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poor? Pay up!

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Deozaan:
I'm not sure I agree with the general idea of the article.

Just for example, using a "payday loan" is something poor people do. But do they do it because they're poor? Or are they poor because they make unwise financial decisions such as using a "payday loan" to buy things before they have the money?

Being poor is a state of mind. I've been broke (and am broke right now) but I've never been poor.

app103:
That article didn't even mention how a great many of the poor finance things like TV's.

What do you do if your TV dies and now you have nothing?

If you are part of the middle class, you grab your credit card and get in your car and take a drive to an electronics store or the mall. You shop around till you find something suitable, in both price and quality, and when you find something you are happy with, you then put it on your credit card.

But if you are poor and have no car or credit card, you go to the local RAC or ColorTyme, subject yourself to their high pressure sales tactics, and select a TV from their very limited selection. Then you sign a contract to make weekly payments for a set term (usually about a year & a half). At the end of that term you own the TV.

But is it a new or used TV? Is it a refurb? You really don't know when you sign the contract. How about the interest rates? They don't disclose that either and will even claim they technically don't charge interest, so they don't have to disclose that.

By the time you have paid off your possibly used, possibly refurbished TV, that you could have bought at Sears for $250 if you had a car or a credit card, you'll be paying over $1000. And shortly after you finally pay it off, it will probably die on you, starting the whole chain all over again.

Oh, and if you are late or miss a payment, they come take the TV away, and if you come up with the money for the payment and want the TV back, you have to start all over again with a new contract, essentially losing everything you paid towards the TV already.

And unlike a credit card, there is no reward or benefit in paying it off early. There is no reduction in fees or interest.

Additionally, during the term of your contract, you will be contacted quite frequently by company sales representatives that will try to pressure you into buying more overpriced crap from them. They are not happy with you just wanting a TV. They want to replace all your furnature, appliances, and electronics.

If you have kids, they will pressure you into buying a $500 computer for them, at a final price of over $2000, with a sales pitch that will lead you to believe that if you don't do it, that it means you are a bad parent that doesn't love their kids and want to see them succeed in life.

You'll find that these businesses operate essentially only in poor neighborhoods. You will not find them in the middle class suburbs. If you are part of the middle class and one of these places opens up shop in your neighborhood, it's time to move. It's one of the signs that your neighborhood is going to hell.

http://www.clnj.org/rentown.htm

40hz:
Or are they poor because they make unwise financial decisions such as using a "payday loan" to buy things before they have the money?
-Deozaan (May 21, 2009, 11:16 PM)
--- End quote ---

Many times, logically "poor" financial decisions are made out of necessity. While it may be unwise to get a so-called payday loan, needing to buy food on Monday when you won't get paid until Friday might have a lot to do with your final decision. Same for rent when you have a due date that comes before your paycheck - and you have a landlord that will use even a one day delay as grounds for breaking your lease, and either asking you to leave or deciding to up your rent as a result. Or skipping a MasteCard payment one month (and taking a hit on your credit score) because you desperately needed to see a dentist, and you didn't have insurance coverage? Which you also decided let go until it became very serious (and much more expensive!) because you didn't have the money because you were paying off some back utility bills.

See how it works? Once you get behind in one area, the whole house starts falling down around your ears. That's the problem with not having money. All it takes is one unforeseen problem requiring cash to start the dominoes tumbling.

I agree that poverty is more a state of mind than a state of grace. I too have often been 'broke,' yet I have never once considered myself 'poor.' But I was brought up by a family that believed in the American Dream with a faith that bordered on religious mania. And through no merit on my part, I inherited their belief, along with an unfortunate genetic propensity for developing heart disease. (You always get some bad with the good. ;D)

Had I had grown up in a family that had suffered the "slings of misfortune" over the generations, I'm sure I wouldn't have been so optimistic. And while it's easy to tell people that they should change the way they think, I'm sure we can all agree that changing our basic attitudes is a lot harder than it looks.

Just my 2¢. (Actually, can I owe it to you until Monday?   ;D)

Stoic Joker:
If you are part of the middle class and one of these places opens up shop in your neighborhood, it's time to move. It's one of the signs that your neighborhood is going to hell.
-app103 (May 22, 2009, 05:37 AM)
--- End quote ---
I've been laughing about this line for the past 5min.

Having had to deal with that type of company in years past I can attest to the 100% accuracy of your description.

My only saving grace was a friend that worked for the company that allowed me to get in on the loadingdock specials where they sold off the best of what was left of the multi-return items. He'd let me know when there was a good (e.g. no questionable history) item X available and I'd slide in and grab it for a greatly redused payment rate (only twice what the item was worth & no warranty). I furnished my first house that way.

cranioscopical:
What do you do if your TV dies and now you have nothing?-app103 (May 22, 2009, 05:37 AM)
--- End quote ---
You do what many of us who have been really poor did, viz. exercise self-control, do without, and adjust your attitude accordingly. Who ever suffered from lack of TV?

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