But you know, in a weird way, what he did makes economic sense. In a homeless community, people rely on each other, and if you are down one day, maybe a buddy is "up". So by giving food to other homeless people in the park, he is "banking" goodwill. Later on, he can ask them for a favor, since he helped them at one time. Pretty smart thinking. A survival skill on the street, no doubt. If he kept the cash, well, it would have been spent on booze. These people aren't necessarily stupid, they just have pretty severe problems.
These folks decided to give a homeless man a house (although it appears they are renting it for him for a year). I will be interested to see how that works out - after a year, then what? Unless he can get a job or have someone pay his rent perpetually, he will be back where he started. Even if they gave him a real home, he would have to pay taxes on it, utilities, insurance, and maintenance. Without a source of income, how does that play out?
I would be interested to see the results of that experiment, after a year.
(UPDATE: I cannot find any video on his Youtube channel with an update on what happened to the homeless man. There are a lot of ads for his videos, though! Homeless man looks very well dressed in the video. Are we being pranked?)
That's why I think it is better to give that $100 or $100,000 or whatever, to a homeless shelter, than to some random guy on the street. You could be giving it to a fraudster. You could be giving it to someone who is just going to spend it on good times and blow it all in short order. I think if you really want to "change someone's life" you have to give them more than money - they need guidance.
And they may not want your guidance.
- A vast majority of homeless people have mental health issues.
- A vast majority have drug/alcohol issues.
- Many just live for the moment or the day.
- All of them have problems managing money.
The fellow who was given $100,000 spent it all and was happy doing that. He wanted to "live for today" and wasn't interested in saving or investing. And quite frankly, he probably made the best choice. Why? Well, he really couldn't do something like buy a house with it, as he had no income stream or means of keeping the house. With no money to pay taxes, insurance, utilities, maintenance etc., the house would fall apart in short order - and be lost to tax auction.
Similarly, something like a car is impractical, if you don't have the income stream to support it - and a place to park it. Money alone didn't solve his problems. But it did allow him to have a really good time, for a short while. A very short while.
And that goes back to the second-to-the-last issue - living for today. You can't instill financial responsibility in someone who doesn't want it. We live near a small city that is mired in poverty. Most of the folks living there squander their meager incomes on lottery tickets, rent-to-own furniture, buy-here-pay-here used cars, payday loans, title pawn loans, rent-to-own "bling rims" and other bad bargains. You could try to teach these folks better financial habits that would put more money in their pocket and make them investors instead of consumers. You wouldn't get very far.
Simply stated, they don't want to hear it.
It is like the response I got from my "Never Lease a Car!" and "Never Cosign a Loan!" postings. The folks that do this don't want to hear that they are being foolish. In both cases, usually there is a car involved - the young college graduate who wants a fancy luxury car, but can't afford it, gets one through leasing. He wants to show off at the high school reunion. The younger man, asking Grandma to co-sign on a Camaro largely wants the same thing.
People want today. They want to live for today and in that regard, they are little more than homeless people who aren't homeless just yet. But for a steady income stream, they would be living on the street. They lose their job, and bam! The inevitable will happen
Homelessness could happen to a lot more Americans, but it doesn't, mostly because so many folks hang on, living "paycheck to paycheck" and staying barely ahead of their creditors each month. It needn't be that way, of course. Putting money aside and investing - and cutting out "living for today" with fancy cars and smart phones - allows you to live more securely and realize that homelessness is not one lost paycheck away.