Wednesday, March 18, 2015

The $4000 Sofa

I bought this leather sofa and loveseat set, used for $500.   Some folks pay nearly ten times as much by financing things.

A reader recently brought to my attention, this article, about how consumer finance "rent to own" type furniture stores can rip-off the very poor for an awful lot of money.  Such stories are heart-wrenching, as they tell the tale of poor decent honest folks, who live in a trailer and make their living hauling chicken guts to dog-food factories, getting gypped out of their last nickel.  These are folks living on $26,000 a year, at or near the poverty line.  They deserve better than this.

Of course, like with anything else, they agreed to get gypped and they did this by deciding that they had to have, right now a new sofa and loveseat, rather than saving up a few dollars for a few months, and then paying cash for something used - or learning to live or fix up what they already have.

The sofa above, I bought (along with matching loveseat) from a friend of mine for $500 for the set.   We used this in the "Wine Bar" in the finished basement of our New York home before we sold it (the new owners bought the sofa!).   The sofa had a large bongwater stain on the cushion (yes, I still hang out with a few people like that, but less and less).  We polished the stained area (actually the whole couch) with brown shoe polish and let it sit out in the sun for a few hours.   The sofa was nearly steaming when we came back.  We buffed the snot out of it, and voila, no more bongwater stain.  It pays to be clever - and handy.

By the way, if you have a car with a brown or black leather interior, this can work (or with liquid shoe polish) to get rid of those worn areas around the side bolsters.  Try a small hidden area first to make sure the color matches, and then apply to the worn area, and when it dries, buff thoroughly.  Then be sure to only wear old clothes the first time you try it out, to make sure it doesn't come off on your new dress.   It worked well on one of my BMWs, and was a lot cheaper than having the upholstery repaired.  But I digress.

Yes, there are some pieces of furniture worth paying thousands for.   But they aren't sold a the rent-to-own furniture depot.

Yes, we have some more expensive furniture.  We have some Stickley pieces which are rather expensive.  They are made with real leather, expensive fabrics, and of course the trademark quarter-sawn "tiger" oak and distinctive "mission" or "craftsman" style.   Such pieces are strong enough to literally jack your car onto (and I am not being dramatic, here, I mean literally), and will last a lifetime - and may actually increase in value over time.   Our living room set cost in the thousands of dollars.  It is nice stuff.  But we did not buy it "on time" either.

The poor, as I have noted time and time again, go to crappy furniture stores and buy junky furniture "on time" and pay twice what wealthier folks pay for good furniture.  By the time they are done paying off the loan, the furniture is trashed and they repeat the process again and again.   By making weekly payments on the sofa and loveseat, the couple in the article cited above paid over $4000 for the furniture, which is a staggering amount of money.

Why do they do this?  They are convinced it is normal to borrow money for everything they own.  They think the only place to buy something is in a retail store and brand new.   The poor are often more obsessed about status than the rich.  It is sad.

I have actually slept on the floor while saving up to buy a new bed.   And no, this wasn't when I was 20 years old and in college but when I was 40 and had a good job.   I could have put it on a credit card and paid interest, but to me, sleeping in a sleeping bag for a few weeks wasn't that big a deal.   I had my eyes on larger things than "have it all now."

Should we do something about this?  Close down "Buddy's" furniture store?  Burn it down?  Pass a law preventing "Buddy" from offering such deals?   Educate the family in question about such deals?  It is hard to say.  Just because people make poor choices and have heart-wrenching stories doesn't necessarily mean sumptin' needs to be done about it.

First of all, before you mock the people in the story as being "stupid" or whatever, consider how brave they were to come forward with their story.  Not many are.  Chances are, their friends and neighbors made similar bad deals, but are too embarrassed to come forward and say anything about it.  So let's not run these folks down for making a dumb choice - but at least congratulate them for making it publicSilence is the con-artists best friend and publicity is his worst enemy.

Hopefully, their friends and neighbors will listen to their story, and realize that these 'buy here pay here' schemes are a dead-end, and places like Buddy's will just go out of business on their own accord.  Keep dreaming, is all I can say.  It seems the appetite of the poor for lousy deals is insatiable.

Should we shut down Buddy's furniture store or pass a law against usurious rates?   Maybe.   Such places have existed since the dawn of time.  Thomas Wolfe wrote about such stores in Look Homeward, Angel. In the fairly recent past (1950's-1960's), we did have consumer protection laws against such high interest rates.  That's why a lot of places went to "rent to own" as they claimed they were not in the business of loaning money, but renting furniture instead.   There will always be a loophole.  But usury laws were largely abolished in the 1970's, when "normal" interest rates went into the double-digits.  So that option is out, I'm afraid.

And the Buddy's of the world contribute heavily to the Republican party, so that no laws will be passed "regulating legitimate businesses" and to make sure that folks like Elizabeth Warren are hounded to the end of the earth.

And sadly, I can guarantee you that the folks profiled in this story likely voted Republican, because of "family values" or religious values issues or because "Obama is a Muslim" or whatnot.   It is a perfect little con, if you think about it - you get your own victims to vote for the government that exploits them.  And until these folks wise up, well, should we really feel sorry for them?   I wonder sometimes, particularly when it is folks like this, living in trailer parks, who would be the first to stuff me in the oven, if they had the chance.

Can we educate these folks not to make silly mistakes like this?  I would hope so.  And there is a continuing education program for them, that in fact they have already matriculated from.  The tuition was $4000, payable to Buddy's Happy Furniture, Inc.

In other words, one would hope that people would realize that paying $4000 for a $500 sofa and loveseat (retail value, about $1500) is a pretty crappy deal no matter how you slice it.   And if they learn anything from this experience, it is not to go back to "Buddy's" furniture store - or anyplace like it.

One would hope that they would sit down and talk with each other and say, "Gee, we are living on a very limited income here, we should budget better.  We need to stop buying lottery tickets, pay down debts, try to save a little money, see if we qualify for any Federal programs like Foodstamps or Obamaphone or whatever, and take what little we have and do a better job in managing it."

Now, I know what some of you are going to say - particularly the bleeding hearts on the Liberal Left - "Well, that's easy for you to say, you've got money!"   And my response is this:  These folks have money, too, they just squander it.   If they had bought a used sofa and loveseat on Craigslist for $500, they would have saved over $3500 over buying at "Buddy's" furniture.  That's THREE THOUSAND FIVE HUNDRED DOLLARS which is an awful lot of money for someone making $26,000 a year (or $500 a week as posited in the story - whether this is take-home or not, is not mentioned).   That's a helluva start toward a nest egg, ain't it?   So no, these folks DO have money to save, and in fact, I can point to $3500 they left laying on the table.

So yes, it is possible to "get ahead" even when you are very poor, but when you are very poor, you have to try doubly hard.   The very poor try the least hardest.  Is there a connection?   Well, yea.   The stereotype of the rich man being frugal exists because being frugal is how he got rich.   My late sister was "poor" and collected government assistance, including "Gub-ment Chee" and she complained long and loud about how rotten her life was.   But I pointed out that she paid $65 a month for cable TV.  "Well, that's our only luxury!" she replied.  Actually, her budget was full of "that's our only luxury!" kind of things.   We all play this game, saying that such-and-such is a sacred cow.  I find that slaughtering sacred cows is the key to getting ahead and a really easy way to get ahead.  Just find the one thing you "cannot live without" in your budget, and then kill that.

So poor folks "go to college" when they get raked over the coals by these raw deals.  Do they learn from their mistakes?

Sadly, many folks take this course, pay their tuition, earn their degree, and then go back for a post-graduate education.   There are billboards in my town that say, "Ripped off by a Title Pawn Loan?  Call CASH ADVANCE!!!!"  - in other words, they figure you are dumb enough to get ripped off once, why not rip you off again.   It is like the Timeshare Resale places - you were dumb enough to buy a timeshare, why not zing you for a $500 "resale" listing fee?

I come to the conclusion that you can't save people from themselves.  You can't.   You can try to tell them, but not only will they ignore your advice, they will shout you down and then attack you even physically.   They not only don't mind being abused, they love their abusers, so you might as well say, "Well good luck with that!"

I wrote this blog to educate myself about financial issues.   Before I sat down and REALLY started thinking about where all the money went, I was not too much unlike the folks in this story, except that I had far more money to squander, and the terms I squandered it under were not quite so onerous.  But squander I did - and many middle-class people do this, claiming to be living "paycheck to paycheck" and not having any idea where the money goes, or that they could live differently.

If you get something out of this, well, then good for you - free lesson and fee tuition.   But I likely don't expect many to gain anything from this blog.   For a few, it reinforces existing beliefs - beliefs they came upon the same way I did, through hard experience and paying lots of tuition to the Buddy's of this world.  They didn't get anything from my blog, they just agree with it.

Others, who are "still in school" figuratively speaking, shout down anything that disagrees with their poor (in every sense of the word) lifestyle choices.   Frequent flyer miles high-interest credit cards are a good deal!  Just because "other people" have bad experiences doesn't mean they won't escape the trap!  They are, after all, Lucky Mouse!    And like them, I would have shouted down similar advice when I was in their shoes.   After all, I was a financial genius, having a wallet full of credit cards.

So, very sadly, I must conclude that the story in the Washington Post won't change the world much.   Folks in Alabama, near "Buddy's Lucky Furniture" aren't going to read a liberal newspaper from D.C.   And even if they did, they would assume the family in the story was just dumb and didn't play the game right, because, after all, if you pay off the loan early, you avoid all that interest, right?  Right.  Except that no one (or very few) ever pays off the loan early.  Financial institutions know this, which is why "90 days same as cash" is so lucrative for them.

Now, you might say, "Well, that's a depressing view of the world - that people are going to get ripped off and there is nothing we can do about it!"   Maybe so.  But then again, maybe not.  After all, you read this far, right?   So there are at least two people in the world who get it....