I’ve Never Been Poor

Ok, confession time.  As a student I had the experience of being broke a few times, but I can honestly say I’ve never been poor in my life.  So what is the difference?  Mmm, to me it is a rather fine line between the two states yet still a big difference.

Being broke is the simple state of being without money.  It might be right before your next pay cheque, so while you are without money you are not without hope of more money.  Being poor is a completely different mind set, you don’t have any money, but you also don’t have any hope of more money.  So at that point worries of having a place to live or having enough to eat come forward.  So I have experienced the first state of being broke, but I’ve never been poor.

I grew up firmly in the middle class (or upper middle class depending on your definition).  So I never went to bed hungry (unless I had been a stubborn idiot and tried to say I won’t eat supper because I didn’t like it).  I grew up always having that security behind me, so I didn’t worry about going hungry or having a place to sleep.  This carried forward even during my broke times as a student.  I always knew if push came to shove I could always beg for some grocery money from my parents and get it (not that I ever did it).  Yet this background level of security has marked me with my approach to money.

I’m not afraid of living on a low amount of spending.  I don’t equate a low level of spending with being poor or a lack of security.  As such my retirement plan can contain a modest level of spending ($27,000/yr) that might scare the crap out of others, but I’m fine with it.

You see money really isn’t just money.  Money is also your hopes, dreams, fears all wrapped up in the guise of numbers at your bank or bills in your pocket.  Your childhood can mark your relationship with money, so if you have ever been poor that will affect you greatly and likely for life.  That desire to never been poor again can drive people to odd savings targets that are really too rich and they can often fall into a cycle of never having enough money or things.  I know I will never be that way, but I do understand how that can drive people in their retirement planning (I’ve had several long discussions with people who have been poor).

I’ve a bit of the opposite of that since I don’t equate a lower level of spending as risky.  Actually I would argue the opposite is true.  A lower level of spending in your life actually allows more savings and thus better security at a much younger age than others.  Also by leaving work while you are younger allows you more time to earn money at other opportunities, that might not exist when you get older and have poorer health.  So while I’m planning an early retirement that might scare you, I would argue I’m going to be better off than most people at that age.  I won’t have to work, so layoffs won’t be a worry, food will always be at the table and I will never be forced to move out of my home by the bank or a landlord.  I just might spend my entire like never knowing the feeling of being poor.

So how about you?  Have you ever been poor or broke?  How did the experience change your relationship with money?

15 thoughts on “I’ve Never Been Poor”

  1. What do you mean when you write that you are planning an early retirement that “might scare you…”? I am guessing that you are planning to achieve financial independence on some very low amount. Is that correct?

    And how do you define “retirement.”

    Do you really intend to stop working once you achieve financial independence or do you mean that you will exit the more traditional construct of work (the nine-tofive, five-day workweek) and work in some other construct?

    If you plan to keep working, then you will not be “retired.” And it is incorrect usage to call any work-construct retirement.

    And having a roof over your head and food to eat is not the opposite of being poor, most of the poor have those as well. Living on a small income is not something to aspire to and it is the opposite of rich.

    I do not believe you have a firm grasp of what poverty actually is as evidenced by your use of the word “poor.” But that is not uncommon in the children of the middle-class.

  2. Poor or broke. About the only time was when I started out to run my own business for the first time and my wife had to support us. She was also just starting out. We didn’t have much money at all, barely able to do any leisure activities, but even then I think that real poor people who couldn’t pay the rent would tell me I didn’t experience nothin’

  3. tmgbooks, why such an angry rant?

    What do you mean when you write that you are planning an early retirement that “might scare you…”? I am guessing that you are planning to achieve financial independence on some very low amount. Is that correct?
    ANSWER: CLEARLY STATES THAT THE PROPOSED RETIREMENT INCOME IS $27,000/YEAR. IT IS THE AUTHOR’S OPINION THAT SOME PEOPLE MAY THINK THAT THIS IS A LOW AMOUNT.

    And how do you define “retirement.”

    Do you really intend to stop working once you achieve financial independence or do you mean that you will exit the more traditional construct of work (the nine-tofive, five-day workweek) and work in some other construct?

    If you plan to keep working, then you will not be “retired.” And it is incorrect usage to call any work-construct retirement.
    ANSWER: I AGREE THAT IF TIM DECIDES TO WORK (EVEN A PART-TIME JOB HE ENJOYS) THAT THIS WOULD NOT MEET THE DICTIONARY DEFINITION OF “RETIREMENT”. EVEN IF HE CHOOSES NOT TO FORMALLY “RETIRE” FROM ALL WORK, TIM WILL STILL HAVE FINANCIAL INDEPENDENCE FROM HIS 9-5 JOB.

    Living on a small income is not something to aspire to and it is the opposite of rich.
    ANSWER: THAT IS YOUR OPINION AND MANY OF THE PARTICIPANTS OF THIS BLOG WOULD RESPECTIVELY DISAGREE WITH YOU. IT IS THE BASIC CHOICE OF TIME VERSUS STUFF. IF YOU CHOOSE TO SPEND YOUR TIME WORKING IN ORDER TO OBTAIN MORE THINGS THAN THAT IS YOUR CHOICE. IT IS MY OPINION THAT A PERSON THAT CAN SPEND MORE OR ALL OF THEIR TIME WITH FAMILY, FRIENDS OR DOING SOMETHING THEY LOVE IS RICHER THAN A PERSON WITH A BENZ OR BIG HOUSE.

    I do not believe you have a firm grasp of what poverty actually is as evidenced by your use of the word “poor.” But that is not uncommon in the children of the middle-class.
    ANSWER: YOUR DEFINITION OF “POOR” MAY BE DIFFERENT. IF YOU WOULD CARE TO SHARE THAT DEFINITION OR YOUR THOUGHTS ON THE SUBJECT I’M SURE WE WOULD ALL BE HAPPY TO READ THEM.

  4. Your post has really got me thinking. I’m going to have to think more about this.

    For instance, today I’m fasting. I’m not eating because I choose not to, though there’s food all around me.

    And my spending has gone way down too after reading these PF blogs. And it could really go down a whole lot more if pressed.

    But looking back in my life, I would have to change how I thought about my past to bring it more in line with your thinking. I definitely struggled when I was in my twenties, and I considered myself poor. But truth is, it was only transitory, and I hardly suffered.

    Really, how little would it take to live? And poverty? It’s relative.

    And why in countries much poorer, people are happier?

    Good post. You made me reexamine my thinking again. You’re a good writer.

  5. I grew up poor, by my definition and by the definition stated here. Our religion required my parents to spend as little time as possible making money so they could focus on the religious requirements. By the time I was born, my parent’s house was paid for, so in that way, I never had to worry about where we were going to live. However, our family was often without enough food, without reliable transportation in a very rural area, and we spent next to nothing on entertainment because there was no money for it. It was not only monetarily poor, but it was soul-sucking because of all the denial and worry we lived with, while the community around us was fairly affluent (by my definition, their houses were not falling down around them, they always had enough and extra food, they never had to help the family push the car home because it was broken or they didn’t have enough money to put gas in the car.) Everything we had was homemade, cobbled together and barely functional, while everything our neighbours had was smooth and sleek and just worked with no question. And I think that’s why, in our society, poor people are unhappy – we compare ourselves to our relatively rich neighbours and see the lack in our own situation. If everyone was in the same or similar situations, it would seem normal and the happiness level would be higher.

    Growing up this way definitely affected my outlook on income and happiness levels. It led me into poor financial decisions in my 20’s, trying to make up for lost time by trying to purchase everything I felt I lacked growing up. (I also got fat once I was able to afford more than enough food, but that’s a different blog – although more closely related than you might think!) I finally was able to shake loose of that mindset and was able to live in abundance for a few years. Now, however, health circumstances are curtailing our family’s income with no hope of recovery, and I feel myself sliding toward the poor mindset again. It’s a struggle that I don’t know how to win.

  6. I did not grow up poor, but definitely not rich either. I remember when I was little, my classmates would have pocket money to buy snacks during recess while I would have nothing. But I understood it was only nice-to-have because I did not really feel hungry at school recess time. My mom always cooked at home (and still does) and only very occasionally we eat out. We lived at a government subsidized home so we did not have to worry about place to live. We were not rich but we were happy.

    Growing up that way has made me not dependent on material at all to have happiness. I don’t even know what LV (the luxurious brand) is till mid 30s! I have always been very disciplined to manage my money and here I am, retired happy but not very rich!

    Sandy, keep up the good work! There are ups and downs in life, and please don’t give up. I am sure you will get a lot of moral support from this blog.

  7. Ross:

    What is scary about $27,000 a year? If your house is owned mortgage-free, that amount is about average for a family of three in the USA.

    And is that gross or net? And what are his expenses? The FI equation has two elements: Income and Expenses. You can’t solve the equation only knowing one of the variables.

    Are you assuming in answering for Tim that he considers that scary because it is so little and that his readers (or any sane person) will think it is simply not enough?

    Or does he intend to augment that amount by continuing to work after he has achieved “early retirement”? Then that figure is irrelevant unless we know how much augmentation will be going on.

    Again, where’s the scary?

    FI is somewhat easier to achieve in Canada than in the USA because in Canada addressing health care is not the issue it is for someone seeking to achieve FI in the USA.

    In fact, in the USA, it is often a deal breaker, particularly for someone with a pre-existing medical condition that would make it almost impossible to acquire private policy health care insurance at any price.

    Of course, in the USA, you could choose to go without and shift the burden to more responsible members of society. But if you do that you are not really FI.

    In the USA, I do not need to define poverty, the government does that based on family size and income. So are you saying that Tim is using the two words as synonymous? They can be but they are not necessarily.

    If I understand you correctly, you are stating that more freedom is your goal and that you perceive the means to that end as being able to support your lifestyle without earned income (via employment) and with passive income (from income and investments?) instead.

    And you also seem to imply that more freedom is superior to more work or, stated another way, the less work the better. That is a value judgment and nothing more; lazy people have the same view, by the way.

    But if more freedom is your goal, it is hardly necessary to achieve financial independence in order to achieve the goal of more free time (or less work time, for that matter).

    Apply Occam’s Razor: If you want more free time, work less now. Why scrimp for years while you work full-time when you can just skip to the chase?

    If, as you seem to claim, the goal of the readers of this blog is to figure out how to live as cheaply as possible to have more free time and if that is your goal, as well, how much more free time do you need or want exactly? “More” is not sufficient as a goal.

    Do you not want to work at all? Is any work a violation of the sanctity of your free time? Is “no work at all” the only solution you think defines success?

    There are people on welfare and food stamps who are doing that now. They are poor but they have achieved what you seem to aspire to.

    Or is it your opinion that FI only “counts” if you achieve your goal with sufficient savings from earned income to produce the necessary amount of passive income? And are those who have chosen the dole to achieve the same end therefor inferior to you?

    I think many of those who are happy living on the dole would think you are wasting your youth “working for the man” simply to achieve what they have now and that they get for free.

  8. I don’t think that by making a life choice to focus on saving and retirement that a person thinks they are superior or better than other people. It is simply their choice to put something that is important to them before other things.

    Living on government subsidies may have the same result as not having to work but it is definitely not FI. It is in fact the opposite, it is being 100% dependent on the state to supply you with the means to survive. The end result of not having to work might be the same but it is definitely not independence.

  9. Interesting post and discussion in the comments.

    I would define poor as meeting both of the following conditions:

    (a) Low net worth, and

    (b) Income and expenses are both low and at best income barely exceed expenses.

    Many households with large incomes and large expenses regardless of NW I would not consider poor. They live in decent if not large houses and simply spend what they make as fast as they make it.

    Many other households live frugally, perhaps rent so they have little NW but have incomes which comfortably exceed their expenses. They are not poor, either.

    Not so obvious how I would classify myself when I was a college student. I had student loans, not yet payable, although I had enough money to buy my schoolbooks and pay my share of tuition and room and board with some left over to enjoy myself. I worked some odd jobs in 3 of my 4 years to give me some spending money. Was I poor? Compared to other college students I knew, not really. I did not feel poor.

    When I bought my first car 25 years ago, I paid cash and had about $20 in the bank (along with cash in my wallet and the ability to get to work by train) for about 2 days until my next paycheck. You could say I was nearly broke for a few days. I was living with my parents at the time, and my income greatly exceeded my expenses so I rebuilt my depleted savings very quickly before I moved out 6 months later. I did not feel poor then, either.

    Since I ERed in 2008, my income dropped a lot but still exceeds my expenses. And my NW is very high. I surely don’t feel poor.

  10. Interesting post … seems you’ve elicited some emotional responses with this topic. That is not surprising but it makes for good discussion.

    I agree that money isn’t just money but much more than that. My family of origin was middle class until my parents divorced. I lived with my mother who was a low wage earner post-divorce and we descended into the very low middle class. It was an emotional and scary time in my life and shaped my feelings about money but more important, about security and how fragile it really is.

    I became a saver early in life and I think those childhood events helped shape that attitude. But although my husband and I have plenty now, it does not erase my deepest fears and knowledge that life can change quickly and money does not buy a deep-down sense of groundedness. Maybe that is what one spiritual leader meant when he said that is it easier for a camel to pass through the eye of a needle than it is for a rich man to see heaven!

  11. Oh, good discussion everyone! There have been some interest stories of people’s childhood and the results in their adult life on money.

    @tmgbooks,

    Wow, that’s a lot of questions. If you read the retirement calculations series (links are in the first sidebar on the right) that should answer your questions on the numbers (they have changed slightly since then, but very close).

    Also by your comments you don’t seem to have read much of the blog so I will try and bring you up to speed. I already work part time at my day job. I currently have every Friday off, but I have chosen to do a second job as a school board trustee. So I’ve already replaced some ‘must do’ work with some ‘want to do’ work. Yet despite that fact I still want to have to option of all my time being ‘want to do’ work and I’m pushing ahead to early retirement. I don’t have a set plan of doing either full retirement or semi-retirement yet as I’ve been debating the options for a while here of each path. The point would be it doesn’t matter in the short run, since the goals are the same.

    I disagree with your statement the getting to early retirement or FI is easier in Canada. We pay much more tax during our working careers to pay for that universal health care. So while you get a greater amount of cash flow during your working career, we in exchange for not having that cash flow get ‘free’ healthcare. The point is we pay for it, just like you, but our system just has different flaws and we cover the costs via our taxes.

    Thanks everyone for the great discussion.

    Tim

  12. Interesting aside – the Globe and Mail had an article on Canadian vs. US taxes last week, basically saying that they were about the same (righhhht…) – it got some good commentary going.

    I grew up poor in a sense – always having a roof over my head and food to eat though, so not really poor. I’d say my parents were similar to Jacob at Early Retirement Extreme, only more frugal. 🙂 They gave me an extreme aversion to money hoarding and dying rich…

    I’ve had periods of poverty in my own life, but it’s made me lighten up a bit on how much I think I need to save because I hope I’ll always have the physical and mental abilities to do what I need to do to bring money in the door if I need to. But hopefully enough warning and common sense that I won’t *have to* actually do that. It was a good learning experience though to get down to and really understand the “essentials” – food, housing, and that’s about it. Oh, and going out for a beer once in awhile. 😛

  13. Tim, thank you for taking the time to respond. You are correct in assuming that I am not a regular reader but I do jump over from the PF aggregator whenever a link there catches my attention.

    I understand your comment about in response to health care not being the issue in Canada that it is for those in the USA pursuing FI; it’s like people who rent that claim they are saving money because they don’t pay property taxes.

    I am of the opinion that taking financial steps to achieve financial independence is prudent as part of a long-term financial plan. After all, in order to really retire, and by that I mean to not pursue earned income at all, you will first have to achieve financial independence.

    In the USA, part of that plan will include Social Security age-related payments (not disability) and withdrawals from retirement savings accounts. That being the case, those who include those income sources in their planning will plan to retire at the traditional age of retirement (62 is the soonest you can start collecting SS).

    But I take exception to calling it “early retirement” when an individual is simply changing their work construct.

    And, in fact, it is almost never the case that someone who is pursuing FI is doing so with a plan that will exclude earned income entirely.

    So why not call a thing what it is? And what it is, in your case, is not “early retirement.” Best of luck and I look forward to reading your posts in the future.

  14. My name is Larry Cuozzo and I recently entered the Moneyville contest to write a financial blog. I recently spoke with Adam Mayers at the Star who liked my idea and wanted to know if I was interested in writing a series of articles, much like you did, on how I was able to achieve my financial goals. He said that in order to continue, I would have to be willing to share details about the decisions I made and how this affected my net worth.

    My concern about doing this is two fold.

    First , I live and work in Toronto and I’m certain that people I know will read the article. Does discussing your financial success come across as arrogant, and bragging?

    My second concern deals with privacy. My name and city I live in will be published. I currently have a listed phone number. Will I get strange phone calls from people or even worse invasions of my privacy?

    Would you share with me your experiences to date? Are my fears overblown or is there some merit to my concerns.

    I’d appreciate your advice.

    Thanks,

    Larry

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