Behavioral Economics of Being Poor.

Note: I made a very simple edit to this early blogpost, and as a result, it shows up as a new post. This was written before I became homeless...

Poor people such as myself make different decisions than people with more money.  Some decisions are simply not possible through limited funds, while other decisions are based on circumstances that change from day to day, rather than careful longterm planning.

Groceries

Poor people spend a greater percentage of not just income, but total cash on hand, on groceries.  For someone making $72,000 a year, spending $60 on groceries isn't a big deal, but for someone with little to zero income like myself, it's impossible.

I can only take advantage of cheap deals, not good values.  This is due to something known as total ring in the grocery industry.  An exec for Kroger once explained this to me in terms of downsizing certain food items, which was causing a lot of grief among shoppers.  He said that they could sell a big Kroger brand can of coffee at a great price, but that doesn't help a poor person buy that item.  'It may be a great value, but that shopper may only have $20, so they can't take advantage of that value.'  So Kroger made smaller cans of coffee, jars of mayo, et cetera. Poor shoppers like me could then buy more things with my money.

Obviously, the goal here is to buy the cheapest foods, but there is also a focus on calorically dense foods.  I have no real vices, and food is my only real escape.  People will perhaps see this as reckless, but keep in mind that poor people live paycheck to paycheck at best and their next meal is never guaranteed.  You'd go crazy if you couldn't have a supply of simple comfort foods such as snack cakes, chips, or pop to go with your meat and potatoes.

Cheap pantry items are a must, including ramen noodles, mac n cheese, canned tuna, and some simple seasonings.  Milk, eggs, bread, and cheese are essential perishable items. Large cuts of meat can be bought only when on sale and must be eaten for every meal until it's gone.

Also potatoes.  At only $2 or $3 for a 10lb bag, potatoes are not only filling, but a great source of potassium and an unbelievable value.

Eating out

Eventually, a friend will call and ask if I've eaten yet, and after a long pause and a sigh, I answer that I have no money.  Many times, my good friend will offer to pay, mostly because he wants to eat and needs someone to accompany him.  

Sometimes, I'll go out to eat anyway. Again, this does seem irresponsible, but consider being holed up in the same small apartment for days or weeks on end.  I have no money for entertainment other than $8 a month for Netflix.  Same as with groceries, going out to eat is focused on getting the most for my money.  Buffets are the first choice for this reason, even if it isn't the cheapest meal, it will most likely be the only one I eat the whole day.

Clothes

Only bought as an emergency, like when something rips.  Only one pair of pants at a time.

Cars

Cheap as possible. Car loans are out of the realm of possibility. Most cash sales are way too much money, even with family helping.  The cars I've been driving have been either hand me downs or cheap charity cases.  I currently drive a 1997 Dodge Stratus that my sister bought for me from a friend after my previous car, a 1995 Ford Taurus that was a hand me down from my parents, died.  The oil burns off slowly, there is a bad seal in the torque converter, so it drinks a lot of transmission fluid, and the car's coolant system leaks.

Someone making more money would observe that making constant repairs is more costly and time consuming than getting a new car.  A new car is under warranty and doesn't tend to break down, but you need credit and stable income for that.  I, like most poor people, have poor credit, but I'll save my rant on consumer credit scoring for another post.

Savings

None.

Technology

My cell phone is a part of a family plan with my parents.  When employed, I paid all or most of it.  Now my parents have the full burden.  

I used part of my student loan money in 2006 to get a top of the line 20" iMac with an intel Core 2 Duo processor.  I still have it. Several years in, it started acting up, randomly overheating and crashing.  It turns out that this is a common problem for the Late 2006 iMac, but Apple never issued a recall.  Despite those problems and despite the fact it's really showing it's age(7+ yrs), this iMac was the single best value I have ever been able to take advantage of.  At $1,700 and lasting more than 7 yrs, this computer has more than made up for any shortcomings.

Social Life

My friends are in the band Swear Jar, so I go to their shows and hang out with them quite a bit.  I don't date.  I have no girlfriends.  I frequent no bars or clubs or go anywhere to meet anyone.  What could I possible have to offer someone?  I'm too poor to be anything other than a complete bummer to be around.