Theoretically, credit should be used for one thing: to make more money. (not less)
However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.
At some point, you run out of hours available and the house of cards collapses.
i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit.
or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.
The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning. The entire system is based on growth and consumption, I have a hard time blaming "the average person"
I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipulation to make people do things that make no sense (see what Alfred Sloan did to GM, for an early example) — it's toxic and should be absolutely avoided.
People aren't going to learn to be skeptical or think critically because we've been literally removing that from the curriculum in schools. How can someone be skeptical of something if they don't even know how to be skeptical?
Social media runs rampant with a form of skepticism, but I would call that closer to paranoia than critical thinking, and I don't think it's really being helpful in the same way.
>> Social media runs rampant with a form of skepticism, but I would call that closer to paranoia than critical thinking
For my generation this was always refered to as a "healthy skepticism", but lately I've noticed many don't necessarily see this as a good trait - an example: any sort of measured, full-picture response to the impact of AI on software development.
As usual, it's a spectrum. The pettiest example is one of Reddit, where you see some random cat video, and the comments all go "this is fake" or "this is posted by a bot" or "how could you do that, you're torturing the cat!".
1. They may all be true, but yiy gotta pick your battles at this point. If you think all of reddit is bots, what use is there complaining in every post
2. Healthy skepticism is supported by observation and findings. The internet as of late has grown lazy on that overall and people just throw out accusations without explanation. That definitely comes more off as paranoia at best, or bad faith at worst.
Liberal arts education leaders haven't been doing themselves any favors. During the recent COVID-19 pandemic we saw many college administrations abandon all critical thinking to enforce blind obedience and mandatory compliance with pointless and counterproductive policies around lockdowns and mandates. Scientists were condemned for daring to even discuss alternative views.
I absolutely see value in classical liberal arts education. But popular denigration is inevitable when people see hypocritical academics casting aside true liberal thinking and using their platform to promote pernicious ideologies.
Million of people die in the US. In a pool of 300 million people that might be a small minority but it could be much worse.
I was diabetic and still am, and was obese. I was also young. There's no telling that a viral infection would have landed me in the hospital but I do have risk factors.
COVID is definitely a risk. It would be foolish not to practice at least some measure of risk control.
There's definitely some loss of trust in institutions, but if it weren't for RFK, I would still trust them more than some random skeptic covid. Now, I don't trust the FDA anymore, how ironic.
> There's definitely some loss of trust in institutions, but if it weren't for RFK, I would still trust them more than some random skeptic covid. Now, I don't trust the FDA anymore, how ironic.
I stopped trusting the institutions the moment that the CDC admitted that they lied to people about "masks aren't effective" in an effort to preserve supplies for hospitals. Even if their motivation was good, that doesn't matter in terms of trustworthiness. If they lie to me (as they indeed did), I'm not going to trust them any more.
I would find that a little more convincing if the people complaining about being lied to about the efficacy of masks were also the people who were afterwards arguing most strongly in favour of masks.
In Southern California, surfers were arrested for surfing on an empty beach. Parks were closed. This was hailed as a safety measure. I suspect these sorts of policies are what GP was talking about, rather than vaccines or masking.
These were completely valid short-term responses to a situation where an effectively quarantined country had a small outbreak in Venice Beach and we didn't know a lot about spread.
But we were not that country. If the front door is wide open and there's a large sign above it saying "Free stuff - take what you want" because your spouse wants to embrace minimalism and throw away all your joint belongings, then triple deadbolting the back door and installing security cameras are not effective measures to protect your belongings.
There are other policy areas where states can experiment with "Red state" vs "Blue state" policies and compare how they perform, but pandemic spread is not one of them. The most permissive line of defense is the decision that has been made for everyone, and all it takes is one person (we used to call these 'bioterrorists', now we call them 'Presidents') to decide to "get this over with before the election", and it renders any other sensible precautions moot.
Areas where very aggressive precautions were implemented to counterbalance reckless policies elsewhere... didn't do that. You can't do that, without a very strong quarantine around the different policy regions.
This does not offer any commentary on the idea of sensible precautions, in a vacuum. The politicization of COVID that happened very rapidly didn't need to occur, and it did not occur in most other pandemics in this country, or in many other countries during COVID.
You picked two odd examples. A beach is debatable as being capable of being opened and closed, and whether or not a person is tresspassing, but parks are generally managed by the state or country. Of course they can close down. They typically close from subset to sunrise.
The idea of a beach closing at night-time was novel to me, when I first came to the US. In the UK beaches are ... just beaches, their status is that of "beach", and access is not controlled at all.
Generally there's a fine for being caught sleeping on the beach I think, but that's really to discourage people being swept away.
I picked two examples of everyday activities that should have been obvious to everyone that they were safe.
Mere weeks later public health authorities encouraged this sort of behavior (going to the beach or the park with ample space between individuals). It seemed a relevant example of "pointless and counterproductive policies around lockdowns"
I think it's very easy to Monday morning quarterback administrative decisions about COVID-19 mitigation now that we're past it, when, at the time, we had very little information which led to a ton of hysteria. I'm not going to relitigate the COVID-19 pandemic response, but I will say I don't think it was inconsistent or ill-advised at all to err on the side of following national health guidance in an emergent situation like that. Even from a purely legal/lawsuit-aversion standpoint, you'd ignore federal guidance/mandates at your financial peril.
> at the time, we had very little information which led to a ton of hysteria
If anything, this simply underscores GP's point. Getting hysterical when you lack information is a total failure of critical thinking, so to the extent that liberal arts educators did so, we should be skeptical of their ability to think critically.
No, that's not a correct conclusion in full generality. The first days of Covid where a case of decision-making under uncertainty: what if R had been 10 and the fatality rate had been 25%? We did not know at first, and these are not absurd numbers: they have existed in past pandemics and if they had held again, fatalities could have been in the tens of millions. Locking down until you can gather more data to rule out this possibility is a rational decision under that uncertainty, because there's asymmetric downside risk of "tens of millions die" versus "chattering internet commenters are annoyed they can't go to the beach".
There's more of an argument here regarding lockdowns going on longer than they needed to, but as much as people want to blame "the experts", most of that was bottom-up from voters. To cite one example, despite how many times I've heard to the contrary, the CDC never, at any point, recommended school closures: that was pure grassroots demand from parents.
You're really missing the point. Many liberal arts college administrations went far beyond any sort of federal government guidance, and imposed lockdown and mandate policies with zero scientific basis. Or look how the Stanford University administration and fellow academics treated Dr. Jay Bhattacharya; that story was repeated at colleges all over the country. The level of hypocrisy and inconsistency makes it clear that they don't deserve any sort of benefit of the doubt.
Classical liberal arts are wonderful, and have been a great benefit to all of humanity. But sadly many academics no longer live up to those ideals in thought, word, and deed. Instead they're more focused on indoctrination and political advocacy then a search for higher truth. If they want to restore public trust in liberal arts education then they need to start by reforming themselves. Otherwise no one will take them seriously, and many taxpayers will oppose public funding.
>imposed lockdown and mandate policies with zero scientific basis
The If Books Could Kill podcast just came out with an episode last week about how the phrase "lockdown and mandate policies [have] zero scientific basis" is almost technically true but is certainly incredibly misleading. The short version is that it would be incredibly difficult to ethically test many healthcare policies to the point that they have scientific support in the way we usually think of having evidence... but we can look at the preponderance of evidence we do have and understand that masks help block germs and viruses, staying home from work or school means I won't transmit contagious diseases to my colleagues, etc
I don't know how any of that had to do with liberal arts. To give you the benefit of the doubt and assume you're interpretation is correct: do you blame the person when they panic in a major earthquake, as they watch their peers crushed around them?
It wasn't normal times and abnormal times need preparation. It's a great thing the acting president during COVID removed the pandemic response team the previous year. It's not wonder we were chickens wandering about without our heads.
The system will never tell you how to escape from the system. Don't hold your breath waiting for that to happen.
"Critical thinking" was never really taught in schools. It was always just training in how to dismiss any proposition by "criticizing" it selectively, with a heavy bias towards criticizing anything outside the system, and a token zone of approved disagreement to convince yourself that you really are free to disagree with things.
You guys never did "This house believes that..." with random teams ? We had one lesson a week on it while English Language was compulsory in senior school (ages 11..16), and the winners got to choose the next week's topic.
First, the universities were given the task of providing an unceasing supply of ideologically correct candidates for vital positions in government, church, and business. The state was able to make the faculties of the "venerable institutions" of higher education, or rather indoctrination, assume this duty because it controlled appointments and held the purse from which "emoluments" flowed into the coffers of academics. Hence the members of the university "hierarchy" made it their "business, the business for which they ... [were] paid," to "uphold certain political as well as religious opinions," namely those of the "ruling powers of the state" (J.S. Mill, Autobiography and Literary Essays, p. 429 (1981), J.S. Mill, Journals and Debating Speeches, p. 350. (1988) ). Thus the universities pursued with vigor their assignment to inculcate in their students those political and ideological views that were cherished by the power elite. The graduates of the ancient universities were, therefore, well prepared for employment in, and by, those institutions that were instrumental in perpetuating the existing maldistribution of income. All of this might come to naught, however, if the masses of the underclass should achieve anything approaching success in potential attempts at throwing off their fetters.
The state devised a second educational strategy in order to prevent such a calamity from occurring. According to Mill, the "elementary schools for children of the working classes" were given the task of ensuring that the poor would continue to accept docilely their dismal station in life. It was very easy for the state to force the public schools to assume this role. It did so simply by failing malignantly to allocate sufficient funds for the operations of what Mill identified contemptuously as "places called schools" (J.S. Mill, Essays on England, Ireland, and the Empire, p.200; emphasis in original). These places were therefor understaffed. Moreover, the few teachers who were actually employed were completely "unfit for their work." The pupils therefore were so "wretchedly ill-taught" that they "did not ... even learn to read." And, said Mill with disgust, no attempt was "made to communicate ideas, or to call forth the mental faculties" of the children". (J.S. Mill, Public and Parliamentary Speeches, November 1850 - November 1868, p. 322 (1988). J.S. Mill, Essays on England Ireland, and the Empire, p. 200 (1982)).
I think contemporary events force people to be skeptical. For one generation it was the Vietnam War, the dissonance between what generals were saying and what was happening on the ground. Another generation had that happen with WMDs in Iraq. I think many in this generation had it happen with "2 weeks to flatten the curve" and the dissonance between promises made about COVID, the efficacy of lockdowns or the efficacy of vaccines.
> because we've been literally removing that from the curriculum in schools
Do you have any actual evidence of this or is this just more parroting of vibes based history?
Most of the people I know who say things like "School didn't teach me X" were just not paying attention. Turns out, if your society doesn't care about or value education, kids aren't going to pay attention.
Like, some states definitely have mediocre education in a lot of ways, but people will say shit like "Why didn't school teach me how to balance a checkbook" as if school didn't teach them basic arithmetic and the ability to read a single paper of instructions included in your checkbook by middle school.
Or you have people saying "Why didn't school teach me how to understand a loan" as if they didn't learn algebra and how to plug a couple numbers into a calculator right next to me in class.
The "vibes" are that the US government has been cutting funding from education since the 80's. I feel this is very well established, but if you really want a source I can fish up a few charts. As a fun fact, today we still spend about as much per student as we did in the 80's for university. The main difference is that funding cratered, so colleges need to make up for that out of pocket.
>people will say shit like "Why didn't school teach me how to balance a checkbook" as if school didn't teach them basic arithmetic and the ability to read a single paper of instructions included in your checkbook by middle school.
Not sure I agree with this interpretation. It's like responding to "why didn't they teach CS" with "well they taught you discrete math and binary". Specialized instruction on applied mathematics is well worth pursuing. It's arguably the big reason Al many students end up thinking "I'm bad at math". They get no context on what it's really used for.
https://www.cato.org/blog/new-k-12-productivity-chart
It's hard to believe that education is getting less funding. There seems to be a perception that spending more money on education will result in smarter students or higher test scores but that doesn't seem to be the case. Obviously if you spend $0 on education results will suffer, but there's a point of diminishing returns where $1 more in spending doesn't seem to have any impact on key metrics
How much we spend on school systems is not a meaningful indicator of how much we spend on education.
American teacher income has barely tracked inflation over the past 30 years, and it sure as shit didn't start high in the 90s. Teachers still have to buy their own supplies, still rely on old material, and still basically can't afford to live.
Gee, why is it so hard to get good teachers into the American school system when someone who is able to go through 4-6 years of college and is smart enough to manage and teach a room full of 30 kids can do pretty much anything else and make way more money? The money isn't going to education.
Yeah, It's one part of the equation. But if the money is being funneled by administration and the actual teachers can't afford proper resources for kids, who wins here.
>why is it so hard to get good teachers into the American school system...
I'm sure we both know the answer, but I'll give a historical account as well. Even pre 70's, teachers were dominated by women. Since this was a single income household system at the time, most jobs offered to women would pay low wages because the roles weren't expected to support a family.
At least back then, there was still respect in the profession. But that was also stripped away in the 80's with the infamous "A nation at risk". Little did we know that the administration was the risk at the time.
True, and this is why you shouldn’t just hand your kid an iPad and peace out. I’m all for technology and video games for my kids, but I’m vigilant to keep my kids’ eyes away from ads. As a result, my kids aren’t foaming at the mouth for the latest and greatest toys and games which was my experience as a child.
One of the important purposes of a society is to improve the raising of kids who might not be raised well by their parents alone, because it is a valuable outcome to everyone.
You don't choose who you get born to, so if society chooses to say "If you get born to a shitty person, you will suffer immensely and we will do nothing about it", that is a bad society.
Nobody deserves to suffer due to an accident of birth.
Also, "It takes a village to raise a child" is not exactly metaphorical.
Half of the country is teaching their kids to take religion literally and never question it, and that any news story that you don’t like isn’t real, simply because you disagree with it.
Handing over an iPad is the least of the issues facing a large portion of our youth and frankly they might be better off if their parents did sit them in front of it and walk away.
It takes a lot of work to be a parent and also monitor all that media consumption/stop all ads. The “average person” isn’t as tech savvy as most of us here and that stuff just doesn’t come as easily to them.
For instance I am very comfortable letting my kids play video games. I play a lot myself, I can make good judgments about what is appropriate for them, what is an appropriate amount of time to play, what is good/bad behavior when playing, what systems are a good choice or if online access (if any) is appropriate. I barely need to think about these things, but for some people this is an incredibly time-consuming, intimidating task.
Is it not ok that parents that spend more time and effort with their kids have better outcomes than parents that spend less time? I’d rather that than have the nanny state regulate everything bad for kids out of existence; we already know what kind of civil rights violations politicians try to justify with children.
It is very hard work raising kids if you are interested in parenting and want to do your best.
The thing is that not everyone's life goal is to be the best parent around. And there is pressure from the society/culture/government to reproduce for healthy economy.
If we as a country want people to have more children, then we need to make their job easier. That may include censorship, age verifications, etc.
Thing is, keeping children out of Instagram, Facebook, or whatever new social media is hyping currently will probably make them kind of weirdos in their bubble, e.g. in school. At least this would be my fear (don't have children). And good luck trying to use any of these ad-infested privacy-invading platforms while trying to avoid ads.
Learning how to stand on your own in school is good practice for doing the same thing in life. By which I’m absolutely not saying “don’t have friends” but rather, you don’t have to be like everyone else.
My kids won’t be on social media until they’re not kids anymore. If none of us take a stand, nothing ever changes.
Their exposure will still be much less than someone who gives them free reign and lets them sit in the livingroom staring at a phone. They won't be staring at the phone distracted while they're hanging out with the family.
No it’s not. Everyone hid things from their parents. I hid soooo much from my parents. It’s fine. It’s normal. It’s far more important to have limited exposure to modern smart phones.
What, exactly, is so problematic about not telling your parents that you smoke weed with your friends before playing video games? What, exactly, is so problematic about not telling your parents who are dangerously religious, that you had sex with your high school girlfriend? These are all normal, innocuous activities of teenagers. A therapist would not think twice about hearing them.
This argument is popular but doesn't hold water. If we suppose for the sake of argument that social media is bad for kids, then it is a parent's duty to keep them off it even if that makes the kid unpopular. As an analogy, consider a kid whose social circle is all shooting heroin. Would it then become acceptable to let your kid do heroin? Of course not. Similarly, even if all the other kids are on social media, it doesn't become acceptable to let your kid use social media (going with the assumed premise that it's bad for them).
It doesn't have to make them weird, especially if you're in a school district where there are no-phone policies. Otherwise it can be difficult, for sure.
Or you end up with the opposite end of the problem. I grew up in destitute poverty and was told all my childhood that credit was an evil trap - I should absolutely never use it.
Well, spring forward to me starting a pretty good career as a software developer and wanting to get my first reliable car. I had no credit history and ended up with a 19% APR. That really, really sucked.
It's been 10 years since then and I still get dinged for not having "enough" credit history despite having a couple car loans and several credit cards that I rotate bills on. The whole system feels like it's designed to punish anyone who doesn't fit into the role of a perfect consumer.
You didn't get fucked with 19% apr because you had no credit history. You got fucked with 19% APR because either the parameters of the loan were really bad or there were some other circumstances. Income less existing obligations vs payment size account for the lion's share of interest rate on an auto loan or just about any other consumer loan.
Credit history is massively over-sold as being impactful by the kind of idiots who live payment to payment.
I agree. My first use of credit was a car loan when I graduated. I had the offer letter to show income (I had not started yet) and some up front sign on / relocation money for the down payment.
No, I got 19% APR because I had no credit history. I know this because there is a big detailed letter full of reasons for your offered rate that you receive when you take out a loan.
The fact that you don’t know this suggests you probably don’t know a lot about how loans work.
> I still get dinged for not having "enough" credit history
Maybe the data is wrong? I took out a few loans over the years with strange comments from the lenders like "You don't have much credit history", but since it didn't impact anything I didn't think much of it. Somewhere down the line a lender was like "I don't think this is you". Turns out that it wasn't.
I’ve had entries show up on my credit report that were not mine, but my father’s in another city 750km away. I did not want his bill payment history mixed in with mine. At all.
It was actually more difficult to have them removed than you’d expect. I’m sure it is by design. You could start the process only after signing up for an online account, but the actual request needed to be made via fax.
As I understood it, it was a bit stranger than that. There was some minimal activity on the report that was actually me (a phone account, if I remember right), but my credit cards and whatnot didn't show up. But also some activity did that wasn't mine. I was somehow partially combined with another credit history, or something like that. I am not well versed in the technical details to truly understand what the problem was. I had to fill out some form to get it corrected and haven't thought about it since.
I’m not sure my kids have ever seen an ad except for little computer games, and they have laptops and iPads (but no network TV or cable). They are far less exposed to consumerism than when we were kids. My teenage daughter dresses like a hobo.
If they've seen Paw Patrol they've been exposed to ads. I don't mean "commercials" I mean that the entertainment itself is the ad - generating excitement for branded merchandise, but also normalizing the idea of kids accomplishing things and learning life lessons in 20-minute increments with the aid of a tremendous amount of stuff that they just have.
Maybe they haven't but the idea extends to most kids' entertainment.
I’ve never had anyone say anything other than “yes, that seems like a good idea, I wish I could do that” when i tell them I do not have a TikTok, instagram, twitter, facebook, etc account.
> but there is still responsibility for people choosing to listen to it
yes, sure, this is easy to say, but hundreds of billions of dollars and uncountable person-hours go into this manipulation machine, and many peoples' lives and livelihoods depend on maintaining it. it's a lot to ask of every individual to be solely responsible for the negative impacts of advertising when we all have lives we want to live.
i'm not saying personal responsibility doesn't play a part, but we shouldn't atomize - we should be organized and wield regulation more effectively against the profit motive.
There are MILLIONs of human years of effort, by experts at manipulating people, put into making people feel this way.
Saying bro, why can't your willpower overcome MILLIONS of years of experts trying to manipulate you is a pretty weak argument. It's basically the same as saying 'why can't you take on the top UFC fighters?' at this point. There is a battle to squeeze everything possible out of the sheep on one side, on the other side is us sheep that just want to chill, enjoy life a little. The sheep are f'd.
GP isn't saying "why can't you take on top UFC fighters?" They're saying "why would you try to take on top UFC fighters?" It's exactly that one-sided battle that makes it so avoiding the engagement is necessary. A lot of effort is no doubt spent developing psychological weapons to use against me. Fortunately there are very few channels for any of them to use to reach me.
Wages for the average person (working class) typically remain stagnant while cost of living increases, particularly through inflation. I imagine minimum wage would be 25-30 bucks an hour if it did track inflation and that would only serve to keep your purchasing power constant.
Credit, in this sense, is also used to solve a cash flow problem. It’s a bad sign when that credit (or Klarna Pay-in-3 style setups) is applied to basic day to day expenses like buying groceries or other necessities.
Basically the market’s answer to increasing poverty: you’re not getting paid more, so how about we give you a payment plan to spread things out?
That's not true. Wages have generally outpaced inflation as long as we've measured inflation properly. Up until the early 1970s this was very palpable, since the early 1970s the delta has been much lower, wage increases have been very slightly above inflation.
Why does it feel different? 1: the amount of stuff we buy has increased a lot. Anybody who owns what would be considered solidly middle class in the early 1970s will feel quite poor today. 2: financial security is way down.
In the early seventies a middle class family of 6 would own a 1200 square foot house, a single car, a single TV and a single radio would be the sum total of the entertainment electronics they owned, they'd have less than a dozen outfits apiece, they'd eat out about once a month, a vacation to a neighboring state would feel like a splurge, et cetera.
But they were relatively content. 1: they were much better off than their parents and grandparents, who experienced the depression & WW2. 2: they were "keeping up with the Joneses". 3: they had a feeling of financial security due to job security and the fact that serious health events were unlikely to financially devastating.
Average American household budgets are dominated by housing, transportation and taxes.
Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
That's a two-edged sword. Food, clothing, cars and all sorts of factory produced stuff are significantly cheaper today than they were 50 years ago. So they don't dominate budgets the way they used to 50 years ago.
Yes, so why are we ignoring that housing is multiple times more expensive? Even with 5 times the luxury expenses, you're not going to end up cheaper than boomers who paid $1000 on a mortgage in a high COL area. Telling people to penny pinch on buying Netflix subscriptions while rent is 70% of their budget is just political theater at this point.
Rent per square foot per person as a fraction of income has been relatively constant. Rent has gone from 13% of income in 1970 to 30% of income today, but average house size has doubled and average family size has halved.
Renting is not owning (no benefits accrue from asset appreciation). The same calc for ownership is very different. Also would love to know % of population in 1970 that rented versus today. My guess is it's much higher today.
But renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it.
I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance.
So how am I losing out on anything unless you think that a house value (minus loan rate) would appreciate more than I can earn with that money instead invested in the stock market or some other real-estate investment deal like multi-family units.
I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates (benefitting the landlord), rental prices also go up, further compounding the "loss" of not owning. This is before we talk about the possibility of using the gains in your property's value as collateral, something obviously not available to renters (or the advantage of locking in a <3.5% 20+ year loan; or the tax advantages on capital gains from property versus stocks). Also, might be different in the US, but in the UK the tenant normally pays the annual taxes.
>Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases.
That just seems crazy to me as rental price here is like 1/3 of what a mortgage would be on a decent house I can find.
Also property taxes seem to go up just as fast or faster than rental increases.
I mean my rent increases like 2-3% a year over the last 15 years that I have been renting.
If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
>If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
Setups like that just sadly don't exist in my part of the world. But, in your case, totally agree. Keep renting and just smash your savings in to other investments. I'd be doing the same.
Taxes? That can't possibly be right. Average American household pays a small fraction of their income in taxes. Unless they somehow got a huge, expensive house and have the mortgage paid off, I don't see how their income could possibly be dominated by taxes over, say, healthcare, or food.
Well if they're buying gasoline in California, or cigarettes in Australia taxes can be a huge part of the pricetag even if they're not thinking of it as taxes. You can see various taxes and fees if you look at the receipt of an airline ticket or a bill from a Telecoms company. I admit the fee they add to fund 911 calls isn't typically large but every little bit adds up
> Average American household budgets are dominated by [...] transportation
Huh? Doesn't the average American live in a city? The whole reason for accepting being squeezed in tightly with other people is so that you don't have to worry about transportation; enabling everything you could ever want and need to be found in short walking distance.
Transportation is for people in rural areas. Yes, it is expensive, but that's exactly why most people left rural areas for the city long ago.
You've been mislead by an overloaded term. Urban in an academic context is a much lower bar than urban in a "any reasonably layman's meaning of the word" context.
Pretty much any time you hear "city" or "urban" it's either a direct or indirect reference to US census data (or follow on research by other academics that uses their definitions) which play fast and loose with the word urban in a way that results in the population of even the most far out municipalities within a city's economic area being countable as urban in some capacity depending on what data set you want to use (some of the data sets draw economic distinctions rather than lifestyle ones, so a rural farmer who exists in the eoncomic gravity well of a major urban area will be counted as urban).
This is all magnified by substantially less than honest people omitting the potentially misleading nature of the term when it suits them and the people who they've informed going on to parrot it without actually understanding it.
INB4 nitpickers, it's been a decade since I've done any work with this data, if my knowledge is out of date and it's no longer misleading to the layman then good.
> Urban in an academic context is a much lower bar than urban
I said city, not urban, trying to portray a high density, well populated area. I fully recognize that the US considers a community as small as 2,000 people to be urban. And, similarly, you need as few as 1,000 people in an area in my country to fall into what is considered urban. This is all well known and understood.
That said, the 3,000 people strong town I live in has everything you need in walking distance, so the point still stands even for small urban too. But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
> But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
Generally, American suburbs (where most Americans live) are neither dense nor particularly walkable. Driving is the only option (since they also generally lack public transit).
> That said, the 3,000 people strong town I live in has everything you need in walking distance, so the point still stands even for small urban too. But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
If you live in a pre-car American town (like the kind that Strong Towns champions), it is likely far more dense than the typical American suburb, and built for walking access - since that was the default at the time they came into existence.
Technically it was established before the automobile, but its tenth of a mile downtown commercial strip is the only remaining remnant of that. For all intents and purposes, it was built to "modern" standards, which is to say that its density is on par with the average American suburb. – To be fair, the streets and sidewalks are sensibly laid out. Some of those winding maze suburbs would take days of walking just to get out of the maze. That certainly helps.
By definition, urban requires at least 1,000 people per square mile at minimum. Any less than that and a place is well and truly rural by every account. Even at that minimum density, unless the town is literally a straight line, most everything should still be reasonably walkable.
The difference is really only that people in towns of 3,000 people want all the jobs, services, and amenities as possible. Whereas suburban folk fight tooth and nail to keep it all out. But the question is: Why? Why wouldn't you want those things nearby, most especially when you are complaining you can't afford transportation to those amenities where there are found elsewhere? What's the appeal of being shoved up tight against your annoying neighbour and to have nothing else?
> The difference is really only that people in towns of 3,000 people want all the jobs, services, and amenities as possible. Whereas suburban folk fight tooth and nail to keep it all out. But the question is: Why? Why wouldn't you want those things nearby, most especially when you are complaining you can't afford transportation to those amenities where there are found elsewhere?
Because the amenities usually require low income service employees, who then might want to live in that suburb, or just stay past their quitting time, which might then compromise some of the reasons you liked the suburb in the first place.
> when you are complaining you can't afford transportation to those amenities where there are found elsewhere
I don't think suburbanites complain about the cost of transportation. They complain about the time spent in traffic.
> which might then compromise some of the reasons you liked the suburb in the first place.
What might be those reasons?
This 3,000 person town has some very well paid people and low paid workers living side-by-side seemingly in harmony. Seriously, I really cannot imagine any quality that would be different in a suburb. I did even live in a suburb of a large city a number of years ago for a while when I was young and dumb and I can really find no noticeable difference in the way of life other than everything I do outside of the home is a lot easier to access now.
Granted, in this part of the world the small town/rural areas are predominantly – almost exclusively, even — white. Is that what you're trying to subtly hint at? That the people in those suburbs are afraid of reverting their "white flight" efforts? Apparently that's a thing, astonishingly.
> I don't think suburbanites complain about the cost of transportation.
That's exactly how we got here, though: Comments were complaining about how transportation is of high cost/unaffordable. When we dug into why transportation was even needed, the answer was that many people live in suburbs that are void of any nearby jobs, other amenities, or anything at all, requiring access to transportation to live out life.
The people who don't need transportation because they have those things nearby have no need to be worried about the cost of transportation. So who is worried about the cost of the transportation? Are you suggesting nobody — that the original comments were making shit up?
> I can really find no noticeable difference in the way of life other than everything I do outside of the home is a lot easier to access now
Yes, small walkable towns are nice. I personally prefer them to unwalkable suburbs by a long shot. But plenty of people reasonably find the balance of their preferences is better met by suburbs. And as suburbs densify into towns themselves, people might reasonably want to upgrade the transportation options available.
> Is that what you're trying to subtly hint at? That the people in those suburbs are afraid of reverting their "white flight" efforts? Apparently that's a thing, astonishingly
Not sure if you meant that sarcastically, but what's astonishing? Historically zoning has been used this way: to exclude non-white people, but it works against poor white people also.
> So who is worried about the cost of the transportation? Are you suggesting nobody — that the original comments were making shit up?
Yeah. For the average middle class suburbanite who can afford a car, transportation is pretty affordable (caveat high oil prices). It's only expensive if you are poor.
> But plenty of people reasonably find the balance of their preferences is better met by suburbs.
Obviously. They wouldn't be there otherwise. But the question was: Why? (Or maybe better asked, given your phrasing, as what or how?) The discussion seeks to understand what that balance is.
> while still having relatively easy access to opportunities.
Trouble is that this discussion stems from comments about how those in the suburbs can't afford the cost of transportation. Is there really opportunity if you can't afford it? Other thread branches seem to agree that those comments were made up bullshit, so that adds complexity, but we aren't really serving the intent of the discussion if we deviate from the idea (even if fake).
> It sounds like you (like me) have found our personal balance elsewhere.
Now, if only I could convince the rest of my family! I have no qualms in admitting that I am where I am because I have chosen to prioritize certain people in my life. I don't much care for the civil side of things.
I have asked a lot of people the same question and not a single other one has said that they didn't actually want to be there on the basis of what the community type offers. I find it quite interesting that I stand alone. Makes one wonder if I actually stand alone, or if others are just putting on a pretty face? Post-purchase rationalization is a hell of a drug.
> Is there really opportunity if you can't afford it?
If your argument is that a suburban lifestyle of convenient access to opportunity is not universally affordable given the current configuration of American society, then I'd be in complete agreement.
Question is what to do about that, if anything.
My preference is to densify the suburbs, allow mixed use development, and add better transit links.
> My preference is to densify the suburbs, allow mixed use development
But then you're right back to it being regular city — exactly what the people in the suburbs (supposedly) want to avoid when they choose to live in the suburbs.
This is the conundrum that prompted the discussion. The cost of transportation is said to be too high, but at the same time it is said that it is important to preserve the qualities of the suburbs that necessitates those high transportation costs.
> and low paid workers living side-by-side seemingly in harmony.
Have you asked the low paid workers about that?
Because I strongly suspect that, to their own detriment, they put in a lot of effort and avoid doing things that would help them get ahead in order to prevent the rich people from having reason to sick the government on them.
Can't smoke weed on your porch or run a mechanic business out of your apartment driveway when you've got a bunch of HNers leering at you from the balconies of their 5-over-1 luxury apartment complex across the street like you're an animal in a zoo.
Most American urban areas are dominated by suburbs where it’s not practical to walk everywhere and public transit is very limited. So a car is necessary and often a car per working adult.
Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers? That completely defies the whole reason for the density. I'm not saying it doesn't exist, I question why people are doing it.
> Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers?
They don't want complete separation from other people. They want conveniences of the city/metropolis (access to jobs, entertainment, and education) while having a lot of space around their home for recreation & privacy.
They don't want farm work (required for that income) either - it's physically and emotionally hard and margins are thin and fragile depending on the weather.
> They want conveniences of the city/metropolis (access to jobs, entertainment, and education)
But not without having to travel. And once travel is in the picture, you can be to the same places just as fast from a farm as you can from another point in the city. It might be hard to appreciate if you have never lived on a farm, but once you do you'll realize that the highway is unbelievably efficient.
Your point only holds for when that stuff is available within walking distance of one's home. But now we're back to not needing costly transportation, so...
> They don't want farm work (required for that income) either
Where do you get the idea that farm work is a necessary condition to realize an income from farm land? Most farmers (in the legal sense) don't farm their own land, they have other farmers work it through sharecropping/rental agreements.
> But not without having to travel. And once travel is in the picture, you can be to the same places just as fast from a farm as you can from another point in the city.
Your phrase "having to travel" is painting with a very broad brush.
There are naturally huge variations in transit time depending on where you live in a metropolis, where you are going, and how you are getting there.
I can walk 15 minutes to a coffee shop and grocery store, drive 20 minutes to a Walmart, and take a train 35 minutes to the office.
All are very convenient and the latter two require transportation.
> Where do you get the idea that farm work is a necessary condition to realize an income from farm land? Most farmers (in the legal sense) don't farm their own land, they have other farmers work it through sharecropping/rental agreements.
Even if you aren't doing the hard labor, you have to want to manage that kind of business. Most people evidently prefer not to, and instead like urban jobs. The last 150 years of urbanization isn't a fluke.
> I can walk 15 minutes to a coffee shop and grocery store
Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by?
> drive 20 minutes to a Walmart
I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rural area with a train and I misunderstood?
> and take a train 35 minutes to the office.
Okay. You got me there. I don't have a train in my backyard. It would take me 20 minutes to get to the station.
But, to be fair, when I lived in a big city downtown it also took me 20 minutes to get to the station, so perhaps your situation of having a train sitting right outside your door waiting on you is a bit unusual?
That said, perhaps you have included, say, 20 minutes to get to the station, and a few minutes waiting on the train. But in that case is the 5-10 minutes of actual train time really that advantageous? In this scenario you're almost at your destination before you even get on the train. Presumably this isn't what you meant.
> you have to want to manage that kind of business.
You'd have to report your income to the government. What else is there?
The onus will be on the farmer working the land to do everything else. I know that well, because I'm one of those farmers. The industry is much too competitive to think you can make the landowner do anything.
> Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by?
I can walk to 3 different ones in 5 minutes - I live in an actual city - but I was trying not to make it about showing off my housing privilege. Note I said "a coffeeshop", not "the nearest coffeeshop".
> I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rural area with a train and I misunderstood?
Big dense city, "urban residential", not a suburb. 10 feet between my house and my neighbor's. So Walmart is not "nearby" because those tend to be in lower-middle income suburbs. However, 2 Targets & a Costco are a 10-15 minute drive away.
> But, to be fair, when I lived in a big city downtown it also took me 20 minutes to get to the station, so perhaps your situation of having a train sitting right outside your door waiting on you is a bit unusual?
> That said, perhaps you have included, say, 20 minutes to get to the station, and a few minutes waiting on the train.
5 minutes walk to the station. 20 minutes on the train. 10 minute walk to the office. If I time it right, no waiting for the train.
> > you have to want to manage that kind of business.
> You'd have to report your income to the government. What else is there?
I get that you don't do any actual physical labor, but don't you have to negotiate deals with labor suppliers (or laborers), seed/fertilizer suppliers, check on the quality of work and the condition of the land, facilities, and equipment?
If you hire people to do that all for you, then what's the ROI? It's hard to imagine that small-hold farming is as easy (and has similar returns) as buying an indexed fund, otherwise everyone would be dumping their capital into it.
But hey, maybe after reading this comment thread, everyone will!
> I get that you don't do any actual physical labor
Well, I personally do the physical labor (if you call riding around in an air conditioned tractor physical labor). You are right that the landowner doesn't.
> but don't you have to negotiate deals with labor suppliers (or laborers), seed/fertilizer suppliers, check on the quality of work and the condition of the land, facilities, and equipment?
That's on me, not the landowner. Why would the landowner do any of those things? Again, their only job is to count the money.
> then what's the ROI?
For me, mostly the fun. I enjoy it. I do also make pretty tidy financial profit doing it, which is admittedly a great bonus, but I expect I would still do it even if that weren't the case. Not everything in life has to be about money. Sometimes it's okay to bask in the pleasure of a hobby.
> It's hard to imagine that small-hold farming is as easy (and has similar returns) as buying an indexed fund
An index fund will, on average, provide greater returns than renting out your land, albeit with greater risk as greater returns expect. You wouldn't move to the country as some kind of get rich quick scheme.
But, if you've somehow already forgotten what we're talking about, when you are already living in the country for whatever reasons life has found you there, the land provides an income that offsets the cost of the necessary transportation.
FWIW, I grew up in Brooklyn, NY. I know about both urban and suburban living. I now live in Columbia, MD: a suburb from the late '60s planned with high ideals.
My three children each have their own room. They can ride their bicycles on our sleepy street without having to constantly worry about reckless drivers. They can explore the walking trails and wooded areas our community maintains. They can play baseball in one of the nearby fields without having to worry about breaking a car window in doing so.
My wife has a large crafting area. I have an office. We have a home theater. We have a workshop in our garage. We have a large sunroom which opens to a large deck suitable for entertaining many friends at once.
Getting even a fraction of what I described above in a city would cost a fortune.
The benefits of living in the country are obvious. And since the land provides income itself, the extra cost of transportation one has to assume to live in the country is well offset anyway.
Its the weird middle ground that has all of the downsides of the country and all of the downsides of the city all packed into one that we're talking about.
> Agriculture is hard work and not at all profitable unless the operation is at scale.
You seem a bit confused. While that is more or less true for the farmer, it is that way because the landlord usually takes most of the profit. As is to be expected. They hold all the cards. You can't farm without land. But given that in this scenario you are the landlord, not the one doing the work...
The key to farm profitability is to own your own land free and clear. But, of course, unless you have a high paying job doing something else instead of farming that's really hard to pull off, so most farmers end up renting (either to a landlord directly, or renting money from a lender). That's when you need scale to make up for the vast majority of the profit going to someone else.
Sure, but outside of where that backyard is wanted to be hundreds of acres, then there is the density necessary to introduce amenities like jobs, healthcare, shopping, etc. alongside the backyard. At which point you no longer need transportation as you have everything you need right there.
But what happens in the places we're talking about is that the people accept a small backyard in order to keep everything close, but also work to ensure that amenities aren't welcome, only allowing other houses to be close. So you get all the downsides of the city, having to trip over your annoying neighbours, but also the downsides of living in the country, having to waste large amounts of time driving to do anything.
What do people see in these strange middle places?
> What do people see in these strange middle places?
Not sharing a wall or ceiling with other people is great actually
I am constantly told that dense housing "built right" is quiet and peaceful and you never hear your neighbors through the walls, but my experience in apartments in my 20s was not like that
I constantly had neighbours that would play loud music at all hours, or get into fights with their partners or otherwise just be extremely disruptive and stressful to share a building with
I'll take the trade of having to drive a couple more minutes to get to a store if it means I never have to hear my neighbours having loud sex through the walls again at 2am when I'm trying to sleep
How? I live in about the most typical suburb imaginable: ~2500 sq ft house on ~8500 sq ft lot. I never hear or am bothered by neighbors (other than early morning landscapers). I have 3 grocery stores that are around a 10 minute walk along with just about every other type business. Don’t understand what is undesirable about that to you.
Well the weird middle places are just a compromise between "having more space and more distance from neighbours" and "being far from amenities and city life"
They close the distance gap, but thanks to poor civil design often (yes, there are exceptions, always) they don't close the time gap. I don't suppose it is being able to see a mostly occluded, hazy silhouette of the downtown skyscrapers is the appeal there. Surely this is about minimizing travel time?
A family member once lived in the suburbs of a large city. I live 50 miles clear of that city. It was always fun to razz them about the fact that I could be to the amenities in the city faster than they could. Many cities (not all, there are exceptions, always) develop as economic hubs, needing to get things in and out of the city as fast as possible, often at the cost of intercity movement. This leaves it more advantageous, if not in the heart of the action, to live outside of the city with respect to the matter of time.
Perhaps people just end up in the suburbs out of happenstance (e.g. they were born there) and never give it any more thought? It would be fascinating to hear from those who gave all three types of places a fair shake and still settled on the suburbs in the end.
During peak hours maybe, or in very poorly designed or overcrowded cities, but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places? Travel time might not be that much longer but it will be longer
> It would be fascinating to hear from those who gave all three types of places a fair shake and still settled on the suburbs in the end
I am one of those people. I grew up in suburbs, my family moved to the countryside in my teens, and I spent my 20s in dense urban areas, settled in the suburbs now
When I lived in the country I did often joke with my friends that I could be anywhere in the city in 20 minutes faster than they could, because I could get far north or far south faster than going through the city
But the tradeoff was that 20 minutes was a hard minimum. I could not get anywhere faster than that really
> but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places?
Once you get to the arterial roads that take the traffic to the amenities that's true, but it is often slow going just to get that far.
Fair to say that is less true if you are on the edge of the suburbs, but, for the sake of this discussion, are you really living in the suburbs if you are right beside the action? I think that goes against the premise presented in the beginning.
> my family moved to the countryside in my teens
Not to diminish or dismiss your experience, but can a teenager really give something like that a fair shake? Like you indicate, you ended up there because your family brought you there, not because you chose to go there to make your own life. Typically, teenagers have limited autonomy and really can't experience it for what it is. You had an experience, but don't you think it would be an entirely different experience if you moved to the countryside now when you can fully shape the experience into being what you want it to be, not what your parents (or equivalent) wanted it to be?
> now when you can fully shape the experience into being what you want it to be
Sort of my whole point is that there is no situation in life that we can "fully" shape into what we want, every situation comes with upsides and downsides which are often not really in our control, because we have to share space with other people
I grew into an adult and commuted to my local college from the countryside. I didn't live out there for long, but a couple of years at least. Long enough to realize it wasn't really for me
> Sort of my whole point is that there is no situation in life that we can "fully" shape into what we want
I am not sure I intended for you to take it that literally, but to the extent that you can fully shape it within the constraints of reality. For example, it is abundantly clear that countrysides are not all equal. Even on the surface, countryside can vary from farmland, mountains, lakes, forests, etc. which each enable completely different lifestyles. Going deeper, the social experience can vary wildly from one countryside to the next. You get the idea. There are some countrysides I'd have no qualms about living in, and others I wouldn't even want to vacation in, let alone live there (even while others quite happily live there). That choice is something within your control.
> I grew into an adult and commuted to my local college from the countryside.
I assume this means that you carried on your stay still living with the same family? If so, I'm not sure that changes the calculus. It is not like something magical happens when you turn 20. The significance of being a teenager earlier was only in that it implied that you were following your parents around. If you continued that into your 20s, 30s, 40s, hell if you are 80 and living in a place of someone else's choosing rather your choosing then I'd say the same applies.
Let me ask this: If you, for some reason, were forced to move to the countryside today, are you choosing to move to the exact place your family chose all those years ago or are you going elsewhere? Assuming you give it some thought, my expectation is latter. The world is a pretty big place. The statistical likelihood that the place you ended up in as a teenager with presumably little to no input also being the best option you can independently find among all of the different countrysides is low.
> The whole reason for accepting being squeezed in tightly with other people
That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly. People really don't like having a shared wall. And it's not that people like these tightly squeezed lot lines, they'd prefer 1 acre lots. These tiny lots are all they can afford while still being somewhat acceptable to them about commutes. Which Americans seem to really just not care about commute times when comparing to tradeoffs on house size and not having shared walls.
And in the end, you can only buy what the cities and towns allow to have built. Which is chosen by those who live there at the time. The cities then make single family structures a requirement, have minimum setbacks and lot sizes, have rigid separations between residential and commercial spaces, etc. So even those people who would want to own an apartment over a commercial suite in what you'd consider an urban area can't make that choice because that choice is illegal.
But people act like these zoning laws just come about on their own. The thing is, these zoning laws are popular. They get put into place because that's what the people who actually vote in local elections push for. I've seen proposal after proposal in cities around me to change zoning to allow density even in limited areas get fought tooth and nail by residents. I remember a project nearby where there was a proposal to build a mixture of 2-3 unit townhouses, some single-family narrow lots, and a tiny spot of commercial for like a coffee shop on land that was currently zoned industrial. All of this connected to the bike network, a large city park and a nature preserve nearby, and good transit connection at the end of the neighborhood. The neighborhoods around fought it tooth and nail and eventually the builder walked away after trying to negotiate for a few years. Well, the land was already zoned industrial, construction broke ground months later to build warehouses. Now instead of a nice neighborhood on my bike path there's warehouses with semi-trucks rolling through all day long. Good job, NIMBYs!
> That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly.
Sure, it isn't coincidence that the "American Dream" has always been portrayed the sizeable house on a large acreage out in the country surrounded by white picket fences. But we're talking about the people who are choosing to cram in beside one another, but aren't bringing the services and joy that such density normally offers to go along with it.
> These tiny lots are all they can afford while still being somewhat acceptable to them about commutes.
I've lived in cities and on farms and the commute times end up being about the same if you ever have to leave your immediate community that is within walking distance. You have to drive further from the farm, sure, but the highway is surprisingly efficient. Is there some reason people are more concerned about distance than time?
The city offers a clear advantage when you are travelling short enough distances that you can walk. But, that brings us right back to wondering what you need costly transportation for? The two dangly things beneath you are right there! (Yes, I know, some people hazve disabilities, but the discussion isn't about them)
> But people act like these zoning laws just come about on their own.
Not at all. That's why we question why people are doing it. It is clearly their own choice. But why when we then hear them crying that the transportation costs are too high?
> the commute times end up being about the same if you ever have to leave your immediate community
People routinely leave their community for their job all the time here. Go take a look at that map I shared earlier. Most of the people in that neighborhood probably don't work in Princeton. They probably don't even work in McKinney or Fairview. Good chance they work in North Plano, Frisco, Addison, Dallas, maybe Garland. Most people living here are probably driving about an hour to their job, each way, every day. With a lot of those people with those kinds of commutes having that take place on a tollway.
They do that because they can buy that 4-bedroom 3-bath 3-car garage ~2,400sqft with a gameroom house on its own lot for $375k. Meanwhile, a similar house within a few miles of their work (say, Frisco) is probably anywhere from $590k to $2M. Property taxes can be pretty steep here, so that $590k house gets like $14k/yr in property taxes in Frisco while that $375k house in Princeton is only $9k/yr, over $400/mo in additional taxes. They could potentially accept a smaller and thus cheaper house, but to them it's not worth the tradeoff. They need that 3-car garage, they need that gameroom.
My wife has coworkers who live in Forney and commute to jobs in Plano and Frisco. They do that commute 3-5 times a week and see nothing wrong with it. They value having a large home with tons of space, and with the kind of income they make there's little chance they could afford it anywhere near where those jobs are. Think a security guard and a building engineer (like an on-site maintenance tech for a commercial property) are going to own a $1M+ house? No. But they still want a 3 bedroom home with a pool and a spa and an outdoor kitchen, and they can get that for $300k in Forney.
Just trying to share the follow on mindset. If you're having to leave your home by car every day for work, then you're absolutely going to have a car. If you already have the car, why go to the little grocery store at the edge of the neighborhood when you just spend a little more transit time and go to the big store that has everything else you'd want to buy?
> People routinely leave their community for their job all the time here.
Sure, where the compensation is sufficient to cover your travel costs you would reasonably consider it. But then transportation costs aren't an issue, making the unaffordability idea that started this moot. But, if we want to move beyond the topic of cost, that just brings us right back to the point that travel time ends up being the same living in the city and living in the country, so what have you gained by living in the city?
What one normally thinks you would gain is having other amenities, like bars, restaurants, healthcare, shopping, and just an all round vibrant community right there to enjoy when you get home from work. But the particular city homes we are talking about don't even have that. They are just houses upon houses upon houses all jammed up against each other with nothing in-between.
And it is that way because people want it to be that way. They don't want the restaurants, shopping, healthcare, etc. to be anywhere nearby. Even though they cry that they afford to the transportation to get to them, funnily enough. But why? What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?
> I'd need, at minimum, a four-bedroom, two-bathroom property in the city.
Check out a settler home sometime. They were tiny, one room houses that housed themselves and their eight+ children just fine. You don't need this in any way, shape, or form. I do understand why you find it desirable, though.
> It will need to be zoned for a good school for obvious reasons.
I don't live in crazy orange man land. What are the (unfortunately, not so) obvious reasons? It befuddles me that different school zones would be different in any way beyond their geographic positioning, which isn't usually a concern when it comes to schooling. I've never heard of such a thing before.
> Can you find a condominium in either city for this price or less?
What's wrong with where you already are? If you found the lack of jobs, restaurants, entertainment, healthcare, etc. in walking to be a problem, you'd have changed it already. Like we established, the only reason those things aren't found where you are is because you and your neighbours have decided you don't want it.
I just don't understand your logic as to why you don't want it, but also don't want to live in the country. What's the benefit of living where you have all the downsides of the city and all the downsides of the country all wrapped up in one?
Attitudes around education in the US vary wildly across the population. To a first approximation, "good schools" are really "good students" (i.e. "good peers"), which generally means that the families within the school's catchment area place higher value on education, which generally correlates with class.
There are feedback mechanisms at play here: the people who want a good education for their kids want to be around the types of people who want a good education for their kids, and they will pay a premium to be around the kinds of people who will pay a premium to do so, reinforcing the class effect. It can't hurt to have bright, engaged kids when trying to recruit and retain good teachers either. The net result is that in some areas the schools have literally 0% of students meeting standards while others have most of the students completing the first year or two of university during high school.
Somewhere like DC where GP lives, schools struggle to get the kids to show up[0]. Meanwhile I live a 10 minute walk from a school where over half the students are in AP classes and 80% of those pass the AP exams.
> Attitudes around education in the US vary wildly across the population.
Is that in some way unique to the US? I would say the same is true here. Certainly when talking to people out on the street, there are clearly some who value schooling to the utmost degree while others dismiss it entirely. I expect this is the case anywhere a sizeable population is found.
> the people who want a good education for their kids want to be around the types of people who want a good education for their kids
…But I have never heard of this happening. Looking at the data, I don't see any significant variation between schools found within a general area where you might conceivably choose a different school by moving a few miles in another direction. A couple of schools in extremely remote areas show up with struggles, in the worst case seeing only ~40% of the students meeting the standard, but I think it is fair to say that the goings on in remote places is something else entirely.
> It can't hurt to have bright, engaged kids when trying to recruit and retain good teachers either.
So would it be reasonable to think that it is ultimately an issue of lacking teacher standards in the US? Different people are going to be different, sure, but around here you aren't allowed to be a teacher within the school system unless you at least are able to live up to a minimum standard that carries a sufficiently high bar such that there really aren't any qualms about what teacher a student gets.
I take from this that in the US, the schools that don't have sufficiently bright, sufficiently engaged kids are apt to get teachers who aren't capable of doing the job. Here, if a school lacking sufficiently bright, sufficiently engaged kids scared off good teachers, the school simply wouldn't have any teachers.
I don't expect it's unique to the US, but I can't speak for other areas. At least any time I've looked, real estate prices for the same floorplan home a couple neighborhoods over in a different school area can differ by a couple hundred thousand dollars, and "good schools" are a common thing for people to say they prioritize, so the effect seems real enough here. I've seen this in multiple cities/states.
Like I said, to a first approximation, "good schools" are much more about the kids and families than the teachers. Teachers in the US are required to have bachelors degrees, and I believe AP teachers need masters, so there's some bar (though I don't find degrees/credentialism to be particularly compelling). Good schools are where the students set good examples for each other and drive each other to do better. Bad schools are where you're automatically in the top half of your class merely for showing up and no peers treat education seriously, so you learn not to either. There's plenty of passable schools too where you can get an adequate education, but middle class and above tend to have higher expectations for their kids, and want all of their kids' friends to have the attitude that working hard in school is completely normal and expected (i.e. they want a "good school").
Schools in bad areas do have retention problems, and the government offers incentives to teach there, but teachers aren't miracle workers.
> "good schools" are much more about the kids and families than the teachers.
Is this a euphemism for "it is really about being around people who are white"? Another commenter here used similar language to this and, once we drilled down into the nitty gritty, it turns out that is what was being said. "White flight" is certainly a thing.
Admittedly, where I am only 2% of the population are visible minorities. You can live anywhere your heart desires, in any school district, and you are, for all sake of practicality, only going to find white people. Perhaps this is why the concept you present seem so foreign to me?
I think I was pretty explicit about what that means: the discrimination is more around class. My local school is one of the best in the state for example, and is ~60% "white" vs. ~80% for the local population. In fact the stats I see indicate that every racial minority group has higher representation within the student body than within the wider city. The more relevant factor is that a bunch of doctors, lawyers, engineers, etc. live in the area. There are no homes in the area for under $1M, and many are $5M+. There is no multi-family housing. 1% of the students qualify for the income-based free lunch program.
The spending per student is below average and lower than nearby worse schools, so it's not that the rich people have a higher tax base to create better schools. It's that the professional class takes for granted that of course their kids are going to take every AP class. They want their kids' friends to have that attitude too, and they expect the school to offer AP everything. If it doesn't, they won't live there.
"Buy the cheapest house in the most expensive neighborhood" is an adage here for aspirationally upwardly mobile people. So basically use your money to mix with higher classes rather than on material goods (and put your kids in school with the highest class group you are able to).
> There are no homes in the area for under $1M, and many are $5M+.
We were talking about someone who found a $575,000 home to be stretching him to his limits. Have we gotten a bit off track here?
> The more relevant factor is that a bunch of doctors, lawyers, engineers, etc.
I'm one to talk as an engineer living in a $300,000 (maybe, on a good day) home, but I technically could afford a multimillion dollar home if I found some strange reason to show off to others. Generally speaking, a $575,000 home is really a "working man's" home.
What you describe is interesting, but is it the same obvious reasons as what was brought up before? Said person isn't of the class you describe.
They didn't say the $575k was stretching, or that it was the current value of the home. Just that it was the price when they bought it, and presumably they couldn't find something nearly as nice in a dense city without paying significantly more.
In any case, you asked why people are concerned about being "zoned for good schools" and why that would be obvious to Americans, and I think I explained it to you: making sure their kids are surrounded by the "right" peers who will pressure them into the "right" behaviors is a high priority for a lot of people, particularly in the professional-managerial class. They generally won't word it that way because overt classism is uncouth, but that's what they mean when you think about it. Obviously that's not a concern you have (it's also not "showing off" to live in an expensive area; everyone around you will necessarily also live in an expensive area...).
Not explicitly, but they indicated that for them to move into the downtown they would require the price to be the same or less. That necessarily implies that $575k is the stretch point. If they had a $1-5M budget, we could have looked at downtown homes in that price range too.
> Just that it was the price when they bought it
That is what it said, but as the mortgage sits at 30 years it is likely that it was purchased recently. Yes, perhaps it is technically possible that he has owned it for 30 years already and just remortgaged it for another 30, or that it was a 40 year mortgage initially, but these are unlikely scenarios. If the commenter is concerned about any detail inaccuracy, he can provide an update.
> it's also not "showing off" to live in an expensive area
I mean, fair enough. Growing up in a rural area that was home to many big-co CEOs and professional athletes who were clearly showing off their extensive fortunes, it's apparent that the real flex is getting as far away from the city as possible. But at the same time I don't expect these houses of which you speak are exactly crack shacks either. Would you not say that they were very nice homes? Nicer than what the janitor at the school lives in? Location, location, location. I get it. However, $5M buys a lot more than just location in a suburb.
But it remains that it would be showing off for me. What useful functionality would a $1-5M home offer that I don't already have in my current home?
Jobs, hopefully paying a good bit more than minimum wage. If not for the city they wouldn't have any kind of income. They don't move to the city because they want some Parisian lifestyle, they move to the city because there are practically no jobs in the actually rural areas.
> They don't want the restaurants, shopping, healthcare, etc. to be anywhere nearby
Correct. They see these things as unsafe for their families to be around. They don't want to live within walking distance of a nightclub.
> Even though they cry that they afford to the transportation to get to them, funnily enough.
Most of the people arguing for better walkability and better transit access are absolutely not the same people actively choosing to live in places like Forney and Princeton and what not. They're generally fine having that commute and are fine driving to the Walmart when they need something that isn't just delivered to their home. Why even bother getting in the car to go to a restaurant, Uber Eats will bring the restaurant to them, and they don't have to deal with the crowds. Which, the few places with actual stores in these areas are massively crowded, because it's just oceans of houses around a few dots of shopping areas with giant parking areas surrounding them.
> What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?
That they were willing to settle for the hour commute and not a two-hour commute, and that was the biggest single-family home they could afford in that hour commute radius and had a decent school district.
You're looking at it in pretty much the opposite direction from how they're looking at it. You're looking at a community you want to live in and then decide the home you can afford. They're looking for the house they want to live in, and then find the community they can afford to buy in. People didn't choose to live in Princeton or Forney or Melissa or Anna (or dozens of other "cities" around DFW) because of city amenities, outside of maybe a school district. They live there because they could buy a big single house cheap.
When I talk to friends about "if you could just move tomorrow, where would you want to live in DFW", their choices are rarely based in closeness to amenities. It is often about wanting more land, more space, more rooms. A family of four with a four-bedroom house with a dining room and two living rooms, too cramped. Need to move further out and get a bigger house. Definitely down to trade close access to the bike trails, walking distance to a large shopping area, walkable to the transit system to go all over the city, public parks with public swimming pools within walking distance, the elementary school around the corner and the middle school down the street for another few hundred square feet of land.
You haven't gained that, though. Not without travel, and once travel is in the picture then you can be located anywhere. Like was said in other comments, in practice, the time to get to a point in the city is the same if you start in the city, or if you start outside of the city. Cities build up as hubs for the surrounding area and the world at large, so getting things in and out of the city really fast is core to their design.
> no jobs in the actually rural areas.
1. The data clearly shows that rural areas, as a rule, have more available jobs. But you aren't apt to be able to work your way up to becoming a professional football player or CEO of a Fortune 500 in those jobs, so, granted, the jobs aren't appealing to the temporarily embarrassed superstar. I'll give you that.
2. I don't know where you think this walled city is that prevents anyone who doesn't live in the city from entering, but I can assure you that we're not talking about it. There is nothing that excludes you from city jobs if you live in the country, and likewise there is nothing that excludes you from working in the country if you live in the city.
In fact, those Fortune 500 CEOs and professional football players often live in the country!
> Like was said in other comments, in practice, the time to get to a point in the city is the same if you start in the city, or if you start outside of the city
This is objectively, radically untrue. It takes my wife 10-15 minutes to get to that same office where it takes the people living in Forney an hour to get in. She'll spend 20 minutes of her day commuting, they'll spend two hours. I used to ride my bicycle to the office before I mostly worked from home and have it take me maybe 15 minutes. Coworkers living in a town literally called Farmersville routinely took over an hour and a half each way. One person has to take a 30-mile trip, one person is taking a five-mile trip which is essentially the same final five miles as the 30-mile trip, how could it possibly be the same time.
> once travel is in the picture then you can be located anywhere
They'd agree with this entirely. I already have to have a car to get to work, so why wouldn't I just use that to go to whatever restaurant or shop I want across the city, why limit myself to only where I could walk? Personally, I enjoy going to the restaurants right at the edge of my neighborhood, on the days I go into the office I like strolling through the parks and to the restaurants nearby. But lots of people wouldn't want to "limit" themselves to only a mile or two, when the shop they'd prefer to shop at is a similar time distance away but by car.
> There is nothing that excludes you from city jobs if you live in the country
Time. Time excludes you from those city jobs. You're eventually having to spend more and more time driving through all those seas of neighborhoods to those decent paying jobs, its eventually just not worth it. People aren't going to be willing to drive two hours each way, it's amazing they're even willing to put up with an hour each way.
Once again, go back to that map of DFW. To really get an "affordable" truly rural place on that East side of DFW where you'd actually have dozens of acres without spending millions, you're probably looking at Josephine, Blue Rdige, maybe Westminister as a few examples. Go see what the commute time is starting at like 7:00 AM from there to Addison. Nearly two hours. Maybe you're going to work at a more industrial job in Garland. Nearly two hours. Are you willing to spend four hours of your day every day in your car?
> The data clearly shows that rural areas as a rule have more available jobs.
More available total jobs or more available comparable jobs? Please do share this data. Other than specific industries like oil and gas it's pretty much the opposite from what I can tell.
> More available total jobs or more available comparable jobs?
More actual opportunity, perhaps? Cities have lots of available jobs (assuming they aren't fake; that is a thing, apparently), and lots of people without jobs, but they never seem to align such that the people without jobs ever fill the open jobs. It's quite curious. As a result, people are much more likely to be without work in cities, as seen in the data. Yes, I'm sure you can find exceptions if you pick particular locations. We were never talking about a specific location.
> Please do share this data.
I'm sure you can look it up just as easily as I.
I was about to suggest that you can hire an assistant if you can't find the time to do it yourself, but whatever causes the above disconnect is apt to bite you too, assuming you are in a city. Oh well.
> You're eventually having to spend more and more time driving through all those seas of neighborhoods to those decent paying jobs
What kind of jobs are trapped in these seas of neighbourhoods? Most businesses need to get supplies into the city and their product out of the city, so usually the jobs are located on the fast track in and out of the city. This means that, if anything, it is easier to access the jobs when you don't live in the city.
Tech might be an exception to that. Maybe that's where your mind went, given the nature of this site. But tech doesn't require an in-person presence at all, so that one doesn't really fit our discussion.
Not any datasets that actually agree with your assertions. Most datasets showcase the hollowing out of rural job opportunities as globalization and automation has massively cut back on manufacturing job opportunities, automation has reduced farm jobs, rural depopulation leads to education closures, etc. So if you have a lot of data otherwise please do share.
And once again it completely goes against everything I've personally seen in nearly a dozen metro areas. I've got family who live in absolutely rural areas and operate farms in the Midwest. I've lived in a few metro areas. I've got close coworkers in other metro areas from me. I've got close friends who came from other rural areas, and know many people who live on these fringe of metro/rural kind of spaces. They all see the rural areas getting hollowed out economic-wise and the only real job opportunities are moving closer into cities.
I've driven through probably a dozen dead rural towns in Texas. Places that had what were probably lively town squares even in the 70s, probably had their last gasps in the 80s, and have been largely boarded up since then.
> We were never talking about a specific location.
I've absolutely been talking specific areas. Have you not been reading my comments and actually looking at the map in question? And then, this is still pretty similar for almost all the other, I dunno, top 30 or so cities by population?
> What kind of jobs are trapped in these seas of neighbourhoods?
Not in those neighborhoods, through those neighborhoods. Decades of continuously pushing the fringe suburb line further and further out has done this. The towns that were once the edge of the city are now 30+mi into the urban area, and they've never been allowed to densify. Once again, it feels like you haven't actually looked at that map I linked once. It would be pretty obvious spending not even five minutes looking at that map to see what I'm talking about.
> Tech might be an exception to that. Maybe that's where your mind went, given the nature of this site.
No. My wife doesn't work in tech and those people in Forney I'm taking about are security guards and building engineers. That's not tech. Once again, are you reading my comments? Where are you going to get a commercial property building engineer paying nearly $100k in a rural area? Going to get a finance job with JPMorgan Chase in a rural area? Far easier finding a civil engineering job in a place where civil engineers are actually building things like skyscrapers and giant highway interchanges and what not than a place that barely has a stoplight. You're not going to have as well paid healthcare job working at a rural hospital struggling to stay open especially after this next round of Medicaid cuts compared to the giant hospital networks like Baylor, UTSouthwestern, Memorial-Hermann, etc, especially if focused on some speciality.
> Most datasets showcase the hollowing out of rural job opportunities
Hollowed out opportunity, or hollowed out available jobs? As noted earlier, there is a pretty big difference. My impression from your comment is that you are trying to say that there are fewer jobs available, which isn't what we were talking about.
> I've absolutely been talking specific areas
What part of "as a rule" made you think this was about a specific area?
> Have you not been reading my comments
Can I assume this implies that you have diligently read mine? If so, in all seriousness, I'd really like to know what part of "as a rule" you took to mean that the focus was on a specific area. My intent was very much to try and avoid focusing on a specific area as I understand full well that conditions can vary from place to place. I'd like to understand how I failed to communicate that.
But perhaps you were so busy trying to tell me your life story that you didn't actually read it after all.
> What part of "as a rule" made you think this was about a specific area?
As a rule that just happenes to not work in any of the large metros of the country in question. I've got a rule that a pen always rolls off on the left side of a desk, too bad it only works on my desk here that is missing a couple of legs!
> Hollowed out opportunity, or hollowed out available jobs? As noted earlier, there is a pretty big difference
Sure they'll go work minimum wage jobs at the highway fast food and gas stops. Buc-ees is iticing for jobs to sling BBQ sandwiches and scrub toilets! Big opportunity there. Once again, where's your data? I've linked mine, you're a foreigner going arguing against my lived experiences without even pointing to actual data, instead berating me and taking down to me about asking for you to actually give examples.
> Can I assume this implies that you have diligently read mine?
Yes, I have read yours. Have you actually read mine? I'm taking about one of the largest metro areas in the US trying to describe why people make the choices I do, showing real examples backed by federal reserve data and actual maps and housing costs and tax data. You're seemingly ignoring them and instead giving your own imagined ideas of transit times and job opportunities and property values not backed by any kind of data.
You're giving assumed ideas while ignoring actual factual linked data and multiple lived experiences in this chat while accusing me of not reading the data you refuse to share. You might want to re-evaluate who is going by gut assumptions.
> As a rule that just happenes to not work in any of the large metros of the country in question.
Large... metro? What? Where did you see me say "large metros as a rule..."? Perhaps you need to read it again? It clearly asserted "rural areas as a rule". You even literally quoted that exact bit in your response! How do you have absolutely no awareness of what is going on now?
> I've linked mine
You certainly did for some strange reason, but I have no idea why. It was rather bizarre. If I wanted to have a discussion with the FED, I'd go talk to it directly. I don't need you to act as a pointless middleman. That is a waste of your time and mine. I suppose I should have some appreciation for your obedient dog-like behavior as you deliver your chew toy to me with glee, but I really cannot find any reason to care. That's not what discussion forums are for. They are, surprisingly, for having discussions. I want to know what you have to say. If you have to rely on someone else to feed you what to say, why bother?
When your rule fails to accurately describe reality over and over, it's pretty worthless as a rule.
> Perhaps you need to read it again? It clearly asserted "rural areas as a rule"
Yeah, it's comparing rural areas to urban areas as a rule. So comparing and talking about metro areas is absolutely relevant here. And the metro areas I've been talking about include a mix of rural and urban areas. Metro doesn't mean urban.
> You certainly did for some strange reason, but I have no idea why.
You have no idea why someone would link to data to back their assertions instead of just saying things like "as a rule" without supppying any data. As a rule US males are 12 feet tall. As a rule dogs have eight legs. Don't bother linking to any data about these things, don't bother actually engaging with real examples, I'm not talking about any specific dogs or specific people, just some imagined models in my head. It's a total waste of time to actually research the data when I've conjectured a general rule in my head!
While that is absolutely true, rural areas within metropolitan areas are not the rule. What do you find notable about exceptional rural areas to offer relevance when discussing typical rural areas?
> Yeah, it's comparing rural areas to urban areas as a rule.
At one point such comparison was made, but we also moved on from that long ago and narrowed our focus to rural areas alone. There was no reasonable sequitur that brought us back to comparison with urban areas. If you want to talk about some random thing outside of our discussion, why not start a new thread?
> Don't bother linking to any data about these things, don't bother actually engaging with real examples, I'm not talking about any specific dogs or specific people, just some imagined models in my head.
Exactly. If I want to know more about the height of US males (male what? you'd better link to something to clarify!!) and how many legs dogs have, I can consult the records. There is absolutely no reason for me to come to you for that information. I am logically, given that this is a discussion forum, not a data collection agency, here to understand that what isn't documented and only revealed through discussion — things like your inner workings.
Which, granted, is still being revealed through this diatribe. And the inner working are quite unusual, indeed. I know we're really starting to go off-topic here and I understand I am being "that guy" in perpetuating it, so I won't continue to push the issue like that curious case above any further if there isn't mutual participation, but I would love to dig into this deeper if you are game. Do you understand HN to be simply a place where you can find free secretarial labor rather than as a place for discussion?
> There is absolutely no reason for me to come to you for that information.
If we're trying to understand and discuss reality, we should absolutely be referencing real data and information and build our conjectures from there. Not just making some statement that reality is a certain way, refusing to engage in any data that points otherwise, and berating people who bring evidence contrary to the conjecture. Otherwise, we're just discussing fantasy and being rude to each other. Personally, I'm wanting to talk about reality, not some urban/rural areas 9rx is envisioning in his mind entirely divorced from any real places and data in the United States.
You say things like "as a rule", give arguments of a drive from a rural area into an urban area should take the same time as just transiting around within the urban area, and offer zero actual real examples, data sets, or proof to your conjectures and berate those who show real data pointing opposite to your statements.
> If we're trying to understand and discuss reality
Science is for understanding reality. Discussion is for understanding what someone is thinking.
> we should absolutely be referencing real data
If that's all that your limited thought is able to offer, I guess, but what, then, do you understand as the value you are bringing to the table? Data is already recorded and I can just as easily go talk to the people who had the minds capable of coming up with that data in the first place if I want to know more about the thinking behind the data. Your involvement would be absolutely pointless.
As you are actually defying your own premise here right now by sharing what you are thinking, not regurgitating someone else's thoughts and data, you remain a valuable contributor. But if you were to devolve into what you suggest you want to be, how could the discussion go anywhere?
> Otherwise, we're just discussing fantasy
If fantasy is what someone is thinking about in the moment, I suppose that is what you are going to get. But that's exactly what discussion seeks to learn. If that's not what you are actually looking for, consider that discussion isn't what you need. As hinted at earlier, there are other ways to explore the world around you. Use the right tool for the job.
But if your discussions aren't even based in reality, what are we even really talking about?
For example:
> As a result, people are much more likely to be without work in cities, as seen in the data.
This is a demonstrably untrue statement. In the US, labor participation rates are lower in rural areas. Unemployment is generally higher in rural areas. Poverty rates are generally higher in rural areas. I'd link the data, but it's not like you'd bother actually reading it from what I gather.
> Data is already recorded and I can just as easily go talk to the people who had the minds capable of coming up with that data in the first place if I want to know more about the thinking behind the data. Your involvement would be absolutely pointless.
Seeing as how you're making statements not grounded in reality and data, I'd say my involvement would have a point of actually directing you to the real statistics and data. I'd hope that one would change their preconceptions when given actual data showing their statements are incorrect. If I continued to push the point that generally dogs have eight legs and you managed to provide me with sources that showcased dogs actually usually only have four, I wouldn't just say your involvement of showing real data is pointless. But pointing out your fantasies aren't based in reality and aren't backed by actual data just results in you berating me.
I agree, we're also wanting to delve into the "whys" of how the world works, which isn't always just directly looking at what the numbers say. But when our base facts we start from aren't actually grounded in reality, the whys we come up with are largely meaningless. The "general rules" we concoct from our fantasies become pretty useless if we take those rules to actually then measure reality and find reality doesn't line up with those rules.
> As hinted at earlier, there are other ways to explore the world around you.
Yes, we can look at data or we can base our ideas of the world off delusions and assumptions. But I take it you'd rather continue to live in your delusions and berate those pointing out when those statements aren't grounded in truth.
My thoughts disagree, but that was said with respect to my country, not the US, so whether or not you are right, the US data is not indicative of that. While I do understand I wasn't fully clear in expressing my thoughts there, what is fascinating is that you jumped into assuming that I meant the US instead of asking "Are you sure you are talking about the US?" or something to that effect.
That is the kind of cool thing you learn in discussion. Who gives a rat's ass about data? I mean, there is good reason to care about data, but the data is right there to look at directly if you really are more interested in the data. Use the right tool for the job.
> I'd say my involvement would have a point of actually directing you to the real statistics and data.
So can I take from this that you aren't looking for discussion, but rather you want to be a teacher? While there is definitely a place for teachers in this world, a place of discussion isn't it. Colloquially, what we call the place you are looking for is "school".
You're wondering why Americans make the housing decisions they do but then use assumptions which aren't based on the realities Americans live in and berate those who actually try and show your assumptions aren't valid in describing why those Americans are making the choices they make in America.
You were wondering:
> Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers?
> I'm not saying it doesn't exist, I question why people are doing it.
I gave lots of data and analysis as to why Americans seem to make this choice. You berated me for giving an actual analysis, gave conjectures not grounded in reality for those people making these choices explaining why my analysis is wrong, and continued to wonder why people would make these choices. Your conjectures weren't valid for the people in question. They weren't based in their reality. But you seem to not want to actually engage in the reality of it.
> Colloquially, what we call the place you are looking for is "school".
People can learn new things and be corrected on their false preconceptions without necessarily being in a school building with a teacher.
> You're wondering why Americans make the housing decisions they do
I wondered what the thoughts about why people make the housing decisions they do were. My country is within America, as it happens, so I suppose if it were to be limited to America that would be all well and good, but it wouldn't have been a detail of any significance.
> You berated me for giving an actual analysis
I engaged in your analysis to see if I can understand if you were confusing opportunity with number of jobs. I don't think we ever gained that understanding, and eventually we just moved on as it was clear that the only thoughts present were about the concept of data itself, which was well outside of the topic at hand and not producing anything of interest to latch onto.
If your thinking sees that as a berating: Fascinating. Can we dive deeper into your thought process there?
I think to most people being called a dog is berating. Saying things like "that's all that your limited thought is able to offer" is berating.
> I engaged in your analysis to see if I can understand if you were confusing opportunity with number of jobs
It sure seems more like you engaged with the analysis to say I'm wrong about objectively factual things and called me a dog when I provided sources.
> I wondered what the thoughts about why people make the housing decisions they do were
You're wondering why people make the housing decisions they do but unwilling to actually engage in looking at the actual data of job opportunities, home values, etc. that might actually give you insights into it, from what I can tell. Because, who gives a rat's ass about the data to answer our questions when assumptions and conjectures will do. Obviously, the answer is because these houses in the exurbs are more likely to be tan and people just love the color tan for their home. We don't need to actually look at any information to see if this is true or not, we'll just discuss as if this is truth. Are the houses more likely to be tan? Do people even prefer tan houses? Who cares.
> Saying things like "that's all that your limited thought is able to offer" is berating.
How so? What are you thinking?
Additionally, it is interesting that you left out the "if". What was the thought process there?
> called me a dog when I provided sources.
I likened you to a dog wanting to pointlessly please its master. Call it berating if you will, but that is the behavior I see dogs exhibit and that is the behavior I observed here. I'm sure you have data to contradict my understanding, but to the extent of the understanding I have, that is simply a factual account.
> You're wondering why people make the housing decisions they do
I asked what others thought about it.
> but unwilling to actually engage in looking at the actual data of job opportunities, home values, etc.
This wouldn't indicate what others thought about it. There is a place for looking at the data, but that would happen independently and wouldn't carry into a discussion. Different tools for different jobs.
You don't see how stating someone has limited thought capacity is berating. You don't see how being called a dog is berating. And now you're suggesting I see you as my master, wow. You might want to re-evaluate what people would commonly find berating. Go discuss that with others and see what you find out.
> You don't see how stating someone has limited thought capacity is berating.
No. If someone has limited thought capacity, they have limited thought capacity. That is just a fact of life. For someone so concerned about the veracity of data, how can you see a datapoint as being berating?
Granted, the datapoint in this case is only hypothetical (as you would have noticed if you retained the "if"), but such datapoints also do exist in the real data. There absolutely are people in this world with limited thought capacity. That much is not a hypothetical.
> You don't see how being called a dog is berating.
Likened to a dog. But, no. Why?
> You might want to re-evaluate what people would commonly find berating.
I'm sure you've got some great data for me to look at, but my understanding is that people find something berating when they understand a statement as some kind of truth that they don't want to admit to themselves. It is quite obvious that nobody feels berated when an assertion is so outlandish that it couldn't be true. That becomes comedy.
I have no illusions of being anything related to a dog, so if you likened me to — or even straight up called me — a dog, I would not find that berating, no. If you went after my actual insecurities, then sure. I would then. I am certainly not immune to silly human emotion, but silly human emotion does not get triggered by random strings of text.
So, perhaps this is good opportunity to dive into why you feel insecure about your thought capacity and animal shapeliness for these particular strings to activate your emotions. What are your thoughts there?
(And my apologies for finding your insecurities. I would have never guessed those particular things would bother anyone. The things you learn from having a discussion!)
Incredible how you can spend so many words to showcase how you can't possibly imagine people don't like to be called unintelligent dogs.
> but silly human emotion does not get triggered by random strings of text
Once again, seemingly completely divorced from reality. You must live on an entirely different planet far away from actual humans if you think human emotions are usually not affected by strings of text.
> but my understanding is that people find something berating when they understand a statement as some kind of truth that they don't want to admit to themselves
No. Things can be berating even if one knows that statement isn't true about them. But I imagine you know that. If someone calls you a worthless piece of trash its being berating regardless of if you think you are or are not a worthless piece of trash.
> Incredible how you can spend so many words to showcase how you can't possibly imagine people don't like to be called...
Incredible it is, I agree. But that's why I'm here. So that I can learn to imagine such things. Learning has to start somewhere. That's what discussion is all about!
> ...unintelligent dogs.
I am intrigued that you think dogs are unintelligent. The exhibit intelligence as far as I can see. What is the thinking there?
> You must live on an entirely different planet far away from actual humans if you think human emotions are not affected by strings of text.
Strings of text and random strings of text are not one in the same. How did your thought process lead you here?
> I never made the claim. My statement was you effectively called me that through your comments.
I likened your behavior to that of a dog. Nothing said you or dogs are unintelligent. That was first seen in the previous comment – the one written by you.
> Are you suggesting all your words are just random and have no intention or structure or meaning behind them?
The fact that emotions are not triggered by random strings of text does not equate to, or even suggest, an inexistence non-random strings of text. How did you think up that one?
> Truly seems like I've just been talking to a bot this whole time.
Would that make a difference? Discussion doesn't have to be only about learning what a human thinks. What a robot thinks can be just as interesting. Hell, if you can figure out how to communicate with a dog to learn what it thinks, why wouldn't you jump all over that? That would be amazing.
Maybe you just don't like learning? It seems like you don't care for it much based on what you are responding with, but that may be a poor interpretation on my part. What do you think?
Many people who live in those towns you describe work in McKinney, Plano and other parts of the suburbs. I’m not saying you’re wrong because there certainly are those people that make those commutes. I personally know a dev who lives in Prosper and another who lives in Melissa and they both commute to Las Colinas! Their reasoning was home affordability, home value growth, and school quality.
Many people do, I agree! I'm not trying to paint it as everyone living there does have an hour commute, it's true many don't.
But yeah, go work a job in Addison, Las Colinas, deep in Plano, etc. You'll find a lot of coworkers living in Farmersville, Prosper, Melissa, etc.
> Their reasoning was home affordability, home value growth, and school quality
This is yet another set of data points showing what I'm talking about, thank you. These people live there because it was cheap when they bought it, they expect the metroplex to keep growing increasing the value of their eventually "closer in" home from where the outskirts will be in a decade, and schools are better than other places they might have afforded to buy. Am I wrong?
In the end transit time to the American Airlines Center to watch a Mavericks or Dallas Stars game didn't matter. It didn't matter it wasn't the restaurant capital of the region.
And I don't blame them, that was the choice they were given with the options presented. Housing in the US is a mess, and it seems few get what they'd really prefer they just have to live with the tradeoffs of what's on the market at the time.
> These people live there because it was cheap when they bought it, they expect the metroplex to keep growing increasing the value of their eventually "closer in" home from where the outskirts will be in a decade, and schools are better than other places they might have afforded to buy. Am I wrong
I think you are wrong, yes
Could be I'm the one who is wrong, but I don't think most people buy homes with this sort of speculation in mind. Most people are just looking for the most comfortable and nicest house they can afford on their budget, and probably don't actually think too much about "what might be built later"
The person I replied to used the phrase "home value growth" in relation to a rapidly developing town.
Definitely anecdotal, but I know of several families which decided to move to certain areas which were rapidly developing at the time based on the projected value growth from the planned new developments. For example, lots of people I know moved from Dallas/Plano/Richardson area to Frisco during the explosive growth of Frisco to get in on that rapid development growth, buy a house cheap today in seemingly the middle of nowhere which will become a massively developed area in the next 10 years, sell the house and move to Prosper where the same will happen, on and on until I guess we hit Oklahoma. I know people who moved to The Colony when the rumors of the Grandscape development started and talk of Toyota moving to the area, expecting home values to rise.
I'm sure people living in places where development is a lot more static probably don't buy with these ideas in mind. But from what I've seen again in again in DFW and Houston and Austin and San Antonio it seems to be a pretty common mindset.
> That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly.
I think it's a large and growing cultural divide.
There is a growing class of predominantly progressive people who look to walkability scores and the variety of ethnic restaurants and music venues to evaluate the desirability of a place to live. And an older more conservative cohort who value what you describe.
I agree there's a growing divide there, and even a decent middle ground there of people who value maybe having a yard but want a park and shops and what not within bicycle distance and not be entirely car dependent.
I'm not entirely sure it's fully an age divide. Definitely age-weighted, I can agree. Other than family that grew up in NYC, most of my family >50 thinks I'm crazy for taking my kids on public transit and can't understand why I'd like to live closer in the city with kids compared to living in the sticks on a large property and a 15 minute drive to the grocery store. But there's also a lot of conservative younger-ish (millennial and younger) people who also seem to have that same mindset of wanting to live further out of the city and don't care or are against things like transit and tax dollars spent on city parks and bike lanes.
That example of the family of four where a four bedroom house is just too cramped for their needs I gave elsewhere? They're barely 30. They're absolutely not alone in what they're looking for.
This is an "urban" home in a "city" of nearly 40,000 residents. Good luck telling this family they don't need to worry about paying for at least one automobile.
And in the 1870s the average middle class family wouldn't have owned nearly the same variety of finished wood and metal products. Industrialization changed that.
You can't just say "but iphones" to hand wave away huge changes in the big items of a family's budget.
I do wonder if there's hidden benefits to using Klarna to get, like, bulk discounts. Buy three months of toilet paper/chicken broth at once at Costco, pay it off over three months, save a few bucks each time.
You don't need klarna for this. Credit cards already fill this need, and with careful use are free. Most people (in my circles) already do this type of thing
Not really. The people that pay interest on credit cards are the ones that pay for the luxuries/points/rewards of those who use credit cards wisely. If I get a 0% apr credit card for 18 months, i put all of my expenses on it for 16 months. I put that equivalent cash in to a high interest yield savings account (HYSA) and pay the card off before it’s due. I pocket the difference since the bank just gave me a free loan.
I thought the businesses pay it? Isn't it like 3% for a transaction fee that a business has to pay to accept a credit card, and the credit card company gives me the card user back like 1% or 1.5%.
I don't think we are disagreeing here, you're just describing the model on why (as usual), the credit card industry punishes the poor or irresponsible. And people who can exploit the system benefit.
When purchasing durable goods or bulk supplies, the difference is minimal. It might require saving before purchase, or gradually moving to the bulk model to preserve cash flow. But it's totally doable with a credit card on the household scale.
> Wages for the average person (working class) typically remain stagnant while cost of living increases, particularly through inflation.
If wages were stagnant, nominally, you'd be making like 25¢ per hour. Wages are stagnant[1] only in real terms (i.e. adjusted for inflation). Cost of living and inflation are very different concepts, but since you indicate that inflation is responsible for most of the cost of living increases, wages have kept pace anyway, so...
[1] Technically not even. Wages are growing faster than inflation, but the margins are small enough that we accept calling it stagnant as a close enough approximation.
It goes beyond that when there's installment payments for burritos being paid. It's not just being brainwashed into consuming too much beyond what they should and more like a systemic problem that pushes people into not being able to easily afford daily food, yet still needing that to get enough time to work and commute.
I find meaning in understanding ever so slightly more about the world we live in, and so I love consuming as many things and experiences as possible to have a rich understanding of myself and to some extent, humanity as a whole.
I don't like the word "consume" though. Am I consuming a surfboard or am I surfing? am I consuming a song, or am I listening to it? singing along to it? This perspective feels tired.
The entire system (evolution) is based on growth and consumption. Blame agriculture! Too much free time to consume now – we are full-time entropy farmers.
Believing what is told, trut all what is told, is something to be blamed about (here I am assuming we are talking about adults). Not like blame was allocated here, just since the topic was mentioned.
You're probably doing things every day without ever questioning them, things that other people would find extremely weird and/or brainwashed behaviours.
Some of my friends became corporate drones when they moved to a country where most people are corporate drones, they don't see the problem even though they changed their entire personality to fit in, yet they are educated, cultured and smart
If it was that easy the average Joe wouldn't be in such a bad mental and physical shape... the forces at play are much stronger than individual will, especially when said will is being worked against from the beginning.
> The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning.
The “average person” doesn’t make enough money to pay rent or afford groceries. You’re blaming the poor based on your idea of what an “average person” looks like, which is a representation of middle and upper middle class. The average person doesn’t have the luxury to consume as many things and experiences as possible.
Just because people aren’t homeless and don’t qualify for food stamps doesn’t mean they can afford things.
You need to make less than $33k for a family of 3 to even qualify for food stamps and then get disqualified if your total assets are above $4.5K. If you’re an adult without children, your food stamps eligibility is capped at 3 months every 3 years. A lot of people who need food stamps, do not qualify for them.
I know a few people that are really struggling on 20k a year where they can barely afford groceries and roof. But based on all the data that isn't the norm.
There is no “system.” It’s all just people making choices. My wife puts straws in the dishwasher to reuse them. She grew up in America the same as everyone else.
Yeah sure... and some people get together and make choices that impact other people ability to make choices, it really isn't rocket science.
If you think Zuckerbeg spending hundreds of millions a year to get the top XXX behavioural scientists to work on how to milk your attention span has the same impact as "my wife puts the straw in the washing machine to reuse them" I have bad news for you
idk how you call lobbies spending literal billions every year to make you think "cars are freedom", "debt is wealth", &c.
The problem is some of us have way more weight to throw around than others, so in some cases one of those "people making choices" has as much impact as millions of people.
As a side-note, putting straws in the dishwasher doesn't do a very good job of cleaning the insides of them. Unfortunately, you've gotta faff with those little brushes.
How does she prevent them from falling through the holes and hitting the heating element at the bottom? Does she throw them in the cutlery basket? Wouldn't it be light enough to fly around inside the dishwasher and land somewhere undesired?
There's no system the same way there's no Facebook, just some databases and servers. Or there's no Java language, it's all just UTF-8 characters. Or there's no government, there's just people voting for other people. Or there's no society, it's all just fancy apes existing and making decisions.
It's quite frankly ludicrous to be a software engineer and pretend systems don't arise from "individual" "independent" elements.
The Java language allows source code to express Unicode
characters in a UTF-16 encoding, and this is unaffected
by the choice of UTF-8 for the default charset.
Perhaps you pasted the wrong one by mistake?
Not that such a change to the language for future code, even if only hypothetical, would bear any difference to this discussion anyway as legacy Java code encoded in other charsets is still Java code.
> However, the javac compiler is affected because it assumes that .java source files are encoded with the default charset, unless configured otherwise by the -encoding option.
Interestingly, in Windows, Java programs were supposedly encoded in CP-1252 before this...?
> In JDK 17 and earlier, the default charset is determined when the Java runtime starts. On macOS, it is UTF-8 except in the POSIX C locale. On other operating systems, it depends upon the user's locale and the default encoding, e.g., on Windows, it is a codepage-based charset such as windows-1252 or windows-31j.
As a former engineer, I would say a “system” is designed as a whole, like all of the things you mentioned (but unlike society). If we are talking about the interactions between separately designed things—e.g. various autonomous vehicles designed by different companies—then we’d talk about “emergent behaviors,” not “systems.”
> Theoretically, credit should be used for one thing: to make more money.
I disagree.
You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
It's not so you can use them to make money, it's so you can use them to enjoy life.
> At some point, you run out of hours available and the house of cards collapses.
Only if you go too far. The point is to buy things knowing what they'll cost monthly and for how long, and to budget those as part of your monthly expenses. As long as you can always handle those, you will never run out of hours available and it's not a house of cards. Nothing collapses. You pay off your car; you pay off your mortgage.
You seem to be treating this as something black-and-white when it's not. It's an incredibly useful tool when used with budgeting. Not "to make more money" but to have a better life for you and your family for when it matters the most. Nobody wants to wait until the kids have graduated from college to be able to buy their first house.
And even with credit cards -- yes you generally want to be paying them off in full monthly. But if you want to take a vacation a couple months before you could otherwise fully pay for it, it's really nice to have that convenience too. Not to mention covering some expenses for a few months if you lose your job. They're a tool to be used responsibly.
If you're using credit to buy a car, most people do so in order to get to and from their place of work for the majority of their driving time. In that way, using credit to buy a car still fits into their theoretical model. For example I know plenty of people who completely got rid of their cars when remote work became more common, or at the very least consolidated to smaller cars or to less cars for a family.
Similar thinking for a house. A lot of people when buying a house go into it with the assumption that it is an appreciating asset that will gain value over time. Yes there are other factors of course like wanting to live closer to schools or in the suburbs/good areas, etc. But regardless this is commonly to facilitate a life that lends itself to you continuing to be able to make money comfortably.
Regarding vacations, no financial expert recommends using a card without the intention of not paying for it. If your plan is to book the vacation on credit for anything other than the benefits of your credit card points systems you might as well not use it at all. And all recommend not using credit cards and instead an emergency fund if you lose your job.
Yes because American public transit is so great and now you have to get up hours earlier and come home later - not great if you have kids or you actually want to spend time with your significant other.
Also what happens when that cheap old car doesn’t start in the morning when you need to get to work or pick your kids up from day care/school or need to be home when they get off the bus?
Where are you going to get the money to fix that old car?
You present some very daunting problems that the young and working class have to deal with (I know, I was both of those decades ago and struggled myself).
Credit to buy a new car though is still generally a bad solution. We should fix the other things you mentioned.
I would like to see laws allowing extreme low-cost vehicles (equivalent to golf carts, I guess) allowed on designated roads. A special inexpensive insurance proviso for them.
That you need something like $30K to buy a new car in the U.S. is insane.
> I would like to see laws allowing extreme low-cost vehicles (equivalent to golf carts, I guess) allowed on designated roads. A special inexpensive insurance proviso for them.
These already exist! You maybe haven't heard about them because they're largely a failure beyond niche applications. They're mostly used for things like hospitality shuttles, facility maintenance, meter maids, etc.
The problem is that they don't make sense for most people, e.g:
1. You can't operate them on high speed roads. The US has a lot of high speed roads, particularly in areas that are poorer.
2. They aren't cheaper than a used car. A street legal Cushman or GEM starts at about $16k. A brand new Nissan Versa is only about $1-2k more, is wildly better equipped, and has more accessible financing. Good $10k used cars are available on every street corner in every poor neighborhood with extremely accessible financing.
3. They are weird. It is much more socially acceptable to drive a similarly priced used car.
4. They lack features that used cars have. Many control cost by omitting basic features such as doors and climate control.
5. The places where you can use them (low speed neighborhood roads) are already more likely to be accessible by alternative means of transportation. (busses, bikes, walking)
I'm guessing you're taking issue with the price? Meh, that's just what it costs to make a decent product. You can (or at least used to be able to) get hot garbage manufactured abroad for less, but it doesn't meet the standards of what anyone would reasonably get, and they don't compare favorably to even a bad used car.
I remember when you could get a $10k new car... but if you adjust for inflation, we still have those cars today (now they're $20k), and they're actually better than the $10k cars back then.
To go between work and my apartment, I didn't need the highway. As I have said in another thread, I made do with a 10-speed bicycle, frcrisake. I don't expect everyone else to be able to do that though.
Yep, I have never taken a loan out to buy a vehicle — even though I have always needed one to make money.
When I was working a pizza place, going to JuCo, I had a 10-speed bike for transportation. (Yeah, even in the shit Kansas winters, I was riding to JuCo along the just-plowed roads. Now get off my lawn!)
... in your case. There was a cash flow savings in your case.
I've moved several times and done the math each time. Sometime it's been more cost effective to own, sometimes to rent. There are a lot of factors that go into that calculation, and the math doesn't always fall on the side of buying. That's especially true if you don't expect to be in a house for decades.
The odds of two emergencies are low enough that you can ignore this. Not that it doesn't happen, but it isn't that common. If you expect two emergencies you should have more in the fund to cover it.
And a lot of people simply don't have the money to build up that kind of fund. To suggest that they "should" is to be pretty out-of-touch with the realities of a lot of people. Sometimes they need to rely on credit, because there aren't any alternatives. So that credit becomes a lifeline, a good thing.
My daughter went a year to and from work by bus in Omaha. Yeah, it sucked. But we should instead be trying to fix that rather than just tell people "Let them eat credit."
I used to hate to take the position that government should save people from themselves, but I've moderated a lot on it. Some people clearly cannot use credit responsibly.
Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing.
It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Having opportunity means you may squander it. Too many guardrails on life paths and behavior blocks meritocratic social mobility as well as opportunities and motivation.
Since conditions are changing too fast there is no appropriate crystallized wisdom about it. There is no wealth of myths that would define how to live. The best we are able to say is the non-instruction to "be free" and to tap into your authentic self and author your life path with freedom and agency.
In biology one can distinguish evolved traits and behaviors (instincts) from learned ones. The latter can adapt much faster to the situation. Even better than learning from environmental feedback over one's lifetime is planning and simulating possible futures and deciding based on that. Somewhere between the individual lifetime and the genetic evolution levels, there is also the level of culture that used to reshape much slower than a single lifetime, taking lessons and condensing them over generations into templates. But more amd more as we diverge from the ancestral environmental conditions of the savannah and hunting-gathering in tight knit tribes and clans, we can less and less rely on biological instinct, cultural bedrock, wisdom from the parents' generation, what you learned a decade ago, and so on. We are forced to adapt and outmaneuver the shifting landscape faster than ever. More and more things pulling in entirely opposite directions. A vortex of stimuli to cut through with a machete-like mental strength. But most people are not built for this, and even those who are, constantly have to gamble and guess and rely on luck and hindsight.
I think the problem is that we left exploitation of people under the umbrella of government open and so all the demand for exploitation has sailed under that flag.
You've got the tire companies lobbying states to up the tread depth for their safety inspections. The HVAC people got refrigerant restricted so that you have to be a license holder to buy it (artificially increasing demand for their service). The plumbing trade groups have a dozen states convinced that you need a license to install a gas dryer, etc, etc.
It's all the same "screw an extra buck out of the public" industry group and cartel behavior we had a century ago, but government just has a seat at the table and gets a cut this time around.
There’s also a second order effect of the people using easy loans/credit money leading to higher prices for everybody else. The cheap options will disappear if there’s a big chunk of the population that will go in debt to get the pricier option.
Why sell $1 tacos when customers are willing to Klarna an $8 burrito?
Why make a school with affordable tuition when students are willing to take out $100k loans?
This definitely happens. It's like giving cheap loans to young couples who are having their first child, which was introduced in Hungary. But without more available housing, the market simply prices it in that suddenly people are able to pay more using this cheap credit, and supply and demand just makes it settle at a higher price.
Credit is basically a loan from the future. Except that's obviously impossible. Time travel doesn't exist, so it's just economic fiction. In the end the math has to add up in terms of real material goods and services right now. People can only reshuffle the goods among themselves, any trade with the future may be a useful fiction to simplify accounting but is obviously just fiction.
This is a bit like saving money for your retirement. It's a fiction. If there aren't enough young people working as nurses to put you in your diapers, then there simply aren't. A pensioner is not using the goods that they made decades ago. Their work dissipated there and then, and now decades later the only value they can consume is the one generated in real time by the actually existing working population.
If the lender can only take the thing (like repossession of the car or foreclosure of the house) and can’t go after the borrower for the difference, lots of problems solve themselves.
Credit can still exist in various secured ways, business credit is barely impacted for real businesses, and people stop being able to go way below zero.
And yet, the banker truly gives me value if I wish to start a business, or upgrade an existing one, and I don't have the capital to do so. I need money to make money, and am willing to pay for the privilege of using someone else's money.
> > Theoretically, credit should be used for one thing: to make more money.
> I disagree.
> You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
There's no contradiction with GP here.
Financing a car or buying a house on mortgage might well save somebody money in the long term (e.g. by allowing them to take on a job to which they have to commute by car, or saving on future rent payments).
If that's the case (and that highly depends on individual circumstances), this still counts as "making more money" – via spending less money.
The real question is: How do you feel about borrowing money used to buy depreciating assets or consumables?
> You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
Still the same principle - you buy long-term asset that makes rent-equivalent money if you rented that otherwise. That is different than borrowing for immediate consumption.
Let’s say you finance $40,000 in auto debt over 5 years. With a low interest rate of 6% paying $6,300 in interest. That’s over 15% of the amount borrowed! Many people have lager rates over longer periods.
Now consider what would happen if you invested that $6,300 for 30 years instead of spent it on interest. You’re losing out on tens of thousands of dollars in total lifetime wealth.
When you borrow money to “enjoy life” it can quickly end up costing 2x what it would if you spent the money outright, even if you borrowed at low rates.
The trick is to borrow $40,000 to buy the car at 6% and keep your $40,000 invested making more than 6%. Even at 7% annually, you’d make $16,102 over five years (1.07⁵ × $40,000). For that matter, at 6.1% annually, you’d make $13,782 (1.061⁵ × $40,000). Heck, even at 5.9%, you’d make $13,277! The reason why you make more even with a lower rate is that you pay less interest each month with the amortising loan!
The trouble is if one borrows that $40,000 to buy a brand-new car (which will lose $16,000 over five years), or if one borrows that $40,000 and doesn’t have or doesn’t invest $40,000, or both. Life’s a lot easier if you already have the money.
Personally borrow and invest over shorter periods of time (less than 10 years) has too high of a risk portfolio for me, especially with a depreciating asset.
What if there is a market downturn, and you’re out not only the decrease in value of your assets but also the interest in your loan. I admit this is down to personal preference and risk tolerance.
Well if you can't survive a downturn and the risk then no you shouldn't do it. But if you can then you should and in the long run you will end up ahead.
Well seeing that you need a car to go to work to have money to invest in the first place…
And before you say “buy an old beater”, then you have to contend with an unreliable car that may cause you to be late to work and get fired. It’s also much easier and cheaper to get a car loan for a newish car than to borrow money to fix a car.
As a young person, I was in the “own an old beater” category for many years. That said, I knew how to maintain and repair most of what could go wrong. That stick shift 1995 Accord had over 300,000 miles when a school bus finally totaled it while parked.
But for most people, maybe not the right answer. There’s a middle ground. There are some very affordable vehicles out there with good warranties. Buy one and for a few hundred a month, you get five years free of worry.
Of course, who does that? What I see are mostly SUVs and other “image” vehicles that cost more to buy and more to run. Frugality just hasn’t been an American trait in recent years, though it seems to be changing in some groups.
I don’t think you need to know a lot about cars to get good value out of them. I had an old ford ranger and all I did was get new tires when they tread wore off, get new brake pads when they started squeaking, and get the oil changed when the little sticker said to. I put 350k miles on that truck.
And if you are already living check to check, buying an old beater they you don’t know the condition of is more risky and harder to come up with the cash as things go wrong like the engine and the transmission.
It’s completely different than buying a slightly used car and keeping it forever where you know the wear and tear patterns on it and you know how you treat it.
Its kind of funny how the people who don’t want to work with “lazy,” mangly, poor people with bad teeth are the first ones to tell poor people how they could’ve made interest on 6300 dollars over 30 years.
It’s pretty rude to make personal assumptions based on a comment on the internet. My entire focus on the comment is providing education about the opportunity cost of borrowing money.
Do you also think that way about buying a house with a mortgage (credit)? I don't.
A mortgage isn't used to make more money. It's used so people can own a house after saving for a few years, rather than waiting until they've saved for a few decades.
A mortgage doesn’t make money, but it (can) enable spending less money. If you buy a place such that interest, maintenance, insurance, taxes and the opportunity cost of not being able to easily relocate are less than rent, then you have saved the difference.
It’s also a way to force saving, which is psychologically useful (and thus valuable).
If you buy a house for 500k on a 5% mortgage over 25 years when you are 25, and you plan to live until you are 85, you will live there for 60 years.
It will cost you 35k a year for 25 years, or 875k a year
After 25 years you have no more expenses.
If instead you rent it for 20k a year, increasing with 2% inflation each year, by year 25 you're paying 33k a year in rent, and by year 60 you're paying 66k a year.
Over 60 years you pay 2.4m in rent, or 900k in mortgage (you could also then sell that house for 1.6m with a 2% annual inflation).
You'd have to invest the savings and get way higher than inflation returns to break even.
Of course there's maintenance costs of the house too, but that's with rent far cheaper than the mortgage. In reality rent tends to be a similar amount as a mortgage (in the UK it tends to be higher - as people won't rent places out if they aren't covering their mortgage - at the very least the interest part of it). You'll likely find house prices appreciating more than inflation too - just like stock prices do. Rent tends to track income.
Now you could argue that you'll get more by investing in high return growth stocks. And you might be right. In the 80s there was a whole "endownment" mortgage craze where you paid the interest on the mortgage, and then the rest rather than paying down the mortgage capital, instead was invested.
This was a massive scandal as many investments didn't have enough to cover the mortgage amount upon maturity. With a mortgage you know that no matter what happens with inflation, growth, returns, stock crashes etc, you will own one house after X years.
> people won't rent places out if they aren't covering their mortgage
btw this is usually false, and mostly irrational.
1. Realize that every landlord has a different capitalization structure. Many likely bought decades ago and thus only owe a fraction of what the current market selling price is. Additionally we also have had a long period of ultra low interest rates so their interest rate is different than what new entrants are paying. Because their capital cost is lower they can actually offer for far less than the (Interest+Taxes+Insurance+Maintenance) costs that a home owner would have to bear.
2. The rational move of a landlord is to price competitively based on what the market can bear, even possibly losing a little money per month in cashflow (but less bad than the appreciation rate and cost of disposal/selling/defaulting).
I'd say it is quite rational. Real estate represents value, and value should be earning at all times. Owning it free and clear does not change that one iota. Rents are based on the value of the property, not the mortgage on it.
False, rents are based on what the market will bear. The value of the property is stickier than rents.
Plus one can be "losing money" on cashflow but earning money in equity, so one can rent for less than the mortgage while the value of the asset is rising even faster than the monthly loss. Of course this only happens based on speculation and having free cash to "lose" monthly.
Some good numbers, but what is missing is the result of investing $35k-$20k=$15k per year. Let's say you earn a %7 real return on $15k/year invested for 60-25=35 years.
Writing a little program:
import core.stdc.stdio;
void main() {
double d = 0;
foreach (i; 0..35)
d = (d+15000)*1.07;
printf("d: $%f\n", d);
}
Yields $2,218,701
I would think twice about buying real estate as an investment.
Personally, I own my home because I want to use it as I see fit, but I recognize that as an investment it's a lousy one.
Can’t argue with the math but one thing about a mortgage is it takes no effort. Just pay the bill and time does the rest. With stock investment there’s an emotional attachment to every major swing, should you buy or should you sell is never far from your thoughts. Using a home as an investment may not make the most return but it’s easy as long as you can pay the bill.
Real estate prices swing around, wax and wane, just like the stock market does. It's just that there is no real estate price ticker.
Investing in the S&P 500 is even less effort. The last time I bought a house, I had to carefully read and sign about 50 pages of legal papers. Buying stocks is just pushing a button.
In places like the Bay Area, property values pretty much never go down in price, and the YoY relative increase is on par with that of index funds. Combine that with rental income, and you can very likely beat an index fund. Mortgages offer much more leverage than margin loans, which helps offset the upfront capital cost.
The value of real estate in Detroit was tied to the auto industry. When it fell, so did real estate prices. The Bay Area's value does come in large part from the tech industry, but it's also a very important port of entry for trans-Pacific immigration and commerce, and that's a lot less likely to change IMO.
But that's beside the point. Substitute Bay Area with Seattle, Los Angeles, Manhattan, or some other area of your choice. Or, better yet, diversify your portfolio by buying real estate in multiple cities. The same options that are available in the stock investment to tune your risk profile are available in real estate investment as well.
Huh? I invest tens of thousands a year into stocks and have never once thought should I buy or sell. I just auto buy weekly, it couldn't be easier and I never think about it at all. They even have funds that automatically re-balance as you approach retirement.
Also you are acting like the housing market can't also crash.
https://www.npr.org/sections/money/2010/11/05/131105373/the-...
I still remember an old Planet Money podcast they did covering a Rent or Buy calculator, It didn't allow for the possibility that the value of a house might fall over time. If you put a negative appreciation rate it would spit out an error. Which in the immediate aftermath of 2007 meant the tool was unable to capture reality.
After 25-50yr (depending a lot on macroeconomic factors and your specific municipality) property taxes will likely be comparable to your mortgage payment.
> You'd have to invest the savings and get way higher than inflation returns to break even.
You say that like it's a difficult thing to do.
S&P500 is up 710% since 1996. Gold is up 92% since 2012.
Personally, the rent control is the best part of a mortgage and even though renting is typically better, I'm fine paying a premium for that. That said, good luck getting somebody to loan you 900k so you can play the stock market; it's much easier to get that for a house though.
If you put around 200-300k into IBKR (not affiliated) you can get portfolio margin which will give you just shy of $2,000,000 in buying power. Access to leverage isn’t really an issue, but forced liquidation definitely is. The bank will not liquidate your mortgage if you end up underwater.
And housing is up 125% since 2012, so the sucker who bought gold instead of a house has lost out.
We can all be rich in hindsight.
(There's also other benefits to owning - like being able to have pets, not being able to be evicted, etc)
But the biggest tell that housing is valuable is that nobody is spending $500k on housing to rent it out if they could make more money pumping $500k into the stock market.
> But the biggest tell that housing is valuable is that nobody is spending $500k on housing to rent it out if they could make more money pumping $500k into the stock market.
Of course they are. I do. I do so knowing full well that my expected returns are going to be nowhere near my brokerage account invested in public equities. The past decade has followed that expectation.
I and many others do it as a form of diversification. It’s risk aversion in the end. Most people with capital don’t want to be putting all their eggs into one basket, so for wealth preservation and diversified income streams it’s a good option even knowing up front you are expected to lose money via opportunity cost.
That ignores other benefits of housing being a privileged investment category by the current government and monetary/tax policy. If you seek cheap leverage this is probably one of your few options as a “two bit” player in the market at that $500k level.
Rental prices are connected to costs, but not tightly.
If I'm a landlord and my costs are $X, but I can find renters for $2X, I'm probably going to charge closer to $2X.
If my costs are $X, but I can only charge $0.9X, I'll most likely rent it for that, because losing $0.1X is better than losing $X; unless I own a lot of units and it makes more sense to push the 'average rent' up, even if it means more vacancies. If the market conditions are like that for a while, I'll probably try to sell, but I'll take the loss for a while.
Additionally, if local market conditions include something like California Prop 13, a landlord that has been holding property since before I was born most likely has a much lower property tax bill than if I purchase a similar property. In that case, renting could supply them with a nice return and me with a nice discount.
> Because otherwise your landlord is subsidising you, and why would they do that?
Because they may have capitalized decades ago and the market only bears a certain price. They're not subsidizing you because their cashflow needs are actually lower than new entrants.
I bought a house when I did because the interest on a mortgage was lower than any reasonable prediction fir inflation, which seemed a lot like free money; but at the time it felt a lot more like a dirty hack taking advantage of terrible government policy than any idealistic system where credit is used to bootstrap productive capitalization.
Low interest rates tend to just push housing prices up. The average expenditure on housing as a percent of income have been nearly constant in the US for 50 years.
You need to compare money paid for mortgage minus price of house against money paid for rent (when you're left with no assets after all the years of paying it).
I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long.
Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benefit from taking it)
Mortgages with low interest rates are also one of the (main) reasons houses are so "expensive" in the first place.
The cheaper money (credit) is, the "higher" the prices will go.
It's not so much that houses became expensive, it's more that money to buy a house (specifically mortgages) became relatively cheaper. Low interest rates did that.
I don't know about this - when I see quotes on build cost in my area they add up to more than similar properties sell for in some cases, and generally aren't a whole lot different than buying to the point that I've wondered why it's like that.
This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have been standard in the US for most of my life, and houses have gotten a lot more expensive during that time.
The effect may pause when interest rates change, but it's unlikely to reverse significantly. People who have homes now aren't going to want to sell for less than they paid for them, so there's a lot of inertia against prices going down.
Home prices have doubled in most areas since 2009 (and worse in many areas.) when people complain about prices in 2025, this is what they’re talking about. This is not driven by the novel existence of 30-year mortgages and interest rates are at a near-term high.
House size, build "quality" (the details in the house), resource scarcity, and zoning policy are the drivers of cost. Cheap credit and lifetime loans allow the system to continue.
Every time a municipality levies a requirement upon new development the price of everything that could be used the same way goes up by that amount since it's the "next best thing". I got told I need to spend $20-50k on engineered assessments and plans to clear an old farm field that was left to grown over for 30yr and is now considered "forest" by (a single unelected employee of) the municipality.
Game out the economic implications of that sort of regulatory behavior across the entire real estate and housing sectors and suddenly a lot of stuff that makes no sense makes a lot more sense.
Housing prices are _generally_ rising. It's entirely possible to buy a house and wind up selling it later, having lost money in it. Many times through no real fault.
I hope most people haven't forgotten about 2008 financial crisis and how it was caused by declining housing prices (and the banks/markets not taking that risk into account)
Housing prices typically appreciate up with inflation over the long run, although local markets don't always follow the same pattern. (IE, Silicon Valley is a case where real estate appreciated faster than inflation.)
Remember, it's over the long run. There can be periods where a house will appreciate faster than inflation, and other periods where the real value of a house doesn't keep up. If you understand this dynamic, you can make a lot of money. (IE, flipping and then becoming a landlord when the market turns.)
Since the not-yet-homeowner is no doubt paying rent, home appreciation can slip by some measure below the rate of inflation and still have been a wise investment.
Of course there is home insurance and repairs to consider. But also there is the increase in rent to consider on the other side as well.
Depends on how long the not yet homeowener will live there. If you live in the same house for the next 40 years you are almost certainly better off owning it. However if you have to move after a year (which might not be in your control) you probably will lose money. 7 years is a good rule of thumb for minimum time you need to live in a house before it is better than renting, but exact circumstances can be very different.
Of course they make money — but they take on no real risk. The home owner (who is taking on the risk) likely stands to make much more money than the lender in appreciation.
(Never mind the homeowner has to live somewhere regardless — and anywhere but mom's basement [1] is going to charge rent which would, by comparison, be throwing money away.)
[1] Okay, my mom charged me rent to live in her basement when I was 19 or 20 and needed a place over the summer.
Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent.
Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essentially unrelated to the monetary value.
You can believe that if you like of course, but I am definitely not teaching my children that.
Renting cheaper than owning sounds like a very short-term view.
My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same.
It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a person with a typical 30-year mortgage would have paid each month 30 years ago. Because one of those two is still paying the same monthly amount today and about to have an asset they can pass along to their kids or spouse (or cash-out if they want to retire to live in a trailer in Eloy, Arizona).
There are plenty of places where many people can afford market-rate rentals, while there is nothing they can afford to buy. That includes some major cities, where land is inherently scarce, as well as other desirable locations, where the locals have chosen to ban sufficient housing.
Rents are ultimately based on what people can afford to pay. Home prices, on the other hand, also reflect the viability of the home as an investment. If the market believes that housing will not become more affordable in the foreseeable future, homes in that area are low-risk investments, and investors will accept lower returns for their money. Home prices grow very high relative to rents. Taking a mortgage to buy then becomes the financial equivalent of taking a loan and putting the money in a savings account.
The city where I live in California is one of those places. Before Covid, home prices were high but tolerable. Then the prices jumped due to WFH, while rents grew at a much slower pace. And then interest rates went up without making a dent in home prices, making homes too expensive for those poor enough to need a substantial mortgage.
> Renting cheaper than owning sounds like a very short-term view.
That highly depends on where you live. In some countries/cities, buying really makes no sense both short and long term. In others, it absolutely might.
In addition, you get countries like the UK where renting is very precarious. You might be forced to move every year, after a year your landlord can turf you out with only a few months' notice, you aren't allowed to modify the house in any way even putting a picture-hook into the wall or redecorating a room, etc. Since most people cannot afford to buy a house outright, a mortgage is necessary to avoid this.
There are maintenance requirements to home ownership, absolutely. And some are not cheap.
But there is absolutely a segment on HN who will act like home ownership is nothing more than pulling out a card for the next four digit expense every month or more.
“What are you going to do when (not if) you hot water dies? And then you need a roof? Oops your house needs painting and new appliances and now the AC is gone too, what about pest control, and hopefully your sewer line doesn’t collapse? Can’t handle all that happening to you? Can you realllly afford a house then?”
Shelter (and, for many, transportation) are a need for maintaining their ability to make money. As such there is some minimum amount that must be spent on these, and loans costing up to that amount can be seen as ways of making money. Most people who make these purchases do buy even more than strictly necessary, and the extra spent above the strictly necessary line should be seen as luxury expenses.
General advice for homes leads to buying a home that does follow the logic, given historic movement of home prices and rental prices. It rarely is put in those terms, but works. For vehicles, the financial recommendation generally is to buy less car as it is a depreciating asset. If you have cash for a luxury expense, then it is no different from any other large luxury purchase, but if you have to finance, go as cheap as possible (but making sure to account for the repair costs, fuel usage, and such, not just the initial cost and loan payments).
For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary until your business gets up and running).
> credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time
In my experience, the average American has no concept of saving money, and those below average even less.
It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it. What do you see in practice? You see people dashing over to the nearest rent-to-own rims shop. (If you don't know poor people, you may not know such businesses exist.)
> Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US
I doubt that greater availability of credit, perhaps facilitated through government subsidy, is what precludes the majority of such people from transforming their lives.
You can't individual financial education your way out of systemic poverty.
Furthermore, the common pattern where poorer people spend money as soon as they get it is, in fact, rational when you look at it from their perspective rather than your own (which, as with most people attempting to moralize to poor people about their choices, appears to be a perspective of "you should be doing absolutely everything you can to maximize your net cash flow").
First of all, people need things like little luxuries. A Starbucks coffee here. A joint to smoke there. We are not, and cannot make ourselves, robots who live only to produce.
Second of all, they know, from experience going all the way back to childhood, that if they have an opportunity to splurge a little now and don't take it, they'll lose that opportunity.
Third of all, they similarly know that regardless of whether they splurge on an ice cream cone today because it's 90°F out, whatever financial trouble that comes tomorrow to eat up the little surplus that makes that possible will still put them in debt. Being in debt $150 instead of $145 just doesn't make that much difference. And if they wanted to avoid that particular debt entirely, they'd have to give up 30 separate instances of "I have an extra $5 today, let me get something to make life a little less shitty".
The only solution to the problems that lead to people not being able to save is increasing the amount of money they get paid.
There's also family situations where liquid savings are at risk of being spent by somebody else. I don't think the marshmallow test people factor that in, you'd need to have a third option where the kid waits dutifully for the extra marshmallow but it gets eaten by someone else in the meantime.
This. If you’re poor and get money, there are all kinds of people interested in getting a slice, and if you’re a good person, you’ll probably have family members who genuinely could use it for necessities. Govt/creditors can also apply systemic pressure like ”oh you no longer qualify as poor this week, so we’ll take back your benefits”. Well thanks, now I’m poor again.
Employers especially don’t like when people break out of poverty, because as soon as they have a buffer they can make choices and bargain. So there’s a lot of deep pocket incentive to keep people in their place.
Yes. And that doesn't have to be an addict family member or a burglar, it can easily be e.g. a landlord who sees that you have more money, and charges you more money. There are a lot of people in a position to make you give up what you have, if they see that there's money to be squeezed.
This is even more true collectively: as an individual, maybe you can get out by being 50% more frugal than the rest. But everyone can't be 50% more frugal than the rest. If everyone tries, it's even more likely that larger society claws it back through higher rents, lower wages etc.
Everyone can't be 50% more frugal than everyone else, but it's possible for "everyone else" to be something other than 3-4% (the current US savings rate).
The money to sustain a high savings rate without a collapse in wages/demand ultimately comes from the government deficit, or deflation I suppose. This can be sustained even without productive real investment, if people just want savings the money will just sit around or repay debt without bidding anything up in the economy.
> landlord who sees that you have more money, and charges you more money.
You were getting a good deal then. Can happen with "affordable" housing I suppose.
> It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it.
Congratulations, you've just discovered that human beings are not perfect rational actors.
Whatever you put aside is not going to be enough to prevent complete financial ruin if shit hits the fan. You might be able to cover smaller emergencies like an appliance breaking or your car needing repairs but literally just giving birth or being in an accident can bankrupt you in the US. I'm not at all surprised low to medium income Americans would just give up and accept their inevitable financial ruin instead of trying to be maximally frugal and socially ostracize yourself, forego most forms of entertainment/recreation and still not be able to get out of survival mode.
Desperation is a good motivator - but not for rational actions. It triggers our survival instincts: hoard what you can, feed on what you can get, grow fat, make rash decisions. This is what the modern economy is built on. FOMO, impulse shopping, conspicuous consumption, high calorie fast food, deals and discounts on overpriced goods, planned obsolescence, etc. We need consumers to be perpetually desperate and starving. Credit just means we can circumvent Henry Ford's problem of them not being able to afford to buy anything because they still can't afford it but are able to pay for it until their credit line runs out.
This assumes, among other things, that they come from a stable home that has space for them and access to the things they need to create and maintain an income stream.
We need to change money flows and redistribute wealth so people can have a hope of saving some money, because they actually can make more money than they absolutely need.
When everything around suggests that the system is rigged against you and care against you, it's no surprise that many people live for the moment and try to find some small bit of pleasure or joy in the moment without planning for a future that may not come.
It's easy to say "why don't they save more?" from an upper or middle class stability, but when the price of everything keeps going up, the police are out to get you, and healthcare is just a fast track to debt that will take away any savings or assets you managed to have, what's the point?
This is a bit too romantic imo. From my eyes, it's mostly:
"An old AMG at 20 is better than a new Ferrari at 60."
There's a slider for how well you want to live your early vs late life. If you work hard, you'll be better off later, and if you go crazy early on, you'll be worse off later. However, there is a point in that you can't catch up on 20-year-old sex, getting drunk or drugged up out of your mind or general fun with friends at 60.
I'm not and never have been into drugs, alcohol and clubbing, so I don't know the limit.
The most I've seen was a ~1k EUR monthly budget for drugs by a person I knew whose main hobby was drugs. It's not astronomical, but we were both students in ~300 EUR/month dorms. It also affected his career progress. Lectures at 8 AM don't mix well with coke the night before.
With cars, the sky's the limit. I'm making 6 digits, and I can still ruin myself financially in a weekend.
And it's not just financially. I love motorcycles because they're cheap, but if I have a proper accident, it'd set me back months if not forever.
It would be easier to buy that argument if it wasn't happening in countries where healthcare is not fast track to debt and police is not out there to get you. I come from such a country and a lot of financially struggling people overspent on status symbols all the time.
Sure, because status matters more than finances. Getting rich may be extremely unlikely if not outright impossible. Looking rich to your peers (and "feeling rich") on the other hand may just be a few years worth of small affordable installments away - even if it's completely superficial and short-lived. And entire industries will literally spend your every waking second trying to convince you that buying their product will make you feel rich.
It has nothing to do with credit.
The whole buy-now-pay-later, 0% rates or pay-day loans industry came much later here. The same goes for predatory marketing industry.
When I went to elementary school everyone was poor as it was a year after communism collapsed. People were still spending their last money on shiny things back then even if those shiny things weren't as shiny as they are today.
>>Getting rich may be extremely unlikely if not outright impossible
Again, in communist and then post communist countries no one thought we could be rich. The things we thought about back then was being able to buy enough food and trying to educate ourselves as education was valued in itself in some families.
Even back then a lot of people spent their last money on pointless shiny things.
I feel Americans and some Western Europeans look for ways to justify dumb behavior and come up with all those theories that have nothing to do with human nature. If you grow up in a country where everyone is the same race, everyone is poor (at least for a few years), the police is not out there to get you and healthcare is free even if terrible and you still witness people making the same stupid decisions you realize it has nothing to do with those theories and everything to do with education, values and ability to make sensible decisions.
I think you're half right. But there are cultures in which people save money. (You can just run a web search for "savings rate".)
My hypothesis is that "human" nature does play a role, specifically a very general phenomenon in animal psychology called "observational learning". If you see people around you who saved money and it worked out for them, you're more likely to imitate those people. Saving money probably isn't instinctive for the vast majority, but that doesn't mean it's unattainable.
Taking the contrapositive, if we look at cultures where people don't save money, it's probably because of a lack of successful role models. Saving money hasn't worked out for people in that culture in the past, so there's nobody to imitate. There are always going to be a few people who do save money, but if they get wiped out by medical debt, rampant hyperinflation, or some other systemic crises, or if the country's bankruptcy laws are so generous that their spendthrift counterparts ultimately live better than they do, then their behavior is less likely to catch on.
In the US, savings culture has been decimated by years of QE and ZIRP, so the people who poured all of their money into housing and stocks did better than the cautious types. Skeptics have claimed for years that this will lead to an awful hangover. We'll see.
It has a lot to do with the structure of economies. Usually they're big exporters with fairly stable currencies. The differences in savings rates are super huge, even within cultural groups.
I'm picturing you in my head as one of those 19th century Englishmen, writing about how being poor is a moral failure and the famine in Ireland is actually a punishment from God and thus nothing should be done about it.
> In 1800, the 1st Earl of Clare observed of landlords that "confiscation is their common title". According to the historian Cecil Woodham-Smith, landlords regarded the land as a source of income, from which as much as possible was to be extracted. With the peasantry "brooding over their discontent in sullen indignation" (in the words of the Earl of Clare), the landlords largely viewed the countryside as a hostile place in which to live. Some landlords visited their property only once or twice in a lifetime, if ever. The rents from Ireland were generally spent elsewhere; an estimated £6,000,000 was remitted out of Ireland in 1842.
> In 1843, the British Government recognized that the land management system in Ireland was the foundational cause of disaffection in the country. The Prime Minister established a Royal Commission, chaired by the Earl of Devon (Devon Commission), to enquire into the laws regarding the occupation of land. Irish politician Daniel O'Connell described this commission as "perfectly one-sided", being composed of landlords with no tenant representation.
Seems more like the wealth of Irish farmers was consistently extracted and sent out of the island, ensuring none of them can get out of poverty. Reminds you of something?
I mean, yes. A country that maintains unnecessary employment in agriculture won't have the labor force to develop industry.
Accumulated capital, will by necessity flow towards other countries, where factories can be built and staffed. Meanwhile, because of the lack of potential competition with industry, the agricultural workers will be treated as poorly as the capital owner pleases. But that doesn't mean they'll be happy to be expelled from their lots of land, even if it'll help them.
The Irish were successfully farming a number of highly nutritious crops. It's just that all of those were taken by the English, under the colonial system of the time.
The potatoes were one of the very few things they were allowed to grow for themselves (and are a great staple crop! near-complete nutrition all in one handy package!). That's why they were left starving when the potato blight hit, not because they were pathetic unenlightened regressives.
You can't really survive on that. It's a snowballing situation. It's perhaps a strategy to avert impending catastrophe but it's like pitching an airplane down to gain speed when the engine is stalling. If it gets you to restart the engine the brief nosedive may let you survive, but if you have to keep turning the nose more and more vertical, the you're gonna meet the ground.
Not sure what you mean by the “average person” here but the biggest kinds of debt are mortgages ($12T) and cc debt, student loans, and car loans (roughly 4T total).
Is your position that taking debt to buy a house is bad unless you can sell it for a profit? Is working for the mortgage lender to accomplish that not worth it?
You can avoid it by renting, but then you’re just working for the landlord, so there’s no avoiding it.
Every single thing you mentioned outside of cc debt (though arguably you should never reach for a credit card outside of using it for the points systems they provide) could be categorized as something used as a tool to make more money.
Vast majority of new car sales will not let the new owner make more money and were financed with debt.
If all of those buyers bought used for cash, nobody would be able to afford used cars for cash.
It really is only businesses that can convert debt into income, most consumers do not want to. There is nothing I can spend on to get a higher hourly rate.
How can you factor in the aspect that a cool car might impress someone who might get you a better job? Or it allows you to "look the part" and "fake it till you make it"? People sometimes rent cars and watches and suits to appear higher class when talking to potential investors or other business partners.
Having a better house might allow you to invite more people over for parties or dinner, which can have downstream effects in your social mobility and status.
If you can keep up with the Joneses and chit chat about your vacation to some nice place, it may allow you to become an insider in some group.
At least that's the "logic" (even if subconscious) to chasing status symbols. Though very often it fails because faking it is hard and you can easily be clocked as a tasteless tryhard. But if you don't take too large steps up, you might get away with it and reap the social benefits.
All of the above are reasons why people go into debt, some derive genuine pleasure and happiness from their purchases. None, however, are investments that one can put on a P&L sheet, and please, never let anyone think otherwise.
You can buy investment properties to convert debt to income and get nice returns. While this is technically a business, there are ways to make it quite passive and thus more like an investment than a business. Margin stock accounts also exist, although I don't know enough to know what situations it makes sense to use them in.
There are arguments to be made, especially if you're young and just starting out to take a reasonable amount of margin and kickstart your compounding growth.
Say you just started working, have no use for your money and are willing to bet 20k on index funds vs a 90% market drop, you should be able to take 2k in leverage and set up your position be auto closed.
But of course as you have more money this type of market exposure starts shifting as you have shorter timer horizons to rebuild and are instead going into more of a wealth conservation mode.
Don't ever look into where the money you make with "passive income" comes from, I guess?
Passive income just means other people are working for your income. At some point, someone has to be poor enough to have to do the actual labor. You can abstract this away with as many financial constructs as you want but it boils down to that. If you can "make money" from mere ownership, we can't all own things that make us money because then we wouldn't have to pay anyone and nobody would have to pay us.
That's not technically a business, it is a business, and it can be a tough time consuming one. I've known more than one person who sold their investment properties because they were tired of being a landlord, which is a job.
Not saying it can't work. It can. But it's a business and a job/sidehustle not magic free money.
This has the rather tone deaf sound of “if you just had financial security, you wouldn’t need to use loans to survive, then you could use them to invest!”.
Which rather misses the point that many people using these tools don’t have financial security, and don’t have the option to invest like that.
Saying that mortgages can be used to buy investment properties doesn’t change the fact that most people use them to provide basic physical security. I.e. a literal roof over their head, that they can’t be taken away with little notice by their landlord for reasons completely beyond their control.
I’ve you’ve never grown up in an environment where the roof over your head isn’t a certainty, and indeed having a different roof over your head every few years is a certainty. Then it can be rather hard to understand why not everyone considers property just an investment opportunity.
> I.e. a literal roof over their head, that they can’t be taken away with little notice by their landlord for reasons completely beyond their control.
Yeah. Before I bought my home four years ago, three of the last four landlords I'd had had promised long term stability, only to non-renew the lease after the first year (for "other" reasons: "Wife thought she'd like the country, we're moving back to the city", "We want a smaller mortgage payment on our primary home", We're going to renovate and sell"). It's a lot of fun moving a family every year. Especially when around here you also have to come up with first, last, security and other fees and can easily be looking at $10K+ just to move.
Space is expensive because of mortgages. If nobody could get a mortgage, nobody would need one. It's a race to the bottom.
Buying a home from a landlord is still working for a landlord; you just pay the present value of future cash flow in a single lump sum, like an annuity.
I tried using one of these offering a 0% intro APR to finance an upgrade to the boat I eventually moved into (saving me 10s of thousands in rent.) They wouldn't let me do it despite having an upper 700s credit score.
It's not clear to me how they pick people to lend to.
Yeah a high credit score isn’t what that lender is looking for. They don’t make money of people who actually repay the loans, indeed they tend to loose rather a lot (cost of capital + cost of account admin).
If someone is offering you a 0% APR loan, it’s either because they’re hoping you’ll move your loans to them, and become unable to leave once the 0% period has ended. Or they’re trying to sell something else (either more of something, or the same thing at a higher price), and want use consumer debt to artificially increase market demand.
You upgrading a boat, so you can save money in the long term, is literally the opposite outcome they’re looking for here.
0% intro APR offers are somewhat predatory in that they rely on a large portion of people keeping a balance after the intro period in order to be offered, or at least building a relationship with other financial products. It wouldn't surprise me that they would reject someone in the high 700s, they might have been looking more for people in the low to mid 600s.
There's also a lot of reasons one might be rejected for a credit line that have nothing to do with credit score. Some lenders have specific policies in addition to credit score, like Chase's 5/24 rule. Some are also just looking for "relationships" and won't offer you their best products unless you have a bank account with them, etc.
If you really believe the only responsible use of credit is to buy productive assets then this is a tautology. As soon as anyone uses credit buy productive assets they cease to be proletarian and become part of the capitalist class.
One flaw with this reasoning is that ignores the time value of money. A dollar today is worth more than a dollar a hundred years from now, if only because we’ll all be dead a hundred years from now. From that perspective and with favorable terms it can make sense to sell the future to buy the present, if someone is willing to take that trade.
There are at least as many ways that this can be finished accurately (for some theory) as there are theories of what should guide human behavior, generally. But this one:
> to make more money.
Is really more apt to theories of appropriate behavior for arms-length business organizations whose only shared interest among their owners is profits than the common ones for individual people.
No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.
Of those who carry credit cards in the US, 60% of them carry a balance [0].
There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600.
If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average" person has solid fundamentals, where credit cards are being used as a strategic tool.
People also tend to spend more when using credit cards [2], which negates most benefits someone may get from using credit card for the points. So even those with solid fundamentals, who are using it as a tool, are probably still losing, just in a less obvious way.
[1] is better interpreted as 40% of people who are willing to work for less than minimum wage answering marketing surveys don't have $400 for an emergency. It could still be true, but the bias in the methodology is obvious.
> Of those who carry credit cards in the US, 60% of them carry a balance [0].
Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rates, yet even in that case selling investments and paying taxes on them and forgoing future earnings on those investments to pay off a credit card immediately vs over a few months is not necessarily the right decision.
Credit cards are about providing you float so you can smooth out cash flow. As an example, I am about to do some home renovations, I expect to spend ~$40k to do so, I also expect to earn and pay off that $40k over the following 4 months. My options are I can carry a balance on a credit card, I can keep my home in a partially renovated state for longer to pay cash, or I can take our a HELOC which has a high origination cost and acts as a secondary lein on my house. The credit card + carrying a balance for 4 months and having my home back in a finished livable state faster is clearly the best choice, but it means I'm in that 60%.
These choices aren't binary, the problem is that many people are not financially literate enough to consider their options and outcomes and choose the best choice, they either have a default choice with no consideration, or no real choice, both with negative outcomes.
Another option is to do margin borrowing on some investment assets that you have. Because it is a secured loan the interest rates are much cheaper than credit cards. Schwab has a good set up, it can be configured to automatically do a loan if you withdraw more funds from your checking account than you have. They currently charge about 12% but there are other options around 6%.
My friend used this set up for his emergency fund since he felt like it would be better to earn an investment return and take a loan in an emergency instead of sitting around having your money earn minimal amounts in a checking account.
Yes, borrowing on margin is a really good strategy, although it depends on your broker how that functions. I've had a good experience using this for smaller amounts, but given market volatility I'm concerned about borrowing this large of a sum on margin, as I don't know what clown stuff is going to happen in the next 6 months, a credit card feels lower risk to me, although the interest rate is higher. I actually considered this, using a credit card will cost me $530 in additional interest over taking margin, but has lower risks in my estimation. That $530 is not enough for me to feel it's worth it to do it via a margin loan.
That said, margin is really useful as a tool because it lets you unlock the value of your investments without tax penalties in lower volatility markets.
I suppose. I just did similarly priced renovations and chose to put off the whole thing until I could do the whole thing with cash. But everyone is in a different situation. While I’ve been at my job for nearly 20 years, the layoffs are frequent, and I’ve never felt any meaningful level of job security. This leads me to seek risk reduction, and part of that is eliminating as many financial obligations as possible. In theory I could probably make more investing (if we ignore the psychology aspects), but in practice it’s had the side effect of dramatically increasing how much in invest on a monthly basis after getting all the debt eliminated (which was really only the house). The peace of mind comes more from those low fixed expenses than from the savings. If I had to, I think I could make ends meet working retail, without dipping into savings/investments. I think about this more often than is probably healthy.
I empathize with that situation, it's something that weighs on my mind a lot as well. One of my goals is definitely to get the mortgage cleared out sooner rather than later. In some ways I'm rolling the dice, but I also feel like I'm safe from layoffs at least one quarter at a time (e.g. I don't think it will be so sudden, it'll align with quarterly earnings), and anything I can pay off in a quarter of work is worth rolling the dice on, even though there's always some risk there.
My plan of the moment is to get to a point where my expenses are minimized (e.g. house is paid off) and I can cover basic living necessities on investment income, and do some type of artisan home business. I keep thinking I'm going to really seriously get into carpentry, which has been a long-time hobby, or open a mechanic's shop (my other long-time hobby).
This is so wildly qrong I dont know how to start. Im assuming this person is not in America, where a lot of the population (unfortunately) uses these practices to buy things that are needed/non-essential) its a shell game the creditors were willing to pay. But now its a lot so its going to affect credit (which is should have to start).
People living paycheck to paycheck need (in your "franchise" language) food and basic clothing as opex for their human capital, and possibly even entertainment, something that is provided to our troops. Trust me the military would not allow for leisure time if they did not think it had a purpose. Eating enough food and wearing a shirt without holes in it does let people make more at work.
This is all true if you have enough for the basics and are looking above the minimum survival costs.
Just to make the money you are making now, you need some stuff, be it a phone or a car, home AC, oven or even a washing machine at home (you can't go to work hungry in dirty clothes).
If you don't have the money to pay with cash, you'll be buying that oven/stove with whatever delayed/monthly payment option is available.
Yes, if you're buying franchises you can do the "make more money" calculations, but if your kids are going to be hungry soon, you often have no choice.
Owing money you don't have has disadvantages even without interest.
For example, if you make 5000 dollars a month and get a 5000 dollar BNPL loan for a stereo, payment due in a month, then even without interest, you now either starve or default on the loan (or incur penalties, i.e. the interest you thought didn't apply).
Why would you buy your phone through a carrier? Is it the good old US lack of regulation so it's the only option carriers let you have? I get my phone and my SIM card separately.
Why not? It’s an iPhone the same as any other iPhone with no carrier bloatware. It usually comes at a discount with monthly credits.
Even if I do buy directly from Apple using the Apple credit card, it’s still 2 years with no interest and the same BNPL in all but name.
And now it’s all eSIM anyway. If I go to another country I just activate the second eSIM.
And it was never about the phone makers not letting you have the phone. Some low end phones even today don’t support all of the carriers frequencies and back in the day you had phones that had to support CDMA vs GSM and even then different parts of spectrum were used by different carriers.
Mobile phones at first “free” with a two year service plan and later as a second line item has been the most popular way to buy phones in the US since I was selling them at Radio Shack in the mid 90s.
I would get a commission based on a $300-$400 phone and the customer paid $1 up front.
I looked it up, and most of the sources seem sketchy (quora, lendingtree), but they agree with your number.
I think the kicker is, the ~50% of people who don't pay them off in full every month can have a massive amount of CC debt and struggle to even make a dent in it.
> Theoretically, credit should be used for one thing: to make more money. (not less)
Credit moves money across time. That’s it. (Analogous to paying a shipper to move stuff across space.)
Not all consumptive debt is bad.(And not all consumptive loans are wealth destroying. I opted to borrow when I bought my car because the rate was so much lower than what I figured I could earn with the money.) And not all cash-flow positive wealth is good.
We should be more scrutinising about how debt is used. But especially for folks with volatile incomes, accumulating debt for consumption is fine as long as it doesn’t snowball.
I think my understanding has come to the fact that loans and interest can smooth out your financial situation: When I was single especially I had a lot of savings building, I was making interest and making money. Then when I had a kid, I end up paying that interest back, because expenses for a kid are way above what I can healthily operate in this economy, and I needed more financial products to cover that. But that's also not forever: As soon as a kid's in school and you aren't sending an entire paycheck a month to the daycare, you can establish a upward financial pattern again.
It'd be nice if kids were an affordable choice for anyone expect Elon Musk, but you know, here we are. \o/
Credit cards however, can be used to get free stuff from rewards.
Credit loans or payment plans can also be used to get a higher credit score, making the first item easier.
Conversely to your example of credit making cash,
Cash can make you money through investing, so Credit can also be used to keep higher amounts of cash on hand when purchases are made. , e.g., buying a car on credit and using the car money to invest. But we're saying the same thing there.
I think that's a technicality. From my perspective 100% discount is called "Free", and I get that a few times a year when flying (tickets, upgrades, etc)
I calculate 100% based on the amount I get from my preferred airline for paying cash for groceries (0) vs the amount I get by using a card they issue (a few imaginary points/$). Then I trade those points for things I couldn't have had by paying cash. As long as I don't pay interest, we're in "Free" territory.
No, you’re still paying for all of that to some extent. Less than people carrying a balance and/or paying with cash or debit cards, sure, but more than zero. (It would be a pure redistribution from cash to card payers only if issuers made no profit or even a loss on never-balance-carrying cardholders, but if they didn’t, why would they still have them as customers?)
It’s still the rational thing to do from an individual perspective, of course, which is why these rewards are so sticky.
> It'd have been nice had they taught me this in school.
Yeah, even at a basic level, it should be made clear that cars depreciate and real estate, by and large, appreciates in value.
One of those is "good money" and the other is "bad money". Kids should learn coming out of school to be able to distinguish which of the two they are throwing "good money" at.
Eagh, real estate depreciates too, just more slowly. Imo the actual difference is that (many) cars are a very expensive way to meet your transportation needs compared to alternatives.
Buy now pay later at 0% is what these programs offer which does not align with what you are saying at all.
Used properly these provide liquidity by spacing out payments.
Certainly there are economic concerns about not being able to afford groceries today but liquidity (especially free liquidity) isn't fundamentally worthless.
I think that's a bit disingenuous. It's not always delaying work. There's only so much time and there are some people who cannot afford to live with the time in the day, the skillset they have, and the market conditions (both income and expenses). Your tone and word choice shows you don't understand the problem at all.
If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.
So you're using a single person you stood behind in a line for a massive generalization but calling one of the largest sources of consumer debt in the US an edge-case?
Sure, but could that not be an edge case? I'd imagine most people aren't sharing the sadder parts of their life. Or, is it possible they spent the rest of their money on everything more important? Could be argued they should cook at home but still.
It’s not an edge case. The vast majority of debt is mortgages and student loans. Things that people pretty much need, unless you happen to have the upfront cash.
You are conflating what actions would maximize the long term returns to the individual with the status quo which is that credit increases liquidity of the average family, who has most of their wealth tied up in home equity.
I'm really sick of this sort of look down your nose at a huge fraction of consumers type behavior. It's the same sort of stupidity that underpins the famous "surely everyone else is wrong" behavior that is exemplified by principal skinner[1].
I eat garbage by the standards of anyone who gives a crap about food and you don't see me going around looking down on everyone for wasting resources on fancy food ingredients and fancy cookware and whatnot. At the end of the day these unnecessary things bring enough perceived benefit to people's lives that they seem worth it, whether that's you overpriced LeDouchebag brand enameled dutch oven or a financing service for consumer garbage doesn't really matter. It's all a "needless" expenditure at the end of the day that people find worth it.
I've never used these services and probably never will, nor am I saying the prevalence of these things is optimal at scale, it's probably not, but I'm not gonna sit there and act like 1 in N consumers, probably hundreds of millions of people, is wrong or ignorant for using them or that I know better for not.
-shitposted from my 8yo phone while driving my $500 car through traffic on bald tires
Absolutely! But they're not, IME, 6x as great as a $50 Lodge dutch oven. They don't solve a categorically different problem or solve the same problem in an innovative new way. They're just really nicely made, is all.
However i bought one and regretted it immediately. I think i just don’t like dutch ovens in general. The pot is heavy as hell. I gave mine away to a friend for free lol.
Carrying a 25 pound weight in the kitchen / dining room is not my idea of fun. :) I use an All-Clad stainless steel pot now instead. Weighs half as much and it will last forever.
> shitposted from my 8yo phone while driving my $500 car through traffic on bald tires
I mostly agree with you, but some of those "needless" expenditures have negative externalities when avoided. Whether that's processed foods causing heart disease and diabetes that strain public health resources, or your bald tires greatly increasing the likelihood of an automobile accident that could kill you or someone else. Your response takes an opposite extreme that none of this matters, when in fact much of it matters, but it's not like treating it like it matters makes you a better person. We need to eliminate moral value judgements from the equation, while still being reasonable.
OK, we'll tell the average worker who can't afford a house or a car by paying cash not to responsibly use a mortgage or a car loan, because some person on the internet said so.
And yes, I'm aware cars are depreciating assets, so spare me the lecture on financing one. I don't currently have a car loan.
>Theoretically, credit should be used for one thing: to make more money. (not less)
This is prima fascia false. Credit, especially artificially low interest rate credit like this, can be used for a ton of reasons, including 'beating inflation.'
I bring this up because so many diligent savers in 2019/2020 got screwed by waiting to buy big tickets items.
This is what happens when interest rates are artificially suppressed. "Buy-now-pay-later" would not exist if the market were able to properly price the time value of money and wasn't backstopped by the Fed and nil reserve requirements.
When I was in my 20s it would take me 20 hours work to earn 100 units
15 years later it takes 3 hours work to earn the same amount
If I borrow 100 units in my 20s at 4%, it cost 4 units per year
I save 20 hours work, and it costs me 4 units a year. That's 48 minutes work in year one, reducing to 8 minute after 15 years. Overall it costs an average 20 minutes a year for 15 years, or 5 hours of work, then I repay the capital which is 3 hours.
I bought a boat on credit. It was the dumbest financial thing I could ever do. It was the best thing spiritually/emotionally I ever did. All of those weekends/vacations boat camping with my kids when they were young. All those times going out after work. So many experiences I would not have gotten to enjoy if I waited until I was 60 to buy in a smart way.
There is such a thing as opportunity cost. Putting dinner on a credit card is dumb. Putting a dinner on credit that ends up being a first date creating a memory and connection with your future spouse is life making. Or dinner with grandparents and kids that might not be around long.
You have completely ignored opportunity cost in your factoring. And it is probably the most important 'human' factor and is just as tied to your 'time' argument. We have 60 some rotations around a star, and stages in life during that time. That needs to go into your 'optimization' as well.
Paying rent doesn't count towards your credit score (at least it didn't a decade ago when I was getting my mortgage). And it's a glaring signal of how the system isn't built for what it claims: evaluating your ability to pay obligations on time. No, the system is built to trap people in poverty and enrich the rentier class.
Landlords like the idea of incorporating rent payments into credit scores, since it adds extra incentive to pay on time. Or, phrased differently, extra punishment for failing to pay on time.
Framing the current default as a help to the rentier class is just silly.
The rentier class are indeed a major cause of stagnation and inequality in our economy, but they are innocent of this one.
This benefits the landlords for the reasons you outlined, and tenants must interact with the credit industry through additional (often predatory) means in order to build a credit history that may allow them to buy their own home. Further, landlords have an incentive against providing this positive feedback, as doing so makes it more likely that tenants would exit a relationship that is profitable to the landlord.
Have seen this first hand. E.g. tenants with a terrible credit score, but 36mo of proof on-time rent payments. They've always made their future payments (in my experience).
Is having your payments reported to a credit bureau really a benefit to you to allow you to have a better credit or is it a collection activity intended to help the creditor collect?
The reason buy now pay it later is being added, is because those lenders are having trouble collecting, so they want to add it to the credit score so there is an additional consequence if they don’t get paid. It’s a collection activity, not something that’s designed to help the payor.
Adding rent is mostly a benefit to the landlord not to the poor people.
The shitty software my landlord used to use -- the Buildium / Realpage scum -- decided to put a popup on every rent payment trying to get me to pay the Realpage scum $5 to $10 to report the rent payment to the credit bureaus.
Realpage offers payments on their website and landlords typically pass on the service costs to their tenants in the form of a $5 “service fee” as itemized by Realpage. Compared to a $10 fee to get a cashier’s check to pay in person (because ACH is done by Realpage), you’re saving $5/mo. (Cash is generally not accepted because they don’t want to be storing cash on location.)
I left the U.S. several years ago and have completely forgotten about "credit scores" in this sense. I get reminded every once-in-a-while how things that used to feel so obvious and inevitable and necessary for society to function are completely artificial.
Where are you now? And what is the system like there?
From my extremely naive understanding, obtaining credit and low rates is, in general, much easier in the US than other places. So it makes sense to me that it has “artificial” tools to help determine risk.
How do other countries handle this and provide the availability that can be found in the US?
Can't speak for every country, but in Sweden for example tax data to a certain level of detail (income by labor, income by capital) is publicly available for each citizen. Same for debts. And debts that go to the collection authority, which has a very dark name (kronofogden), are very public and somewhat worse than having to wear a scarlet letter. So credit institutes have enough of an idea of your finances to decide your rate.
Banks are required to prove their loans are affordable. They can only lend someone an amount that they can prove the borrower can afford.
In my experience, rates are not low in the U.S. They are high because high risk loans are able to be granted.
The availability of debt for things like housing and cars is very complicated, but high taxes, a high degree of education, livable minimum wages, and realistic employee rights helps increase stability and decrease risk. I don't say it to be flippant. It is more complex than even I understand. It's only to say that, given that these systems are designed artificial systems, there are multiple implementations that work under various constraints and incentives.
The US also has low interest loans for people who can probably afford the loan beyond what a credit score indicates. That is a conservative form of lending and it’s true that the US supports a wider range of lending than most countries.
In some countries a credit score is a mysterious value calculated by a private company based on patterns of consumerism and money usage that greatly affects your life. You must earn the score through engaging with other private companies, to the company's profit. This is why in the US & UK people get credit cards early, to improve their score whilst trying to avoid the debt trap.
In Scandinavian countries there are registries of your income (from the tax authority), your debts (including buy now pay later which are technically flexible loans) and any bad debts you have that have gone to debt collection. No history of previous balances, repayments, how long you've had a credit card, etc... Companies use this to come up with a score, either themselves or a company like Bisnode will do it for them. So basically it's a simpler calculation based mainly on current situation than history.
You can have debts totally only up to a certain percentage of your income. Banks require that you produce a monthly budget demonstrating that you have a certain amount left per month after all expenses and debts are paid. You have to be able to prove this by giving them access to your tax and financial records. Most rates for things like homes and cars are consistent from bank to bank across the country.
And how do lenders assess previous defaults when underwriting new loans?
From what I've seen, most developed countries actually do have the equivalent of the US credit reporting agencies. It's just that the functionality goes by different names and is distributed across several different types of entities rather than being centralized in three credit reporting agencies (plus Fair Isaac Corporation / FICO which is a vendor to all of them).
For better or worse, it's not really possible to have a modern economy with high growth rates unless lenders have a reasonably reliable way of quantifying borrower propensity to pay. Debt to income ratio is a piece of that, but some people are just deadbeats.
To be clear, credit reporting and tracking is not the only function of credit scores in the U.S. These functions do exist elsewhere and are often called "registries." They are not private companies, but instead public centralized institutions. Likewise, it is not possible for private companies to loan debt to citizens, even by proxy.
For bankruptcies and defaults, there are similarly court records from public institutions, which you give a bank access to. They cannot search these sources without your consent, though of course they will then not loan to you.
Society itself is completely artificial. Money, property rights, laws, taxes, even the words I'm using to write this very comment... all of these are just human inventions, reified mythology.
It's useful to remember this when tempted to make arguments that assume there is a Right Way to do things. We are exploring a massive possibility space where components interact in non-linear ways. There isn't a right way, there is no golden path. The reality of our society is an integration of each individual experience. We build theories as abstractions of that integration in order to manage and engage with that massive complexity. It can be useful, as long as we remember that they are abstractions. When we forget that our abstractions are only abstractions, we tend to cause additional problems on top of that which we were already trying to engage.
What struck me about credit scores is that, from the outside, it seems so obviously ripe for corruption and predation. But growing up, it just felt that it was the way things had to be; how could it possibly be different?
This is the aim of every culture & political system: to remove the ability to even consider that other ways of doing things are possible and that other countries doing things differently are terribly flawed compared to the paradise you live in.
There's no lobbying necessary, because FICO isn't a government agency, its a private company. Why we have a private company determining such an important thing with minimal government oversight is certainly a question we could be asking.
That being said, there's an innocent explanation for this specifically. BYPL is pretty new as a common type of debt (became popular in the last five years). They're putting it into FICO 10. The last time they updated FICO was FICO 9 which was released in 2014, before that there was FICO 8 in 2008... a lot of banks are still using FICO 8 or even earlier models. Banks are slow to change, and FICO moves slowly because banks don't want their models upended every year. Fwiw if the government was more involved in this I doubt it would be taken into account any faster.
Your credit score can decrease if you pay off your credit card balance or pay it down too quickly. For example, paying off the last $10k on a home loan. The score is also a reflection of your value to them as a paying customer. How much money you can make them, and how reliable you are with regular payments based on past data. These types of businesses may seem off, but if the customer is reliable and makes you money, assigning a low score based simply on the business type is a recipe for litigation.
That is true when you close an account (like paying off the last $10k on a home loan), but I don't think that is correct when paying a credit card down to a $0 balance and leaving it open.
The reason is that your credit score is impacted by both your available credit (higher is better) and credit utilization (lower is better). When you pay of the last of a home loan and close that account, your available credit goes down and your credit utilization goes up (assuming you had any other debt). Both of those hurt you. When you pay the credit card down to $0 and leave it open, your available crediot stays the same and your utilization goes down.
> Your credit score can decrease if you pay off your credit card balance or pay it down too quickly
It can have a short term impact, sure, but long term (a few years), your score will be fine. I paid my last student loans years ago and I did see a sudden score drop and not I'm sitting right below 800 with no debt.
It's crazy how many things that require credit are on a self report basis. And the only time they actually report is for a past due debt and not successful payments.
They also didn’t destroy people’s credit when they got upside down and had to return the $5k couch or $15k car they were talked into buying on their fixed income, but that’s usually “other people” problems.
You’re so right, and that is exactly why we don’t have an entire class of jobs whose purpose is to get people to spend more than intended. Yup, all personal responsibility. 50% of people having less than a middle school education level, but you’re totally correct, it’s just ALL personal responsibility. No other factors at all!
I doubt most people would pass a financial audit, unless they had built their life around "proper accounting controls". Of course, if they had an incentive to do so, it probably would only take two or three years to get things in place and consistent. But then, most people don't have 1.3 Million active employees [1], who knows how many contractors and retirees. The DoD's finances were not designed around audit requirements and it takes time and consistent attention to retrofit accounting controls into a very large organization.
What's interesting here is that normally BNPL only does a soft check.
I wonder if this is going to change.
Equally, I find it weird that companies can ding your credit for not paying but have no obligation to report on-time payments. It should be both or none.
Technically it is largely already built in as an assumption that payments are made on time. You also don’t lend to a friend you will not be paid back by, will you? The credit score reduction is merely a diversion from norm, i.e., the expectation that you pay what you agree you owe.
Ironically, there is actually zero reward for being a reliable person, there is only a punishment for being an unreliable person; and with all the money printing, even the punishment for being an unreliable person has been almost totally removed and being reliable and upstanding is effectively a punishment since you don’t get to live like a king on a shoe string and then declare bankruptcy and have credit extended to you immediately afterwards because money is cheapened and consequences are void.
> You also don’t lend to a friend you will not be paid back by, will you?
I don't lend to friends and family. It's not worth losing those bonds over. I'll help financially where I can, and I'm not going to stop anyone paying me back, but I'm assuming that money is just gone.
Does anyone else live in a place where there isn't a visible "score" for how valuable you are, but rather only a "credit check" for how risky you are, which is performed if you apply for new credit (buying anything with an invoice, getting a credit card, or taking any other kind of loan)? Meaning that if you have a good income and no history of failing payments, you are basically passing the check with flying colors, and will have the same "score" as someone who has had tons of well-served credit before?
This thing where the score as in "risk" and score as in "business opportunity for lenders" is intertwined, and creates weird incentives for consumers, is that only a US thing or do any other countries have something similar?
Credit scores aren't a score of how valuable you are, they're a score of creditworthiness or how unlikely you are to default on a loan. The largest factors are age of credit and payment history. Utilization is also a factor. Someone who occasionally misses payments and has high utilization is going to be more profitable but higher risk to lend to.
Just because that’s what a scores is designed to do it doesn’t mean that’s what businesses use it for downstream.
The fact people always debate what a credit score really means suggests that there are too many factors rolled up into a single number when we should really have a few distinct sub-scales. Anybody that has made a dashboard for a ceo with a short attention span that refuses to deal with nuance and just wants to see “a number” knows this problem all too well
I agree in general, but a credit score absolutely DOES NOT tell you how profitable someone is to lend to, and in general someone with a very high credit score is a very low margin customer.
And that's where interest rates come in. Lenders will typically make similar profit margins on all types of customers regardless of credit score. They charge lower interest rates to borrowers with high credit scores so it all evens out when averaged over a large customer base. Most lending markets are highly competitive so any major differences quickly get arbitraged away.
A score alone does not directly do so. But there is a report attached that will track balances and such. While balance tracking has no "history" in a credit report, lenders can make actuarial guesses based on DTI and other markers which are absolutely included. Which is why, when denied, you don't just get told "Your score is too low" but things like "existing balances are too high", "age of existing accounts is too new", etc.
Yes, which is exactly why Fair Isaac Corp. sells multiple different scoring models customized for different use cases. It's not just one FICO score. For example, auto lenders usually stratify borrowers in a different way from home mortgage lenders. Contrary to the naive hot takes on HN, lender CEOs are well aware of these nuances.
Credit scores in the US function similarly to this risk assessment you describe, with the caveat that there is no standard way to measure risk without a credit history. In my experience, it does not take very long to establish that baseline, and there are inexpensive vehicles to do so, such as secured credit cards. Small-scale lenders are likely to accept alternative documents like income statements or proof of payment history to qualify. FICO scores, as imperfect as they are, merely simplify the risk assessment process.
I suppose it may be related to the overall "looser" grip on who exists, and what counts as collateral. If I "default" on a loan, the lender is still pretty safe to get back most or all of it, since any loan is secured by my future income. So there's not as much need to prove my credit history - my income is public and always was, and my future income is collateral for any loan, including mortgages if my house is suddenly under water in a recession.
That means that barring any failures to service credit in the past, I don't need a history of successfully servicing credit in order to get credit.
It probably makes sense to do so. Not that I condone the FICO hustle. But small loans can add up quickly and delinquencies need to be measured for financial market stability.
The worst part is that it will equally affect all the responsible people when it blows up just like it is affecting them now when BNPL is just one more way in which demand is artificially created that drives up prices.
I live in a working-class neighborhood and it blows my mind how often DoorDash visits my neighbors (particularly considering there are dozens of restaurants within one mile).
The only time I encourage delivery service is when we're too intoxicated to drive.
I stayed with distant family for a bit around COVID when everyone was WFH. Him and his wife must have gotten 3-5 DoorDash deliveries a day pretty reliably, I was blown away. Each ordering their own thing from different restaurants. Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost. Sometimes the different drivers would arrive at the same time and we’d have a little jam up on the porch.
> Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost.
Obviously I can’t say if this was the case for your family but a friend of mine pays for the premium dash pass subscription and this is exactly the kind of thing he would do, knowing that he won’t be charged the delivery fee. Dunno about tips but that’s optional anyway.
(Man, I sure hope that individual delivering the donut was paid for their time, though. No clue if the economics of Doordash’s subscription model actually allows for that but I can’t imagine how it would, with 3+ deliveries per day at [$10/mo](https://help.doordash.com/consumers/s/article/What-is-DashPa...). Gotta be a combination of some drivers getting screwed, Doordash losing money, and/or dash pass subscribers who rarely order. The order minimum does not apply everywhere. Maybe there are different payment tiers but that’s not detailed on their help page.)
When COVID started my wealthiest elders decided to start eating out for every meal in order "to support local businesses." Ironically, they did not leave any tips because "you don't tip unless you sit down in the restaurant." You're not helping in the way you think you are, Gramps.
>You're not helping in the way you think you are, Gramps.
Why do you believe this? Tips cannot go to the business, and businesses were closing during covid because they weren't making any revenue.
The tips helped servers sure, but so did buying food from their place of work such that they can continue to have a job, unless that job literally paid less than minimum wage or unemployment, which is its own atrocity.
Yes it's a bit odd that the article poses the question if this will help or harm credit seekers. The point of the system is to provide transparency.
What does need to happen however is that these inputs are properly weighted such that those using FICO can make appropriate decisions. Similar to credit cards, numerous BNPL-purchases do not necessarily indicate that the debtor is in financial trouble. They could merely be using the services for the other conveniences they offer. Whereas seeking numerous loans is usually a negative metric.
The hustle is mostly just getting merchants to eat bigger discounts in hope of selling more volume. Instead of eating ~3% interchange on a credit card, merchants eat ~6% subsidizing short-term BNPL loans.
The irony is that it does not even really matter anymore at this stage, especially with mortgages. So you get a few points taken off because you have 800 vs 600 score, but it won’t really make a difference when both are on the same out of control roller coasters where house prices have increased by 100% in 7 years.
US home prices haven't increased by 100% in 7 years. On a national basis, the Case-Shiller index has only increased by 65% (nominal dollars, not inflation adjusted).
In the short term, the difference in mortgage interest rates between prime versus subprime loans can have a major impact on borrower cashflow and the type of property they can afford.
The security and privacy nighmare that the various credit score systems bring on by collecting and storing sensitive data on individuals some way somewhere with some sort of access for someones for something (a very real big brother in esence on essentials matters), is a good incentive keeping people away from loans. The less is more in this case. Avoiding avoidables.
The crime is that in the very essential case of abode it is impossible to avoid for the generic population. Both renting and mortgages require you do disclose your life for organizations and sometimes individuals having financial incentives with you. Making you exposed and voulnarable, no choice is given. It is a must (you and your dependants cannot choose not to live somewhere).
So they do not have to risk their capital gain, allowed to risk your most sensitive personal data.
What is the functional difference between BNPL and credit cards that can explain why it’s become popular? A credit card is literally “buy now pay later” so is it just the ease of onboarding?
BNPL is 0% interest over N months. A credit card is 20% APY over the total balance over minimum payment. And it's offered by my CC providers.
For some larger purchases on a 12 month plan, leaving the money in savings loses me 1.5% cash back but gains me around 3% interest (after accounting for the depleting principle).
It would be stupid not to do it sometimes. I don't really get the financer's benefit. Though maybe it's because I do pay it, and if I didn't there would be 200% APY or something.
The merchant pays a fee for it, and they do it to get a sale that they otherwise would have missed.
If you decide to save $25/mo for a $100 product, that is 4 months for you to change your mind, have an emergency suck up that money, or score a lower price by waiting for a sale. But for some segment of the population, they will close on a pay-in-4 right now instead of waiting, and that is guaranteed money.
Yeah, I’m not sure if BNPL loans have changed in the last decade at all but the financiers make money on the people who don’t pay the balance by the end of the term. I’ve financed a couple expensive electronics when it made more sense in my younger days and the terms were such that if you don’t pay it off by the end of the term, you owed ~24% of the total bill in interest.
I bought tons of solar panels with 24 month 0% interest CC for my DIY installation. Kinda makes entire system free. I wish BNPL were offering longer payment periods, few months is not worth the risk at all.
Subprime borrowers use BNPL a lot and often don't pay it all back. Extending the terms would likely mean Klarna and Affirm will make back less money before the loan defaults.
A credit card is for gaining access to the electronic payment monopoly's network[1]. BNPL is explicitly a loan. Yes, a credit card transaction may effectively turn into BNPL if you fail to complete your end of the transaction in a timely manner, but that is a hindsight outcome, not the reason for choosing the method in the first place.
[1] Nowadays you can often also use the network with other methods, like a debit card, but those alternatives still aren't universally accepted like credit cards are.
For most of them, interest accrues from the date of purchased but is not charged if you pay on time. If you don’t, you owe all the back interest from day one.
Ah, that's the scam. Yet another poor tax, then? The rich get interest on money they already spent, the poor get an illusion of safety followed by even more destitution?
That’s not how BNPL works in its modern form with the third party companies. You pay late fees if you pay late. If you have a 3 month plan, they divide the payment into three equal installments and you pay it off.
The parent poster is confusing BNPL with cobranded cards like Room 2 Go credit cards that have special promotions with “0% for x months”. It’s a regular credit card where the minimum payment won’t guarantee that you pay the original amount off in “x” months, but you only have to pay 2% of the balance. These have always shown up on your credit report.
They are “deferred interest” plans where if you don’t pay the balance off in $x months it will charge you back interest.
Ah yes, the big scam of offering zero interest unsecured loans to anyone without even running a credit check. These companies are bound to have big losses when things go south because they literally offer you free money.
Depends on your definition of 'penalized'. FICO is all about identifying good ROI candidates.
Say you are a lender, you want someone who constantly uses credit, always pays their bills and has the capacity take on new debt. That's what FICO is for.
It's not some consumer reward system. It's not your score to game, it's a score on you for companies to game. Quit playing the game.
IMO the game is to get the highest credit score while spending the least on credit. That way if you e.g. need to acquire housing, a reliable vehicle, business loans, even employment or insurance, you will be able to and can get a good deal. Sure, paying nothing saves you money, but it also costs you the opportunity cost between what you could earn/save by utilizing credit vs waiting months to years to save up and pay cash.
The easiest approach is to get high point credit cards and pay them off each month.
That way, you don’t pay anything (and are subsidized).
Of course the money comes from people that don’t do this, and vendors’ margins.
So, it’s “Participate in the credit card racket or no house for you” on one side and “That’s a nice shop you have there. It’d be a shame if something happened to it.” on the other.
The US really should abolish the credit rating industry.
But to answer the question, there's quite an instinctual aversion to earning money through apparent idleness. Same reason that people hate landlords who just get "passive income" simply for owning. (Of course the owner had to buy it in the first place, or had to inherit it - and indeed inheriting too much stuff also rubs people the wrong way - except if they themselves are blocked from passing on their things to their kids).
Same reason that merchants were distrusted, since there was no concept of economics that would allow them to understand that in fact trading and arbitrage is actually valuable contribution for the market to properly price goods, and is a much better way to price things than gut feelings about "sentimental value" or the labor theory. But this was not well understood so making money through trade was seen as witchcraft. How come he can come to the village and buy our pig for X and then go sell it for X+Y in the city? I mean that's somewhat understandable, the transport etc. Income through interest doesn't even have that. Of course the real value proposition is again a kind of resource allocation cognitive processing. The lender's contribution is in the assessment of prospects of the profitability of a venture. That apparently this is not the case in many consumption credits is indeed some kind of system failure, and some perverse incentives set up by regulations, where somehow the financial companies are not punished by reality for misallocating. See 2008 etc.
I suspect actually MOST ancient traditions ban usury (or ban lending altogether). Christianity banned usury, Islam banned essentially all lending, Hinduism banned some casts from lending and regulated the lending of others[1].
I think the practice was found to be corrosive to societies and thus at one point or another many of them tried to ban it. (Lending is also very helpful for commerce, so most societies also reintroduced it. Actual practice varied at different points in history.)
All Abrahamic faiths ban lending where the returned amount is greater than that borrowed, i.e. charging interest. Judaism "worked around" it by banning it amongs Jews but allowed lending on interest to non-Jews. Christianity originally followed Jewish law in this regard but abandoned it later on. Islam, adheres to banning interest strictly, but this is subject to different interpretations. E.g., buying an item at a higher price but paying in installments is allowed by some schools of jurisprudence, while others disallow it, while there is unanimous condemnation of a loan whose interest "doubles and redoubles" [explicit in the Quran], which is the typical credit card or mortgage. The main difference in buying at a higher price + installments from a conventional interest based lone is that the profit gets agreed to at sale, and it holds regardless of whether the full payment is made early or not.
Muslims have got around the problem of not being able to pay for houses in cash by constructing a joint ownership scheme, where the lender and buyer enter into a joint ownership of the house; the buyer pays rent and adds extra to buy more equity, and the rent goes to both the buyer and lender in proportion to their equity as a business partnership. Over time, the rent part decreases and the equity buying accelerates. There are other models, but this is the most popular one. Due to Federal and state laws, such mortgages are often reported with interest rates even though, technically, interest is not being charged.
FICO scores are a joke. They hint at what they use to calculate them, but the algorithms are kept secret. Fair Isaac can't reveal the algorithms, otherwise they'd get gamed. Incentives to keep bad info and wrong info in dossiers are strong, too. If allowed, Fair Isaac would put rumors and other bullshit on n your file, and never take it out.
They don't really "hint at what they use to calculate them" so much as "tell you exactly what is used to calculate them, how it's calculated, and even include an estimation tool so you can calculate your score yourself"
For fucks sake, at least keep your conspiracy theories somewhat believable.
Absolutely nobody is worried about "gaming" credit scores because the activities to "game" credit scores are identical to the activities that make you likely to pay off debt in the future and that's what a credit score measures. So it doesn't matter if you pay off your bills to "game" or to be responsible, you're still paying off your bills.
I don't know that they are really that complicated... I just do the things that they suggest the scores are based on. Pay on time, have more accounts that have been opened longer, have a lower credit utilization, etc and I watch my score go up and up.
My score started at around 670 when I was young and before I had done anything and I did the things and now it's around 820.
the score is easy to reverse engineer if you have the data and pretty much every big bank has the data.
source: I worked at a big bank and did this, it was easy.
Most of the stuff is obvious and intuitive (don't make late payments). One that's not terribly intuitive is credit line utilization. It has a big impact and most people don't think about it. For example, it's better to have 2k in credit card debt if you have 20k in credit lines vs. 1k in debt on 2k in credit lines.
You forget the scoring is not based on individual performance only. It also includes your performance compared to those in similar groups or buckets.
Ever wonder why your credit score goes down randomly in one month despite nothing changing?
FICO’s black box algorithm put you in a newer credit group of higher credit scores. In that group, your profile scored much lower compared to others. Thus you get a 10-20 point deduction.
If you have a long history of good credit it probably doesn’t matter. But if you are a young person looking for auto/home mortgages, that 10-20 pt dedication _could_ lead to slightly higher APRs depending on the underwriters own scoring algorithm.
There are no incentives for Fair Isaac to promote or use "wrong info" because if the score they produce is deemed to be an inaccurate measure of credit risk, it would not be a useful product.
Why would they put rumors and bullshit in your file? The credit bureaus aren’t out to get you. Their goal is to help their clients (lenders and similar) to make money by identifying how risky their clients are. An accurate risk assessment is good for them. If you’re a good risk, they want your score to be high. They don’t gain anything by putting crap on your file to tank your score.
The only appeal of these loans is that they weren’t incorporated into FICO score. These companies will all fail once people start noticing their scores drop.
This would probably only affect the people with the worst credit scores I imagine. I just don't see a ton of 800+ credit score people deciding to spend 5 payments of $20 for a pair of $80 shoes.
I always thought it was interesting that the BNPL loans’ interest is subsidized by the retailer, which pay the premium in order to improve the chance of a sale (hoping to hone in on those who can’t afford it now and make it back on that extra spend). Which means high credit score, wealthy spenders could put everything they can on BNPL plans and profit the (minuscule) interest over time, but if you can do that on big purchases, maybe it’ll add up. Same way credit cards work, if you have the cash flow and always pay them off in full, you can make a few bucks in a HYSA for the 40 ish days before the statement.
I can see a future where a BNPL loan is not offered if the signals the checkout page collects indicates wealth, since they don’t have an issue of cash flow stopping a purchase. Imagine a loan that has a credit score maximum, not a minimum.
I’m not sure. I’m sophisticated enough to use BNPL and set aside the funds in a HYSA, but I never have as you miss out on: credit card rewards, credit card purchase protection, credit card extended warranties, credit card chargeback infrastructure. Additionally, I’ve seen BNPL offers where the first payment is in 2 weeks compared to 30-50 days for credit cards depending on when your statement closes and how soon you have to pay, so the extra interest is less than you might think. It could make sense for very large purchases, but then, that’s also where credit card features can really come in handy.
Discriminating wealthy customers increases the risk profile of the loans which is already questionably high. Retailers are used to paying extra for credit card transactions anyways. BNPL really is just meant to compete with credit cards by splitting the runway across more months for the loan. Equally predatory business model but credit cards are able to offer the same interest amortization that you can do with bnpl through the rewards programs. They're effectively the same.
Eh, in the same way a lot of retailers offer student discounts, they want to meet everyone at their maximum spending limit to capture more of the demand curve. It doesn’t have to be one or the other; not offering BNPL loans to wealthy customers aren’t likely to tangibly affect sales of that group.
1.5% back on the purchase via CC rewards beats earning 1% over 3 months (4% yield) in a HYSA every time, anyone using BNPL is using them suboptimally.
For a 3 month BNPL loan to be worth it, HYSA rates must be over 6%, and actually a bit more due to the time value of money; you get CC reward cash after the statement period but it takes 90 days (and up to ~120 days) to get three monthly interest payments.
No, I was replying to your comment. Using a BNPL loan is less optimal than paying with a credit card due to the cash back rewards.
People with good credit may use them, but it makes zero sense to do so. You always come out ahead by using a credit card and paying it off immediately unless the high yield savings rate is 6% or higher assuming a BNPL loan term of 3 months. Beyond that, it does make sense to use them, like Apple’s 12 month no interest on Apple products with the Apple Card.
I don't think a discussion of optimality is relevant to what I wrote.
Lots of people with good credit are not maximizing credit card rewards and sign-up bonuses, either. Humans are not homo economicus. (And just as a factual matter, there are sometimes longer BNPL terms than 3 months, which changes the math on what is "optimal.")
Shifting a cost forward a couple months interest free is a great deal for people who are financially responsible, especially if you have some other loan (like a mortgage) that you could be paying off more of instead.
It's no different to the practice of using a credit card for everything and then paying off in full a month later because the credit card interest is lower (often zero if you pay off within a month) than the mortgage interest.
I briefly looked into this, but I wasn't convinced the juice was worth the squeeze. My cash is automatically getting ~4%, but there's too much fine print to make sure the BNPL rate really is 0%, I'm sacrificing 2% cash back, and missing one payment makes the whole endeavor negative ROI.
I suspect this is where some buyers will get into trouble. Theyll think they made a payment, or they miss a notification that tells them to send this month's payment to servicer X not Y, and before they realize, boom they are in default and owe all the interest.
This seems like it’s going to harm more people than help. Encouraging fiscal irresponsibility under the guise of improving your credit score. All it’s really going to do is give lenders another metric to deny you a loan, either because of delinquent accounts or too many accounts opened and closed.
Background: During the riskiest span of my life, financially, I used to have a 780+ score and an AMEX Gold (for about a decade, early 2000s); now I don't have any credit cards, my vehicles are entirely paid.
My Conclusion: Credit scores demonstrate ability to re-pay interest (i.e. lender profits); it is a score that demonstrates how profitable you might-could-be, not necessarily representative of fiscal wisdom.
Meditation: not caring about your credit worthiness is a fantastic approach to life, as long as you've already bought your house (or have alternate plans, not involving a mortgage).
"The industry has long believed that consumers using BNPL responsibly should result in positive credit scores, as the majority of users are paying back in full and on time."
Because "most people pay back fully on time" is not the metric.
The real question is what are the delinquency and default rates for BNPL as compared to other forms of consumer credit.
Given the previous understanding that it didn't hit your FICO, the retailer subsidy as a sales lead, and the types of products people were financing.. one might assume worse..
What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time?
To me this seems like a new product that would target a different consumer than the one that makes payments on time. But I would like if someone challenges this view. Thanks!
I’ve used them several times, mostly because they are relatively cheap forms of credit for short durations (<12 months). I have plenty of credit available via traditional credit cards, but BNPL —- to this point —- haven’t reported usage rates to the bureaus.
Last summer our A/C went out. It ended up being about $4.5k to replace, and it was a heat emergency at the time. So I put the whole thing on Affirm for three months, at 0% interest. I paid about $50 in fees. That got us through the immediate emergency and gave me time to shop around for a better way to fund it.
I ended up taking out an auto loan with my credit union. The rates were much cheaper than a personal/unsecured loan, and I have three vehicles in the driveway without liens. The loan was for four years, but I’ve already paid it off.
In a tighter situation, BNPL not impacting your credit utilization rates is a big benefit.
> What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time?
Slightly longer repayment time frames. (Multiple months instead of just one.)
CC gives me 30 days to pay it back interest free. BNPL gives me 2, 3, 6, or more months with very little or even no interest. If I know I'm not going to be able to pay it off in a month, I'd rather do a BNPL loan since it's so cheap. Additionally, you can have awful or no credit and still be approved for BNPL. It may be beneficial to have some repaid loans on your credit if you ruined your credit earlier in life like this credit builder CCs that have a super low limit.
I’ll add that I’ve found that the more you use Affirm at least, the better my options get.
I started by always choosing the shortest “plan”, which was 0% and no fees. After I’d paid off a few of those, I started getting offered plans of up to a year with no interest and very minimal fees.
Now, while I don’t use Affirm for luxury/unnecessary purchases, it offers better rates than any credit card I have, and better than a bank loan in many cases.
I have three Affirm loans right now, for a total of about $8k. All three of those are business expenses, and all three have increased profit in our business significantly more than they cost us.
I should have specified those durations are both interest-free. If you don't pay your credit card off after one month, it accrues interest at fairly high rates.
A CC gives 1% cash back. Your bank's savings give 4% interest. BNPL doesn't earn the cash back, but over a long term you make more in interest for some purchases.
For small puchases with short repayment periods? Not a clue.
That's an incomplete answer because it doesn't take total debt burden and history of payments into account over time. Score is fluid and should decrease while debt burden is high or increases. At the end though, score should improve slightly because they are slightly more trustworthy having repaid what was promised.
I successfully applied for a mortgage with ~30 credit cards open. Nobody batted an eye, or even commented on it. They looked at balances and credit score. Balances were almost all zero and credit score was excellent.
A hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage, it doesn't hurt.
> Balances were almost all zero and credit score was excellent
Not the same.
> hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage
Again, not the same.
Affirm can be worse than credit cards because credit cards are a single line of credit of X size. The people using it don’t realize that a bunch of tiny lines of credit add up to a larger one ultimately and they can find themselves overleveraged.
I wonder how it will be implemented. Because for me, Affirm shows my "purchasing power" almost like a credit card, even if it's currently utilized across multiple purchases. So I could see a difference between "making payments on an open balance of $X on an account with $Y purchasing power", even if those payments are subdivided into the original purchases, versus, "You have 7 open Affirm loans".
I do that too, I actually get a kick out ripping off those predatory 0% interest traps. I had no idea the BNPL things didn’t impact credit scores. If they’re unsecured with no credit worthiness impact then why even pay them back?
yet another vague data point mortgage underwriters can use to deny your loan
In corporate back room, "persons score is high enough to qualify and income is good enough but there’s a strong history of bnpl usage. Over 200 accounts ranging from food to groceries and luxury items. Risk to default has increased, thus approval for slightly higher APR compared to peers with none to lower BNPL usage.”
Rinse and repeat this for hundreds of thousands of loans and now bank is raking in (more) profits
For the line to go up you need people to keep buying more, and reducing costs. But when these costs are people's salary, you end up paying them less, so they can't buy more, thus credit.
The overreliance on credit as a new step in the consumption cycle is an indicator that the whole system is collapsing, but somehow it's supposed to be good news that buying a burrito might be used against you to further drawn you down.
The town is on fire but good news, your house being burned down will get you air-miles.
Theoretically, credit should be used for one thing: to make more money. (not less)
However, instead of using it to buy or construct a machine to triple what you can produce in an hour, the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.
At some point, you run out of hours available and the house of cards collapses.
i.e., credit can buy time in the nearly literal sense, you can do an hour's work in half an hour because the money facilitates it, meaning you can now make more money. If instead of investing in work you're spending on play, then you end up with a time deficit.
or, e.g. you can buy 3 franchises in 3 months instead of 3 years (i.e. income from the 1 franchise), trading credit for time to make more money, instead of burning it. It'd have been nice had they taught me this in school.
> the average person is using
The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning. The entire system is based on growth and consumption, I have a hard time blaming "the average person"
I acknowledge that such telling exists, but there is still responsibility for people choosing to listen to it. Skepticism is vital. Beyond being skeptical of what you see, it is wild to me that we don't have approximately everyone blocking all ads, cable news, most social feeds, and other such transparently manipulative shit. Advertisement especially is literally industrialized and research-based psychological manipulation to make people do things that make no sense (see what Alfred Sloan did to GM, for an early example) — it's toxic and should be absolutely avoided.
People aren't going to learn to be skeptical or think critically because we've been literally removing that from the curriculum in schools. How can someone be skeptical of something if they don't even know how to be skeptical?
Social media runs rampant with a form of skepticism, but I would call that closer to paranoia than critical thinking, and I don't think it's really being helpful in the same way.
>> Social media runs rampant with a form of skepticism, but I would call that closer to paranoia than critical thinking
For my generation this was always refered to as a "healthy skepticism", but lately I've noticed many don't necessarily see this as a good trait - an example: any sort of measured, full-picture response to the impact of AI on software development.
As usual, it's a spectrum. The pettiest example is one of Reddit, where you see some random cat video, and the comments all go "this is fake" or "this is posted by a bot" or "how could you do that, you're torturing the cat!".
1. They may all be true, but yiy gotta pick your battles at this point. If you think all of reddit is bots, what use is there complaining in every post
2. Healthy skepticism is supported by observation and findings. The internet as of late has grown lazy on that overall and people just throw out accusations without explanation. That definitely comes more off as paranoia at best, or bad faith at worst.
I see this as directly correlated with the gradual denigration of liberal arts education, a core tenet of which is critical thinking.
Liberal arts education leaders haven't been doing themselves any favors. During the recent COVID-19 pandemic we saw many college administrations abandon all critical thinking to enforce blind obedience and mandatory compliance with pointless and counterproductive policies around lockdowns and mandates. Scientists were condemned for daring to even discuss alternative views.
I absolutely see value in classical liberal arts education. But popular denigration is inevitable when people see hypocritical academics casting aside true liberal thinking and using their platform to promote pernicious ideologies.
Million of people die in the US. In a pool of 300 million people that might be a small minority but it could be much worse.
I was diabetic and still am, and was obese. I was also young. There's no telling that a viral infection would have landed me in the hospital but I do have risk factors.
COVID is definitely a risk. It would be foolish not to practice at least some measure of risk control.
There's definitely some loss of trust in institutions, but if it weren't for RFK, I would still trust them more than some random skeptic covid. Now, I don't trust the FDA anymore, how ironic.
> There's definitely some loss of trust in institutions, but if it weren't for RFK, I would still trust them more than some random skeptic covid. Now, I don't trust the FDA anymore, how ironic.
I stopped trusting the institutions the moment that the CDC admitted that they lied to people about "masks aren't effective" in an effort to preserve supplies for hospitals. Even if their motivation was good, that doesn't matter in terms of trustworthiness. If they lie to me (as they indeed did), I'm not going to trust them any more.
I would find that a little more convincing if the people complaining about being lied to about the efficacy of masks were also the people who were afterwards arguing most strongly in favour of masks.
Strangely, it appears to be the opposite.
That doesn't seem that strange. If they can't trust an institution, people stop trusting lots of things.
No, people are supposed to then test themselves
In Southern California, surfers were arrested for surfing on an empty beach. Parks were closed. This was hailed as a safety measure. I suspect these sorts of policies are what GP was talking about, rather than vaccines or masking.
These were completely valid short-term responses to a situation where an effectively quarantined country had a small outbreak in Venice Beach and we didn't know a lot about spread.
But we were not that country. If the front door is wide open and there's a large sign above it saying "Free stuff - take what you want" because your spouse wants to embrace minimalism and throw away all your joint belongings, then triple deadbolting the back door and installing security cameras are not effective measures to protect your belongings.
There are other policy areas where states can experiment with "Red state" vs "Blue state" policies and compare how they perform, but pandemic spread is not one of them. The most permissive line of defense is the decision that has been made for everyone, and all it takes is one person (we used to call these 'bioterrorists', now we call them 'Presidents') to decide to "get this over with before the election", and it renders any other sensible precautions moot.
Areas where very aggressive precautions were implemented to counterbalance reckless policies elsewhere... didn't do that. You can't do that, without a very strong quarantine around the different policy regions.
This does not offer any commentary on the idea of sensible precautions, in a vacuum. The politicization of COVID that happened very rapidly didn't need to occur, and it did not occur in most other pandemics in this country, or in many other countries during COVID.
You should read about the politicization of the 1918 flu: https://pmc.ncbi.nlm.nih.gov/articles/PMC7893336/
You picked two odd examples. A beach is debatable as being capable of being opened and closed, and whether or not a person is tresspassing, but parks are generally managed by the state or country. Of course they can close down. They typically close from subset to sunrise.
The idea of a beach closing at night-time was novel to me, when I first came to the US. In the UK beaches are ... just beaches, their status is that of "beach", and access is not controlled at all.
Generally there's a fine for being caught sleeping on the beach I think, but that's really to discourage people being swept away.
I picked two examples of everyday activities that should have been obvious to everyone that they were safe.
Mere weeks later public health authorities encouraged this sort of behavior (going to the beach or the park with ample space between individuals). It seemed a relevant example of "pointless and counterproductive policies around lockdowns"
I think it's very easy to Monday morning quarterback administrative decisions about COVID-19 mitigation now that we're past it, when, at the time, we had very little information which led to a ton of hysteria. I'm not going to relitigate the COVID-19 pandemic response, but I will say I don't think it was inconsistent or ill-advised at all to err on the side of following national health guidance in an emergent situation like that. Even from a purely legal/lawsuit-aversion standpoint, you'd ignore federal guidance/mandates at your financial peril.
> at the time, we had very little information which led to a ton of hysteria
If anything, this simply underscores GP's point. Getting hysterical when you lack information is a total failure of critical thinking, so to the extent that liberal arts educators did so, we should be skeptical of their ability to think critically.
No, that's not a correct conclusion in full generality. The first days of Covid where a case of decision-making under uncertainty: what if R had been 10 and the fatality rate had been 25%? We did not know at first, and these are not absurd numbers: they have existed in past pandemics and if they had held again, fatalities could have been in the tens of millions. Locking down until you can gather more data to rule out this possibility is a rational decision under that uncertainty, because there's asymmetric downside risk of "tens of millions die" versus "chattering internet commenters are annoyed they can't go to the beach".
There's more of an argument here regarding lockdowns going on longer than they needed to, but as much as people want to blame "the experts", most of that was bottom-up from voters. To cite one example, despite how many times I've heard to the contrary, the CDC never, at any point, recommended school closures: that was pure grassroots demand from parents.
You're really missing the point. Many liberal arts college administrations went far beyond any sort of federal government guidance, and imposed lockdown and mandate policies with zero scientific basis. Or look how the Stanford University administration and fellow academics treated Dr. Jay Bhattacharya; that story was repeated at colleges all over the country. The level of hypocrisy and inconsistency makes it clear that they don't deserve any sort of benefit of the doubt.
Classical liberal arts are wonderful, and have been a great benefit to all of humanity. But sadly many academics no longer live up to those ideals in thought, word, and deed. Instead they're more focused on indoctrination and political advocacy then a search for higher truth. If they want to restore public trust in liberal arts education then they need to start by reforming themselves. Otherwise no one will take them seriously, and many taxpayers will oppose public funding.
>imposed lockdown and mandate policies with zero scientific basis
The If Books Could Kill podcast just came out with an episode last week about how the phrase "lockdown and mandate policies [have] zero scientific basis" is almost technically true but is certainly incredibly misleading. The short version is that it would be incredibly difficult to ethically test many healthcare policies to the point that they have scientific support in the way we usually think of having evidence... but we can look at the preponderance of evidence we do have and understand that masks help block germs and viruses, staying home from work or school means I won't transmit contagious diseases to my colleagues, etc
https://www.buzzsprout.com/2040953/episodes/17348825-in-covi...
I don't know how any of that had to do with liberal arts. To give you the benefit of the doubt and assume you're interpretation is correct: do you blame the person when they panic in a major earthquake, as they watch their peers crushed around them?
It wasn't normal times and abnormal times need preparation. It's a great thing the acting president during COVID removed the pandemic response team the previous year. It's not wonder we were chickens wandering about without our heads.
Isolation and masking have been proven again and again to minimize the transmission of infection. There are still 700-1200 excess deaths per week: https://www.pmc19.com/data/PMC_COVID_Forecast_June232025.pdf
The system will never tell you how to escape from the system. Don't hold your breath waiting for that to happen.
"Critical thinking" was never really taught in schools. It was always just training in how to dismiss any proposition by "criticizing" it selectively, with a heavy bias towards criticizing anything outside the system, and a token zone of approved disagreement to convince yourself that you really are free to disagree with things.
You guys never did "This house believes that..." with random teams ? We had one lesson a week on it while English Language was compulsory in senior school (ages 11..16), and the winners got to choose the next week's topic.
Critical thinking was taught in schools. That’s English class and, to a lesser extent, history or social studies.
Naturally a lot of engineer-types blew those off as subjective mumbo jumbo. But that’s critical thinking.
Something I'd stumbled across a few years back:
First, the universities were given the task of providing an unceasing supply of ideologically correct candidates for vital positions in government, church, and business. The state was able to make the faculties of the "venerable institutions" of higher education, or rather indoctrination, assume this duty because it controlled appointments and held the purse from which "emoluments" flowed into the coffers of academics. Hence the members of the university "hierarchy" made it their "business, the business for which they ... [were] paid," to "uphold certain political as well as religious opinions," namely those of the "ruling powers of the state" (J.S. Mill, Autobiography and Literary Essays, p. 429 (1981), J.S. Mill, Journals and Debating Speeches, p. 350. (1988) ). Thus the universities pursued with vigor their assignment to inculcate in their students those political and ideological views that were cherished by the power elite. The graduates of the ancient universities were, therefore, well prepared for employment in, and by, those institutions that were instrumental in perpetuating the existing maldistribution of income. All of this might come to naught, however, if the masses of the underclass should achieve anything approaching success in potential attempts at throwing off their fetters.
The state devised a second educational strategy in order to prevent such a calamity from occurring. According to Mill, the "elementary schools for children of the working classes" were given the task of ensuring that the poor would continue to accept docilely their dismal station in life. It was very easy for the state to force the public schools to assume this role. It did so simply by failing malignantly to allocate sufficient funds for the operations of what Mill identified contemptuously as "places called schools" (J.S. Mill, Essays on England, Ireland, and the Empire, p.200; emphasis in original). These places were therefor understaffed. Moreover, the few teachers who were actually employed were completely "unfit for their work." The pupils therefore were so "wretchedly ill-taught" that they "did not ... even learn to read." And, said Mill with disgust, no attempt was "made to communicate ideas, or to call forth the mental faculties" of the children". (J.S. Mill, Public and Parliamentary Speeches, November 1850 - November 1868, p. 322 (1988). J.S. Mill, Essays on England Ireland, and the Empire, p. 200 (1982)).
Hans E. Jensen, "John Stuart Mill's Theories of Wealth and Income Distribution" <https://web.archive.org/web/20190828233020/http://www.tandfo...>. Review of Social Economy. Pages 491-507. Published online: 05 Nov 2010.
Previously noted: <https://web.archive.org/web/20190828233020/https://old.reddi...>
This is conspiratorial nonsense.
It sounds very familiar to a fundamentalist Christian, taught in either private or home schools that fostered that sort of thinking.
>>This is conspiratorial nonsense.
>It sounds very familiar to a fundamentalist Christian, taught in either private or home schools that fostered that sort of thinking.
That's as may be, but it doesn't make it any less "conspiratorial nonsense," does it?
Maybe. For some reason it seemed like a more poignant reply at the time, but now I see it doesn’t add much to the conversation. :)
I think contemporary events force people to be skeptical. For one generation it was the Vietnam War, the dissonance between what generals were saying and what was happening on the ground. Another generation had that happen with WMDs in Iraq. I think many in this generation had it happen with "2 weeks to flatten the curve" and the dissonance between promises made about COVID, the efficacy of lockdowns or the efficacy of vaccines.
> because we've been literally removing that from the curriculum in schools
Do you have any actual evidence of this or is this just more parroting of vibes based history?
Most of the people I know who say things like "School didn't teach me X" were just not paying attention. Turns out, if your society doesn't care about or value education, kids aren't going to pay attention.
Like, some states definitely have mediocre education in a lot of ways, but people will say shit like "Why didn't school teach me how to balance a checkbook" as if school didn't teach them basic arithmetic and the ability to read a single paper of instructions included in your checkbook by middle school.
Or you have people saying "Why didn't school teach me how to understand a loan" as if they didn't learn algebra and how to plug a couple numbers into a calculator right next to me in class.
The "vibes" are that the US government has been cutting funding from education since the 80's. I feel this is very well established, but if you really want a source I can fish up a few charts. As a fun fact, today we still spend about as much per student as we did in the 80's for university. The main difference is that funding cratered, so colleges need to make up for that out of pocket.
>people will say shit like "Why didn't school teach me how to balance a checkbook" as if school didn't teach them basic arithmetic and the ability to read a single paper of instructions included in your checkbook by middle school.
Not sure I agree with this interpretation. It's like responding to "why didn't they teach CS" with "well they taught you discrete math and binary". Specialized instruction on applied mathematics is well worth pursuing. It's arguably the big reason Al many students end up thinking "I'm bad at math". They get no context on what it's really used for.
https://www.cato.org/blog/new-k-12-productivity-chart It's hard to believe that education is getting less funding. There seems to be a perception that spending more money on education will result in smarter students or higher test scores but that doesn't seem to be the case. Obviously if you spend $0 on education results will suffer, but there's a point of diminishing returns where $1 more in spending doesn't seem to have any impact on key metrics
How much we spend on school systems is not a meaningful indicator of how much we spend on education.
American teacher income has barely tracked inflation over the past 30 years, and it sure as shit didn't start high in the 90s. Teachers still have to buy their own supplies, still rely on old material, and still basically can't afford to live.
Gee, why is it so hard to get good teachers into the American school system when someone who is able to go through 4-6 years of college and is smart enough to manage and teach a room full of 30 kids can do pretty much anything else and make way more money? The money isn't going to education.
So where's the money going?
Yeah, It's one part of the equation. But if the money is being funneled by administration and the actual teachers can't afford proper resources for kids, who wins here.
>why is it so hard to get good teachers into the American school system...
I'm sure we both know the answer, but I'll give a historical account as well. Even pre 70's, teachers were dominated by women. Since this was a single income household system at the time, most jobs offered to women would pay low wages because the roles weren't expected to support a family.
At least back then, there was still respect in the profession. But that was also stripped away in the 80's with the infamous "A nation at risk". Little did we know that the administration was the risk at the time.
That's part of the system, grovelling powerless teachers that will roll that shit downhill.
You can’t block all of it all of the time, and children (some of the most vulnerable) especially can’t.
True, and this is why you shouldn’t just hand your kid an iPad and peace out. I’m all for technology and video games for my kids, but I’m vigilant to keep my kids’ eyes away from ads. As a result, my kids aren’t foaming at the mouth for the latest and greatest toys and games which was my experience as a child.
One of the important purposes of a society is to improve the raising of kids who might not be raised well by their parents alone, because it is a valuable outcome to everyone.
You don't choose who you get born to, so if society chooses to say "If you get born to a shitty person, you will suffer immensely and we will do nothing about it", that is a bad society.
Nobody deserves to suffer due to an accident of birth.
Also, "It takes a village to raise a child" is not exactly metaphorical.
Half of the country is teaching their kids to take religion literally and never question it, and that any news story that you don’t like isn’t real, simply because you disagree with it.
Handing over an iPad is the least of the issues facing a large portion of our youth and frankly they might be better off if their parents did sit them in front of it and walk away.
It takes a lot of work to be a parent and also monitor all that media consumption/stop all ads. The “average person” isn’t as tech savvy as most of us here and that stuff just doesn’t come as easily to them.
For instance I am very comfortable letting my kids play video games. I play a lot myself, I can make good judgments about what is appropriate for them, what is an appropriate amount of time to play, what is good/bad behavior when playing, what systems are a good choice or if online access (if any) is appropriate. I barely need to think about these things, but for some people this is an incredibly time-consuming, intimidating task.
Is it not ok that parents that spend more time and effort with their kids have better outcomes than parents that spend less time? I’d rather that than have the nanny state regulate everything bad for kids out of existence; we already know what kind of civil rights violations politicians try to justify with children.
It is very hard work raising kids if you are interested in parenting and want to do your best.
The thing is that not everyone's life goal is to be the best parent around. And there is pressure from the society/culture/government to reproduce for healthy economy.
If we as a country want people to have more children, then we need to make their job easier. That may include censorship, age verifications, etc.
You’re making this a very stark, binary choice. Reality is far more nuanced.
Thing is, keeping children out of Instagram, Facebook, or whatever new social media is hyping currently will probably make them kind of weirdos in their bubble, e.g. in school. At least this would be my fear (don't have children). And good luck trying to use any of these ad-infested privacy-invading platforms while trying to avoid ads.
Learning how to stand on your own in school is good practice for doing the same thing in life. By which I’m absolutely not saying “don’t have friends” but rather, you don’t have to be like everyone else.
My kids won’t be on social media until they’re not kids anymore. If none of us take a stand, nothing ever changes.
Your kids will create hidden social media accounts that you don't know about. That's what I would have done in their situation.
Their exposure will still be much less than someone who gives them free reign and lets them sit in the livingroom staring at a phone. They won't be staring at the phone distracted while they're hanging out with the family.
Hiding things from parents is a far bigger problem than staring at a phone in a living room.
No it’s not. Everyone hid things from their parents. I hid soooo much from my parents. It’s fine. It’s normal. It’s far more important to have limited exposure to modern smart phones.
The people who say things like this inevitably are the ones who spend ten minutes with a therapist and the therapist’s eyes go wide
What, exactly, is so problematic about not telling your parents that you smoke weed with your friends before playing video games? What, exactly, is so problematic about not telling your parents who are dangerously religious, that you had sex with your high school girlfriend? These are all normal, innocuous activities of teenagers. A therapist would not think twice about hearing them.
Indeed, I might have done the same. At least that will be a challenge, lacking smart phones.
Being an outlier when the in-group is actively having their brains turned to mush seems like the better of the two outcomes.
This argument is popular but doesn't hold water. If we suppose for the sake of argument that social media is bad for kids, then it is a parent's duty to keep them off it even if that makes the kid unpopular. As an analogy, consider a kid whose social circle is all shooting heroin. Would it then become acceptable to let your kid do heroin? Of course not. Similarly, even if all the other kids are on social media, it doesn't become acceptable to let your kid use social media (going with the assumed premise that it's bad for them).
It doesn't have to make them weird, especially if you're in a school district where there are no-phone policies. Otherwise it can be difficult, for sure.
Or you end up with the opposite end of the problem. I grew up in destitute poverty and was told all my childhood that credit was an evil trap - I should absolutely never use it.
Well, spring forward to me starting a pretty good career as a software developer and wanting to get my first reliable car. I had no credit history and ended up with a 19% APR. That really, really sucked.
It's been 10 years since then and I still get dinged for not having "enough" credit history despite having a couple car loans and several credit cards that I rotate bills on. The whole system feels like it's designed to punish anyone who doesn't fit into the role of a perfect consumer.
You didn't get fucked with 19% apr because you had no credit history. You got fucked with 19% APR because either the parameters of the loan were really bad or there were some other circumstances. Income less existing obligations vs payment size account for the lion's share of interest rate on an auto loan or just about any other consumer loan.
Credit history is massively over-sold as being impactful by the kind of idiots who live payment to payment.
I agree. My first use of credit was a car loan when I graduated. I had the offer letter to show income (I had not started yet) and some up front sign on / relocation money for the down payment.
It was fine, I paid it off quickly.
No, I got 19% APR because I had no credit history. I know this because there is a big detailed letter full of reasons for your offered rate that you receive when you take out a loan.
The fact that you don’t know this suggests you probably don’t know a lot about how loans work.
> I still get dinged for not having "enough" credit history
Maybe the data is wrong? I took out a few loans over the years with strange comments from the lenders like "You don't have much credit history", but since it didn't impact anything I didn't think much of it. Somewhere down the line a lender was like "I don't think this is you". Turns out that it wasn't.
What do you mean? Your credit report was someone else’s credit history?
I’ve had entries show up on my credit report that were not mine, but my father’s in another city 750km away. I did not want his bill payment history mixed in with mine. At all.
It was actually more difficult to have them removed than you’d expect. I’m sure it is by design. You could start the process only after signing up for an online account, but the actual request needed to be made via fax.
As I understood it, it was a bit stranger than that. There was some minimal activity on the report that was actually me (a phone account, if I remember right), but my credit cards and whatnot didn't show up. But also some activity did that wasn't mine. I was somehow partially combined with another credit history, or something like that. I am not well versed in the technical details to truly understand what the problem was. I had to fill out some form to get it corrected and haven't thought about it since.
Why'd that suck so much? As a software dev couldn't you just pay it off a month or two later?
I dunno about you but my first car was when I was 16 working at Tim Hortons for minimum wage, long before I had a software developer salary...
That would depend on what car they bought.
I’m not sure what software devs make $15 grand a month in disposable income 2 years into their career, but I certainly was not one of them.
I’m not sure my kids have ever seen an ad except for little computer games, and they have laptops and iPads (but no network TV or cable). They are far less exposed to consumerism than when we were kids. My teenage daughter dresses like a hobo.
If they've seen Paw Patrol they've been exposed to ads. I don't mean "commercials" I mean that the entertainment itself is the ad - generating excitement for branded merchandise, but also normalizing the idea of kids accomplishing things and learning life lessons in 20-minute increments with the aid of a tremendous amount of stuff that they just have.
Maybe they haven't but the idea extends to most kids' entertainment.
And that's why government regulation was invented.
You mean corporations regulating the government? Oh wait...
> children … especially can’t
Worry about your own kids, teach them the right values, and use others’ imperfect knowledge to the advantage of your family.
Yeah who cares about society?
How do you propose to at least get society off TikTok or Instagram? You will only face backlash if you try to utter in that direction.
I’ve never had anyone say anything other than “yes, that seems like a good idea, I wish I could do that” when i tell them I do not have a TikTok, instagram, twitter, facebook, etc account.
I guess they all need those accounts for their student visas.
> but there is still responsibility for people choosing to listen to it
yes, sure, this is easy to say, but hundreds of billions of dollars and uncountable person-hours go into this manipulation machine, and many peoples' lives and livelihoods depend on maintaining it. it's a lot to ask of every individual to be solely responsible for the negative impacts of advertising when we all have lives we want to live.
i'm not saying personal responsibility doesn't play a part, but we shouldn't atomize - we should be organized and wield regulation more effectively against the profit motive.
There are MILLIONs of human years of effort, by experts at manipulating people, put into making people feel this way.
Saying bro, why can't your willpower overcome MILLIONS of years of experts trying to manipulate you is a pretty weak argument. It's basically the same as saying 'why can't you take on the top UFC fighters?' at this point. There is a battle to squeeze everything possible out of the sheep on one side, on the other side is us sheep that just want to chill, enjoy life a little. The sheep are f'd.
GP isn't saying "why can't you take on top UFC fighters?" They're saying "why would you try to take on top UFC fighters?" It's exactly that one-sided battle that makes it so avoiding the engagement is necessary. A lot of effort is no doubt spent developing psychological weapons to use against me. Fortunately there are very few channels for any of them to use to reach me.
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Wages for the average person (working class) typically remain stagnant while cost of living increases, particularly through inflation. I imagine minimum wage would be 25-30 bucks an hour if it did track inflation and that would only serve to keep your purchasing power constant.
Credit, in this sense, is also used to solve a cash flow problem. It’s a bad sign when that credit (or Klarna Pay-in-3 style setups) is applied to basic day to day expenses like buying groceries or other necessities.
Basically the market’s answer to increasing poverty: you’re not getting paid more, so how about we give you a payment plan to spread things out?
That's not true. Wages have generally outpaced inflation as long as we've measured inflation properly. Up until the early 1970s this was very palpable, since the early 1970s the delta has been much lower, wage increases have been very slightly above inflation.
Why does it feel different? 1: the amount of stuff we buy has increased a lot. Anybody who owns what would be considered solidly middle class in the early 1970s will feel quite poor today. 2: financial security is way down.
In the early seventies a middle class family of 6 would own a 1200 square foot house, a single car, a single TV and a single radio would be the sum total of the entertainment electronics they owned, they'd have less than a dozen outfits apiece, they'd eat out about once a month, a vacation to a neighboring state would feel like a splurge, et cetera.
But they were relatively content. 1: they were much better off than their parents and grandparents, who experienced the depression & WW2. 2: they were "keeping up with the Joneses". 3: they had a feeling of financial security due to job security and the fact that serious health events were unlikely to financially devastating.
Average American household budgets are dominated by housing, transportation and taxes.
Maybe some of that problem is about spending too much money, but it cannot be denied that housing are unaffordable and that transportation is inefficient and is a mess.
That's a two-edged sword. Food, clothing, cars and all sorts of factory produced stuff are significantly cheaper today than they were 50 years ago. So they don't dominate budgets the way they used to 50 years ago.
Yes, so why are we ignoring that housing is multiple times more expensive? Even with 5 times the luxury expenses, you're not going to end up cheaper than boomers who paid $1000 on a mortgage in a high COL area. Telling people to penny pinch on buying Netflix subscriptions while rent is 70% of their budget is just political theater at this point.
Rent per square foot per person as a fraction of income has been relatively constant. Rent has gone from 13% of income in 1970 to 30% of income today, but average house size has doubled and average family size has halved.
Renting is not owning (no benefits accrue from asset appreciation). The same calc for ownership is very different. Also would love to know % of population in 1970 that rented versus today. My guess is it's much higher today.
But renting has no property taxes or maintenance costs and should cost a lot less, meaning you can take the money that would have gone to those other things and invest it to earn returns on it.
I pay 600/mo in rent, so 7200 a year. A basic house around me would easily be about 7200 in property tax + average annual maintenance costs + increased utility costs + increased insurance.
So how am I losing out on anything unless you think that a house value (minus loan rate) would appreciate more than I can earn with that money instead invested in the stock market or some other real-estate investment deal like multi-family units.
I guess it depends somewhat on where you live and what interest rates are doing when you buy. Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases. So as the underlying asset appreciates (benefitting the landlord), rental prices also go up, further compounding the "loss" of not owning. This is before we talk about the possibility of using the gains in your property's value as collateral, something obviously not available to renters (or the advantage of locking in a <3.5% 20+ year loan; or the tax advantages on capital gains from property versus stocks). Also, might be different in the US, but in the UK the tenant normally pays the annual taxes.
>Where I live (and true of virtually everywhere else I've lived over the last 20+ years), monthly rent significantly exceeds what the monthly mortgage repayment would be for the property if bought. Rental prices also seem to increase in lock step with or even above house price increases.
That just seems crazy to me as rental price here is like 1/3 of what a mortgage would be on a decent house I can find.
Also property taxes seem to go up just as fast or faster than rental increases.
I mean my rent increases like 2-3% a year over the last 15 years that I have been renting.
If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
>If I look back over my spreadsheets I have spent about 100K on rent in the last 15 years that I have been renting and that includes water and heat.
Setups like that just sadly don't exist in my part of the world. But, in your case, totally agree. Keep renting and just smash your savings in to other investments. I'd be doing the same.
I remember reading years ago that food used to cost 30% of a family's income in the early 1900s
Taxes? That can't possibly be right. Average American household pays a small fraction of their income in taxes. Unless they somehow got a huge, expensive house and have the mortgage paid off, I don't see how their income could possibly be dominated by taxes over, say, healthcare, or food.
A family that makes 80k spends about
- 9400 on federal income taxes
- 12,000 on payroll taxes (including corp chunk b/c of economics)
- 3000-9000 on sales/property/stage income taxes
That's a pretty big chunk.
I guess I don't really count payroll taxes since it's not a line item in my budget. Anyway, that's certainly a bigger chunk than I was envisioning.
Income tax is not the only tax.
First off there is payroll tax.
Then there are sales taxes.
And don't forget property tax.
I am probably forgetting something.
Well if they're buying gasoline in California, or cigarettes in Australia taxes can be a huge part of the pricetag even if they're not thinking of it as taxes. You can see various taxes and fees if you look at the receipt of an airline ticket or a bill from a Telecoms company. I admit the fee they add to fund 911 calls isn't typically large but every little bit adds up
You left out health care and education.
> Average American household budgets are dominated by [...] transportation
Huh? Doesn't the average American live in a city? The whole reason for accepting being squeezed in tightly with other people is so that you don't have to worry about transportation; enabling everything you could ever want and need to be found in short walking distance.
Transportation is for people in rural areas. Yes, it is expensive, but that's exactly why most people left rural areas for the city long ago.
You've been mislead by an overloaded term. Urban in an academic context is a much lower bar than urban in a "any reasonably layman's meaning of the word" context.
Pretty much any time you hear "city" or "urban" it's either a direct or indirect reference to US census data (or follow on research by other academics that uses their definitions) which play fast and loose with the word urban in a way that results in the population of even the most far out municipalities within a city's economic area being countable as urban in some capacity depending on what data set you want to use (some of the data sets draw economic distinctions rather than lifestyle ones, so a rural farmer who exists in the eoncomic gravity well of a major urban area will be counted as urban).
This is all magnified by substantially less than honest people omitting the potentially misleading nature of the term when it suits them and the people who they've informed going on to parrot it without actually understanding it.
INB4 nitpickers, it's been a decade since I've done any work with this data, if my knowledge is out of date and it's no longer misleading to the layman then good.
> Urban in an academic context is a much lower bar than urban
I said city, not urban, trying to portray a high density, well populated area. I fully recognize that the US considers a community as small as 2,000 people to be urban. And, similarly, you need as few as 1,000 people in an area in my country to fall into what is considered urban. This is all well known and understood.
That said, the 3,000 people strong town I live in has everything you need in walking distance, so the point still stands even for small urban too. But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
> But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
Generally, American suburbs (where most Americans live) are neither dense nor particularly walkable. Driving is the only option (since they also generally lack public transit).
> That said, the 3,000 people strong town I live in has everything you need in walking distance, so the point still stands even for small urban too. But it remains that average American lives in larger, more dense communities than that, so the idea of needing transportation is quite strange and defeats the purpose of the density.
If you live in a pre-car American town (like the kind that Strong Towns champions), it is likely far more dense than the typical American suburb, and built for walking access - since that was the default at the time they came into existence.
> If you live in a pre-car American town
Technically it was established before the automobile, but its tenth of a mile downtown commercial strip is the only remaining remnant of that. For all intents and purposes, it was built to "modern" standards, which is to say that its density is on par with the average American suburb. – To be fair, the streets and sidewalks are sensibly laid out. Some of those winding maze suburbs would take days of walking just to get out of the maze. That certainly helps.
By definition, urban requires at least 1,000 people per square mile at minimum. Any less than that and a place is well and truly rural by every account. Even at that minimum density, unless the town is literally a straight line, most everything should still be reasonably walkable.
The difference is really only that people in towns of 3,000 people want all the jobs, services, and amenities as possible. Whereas suburban folk fight tooth and nail to keep it all out. But the question is: Why? Why wouldn't you want those things nearby, most especially when you are complaining you can't afford transportation to those amenities where there are found elsewhere? What's the appeal of being shoved up tight against your annoying neighbour and to have nothing else?
> The difference is really only that people in towns of 3,000 people want all the jobs, services, and amenities as possible. Whereas suburban folk fight tooth and nail to keep it all out. But the question is: Why? Why wouldn't you want those things nearby, most especially when you are complaining you can't afford transportation to those amenities where there are found elsewhere?
Because the amenities usually require low income service employees, who then might want to live in that suburb, or just stay past their quitting time, which might then compromise some of the reasons you liked the suburb in the first place.
> when you are complaining you can't afford transportation to those amenities where there are found elsewhere
I don't think suburbanites complain about the cost of transportation. They complain about the time spent in traffic.
> which might then compromise some of the reasons you liked the suburb in the first place.
What might be those reasons?
This 3,000 person town has some very well paid people and low paid workers living side-by-side seemingly in harmony. Seriously, I really cannot imagine any quality that would be different in a suburb. I did even live in a suburb of a large city a number of years ago for a while when I was young and dumb and I can really find no noticeable difference in the way of life other than everything I do outside of the home is a lot easier to access now.
Granted, in this part of the world the small town/rural areas are predominantly – almost exclusively, even — white. Is that what you're trying to subtly hint at? That the people in those suburbs are afraid of reverting their "white flight" efforts? Apparently that's a thing, astonishingly.
> I don't think suburbanites complain about the cost of transportation.
That's exactly how we got here, though: Comments were complaining about how transportation is of high cost/unaffordable. When we dug into why transportation was even needed, the answer was that many people live in suburbs that are void of any nearby jobs, other amenities, or anything at all, requiring access to transportation to live out life.
The people who don't need transportation because they have those things nearby have no need to be worried about the cost of transportation. So who is worried about the cost of the transportation? Are you suggesting nobody — that the original comments were making shit up?
> I can really find no noticeable difference in the way of life other than everything I do outside of the home is a lot easier to access now
Yes, small walkable towns are nice. I personally prefer them to unwalkable suburbs by a long shot. But plenty of people reasonably find the balance of their preferences is better met by suburbs. And as suburbs densify into towns themselves, people might reasonably want to upgrade the transportation options available.
> Is that what you're trying to subtly hint at? That the people in those suburbs are afraid of reverting their "white flight" efforts? Apparently that's a thing, astonishingly
Not sure if you meant that sarcastically, but what's astonishing? Historically zoning has been used this way: to exclude non-white people, but it works against poor white people also.
> So who is worried about the cost of the transportation? Are you suggesting nobody — that the original comments were making shit up?
Yeah. For the average middle class suburbanite who can afford a car, transportation is pretty affordable (caveat high oil prices). It's only expensive if you are poor.
> But plenty of people reasonably find the balance of their preferences is better met by suburbs.
Obviously. They wouldn't be there otherwise. But the question was: Why? (Or maybe better asked, given your phrasing, as what or how?) The discussion seeks to understand what that balance is.
> The discussion seeks to understand what that balance is.
In the suburbs people generally seek more space, privacy, and security, while still having relatively easy access to opportunities.
It sounds like you (like me) have found our personal balance elsewhere.
> while still having relatively easy access to opportunities.
Trouble is that this discussion stems from comments about how those in the suburbs can't afford the cost of transportation. Is there really opportunity if you can't afford it? Other thread branches seem to agree that those comments were made up bullshit, so that adds complexity, but we aren't really serving the intent of the discussion if we deviate from the idea (even if fake).
> It sounds like you (like me) have found our personal balance elsewhere.
Now, if only I could convince the rest of my family! I have no qualms in admitting that I am where I am because I have chosen to prioritize certain people in my life. I don't much care for the civil side of things.
I have asked a lot of people the same question and not a single other one has said that they didn't actually want to be there on the basis of what the community type offers. I find it quite interesting that I stand alone. Makes one wonder if I actually stand alone, or if others are just putting on a pretty face? Post-purchase rationalization is a hell of a drug.
> Is there really opportunity if you can't afford it?
If your argument is that a suburban lifestyle of convenient access to opportunity is not universally affordable given the current configuration of American society, then I'd be in complete agreement.
Question is what to do about that, if anything.
My preference is to densify the suburbs, allow mixed use development, and add better transit links.
> My preference is to densify the suburbs, allow mixed use development
But then you're right back to it being regular city — exactly what the people in the suburbs (supposedly) want to avoid when they choose to live in the suburbs.
This is the conundrum that prompted the discussion. The cost of transportation is said to be too high, but at the same time it is said that it is important to preserve the qualities of the suburbs that necessitates those high transportation costs.
> and low paid workers living side-by-side seemingly in harmony.
Have you asked the low paid workers about that?
Because I strongly suspect that, to their own detriment, they put in a lot of effort and avoid doing things that would help them get ahead in order to prevent the rich people from having reason to sick the government on them.
Can't smoke weed on your porch or run a mechanic business out of your apartment driveway when you've got a bunch of HNers leering at you from the balconies of their 5-over-1 luxury apartment complex across the street like you're an animal in a zoo.
> Can't smoke weed on your porch or run a mechanic business
Why not? My neighbours do both those things. It seems they can do it just fine.
> 5-over-1 luxury apartment complex
That would be the true spectacle.
Most American urban areas are dominated by suburbs where it’s not practical to walk everywhere and public transit is very limited. So a car is necessary and often a car per working adult.
Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers? That completely defies the whole reason for the density. I'm not saying it doesn't exist, I question why people are doing it.
> Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers?
They don't want complete separation from other people. They want conveniences of the city/metropolis (access to jobs, entertainment, and education) while having a lot of space around their home for recreation & privacy.
They don't want farm work (required for that income) either - it's physically and emotionally hard and margins are thin and fragile depending on the weather.
> They want conveniences of the city/metropolis (access to jobs, entertainment, and education)
But not without having to travel. And once travel is in the picture, you can be to the same places just as fast from a farm as you can from another point in the city. It might be hard to appreciate if you have never lived on a farm, but once you do you'll realize that the highway is unbelievably efficient.
Your point only holds for when that stuff is available within walking distance of one's home. But now we're back to not needing costly transportation, so...
> They don't want farm work (required for that income) either
Where do you get the idea that farm work is a necessary condition to realize an income from farm land? Most farmers (in the legal sense) don't farm their own land, they have other farmers work it through sharecropping/rental agreements.
> But not without having to travel. And once travel is in the picture, you can be to the same places just as fast from a farm as you can from another point in the city.
Your phrase "having to travel" is painting with a very broad brush.
There are naturally huge variations in transit time depending on where you live in a metropolis, where you are going, and how you are getting there.
I can walk 15 minutes to a coffee shop and grocery store, drive 20 minutes to a Walmart, and take a train 35 minutes to the office.
All are very convenient and the latter two require transportation.
> Where do you get the idea that farm work is a necessary condition to realize an income from farm land? Most farmers (in the legal sense) don't farm their own land, they have other farmers work it through sharecropping/rental agreements.
Even if you aren't doing the hard labor, you have to want to manage that kind of business. Most people evidently prefer not to, and instead like urban jobs. The last 150 years of urbanization isn't a fluke.
> I can walk 15 minutes to a coffee shop and grocery store
Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by?
> drive 20 minutes to a Walmart
I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rural area with a train and I misunderstood?
> and take a train 35 minutes to the office.
Okay. You got me there. I don't have a train in my backyard. It would take me 20 minutes to get to the station.
But, to be fair, when I lived in a big city downtown it also took me 20 minutes to get to the station, so perhaps your situation of having a train sitting right outside your door waiting on you is a bit unusual?
That said, perhaps you have included, say, 20 minutes to get to the station, and a few minutes waiting on the train. But in that case is the 5-10 minutes of actual train time really that advantageous? In this scenario you're almost at your destination before you even get on the train. Presumably this isn't what you meant.
> you have to want to manage that kind of business.
You'd have to report your income to the government. What else is there?
The onus will be on the farmer working the land to do everything else. I know that well, because I'm one of those farmers. The industry is much too competitive to think you can make the landowner do anything.
> Not to make it sound like a competition, but I can do it in 5 not living in a city. Why does it take so long in a place that should be optimized for keeping everything close by?
I can walk to 3 different ones in 5 minutes - I live in an actual city - but I was trying not to make it about showing off my housing privilege. Note I said "a coffeeshop", not "the nearest coffeeshop".
> I can be to two different Walmarts given 20 minutes. That is also an unusually long time for a heavily populated area. Are you actually living in a rural area with a train and I misunderstood?
Big dense city, "urban residential", not a suburb. 10 feet between my house and my neighbor's. So Walmart is not "nearby" because those tend to be in lower-middle income suburbs. However, 2 Targets & a Costco are a 10-15 minute drive away.
> But, to be fair, when I lived in a big city downtown it also took me 20 minutes to get to the station, so perhaps your situation of having a train sitting right outside your door waiting on you is a bit unusual?
> That said, perhaps you have included, say, 20 minutes to get to the station, and a few minutes waiting on the train.
5 minutes walk to the station. 20 minutes on the train. 10 minute walk to the office. If I time it right, no waiting for the train.
> > you have to want to manage that kind of business.
> You'd have to report your income to the government. What else is there?
I get that you don't do any actual physical labor, but don't you have to negotiate deals with labor suppliers (or laborers), seed/fertilizer suppliers, check on the quality of work and the condition of the land, facilities, and equipment?
If you hire people to do that all for you, then what's the ROI? It's hard to imagine that small-hold farming is as easy (and has similar returns) as buying an indexed fund, otherwise everyone would be dumping their capital into it.
But hey, maybe after reading this comment thread, everyone will!
> I get that you don't do any actual physical labor
Well, I personally do the physical labor (if you call riding around in an air conditioned tractor physical labor). You are right that the landowner doesn't.
> but don't you have to negotiate deals with labor suppliers (or laborers), seed/fertilizer suppliers, check on the quality of work and the condition of the land, facilities, and equipment?
That's on me, not the landowner. Why would the landowner do any of those things? Again, their only job is to count the money.
> then what's the ROI?
For me, mostly the fun. I enjoy it. I do also make pretty tidy financial profit doing it, which is admittedly a great bonus, but I expect I would still do it even if that weren't the case. Not everything in life has to be about money. Sometimes it's okay to bask in the pleasure of a hobby.
> It's hard to imagine that small-hold farming is as easy (and has similar returns) as buying an indexed fund
An index fund will, on average, provide greater returns than renting out your land, albeit with greater risk as greater returns expect. You wouldn't move to the country as some kind of get rich quick scheme.
But, if you've somehow already forgotten what we're talking about, when you are already living in the country for whatever reasons life has found you there, the land provides an income that offsets the cost of the necessary transportation.
FWIW, I grew up in Brooklyn, NY. I know about both urban and suburban living. I now live in Columbia, MD: a suburb from the late '60s planned with high ideals.
My three children each have their own room. They can ride their bicycles on our sleepy street without having to constantly worry about reckless drivers. They can explore the walking trails and wooded areas our community maintains. They can play baseball in one of the nearby fields without having to worry about breaking a car window in doing so.
My wife has a large crafting area. I have an office. We have a home theater. We have a workshop in our garage. We have a large sunroom which opens to a large deck suitable for entertaining many friends at once.
Getting even a fraction of what I described above in a city would cost a fortune.
The benefits of living in the country are obvious. And since the land provides income itself, the extra cost of transportation one has to assume to live in the country is well offset anyway.
Its the weird middle ground that has all of the downsides of the country and all of the downsides of the city all packed into one that we're talking about.
> And since the land provides income itself
Hardly. Agriculture is hard work and not at all profitable unless the operation is at scale.
> Agriculture is hard work and not at all profitable unless the operation is at scale.
You seem a bit confused. While that is more or less true for the farmer, it is that way because the landlord usually takes most of the profit. As is to be expected. They hold all the cards. You can't farm without land. But given that in this scenario you are the landlord, not the one doing the work...
The key to farm profitability is to own your own land free and clear. But, of course, unless you have a high paying job doing something else instead of farming that's really hard to pull off, so most farmers end up renting (either to a landlord directly, or renting money from a lender). That's when you need scale to make up for the vast majority of the profit going to someone else.
Some people really just want a back yard with a white picket fence their kids can play in
Sure, but outside of where that backyard is wanted to be hundreds of acres, then there is the density necessary to introduce amenities like jobs, healthcare, shopping, etc. alongside the backyard. At which point you no longer need transportation as you have everything you need right there.
But what happens in the places we're talking about is that the people accept a small backyard in order to keep everything close, but also work to ensure that amenities aren't welcome, only allowing other houses to be close. So you get all the downsides of the city, having to trip over your annoying neighbours, but also the downsides of living in the country, having to waste large amounts of time driving to do anything.
What do people see in these strange middle places?
> What do people see in these strange middle places?
Not sharing a wall or ceiling with other people is great actually
I am constantly told that dense housing "built right" is quiet and peaceful and you never hear your neighbors through the walls, but my experience in apartments in my 20s was not like that
I constantly had neighbours that would play loud music at all hours, or get into fights with their partners or otherwise just be extremely disruptive and stressful to share a building with
I'll take the trade of having to drive a couple more minutes to get to a store if it means I never have to hear my neighbours having loud sex through the walls again at 2am when I'm trying to sleep
You've made a great case for living in the country, but not for the weird middle places.
How? I live in about the most typical suburb imaginable: ~2500 sq ft house on ~8500 sq ft lot. I never hear or am bothered by neighbors (other than early morning landscapers). I have 3 grocery stores that are around a 10 minute walk along with just about every other type business. Don’t understand what is undesirable about that to you.
Well the weird middle places are just a compromise between "having more space and more distance from neighbours" and "being far from amenities and city life"
> and "being far from amenities and city life"
They close the distance gap, but thanks to poor civil design often (yes, there are exceptions, always) they don't close the time gap. I don't suppose it is being able to see a mostly occluded, hazy silhouette of the downtown skyscrapers is the appeal there. Surely this is about minimizing travel time?
A family member once lived in the suburbs of a large city. I live 50 miles clear of that city. It was always fun to razz them about the fact that I could be to the amenities in the city faster than they could. Many cities (not all, there are exceptions, always) develop as economic hubs, needing to get things in and out of the city as fast as possible, often at the cost of intercity movement. This leaves it more advantageous, if not in the heart of the action, to live outside of the city with respect to the matter of time.
Perhaps people just end up in the suburbs out of happenstance (e.g. they were born there) and never give it any more thought? It would be fascinating to hear from those who gave all three types of places a fair shake and still settled on the suburbs in the end.
> they don't close the time gap
During peak hours maybe, or in very poorly designed or overcrowded cities, but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places? Travel time might not be that much longer but it will be longer
> It would be fascinating to hear from those who gave all three types of places a fair shake and still settled on the suburbs in the end
I am one of those people. I grew up in suburbs, my family moved to the countryside in my teens, and I spent my 20s in dense urban areas, settled in the suburbs now
When I lived in the country I did often joke with my friends that I could be anywhere in the city in 20 minutes faster than they could, because I could get far north or far south faster than going through the city
But the tradeoff was that 20 minutes was a hard minimum. I could not get anywhere faster than that really
> but ultimately if everyone is using the same roads then you will eventually sit in the same traffic if you're trying to get to the same places?
Once you get to the arterial roads that take the traffic to the amenities that's true, but it is often slow going just to get that far.
Fair to say that is less true if you are on the edge of the suburbs, but, for the sake of this discussion, are you really living in the suburbs if you are right beside the action? I think that goes against the premise presented in the beginning.
> my family moved to the countryside in my teens
Not to diminish or dismiss your experience, but can a teenager really give something like that a fair shake? Like you indicate, you ended up there because your family brought you there, not because you chose to go there to make your own life. Typically, teenagers have limited autonomy and really can't experience it for what it is. You had an experience, but don't you think it would be an entirely different experience if you moved to the countryside now when you can fully shape the experience into being what you want it to be, not what your parents (or equivalent) wanted it to be?
> now when you can fully shape the experience into being what you want it to be
Sort of my whole point is that there is no situation in life that we can "fully" shape into what we want, every situation comes with upsides and downsides which are often not really in our control, because we have to share space with other people
I grew into an adult and commuted to my local college from the countryside. I didn't live out there for long, but a couple of years at least. Long enough to realize it wasn't really for me
> Sort of my whole point is that there is no situation in life that we can "fully" shape into what we want
I am not sure I intended for you to take it that literally, but to the extent that you can fully shape it within the constraints of reality. For example, it is abundantly clear that countrysides are not all equal. Even on the surface, countryside can vary from farmland, mountains, lakes, forests, etc. which each enable completely different lifestyles. Going deeper, the social experience can vary wildly from one countryside to the next. You get the idea. There are some countrysides I'd have no qualms about living in, and others I wouldn't even want to vacation in, let alone live there (even while others quite happily live there). That choice is something within your control.
> I grew into an adult and commuted to my local college from the countryside.
I assume this means that you carried on your stay still living with the same family? If so, I'm not sure that changes the calculus. It is not like something magical happens when you turn 20. The significance of being a teenager earlier was only in that it implied that you were following your parents around. If you continued that into your 20s, 30s, 40s, hell if you are 80 and living in a place of someone else's choosing rather your choosing then I'd say the same applies.
Let me ask this: If you, for some reason, were forced to move to the countryside today, are you choosing to move to the exact place your family chose all those years ago or are you going elsewhere? Assuming you give it some thought, my expectation is latter. The world is a pretty big place. The statistical likelihood that the place you ended up in as a teenager with presumably little to no input also being the best option you can independently find among all of the different countrysides is low.
Because it's cheaper, if we're bring frank. The middle class is slowly being priced out of urban sprawls.
> The whole reason for accepting being squeezed in tightly with other people
That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly. People really don't like having a shared wall. And it's not that people like these tightly squeezed lot lines, they'd prefer 1 acre lots. These tiny lots are all they can afford while still being somewhat acceptable to them about commutes. Which Americans seem to really just not care about commute times when comparing to tradeoffs on house size and not having shared walls.
And in the end, you can only buy what the cities and towns allow to have built. Which is chosen by those who live there at the time. The cities then make single family structures a requirement, have minimum setbacks and lot sizes, have rigid separations between residential and commercial spaces, etc. So even those people who would want to own an apartment over a commercial suite in what you'd consider an urban area can't make that choice because that choice is illegal.
But people act like these zoning laws just come about on their own. The thing is, these zoning laws are popular. They get put into place because that's what the people who actually vote in local elections push for. I've seen proposal after proposal in cities around me to change zoning to allow density even in limited areas get fought tooth and nail by residents. I remember a project nearby where there was a proposal to build a mixture of 2-3 unit townhouses, some single-family narrow lots, and a tiny spot of commercial for like a coffee shop on land that was currently zoned industrial. All of this connected to the bike network, a large city park and a nature preserve nearby, and good transit connection at the end of the neighborhood. The neighborhoods around fought it tooth and nail and eventually the builder walked away after trying to negotiate for a few years. Well, the land was already zoned industrial, construction broke ground months later to build warehouses. Now instead of a nice neighborhood on my bike path there's warehouses with semi-trucks rolling through all day long. Good job, NIMBYs!
> That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly.
Sure, it isn't coincidence that the "American Dream" has always been portrayed the sizeable house on a large acreage out in the country surrounded by white picket fences. But we're talking about the people who are choosing to cram in beside one another, but aren't bringing the services and joy that such density normally offers to go along with it.
> These tiny lots are all they can afford while still being somewhat acceptable to them about commutes.
I've lived in cities and on farms and the commute times end up being about the same if you ever have to leave your immediate community that is within walking distance. You have to drive further from the farm, sure, but the highway is surprisingly efficient. Is there some reason people are more concerned about distance than time?
The city offers a clear advantage when you are travelling short enough distances that you can walk. But, that brings us right back to wondering what you need costly transportation for? The two dangly things beneath you are right there! (Yes, I know, some people hazve disabilities, but the discussion isn't about them)
> But people act like these zoning laws just come about on their own.
Not at all. That's why we question why people are doing it. It is clearly their own choice. But why when we then hear them crying that the transportation costs are too high?
> the commute times end up being about the same if you ever have to leave your immediate community
People routinely leave their community for their job all the time here. Go take a look at that map I shared earlier. Most of the people in that neighborhood probably don't work in Princeton. They probably don't even work in McKinney or Fairview. Good chance they work in North Plano, Frisco, Addison, Dallas, maybe Garland. Most people living here are probably driving about an hour to their job, each way, every day. With a lot of those people with those kinds of commutes having that take place on a tollway.
They do that because they can buy that 4-bedroom 3-bath 3-car garage ~2,400sqft with a gameroom house on its own lot for $375k. Meanwhile, a similar house within a few miles of their work (say, Frisco) is probably anywhere from $590k to $2M. Property taxes can be pretty steep here, so that $590k house gets like $14k/yr in property taxes in Frisco while that $375k house in Princeton is only $9k/yr, over $400/mo in additional taxes. They could potentially accept a smaller and thus cheaper house, but to them it's not worth the tradeoff. They need that 3-car garage, they need that gameroom.
My wife has coworkers who live in Forney and commute to jobs in Plano and Frisco. They do that commute 3-5 times a week and see nothing wrong with it. They value having a large home with tons of space, and with the kind of income they make there's little chance they could afford it anywhere near where those jobs are. Think a security guard and a building engineer (like an on-site maintenance tech for a commercial property) are going to own a $1M+ house? No. But they still want a 3 bedroom home with a pool and a spa and an outdoor kitchen, and they can get that for $300k in Forney.
Just trying to share the follow on mindset. If you're having to leave your home by car every day for work, then you're absolutely going to have a car. If you already have the car, why go to the little grocery store at the edge of the neighborhood when you just spend a little more transit time and go to the big store that has everything else you'd want to buy?
> People routinely leave their community for their job all the time here.
Sure, where the compensation is sufficient to cover your travel costs you would reasonably consider it. But then transportation costs aren't an issue, making the unaffordability idea that started this moot. But, if we want to move beyond the topic of cost, that just brings us right back to the point that travel time ends up being the same living in the city and living in the country, so what have you gained by living in the city?
What one normally thinks you would gain is having other amenities, like bars, restaurants, healthcare, shopping, and just an all round vibrant community right there to enjoy when you get home from work. But the particular city homes we are talking about don't even have that. They are just houses upon houses upon houses all jammed up against each other with nothing in-between.
And it is that way because people want it to be that way. They don't want the restaurants, shopping, healthcare, etc. to be anywhere nearby. Even though they cry that they afford to the transportation to get to them, funnily enough. But why? What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?
> What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?
Children, among other things. Let's make this concrete.
I live ~40 minutes from Washington DC and ~30 minutes from Baltimore. I have three children.
I'd need, at minimum, a four-bedroom, two-bathroom property in the city. It will need to be zoned for a good school for obvious reasons.
The 30y mortgage on my six-bedroom, 3.5-bathroom home in the suburbs is ~$3,500/month.
Can you find a condominium in either city for this price or less?
(For reference: my property value at the time of purchase was $575,000.)
> I'd need, at minimum, a four-bedroom, two-bathroom property in the city.
Check out a settler home sometime. They were tiny, one room houses that housed themselves and their eight+ children just fine. You don't need this in any way, shape, or form. I do understand why you find it desirable, though.
> It will need to be zoned for a good school for obvious reasons.
I don't live in crazy orange man land. What are the (unfortunately, not so) obvious reasons? It befuddles me that different school zones would be different in any way beyond their geographic positioning, which isn't usually a concern when it comes to schooling. I've never heard of such a thing before.
> Can you find a condominium in either city for this price or less?
What's wrong with where you already are? If you found the lack of jobs, restaurants, entertainment, healthcare, etc. in walking to be a problem, you'd have changed it already. Like we established, the only reason those things aren't found where you are is because you and your neighbours have decided you don't want it.
I just don't understand your logic as to why you don't want it, but also don't want to live in the country. What's the benefit of living where you have all the downsides of the city and all the downsides of the country all wrapped up in one?
Attitudes around education in the US vary wildly across the population. To a first approximation, "good schools" are really "good students" (i.e. "good peers"), which generally means that the families within the school's catchment area place higher value on education, which generally correlates with class.
There are feedback mechanisms at play here: the people who want a good education for their kids want to be around the types of people who want a good education for their kids, and they will pay a premium to be around the kinds of people who will pay a premium to do so, reinforcing the class effect. It can't hurt to have bright, engaged kids when trying to recruit and retain good teachers either. The net result is that in some areas the schools have literally 0% of students meeting standards while others have most of the students completing the first year or two of university during high school.
Somewhere like DC where GP lives, schools struggle to get the kids to show up[0]. Meanwhile I live a 10 minute walk from a school where over half the students are in AP classes and 80% of those pass the AP exams.
[0] https://www.nbcwashington.com/investigations/about-4-in-10-d...
> Attitudes around education in the US vary wildly across the population.
Is that in some way unique to the US? I would say the same is true here. Certainly when talking to people out on the street, there are clearly some who value schooling to the utmost degree while others dismiss it entirely. I expect this is the case anywhere a sizeable population is found.
> the people who want a good education for their kids want to be around the types of people who want a good education for their kids
…But I have never heard of this happening. Looking at the data, I don't see any significant variation between schools found within a general area where you might conceivably choose a different school by moving a few miles in another direction. A couple of schools in extremely remote areas show up with struggles, in the worst case seeing only ~40% of the students meeting the standard, but I think it is fair to say that the goings on in remote places is something else entirely.
> It can't hurt to have bright, engaged kids when trying to recruit and retain good teachers either.
So would it be reasonable to think that it is ultimately an issue of lacking teacher standards in the US? Different people are going to be different, sure, but around here you aren't allowed to be a teacher within the school system unless you at least are able to live up to a minimum standard that carries a sufficiently high bar such that there really aren't any qualms about what teacher a student gets.
I take from this that in the US, the schools that don't have sufficiently bright, sufficiently engaged kids are apt to get teachers who aren't capable of doing the job. Here, if a school lacking sufficiently bright, sufficiently engaged kids scared off good teachers, the school simply wouldn't have any teachers.
I don't expect it's unique to the US, but I can't speak for other areas. At least any time I've looked, real estate prices for the same floorplan home a couple neighborhoods over in a different school area can differ by a couple hundred thousand dollars, and "good schools" are a common thing for people to say they prioritize, so the effect seems real enough here. I've seen this in multiple cities/states.
Like I said, to a first approximation, "good schools" are much more about the kids and families than the teachers. Teachers in the US are required to have bachelors degrees, and I believe AP teachers need masters, so there's some bar (though I don't find degrees/credentialism to be particularly compelling). Good schools are where the students set good examples for each other and drive each other to do better. Bad schools are where you're automatically in the top half of your class merely for showing up and no peers treat education seriously, so you learn not to either. There's plenty of passable schools too where you can get an adequate education, but middle class and above tend to have higher expectations for their kids, and want all of their kids' friends to have the attitude that working hard in school is completely normal and expected (i.e. they want a "good school").
Schools in bad areas do have retention problems, and the government offers incentives to teach there, but teachers aren't miracle workers.
> "good schools" are much more about the kids and families than the teachers.
Is this a euphemism for "it is really about being around people who are white"? Another commenter here used similar language to this and, once we drilled down into the nitty gritty, it turns out that is what was being said. "White flight" is certainly a thing.
Admittedly, where I am only 2% of the population are visible minorities. You can live anywhere your heart desires, in any school district, and you are, for all sake of practicality, only going to find white people. Perhaps this is why the concept you present seem so foreign to me?
I think I was pretty explicit about what that means: the discrimination is more around class. My local school is one of the best in the state for example, and is ~60% "white" vs. ~80% for the local population. In fact the stats I see indicate that every racial minority group has higher representation within the student body than within the wider city. The more relevant factor is that a bunch of doctors, lawyers, engineers, etc. live in the area. There are no homes in the area for under $1M, and many are $5M+. There is no multi-family housing. 1% of the students qualify for the income-based free lunch program.
The spending per student is below average and lower than nearby worse schools, so it's not that the rich people have a higher tax base to create better schools. It's that the professional class takes for granted that of course their kids are going to take every AP class. They want their kids' friends to have that attitude too, and they expect the school to offer AP everything. If it doesn't, they won't live there.
"Buy the cheapest house in the most expensive neighborhood" is an adage here for aspirationally upwardly mobile people. So basically use your money to mix with higher classes rather than on material goods (and put your kids in school with the highest class group you are able to).
> There are no homes in the area for under $1M, and many are $5M+.
We were talking about someone who found a $575,000 home to be stretching him to his limits. Have we gotten a bit off track here?
> The more relevant factor is that a bunch of doctors, lawyers, engineers, etc.
I'm one to talk as an engineer living in a $300,000 (maybe, on a good day) home, but I technically could afford a multimillion dollar home if I found some strange reason to show off to others. Generally speaking, a $575,000 home is really a "working man's" home.
What you describe is interesting, but is it the same obvious reasons as what was brought up before? Said person isn't of the class you describe.
They didn't say the $575k was stretching, or that it was the current value of the home. Just that it was the price when they bought it, and presumably they couldn't find something nearly as nice in a dense city without paying significantly more.
In any case, you asked why people are concerned about being "zoned for good schools" and why that would be obvious to Americans, and I think I explained it to you: making sure their kids are surrounded by the "right" peers who will pressure them into the "right" behaviors is a high priority for a lot of people, particularly in the professional-managerial class. They generally won't word it that way because overt classism is uncouth, but that's what they mean when you think about it. Obviously that's not a concern you have (it's also not "showing off" to live in an expensive area; everyone around you will necessarily also live in an expensive area...).
> They didn't say the $575k was stretching
Not explicitly, but they indicated that for them to move into the downtown they would require the price to be the same or less. That necessarily implies that $575k is the stretch point. If they had a $1-5M budget, we could have looked at downtown homes in that price range too.
> Just that it was the price when they bought it
That is what it said, but as the mortgage sits at 30 years it is likely that it was purchased recently. Yes, perhaps it is technically possible that he has owned it for 30 years already and just remortgaged it for another 30, or that it was a 40 year mortgage initially, but these are unlikely scenarios. If the commenter is concerned about any detail inaccuracy, he can provide an update.
> it's also not "showing off" to live in an expensive area
I mean, fair enough. Growing up in a rural area that was home to many big-co CEOs and professional athletes who were clearly showing off their extensive fortunes, it's apparent that the real flex is getting as far away from the city as possible. But at the same time I don't expect these houses of which you speak are exactly crack shacks either. Would you not say that they were very nice homes? Nicer than what the janitor at the school lives in? Location, location, location. I get it. However, $5M buys a lot more than just location in a suburb.
But it remains that it would be showing off for me. What useful functionality would a $1-5M home offer that I don't already have in my current home?
> so what have you gained by living in the city?
Jobs, hopefully paying a good bit more than minimum wage. If not for the city they wouldn't have any kind of income. They don't move to the city because they want some Parisian lifestyle, they move to the city because there are practically no jobs in the actually rural areas.
> They don't want the restaurants, shopping, healthcare, etc. to be anywhere nearby
Correct. They see these things as unsafe for their families to be around. They don't want to live within walking distance of a nightclub.
> Even though they cry that they afford to the transportation to get to them, funnily enough.
Most of the people arguing for better walkability and better transit access are absolutely not the same people actively choosing to live in places like Forney and Princeton and what not. They're generally fine having that commute and are fine driving to the Walmart when they need something that isn't just delivered to their home. Why even bother getting in the car to go to a restaurant, Uber Eats will bring the restaurant to them, and they don't have to deal with the crowds. Which, the few places with actual stores in these areas are massively crowded, because it's just oceans of houses around a few dots of shopping areas with giant parking areas surrounding them.
> What compels one to be tripping over their neighbour, but at the same time not wanting to engage in a community with them?
That they were willing to settle for the hour commute and not a two-hour commute, and that was the biggest single-family home they could afford in that hour commute radius and had a decent school district.
You're looking at it in pretty much the opposite direction from how they're looking at it. You're looking at a community you want to live in and then decide the home you can afford. They're looking for the house they want to live in, and then find the community they can afford to buy in. People didn't choose to live in Princeton or Forney or Melissa or Anna (or dozens of other "cities" around DFW) because of city amenities, outside of maybe a school district. They live there because they could buy a big single house cheap.
When I talk to friends about "if you could just move tomorrow, where would you want to live in DFW", their choices are rarely based in closeness to amenities. It is often about wanting more land, more space, more rooms. A family of four with a four-bedroom house with a dining room and two living rooms, too cramped. Need to move further out and get a bigger house. Definitely down to trade close access to the bike trails, walking distance to a large shopping area, walkable to the transit system to go all over the city, public parks with public swimming pools within walking distance, the elementary school around the corner and the middle school down the street for another few hundred square feet of land.
> Jobs
You haven't gained that, though. Not without travel, and once travel is in the picture then you can be located anywhere. Like was said in other comments, in practice, the time to get to a point in the city is the same if you start in the city, or if you start outside of the city. Cities build up as hubs for the surrounding area and the world at large, so getting things in and out of the city really fast is core to their design.
> no jobs in the actually rural areas.
1. The data clearly shows that rural areas, as a rule, have more available jobs. But you aren't apt to be able to work your way up to becoming a professional football player or CEO of a Fortune 500 in those jobs, so, granted, the jobs aren't appealing to the temporarily embarrassed superstar. I'll give you that.
2. I don't know where you think this walled city is that prevents anyone who doesn't live in the city from entering, but I can assure you that we're not talking about it. There is nothing that excludes you from city jobs if you live in the country, and likewise there is nothing that excludes you from working in the country if you live in the city.
In fact, those Fortune 500 CEOs and professional football players often live in the country!
> Like was said in other comments, in practice, the time to get to a point in the city is the same if you start in the city, or if you start outside of the city
This is objectively, radically untrue. It takes my wife 10-15 minutes to get to that same office where it takes the people living in Forney an hour to get in. She'll spend 20 minutes of her day commuting, they'll spend two hours. I used to ride my bicycle to the office before I mostly worked from home and have it take me maybe 15 minutes. Coworkers living in a town literally called Farmersville routinely took over an hour and a half each way. One person has to take a 30-mile trip, one person is taking a five-mile trip which is essentially the same final five miles as the 30-mile trip, how could it possibly be the same time.
> once travel is in the picture then you can be located anywhere
They'd agree with this entirely. I already have to have a car to get to work, so why wouldn't I just use that to go to whatever restaurant or shop I want across the city, why limit myself to only where I could walk? Personally, I enjoy going to the restaurants right at the edge of my neighborhood, on the days I go into the office I like strolling through the parks and to the restaurants nearby. But lots of people wouldn't want to "limit" themselves to only a mile or two, when the shop they'd prefer to shop at is a similar time distance away but by car.
> There is nothing that excludes you from city jobs if you live in the country
Time. Time excludes you from those city jobs. You're eventually having to spend more and more time driving through all those seas of neighborhoods to those decent paying jobs, its eventually just not worth it. People aren't going to be willing to drive two hours each way, it's amazing they're even willing to put up with an hour each way.
Once again, go back to that map of DFW. To really get an "affordable" truly rural place on that East side of DFW where you'd actually have dozens of acres without spending millions, you're probably looking at Josephine, Blue Rdige, maybe Westminister as a few examples. Go see what the commute time is starting at like 7:00 AM from there to Addison. Nearly two hours. Maybe you're going to work at a more industrial job in Garland. Nearly two hours. Are you willing to spend four hours of your day every day in your car?
> The data clearly shows that rural areas as a rule have more available jobs.
More available total jobs or more available comparable jobs? Please do share this data. Other than specific industries like oil and gas it's pretty much the opposite from what I can tell.
> More available total jobs or more available comparable jobs?
More actual opportunity, perhaps? Cities have lots of available jobs (assuming they aren't fake; that is a thing, apparently), and lots of people without jobs, but they never seem to align such that the people without jobs ever fill the open jobs. It's quite curious. As a result, people are much more likely to be without work in cities, as seen in the data. Yes, I'm sure you can find exceptions if you pick particular locations. We were never talking about a specific location.
> Please do share this data.
I'm sure you can look it up just as easily as I.
I was about to suggest that you can hire an assistant if you can't find the time to do it yourself, but whatever causes the above disconnect is apt to bite you too, assuming you are in a city. Oh well.
> You're eventually having to spend more and more time driving through all those seas of neighborhoods to those decent paying jobs
What kind of jobs are trapped in these seas of neighbourhoods? Most businesses need to get supplies into the city and their product out of the city, so usually the jobs are located on the fast track in and out of the city. This means that, if anything, it is easier to access the jobs when you don't live in the city.
Tech might be an exception to that. Maybe that's where your mind went, given the nature of this site. But tech doesn't require an in-person presence at all, so that one doesn't really fit our discussion.
> Im sure you can look it up just as easily as I.
Not any datasets that actually agree with your assertions. Most datasets showcase the hollowing out of rural job opportunities as globalization and automation has massively cut back on manufacturing job opportunities, automation has reduced farm jobs, rural depopulation leads to education closures, etc. So if you have a lot of data otherwise please do share.
And once again it completely goes against everything I've personally seen in nearly a dozen metro areas. I've got family who live in absolutely rural areas and operate farms in the Midwest. I've lived in a few metro areas. I've got close coworkers in other metro areas from me. I've got close friends who came from other rural areas, and know many people who live on these fringe of metro/rural kind of spaces. They all see the rural areas getting hollowed out economic-wise and the only real job opportunities are moving closer into cities.
I've driven through probably a dozen dead rural towns in Texas. Places that had what were probably lively town squares even in the 70s, probably had their last gasps in the 80s, and have been largely boarded up since then.
https://www.federalreserve.gov/econres/notes/feds-notes/chan...
> We were never talking about a specific location.
I've absolutely been talking specific areas. Have you not been reading my comments and actually looking at the map in question? And then, this is still pretty similar for almost all the other, I dunno, top 30 or so cities by population?
> What kind of jobs are trapped in these seas of neighbourhoods?
Not in those neighborhoods, through those neighborhoods. Decades of continuously pushing the fringe suburb line further and further out has done this. The towns that were once the edge of the city are now 30+mi into the urban area, and they've never been allowed to densify. Once again, it feels like you haven't actually looked at that map I linked once. It would be pretty obvious spending not even five minutes looking at that map to see what I'm talking about.
> Tech might be an exception to that. Maybe that's where your mind went, given the nature of this site.
No. My wife doesn't work in tech and those people in Forney I'm taking about are security guards and building engineers. That's not tech. Once again, are you reading my comments? Where are you going to get a commercial property building engineer paying nearly $100k in a rural area? Going to get a finance job with JPMorgan Chase in a rural area? Far easier finding a civil engineering job in a place where civil engineers are actually building things like skyscrapers and giant highway interchanges and what not than a place that barely has a stoplight. You're not going to have as well paid healthcare job working at a rural hospital struggling to stay open especially after this next round of Medicaid cuts compared to the giant hospital networks like Baylor, UTSouthwestern, Memorial-Hermann, etc, especially if focused on some speciality.
> Most datasets showcase the hollowing out of rural job opportunities
Hollowed out opportunity, or hollowed out available jobs? As noted earlier, there is a pretty big difference. My impression from your comment is that you are trying to say that there are fewer jobs available, which isn't what we were talking about.
> I've absolutely been talking specific areas
What part of "as a rule" made you think this was about a specific area?
> Have you not been reading my comments
Can I assume this implies that you have diligently read mine? If so, in all seriousness, I'd really like to know what part of "as a rule" you took to mean that the focus was on a specific area. My intent was very much to try and avoid focusing on a specific area as I understand full well that conditions can vary from place to place. I'd like to understand how I failed to communicate that.
But perhaps you were so busy trying to tell me your life story that you didn't actually read it after all.
> What part of "as a rule" made you think this was about a specific area?
As a rule that just happenes to not work in any of the large metros of the country in question. I've got a rule that a pen always rolls off on the left side of a desk, too bad it only works on my desk here that is missing a couple of legs!
> Hollowed out opportunity, or hollowed out available jobs? As noted earlier, there is a pretty big difference
Sure they'll go work minimum wage jobs at the highway fast food and gas stops. Buc-ees is iticing for jobs to sling BBQ sandwiches and scrub toilets! Big opportunity there. Once again, where's your data? I've linked mine, you're a foreigner going arguing against my lived experiences without even pointing to actual data, instead berating me and taking down to me about asking for you to actually give examples.
> Can I assume this implies that you have diligently read mine?
Yes, I have read yours. Have you actually read mine? I'm taking about one of the largest metro areas in the US trying to describe why people make the choices I do, showing real examples backed by federal reserve data and actual maps and housing costs and tax data. You're seemingly ignoring them and instead giving your own imagined ideas of transit times and job opportunities and property values not backed by any kind of data.
You're giving assumed ideas while ignoring actual factual linked data and multiple lived experiences in this chat while accusing me of not reading the data you refuse to share. You might want to re-evaluate who is going by gut assumptions.
> As a rule that just happenes to not work in any of the large metros of the country in question.
Large... metro? What? Where did you see me say "large metros as a rule..."? Perhaps you need to read it again? It clearly asserted "rural areas as a rule". You even literally quoted that exact bit in your response! How do you have absolutely no awareness of what is going on now?
> I've linked mine
You certainly did for some strange reason, but I have no idea why. It was rather bizarre. If I wanted to have a discussion with the FED, I'd go talk to it directly. I don't need you to act as a pointless middleman. That is a waste of your time and mine. I suppose I should have some appreciation for your obedient dog-like behavior as you deliver your chew toy to me with glee, but I really cannot find any reason to care. That's not what discussion forums are for. They are, surprisingly, for having discussions. I want to know what you have to say. If you have to rely on someone else to feed you what to say, why bother?
When your rule fails to accurately describe reality over and over, it's pretty worthless as a rule.
> Perhaps you need to read it again? It clearly asserted "rural areas as a rule"
Yeah, it's comparing rural areas to urban areas as a rule. So comparing and talking about metro areas is absolutely relevant here. And the metro areas I've been talking about include a mix of rural and urban areas. Metro doesn't mean urban.
> You certainly did for some strange reason, but I have no idea why.
You have no idea why someone would link to data to back their assertions instead of just saying things like "as a rule" without supppying any data. As a rule US males are 12 feet tall. As a rule dogs have eight legs. Don't bother linking to any data about these things, don't bother actually engaging with real examples, I'm not talking about any specific dogs or specific people, just some imagined models in my head. It's a total waste of time to actually research the data when I've conjectured a general rule in my head!
> Metro doesn't mean urban.
While that is absolutely true, rural areas within metropolitan areas are not the rule. What do you find notable about exceptional rural areas to offer relevance when discussing typical rural areas?
> Yeah, it's comparing rural areas to urban areas as a rule.
At one point such comparison was made, but we also moved on from that long ago and narrowed our focus to rural areas alone. There was no reasonable sequitur that brought us back to comparison with urban areas. If you want to talk about some random thing outside of our discussion, why not start a new thread?
> Don't bother linking to any data about these things, don't bother actually engaging with real examples, I'm not talking about any specific dogs or specific people, just some imagined models in my head.
Exactly. If I want to know more about the height of US males (male what? you'd better link to something to clarify!!) and how many legs dogs have, I can consult the records. There is absolutely no reason for me to come to you for that information. I am logically, given that this is a discussion forum, not a data collection agency, here to understand that what isn't documented and only revealed through discussion — things like your inner workings.
Which, granted, is still being revealed through this diatribe. And the inner working are quite unusual, indeed. I know we're really starting to go off-topic here and I understand I am being "that guy" in perpetuating it, so I won't continue to push the issue like that curious case above any further if there isn't mutual participation, but I would love to dig into this deeper if you are game. Do you understand HN to be simply a place where you can find free secretarial labor rather than as a place for discussion?
> There is absolutely no reason for me to come to you for that information.
If we're trying to understand and discuss reality, we should absolutely be referencing real data and information and build our conjectures from there. Not just making some statement that reality is a certain way, refusing to engage in any data that points otherwise, and berating people who bring evidence contrary to the conjecture. Otherwise, we're just discussing fantasy and being rude to each other. Personally, I'm wanting to talk about reality, not some urban/rural areas 9rx is envisioning in his mind entirely divorced from any real places and data in the United States.
You say things like "as a rule", give arguments of a drive from a rural area into an urban area should take the same time as just transiting around within the urban area, and offer zero actual real examples, data sets, or proof to your conjectures and berate those who show real data pointing opposite to your statements.
> If we're trying to understand and discuss reality
Science is for understanding reality. Discussion is for understanding what someone is thinking.
> we should absolutely be referencing real data
If that's all that your limited thought is able to offer, I guess, but what, then, do you understand as the value you are bringing to the table? Data is already recorded and I can just as easily go talk to the people who had the minds capable of coming up with that data in the first place if I want to know more about the thinking behind the data. Your involvement would be absolutely pointless.
As you are actually defying your own premise here right now by sharing what you are thinking, not regurgitating someone else's thoughts and data, you remain a valuable contributor. But if you were to devolve into what you suggest you want to be, how could the discussion go anywhere?
> Otherwise, we're just discussing fantasy
If fantasy is what someone is thinking about in the moment, I suppose that is what you are going to get. But that's exactly what discussion seeks to learn. If that's not what you are actually looking for, consider that discussion isn't what you need. As hinted at earlier, there are other ways to explore the world around you. Use the right tool for the job.
But if your discussions aren't even based in reality, what are we even really talking about?
For example:
> As a result, people are much more likely to be without work in cities, as seen in the data.
This is a demonstrably untrue statement. In the US, labor participation rates are lower in rural areas. Unemployment is generally higher in rural areas. Poverty rates are generally higher in rural areas. I'd link the data, but it's not like you'd bother actually reading it from what I gather.
> Data is already recorded and I can just as easily go talk to the people who had the minds capable of coming up with that data in the first place if I want to know more about the thinking behind the data. Your involvement would be absolutely pointless.
Seeing as how you're making statements not grounded in reality and data, I'd say my involvement would have a point of actually directing you to the real statistics and data. I'd hope that one would change their preconceptions when given actual data showing their statements are incorrect. If I continued to push the point that generally dogs have eight legs and you managed to provide me with sources that showcased dogs actually usually only have four, I wouldn't just say your involvement of showing real data is pointless. But pointing out your fantasies aren't based in reality and aren't backed by actual data just results in you berating me.
I agree, we're also wanting to delve into the "whys" of how the world works, which isn't always just directly looking at what the numbers say. But when our base facts we start from aren't actually grounded in reality, the whys we come up with are largely meaningless. The "general rules" we concoct from our fantasies become pretty useless if we take those rules to actually then measure reality and find reality doesn't line up with those rules.
> As hinted at earlier, there are other ways to explore the world around you.
Yes, we can look at data or we can base our ideas of the world off delusions and assumptions. But I take it you'd rather continue to live in your delusions and berate those pointing out when those statements aren't grounded in truth.
> what are we even really talking about?
Our thoughts, ideas.
> This is a demonstrably untrue statement.
My thoughts disagree, but that was said with respect to my country, not the US, so whether or not you are right, the US data is not indicative of that. While I do understand I wasn't fully clear in expressing my thoughts there, what is fascinating is that you jumped into assuming that I meant the US instead of asking "Are you sure you are talking about the US?" or something to that effect.
That is the kind of cool thing you learn in discussion. Who gives a rat's ass about data? I mean, there is good reason to care about data, but the data is right there to look at directly if you really are more interested in the data. Use the right tool for the job.
> I'd say my involvement would have a point of actually directing you to the real statistics and data.
So can I take from this that you aren't looking for discussion, but rather you want to be a teacher? While there is definitely a place for teachers in this world, a place of discussion isn't it. Colloquially, what we call the place you are looking for is "school".
You're wondering why Americans make the housing decisions they do but then use assumptions which aren't based on the realities Americans live in and berate those who actually try and show your assumptions aren't valid in describing why those Americans are making the choices they make in America.
You were wondering:
> Yes, but why would anyone want to live on what is effectively a farm, but without the benefit of separation from other people or land (read: income) that a farm offers?
> I'm not saying it doesn't exist, I question why people are doing it.
I gave lots of data and analysis as to why Americans seem to make this choice. You berated me for giving an actual analysis, gave conjectures not grounded in reality for those people making these choices explaining why my analysis is wrong, and continued to wonder why people would make these choices. Your conjectures weren't valid for the people in question. They weren't based in their reality. But you seem to not want to actually engage in the reality of it.
> Colloquially, what we call the place you are looking for is "school".
People can learn new things and be corrected on their false preconceptions without necessarily being in a school building with a teacher.
> You're wondering why Americans make the housing decisions they do
I wondered what the thoughts about why people make the housing decisions they do were. My country is within America, as it happens, so I suppose if it were to be limited to America that would be all well and good, but it wouldn't have been a detail of any significance.
> You berated me for giving an actual analysis
I engaged in your analysis to see if I can understand if you were confusing opportunity with number of jobs. I don't think we ever gained that understanding, and eventually we just moved on as it was clear that the only thoughts present were about the concept of data itself, which was well outside of the topic at hand and not producing anything of interest to latch onto.
If your thinking sees that as a berating: Fascinating. Can we dive deeper into your thought process there?
I think to most people being called a dog is berating. Saying things like "that's all that your limited thought is able to offer" is berating.
> I engaged in your analysis to see if I can understand if you were confusing opportunity with number of jobs
It sure seems more like you engaged with the analysis to say I'm wrong about objectively factual things and called me a dog when I provided sources.
> I wondered what the thoughts about why people make the housing decisions they do were
You're wondering why people make the housing decisions they do but unwilling to actually engage in looking at the actual data of job opportunities, home values, etc. that might actually give you insights into it, from what I can tell. Because, who gives a rat's ass about the data to answer our questions when assumptions and conjectures will do. Obviously, the answer is because these houses in the exurbs are more likely to be tan and people just love the color tan for their home. We don't need to actually look at any information to see if this is true or not, we'll just discuss as if this is truth. Are the houses more likely to be tan? Do people even prefer tan houses? Who cares.
> Saying things like "that's all that your limited thought is able to offer" is berating.
How so? What are you thinking?
Additionally, it is interesting that you left out the "if". What was the thought process there?
> called me a dog when I provided sources.
I likened you to a dog wanting to pointlessly please its master. Call it berating if you will, but that is the behavior I see dogs exhibit and that is the behavior I observed here. I'm sure you have data to contradict my understanding, but to the extent of the understanding I have, that is simply a factual account.
> You're wondering why people make the housing decisions they do
I asked what others thought about it.
> but unwilling to actually engage in looking at the actual data of job opportunities, home values, etc.
This wouldn't indicate what others thought about it. There is a place for looking at the data, but that would happen independently and wouldn't carry into a discussion. Different tools for different jobs.
You don't see how stating someone has limited thought capacity is berating. You don't see how being called a dog is berating. And now you're suggesting I see you as my master, wow. You might want to re-evaluate what people would commonly find berating. Go discuss that with others and see what you find out.
> You don't see how stating someone has limited thought capacity is berating.
No. If someone has limited thought capacity, they have limited thought capacity. That is just a fact of life. For someone so concerned about the veracity of data, how can you see a datapoint as being berating?
Granted, the datapoint in this case is only hypothetical (as you would have noticed if you retained the "if"), but such datapoints also do exist in the real data. There absolutely are people in this world with limited thought capacity. That much is not a hypothetical.
> You don't see how being called a dog is berating.
Likened to a dog. But, no. Why?
> You might want to re-evaluate what people would commonly find berating.
I'm sure you've got some great data for me to look at, but my understanding is that people find something berating when they understand a statement as some kind of truth that they don't want to admit to themselves. It is quite obvious that nobody feels berated when an assertion is so outlandish that it couldn't be true. That becomes comedy.
I have no illusions of being anything related to a dog, so if you likened me to — or even straight up called me — a dog, I would not find that berating, no. If you went after my actual insecurities, then sure. I would then. I am certainly not immune to silly human emotion, but silly human emotion does not get triggered by random strings of text.
So, perhaps this is good opportunity to dive into why you feel insecure about your thought capacity and animal shapeliness for these particular strings to activate your emotions. What are your thoughts there?
(And my apologies for finding your insecurities. I would have never guessed those particular things would bother anyone. The things you learn from having a discussion!)
Incredible how you can spend so many words to showcase how you can't possibly imagine people don't like to be called unintelligent dogs.
> but silly human emotion does not get triggered by random strings of text
Once again, seemingly completely divorced from reality. You must live on an entirely different planet far away from actual humans if you think human emotions are usually not affected by strings of text.
> but my understanding is that people find something berating when they understand a statement as some kind of truth that they don't want to admit to themselves
No. Things can be berating even if one knows that statement isn't true about them. But I imagine you know that. If someone calls you a worthless piece of trash its being berating regardless of if you think you are or are not a worthless piece of trash.
> Incredible how you can spend so many words to showcase how you can't possibly imagine people don't like to be called...
Incredible it is, I agree. But that's why I'm here. So that I can learn to imagine such things. Learning has to start somewhere. That's what discussion is all about!
> ...unintelligent dogs.
I am intrigued that you think dogs are unintelligent. The exhibit intelligence as far as I can see. What is the thinking there?
> You must live on an entirely different planet far away from actual humans if you think human emotions are not affected by strings of text.
Strings of text and random strings of text are not one in the same. How did your thought process lead you here?
> I am intrigued that you think dogs are unintelligent.
I never made the claim. My statement was you effectively called me that through your comments. But sure, just make things up.
> Strings of text and random strings of text are not one and the same. How did your thought process lead you here?
Are you suggesting all your words are just random and have no intention or structure or meaning behind them?
Truly seems like I've just been talking to a bot this whole time.
> I never made the claim. My statement was you effectively called me that through your comments.
I likened your behavior to that of a dog. Nothing said you or dogs are unintelligent. That was first seen in the previous comment – the one written by you.
> Are you suggesting all your words are just random and have no intention or structure or meaning behind them?
The fact that emotions are not triggered by random strings of text does not equate to, or even suggest, an inexistence non-random strings of text. How did you think up that one?
> Truly seems like I've just been talking to a bot this whole time.
Would that make a difference? Discussion doesn't have to be only about learning what a human thinks. What a robot thinks can be just as interesting. Hell, if you can figure out how to communicate with a dog to learn what it thinks, why wouldn't you jump all over that? That would be amazing.
Maybe you just don't like learning? It seems like you don't care for it much based on what you are responding with, but that may be a poor interpretation on my part. What do you think?
Many people who live in those towns you describe work in McKinney, Plano and other parts of the suburbs. I’m not saying you’re wrong because there certainly are those people that make those commutes. I personally know a dev who lives in Prosper and another who lives in Melissa and they both commute to Las Colinas! Their reasoning was home affordability, home value growth, and school quality.
Many people do, I agree! I'm not trying to paint it as everyone living there does have an hour commute, it's true many don't.
But yeah, go work a job in Addison, Las Colinas, deep in Plano, etc. You'll find a lot of coworkers living in Farmersville, Prosper, Melissa, etc.
> Their reasoning was home affordability, home value growth, and school quality
This is yet another set of data points showing what I'm talking about, thank you. These people live there because it was cheap when they bought it, they expect the metroplex to keep growing increasing the value of their eventually "closer in" home from where the outskirts will be in a decade, and schools are better than other places they might have afforded to buy. Am I wrong?
In the end transit time to the American Airlines Center to watch a Mavericks or Dallas Stars game didn't matter. It didn't matter it wasn't the restaurant capital of the region.
And I don't blame them, that was the choice they were given with the options presented. Housing in the US is a mess, and it seems few get what they'd really prefer they just have to live with the tradeoffs of what's on the market at the time.
> These people live there because it was cheap when they bought it, they expect the metroplex to keep growing increasing the value of their eventually "closer in" home from where the outskirts will be in a decade, and schools are better than other places they might have afforded to buy. Am I wrong
I think you are wrong, yes
Could be I'm the one who is wrong, but I don't think most people buy homes with this sort of speculation in mind. Most people are just looking for the most comfortable and nicest house they can afford on their budget, and probably don't actually think too much about "what might be built later"
The person I replied to used the phrase "home value growth" in relation to a rapidly developing town.
Definitely anecdotal, but I know of several families which decided to move to certain areas which were rapidly developing at the time based on the projected value growth from the planned new developments. For example, lots of people I know moved from Dallas/Plano/Richardson area to Frisco during the explosive growth of Frisco to get in on that rapid development growth, buy a house cheap today in seemingly the middle of nowhere which will become a massively developed area in the next 10 years, sell the house and move to Prosper where the same will happen, on and on until I guess we hit Oklahoma. I know people who moved to The Colony when the rumors of the Grandscape development started and talk of Toyota moving to the area, expecting home values to rise.
I'm sure people living in places where development is a lot more static probably don't buy with these ideas in mind. But from what I've seen again in again in DFW and Houston and Austin and San Antonio it seems to be a pretty common mindset.
> That's the thing, a lot of Americans really don't like this idea of being squeezed in tightly.
I think it's a large and growing cultural divide.
There is a growing class of predominantly progressive people who look to walkability scores and the variety of ethnic restaurants and music venues to evaluate the desirability of a place to live. And an older more conservative cohort who value what you describe.
I agree there's a growing divide there, and even a decent middle ground there of people who value maybe having a yard but want a park and shops and what not within bicycle distance and not be entirely car dependent.
I'm not entirely sure it's fully an age divide. Definitely age-weighted, I can agree. Other than family that grew up in NYC, most of my family >50 thinks I'm crazy for taking my kids on public transit and can't understand why I'd like to live closer in the city with kids compared to living in the sticks on a large property and a 15 minute drive to the grocery store. But there's also a lot of conservative younger-ish (millennial and younger) people who also seem to have that same mindset of wanting to live further out of the city and don't care or are against things like transit and tax dollars spent on city parks and bike lanes.
That example of the family of four where a four bedroom house is just too cramped for their needs I gave elsewhere? They're barely 30. They're absolutely not alone in what they're looking for.
This is an "urban" home in a "city" of nearly 40,000 residents. Good luck telling this family they don't need to worry about paying for at least one automobile.
https://maps.app.goo.gl/niLDDJkrkYJ1Hh4J7
And in the 1870s the average middle class family wouldn't have owned nearly the same variety of finished wood and metal products. Industrialization changed that.
You can't just say "but iphones" to hand wave away huge changes in the big items of a family's budget.
The amount of junk in my house is astonishing when compared to what was in the small house I grew up in.
I do wonder if there's hidden benefits to using Klarna to get, like, bulk discounts. Buy three months of toilet paper/chicken broth at once at Costco, pay it off over three months, save a few bucks each time.
You don't need klarna for this. Credit cards already fill this need, and with careful use are free. Most people (in my circles) already do this type of thing
That "woth careful use" is carrying a trillion dollar industry on its back, sadly. Clearly society is in fact not careful.
Not really. The people that pay interest on credit cards are the ones that pay for the luxuries/points/rewards of those who use credit cards wisely. If I get a 0% apr credit card for 18 months, i put all of my expenses on it for 16 months. I put that equivalent cash in to a high interest yield savings account (HYSA) and pay the card off before it’s due. I pocket the difference since the bank just gave me a free loan.
I thought the businesses pay it? Isn't it like 3% for a transaction fee that a business has to pay to accept a credit card, and the credit card company gives me the card user back like 1% or 1.5%.
I don't think we are disagreeing here, you're just describing the model on why (as usual), the credit card industry punishes the poor or irresponsible. And people who can exploit the system benefit.
Credit cards fill this need for a month of spend, but if you want to go three months at a time you need to figure out a different solution.
When purchasing durable goods or bulk supplies, the difference is minimal. It might require saving before purchase, or gradually moving to the bulk model to preserve cash flow. But it's totally doable with a credit card on the household scale.
They had a $5 off a $20 purchase promo on eBay recently. I imagine they'd make similar offers on other platforms too.
> Wages for the average person (working class) typically remain stagnant while cost of living increases, particularly through inflation.
If wages were stagnant, nominally, you'd be making like 25¢ per hour. Wages are stagnant[1] only in real terms (i.e. adjusted for inflation). Cost of living and inflation are very different concepts, but since you indicate that inflation is responsible for most of the cost of living increases, wages have kept pace anyway, so...
[1] Technically not even. Wages are growing faster than inflation, but the margins are small enough that we accept calling it stagnant as a close enough approximation.
It goes beyond that when there's installment payments for burritos being paid. It's not just being brainwashed into consuming too much beyond what they should and more like a systemic problem that pushes people into not being able to easily afford daily food, yet still needing that to get enough time to work and commute.
I find meaning in understanding ever so slightly more about the world we live in, and so I love consuming as many things and experiences as possible to have a rich understanding of myself and to some extent, humanity as a whole.
I don't like the word "consume" though. Am I consuming a surfboard or am I surfing? am I consuming a song, or am I listening to it? singing along to it? This perspective feels tired.
The entire system (evolution) is based on growth and consumption. Blame agriculture! Too much free time to consume now – we are full-time entropy farmers.
[dead]
Consumer brainrot is real and declining education is not helping this cause either
I don't think blame was being apportioned.
> I have a hard time blaming "the average person"
People still have agency and so are responsible for their decisions.
Believing what is told, trut all what is told, is something to be blamed about (here I am assuming we are talking about adults). Not like blame was allocated here, just since the topic was mentioned.
You're probably doing things every day without ever questioning them, things that other people would find extremely weird and/or brainwashed behaviours.
Some of my friends became corporate drones when they moved to a country where most people are corporate drones, they don't see the problem even though they changed their entire personality to fit in, yet they are educated, cultured and smart
If it was that easy the average Joe wouldn't be in such a bad mental and physical shape... the forces at play are much stronger than individual will, especially when said will is being worked against from the beginning.
> The "average person" is told from birth to consume as many things and experiences as possible as it if was the only thing that could give their life a meaning.
The “average person” doesn’t make enough money to pay rent or afford groceries. You’re blaming the poor based on your idea of what an “average person” looks like, which is a representation of middle and upper middle class. The average person doesn’t have the luxury to consume as many things and experiences as possible.
Doesn't "average" = "middle class" by definition?
US median individual income in 2022 was $48k
https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
> The “average person” doesn’t make enough money to pay rent or afford groceries
<1% of the US population is homeless, and ~10% receive food stamps. The average person makes enough money to pay rent and buy groceries.
Just because people aren’t homeless and don’t qualify for food stamps doesn’t mean they can afford things.
You need to make less than $33k for a family of 3 to even qualify for food stamps and then get disqualified if your total assets are above $4.5K. If you’re an adult without children, your food stamps eligibility is capped at 3 months every 3 years. A lot of people who need food stamps, do not qualify for them.
Credit card debt is $1.2T, out of which 10% is delinquent for more than 90 days. https://www.stlouisfed.org/on-the-economy/2025/may/broad-con...
Student loan debt is at $1.7T.
People are going into debt to buy groceries. https://www.cnbc.com/amp/2024/05/20/americans-are-going-into...
The average American life is way worse than what people generally make it out to be.
The median household income is 80k which is plenty to afford groceries and rent.
How did you come to believe that half the people in the richest country in the world can't afford to eat or have a roof over their head?
Because it is a lived experience.
I will say the exact same thing for me and 90% of the people around me.
I know a few people that are really struggling on 20k a year where they can barely afford groceries and roof. But based on all the data that isn't the norm.
Average *American
Probably average "any country where it's common to own a car for less than 10 years" tbh.
and those that do not meet that criteria are going the same way.
Nah. More like everywhere besides North Korea.
There is no “system.” It’s all just people making choices. My wife puts straws in the dishwasher to reuse them. She grew up in America the same as everyone else.
> It’s all just people making choices.
Yeah sure... and some people get together and make choices that impact other people ability to make choices, it really isn't rocket science.
If you think Zuckerbeg spending hundreds of millions a year to get the top XXX behavioural scientists to work on how to milk your attention span has the same impact as "my wife puts the straw in the washing machine to reuse them" I have bad news for you
idk how you call lobbies spending literal billions every year to make you think "cars are freedom", "debt is wealth", &c.
The problem is some of us have way more weight to throw around than others, so in some cases one of those "people making choices" has as much impact as millions of people.
As a side-note, putting straws in the dishwasher doesn't do a very good job of cleaning the insides of them. Unfortunately, you've gotta faff with those little brushes.
How does she prevent them from falling through the holes and hitting the heating element at the bottom? Does she throw them in the cutlery basket? Wouldn't it be light enough to fly around inside the dishwasher and land somewhere undesired?
She puts them in the cutlery basket.
There's no system the same way there's no Facebook, just some databases and servers. Or there's no Java language, it's all just UTF-8 characters. Or there's no government, there's just people voting for other people. Or there's no society, it's all just fancy apes existing and making decisions.
It's quite frankly ludicrous to be a software engineer and pretend systems don't arise from "individual" "independent" elements.
> Or there's no Java language, it's all just UTF-8 characters.
Some programming languages explicitly require UTF-8 in the language specification. Java is not one of them.
As of Java 18, it is: https://openjdk.org/jeps/400
That's not what your link says:
Perhaps you pasted the wrong one by mistake?Not that such a change to the language for future code, even if only hypothetical, would bear any difference to this discussion anyway as legacy Java code encoded in other charsets is still Java code.
Just one sentence after the one you quoted:
> However, the javac compiler is affected because it assumes that .java source files are encoded with the default charset, unless configured otherwise by the -encoding option.
Interestingly, in Windows, Java programs were supposedly encoded in CP-1252 before this...?
> In JDK 17 and earlier, the default charset is determined when the Java runtime starts. On macOS, it is UTF-8 except in the POSIX C locale. On other operating systems, it depends upon the user's locale and the default encoding, e.g., on Windows, it is a codepage-based charset such as windows-1252 or windows-31j.
1. javac is an implementation, not a specification.
2. As noted in the very quote provided, said particular implementation accepts various encodings; naturally, as the language allows various encodings.
That is quite unlike the languages that specify that anything other than UTF-8 is invalid code.
As a former engineer, I would say a “system” is designed as a whole, like all of the things you mentioned (but unlike society). If we are talking about the interactions between separately designed things—e.g. various autonomous vehicles designed by different companies—then we’d talk about “emergent behaviors,” not “systems.”
Do you think the choanoflagellate making up your fingertip knows there is a system.
> Theoretically, credit should be used for one thing: to make more money.
I disagree.
You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
It's not so you can use them to make money, it's so you can use them to enjoy life.
> At some point, you run out of hours available and the house of cards collapses.
Only if you go too far. The point is to buy things knowing what they'll cost monthly and for how long, and to budget those as part of your monthly expenses. As long as you can always handle those, you will never run out of hours available and it's not a house of cards. Nothing collapses. You pay off your car; you pay off your mortgage.
You seem to be treating this as something black-and-white when it's not. It's an incredibly useful tool when used with budgeting. Not "to make more money" but to have a better life for you and your family for when it matters the most. Nobody wants to wait until the kids have graduated from college to be able to buy their first house.
And even with credit cards -- yes you generally want to be paying them off in full monthly. But if you want to take a vacation a couple months before you could otherwise fully pay for it, it's really nice to have that convenience too. Not to mention covering some expenses for a few months if you lose your job. They're a tool to be used responsibly.
If you're using credit to buy a car, most people do so in order to get to and from their place of work for the majority of their driving time. In that way, using credit to buy a car still fits into their theoretical model. For example I know plenty of people who completely got rid of their cars when remote work became more common, or at the very least consolidated to smaller cars or to less cars for a family.
Similar thinking for a house. A lot of people when buying a house go into it with the assumption that it is an appreciating asset that will gain value over time. Yes there are other factors of course like wanting to live closer to schools or in the suburbs/good areas, etc. But regardless this is commonly to facilitate a life that lends itself to you continuing to be able to make money comfortably.
Regarding vacations, no financial expert recommends using a card without the intention of not paying for it. If your plan is to book the vacation on credit for anything other than the benefits of your credit card points systems you might as well not use it at all. And all recommend not using credit cards and instead an emergency fund if you lose your job.
No. You can rent and you can take the bus. Or rent and buy a crazy cheap old used car.
A house and a decent car are not primarily about making money. They're about your quality of life.
> And all recommend not using credit cards and instead an emergency fund if you lose your job.
And if you already used your emergency fund on, say, a medical emergency...?
Yes because American public transit is so great and now you have to get up hours earlier and come home later - not great if you have kids or you actually want to spend time with your significant other.
Also what happens when that cheap old car doesn’t start in the morning when you need to get to work or pick your kids up from day care/school or need to be home when they get off the bus?
Where are you going to get the money to fix that old car?
You present some very daunting problems that the young and working class have to deal with (I know, I was both of those decades ago and struggled myself).
Credit to buy a new car though is still generally a bad solution. We should fix the other things you mentioned.
I would like to see laws allowing extreme low-cost vehicles (equivalent to golf carts, I guess) allowed on designated roads. A special inexpensive insurance proviso for them.
That you need something like $30K to buy a new car in the U.S. is insane.
> I would like to see laws allowing extreme low-cost vehicles (equivalent to golf carts, I guess) allowed on designated roads. A special inexpensive insurance proviso for them.
These already exist! You maybe haven't heard about them because they're largely a failure beyond niche applications. They're mostly used for things like hospitality shuttles, facility maintenance, meter maids, etc.
https://en.wikipedia.org/wiki/Low-speed_vehicle
https://en.wikipedia.org/wiki/Neighborhood_electric_vehicle
The problem is that they don't make sense for most people, e.g:
1. You can't operate them on high speed roads. The US has a lot of high speed roads, particularly in areas that are poorer.
2. They aren't cheaper than a used car. A street legal Cushman or GEM starts at about $16k. A brand new Nissan Versa is only about $1-2k more, is wildly better equipped, and has more accessible financing. Good $10k used cars are available on every street corner in every poor neighborhood with extremely accessible financing.
3. They are weird. It is much more socially acceptable to drive a similarly priced used car.
4. They lack features that used cars have. Many control cost by omitting basic features such as doors and climate control.
5. The places where you can use them (low speed neighborhood roads) are already more likely to be accessible by alternative means of transportation. (busses, bikes, walking)
> A street legal Cushman or GEM starts at about $16k
I see a business opportunity.
Where? 'cause I'm not seeing it.
I'm guessing you're taking issue with the price? Meh, that's just what it costs to make a decent product. You can (or at least used to be able to) get hot garbage manufactured abroad for less, but it doesn't meet the standards of what anyone would reasonably get, and they don't compare favorably to even a bad used car.
You might find this interesting:
https://www.youtube.com/watch?v=yRG0Wai4sR0
I remember when you could get a $10k new car... but if you adjust for inflation, we still have those cars today (now they're $20k), and they're actually better than the $10k cars back then.
How are you going to safely have a golf cart on a highway? And what good is a car that can’t get you everywhere you need to go?
To go between work and my apartment, I didn't need the highway. As I have said in another thread, I made do with a 10-speed bicycle, frcrisake. I don't expect everyone else to be able to do that though.
Yep, I have never taken a loan out to buy a vehicle — even though I have always needed one to make money.
When I was working a pizza place, going to JuCo, I had a 10-speed bike for transportation. (Yeah, even in the shit Kansas winters, I was riding to JuCo along the just-plowed roads. Now get off my lawn!)
8 years ago I bought a house. My monthly rent was 1300 and mortgage/escrow/repair savings were instead 2000. Rent went up $100-$200 a year.
My son is looking for rentals in our same community and the equivalent rental to what I had is now around $3000.
Even ignoring appreciation, in the long term there was a cash flow savings.
> there was a cash flow savings
... in your case. There was a cash flow savings in your case.
I've moved several times and done the math each time. Sometime it's been more cost effective to own, sometimes to rent. There are a lot of factors that go into that calculation, and the math doesn't always fall on the side of buying. That's especially true if you don't expect to be in a house for decades.
> My son is looking for rentals in our same community and the equivalent rental to what I had is now around $3000.
Good for you. Bad for your son or anyone living in your community.
Agree. I wonder though if the tone of your comment doesn't come across as casting blame on the person who got the mortgage years ago.
It's not intended to, although it is intended to be blunt.
The odds of two emergencies are low enough that you can ignore this. Not that it doesn't happen, but it isn't that common. If you expect two emergencies you should have more in the fund to cover it.
> If you expect two emergencies
Emergencies are unexpected.
And a lot of people simply don't have the money to build up that kind of fund. To suggest that they "should" is to be pretty out-of-touch with the realities of a lot of people. Sometimes they need to rely on credit, because there aren't any alternatives. So that credit becomes a lifeline, a good thing.
Lol what bus?
My daughter went a year to and from work by bus in Omaha. Yeah, it sucked. But we should instead be trying to fix that rather than just tell people "Let them eat credit."
Fixing takes time. I need to get to work today or else I'm fired and homeless in a few weeks.
> They're a tool to be used responsibly.
I used to hate to take the position that government should save people from themselves, but I've moderated a lot on it. Some people clearly cannot use credit responsibly.
Societies used to understand this and put lots of limits around exploiting people, such as banning interest rates. But there is no unalloyed good. That ban also blocked rapid economic development as seen in the 19th century, where credit was absolutely critical for railroad construction and other infrastructure like electric or plumbing.
It's a real dilemma with tradeoffs, where slogans and soundbites don't work. Having opportunity means you may squander it. Too many guardrails on life paths and behavior blocks meritocratic social mobility as well as opportunities and motivation.
Since conditions are changing too fast there is no appropriate crystallized wisdom about it. There is no wealth of myths that would define how to live. The best we are able to say is the non-instruction to "be free" and to tap into your authentic self and author your life path with freedom and agency.
In biology one can distinguish evolved traits and behaviors (instincts) from learned ones. The latter can adapt much faster to the situation. Even better than learning from environmental feedback over one's lifetime is planning and simulating possible futures and deciding based on that. Somewhere between the individual lifetime and the genetic evolution levels, there is also the level of culture that used to reshape much slower than a single lifetime, taking lessons and condensing them over generations into templates. But more amd more as we diverge from the ancestral environmental conditions of the savannah and hunting-gathering in tight knit tribes and clans, we can less and less rely on biological instinct, cultural bedrock, wisdom from the parents' generation, what you learned a decade ago, and so on. We are forced to adapt and outmaneuver the shifting landscape faster than ever. More and more things pulling in entirely opposite directions. A vortex of stimuli to cut through with a machete-like mental strength. But most people are not built for this, and even those who are, constantly have to gamble and guess and rely on luck and hindsight.
I think the problem is that we left exploitation of people under the umbrella of government open and so all the demand for exploitation has sailed under that flag.
You've got the tire companies lobbying states to up the tread depth for their safety inspections. The HVAC people got refrigerant restricted so that you have to be a license holder to buy it (artificially increasing demand for their service). The plumbing trade groups have a dozen states convinced that you need a license to install a gas dryer, etc, etc.
It's all the same "screw an extra buck out of the public" industry group and cartel behavior we had a century ago, but government just has a seat at the table and gets a cut this time around.
There’s also a second order effect of the people using easy loans/credit money leading to higher prices for everybody else. The cheap options will disappear if there’s a big chunk of the population that will go in debt to get the pricier option.
Why sell $1 tacos when customers are willing to Klarna an $8 burrito?
Why make a school with affordable tuition when students are willing to take out $100k loans?
This definitely happens. It's like giving cheap loans to young couples who are having their first child, which was introduced in Hungary. But without more available housing, the market simply prices it in that suddenly people are able to pay more using this cheap credit, and supply and demand just makes it settle at a higher price.
Credit is basically a loan from the future. Except that's obviously impossible. Time travel doesn't exist, so it's just economic fiction. In the end the math has to add up in terms of real material goods and services right now. People can only reshuffle the goods among themselves, any trade with the future may be a useful fiction to simplify accounting but is obviously just fiction.
This is a bit like saving money for your retirement. It's a fiction. If there aren't enough young people working as nurses to put you in your diapers, then there simply aren't. A pensioner is not using the goods that they made decades ago. Their work dissipated there and then, and now decades later the only value they can consume is the one generated in real time by the actually existing working population.
Ban personal liability on loans (full recourse).
If the lender can only take the thing (like repossession of the car or foreclosure of the house) and can’t go after the borrower for the difference, lots of problems solve themselves.
Credit can still exist in various secured ways, business credit is barely impacted for real businesses, and people stop being able to go way below zero.
How do you apply this to loans for things that cannot be repossessed, like college degrees or medical treatment?
> Societies used to understand this and put lots of limits around exploiting
They still do (at least in the US). Jewish people have access to Heter Iska loans according to their religion. They do not extend this to gentiles.
Humans have known for a long time usury is inherently predatory. Nobody should profit off simply having money.
> usury is inherently predatory. Nobody should profit off simply having money.
Well, the time value of money is a real thing.
And yet, the banker truly gives me value if I wish to start a business, or upgrade an existing one, and I don't have the capital to do so. I need money to make money, and am willing to pay for the privilege of using someone else's money.
> > Theoretically, credit should be used for one thing: to make more money.
> I disagree.
> You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
There's no contradiction with GP here.
Financing a car or buying a house on mortgage might well save somebody money in the long term (e.g. by allowing them to take on a job to which they have to commute by car, or saving on future rent payments).
If that's the case (and that highly depends on individual circumstances), this still counts as "making more money" – via spending less money.
The real question is: How do you feel about borrowing money used to buy depreciating assets or consumables?
> You use credit to buy a car or buy a house when you don't have the cash to buy them up-front.
Still the same principle - you buy long-term asset that makes rent-equivalent money if you rented that otherwise. That is different than borrowing for immediate consumption.
Both transportation and shelter are important to earn money
You can't deny the strong ability to make money using credit or debt though.
No it's not the only way you can use it, but it's a pretty big way that a lot of people do successfully use it.
This ignores the fundamental equation
where "T" is time, "M" is money, and k is some constant.Let’s say you finance $40,000 in auto debt over 5 years. With a low interest rate of 6% paying $6,300 in interest. That’s over 15% of the amount borrowed! Many people have lager rates over longer periods.
Now consider what would happen if you invested that $6,300 for 30 years instead of spent it on interest. You’re losing out on tens of thousands of dollars in total lifetime wealth.
When you borrow money to “enjoy life” it can quickly end up costing 2x what it would if you spent the money outright, even if you borrowed at low rates.
The trick is to borrow $40,000 to buy the car at 6% and keep your $40,000 invested making more than 6%. Even at 7% annually, you’d make $16,102 over five years (1.07⁵ × $40,000). For that matter, at 6.1% annually, you’d make $13,782 (1.061⁵ × $40,000). Heck, even at 5.9%, you’d make $13,277! The reason why you make more even with a lower rate is that you pay less interest each month with the amortising loan!
The trouble is if one borrows that $40,000 to buy a brand-new car (which will lose $16,000 over five years), or if one borrows that $40,000 and doesn’t have or doesn’t invest $40,000, or both. Life’s a lot easier if you already have the money.
Personally borrow and invest over shorter periods of time (less than 10 years) has too high of a risk portfolio for me, especially with a depreciating asset.
What if there is a market downturn, and you’re out not only the decrease in value of your assets but also the interest in your loan. I admit this is down to personal preference and risk tolerance.
Well if you can't survive a downturn and the risk then no you shouldn't do it. But if you can then you should and in the long run you will end up ahead.
Well seeing that you need a car to go to work to have money to invest in the first place…
And before you say “buy an old beater”, then you have to contend with an unreliable car that may cause you to be late to work and get fired. It’s also much easier and cheaper to get a car loan for a newish car than to borrow money to fix a car.
As a young person, I was in the “own an old beater” category for many years. That said, I knew how to maintain and repair most of what could go wrong. That stick shift 1995 Accord had over 300,000 miles when a school bus finally totaled it while parked.
But for most people, maybe not the right answer. There’s a middle ground. There are some very affordable vehicles out there with good warranties. Buy one and for a few hundred a month, you get five years free of worry.
Of course, who does that? What I see are mostly SUVs and other “image” vehicles that cost more to buy and more to run. Frugality just hasn’t been an American trait in recent years, though it seems to be changing in some groups.
I don’t think you need to know a lot about cars to get good value out of them. I had an old ford ranger and all I did was get new tires when they tread wore off, get new brake pads when they started squeaking, and get the oil changed when the little sticker said to. I put 350k miles on that truck.
And if you are already living check to check, buying an old beater they you don’t know the condition of is more risky and harder to come up with the cash as things go wrong like the engine and the transmission.
It’s completely different than buying a slightly used car and keeping it forever where you know the wear and tear patterns on it and you know how you treat it.
Im just encouraging people to do the math, and to consider borrowing smaller amounts of money over shorter periods of time.
Its kind of funny how the people who don’t want to work with “lazy,” mangly, poor people with bad teeth are the first ones to tell poor people how they could’ve made interest on 6300 dollars over 30 years.
It’s pretty rude to make personal assumptions based on a comment on the internet. My entire focus on the comment is providing education about the opportunity cost of borrowing money.
Do you also think that way about buying a house with a mortgage (credit)? I don't.
A mortgage isn't used to make more money. It's used so people can own a house after saving for a few years, rather than waiting until they've saved for a few decades.
A mortgage doesn’t make money, but it (can) enable spending less money. If you buy a place such that interest, maintenance, insurance, taxes and the opportunity cost of not being able to easily relocate are less than rent, then you have saved the difference.
It’s also a way to force saving, which is psychologically useful (and thus valuable).
If you buy a house for 500k on a 5% mortgage over 25 years when you are 25, and you plan to live until you are 85, you will live there for 60 years.
It will cost you 35k a year for 25 years, or 875k a year
After 25 years you have no more expenses.
If instead you rent it for 20k a year, increasing with 2% inflation each year, by year 25 you're paying 33k a year in rent, and by year 60 you're paying 66k a year.
Over 60 years you pay 2.4m in rent, or 900k in mortgage (you could also then sell that house for 1.6m with a 2% annual inflation).
You'd have to invest the savings and get way higher than inflation returns to break even.
Of course there's maintenance costs of the house too, but that's with rent far cheaper than the mortgage. In reality rent tends to be a similar amount as a mortgage (in the UK it tends to be higher - as people won't rent places out if they aren't covering their mortgage - at the very least the interest part of it). You'll likely find house prices appreciating more than inflation too - just like stock prices do. Rent tends to track income.
Now you could argue that you'll get more by investing in high return growth stocks. And you might be right. In the 80s there was a whole "endownment" mortgage craze where you paid the interest on the mortgage, and then the rest rather than paying down the mortgage capital, instead was invested.
This was a massive scandal as many investments didn't have enough to cover the mortgage amount upon maturity. With a mortgage you know that no matter what happens with inflation, growth, returns, stock crashes etc, you will own one house after X years.
> people won't rent places out if they aren't covering their mortgage
btw this is usually false, and mostly irrational.
1. Realize that every landlord has a different capitalization structure. Many likely bought decades ago and thus only owe a fraction of what the current market selling price is. Additionally we also have had a long period of ultra low interest rates so their interest rate is different than what new entrants are paying. Because their capital cost is lower they can actually offer for far less than the (Interest+Taxes+Insurance+Maintenance) costs that a home owner would have to bear.
2. The rational move of a landlord is to price competitively based on what the market can bear, even possibly losing a little money per month in cashflow (but less bad than the appreciation rate and cost of disposal/selling/defaulting).
> and mostly irrational
I'd say it is quite rational. Real estate represents value, and value should be earning at all times. Owning it free and clear does not change that one iota. Rents are based on the value of the property, not the mortgage on it.
False, rents are based on what the market will bear. The value of the property is stickier than rents.
Plus one can be "losing money" on cashflow but earning money in equity, so one can rent for less than the mortgage while the value of the asset is rising even faster than the monthly loss. Of course this only happens based on speculation and having free cash to "lose" monthly.
> rents are based on what the market will bear
And that is the value of the property. I.e. the value of property is what income it will generate.
When those two values diverge, then "arbitrage" steps in which converges them again.
> It will cost you 35k a year
> If instead you rent it for 20k a year
Some good numbers, but what is missing is the result of investing $35k-$20k=$15k per year. Let's say you earn a %7 real return on $15k/year invested for 60-25=35 years.
Writing a little program:
Yields $2,218,701I would think twice about buying real estate as an investment.
Personally, I own my home because I want to use it as I see fit, but I recognize that as an investment it's a lousy one.
Can’t argue with the math but one thing about a mortgage is it takes no effort. Just pay the bill and time does the rest. With stock investment there’s an emotional attachment to every major swing, should you buy or should you sell is never far from your thoughts. Using a home as an investment may not make the most return but it’s easy as long as you can pay the bill.
Real estate prices swing around, wax and wane, just like the stock market does. It's just that there is no real estate price ticker.
Investing in the S&P 500 is even less effort. The last time I bought a house, I had to carefully read and sign about 50 pages of legal papers. Buying stocks is just pushing a button.
In places like the Bay Area, property values pretty much never go down in price, and the YoY relative increase is on par with that of index funds. Combine that with rental income, and you can very likely beat an index fund. Mortgages offer much more leverage than margin loans, which helps offset the upfront capital cost.
For decades, property values kept going up in Detroit until they didn't.
The value of real estate in Detroit was tied to the auto industry. When it fell, so did real estate prices. The Bay Area's value does come in large part from the tech industry, but it's also a very important port of entry for trans-Pacific immigration and commerce, and that's a lot less likely to change IMO.
But that's beside the point. Substitute Bay Area with Seattle, Los Angeles, Manhattan, or some other area of your choice. Or, better yet, diversify your portfolio by buying real estate in multiple cities. The same options that are available in the stock investment to tune your risk profile are available in real estate investment as well.
not just Detroit…
Huh? I invest tens of thousands a year into stocks and have never once thought should I buy or sell. I just auto buy weekly, it couldn't be easier and I never think about it at all. They even have funds that automatically re-balance as you approach retirement.
Also you are acting like the housing market can't also crash.
25 years ago, I sold my previous house. It recently sold for 4x what I sold it for, a 300% ROI. Was selling it a financial mistake?
Consider that I didn't pay property taxes, insurance, maintenance, and squatter eviction costs for the last 25 years.
Consider that the S&P500 went up 561%.
Buying a house is not a good wealth builder strategy.
somehow, I never learned to use a spreadsheet
You can use a rent vs buy calculator to do the math for your situation: https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
The parent is minimizing a bunch of coats of owning: maintenance, property tax, included utilities, HOAs, and most importantly opportunity cost.
https://www.npr.org/sections/money/2010/11/05/131105373/the-... I still remember an old Planet Money podcast they did covering a Rent or Buy calculator, It didn't allow for the possibility that the value of a house might fall over time. If you put a negative appreciation rate it would spit out an error. Which in the immediate aftermath of 2007 meant the tool was unable to capture reality.
I would use the long-run return on housing: the same as inflation.
>After 25 years you have no more expenses.
After 25-50yr (depending a lot on macroeconomic factors and your specific municipality) property taxes will likely be comparable to your mortgage payment.
Property taxes tend to go up with inflation though, so while the numbers given are wrong, the point still stands.
> You'd have to invest the savings and get way higher than inflation returns to break even.
You say that like it's a difficult thing to do.
S&P500 is up 710% since 1996. Gold is up 92% since 2012.
Personally, the rent control is the best part of a mortgage and even though renting is typically better, I'm fine paying a premium for that. That said, good luck getting somebody to loan you 900k so you can play the stock market; it's much easier to get that for a house though.
If you put around 200-300k into IBKR (not affiliated) you can get portfolio margin which will give you just shy of $2,000,000 in buying power. Access to leverage isn’t really an issue, but forced liquidation definitely is. The bank will not liquidate your mortgage if you end up underwater.
Yeah forced liquidation is a big problem for a long-term loan.
IIUC, Musk et al take loans at 25% of their share's value to avoid this ever coming up.
Also the average house price is 500k in the US so a 20% downpayment (which not everybody does) is still less than 200k.
> Gold is up 92% since 2012.
And housing is up 125% since 2012, so the sucker who bought gold instead of a house has lost out.
We can all be rich in hindsight.
(There's also other benefits to owning - like being able to have pets, not being able to be evicted, etc)
But the biggest tell that housing is valuable is that nobody is spending $500k on housing to rent it out if they could make more money pumping $500k into the stock market.
> But the biggest tell that housing is valuable is that nobody is spending $500k on housing to rent it out if they could make more money pumping $500k into the stock market.
Of course they are. I do. I do so knowing full well that my expected returns are going to be nowhere near my brokerage account invested in public equities. The past decade has followed that expectation.
I and many others do it as a form of diversification. It’s risk aversion in the end. Most people with capital don’t want to be putting all their eggs into one basket, so for wealth preservation and diversified income streams it’s a good option even knowing up front you are expected to lose money via opportunity cost.
That ignores other benefits of housing being a privileged investment category by the current government and monetary/tax policy. If you seek cheap leverage this is probably one of your few options as a “two bit” player in the market at that $500k level.
But owning a house has other costs that owning gold doesn't.
Are you factoring in property taxes, maintenance costs, utility costs, insurance, etc?
You should look into how many homes are being purchased primarily for AirBNB/VRBO type income streams...
No more expenses... Right!
No property tax. No homeowner's insurance. No maintenance. Just living on easy street.
It seems unlikely you'd be able to rent somewhere for less than the cost of
* maintenence
* taxes
* return on capital
Because otherwise your landlord is subsidising you, and why would they do that?
Rental prices are connected to costs, but not tightly.
If I'm a landlord and my costs are $X, but I can find renters for $2X, I'm probably going to charge closer to $2X.
If my costs are $X, but I can only charge $0.9X, I'll most likely rent it for that, because losing $0.1X is better than losing $X; unless I own a lot of units and it makes more sense to push the 'average rent' up, even if it means more vacancies. If the market conditions are like that for a while, I'll probably try to sell, but I'll take the loss for a while.
Additionally, if local market conditions include something like California Prop 13, a landlord that has been holding property since before I was born most likely has a much lower property tax bill than if I purchase a similar property. In that case, renting could supply them with a nice return and me with a nice discount.
> Because otherwise your landlord is subsidising you, and why would they do that?
Because they may have capitalized decades ago and the market only bears a certain price. They're not subsidizing you because their cashflow needs are actually lower than new entrants.
I bought a house when I did because the interest on a mortgage was lower than any reasonable prediction fir inflation, which seemed a lot like free money; but at the time it felt a lot more like a dirty hack taking advantage of terrible government policy than any idealistic system where credit is used to bootstrap productive capitalization.
Low interest rates tend to just push housing prices up. The average expenditure on housing as a percent of income have been nearly constant in the US for 50 years.
Yes but I get to keep the equity in the house. I don't keep anything I pay towards interest.
You need to compare money paid for mortgage minus price of house against money paid for rent (when you're left with no assets after all the years of paying it).
NYTimes has a great calculator for doing just that https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
I do. Housing prices are constantly rising, when you take a loan you are buying an asset which (with some luck) may appreciate in value more than mortgage interest rates. That's why in some countries it's worth taking a loan as soon as possible without saving for too long.
Sure, without mortgage you may not be able to afford a house at all but it does not change the fact that mortgage is a "good" loan (i.e. you benefit from taking it)
Mortgages with low interest rates are also one of the (main) reasons houses are so "expensive" in the first place.
The cheaper money (credit) is, the "higher" the prices will go.
It's not so much that houses became expensive, it's more that money to buy a house (specifically mortgages) became relatively cheaper. Low interest rates did that.
I don't know about this - when I see quotes on build cost in my area they add up to more than similar properties sell for in some cases, and generally aren't a whole lot different than buying to the point that I've wondered why it's like that.
People forget that houses tend to get bigger when people can afford it. Adam Smith observed this back in his famous book.
This is a one-time effect, though. Or at least, an effect that only changes periodically (and should reverse) when interest rates change. 30-year mortgages have been standard in the US for most of my life, and houses have gotten a lot more expensive during that time.
The effect may pause when interest rates change, but it's unlikely to reverse significantly. People who have homes now aren't going to want to sell for less than they paid for them, so there's a lot of inertia against prices going down.
The home ownership rate in the USA is 65%. If house prices start going down, money will be printed until they start going back up.
Mortgage loans have been getting cheaper due to automation and the commoditization of loans / increase in surplus capital.
That then pushes up home prices over time relative to inflation.
Home prices have doubled in most areas since 2009 (and worse in many areas.) when people complain about prices in 2025, this is what they’re talking about. This is not driven by the novel existence of 30-year mortgages and interest rates are at a near-term high.
Half of that is inflation. Most of what remains is the anomaly in housing prices in 2009 https://fred.stlouisfed.org/series/MSPUS
Inflation adjusted median US home prices Q4 2024 where 419,300 vs Q4 2006 ~382,00 that isn’t flat but the difference is far less interesting.
House size, build "quality" (the details in the house), resource scarcity, and zoning policy are the drivers of cost. Cheap credit and lifetime loans allow the system to continue.
Every time a municipality levies a requirement upon new development the price of everything that could be used the same way goes up by that amount since it's the "next best thing". I got told I need to spend $20-50k on engineered assessments and plans to clear an old farm field that was left to grown over for 30yr and is now considered "forest" by (a single unelected employee of) the municipality.
Game out the economic implications of that sort of regulatory behavior across the entire real estate and housing sectors and suddenly a lot of stuff that makes no sense makes a lot more sense.
> Housing prices are constantly rising
Housing prices are _generally_ rising. It's entirely possible to buy a house and wind up selling it later, having lost money in it. Many times through no real fault.
I hope most people haven't forgotten about 2008 financial crisis and how it was caused by declining housing prices (and the banks/markets not taking that risk into account)
We do. And we remember the rebound some years later and are still kicking ourselves for having not scooped up real estate fire-sales in Las Vegas.
I mean, hypothetically. Some people. Might be kicking themselves.
> Housing prices are constantly rising
Housing prices typically appreciate up with inflation over the long run, although local markets don't always follow the same pattern. (IE, Silicon Valley is a case where real estate appreciated faster than inflation.)
Remember, it's over the long run. There can be periods where a house will appreciate faster than inflation, and other periods where the real value of a house doesn't keep up. If you understand this dynamic, you can make a lot of money. (IE, flipping and then becoming a landlord when the market turns.)
Since the not-yet-homeowner is no doubt paying rent, home appreciation can slip by some measure below the rate of inflation and still have been a wise investment.
Of course there is home insurance and repairs to consider. But also there is the increase in rent to consider on the other side as well.
Depends on how long the not yet homeowener will live there. If you live in the same house for the next 40 years you are almost certainly better off owning it. However if you have to move after a year (which might not be in your control) you probably will lose money. 7 years is a good rule of thumb for minimum time you need to live in a house before it is better than renting, but exact circumstances can be very different.
Yes, though I’d add that a house is generally viewed as an investment, unlike something like a car, which typically depreciates in value.
- They’re giving you a line of credit, money you don’t have, to buy a house.
- Why else would mortgage loans ave percentage rates if not to make money off lending you money?
The parent comment was about how you should only take loans if you expect a return on the investment greater than the interest. Not about the bank.
Of course they make money — but they take on no real risk. The home owner (who is taking on the risk) likely stands to make much more money than the lender in appreciation.
(Never mind the homeowner has to live somewhere regardless — and anywhere but mom's basement [1] is going to charge rent which would, by comparison, be throwing money away.)
[1] Okay, my mom charged me rent to live in her basement when I was 19 or 20 and needed a place over the summer.
I think you've misread. The thread is about consumers of credit using it to make themselves money.
Often, a mortgage is either used to make money (from rising house prices) or save money (when the mortgage is cheaper than rent).
Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent.
Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essentially unrelated to the monetary value.
You can believe that if you like of course, but I am definitely not teaching my children that.
Renting cheaper than owning sounds like a very short-term view.
My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same.
It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a person with a typical 30-year mortgage would have paid each month 30 years ago. Because one of those two is still paying the same monthly amount today and about to have an asset they can pass along to their kids or spouse (or cash-out if they want to retire to live in a trailer in Eloy, Arizona).
NYTimes publishes a fantastic calculator [0] to help make this kind of rent vs. buy decision. It's not always that clear cut.
[0] https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...
There are plenty of places where many people can afford market-rate rentals, while there is nothing they can afford to buy. That includes some major cities, where land is inherently scarce, as well as other desirable locations, where the locals have chosen to ban sufficient housing.
Rents are ultimately based on what people can afford to pay. Home prices, on the other hand, also reflect the viability of the home as an investment. If the market believes that housing will not become more affordable in the foreseeable future, homes in that area are low-risk investments, and investors will accept lower returns for their money. Home prices grow very high relative to rents. Taking a mortgage to buy then becomes the financial equivalent of taking a loan and putting the money in a savings account.
The city where I live in California is one of those places. Before Covid, home prices were high but tolerable. Then the prices jumped due to WFH, while rents grew at a much slower pace. And then interest rates went up without making a dent in home prices, making homes too expensive for those poor enough to need a substantial mortgage.
> Renting cheaper than owning sounds like a very short-term view.
That highly depends on where you live. In some countries/cities, buying really makes no sense both short and long term. In others, it absolutely might.
In addition, you get countries like the UK where renting is very precarious. You might be forced to move every year, after a year your landlord can turf you out with only a few months' notice, you aren't allowed to modify the house in any way even putting a picture-hook into the wall or redecorating a room, etc. Since most people cannot afford to buy a house outright, a mortgage is necessary to avoid this.
There are maintenance requirements to home ownership, absolutely. And some are not cheap.
But there is absolutely a segment on HN who will act like home ownership is nothing more than pulling out a card for the next four digit expense every month or more.
“What are you going to do when (not if) you hot water dies? And then you need a roof? Oops your house needs painting and new appliances and now the AC is gone too, what about pest control, and hopefully your sewer line doesn’t collapse? Can’t handle all that happening to you? Can you realllly afford a house then?”
Shelter (and, for many, transportation) are a need for maintaining their ability to make money. As such there is some minimum amount that must be spent on these, and loans costing up to that amount can be seen as ways of making money. Most people who make these purchases do buy even more than strictly necessary, and the extra spent above the strictly necessary line should be seen as luxury expenses.
General advice for homes leads to buying a home that does follow the logic, given historic movement of home prices and rental prices. It rarely is put in those terms, but works. For vehicles, the financial recommendation generally is to buy less car as it is a depreciating asset. If you have cash for a luxury expense, then it is no different from any other large luxury purchase, but if you have to finance, go as cheap as possible (but making sure to account for the repair costs, fuel usage, and such, not just the initial cost and loan payments).
For a lot of folks, credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time. Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US (SBA loans are terrible, and you need enough money to cover your own salary until your business gets up and running).
> credit is the only way they're surviving on something close to minimum wage. Or credit was the only "safety net" they had during a rough time
In my experience, the average American has no concept of saving money, and those below average even less.
It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it. What do you see in practice? You see people dashing over to the nearest rent-to-own rims shop. (If you don't know poor people, you may not know such businesses exist.)
> Almost none of these people have the kind of collateral needed to use credit to truly transform their lives, and the government assistance for that is seriously lacking in the US
I doubt that greater availability of credit, perhaps facilitated through government subsidy, is what precludes the majority of such people from transforming their lives.
You can't individual financial education your way out of systemic poverty.
Furthermore, the common pattern where poorer people spend money as soon as they get it is, in fact, rational when you look at it from their perspective rather than your own (which, as with most people attempting to moralize to poor people about their choices, appears to be a perspective of "you should be doing absolutely everything you can to maximize your net cash flow").
First of all, people need things like little luxuries. A Starbucks coffee here. A joint to smoke there. We are not, and cannot make ourselves, robots who live only to produce.
Second of all, they know, from experience going all the way back to childhood, that if they have an opportunity to splurge a little now and don't take it, they'll lose that opportunity.
Third of all, they similarly know that regardless of whether they splurge on an ice cream cone today because it's 90°F out, whatever financial trouble that comes tomorrow to eat up the little surplus that makes that possible will still put them in debt. Being in debt $150 instead of $145 just doesn't make that much difference. And if they wanted to avoid that particular debt entirely, they'd have to give up 30 separate instances of "I have an extra $5 today, let me get something to make life a little less shitty".
The only solution to the problems that lead to people not being able to save is increasing the amount of money they get paid.
There's also family situations where liquid savings are at risk of being spent by somebody else. I don't think the marshmallow test people factor that in, you'd need to have a third option where the kid waits dutifully for the extra marshmallow but it gets eaten by someone else in the meantime.
This. If you’re poor and get money, there are all kinds of people interested in getting a slice, and if you’re a good person, you’ll probably have family members who genuinely could use it for necessities. Govt/creditors can also apply systemic pressure like ”oh you no longer qualify as poor this week, so we’ll take back your benefits”. Well thanks, now I’m poor again.
Employers especially don’t like when people break out of poverty, because as soon as they have a buffer they can make choices and bargain. So there’s a lot of deep pocket incentive to keep people in their place.
Yes. And that doesn't have to be an addict family member or a burglar, it can easily be e.g. a landlord who sees that you have more money, and charges you more money. There are a lot of people in a position to make you give up what you have, if they see that there's money to be squeezed.
This is even more true collectively: as an individual, maybe you can get out by being 50% more frugal than the rest. But everyone can't be 50% more frugal than the rest. If everyone tries, it's even more likely that larger society claws it back through higher rents, lower wages etc.
Everyone can't be 50% more frugal than everyone else, but it's possible for "everyone else" to be something other than 3-4% (the current US savings rate).
The money to sustain a high savings rate without a collapse in wages/demand ultimately comes from the government deficit, or deflation I suppose. This can be sustained even without productive real investment, if people just want savings the money will just sit around or repay debt without bidding anything up in the economy.
> landlord who sees that you have more money, and charges you more money.
You were getting a good deal then. Can happen with "affordable" housing I suppose.
> It's funny to me that America gets flak from all over the world for having no social safety net; if this was actually true, you'd expect to see people put aside a bit of their income, however meager it may be, out of an expectation that they will need it.
Congratulations, you've just discovered that human beings are not perfect rational actors.
Economists hate this one weird trick!
I mean I guess they get some perceived value out of the rims that makes the stability trade off worth it.
Whatever you put aside is not going to be enough to prevent complete financial ruin if shit hits the fan. You might be able to cover smaller emergencies like an appliance breaking or your car needing repairs but literally just giving birth or being in an accident can bankrupt you in the US. I'm not at all surprised low to medium income Americans would just give up and accept their inevitable financial ruin instead of trying to be maximally frugal and socially ostracize yourself, forego most forms of entertainment/recreation and still not be able to get out of survival mode.
Desperation is a good motivator - but not for rational actions. It triggers our survival instincts: hoard what you can, feed on what you can get, grow fat, make rash decisions. This is what the modern economy is built on. FOMO, impulse shopping, conspicuous consumption, high calorie fast food, deals and discounts on overpriced goods, planned obsolescence, etc. We need consumers to be perpetually desperate and starving. Credit just means we can circumvent Henry Ford's problem of them not being able to afford to buy anything because they still can't afford it but are able to pay for it until their credit line runs out.
People need to stop moving out of their parent's house if they can't be stable. That's the root cause of a lot of the problems in the US.
This is now happening.
This assumes, among other things, that they come from a stable home that has space for them and access to the things they need to create and maintain an income stream.
If you look at the home ownership rates of that generation it would be a fair assumption
For the entire population, sure. For a subpopulation that doesn't have a stable income, not necessarily, particularly given class mobility statistics.
And then you have the same people complaining about low birth rates...
Does living independently before you get married make you more or less likely to have kids? That would be an interesting statistic.
We need to change money flows and redistribute wealth so people can have a hope of saving some money, because they actually can make more money than they absolutely need.
When everything around suggests that the system is rigged against you and care against you, it's no surprise that many people live for the moment and try to find some small bit of pleasure or joy in the moment without planning for a future that may not come.
It's easy to say "why don't they save more?" from an upper or middle class stability, but when the price of everything keeps going up, the police are out to get you, and healthcare is just a fast track to debt that will take away any savings or assets you managed to have, what's the point?
This is a bit too romantic imo. From my eyes, it's mostly:
"An old AMG at 20 is better than a new Ferrari at 60."
There's a slider for how well you want to live your early vs late life. If you work hard, you'll be better off later, and if you go crazy early on, you'll be worse off later. However, there is a point in that you can't catch up on 20-year-old sex, getting drunk or drugged up out of your mind or general fun with friends at 60.
There is a ceiling on how much you can spend on these things. Generally it is not fun to get drunk or high that frequently, and in the limit you die.
I'm not and never have been into drugs, alcohol and clubbing, so I don't know the limit.
The most I've seen was a ~1k EUR monthly budget for drugs by a person I knew whose main hobby was drugs. It's not astronomical, but we were both students in ~300 EUR/month dorms. It also affected his career progress. Lectures at 8 AM don't mix well with coke the night before.
With cars, the sky's the limit. I'm making 6 digits, and I can still ruin myself financially in a weekend.
And it's not just financially. I love motorcycles because they're cheap, but if I have a proper accident, it'd set me back months if not forever.
It would be easier to buy that argument if it wasn't happening in countries where healthcare is not fast track to debt and police is not out there to get you. I come from such a country and a lot of financially struggling people overspent on status symbols all the time.
Sure, because status matters more than finances. Getting rich may be extremely unlikely if not outright impossible. Looking rich to your peers (and "feeling rich") on the other hand may just be a few years worth of small affordable installments away - even if it's completely superficial and short-lived. And entire industries will literally spend your every waking second trying to convince you that buying their product will make you feel rich.
You don’t even need an industry to convince you. Eg former Soviet countries were/are notorious for being obsessed with material luxury.
It has nothing to do with credit. The whole buy-now-pay-later, 0% rates or pay-day loans industry came much later here. The same goes for predatory marketing industry.
When I went to elementary school everyone was poor as it was a year after communism collapsed. People were still spending their last money on shiny things back then even if those shiny things weren't as shiny as they are today.
>>Getting rich may be extremely unlikely if not outright impossible
Again, in communist and then post communist countries no one thought we could be rich. The things we thought about back then was being able to buy enough food and trying to educate ourselves as education was valued in itself in some families. Even back then a lot of people spent their last money on pointless shiny things.
I feel Americans and some Western Europeans look for ways to justify dumb behavior and come up with all those theories that have nothing to do with human nature. If you grow up in a country where everyone is the same race, everyone is poor (at least for a few years), the police is not out there to get you and healthcare is free even if terrible and you still witness people making the same stupid decisions you realize it has nothing to do with those theories and everything to do with education, values and ability to make sensible decisions.
I think you're half right. But there are cultures in which people save money. (You can just run a web search for "savings rate".)
My hypothesis is that "human" nature does play a role, specifically a very general phenomenon in animal psychology called "observational learning". If you see people around you who saved money and it worked out for them, you're more likely to imitate those people. Saving money probably isn't instinctive for the vast majority, but that doesn't mean it's unattainable.
Taking the contrapositive, if we look at cultures where people don't save money, it's probably because of a lack of successful role models. Saving money hasn't worked out for people in that culture in the past, so there's nobody to imitate. There are always going to be a few people who do save money, but if they get wiped out by medical debt, rampant hyperinflation, or some other systemic crises, or if the country's bankruptcy laws are so generous that their spendthrift counterparts ultimately live better than they do, then their behavior is less likely to catch on.
In the US, savings culture has been decimated by years of QE and ZIRP, so the people who poured all of their money into housing and stocks did better than the cautious types. Skeptics have claimed for years that this will lead to an awful hangover. We'll see.
It has a lot to do with the structure of economies. Usually they're big exporters with fairly stable currencies. The differences in savings rates are super huge, even within cultural groups.
Demographics also play a role as does inequality.
I'm picturing you in my head as one of those 19th century Englishmen, writing about how being poor is a moral failure and the famine in Ireland is actually a punishment from God and thus nothing should be done about it.
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Your oversimplification placing the blame back on Irish farmers is troubling. Maybe you should do some reading to clear that up? Let's start here: https://en.wikipedia.org/wiki/Great_Famine_(Ireland)#Causes_...
> In 1800, the 1st Earl of Clare observed of landlords that "confiscation is their common title". According to the historian Cecil Woodham-Smith, landlords regarded the land as a source of income, from which as much as possible was to be extracted. With the peasantry "brooding over their discontent in sullen indignation" (in the words of the Earl of Clare), the landlords largely viewed the countryside as a hostile place in which to live. Some landlords visited their property only once or twice in a lifetime, if ever. The rents from Ireland were generally spent elsewhere; an estimated £6,000,000 was remitted out of Ireland in 1842.
> In 1843, the British Government recognized that the land management system in Ireland was the foundational cause of disaffection in the country. The Prime Minister established a Royal Commission, chaired by the Earl of Devon (Devon Commission), to enquire into the laws regarding the occupation of land. Irish politician Daniel O'Connell described this commission as "perfectly one-sided", being composed of landlords with no tenant representation.
Seems more like the wealth of Irish farmers was consistently extracted and sent out of the island, ensuring none of them can get out of poverty. Reminds you of something?
I mean, yes. A country that maintains unnecessary employment in agriculture won't have the labor force to develop industry.
Accumulated capital, will by necessity flow towards other countries, where factories can be built and staffed. Meanwhile, because of the lack of potential competition with industry, the agricultural workers will be treated as poorly as the capital owner pleases. But that doesn't mean they'll be happy to be expelled from their lots of land, even if it'll help them.
None of that should be a mystery.
"Agriculture" didn't fail.
The Irish were successfully farming a number of highly nutritious crops. It's just that all of those were taken by the English, under the colonial system of the time.
The potatoes were one of the very few things they were allowed to grow for themselves (and are a great staple crop! near-complete nutrition all in one handy package!). That's why they were left starving when the potato blight hit, not because they were pathetic unenlightened regressives.
So, the potato blight didn't have anything to do with the Great famine?
> You see people dashing over to the nearest rent-to-own rims shop. (If you don't know poor people, you may not know such businesses exist.)
And many on this site don’t recognize a racist dog whistle I guess.
You can't really survive on that. It's a snowballing situation. It's perhaps a strategy to avert impending catastrophe but it's like pitching an airplane down to gain speed when the engine is stalling. If it gets you to restart the engine the brief nosedive may let you survive, but if you have to keep turning the nose more and more vertical, the you're gonna meet the ground.
Good analogy.
You need money to cover your expenses. Forgoing the rest of your salary is a very, very cheap form of leverage.
For the risk to make sense you probably do already need enough, though.
Not sure what you mean by the “average person” here but the biggest kinds of debt are mortgages ($12T) and cc debt, student loans, and car loans (roughly 4T total).
Is your position that taking debt to buy a house is bad unless you can sell it for a profit? Is working for the mortgage lender to accomplish that not worth it?
You can avoid it by renting, but then you’re just working for the landlord, so there’s no avoiding it.
Every single thing you mentioned outside of cc debt (though arguably you should never reach for a credit card outside of using it for the points systems they provide) could be categorized as something used as a tool to make more money.
Vast majority of new car sales will not let the new owner make more money and were financed with debt.
If all of those buyers bought used for cash, nobody would be able to afford used cars for cash.
It really is only businesses that can convert debt into income, most consumers do not want to. There is nothing I can spend on to get a higher hourly rate.
How can you factor in the aspect that a cool car might impress someone who might get you a better job? Or it allows you to "look the part" and "fake it till you make it"? People sometimes rent cars and watches and suits to appear higher class when talking to potential investors or other business partners.
Having a better house might allow you to invite more people over for parties or dinner, which can have downstream effects in your social mobility and status.
If you can keep up with the Joneses and chit chat about your vacation to some nice place, it may allow you to become an insider in some group.
At least that's the "logic" (even if subconscious) to chasing status symbols. Though very often it fails because faking it is hard and you can easily be clocked as a tasteless tryhard. But if you don't take too large steps up, you might get away with it and reap the social benefits.
All of the above are reasons why people go into debt, some derive genuine pleasure and happiness from their purchases. None, however, are investments that one can put on a P&L sheet, and please, never let anyone think otherwise.
You can buy investment properties to convert debt to income and get nice returns. While this is technically a business, there are ways to make it quite passive and thus more like an investment than a business. Margin stock accounts also exist, although I don't know enough to know what situations it makes sense to use them in.
There are arguments to be made, especially if you're young and just starting out to take a reasonable amount of margin and kickstart your compounding growth.
Say you just started working, have no use for your money and are willing to bet 20k on index funds vs a 90% market drop, you should be able to take 2k in leverage and set up your position be auto closed.
But of course as you have more money this type of market exposure starts shifting as you have shorter timer horizons to rebuild and are instead going into more of a wealth conservation mode.
You clearly are delusional if you believe that the people drowning in credit card debt are in ever in this position.
Don't ever look into where the money you make with "passive income" comes from, I guess?
Passive income just means other people are working for your income. At some point, someone has to be poor enough to have to do the actual labor. You can abstract this away with as many financial constructs as you want but it boils down to that. If you can "make money" from mere ownership, we can't all own things that make us money because then we wouldn't have to pay anyone and nobody would have to pay us.
That's not technically a business, it is a business, and it can be a tough time consuming one. I've known more than one person who sold their investment properties because they were tired of being a landlord, which is a job.
Not saying it can't work. It can. But it's a business and a job/sidehustle not magic free money.
This has the rather tone deaf sound of “if you just had financial security, you wouldn’t need to use loans to survive, then you could use them to invest!”.
Which rather misses the point that many people using these tools don’t have financial security, and don’t have the option to invest like that.
Saying that mortgages can be used to buy investment properties doesn’t change the fact that most people use them to provide basic physical security. I.e. a literal roof over their head, that they can’t be taken away with little notice by their landlord for reasons completely beyond their control.
I’ve you’ve never grown up in an environment where the roof over your head isn’t a certainty, and indeed having a different roof over your head every few years is a certainty. Then it can be rather hard to understand why not everyone considers property just an investment opportunity.
> I.e. a literal roof over their head, that they can’t be taken away with little notice by their landlord for reasons completely beyond their control.
Yeah. Before I bought my home four years ago, three of the last four landlords I'd had had promised long term stability, only to non-renew the lease after the first year (for "other" reasons: "Wife thought she'd like the country, we're moving back to the city", "We want a smaller mortgage payment on our primary home", We're going to renovate and sell"). It's a lot of fun moving a family every year. Especially when around here you also have to come up with first, last, security and other fees and can easily be looking at $10K+ just to move.
Space is expensive because of mortgages. If nobody could get a mortgage, nobody would need one. It's a race to the bottom.
Buying a home from a landlord is still working for a landlord; you just pay the present value of future cash flow in a single lump sum, like an annuity.
I tried using one of these offering a 0% intro APR to finance an upgrade to the boat I eventually moved into (saving me 10s of thousands in rent.) They wouldn't let me do it despite having an upper 700s credit score.
It's not clear to me how they pick people to lend to.
Yeah a high credit score isn’t what that lender is looking for. They don’t make money of people who actually repay the loans, indeed they tend to loose rather a lot (cost of capital + cost of account admin).
If someone is offering you a 0% APR loan, it’s either because they’re hoping you’ll move your loans to them, and become unable to leave once the 0% period has ended. Or they’re trying to sell something else (either more of something, or the same thing at a higher price), and want use consumer debt to artificially increase market demand.
You upgrading a boat, so you can save money in the long term, is literally the opposite outcome they’re looking for here.
Exactly. The thing I always have to remind myself: issued loans aren't liabilities for companies, they're assets. Assets need a return!
It’s not just the credit score - the APR offered is also chosen by the retailer.
0% financing costs the retailer 8%(ish) of the total amount, which is how the lender makes their money.
So in your case, the retailer didn’t want to lose that much of their margin.
0% intro APR offers are somewhat predatory in that they rely on a large portion of people keeping a balance after the intro period in order to be offered, or at least building a relationship with other financial products. It wouldn't surprise me that they would reject someone in the high 700s, they might have been looking more for people in the low to mid 600s.
There's also a lot of reasons one might be rejected for a credit line that have nothing to do with credit score. Some lenders have specific policies in addition to credit score, like Chase's 5/24 rule. Some are also just looking for "relationships" and won't offer you their best products unless you have a bank account with them, etc.
Only the bourgeoisie can be trusted to handle credit responsibly.
The proletariat is too illiterate and short-term-focused to be trusted with it.
If you really believe the only responsible use of credit is to buy productive assets then this is a tautology. As soon as anyone uses credit buy productive assets they cease to be proletarian and become part of the capitalist class.
Try reading my comment again with a more sarcastic tone.
One flaw with this reasoning is that ignores the time value of money. A dollar today is worth more than a dollar a hundred years from now, if only because we’ll all be dead a hundred years from now. From that perspective and with favorable terms it can make sense to sell the future to buy the present, if someone is willing to take that trade.
> Theoretically, credit should be used
There are at least as many ways that this can be finished accurately (for some theory) as there are theories of what should guide human behavior, generally. But this one:
> to make more money.
Is really more apt to theories of appropriate behavior for arms-length business organizations whose only shared interest among their owners is profits than the common ones for individual people.
No, an average person uses it to improve liquidity atop overall solid fundamentals. Literally hundreds of million people worldwide do it with no adverse effects and improved quality of life. Irresponsible people are relatively a minority (although they tend to make the news). And aversion to financing is in itself a poverty marker more often than not.
Of those who carry credit cards in the US, 60% of them carry a balance [0].
There are also all those reports that have come out about how nearly 40% of Americans don't have $400 for an emergency [1], with the median being just $600.
If the rule of thumb for an emergency fund is 3-6 months of expenses, and we can agree that paying interest on a credit card is a bad finical decision, then I'm not sure how the "average" person has solid fundamentals, where credit cards are being used as a strategic tool.
People also tend to spend more when using credit cards [2], which negates most benefits someone may get from using credit card for the points. So even those with solid fundamentals, who are using it as a tool, are probably still losing, just in a less obvious way.
[0] https://libertystreeteconomics.newyorkfed.org/2025/03/why-ar...
[1] https://www.empower.com/press-center/37-americans-cant-affor...
[2] https://link.springer.com/article/10.1023/A:1008196717017
[1] is better interpreted as 40% of people who are willing to work for less than minimum wage answering marketing surveys don't have $400 for an emergency. It could still be true, but the bias in the methodology is obvious.
> Of those who carry credit cards in the US, 60% of them carry a balance [0].
Carrying a balance is not automatically the worst choice. I have a massively positive net worth (for a working stiff), so could effectively have $0 debt at any point in time, inclusive of my mortgage, but all debt is not equal, nor are all investments. Credit card debt is clearly one of the worst forms of debt with the harshest interest rates, yet even in that case selling investments and paying taxes on them and forgoing future earnings on those investments to pay off a credit card immediately vs over a few months is not necessarily the right decision.
Credit cards are about providing you float so you can smooth out cash flow. As an example, I am about to do some home renovations, I expect to spend ~$40k to do so, I also expect to earn and pay off that $40k over the following 4 months. My options are I can carry a balance on a credit card, I can keep my home in a partially renovated state for longer to pay cash, or I can take our a HELOC which has a high origination cost and acts as a secondary lein on my house. The credit card + carrying a balance for 4 months and having my home back in a finished livable state faster is clearly the best choice, but it means I'm in that 60%.
These choices aren't binary, the problem is that many people are not financially literate enough to consider their options and outcomes and choose the best choice, they either have a default choice with no consideration, or no real choice, both with negative outcomes.
Another option is to do margin borrowing on some investment assets that you have. Because it is a secured loan the interest rates are much cheaper than credit cards. Schwab has a good set up, it can be configured to automatically do a loan if you withdraw more funds from your checking account than you have. They currently charge about 12% but there are other options around 6%.
My friend used this set up for his emergency fund since he felt like it would be better to earn an investment return and take a loan in an emergency instead of sitting around having your money earn minimal amounts in a checking account.
Yes, borrowing on margin is a really good strategy, although it depends on your broker how that functions. I've had a good experience using this for smaller amounts, but given market volatility I'm concerned about borrowing this large of a sum on margin, as I don't know what clown stuff is going to happen in the next 6 months, a credit card feels lower risk to me, although the interest rate is higher. I actually considered this, using a credit card will cost me $530 in additional interest over taking margin, but has lower risks in my estimation. That $530 is not enough for me to feel it's worth it to do it via a margin loan.
That said, margin is really useful as a tool because it lets you unlock the value of your investments without tax penalties in lower volatility markets.
I suppose. I just did similarly priced renovations and chose to put off the whole thing until I could do the whole thing with cash. But everyone is in a different situation. While I’ve been at my job for nearly 20 years, the layoffs are frequent, and I’ve never felt any meaningful level of job security. This leads me to seek risk reduction, and part of that is eliminating as many financial obligations as possible. In theory I could probably make more investing (if we ignore the psychology aspects), but in practice it’s had the side effect of dramatically increasing how much in invest on a monthly basis after getting all the debt eliminated (which was really only the house). The peace of mind comes more from those low fixed expenses than from the savings. If I had to, I think I could make ends meet working retail, without dipping into savings/investments. I think about this more often than is probably healthy.
I empathize with that situation, it's something that weighs on my mind a lot as well. One of my goals is definitely to get the mortgage cleared out sooner rather than later. In some ways I'm rolling the dice, but I also feel like I'm safe from layoffs at least one quarter at a time (e.g. I don't think it will be so sudden, it'll align with quarterly earnings), and anything I can pay off in a quarter of work is worth rolling the dice on, even though there's always some risk there.
My plan of the moment is to get to a point where my expenses are minimized (e.g. house is paid off) and I can cover basic living necessities on investment income, and do some type of artisan home business. I keep thinking I'm going to really seriously get into carpentry, which has been a long-time hobby, or open a mechanic's shop (my other long-time hobby).
This is so wildly qrong I dont know how to start. Im assuming this person is not in America, where a lot of the population (unfortunately) uses these practices to buy things that are needed/non-essential) its a shell game the creditors were willing to pay. But now its a lot so its going to affect credit (which is should have to start).
People living paycheck to paycheck need (in your "franchise" language) food and basic clothing as opex for their human capital, and possibly even entertainment, something that is provided to our troops. Trust me the military would not allow for leisure time if they did not think it had a purpose. Eating enough food and wearing a shirt without holes in it does let people make more at work.
This is all true if you have enough for the basics and are looking above the minimum survival costs.
Just to make the money you are making now, you need some stuff, be it a phone or a car, home AC, oven or even a washing machine at home (you can't go to work hungry in dirty clothes).
If you don't have the money to pay with cash, you'll be buying that oven/stove with whatever delayed/monthly payment option is available.
Yes, if you're buying franchises you can do the "make more money" calculations, but if your kids are going to be hungry soon, you often have no choice.
You are literally describing using credit as a tool to make more money, just some in a slightly more indirect way, thus you are not in disagreement.
And this has nothing to do with buy now pay later since you aren’t charged interest
Owing money you don't have has disadvantages even without interest.
For example, if you make 5000 dollars a month and get a 5000 dollar BNPL loan for a stereo, payment due in a month, then even without interest, you now either starve or default on the loan (or incur penalties, i.e. the interest you thought didn't apply).
You realize almost every phone in the US that you buy through the major carriers has worked like this for decades?
Why would you buy your phone through a carrier? Is it the good old US lack of regulation so it's the only option carriers let you have? I get my phone and my SIM card separately.
Why not? It’s an iPhone the same as any other iPhone with no carrier bloatware. It usually comes at a discount with monthly credits.
Even if I do buy directly from Apple using the Apple credit card, it’s still 2 years with no interest and the same BNPL in all but name.
And now it’s all eSIM anyway. If I go to another country I just activate the second eSIM.
And it was never about the phone makers not letting you have the phone. Some low end phones even today don’t support all of the carriers frequencies and back in the day you had phones that had to support CDMA vs GSM and even then different parts of spectrum were used by different carriers.
Mobile phones at first “free” with a two year service plan and later as a second line item has been the most popular way to buy phones in the US since I was selling them at Radio Shack in the mid 90s.
I would get a commission based on a $300-$400 phone and the customer paid $1 up front.
> the average person is using it to delay having to work that hour at all, in exchange for having to work an hour and six minutes sometime later.
As long as inflation is higher than the interest rate, it means having to work less than an hour in total.
(But it's unsustainable in the long run ...)
> the average person
I’m pretty sure the median American does NOT carry a monthly CC balance. They pay it off in full every month.
But it’s very close to 50%. And may swing one side or the other depending on how fubar the economy is at that moment in time.
So what you said is true for roughly half of Americans. But not true at all for the other ~half.
I think.
I looked it up, and most of the sources seem sketchy (quora, lendingtree), but they agree with your number.
I think the kicker is, the ~50% of people who don't pay them off in full every month can have a massive amount of CC debt and struggle to even make a dent in it.
> Theoretically, credit should be used for one thing: to make more money. (not less)
Credit moves money across time. That’s it. (Analogous to paying a shipper to move stuff across space.)
Not all consumptive debt is bad.(And not all consumptive loans are wealth destroying. I opted to borrow when I bought my car because the rate was so much lower than what I figured I could earn with the money.) And not all cash-flow positive wealth is good.
We should be more scrutinising about how debt is used. But especially for folks with volatile incomes, accumulating debt for consumption is fine as long as it doesn’t snowball.
sometimes you make money in lumps
debt allows people smooth that out and lending companies take a fee for that service
nothing evil or wrong about it
Yes. Or to rephrase, debt/interest is a way of moving money through time.
In some states, your FICO score is used to determine how much your electric utility charges you. Or whether you can be permitted to rent an apartment.
Sample: https://www.wsj.com/articles/SB109469015834513166?gaa_at=eaf...
I think my understanding has come to the fact that loans and interest can smooth out your financial situation: When I was single especially I had a lot of savings building, I was making interest and making money. Then when I had a kid, I end up paying that interest back, because expenses for a kid are way above what I can healthily operate in this economy, and I needed more financial products to cover that. But that's also not forever: As soon as a kid's in school and you aren't sending an entire paycheck a month to the daycare, you can establish a upward financial pattern again.
It'd be nice if kids were an affordable choice for anyone expect Elon Musk, but you know, here we are. \o/
I like to think of it as "debt productivity" - for every $1 of debt, the result of utilizing that should be more that $1 + interest.
Consumer debt, obviously, almost never follows that logic.
Credit cards however, can be used to get free stuff from rewards.
Credit loans or payment plans can also be used to get a higher credit score, making the first item easier.
Conversely to your example of credit making cash, Cash can make you money through investing, so Credit can also be used to keep higher amounts of cash on hand when purchases are made. , e.g., buying a car on credit and using the car money to invest. But we're saying the same thing there.
Credit card rewards are just discounts, discounts that are charged to the merchant. It's not a free lunch by any means.
I think that's a technicality. From my perspective 100% discount is called "Free", and I get that a few times a year when flying (tickets, upgrades, etc)
I calculate 100% based on the amount I get from my preferred airline for paying cash for groceries (0) vs the amount I get by using a card they issue (a few imaginary points/$). Then I trade those points for things I couldn't have had by paying cash. As long as I don't pay interest, we're in "Free" territory.
No, you’re still paying for all of that to some extent. Less than people carrying a balance and/or paying with cash or debit cards, sure, but more than zero. (It would be a pure redistribution from cash to card payers only if issuers made no profit or even a loss on never-balance-carrying cardholders, but if they didn’t, why would they still have them as customers?)
It’s still the rational thing to do from an individual perspective, of course, which is why these rewards are so sticky.
And as a merchant, yes it's annoying, but it's also nice when a customer pays with a credit card, because we actually get paid then.
> It'd have been nice had they taught me this in school.
Yeah, even at a basic level, it should be made clear that cars depreciate and real estate, by and large, appreciates in value.
One of those is "good money" and the other is "bad money". Kids should learn coming out of school to be able to distinguish which of the two they are throwing "good money" at.
Eagh, real estate depreciates too, just more slowly. Imo the actual difference is that (many) cars are a very expensive way to meet your transportation needs compared to alternatives.
Buy now pay later at 0% is what these programs offer which does not align with what you are saying at all.
Used properly these provide liquidity by spacing out payments.
Certainly there are economic concerns about not being able to afford groceries today but liquidity (especially free liquidity) isn't fundamentally worthless.
Used properly, BNPLs are strictly inferior to credit cards.
That said, one of their practical advantages is that they’re harder to use improperly than credit cards.
Since no one has done so yet, I'll link to (without necessarily endorsing) patio11's defense of BNPLs: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
I think that's a bit disingenuous. It's not always delaying work. There's only so much time and there are some people who cannot afford to live with the time in the day, the skillset they have, and the market conditions (both income and expenses). Your tone and word choice shows you don't understand the problem at all.
If somebody can BNPL or otherwise credit lifesaving medicine (such as the many people in the USA who die from inability to afford healthcare), that's not play money because they don't want to work.
Obviously there are edge cases. Debt can be a form of insurance for the individual.
However, I stood in line behind someone who financed a bowl of noodles with afterpay, and it got me thinking. Those are the folks I'm talking about.
So you're using a single person you stood behind in a line for a massive generalization but calling one of the largest sources of consumer debt in the US an edge-case?
Neat.
Sure, but could that not be an edge case? I'd imagine most people aren't sharing the sadder parts of their life. Or, is it possible they spent the rest of their money on everything more important? Could be argued they should cook at home but still.
It’s not an edge case. The vast majority of debt is mortgages and student loans. Things that people pretty much need, unless you happen to have the upfront cash.
You are conflating what actions would maximize the long term returns to the individual with the status quo which is that credit increases liquidity of the average family, who has most of their wealth tied up in home equity.
I'm really sick of this sort of look down your nose at a huge fraction of consumers type behavior. It's the same sort of stupidity that underpins the famous "surely everyone else is wrong" behavior that is exemplified by principal skinner[1].
I eat garbage by the standards of anyone who gives a crap about food and you don't see me going around looking down on everyone for wasting resources on fancy food ingredients and fancy cookware and whatnot. At the end of the day these unnecessary things bring enough perceived benefit to people's lives that they seem worth it, whether that's you overpriced LeDouchebag brand enameled dutch oven or a financing service for consumer garbage doesn't really matter. It's all a "needless" expenditure at the end of the day that people find worth it.
I've never used these services and probably never will, nor am I saying the prevalence of these things is optimal at scale, it's probably not, but I'm not gonna sit there and act like 1 in N consumers, probably hundreds of millions of people, is wrong or ignorant for using them or that I know better for not.
-shitposted from my 8yo phone while driving my $500 car through traffic on bald tires
[1] https://knowyourmeme.com/memes/am-i-so-out-of-touch
Le Creuset pots are genuinely great though
Absolutely! But they're not, IME, 6x as great as a $50 Lodge dutch oven. They don't solve a categorically different problem or solve the same problem in an innovative new way. They're just really nicely made, is all.
well built and work well - yes!
However i bought one and regretted it immediately. I think i just don’t like dutch ovens in general. The pot is heavy as hell. I gave mine away to a friend for free lol.
Carrying a 25 pound weight in the kitchen / dining room is not my idea of fun. :) I use an All-Clad stainless steel pot now instead. Weighs half as much and it will last forever.
> shitposted from my 8yo phone while driving my $500 car through traffic on bald tires
I mostly agree with you, but some of those "needless" expenditures have negative externalities when avoided. Whether that's processed foods causing heart disease and diabetes that strain public health resources, or your bald tires greatly increasing the likelihood of an automobile accident that could kill you or someone else. Your response takes an opposite extreme that none of this matters, when in fact much of it matters, but it's not like treating it like it matters makes you a better person. We need to eliminate moral value judgements from the equation, while still being reasonable.
For the average consumer, debt is selling its future self as slave.
Which is a good deal if the slave you sell is dead. When there's no future, selling the nonfuture for the price of a future is a good deal.
I'm currently living off of investment gains from high interest consumer loans.
Are you familiar with the boots theory of socioeconomic unfairness?
That's basically a special case of the Matthew principle.
the goal is to die before you run out of hours
You forget that you don’t pay taxes on debt.
OK, we'll tell the average worker who can't afford a house or a car by paying cash not to responsibly use a mortgage or a car loan, because some person on the internet said so.
And yes, I'm aware cars are depreciating assets, so spare me the lecture on financing one. I don't currently have a car loan.
>Theoretically, credit should be used for one thing: to make more money. (not less)
This is prima fascia false. Credit, especially artificially low interest rate credit like this, can be used for a ton of reasons, including 'beating inflation.'
I bring this up because so many diligent savers in 2019/2020 got screwed by waiting to buy big tickets items.
This is what happens when interest rates are artificially suppressed. "Buy-now-pay-later" would not exist if the market were able to properly price the time value of money and wasn't backstopped by the Fed and nil reserve requirements.
When I was in my 20s it would take me 20 hours work to earn 100 units
15 years later it takes 3 hours work to earn the same amount
If I borrow 100 units in my 20s at 4%, it cost 4 units per year
I save 20 hours work, and it costs me 4 units a year. That's 48 minutes work in year one, reducing to 8 minute after 15 years. Overall it costs an average 20 minutes a year for 15 years, or 5 hours of work, then I repay the capital which is 3 hours.
I've spent 8 hours of work rather than 20 hours.
I like to occasionally use BNPL to spread out big purchases for things even if I can already afford it.
I bought a boat on credit. It was the dumbest financial thing I could ever do. It was the best thing spiritually/emotionally I ever did. All of those weekends/vacations boat camping with my kids when they were young. All those times going out after work. So many experiences I would not have gotten to enjoy if I waited until I was 60 to buy in a smart way.
There is such a thing as opportunity cost. Putting dinner on a credit card is dumb. Putting a dinner on credit that ends up being a first date creating a memory and connection with your future spouse is life making. Or dinner with grandparents and kids that might not be around long.
You have completely ignored opportunity cost in your factoring. And it is probably the most important 'human' factor and is just as tied to your 'time' argument. We have 60 some rotations around a star, and stages in life during that time. That needs to go into your 'optimization' as well.
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Ok, do rent next.
Paying rent doesn't count towards your credit score (at least it didn't a decade ago when I was getting my mortgage). And it's a glaring signal of how the system isn't built for what it claims: evaluating your ability to pay obligations on time. No, the system is built to trap people in poverty and enrich the rentier class.
Landlords like the idea of incorporating rent payments into credit scores, since it adds extra incentive to pay on time. Or, phrased differently, extra punishment for failing to pay on time.
Framing the current default as a help to the rentier class is just silly.
The rentier class are indeed a major cause of stagnation and inequality in our economy, but they are innocent of this one.
The current default is that missing a rent payment can harm your credit score, but paying on time will never improve it.
https://www.experian.com/blogs/ask-experian/can-late-rent-pa...
This benefits the landlords for the reasons you outlined, and tenants must interact with the credit industry through additional (often predatory) means in order to build a credit history that may allow them to buy their own home. Further, landlords have an incentive against providing this positive feedback, as doing so makes it more likely that tenants would exit a relationship that is profitable to the landlord.
Thank you for explaining this issue in more detail.
Have seen this first hand. E.g. tenants with a terrible credit score, but 36mo of proof on-time rent payments. They've always made their future payments (in my experience).
Is having your payments reported to a credit bureau really a benefit to you to allow you to have a better credit or is it a collection activity intended to help the creditor collect?
The reason buy now pay it later is being added, is because those lenders are having trouble collecting, so they want to add it to the credit score so there is an additional consequence if they don’t get paid. It’s a collection activity, not something that’s designed to help the payor.
Adding rent is mostly a benefit to the landlord not to the poor people.
The shitty software my landlord used to use -- the Buildium / Realpage scum -- decided to put a popup on every rent payment trying to get me to pay the Realpage scum $5 to $10 to report the rent payment to the credit bureaus.
A popup? How? If you can't pay by cash or bank transfer then wtf are they doing?
Realpage offers payments on their website and landlords typically pass on the service costs to their tenants in the form of a $5 “service fee” as itemized by Realpage. Compared to a $10 fee to get a cashier’s check to pay in person (because ACH is done by Realpage), you’re saving $5/mo. (Cash is generally not accepted because they don’t want to be storing cash on location.)
Will the horrors never cease?
Just what we need, every sleazebag landlord who owns 3 apartments and thinks he's hot shit holding his ability to fuck your credit up over your head.
I left the U.S. several years ago and have completely forgotten about "credit scores" in this sense. I get reminded every once-in-a-while how things that used to feel so obvious and inevitable and necessary for society to function are completely artificial.
Where are you now? And what is the system like there?
From my extremely naive understanding, obtaining credit and low rates is, in general, much easier in the US than other places. So it makes sense to me that it has “artificial” tools to help determine risk. How do other countries handle this and provide the availability that can be found in the US?
Can't speak for every country, but in Sweden for example tax data to a certain level of detail (income by labor, income by capital) is publicly available for each citizen. Same for debts. And debts that go to the collection authority, which has a very dark name (kronofogden), are very public and somewhat worse than having to wear a scarlet letter. So credit institutes have enough of an idea of your finances to decide your rate.
Banks are required to prove their loans are affordable. They can only lend someone an amount that they can prove the borrower can afford.
In my experience, rates are not low in the U.S. They are high because high risk loans are able to be granted.
The availability of debt for things like housing and cars is very complicated, but high taxes, a high degree of education, livable minimum wages, and realistic employee rights helps increase stability and decrease risk. I don't say it to be flippant. It is more complex than even I understand. It's only to say that, given that these systems are designed artificial systems, there are multiple implementations that work under various constraints and incentives.
The US also has low interest loans for people who can probably afford the loan beyond what a credit score indicates. That is a conservative form of lending and it’s true that the US supports a wider range of lending than most countries.
What country is this?
In some countries a credit score is a mysterious value calculated by a private company based on patterns of consumerism and money usage that greatly affects your life. You must earn the score through engaging with other private companies, to the company's profit. This is why in the US & UK people get credit cards early, to improve their score whilst trying to avoid the debt trap.
In Scandinavian countries there are registries of your income (from the tax authority), your debts (including buy now pay later which are technically flexible loans) and any bad debts you have that have gone to debt collection. No history of previous balances, repayments, how long you've had a credit card, etc... Companies use this to come up with a score, either themselves or a company like Bisnode will do it for them. So basically it's a simpler calculation based mainly on current situation than history.
What's the process of vetting people for loans in your current country?
You can have debts totally only up to a certain percentage of your income. Banks require that you produce a monthly budget demonstrating that you have a certain amount left per month after all expenses and debts are paid. You have to be able to prove this by giving them access to your tax and financial records. Most rates for things like homes and cars are consistent from bank to bank across the country.
And how do lenders assess previous defaults when underwriting new loans?
From what I've seen, most developed countries actually do have the equivalent of the US credit reporting agencies. It's just that the functionality goes by different names and is distributed across several different types of entities rather than being centralized in three credit reporting agencies (plus Fair Isaac Corporation / FICO which is a vendor to all of them).
For better or worse, it's not really possible to have a modern economy with high growth rates unless lenders have a reasonably reliable way of quantifying borrower propensity to pay. Debt to income ratio is a piece of that, but some people are just deadbeats.
To be clear, credit reporting and tracking is not the only function of credit scores in the U.S. These functions do exist elsewhere and are often called "registries." They are not private companies, but instead public centralized institutions. Likewise, it is not possible for private companies to loan debt to citizens, even by proxy.
For bankruptcies and defaults, there are similarly court records from public institutions, which you give a bank access to. They cannot search these sources without your consent, though of course they will then not loan to you.
Society itself is completely artificial. Money, property rights, laws, taxes, even the words I'm using to write this very comment... all of these are just human inventions, reified mythology.
It's useful to remember this when tempted to make arguments that assume there is a Right Way to do things. We are exploring a massive possibility space where components interact in non-linear ways. There isn't a right way, there is no golden path. The reality of our society is an integration of each individual experience. We build theories as abstractions of that integration in order to manage and engage with that massive complexity. It can be useful, as long as we remember that they are abstractions. When we forget that our abstractions are only abstractions, we tend to cause additional problems on top of that which we were already trying to engage.
What struck me about credit scores is that, from the outside, it seems so obviously ripe for corruption and predation. But growing up, it just felt that it was the way things had to be; how could it possibly be different?
> how could it possibly be different?
This is the aim of every culture & political system: to remove the ability to even consider that other ways of doing things are possible and that other countries doing things differently are terribly flawed compared to the paradise you live in.
They didn't before? It's a credit like any other type, increasing debt burden like any credit. Seems like corru... ahem, lobbying of course. :)
There's no lobbying necessary, because FICO isn't a government agency, its a private company. Why we have a private company determining such an important thing with minimal government oversight is certainly a question we could be asking.
That being said, there's an innocent explanation for this specifically. BYPL is pretty new as a common type of debt (became popular in the last five years). They're putting it into FICO 10. The last time they updated FICO was FICO 9 which was released in 2014, before that there was FICO 8 in 2008... a lot of banks are still using FICO 8 or even earlier models. Banks are slow to change, and FICO moves slowly because banks don't want their models upended every year. Fwiw if the government was more involved in this I doubt it would be taken into account any faster.
Your credit score can decrease if you pay off your credit card balance or pay it down too quickly. For example, paying off the last $10k on a home loan. The score is also a reflection of your value to them as a paying customer. How much money you can make them, and how reliable you are with regular payments based on past data. These types of businesses may seem off, but if the customer is reliable and makes you money, assigning a low score based simply on the business type is a recipe for litigation.
That is true when you close an account (like paying off the last $10k on a home loan), but I don't think that is correct when paying a credit card down to a $0 balance and leaving it open.
The reason is that your credit score is impacted by both your available credit (higher is better) and credit utilization (lower is better). When you pay of the last of a home loan and close that account, your available credit goes down and your credit utilization goes up (assuming you had any other debt). Both of those hurt you. When you pay the credit card down to $0 and leave it open, your available crediot stays the same and your utilization goes down.
Yeah, paying $10k off your home loan makes your credit score go up if it isn’t closing the loan.
> Your credit score can decrease if you pay off your credit card balance or pay it down too quickly
It can have a short term impact, sure, but long term (a few years), your score will be fine. I paid my last student loans years ago and I did see a sudden score drop and not I'm sitting right below 800 with no debt.
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It's crazy how many things that require credit are on a self report basis. And the only time they actually report is for a past due debt and not successful payments.
Read the article and approach, the BNPL is going to be in effect like one credit card opened per transaction.
They also didn’t destroy people’s credit when they got upside down and had to return the $5k couch or $15k car they were talked into buying on their fixed income, but that’s usually “other people” problems.
Being "talked into" is one hell of an excuse not to take accountability for your own purchases.
You’re so right, and that is exactly why we don’t have an entire class of jobs whose purpose is to get people to spend more than intended. Yup, all personal responsibility. 50% of people having less than a middle school education level, but you’re totally correct, it’s just ALL personal responsibility. No other factors at all!
If the DOD can't do it, why should poor people? https://americanmilitarynews.com/2024/11/pentagon-fails-7th-...
I doubt most people would pass a financial audit, unless they had built their life around "proper accounting controls". Of course, if they had an incentive to do so, it probably would only take two or three years to get things in place and consistent. But then, most people don't have 1.3 Million active employees [1], who knows how many contractors and retirees. The DoD's finances were not designed around audit requirements and it takes time and consistent attention to retrofit accounting controls into a very large organization.
[1] https://dwp.dmdc.osd.mil/dwp/api/downloadZ?fileId=136507&gro...
Ok, but the point is: people whose job it is to be accountable, cannot
Blaming poor people for being scammed only benefits grift culture.
But since this site is essentially a growth engine for grift its unsurprising to find parrots of this "poor people are moral and ethical inferiors"
Yep you're onto something here but surely they operate within legal reasonable frameworks of the government surely.
Regardless no one can make you buy anything
They can't keep up with techbros coming up with new names for debt.
What's interesting here is that normally BNPL only does a soft check.
I wonder if this is going to change.
Equally, I find it weird that companies can ding your credit for not paying but have no obligation to report on-time payments. It should be both or none.
Technically it is largely already built in as an assumption that payments are made on time. You also don’t lend to a friend you will not be paid back by, will you? The credit score reduction is merely a diversion from norm, i.e., the expectation that you pay what you agree you owe.
Ironically, there is actually zero reward for being a reliable person, there is only a punishment for being an unreliable person; and with all the money printing, even the punishment for being an unreliable person has been almost totally removed and being reliable and upstanding is effectively a punishment since you don’t get to live like a king on a shoe string and then declare bankruptcy and have credit extended to you immediately afterwards because money is cheapened and consequences are void.
> You also don’t lend to a friend you will not be paid back by, will you?
I don't lend to friends and family. It's not worth losing those bonds over. I'll help financially where I can, and I'm not going to stop anyone paying me back, but I'm assuming that money is just gone.
Completely different calculus compared to credit.
Does anyone else live in a place where there isn't a visible "score" for how valuable you are, but rather only a "credit check" for how risky you are, which is performed if you apply for new credit (buying anything with an invoice, getting a credit card, or taking any other kind of loan)? Meaning that if you have a good income and no history of failing payments, you are basically passing the check with flying colors, and will have the same "score" as someone who has had tons of well-served credit before?
This thing where the score as in "risk" and score as in "business opportunity for lenders" is intertwined, and creates weird incentives for consumers, is that only a US thing or do any other countries have something similar?
Credit scores aren't a score of how valuable you are, they're a score of creditworthiness or how unlikely you are to default on a loan. The largest factors are age of credit and payment history. Utilization is also a factor. Someone who occasionally misses payments and has high utilization is going to be more profitable but higher risk to lend to.
Just because that’s what a scores is designed to do it doesn’t mean that’s what businesses use it for downstream.
The fact people always debate what a credit score really means suggests that there are too many factors rolled up into a single number when we should really have a few distinct sub-scales. Anybody that has made a dashboard for a ceo with a short attention span that refuses to deal with nuance and just wants to see “a number” knows this problem all too well
I agree in general, but a credit score absolutely DOES NOT tell you how profitable someone is to lend to, and in general someone with a very high credit score is a very low margin customer.
And that's where interest rates come in. Lenders will typically make similar profit margins on all types of customers regardless of credit score. They charge lower interest rates to borrowers with high credit scores so it all evens out when averaged over a large customer base. Most lending markets are highly competitive so any major differences quickly get arbitraged away.
A score alone does not directly do so. But there is a report attached that will track balances and such. While balance tracking has no "history" in a credit report, lenders can make actuarial guesses based on DTI and other markers which are absolutely included. Which is why, when denied, you don't just get told "Your score is too low" but things like "existing balances are too high", "age of existing accounts is too new", etc.
Yes, which is exactly why Fair Isaac Corp. sells multiple different scoring models customized for different use cases. It's not just one FICO score. For example, auto lenders usually stratify borrowers in a different way from home mortgage lenders. Contrary to the naive hot takes on HN, lender CEOs are well aware of these nuances.
Credit scores in the US function similarly to this risk assessment you describe, with the caveat that there is no standard way to measure risk without a credit history. In my experience, it does not take very long to establish that baseline, and there are inexpensive vehicles to do so, such as secured credit cards. Small-scale lenders are likely to accept alternative documents like income statements or proof of payment history to qualify. FICO scores, as imperfect as they are, merely simplify the risk assessment process.
I suppose it may be related to the overall "looser" grip on who exists, and what counts as collateral. If I "default" on a loan, the lender is still pretty safe to get back most or all of it, since any loan is secured by my future income. So there's not as much need to prove my credit history - my income is public and always was, and my future income is collateral for any loan, including mortgages if my house is suddenly under water in a recession.
That means that barring any failures to service credit in the past, I don't need a history of successfully servicing credit in order to get credit.
It probably makes sense to do so. Not that I condone the FICO hustle. But small loans can add up quickly and delinquencies need to be measured for financial market stability.
If you're paying for your food delivery on an installment plan, you're probably going to have a blow up.
https://www.nytimes.com/2025/03/23/business/doordash-klarna-...
The worst part is that it will equally affect all the responsible people when it blows up just like it is affecting them now when BNPL is just one more way in which demand is artificially created that drives up prices.
I don't understand people. If you need to use an installment plan why the hell are you using DoorDash which is a luxury ripoff?
I can afford it but I don't use it because it's obscene.
I'm tempted to say that some people are poor because they're imbeciles with poor financial sense.
>using DoorDash ... is a luxury ripoff
I live in a working-class neighborhood and it blows my mind how often DoorDash visits my neighbors (particularly considering there are dozens of restaurants within one mile).
The only time I encourage delivery service is when we're too intoxicated to drive.
I stayed with distant family for a bit around COVID when everyone was WFH. Him and his wife must have gotten 3-5 DoorDash deliveries a day pretty reliably, I was blown away. Each ordering their own thing from different restaurants. Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost. Sometimes the different drivers would arrive at the same time and we’d have a little jam up on the porch.
> Random “I want a donut from 711 at 1am” where I’m sure fees/tip were multiples of the actual food cost.
Obviously I can’t say if this was the case for your family but a friend of mine pays for the premium dash pass subscription and this is exactly the kind of thing he would do, knowing that he won’t be charged the delivery fee. Dunno about tips but that’s optional anyway.
(Man, I sure hope that individual delivering the donut was paid for their time, though. No clue if the economics of Doordash’s subscription model actually allows for that but I can’t imagine how it would, with 3+ deliveries per day at [$10/mo](https://help.doordash.com/consumers/s/article/What-is-DashPa...). Gotta be a combination of some drivers getting screwed, Doordash losing money, and/or dash pass subscribers who rarely order. The order minimum does not apply everywhere. Maybe there are different payment tiers but that’s not detailed on their help page.)
When COVID started my wealthiest elders decided to start eating out for every meal in order "to support local businesses." Ironically, they did not leave any tips because "you don't tip unless you sit down in the restaurant." You're not helping in the way you think you are, Gramps.
>You're not helping in the way you think you are, Gramps.
Why do you believe this? Tips cannot go to the business, and businesses were closing during covid because they weren't making any revenue.
The tips helped servers sure, but so did buying food from their place of work such that they can continue to have a job, unless that job literally paid less than minimum wage or unemployment, which is its own atrocity.
Yes it's a bit odd that the article poses the question if this will help or harm credit seekers. The point of the system is to provide transparency.
What does need to happen however is that these inputs are properly weighted such that those using FICO can make appropriate decisions. Similar to credit cards, numerous BNPL-purchases do not necessarily indicate that the debtor is in financial trouble. They could merely be using the services for the other conveniences they offer. Whereas seeking numerous loans is usually a negative metric.
> The point of the system is to provide transparency.
FICO scoring is far from "transparent".
Good, it will bring the stupid BNPL ecosystem back to earth, when people stop using it as free money.
thats interesting. I was always wondering what the hustle was, guess that was it- it was outside of the credit system
The hustle is mostly just getting merchants to eat bigger discounts in hope of selling more volume. Instead of eating ~3% interchange on a credit card, merchants eat ~6% subsidizing short-term BNPL loans.
Well, they're also doing the old "burn through VC cash in the name of growth" thing.
It already shows up when mortgage lenders do their checks, AIUI.
The irony is that it does not even really matter anymore at this stage, especially with mortgages. So you get a few points taken off because you have 800 vs 600 score, but it won’t really make a difference when both are on the same out of control roller coasters where house prices have increased by 100% in 7 years.
US home prices haven't increased by 100% in 7 years. On a national basis, the Case-Shiller index has only increased by 65% (nominal dollars, not inflation adjusted).
https://fred.stlouisfed.org/series/CSUSHPINSA
In the short term, the difference in mortgage interest rates between prime versus subprime loans can have a major impact on borrower cashflow and the type of property they can afford.
The security and privacy nighmare that the various credit score systems bring on by collecting and storing sensitive data on individuals some way somewhere with some sort of access for someones for something (a very real big brother in esence on essentials matters), is a good incentive keeping people away from loans. The less is more in this case. Avoiding avoidables.
The crime is that in the very essential case of abode it is impossible to avoid for the generic population. Both renting and mortgages require you do disclose your life for organizations and sometimes individuals having financial incentives with you. Making you exposed and voulnarable, no choice is given. It is a must (you and your dependants cannot choose not to live somewhere).
So they do not have to risk their capital gain, allowed to risk your most sensitive personal data.
What is the functional difference between BNPL and credit cards that can explain why it’s become popular? A credit card is literally “buy now pay later” so is it just the ease of onboarding?
BNPL is 0% interest over N months. A credit card is 20% APY over the total balance over minimum payment. And it's offered by my CC providers.
For some larger purchases on a 12 month plan, leaving the money in savings loses me 1.5% cash back but gains me around 3% interest (after accounting for the depleting principle).
It would be stupid not to do it sometimes. I don't really get the financer's benefit. Though maybe it's because I do pay it, and if I didn't there would be 200% APY or something.
The merchant pays a fee for it, and they do it to get a sale that they otherwise would have missed.
If you decide to save $25/mo for a $100 product, that is 4 months for you to change your mind, have an emergency suck up that money, or score a lower price by waiting for a sale. But for some segment of the population, they will close on a pay-in-4 right now instead of waiting, and that is guaranteed money.
The seller benefits from the increased demand, the financier sells this as a service to the seller.
Yeah, I’m not sure if BNPL loans have changed in the last decade at all but the financiers make money on the people who don’t pay the balance by the end of the term. I’ve financed a couple expensive electronics when it made more sense in my younger days and the terms were such that if you don’t pay it off by the end of the term, you owed ~24% of the total bill in interest.
I bought tons of solar panels with 24 month 0% interest CC for my DIY installation. Kinda makes entire system free. I wish BNPL were offering longer payment periods, few months is not worth the risk at all.
Subprime borrowers use BNPL a lot and often don't pay it all back. Extending the terms would likely mean Klarna and Affirm will make back less money before the loan defaults.
- No application process. You are at a store's checkout page or sales kiosk and can sign up in a couple of clicks.
- No credit checks.
- Longer payment period - usually 2-3 months with no interest.
A credit card is for gaining access to the electronic payment monopoly's network[1]. BNPL is explicitly a loan. Yes, a credit card transaction may effectively turn into BNPL if you fail to complete your end of the transaction in a timely manner, but that is a hindsight outcome, not the reason for choosing the method in the first place.
[1] Nowadays you can often also use the network with other methods, like a debit card, but those alternatives still aren't universally accepted like credit cards are.
Fixed payment schedule and no interest being charged.
For most of them, interest accrues from the date of purchased but is not charged if you pay on time. If you don’t, you owe all the back interest from day one.
Ah, that's the scam. Yet another poor tax, then? The rich get interest on money they already spent, the poor get an illusion of safety followed by even more destitution?
That’s not how BNPL works in its modern form with the third party companies. You pay late fees if you pay late. If you have a 3 month plan, they divide the payment into three equal installments and you pay it off.
The parent poster is confusing BNPL with cobranded cards like Room 2 Go credit cards that have special promotions with “0% for x months”. It’s a regular credit card where the minimum payment won’t guarantee that you pay the original amount off in “x” months, but you only have to pay 2% of the balance. These have always shown up on your credit report.
They are “deferred interest” plans where if you don’t pay the balance off in $x months it will charge you back interest.
Ah yes, the big scam of offering zero interest unsecured loans to anyone without even running a credit check. These companies are bound to have big losses when things go south because they literally offer you free money.
They are already having big losses.
Beats the pants off a payday loan.
So are some of us going to get penalized for not having a buy-now-pay-later history?
Depends on your definition of 'penalized'. FICO is all about identifying good ROI candidates.
Say you are a lender, you want someone who constantly uses credit, always pays their bills and has the capacity take on new debt. That's what FICO is for.
It's not some consumer reward system. It's not your score to game, it's a score on you for companies to game. Quit playing the game.
Credit score NULL.
IMO the game is to get the highest credit score while spending the least on credit. That way if you e.g. need to acquire housing, a reliable vehicle, business loans, even employment or insurance, you will be able to and can get a good deal. Sure, paying nothing saves you money, but it also costs you the opportunity cost between what you could earn/save by utilizing credit vs waiting months to years to save up and pay cash.
The easiest approach is to get high point credit cards and pay them off each month.
That way, you don’t pay anything (and are subsidized).
Of course the money comes from people that don’t do this, and vendors’ margins.
So, it’s “Participate in the credit card racket or no house for you” on one side and “That’s a nice shop you have there. It’d be a shame if something happened to it.” on the other.
The US really should abolish the credit rating industry.
Why do some ancient traditions ban usury?
There are regulations around it even today. It's not a complete free-for-all. https://www.paidnice.com/usury-laws-by-state
But to answer the question, there's quite an instinctual aversion to earning money through apparent idleness. Same reason that people hate landlords who just get "passive income" simply for owning. (Of course the owner had to buy it in the first place, or had to inherit it - and indeed inheriting too much stuff also rubs people the wrong way - except if they themselves are blocked from passing on their things to their kids).
Same reason that merchants were distrusted, since there was no concept of economics that would allow them to understand that in fact trading and arbitrage is actually valuable contribution for the market to properly price goods, and is a much better way to price things than gut feelings about "sentimental value" or the labor theory. But this was not well understood so making money through trade was seen as witchcraft. How come he can come to the village and buy our pig for X and then go sell it for X+Y in the city? I mean that's somewhat understandable, the transport etc. Income through interest doesn't even have that. Of course the real value proposition is again a kind of resource allocation cognitive processing. The lender's contribution is in the assessment of prospects of the profitability of a venture. That apparently this is not the case in many consumption credits is indeed some kind of system failure, and some perverse incentives set up by regulations, where somehow the financial companies are not punished by reality for misallocating. See 2008 etc.
I suspect actually MOST ancient traditions ban usury (or ban lending altogether). Christianity banned usury, Islam banned essentially all lending, Hinduism banned some casts from lending and regulated the lending of others[1].
I think the practice was found to be corrosive to societies and thus at one point or another many of them tried to ban it. (Lending is also very helpful for commerce, so most societies also reintroduced it. Actual practice varied at different points in history.)
1. https://www.sacred-texts.com/hin/sbe14/sbe1405.htm
All Abrahamic faiths ban lending where the returned amount is greater than that borrowed, i.e. charging interest. Judaism "worked around" it by banning it amongs Jews but allowed lending on interest to non-Jews. Christianity originally followed Jewish law in this regard but abandoned it later on. Islam, adheres to banning interest strictly, but this is subject to different interpretations. E.g., buying an item at a higher price but paying in installments is allowed by some schools of jurisprudence, while others disallow it, while there is unanimous condemnation of a loan whose interest "doubles and redoubles" [explicit in the Quran], which is the typical credit card or mortgage. The main difference in buying at a higher price + installments from a conventional interest based lone is that the profit gets agreed to at sale, and it holds regardless of whether the full payment is made early or not.
Muslims have got around the problem of not being able to pay for houses in cash by constructing a joint ownership scheme, where the lender and buyer enter into a joint ownership of the house; the buyer pays rent and adds extra to buy more equity, and the rent goes to both the buyer and lender in proportion to their equity as a business partnership. Over time, the rent part decreases and the equity buying accelerates. There are other models, but this is the most popular one. Due to Federal and state laws, such mortgages are often reported with interest rates even though, technically, interest is not being charged.
If you look up the various means of buying home without having all of the money up front that are compliant, it’s just a mortgage by different name.
https://www.guidanceresidential.com/resources/faith-based-fi...
FICO scores are a joke. They hint at what they use to calculate them, but the algorithms are kept secret. Fair Isaac can't reveal the algorithms, otherwise they'd get gamed. Incentives to keep bad info and wrong info in dossiers are strong, too. If allowed, Fair Isaac would put rumors and other bullshit on n your file, and never take it out.
They don't really "hint at what they use to calculate them" so much as "tell you exactly what is used to calculate them, how it's calculated, and even include an estimation tool so you can calculate your score yourself"
https://www.myfico.com/credit-education/whats-in-your-credit...
>payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
https://www.myfico.com/fico-credit-score-estimator/estimator
For fucks sake, at least keep your conspiracy theories somewhat believable.
Absolutely nobody is worried about "gaming" credit scores because the activities to "game" credit scores are identical to the activities that make you likely to pay off debt in the future and that's what a credit score measures. So it doesn't matter if you pay off your bills to "game" or to be responsible, you're still paying off your bills.
I don't know that they are really that complicated... I just do the things that they suggest the scores are based on. Pay on time, have more accounts that have been opened longer, have a lower credit utilization, etc and I watch my score go up and up.
My score started at around 670 when I was young and before I had done anything and I did the things and now it's around 820.
the score is easy to reverse engineer if you have the data and pretty much every big bank has the data.
source: I worked at a big bank and did this, it was easy.
Most of the stuff is obvious and intuitive (don't make late payments). One that's not terribly intuitive is credit line utilization. It has a big impact and most people don't think about it. For example, it's better to have 2k in credit card debt if you have 20k in credit lines vs. 1k in debt on 2k in credit lines.
>the score is easy to reverse engineer if you have the data
In fact, FICO even provides you with a tool to "reverse engineer" a credit score given the data.
https://www.myfico.com/fico-credit-score-estimator/estimator
You forget the scoring is not based on individual performance only. It also includes your performance compared to those in similar groups or buckets.
Ever wonder why your credit score goes down randomly in one month despite nothing changing?
FICO’s black box algorithm put you in a newer credit group of higher credit scores. In that group, your profile scored much lower compared to others. Thus you get a 10-20 point deduction.
If you have a long history of good credit it probably doesn’t matter. But if you are a young person looking for auto/home mortgages, that 10-20 pt dedication _could_ lead to slightly higher APRs depending on the underwriters own scoring algorithm.
There are no incentives for Fair Isaac to promote or use "wrong info" because if the score they produce is deemed to be an inaccurate measure of credit risk, it would not be a useful product.
Why would they put rumors and bullshit in your file? The credit bureaus aren’t out to get you. Their goal is to help their clients (lenders and similar) to make money by identifying how risky their clients are. An accurate risk assessment is good for them. If you’re a good risk, they want your score to be high. They don’t gain anything by putting crap on your file to tank your score.
The only appeal of these loans is that they weren’t incorporated into FICO score. These companies will all fail once people start noticing their scores drop.
That seems like it makes sense whatever one think of credit scores, it's actually surprising to me that a form of credit didn't show previously.
This would probably only affect the people with the worst credit scores I imagine. I just don't see a ton of 800+ credit score people deciding to spend 5 payments of $20 for a pair of $80 shoes.
I always thought it was interesting that the BNPL loans’ interest is subsidized by the retailer, which pay the premium in order to improve the chance of a sale (hoping to hone in on those who can’t afford it now and make it back on that extra spend). Which means high credit score, wealthy spenders could put everything they can on BNPL plans and profit the (minuscule) interest over time, but if you can do that on big purchases, maybe it’ll add up. Same way credit cards work, if you have the cash flow and always pay them off in full, you can make a few bucks in a HYSA for the 40 ish days before the statement.
I can see a future where a BNPL loan is not offered if the signals the checkout page collects indicates wealth, since they don’t have an issue of cash flow stopping a purchase. Imagine a loan that has a credit score maximum, not a minimum.
I’m not sure. I’m sophisticated enough to use BNPL and set aside the funds in a HYSA, but I never have as you miss out on: credit card rewards, credit card purchase protection, credit card extended warranties, credit card chargeback infrastructure. Additionally, I’ve seen BNPL offers where the first payment is in 2 weeks compared to 30-50 days for credit cards depending on when your statement closes and how soon you have to pay, so the extra interest is less than you might think. It could make sense for very large purchases, but then, that’s also where credit card features can really come in handy.
Discriminating wealthy customers increases the risk profile of the loans which is already questionably high. Retailers are used to paying extra for credit card transactions anyways. BNPL really is just meant to compete with credit cards by splitting the runway across more months for the loan. Equally predatory business model but credit cards are able to offer the same interest amortization that you can do with bnpl through the rewards programs. They're effectively the same.
This is a theory, but it flies directly in the face of reality which is that nearly every retailer on the planet would prefer more wealthy customers.
Eh, in the same way a lot of retailers offer student discounts, they want to meet everyone at their maximum spending limit to capture more of the demand curve. It doesn’t have to be one or the other; not offering BNPL loans to wealthy customers aren’t likely to tangibly affect sales of that group.
Students are future wealthy customers.
Except it's 4 payments of $20. The whole selling point is that they're zero interest. It's CC float without the CC.
Plenty of people with good credit use BNPL loans; they are offered on much higher cost items than $80.
1.5% back on the purchase via CC rewards beats earning 1% over 3 months (4% yield) in a HYSA every time, anyone using BNPL is using them suboptimally.
For a 3 month BNPL loan to be worth it, HYSA rates must be over 6%, and actually a bit more due to the time value of money; you get CC reward cash after the statement period but it takes 90 days (and up to ~120 days) to get three monthly interest payments.
Maybe you replied in the wrong place? This isn't responsive to my comment.
No, I was replying to your comment. Using a BNPL loan is less optimal than paying with a credit card due to the cash back rewards.
People with good credit may use them, but it makes zero sense to do so. You always come out ahead by using a credit card and paying it off immediately unless the high yield savings rate is 6% or higher assuming a BNPL loan term of 3 months. Beyond that, it does make sense to use them, like Apple’s 12 month no interest on Apple products with the Apple Card.
I don't think a discussion of optimality is relevant to what I wrote.
Lots of people with good credit are not maximizing credit card rewards and sign-up bonuses, either. Humans are not homo economicus. (And just as a factual matter, there are sometimes longer BNPL terms than 3 months, which changes the math on what is "optimal.")
Shifting a cost forward a couple months interest free is a great deal for people who are financially responsible, especially if you have some other loan (like a mortgage) that you could be paying off more of instead.
It's no different to the practice of using a credit card for everything and then paying off in full a month later because the credit card interest is lower (often zero if you pay off within a month) than the mortgage interest.
I briefly looked into this, but I wasn't convinced the juice was worth the squeeze. My cash is automatically getting ~4%, but there's too much fine print to make sure the BNPL rate really is 0%, I'm sacrificing 2% cash back, and missing one payment makes the whole endeavor negative ROI.
> fine print
I suspect this is where some buyers will get into trouble. Theyll think they made a payment, or they miss a notification that tells them to send this month's payment to servicer X not Y, and before they realize, boom they are in default and owe all the interest.
In the case of a 0% grace period sure I agree, but otherwise in no world is credit card interest cheaper than a mortgage over the same time period.
You're right, I was misremembering - it's just the 0% interest when you pay off the full balance every month that makes this worth doing.
A lot of young people where Affirm-ing their DoorDash etc. even though they had the money
A lot of BNPL loans are offered at 0% for X payments. Usually 6 months, sometimes 12 months on larger purchases.
Given current interest rates, I take that deal WHENEVER it's offered.
That would depend on the fees and interest, no?
I have so much extra money just laying around that I take unnecessary risks and add complexity to my financial life for kicks and giggles.
Aww so I can't use BNPL for my $10 California burrito anymore?
I was looking forward to 4 $2.50 weekly payments!
Man, I wish for a $10 California burrito. In Los Angeles I'm often looking at $5+ tacos.
This seems like it’s going to harm more people than help. Encouraging fiscal irresponsibility under the guise of improving your credit score. All it’s really going to do is give lenders another metric to deny you a loan, either because of delinquent accounts or too many accounts opened and closed.
Maybe not deny in case of too many accounts opened or closed but risk profile can change. So think higher APRs compared to people without bnpl.
How long until my score goes down because I don’t use these?!??
Background: During the riskiest span of my life, financially, I used to have a 780+ score and an AMEX Gold (for about a decade, early 2000s); now I don't have any credit cards, my vehicles are entirely paid.
My Conclusion: Credit scores demonstrate ability to re-pay interest (i.e. lender profits); it is a score that demonstrates how profitable you might-could-be, not necessarily representative of fiscal wisdom.
Meditation: not caring about your credit worthiness is a fantastic approach to life, as long as you've already bought your house (or have alternate plans, not involving a mortgage).
Credit scores will tank further
Why?
"The industry has long believed that consumers using BNPL responsibly should result in positive credit scores, as the majority of users are paying back in full and on time."
Because "most people pay back fully on time" is not the metric.
The real question is what are the delinquency and default rates for BNPL as compared to other forms of consumer credit.
Given the previous understanding that it didn't hit your FICO, the retailer subsidy as a sales lead, and the types of products people were financing.. one might assume worse..
Because it’s shadow debt and it will show the person as overleveraged with a bunch of Affirm loans
If customers make every payment their score should improve.
What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time?
To me this seems like a new product that would target a different consumer than the one that makes payments on time. But I would like if someone challenges this view. Thanks!
Structuring.
I’ve used them several times, mostly because they are relatively cheap forms of credit for short durations (<12 months). I have plenty of credit available via traditional credit cards, but BNPL —- to this point —- haven’t reported usage rates to the bureaus.
Last summer our A/C went out. It ended up being about $4.5k to replace, and it was a heat emergency at the time. So I put the whole thing on Affirm for three months, at 0% interest. I paid about $50 in fees. That got us through the immediate emergency and gave me time to shop around for a better way to fund it.
I ended up taking out an auto loan with my credit union. The rates were much cheaper than a personal/unsecured loan, and I have three vehicles in the driveway without liens. The loan was for four years, but I’ve already paid it off.
In a tighter situation, BNPL not impacting your credit utilization rates is a big benefit.
> What is the benefit for a consumer to use this type of loan and then pay it back on time versus using a credit card and then paying the card back on time?
Slightly longer repayment time frames. (Multiple months instead of just one.)
This sounds like a consumer that does not pay the balance each month…
CC gives me 30 days to pay it back interest free. BNPL gives me 2, 3, 6, or more months with very little or even no interest. If I know I'm not going to be able to pay it off in a month, I'd rather do a BNPL loan since it's so cheap. Additionally, you can have awful or no credit and still be approved for BNPL. It may be beneficial to have some repaid loans on your credit if you ruined your credit earlier in life like this credit builder CCs that have a super low limit.
I’ll add that I’ve found that the more you use Affirm at least, the better my options get.
I started by always choosing the shortest “plan”, which was 0% and no fees. After I’d paid off a few of those, I started getting offered plans of up to a year with no interest and very minimal fees.
Now, while I don’t use Affirm for luxury/unnecessary purchases, it offers better rates than any credit card I have, and better than a bank loan in many cases.
I have three Affirm loans right now, for a total of about $8k. All three of those are business expenses, and all three have increased profit in our business significantly more than they cost us.
I should have specified those durations are both interest-free. If you don't pay your credit card off after one month, it accrues interest at fairly high rates.
A CC gives 1% cash back. Your bank's savings give 4% interest. BNPL doesn't earn the cash back, but over a long term you make more in interest for some purchases.
For small puchases with short repayment periods? Not a clue.
It’s like layaway. Also you didn’t really need credit before to get them.
I guess it would make sense for larger purchases that could not be paid within a month..,,
Lower interest because the seller pays the interest
But a lower interest expense is not relevant to a consumer that pays the balance on time…
If you put the cost on a credit card and paid it off over the same number of months you would pay a lot of interest.
That's an incomplete answer because it doesn't take total debt burden and history of payments into account over time. Score is fluid and should decrease while debt burden is high or increases. At the end though, score should improve slightly because they are slightly more trustworthy having repaid what was promised.
We don't really know that. The algorithm is secret.
Not if it shows a bunch of Affirm loans. You could look overleveraged for say getting a mortgage
1. Maybe they are over leveraged, let a bank to decide with all the data.
2. BNPL often has short durations (3 months) so it’s not a long term problem for people with BNPL if they pay it all back.
Affirm can go up to 60 months on larger purchases
A bunch of tiny loans does not loom good
Urban myth.
I successfully applied for a mortgage with ~30 credit cards open. Nobody batted an eye, or even commented on it. They looked at balances and credit score. Balances were almost all zero and credit score was excellent.
A hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage, it doesn't hurt.
> Balances were almost all zero and credit score was excellent
Not the same.
> hundred small loans that were all paid off on time over the last decade is extremely helpful getting you a mortgage
Again, not the same.
Affirm can be worse than credit cards because credit cards are a single line of credit of X size. The people using it don’t realize that a bunch of tiny lines of credit add up to a larger one ultimately and they can find themselves overleveraged.
I wonder how it will be implemented. Because for me, Affirm shows my "purchasing power" almost like a credit card, even if it's currently utilized across multiple purchases. So I could see a difference between "making payments on an open balance of $X on an account with $Y purchasing power", even if those payments are subdivided into the original purchases, versus, "You have 7 open Affirm loans".
Mortgages have always required you to disclose any BNPL plans to my knowledge.
Are people taking out a large number of large Affirm loans though?
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Circular much?
For the downvoters... having worked in this industry, these loans are already heavily modeled with FICO scores. Who is wagging which tail?
I always take on debt if it's an option at 0%. Or sometimes even if it's a low promo thing, like 3%.
I do that too, I actually get a kick out ripping off those predatory 0% interest traps. I had no idea the BNPL things didn’t impact credit scores. If they’re unsecured with no credit worthiness impact then why even pay them back?
I honestly have no idea whether buy now pay later is considered good or bad. The article is email-walled so I don’t know.
I was fiscally responsible and didn’t buy things on credit. I had a low credit score.
Now I deliberately pat for things on credit then pay them off immediately to have a high credit score.
Maybe we could replace credit score with an actual measure of financial responsibility?
yet another vague data point mortgage underwriters can use to deny your loan
In corporate back room, "persons score is high enough to qualify and income is good enough but there’s a strong history of bnpl usage. Over 200 accounts ranging from food to groceries and luxury items. Risk to default has increased, thus approval for slightly higher APR compared to peers with none to lower BNPL usage.”
Rinse and repeat this for hundreds of thousands of loans and now bank is raking in (more) profits
How do banks make more profit by issuing fewer mortgages?
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For the line to go up you need people to keep buying more, and reducing costs. But when these costs are people's salary, you end up paying them less, so they can't buy more, thus credit.
The overreliance on credit as a new step in the consumption cycle is an indicator that the whole system is collapsing, but somehow it's supposed to be good news that buying a burrito might be used against you to further drawn you down.
The town is on fire but good news, your house being burned down will get you air-miles.