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Comment by damiankennedy | Hacker News Reader

I'm not so sure, living paycheck to paycheck doesn't mean you have no discretionary spending at all. Maybe you have $500 a month for one off expenses and you already used up this months on a laptop for you kid at school or something.

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One off expenses don't happen 12 times a year. If you haven't been able to save $100 a month for five months, you just won't be able to save five times as much, let's be realistic.

Poor people find that one off expenses happen surprisingly often. Between car breakdowns (far more likely for those who can only afford a clunker), sudden health crises, domestic maintenance, wear and tear on clothes, unexpected inflationary price rises on essentials like energy and food, and a host of other issues, the poor have no slack at all in their budgets.

Of course the real problem is many jobs don't pay enough.

In fact not getting paid enough - and therefore being unable to budget - is considered evidence of poor character, while not paying enough is considered evidence of enlightened and mature rationality.

It's quite a strange view of the world.

How one-off are they really, at that point? Either way, the other guy's point -- that paying it off is not all that likely -- still stands.

>One off expenses don't happen 12 times a year.

so you'd be in favor of payday loans if they were limited to n times per year?

>If you haven't been able to save $100 a month for five months, you just won't be able to save five times as much, let's be realistic.

what about people who have the free cash flow, but can't save for various reasons? eg. friends/family asking for money, poor self control, etc.?

For example, in Italy there's a special kind of payday loan that is limited by law to 1/5th of the net paycheck. It is taken off the paycheck by agreement between your bank and the lender's. The combination of these two rules makes them more likely to be paid successfully, and gives them a better APR than e.g. credit cards despite being essentially used for the same purpose as subprime payday loans in America. There's also a maximum legal APR of ~18% for these loans (it varies every quarter), which is better than e.g. the ~24% maximum legal APR of credit cards

Unbounded APR and "letting the market figure it out" is not the solution.

Isn't Italy topping the charts of countries in financial ruin? If it weren't for Greece being worse Italy would be in the headlines. If America is to change laws, it'd help to use a successful nation as an example

Interesting spin on the ad hominem, but I just mentioned what I know about since I live here. Anyway, we're talking about private debt; and while Italy has a huge public debt, its private debt is quite low.

BTW, right now US treasury bonds have a higher 10y yield than Italy.

and next month, another emergency. The root cause is low income, because with a higher income, such things won't be an emergency.

If you have $500 per month for one off expenses, you should have been able to build some sort of emergency fund.

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