Have a little empathy. These people sign contracts without understanding what they are agreeing to, and instead of their vacation photos, they're out thousands of dollars - substantial sections of their entire net worth. On the other hand, if that sounds good, there are all sorts of payday loan companies that would love investors for new branches I'm sure.

Edit: I don't mean the buyers don't grasp the full cost, but that they have difficulty projecting their lives 6, 12, 18 months in the future. I'm not under the impression the people in the story are dumb or ignorant.

Managing money is not that hard. Abbot also mentions that she knows how much she's paying, she's not blind to it.

I think what people don't understand is the intense amount of stress that poverty causes and how it affects your judgement. When you're in a spot so bad that you have maybe $20 a week for food and have bills and collections wanting everything you have, simple things like a new couch or speakers look like an escape, almost therapeutic, when you have nothing. The desire to be "normal" and come across as relevant in society can be so strong. You can't look at the couch as just a couch, these people are looking at an escape from their lives.

I highly suspect that the majority of HNers haven't been subject to a level of poverty that affects the mind like this. I can't take someone, who talks about the lives of the impoverished when they can take a degree, savings account, and probably a stable family/upbringing to the argument seriously.

This is something that most well off people have a hard time understanding. I remember well a story on NPR where a younger sibling scrimped and saved to buy his older brother a Nintendo DS, only to have an older and richer neighbor come over and berate him for wasting his money like that. When you're struggling every day to make ends meet, constantly worried about the future, and playing mental gymnastics to determine which bills you can afford to pay and still have food, even the smallest luxury is a relief.

There are also people with relatively limited education and intelligence and relatively high stress levels binging on furniture every time they walk into the store to make payments on the last item because they're extremely susceptible to the marketing messages that "normal" American families replace their sofas on a regular basis, and deferred payments are easier to keep up with.

[0] http://www.apa.org/helpcenter/willpower.aspx [1] http://www.washingtonpost.com/national/health-science/povert...

That's inconsistent with what the article states:

> Abbott wanted a love seat-sofa combo, and she knew it might rip her budget.

> Their decision to spring for a new sofa set was, if anything, a bet on the most optimistic arc for their family. Donald was getting regular work, sometimes making $500 in a week, paid by the load to haul pureed chicken guts — used for pet food — to factories across the South. If he could keep up the pace, they’d be okay.

> Abbott has spent eight months now with the sofa set, and some days, she can shrug off the costs. She’ll sink into the cushions just before her kids get out of school and say she wouldn’t trade the feeling “for a million bucks.” Normal families have sofas, she says, and you’ll do what it takes to feel normal.

> Abbott and Donald smoked a cigarette in the bathroom and sorted through the grim math. It was less than they were used to, but sickness and an oversupply of drivers had left Donald with the shrunken paycheck.

> “We’ve always talked about the benefits and costs,” she said on the drive home. “Because with a family you can’t just say, ‘I want this, I’m going to get it.’ But growing up having the chair, the recliner, the love seat, the couch and everything, you just get used to the normal stuff. Sometimes it’s hard to break from the normal stuff and get to reality.”

It's clear from the article that the Abbotts made a considered decision. It might not have been a financially prudent one, but not all considered decisions are good ones.

I find it ironic that you call for empathy when the not-so-subtle suggestion in your comment is that folks like the Abbotts are ignorant. They very clearly are not.

You make a good point and I should have been more clear in my post. I don't mean that they didn't understand the dollar amounts in question, but it's also clear that the long term effect of paying for the furniture is worse than they expected. There's no way for them to "get ahead" - just many chances to fall behind.

The article's presentation of "These people have no options except to be horrifically exploited" is wrong at best, maybe even dishonest. No matter how much money you make, spending beyond your means because you have to have luxuries you really can't afford is a bad financial play.

I feel a lot of empathy for people who get caught in the RAC trap. They're digging themselves into a hole that they'll never escape from, and that's genuinely sad. But it's a fixable problem! They aren't victims of their circumstances, they're victims of their own consumerism. At the end of the day, each of us is responsible for what we choose to spend our earnings on, and if you choose to spend all your expendable income on instant gratification, that's your choice, and you get to own the consequences of that choice.

I had a family and was self-employed, which meant no guarantee of stable income and self-employment insurance, plus self-employment taxes. My take home covered rent, food, and basic utilities - usually. We certainly couldn't afford new furniture or appliances. We ate at a 10-year-old kitchen table that cost $100 from a grocery store with 4 chairs, which were literally falling apart from use. My couch was second-hand from a garage sale. My car was a used one that I learned to repair myself because I couldn't afford to pay a mechanic to fix it for me.

I could have "afforded" to rent furniture. I even looked at it at one point, did the math on it, and nope'd right out of there. My wife wasn't happy at all - she'd been campaigning for new furniture for a long time - but it was the right financial choice.

I'm in a much more stable financial situation now, but my kitchen table is a used one that my wife and I stripped, sanded, and refinished ourselves. My entertainment center we got from some friends who were moving and didn't have room for it. My TV I picked up on the curb, and it cost me $35 for a new DLP bulb. My coffee table I got for $20 at a furniture outlet store. I still have the garage sale couch.

The situation is a lot more nuanced for me: yes, the people doing the renting do have some responsibility for this, but:

1) I don't see responsibility-shifting as justification for scummy business practices. If what you do as a business is fundamentally scummy (even if legal) then you're a scumbag, period, and deserve to be called out and taunted (and, if it were up to me, regulated out of business). The people running these rent-to-own companies (like most payday loan places, underhanded adware software pushers, etc) are scumbags and I wish the worst kind of bad karma on them, though sadly I don't actually believe in karma.

2) I don't fully understand how someone could have a total lack of empathy for the renters here, though I'm not surprised to see it. If this were a story about some startup founder who just as stupidly maxed all of his personal credit on some startup (ignoring the obvious math of how likely he is to fail, not entirely different from how some are blaming these renters for ignoring the math), there would be a lot more sympathy here, I think, due to relatability (mere exposure effect).

Bad decisions are not something only poor people make, they just happen to pay a much higher (normalized) price for bad financial decisions than the rest of us because they are already so close to having nothing.

I can sympathize because clearly they're getting a shitty deal out of life, and I'm aware of various possible explanations as to why somebody with no money might want to buy expensive goods, but I can't really do empathy because the phenomenon is basically mysterious and counterintuitive to me.

For example, maybe they don't think much about the future because they feel they have no good future regardless. So they take the hit to ease a little bit of the struggle. My point is that I suspect a lot of the "haters," so to speak, in this thread have never experienced hopelessness in their lives before.

I will tell you just this: I'm disappointed that "poor" can't pick up a sofa from the street for free.

That's what I did when I was poor. Living in a Brooklyn basement with roaches on minimal wage, straight from the plane, barely speaking English.

These guys aren't poor. Poor don't buy new $1,500 sofas. Heck, right know with kid and wife and combined income close to $200k I don't have $1,500 sofa as there are better ways to spend (invest) money. My sofa is from Ikea, got it in 2007 for about $1,000.

They are stupid.

The question is why is the issue so widespread? Why are these RTB businesses making such a killing exploiting a behavior that has become increasingly massive in the 7 years since the recession started? What is so screwed up in American society that the lower class families which should be saving up and making careful purchasing decisions to improve their lot in life, are instead throwing themselves at the wolves' mouths?

Maybe if we all here just laughed loud enough so other poor could hear it, maybe then it would be just unacceptable for them to do stupid things like this. Maybe, if they knew the society will not care if they waste $4k, they would be much more cautious. Maybe, other poor, need an example, so they don't do stuff like that. Maybe strong families, churches - shouldn't have been targeted for destruction. Because maybe they could help them.

Where I'm coming from we have this saying: communism is all about fixing problems that it created in the first place.

And this story above is a classic example.

As you will observe, HN is throughly infected with the communist delusion, commonly observed with atheist intelectuals. People like us, who escaped communist shitholes, after having to witness how it degenerates whole societies like a cancer and therefore being allergic to the false "but but but we have to help!" siren call, will be attacked by the infected often for merely loudly pronouncing the word "communism", which the rabid marxists are trying to cover up like the plague.

After escaping to the west precisely to escape the social trainwrecks caused by the communist fallacy, it is so sad having to watch the new home going down the same damn way as if they didnt have basically the rest of the planet as a cautionary tale.

The question is, should they be protected from the consequences of their undeniable dumbness and ignorance? I would answer yes.

I, fortunately, can say that I'm privilaged enough to have not faced the scenario described in the article, though through work over the years I've gotten to know a number of people in a very similar situation.

You get a minimum wage job, say at a grocery store, because, well, you literally have no other options. You couldn't focus in high school, maybe you dealt with drug issues, had ADHD, got pregnant in a family that wouldn't permit abortion (or in one of the many states where you have to drive hundreds of miles, have multiple appointments on separate days, and jump through a variety of other hoops). By the time you're in your 20s, you have no high school education and even if you want to turn your life around you need to put in extensive effort to, say, get a GED, go to community college, etc. All while working full time in order to just have food on the table and, if you're lucky enough to have moved away from your parents, a roof over your head.

With the job itself it becomes tough. Say you make $400 a week before taxes working $10 bucks an hour at a grocery store. A fair chunk of that is going to go towards food, and frankly that's not going to be very healthy food for the amount of money you're able to spend and the time you have to prepare it. You've then got to spend 10% of that every couple weeks so you have enough gas to get to work, probably payments on a cheap used car (and numerous repairs that will likely have to come on credit), rent, cigarettes (its an addiction, keep that in mind) and god knows what random medical or accidental expenses come up will eat up pretty much the rest. IF you're lucky you might be able to put a few bucks in a savings account, but chances are when you have those accidental expenses you'll want to use some of those savings just so you don't have to put it all on credit and add more to your reoccurring expenses.

To make matters worse, you have very little control over when you actually work. Most minimum wage employers give you a two week schedule at most, sometimes just a one week, often determine how many hours you have with that short of notice, and have wildly different hours. Working at a Safeway recently I dealt with, say, 35 hours during the week, some late night shifts from 3:00pm-11:30, but then eight hours later being called back in to help open at 7:30 (yes, they can do that). Further, that store only did one week scheduling, so you wouldn't even know until Thursday if you were working THAT UPCOMING SUNDAY. And furthermore they frequently took advantage of loopholes in the contract to have their employees working six, seven, eight, sometimes even ten days straight with such irregular hours. The ability to sign up for classes, make it a regular routine to, say, learn some new skill, becomes winnowed down to nothing.

To make matters worse, you have little opportunity to move somewhere where there might be better opportunities. There's a reason wealthier people are much more likely to move away. You need a deposit plus first and last months rent anywhere new you're moving, but with how little you're able to save that's a huge burden to come up with. Furthermore, the sheer cost of moving, usually in the order of thousands of dollars, is even greater. Plus, if you do chose to do that, you're leaving the only real support network you may be lucky enough to have: your family.

So before those in this comment thread disdain them for making the choice, however illogical, to try and have some sense of normalcy in their lives (or at least the normalcy projected ad nauseum by the American media and in the ad campaigns of the very places they're working), consider the sort of stress they're already under.

I would add that you need not to have ADHD, drug problems or gotten pregnant as a disadvantage: you might just come from a social/family background that encourages you to take a job as soon as you finish high school and you get stuck at you minimum wage job.

Then when your life becomes what sheltgor described, you don't have any perspective in your job, you can't afford moving or holidays. At that point you are used to not having much but you still want to spend it as you wish. Anyway what is the point of giving much into savings if you can't enjoy your life ? That's when the spending might get irrational (paying more for less, smoking, etc.).

"you might just come from a social/family background that encourages you to take a job as soon as you finish high school and you get stuck at you minimum wage job."

Not only that, but before finishing high school as well. A lot of people forget that 15% or so of adults (25 or older, I believe) don't have a high school diploma or GED.

But even if you do dig yourself into that hole, why would you then go out and buy a $1500 couch combo? I grew up fairly poor (though admittedly not as poor as the scenario you describe), and buying something that expensive would have been considered criminally reckless by my parents. By shopping at going-out-of-business sales and whatnot, you can snag decent new furniture for a tiny fraction of that. By never (and I mean literally never) eating out, out food budget was maybe $100 per month per person. Most people would be shocked at how cheaply you can live, without compromising on the essentials, if you're smart about it.

And I do agree with you that there are much cheaper ways to, say get a couch, but I do take issue with your food budget. You're making that out to be a low cost, when in reality $100 bucks per person per month is HUGE. If you've got yourself and a kid to support, that's say $200 (with very careful budgeting and probably fairly low quality nutrition) on an after tax monthly income of maybe $1200 bucks. That's an enormous chunk of change, particularly when coupled with other recurring costs like rent and gas money. Also, regarding the couch, as some in this thread have pointed out the idea that everyone thinks logically is unfortunately false. Someone's already under enormous stress from an erratic work schedule and barely eking buy, perhaps has other issues to deal with like health problems, and they want the sense of having one thing that 'normal people' do. It's a very, very powerful motivation especially when the store oh so enticingly packages it as being a few dozen bucks a month.

IIRC, DARE has been shown time and time again to be effective -- at modifying the attitudes of people subjected to it to be more positive and receptive to law enforcement.

Its also, true, been shown to be completely ineffective at its notional purpose (reducing drug abuse in its target population.)

The information in DARE is, in fact, not sound, which is a big part of why it's not only ineffective, but anti-effective. When kids figure out that they won't die when they have a beer or joint (or whatever the scare tactic du jour is) they realize all at once that they have been lied to. The tendency is for the kids to throw the baby out with the bathwater, ie. they make a perfectly human mistake of realizing (correctly) that the DARE program is an unreliable source of information, and therefore they come to the (incorrect) conclusion that it contains zero valuable information, or worse that the opposite of the information is actually true. In other words, they say to themselves: it turns out taking a puff of weed isn't dangerous and in fact is fun, therefore drugs must be pretty great under most circumstances.

We all see ourselves as the hero of our own story, so I don't begrudge you interpreting your own history as you being prudent and responsible with valuable information that DARE provided you. I'm inviting you to consider that another plausible interpretation is that you're gullible, and lack the curiosity to discover things for yourself because you're too afraid to take risks. I'm not saying it's true, but I am saying it's possible. Back in high school all it would've taken is one slightly pushy friend and one positive experience with drugs, and your life could have turned out radically different, not because you were dumb or irresponsible, but because the experience you arbitrarily happened to have was different.

"One positive experience" with drugs could, indeed, have wrecked my life, but that one experience would never happen and could never happen. The reason is that I wouldn't have done it, pushy friend or no, because I believed what the adults in my life were telling me. Parents, teachers, and DARE officers all said substantially the same thing, and when only idiot kids were telling me different, weighing the relative trustworthiness of those groups was not especially difficult.

There's nothing arbitrary about this. It's called sound reasoning, and part of it is not taking reckless risks. There's a common myth that kids are incapable of it, but I suspect that the truth is closer to them choosing not to practice it.

[1] http://mic.com/articles/92675/the-5-big-lies-that-d-a-r-e-to...

You dropped out of high school and now spent several years getting your high school diploma while flipping burgers to make a living? Great, but you're now in your mid-to-late-20s and you should have finished college or have several years of relevant job experience by now.

I'm getting the feeling that your view of wealth is that it is never earned, that it's given. That is certainly possible but the financial downturn should have taught you something. People that have wealth didn't get there by making poor business decisions.

Being poor isnt primarily an inability to make money, it is an inability to save money and delay gratification. Being poor is a mental state. They'd likely end up poor even if they won a lottery.

To be fair, when you're down it's hard to pull yourself back up. Especially when you see no future for yourself, why not "treat yourself" to a simple luxury here and there. These people aren't thinking about the future because they don't believe they have one.

>Being poor isnt primarily an inability to make money, it is an inability to save money and delay gratification.

I disagree. The primary reason these folks are poor is their inability to make money. Will they ever become wealthy (high net worth) without the ability to save money and delay gratification? No. But there are many in the middle class who are low net worth due to spending but do not live a "poor" lifestyle with all the burdens it entails like these people do.

The first step to financial security is getting the skills necessary to bring in income sufficient to cover a modest life and then save. These people are simply not able to bring in that level of income. Even if they scrimped and saved a large portion of their paycheck, they would still be wiped out quickly given any major disruption.

We're talking about people who know there's no realistic way to achieve that gratification without making bad decisions. It's not about how long you need to wait to be able to afford something without cutting off your leg. It's about which leg you're willing to cut off to afford the other one.

However, the sensible side is frustrated that these people aren't doing basic math. These people are choosing to buy something that they can't afford. Do they need these items? Does anyone need a couch? Does anyone NEED a TV/wedding ring? No. You can live without it.

End the end: All I got from this article was: "Look at these people who don't realize where they stand financially and refuse to accept that it's not where they'd like to be."

People who haven't read e.g. Adam Smith on linen shirts like to take the image of a poor person with a wedding ring or a television and hold it up as an example of excess, but when you see widespread behavior that appears irrational, the right response is not to criticize it on those grounds, but to try to understand why it's happening. It's always happening for a reason.

1: http://www.washingtonpost.com/wp-dyn/content/article/2009/05... 2: http://thepsychreport.com/research-application/featured-rese...

I understand this sentiment, but it's risk mitigation. As the article points out, there are no options for these people outside of this. It's serving a market and it's doing so in a way that reduces the risk - in some ways for both parties.

Is it a smart move on the part of customers? I think it's hard to argue that it is, but I don't know that it's necessarily the fault of these businesses. If anything, it's a better move than going to an Amscot or getting a subprime credit card, because you're not wrecked financially nor is your credit ruined necessarily.

It really goes to show the culture of poverty, and how hard it is to break from it. These people simply do not have the means or even the faintest idea to better their situation. It is very, very sad. They have no chance of breaking away from this vicious cycle. It is a major societal problem.

This business model is exploitative and downright evil. But they are not the problem. They are merely the symptoms. Getting rid of those rent-to-own shops won't fix the broken system.

> They are charging people with ridiculous prices because the risk of them failing to pay is ridiculous certain.

> This business model is exploitative and downright evil. But they are not the problem.

Indeed, the problem is that these business are kept open by people who do not budget properly. Closing these businesses doesn't mean these people will have more money to spend on things that matter. We can say they aren't helping, but we can't say the consumers would better allocate their money.

Going without a 60" TV or iPad isn't an option?

Then again, it could also just be a way to spend more time and money on video games and movies...

Is two months of having to use the internet from the library really worth spending $1000 on when you can't even afford a $230 ipad? Sorry, but there are other options.

Except that isn't even remotely true.

Compare to buying a couch like a normal person at a normal furniture retailer. If you have the income to sustain the payments and know that you'll be paying more in the long run, it's a tradeoff some people are willing to make. Most of the time, you can pay off rentals early.

The same kind of shenanigans go on with any financial instrument when one is considered "high risk". Credit cards charge ~30% APR until you have a well-established credit history. Car loans cost 15-20%. In any of these cases, you're a fool if you let the full term run out at those rates. You could say that someone doesn't need a car to get by, but it sure helps a lot, and so does a decent bed if someone is trying to get a good night's rest and be functional for work the next day.

RTO does serve a legitimate purpose. It's just expensive, but sometimes that tradeoff can be reasonable.

Yes, it's true that it's probably possible to get a couch without going through a RTO contract if you have the money to make RTO payments. That doesn't mean it's reasonable, plausible, or even just worth all the extra effort. If you need a couch now and can pay it off a few payments down the road, it's not so bad to be willing to pay a substantial expense for that convenience. As long as the consumer is informed, there's no reason this voluntary trade of security/convenience for money shouldn't be allowed or performed.

Of course it'd be cheaper if the consumer had access to cheaper credit, but they don't, so these places have sprung up to help/serve those people. Again, I don't think there's anything inherently wrong with that. It's just expensive (for both parties).

I know because I was doing exactly what some people in this thread would suggest. We moved to a new house Wednesday and needed a gas dryer instead of electric. Though we could afford the $2k for a nice new set, I looked around and found a great deal on a barely used pair that an elderly couple had to put in storage when they downsized. I rented a Home Depot truck while movers were still loading up at the old house, met the folks at their storage unit with their son to help me load it, got the W/D loaded up, and brought it over to the new house while the movers were still there so that they could unload and hook it up. I ended up saving about a thousand dollars and helped out some nice folks who were happy to not need to pay for the storage unit anymore.

You're right about the insurance and valid license being a requirement for a rental, of course. Around here, that's a pretty low bar because almost everyone drives (and I'd bet the people in the article drive too). I could see that being an issue in places where public transit was half decent and people didn't drive. On the other hand, a fair number of people in blue collar work (like at least the one guy in that article) have easier access to work trucks than most of us.

I'm well aware of and thankful for how privileged I am to be able to maneuver without as much financial pressure as the people in the article. On the other hand, if my time was only exchangeable for minimum wage, saving four figures would be well worth the time and effort of arranging something like a Craigslist purchase.

Like I said, it might be an absolutely terrible idea, but this business presenting the opportunity in this fashion actually reduces the overall risk for this demographic.

There's clearly some blame to go around. Better public education on financial decision making would help. The companies providing this type of financing could alter their business model or screening processes.

Also, it seems that many lower income individuals strive to own new items because it portrays financial success even if it results in the opposite.

They only look at the monthly cost. There's no consideration given to the lifetime cost. Sometimes it's an inability to make the calculation, sometimes it just never occurs to them, and sometimes it's deliberate avoidance.

Further, when examining the monthly cost, it's often done with an eye towards the most optimistic scenario. "I make X in a good month, I spend Y if I eat mostly ramen, therefore I can afford to pay X - Y per month on my new toy." There's often no consideration of normal fluctuations, let alone emergency expenses.

The above probably comes across as blaming the poor, but I really think a lot of it comes down to education and culture. People just aren't taught what these deals really cost, or how to budget, or how to spend less than you earn. And then it's hard to have crap furniture and a junky car when your neighbor, who you know makes no more money than you do, has a nice new couch and a sporty car.

I've seen this in action. I've lived it a little, but fortunately not much. I'm trying real hard not to be disparaging even though I may not have completely succeeded.

Indeed, and bad in the sense that it generally doesn't teach this sort of thing. Or prepare individuals sufficiently deal with a lot of life situations.

But at least they know trigonometry! (If they even graduated higschool)

Well. In this case, he may just don't want to care too much about financial math because he does not have any financial issue pressing him to consider that part.

Paul Erdős might not care about his own financial status as well, but that does not mean he will pay all he has to buy an iPad.

I did basic math on my cell phone plan this morning, and realized I can get a better deal by buying the device outright, and just getting a BYOD plan - so that's what I'm planning to do. Yet the VAST majority of Americans are doing the subsidized phone thing.

These are the MVNOs:

Sprint: Go with Ting, Freedom pop, virgin mobile ATT: Cricket (all thought they're pretty bad) TMobile: TMobile Prepaid multi carrier: Walmart StraightTalk, TracFone Verizon: PagePlus

It's sad that we've created a paycheck to paycheck culture, but thats what we have.

And yeah, it's a way better bet than an iPad in every sense except maybe screen size.

They could've gotten several decent looking couches for $300 or less on Craigslist: http://huntsville.craigslist.org/search/fuo?query=couch+cull...

If that seems callous, then it's because I've been poor and had to make those choices. Always pay cash, unless it's something that can help you make money (car to get to work, training, college education).

http://www.walmart.com/cp/4038?povid=cat1070145-env172199-mo...

From my own experience, we were selling a house that we'd moved out of, and having a hard time finding a buyer. Realtor suggested 'staging' the home, filling it with furniture, as a full home looks more lived in, and gives buyers an easier time imagining their own furniture in place of yours.

Went to rent-a-center, rented a living room and dining room set and a bed for the master, and the home sold rather quickly thereafter. Though I couldn't say whether or not the furniture had anything to do with it, the renting of furniture is, by no means, predatory on its face.

That people are renting furniture to own is the problem. There are numerous other options, including Craigslist, buying used furniture, or even layaway are all superior to rental.

However, if you are a businessperson offering to rent furniture, and if you believe that there are non-predatory reasons to rent out such furniture, then shouldn't you be targeting such rental purposes? If renting to own is the problem, then perhaps you shouldn't offer rent-to-own. Or, if a credit check is enough to rule out customers who are unlikely to pay, perhaps there should be a credit check. I am sure, in your case, you would have been able to pass such a check. I simply do not believe that a renter can benefit from usurious rentals and be absolved of moral burden because the renter 'should have known better'.

There are also plenty of benefits for renting to own. I know a couple of startups on the east coast who rent furniture to own, specifically the lobby stuff (moreso than the actual office equipment) because

1) They were able to negotiate better than the listed prices and

2) it's potentially cheaper than hiring an account and/or figuring out the excise and use taxes on the assets.

Just because there are predatory use cases doesn't make the practice predatory ut totum. Also, nobody's compelling people to buy furniture they can't afford.

People who only have ninth-grade educations aren't the greatest at basic math or delayed gratification.

http://vimeo.com/50044167

Maybe they should see that video.

I don't mean to blame the victim, here. But it really rubs me the wrong way that the article doesn't even mention the possibility that a person could not buy stuff they don't need.

We could do with a lot better financial education. Far too many people think of large purchases in terms of a monthly cost. We could also do with usury laws that enforced better and harder to dodge. But we could also do with a discussion of these things that doesn't paint buying a $1,500 sofa as the "only option".

There are lots of options, but they usually involve paying cash, which means having the discipline to save cash for what you want and not spend it when you want something else.

If you have an expensive townhouse, picking up furniture off the street can be seen as either being clever with your money or even "artsy" (especially if your refurbish it before putting it in your expensive townhouse).

If you are dirt poor, it just reaffirms your inability to afford actually spending money on things like that. And because being actually poor (e.g. being raised in a poor family, lacking a reasonable level of education, having bad job prospects (no chance of career advancement), working three crappy jobs to barely sustain your household without being able to put any money aside, and so on) carries a lot of stigma, poor people tend to be more self-conscious about how poor they appear to their peers (especially peers that do buy expensive crap even if they have to sign this kind of bullshit contracts).

There's also a distinct difference between being poor as a student or entrepreneur (because being poor is just a temporary thing and it's seen as a temporary sacrifice) versus being poor as a regular part of the workforce (why don't you just save some of the money or work more?) or unemployed (why aren't you working?) or even long-term unemployed (why haven't you been working? or from the employer side: there must obviously be something wrong with you or else you would have been working).

> They aren't victims of their circumstances, they're victims of their own consumerism.

Yes, creature comforts should be comforting and worthwhile instead of anxiety inducing money sinks. But I think sometimes advice about _when_ to buy creature comforts can be lost on people who have never had the opportunity to know the deep comfort involved with having some savings they don't intend to spend.

I'd rather have money sit in a bank account slowly losing value to inflation than buy a couch, TV, game console, etc. It's WAY nicer, and I think part of the reason people get caught in traps like this is that the advice they get about how to manage finances doesn't clue them into this.

I...what makes you think you can handle payments on a lease if you can't save what you'd be paying on those payments otherwise?

People are really bad at managing money. The proliferation of credit has done immense damage to peoples' abilities to conceptualize what they can afford.

No one wants to go to people and say "Hey, your life is going to go into the shitter eventually, are you ready for it?" and keep pointing out that happens to everyone eventually, sometimes more than once.

They don't live in isolation. They're bombarded with a consumerist culture that tells them to live outside the standard they can reasonably afford. It takes an iron will to ignore all outside influences and be content with the stable level of poverty you can afford.

I mean "shit" as in something goes wrong that makes things unpleasant. If you have the financial cushion, in the US, it isn't that bad [unless its medical, in which case you'll end up bankrupt much of the time although hopefully ACA will reduce that issue].

> They don't live in isolation. They're bombarded with a consumerist culture that tells them to live outside the standard they can reasonably afford. It takes an iron will to ignore all outside influences and be content with the stable level of poverty you can afford.

Tbh, I agree with you. I want to go back to renting a room so I can save more money and my friends/family all openly attack me on the idea because "No woman will want you, blah blah", etc. The hilarious part is the same ones mock me for "consuming too much" even tho the handful of things they mock me about collectively cost less than $50/month compared to saving $1k/month by renting a room. I'm single now and I don't need that much space.

Aka shortsighted. And I'm definitely not saying I haven't been there.

Whereas if you keep putting that $25-per-paycheck into a savings account (or a shoebox, or a hollowed-out book or whatever), there will probably come a time when being able to fix your car's transmission, or buying food to make sure your kids aren't starving, or having just one dinner at a place with cloth napkins, is going to seem more important than whatever you're saving for.

But this ties into the poverty trap where you simply stop thinking about the future because you're out of hope.

Yes, you can afford a payment today, but you can't afford the couch, if you can't otherwise save to buy it outright.

Except, you're exactly right- the stuff that the money gets spent on will frequently be wildly more important than the sofa. It should be saved, and then it should be spent on the more important stuff. And then you never get a sofa, but at least your transmission works and your kids aren't eating ramen six days a week.

This isn't just for low-income people. Plenty of people making a decent salary will go out and overextend themselves when they get their first apartment as well. Rent-a-center comes to take stuff back from people that make $60k/year just as often as they do from people who make $30k/year.

I'm also not sure I'd classify people as 'poor' who have $300/month they can spend on renting these items which are mostly luxury items. You can argue that you 'need' a TV or laptop to live, but you can get a $200 laptop or $200 TV, instead of $1,000 models.

And yes, stupid people tend to be poor, and poor people tend to be stupid. I live in a country where the vast majority of people were kept uneducated (and I profit handsomely from the educational/intelligence differential between me and them). They would be eaten alive by big business if the government didn't make an effort to protect them-and the givernment knows it is into own interest to protect the poor in the interests of social stability, since there are so many of them.

The way I see it, is that governments in the US have no need to protect the poor from the consequences of their own stupid choices, even if it is ethically the right thing to do.

But the government in the US is trying to get everyone educated -- not always effectively, though. I know some schools suck, I went to a public school in the middle of a ghetto. Many of the students came from impoverished families, and would routinely bite the hand that feeds them when it came to education -- by disrupting class, (very proudly) not doing their homework, and whatnot. Watching that kind of behavior day-after-day took away any sympathy I might have for the consequences of their actions.

Regardless of the reality - of the two statements "it's your decisions that affect your level of poverty" and "it's society's fault you are poor" - one of these statements empowers the individual to make better choices, and the other discourages it.

PS: +1 to the folks who said garage sale / thrift store / second-hand couches. It's mind-boggling that anyone struggling w/ money would buy(/rent) new furniture.

People who are exploited don't need your advice. We all know that we can live in a lean-to made of spruce branches and dry pine needles if we had to. That's not the problem these people have.

Maybe the commenters here offering their well-intentioned advice are unaware of the shame and guilt that goes with being poor. It is widely believed in popular culture that your financial situation and future are within your hands and beyond reasonable misfortunes, if you end up poor, it's self-inflicted: you mismanaged your money, you decided to have an alcohol addiction, you don't know how to follow safety procedures and lost your leg, you didn't study hard in school and save money to go to college. You didn't work hard enough. You're lazy. You're stupid. You smell. You could dress better. Blah blah blah.

The problem is that these rent-to-own businesses exploit that shame and guilt. They're using some pretty under-handed tactics to convince economically disadvantaged people that they can afford these luxury goods they clearly cannot. They try to sound appealing by offering luxury goods to people who cannot otherwise afford them so that they can stop feeling like they are failures. They obscure the true cost of their payment plans with sticker prices that emphasize the lowest term prices and not the full cost (car advertisers like to show the lease-cost in the commercial but are required in most places I know to disclose the full price of the car in the ad).

To say that these people are "stupid" for falling in with these businesses is ignorant of the predatory practices these businesses are using and the complicating factors which result in poverty.

"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."

I know people that rent to own, and while part of me is screaming "WTF, save up for a couple of months" inside, another part understands the thought process that gets you things like couches NOW but at 4x the cost.

Some feel entitled to have something ("I want it, I deserve it, I'm getting it, I don't care about consequences" - yes, I often hear that one). Some think they can afford it but can't ("oh, it's just $30/mo, and I've got $100/mo to spare" - and they do this 6 times). Some fall for fast-talk marketing ("look at this great-looking new $5000 sofa! for just $50/mo you can have it right now!" - no timeframe specified, same thing is $1500 down the street). Some just don't understand finances ("I can't be broke, my credit card still works"). Some are proving something ("I bought it just to convince myself I'm rich enough to" - yup, hear that one too). Some just trust it will work out ("I spend $150/day, my spouse takes care of it" - while he gets second & third job, leveraging finances to the breaking point, as she ignores his pleas to stop). All of it adds up to: you're poor because you're spending $4150 for a $1500 sofa you could have gotten off Craigslist for $100 and which you didn't need anyway. Ignorant, willful or malicious, outgo > income => poverty.

I keep thinking back to a moment of comprehension: I was repairing a poor family's sofa (gratis, because I care even though I'd only met them that day), wondering why it was damaged the way it was, when the tweenagers asked me for a sheet of plastic to cover the window they had just torn the screen out of (and presumably had prior broken the glass) - hit me that they were in the state they were in because they had as a way of life wantonly destroyed what they had.

Yes, some are poor because life dealt them a bad hand; don't conflate them with those who CHOOSE to be poor. And to the currently lead comment: I am empathetic, and continue to assist the poor - but empathy wears thin when people make stupid choices on a regular basis and blame those who merely fulfill their demands & desires.

If you can't keep up with payments to yourself, you have no business entering into a contract to make payments to someone else.

This is the problem. They have certain expectations set as to what a "normal" life is. A big, fluffy, crap sofa. Park the thing in front of the T.V. and waste your time.

Come to the Philippines, it's a great place to reset expectations. Personally, I would rather setup the "living room" in nomadic style. Throw a rug and some cushions on the floor. Maybe arrange them around a circular bamboo table on which you can set food on. Sit around that table and talk to your family and friends.

> Some weeks, they couldn’t pay their cellphone bills.

In the Philippines, people don't have cellphone bills. Nearly everyone goes prepaid.

Sure, eating 10,000 calories in one meal is not something your waistline can afford, and you recognize that, but that's about what that one donut a week is equivalent to over the year. It's really easy to say "Okay" to something you really really want when it's a small periodic cost, and even if at some level you know it adds up, you still can make that mistake really easily, and get irritated at the person who keeps bringing them to the Friday meeting (or whatever). So some irritation at the system allowing this behavior might be reasonable.

I can hit craigslist and get free couches that are perfectly usable all day long. My house is almost entirely filled with craigslist and garage sale furniture. I have a beautiful solid wood armoir for my 26" flatscreen tv. It and everything inside it cost less than 60 bucks.

I don't go out buying 1000 dollar 60" tvs for 5000 dollars. That's rediculous, nobody needs to, it's just consumerism at it's worst.

I don't know your specific circumstances, and I apologize if the points above don't all apply to you. But it's important to realize that there are a lot of non-obvious resources that people from wealthy backgrounds have that they don't even think about which allow them to save money.

One can purchase a local paper for $1.00 or less. Yard sales and Goodwill stores are free and easy to peruse on a weekend morning.

Let's not pretend that finding a couch is a herculean task, or saving up the cash for a couple of months is nigh impossible.

Stuff like this disgusts me. How is it even legal to charge so much interest?!

On the other hand, people living in the poor, rural areas have no access to this supply of cheap quality used goods. And they don't have the means to leave.

I would suppose opening up a business that transfer used goods from the rich area to poor area and capitalize on the margin would be a great idea in a lot of ways.

I imagine if you were patient enough you'd find a really good couch on Craigslist free section.

When I was in my early 20s, I lived in a town that was maybe 30% college students. Apartment complexes would bring out huge dumpsters for "moving day". Much of the stuff that was thrown away was fine, just too much hassle to move. My friends and I would go around in a truck and dumpster dive. We got furniture this way, as well as a TV and a blender that I still have (after through cleaning) many years later. There was a lot of nice stuff that we didn't take we saw over the years - a fossball table and an electric organ stick out in my memory.

Consumers pay 2x for a phone because they can't afford to pay upfront for their phone. Or because they don't do the math to realize how how much more they're paying by financing their phone rather than saving up for it.

Tell someone they have to spend $650 on an iPhone today. They will balk.

Tell someone they can spend $200 on an iPhone. They will sign their life away. And that $200 iPhone quickly becomes a much more expensive iPhone.

These are not necessities for living. iPads, couches, and lamps are luxuries in varying degrees. These people can always make the choice to simply not buy them.

Massively overcharging poor people for products they probably shouldn't buy is a profitable endeavour, but only in line with the margins made by budget retailers usually regarded as offering good value-for-money

There is a reason that the prices are so high. It's not just the "evil capitalists".

Of course in the current economic climate anyone not investing properly and just saving money is losing roughly 2% to inflation and probably even more because the stock market has risen by much more. So countries where people have traditionally left lots of money in saving accounts get screwed over and those that are in debt are rewarded (the majority in the US and GB).

In the last few months, African Bank, which owned a furniture company, imploded.

JD Group, the dominant furniture retailer, that was built on exploitative credit, is spinning off its financial assets.

Still, there is more pain ahead. How ironic that the U.S. is allowing its poor to be exploited the same way.

Part of that is transportation and availability. A guy living in a lower middle class or so neighborhood that drives a pickup is a lot more likely to find and grab a free / cheap couch than a single mom taking the bus to work.

Let's stop sugar-coating this kind of nonsense and shifting the blame to predatory companies. Nobody made these people spend their money on non-essential furniture and electronics.

If we were talking about food, utilities, healthcare or shelter, it would be another thing entirely. But these folks have set aside delayed gratification and voluntarily purchased luxury items at a mark-up that would make a theater concession stand manager blush.

Yes, nobody's pointing a gun at their head and forcing them to buy expensive crap.

But there's advertising everywhere. Advertising is there to get people to buy things they might otherwise not buy. I'm not against consumerism, but it's absurd to have companies spend billions on getting people to buy their stuff and then blaming the same people for their purchasing habits.

Humans are not rational machines. We're social animals. We do a lot of stupid things. But we're not any more stupid for not being able to grow beyond that.

But if advertising is such an irresistible siren song, how come you and I -- and everybody else on HN -- are not up to our necks in debt to rent-to-own stores?

I don't think its because we're special. I think it's because most of us engage in some kind of critical thinking, self control, and can do basic math.

It is the responsibility of the individuals themselves.

Look at yourself critically. How many of your last year's purchasing decisions were based on actual need? And of those, how many times could you have bought something cheaper instead? And no rationalisations about cost and quality and long-term amortisations and whatnot, please.

Yes, poor people suck at managing their money. But at the same time the advertising industry focusses on them. A lot of price-based advertising relies on people not looking at it closely enough. Yay, free phones with mobile contracts. I can buy a new sofa for only $50/month (over the next ten years). This ringtone costs only 99 cents (if you subscribe for 3 ringtones per week at a cost of $2.97/week and all the ones you want are in different subscriptions and don't forget the offer code you originally subscribed with or you'll have a hard time cancelling the subscription when you notice it a month from now).

Our culture places a lot of emphasis on status symbols and wealth. If you're not wealthy, that's because you're lazy. If you can't afford status symbols to prove your wealth it's because you're a failure as a human being. This is an exaggeration, but it's what the mainstream media tells you and what the billboards shout at you.

I'm not saying it's impossible to manage your funds well if you barely have any. I've seen plenty of old widows in Germany be able to make do with welfare because they were used to not being able to afford anything (or even theoretically be able to buy anything if they had the money) throughout the post-war period, but we're talking about people who've learned to cope in a situation where it was entirely possible to freeze or starve to death even if you did everything right. Luxury meant having a variety of food on the table (or having spare tobacco for your own use, rather than for trading), not being able to afford the latest iPhone.

I would also argue that HN necessarily isn't representative of "average folks". The average HN user is special. Not better, but different. There's a disproportionate amount of entrepreneurs (yes, they are the exception) for example. Plus, there's the survivor bias: if you're here, you probably haven't found it an impossible task to keep out of poverty (even if you ever were close to it). If you had, you wouldn't be here in the first place.

But the entire point is moot anyway. If everyone is able to engage in some kind of critical thinking, self control and doing basic math, and still there are a lot of people trapped in these cut-throat contracts, the average person is evidently not sufficiently able to avoid them (and if those things are all it takes to do so, they are evidently not as good at them).

But I think this isn't a question of facts, it's a question of ideology: I think it's our responsibility as a society to keep people out of situations where they become practically unable to act freely (even if they only have themselves to blame). You seem to hold the opinion that if they screw up their own lives, we have no obligation to help them and they only owe it to themselves.

IMO, this is an issue of a failed education system, failing to equip this woman with the skills she needs to do any financial planning.

I'm personally of the opinion that we need to have public education for 30+ year olds who are in this state. No amount of assistance is going to help them until we give them financial training to make better decisions.

Give high school dropouts in their 30s and 40s an opportunity to grow in society. Maybe she'll actually be able to get that job at Walmart if we train her.

She gets the couch either way, but in one instance, she gets the couch and keeps $3000 for herself, instead of paying exorbitant fees due to poor credit. (probably because she kept defaulting on loans and no bank trusts her for a standard credit card like everyone else). Bad Credit doesn't just pop up overnight.

I do think that in America, you can screw yourself harder than in other countries. There are numerous lifelines, and plenty of credit opportunities... but those close off if you make bad decisions and lose trust. You will never be starving or missing out on critical health care however, due to the food stamps and medicaid programs (which I do support funding)... but building someone up who has reached rock bottom seems to be a difficult problem to solve.

There are other problems, like she doesn't have the skills to even pass as a Walmart shelf-stocker. I really don't know what we're supposed to do about that, outside of maybe expand our public education system to include adults.

Why they don't buy second hand I don't know? You can go to an auction site, get the same $1500 sofa for $500.

When we moved into our house, we bought all our furniture on a zero-interest, four year loan. It made a lot of financial sense to pay a fairly low monthly payment and have the large amount of money available for investments.

I think better phrasing would be that needing to rent or get a loan for any consumer item is a bad idea. It's fine to take out a loan if you have the cash anyway but find it advantageous to hold onto it, but if you're relying on future income to buy the stuff now, it's a sign of trouble.

You're poor if you have serious problems having food and a basic place to live in at the same time, without spending anything on bullshit. If your problem is 'I can't afford this sofa', or a new ipad, you aren't poor, you just aren't wealthy.

I once bought a couch set for about the same price, but yet, thankfully, I could afford to pay for it up front. I got two loveseats and a couch for about $1600.

Funny story -- 6 years later, all were in perfectly fine condition -- the springs were NOT poking out the bottom, not cutting "gashes" in my floor.

I split up the set and sold them through Craigslist for about $950 total.

My total 6-year cost? $650, or $2/week for the whole set.

I'm not going to draw any broad conclusions on the wealth/capital/income gap or privilege, or anything like that -- but the author does readers a disservice to gloss over the poor assumptions that lead to many believing they are "forced" to make these kinds of purchases.

If a business model were to come along that would help teach them how to attain what they want through financially responsible means instead of loan sharking, I believe it would be incredible for the impoverished society.

I have been in this sort of situation and I know the mindset. You can not even understand how to set goals, to figure out how to better your future! You have no idea what to do, and these business prey on that mindset.

However, if you had a business that taught how to save for items you need and want, how to set goals and put away money, it would greatly change these peoples lives!

Just as the furniture rental place likely never told the family that the weekly-payment total would be $4,150, the article doesn't clearly show the price the family was looking at: $57.64/week.

I'm much more sympathetic to their decision when looking at the two numbers they were faced with: $58 vs $1500. A bad sofa on Craigslist is $200.

It seems like a good solution to the problem would be to require the $4150 total to be made explicit on a standardized disclosure form, not unlike what you see on a home mortgage.

1. there is a logical reason the stores charge what they do("some 75 percent of items are returned or repossessed within weeks of the transaction" Anyone care to calculate what the interest rate should be on a loan with a ~75% chance of default?)

2. The prices that stores charge are not a "good deal" and therefore increasing sales "hurts people"

3. Shouldn't people be allowed to make decisions that may be against their best interest - at least in the U.S. there is/was a national sense of personal freedom and self determination

So they can afford cigarettes? I have a hard time feeling bad for people with low income and expensive vices.

It's like the saying that if you owe the bank a million dollars, you have a problem, but if you owe the bank a billion dollars, the bank has a problem.

Here, if one person is stuck in poverty because of poor life choices, they have a problem. If ten million people are stuck in poverty because of poor life choices, we all have a problem.

Rather than point fingers and talk about "responsibility" and all the rest, it would be much more useful to simply talk about why this happens (both internal and external reasons), what can be done to help, and whether those actions are worthwhile.

Where I grew up, everybody was pretty damn poor. Still, probably half my neighborhood or more was beholden to Rent-A-Center for a dining room set or couch. Most were ashamed to shop at K-Mart or even buy generic cereal.

That said, I think IKEA could do tidy business by targeting a slimmed down catalog to the areas where rent to own thrives.

As an example, we just bought the company car my wife gets that we'd been driving for free for the last couple of years. We bought it at about 50% of the new value, an significantly discounted from the used price.

There's also things like deferred compensation, pension payments, etc that make it easier and easier for people with money to spend less and save more.

And related to the story, we never buy anything on credit. Not even the car we just bought. It's cash or bank transfer, or if we do pay by credit card for something it's paid each month. We keep our credit card limits quite low though.

I have the luxury of using credit cards solely for net30 financing. Car loan -- maybe if I'm fairly certain my investment account will return more than the loan APR.

Without that cushion of liquidity, it's all too easy to slip into a cycle of needing credit to stay afloat. Saving small amounts doesn't feel useful, so you don't do it; and small charges don't feel like they will hurt you, so you rack them up.

It's a societal problem as much as a educational one. I have no idea where we go from here, but I wonder if social systems like basic income would help alleviate the problem.

Why stupid pay $4,150 for a $1,500 sofa?

Because when I was poor I collected one from the street for free. It hasn't even crossed my mind to go to a store when broken.

* religion (the poor are more likely to be religious, most religions frown upon birth control) * abusive relationships (I've seen women go from comfortable living in their on home to being on welfare because after X years, their partners are abusive) * addictions * medical bills * onset of mental illness

What I'm trying to get at is that being poor is not enough to produce what's seen in this article. You need a combination of poverty, broken family unit, lack of education (just because the school is down the street doesn't mean your parents are going to let you attend!), even craigslist is something that you might never have heard of!

Then, if you are working 7 days a week, getting up at 5:30am, and all that stuff - why the heck you need a sofa for $1,500? Safe and invest this $1,500 in your child's education for Goodness sake! This is what poor Jews have been doing in the US since before-ww2 and look how well it worked for them!

And blunt jokes aside -- I would fill much more fulfilled putting this 1500 to my kids college fund/whatever then buying something I don't really need.

Why are you poor? Because you are stupid. Why are you stupid? Because you are poor.

No one will break the vicious circle for them. They have to do it.