
Rental America: Why the poor pay $4,150 for a $1,500 sofa (2014) - prostoalex
http://www.washingtonpost.com/news/storyline/wp/2014/10/16/she-bought-a-sofa-on-installment-payments-now-its-straining-her-life/?src=longreads
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gatsby
Previous discussion:

[https://news.ycombinator.com/item?id=8471786](https://news.ycombinator.com/item?id=8471786)

[https://news.ycombinator.com/item?id=8473541](https://news.ycombinator.com/item?id=8473541)

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w1ntermute
> 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..The love seat and sofa retailed, together,
> for about $1,500.

Why exactly is a family with a maximum of $25,000/year in (unreliable) income
buying a new sofa that costs $1,500 upfront?

I make more than 4x what they do in reliable income and have no dependents,
yet I got my sofa $300 used on Craigslist. These people need to learn some
basic personal finance.

~~~
mikekchar
> Normal families have sofas, she says, and you’ll do what it takes to feel
> normal.

"Normal" families buy new things too. "Normal" families don't scrimp and save
just so they can have chairs to sit on, and beds to sleep in.

Interestingly, I neither have chairs in my apartment nor a bed. Nobody thinks
I'm "abnormal" in this respect because I live in Japan. It _is_ a bit strange
that I work from home, program on an end table I borrowed from my mother-in-
law and I sit on a stool that I bought for about $15 (admittedly new). But I
started using that 6 months ago thinking I would upgrade when I needed to.
Surprisingly I haven't needed to.

The expectation of "normality" is what is killing the poor. This is based on
your culture. You need a bed. You need a sofa. You need a kitchen table. You
need an oven. You need a car. You need a sensible desk to work on. You need a
special work chair. You need cable television.

None of these things are actually needed in most cases. Possibly a person
needs one or two of these things in specific cases, just like I need a
computer to do my job. I don't have any of the things listed above and I'm not
poor by any stretch of the imagination. My life seems perfectly "normal" to
me.

Without trying to sound superior (which is really difficult because probably I
am unconsciously feeling that way), the skills you need to live happily on a
very, very low income are probably the same skills you need to have to make
(and keep) a lot of money.

~~~
reagency
Your last sentence doesn't really make sense. Plenty of rich people buy plenty
of frivolous things

~~~
mikekchar
I had to think about your 2 sentences for a long time before I decided that
you are right. The top 10% of income earners make $113,799 per year in the
USA. The number of people I've seen who can earn that amount of money and burn
through it _all_ is astounding. I personally even know people who can spend
that kind of money and even need to look for food handouts at the end of the
month.

I suppose what I meant is that if you can live happily on $10K per year, then
probably it will be very easy for you to get and maintain employment for a lot
more. As well as meeting people who can burn through money at a ferocious
rate, I've met (much fewer) people who can live happily in what most Americans
would call poverty. Those people always seem to have much more money than they
need.

It takes rare skills to live like that. The end result is that the poor have
very little chance of bootstrapping themselves out of poverty (because if they
could, they already would).

------
devindotcom
“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.”

― Terry Pratchett, Men at Arms: The Play

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sergiotapia
I'm sorry but I've been dirt broke, with family (wife n kids). I'm talking
about making the choice between buying bubble gum and having enough to pay the
bus fare home. Never in a million years would I buy brand new furniture,
ipads, god damn -speakers-, if I were that broke again. Food, rent and
utilities comes first. Priorities people.

So these business are not really preying on desperate people, but stupid
people with poor impulse control.

~~~
anigbrowl
_a_ used _32-gigabyte, early model iPad costs $1,439.28, paid over 72 weeks._

As you say, a business like this preys on stupid people. They are trying to be
thrifty but have no idea how much things should cost or how to handle more
than minimal amounts of cash. It's pure exploitation.

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ComputerGuru
These people are making 250-500/week/family, which isn't a lot obviously, but
also isn't so little as to be permanently destitute - provided you're not
signing away your income with stupid things like this run by dirtbags claiming
to be serving the lower-income population.

If you spend it right, you can get out of spiraling debt and save up for a
better future, even with only 1000-2000 monthly income - but not while
"lucrative" options like these tempt you into getting a new phone and a new tv
when you really can't afford it.

It's hard to resist pointing out the obvious without sounding cruel and harsh,
but regardless of what's fair and what's not, it's never right to spend
outside of your means. That 1500 sofa sure does look nice and comfy, but
you're trading away any chance at escaping your life in a trailer park if you
buy it on a 1000/month salary - and that's without the 300% interest rate.

The problem is, stupidity in spending isn't restricted to a specific subset of
the population. It's the reason why blue collar workers, white collar
employees, lawyers, doctors, engineers, everyone can fall victim to credit
card debt and wind up bankrupt and with nothing - even (or perhaps,
especially) multimillionaire sports stars. You'll never have enough to own
everything you see, but America makes it easy to obtain it anyway. A better
car, a bigger house, a nicer education - just sign here, and it's yours!

Edit: yes, it's really (technically) possible to persevere and save your way
out of even the most meager of salaries, even when opportunities are withheld
from those that need it most. This article, "only a constant factor worse than
optimal," written by someone that I suspect might be the smartest person I've
ever encountered, illustrates the secret: [https://www.mail-
archive.com/kragen-tol@canonical.org/msg003...](https://www.mail-
archive.com/kragen-tol@canonical.org/msg00309.html)

------
bane
I grew up relatively poor, but have managed to work my way out of it.

The reasons behind being poor and staying poor are complex.

But one of the common themes is basically poor impulse control, and growing up
seeing more examples of this than examples of what good impulse control looks
like can be profoundly influential.

When my wife and I were first married we were among the poorest I've ever
been. We had a very small, very spare apartment, and I _wanted_ a couch...
_bad_ , because it seemed that we needed one. My wife (who grew up in a fairly
wealthy family) simply put her foot down and we simply sat on the floor for
the first two years.

It kind of sucked, but there was at least one-time where the money we would
have spent on a couch ended up keeping a roof over our heads and she was
proven correct.

The friends I grew up with, who remain poor, struggle to make rent, but have
top of the line smart phones with expensive plans, buy new furniture
constantly, have apartments full of sports memorabilia or expensive knife and
sword collections and so on. Many of them have buried themselves into MMOs,
often paying for multiple accounts and multiple computers to use them with.

I know people who got into a local college, decided not to pay the tuition so
they could instead outfit themselves in head-to-toe suits of armor so they
could walk around the local Renaissance festivals, and then lost the entire
suit when they couldn't pay the bill on the self-storage place they were
storing it all in.

------
bruceb
These center have to deal with the risk of destruction, bed bugs, etc. They
also allow renters to return an item. It's not surprising they have prices. I
can't really fault them.

Not sure whey these people just don't buy used furniture.

~~~
acveilleux
If they get more then 25 weeks of payments in the useful life of the object,
they are ahead of the yuppy stores I sometime buy furniture on instalments
from. The difference is that the yuppy store I buy from do 0% financing (by
eating their own margin to cover the lender's take) and I do instalments
strictly because I get the use of the money for free.

Obviously, the difference is that my "hourly" wage is a lot better then
minimum wages and I've demonstrated that I'm credit worthy over the last 16
years I've had access to credit.

------
joe_the_user
Well,

As they say, it's a particular segment of poor.

I personally shop at thrift stores and take hand-me-downs. I buy cheap laptops
and load Linux.

But all this takes time. The three-part-time job segment of workers can't do
that and winds-up in the arms of these people. It almost makes that third job
worthless - the problem is people want a lifestyle where they feel middle
class.

~~~
gscott
There is a portion of the rich who do this too. When Michael Jackson died, his
family came and went to take some of the furniture but had to bring it back.
Apparently it was rented.

------
_nedR
This sort of thing should be regulated. There is a line between healthy
capitalism and crass exploitation of the poor by the rich. The poor and
unaware need to be protected.

~~~
bruceb
Why does this need to be regulated? This isn't gouging on a need for medicine
or food. Having is $1500 couch isn't a necessity. This business provides a
good service. Decently nice furniture you can rent and return. It says how
much the total cost is if you rent weekly until you own it.

~~~
toomuchtodo
They're essentially a payday lender for furniture. That's why they need to be
regulated.

~~~
bruceb
Not really. Pay day lenders lend money to people who are desperate as they
need some money right now.

These people are buying a $1500 sofa when there are used alternatives readily
available.

~~~
toomuchtodo
If people don't need the furniture, then furniture rental stores should have
no problem being regulated under the same usury laws that govern financial
institutions, right?

------
x5n1
Why do the rich get a better interest rate than the poor?

~~~
NeutronBoy
Interest rate tends to reflect the risk of investment. Rich people are less
risky to lend money to than poor people.

~~~
x5n1
It was meant to be a rhetorical question. But yes this is generally true. But
they can afford the interest rate much less than rich people (poor people).

~~~
joevandyk
What someone can afford doesn't necessarily affect the price.

~~~
Natsu
What really affects the price is what someone's best alternative is. If you
have no alternatives, you get exploited.

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mc32
There should be greater regulation for what is essentially usury. Second, home
economics needs to be drilled more throughout school. From elementary to
highschool. Get kids versed in everyday economics. Many are practically
illiterate with regard to home ec.

Brainwash them, instill the notion of managing money more productively
throughout schooling so it becomes second nature. The cold reality of
economics could even have the secondary effect of 'scaring' (rather bring
reality to light) into taking their education seriously. As opposed to, my
parents make me go, I'd rather drop out, school isn't for me --a mentality I
saw when growing up. Maybe kids are wiser these days.

------
cbhl
One of the things that boggles my mind is the disparity between the following
two scenarios:

\- when an American wins the lottery: they spend the money, get a temporary
increase in happiness, then it drops back down

\- GiveDirectly gives an extremely poor person a few hundred dollars: they
spend it on things that improve their earnings and reduce their hunger

How can both of these things happen in the same world?

~~~
sliverstorm
Perhaps few American lottery winners have been nearly as poor as GiveDirectly
recipients?

Many of the GiveDirectly recipients I've read about are so poor they spend the
money on things like sheet metal roofs for their houses (to replace the
thatch) so they don't leak and fall apart in a year. That's a level of poverty
much of the American poor don't have to contend with- it's been a hundred
years since many Americans had dirt floors, and many more than that since many
American houses were thatchtops.

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mrmagooey
You exploit peoples interest or addiction to various chemical substances and
they devote entire government departments to chase you down, but you exploit
peoples interest or addiction to the latest consumer products and you might
get some tax breaks.

------
menssen
Does the fact that this article is at the top of the front page say something
about our discomfort that the extreme boundaries of our community are still
the top 25% of this country's economy?

(Upvoted to express how much I care.+)

\+ sad joke

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xname
A month ago, I went into a furniture store, the salesman kept saying the store
provide "financing" over and over, even I never asked him about "financing". I
knew this is their way to trick stupid people, because many stupid people see
a $1000 item (with a $100 payment per week) as a $100 item.

