^ This. All too many people think explanations are excuses. They aren’t. You have to find out WHY something is happening in order to fix the problem, not dismiss the why as an “excuse”.
Also, I think you underestimate the sheer amount of ignorance that is out there. I’m continually gobsmacked at the basic, basic stuff so many people just don’t know. I can’t figure out whether it’s a failure of our schools or their family or themselves.
This, a thousand times this.
Back when I was poor, I bought shoes at least once a month. Cheap shoes that hurt my feet and wore out very fast. They were very cute shoes and I thought I needed them to look good for work. I kinda felt superior to a coworker who only had 5 pairs of shoes until the day she sat down with me and ran the numbers. The very nice, classy shoes she was wearing had cost her a hundred dollars. OMG!!! But, they were almost 3 years old and still looked great.
I was wearing 20 dollar shoes that were a month old and already looked shabby. So, I was paying at least 260 a year for shoes that I had to toss on a regular basis and she only paid 100 dollars a year for shoes.
Who knew that paying more for shoes really made such a difference? Not me. I never would have bought my first pair of expensive shoes without her explaining that to me.
At some time earlier, a teacher or guidance councilor made me realize that I could stop living in my car with more education so I applied myself in high school while my friends partied and got pregnant. I joined the military and took full advantage of the educational benefits and after years of work finally managed to join the middle class.
Most of my friends from that time are still on government assistance while working minimum wage jobs. I really do believe that the only thing that saved me was people constantly telling me about the bad decisions I was making and how to make better ones.
Education is the key, but the problem is that you can lead a horse to water, but you can’t make it drink.
Sounds like your co-worker happened on the Sam Vimes Theory of Economic Injustic.
Your point about education is valid, but what if you hadn’t had that conversation with a co-worker? What if the teachers or counselors at your school didn’t give enough of a damn to talk to you? Do you recognize that part of your education was the luck of encountering those people?
That’s part of the problem - we’re not systematically teaching these things to people. If you grow up in a well-off household where the adults already know these things you are more likely to get this sort of education (although Dangerosa’s anecdote shows that’s no guarantee either). We’re relying on LUCK for people to learn these things, yet berating them for not having that luck.
Yes, this is the key here. In the Cracked article, the Cleese was acknowledging the fact that he made stupid decisions … he CALLED them that. But he was also explaining the psychological and social factors that kept him in poverty. For example, he states that he had a lot of relatives and friends who were just as poor as he was who gave him money when he needed it to get by … so how could he refuse them when THEY asked for money and he had any money at all? It’s a social issue as well as a psychological one.
The people who keep disclaiming this as simple issues of ignorance and stupidity of people who are poor and won’t or can’t learn use the language of condemnation. They wish to wash their hands of such concerns, to not care about the people who are trapped in poverty cycles. But understanding really is the key. Cleese got out, so have some of the Dopers posting here … it can happen.
In fact, one of the best solutions to poverty is one that I am sure most conservatives will hate: it’s called mincome/basic income which consists of simply GIVING everyone who is below poverty level enough money to get out of poverty. No strings, no preconditions, just give them the money. It’s been tried in India, in Canada, in a lot of places, and it’s been successful everywhere it’s been tried.
I am not holding my breath for it to be tried on a large scale in America, though.
That’s not the argument.
I have a friend who bought a house, occupies a tiny back room, and rents out the rest per room. This covers his mortgage and turns a small profit. I have another friend who owns a house and rents it as a long-term executive renter, and lives overseas in company-provided housing. He also turns a nice profit. I’ve got another friend who lives in his mom’s basement, and pays exactly zero for housing. He can invest what he saves in whatever vehicle he wants, including real estate if he chooses to.
Viewed on a dollar-per-dollar basis, these are objectively “better” financial choices. Which means that an owner-occupied housing unit is definitely NOT the “financially smartest” way to live. I bet we could list a few dozen ways to live in an objectively “smarter” way.
But we don’t think of it that way, because it’s kind of a default for us. We expect to live that way. We would think it was abnormal not to. So we make “not smart” decisions based on things we want or expect.
What does that sounds like? Sounds like what everyone on earth, rich or poor, does. None of us are financial saints, and few of us have much room to look down our nose at others.
I’m always curious about this. Of course the first thing that comes to the mind if looking for objections is that this would lead to inflation (in the prices of those things the recipients of the program are interested in buying, anyway). Does it? If not, why not?
In situations where it is being tried, it is successful. For emergency relief during disasters it’s about a million times better- cheap to transport and distribute, and allows people to get what they need.
There are some programs using it for development aid, most notably in Brazil, where it does seem to be helping a lot. Another example is cash remittances that people send their families back home, which is having a massive positive effect.
Unfortunately, even in straightforward situations, it’s politically unpopular. It doesn’t give that same mix of warm-fuzzies and paternalist superiority.
I have never ever berated anyone for the bad choices they made because they didn’t know other options. I do know how lucky I was that people kept beating me about the head and shoulders over my bad choices whilst telling me how to do better.
While I didn’t know the shoe thing was a thing, I have used that example with other people…hoping that they would listen and maybe their “luck” would change. Even if you are driving a 500 dollar POS, changing the oil is expensive but worth it. If you have the room to store stuff, buying in bulk is more expensive but it saves money. Taking lunch to work not only saves money, it saves time that you can use to study or just relax.
Sometimes when you are just trying to survive, it takes a whole lot of wacks with the clue-by-4 before you can manage to wake up and pay attention.
Of course different people have different wants and expectations. But plenty of people make financially bad decisions even based on their own wants and expectations. I know a couple who has lived in the same single family house for over 40 years. They like living in a house rather than an apartment, they like the neighborhood, they didn’t want to downsize when the kids moved out 20 years ago. They have to shovel the snow, rake the leaves, mow the lawn, put the trash at the curb for garbage day and pay for all the utilities including heating oil. Sounds like a typical homeowner, right? Except they’re not - they have been renting that same single family house for over 40 years. They get the worst of both worlds- they have to take care of the property just like a homeowner would have to, but don’t have any equity, they’ve paid more in rent than paying off a mortgage and property tax and repairs would have cost, they will never stop paying rent while a mortgage would have been paid off by now, the landlord can decide he wants to let a relative live in the house and not renew their lease, etc. I cannot imagine that they ended up in this situation because actually thought about what they wanted 40 years ago and decided that they wanted to live a homeowner’s lifestyle in a rental house.
It’s one thing to decide you want a renter’s lifestyle - to have someone take care of the sidewalks and the lawns, to be able to move when your lease ends without having to wait to sell your current house/apartment - and be willing to pay for it by not owning anything at the end of it. Nothing wrong with that at all. It’s entirely different to want and live a homeowner’s lifestyle and end up paying for a renter’s lifestyle because you either never thought about what you really wanted or just because of inertia.
You’ve left out repairing the leaky roof, the broken water heater, the cracked foundation, the termite damage, and the busted pipes. Or renovating the kitchen because granite countertops are suddenly so 2005 and you want the house to sell eventually. Yes, as a house renter I am responsible for the yard mainetenance and dragging the trash to the curb. But I live three miles from the office. I live less than a half a mile away from grocery stores, a movie theater, shopping, and international cuisine. I don’t have to worry about drive-by shootings and trash-littered streets. If I had kids, I wouldn’t have to worry about them receiving an inferior education. There’s a big ass park right around the corner. I don’t have a landfill in my backyard.
Without knowing why your friends are so attached to their rental home, I can’t possibly judge their decision. Perhaps they have invested in stocks and bonds and when they’re ready to cash those things out, they will come out ahead over their homeowning friends. Who the hell knows?
Plenty of people make decisions that don’t maximize their incomes, and yet still manage to make a whole lot of sense. The ROI of an engineering degree is quite high. But a person who decides not to pursue this lucrative field isn’t necessarily making a dumb decision. Money isn’t everythiing.
Good points all around. I’d like to add a few more regarding some misconceptions:
A lot of anecdotes seem to be in the extremes. People HORRIBLE with money, vs the poster who is super smart and frugal . It comes off as annoyingly smug sometimes. People place different value on different things, so while comparing is easy the reality is “I value thing, co worker doesn’t therefore he is a fool” attitude really loses sight of the other persons priorities.
Also, it seems like some people take a dim view on the idea of homeownership, car ownership, and expensive weddings here. They are often seen as foolish ventures, and include the most cherry picked of anecdotes to back them up. Consider that if the person or couple had the self discipline to save up a down payment or cost in full, they in their own way are financially responsible. It it really easy to associate something extravagant with impractical. When you assume only moochers, impulsive people or idiots make those financial choices it is easy to generalize.
Similarly, a person could take pride in spending only $80 a month living in a closet somewhere, but that doesn’t necessarily mean they are investing their bigger savings sensibly. Just as some people like flashy gaudy displays of wealth, others like being misers for the sake of miserdom. And of course both sides are going to feel totally justified in their choices.
Buying a house and renting it out on a room-by-room basis is financially smart. And you’re right, for someone who wants the apartment lifestyle while also building equity, it is the smartest way to live. But how common is it? There’s “the default” and then there are unicorns like your friend. It’s nice to talk about exceptions and alternate ways to live (I rented out a room in my house to a friend for a while and it was pretty good), but let’s not pretend that this is some trend sweeping the nation.
That was the problem with the so-called preferentes in Spain (“preferential investments”): you know how some drugs are legal simply because the government hasn’t gotten around to banning them yet? This financial product was like that in that it was, strictly speaking, legal, but as soon as someone realized what it was like and the harm it was causing, it got banned.
But in between, many people had put money in there at the behest of their bank person, not realizing that nowadays the job title isn’t “cashier” or even the euphemistic “financial advisor”: they’re “salespersons”. Their job is to push the product now, not to advise you on what will be better for you when you retire.
For many years, the only way to cook vegetables I was familiar with was my mother’s “boil them till they’re grey” - time consuming, and the results are horrid. Despite being responsible for most of my family’s meals since middle school, I didn’t find out you can parboil or stir-fry (lightly, please, and without drowning the food in oil) until I was about 40 - less time, better results! But then, most of the people I grew up with were finding that out at about the same time; for us, there was clearly a heavy cultural component. Our stir-frying had previously been step 1 of a longer preparation, we hadn’t realized you could stop there until Chinese restaurants started having kitchens you see from the dining room.
No , I didn’t forget those things
Except for the granite countertops , renters generally do pay for all of those things. Not in lump sums, but landlords aren’t in business to lose money.Unless it’s so hard for the landlord to find a tenant that the choices are to lose money or get no rental income at all, maintenance and repair costs, property taxes and all other expenses are accounted for in the rent. Although I didn’t mention that they can’t do any renovations that they might want for their own convenience/enjoyment , which is the reason most of my homeowner friends do renovations, not because they might want to sell somewhere down the road.
I’m guessing not - between the increase in real estate values in NYC between the 70’s and now and the fact that at 71, he still works as a night manager in a bowling alley, it’s hard to imagine that he had investments that did so well.
No, money isn’t everything. But there’s a huge difference between deciding not to pursue an engineering degree because you want to be a social worker and getting an engineering degree at MIT even though what you really want to do is sell real estate.
I don’t know how else to say this.
Buying a house is an expensive thing (compared to more efficient investments) that middle class people do because it provides them the lifestyle they expect and/or desire.
Buying a double-cheeseburger meal is an expensive thing that poor people do because it provides them the lifestyle they expect and/or desire.
Buying a private island is an expensive thing rich people do because it provides them the lifestyle they expect and/or desire.
All are perfectly fine things to do, assuming you can swing they cost without becoming a burden on society. All things considered, they aren’t terrible ways to spend money and come with lots of advantages.
But none of them are going to win you a Boy Scout badge for amazing thriftiness.
That’s all I’m saying. Saying “I have am financial astute and have good morals, as evidenced by my buying a house in the suburbs, unlike all those undisciplined idiots spending their money on Happy Meals that will just make them fat” is not that different than the rich guy saying “I have great financial sense, as evidenced by my private island off Bali. Not like those idiots that waste all their money on ticky-tacky McMansions that wont last even 50 years in those horrible suburbs.”
Everyone’s spending money on junk they want. I’ve been around the world among millionaires and subsistence farmers, and we are all doing the same darn thing. And of course everyone thinks the way they spend money is in line with what is good and right in the world, while considering everyone else’s way of spending money to be intolerably stupid.
Many of the NYC victims of Tropical Storm Sandy are probably envying this guy, though.
Which one describes the renter who chooses to be a renter for a bunch of intangible reasons?
I’m assuming your friends have a reason for why they rent. If they don’t, then yeah, they shole is crazy. But I’m guessing they do. I can’t judge them without knowing what that reason is. Just like I can’t judge someone for not studying engineering without knowing why.
I don’t think it has ever been tried on a large enough scale to answer your question definitively. Here’s a story about Canada’s experimentin the city of Dauphin. And here’s a story about India’s experiment.
In both cases the experiments were conducted on a local level. There was no mention of price inflation being a problem but why would a local merchant be willing to raise his prices when his customers can just by the same products from a nearby town-village instead? On a national/state level things might be different.
Look on to Brazil’s Bolsa Familia, which is huge (though the transfer does come with some minimal conditions around vaccination and school attendance.)
And they probably envy me as well, because both he and I are far enough inland not to have had damage. But I don’t know a single homeowner whose house was damaged who wished that they had rented the house that got damaged instead of owning it.
That was part of my point, although I guess it was a little buried. I don’t think they actually *did *make a decision in the sense of thinking about how they wanted to live and decided that they wanted to live the rest of their lives in a single family house in this neighborhood and preferred to rent rather than buy because of reasons X,Y,Z. I think it’s more likely that they decided to rent for what may have been a good reason at the time (to see if they liked the neighborhood, for example) and just never revisited it. Because that’s what the people I know who make “bad decisions” do- they don’t think about what they really want and how to get there and they just continue to do what they’re accustomed to doing without thinking about whether the decision they sort of made two or five or ten years ago still makes sense.
Sure, sometimes there's a lack of knowledge or education but fairly often in my experience it's just a lack of thinking. They don't actually decide that it's worth over $2000 a year to buy lunch at work rather than bringing it from home- instead, they're shocked when they find out what they're paying for lunch over the course of a year. Or when they suddenly realize at 47 that they will probably never be able to retire, they regret those months-long trips during which they continued to pay rent on their apartment and didn't earn any money. There's nothing wrong with taking months-long trips or even with paying the rent while you're gone so that you don't have to find a new apartment when you return. But it's a really bad idea to do that without even realizing that you will have to give up something you may want more.