poor? Pay up!

[urlwolf]

Great article at the washintong post: Poor? Pay up!.
In fact, one cannot afford to be poor!

[gexecuter]

The poor always end up paying someway or another and that pretty much sucks.

[mouser]

I'm afraid the age old saying is more true than ever.. The rich get richer, the poor get poorer -- that's how the world's economies are set up -- while not impossible, it's a very hard syndrome to break out of.

[f0dder]

It's an old truth, even in countries with relatively well-working welfare as Denmark.

[40hz]

Right in keeping with something noted by many financial planners and counselors:

Once your net worth exceeds one million dollars, "The System" starts working for you rather than the other way around. So the name of the game is to get your net worth up above $1 million as quickly as possible. Because once you hit that million, it becomes relatively easy to move up to $10 million and beyond. Once you're a millionaire you become eligible for tax breaks, investment opportunities, and favorable credit terms only offered to the very wealthy. Our society is set up to reward what it considers "success."

As Steven Schwartz so nicely put it in the song All for the Best from the musical Godspell:

Some men are born to live at ease,
Doing what they please,
Richer than the bees are in honey...

Never growing old,
Never feeling cold,
Pulling pots of gold from thin air.

They are the best in every town,
Best at shaking down
Best at making mountains of money...

They can't take it with them, but what do they care?

They get the center of the meat,
Cushions on their seat
Houses on a street where it's sunny...

Summers by the sea,
Winters warm and free
All of that, and we get the rest...

Yes, who is this land for?
The sun and the sand for?
You guessed!

It's all for The Best...

Probably be a lot funnier if it weren't so sadly true.  

[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?

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. )

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?   )

[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.

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?

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?

[Stoic Joker]

Or are they poor because they make unwise financial decisions such as using a "payday loan" to buy things before they have the money?

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. )

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?   )

It's been said that most of the middleclass are generally only 2 paychecks away from bankruptcy for exactly this reason.

[Stoic Joker]

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

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?

Ah! The shear joys of inurement ... Not! ...Yard sale, pawn shop, dumpster diving, or creative DIY home repair. There are always options ... especially if all you have is time. I've had to do all the above in my time ... the one thing I refused to do is resign myself to having to accept nothing.

[app103]

Who ever suffered from lack of TV?

When I was a kid, I didn't get to pick & choose what I got to watch on TV, and I had an early bedtime that prevented me from watching anything that fell in the prime-time slot.

As a result, I always failed school assignments that required me to watch something specific on TV. (Remember Roots? I was supposed to watch it every night and take notes, and turn in an essay when the miniseries was complete. It weighed very heavily against my grade.)

Now, imagine that you would love for your children to complete their school assignments, but due to the fact that you are too poor to buy a TV, they can't.

_______

That being said, currently the only TV in my house (that works) is a battery operated black & white analog thing with a 5" screen (running with an A/C adapter) that will go in the trash next month, since even with a free DTA converter box, it's pretty much useless, since I can't connect the converter to it.

I will suffer greatly for this loss, even though I haven't really watched TV in about 6 years. This little 5" screen is what keeps my husband out of my hair and off my lap while I am trying to use my computer.

Last year when we had the big storm that caused a power failure that lasted almost 5 days, I wanted to kill him. I knew what to do with myself (read a book, crochet, etc) but he had no clue what to do with himself. As a result, he made it very difficult for me to do anything. You try reading a book in the same apartment with a very bored man that is constantly getting in trouble with something he isn't supposed to be touching or doing. It's worse than babysitting a bunch of 2 year olds. I tried to teach him how to play solitaire with a real deck of cards (failed), tried to teach him latch-hook rug making (failed), and at one point I said we needed to invest in an old fashioned rainy day chest of kids toys. Things like coloring books, crayons, legos, lincoln logs, etc. I was less than half joking when I said it.

So, beginning next month I am going to have to put up with a similar situation, 4 days a week, because things are pretty rough here and my husband is only working part time. So, if I should suddenly stop logging in on the forum for any long length of time, after the official switch to digital, you can assume I am in jail for killing him.

So, does that answer your question about who has ever suffered because of a lack of TV?

[40hz]

This little 5" screen is what keeps my husband out of my hair and off my lap while I am trying to use my computer.

Sorry to hear that.

I'm in a more fortunate position in that regard. Should my beloved climb on my lap and get in my hair while I'm using a computer, I'd immediately switch it off in order to pursue some more "interesting" activities.

(I could use the exercise anyway...  )

[app103]

This little 5" screen is what keeps my husband out of my hair and off my lap while I am trying to use my computer.

Sorry to hear that.

I'm in a more fortunate position in that regard. Should my beloved climb on my lap and get in my hair while I'm using a computer, I'd immediately switch it off in order to pursue some more "interesting" activities.

(I could use the exercise anyway...  )

The only reason why mine climbs on my lap while I am using my computer is to see the screen better. He's being nosy. And it's usually only during commercial breaks.

[cianoc]

<i>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?</i>

a) Its different when you have kids.
b) "By buying things before they have the money" - you're talking about stuff like getting the car you need to commute to your job repaired (can that wait?). Paying doctors bills. Paying for the emergency plumber. New school clothes. An unexpectedly large fuel bill. Poor people have no contingency funds for emergencies, or anything out of the ordinary.

[40hz]

Its different when you have kids.

Truer words were never spoken.

Whole industries have grown up around exploiting a parent's guilt and their desire to do what's best for their children. That sort of thing hurts the middle-class parent. But when it comes to cash strapped parents, it does a lot more than hurt. It also draws blood.

[wraith808]

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.

This.  Even when I've been broke, or not so well off, it's been a temporary thing, not a way of life.  Because of that outlook, people have always looked at me as playing on a different field, and to a certain extent it's true.  Though it's a pithy saying, I've found it to be true that even in money matters, your attitude determines your altitude.

<i>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?</i>

a) Its different when you have kids.
b) "By buying things before they have the money" - you're talking about stuff like getting the car you need to commute to your job repaired (can that wait?). Paying doctors bills. Paying for the emergency plumber. New school clothes. An unexpectedly large fuel bill. Poor people have no contingency funds for emergencies, or anything out of the ordinary.

Been there done that.  Not there anymore.  Is there that much different about me that I'm not there anymore?  It's called sacrifice unnecessary things to pay for the necessary.  We can sacrifice a *lot* more than we do in times of need- it really depends on how much it's *really* worth to you.

Not to say that I'm down on people who are in that situation, just that it's a choice.  And this whole mentality about things are so bad/people are so poor obscures the sight of those who really *are* in dire straits.  Don't mortgage your future to pay for your present is a really good thing to live by.  It took me a while to get it, but having done so, it's really freed me to live way under my means.

[Edvard]

Good reply, Wraith808.
I've most often discovered that a positive attitude about the situation usually allows me to make better decisions to overcome it, although I'll confess to identifying quite gravely with most of the sentiments posted here.

In my family, we don't have cable or satellite TV service, the TV has a DVD player and we get our movies and stuff from the library. We don't have cell phones. Our internet is free dial-up (thank you, NoCharge!!) and all the computers that have been in the house have been second hand from my employer (thanks Boss!!).
We have a modest house payment because we bought it relatively inexpensively (and before the house pricing boom) from our landlord who wanted to get out of the renting business, which we refinanced for enough to pay off some bills and pay off the car.
We have some credit card debt from when my wife got quite ill but those accounts are closed and we have negotiated better terms as we pay them down.

Now for the rub...
I have a job. A fairly good job that pays around $1900 USD per month.
Yet I pay the house payment, utility bills, put some gas in the car and a few things in the pantry and my paycheck is gone or more, necessitating an overdraw or "payday loan" and reliance on the generosity of family some weeks.
(I do odd handy-man jobs for the in-laws and they pay whatever they feel like. They're generous, so it's all good.)

In some countries of this crazy world, I am fully aware that I would be considered a ridiculously rich man, and yet here in the fattest country in the world, I feel like I'm barely scraping.

I do not begrudge the rich their privilege, especially if they worked hard to get where they are. Ingrateful heirs and greedy ne'er-do-wells notwithstanding, there is nothing wrong with rewarding hard work and honest effort.
BUT...
The practice of businesses built on taking advantage of the less-than-fortunate seems like some sick kind of Schadenfreude that most in their right mind would find loathsome at best. I would support legislation to regulate and curb these kinds of practices to take away the advantage they cultivate at the expense of those they prey upon.
However I fear the real problem may be multi-headed and equipped with tentacles and therefore difficult to combat and remedy in an entirely practical manner.

*sigh*

[wraith808]

I do not begrudge the rich their privilege, especially if they worked hard to get where they are. Ingrateful heirs and greedy ne'er-do-wells notwithstanding, there is nothing wrong with rewarding hard work and honest effort.
BUT...
The practice of businesses built on taking advantage of the less-than-fortunate seems like some sick kind of Schadenfreude that most in their right mind would find loathsome at best. I would support legislation to regulate and curb these kinds of practices to take away the advantage they cultivate at the expense of those they prey upon.
However I fear the real problem may be multi-headed and equipped with tentacles and therefore difficult to combat and remedy in an entirely practical manner.

I feel like you on this.  I see that risk is the reason that payday loans charge usurious interest, and that they do provide a service that people take advantage of so on that level it makes sense.  But is it right?  If people want to mortgage their future for their present and someone takes advantage of that want, is it our place to let or not let them?

One way sounds almost socialist and the other way predatory.

Almost reminds me of sub-prime lending and we know the way that worked out.

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[cranioscopical]

So, does that answer your question about who has ever suffered because of a lack of TV?

Nope, it just makes me feel another flash of despair about the way our society is headed.
The idea that TV is a 'must have' seems entirely preposterous to me. And the fact that 'poor' people 'have to' pay more to obtain one, when the act of saving the rip-off fees that they spend to do so would allow a later, cheaper purchase beggars belief. Many years ago, when I was struggling to keep my child fed and clothed, the U.K. required an annual TV license fee in order to use a set. The gift of a TV would have been impossible for me to accept because paying for the license just wasn't an option.

I don't think we can reconcile our views on this one  

[wraith808]

I think she was mostly kidding.  I think.  I hope.

[Edvard]

One way sounds almost socialist and the other way predatory.

Like I said... tentacles.
I rail at the methods of madness I know to be detrimental to my financial health... Even as I write out the check knowing it is my only recourse (aside from outright begging) when the fridge is empty. It is more than once I have seriously considered forgoing occasional meals out of concern for the thickness of my wallet rather than the thickness of my middle. 

Almost reminds me of sub-prime lending and we know the way that worked out.

I too, was trying to work my rant in that direction but couldn't quite make the connection. We bought our house a full two years before housing prices skyrocketed and banks started offering 0% down loans to many who (in the long-term view) could not afford them, and I'm not just talking about the interest rates...

[app103]

One way sounds almost socialist and the other way predatory.

What is wrong with usury laws that limit the amount of interest one can charge, legally? I live in a state that has had usury laws since it was an English colony, so this is not something unheard of.

We don't have "payday loans" here because they exceed the 30% APR legal limit.

And what about extending the existing laws to cover more things, like rent to own? They should be disclosing the APR in a nice little chart like all credit companies have to do. There should not be a loophole that lets them get away with not doing that and allowing them to charge an illegal interest rate and making claims that it's not interest.

And it should be illegal to seize and keep $1000's of assets if someone defaults on a $300 loan. (People in FL lose their cars they put up as collateral on these small loans, and they are never refunded the difference)

And what happened to the laws that say that any hospital that receives federal funding has to offer charity care to anyone that shows up at the emergency room and can't afford it? It used to be that if someone was poor they could get that and not get sued and then have their wages garnished if they were under the poverty line. Now they end up with their wages cut to $150/week till the bill, interest, court fees, collection agency fees, plaintiff's lawyer fees, etc is paid off. Instead of charity care covering a $3000 bill, they are being fleeced to pay $10,000 or more, just because they are poor.

[wraith808]

One way sounds almost socialist and the other way predatory.

What is wrong with usury laws that limit the amount of interest one can charge, legally? I live in a state that has had usury laws since it was an English colony, so this is not something unheard of.

Well, for one thing, at times people need an alternative.  And if these become a losing proposition because you are unable to mitigate the risk, then that alternative doesn't exist.  I've used it before when I had no other alternative; I had already sold what I could, and had a critical debt that needed to be paid and I knew I would have the money when I got paid.  The fee was worth getting the money now.

What I did do was make sure I wouldn't be in that position again, and I was also very aware of what I was doing, so it was a one time fee, not a way of life.  But what if it hadn't been available?

The reason the rates are so exorbitant is because of the failure rate of the loans.  And the repossession is not really wanted; the fees to do so merely allow the businesses to stay afloat- the interest rate on the people who make good on the loans are what keep the businesses going.

It's not as cut and dried as people make it out to be, and it's easy to lose sight of this and either legislate the option out of business, or allow them too free a hand.  They do serve a purpose to those who need them, and in general those who are totally against the idea and refuse to see the service that is being provided have never found themselves in dire enough straits to use them...