How do poor people afford everything?

In My Humble Opinion
141

I don’t think you understand the meaning of the word “biased”. If by “biased” you mean “qualified to answer a question because of experience” yes, I suppose I’m biased. But again, the OP asked about poor people and how we afford everything. We can’t, so we pay for necessities first. For US, the POOR, hair and nails come after rent, lights, and gas. They come after children’s needs. They come after food and basic supplies. They come after just about everything else. I’d choose to spend the money other people spend on appearance on taking my daughter to a play or getting her a pair of skates… both of which are luxuries that I will spend money on. They aren’t necessities, they are luxuries. I’m not sure what you mean about five dolla luxury goods. If you’re saying getting nail and hair care costs anywhere near five dollars you are mistaken.

Man you sure are adamant about those nails aren’t you?

142

A house is like any other investment in one sense - no investment that is in any way speculative has a guaranteed return. The real issue is, if you were going to invest that money elsewhere, finding some investment that has a better return.

Naturally, as the housing bubble demonstrated, any class of investment can be oversold, and the big problem with a house is that for most people it is putting all the investment eggs in one, illiquid basket - no diversification for safety.

OTOH, and I keep stressing this, it is very useful for the non-financially-savvy and disciplined to have a forced savings mechanism. A large number of people who rent do not save the resulting savings and invest it elsewhere, or retain it for an emergency - it just goes to more consumption. So at the end of the day the average home buyer has an asset (illiquid though it may be) and the average renter has nothing, other than the memory of enjoying that slightly higher disposable income.

143

This is a really weird thread.

I am by no means poor. I’ve never really been “poor”, though I have been pretty darn close to it. There were months where I really had to scrape together to make my rent.

But these days I can afford things and I am still cautious about what I buy. If that sense of frugality doesn’t get ingrained in you from youth, well, that’s what you hear about those poor people winning the lottery and a year later they’re broke. They never learned how to save.

I still look at almost everything I buy with caution. That doesn’t mean I don’t buy things when I want to, but I’ve learned to delay gratification or avoid it altogether. I have a credit card. Almost everything I buy on it I pay in the same month - no interest whatsoever. I basically use it as a form of cash, and as a form of insurance - should I ever need to make a big purchase, I’ve got the card.

Manicures? Pshaw. I have had a professional manicure once in my life, and I hated it. It just isn’t my interest. So I don’t spend even $5 on it. I do my nails myself. I don’t bite them, either, I like how it’s one or the other. And professionally done nails don’t cost $5.

If you don’t learn it when you’re poor, you’re not going to learn it when you have money.

As to the house thing, well, we do save, quite a bit, every month. I’m not worried about that. And I don’t understand where people keep coming from in saying that we have nothing. We don’t just have the slightly higher income. We also don’t have to pay thousands of dollars for repairs, ever. AND we have the time that goes towards a maintaining a house. Time to do other things.

Time is important, and time is money. And now that I see all of the people who encouraged me and pressuered me to buying a house are stuck in houses they can’t sell for love or money, I wipe my brow with relief that I waited. It’s like having a kid. You should do it when it’s right for you, not just fall into pregnancy like it’s going out of style.

144

yeah but if you have a lot of kids invent in this 9 beds 10 baths 37 acres

145

Could almost be a definition of poor. :wink:

Actually, I think a better definition of poor is someone who cannot, even with the best money management skills and the most rutheless budgeting for necessities only, save up enough money so that they are safe in case of the unexpected.

What defines true poverty is not arguing about luxuries, it is the sense of vulnerability to fortune - that one more thing going wrong would be a disaster, rather than an inconvenience. The non-truly-poor always have some sort of resources available; the truly poor do not.

146

In this case, it appears to be appropriate. Go to an online dictionary and look at the several definitions of the word luxury. One definition, the one that you seem to think is the only one, involves expensive stuff. Another, an equally common and valid one, involves stuff one doesn’t need.
[QUOTE=Merriam Webster]
something adding to pleasure or comfort but not absolutely necessary
[/QUOTE]
. A fifty cent newspaper is a luxury if you are broke.

147

Ok, well I wasn’t sure if you were serious or not in your questions but now I’m certain there’s no way you’re being sincere. I mean…if you have a lot of kids and consider yourself ‘poor’, there’s no way you’re going to have the disposable income to pay the mortgage on that thing, let alone the utilities, taxes and insurance. When you’re poor, you don’t have the money to invest in anything.

Edit: The property tax alone is more than I’ve ever made in a year in my entire life! By quite a large margin!

148

yeah unless you did it for like 90 years mortage

149

Ok now I just think you’re crazy. Like Angelsoft, there’s no way I believe you’re being sincere anymore.

Anyway I never want to have kids. Decided that one long ago. Lovely Tudor, nice to dream, but I’m content with a small ranch house somewhere. Just a little bigger than the one I am renting.

150

yeah thats also a great way to save money not get newspaper its like $30 a month to save and i guess you don’t really need it theres probably a news section online.

151

I just noticed that our OP is an 18 year old who lives with his mother. The OP of his first thread was titled How often do you guys get haircut?
[QUOTE=CEOofPolar]
i like to go once a week its 15$ and i give 5$ tip so 20$ a week not too bad my i don’t work my mom pays for them im only 18 and i like the way it look. but i might finally miss a day tommorw because my mom wouldn’t buy me a ralph lauren sweater and all the other clothes i wore to the barber shop : (
[/QUOTE]
I think we’ve treated him far more seriously than he deserves.

152

Did you see how the property value is slowly sinking?

When you’re poor, you sleep two or more to a room. That’s what we were doing until the roommate left. My little girl and I both slept in the living room. The roommate and my older daughter had the two bedrooms. Now my little girl has the other bedroom and I have the living room as a bedroom. It’s twice the size of the other rooms so I’m enjoying the space.

153

idk get a college degree? and pay it back later?

154

Well, if you are one of those who are good with money, frugal and able to save and invest on your own and regularly, then my post clearly isn’t meant for you.

I would be the last to say that the decision between renting and buying is a slam-dunk. It isn’t. Many factors are involved. I’m merely pointing out that financially it is a mistake to simply look at it as rent versus mortgage and mainitenance. As a financial decision, one also has to take into account the fact that mortgage is going towards creating equity in an investment that you own, and rent is not.

That being said, if you are saving bucks on rent (and no maintenance) and you are investing that savings in an investiment with better returns than real estate, then clearly you are comming out ahead and (personal reasons aside) as a purely financial decision, you have made the right choice … my point is that generally speaking many people who rent do not have the financial discipline to do this.

On a personal note, as a homeowner myself and former long-time renter, I have not found home-ownership a tremendous time-sink - as far as aggrivation goes, one trades the aggrivation of dealing with contractors for the aggrivation of dealing with landlords who have little interest in making repairs, who will ‘get around to it someday’.

As a purely financial decision, so far at least home ownership has been pretty successful for us - though my math isn’t good enough to figure out exactly how much. I bought 7 years ago and I’ve paid off my mortgage this summer (we rented for 12 years and built up a large down payment). The house has increased in assessed value by 35% during that time, meaning an average of 5% return per year - minus of course the amount of mortgage interest paid over that time. That’s not bad considering how badly equities have performed over the past seven years, and how low mortgage rates and inflation have been.

155

I’m 100% with you that if home ownership works for you and you want it, by all means. I hesitate in recommending it, ever, though. I’m not kidding when I say I’ve gotten a ton of pressure to buy a home over the years. Entering a 30 year committment on other people’s say so? Hmmm.
The only other thing I’ll add is that yes, I have had lazy landlords, and it’s been ridiculously easy to get up and move if need be. I do year long leases, and I can suck it up for a year.

Otherwise you are correct, Malthus. I’m actually really glad to hear your house has increased in value. Nowadays you hear about so many people whose mortgages are underwater - I think that’s how you say it, when you still owe money on the house but now it’s worth less than what you paid for it.

156

house maintenance don’t cost thousands of month like you think maybe once every 10 years get new windows. but overall its funner to have a house and personally if you can spend most of your pay check on a house and get a junker car.

157

I disagree. Why do you care anyway, if I buy a house? Here’s the best most important reason, just like having kids: I don’t want one..

158

Do you have a paycheck to spend on your imaginary house?

159

If you own, then you’re responsible for fixing every little thing that goes wrong. Water heater suddenly dies? You gotta fork out a couple grand to get a new one. Leaky roof? Better hope you have enough saved. Every little thing that goes wrong is now your financial responsibility. When you rent, it’s not. You just call up your landlord and THEY have to fix it. Me, I’d rather rent and be assured I won’t have to suddenly come up with a large chunk of cash to fix some sort of emergency regarding the house. And while I’m never one to buy a brand new car, for most people your car is your entire livelihood. You need to make sure it works. Because if it doesn’t work, neither do you.

160

Maybe his mom will buy him a house.

I said that in jest, but then I realized that she probably will. Poor little rich boy is going to live his life without ever needing a real job or understanding what it’s like to have to feel the bite of every dollar spent.

In 17 years he’ll run for congress and make financial decisions that effect millions of people.