Rental America: Why the poor pay $4,150 for a $1,500 sofa • Hacker News Board

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#11

Post by SnowProblem » Fri, Oct 17, 2014, 10:23 PM UTC

arbuge wrote: post #9

bdamm wrote: post #4

Most will turn up their noses for buying a sofa this way, and yet most folks here will happily suffer just as shocking a cost in order to buy a house.

Which is particularly ironic when you consider that the cost of the house typically exceeds the cost of the furniture several times over.

Unlike a couch though, you need a place to live. Is it cheaper to continue renting until you can afford to buy outright? I thought the answer was no.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#12

Post by nashashmi » Fri, Oct 17, 2014, 10:24 PM UTC

This reminds of HBO comedian John Oliver talking about payday loans.

I kept thinking about this and got very emotional over it. So I came up with a quote: Wealth is a beauty nurtured in savings so keep the choices you make on how much you use limited to your priority needs.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#13

Post by jtth » Fri, Oct 17, 2014, 10:24 PM UTC

Perhaps the issue concerns why anyone would purchase a $1,500 sofa.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#14

Post by turar » Fri, Oct 17, 2014, 10:25 PM UTC

This may sound offensive, but is buying a $1500 sofa really a good decision if you're "poor"? I don't consider myself poor, and I bought a $500 sofa, it's pretty nice and has worked well for many years. I also have a lot of good used furniture that I've bought for almost nothing off Craigslist.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#15

Post by outside1234 » Fri, Oct 17, 2014, 10:25 PM UTC

This should really be titled "why the financially ignorant pay $4,150 for a $1,500" - you see this lack of financial smarts pretty much across the wealth spectrum from sofas to McMansions.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#16

Post by gxs » Fri, Oct 17, 2014, 10:26 PM UTC

You know, I hate to sound elitist or conceited or whatever word you may want to use to describe the following statement, but it's true: there is a huge element to these decisions that goes beyond education and background. At the end of the day, it boils down to plain old reasoning ability.

I have a friend who is pretty well educated in a non stem field and is decently successful (lower middle class).

We both drive the same car that is currently worth 9k (a car which he shouldn't have gotten either, but I digress).

We spent an hour the other day debating why he shouldn't buy a brand new 22k car that will save him 900 per year on gas.

For the life of me I just couldn't get him to see why the best decision financially was to drive his current car into the ground.

His argument was literally, in 10 years my new car will be worth more than yours. I was dumbfounded - I could not get him to see that it was coming at a cost of an additional 13k up front. He said it in a "haha got you! - you forgot about that!" kind of way.

I just gave up.

At what point do we just admit that no matter the education level, no matter the background, some actors in the economy just won't make the most prudent choice?

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#17

Post by wfjackson » Fri, Oct 17, 2014, 10:27 PM UTC

I wish the government or charities helped these people out by educating them about the various ways they can be frugal and the typical ways they get fleeced by holding free seminars and giving out flyers/books.

Perhaps the tips in Reddit's /r/frugal can be made into a book and freely distributed to such people?

There's an immense amount of money being spent on such folks, much of it from taxpayer dollars and it still isn't very effective at lifting them from the vicious cycle of poverty.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#18

Post by jeffwass » Fri, Oct 17, 2014, 10:28 PM UTC

bdamm wrote: post #4

Most will turn up their noses for buying a sofa this way, and yet most folks here will happily suffer just as shocking a cost in order to buy a house.

A key difference is that the sofa is a wasting asset, with decreasing resale value over time. A house usually retains or has increasing resale value.

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#19

Post by aliston » Fri, Oct 17, 2014, 10:28 PM UTC

pseudometa wrote: post #7

This is somewhat similar to how nearly all of the middle-class buy houses... by the time they finish paying off their mortgage they've spent twice as much as the original list price. At least with homes, there is a chance for property to increase in value.

The home itself is fundamentally a depreciating asset as well. I think theres a reasonable argument to be made that the perception of real estate as an asset with increasing value is largely inflated by 30 years of increased leverage, decreasing interest rates, longer loan terms and decreased lending standards. Back in the 1950s, the average loan-to-value on a home was about 50%. Somehow it has since become standard to leverage yourself 5:1 on a home purchase, which for any other asset class would be kind of nuts!

Re: Rental America: Why the poor pay $4,150 for a $1,500 sofa

#20

Post by downandout » Fri, Oct 17, 2014, 10:29 PM UTC

bdamm wrote: post #4

Most will turn up their noses for buying a sofa this way, and yet most folks here will happily suffer just as shocking a cost in order to buy a house.

Not that this makes it much better, but the house at least has a chance of not being a depreciating asset. The $1500 sofa is worth $800 the day after it's delivered.