Piggy Bank in Hand

Poverty Mindset (An Article In Response to ‘How to Lose a Third of a Million Dollars Without Really Trying’)

There was an uproar this morning as publishing professionals all over the internet raged over the Medium article: How to Lose a Third of a Million Dollars Without Really Trying .

People who work in an often thankless job for little pay are understandably upset that the author suggests that it was their responsibility to help her navigate the difficulties of publishing and that they should have prepared her better for what she should expect after landing a six-figure advance (a goal that many of us can only dream of). I’m not going to step into the puddles of blame here. That’s not my concern.

That said, one sentence jumped out at me, and it ultimately fully explains what happened and why. “As a kid who’d once stood in line with her mother to get food stamps […]”

People often talk about growing up poor, but what they really mean is that they grew up lower middle class. Growing up poor means not knowing where your next meal comes from. Growing up poor means that you get new clothes once a year before school, and otherwise you make do. Growing up poor means that the only restaurant you go to is McDonalds, and you are excited for it because it only happens once a year. It means that you go grocery shopping once a month, and that money has to stretch as far as it can.

Growing up poor means that you develop what it known as Poverty Mindset. It means that when a few extra bucks come your way, you spend it fast, and often on something that you really don’t need because your wants are never met.

I know this because I lived it. I also lived the climb out of poverty and all the terribly financial decisions that go with it. When I got my first credit card (and my second, to be honest), it was maxed out within a month.

When you grow up poor, you never learn sound financial choices because there is not enough to go around. There are no savings, no investments, no anything other than the basics. When your parents are doing the best they can with not enough, there is no one to teach you how to make smart choices. And it takes a very long time to change your way of thinking.

I haven’t had to worry about that level of poverty in nearly 20 years, and I still catch myself opting for the cheaper option at the grocery store even when the option that is a couple dollars more is actually a better deal because the price per unit is less. When you grow up poor, it is the one you can afford, and that is it. There is no buying more to last longer because that extra couple of bucks needs to go to something else.

I’ve seen the same things I have struggled to overcome keep friends and relatives in poverty because Poverty Mindset is so hard to kick. It leads to poor financial decisions that land you right back in debt. When money comes to hand, suddenly you can afford all those things that you dreamt about, and why shouldn’t you have them? After all, you earned this money.

But that’s the trick of it, isn’t it? You may have earned money, but any financial gain, not just author advances can be (and often are) temporary. Anything can happen to land you back where you were. And it sucks to do the responsible thing and pay off debt and invest for a rainy day when all you really wanted was a fancy drink and an expensive meal.

I took business classes when I went to school because I knew that it was important to learn what to do when you work for yourself. I’ve been dreaming of self-employment since I got my first job at WalMart. The thing that every author needs to know, whether you are aiming for trad or self-publishing, is that you are your own boss. There is no one to do all the HR work for you, no one to meter out money on a weekly basis, no one to make sure that your taxes get sent in at the right time. You have to do all of that, and you need to make it your business to understand how.

I am sorry to see that this author had to learn this lesson the hard way, and at so high a cost, but I think that all the rest of us, who may not be thinking of writing in terms of the business that it is, can learn from her example — especially if you come from a disadvantaged background. Save the MFA for when you’re in your forties or fifties. Opt for business and accounting classes. Even if you hire a business manager and an accountant, knowing what their jobs entail will ensure that you can avoid predators looking to part you from your advance.

And as boring as it is, if a six figure advance comes your way, pay off your debt. Invest. Even if you drop it in boring mutual funds, you can ensure that there is money for your retirement. Heck, $100,000 invested wisely can support you for the rest of your life. Not in NYC style, of course, but a reliable and stable income. That confidence and comfort are what kill Poverty Mindset. It takes time and patience, but it can be beaten.

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