there are at least three other adults (single or married) who are bankrupting themselves with foolish purchases, fancy cars, clothes, and computers. Some of my single friends can’t make it paycheck to paycheck (no matter their income) because they are selfish and childish. They have to buy the new XBox 360 more desperately than an 11-year old. I’m so tired of people saying “wait to have children”. It is just a knee-jerk reaction to seeing folks who have to live below the “poverty level” (which is ridiculously high in America). Most of the time, those of us who are “not rich” made plenty of bad mistakes that caused us to still be considered “poor” by some people. Having children doesn’t cause you to be poor – and it certainly makes you rich in some other ways that money can’t buy.
Lastly, saving money is a great idea, but that is hardly ever the problem with people – it is their spending that is out of control. You want to spend $120 per week on eating out and hanging out and buying stuff and being, well, a consumer – but save $100 a month in your 401(k)? Now, that’s poor!
So, have some children (be blessed), stop wasting money, go to college if you love to learn or dream of learning a certain field, buy a home when you are ready and when you’ve settled down, save some money for a rainy day but don’t get religious about it yet (it can’t save you after all), and do not move back in with your parents – did you learn nothing at all from the movie? Your parents REALLY don’t want you there – and if they do, they don’t care about your long-term well-being. Independence is important and helps you to learn. Mom and Dad deserve some time to grow and have time to themselves.
2.
samerwriter
January 30th, 2007 at 11:31 am
I’m a bit less opposed to these ideas than the previous poster..
I think college is a great way to improve your fortunes, so long as you don’t graduate with an art history BA and a 2.0 GPA from Harvard. Pick somewhere affordable, get a marketable degree, and work two jobs in the summers to avoid going into too much debt. (I don’t mean to dump on art history majors, that’s just one of the stereotypical “unmarketable” degrees).
I’m not a huge fan of home ownership. I’ve seen statistics showing that home-owners are wealthier than non-home-owners, but I think those confuse correlation with causation. Owning a home is not cheaper than renting. People always forget to take into account landscaping costs, maintenance, insurance, and all the money spent to fill the house with furniture and decorations.
I totally agree with the savings aspect. Lawrence is right, though, that the way to savings is to keep expenses in check. I know a lot of people who save 5% – 10% of their income, but they go into debt on credit cards at a faster rate than that. Every few years they raid their savings to get out of debt, then the cycle starts again.
I’m not a big fan of moving back home. My parents told me that we were welcome to move back home with them; they would expect a rent check for 150% of the “going rate” on the first of every month. Of course they were kidding, but the message was clear. They expected us to learn to handle our own problems, and be successful without their assistance. I think that was a great lesson to learn.
3.
English Major
January 30th, 2007 at 1:34 pm
While I think the first poster may have a point with the “this may not be enough to break the cycle of poverty” argument, my real concern is the sex. Surely, you jest when you say that sex is only for those equipped for children. Planned Parenthood=birth control on sliding scale=closest thing around to free lovin’.
4.
beloml
January 31st, 2007 at 9:54 pm
I read somewhere that you need to do three things to avoid poverty: graduate from high school, don’t get married until you’re out of your teens, and don’t have children until you’re married. Makes sense to me.
5.
Myself
October 30th, 2007 at 2:43 pm
Home ownership doesn’t always work. The choices must be made entirely on a local level.
Renters can be better off depending upon their circumstances.
What to do?
1) Save 20% or more of your paycheck. Some of that should be to liquid savings/CD/MM. Some towards long-term savings (i.e. retirement.
2) Don’t pay more for your first vehicle than you can afford. In other words, don’t just get a lease because the monthly payment is lower than if you bought it outright. If you can afford a payment of $x for a vehicle (which should include insurance, gas, oil changes, etc.), then you need to purchase a vehicle that is no more than that.
3) Don’t move out of mom/dad’s house on a whim. If there is abuse of any sort, get out immediately. But if there isn’t, save up to pay most you can down on a house. If prices for houses (and their maintenance/utilities/insurance) exceed rent (along with utilities/insurance), then you should rent. Don’t forget that there is more to just renting, since you may or may not be paying utilities, and you should still carry renters insurance for your own belongings.
4) As for “wait to have children”. If you have the above taken care of (i.e. you have more coming in than going out), and you are old enough of course, then go ahead and have kids. Just don’t forget to allow for food/clothing/healthcare for the little munchkins … we have 4 ourselves.
6.
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May 15th, 2009 at 2:32 am
I think that how a person become poor and how he can be able to pass from this state of living really depends on what his outlook in life is. If he is determine to succeed then there is a possibility that he can no longer be a poor person.
7.
paulamorris
May 25th, 2009 at 4:56 am
I found that an online education is an excellent way to juggle both your responsibilities at work and at home along with completing your education. There are also several colleges that offer accelerated programs that allow you to graduate ahead of schedule and plunge into the work place and earn sooner. You are so right when you impress upon the importance of a college education. I recently graduated from CollegeAmerica with a BS in Accounting. Through their FastFlex program I graduated in as little as 36 months. Now I am happily placed in a well-paid secure job and I can only hope my scrimping days are far behind me.
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July 2nd, 2009 at 4:49 pm
Many of us do not keep an account of income and expenses. This is wrong. Keeping account is a good habit and is to be commended. It has a dual benefit in that we know how much we have spent and also for what item.
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July 27th, 2010 at 8:32 pm
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August 2nd, 2010 at 10:13 pm
When you learn five simple that your life will find great changes, and you will become rich
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August 23rd, 2010 at 3:16 pm
I agree with all your points here especially the first one. While there are a few dropouts who made it big later on in their lives, majority of successful people are those that have a college degree. Education is really an important factor to jumpstart you career.
12.
moonstone
August 24th, 2010 at 7:48 pm
“The world is full of educated derelicts” – Calvin Coolidge.
Honestly I think the most important of these is #5, swallow your pride. Pride costs people a ridiculous amount of money, and in a lot of cases, it literally keeps people poor. Anyway, good article, got me thinking.
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September 2nd, 2010 at 11:02 pm
Having a college education is essential today since that is the only way to get an internship which can turn into a full time job.
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October 29th, 2010 at 12:33 am
Hi,thanks for sharing the information regarding to the things that are helpful to remove the poverty and i think that these will be also helpful for me because currently i’m facing poverthy and at last i would like to say that education is the most important first of all because only a educated person can only understand the things described in the article.Thanks again for sharing the information…
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Try living as a pauper for a few years, even though you may have a well paying job. That money in your account could mount up big-time.
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