This is what happened when I drove my Mercedes to pick up food stamps
washingtonpost.com
washingtonpost.com
The "2003 Mercedes Kompressor" talked about in the article could be one of two models:
Model $(2003) $(2014 CPI) 2014 Value
C230 Coupe/Sedan ~$28k ~$36k ~$5k
SLK230 Convertible ~$40k ~$52k ~$7k
Note that both are worth very little today. They're just old, crappy cars like any other. Your old Honda may in fact have fewer mechanical issues at this point. People revere the badge even on older vehicles where it no longer means much.
If the middle-aged Mercedes they had was running and reliable, they were prudent to keep it. The cost of trading down to an unknown car with potential unknown mechanical issues would likely not save them any money. It's possible it could end up costing more.
When you are cash flow poor, reducing out-of-pocket expenses is the first priority. Liquidating assets to raise cash is a quick one-time fix, it's being done at a time when you have no leverage with which to get maximum value out of those asset sales, and does nothing to resolve the larger problem of income < expenses.
It is unfortunate, I think, that however prudent and reasonable their choices, the cognitive dissonance created by the sight of the "luxury" car at the food stamp offices is going put them at odds with public opinion.
Any reasonable person when they first start working should aim to do the following things in order. Try and eliminate any outstanding debt, Save enough money for the rainy days, and then comes the next most essential commodity- a house and if you are done with that- a car.
They way I see, a lot of poverty issues in the US seem to arise from mismanagement of one's money. If you don't have a home, and don't have a large cache of savings and have debt on top of all this, buying a luxury car on debt again comes out straight as mismanagement of money.
The author began 2008 with dual-source, six-figure income, a modest house, and a couple of cars, and no kids. Within the year, the couple had twins, had lost the greater of their two income sources, and had the audacity to hope that they could recover from their sudden and not-at-all-expected fall from grace.
This is not poverty born of mismanagement of funds, irresponsible spending, or negligence. It is temporary poverty born of bad luck. It's also the sort that the assistance programs in the U.S. are designed to help, and the fact that the author's family was able to recover with that assistance makes this a success story.
I one lesson I take out of this for my own good is if I'm having a good run, I'm going to use that to save/invest and not spend. Until the trend moves to becoming permanent and becomes the norm I'm not going to assume it will last forever.
Lifestyle pitfalls are difficult to climb out of.
Your comments about assistance for temporary bad luck nicely describe how many assistance programs should work. Unfortunately...
> It's also the sort that the assistance programs in the U.S. are designed to help
...this is not even remotely true for almost all of the assistance programs in the U.S. Unless you have literally no other choice, you will be rejected. This what we get after decades of rhetoric about "welfare queens" and related fears that someone could be scamming the system.
Do you still have at least ~$30 in your wallet? A lot of programs will reject you for too much cash. Own anything?[1] Sell it first. Have a pittance in a retirement package that you're not allowed to touch for 30 years? Take the 90+% penalty to cash it in first.
Unfortunately, we have effectively optimized most of our welfare/assistance programs in exactly the wrong way. I suspect we could save quite a bit of money if we dropped the suspicion and helped people early, while they still had a job.
[1] A single "used-econobox" tier car (YES, they check models and current market price) is often excluded, in the theory that you can't actually get most jobs without it.
In what way are these programs "President Obama's"? Shouldn't these be considered "The Congress's programs"?
I really worry about the degree to which my fellow citizens seem to believe that the President does/should act like a monarch.
No, you should have sold the Mercedes because you already had one other car, and two cars and their insurance and upkeep seems like an unnecessary luxury for two unemployed people on food stamps.
It's bad enough in Germany where nearly every employer expects "mobility" (i.e. driver's license+car), and that with our quite generous mass transit. US is definitely worse.
>Darlena Cunha is a former television producer turned stay-at-home mom to twin girls.
...maybe someone from the Boston area can chime in on the state of public transportation.
There are many people here in Minnesota who drive comparable distances to make less money. When you live in the sticks and the closest job is a gas station 30 miles away that pays minimum wage, you're pretty much screwed.
But I just moved back to Washington, and there's no way you could do without a car here. The busses only cover about half the city, and they're few and far between (and they only run until 10pm). I'm 10 minutes away from a grocery store by car, so walking is out of the question. Cities that aren't packed full of people don't have a reason to invest in their public transit systems, because the payoff isn't worth the cost (there's just too much space to cover for so few people).
Also, you would not be making payments on the car because, uh, you paid for it in cash with the money from selling the car.
I'm extrapolating from incomplete data, of course, but I feel the article's statement deserved far more analysis than the 1-sentence glossover it received.
More likely, it was something like a C230 Kompressor, which ran ~$30k new.
Besides, once they had that cash in hand, they'd no longer be eligible for food stamps (you need to prove you have no savings or assets). They'd either have to stop collecting food stamps and burn up the excess capital on groceries, or commit welfare fraud.
Being poor in America is rough. Regardless of the "but the poor still have cable TV!" argument, US culture (and the systems created by that culture) takes an almost punitive approach to poverty, where the poor are seen to deserve it and not be capable of making rational decisions.
Also, you are being callous, two unemployed people on food stamps, with children, probably need two cars just as much as anybody. They were probably busting ass, continuously, to get a new job, that usually means driving around, a lot.
>> In just two months, we’d gone from making a combined $120,000 a year to making just $25,000 and leeching out funds to a mortgage we couldn’t afford.
There are many of us who settle for a cheap car instead of a Mercedes and put that saved money in a savings account for a sudden emergency like this.
If you don't have atleast 1 year or more of emergency funds, you shouldn't be buying luxury cars and homes and then expect to pass off the burden on taxpayers(many of whom are suffering themselves to make ends meet, renting instead of buying and not going for luxuries) when hard times fall on you.
The reality is, no matter how big your emergency fund is, Shit Happens. They weren't expecting a pregnancy, let alone with expensive, high-maintenance twins. They weren't expecting to lose their jobs. They weren't expecting to be stuck for more than one year looking for a job ("The days of unemployment turned into weeks, months, and, eventually, years."). Everyone has a guilty pleasure or two, and it's not always as obvious as a cheapo Mercedes (which is not a bad choice at all if you're looking at long term costs vs a cheap car). A $240k house is hardly "luxury" and may make more sense than renting in that area. Even if they had a 1 year emergency fund (a fairly rare thing to do in itself), they likely would have been back on food stamps anyway.
Sure, she could have sold both cars and possibly lose a job as a result. Sure, she could be homeless. Sure, she could do a lot of other really shitty things. I'm glad WIC helped her so she didn't have to give up everything. I only wish SNAP (food stamps) and WIC and other programs could help more people before they feel like they gave up everything they had and then some.
My husband and I both make six figures, we manage to save most of it with cheap rent and very little spent on necessities let alone luxuries, and we have Oh Shit savings for more than one year. But this kind of doomsday scenario is why we have yet to buy a house or a car (thankfully half decent public transit in the bay area) and having children requires us to make a leap of faith, assuming that most people like us do it all the time. The "pay rent and bills, food, and other necessities for a few years" fund doesn't look big enough even for one person accidents, let alone anything else...
If you find yourself in a situation where you blew through your emergency fund and you're still having problems making ends meet, I sincerely hope that you can find the help you need without judgment.
Even the person in the OP's Imgur picture? Everytime someone is given money, it's coming from someone else and not going to someone else who could be more deserving.
The root beer, no sympathy! Don't buy it with food stamps.
> That’s how I found myself, one dreary day when my Honda wouldn’t start, in my husband’s Mercedes at the WIC office.
And unreliable transportation can contribute to losing your job, not being considered for a position because you got to the interview late, etc.
The author addresses that:
> And even if we had wanted to do that, here’s what people don’t understand: The reality of poverty can spring quickly while the psychological effects take longer to surface. When you lose a job, your first thought isn’t, “Oh my God, I’m poor. I’d better sell all my nice stuff!” It’s “I need another job. Now.” When you’re scrambling, you hang on to the things that work, that bring you some comfort. That Mercedes was the one reliable, trustworthy thing in our lives.
I think we all know that when you sell something you generally make pennies on the dollar for what it originally cost. And in a situation like hers you think a return to normalcy is right around the corner. I am sure they told themselves "We have to have two cars so we can go to interviews and take care of the kid, etc."
How do you know the car you just bought is reliable?
While you can dig up the reliability ratings and Consumer Reports reviews for a brand new vehicle, each used car has its own story and a host of potential problems to surface.
The economic details of the transaction are such that if you need to unload a used car, you're unlikely to get a very good deal for it, but of course when you buy one, you are expected to pay dealer's repair and upkeep costs as well as markup. Plus sales tax to the state. A few hundred dollars lost on accepting suboptimal offer when selling, a few hundred dollars overpaid to drive another used car off the dealer's lot, a few hundred dollars to the state, and we start talking about some real money wasted.
A crappier car? Heaven forbid. Payments? Not if you buy an appropriate car...
Cars break down, cars are often needed for jobs and for interviews for jobs, and two adults looking for whatever they can get are going to want to keep two cars as a _necessity_ in a lot of places.
I absolutely understand how a family on food stamps could justify having two cars, especially when one is already paid off. They had jobs during this time, even (not that that changes anything):
> In just two months, we’d gone from making a combined $120,000 a year to making just $25,000 and leeching out funds to a mortgage we couldn’t afford.
Whatever the explanation, it was paid off previous to this narrative, was reliable, and this is her justification for not selling it.
As user hacknat said, the amount of time and energy it takes to sell an older luxury car is not negligible.
I guess I'm just having a hard time garnering sympathy for someone who displays such conspicuous consumption especially without the financial means to really pull it off. Their previous behavior is a HUGE part of what's wrong with US culture.
I wouldn't argue that the purchase of the car was a good financial decision. As a side note, I don't think buying a C-class Mercedes is EVER a good financial decision. The reactions to this article (or that OP experienced in the narrative) are a testament to the success of Mercedes establishing themselves as a luxury brand even though they sell econo-box line vehicles (top post right now puts this pretty well; this is a symbol of wealth, not actually much of an asset).
I think the house was a worse decision, as it implies a longer confidence in earning potential; the car could have been paid off much more quickly, and we don't really know their earning power at the time of purchase (though I doubt it'd help the point of them being fiscally responsible).
I think a big part of this article is trying to cast an empathetic light on people that end up in tough financial situations BECAUSE of bad financial decision, despite having come from opportunity. When considered clearly, even those impoverished that did not come from opportunity could be saddled with the blame of 'bad financial decisions', but just have many more justifications (that are more easily empathized with) for making the decisions they did.
At some point or another, though, you are following the same mindset of the 'root beer police' in the line at the store, written about in the article. You are drawing a line saying 'you purchasing THAT is not responsible', and you feel justified in doing so because they are using public help.
That's sort of the debate at hand here. Is the use of public funds an invitation, or justification, for judgement from others on your consumption? I believe that it is; if you are going to take money from the government, one cost you suffer will be unyielding judgement from others on what you do or do not buy.
My point: not selling my old(er) Mercedes in lieu of taking food-stamps while I find another job might ACTUALLY be the best financial decision I can make, for a number of reasons. Whether or not I feel morally reprehensible about this is my own business, really; the assistance programs have their own requirements for eligibility and if I meet them, I meet them. Despite this, it is an invitation for judgement in the cultural climate in which we live, and that's just how that is.
Part of my reaction to this story is self-defense and fear. I live in the US and from birth we're inundated with narrative about how we should live and what we should strive for. The nice house, nice car, nice job... "Nice" being defined externally, always. If you don't want to slip into the pre-carved paths, you need to stay vigilant.
In a sense, shaming this story is a fight against that narrative. By buying into it, the author reenforced it and then suffered the consequences when reality struck. Situations like this are obviously very personal and it's hard to judge on an individual level but in aggregate what they have done is causing damage beyond their own life. Not just the public funds they're now using, but by perpetuating a culture that the author presents as not only acceptable but desirable.
From the car to the house to the journalism degree. No choice showed any foresight and unfortunately large swaths of our population are living this life everyday.
At some point very soon, all of this story is going to have to come to an end and I'm not sure what will replace it. I personally believe that having (and keeping) sharp technical skills, being entrepreneurial and keeping your costs well below your means provide an answer.
In short, it's going to be an interesting decade to come.
I disagree, however, that shaming the story is fighting against that narrative. Empathy for individual decisions does more to effect systemic change, if by no other mechanism than allowing you a clearer understanding of why those decisions were made.
Darlena and her husband making these decisions will not effect the system as a whole, and neither will vilifying them. Understanding why they did what they did, and educating others on how their decisions hurt them will effect change.
The 'this could happen to anyone' tone irks me as well, but in my experience, it is also quite human. The view from hindsight is remarkably clear. The OP was probably more aware than anyone as they opened themselves up to fragility with each financial decision. Unplanned pregnancies (that double in expense w/ twins), jobs in new towns, unexpected job losses, DO happen. When they do, you there is rarely a 'whoa, we've taken on too much debt, this is not sustainable' moment that you can just turn it around. Horse was out of the barn.
an interesting and related read posted further down this thread was a fantastic perspective (though I'm not sure if I agree with it entirely): http://thelastpsychiatrist.com/2012/11/hipsters_on_food_stam...
"I hope other's can learn from our mistakes and learn to live below their means, because circumstances can change on a dime. Savings is critical, and looking back on things, we spent too much on frivolous consumer items like luxury vehicles."
If you think someone spending $30k on a car with a $120k income is bad, you probably don't want to hear about the folks buying those cars while making half that amount (or worse, leasing them).
Besides, they were pretty conservative with their home purchase. A $250k house on a $120k income is way more conservative than what a lot of people do these days. Just by virtue of the home price, I'd argue they were doing better than the typical Bay Area programmer, who might make $120k but face home prices 5-15 times their income.
Being "hard" to sell isn't an excuse. Real poor people sell any asset they can get their hands on.
As for the house, if they lived in any sort of metropolitan area, $250k is not extravagant. In fact, while their income was comfortably over double the median US household income, their house price was right at the median. The average American household leverages their income twice as much as this couple was.
Wow, these comments are really proving her point.
If we're going to choose to address this as a society via public funds it ought to be a matter of public discourse. That doesn't mean people should be tolerated for inflammatory views... but certainly warrants some healthy debate.
I'm of the opinion that there should be a small amount of no-questions-asked assistance available, so people don't have to prove to themselves that they are poor in order to receive stuff, but of a limited quality/quantity that people of means will voluntarily not bother. That's an entirely separate discussion, though.
My feelings and expectations of the poor are still extremely negative despite all of this. Those of the folks who have never had to experience it even more so. You would have a hard time of switching EBT to cash in a "moderate" political climate, say nothing of the current "Fly this plane into the ground" era.
The glibness of the comments here really rubs me the wrong way. A lot of software people - you know, arguably the MOST employable people on the planet - have no hesitation tut-tuting about what The Poors should do while pushing buttons in a comfy chair in an AC office with the knowledge that if anything were to happen, they'd be OK.
News flash, being poor SUCKS, and it means you work your ass of just to get by every day, always in constant fear of the next unexpected event - your car breaks down or you get sick, then you miss a day of work, then you get fired, then you can't find another job, then you're homeless.
It's almost like a bunch of you ready the article and missed the point.
What is the point of the article? I mean besides the we-can-sell-ads-ginning-up-outrage-(which-may-or-maynot-be-misplaced). I'd like to see a "The Last Psychiatrist" like take on it:
http://thelastpsychiatrist.com/2012/11/hipsters_on_food_stam...
If you own two cars, one being a mercedes (don't care it's old) and are on foodstamps then you may want to read that site.
It's not a knock. But you can live a lot cheaper than you think... and still save money... and be happy.
REVISE:
No problem with public assistance. But I did want to emphasize that there are people who are very happy living on wages far below what these two were capable of.
To be fair, though, regarding their lifestyle before the crisis, a $250k home on a $120k income is very conservative by most modern standards. They were leveraging their income far less than is typical in the Bay Area in fact.
"but that would have probably taken a fair amount of time and effort -- would it have really been worth it?"
After the first statement? Yes. Heaven forbid it takes time and effort to try to improve your situation.
If they are in such a bad situation that they have to sell off their car in order to pay for some meals, then clearly they needed the support they got. Giving up personal transportation in exchange for food is not even remotely a solution to the problem. It actually makes it far more difficult to regain employment (their Honda broke down, remember?), and the cash from the car sale is only a temporary bandaid--it does nothing at all to solve the fundamental problem of "income < expenses."
It's beyond me how you could think that someone who is in such trouble that they have to sell off all means of personal transportation so their children don't die of starvation would not deserve some sort of aid. In any case, the couple in this story, having regained a comfortable income, is now paying taxes every month so that if you face severe financial trouble you too can receive some aid without having to immediately liquidate every asset you own so your family doesn't die, even those assets that are critical to finding a real resolution of your difficulties.
We can kill that straw man together if you'd like...
Who's saying they didn't deserve assistance? I am simply saying that reducing one's liabilities and conveniences can do as much for your bottom line as going and getting a high paying job. In fact, if you reduce your outgoing costs significantly enough (two cars, two insurances) you may be able to find employment that at a lower wage that will allow you to feed your kids comfortably.
> if you reduce your outgoing costs significantly enough (two cars, two insurances) you may be able to find employment that at a lower wage that will allow you to feed your kids comfortably.
Now they have one car (which broke down) and an income which is just enough to feed their kids comfortably. While the threat of starvation has been eliminated, the difficulty of regaining their original income has been increased, as they're now time-poor as well and even potentially lack personal transportation.
MMM is not about how to deal with a financial emergency that you weren't prepared for. It's about how to prepare for emergencies in the first place.
Or see here: http://www.mrmoneymustache.com/2013/12/03/reader-case-study-...
or here: http://www.mrmoneymustache.com/2012/04/18/news-flash-your-de...
or here: http://www.mrmoneymustache.com/2012/09/15/reader-case-study-...
Hate to sounds like a MMM fanboy... but they do offer as much helpful advice for those in crisis as they do for those striving to improve. It's just more painful measures when speaking of the former.
I guess "being poor" is a relative thing that depends on background and upbringing. When someone says they're poor this image is what comes to my mind, not couple of people with a Honda and Mercedes or ones buying root beer on a deal.
This is the essence of pure capitalism. Only when you're truly fucked up, you can expect help from others.
It's disgusting.
A fridge and microwave allows you to store and prepare meals more cheaply. Buying several hot dogs and buns at once--keeping them refrigerated, and heating what you eat in the microwave--is a lot cheaper in the long run than buying one pre-warmed hot dog from the convenience store whenever you get hungry.
A car that starts and operates reliably is so valuable in America that people would rather give up their houses and live in their cars than vice versa. Even the east coast, where the original municipal architecture predated cars, rather heavily relied upon horses for transportation. We have never been friendly to pedestrian travel (but pedestrian competitions are another story).
If you do not have a car, you are automatically a de facto second-class citizen. The smart thing to do is buy a used car near the start of the bottom of its bathtub curve of reliability, repair it until near the end, and then stop. You then buy your next used car, and it is your backup vehicle for when your original beater finally dies. So the most cost-effective transportation solution is often to have two cars: one older beater/grocery-getter and one newer and more reliable backup. It doesn't matter how many people are in your family. If you are poor, your car may be getting close to being uneconomical to repair, and you will still need to get around whenever it is undriveable.
Even the original article confirms this. Honda broke down. Mercedes was the backup.
Everybody does this if they can. If your car is in any way unreliable, you secure temporary backup transportation before it breaks down. If you have money, you can rent a car for a week, or use a loaner from your repair shop. If you don't, you must have a friend or relative that can drive you to and from work until you get your car back.
The outrage is as incomprehensible to me as being shocked if a poor soldier carries an expensive rifle, or if a poor electrician has an expensive fiberglass ladder instead of a cheaper aluminum one, or if a poor plumber installs expensive copper in his own house instead of PVC pipe and zinc fittings. You do not begrudge people the tools they need to do their jobs, so why would you complain about those they use to live their lives?
Too many people obsess over cost and ignore value. A capital investment may cost more initially, but it definitely provides more value over its useful lifespan.
So when you see a welfare recipient with a complete suite of kitchen appliances, two cars, and maybe even a television and Internet-connected computer, you can tell yourself that there is a person who can bounce themselves back out of the safety net someday, and probably sooner rather than later. Even if they don't, they might be able to throw a child out far enough for them to lower a rope back down. When you see the person that doesn't even have a grocery cart, that person is the one that will be costing the system the most money in the long run. Suggesting that people sell the things that help them survive and save money is absolutely the worst thing you can tell them.
So you keep the Mercedes. Start looking out for a used car to replace the old Honda that broke down. If you get tired of people giving you funny looks, get a can of rust-colored automotive paint and simulate some old body damage with it. Above all, you don't make stupid economic decisions because the people around you can't recognize a smart one.
I grew up "first world poor" in Appalachia and was approximately a hundred times better off than the man in that photo. I had a modest roof over my head, clothes, toys, food, utilities, a big yard, and among the best public schools in the country. My mother used food stamps at one point in the late 1980s when things were bad. Bad is a relative term.
[1] Meaning, with resolution to their house situation, they might've been ok. But that's a huge expenditure each month with a risk of homelessness if they fail to make the payments.
(Four people on $25k/year is nearly at the poverty line of $23,580 - http://aspe.hhs.gov/poverty/14poverty.cfm )
Setting your rather narrow and shallow understanding of what "poor" is aside, the subject of this article is poor by American standards, and at least the way I read it the point isn't "pity us because we're on food stamps" so much as it is that the attitude of "being poor ought to be an humiliating condition" is ingrained in America.
Poor isn't when you're with one foot in the grave, poor is when you have little money and a low income. That doesn't immediately make you a background character in a Dickensian novel who dies of hunger on the streets of New York. That doesn't mean having a fridge to store your food in is some frivolous expense - fridges are a basic necessity. A PC is a basic necessity if you want to get anywhere. What else would you deny people just so you can label them poor and feel nice and fuzzy in your heart knowing you're giving a tuppence to a guy who'll die a poetic death on the street? Clothes? Beds? Houses?
Additionally, go fuck yourself.
I am sorry that I am a little biased. My grandfather died in middle age because he couldn't afford medical care. My mom once picked up a snake instead of a pen while she was studying in the dark by candlelight because they couldn't afford electricity.
So, yes, fuck me for thinking someone should've saved money for the future by buying a cheaper car instead of driving around in a Mercedes and then expecting hardworking taxpayers who themselves are struggling and making do with an old Kia, to foot the bill when hard times roll in. I am surprised you're not advocating the government giving them a Tesla so that they can get out of their depression and feel better about being suddenly "poor".
If there was no WIC or food stamps, would they have sold the Mercedes to feed their twin babies and tried to use only their Honda?
People should be more fiscally responsible.
But, yeah, fuck me for thinking so.
You dump the house. The glaringly obvious best move in the story is to yield the deed to the house to the creditors, get bankruptcy protection for any deficiency, and use your former mortgage payment on a smaller apartment and upgraded renter's insurance. You get rid of everything that doesn't help you make money or help you keep it, and keep everything that does until someone comes and takes it from you. Never eat the last of your seed corn.
The car is still worth more to them than any money they could get from selling it, and they didn't have to pay extra to keep it.
I wouldn't say "fuck you" for your suggestion, but I do think that it was ill-considered, and that a depressingly large number of people would agree that it was a good idea.
I am also curious to know if your mother was ever able to train the snake well enough to produce recognizable writing with it.
If you have negative equity in a property that has negative cash flow, you really should get rid of it as fast as humanly possible, by any means at your disposal, no matter how much beans and rice you typically eat in a month.
I for one would prefer to live in a world where poverty of the sort seen in your picture doesn't exist. Part of achieving that is being willing to help out others when they hit hard times but aren't necessarily on the verge of death. Raising the standard of living means just that: it means raising the base expectation of what life as a human being entails. When someone faces trouble and falls below that base expectation, others jump in to help.
The worst sin this couple did, as far as I can tell, is they bought some root beer with food stamps and didn't sell a car which they very much needed for reliable transportation. They used the government help when they needed it, then regained employment and are once again self-sufficient. This is exactly what these social services are for.
Let's suppose they got no help at all, like you seem to think would have been fair. They probably would have had to sell the car in order to feed their children (and themselves). They would have soon lost all modes of personal transportation, in fact, because their Honda broke down (and are you going to spend cash to repair it when you need every dime you have for food?). Therefore, they would have relied almost entirely on public transportation. The difficulty of finding new employment just doubled, meaning that the length of time they face poverty probably also just doubled.
But selling that car didn't fix the fundamental mathematical problem of "income < expenses." It only provided temporary capital at the expense of personal transportation and probably employment, meaning it actually exacerbated the real problem, which is increasing income rather than immediate cash reserves.
Oh, and by the way, back when they were making $120k, and now again that they have decent income again, they were (and now are again) paying so that others can receive the same help in similar situations.