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Feb 13th, 2015
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  1. No, it literally costs more to be poor, regardless of where you live. That's my point.
  2. It's easy to get trapped in poverty. When you get down on your luck once, there are a variety of things that can combine to keep you there.
  3. Say you're living on a low income. You're just barely making enough to pay the bills and save a little each month. You have a washing machine, but then it breaks. You don't have enough savings to get it fixed or buy a new one. Suddenly, you have to take your laundry to the laundromat and pay that much higher cost. Now your budget is even more strained, and you can't save anything at all.
  4. Credit is another great example. Most middle class folks have a credit card or two. If they have a sudden expense and don't have the savings to cover it, they can put in on the credit card. If they pay it off before the balance is due, they will pay zero interest. Someone on a low income, however, doesn't have access to any decent credit cards. If they get caught in the exact same situation, they may have to turn to payday loan places that charge criminally high interest. It's easy to get caught in a never-ending cycle of payday loan after payday loan.
  5. Clothing is another example. It's actually more frugal over time to buy very durable clothing with a high upfront cost. An $80 pair of shoes might last 10 years, while a $20 pair of shoes will last 3 months. The person with enough cash reserves can afford quality items, while the poor person has to buy crap item after crap item.
  6. Another great example, transportation. A middle class frugal person can get affordable and effective transportation. Buy a two year old car, keep it till it's ten years old and too expensive to maintain. When the middle class person sells that car, a poor person will buy it. They get stuck paying for expensive maintenance after expensive maintenance, $50 here, $100 there. It's a cheaper up-front cost, but over time their car costs more. Their other option is to skip the car and take the bus, but then they have to deal with the opportunity costs of that. A 15 minute drive becomes an hour long walk and bus ride.
  7. And there are many, many more examples. If you have limited income, you usually don't have the cash to make large up-front purchases that save you money in the long run. This traps a lot of people in poverty.
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