I buy cheap hotdogs for meat, and cheap cars that I drive into the ground to get my money's worth out of them, but I can't afford to pay rent. I've been almost homeless for the last year.
But, I just bought a house a few days ago. I bought it super cheap, and it needs a lot of work that I'm doing myself.
I still can't afford to pay rent, not because I couldn't, but because it's a waste of money.
I didn't think twice about buying this house because it was a fantastic deal.
5 years from now I will have spent less than someone that is still one payment away from being evicted if they miss a rent payment.
But cars are optional if you live somewhere with working mass transportation.
Of course in reality these schemes are traps to get poor people to overspend, but the issue is not that they are physically unable to buy long lasting items, but that the system is constantly trying to trick them in to failing.
When they are available, it is never really for things like shoes or the specialty-sized bra you really need that they do not sell at Wal-mart or a non-specialty store (I spent over $100 for my last one, and had to order in the US or wear something that didn't fit).
Instead, they'll lease you furniture, refrigerators, and stoves with the promise that you'll own it some day (and honestly, for washer/dryers, this might be the intelligent choice as it is cheaper than the pay laundry if you have a family). They'll give you a car loan for a bad car, too.
Buy now pay later schemes aren't even worth it if you are financially insecure: I'd have never done this with my ex, for example, even if I knew that on paper, we might have the money. My ex, you see, is my ex for a reason, and part of that reason was money simply going missing, sometimes meaning that I couldn't buy more food or be afraid of running out of gas. Poverty - on paper - is like this.
They are absolutely a trap but if you were financially smart, you could use them to your advantage to overcome the initial investment vs lifetime cost problem.
The issue is not so much that these people have no options, but that they do not have the knowledge to pull them out of the endless traps that get marketed to them.
The problem is that when you are strapped for cash your freedom of action is limited and it is hard to be financially smart due to the stress.
You not only get your boots discounted and/or bundled with some other offer, there's a fair chance you don't have to pay for them at all.
I've been on both sides, and the differences are a real eye-opener.
I do agree that it is a better scenario than having to always buy the lesser quality item, but you still are paying the 'poverty tax'
There it is. Barely hidden by more advanced financing.
The quality difference between a $10 product and a $100 product of the same type is enormous. But then when you go up to $200 the quality increases much less. There is a name for this that I can’t recall right this second, the point being that there is a sweet spot price/quality wise for most things.
Housing is also getting pretty bad. Essentially, the lower your income, the more you are expected to pay back to the bank since you can only put aside so much money for the mortgage each month.
A well-off person will pay his house as much as 2-3x faster than a 'poor' person, essentially allowing him to invest for the future at a much earlier stage in life.
Mortgage interest is also tax-deductible, while personal loan interest is not. This makes the mortgage the last debt to pay off, not the first.
This does not affect 80%+ people, who are better off with standard deductions since 2017 tax cuts and jobs act.
In 2018, 87% did not itemize.
https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
This ignores the indisputable fact that if personal loan interest were deductible, fewer would be better off with the standard deduction.
I mean, if you eliminate all specific deductions, everyone will be better off with the standard deduction no matter how small it is. That doesn’t mean no one is impacted by the elimination of specific deductions, in fact, it means the opposite.
In any case, this doesn't change that wealthy people are likely not in a hurry to pay off their cheapest debt.
No, 80% percent are better off with the standard deduction than itemizing given the Trump tax changes (which include increases, like limiting the SALT deduction, as well as cuts.)
One might almost imagine that there is a reason that no one at all has said “lower income people are paying more” in this discussion.
But have fun beating that strawman.
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.