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I lived in a working class area for a few years, and saw nice cars there despite the fact that half of the homes were in foreclosure. I guess the cars were not strictly nice - tacky could describe a fair few - but they were expensive given their model year and local incomes.
Only later did I find out that auto loans are the new subprime. When the next recession hits, the repo man will cometh.
I think that short term decision making is not an effect of being poor (seeking material goods as an escape), but that short term decision making is a cause of being poor. In this way, blowing your (limited) money on bling is just another symptom of the problem.
I lived in a working class area for a few years, and saw nice cars there despite the fact that half of the homes were in foreclosure. I guess the cars were not strictly nice - tacky could describe a fair few - but they were expensive given their model year and local incomes.
Only later did I find out that auto loans are the new subprime. When the next recession hits, the repo man will cometh.
I think that short term decision making is not an effect of being poor (seeking material goods as an escape), but that short term decision making is a cause of being poor. In this way, blowing your (limited) money on bling is just another symptom of the problem.
Someone on C-D wrote a post about how being poor tends to make personal finance decisions 100% tactical - conserving a dollar here and there - as opposed to strategic. When every dollar of income is committed to current expenses (e.g. rent, utilities, and food) you're not in a position to plan a year ahead.
In that sense, short term decision making is an effect of being poor.
Nice cars in a working class neighborhood could be a frustration response to bad results from clunkers in working class neighborhoods. If you drive clunkers long enough, bad things happen (e.g. clunkers break down, you can't get to work, your paycheck is short as a result (if you're not fired for not showing up), so you can't afford to fix your car, you get a payday loan to fix your car, now you're in a debt spiral) and some people eventually opt for the long-term overpriced car debt because that nice car means no more work issues because the clunker broke down.
For "YOU" apparently. Not for me. You like to wallow in it. I have a great place! No worries...I can be gone a lot...here's my schedule the next few months...Palm Springs, Costa Rica, California, SE Asia including Singapore and Thailand, etc., and back again to Nevada and Northern Cal.
If I owned a home here in the Northland, I'd have to figure out what to do with it while I was gone in the winter , etc...
I live in a great apartment complex with underground heated parking.
When I leave, I'll set the temp at 65 or whatever...(the halls are heated so my avg winter utility bill is $40), put my luggage in the taxi to the airport and I'm off!!
"Renting can be a situation where you pay some money to enjoy a life of carefree comfort that allows you freedom to do what you want with the time not spent maintaining or worrying about your house."
Home ownership is not a panacea to happiness, Freemkt.
BTW, why do you call yourself freemkt? You espouse socialism at it's finest with every keystroke!!
Could you maybe squeeze in some productive work time into your busy globetrotting schedule?
I support a free market in housing and land use, I want to own an affordable 400-sf tiny house on a 2,500-sf lot. Standard zoning regs don't allow that.
How does it put up barriers? Quite the opposite. It's historically been way too easy for people to own homes...thus the debacle a few years ago. You must not have practiced "fogging a mirror" because that's all it took back then.
Minimum lot size requirements = if you cannot afford the minimum-size lot, you cannot own any home. That's why I was able to rent a guest house that I could not buy. I live in a city where something like 48 percent rent - and many local homeowners COULD NOT QUALIFY FOR A MORTGAGE TODAY IF THEY HAD TO PAY CURRENT HOME PRICES. Way too easy for people to own homes?
Could you maybe squeeze in some productive work time into your busy globetrotting schedule?
I support a free market in housing and land use, I want to own an affordable 400-sf tiny house on a 2,500-sf lot. Standard zoning regs don't allow that.
In my town, a non-profit is building several tiny homes on small lots. They run programs that help the poor with their job/life skills and help them build a healthy work ethic so they can obtain real jobs and work their way out of poverty. They also teach real life money skills.
Maybe you should check out similar programs in your area? I'm sure one thing they would tell you is that you need to work more hours, that part time minimum wage work is never enough to purchase a home of any size and still have money to cover furniture, appliances, utilities, insurance, taxes, upkeep and repairs.
Nice cars in a working class neighborhood could be a frustration response to bad results from clunkers in working class neighborhoods.
"Frustration response" sounds like emotional thinking, which would be imprudent. The nice cars I saw were not 4 or 5 year old used Corollas, which would be a valid response to driving broken-down clunkers. They were cars like VW bugs, Mini Coopers, Dodge Chargers, and Suburbans. (A Suburban is understandable if you have a large family.) These cars are showy and expensive. There were a lot of Civics and Corollas (often tricked out), but there were also a lot of expensive new model cars that were clearly being leased or purchased with a lot of financing.
There are numerous reports that auto loans are the new subprime. This means the poor are again being scammed out of their money with the lure of consumer goods and exotic financing. Being poor doesn't force you to be a mark. I still think marks are more likely to be poor though.
"Frustration response" sounds like emotional thinking, which would be imprudent. The nice cars I saw were not 4 or 5 year old used Corollas, which would be a valid response to driving broken-down clunkers. They were cars like VW bugs, Mini Coopers, Dodge Chargers, and Suburbans. (A Suburban is understandable if you have a large family.) These cars are showy and expensive. There were a lot of Civics and Corollas (often tricked out), but there were also a lot of expensive new model cars that were clearly being leased or purchased with a lot of financing.
There are numerous reports that auto loans are the new subprime. This means the poor are again being scammed out of their money with the lure of consumer goods and exotic financing. Being poor doesn't force you to be a mark. I still think marks are more likely to be poor though.
Have you priced out these cars and surveyed their owners at all or are you just using emotional thinking?
Someone on C-D wrote a post about how being poor tends to make personal finance decisions 100% tactical - conserving a dollar here and there - as opposed to strategic. When every dollar of income is committed to current expenses (e.g. rent, utilities, and food) you're not in a position to plan a year ahead.
In that sense, short term decision making is an effect of being poor.
Nice cars in a working class neighborhood could be a frustration response to bad results from clunkers in working class neighborhoods. If you drive clunkers long enough, bad things happen (e.g. clunkers break down, you can't get to work, your paycheck is short as a result (if you're not fired for not showing up), so you can't afford to fix your car, you get a payday loan to fix your car, now you're in a debt spiral) and some people eventually opt for the long-term overpriced car debt because that nice car means no more work issues because the clunker broke down.
Somehow I don't think a repossessed car can get you to work any more than one that doesn't run.
Have you priced out these cars and surveyed their owners at all or are you just using emotional thinking?
In this neighborhood, the median household income is about $45,000, and average rent is about $2000 per month. So assuming no income tax paid, you're down to $21,000 per year to spend. To buy a new Dodge Charger would be $363 per month for 72 months, which comes to $4356 per year for 6 years. You would be spending about 10% of your gross income on a car payment. The rule of thumb is to not spend more than 10% of gross income on at max a 4 year term. This situation is marginal but is pushed over the edge by the higher-than-average rents in the neighborhood and the 6 year term. If you take that $4356 and double it, you could buy a decent used car with two years' worth of financing or extend the term for a lower monthly payment.
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