Letters to the Editor
Amerigo
Published Letters: 955 Editor's Choice: 60
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Dear Anonymous
[Read the article: Usury: Back and better than ever]
[Read more letters about this article: Here]You too make some good points.
However no one in their right mind would take a pay day loan or an instant income tax refund, (nor does borrowing on credit cards make much sense unless you can pay it off in the short term), whereas using the capital in your home makes quite a bit of sense, and may even get you tax deductions. I recently refinanced my rental properties so as to get out some cash for upgrades, which in turn may increase the capital value of the property and enable me to borrow even more. This is capitalism at work.
Addictions to alcohol and cigarettes (and other drugs),as well as poor money management skills, are a major component of keeping the poor poor. When you live from pay check to pay check, there is no such thing as financial planning.
The state of the economy does not help, with there not being too many good paying jobs these days for non college educated people, but I think that a young couple who both work and who are thrifty and abstemious can progress in the world, acquire their own homes, raise a family etc. without deprivation.
Not everyone can live the good life, but even my tenants, who are pretty much at the bottom of the pile have motor vehicles (or access to) refrigerators, air conditioning, cell phones, cable and satellite television, washing machines, some kind of health care (babies delivered in modern, well equipped hospitals), enough to eat and other benefits that most occupants of the planet don't have.
Unfortunately, however, they will often prefer to spend their money on booze and cigarettes rather than on some bleach to occasionally clean the toilet.
But I don't think this makes it right for businesses to take advantage of their stupidity and gullibility. They need help to improve their lives, not exploitation. Obviously loan sharks are not charity workers, but government can and does regulate all kinds of things, and ought to regulate loan sharking better than it does.
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A better alternative to loan sharks...
[Read the article: Usury: Back and better than ever]
[Read more letters about this article: Here]... would be to borrow some money from a friend or family member or someone at work who is not trying to rip you off. In theory at least.
Actually, I find myself lending money to my tenants, not really willingly, but because they will be late with the rent, which is a kind of borrowing, but will pay the electric and, of course, purchase the beer and cigarettes, because the electric company and the liquor merchants won't give them credit, and because they know that evicting them is difficult and costly.
Charging them extra for late rent tends to make them get even further behind. It is a bit like shouting at a cat! Not very productive. Similarly occasionally--very occasionally--I will give them a ride to a doctor's appointment, because if they have to pay for a taxi, they will only get further behind or be more likely to get into loan shark problems.
But if they go to loan sharks, it only further diminished their ability to pay their rent on time.
Regarding using home equity loans to buy a car, which someone mentioned here--this is not a bad idea. When my car eventually croaks, I will probably get the car dealer down the road to buy me a car in the auction--he charges a flat $275 for this--and pay for it with some of my real estate equity money. This way I get some income tax relief on the borrowed money, and the title to the car or truck is mine, so I don't need to have expensive collision damage insurance that would be needed if there was a loan on the vehicle--which saves a fortune.
Poor people, of course, don't get the 0% interest new car loans from the dealerships. They have to pay exorbitant rates of interest at the Buy Here Pay Here used-car lot, which is the real money maker for my car dealer friend (OK, acquaintance) who both sells the cars and provides the financing. And they have to pay exorbitant rates of insurance with whichever company will take them--probably the one arranged by the dealer.
Of course poor people in the US tend to be poor because they are stupid and have poor judgment, but there is still no need to exploit them unfairly. They are all God's children, or would be if God existed.