Trent at The Simple Dollar recently had a couple posts on Class Warfare and Being Broke and Being Poor. These posts generated a lot of strong reactions and I want to share my own thoughts coming from the perspective of someone at the lower end of the financial spectrum.
The “Class Warfare” post sprang from this quote-“You paid off $17,000 in credit card debt in a little over a year? You’re not a poor person, you’re a rich person. You don’t have financial problems and you can’t relate to my situation. I will have to find another website to read.”- that Trent received from a reader. I can somewhat understand where the reader is coming from. It can be irritating to read on blogs how you should lower your expenses by turning off your cable or cutting out the daily latte. Any sensible person at a lower income doesn’t indulge in those luxuries anyway. Advice to spend less than you earn can seem irrelevant when almost all your earnings go to basic necessities.
That being said I do agree that the basics of personal finance are the same for both the poor and the rich. If you are poor you just need to adapt them to your situation. It does make sense to get financial advice from someone who has had success with their personal finances. So yes, even though I’m poor I’ll gladly take financial advice from someone who is rich.
The other post had to do with the difference between being broke and being poor. Since I make less than $15,000 a year many would consider me poor. Trent defines poor as meaning that that you don’t have the resources available to you to improve your financial situation. Under this definition I’m not poor because I do have resources available to improve my financial situation. Once I complete my J.D. I should be able to get a job making significantly more income. Even if I didn’t finish my law degree I could move back to Vegas and return to the gaming industry where I would make a decent income. I made a conscious decision though that the pay I received wasn’t worth it to me to stay in a career I didn’t like.
Broke is defined as a situation you find yourself in because you’re either underearning or overspending. I suppose I am underearning but I don’t consider myself broke. I have a few thousand in savings and I can easily pay all my bills. That doesn’t sound like broke to me.
I guess my financial situation doesn’t really fit either definition. I find it possible to live well on what is considered a poor person’s income. I don’t give advice here on how to get rich because I’m not rich. My advice is on how to make the most of what you have which is what I do. This way it doesn’t matter whether you’re rich or you’re poor you just need to have enough.
That’s a good point you have there. I have always been wondering where can an individual with low income and low(frugal) expenses cut spending if they are not endulging in lattes or other splurging?