Author Archives: Steve Rhode

My Car Is All Worn Out. What Should I Do?

Question:

Dear Steve,

I need two new cars(used cars) but I don’t know if I should fix these old cars or trade them in and buy two used ones. My 2007 Kia Optima has 165K miles on it and won’t pass inspection — it needs a catalytic converter and new tires (maybe $1500?). My ex-wife has a Kia Sedona with 100K miles and needs new a transmission (Maybe over $3k).

These cars are paid off and we both desperately need cars, more so, me. With no car loans right now, I barely pay my bills every month. And I only have a little over $2k in savings.

I also just had a car accident that was 100 percent their fault and received a check for $1500 for damages.

My ex-wife does not do a lot of driving but I do a ton unfortunately. Do you have some financial advice of what my best option to do is for this very stressful situation?

Thanks so much!

George

Answer:

Dear George,

Well, you gave me a couple of important clues. You said you currently do not have any car payment but you are barely getting by and have little in savings. I also get the impression you are not living lavishly and don’t have much to trim in the budget.

So we have to piece together a solution that does not increase your transportation costs and still allows you to have reliable transportation. I’m not sure that’s possible.

Both of your cars seem to be cared for but have worn out critical components. When vehicles reach the end of their affordable or useful life the options are to fix them up or ditch them. They reach a point where fixing them just gets you a free membership in the Repair of the Month club.

I could not help but notice that you are trying to come up with a solution for you and your ex-wife. You know I’m pretty good at what I do but figuring out an answer for two now separate and divided households is beyond my pay grade.

I’m a big fan of buying used, rather than new cars but your situation is a bit different. In your case, with limited additional resources, I like new cars with good value and awesome warranties.

New car financing from manufacturers can be obtained with really great rates and here is how to do that. A new car will give you the financial protection from a major auto repair over the next few years. Sometimes the advice you always hear about never buying a new car just doesn’t apply to every situation.

Not long ago I actually had a chance to borrow and drive one of the least expensive cars available today. Sure, it was laughingly small but all four of us adults fit in the car and it was a surprisingly brisk ride. In fact, I even took a picture of the Chevy Spark we borrowed because it was so unusual.

The Chevy Spark I drove recently.

The car starts at $12,170 (I know, who ever pays the base price?) and the U.S. Department of Energy reports the car gets 30 MPG city and 39 MPG highway. With your insurance check in hand and your beater to trade in there might be a deal to be had on this or a similarly inexpensive car like the Nissan Versa, Mitsubishi Mirage, or Ford Fiesta.

So let’s look at the costs and cost savings to see how buying you a new car might make sense and cents.

According to Fuelly.com, drivers with a 2007 Kia Optima like yours generally say their combined fuel milage is in the 28 MPG range. Real drivers in the 2015 Chevy Spark are reporting 36 MPG.

Now you say you drive a lot. In my book a lot would be 2,000 miles a month. Hey, I’ve got to use some number for the calculations. At 2,000 miles per month your Kia would burn about 71 gallons a month while a car like the Spark would burn 55 gallons. At current prices that would save you about $34 a month and if fuel prices go up the savings are even bigger.

Chevy is offering zero percent financing and if you qualified your payment, based on $13,000 would be $180 a month. But really it would be $146 a month if you factored in fuel savings. You’d have to check on what your insurance costs would be.

According to Chevy, the Spark has a two-year or 24,000 mile scheduled service program so you wouldn’t have to pay for any service for the next year or so based on your driving. It also has a five-year or 100,000 of roadside assistance and powertrain warranty.

Look, I’m not suggesting you should blindly run out a buy a new car. But what I am suggesting is that we have to look at a solution where you are not pouring good money after bad and whatever you decide to do allows you a better chance of less transportation problems and costs moving forward.

And I’m also not saying you should buy the Chevy Spark. There are several cars to choose from in the entry level range.

While a new car does increase some of your costs it also reduces some and most importantly, gives you a better chance of having reliable transportation for a longer period of time with a manufacturer warranty to protect your financial risk of major repairs.

As far as your ex-wife goes, have her write to me and I’ll tackle her situation separately.

Steve

Get Out of Debt Guy – Twitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.



How to Clean Up With Your Own Pet Business

I thought this article Kelli Clevenger shared with me was awesome. It opens the possibilities for people who want to start their own business and who love pets. But one lucrative opportunity isn’t in there, poop scooping. I know a couple of people who have really cleaned up by cleaning up.

It’s a staggering number. The American Pet Products Association estimates that pet owners will spend over $60 billion on their pets in 2015. Owners love their pets and don’t mind spending money on them. If you need extra income, or a new career, you can profit from pet ownership.

As the former owner of a pet grooming business, I know how profitable it can be. Most pet businesses require little or no education, are easy to learn, and only require three things: a love of animals, a strong desire to learn, and dependability. If you have those traits, a pet business might be your solution to extra income or permanent employment.

From experience, I can say that pet owners are always looking for reliable, trustworthy individuals to care for their pets. Those traits can be parlayed into different types of businesses. Selling pet products can boost income, too. If this sounds interesting, check out these ideas:

Pet grooming – By shadowing other groomers and studying books and tutorials, pet grooming can be easily learned. By combining patience and practice, you can become a confident, trustworthy groomer. Get started by learning the basics and then practice, practice, practice. By practicing on pets of family members, friends, and those at local shelters, it’s easy to get plenty of practice. When you feel confident, open your own business. It can even be a great home-based business. Some states may require certification, fees, or special permits; check with yours.

Pet sitting – Many pet owners search for a dependable, trustworthy sitter. Pet sitting can be done in their home or yours. If you choose to sit in your home, it may require additional kennels, crates, and possibly outdoor fencing. If you already have existing fencing, that’s a plus. A safe environment is a necessity when pets are in your care. Just remember that all pets need proper vaccinations to ensure the safety of others. Once pet owners trust you, they will return for repeat business.

Pet bakery – If you love to bake, why not parlay that into homemade treats for your four-legged friends? While research is necessary to ensure safe ingredients, little else is needed. You can sell your yummy treats at flea markets, fairs, and festivals; you can even consider an online store. Only your imagination will limit the flavors and shapes you can bake.

Pet jewelry – Love making jewelry? Then customize jewelry to reflect different breeds. By creating necklaces, bracelets, and earrings of favorite breeds, you can profit from the public’s love of jewelry and pets. Just like pet treats, items can be sold at flea markets, fairs, festivals, and online. With a creative imagination and good skills, ideas are limitless.

Do-It-Yourself pet grooming store – Yes, these can be profitable. Some pet owners love bonding with their pet during the grooming and bathing process; however, they don’t enjoy messing up their home. Your facility would provide safe bathing options, grooming tables, clippers, cleaning products, etc. The pet owner pays a fee to use them. It’s as simple as that. You’re earning money without doing the hard work. Just know that it’s hard work keeping the facility clean and free of bacteria. Make sure to implement safe cleaning practices to ensure the safety and health of pets and pet owners.

Dog walking business – Many pet owners feel guilty leaving their pets for long hours each day. You can profit from that guilt. A strong leash, a good collar, and a good pair of walking shoes are all you need to get started. Post flyers everywhere to let folks know about your new venture. You can even distribute business cards to local vets, shelters, and pet stores. Charge by the hour or walk.

Dog training – Do you have unlimited patience? Are you good at training your own pets? Then you may want to consider being certified as a pet trainer. Once certified, many pet owners will request that you come to their home to train in the pet’s environment. Start-up cost is low and can be profitable if you’re able to rid pets of problem habits.

While start-up costs can vary, many pet businesses can start small and grow over time. Each state may require different permits and fees, so check with your county and state offices before moving forward. Be aware that you may need insurance and/or bonding, too.

Your love of pets can boost your income, while giving you great satisfaction. With little training and low startup costs, pet related businesses are booming. By choosing the right pet business for your personal needs, you can easily boost your income and possibly find a new career.

Kelli is a freelance writer who lives on a small horse farm in the North Carolina foothills. She lives with her husband, horses, dogs, and bossy cats; her hobby is saving money. Today she’s sharing her writing with TheDollarStretcher.com. Visit today for 10 ways to save on pets.

This article by Kelli Clevenger first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.



Department of Education Reaches Decision About Student Loans and Bankruptcy

The Department of Education has just released guidance on how it will handle bankruptcy discharge requests for government backed student loan debt. And while the guidance is helpful, it’s also a bit disingenuous in that it places the burden on students who believed what schools and colleges sold them as a smart financial move.

The guidance wants to provide a balance between collecting on student loans except where the loans would pose an undue hardship on the debtor.

The Department of Education desires to find its balance in collecting debts versus allowing debt to be discharged. What this formula misses is the inequity of the indebtedness to begin with by schools, for-profit and nonprofit, pushing loans on consumers. It’s almost like a game of “tag, you’re it” where the consumer is the one holding the bag or hot potato.

But the July 7, 2015 letter from the Department of Education gives some hope to those seeking discharge of some student loan debt. The United States Department of Education says, it would consent to and/or not oppose undue hardship discharge of student loans where repaying the loan would impose an undue hardship on the debtor. – Source

Attorneys have been vigorous to challenge consumers who have sought to discharge their federal student loan debt even when it has been an undue hardship. But the guidance released today also let’s us know that challenging these cases has a formula for when it is NOT advantageous for the government to oppose the discharge request. The document from the Department of Education says, “If a holder determines that requiring repayment would not impose an undue hardship, the holder must then evaluate the cost of undue hardship litigation. If the costs to pursue the matter in bankruptcy court are estimated to exceed one-third of the total amount owed on the loan (including the current principal balance, any unpaid accrued interest, and current, unpaid accrued collection costs), the holder may accept and/or not oppose an undue hardship claim by the borrower in an adversary proceeding.”

It’s too early to see how many lenders “may” elect to follow this advice. But having this in writing is a good tool for consumer bankruptcy attorneys.

To read more about how to eliminate federal and private student loans in bankruptcy, click here.

Undue Hardship Formula

Here is what the Department of Education has to say about what constitutes and undue hardship and thus a consent to allow the student loan debt to be discharged.

The following factors and considerations are offered as points to consider by lenders for discharge:

  • Whether a debtor has filed for bankruptcy due to factors beyond his or her control and the impact such factor(s) have on debtor’s ability to repay the student loan debt. Which includes a divorce resulting in diminution of family income, which will not realistically be reestablished.
  • Whether a debtor who asserts undue hardship due to physical or mental impairment may qualify for Total and Permanent Disability Discharge (TPD) and/or other administrative discharges available. These include:
    Death Discharge
    Closed School Discharge
    False Certification Discharge
    False Certification Ability to Benefit
    Unauthorized Signature or Identity Theft
    Unpaid Refund Discharge
    Borrower Defense
  • Veterans who have been determined by the Department of Veterans Affairs to be unemployable due to a service-connected disability.
  • Whether a debtor is approaching retirement, taking into consideration debtor’s age at the time student loans were incurred, and resources likely to be available to the debtor in retirement to repay the student loan debt. Borrowers who choose to incur student loan debt at an older age, whether that debt is for themselves or a dependent (i.e,, Parent PLUS loans), should not be able to rely on their age alone and/or their entrance into retirement to prove undue hardship.
  • Whether a debtor’s health has materially changed since the student loan debt was incurred.
  • Whether significant time has elapsed since the debt was incurred.
  • Whether a debtor’s expenses are reasonable and indicate minimization of unnecessary expenses to provide funds for student loan repayment.
  • Whether a debtor had the mental and/or physical capacity to pursue administrative discharge options and/or income-driven repayment plans, if those options were not pursued, or whether a debtor had any physical or psychological factors that would have made the administrative process more burdensome to the borrower.

Here is an actual example of when the Department of Education feels bankruptcy discharge should be considered.

Facts: Borrower obtains student loans in order to complete a Master’s degree. Upon graduation she starts working and making payments. A few years after her graduation, her child becomes seriously ill, with no prospect of recovery, requiring round-the-clock care. The child’s illness is followed by a divorce, with no child support or alimony forthcoming. This set of circumstances makes the borrower unable to work full-time due to child care obligations. She works part-time, bringing in only a fraction of her full-time income. Her child’s medical expenses are also extremely high.

Analysis: The facts above show that debtor demonstrated willingness to repay her loans and did so when her resources permitted, and that her bankruptcy filing and circumstances were a result of circumstances beyond her control. Furthermore, the circumstances that caused her financial difficulties are likely to persist. The Department believes that a pattern such as this would warrant exploring some of the income-driven repayment options. If these options are not available and/or do not alleviate the financial hardship, a consent to undue hardship discharge, either in full or part, may be appropriate.

Bottom line, if the consumer and bankruptcy attorney put forward a reasonable and well documented case the student loans will create an undue hardship, the guidance offered today by the Department of Education is “If this consideration leads to the conclusion that repayment would impose an undue hardship, the holder should consent to, or not oppose the discharge, as authorized by the governing statute and regulations.”

What Now?

While the Department of Education has laid out a course more bankruptcy attorneys can follow to seek a discharge of student loan debt as an undue hardship, it will take time for a smooth process to be developed. But even if the government does not allow for a total discharge of the debt, there exists an opportunity to “agree to discharge of a portion of the amount owed” and allow the consumer to get a bit of a bankruptcy fresh start.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Steve

Get Out of Debt Guy – Twitter, G+, Facebook

If you’d like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

Deceptive Mailer Sure Seems to Spoof Department of Treasury for Debt Relief

An amazing reader sent in a new debt relief mailer through my I Buy Junk Mail program.

This one is rather alarming. I doubt the average person would see through what I think is a smoke screen to understand what just landed in their mailbox.

From outside appearances the letter looks like some sort of legal documentation, maybe governmental with the use of the big eagle.

The envelope is even markered Legal and Documentation.

20150602_155839

20150602_155848

But the inside of the letter is a doozie in my opinion.

20150602_155731

The letter leads off with a headline that if people didn’t understand or miss the “RE:” would make it appear to be from the Department of the Treasury. As with many of these mailers that I write about, there is just enough to appear to be one thing but a disclaimer it is something else.

And I challenge anyone to determine who the company is behind this mailer. They identify themselves as Assistance Center, can there be anything more generic?

This line sure seems misleading, “This letter is to advise you that, Pursuant to the Department of the Treasury Publication 4681, the IRS is now permitting tax-free credit card debt forgiveness for borrowers who are experiencing a hardship and deemed insolvent.”

This is an IRS process that has been around for years. You can read the official IRS page on this, here.

The next underlined section is both a disclaimer and telling:

“It is important to note that Assistance Center is not a government or collection agency; this is not an attempt to collect a debt. The Assistance Center does not charge a fee for its initial consultation.”

Well there might not be a fee of the initial consultation but they don’t say there are no fees at all. To me that means there will be fees.

Next is an odd line, “You do not need to be late to qualify for this hardship program, however late payments will expedite the qualification process.” What hardship program are we talking about? If it is the IRS publication 4681, it does not say a qualification for income tax on forgiven debt is predicated on delinquency. So is the ever generic Assistance Center calling their pitch a hardship program?

The benefit section of the mailer reads like the typical debt settlement sales pitch and it proclaims the following benefits:

  • An Immediate Reduction of Payments
  • A Reduction of your overall Debt of up to 68% or more
  • Complete Elimination of Your Credit Card Debt
  • Finally put a Stop to Collection Calls and Letters with Debt Satisfaction
  • Get This Debt Paid Off and Restore Your Credit Rating

Wow! So much alleged bullshit here. Let’s go over it point by point:

  • An Immediate Reduction of Payments – But this is typically accomplished by the commissioned sales rep of such marketing outfits asking what you can pay and then setting that as your payment. It is NOT a creditor approved reduction and generally tosses you into delinquency, collections, and potential lawsuits when you pay less than agreed to the creditor. And is the creditor even going to get paid? In most generic settlement program they will stop getting payments so the debt can be attempted to be settled.
  • A Reduction of your overall Debt of up to 68% or more – There is no support to this statement and the Federal Trade Commission really frowns on this sort of claim. See this action against DebtPro 123 by the FTC over similar claims.
  • Complete Elimination of Your Credit Card Debt – Again, this seems like a problematic statement that conflicts with the Telemarketing Sales Rule and limitations it makes on performance claims. For example, how many people who signed up for this program actually eliminated 100% of their debts. Actual performance results of such programs in general paint a much different picture. Click here to see overall results.
  • Finally put a Stop to Collection Calls and Letters with Debt Satisfaction – I think this might be my favorite line of all because guess what, collection calls stop for everyone when the debt is satisfied.
  • Get This Debt Paid Off and Restore Your Credit Rating – Wow! this mailer just landed in a nasty place. It sounds like it has now run into trouble with the Credit Repair Organizations Act (CROA) as the courts just recently ruled in another similar situation. Read this recent article

The following statement in the advertisement is interesting. Earlier the letter said you did not need to be late to qualify for the “hardship program” but here it says you need to call immediately “to avoid any possible legal action from your creditors.” What legal action is a creditor going to take against someone who is current on their bills? The answer would be none.

In closing they say, “You need, and will receive, the full support of our organization to put this behind you for good.” Only one problem with that. If they are so proud and supportive then why not actually disclose who they are and where they are located?

I would advise anyone who gets such a letter to follow my free guide on how to check out a debt relief company. See The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line before you leap. An open and honest company won’t hesitate to answer the questions in that guide.

This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

My Mother is on Medicaid and Bank of America is Owed Money

Question:

Dear Steve,

Hi – I have a question – my mother is in a nursing home, Medicaid pays for the home – she must turn over her social security and small pension to them each month. She has no money – she has a credit card from Bank of America with $3500-$4000 on it – she is the only user of the card, I am not listed as an authorized user – I have been making the minimum payments – I can no longer afford to do this – what should I do?

Thank you.

Beth

Answer:

Dear Beth,

If you stop paying then Bank of America may try to collect from her but if she has no assets then there is nothing to go after. Even if they decided to sue her and they won, it sounds as if your mother is what people call judgment proof. This just means there are no assets to go after to try and collect the judgment. Typically, public benefits and Social Security are exempt from being garnished.

Alternatively, your mother could file bankruptcy to legally terminate the debt in about 90 days. In this case she would not face any possible tax liability from the charge-off of the debt and it would stop any future collection attempts.

The cost of filing bankruptcy might be around $1,900 when all is said and done but the rapid elimination of the debt and the ensuing quiet might have some value as well for you and your mother. That is a question you will have to consider.

If bankruptcy sounds like the better way to make your mother’s future days better without the threat of the debt hanging over her, then I would suggest you talk to a local bankruptcy attorney and discuss her specific situation. Most bankruptcy attorneys will gladly talk to you for free.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.

Steve

Get Out of Debt Guy – Twitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

If you’d like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

My Islamic Faith Prevents Me From Paying Interest on My Student Loans

Question:

Dear Steve,

I had two citi-student loans and at some point in time within the last 5 years they went to Navient (Sallie Mae)

I recently called to ask if I could get a lower pay-off amount as the original loans were 32K and now they are up to about 64K because of deferment and interest. They said no and I believe these may have been private loans.

My conditions have changed I was born into Islam however never knew much about my religion. Since 2012 I have been learning more about my faith and it is strictly forbidden in my faith to have dealings with interest.

I am offering to pay off the original amount I owe however due to religious reasons would like them to recognize that my awareness and conditions have changed from the time of originally accepting the loan with Citi-Student Loan Corp and not even with them at Sallie Mae.

Can I get the interest wiped out and close this account and case with just paying the original amount borrowed?

I am in the Seattle, WA area are there attorneys that you can direct me to that can help?

Amir

Answer:

Dear Amir,

Yes, I am very familiar with the issues surrounding the Islamic approach to interest. You might enjoy reading Debt & Religion: A Look at the Islamic View of Debt With Imam Asal.

Asking any lender to adjust their terms and conditions after the fact for religious reasons is just not going to happen.

You’ve also learned a painful lesson, the damage caused by deferment is enormous. Most people think it is an innocent time not to make payments and get a payment vacation. In fact it just puts the debt in turbo and the interest causes the balances to explode.

I have observed Sallie Mae, now Navient, settling more loans, click here, but you’ll need expert assistance to get yourself in the right spot to settle them. If you just call up and ask, they will generally say they don’t settle. However, people are receiving offers in writing from Navient without asking when they are significantly delinquent.

The next issue is if you will have the money on hand to settle. You’ll need to either need to payoff the settlement in one payment or three or four.

If you don’t have funds available to do that then you might want to talk to your mosque about Zakat, “a muslim charitable fund that followers may ask for help from in order to repay problem debt. Zakat is a obligatory charity for Muslim followers.” – Source

But even considering all those facts above, if your faith is guiding your repayment then you’ll have to seek wise counsel on how to deal with what the the Imam told me. He said, even those that borrowed with interest, are obligated to repay their entire debt and if they don’t they will prohibited from entering paradise when they die.

How you overcome that little issue is above my pay grade.

This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

Broke With Privilege

I loved the article Stefanie O’Connell submitted to me through the Personal Finance Syndication Network that I had to share it with you.

Broke With Privilege

My mother grew up in poverty, raised by a single-mother in a non-English speaking household in New York City. Without the slightest hint of today’s buzzword – “privilege”- in her upbringing, she worked and earned herself a scholarship to Barnard College and later, Columbia Business School, paving the way for her unprecedented career successes.

I, on the other hand, grew up drowning in privilege. Every night my parents would sit down with me and review my homework. If I wasn’t doing well, I would be sent to tutoring after school. If I was struggling in a class, they’d help me with extra credit projects. I was signed up for so many extracurriculars it was like my parents were challenging colleges to reject me.

I had just about every resource at my disposal to develop my skill sets, learn to problem solve, and learn to learn. That privilege is what afforded me the opportunity to pursue something as impractical as theater and end up broke. It’s also the privilege that allowed me to apply my critical thinking and problem solving skills to eventually break free of broke.

Broke with Privilege

When it comes to poverty, despite my financial expertise and very real experience of limited income, I still feel at a loss for giving advice. Knowing my privilege also makes me very cognizant of the fact that I have no idea what it means not to have privilege.

Not to have income is not the same as not having privilege.

I’ve been without income, but never for a moment have I lacked privilege. Never for a moment have I not been equipped every skill I needed to find appropriate information, resources, and connections to solve whatever challenge I was facing. Never for a moment have I had to face the risk of sleeping on the street or going hungry or having nowhere and no one to turn to. My network of support – not necessarily monetary, but human- is so vast and valuable that I can afford to take big risks – like pursuing theater, traveling the world, and starting my own business. If I fail miserably, I know there’ll always be a couch to crash on.

When I think about the value of my privilege, I find it comes down to learned skills and a network of support more than anything else. By redefining privilege in this way, I also start to understand how my mom became such a raging success.

Broke with Privilege

Yes, my mother grew up without the benefit of high- or even subsistence-level income, but she grew up with a remarkable model of work, my grandmother (though low earning, hard working), and high expectations of achievement. She also had a vast community network comprised of fellow immigrants that, despite severely limited resources, had an insatiable appetite for “something better”.

While she may have faced great hardships, my mother had extraordinary models of what was expected and what was possible in her life that made her very connected to the potential for opportunity and success. In fact, that entire community she grew up with “lifted itself” from poverty in one generation.

So what’s the barrier for those in poverty now to do the same?

Privilege.

It’s not a monetary construct, it’s an opportunity construct.

Models for success have segregated themselves from the people who need those models most. My mom doesn’t live in poverty anymore. She moved to Connecticut to send her kids to better public schools, an understandable decision for which I am grateful, but one that according to research by Robert Putnam, has lead to the growing opportunity gap between rich and poor.

Upper-middle-class families separate themselves into affluent suburbs with separate public schools, and as a result, poorer children don’t get the necessary access to the same amenities and exposure to the same models of achievement. The end result according to further research by Rebecca Diamond – an ever-growing income gap between high-skilled and low-skilled workers, which no doubt perpetuates privilege (and lack thereof) even further.

Lack of privilege is isolation from opportunity.

No matter how many times I cry broke or fear the threat of unemployment or dwindling bank account balances, I will always know my privilege.

This article by Stefanie O’Connell first appeared on The Broke and Beautiful Life and was distributed by the Personal Finance Syndication Network.

— This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.