Interest Rate Policy Increasing Poverty Among Seniors

According to a new report, the number of seniors living in poverty soared almost 25 percent between the years 2007 and 2008.

Women have been the most affected. Up to 80 percent, suggests the report.

Daphne and I are, or soon will be, counted among those women.

At 60 years of age we don't yet officially qualify as seniors. However, with the Bank of Canada having kept interest rates ridiculously low over the past several years, we will be among the poverty statistics for seniors in future reports. Many of our friends already are or soon will be.

We are the women who worked for decades in low-paying 'female' jobs while child-rearing. We are the women who, out of our low incomes, scrimped and saved knowing that nothing was sure for tomorrow.

Now we are punished for saving because of an interest rate policy that values consumption, debt and a head-in-the-sand mentality over thrift, responsibility and the urge to maintain self-reliance.

The following is an excerpt from one woman's story. It could be duplicated many times over, by many other women:

I am tired. I have been working since I was 14. When I retire at 65, I’m going to have this little tiny government handout. It won’t matter how resourceful I’ve been. There’s no financial reward for that...

I am one of the working poor. The reward for that is more poorness. It's, "Sorry lady, you did a really good job. You raised those kids. You were only on Welfare for eleven months. Good for you, good for you - here are your pennies" (p47).

When will the Bank of Canada stop its insane interest rate policy? The result has been consumer interest rates so low that they don't even keep up with inflation. No surprise, then, that the people most dependent on hard-earned savings, largely senior women, are falling behind.

[Cross-posted at Challenging the Commonplace]

Interest Rate Policy Punishes Most Vulnerable

The Bank of Canada's interest rate policy punishes saving and rewards debt. As does the federal government when it bails out "too big to fail" corporations and industries and rescues banks from the results of their rash decisions.

Such policies punish those people who scrimp and save, who put off buying today so they'll be able to live tomorrow. Many of these people are now in, or about to enter retirement; only to find their savings earning one or two percent or, if they're particularly fortunate, 2.5 percent.

Such people dare not put their savings into the markets, not when their lives are reliant on those savings. We have all seen what happens to the markets.

How did Canada get things so ass backwards?

How did Canada get to rewarding people who buy like there is no tomorrow? Who get mortgages they can't afford? Who purchase more automotive and recreational vehicles, gadgets and gewgaws, vacations and cruises than they could ever use?

Too many seniors today are struggling to make ends meet because their hard-earned savings are earning less than the increases to their living expenses, such increases exceeding the cost of living. (For most seniors, some form of disability is present.)

This situation, the erosion of seniors' and others' savings, is thanks to the interest rate policy of the Bank of Canada.

It's downright criminal.

[Cross-posted at Challenging the Commonplace]

Waiting, Waiting, Waiting...

Waiting is the biggest stressor* for me.

It hasn't helped that what I'm waiting for has meant my being unable to buy desperately needed things.

My remaining pants and jeans are falling off me, literally. As I walk to and from the grocery store, I'm having to keep hitching them up. When I go out, I look poor and that embarrasses me.

Recently, my fallen-apart comforter and last top sheet, plus the t-shirts I'd been wearing for nightwear had become so threadbare they were good for nothing but the dumpster. What bedding remains is a single fitted sheet to cover the mattress. I've been spending my nights trying to sleep with a single, light throw over me. It's no bigger than a bath towel.

The nights are getting colder; the heat hasn't been turned on yet. I'm so cold.

Then there's the reading glasses and the LCD/LED monitor that's needed to replace this ancient CRT one. The brightness levels of my monitor have so decayed that a person with good eyesight said everything looks blurry. Using this monitor has worsened my eyesight.

Why don't I get the things I need? What's the wait about?

I'm waiting for approval of my application to the BC government's Shelter Aid for Elderly Renters (SAFER), a rental subsidy program for low-income seniors.

The SAFER office received my application on July 19th.

In anticipation over the last two years of applying for SAFER when I turned 60, I'd calculated and apportioned my savings to last until I would begin receiving the subsidy. This meant living on no more than $700 per month.

In my calculations, I assumed the processing of SAFER applications would take up to six weeks. Nothing on the BC Housing website suggested otherwise.

Six weeks didn't seem like such a bad assumption. There was, after all, the customary advisement of "up to six weeks" that I'd been told or read whenever I'd dealt with federal or provincial government services in the past.

Silly me. I was going by experiences back in the days of yore. Back in the halcyon days prior to the BC election in 2001, before the large budget and public service cuts done by the Campbell government.

The middle of August came and went and I'd still had no word from SAFER, not even acknowledgement of receipt of my application. So I called their office using Skype and was told to expect to receive my first payment at the end of September. By that time SAFER would owe me three months' worth of payments, which would total approximately $1,000.

Panic set in, but I eventually coped. I began visiting the food bank more frequently and cutting even further on my 'discretionary' spending - to about $80 per month. By 'discretionary', I mean everything else other than rent, hydro and cable (internet only).

With three weeks having passed since I'd checked with SAFER, I called again on September 3rd. Now I was told that they were about "four weeks behind in processing" and were still working on the applications from the middle of June. Ergo, I should not expect to receive payment until "at least [the last working day of] October." I asked if 'at least' really meant 'not until the end of November'. The man restated "the end of October," without the qualifier.

So now I'm scared and I don't trust that I'll see a SAFER payment the end of October either.

All my best-laid plans - to make my savings last not just until the SAFER payments would begin, but to stretch them until I turned 65 and qualified for Old Age Security and the Guaranteed Income Supplement - look to have been for nought. With the punishingly low interest rates, (especially punishing for people dependent on their savings), my savings over the past while have been earning very little. In June, I did what I could and put most of my money into two non-redeemable term deposits. The rest, $2,700, went into a redeemable (after 90 days) term deposit; starting the 15th of this month, it's to be divvied out in 10 monthly payments of $270.

You do the math:

* CPP payment: $295.55
* Savings: $270.00
* Total monthly: $565.55

Rent just went up: $501. Shaw internet service just went up: $52.64.

Forget about hydro, food, monitors, reading glasses, warm bedding, sleep wear, pants that fit.

No matter what I do, no matter how hard I try to make things work, it never seems to be enough.

When you live so close to the edge, there's no room to accommodate government 'service delays'.

Thank you, Gordon Campbell, for approving all those cutbacks to BC's public service.

*On Saturday I bought more St. John's Wort. It's an expense I can ill afford; but I also cannot afford the toll this stress is taking on my body and my mind. I've been too ready to erupt lately. Kiltie and Brodie are affected by the tension. Time to do something about it.

The Why and How of a Lowest Decile Household

Daphne and I have mentioned that each of our households is in the lowest decile of income categories. That's half again Statistics Canada's low-income cut offs (LICOs), which are measured at the lowest quintile of household incomes.

Here are the LICOs for 2008 for family sizes of one to four persons:

LOWEST QUINTILE (one-fifth):

	Community Size
	Rural	Urban
		Under 30K	30K-100K	100K-500K	Over 500K
Family size	Annual household income
1 person	12,019	13,754	15,344	15,538	18,373
2 persons	14,628	16,741	18,676	18,911	22,361
3 persons	18,215	20,845	23,255	23,548	27,844
4 persons	22,724	26,007	29,013	29,378	34,738

The list continues for families of 5, 6, and 7 or more persons.

Daphne and I each live in the Cowichan Valley, which has numerous smallish communities. At last census, the Valley's total population was 79,000. It has seen a big box boom in recent years, so we're likely closer to 100,000 now.

For the table below, I've divided the LICOs into two, to show what the lowest decile of income looks like:

LOWEST DECILE (one-tenth):

	Community Size
	Rural	Urban
		Under 30K	30K-100K	100K-500K	Over 500K
Family size	Annual household income
1 person	6,010	6,877	7,672	7,769	9,187
2 persons	7,314	8,372	9,338	9,456	11,181
3 persons	9,108	10,423	11,628	11,774	13,922
4 persons	11,362	13,004	14,507	14,689	17,369

This is the level at which Daphne and I subsist.

Why?

My income is so low because I can't do the work that is available in this community. Few jobs are anything but retail. That requires standing for long hours, reaching, twisting, bending. I've a bad hip from an old injury sustained in childhood. The wear and tear on the hip, and the associated scoliosis and arthritis that developed cause considerable pain. I can't do retail. And probably shouldn't, likely being an Aspie as well; however, I'd like to have given it a go.

I saved while still able to work because I knew it would get to this point. On a salary of only $12,500 per year, for the last four years ending December 2006, I saved $5,000 each year. That is, I saved $20,000... which makes my head explode when I read about people far more affluent who bury their heads in the sand.

During the 1990s, starting at the age of 41, I'd been a full-time student, so at the end of 2000, I also had $4,000 left from a doctoral fellowship.

That's what I've been living on ever since, that $24,000 plus interest, together with sales tax rebates and the very rare web design, research or writing contract. Of course, three years later, it's not $24,000 anymore.

People may wonder (I have at times) why I don't - or didn't - just spend my money, live relatively high on the hog for a year and then apply for 'financial assistance', i.e., welfare or disability benefits.

Well here's the thing: I have no dependent children, am fiercely independent, can't ask for help, have a hard time accepting gifts for the same reason, and loathe people trying to interfere with or control my life, also for the same reason. No way will I subject myself to this province's punitive welfare system, not with a childhood history of longterm abuse.

As for disability benefits, you must, in addition to everything else related to the degrading, demoralizing, dehumanizing application process - in BC you must apply for welfare before you can apply for disability benefits -, subject yourself to doctors who don't know you from Adam and resent the time they must spend filling out 30-page forms.

All of which explains why I've tried to live on no more than $8,500 annually for the last nine years (actually, $8,500 from 2001 to 2007 and $7,500 since 2008). Unfortunately, the interest on my shrinking balance hasn't kept up with the rising costs of shelter and food. Ergo, I've been falling behind each of those years.

Consider rent, now $486 per month. In 2003, it was $400 per month.

Hydro has stayed just about the same, at $12 per month. Barebones shelter, then, is $5,976 annually. That's almost 80 percent of my annual household income.

I've no phone. Instead I maintain a high-speed internet connection for reasons I've stated previously. The cost for that is $49.23 per month or $590.76 per year. I wish Canada had a policy that promoted internet access for all, since staying connected is essential for participation in a modern society.

Add up my costs so far - rent $5,976, hydro $144, internet $596.76 - and the annual total is $6.716.76. That leaves $783.24 for everything else.

So there you go, one budgetary tale of life in the poverty well ... to be continued.

Flushing Money Away

Daphne writes today about the cost of food and other goods her household consumes over the course of a month. Note these three things: Daphne counts, and accounts for, every penny; there's a furry resident in her household; her reflections on alternatives to toilet paper.

While most people treat the one-cent coin as throwaway, we value it. Last month, Daphne spent $107.93 on food. That's 10,793 pennies; or 360 pennies per day. Not a heck of a lot. 

I record all my expenses using an old version of Quicken Basic. I even break down the Groceries category into sub-categories: Bread, Dairy, Fruit-Veggies, Other Carbs, Protein, Treats. There's a separate category for Household and Medicine.

By the way, I've no idea why I still pay an amount for my thyroid medication. Given zero income and BC's Pharmacare, it shouldn't be happening. Yet last month I was charged $4.76. Think about that. That's 476 pennies. Consider the above per day penny count for Daphne. I work to keep my daily expenditures under 200 pennies.

Note that Daphne's is a three-person household. (I include Kitty in that number, natch.) My household also has three residents. We've had some desperate trials over the past few months. All has worked out but there are likely bad times ahead.

Then there's toilet paper. It's a horrible thought that we flush money away like that. As with Daphne, I've gone over the alternatives. And there are some months, more of them lately than a couple of years ago, when I do the dampen-cloth-wipe-and-rinse procedure.

Can't quite (yet) bring myself to the, er, shittier application of the cloth. But hand-washing at the sink after each piddle I've become accustomed to. In fact, I'm ALMOST coming to prefer it. When you think about it, a clean damp cloth does keep one's nether regions cleaner, fresher. And it's good for the environment!

Not that I'm advocating for it, you understand.

ETA: When writing this post, I assumed Daph's frugal food budget covered both humans in her household. My mistake and I'm glad of it.

Silver Linings Savings Plan

Saving money while living on a small income can be daunting. It is for me. However, having a little stashed away gives me some vital security and independence. It matters less how much I've saved than that there's money nearby for emergencies. When you live on the edge, that's essential.

While my offspring were at home there was a beautiful crystal decanter on the kitchen counter, which I found at my favourite second hand store. It was for dimes only, because they took up less space, were less missed, took a long time to fill the container and resulted in the highest overall amount when counted. Leaving it in plain sight reminded us to check and see if any tiny shiny dimes were lurking in a pocket, begging to be added to the growing pile. The contents were for specific reasons, the main one being a ten day stay at a summer camp for both children every year.

During my working years, I had income tax deducted as a single person. That resulted in a larger return at year end, since my total income from various part-time employment was usually too low to be taxable. I used the money to pay off a yearly lump sum of my mortgage without penalties. I arranged for a bi-monthly mortgage payment and shortened the amortization from the initial 25 years to ten years as soon as it was financially possible to do so.

I also committed an extra ten percent of my net income each pay cheque into a special 'house payment' account I had set up with the credit union. Then I invested that in eco-friendly ventures. Despite the unavoidable dips into the pot for renovations/repairs to my house/mouth/auto, it has grown over the years.

Such steps to maintain control over my tiny income have empowered me with a sense of self-pride in what I can accomplish. Equally important, I feel beholden to no one.

After taking care of the big money items, I make good use of the remaining income. I plan a budget and stick to it. I even allow for enrichment, such as an occasional spray of fresh flowers to grace my home during the gloomy mid-winter months, a trip to a favourite art supply store, or a few dollars to share with a friend.

All things considered, my life in the lowest decile of income isn't a bad one, largely because I have taken ownership of it.