The Poverty Tax

[AthenaAwakened]

Call it a poverty tax. It’s the hundreds of dollars, if not thousands, in extra fees people making $20,000 or $25,000 or $30,000 a year pay because they have lousy credit or because they have no savings.

Add up all the profits pocketed by all those payday lenders, check cashers, subprime auto lenders, and other Poverty, Inc. enterprises and divide it by the 40 million households the Federal Reserve says survive on $30,000 a year or less. That works out to around $2,500 per household, or a poverty tax of around 10 percent.

...


Thankfully, a good portion of the working poor never resort to a payday loan. They avoid paying the steep rates charged by the local Rent-A-Center. Plenty of people earning less than $30,000 a year have a checking account and good credit. There’s also help on the horizon as the new Consumer Financial Protection Board has singled out payday loans and subprime auto finance as two of its top priorities.

Yet don’t underestimate the ingenuity or hunger for profits driving those who the author Mike Hudson dubbed “merchants of misery.” A few years back, I attended the annual Check Cashers Convention, where I sat in on a 90-minute presentation dubbed, “Effective Marketing Strategies to Dominate Your Market.” Speaking to a standing-room only crowd, a consultant named Jim Higgins shared his tips for turning the $1,000-a-year check cashing or payday customer into one worth “$2,000 to $4,000 a year.” Pens scribbled furiously as he tossed out ideas. Raffle off an iPod. Consider Scratch ‘n Win contests. Institute the kind of customer reward programs that has worked so well for the airlines. And for those who are only semi-regulars offer a “cash 3, get 1 free” deal. After all, Higgins told the crowd, “These are people not used to getting anything free. These are people not used to getting anything, really.”

http://www.pbs.org/wnet/need-to-know/opinion/america’s-poverty-tax/13863/

 

[dismal]

a consultant named Jim Higgins

Wow, Higgins is a douche.

 

[Loren Pechtel]

Thankfully, a good portion of the working poor never resort to a payday loan. They avoid paying the steep rates charged by the local Rent-A-Center. Plenty of people earning less than $30,000 a year have a checking account and good credit.

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

 

[arkirk]

Call it a poverty tax. It’s the hundreds of dollars, if not thousands, in extra fees people making $20,000 or $25,000 or $30,000 a year pay because they have lousy credit or because they have no savings.

Add up all the profits pocketed by all those payday lenders, check cashers, subprime auto lenders, and other Poverty, Inc. enterprises and divide it by the 40 million households the Federal Reserve says survive on $30,000 a year or less. That works out to around $2,500 per household, or a poverty tax of around 10 percent.

...


Thankfully, a good portion of the working poor never resort to a payday loan. They avoid paying the steep rates charged by the local Rent-A-Center. Plenty of people earning less than $30,000 a year have a checking account and good credit. There’s also help on the horizon as the new Consumer Financial Protection Board has singled out payday loans and subprime auto finance as two of its top priorities.

Yet don’t underestimate the ingenuity or hunger for profits driving those who the author Mike Hudson dubbed “merchants of misery.” A few years back, I attended the annual Check Cashers Convention, where I sat in on a 90-minute presentation dubbed, “Effective Marketing Strategies to Dominate Your Market.” Speaking to a standing-room only crowd, a consultant named Jim Higgins shared his tips for turning the $1,000-a-year check cashing or payday customer into one worth “$2,000 to $4,000 a year.” Pens scribbled furiously as he tossed out ideas. Raffle off an iPod. Consider Scratch ‘n Win contests. Institute the kind of customer reward programs that has worked so well for the airlines. And for those who are only semi-regulars offer a “cash 3, get 1 free” deal. After all, Higgins told the crowd, “These are people not used to getting anything free. These are people not used to getting anything, really.”

http://www.pbs.org/wnet/need-to-know/opinion/america’s-poverty-tax/13863/

I heard a local realtor here make the same remark back in 2006. Then she drove off in her new top of the line luxury car. Let's face it...either we change and get some realistic regulation and governance or nobody will be getting anything,

 

[AthenaAwakened]

http://www.pbs.org/wnet/need-to-know/opinion/america’s-poverty-tax/13863/

I heard a local realtor here make the same remark back in 2006. Then she drove off in her new top of the line luxury car. Let's face it...either we change and get some realistic regulation and governance or nobody will be getting anything,

True.

The poor are not treated like people, but prey. And it is time to organize

 

[Jayjay]

a consultant named Jim Higgins

Wow, Higgins is a douche.

Nah, it just means that his suggestions were clever satire.

 

[Jayjay]

The poor are not treated like people, but prey. And it is time to organize

View attachment 1548

Nice idea until the predator fish realizes, "waitaminute, that's still a flock of food that only looks like a bigger predator".

 

[dismal]

The poor are not treated like people, but prey. And it is time to organize

For the money the democrats spent failing to reelect Kay Hagan they probably could have opened up a nationwide chain of check cashing stores offering financial services at super low barely profitable rates.

 

[TV and credit cards]

Thankfully, a good portion of the working poor never resort to a payday loan. They avoid paying the steep rates charged by the local Rent-A-Center. Plenty of people earning less than $30,000 a year have a checking account and good credit.

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

Sure. It's called being an average person who makes mistakes. Problem is, when you're pulling down $300-$350 a week, it's a hell of a lot tougher to recover. I conducted financial counseling for folks in the military who made such mistakes. I used to shake my head at some of the stuff I saw. But, you know what, mistakes are just that. Many people poor and rich alike would be surprised to see how much money they waste, waste by their own standards and don't even realize it. Five dollars here, ten dollars there. Write down every dime you spend over the course of a month, you'll see it.
The federal government has protections in place for active duty military with regards to interest rates, it's not a stretch to put some in place for those making peanuts. Personally, I'd like to see the government dictate what various consumer industries can do instead of what they can't after the damage is done. There's always another deceptive business practice in the works.

 

[Bronzeage]

Thankfully, a good portion of the working poor never resort to a payday loan. They avoid paying the steep rates charged by the local Rent-A-Center. Plenty of people earning less than $30,000 a year have a checking account and good credit.

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

It's called having more bills than income.

Let's suppose you are a working poor person. You have to pay rent and a car note every month. You are poor, but frugal. Your income barely exceeds your expenses, but you are very careful. One morning the car won't start. You miss a day's pay and are in danger of losing your job. The car repair is equal to a car note. The car is critical to your livelihood. The car insurance is also due this month.

Something is going to be paid late. Which is it? Car note, or insurance?

 

[Loren Pechtel]

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

Sure. It's called being an average person who makes mistakes. Problem is, when you're pulling down $300-$350 a week, it's a hell of a lot tougher to recover. I conducted financial counseling for folks in the military who made such mistakes. I used to shake my head at some of the stuff I saw. But, you know what, mistakes are just that. Many people poor and rich alike would be surprised to see how much money they waste, waste by their own standards and don't even realize it. Five dollars here, ten dollars there. Write down every dime you spend over the course of a month, you'll see it.
The federal government has protections in place for active duty military with regards to interest rates, it's not a stretch to put some in place for those making peanuts. Personally, I'd like to see the government dictate what various consumer industries can do instead of what they can't after the damage is done. There's always another deceptive business practice in the works.

How about learning from one's mistakes rather than keeping on making them?

- - - Updated - - -

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

It's called having more bills than income.

Let's suppose you are a working poor person. You have to pay rent and a car note every month. You are poor, but frugal. Your income barely exceeds your expenses, but you are very careful. One morning the car won't start. You miss a day's pay and are in danger of losing your job. The car repair is equal to a car note. The car is critical to your livelihood. The car insurance is also due this month.

Something is going to be paid late. Which is it? Car note, or insurance?

No, it's not. The article admits most poor people don't trash their credit.

 

[TV and credit cards]

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

It's called having more bills than income.

Let's suppose you are a working poor person. You have to pay rent and a car note every month. You are poor, but frugal. Your income barely exceeds your expenses, but you are very careful. One morning the car won't start. You miss a day's pay and are in danger of losing your job. The car repair is equal to a car note. The car is critical to your livelihood. The car insurance is also due this month.

Something is going to be paid late. Which is it? Car note, or insurance?

This is absolutely true. These folk, learn from their mistakes or not are always one unexpected bill away from ruin.

**********

My point is Loren, some people will buy things on credit terms most of us would balk at and never realize, never learn their lesson. It is beyond them. They need protection. They simply do not understand what they are getting into. All they hear is $49 a month and they can get what they want.

Back in the heyday of the housing market in the early 2000 in San Diego, I had a friend. Great guy. Worked his ass off. Had his own cleaning service. Made some pretty good money cleaning buildings at night. Didn't know his ass from a hole in the ground when it came to managing his business (gave everything to Paychex to take care of) or personal finances.
One Sunday he walks into the room and proudly proclaims that he just closed escrow on a new home. Got a 1% interest rate. Did he eventually learn his lesson about 1% interest rates? Yes. Will another scam come down the pipe and screw him all over again? You bet your sweet bippy.
We need to stop these scams before they happen.

 

[Derec]

One Sunday he walks into the room and proudly proclaims that he just closed escrow on a new home. Got a 1% interest rate. Did he eventually learn his lesson about 1% interest rates? Yes. Will another scam come down the pipe and screw him all over again? You bet your sweet bippy.

Just out of curiosity, what exactly was the scam?

We need to stop these scams before they happen.

The fool and his money are soon parted no matter what you do.

 

[Bronzeage]

In other words, being poor doesn't mean you have to trash your credit.

Thus some other factor is behind their poor credit.

It's called having more bills than income.

Let's suppose you are a working poor person. You have to pay rent and a car note every month. You are poor, but frugal. Your income barely exceeds your expenses, but you are very careful. One morning the car won't start. You miss a day's pay and are in danger of losing your job. The car repair is equal to a car note. The car is critical to your livelihood. The car insurance is also due this month.

Something is going to be paid late. Which is it? Car note, or insurance?

No, it's not. The article admits most poor people don't trash their credit.

It's not what? That doesn't answer the question.

It's a simple hypothetical question which reflects the reality which many working poor face every day. What would you do in this situation?

 

[Loren Pechtel]

My point is Loren, some people will buy things on credit terms most of us would balk at and never realize, never learn their lesson. It is beyond them. They need protection. They simply do not understand what they are getting into. All they hear is $49 a month and they can get what they want.

Back in the heyday of the housing market in the early 2000 in San Diego, I had a friend. Great guy. Worked his ass off. Had his own cleaning service. Made some pretty good money cleaning buildings at night. Didn't know his ass from a hole in the ground when it came to managing his business (gave everything to Paychex to take care of) or personal finances.
One Sunday he walks into the room and proudly proclaims that he just closed escrow on a new home. Got a 1% interest rate. Did he eventually learn his lesson about 1% interest rates? Yes. Will another scam come down the pipe and screw him all over again? You bet your sweet bippy.
We need to stop these scams before they happen.

There's no way we can stop *ALL* scams. Fools and their money are soon parted, society can't prevent that. Or do you think we should live in a dictatorship for our own good?

And who are the superior intellects that get to decide what choices we have?

 

[bilby]

My point is Loren, some people will buy things on credit terms most of us would balk at and never realize, never learn their lesson. It is beyond them. They need protection. They simply do not understand what they are getting into. All they hear is $49 a month and they can get what they want.

Back in the heyday of the housing market in the early 2000 in San Diego, I had a friend. Great guy. Worked his ass off. Had his own cleaning service. Made some pretty good money cleaning buildings at night. Didn't know his ass from a hole in the ground when it came to managing his business (gave everything to Paychex to take care of) or personal finances.
One Sunday he walks into the room and proudly proclaims that he just closed escrow on a new home. Got a 1% interest rate. Did he eventually learn his lesson about 1% interest rates? Yes. Will another scam come down the pipe and screw him all over again? You bet your sweet bippy.
We need to stop these scams before they happen.

There's no way we can stop *ALL* scams. Fools and their money are soon parted, society can't prevent that. Or do you think we should live in a dictatorship for our own good?

And who are the superior intellects that get to decide what choices we have?

Well you can't have it both ways; If poor people are allowed to make their own choices, rather than deferring to your superior intellectual assessment of how they should spend their money, then you have no grounds for objecting to those choices. Or do you think the poor should live in a dictatorship for their own good?

If people are being defrauded, then the fraudsters need to be caught and punished. That a fraud is so transparent as to only entrap fools does not make it acceptable, for any definition of 'fool'.

It seems that pay day loan sharks are allowed to get away with fooling people into taking on massive debt burdens, simply by making enough of a hint about the hook that regulators can be buffaloed into accepting that the victims were warned - when in fact the bait is so tempting to the genuinely poor that they can be persuaded to ignore the deliberately subtle hints about the hook.

There was a recent move over here to require all lenders to publish the APR for their loans, and to print this information on all loan contracts; the payday loan companies were up in arms, saying that the idea of paying 8,000% APR would scare their customers, and ruin their businesses. Of course, that isn't a reason not to do it - it is a restatement of the reason why in needs to be done. But rich people have more influence than poor people, so the laws were watered down to allow the fraudsters entrepreneurs to stay in business.

 

[laughing dog]

And who are the superior intellects that get to decide what choices we have?

Obviously the very same intellects who pass judgment on the spending habits of the undeserving poor.