In many cases the added on part is larger than the original debt.
Then there's buying quality products that last longer by the wealthy and crappy products that need to be replaced (far) more frequently by the poor and many more examples like these.
Yep, to be capital efficient you need capital, and it's one reason having X amount of money today is worth more than having X tomorrow. Unfortunately it's such a fundamental problem that it will exist as long as there are scarce resources.
I remember when I first moved into my poor/gentrifying neighborhood of Manhattan, I went to buy light bulbs at the local pharmacy. I picked out all LEDs, and when I got to the check-out counter the lady working there stopped in disbelief. "Sir, you know these are ten dollars each?" I'm like duh, they have a fifth the electricity cost and last 30 times longer, but looking back I can see how this would seem so bizarre to her.
The major point that you're failing to argue against is this: poor people often must use loans to live their day-to-day lives.
It doesn't matter what proportion of bad debt is the result of poor people and what proportion is due to financial ignorance. The point is that poor people suffer by requiring loans.
Do some research on payday loans and car-title loans. These are some extremely exploitative lenders taking advantage of people who aren't able to make ends meet.
They were not irresponsible people: they had smart phones but no landline: Smartphone for $60/month versus landline for $70/month, they were making some smart decisions about where to spend their money.
The issues they did have were not being in contrl of their budgets. For the majority of these families, just learning about the envelope budget system helped them regain control. Also learning how to shop around more carefully and pay attention to whh coupons were useful and which were merely advertising helped.
The catch for low incme families can simply be not knowing how to be ruthlessly disciplined with their budget.
There is a vast gulf between, "being irresponsible," and "not knowing better ways to manage their money."
Poor people are often poor because they do not have access to the same opportunities as you: inadequate education, poor training, naiveté about wealth-building habits, and so on.
You can help make the world a better place by not perpetuating the myth that poor people are popr because they are undisciplined, lazy, stupid, or irresponsible.
Even better, find a local support group for low income families and see how you can provide assistance.
If I was so poor as to barely afford food I would be living either without a phone or with a $20 shit-phone on a bare bones prepaid plan. Costs hundreds less and gets the same shit done (person-to-person communication)
The $60/m plan with meh smartphone is much cheaper than landline + computer + Internet.
Furthermore, I often see the homeless guys in NYC with cheap Dell laptops and Thinkpads using public Wifi to Skype their buddies. So there's that.
Whether or not you're right about how you'd actually behave, it's irrelevant. We can see how poor people actually do behave, and we can look to solutions that work empirically rather than philosophically.
If you were poor and unemployed, would you go without a phone, and access to email, LinkedIn and other services while you were looking for work? How do you edit those Word documents or read PDFs?
A smartphone is cheaper than a landline and desktop computer of any variety.
If you really believe that a person can look for work with just a $20 feature-phone, go try it yourself for a month as an actual experience and not a thought experiment!