I was discussing politics and society with some friends who came over this evening. It has long bothered me the way this country is set up like quicksand. I read today that the American middle class has been priced out of the home market in most major cities. I read about the horribly screwy loans people are forced to take out like the 40 year mortgage which of course ends up costing the buyer a fortune in interest over the extra 10 years of the loan or the speculative loans which are interest only for 3-5 years but involve speculating that your home will retain its inflated value or go up in value in the next 3-5 allowing you to sell it when your principal comes due and/or the interest rates go up and you can no longer afford your monthly payments. The same with the 20/80 loans and all of the other non-conventional mortgages out there now which may look appealing when they are the only way to buy a home for a large majority of people like the new middle class (20 -30sometings just getting to that point in life they are able and desire to buy a home) and any other first time home buyer. To me these loans look like the real estate version of the leg breaker car lots. Buy here pay here EZ finance (But be ready to PAY OUT THE ASS FOR IT!!) So that got me on to my other beef about the way we have set ourselves up for the poor to stay poor and the rich to get richer. Here are some examples of things I see every day. Please add others you may have seen.
Small buys vs Bulk Buys and Stock Up On Sales, if you only have $40 to spend on groceries you have to buy small packages of many things and pay more for each thing. The person with the extra money saves more of it by buying in bulk and buying lots of things when they are on sale. Over each year this can add up to quite a bit.
Interest Rates, a poorer person will often be more likely to be late with a payment or have other blemishes on their credit due to sheer inability to pay. They stay poor by paying exorbitant interest rates and other fees for financial transactions which someone with a better income and better credit will not have to pay.
Bank Fees, Now to speak to a teller you need to pay a $2 fee in many banks while this is a more blanket leech on everyone regardless of income level, it is a much greater percentage of someone who makes $5.15 an hours income than it is of someone who makes $50 an hour. If you do not have a bank account to cash a check you must pay crazy check cashing fees, this does not lend one to financial freedom as the money gets leeched away left and right by such things.
Rent, If you cant afford to buy you have to rent, if you are renting you are throwing money away every month never building any capital. Owning a home is like putting money into a giant piggy bank. Renting involves putting money into porcelain as well but it comes in the form of a giant commode.
Other Screwy Financial Situations, such as the Rent to own which of course means you will have a TV, but you paid $2000 for the same TV someone with the cash up front got for $600.
Deposits, for those with blemished credit or who do not meet income requirements there are often deposits required for utilities and other services. These of course are money out of the persons pocket which is not working for them in any way and often can continue the cycle of not having that money to put towards other bills and necessities.
Traffic Fines, a poorer person is more likely to have a lesser car, time and again this person WILL get pulled over more likely than a person in a nicer car. Being pulled over for standing out (but then ticketed to justify the stop) or fix-its which they cannot afford to fix, they will often become bogged with fines which they in turn cant pay and add up to more and greater fines and it becomes a vicious cycle for them.
Nothing to Venture Nothing to Gain, if a person isnt sure what rectal crevice next weeks grocery money is going to materialize out of they do not have the means to venture money on potential money making endeavors. They may see the fabulous deal at an auction which they are 99.9% sure they could turn around to quadruple their money in no time with but when food is needed and rent due they are unable to justify the risk therefore never realizing the possibility of getting ahead in this way. Not to mention the inability to even consider stocks or other investments.
Insurance Or Lack Thereof, Those barely scraping by may find themselves simply unable to produce or justify insurance, health or property. Then when a situation medically arises they are mired in debt and credit problems which exacerbate their situation in many ways. Or if they suffer a property loss, such as having their apartment robbed or car wrecked they are stuck starting out back at 0 having to reacquire all of the lost possessions possibly getting into Rent to own and interest accruing monthly payments for repairs situations. Not to mention if it is a car loss, towing, rental car and cab or bus fees on top of the car repairs and automotive costs they incur.
Food and Poor Health, being on a tight budget often involves eating crappy foods as the least expensive foods are often high in fat and chemicals and low in nutritional value. Over the course of time this can lead to obesity and other health problems a person who can afford the more healthy choices would not succumb to. This of course leads to more credit and cash flow problems no to mention time lost from work which only buries the person deeper.
Poor Quality, When one doesnt have enough to buy the quality item they often settle for a lesser similar item. While the lesser item may serve the same function as the more expensive item it will break faster and often be much less efficient. Thus costing more over the course of it or the buyers lifetime than if they had bought the more expensive quality item to begin with.
Wal-Mart and Dollar Store Shopping, while these places lure people in with their low prices they are chocked full of low quality merchandise and insidious marketing and product placement. A person may go to Wal-Mart to save $.20 buying dish soap but end up walking out of the place with the dish soap plus a candy bar, a set of Buggs Bunny shot glasses and some Jasmine body lotion they didnt need. So saving the $.20 is a moot point when they ended up spending $20 on useless crap which was placed in the isles and marketed specifically for this purpose. Same thing with dollar stores, yes its cool and only a dollar but 20 pieces of crap still adds up to $20 which is much better spent on something less useless or with a longer usable life.
I could go on but Ill be surprised if anyone is still reading this far so Ill digress. I wish there was a solution for this vicious cycle people fall into. I guess the only realistic one at this point is for those in a situation where these things apply is to recognize them for what they are, money leeches, and find ways to avoid as many of them as they can. Let me know what you think or if you have any more glaring wealth inhibitors like this.
Small buys vs Bulk Buys and Stock Up On Sales, if you only have $40 to spend on groceries you have to buy small packages of many things and pay more for each thing. The person with the extra money saves more of it by buying in bulk and buying lots of things when they are on sale. Over each year this can add up to quite a bit.
Interest Rates, a poorer person will often be more likely to be late with a payment or have other blemishes on their credit due to sheer inability to pay. They stay poor by paying exorbitant interest rates and other fees for financial transactions which someone with a better income and better credit will not have to pay.
Bank Fees, Now to speak to a teller you need to pay a $2 fee in many banks while this is a more blanket leech on everyone regardless of income level, it is a much greater percentage of someone who makes $5.15 an hours income than it is of someone who makes $50 an hour. If you do not have a bank account to cash a check you must pay crazy check cashing fees, this does not lend one to financial freedom as the money gets leeched away left and right by such things.
Rent, If you cant afford to buy you have to rent, if you are renting you are throwing money away every month never building any capital. Owning a home is like putting money into a giant piggy bank. Renting involves putting money into porcelain as well but it comes in the form of a giant commode.
Other Screwy Financial Situations, such as the Rent to own which of course means you will have a TV, but you paid $2000 for the same TV someone with the cash up front got for $600.
Deposits, for those with blemished credit or who do not meet income requirements there are often deposits required for utilities and other services. These of course are money out of the persons pocket which is not working for them in any way and often can continue the cycle of not having that money to put towards other bills and necessities.
Traffic Fines, a poorer person is more likely to have a lesser car, time and again this person WILL get pulled over more likely than a person in a nicer car. Being pulled over for standing out (but then ticketed to justify the stop) or fix-its which they cannot afford to fix, they will often become bogged with fines which they in turn cant pay and add up to more and greater fines and it becomes a vicious cycle for them.
Nothing to Venture Nothing to Gain, if a person isnt sure what rectal crevice next weeks grocery money is going to materialize out of they do not have the means to venture money on potential money making endeavors. They may see the fabulous deal at an auction which they are 99.9% sure they could turn around to quadruple their money in no time with but when food is needed and rent due they are unable to justify the risk therefore never realizing the possibility of getting ahead in this way. Not to mention the inability to even consider stocks or other investments.
Insurance Or Lack Thereof, Those barely scraping by may find themselves simply unable to produce or justify insurance, health or property. Then when a situation medically arises they are mired in debt and credit problems which exacerbate their situation in many ways. Or if they suffer a property loss, such as having their apartment robbed or car wrecked they are stuck starting out back at 0 having to reacquire all of the lost possessions possibly getting into Rent to own and interest accruing monthly payments for repairs situations. Not to mention if it is a car loss, towing, rental car and cab or bus fees on top of the car repairs and automotive costs they incur.
Food and Poor Health, being on a tight budget often involves eating crappy foods as the least expensive foods are often high in fat and chemicals and low in nutritional value. Over the course of time this can lead to obesity and other health problems a person who can afford the more healthy choices would not succumb to. This of course leads to more credit and cash flow problems no to mention time lost from work which only buries the person deeper.
Poor Quality, When one doesnt have enough to buy the quality item they often settle for a lesser similar item. While the lesser item may serve the same function as the more expensive item it will break faster and often be much less efficient. Thus costing more over the course of it or the buyers lifetime than if they had bought the more expensive quality item to begin with.
Wal-Mart and Dollar Store Shopping, while these places lure people in with their low prices they are chocked full of low quality merchandise and insidious marketing and product placement. A person may go to Wal-Mart to save $.20 buying dish soap but end up walking out of the place with the dish soap plus a candy bar, a set of Buggs Bunny shot glasses and some Jasmine body lotion they didnt need. So saving the $.20 is a moot point when they ended up spending $20 on useless crap which was placed in the isles and marketed specifically for this purpose. Same thing with dollar stores, yes its cool and only a dollar but 20 pieces of crap still adds up to $20 which is much better spent on something less useless or with a longer usable life.
I could go on but Ill be surprised if anyone is still reading this far so Ill digress. I wish there was a solution for this vicious cycle people fall into. I guess the only realistic one at this point is for those in a situation where these things apply is to recognize them for what they are, money leeches, and find ways to avoid as many of them as they can. Let me know what you think or if you have any more glaring wealth inhibitors like this.
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Thanx again,
xoxox
Babygirl