## Near poor: Above the poverty line and below the middle class

### Time to organize a spending plan and set goals.

After a speaking engagement the other day I was approached by a person who told me that they couldn’t afford many of their monthly financial needs. They had cut expenses as much as they could, but it just was not enough. They qualified for some public assistance but there just was not enough money to satisfy all of their monthly needs. The census bureau has a label for this class of people – the near poor or nearly poor. The near poor are above the poverty line, but do not have sufficient income to support themselves or their families. The safety net of government and private programs is just not sufficient to catch these folks.

The United States Census Bureau defines the near poor as those who are between 100 percent and 125 percent of the poverty line for their household. For example, a family of four with two adults and two children in the household would have a poverty threshold of \$23,850 using 2014 Health and Human Services guidelines. So if \$23,850 is 100 percent, to find the upper threshold we multiply \$23,850 by 1.25 to get \$29,813. A family of four making \$29,813 has a gross monthly income of \$2,484. Gross income is income before taxes are taken. If they have housing expenses equal to thirty percent of their gross income or \$745 per month, it leaves \$1,739 to pay for taxes, food, clothing, transportation and other expenses. You can substitute your monthly payments to see that it doesn’t take long to spend \$1,739 on a family of four. What if there are substantial medical needs? What about credit card debt, car payments and student loans?

For many of these households who are near poverty, the solution to their problems may be in finding ways to increase income. According to the report by the census bureau, the number of people living below the poverty threshold may fluctuate with the business cycle. Unfortunately, the number of people who have remained near poor has remained rather static over the 46 year period examined. Therefore, it may take significant effort and/or positive events to help someone to break this pattern.

People who have faced major money problems need to follow a plan. You may not have filed bankruptcy or experienced foreclosure, but it may help to attack the problem as if you have, and a good place to begin is to get organized for the battle. Next you need to create a spending plan for your current situation. Once you know what you need, set goals. Maybe a second job or having a garage sale can give you a temporary boost to pay off a debt or to just get you moving in the right direction. Many people have developed additional skills or discovered passions by working part-time. You may be part of the almost 15 million nearly poor in the United States, but you do not have to remain in this category.

If you want to learn more about money management and solving money problems, check out this website . In addition, Michigan State University Extension offers a variety of money management programs throughout the state of Michigan.