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Comment by pavel_lishin | Hacker News Reader

Because you don't need to save up as much to make payments on a lease. Those are, let's say $50 a month. As soon as you get your paycheck, you send that $50 to the rent-to-own agency, and that money is gone - they're "saving" it for you.

Whereas if you keep putting that $25-per-paycheck into a savings account (or a shoebox, or a hollowed-out book or whatever), there will probably come a time when being able to fix your car's transmission, or buying food to make sure your kids aren't starving, or having just one dinner at a place with cloth napkins, is going to seem more important than whatever you're saving for.

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Yes, exactly right. All the more reason not to hobble yourself with crippling financial obligations just to get a new sofa. They're essentially locking themselves into a financial decision that cannot be undone, and therefore when, later on down the road, more important financial decision points present themselves, they're unable to cope.

But this ties into the poverty trap where you simply stop thinking about the future because you're out of hope.

Which is really a sign that y'know, you can't afford what you were saving up for since you don't have enough saved for anything going wrong...

But that just means that you couldn't afford the lease to begin with. All you're doing is spending your transmission-fixing money and ending up with no asset to show for it. You can't sell that couch to pay for your transmission - it's money down a hole.

Yes, you can afford a payment today, but you can't afford the couch, if you can't otherwise save to buy it outright.

See, my first thought about this was that it was an impulse control thing- people fail at saving money because somehow it always gets spent, and this solves that problem.

Except, you're exactly right- the stuff that the money gets spent on will frequently be wildly more important than the sofa. It should be saved, and then it should be spent on the more important stuff. And then you never get a sofa, but at least your transmission works and your kids aren't eating ramen six days a week.

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