6 things I did because I was poor that made me poorer

Matt Stokes is a freelance writer, editor, blogger, and TV producer in New Orleans. His first novel, Generation Why, is a humorous look at the difficulties of college graduates in the 2010s who don't know what to do with their lives. The book came out in 2012 and is available from Amazon . Follow him on Twitter @mattstokes9.

Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.

Like almost everyone else I know, I went through a period after college where I had a very difficult time being self-sufficient. It didn't feel that way at the time, and I think most people who get into this situation agree; we all feel like grown-ups, breathing the freedom of financial autonomy.

But I was anything but mature when it came to money. I spent more money than I made, went deep into debt, racked up insufficient funds fees, and received countless calls from bill collectors demanding I pay them. All of this happened without me ever realizing I was digging myself a hole, because you never feel it when it's happening, because you're not paying attention.

Eventually I was able to focus, plan, and develop the discipline to get out of debt, pay my bills, save money, and stop living paycheck to paycheck. But not everybody is so fortunate, and I have many friends and family members who do the kinds of things I detail below. What follows are six things I did because I was poor, and doing these six things made me poorer.

6. Buying Only $10 of Gas at a Time

When you have only $50, a week until your next paycheck, and an empty tank of gas, it just feels right to buy a small amount of gas. Feels better, that's for sure, because you still have lots of money in your pocket. You'll have to return to the gas station four more times that week, of course, but at least it won't seem like you're spending much.

Forget fuel efficiency; this type of thinking speaks to a mind-set incapable of planning ahead, oblivious to how much it costs to drive a car and live your life. It's similar to never buying groceries for a week, instead spending $7 a day for fast food and then $12 at the store for that night's dinner and drinks. It feels better than planning a week's worth of meals and spending accordingly one time at the grocery, but it costs far more in the long run and leaves you broke again and again before your paycheck.

5. Buying Things With Store Credit Cards

Many people get into trouble with retail credit card debt, and I'm lucky to have mostly avoided this trap, with one notable exception. When I first moved into my own apartment, I wanted a large, state-of-the-art HDTV for all my viewing needs. Because I couldn't afford one, Best Buy was more than happy to swoop in and offer me financing on a $2,000 behemoth. This felt great; I drove home that day with a great TV and wouldn't have to pay until the end of the month, and then only $50 or so every month after that…. for the next decade of my life. Making matters worse was that this happened just before the price of HDTVs plummeted; I was still making payments by the time similar TVs started going for under $500.

4. Never Checking My Bank Account

When you're poor you become used to hovering near a zero balance in your checking account. It's just a fact of life, and you live in perpetual intimidation of the negative. So you'd think this would lead me to diligently check my account several times a day to make sure I had a positive balance, but this fear instead had the effect of making me avoid checking my bank account altogether. I would go days without checking, lacking a clue about how much money I had. I held out on checking until I absolutely needed to, and then, oh, the joy at spotting a positive integer, even if it was under a dollar, because it meant I hadn't been accruing $35 NSF fees for days without realizing it. But mostly I would just let days go by without checking a balance, because seeing a negative balance would mean I'd have to think about money, and that would ruin my night.

To be this scared and intimidated by the bank account should be motivation to, you know, get your act together. Instead I just became depressed and decided to do nothing at all. I was a gold mine for my bank; banks make huge profits on overdraft fees and programs, but the whole system doesn't work without unmotivated, apathetic people like me.

3. Rent-to-Own

Rent-A-Center and its brood are a wholesale plague on our instant-gratification society. Even ignoring these businesses' shady collection practices, rent-to-own stores are, philosophically, a very bleak idea. They promote the thought that nothing is so cheap and unimportant that it can't be leased. And because I thought it'd be really awesome to stay up late into the night reading on a cushy swivel chair, but lacked the several hundred dollars on hand to buy it, I thought nothing of paying $40 a month to borrow it. Forget that after a while I'd paid enough total to have bought the chair brand-new; or that I ended up hardly ever using it. (Another symptom of the poor and short-sighted: a lack of motivation to do something simple like return a chair that you don't own to save gobs of money.) These rent-to-own schemes are a scourge because they make people like me think we're not good enough to own things like recliners or Nintendo Wiis. By making us focus on the small things, we become distracted from thinking of big-picture financial things, like saving money to buy a house.

2. Telling Myself it Always Works Out

The thing is, when things got really bad for me financially, they usually did work out. I always paid my bills, even if they were late. I had my cable and Internet service cut off several times, but I never lost my power because, come on, I wasn't some lowlife who couldn't afford his electricity bill. No, things never really felt that bad. I was used to never having money and never having a sense of where I would be financially the next month; this was just how things were supposed to be.

Things always worked out, sure, but I was only in my mid-20s. I hadn't really had time to put that to the test; catastrophe could have struck at any time, and the fact that it hadn't happened yet didn't mean it couldn't. “It always works out, somehow” is really the worst thing I could have told myself; it's a refrain of the lazy and the depressed, an excuse to hold off on dealing with our problems for at least another day.

1. Payday Loans

The items on this list all have something in common: They're behaviors enabled by an unwillingness to look ahead, to organize your life in a meaningful way, to even connect Future You with Present You. They allow you to punt away your problems. Payday loans creep on this tendency in the worst way.

The idea of payday loans actually sounds pretty useful: Lend cash to people who prove they're employed and can repay the loan on their next payday for a fee, usually about $50. But that's rarely how these transactions end up going. Inevitably, payday loan customers are on a fixed income and won't magically have an extra lump sum of cash appear in two weeks to pay off the loan and fee, so the payday loan store lets you “renew” your loan, meaning you pay a fee ($50 for me) to extend the deadline another two weeks. Once you get into this cycle, you can find yourself renewing loans indefinitely. Getting a paycheck and heading to the payday loan store to hand over $50 just becomes a fact of life, and what's tragic for those who get caught up in it is that with this $50 they're buying… nothing. (For this reason, payday lending is legally questionable and not as widespread in the 15 states where triple-digit interest rates are illegal.) And I understood what was going on as it was happening, was aware of how much money I was wasting because I lacked the discipline to gather $400 to pay off the loan. I knew I was losing thousands of dollars in the long run, but I would defend it to myself by saying, “Yeah, but it doesn't feel like that.”

We make it easy for poor people to get poorer, sure; but ultimately the fault lies with every person who lacks the motivation to make a budget and stick to it, to get a sense of how much money it takes to live the way you want to live, and to then organize your habits accordingly. I lived this way, and it was my own fault; I did it not because I wanted a lot, but because I just didn't care.

More about...Budgeting, Debt

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Elizabeth
Elizabeth

I could be wrong here, but I think what the OP is talking about is being broke, not poor? One thing the recession taught me is that even people in big houses with fancy cars can be a financial disaster waiting to happen — but it’s not the same kind of struggle that people face when they live below the poverty line. For those that have the means to improve their situation, I think this line says it all: “”the fault lies with every person who lacks the motivation to make a budget and stick to it, to get a… Read more »

Mary
Mary

If I could like this response more than once, I would. There is a HUGE difference between being broke (yet buying a $2000 TV and renting furniture) and being poor (and worrying about your next meal). The tone of this article kind of rubbed me the wrong way (i.e. everyone can solve their poverty by just learning to manage money). However, I do think many young people experience these issues while learning to live on their own.

Abby
Abby

Thank you. I was fine with the article until I hit that last paragraph, and you expressed my feelings perfectly.

BD
BD

SO True.
Poor people do *not* have money to buy a $2,000 TV, even with financing. I haven’t owned a TV for years now, because it’s a frivolous item that I cannot afford. I don’t own a car either – can’t afford one. Or a smartphone – can’t afford it. The only reason I even have a computer and internet is because I use it for my freelancing, which right now, is my only source of income (so I obviously can’t get rid of the internet or the computer!)

nicoleandmaggie
nicoleandmaggie

These are good examples of things that people near the poverty line do by necessity. It really sucks. At some point they lose the bank account and can’t or won’t get another.

Sassy
Sassy

I watched my nephew doing the same thing as far as food and gas — and when he overdrew, instead of one $33 overdraft charge for filling his tank there would be three or four — all 3 to 5 times the amount he actually put on his debit card. It killed us to watch it happen; he’s still paying back family loans that helped him pay off the charges so he could get straight. Good article.

Lindawer
Lindawer

Wow, this really opened my eyes to things I thought were saving me money. I buy gas in increments telling myself that I will get just the minimum to get by in case the price goes down in a few days. Aside from the extra time wasted stopping more frequently, I often pick up a junk food snack while there. I have a regular commute and will start planning my gas purchases so I only have to fill up once a week which will be in my budget. Thanks for the eye opener. I am starting to get back to… Read more »

Elizabeth
Elizabeth

Not sure if this helps, but keep an eye on price fluctuations in your area. When I had a longer commute, I used to fill up on Tuesdays or Wednesdays because the prices always went up right before pay day and the weekend. (Especially in the summer!) Often our local radio station or TV station will warn about price hikes too.

linda
linda

Thank-you for sharing your experiences. I also have been there.

mike
mike

I stopped skimming this article after the usage of the word lowlife for not being able to afford the electric bill. I say skimming because I never did any of these things ands prioritized bill my bills according to real needs and paying them 1st but it doesn’t mean I don’t know people who have trouble with their bills due to extenuating circumstances. So one persons lowlife is another persons friend.

lmoot
lmoot

I’m pretty sure he was being facetious when he said that. He was mocking his younger self for that way of thinking.

I really enjoyed this post. I’ve done the thing (ok, I still do them) with filling the gas partway, and getting enough groceries for a few days, and spending money on fastfood.

Though I do agree that poor is different than broke. HOWEVER there are still people who are below the poverty line who also use their money to buy things they can afford (and which are wants, not needs).

Sara
Sara

I loved this article – and I can definitely relate. I grew up poor so it took a long time to figure out how to break the poor spending habits I learned.

Laci
Laci

Having read Matt Stokes book, Generation Why, I’m very aware of his sense of humor. I can assure everyone he meant no harm in his use of the words “poor” and “lowlife.” He speaks in extremes to emphasize the absurdity of the way people think, or don’t think when it comes to looking at themselves realistically and somehow not applying the same views on themselves as they apply to others.

Sounds rather familiar, huh Mr. Prioritize My Bills According to REAL Needs. Nice way to talk about your friends.

Diane
Diane

It sounds like the real obstacle was the refusal to accept that you were poor. If you had, you wouldn’t have been buying TVs and chairs, which you don’t need to survive, or spending $12 a night on dinner and drinks from the grocery. It’s a live-and-learn thing, since you were young and just out of college. It is good, though, to show that things like Rent-to-own and payday loans aren’t so good in the long run.

James
James

What’s the problem with buying gas $10 at a time? Anything that serves as a reminder that driving actually costs money (and might stimulate you to drive less by carpooling, walking, biking, taking public transit, etc) seems like it would be a good thing.

The analogy to buying fast food every day instead of buying groceries for a week doesn’t really hold up. Food actually costs more when you buy it in small quantities. Gas costs the same per gallon regardless of whether you’re buying 1 gallon or 20.

Kirk
Kirk

If you don’t have to drive out of your way to get gas then it doesn’t matter, it only costs a little extra time for every stop. If you gas station doesn’t raise prices for credit cards it shouldn’t matter at all, as you won’t be paying for it the end of the month. Really it has to do with long term planning & budgeting. $0.10 increments in price don’t mean much, but when gas prices are -$0.20 bellow yearly average I will buy up bulk gas to use when gas prices are higher. Where I am it’s usually Jan-April… Read more »

Breezy
Breezy

How do you buy bulk gas? That is something my husband and I have considered, but I’m not sure how to store it.

stellamarina
stellamarina

Plus….if you are trying to hypermile..a full tank of gas is more weight to carry around and therefore a higher use of your gas. I only put $13 of gas into my car per week but that is how much I need.

Amanda Sheahan
Amanda Sheahan

I wonder if, before he wrote this article, Mr. Stokes pondered how fortunate he is to have a bank account. Most working poor don’t have that luxury – and that hosts 2 of the biggest pitfalls he talks about, payday loans and rent-to-own. Think about this. Banks won’t let you open an account if you don’t have several thousand dollars to start with, but how are you supposed to accumulate that money? Where is somebody who is already struggling supposed to not only come up with the money, but find a safe place to stow it while they are accumulating… Read more »

BD
BD

Where are you getting that information?
Every bank I’ve ever been with will let you open a checking account with hardly anything in it. $25 is usually sufficient. For savings, $100 is usually enough (although, I’m pretty sure I’ve opened up savings accounts with less than that).
I’ve always been poor, and was always able to open an account with a bank with very little money.

Ely
Ely

When I met my husband he was severely under-employed and couldn’t get a bank account. Not only did he rarely have $25, he only had one ID: a driver’s license. Every bank required 2. (Most of them told him a credit card would do, which was hilarious because he could not get a credit card either.)

superbien
superbien

He didn’t have a social security card, or birth certificate? Those are usually the alternate IDs people use. Passports cost money, and are only needed with international travel, so I could see him not having those, but you get SSN card and birth certificate at birth.

Ely
Ely

I’m sure he could have gotten them, but it’s enough of a hassle that even I don’t know how to do it, so I doubt it was worth the trouble to him at the time.

superbien
superbien

[I think this is posting out of order – I’m responding to your statement “I’m sure he could have gotten them, but it’s enough of a hassle that even I don’t know how to do it, so I doubt it was worth the trouble to him at the time.”] That makes sense – often things just seem really overwhelming, especially on the spot. I just recently ordered both documents so I know that it’s actually become quite easy nowadays, if you ever needed to… I’m throwing this out there for general knowledge 🙂 Social Security card replacement is free –… Read more »

Robert Jacobs
Robert Jacobs

Your average American household has participated in at least one of the six habits. That is why the average American has a pile of debt and is broke, not to mention trying to justify their stupidity until they decide to make a change by stop making stupid choices and get out of debt. I enjoyed this post and will share on Twitter.

Thomas | Your Daily Finance
Thomas | Your Daily Finance

Those payday loans are killer and I know people that are almost in the state of being addicted to using them. Those interest rates are nuts and it causes you to lose more money and be even more behind on money. I know one thing was putting things on credit cards and then turning around spending the cash that I had that should have went towards the bills. I was using the credit cards like they were cash. You have to pay those dang things back.

Ross Williams
Ross Williams

I have to admit, when I was poor I kept my gas tank close to empty most of the time and it saved me money. Its easy to “burn” money in the form of gas without realizing how much that trip really is costing us. According to the AAA and IRS, the cost of driving a mile is a little over %.50. I doubt many people actually think about that when deciding whether to take a trip or even when buying a house 20 miles from work. Payday loans and rent to loan are businesses built on exploiting people’s ignorance.… Read more »

Matt
Matt

“You can blame yourself as the victim of your own stupidity or blame the ‘smart operator’ who took advantage of it. Or you can blame regulators for failing to put them out of business.”

Well, you can TRY blaming all of those things, but if you’re honest with yourself than you’ll see only one of them really deserves the blame.

jim
jim

I really liked this article. I’ve got a 20-something son and I’m forwarding it to him. Appreciate the honesty and the “what not to do” tips on things a lot of 20-somethings may do, totally unaware of where it will take them. Thanks.

Matt @ Your Living Body
Matt @ Your Living Body

Things I’ve done that made me more poor:

1. Student loans

2. Student loans

3. Student loans

4. Use a credit card in college to pay for dates with girls that I didn’t end up married to.

5. Student loans

jim
jim

Matt,
No truer words were ever spoken!

Lindsay
Lindsay

Ever charged your community college tuition on a credit card instead of getting a small student loan? Now that is probably the dumbest thing I ever did with money. :/

I have never done any of the other things on this list… but I have charged lots of things that I didn’t need, like cute shoes, and going out for sushi, and car repairs when I could have walked to work.

I don’t carry a balance now, but I still have a ways to go in terms of being frugal.

Debi
Debi

“It always works out, somehow” is really the worst thing I could have told myself; it’s a refrain of the lazy and the depressed, an excuse to hold off on dealing with our problems for at least another day. So, so true. This is the most toxic of all the issues you outlined. At least you were still in your twenties when you outgrew this thinking. We have in our family someone who in 34 and still living this philosophy. Bad teeth due to not being able to afford a dentist, no health care, a part time job at McDonands,… Read more »

Jake @ Common Cents Wealth
Jake @ Common Cents Wealth

I really hate payday loans. They just ensure the poor get poorer. If borrowers knew just how large of an interest rate they were paying I’m not sure many would do it. I would do everything else possible before going to a payday lender.

Stephen Kratcoski
Stephen Kratcoski

To Jake,

I agree completely with your comment. Two of my friends tried payday loans and got deeper in debt. One of them started getting phone calls from collection agents. This was years ago but both of them learned a hard lesson.

Steve: Comment #35

Thera
Thera

Great article and I agree with and have fallen for, all of them. You forgot another, besides student loans, car sharks. The guys who will let you buy a car with no credit etc. and charge 29% interest on a car guaranteed to break down the day after the crappy useless warranties expire.

Stephen Kratcoski
Stephen Kratcoski

Payday loans were created to provide quick emergency cash for consumers on a low income that are constantly behind on their bills. Financial institutions know they can get away with 200%+ interest charges making their problems even worse. You are basically giving these companies free money at triple digit rates.

Stephen Kratcoski

daren
daren

in the uk some are as high as 600%

Goks Lakota
Goks Lakota

Thanks Stephen! I will try to use payday cash as you say. thanks!

shewanna
shewanna

I love this…sounds like me presently…

Camp System
Camp System

Thank you for this blog. It has a lot of great information and some great contributors. Interesting, clear and precise. Thank you for the info Ellen.

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