‘œAnyone who has ever struggled with poverty knows how extremely expensive it is to be poor.’ ‘“ James Arthur Baldwin

Last month, the Washington Post published an article entitled ‘œPoor? Pay Up.’ The story described how being poor often results in the lack of basic conveniences such as a car or a checking account, and how the lack of those conveniences leads to extra fees and high prices.

When it comes to food shopping, not having a car means that one is much more likely to use the corner store, where the costs are much higher.

You don’t have a car to get to a supermarket, much less to Costco or Trader Joe’s, where the middle class goes to save money. You don’t have three hours to take the bus. So you buy groceries at the corner store, where a gallon of milk costs an extra dollar.

Groceries aren’t the only place where the poor pay more.   A lack of a checking account results in paying exorbitant fees at check cashing places.

Lenwood Brooks walks out of the check-cashing place. He is angry about how much it just cost him to cash a check. “They charged me $15 to cash a $300 check,” he says. ‘¦[H]is story is as complicated as the various reasons people find themselves in poverty and in need of a check-cashing joint. He says he lost his driver’s license and now his regular bank “won’t recognize me as a human. That’s why I had to come here. It’s a rip-off, but it’s like a convenience store. You pay for the convenience.”

Since my wife lost her contract, we’ve had to be much more careful about money, and we’ve noticed quite a few places where the poor seemed to get dinged while the middle class and wealthy are able to escape the charges.   Here are just a few areas where we’ve discovered not having enough money can hurt.

Non-working automobiles ‘“ When our disabled station wagon was ticketed for being parked in one spot for too long, we were faced with a $50 fine.   We were able to escape paying because we knew our state’s vehicle code had a provision for forgiveness, and could prove the car was temporarily disabled and in the process of being repaired.   Had we not had the money to negotiate with our neighbor for its repair, we probably would have been forced to pay the fine.

Bounced check fees ‘“ I have a checking account with our local credit union, since it was cheaper to finance our automobile there.   The account is rarely used, and only carries a balance of $50 or so.   Recently, someone else’s $120 check was erroneously cleared against my account.   The account didn’t have enough money to cover it, so the credit union helpfully transferred money from my savings account (there still wasn’t enough money to cover the check) and charged $29 for the ‘œcourtesy’ of making the transfer and honoring the NSF check.   Although I was able to get the mess straightened out and the fees refunded since the check wasn’t mine, it was a sobering reminder of how much not having enough money can cost.   A banking mistake when you are poor can cost nearly $30.

Payday advance loans ‘“ Back in the days before we had a kid, we rented out our spare bedroom to a roommate.   She was disabled and received Social Security payments and frequently found herself in the position of having to use payday advance loans to make it through the month.   She would routinely pay a fee of $45.00 to borrow a total of $255. She was paying a whopping 460% APR for borrowing money for only two weeks.

So what can you do to avoid some of these extra costs?   In our experience, the biggest key to avoiding them is planning and organization.   Here are some things we’ve learned:

1.       Keep your vehicles in running order if at all possible.   If you can’t, don’t park dead, or semi-dead, cars on public property.   If you can’t avoid parking on the street, be religious about moving the vehicle (even if you have to push it) to avoid getting a parking ticket.   If your economic situation means you won’t be able to keep the vehicle in running order, give thought to disposing of it and finding alternate transportation.

2.       Be meticulous with record-keeping.   Keeping your checkbook carefully balanced will avoid bounced check fees.   Don’t write checks until you are sure your deposits have cleared.   If you aren’t sure, check with the bank to make sure the money is available.   Be careful with automatic withdrawals from your checking account.   Although they can be a godsend for forgetful bill-payers, they can also be a disaster for those whose deposits don’t arrive on time.

3.       Only pay bills that you can cover.   It’s easy to let creditors bully you into a payment plan you can’t manage, resulting in a trip to the payday advance store.   If you are facing a late charge, compare the costs of the late fee against the cost of the payday advance.   You may find that the late fee costs less.

Next in series: Staying on Track

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