LogFAQs > #914404612

Also there are a few things to keep in mind here:

First, people don't take out predatory loans because they *want* to. They generally do it because they *have* to. Nobody walks up to a store with a sign that says "FA$TCA$H" and thinks, "Yeah, I can *totally* borrow 1000 bucks for them, no sweat!" They do it because they're desperate and have nothing else to turn to.

If it's about CC debt, I think there are a lot of things at work here than people not knowing their math. You know how rich people become so used to their lifestyle that they start to talk about how they have trouble "making ends meet"? Even though the reason they have trouble "making ends meet" is because they buy $60,000 cars and send their kids to $40,000 private schools and $15,000 sleepaway camps? I mean, they'd have *so much* money left over if they just bought a Honda instead. But none of them ever does it.

I think that's what a lot of people do with debt. It's not like anybody wakes up and says, "Man, I should really use my credit card to buy something I can't afford!" It's the fact that they want that thing so badly that they're willing to overlook the long-term consequences of doing it. Their not knowing that the interest on a credit card is compounded monthly and grows exponentially isn't the problem here. The problem is that they desire *so much* to live outside of their means and credit cards offer a way for them to do so.

It's the same reasoning behind why you'll see poor people on food stamps walking around with nice sneakers and TVs that they can't afford either. Because the desire to look nice or enjoy the nicer things in life outweighs the common sense that they have. That's why most Americans lack the cash necessary to cover a small emergency:

https://www.nbcnews.com/better/money/most-americans-lack-reserve-cash-cover-500-emergency-survey-n493096
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