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

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

#41

Post by DubiousPusher »

wfjackson wrote: post #17

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…

>There's an immense amount of money being spent on such folks

I think you need to substantiate this claim.

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

#42

Post by gxs »

crassus2 wrote: post #40
gxs wrote: post #16

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 th…

Education can only make up for so much of a deficit in cognitive ability. We know that cognitive ability and income levels are correlated.

Correlated, sure. But you can easily argue that it's as simple as people with higher cognitive ability can figure out ways to increase their income level better than others.

Or you could argue, education is correlated with higher income, so educate people, increase their income, and hope that their abilities go up as well.

Not sure if we're disagreeing or agreeing here, but all I am saying the problem isn't always as easy as, let's just give poor people more money and education. Problem solved.

At some point we'll have to recognized these difference in people, but it's embedded deeply in our culture that everyone is created equal. Which to be honest, I love.

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

#43

Post by albedoa »

gxs wrote: post #16

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 th…

Can you show us the math you used to argue your point? Maybe using 3–5 years instead of 10.

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

#44

Post by maxerickson »

gxs wrote: post #42
crassus2 wrote: post #40

Earlier quoted context omitted.

Education can only make up for so much of a deficit in cognitive ability. We know that cognitive ability and income levels are correlated.

Correlated, sure. But you can easily argue that it's as simple as people with higher cognitive ability can figure out ways to increase their income level better than others. Or you could argue, education is correlated with higher income, so educate people, increase their income, and hope that their abilities go up as well. Not sure if we're disagreeing or agreeing here, but all I am saying the problem isn't always as…

I wonder if we just need words/abstractions that narrowly identify some of these things.

So if we could very quickly call something an attack on in-out group psychology (you know, like aggressive branding, or professional sports, or so called amateur sports, or much of political discourse or ...), maybe it makes it easier to sway people to resist it.

I guess if you figure out the right package, you do better than when you wave your hands around and mumble incoherently.

For financing, a first step is to point out that the real cost is often hidden in the length of the contract.

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

#45

Post by crassus2 »

gxs wrote: post #42
crassus2 wrote: post #40

Earlier quoted context omitted.

Education can only make up for so much of a deficit in cognitive ability. We know that cognitive ability and income levels are correlated.

Correlated, sure. But you can easily argue that it's as simple as people with higher cognitive ability can figure out ways to increase their income level better than others. Or you could argue, education is correlated with higher income, so educate people, increase their income, and hope that their abilities go up as well. Not sure if we're disagreeing or agreeing here, but all I am saying the problem isn't always as…

We do more good for more people when our beliefs reflect reality, rather than what we wish were true. If it turns out that the cognitive science research showing that some people are smarter than others is correct we might decide that merely educating poor people will not convince them to act like less-poor people.

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

#46

Post by GuiA »

DubiousPusher wrote: post #39

This is a poor example of a real phenomenon. I was raised in a family of four with an anual income around $14,000 a year. Today, I'm an engineer with a base salary in the six figures. I can tell you first hand, wealth gives you not just the ability to do more but the ability to make the money you do have go further. It's not the $4,000 sofas that strain poor people to the financial limit. It's the hot water heater yo…

Well, sure, but buying sofas and iPads at a 200%+ markup certainly can't help.

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

#47

Post by fallinghawks »

javajosh wrote: post #23
abbot2 wrote: post #10

A better question would be "why the poor buy a $1500 sofa"?

Agreed. Seriously, poor people should be dumpster diving or cruising garage sales for furniture, not buying new. This is just people being stupid with what little money they have, and they get little or no sympathy from me. This is true even though, in general, I support a much stronger safety net and tighter regulation on predatory financial practices like payday loans. The vital difference is between necessity and…

I would really like to know what happened to the idea of saving. I'm sure I'm going to sound like some old codger (OK, I'm almost 50, I am) but my first 10+ years out of university I had secondhand furniture and the cheapest bookcases I could find, and I was a network manager.

My parents taught me not to buy things I couldn't afford to pay in full immediately, because loans cost you. With the exception of my house, I have never taken out a loan. I pay my CC in full every month. Why do poor people feel they must have new, quality furnishings? I can see the rare splurge on something nice, but it seems everyone has to have all sorts of nice stuff regardless of whether they can afford it or not. Craigslist makes it ridiculously easy to find affordable furniture.

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

#49

Post by tehwalrus »

kansface wrote: post #32
tehwalrus wrote: post #6

What is stopping an entrant going in at 50% APR rates, and competing with these guys on the weekly price? Or is the cost of doing business where 9/10 people default (mostly because you charged them too much) just that high?

Do you think an ethical pay day loan business could exist? I tend to think anyone with ethics wouldn't touch the industry in the first place. > mostly because you charged them too much Why don't you think both parties share the blame?

I think there's a difference between charging 30-40% APR (double what a crappy bank charges for a credit card, approx) and charging 4000% APR like Wonga.

Also note we're talking about different but related businesses - ludicrously overcharging for payday loans is one thing, ludicrously overcharging for hire-purchase is another. The second is less risky, assuming people don't trash their own furniture/possessions.

Finally, no, I am not certain an ethical payday loans business can exist, but I am certain an ethical loans business can exist. It's all a matter of gradually finding a limit, where people stop ranting about how unethical it is.

(to clarify - I am not actually a populist ethicist, I was merely speaking in practical terms.)

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

#50

Post by dingaling »

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.

> by the time they finish paying off their mortgage they've spent twice as much as the original list price.

Mortgages are the cheapest loans available to the public, so I don't see much of an alternative.

Most folk will never be able to save enough to buy outright with 'cash', since they would have to pay to live somewhere whilst saving. Essentially that's lost money.

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