Get a pay raise, buy a nicer iphone. Earn a pay bonus, buy a bigger TV. Abnormally large tax return, get a nicer gaming system....
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This post has some truth to it, but it's not the whole truth.
We use two terms in my circles for these phenomenon. One is called “poor tax.” Buy old car. Won’t pass smog. Can’t afford to fix it or you would have just bought a more expensive car that worked better. Cant fix it, can’t pass smog. Cant register. Get tickets and penalties for non registration. Can’t afford them. If you get enough to fix the car, you can fix it but then can’t afford to register it because of the penalties. If you pay the penalties you can’t fix it, can’t register it, more penalties. If you non op it you can’t drive it at all. No plates. Either way- can’t park it on the street or at your apartment with expired reg. It gets tickets. Can’t pay them. It gets towed. So on. Poor tax.
The second is called “lifestyle tax.” Get promoted. Can’t have a Jr. exec show up in a crap box. Can’t bike anymore because you need to be fresh for meetings and might be called any hour. Time to buy a car that “passes” in the new circle. (Stupid or not a big part of promotion in most fields is fitting in in the ways people care about.) Need nicer clothes. Better hair cut. Can’t justify tipping $2 flat like when you were broke. Now it’s 15-20% because you CAN afford it even if you don’t want to. Better food. More expensive. More likely to meet people into more expensive things. Want to network? Be social? Spend more to fit in. Can’t tKe execs to lunch in your mom’s old Camry, can’t entertain in a studio. Bigger place bigger rent. Better zip code bigger rent. Can’t apply as a middle weight with an address in the “wrong” neighborhood on the app. Doesn’t work well.
More heating, cooling, electricity, water for that green lawn because your middle class neighbors will raise hell if your brown grass or “pebble fill” upsets their aesthetic or lowers their property value. Screw them? Ok. Get ready to pay for a lawsuit over grass. Even if you win it’s gonna cost you. Enjoy. Friends and relatives suddenly need money. Uh oh.
Can’t have that $20 table in a $4,000 a month house. Need better furniture. Ever shop for good furniture? My couch cost slightly more than my car. Yay. Get ready for a “real” bed and mattress too. Those make the couch look cheap lifestyle tax. If you want to keep up and get ahead- at a certain level you have to “play ball.” This doesn’t apply to those with insane technical or artistic athletic etc. gifts. But if you’re working in an “office” setting you’ll likely need to fit in.
It’s not always “traditional” stuff either. The “geek” office can be as bad or worse. You can’t show up in that Walmart costume. Not with rich geeks. They’ll expect film grade props, with bonus points if they’re made by the original prop maker or used in the original production. Say hello to the $2k-15k costume party. Latest gadgets, etc. etc. there’s more- but “lifestyle tax” is real.
It's not a poor person problem, it's simply a reality of life. It's difficult, sporadic, unequal, and constant. But it's not going away so complaining about it on twitter won't help.
To be fair, poor people face their own set of challenges, and that which effects others tends to effect the poor more when it comes to finances and the like. So we can’t really “compare” suffering or difficulty but we CAN compare the magnitude of tangible effect of said things. That is to say- the rich popular girl who doesn’t get a new Mercedes and gets a Lexus can feel just as sad as the poor kid who can’t afford lunch. Problems are problems and the saddest thing you’ve ever experienced is still going to be the saddest thing YOU know. BUT-
The tangible effect, the consequences are not the same. Both kids would be disappointed to not get a scholarship to their dream school, but the kid who can afford to go to school or qualify for a loan at a good rate will take a different life trajectory from the kid who without the scholarship simply cannot go to a University at all.
So the fine for not registering your car, the cost of a root canal for an untreated tooth- they are the same rich or poor. However as a percent of available income that identical cost represents a higher percentage of ones total budget, just as all things do. The rich and irresponsible can face such consequences but the poor and responsible who would tend to the matter of they could also face the same consequences because they cannot afford to mitigate the future costs. Thusly the poor are statistically more likely to face such future expenses from neglect because wether they are aware of the need to mitigate or not they are less likely to be able to.
You know what really grinds my gears? In most countries renting is MORE expensive than monthly mortgage payments. And we're not talking 100$ more either. It is sometimes up to 500$ more expensive to rent than it is to buy.
WHY is it that people who have been renting, for say, 10 years and have never been late are rejected for a mortgage because the earn too "little"?
If they can spend 500$ MORE on rent, consistently and without fail, then they CERTAINLY can afford to pay rent and maintenance costs on a house. Monthly maintenance does NOT cost 500$ a month. Not even close.
Poor tax. Discussed above. The more money you have- the easier making more money becomes. There are ceilings that keep people from the next level if they can’t break the ceiling. Credit systems and real estate systems aren’t designed to service people. They, like much else, funnel money from bottom to top. “Preferred customers” are ones who will make a bank the most money.
You buy a house for 1.2 million. Rent it for 2x the mortgage. Take the equity and buy another house. As a bank- I’ve got you for an easy 4-6% of 2.5 million. You’ve got collateral too. You’ll maybe take a loan on the house to improve it, use credit to do other things. At higher rates. You’ll finance a new car for $50+k every 4-8 years and I’ll make that too. I want you to spend. You have deep pockets and will give me money. The person who can pay the rent but can’t save the down? They don’t buy $50k cars or multiple homes. They don’t add rooms or granite entry ways. They won’t come to me to finance college for their 4 kids. I want the customer who spends.
So it isn’t actually so much that you can’t afford it- it is that the credit score and other factors used by lenders to quantify how much money they’ll make off of you in a lifetime is too low for them to want to deal with you. They want to give that wealth to someone who will pay back into their system. Those high rents drive high property costs which then equal higher loans for new homes which equals more total interest. Selling more homes to fewer but wealthier people makes more money on the backend than selling more homes to more but less wealthy people. That’s why property values tend to be lower in blue collar areas than in places where wages have greater disparity.
If such a neighborhood exists somewhere that becomes desirable to live- the richer can buy up homes for what to them is a “steal.” The sudden increase in demand for homes raises prices, the next wave of rich folks pays more and so on. If the area stays desirable for a few decades those prices can become stratospheric and then the bank is holding some serious loan clout. So long as wages stay high. If the prices become so high people can’t afford them... well... see the recent housing crash for that one.
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This post has some truth to it, but it's not the whole truth.
WHY is it that people who have been renting, for say, 10 years and have never been late are rejected for a mortgage because the earn too "little"?
If they can spend 500$ MORE on rent, consistently and without fail, then they CERTAINLY can afford to pay rent and maintenance costs on a house. Monthly maintenance does NOT cost 500$ a month. Not even close.