Are You Poor or Broke?
Posted by Gail | Filed under Uncategorized
The first winning post is up so have a read. And for those of you who want to get your books signed or want a hug, my first two appearances for Debt-Free Forever have been set up at Costco. I’ll be in Ajax between 11 and 1 on Saturday January 9. Later the same day, between 3 and 5, I’ll be at the Costco in Etobicoke (50 Queen Elizabeth Blvd). See you there.
Back when I was shooting Season 2 of Til Debt Do Us Part – heavens, that seems so loooong ago now – one of my couples made an interesting observation to his family. Gerry of Kelly&Gerry said, “We’re not poor, we’re broke.” Good distinction.
Periodically I hear from people who want to bust my chops because the people on my show make lots of money and I shouldn’t be rewarding them for their stupidity in overspending. We’ve worked with people from all income brackets, some quite limited and believe me, there’s a big difference between being POOR and being BROKE.
People who are poor don’t have the resources available to improve their financial situations. They may face a personal challenge, such as a learning or physical disability. It may be because life has kicked ‘em hard and they haven’t found their way back to their feet: divorce can do it; widowhood can do it; unemployment can do it. So can having a mess of kids before you’re financially prepared. Poverty is not something I can do anything about. The only solution to not having enough money is to find a way to Make More Money. It’s that simple.
Being BROKE, on the other hand, is something I can help people do something about lickety-split. If you’re broke, you have resources available to you and you can improve your financial situation, you just may not know how. It may be that you’re financially illiterate. It may be that you have no will power, no ability to defer gratification, no time management skills. Or you may simply be LAAAAZZZZY! I can teach you. I can help you see another path. I can kick your ass. I can help you make it better.
I have worked with people who have one foot in both these camps: they’re poor, but it is of their own making, and I can make ‘em make more money. But most of the people I work with are BROKE, and most of the people who watch the show who benefit from the tactics I offer are BROKE.
I often get letters from people who say things like:
Gail, I need help. I’m on a disability income and I don’t make enough money to feed my family, so how am I supposed to save?
You’re right. If you don’t make enough money to feed your family, you’re poor and my strategies won’t work. You have to undo poor – find a way to make more money – before you can put financial strategies to work.
As for the people who “make lots of money and are in debt,” they’re the reason the show exists and so many people who watch have been able to benefit. If the doctor hadn’t been overspending by three times his income, we wouldn’t have had a show. And if the chick with the dogs hadn’t been overspending on her pooches, we wouldn’t have had a show. Ditto the teacher who wouldn’t go out to work, the babe who only wore stuff three times, and the guy who gambled.
Years ago when my family emigrated from Jamaica, the woman who helped to raise me didn’t want to stay in Jamaica either. Daphne, whom I loved with all my heart, wanted her own opportunity. My dad got her a visitor’s visa to the U.S. and she stayed. Daphne learned to read and write at my mother’s elbow. With no education, no financial nest egg, no job, Daphne got busy creating a life.
Daphne worked a full time day job and a full-time night job, looking after an elderly woman who needed an attendant at night. Daphne learned to drive, bought herself a car, bought herself a house, paid for her legalization in the U.S., brought her children to live with her, put her daughter through college. My lord, the woman had fortitude!
The last time I saw Daphne was about twenty years ago. She wanted to buy me something. I was the little girl she’d helped to raise, and she was determined to give me a gift.
I still have the dress Daphne gave me. It’s ratty. Really ratty. But I wear it almost every week. It reminds me of her every time I put it on. And she is my beacon of strength.
Our circumstances do not define us. We can achieve anything we put our minds to. We have the power to make life whatever we want. Some of us want more.
Daphne wanted more. And she busted her ass to make it so. She achieved a lot, moving from poor to not so poor, to secure. She made a life.
God grant me her tenacity.
December 29, 2009 at 7:51 am
Thats a great post about the differences between broke and poor. I have family that is poor I also have family that is broke. For the poor ones I often wonder why perfectly capable people refuse to go out and Make More Money. The Broke ones have issues other then an income problem that needs more attention to fix. The Poor ones just need to get a job and get to work. (And for those wonder I’m not talking about the ones that can’t work due to disabilities, I’m talking about the capable poor in my family.)
regards,
Jason
December 29, 2009 at 9:32 am
The problem I find with people that are supposedly broke in the definition here is that if the ones on the show are broke and not poor how are these people intelligent enough to hold a job in the first place?
If they lack that much common sense I sure would wonder what they would be like in the workplace.
Further still a holding a job at the income levels on the show?
Getting a job is one thing keeping it is another.
Wow you gotta wonder
Just no common sense
I know a few poor people who could live like millionaires on the incomes of the supposed broke people in the show.
As for the disabled and poor there is no way these people are a product of their own doing for the most part its a tough hall for them.
Really its like the US two classes of people the haves and have nots.
Why do credit card companies extend credit to people who are way over extended in the first place?(broke people)
Again makes no sense really.
Those people should not be allowed to carry that much potential credit around.
I saw in the store on boxing day, while in the lineup thru the store that the vast majority of people charged their purchases.
These would be by definition here broke people.
These purchases were for large TV’s and such.
I am talking like $1200 dollars and up.
Hope they are trying to add up their frequent flyer points thats all.
What was even more amazing was as I chatted with this younger set they had no idea of what set to buy or any technical details or pricing structures.
No clear idea of purchase on the way into the store.
They didn’t know whether they wanted lcd,plasma or whatever even to size.
Does size really matter?
No reseach done other than what Joe or Sally has.
In fact in several cases where their friend said to get this and that was sold out they simply bought higher up adding even more to the charge bill.
Wow!
Being an electronics major from high school and a tradesman I was really shocked at the buying habits or lack of.
In fact one large tv purchase was for the guys kids to play video games on..This guy is loaded or stupid.he mentioned it was their 3rd tv!!
Oh what was I doing in the store?
I bought a pair of cordless phones at half price, paid cash, sold my old ones 90 minutes later!!!
December 29, 2009 at 10:24 am
Poor vs. Broke is a distinction made by Larry Winget in his book “You’re Broke Because You Want to Be”. It’s a quick, tough-love kind of read and may be just what you need if you’re in over your head.
I agree with Gail. If we can help those who have the means to get out of debt with some education, we all benefit. If those who are deep in debt (even if it’s through their own ignorance) are willing to put in the work to get out of debt, more power to them and to those who teach them.
As for the poor, they also deserve our effort and attention. It would be great to see more organizations like Kiva (who lend money to the poor for entrepreneurial purposes) grow and help these folks help themselves.
December 29, 2009 at 10:30 am
Everyone needs a Daphne in their lives.
If I had one, she’s kick my pants and tell me the only way out is working harder and earning more money. (temporarily poor)
December 29, 2009 at 11:20 am
I remember the Dr. saying that on the show Gail. Good distinction as you say.
I can only hope everyone has a financial ‘light bulb’ or ‘aha’ moment. I know it starts small, like a ripple in a pond. I have gathered here that each of us tries to share Gail’s wisdom with others, be it family, friends or co-workers. Hopefully what we say will click with them and they in turn will talk to others thus making the ripple bigger.
December 29, 2009 at 11:25 am
Just saw this and thought I’d share. Hope it works!
http://ca.news.finance.yahoo.com/s/24122009/2/biz-finance-christmas-spenders-challenged-reduce-debt-interest-rates-rise.html
December 29, 2009 at 11:26 am
Good distinction!
I’m in a state of poverty for a while as a student working part-time. It doesn’t mean that we need instructions on how to handle finances! Right now, my fiance and I are carrying our own tuition load and living expenses with only a $1500 credit card balance that we will eliminate as his graduation present next December.
Poor does not equal bad with money.
December 29, 2009 at 12:26 pm
Great observation as always.
For those of us who’ve gone over (or way over as I’m sometimes accused…) to the frugal side, all I can do somedays is shake my head in amazement at the choices others make. Choosing to be underemployed isn’t wrong if your lifestyle is matched to your income. In fact somedays a low stress, no overtime or deadline minimum wage job looks pretty appealing to me. Taking a job like that would mean massive changes to my family in terms of where and how we live, and when and if we get to retire. For now it’s a change I’m not prepared to make when it impacts so many others. In the interim, I work a crazy stressful job, make good money, and yet we live like we’re broke in many ways. By cutting our basic living expenses waaaaay below our income we are moving day by day closer to early retirement (December 2020 if we stay on track). The difference for us is that we don’t feel like we’re suffering or not keeping up with the Jones’ because our choices are self-imposed. Huge difference. I know that on any given day I can choose to splurge a little, and then tomorrow go back to our frugal “normal”. Being able to take a little break once in a great while means we are able to keep our focus on the long term goals and still enjoy today. The folks who worry me are the ones I know aren’t making big salaries or have been laid off with no job in sight, and yet they spend on things they must feel are needs not wants – things we consistently do without even though we could easily afford them. I know their choices aren’t my business and worrying about them (or mostly their kids) doesn’t help, but it’s like watching a slow motion trainwreck and feeling helpless to stop it. Once in a while I an opportunity comes up to mention something we’re doing, or more likely not doing, in order to reduce costs. While I hope the idea will register, I know I run the risk of coming a cross as a know it all, or a busybody so mostly a bite my lip and try not to say anything.
December 29, 2009 at 12:38 pm
Categorizing yourself as poor is a good way to stay broke. It’s like you become so entrenched in the idea that you are a have not, that you keep yourself from attaining anything of value, like ‘I can’t afford that’ so you frivol your money away on minutia that add up to more than the cost of the things you supposedly cannot afford. It’s this mentality of ‘poordom’ that seems to rear its ugly head and you find your need to surround yourself with material wealth more necessary than actual wealth, because it makes you feel like you have money when you don’t. It seems that being broke or consistently strapped for cash becomes a lifestyle. You don’t even have a concept of how it would feel to not juggle bill payments between accounts or use credit cards for trivial purchases, and saving, ha! Is it possible that you become addicted to debt because you pride yourself on your ability to balance the ever unstable beach ball on your nose? Perhaps you watched your mom do this for years and thought she was superwoman because she managed to keep food on the table with a creative circus act that amassed a whole wackload of debt behind the curtains. This is the cyclical part, it’s like having money would be too easy, too simple, you want to take on the challenge of being broke, because you inherited it.
December 29, 2009 at 1:29 pm
I used to be broke. In more ways than just money. But things are better now, I am more disciplined – taking control of my financial situation made me more disciplined in many other out of control areas of my life. I am amassing my emergency fund, saving more for retirement, putting money away for property taxes and home repairs that will need to be done (we have a schedule of what we think will need to be done over the next 5 years so we save for those now – like new furnace, roof, likely new appliances as these are getting on to 20 years+ etc), the vacation fund, and the last car loan payment is in one week which means total debt freedom (including no mortgage).
I could live more frugally but I don’t because everything is shaping up. So I actually do spend more on life than Gail recommends. But I spend less on housing, transportation and will have no debt repayment in a week. I put over 40% away in savings, both short and long term. So what if I’m going to buy the big screen home entertainment centre with sound system? I’m saving for it and will pay cash for it – maybe by the time I save enough I’ll decide I don’t want it anymore. Yes I know there are other more useful items I could buy with my money, or save even more for that retirement. But if I’m paying cash, don’t have debt, and have the emergency fund, the home repair fund, the retirement fund, etc., then what’s the problem?
December 29, 2009 at 1:42 pm
We loved that quote when we first heard it. It’s a good distinction. I have family who are poor and many who are just broke. Those who are poor and able CAN fix that…they just have to work harder.
As always sound advice, Gail.
December 29, 2009 at 1:54 pm
Great post, as usual. As I posted before, I am not broke, I am secure – in knowing that all my bills are paid, rent is current, food in the pantry and gas in the van. Taking care of these essentials quite often only leaves pocket change, but by knowing, thanks to Gail’s budget, where my money is going prior to the paycheque deposit, it just doesn’t matter! We have a TV in the staff room at work, and if I get the remote before anyone else, and TDDUP is on, that is what we are watching! So often, many of us comment that if we had/made as much money as the show’s participants, our lives would be so much better/happier/easier… Something I learned in my HR course is that we adapt to our surroundings/circumstances. Leave a plant in a pot that is too small, the roots will compact and the plant gets stunted. Transplant it into a larger pot, and the plant will grow to fill up it’s space. Without a plan in place, no matter how much money you make, you will find a way to spend it and then some. The up side of ‘forcing’ co-workers to watch Gail is that some of them have found this website and the interactive budget and are excited to get on board! Today, I am redesigning my budget because the $600/month I was paying to have my horse broke to ride will now be able to go to other future plans, like the newer vehicle I plan to buy – with cash! Gail, you are a Godsend, and I can’t thank you enough for your knack of telling it like it is. Happy New (debt free) Year to all!!
December 29, 2009 at 2:08 pm
I completely get the distinction between poor and broke. I am a 26 year old college grad that had a hard time finding a job the first year after graduation. I ended up getting a part time job doing something that doesn’t require a degree but it gave me an opportunity to at least pay my own cell phone bill and put gas in my car (I live at home with my parents). About 6 months later I got a job in my field but it is entry level and pays only $25,000 a year but there is opportunity for a promotion (I hope that comes in the near future). I decided to keep my part time job that would pay about $5,000 a year. I really think I would be comfortable if I made at least $35,000 a year. I would be able to be comfortable and truly save up. I refuse to be poor.
December 29, 2009 at 4:09 pm
I had never thought of this distinction until now – I heard it on Gail’s show but I didn’t quite get it until now. It is an eye opener! I have been poor, broke for a while then poor, and now I am not poor, nor broke, nor rich, just in a financial happy medium.
My mother’s parents were dirt poor, and my father’s parents were well off. What a difference! As a child I decided I wanted to be like my maternal grandparents, and I still do. My grandmother always said she felt rich when she moved to the city and had an indoor toilet. All her life she sewed into the night for others so her children had shoes, all the while singing happily. To me she was the richest person I knew because when I walked into the door of her appartment you could feel the love, peace and joy. She didn’t have much of anything and she didn’t need anything, but us, her family. She is my hero! My paternal grandmother may have been rich but she was the sadest person I have ever known. There was no love in the large children filled farm house, and there was never any peace that I ever felt. She worked hard but went without so many things all in the name of saving more money, so much so that she often didn’t refill her diabetes medications because my grandfather would complain about the cost, and she died young from complications due to her diabetic coma. In his old age my grandfather used to get around his house using a flashlight to save on the hydro. My father and his siblings would prefered his parents to have enjoyed their money instead of piling it up for them.
I have been and seen poor, broke, and rich. How you define these words lies in what you think they refer to – money, family, material things, or love.
When it comes to money it is also so very important to have a good balance in life – saving, time for family and friends, and having fun. If you don’t, you could end up financially rich but poor or broke in all the other areas of your life. So please take the time to balance the things that are important to you, so that you can be like my maternal grandmother and be rich beyond your dreams.
Happy New Year everyone!
Anne
December 29, 2009 at 5:00 pm
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December 29, 2009 at 6:11 pm
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December 29, 2009 at 7:00 pm
Daphne sounds amazing, I can see why you value her gift so much.
As for the distinction between being poor and being broke, you make an excellent point. And it’s one that more folks would do well to understand.
December 29, 2009 at 11:06 pm
Great post Gail! I’ve learned how easily one can end up broke because of poor planning.
In 2007 I left my job in Fort McMurray for a job that paid more in Calgary. I thought I had it all figured out – after all I was making a decent income and I had (what I thought was) decent savings right? Well, I rented out my place in Fort McMurray – it took a month to organize it so I had to pay my mortgage and condo fees out of my savings. I still needed a place in Calgary but no one would rent to me without me signing a 12 month lease for horrendous rental rates so I tried staying in a hotel while I looked for a new home to purchase. Prices were sky high because all the lower priced hotels were filled with working people who also couldn’t find an affordable place to live.
Then I had to pay property taxes on the place in Fort McMurray, moving expenses, storage fees and renew my car insurance all at the same time. My credit card bills began increasing. My new job started but my first paycheque wouldn’t come for a month. I missed paying my credit card balance by two days because I was living in a hotel and didn’t get the credit card bill on time. Suddenly I owed interest and it was steadily climbing. I couldn’t keep on top of it. I was living in a hotel and eating out every night. And then it happened…I was out of available money and credit.
It happened on a Friday. I remember being absolutely panicked. My credit card was maxed, my bank account didn’t have enough for me to make an ATM withdrawal and I couldn’t access my investment accounts (which contained a deposit for the Calgary home I intended to buy) because the bank was closed. Here I was, a woman with a six-figure income debating whether to concoct some terrible lie to the hotel staff (who needed me to settle the bill every four days) or see if I could get a bed at the homeless shelter.
I got lucky – a friend offered me a room at her place and let me wait until I finally got paid to pay her rent.
It took me a year of hard saving to pay off that one month of brokeness. I have since learned that lesson. One small error in judgement can start a downward spiral that can be misery to climb out of. Thank heavens for people like you Gail and the posters on this website. Everyone’s encouragement for those in dire straits keeps people believing there can be a light at the end of the tunnel.
Happy New Year all!
December 30, 2009 at 8:12 am
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December 30, 2009 at 8:46 am
2 Cents & Courtney, I couldn’t agree more. You future/present has a heck of a lot to do with your attitude. if you don’t believe you can be more, you never will.
Anna, thank heavens you had a friend to help you out when you were in need. That could have ended terribly – especially as a lone woman in a big city. Glad it worked out!
December 30, 2009 at 5:04 pm
Gail: love your show, every time we watch it, we learn some great nugget of info! Love your laugh too! thanks for helping us get out of debt!
January 2, 2010 at 3:53 pm
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January 2, 2010 at 9:44 pm
Dear Gail,
My husband and I have been watching your show on Slice for over a year now- your philosophy works! I have given my husband an old antique sealer jar, and the money I give him is to last him a week. He laughs now, eveybody knows what that jar is on the counter in our kitchen. You have saved us a pile of $$ in bank charges, and have reinforced ideas of saving and paying bills on time.
You are somebody we would love to meet, as we love your sense of humour, and quick wit on the show. With sharpie in hand, my husband would love for you to sign his jar.
See you in Ajax!!
Truly,
Karen & Anthony
June 3, 2010 at 10:34 pm
Thanks Gail! I needed that today.
The employment market isn’t exactly great right now and my husband and I keep looking, keep scraping by. It isn’t permanent. We may not see the pay off immediately, but if we keep working hard at finding more work/better work we’ll get the money we need.