In recent days, many of us have become significantly more aware of the issue of being low-income. The freeze of SNAP benefits impacted 42 million Americans. Medicaid cuts will impact 11.8 million more. Cuts to vital programs that help people who are struggling to afford housing are on the chopping block as well.
That said, this is nothing new for people living on the edge. The problem with living there is that it is very easy to fall off.
Every day, so many of our neighbors are at risk of falling into the financial abyss. When vital services are cut, it pushes them even closer. We saw it with the recent SNAP budget issue, where many folks asked, “Why are there so many people living on SNAP? That shouldn’t be the case.” The answer is simultaneously both simple and complicated.
The largest number of those living on SNAP are seniors, children and the disabled. But why? For our seniors, there are many answers, but the reality is that their Social Security payments are not keeping up with the cost of living. Rent is 41% higher than it was 5 years ago. Food prices have increased 23%. The cost of healthcare and medicine continues to skyrocket. Among these costs, SNAP is a life sustaining and saving resource for these seniors. Many of those who are disabled are in the same situation. No longer able to work, they rely on programs like Medicaid and SNAP to help them survive day-to-day. For families with children, the answers become even more complicated, especially with the cost of daycare outpacing the cost of a mortgage right now.
Being low-income shouldn’t be a life sentence. However, once your income dips into that area, it is very hard to come out due to the many systems and barriers keeping folks in this income bracket.
For example, having limited income first constrains your buying power for other goods. Because current prices for goods and services are so high, many who are low-income rely on credit, payday loans, and/or other mechanisms that charge high interest to use their money. Using these systems is not by choice, but rather by necessity. Additionally, SNAP doesn’t cover cleaning products, baby products, or personal care items. While someone can use SNAP for food, they can’t use it to purchase items like diapers, but they can use their credit card if they are low on cash. Because there is already little money for them to spend, it is difficult, if not impossible, to get out from under the trap of high-interest credit. It is then even more difficult to pay down more than a minimum payment each month, resulting in a lower credit rating.
This credit trap has significant ramifications. For example, purchasing a reliable car becomes significant debt, rather than a responsible part of a budget, because approval for a loan with less than 15% interest is then impossible; this then creates more debt and credit issues. Systems like payday loans, high interest credit cards, and rent-to-own schemes that profit off the desperation and suffering of others can and should bear responsibility as well. These systems offer promises of “no credit, low credit, no problem” that are, at best, high cost, and at worst, illegal.
Having low income and questionable credit also makes it harder to rent a safe, affordable, and decent place to live, especially with today’s rental prices. Those who are low-income often end up in areas that have little to no resources. These areas also often have underfunded schools who cannot provide innovative, quality education so that there can be a better path forward for the next generation. Living in these areas also makes factors like access to fresh food more difficult, as many of these areas are “Food Deserts.” In Food Deserts, large grocery stores can’t make a profit, so they close their stores, leaving small, expensive convenience stores with little fresh or nutrient-dense food. Having less healthy food is directly related to poor health outcomes, such as diabetes, heart disease, and mental health disorders, which end up costing both the consumer and their community more through lost work and significant healthcare costs. Thus, the cycle continues.
In these situations, hope becomes hard to find, and survival becomes your number one focus. While mental health, substance abuse, and crime seem like they are a personal failing that causes poverty, it’s often the stress and trauma of poverty that leads to these issues.
There are entire books dedicated to this subject (Poverty By America by Mattew Desmond, Nickel and Dimed by Barbara Ehrenreich, etc.) and I cannot do it justice in this short blog, but I think it is helpful to put context around current affairs, especially the subject of why poverty is growing and the middle class is disappearing.
At The Open Link, we believe that it is essential to help the whole person. We focus on things like food and nutrition, staying active as older individuals, providing children with the supplies they need to grow up healthy and strong, helping families improve their circumstances by getting a high school diploma or a higher paying job, helping those who need benefits like SNAP or LIHEAP, and paying an occasional overdue bill in an emergency. The one area that hasn’t been addressed, but we see a growing need to do so, is financial empowerment.
The Open Link wants to educate and empower people around their finances, regardless of how limited they might be. This is more than just literacy. It is learning about the role of money and how you as a consumer can control it, rather than having it control you.
That is why, starting on Wednesday, January 7th, we are introducing a pilot program – Smart Finances, Bright Futures. This 6-week financial empowerment class focuses on helping participants build realistic budgets, understand credit, dump debt, determine what’s a need and what’s a want, help them know their rights around debt collection and predatory lending, and to overall become an even more savvy consumer. We are pulling in experts from all areas, including credit counseling, budget management, and banking, to help those who want to be better with their money. The key to the class’s success is that after the initial 6 weeks are complete, we pair each participant with a coach to help address specific issues that are making it hard for them to get ahead financially, such as late fees on a credit card or a high medical bill that needs negotiating. Right now, we are looking for volunteer coaches to help our class participants. Coaches will undergo an orientation and some training and then be paired with a participant to meet at least three times to go over what’s been learned.
If you are interested in becoming a coach or getting more involved with our newest initiative, please contact Heather O’Donnell at instructor@theopenlink.org.
