A long time ago now, when I was in college, I had the first experience of getting a bit over my head with credit card bills. After some embarrassment, I fixed the problem and have been credit concious every since. I pay bills on time. I don’t charge anything I cna’t pay for within one month. I put money into savings almost every month. Basic , good fiscal policy.

Later on, I worked as a legal secretary. Part of the practice involved dealing with bill collection, mortgage foreclosure and the like. If you want to see people in financial trouble, this is where to work. People make bad decisions and get themselves behind the eight ball, making it even harder to get back to neutral -break even- not even talking about getting ahead.

After my husband and I finished grad school and started our adult lives, paying back student loans, buying our first house, etc. we rapidly found out there is a level of income in this country that once you hit it, it is almost impossible, if you are the least bit fiscally concious, togo back to just scraping by. All of a sudden, banking fees go away. Stock trades are free or very cheap. I can’t bounce a check even if Iwanted to. As long as I don’t overspend, or waste money, I am in a position where people are giving us free things to earn our business, but these are the same things that people with financial issues very hard.

For example, bounced check fees. If you couldn’t pay the check the first time, the $30 fee per occurrance is even worse than the threat of prosecution, since passing bad checks is indeed a crime. ATM fees. BAD news for everyone, really disproportionately bad for those with little money. Late payment fees. Again, hits those in finacial trouble even more. Late tax fees and penalties that compound and REALLY put people in a hole they can’t get out of.

I found out through these experiences that even smart people can make bad financial mistakes, but the system is also stacked against those on the bottom. If you are in trouble with money, you have to be very conservative and obey the main rules of finance.

  • Don’t spend any money you don’t have
  • Understand the difference between what you want and what you need. For example, if you have to choose, the electric company will cut you some slack, but not paying the rent is a disaster and will leave you homeless. If things are this bad, pay the rent first, then utilities, then transportation then credit. Then you can worry about the rest. No one ever died from eating ramen noodles for a month and giving up venti lattes.
  • It always killed me when people were being evicted from an apartment, but they had cable with all the expensive channels, a huge TV and the nicest things- perhaps this speaks to bad prioritization.
  • It’s better to drive a beat car you can afford than a nice car that you can’t.
  • Give up the expensive monthly drains on income. Expensive cable addons. Even the internet can be expensive, but you can always use it at public libraries and colleges. Are there any monthly expenses you can cut back on? remember, shelter, food, and necessary transportation are first, the rest may be luxuries.

    This morning in the NY Times they were talking about how some banks are now giving away free stock trades for their best customers and the ones with at least $25,000 in deposits. What we really need to do is to encourage people with a whole lot less money to have access to saving a nest egg and investing it so the saving comp0unds and gives people a leg up long term.

  • I don’t know how we can fix this, but it seems to me the fact that people get kicked while their down financially seems undemocratic and unfair. Suggestions people?