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

#51

Post by chrismcb » Sat, Oct 18, 2014, 9:19 AM UTC

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…

Are you sure the best decision financially is to drive the current car into the ground? We don't have enough context toy make an informed decision. But saving 1000+ a year in gas (that continues to go up) to have a brand new, relatively maintenance free car for the next several years isn't necessarily a horrible decision

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

#52

Post by wlievens » Sat, Oct 18, 2014, 12:11 PM UTC

crassus2 wrote: post #45

gxs wrote: post #42

Earlier quoted context omitted.

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.

What will, then, beyond "merely" educating?

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

#53

Post by bradleyland » Sat, Oct 18, 2014, 2:39 PM UTC

chrismcb wrote: post #51

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…

Are you sure the best decision financially is to drive the current car into the ground? We don't have enough context toy make an informed decision. But saving 1000+ a year in gas (that continues to go up) to have a brand new, relatively maintenance free car for the next several years isn't necessarily a horrible decision

It is incredibly difficult to beat the "drive it in to the ground" strategy on a strict fiscal basis alone. Even a $22k car will come with a ~$400/month car payment. That's $4,800/year in car repairs; which is a lot of repairs. That's almost 1370 gallons of gas (at around ~$3.50/gallon). You can drive 34,250 miles on that amount of gas if your current car averages around 25 MPG (not hard if you already own a compact car). It really only starts making sense when the older car requires so many repairs that it becomes unreliable. At that point, it starts making you late to work, or causes inconveniences that are untenable.

There are lots of reasons to buy a new car. I drive a new car every three years, so I lease. Fiscally, the decision to drive a new car every three years is about the worst decision you can make. I make that decision in the light of day though. I'm able to afford it, and we still maintain a household savings rate of 30%. Yes, I could increase that savings percentage even more by paying cash for a car and driving it in to the ground, but I choose not to. I choose the luxury of a new car in spite of its fiscal downsides.