Step One Of Getting Out Of Poverty: Stop Going Further Into Debt To Buy TVs And Loveseats
“If you can’t afford it, you don’t deserve it.” — Anonymous
I was a little surprised — scratch that — a little disappointed to see a newspaper bemoaning how unfair it was that many people who are poor got that way because they keep buying things that they can’t afford,
Like everyone else, low-paid, cash-strapped earners are constantly being tempted by consumer goods and lured by the promise of easy money. Access to financing or credit has never been easier.
From rent-to-own plasma TVs, PCs and used cars, pre-approved credit cards that come in the mail, and lines of credit available to low-income earners at the drop of a hat, not to mention the payday lenders at almost every strip mall, it is easy for the working poor to access cash to buy the latest consumer craze or pay the monthly mortgage.
Bad credit rating? Divorced? Single? New immigrant to Canada? Visa student? No problem. You can go on the Internet and find a variety of companies willing to lend cash instantly, no questions asked.
But being poor is costly. Prices for products and services soar when you rely on lenders that charge high interest rates, which can run from 30 per cent on department store credit cards and rent-to-own company leases to 60 per cent plus fees with payday lenders.
The Vanier Institute for the Family released a study last year that examined the assets and debts of Canada’s 15 million households. They found that, based on Statistics Canada figures, the poorest 20 per cent, approximately 2.6 million households, had a net worth of $34 billion but their debts totalled $40 billion.
“This is the only group where the debt is bigger than the (net) value of the assets,” says Roger Sauvé, a consultant who prepared the report.
Meanwhile, the richest 20 per cent had debts worth $186 billion but held net assets worth $3.5 trillion. The StatsCan figures also showed the poorest 20 per cent were more likely to have vehicle and student loans and credit card debt than any other group.
…Marion Callow, 59, leased a sofa and loveseat from easyhome. She says she signed up to lease the furniture for more than two years. Less than a year and about $700 into her payments, she noticed a flyer from another store selling a similar couch for $999 and got easyhome to take the furniture back.
Callow said she went to easyhome because it requires no credit. She could also get the furniture the next day. “They’ve got nice furniture but boy, do they charge,” says Callow, who is on disability and lives in subsidized housing in North York. “It’s not fair. I’m on a fixed income.”
…The Oxleys can’t afford either to rent or go to the movies. But Mary’s line of credit is maxed out at $19,000 because of a used vehicle she bought. To make things easier for Don, at home all day, and to give the family a source of entertainment two years ago, she bought a large-screen plasma TV and made payments on it for two years.
“You have to have some entertainment for him,” she says.
The $3,800 TV is now paid for. But they still have their monthly cable bill of $176, which includes the Internet, cell and home phone.
For many low-income earners, a widescreen TV is “essentially and fundamentally the only entertainment,” says Peel Family Services’ Triantafillou. “How sad is that? I don’t doubt for a minute, if they had the means they’d find other entertainment.”
You know, I’m not going to tell you that the businesses that entice poor people to spend money they can’t afford so that the companies can clean up on the exorbitant interest rates bear no moral responsibility for what they’re doing, because I don’t think that’s ethical.
That being said, nobody owes anyone else a living, people are personally responsible for what they spend their money on, and there simply is no such thing as a free lunch.
That’s a lesson I learned myself, the hard way, when I was a college student. Like a lot of college students, I was strapped for cash and I thought it made perfect sense to get a credit card to make sure I could cover my bills — that was the idea anyway. Of course, I made a few impulse purchases on occasion, and because I was cash poor and because I wasn’t particularly responsible about paying off my bills, I started running up a lot of debt and penalties on my card. Eventually, I owed a month’s salary on my card, most of which was from interest and late fees, before I smartened up, worked relentlessly to pay the card off, and then cut it into strips and never got another credit card. Now, that wasn’t the last time I had any problems related to being financially irresponsible in my twenties, but it was the beginning of a lesson that stuck with me for the rest of my life.
What I learned was that if you can’t afford a $3,800 TV, you don’t buy it. If you can’t make the payments on your expensive house or car, then maybe you shouldn’t get them in the first place. If your situation changes and you can’t afford the lifestyle you once had, then your lifestyle needs to change to match up to your new income level.
If the people who were mentioned in this article had learned that lesson, I suspect that they’d live much happier lives.