How do people end up so poor?

Great Debates
121

You are seriously backing emack up on this? You have GOT to be kidding me. I mean, Christ, the original cite was really short and said that $645 was 9% of $13,000. I’m sure the full study was a lot more nuanced and managed to at least get the maths right, but the link was to a very short article.

The second link seems to be talking about gamblers at the same time as talking about lottery participation; a lot of people play the lottery without doing any other gambling, so it’d be a mistake to look at ‘gamblers’ and extrapolate from them to other people who play the lottery. That’s what appears to have happened, but there’s no methodology there, no indication of who they surveyed or what they asked.

And writing ‘Put another way, the lowest-earning households spend about 10.8 percent of income on gambling, versus 0.7 percent of income for the highest earners’ is a little misleading when they actually mean households including people identified as gamblers.

Or do you really think emack was justified in claiming that 9%, then 10% of poor families’ income goes on gambling? When his cites don’t claim that - they’re talking about a subset of families - and they don’t lay out what they mean and one can’t even get the maths right - and it defies logic anyway? Yet, instead of wondering why he’s misrepresenting his sources, you criticise me?

That furniture site isn’t about ‘renting’ furniture. You own it after a period of time (up to 2 years). Like buying from a catalogue. It’s probably not the best overall value for money, but it might well be all someone can afford each month. That is one of the ways being poor gets you - like someone said about Pratchett’s boots analogy earlier.

Does anyone actually rent furniture then?

122

I have not offered any assessment. I am saying that so far he has made a better argument than you. He has presented a credible-looking cite and your only rebuttal is your personal incredulity. That is not going to persuade many people. Offer some evidence - either find the flaws in his cite or offer your own evidence.

And on furniture, if you do not accept the Aaron’s rent-to-own as being true furniture rental, why not do your own research? Searching for “furniture rental” offers many hits. For example this company
(which also rents furniture in the UK), and this one, and this one.

123

“Credible-looking” is NOT the same as actually credible and the criticisms leveled against that cite are, well, credible.

124

They may well be. But

is not a persuasive criticism. That’s all I’m saying - fight cites with cites or critique the cite, but opinion is not a persuasive rebuttal.

125

Are any of those things listed something you think a person living in poverty SHOULD do?

Let’s say you had a friend making $21k per year with a wife and two kids. He says they’re thinking of having another child, would you encourage him to do that?

If he told you he knows of a wicked system for winning at Black Jack, would you encourage him to try it out?

If I told you could could save 15% on car insurance simply by switching, wouldn’t you do it?

126

It is easy to believe that poor people are spending 10 percent of their income in lottery and gambling. They are poor after all and anything bad you say about them must be right. They are lesser people who require advice on turning down thermostats and buying furniture. There is no way they could make proper decisions without the fine leadership of some dopers.
I think poor people could give some arrogant people on this board some good lessons on how to live on little. They have been doing it a long time. Life as a struggle makes you hard and you learn how to get by.
But live in a cold home. Put plastic on your windows. Turn off the lights and live in the dark. Don’t have a Tv or a computer ,even though it is how many get jobs. Do that ,and all will be well.

127

You are making an assumption that I would not be way ahead of you and already be doing all I can. Your advice would be unneeded and presumptuous.

128

No, it certainly did NOT say that. It said that the subset of people earning LESS than $13,000 were on average spending 9% of their income on lottery/gambling. That does not mean everyone earying $13,000 was spending 9%, nor does it mean that 9% of $13,000 is $645.

But you are more than welcome to prove that I’m wrong. Here’s more data for you to refute:

1 In Texas:
*There’s plenty to suggest that the Texas lottery tends to be regressive, appealing to folks who can least afford it.

While players from high income brackets reported higher participation rates than low income players, low income players spent, for the most part, more money per month.

Players making under $12,000 a year spent three times as much as those pulling in over $100,000 and nearly double those making between $75,000 and $100,000. ($19 a month for the under $12,000 respondents, vs. $6 a month for those over $100,000; and $10 for those earning between $75,000 and $100,000.*

If a person was complaining to you that they can’t afford a $19 pair of shoes for their kid, but were spending $19 per month on the lottery, what would you suggest to them? Setting aside that $19 per month means there is $200 to buy new tires for the car.

2 In South Carolina
But a review of demographic studies commissioned by the South Carolina Education Lottery, obtained through a Freedom of Information Act request, shows that although low-income and minority groups may not be targeted in the lottery’s advertising, they are more likely than other
—People in households earning under $40,000 accounted for 28 percent of the state’s population, 31.3 percent of lottery players and 53.4 percent of frequent players.

3 In California, 44% of sales are from households earning less than $35k per year (1999 stat)

Sure, if you don’t consider playing the lottery as gambling. Perhaps you see it as a sound financial investment. In fact, someone on this message board once suggested the lottery was a good way for the poor to get ahead.

So tell me, do you think spending $645 a year is a sound financial investment for a person living in poverty? For a person that has to choose between feeding their kids or getting them shoes, could a third option be not buying $645 worth of lottery tickets?

Do you see that as a sound financial investment?

Too many, including the girl in this article
Being poor is making sure you don’t spill on the couch, just in case you have to give it back before the lease is up.

That was the comment that sent Broomstick off on a tangent. You’ve been shown dozens of furniture rental facilities that make lots of money, so who do you think is renting that stuff, and do you think it’s a sound financial decision?

129

You didn’t answer the question. What on that list do you think a person living in poverty SHOULD do? I’m not making any assumptions here, like I said before:

“Almost 29 percent of adults with incomes of less than $15,000 are smokers”

“People in the bottom 20 percent of income earners, as a group, spend 2.33 percent of their income on tobacco products, more than 10 times the percentage of income paid by the highest earners.”

Do you think that smoking is a sound financial decision for a person making less than $15,000 a year?

If the choice was buying a pack of smokes, or a bag of oranges, what would you suggest?

The OP asked “How do people end up so poor?” Well, for 29% of them I say part of the problem is that they spend 2.33% of their income on tobacco products. Unless of course you think that’s not their fault, and that it’s The Man that forces them to smoke to keep them down.

130

It is not my place to either encourage or discourage reproduction.

I’d encourage him to try it in a game with friends using poker chips rather than real money.

I’d have to look at the new policy. I’ve seen insurance policies that were total crap, where the maximum possible payout was less than the total paid in premiums over a year. Such a policy is just as much a rip-off as a payday loan company. It’s not a wise purchase.

Cheapest is NOT always the best way to go, even when you’re poor. It’s the principle of Vimes’ Boots. If you can afford the $50 boots that will last 10 years up front it’s a better deal by far than the $10 boots that will only last a year and won’t keep your feet dry anyway. I will extend that to say that even if it takes you five years to pay off the $50 boots (resulting, after interest, of a total payment of $75) it’s still a better deal than paying $10 a year for 10 years. And you’ll have dry feet, too. Which is why, sometimes, buying things in installments makes sense when you can’t buy it up front.

But you, emacknight, want to impose a hard-and-fast rule of always be cheap, even when it hurts the poor, because… well, I don’t know. You don’t think the poor deserve dry feet?

131

Are you saying that poor people don’t spend money on the lottery or gambling? Or that it’s a sound financial decision?

Will that include lessons on what lottery tickets are the hottest? Which brand of cigarettes are the coolest? Which alcohol gets your black out drunk the fastest?

Are you suggesting they SHOULDN’T do those things? Was I wrong to try and lower my utility bill? I feel kind of stupid now putting on a sweater when all I had to do was turn up the thermistat.

132

Do you see that choice as being a sound financial decision? Yes or no.

I take that as a weasely way of saying you don’t think gambling is a sound financial decision. Or do you think there is a super secret way that guarantees he’ll win at blackjack?

So what you’re saying is that there are wise purchases, and unwise purchases, did I interpret that correctly?

Didn’t say it was.

Yes, that is absolutely correct, and a financial decision very few people (rich or poor) are capable or making. What happens is that it hurts the poor much more than it hurts the rich, and results in the poor staying poor. And often results in the rich becoming poor.

So yes, SOMETIMES buying in installments is the correct decision, but does that mean it’s ALWAYS the correct decision? I’ve crunched the numbers and renting a couch is NOT a good idea, but renting an apartment is.

It isn’t fun or easy to make that calculation on every purchase you make, but if you’re poor, and need $200, the results of those calculations add up. In the boot scenario that’s an extra $50 which buys quite a few oranges.

The reality of the boot scenario is that it’s unlikely the installment plan will be in your favour, it’s more likely to be something low but frequent. The pay day loan scheme would give you the $50 but charge you $5 per month until you paid it back. A credit card would charge easily 20% per year, so after 5 years you’ve spent $50 on interest.

No, that simply makes it easier for you to dismiss what I’m saying. You pull back into a shell and assume the world is out to get you. Buying boots that fall apart and don’t keep your feet dry is an extremely common mistake both the rich and poor make. The point is to make sound financial decisions.

But I guess renting the boots means you don’t lose your benefits right?

133

It’s not a disability insurance thing, which is something that workers carry for themselves, but workers comp insurance. which AFAIK, most states require employers to carry; generally speaking, it pays for the medical bills, and usually some portion of the disability incurred by a work-related injury.

You may have to sue for the rest if they give you the run-around, but generally speaking, if you get hurt on the job, assuming it’s not due to your own negligence or stupidity (and some cases even then) they’re on the hook for your lost wages. People are usually assigned a disability percentage; a friend had a hand injured on the job, was rated 3% disabled, and not only did the worker’s comp stuff pay his medical bills, he got some sort of payout for the 3% disability.

The details almost certainly depend on the state.

134

Well, yes, I did mention I specifically excluded specialty MOS - because much of the time you’ll be specifically excluded from them.
Given a choice between teaching your ass from absolute zero, or picking the guy who dabbled with that in school/college/as a private hobby and knows the basics if not better, they’re not going to take the time to teach your ass unless they absolutely have to. Coming in as a zero learning PFC, what’s more likely: that you’ll be assigned to fix and supervise a sonar array, or that they’ll tell you to dig latrines (or whatever the Navy equivalent is) ?

There’s also the matter of simple proportions : don’t know how it is in the Navy, but in the Army how many high end mechanics or electricians do they need compared to guys who shoot stuff, assault stuff, call arty on stuff, fill out forms re:stuff etc… ? The odds of coming out with knowledge that can applied to civilian life are dismal. I’m sure it does happen, within each batch of new recruits even. But then people win at the casino, too. Just, not a lot of 'em, not enough that the statement “going to the casino is a great way to earn money” becomes valid.

135

Yes. I’ve known a lot of poor people who rent furniture. I remember one woman I worked with always had to get her check and run to the check cashing place so she could get the money to go to the rent-a-center and make the payments on her furniture and tv. Showing her the math never would sink in. She could own that poorly made furniture 5 times over for what she paid to rent to own. She also couldn’t grasp how eating breakfast and lunch out contributed to her money woes. All her money would be gone by the middle of the week.

I think a lot of people who are poor contribute to their situation the way she did. It’s as if they were never taught anything but instant gratification.

Sure, there are also a lot of poor people who don’t sit around making foolish choices the way she did, but it doesn’t make the fact that there is a group of people who don’t know the most basic things about money who keep themselves poor any less true.

136

here is a story about poor people who are struggling to survive. No they do not rent furniture. No they do not buy lottery. They struggle every day of their lives. But I suppose some think they are fair game for criticism.

137

The article you linked to says nothing about renting furniture or playing the lottery, was that what you meant to link to? Are you denying that poor people play the lottery? Or are you suggesting that it’s a good thing for poor people to play the lottery?

Please answer my question from post 125, “Are any of those things listed something you think a person living in poverty SHOULD do?”

138

Which can take upwards of 3% of the value, or $3 at Walmart.

139

The lottery is irrelevant. Why do you harp on it? I saw a study a couple years ago that said the average lotto player made 65 K a year. I believe it is dropping now because wages are dropping. I was going to save that study because the paternalistic attitude of some is extremely annoying.
Sitting in the dark in a cold home or a tent, will not help you out of poverty . A lotto ticket might. It is a shred of hope in a bleak life.
People use check cashing services because they don’t have bank accounts. They have to buy money orders to pay their bills.

140

You still didn’t answer my question, not that I’m surprised, I’m not sure I’ve ever seen you able to answer a question.

Unless what you are saying is that spending 9% of your income on lottery tickets is a sound financial plan for someone living in a tent. Instead of buying an orange or lots of ramen noodles, buy $645 worth of lottery tickets, might make $65k!

But thank you for not including a random link to something unrelated.