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Being poor is really expensive. This is something rich and middle upper class people never can really grasp. The cost of credit, unstable housing situations, h

Being poor is really expensive. This is something rich and middle upper class people never can really grasp. The cost of credit, unstable housing situations, having a car that breaks down all the time etc. all conspires to keep you poor. As the OP points out, when you are below the threshold needed for "basics", the interest on your debt is always higher than any return on any hypothetical investment you might make with savings (which you can never justify allocating). American society is great at convincing people that this is their personal moral failing, rather than a system designed to keep the maximum number of people as debt slaves.

ReactiveJelly 4y ago
I think this is part of why buying a house is cheaper than renting - The credit check and down payment just filters out poor people.
klenwell 4y ago
Good example of that here: https://www.cnn.com/2015/03/06/us/ferguson-missouri-racism-tickets-fines https://www.cnn.com/2015/03/06/us/ferguson-missouri-racism-t... So began an odyssey with Ferguson police, municipal court and city hall that left her with $1,200 in fines that to this day she still doesn’t fully understand. She paid the sum because endless court hearings about the car wore her down. “I don’t have a lawyer. I’m not a lawyer. It’s me going up against the city of Ferguson when the attorneys won’t help,” Hoskin said this week. From a NPR story: Earlier this year, in the series Guilty and Charged, NPR's investigations unit found that the practices in Ferguson are common across the country. The series reported that nationwide, the costs of the justice system are billed increasingly to defendants and offenders, and that this creates harsher treatment of the poor. Because people with money can pay their hundreds or thousands of dollars in fines and fees right away, they are usually done with the court system. https://www.npr.org/2014/08/25/343143937/in-ferguson-court-fines-and-fees-fuel-anger https://www.npr.org/2014/08/25/343143937/in-ferguson-court-f... It's one of things that boiled over with a lot of the civil rights protests.
anonymouskimmer 4y ago
"the interest on your debt is always higher than any return on any hypothetical investment you might make with savings (which you can never justify allocating)." This wouldn't necessarily be the case if poor people had access to 401(k)s with matching contributions. But even when they do have "access" to investment accounts it's really rare to have matching contributions of any kind. And yeah, even if they had it they still couldn't necessarily afford to pay into it. When I finally had excess income I got a guaranteed ~10% rate of return by paying off my credit card debt. And that's what I did instead of investing. (That, and buying a new mattress.)

ReactiveJelly 4y ago

I think this is part of why buying a house is cheaper than renting - The credit check and down payment just filters out poor people.

klenwell 4y ago

Good example of that here: https://www.cnn.com/2015/03/06/us/ferguson-missouri-racism-tickets-fines https://www.cnn.com/2015/03/06/us/ferguson-missouri-racism-t... So began an odyssey with Ferguson police, municipal court and city hall that left her with $1,200 in fines that to this day she still doesn’t fully understand. She paid the sum because endless court hearings about the car wore her down. “I don’t have a lawyer. I’m not a lawyer. It’s me going up against the city of Ferguson when the attorneys won’t help,” Hoskin said this week. From a NPR story: Earlier this year, in the series Guilty and Charged, NPR's investigations unit found that the practices in Ferguson are common across the country. The series reported that nationwide, the costs of the justice system are billed increasingly to defendants and offenders, and that this creates harsher treatment of the poor. Because people with money can pay their hundreds or thousands of dollars in fines and fees right away, they are usually done with the court system. https://www.npr.org/2014/08/25/343143937/in-ferguson-court-fines-and-fees-fuel-anger https://www.npr.org/2014/08/25/343143937/in-ferguson-court-f... It's one of things that boiled over with a lot of the civil rights protests.

anonymouskimmer 4y ago

"the interest on your debt is always higher than any return on any hypothetical investment you might make with savings (which you can never justify allocating)." This wouldn't necessarily be the case if poor people had access to 401(k)s with matching contributions. But even when they do have "access" to investment accounts it's really rare to have matching contributions of any kind. And yeah, even if they had it they still couldn't necessarily afford to pay into it. When I finally had excess income I got a guaranteed ~10% rate of return by paying off my credit card debt. And that's what I did instead of investing. (That, and buying a new mattress.)