The High Cost of Poverty: Why the Poor Pay More?

[MountainLaurel]

Something we all need to be reminded of from time to time . ..

You have to be rich to be poor.

That's what some people who have never lived below the poverty line don't understand.

Put it another way: The poorer you are, the more things cost. More in money, time, hassle, exhaustion, menace. This is a fact of life that reality television and magazines don't often explain.

So we'll explain it here. Consider this a primer on the economics of poverty.

"The poor pay more for a gallon of milk; they pay more on a capital basis for inferior housing," says Rep. Earl Blumenauer (D-Ore.). "The poor and 100 million who are struggling for the middle class actually end up paying more for transportation, for housing, for health care, for mortgages. They get steered to subprime lending. . . . The poor pay more for things middle-class America takes for granted."

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/17/AR2009051702053.html?hpid=topnews

[Bluzmann57]

1. There is a grocery store chain

here in the Midwest which has two stores within around 2 or 3 miles from my house. Usually, I stop at the one nearest my place but every now and then I stop at another one on the way home from work, since it's on the way. The one I stop at on the way home is in a lower income area and I discovered the other day that an item cost .$20 more at the lower income store than at the usual. Same item, same manufacturer. I couldn't believe my eyes so I went back a couple of day later to make sure. I thought maybe the item was on sale at one store only. Nope. Prices were the same as before. Unbelievable to me. Lower income people are being forced to pay more if they stop at their neighborhood grocery store. A lot of folks down there don't have cars so they walk to the store. And get charged more than if they go to the same chain up here. Ridiculous.

[Orrex]

3. That's an ugly manifestation of the phenomenon

A more insidious fee charged to the poor is the simple fact of credit. So that when a poor or even middle-class family buys a $3,000 car, the loan winds up costing them $7,500. Or when they have to use a credit card to buy a water heater, it ultimately costs them $1,000 because they simply don't have the cash to pay for it up front.

The media's made a lot of noise about people living above their means and/or relying too much on credit, but the simple fact is that credit is a necessary and nearly inescapable evil for a great many in our society, and as such it's been used as a means of ensuring that impoverished families stay that way.

[zipplewrath]

4. No, it's not

Credit is not "necessary". It may be "smart" in many situations, but it can be generally avoided. And generally it should be. Credit is an "asset" in some sense (mostly in an accounting sense) and should be managed as such. And this story points out why. Credit "costs". It increases the cost of everything you buy with it.

[Orrex]

8. So when the furnace breaks, the low-income family should just do without?

Do you pay up front and in full for absolutely everything? Even for expensive necessities? Did you buy a home with cash? A car? Pay large medical bills?

Anyone who claims that credit is not necessary has never been in a situation that makes it necessary.

[zipplewrath]

15. False dichotomy

Your metaphor is founded upon a false dichotomy. The only "solution" to a broken furnace isn't to borrow. There are many potential solutions. I do pay cash for "everything" except the house. That is a choice, not a necessity, based upon the presumed asset value of the home. It is in essence an investment. You only have to go back to roughly your parents generation (maybe your grandparents) to find a time when credit, even mortgage credit, was difficult to obtain at all. Yet they managed. My first car was bought with cash. I rode a bike until my job created enough cash to buy a car. But even that was a choice, I could have kept riding the bike. (prior to the bike I took the bus). I have borrowed money to buy a car, but only because I chose to. I could have kept buying them for cash. Large medical bills are paid for with insurance. I can choose to use credit as a form of insurance, but that has to be balanced with ones ability to pay the debt.

I understand the nature of the problem. But the "answer" isn't free and easy credit. Quite the opposite, the answer is positioning oneself to reduce the potential need for credit. Insurance, savings, income, these are the aspects of a life that one assembles to avoid the problems we know will come along in life. And I think that most people don't understand how frequently they live on the "economic edge". Money in the bank can be a sign of many things, including that you've just been lucky for a while, or that certain assets are declining in value and will need to be replaced soon.

It's why something like National Health care is important. It is to all of our economic advantage to share that "risk". It allows us to keep the cost low, and lower the demands upon our incomes, and savings. It is why social security, and unemployment insurance are to our collective benefit. We are able, collectively, to more economically manage that risk's costs. And it benefits our economy as a whole, and therefor all of us collectively.

[Orrex]

20. No, it isn't

It's a very real and not uncommon occurrence. Also, any arguments about "how my parents did without credit" are entirely irrelevant to today's economy, because the economy as a whole was structured differently, and middle-class income was substantially more powerful than it is today.

Explain how this is a false dichotomy:

1. Family A has $200 in savings and an income that just barely meets their monthly needs.
2. The furnace of Family A breaks in early February, during single-digit temperatures, so their house is without heat and without hot water.
3. Family A can't afford to buy a new furnace outright, because a new furnace costs $1200.
4. Family A can't arrange an installment plan through the furnace manufacturer, because the income-provider is recently unemployed, and Family A's credit is in the shitter, and the furnace manufacturer doesn't allow cosigners on their installment plans
5. Nor can they get a loan through a financial institution, because the income-provider is unemployed.
6. However, Family A has $5000 available on a credit card.
7. Family A has no means of acquiring a furnace without using the credit card.
8. Family A can do without heat or hot water, or Family A can acquire a furnace through the use of a credit card.

Have you ever had to choose to pay your heating bill, paying your mortgage (or rent), and buying groceries? Many families have to make this choice each month, so this is hardly abstract.


Perhaps your underlying argument is that society as a whole shouldn't be structured in such a way that the use of credit is unavoidable, and perhaps you're right about that, for what it's worth. In the meantime, Family A can freeze to death, or they can break out the credit card.

[zipplewrath]

24. Living on the edge

The June before, the family you describe needed to figure out how to get their living costs down to meet their income, or increase their income. Credit may be involved in accomplishing this (student loans, asset purchase, etc.). What you are describing is being "self insured" and that is generally only advised for the truly wealthy. They could consider purchasing a home warranty policy if it fits within their income. But if they are in a home they cannot afford, they are just waiting for a disaster. And relying upon credit is ultimately just going to make their situation worse. One has to take the steps to get into a sustainable economic situation. Otherwise you're just living on that economic edge I mentioned. If you are truly living "paycheck to paycheck" you are in an unsustainable situation, just waiting for a major problem. Truth is if you are in a position of not being able to save about 10% of your gross income, you are probably on the edge economically. If you can't afford to insure an asset, there's a good chance you can't afford the asset. Using credit to buy that asset, or maintain it, is just setting yourself up for disaster.

People fall on hard economic times, I understand that, and I'm not trying to say it's always their fault. I'm saying that credit is a dangerous and generally inappropriate method of addressing the problems associated with that.

[Orrex]

26. The June before, they were paying their bills from the previous winter

You seem to be making the mistaken assumption that all debts are foreseeable and that it's within the power of the debtors to plan for them when their income simply isn't adequate to do so.

In essence, your proposed solution amounts to "make more money."

I'd love to see data on just how many people are living paycheck-to-paycheck, because I'd wager that it's a great deal larger than the media would have us believe.

And, once again, you're making my point for me:

And relying upon credit is ultimately just going to make their situation worse.

I'm not disputing that. In fact, that's the basis of my point. What you seem unwilling to accept is that, for some people, the dependence upon credit is unavoidable, and--in keeping with the OP--that's yet another reason why the poor pay more.

[zipplewrath]

45. I'm confused

You admit that relying upon credit will make it worse, but you say it is unavoidable. At some point the credit will become unavailable. Then what do they do? Do that first.

[Orrex]

47. So you're saying that they should forfeit their house now?

Let me ask you three simple questions:

Have you already earned all of the money that you're ever going to need?
Have you already paid cash for everything you're ever going to purchase?
Do you make every decision only after careful consideration of the consequences and impact ten or fifteen or twenty years down the road?

If you can honestly answer "yes" to all three of those, then I will accept your argument. Otherwise, you're living in exactly the same situation as Family A, but you just don't know it yet.

[zipplewrath]

56. I have years of savings

I could last years on my savings. My only debt right now is my mortgage which is roughly 20% of the current (depressed) market value of my home. I have term life insurance on the other wage earner, and upon myself specifically to cover the house. I've got long term disability insurance. I have plans to reduce my expenses to very low levels.

And I didn't get here by accident. I sleep on a floor for months in my cheap single apartment until I'd built up enough cash to justify a matress. The bed frame came a few years later (I made it out of scrap lumber). I ate off the top of the small fridge for a year before I got a second hand kitchen table. It took a few years, but I ultimately saved up enough to "allow" myself a few of the "luxuries" of life. And I kept saving, for years. I didn't borrow except a few specific exceptions (one of which was a mistake). I've now got savings that can keep me afloat for probably the better part of 5 years, and insurance on most of my specific assets. In 5 years, I might decide to sell my house if I needed to and I could leverage that money to last even longer.

I agree with you in one sense though, most folks structure their finances closer to the economic edge than they realize, until it's too late.

[Orrex]

69. Most people live in circumstances wholly beyond their control

[Baby Snooks]

76. Well aren't you just perfect?

I really get tired of perfect people as well as their attitude that people should just live within their means the way they do. At this point half of America would be living under the bridges without credit.

By chance do you also have children? Or are you saving up until you can afford them?

As for the "other wage earner," if I were the "other wage earner" I would find someone who looked on me as something more than just an extra paycheck to save with. And how nice you carry term life on them. Might come in handy if they drop dead the day before they retire and no longer have an extra paycheck sufficient enough for you to continue saving with. Drop dead or are pushed down an elevator shaft. Accidentally of course.

I really hate wishing ill on people but if there was someone who might deserve discovering that all it takes is one disaster to destroy "economic security" you are definitely that person.

[zipplewrath]

81. That's not the point

I'm not saying bad things don't happen. I'm saying that when they do, running up new debt isn't generally the solution path. Go to any credit counselor and they tell you the same thing. Also, if you go to one well before all these bad things happen, they'll show you some of the choices you have to make now.

And the point of the "other wage earner" comment was to address a specific question from the previous post. When one is relying upon 2 incomes, contingencies have to be planned for the loss of either, or both.

In a way we are in agreement on a fundamental issue, but are disagreeing on how to address them in the current environment. The cost of managing life's risks can be expensive. (Go price long term care insurance, whoa!) One thing that can help with this is by sharing these risks and expenses. Social Security (which is an insurance program actually) is one example. Workman's comp, unemployment insurance, and programs like these reduce the cost burdens of these risks making it easier for us all, and therefor helping the economy. Nationalize health care is another. Public education, public transportation, these are other ways we share expenses and risks.

[Orrex]

86. No, that IS the point

You're sitting on your throne dispensing your wisdom about the impossibility of unavoidable circumstances, and you're invoking credit counselors as if they're the be-all and end-all of fiscal reality.

So when a person shows up with a broken furnace and no way to pay for it, what will the credit counselor advise, exactly? What the counselor might say before the emergency is irrelevant, because that's not the situation we're discussing.

[zipplewrath]

96. Probably sell an asset

Most likely sell an asset. Maybe rent a room. The first thing they almost always do is to cut up the credit cards.

The original assertion was that credit was a necessity for poor people. That is the dispute. It is a tool, but can be easily misused, and usually is. Credit is a poor way of "self insuring". But one must endeavor, early on, to organize ones self be able to handle the predictable events of life.

[rug]

89. Beat this.

[uppityperson]

36. "The only "solution" to a broken furnace isn't to borrow. There are many potential solutions."

What potential solutions?

Here you say that the previous yr "the family you describe needed to figure out how to get their living costs down to meet their income, or increase their income." How can they get their living costs down further when they have already cut back all but the absolute necessities? How can they increase their income when they can not get hired? When you apply for jobs that have 200 other applicants, and you don't get hired, how can you increase your income?

"But if they are in a home they cannot afford, they are just waiting for a disaster."

They could afford the home until the main income was laid off. Now? They have depleted their savings trying to get by while applying for job after job after job.

What to do in the meantime? Freeze or pay with credit, having to pay more because they have to use credit. Or maybe they should just default on the house and move out onto the street.

[zipplewrath]

46. Don't deplete savings

Don't hang onto an asset you can't afford by depleting your savings. Don't run up debts on an asset you can't afford. Don't just wait around depleting savings hoping that your "ship" will come in. You have to take action earlier than that. If that means moving to a smaller place, or into a communal living situation, do it early, before the debts get run up. Whatever it is you're going to do when the credit runs out, do that first.

[Orrex]

51. So your answer *is* that they should forfeit their home

In the cited example--drawn from reality--they can't sell their home because no buyer exists and the home has depreciated below the amount of their mortgage. If they suffer foreclosure and wind up on the street, they can live in a government shack, because their shitty credit will discourage most reputable rental companies from giving them a lease.

So what happens when, say, 10 million families suddenly go looking for government housing? That's the inevitable result of what you're proposing, so--by your reasoning--the government should just deal with that future reality now.

[zipplewrath]

58. I don't know their specifics

That may be the solution, I don't know without knowing what other options they have or had. But throwing good, borrowed, money after bad isn't a solution. If they have to give up the house, that may be what they have to do. In the current rental market, they'll be able to find housing. It's actually a renters market right now. But the issue is that they got to this point. If it happened "over night" they were living on the economic edge for years. They may not have known it but they were.

[uppityperson]

109. Not everywhere. It would cost me much more to rent than to keep what I have

Unless you mean I should go into debt to have enough money to rent.

You have so many assumptions.

[reggie the dog]

57. I have a communal living situation already

It is called having a wife and kid and living in a 2 bedroom place. Now take a wife and 2 kids in the same place and you have 2 people per bedroom already. How communal do you want to get?

Don't deplete savings....great advice....to someone WHO HAS NEVER HAD ANY FUCKING SAVINGS TO GO ALONG WITH THEIR MASTERS! At least I could sell my condo. I know I have it better than others do, bud damn dont depelete savings, give me a fucking break. You need saving to deplete in the first place.

[zipplewrath]

59. That's not communal

Living with your parents would be communal, or a brother, or someone else in a similar situation as yourself. And if you don't have savings, how did you get there? If you aren't saving money, and you have income, you're not in a good situation and you need to change things and fast. What you DON'T need to do is run up new debt.

[reggie the dog]

60. my parents?

they live a 9 hour PLANE ride away. My in-laws? 11 hours in plane. Idem for our siblings. How did I get to not having savings? easy I NEVER HAD SAVINGS, NEVER, EVER, NEVER! My parents paid for my university, and my parents and my inlaws gave us the 10 percent down to buy or condo so that we would not throw money away on rent. I know we are not in the best situation but my wife is a civil servant here in France and will not be laid off EVER. I get shitty contract then am unemployed then find a shitty contract. At least here we have a social saftey net which gives people like us and poorer help. The state pays for most of our nanny fees so I can work and we get 172 euros per month for our kid, which easily goes for diapers, food, and the like for her. Our debt comes from our mortgage and our car payments (we need them to go to work as there is no train where I live in the countryside where my wife, the civil servant, has been stationed). Luckily we have no student loans to pay off like some of our friends. How many people have to live in a 2 bedroom 1 bathroom condo where the kitchen and living room are the same room before you would call it communal? We have 3 already and lots of folks do it with 4. How many do we need?

[zipplewrath]

72. Social Safety Net

That is an important asset. It allows you to not have to make personal arrangements for these features and you get to share the cost burdens of your risks with others. That is very valuable. It also means you can commit more of your income to acquiring other assets. I suspect savings would still be a good idea.

[Orrex]

85. Your "communal living" solution is unrealistic in today's society, so that's not an answer.

Perhaps one day it will be a workable reality, but today isn't the day.

[zipplewrath]

92. People do it right now

There are many immigrant cultures do it right now. Multiple families in one house, sharing expenses (and to some extent income). It was a well known path for many a young couple to "live with mom" until they gather themselves well enough to move out. Many of my friends in their younger years rented rooms in their house as a way to supplement their incomes. They also did laundry, walked dogs, house sat, and worked various odd temp jobs until their careers were able to generate enough income upon which to depend. This is what I mean by "configuring ones self". It also means getting the trainings, getting the certifications, basically getting the education to get and keep meaningful employment. It takes years, and debt CAN be a part of it, but as an investment.

[Orrex]

93. Don't give me that bullshit. We're talking about society as a whole

You can't say that "living with mom" counts as communal living when elsewhere in the thread you said that it does not.

And we're not talking about kids sharing a house. We're talking about whole home-owning families facing real financial hardship today.


There is no structure in place anywhere in the US to support the style of living you propose. What you propose is not a solution to the necessity of credit; it's a way of making people feel stupid for having no recourse other than resorting to credit.

[zipplewrath]

97. Maybe talking past each other.

I didn't mean to say that living with mom wasn't "a" way, but not the only way. And at that point I was making reference to whole families sharing homes. Most often their related some how, but that isn't particularly necessary. Home sharing does go on, I believe there is even a website somewhere that people use to find each other. "resorting to credit" for a debt that cannot be afforded, isn't a solution to anything. If the debt can be afforded, then the money could have been saved up front, or spent on some form of insurance.

[uppityperson]

108. "Don't just wait around depleting savings hoping that your "ship" will come in."?

Good grief. People who are unemployed, who have been fired or laid off and haven't been able to get hired again, except at a low paying job that won't hardly buy the family food, they are waiting around hoping their "ship" will come in?

So, as soon as you are laid off, you should sell your house. As soon as I get in enough dental trouble, I should sell my house rather than depleting my savings paying for my health.

I just hurt my back at work. Guess I should have taken in a renter last yr.


"Whatever it is you're going to do when the credit runs out, do that first." Yup. Thank you for your concern.

[zipplewrath]

112. Speaking in generalities

We are all talking in broad generalities here. The point of the comment was that you have more choices earlier than later. Once savings are depleted, your choices will narrow severely. If you have a severe income disruption, one needs to make realistic evaluations of how soon it will be able to be restored or replaced. Depleting savings just because "you don't know what else to do" isn't going to solve anything. Depleting them because you just want to delay the inevitable is a losing strategy and is also letting better opportunities lapse, in favor of worse opportunities later. Part of the reason for things like workman's comp is so that there is time for people to get healthy and return to work without major disruptions to income streams. Savings can be used to "weather" income disruptions, as long as the savings are sufficient to cover the period of time of the disruptions. But someone who is already living "paycheck to paycheck" has no capacity to weather disruptions. Adjustments have to be made immediately. Waiting only makes things worse.

[fedupwithbush]

31. I have to respond to the notion about insurance.

If you are poor or below middle class, you can't afford that luxury. Pay for health insurance when you won't be able to afford food? No. Pay for life insurance when you won't be able to pay the electric bill? No. Pay for rental insurance when you can't afford to have your teeth fixed? No.

Insurance of any type is a luxury to the poor. I know, I grew up poor. Now I'm barely middle class.

We had no insurance of any kind growing up.

Now we have dental, health, AFLAC, life, short term disability, credit card, house and we keep the vehicles(even the paid off ones) with full coverage too.

BUT, all that will go away if we get laid off for very long or have to take jobs below what we make now.

Those are expenses you can't pay on low wages.

And the only reason we can pay them now, even with higher wages, is that our employer helps with some of them. Otherwise we wouldn't have all that we do have.

I could survive being poor again, but I hope my children don't have to have a life changing experience like that.

So to anyone who says they can pay for that stuff and doesn't have to worry, I wonder how you do it. Did you get a break somewhere in life as in a trust fund or some relative passed away(hopefully of old age) and left you something?

We save, but there is no amount of saving on lower wages that can make you solvent to pay all those rainy day insurance policies for more than a year, if you aren't making a lot more than most of us.

[Wednesdays]

107. Pull yourself up by your bootstraps, buddy!

Shoot...haven't you heard of Horatio Alger? :eyes:

Personal responsibility...personal responsibility. The public isn't your personal nanny.

(Oh, did I forget the sarcasm tag?)

[Pakhet]

30. really? I live in phx

it's 107 here today. we don't have an air conditioner. they run $4-$6000. I make $13 an hour. how, without credit (that I can't get anyway), am I supposed to come up with that kind of money? I love ppl who never have anything go wrong in their lives...

[Orrex]

42. Obviously, you should just earn more

And you should have started saving for that air conditioner ten years ago.

Duh!

:sarcasm:

[zipplewrath]

49. Apparently you don't

If you don't have the money, and you're going to stay where you are, you'll do it without A/C. It's not about never having anything go wrong. It's about planning for things to go wrong and taking action early. But the real point is that credit isn't the solution to these questions. And the original point really was that it just make things worse.

[reggie the dog]

54. do you know what it is like sleeping at night when

it stays above 100 in the building? heat kills just as cold kills. I live where it gets up to 107 or 110 for a few of the hottest days of the year and stays above 90 for 2 months and I do not have an air conditioner but I am only 30. Once you get past 60 the heat can be deadly and I understand why so many elderly people have air conditioning. Now imagine you live were it stays above 100 for 2 months and gets up to 115 or 120 for the hot days.

[izquierdista]

5. Credit is not a necessity

It's only in the last 30 years or so that the rich have discovered it as another tool to extract money from the poor. My parents were well schooled in economics by the Depression and they refused to have any credit accounts (other than a home mortgage) until one auto breakdown convinced them that maybe one credit card for emergency use only would be a good idea. Their generation has almost all died out now, and the public has forgotten how easy credit and speculating on margin can cause no end of trouble. But the rich only make small profits when saving is encouraged and things are bought on lay-away. Much better when they can have the poor sign an agreement with the Devil of Credit, who always has another fee to tack on and another payment to collect. And with all advertising telling you to buy and enjoy now with no payments until February 2011, who can resist?

[Orrex]

9. Certainly it is, and that's the problem

See my reply above. If your electricity is going to be shut off, and your transmission is shot, and you suddenly need an emergency appendectomy, do you just reach into a barrel of $100 bills and pay for it all in cash?

Even the example that you cite ("maybe one credit card for emergency use only") is proof of my point. Credit used for an emergency is credit used out of necessity.


I'm absolutely not claiming that it's necessary to buy a huge plasma tv on credit, but it's simply false to assert that the demands of life don't make credit a necessity in some--or many--instances.

[MadHound]

11. Funny then how I, and many millions of others across the country, have managed to live our lives

Without credit cards. In fact the only outstanding credit I've ever used have been my home mortgages, otherwise I've either paid in full or done without. And before you jump to conclusions, no, I'm not rich, by any stretch of the imagination.

This whole "credit card as a necessity" is a false meme that has been pushed successfully by the CC corporations for years and decades now, and it's sad to see how many people have fallen for it.

[Orrex]

14. So the credit that's necessary for YOU is okay, but the credit necessary for others is bad?

If you deem a mortgage necessary, then you're once again making my point for me.

But beyond that, even in my modest lifestyle, a great many necessities would simply have been impossible without credit. And before you jump to conclusions, that's not because of any extravagant purchases or carefree spending.


And if you read my first post in this thread, you'd see that I referred not to the necessity of credit cards but of credit itself.

Regardless, if you believe that credit cards themselves are never necessary, you're a bigger part of the economic problem than credit card corporations, because you've bought into the bootstrap delusion that everyone can get their finances together without resorting to high-cost--but unavoidable--solutions.

[fedupwithbush]

65. I'd like to know what income makes that possible in this day and age.

I'm not being rude, please don't think so. I just can't imagine how anyone, unless they are making 100's of thousands of dollars a year, can live without a credit line and being able to buy on credit for big or unplanned expenses. We own our home, our roof needs replaced. We can't afford to pay for it with cash, no way and no how. If we could, we wouldn't have a mortgage.

In our area of the country, you can live easily on $200,000 and pay all your bills in full. You could also save a huge amount, unless you insist on having a $2000 mortgage payment a month.

I can't believe people would fork over 1/4 or more of their take home pay for a mortgage. Utilities alone take 3 times what our mortgage does.

I'm really interested and concerned about what people consider NORMAL living expenses.

What's normal? And who determines it?

Is paying $400 every 2 weeks for groceries normal? Is paying $200 to $350 for electric, sewer and water a month normal? We don't eat lobster nor do we have the heat set above 68. We have one paid in full vehicle and one we're making payments on. My kids have never had a pair of jeans that cost over $15 dollars. We have no granite counter tops, wood floors or landscaped yard. We are not able to afford a vacation every year. Yet we make on paper close to $100,000 a year. That's $70,000 more on paper than we made when we got married over 20 years ago.

So please tell me what is excessive? We live in one of the least expensive states to live in, in the country. (Unless you count taxes, where we are up there.)

Thanks for answering and if not, I'm not surprised. No one wants to talk income and budget in depth.

[Orrex]

70. Excellent post (nt)

[zipplewrath]

74. Regional

A "living wage" is a variable item depending upon where you live. Of course, that to some extent is one of the choices one has to make about setting themselves up economically. A single person in many parts of the country is going to need something in excess of $40,000 a year presuming benefits. But that presumes they want to live "alone". Sharing housing can help with that some what. Even more so if other expenses can be shared as well. Positioning oneself to be able to access public transportation, or use simple forms (bikes, scooters, walking) can bring it down as well.

[Orrex]

82. Again with the Libertarian nonsense

In Libertopia, sure. Everyone can live on the cheap in peace and harmony, without unforeseen emergencies.

But in reality, it just ain't gonna happen.

[zipplewrath]

99. The issue is "unforseen"

There are few "unforseen" emergencies. That's effectively the point. Most things can be anticipated, even while we also try to avoid them. Insurance, savings, and just not taking on debt to begin with are all manners in which we anticipate these things. So is where we choose to live, what we choose to learn, etc.

[reggie the dog]

55. no, obviously you simply prostitute your self

or sell drugs on the street to pay for these unexpected things. orrr or or or you just rob the rich bastards you see coming into your neighborhood to buy drugs and sex from other poor people. It is easy, you take a 9 mm pistol, let one shot rip to show you mean business, get the person out of their luxury car, shoot them in the head so there is no witness, and take the car to a chop shop, see it is all so easy...................

[mrcheerful]

10. I have to disagree with you on that, often the poor have little or no choice

in taking on a loan. For example, say their refrig goes out, they have 2 choices, either a store credit loan or rent a center, they have no choice but pay a higher price for said item. Sure they can get lucky and find a used refrig but how long will that last and things like that are in low supply depending on your area of the country. Living on a fixed income often means that 98% of your income goes on such things as heat, electricity and food, leaving very little left for emergencies. Things like a washer and dryer for clothes or a dish washer are not found in the poor folks home. Then if the poor live in an area that has no or limited public transportation they have the added cost of a vehicle, usually they end up with a car that gets low gas mileage and runs maybe 2 or 3 times a month inbetween break downs, meaning the thing sits more then its driven but they are paying insurance on it while it sits in the yard.

I'll use my current situation as an example. Last fall I signed up for winter protection so my heat and power weren't shut off, my bill all winter was $77 but I paid $100 a month hoping to keep my bill lower so when winter protection ended my bill wouldn't go up as high. Well the plan ends this month on the 31st, I get in the mail my summer payment plan, $275 a month, because the power company under estimated my power usage I still owe $900 on my winter bill. Lucky for me I got President Obama's stimulus check which will be used on that bill and get it lowered so I can pay less. If it wasn't for that, I would be robbing Peter to pay Paul all summer and would end up having my power cut off until the bill was paid.

Often the poor find themselves giving up basics to survive, like eating once a day or once every other day, I spend a lot of months where I don't eat for 2 or 3 days just so I can pay bills and keep a 30 year old van going. My example isn't unlike others, medicines I'm supposed to be on, well I'm no longer on those meds as I stopped using them.

[MadHound]

13. Everybody's situation is different.

I've lived a significant portion of my life poor, homeless even for awhile, and yet I've never been in debt until I bought a house and took out a mortgage. I've never had a credit card, nor have I signed up for those "price averaging" schemes, because they're nothing but suckers' games designed to part you from your money.

If you're poor, the worst thing that you can do is get yourself in debt, and while you have to be smart, and in some cases do without, you can live a credit free life. If you don't, you're going to be nothing more than a debt slave all your life.

[Orrex]

16. Everybody's situation is different, indeed

It's super-duper that you've gone from homelessness to homeownership. How did you accomplish this, exactly? Your virtuous no-credit existence would surely serve as a valuable lesson to those of us who, in your view, have bought into the hype of the CC corporations.

If you're poor, the worst thing that you can do is get yourself in debt, and while you have to be smart, and in some cases do without, you can live a credit free life.

Well, that's just sanctimony. In point of fact, if you're poor, the worst thing that you can do is to freeze your children or fail to feed them. Perhaps, when the gas shut-off notice is nailed to your door, and you're looking forward to a few weeks of single-digit temperatures, you can warm yourself with a wallet devoid of credit cards.

A great many people are "smart" and know how to "do without," but circumstances can still overwhelm their resources, forcing them to choose between using a credit card and winding up starving on the street.


This is a fact, and your refusal to accept it as fact doesn't change it.

[FirstLight]

17. ANYONE who says they don't "need" credit when they are poor

either has never been truly poor and had children and crazy expenses like car or medical...or they just live without. I forego dental work, and my kids don't have yearbooks or participate in some school activities, because we can't aford it. Luckily I have parents who help quite often, but we still go without much of the time. I can't get credit .period. so there is no option for me if I didn't have the help that I do. My car would be long gone and I'd be either NOT driving or driving a seriously LESS safe car...

I HAVE to live without credit...and yet I know that there are just things in life we will never have because of that. I am so very blesed that the really serious essentials are there if I need them, because I know very well how we'd end up if that wasn't the case.

[hootinholler]

35. How the fuck did you get a mortgage without credit? n/t

[Hannah Bell]

37. good question. that's precisely the reason i took out a credit card,

that & being able to rent a car.

it's not impossible, but you pay more for the mortgage.

[zipplewrath]

18. Alternatives

The question one has to ask themselves is, if credit wasn't available, how would I manage. A refrig "goes out" is a predictable event. Relying upon credit to address that event is a mistake. Money should be saved prior to the failure of the device to be able to address the problem. One should not organize themselves such that 98% of their income is dedicated to recurring and predictable events.

In your personal situation, it is obvious your primary problem is one of income. Not sure what you can do now about income, but credit isn't going to make your income go up. And in fact, is probably costing you to pay even more for many things.

[mrcheerful]

19. There lays the problem I became disabled at the age of 5 and have been on disability since

84. Rehab type jobs don't pay enough for one to get the SS numbers up high enough so you get the basic $695 disability pay to live on. When I started on SSDI the payments just allowed one to make rent and eat. 30 years later everythings gone sky high and your still expected to live on what SSDI allows you.

It's not in your hands how to organize a thing, you just squeak by month to month, year to year hoping nothing will happen that doesn't swamp you. I watched places I rented back in the 80's for under $100 jump up to $450, mobile home parks, even then it was still the same thing, 98% of every dollar went on living. So trying to say you shouldn't organize your income so your not spending 98% on living is plan silly when you have no other choice.

Sure there have been times in the last 30 years where I didn't have any creature comforts, like a TV, cable, phone or internet access, I gave those up to handle emergency needs. But like I always say as bad as things get there is always someone out there in worse shape then I am.

[Orrex]

21. Again, you've proven the point you're trying to dispute

In your personal situation, it is obvious your primary problem is one of income. Not sure what you can do now about income, but credit isn't going to make your income go up. And in fact, is probably costing you to pay even more for many things.

The part in bold-face is the exact point of this thread, and specifically the subthread that I started.

Here's the false dichotomy that you've constructed:

Either people do not use credit at all, or their use of credit is unnecessary.

That's simply not the case, and in fact I can speak from personal experience that reality often forces people to resort to credit because no option is available.

Your exhortation to save money is lovely but has little to do with life during the past decade, because the month-to-month costs of living--even while "making do"--are more than sufficient to consume a family's entire income. In fact, your suggestion is exactly the same as the one made by a certain black-souled Vice President not long ago.

[zipplewrath]

23. I think you've over stated

I don't think my position is as hard as you suggest. Credit has uses, but one use it does not have is to supplement for insufficient income. It also makes for a very dangerous form of self insurance. What most folks here are suggesting the "necessary" uses for credit fall into one of 3 categories. Making up for insufficient income, self insurance, or cash flow management. In all 3 cases, there are only very rare occasions when that is appropriate. Credit can be used for "investment" purposes, which can include education, home purchases, or business/employment purchases (tools, training, facilities, etc.). Credit can be used for "insurance" but that really is for people of "means". i.e. sufficient excess income to be able to pay the debt if incurred. Credit can be used for cash flow management, but most of us don't have much demand for such a thing. It can be used to supplement income, but it really is only justifiable over very short time periods, and basically falls into the category of cash flow management.

You say that folks are "forced" into credit because no other options are available. They are "forced" because they configure themselves into positions to rely upon the availability of credit. If you have insufficient income, credit is not the solution. You only have to go back one or two generations to a time when credit was not basically available, especially in any modern sense. As such, they did not rely upon it.

I agree basically with the original point of the thread, credit costs. It is the concept that it is a modern "necessity" that I dispute. One can learn to use it to help themselves economically, but most of the reasons being given for its necessity only exist because people configure themselves to need it. I understand that people see credit as a "solution" to short term problems. Predominately it just makes their longer term situation worse, and generally it isn't a solution so much as delaying of the inevitable. The solution to poverty isn't credit, it is an improved economy and better structured public institutions to share risks. The use of credit in this economy is part of what went wrong.

[Orrex]

29. I understand that you dispute the necessity of credit; my point is that you are incorrect

You say that folks are "forced" into credit because no other options are available. They are "forced" because they configure themselves into positions to rely upon the availability of credit.

This is simply untrue. Consider a two-income family, living within its means but unable to amass much in the way of savings. Now consider that one of the two income-providers loses his or her job. Suddenly the family, through no fault of its own, and without having "configured itself into a position to rely upon the availability of credit" is suddenly unable to afford the basic necessities of month-to-month living.

Let's assume further that their modest home has depreciated in the current market, and they're unable to sell because no one is buying. Heck, let's also assume that their furnace breaks just as Old Man Winter comes a-calling.

Do you suggest that this kind of situation is not possible? The family is suddenly thrust into a situation where they must rely on credit or else live without heat and/or without a house altogether.

If you have insufficient income, credit is not the solution.

I get your point that credit is ultimately not a substitute for income; in fact, I doubt that anyone on DU thinks otherwise! The point that you seem unwilling to concede is that circumstances can and often do make a reliance on credit (even credit cards) unavoidable. This is simply a fact. I speak from personal experience and from knowledge of many friends who've likewise struggled to get by.

You only have to go back one or two generations to a time when credit was not basically available, especially in any modern sense. As such, they did not rely upon it.

Again, that's true but irrelevant, because the economic reality of the time was completely different from what it is today. You might also argue that people didn't rely on computers just two or three generations ago; that would also be true but irrelevant.

[izquierdista]

33. A credit analogy

There is no reason that people must rely on credit any more than people must gamble. Credit card companies and casinos exist for one reason: to make themselves richer by making their customers poorer. Avoiding both as much as possible is sound advice.

[Orrex]

41. Nope--that's begging the question

The only way that your analogy works is by assuming outright that neither gambling nor credit is ever necessary. Since we are discussing whether or not credit is necessary, your analogy doesn't work because you are simply assuming your conclusion.

Still, let's run with your reasoning a little, in the interest of discussion. Consider:

One should also avoid processed foods. However, if you were literally starving, and free range, cage-free eggs weren't available, I'm confident that you'd eat a pan full of hamburger helper (or whatever processed food were available in that case).

Lots of things should be avoided. In fact, that deserves a "no shit" response. Regardless, it's irrelevant to our discussion which is about what can be avoided, rather than what should be.

[zipplewrath]

53. Credit isn't a solution to the problem

You keep describing horrible situations that aren't improved by running up further debt. If you can't afford your current living situation, and have insufficient cash on hand, running up debt isn't a solution to anything. You have two choices, make more and/or spend less. Anything else is a real bad bet. You have to start these things early too, because some things take time, and some things become more expensive the longer you wait. Having huge losses in your investments isn't a good reason to run up new debt. If the income has some reasonably sure chance of returning, one can use debt for cash flow control. But we're talking REAL short time frames here. Otherwise start making the tough choices now that will be forced upon you when the credit runs out.

[Orrex]

67. Again, you're misunderstanding the point

If were faced with a choice between an immediate, life-threatening situation (e.g. no heat or hot water) and the use of a credit card that will cause you to accumulate further debt, would you freeze your family to death just so that you don't have to be on the hook to Citigroup? That is the undeniable essence of what you're advocating, and it demonstrates very clearly that you've never been faced with a choice like that, which in turn means that you've never been both poor and desperate.

And before you cry "false dichotomy," it's not. It's the choice faced by many Americans every month, and it seems that you're about the only person in the thread who doesn't understand reality.

Another point you seem unable to comprehend is that many people don't have the option of cutting costs or saving money, because they're already living at the very limit of their resources even with their meager lifestyles.

Your sanctimonious call to make "the tough choices now" only demonstrates further that you don't understand what people are really going through, because they make "the tough choices" every time they get a bill or have to buy shoes for their kids. Every time. Every month. For as long as they can remember and for longer than they can foresee.


Your stance is indistinguishable from Libertarians' Horatio-Alger-wet-dream bullshit. Very Progressive.

It's clear that you are not only beyond reason on this subject; you are wholly beyond reality.

[zipplewrath]

71. Go to any Credit counselor.

You go to any credit counselor and they will not advise taking on new debt in many of the situations you describe. A failed heater or other important appliance is a predictable event and one needs to make arrangements well before the event occurs. That's why it's a false dichotomy, because yes, if you choose to wait to address predictable events, then you will have few if any choices. If you are living paycheck to paycheck, you are living in an unsustainable fashion and something has to change. You can wait to have it forced upon you, or you can make the choices now. Many of the scenarios you describe are people who waited to long to address very predictable situations. If you are there now, no credit counselor is going to advise you take on new debt. Don't ask me, ask them.

[Orrex]

73. Your pie-in-the-sky fantasy about "predictable events" is beyond the reach of 90% of Americans

You're saying that I should set aside $500 for a new fridge and $1200 for a new furnace and $400 for a new water heater and, say, $500 for several years' worth of clothes for my family and so on and so on and so on. That's lovely, but the person for whom credit is a necessity is simply never in a position to set aside that money in the first place.

All along you've acted as though people who need credit are living extravagantly beyond their means and are wholly ignorant of the circumstances and the consequences of their actions. None of these is true.

If you are living paycheck to paycheck, you are living in an unsustainable fashion and something has to change.

Well no shit. And what, exactly, should be changed? Unemployment is in double digits in many states, so a person can't just grab another job. And anyone who's living paycheck to paycheck has already cut out all frivolous, unnecessary spending.


So tell me, O Sage of the Five-Year Savings Account, what would the credit counselor advise when Family A needs a furnace? Would the counselor say "first, you should start setting money aside ten years ago?"

[zipplewrath]

77. Not quite

You need a certain amount of cash on hand. But not all of those things will happen simultaneously. Some things can be handled with various forms of insurance. Another manner of handling some of these issues is to sell other assets. Credit counselors often encourage people to sell "down" assets such as cars, to pay for other needed assets. It takes coordination, and time to make the necessary arrangements. That is where temporary credit can be used, in order to bring longer term expenses down.

As I say, the point isn't that bad things don't happen. The point is that in dire circumstances where there is a loss of income, or expenses exceed income, no credit counselor is going to generally advise that running up new debt that doesn't lead to new income or lowering long term expenses, is a good idea. If you have the future income to justify the debt for a water heater that can be a solution path. Saving for one up front is better. But if you DON'T have the future income to pay the debt, you shouldn't bury yourself in new debt. Truly, if you aren't able to save for one, some form of home warranty might be a good idea.

[Orrex]

88. What will the counselor say when the choice is between "forfeit your home" or "freeze to death?"

And if the car is needed for work, then selling it isn't an option.


Pretty much everyone in the thread has rightly identified your argument as the same old sanctimonious "they did it to themselves" attitude that does nothing to remedy any of the underlying problems and serves only to puff up the person who's been lucky enough to avoid the catastrophes that they tell other people to plan for.

[zipplewrath]

98. Probably forfeit the home.

I'm guessing, but I'm pretty sure they'd pick life over the house. Usually, they merely advise you "sell down" the car, i.e. sell it and obtain a cheaper one (or alternate form). They almost always advise that you get into a housing situation that is affordable (in real terms, roughly 30% of gross IIRC).

I freely admit that bad things happen, and one cannot always stop them. I merely dispute that the "solution" to poverty is taking on unaffordable debt. And the reasons given for needing credit are wholly predictable and should be handled in advance to avoid the use of unaffordable credit.

[Orrex]

104. Then your position boils down to this:

"Don't allow anything to occur that can't be entirely handled in advance."

In spite of all of your slogans about credit counselors and selling assets and communal living, what you're basically saying is "have more money than you'll ever need."

Incidentally, "selling an asset" is seldom an option, when one has no assets to sell. And "selling down your car" isn't viable when you're driving a $750 POS and need it for your job.


Additionally, if you owe $50,000 on your mortgage and your home won't sell for more than $40K, then you're advising Family A to take on $10,000 worth of debt. But I guess that beats $1200 on a credit card.



Nothing you've offered in this thread is remotely realistic.

[zipplewrath]

113. Neither is taking on debt you can't afford

In essence that is the point. For all the solutions you find unrealistic, adding debt you can't afford isn't one either. If it is somehow debt you can afford, even at the reality of some pain, that is money one should have set aside in advance.

The situation being described here that is most difficult is the major disruption of the income stream. That is problem for which there is often no good, nor easy, solutions especially in the short term. But that includes just running up additional debt. The situation you're describing is a guy so deep in a hole that he can't get out. Digging the hole deeper isn't a solution. Usually, the only reasonable "out" is assistance, either from the government or from friends and relatives. I have some experience in this area and ultimately that was the direction most folks went. They went back to family or combined resources with someone else in a similar situation. It was made all the harder because they waited too long, and ran up additional debt in the process. Worst case, many had to declare bankruptcy.

[Ms. Toad]

87. I agree that credit is not the solution - BUT

I find this attitude unacceptable:

>>You say that folks are "forced" into credit because no other options are available. They are "forced" because they configure themselves into positions to rely upon the availability of credit.<<

I used to work in a school district in the inner city. My class turnover was about 60% every year. Parents in that district would camp with friends, relatives etc., and save up enough working at a fast food restaurant for minimum wage - often less than full time - earning maybe $400-$500/month. When they got first and last month's rent saved up for a lousy (sometimes literally) $100-$200/month squat house, they moved. If it took them across school district lines, they were gone. They stayed there usually about 4-5 months - just long enough for the next eviction to catch up with them when they didn't have enough money coming in to pay the rent. Then, back out on the street - or hopefully they can find someone else to camp with with whom they haven't worn out their welcome. Again - if it took them across district lines, they were gone. The kids survived on school lunches - generally including through the summer, as it was the only food they got. As they got older, some of the kids took jobs to supplement the family income so maybe they could stay in the same house all year.

Sorry - but these folks did not "configure themselves" into positions to rely on the availability of credit. Their income does not match their outgo; they are (many of them) incapable of or unable to find (or make it to) work that pays more. Their lack of stable housing exacerbates the problem because if they are booted out of their house their next house may not be within walking distance (and they may have no other means of transportation) to their job so they may need to quit and start all over again. Many of these parents lacked even a high school education. That's the sad reality - and these are the families that had enough where-with-all to move out of the deep inner city. Where I taught was actually a step up from the darkest recesses of poverty.



On the flip side, you have my daughter - the daughter of privilege. Were it not for the privilege that living as my daughter will provide her, she would likely be in the same shoes for very different reasons. Her health care costs, in a year when nothing goes wrong, are between $5000 and $10,000 - perhaps higher. I can't tell you precisely, since we have not yet finished a year since her health care costs took a big leap by the diagnosis of a second chronic illness.

Even with a high school education (and, we hope, a fancy college education), chances are she will need to rely on us for the first 10-20 years of her adult life to survive. It is unlikely that she will be able to work full time because of her health conditions - BUT it will (we hope) be years before her health deteriorates to the point where she qualifies for SSI or SSD (even though she now has two chronic illnesses, either one of which alone will eventually qualify her). She is struggling to finish 12 hours this semester (the semester has ended and she has three papers still to write).

If she were not a child of privilege, whose parents can afford to pay for her health care once she is bounced off the family plan, it would be very unlikely that that she could make enough money to pay $5000-$10,000 for routine health care, save enough for the years when something does go wrong, pay rent, put food on the table, etc. She would likely be living on the edge; a position made all that more challenging and precarious because of her health.

She has the intelligence, solid education, years of hearing us talk about saving and making choices - resenting some of the choices - but at least having been exposed to the concept enough that (asked from health costs) she should be able to do the bootstrapping you did. Making choices has always been part of her life because, unlike the students I taught, we had enough money to have the luxury of being able to make choices. Having the ability to, but choosing not to, buy a bed on credit rather than setting aside money to buy it later is a very different life dynamic than literally not knowing where your next meal is coming from - day in and day out for years, often times starting in infancy.

Even with that advantage - if we were suddenly to vanish - because of the barriers her health throws in the way it would be a very short time before she would be faced with economic circumstances that would move her beyond her ability to live beyond hand to mouth.

I am glad you were able to raise yourself up out of poverty - but your circumstances are not the circumstances everyone finds themselves in, and I'm having a hard time "listening" to your basic point that credit is not the solution because I find the blame you heap on folks who are, in many instances, in circumstances beyond their control very troubling. I probably won't end up living had to mouth - but I am well aware how precarious my position of privilege is - and how little credit I can actually take for being in that position.

[Orrex]

90. Another excellent post

:applause:

[zipplewrath]

100. Again, not what I'm saying

I merely disputed that credit was "necessary" for the poor. The people you describe would not be helped by taking on unaffordable debt. The solution for these people is not borrowing what cannot be afforded. It is not acquiring assets they cannot not afford to keep.

It takes years to "configure" ones self. And mistakes and set backs can take years to over come. One of those mistakes is taking on debt you won't be able to afford. In prior work with a homeless shelter, they came to the conclusion that if you did everything they told you to do, they could take you from homeless to independent in about 2 years. They also admitted that it would most likely take longer because of illness, or economic down turns. But what they never did was to get these people to take on debt that they could not afford. Basically, they didn't get them to borrow money at all. Quite the opposite, they worked with them to establish savings.

[Ms. Toad]

105. You can make your point that credit is not the answer

without slamming those who, through no fault of their own, live hand to mouth. The comment I responded to was only one of many subtle, and not so subtle, put downs of people who are already struggling, many who have been spending no more than absolutely necessary for decades - and still find themselves in emergencies they do not have the cash to respond to.

When you try to make the point that credit is not the answer - and couple it in virtually every post with a slam on people who didn't have the emotional, intellectual, financial, family, educational, or other resources to pull off the bootstrapping you did - your point is lost.

[zipplewrath]

111. Not sure I did

I made several attempts to acknowledge that bad things happen. All I was attempting to explain was that credit wasn't the answer for many of the situations described. The "answer" is usually about having to make hard choices, preferably early. There are collective answers to which I referred several times, issues of shared risk through government programs of the kind progressives tend to support. The high cost of trying to manage these risks, something to which everyone seems to acknowledge, is a justification for dealing with them in a collective manner. It benefits us all and the economy as well.

There are things that folks can do for themselves to reduce the impacts of these risks. You can't easily make them go to zero, and mistakes can have an almost disproportionate impact on individuals. That not withstanding, the answer isn't credit. If it is credit you can afford, better to have been saving the money for that debt payment up front. If it is debt that can't be afforded, you're just digging your hole deeper.

And someone had a point back there somewhere that I thought skirted by. They mentioned the lack of economic skills of many of the poor. I agree extensively. And it isn't just the "poor" either. The vast majority of us aren't economic geniuses. All the more reason one has to be careful in the management of debt and credit. All the more reason it is very risky to use credit as some form of insurance on assets. And really, all the more reason for the kinds of progressive government programs which share and manage this risks collectively. SS practically created the retired middle class. Unemployment insurance has managed a problem collectively for the better part of a half century now. FDIC has saved us multiple times. These kinds of programs are important for collectively sharing the risks of life so we can do so more affordably. And these kinds of programs are also most important for folks just entering their economic lives.

It's also why regulation is important, including those kinds of "nanny state" regulations that people hate so much. It doesn't do any good to "give" people mortgages they can't afford. Habitat for Humanity does great work but even with their generosity, only something like 13% of their applicants have enough income to qualify for their homes. Predatory lending is a real problem. It predominately is a case of the greedy preying on the clueless. People can rationalize aquiring all manner of assets. But if the economics aren't there, they are just being set up for a set back, and usually far more than the risk was worth. And good God, we have to do something about usery level interest rates and fees. When credit counseling services get ahold of this population, the first thing they do is renegotiate all these rates and fees. The reality is that they shouldn't be allowed to be charged in the first place.

[noiretextatique]

40. you remind of the people in my economics class

who talk about "how things should be" instead of how things really are. not everyone has perfect economic knowledge, in fact a lot of people don't have any economic knowledge. still, as i told my fellow students, poor people recycle stuff all the time, and not necessarily to help the environment, but because of economic necessity.

[reggie the dog]

50. it is predictable

but how can you save up money for these expenses if you already do not have enough to pay the rent, eat, and buy clothing for youself and your kids? I guess you could sell drugs or prostitute yourself, or rob others if that does not bother you and put that cash away somewhere for a rainy day and just live day to day off of a shit wage job, but you know what, lots of people do not want to prostitute themselves, are morally opposed to robbing other people, and do not want to take the risk of jail associated with these activities. No shit one should not organize themselves such that 98% of their income is dedicated to paying the bills and eating. ONE HAS TO ORGANIZE THEMSELVES AS SUCH, OR WORSE, BECAUSE WAGES ARE LOW!!!!!!!!! Lots of people work, are poor, have no cell phone, no internet, no cable tv, and do not even spend money on booze or drugs AND STILL COME UP SHORT EACH MONTH! Now do not even get me started about people with the misfortune to find themselves out of work, or ill, or worse BOTH!

[Orrex]

75. Don't expect any answers to your questions

I've been asking the same things in about 15 different posts, and I haven't yet received a real answer.

[zipplewrath]

83. How do you get there?

One doesn't organize themselves in a day, and you can't undo years of poor decisions in one month. So digging a deep hole, so deep you can't get out, and then claiming that unaffordable credit is the only way out is a bit disingenuous. As I suggest, any credit counselor will tell you that. Wages are low, so income has to be leveraged. Shared housing, shared expenses, shared risks, these are how folks used to do it and the methods still work and many still use them to this day. Some cultures that come here use these very techniques in this day and age in order to make a foot hold and get ahead.

[Baby Snooks]

79. Lesson 150: Saving for the refrigerator repair....

I suppose the average American family could just fast for a day every week in order to save the money to pay for the repair when the refrigerator goes out. And hope it doesn't go out until they've saved enough to repair it. Same thing with everything else. Maybe just spend a day with nothing every week. No food, no lights, no a/c or heat. And save away for the rainy day. I find this most incredible. I also find it completely detached from the reality most Americans live with.

[zipplewrath]

101. Rather extreme

More likely just unload some asset, or find some extra work once and a bit. Maybe rent a room in the house. Food for some is some of the smaller expenses they have, it is a hard place to save alot of money (for someone already pinching pennies). Typically it is transportation and housing costs that dominate (well, and health care for some. That one is the real killer, and the hardest to handle).

[izquierdista]

28. Being poor

It's a good thing that these poor people that have to turn to credit don't live in a third world country. Or maybe then they would learn how to get by on $200 a month. For the whole family, and still eat 3 meals a day.

The poor in the U.S. fall victim to an endless series of cons, ripoffs, finance charges, loan fees, penalties, surcharges, and late fees that are orchestrated on them by the ones running the show. They get hoodwinked into thinking that if they play by some set of rules, they can get ahead. At least the poor living in Ukraine aren't deluded by these managed expectations. Their government does nothing in the way of stimulus to keep them in the market economy. If their refrig goes out, they also have two choices; use the window ledge for an ice box or if the weather is warm, don't buy any perishable items. But they all have a washer and dryer in their homes: the bathtub and the clothesline.

The free market capitalists love to point out that "a rising tide lifts all boats" implying that even the poor in their leaky dinghies are on their way to being yacht owners. The point I am making is that the poor in the U.S. are continually enticed into the market economy, only to be kicked back in the water after they have surrendered what cash they have. Better that they learn how to survive independently of the market economy that treats them so poorly. They can grow their own food, sew their own clothes, barter, cut their own firewood, you know, the sort of thing that pioneers did in places where there was no market economy.

[reggie the dog]

52. 200 US DOLLARS A MONTH??? ARE YOU CRAZY!

Rent????? so basically you have to live in the street, eat the cheapest worst food in the supermarket (200 dollars is perhaps 2 weeks of groceries for a family of 4 so you also have to learn how to go hungry, you have to learn how to wear rags, and you have to learn how to put up with parasites, worms, ticks and the like that will start to live on you for lack of a shower or access to clean water.

[izquierdista]

61. Yes, $200/month

That's the average wage in Ukraine. That being the average wage, you can imagine what the average family can afford. You can imagine the quality of a $50/month apartment, it's comparable to a 30 year old single wide trailer. Food is a lot cheaper though (since it isn't trucked 1500 miles) and you can buy a lunch for 50 cents. Clothing is comparable in price with America, if you shop at the bargain discounters and second hand stores. They don't have much of a problem with parasites though, the sanitation, water and electricity work a lot of the time. Yet still, in a country that poor, they have gaming machines all over the place and plenty of ads for low cost credit -- oops, I guess they do have a problem with parasites.

[reggie the dog]

66. 2OO dollars a month in the USA

I know the cost of living is cheaper in the USA but hell even the lot fees for a trailer are over 200 dollars in the USA. I know that in places like Greece, Lithuania, Romania etc. people live on less, but rent is less, food is less etc. You suggested that Americans learn to live on 200 dollars a month. They cannot as their rent and food eat up much more than 200 dollars a month.

[Baby Snooks]

80. The $500 a month apartments in the United States ain't so hot either...

"You can imagine the quality of a $50/month apartment, it's comparable to a 30 year old single wide trailer."

The $500 a month apartments in the United States that most who earn $2,000 a month are stuck with aren't much better than the $50 a month apartments in the Ukraine most who earn $200 a month are stuck with.

And thank you for implying that all poor people gamble their money away and then go borrow more to finance their gambling.

Truly disgusting. And you're a Democrat?

[izquierdista]

84. Not all

Poor people don't necessarily gamble, but most gamblers wind up as poor people. If you are poor and get addicted to the gambling, then you are sure never to get out. I've seen it firsthand, living in Las Vegas.

[malletgirl02]

94. I agree

That was a great Response, and any many places you won't be able to even get a $500 apartment. In some place $500 will get you a one roo.m in one if you are lucky. You are right $200 a month is imposible to live on in any part of the US, even if you are super frugal.

[Orrex]

68. Well, that's just foolish.

$200/month in the US does not equal $200/month in Ukraine, so any analogies proceeding from that nonsensical equation are themselves nonsensical.

[uppityperson]

110. I know. All the poor people should just move to the Ukraine!

See? All it would take is a passport and plane ticket, with the money set aside years ahead.



:sarcasm:

[paulsby]

39. to some extent, no

when i was poor and struggling, i simply did not have a credit card. i didn't use any credit.

i didn't go to rent-a-center and pay a significant portion of my income on furniture and big teevee as i have seen MANY people do, and i even slept on a sleeping bag on the floor (not even a mattress) for a few months.

credit has to cost more to people who are higher risk. that's part of credit - risk assessment.

it sucks, but nobody has a "right" to buy stuff that costs more than they can afford.

[Orrex]

44. Your points are not relevant to the discussion at hand

We're not talking about the choice to use credit to acquire luxuries. We're talking about the need to use credit to pay for unavoidable necessities. Your post amounts to a straw man.

[tabbycat31]

6. agree 100%

I live in an unusual area. 2 miles north of me is a poverty stricken city. 2 miles south is a resort area for the wealthy. The difference in services offered is immense. In the ritzy town, the only "poor" type of shop is an upscale consignment shop. The poorer city has convenience stores, check cashing stores (no banks), tax refund loan shops, etc. The food offered is McDonalds and fried chicken. No regular grocery store, and rent to own stores are all over the place.

[noiretextatique]

43. it's called the poverty industry

and some big players are behind some of these outlets, including GE and Citibank. they banks abandoned poor areas, then they invested in check cashing and rent to own places. they make a lot more money with their poverty industry businesses than they do with their legitimate businesses.
http://money.cnn.com/magazines/fortune/fortune_archive/1998/06/08/243515/

[izquierdista]

91. And that ensures that the poor will stay poor

For if GE and Citibank have built business models based on ripping off poor people, don't expect the politicians who get bribes donations from them to alter the status quo.

[Digit]

7. I discovered that same phenomena when I lived in San Diego

The grocery store in the more wealthy area of town had lower prices than my local store.

Another thing I discovered while having access to real estate records in two different states is that lower priced homes are assessed at the top of their market value and more expensive properties are assessed at a fraction of their market value. Of course this results in the owners of the more expensive properties paying far less than their proportionate share of real estate taxes.

As a realtor in both states, I knew the market values pretty well.

[gmoney]

32. Yeah, I've noticed that with drugstores and fast food joints.

At the fast food joints, everything is about 20 cents more per item, and the drugstore (Walgreens) various items are somewhat higher in the poor part of town than the more affluent section.

I'm told this is needed to offset greater shoplifting losses, vandalism, increased security, etc.

[paulsby]

38. it's because of shrinkage,.

grocery stores operate on a VERY tight margin.

and as somebody who has worked as a cop in both "the hood" and wealthy neighborhoods, i talk to store owners, etc. all the time.

in poorer neighborhoods, they simply suffer more shrinkage - iow they lose more stuff due to shoplift, employee theft, etc. and have to raise costs to compensate.

it SUCKS for the honest people have to pay the cost of crime, so to speak. but the poor ARE disproportionately affected by crime (violent crime too) as any cop knows.

[Bluzmann57]

64. Good point

I guess I never really thought about that. Makes sense, sadly enough.

[dysfunctional press]

62. there may be other reasons for the price differences between two stores.

rent, security costs, shrinkage due to shoplifting, etc...there are a lot of factors that go into pricing products in supermarkets.
the store with the cheaper price could also have priced it in response to competition from another neighborhood store. when you don't have all the info, it generally isn't right to make assumptions as to the reasons.

[NutmegYankee]

63. Kroger. Keeping Appalachia dirt poor since 1883.

Having served in the Appalachian (App-a-LATCH-che-an) Service Project, I saw this first hand. It was third world poverty, right here in the USA.

[Wednesdays]

106. In my area, the cheapest groceries and gas

are in the "new money" neighborhoods...the ones with the McMansions (as a side note, the recession hasn't hit here as hard as other regions of the country).

[FourScore]

2. K&R

[The2ndWheel]

12. Because they're forced to live the same way as the wealthy

That's why mass production works so well. There is a lack of diversity in the products, which is the most efficient way of doing business. If people had an alternative, none of this would work. It's not even a left or right thing. People are engulfed by both sides of the coin. Mass produced consuming taxpayers. Interchangeable, predictable, expendable. That's the ultimate goal of governments and corporations. Well, the ultimate goal would be for both the government and the corporation to be the same entity, as again, the lack of diversity would increase the efficiency of mass producing products.

[zipplewrath]

25. tyranny of the plurality

I think what you are getting as is what I call the "tyranny of the plurality". Economies and societies will tend to organize themselves around what "most folks" need and do. So if your needs fall outside of that, it will almost assuredly cost you more to obtain them.

[JeffR]

22. 5th rec

:kick:

[ColbertWatcher]

27. k+r, n/t

[EndersDame]

34. Going Grocery Shopping and Doing Laundry while taking the Bus Suck

I recently got POS car and am so grateful I dont have to carry around dirty laundry or grocery bags that would inevitably break on the bus route home

[dembotoz]

48. former vista worker. have lived in both middle class and dirt poor neightborhoods

those who claim it is not more expensive to be poor are merely
BLIND AS A FUCKING BAT.

Access to a reliable car is key.

[Raksha]

102. I totally agree! The attitude of some of the posters on this thread

sickens me so much I changed my mind about posting anything. Fortunately, some other posters have pretty much said what I would have said if I weren't so angry. So did the lead article.

Re those who claim it is not more expensive to be poor are merely
BLIND AS A FUCKING BAT.

Access to a reliable car is key.

[Mark Twain Girl]

78. True. Time, too. Buses, lines, wait lists, food pantry, free clinic. Time

hassle, exhaustion, menace. Yeah.

[Raksha]

103. Nobody who hasn't lived that way can possibly understand it.

Hell, I wouldn't mind if it took me twice as long as it takes everyone else to go grocery shopping, do laundry, etc. That would be a luxury! But when it ROUTINELY takes 3-5 times as long, it gets a little tedious to say the least.

Re True. Time, too. Buses, lines, wait lists, food pantry, free clinic. Time

[varelse]

95. They don't call it the cycle of poverty for nothin

and a vicious, heartless, cold vortex it is, too.