Payday Loans... Legal Loansharking?

Posts like this have been made countless times by a countless number of people. I feel the need to throw my input into the mix as well, as I have insider experience.

For two years I was a branch manager of a payday loan company. When I took over the store, I was the youngest manager within the company's 200 plus stores. The store was losing thousands each month. Within my time at the company, I brought the store up to making over 37,000 dollars each month, with virtually no defaulted loans. I was rolling in money at the place, as I received 5% of that 37,000+ as a bonus, on top of my hourly wage. My store had the highest growth rate in one year, which I recieved another bonus for, lowest defaulted loans for the year... another bonus. During the end of my time, my district manager had made me the trainer for the district, and basically give me half of her district to tend to as well. When I traveled, I did so in my own vehicle, was paid gas mileage, plus 40 dollars for food expenses. I was put up in a hotel at times to help with setups of new stores and was given even more money as a living allowance... well over what I needed to "live." If I was required to run a store for a period of time, I would get a bonus for that store, plus the bonus for my home store. The moral of this story is that there is tons of money being made through payday loans.

The interest rate on these 2 week loans were upwards of 450%. They also make money on cashing payroll checks, fax services, copying, doing taxes, money orders, etc. They prey on the poor and weak, I don't care how much the commercial say's "Please use payday lending responsibly." They are in the business of making money, and by lending it to the poor and charging outrageous interest rates, they keep making money. A person borrows $200 dollars, and two weeks later, has to bring in either the $30 dollar interest rate to "roll-over" the loan, or bring in the whole $230 dollars(Kentucky law does not allow the "roll-over" system, that's why I mentioned both). When someone pays off the loan of $230 dollars, they are now needing money again, and couldn't afford to just pay the loan off. So they borrow the same $200 again. Two weeks later, they pay basically another $30 fee, and borrow the same $200 again. This is what the lenders want. After so long, you've paid thousands in fees, yet your still borrowing the same money you borrowed in the first place. They are not like a finance company, where you pay a payment on a loan and eventually it gets paid off. The loan just keeps going and going until you pay the full amount of your loan and walk away.

People can avoid these traps by simply not falling into them to begin with. Whether you need the money now or not, just don't use them. These companies can take you to small claims court if you default, and can even garnish your wages. Lucky for people in my town, the county attorney hates payday loan companies, and therefore will not set up a small claims case for any representitive of the company.

I know I've rambled a lot, but I had a point to make. If you are already in this trap, call the office and ask for a payment plan, as you can not make the full payments any longer. They should set you up on one, and you can slowly get rid of this trap once and for all.

Finances Update

I figured that I would start off the month right by listing my finances, that way you guys can follow along. I am going to be keeping this info updated as much as possible to the right of the blog on the homepage. A nice quick glance at how I'm doing so far.

The IRS has given me a refund date of March 10th. I am ready for this to come. I need to buy a car badly. My kids need things as well. I've done spoken to the boss(my wife) about how we need to buy extras of the things we absolutely are going to need for the next few months and put back some emergency cash before she tries to go wild and spend it all(she's the spender in the family).

I received my final paycheck from my job today, all of 178 dollars. I should be getting a refund on a water deposit I made with the house we just moved from, so I'm expecting over $50.00 there.

I have no job prospects yet. So we will be stretching our refund for as long as we have to. I have been looking on the internet as well for work, something I can do from home. I've been doing a little pay-per-click sites, but at .005 per click, I can see I am getting nowhere fast. Anyone have any leads on online work that's more promising?

Credit Cards and Living Without Them

I have long since been against the use of credit cards in my life. I've never owned one, and don't plan to. What exactly is the use for them? I know some offer all kinds of rewards or cash-back, but you're still left with a bill to pay, most of the time you pay more to the credit card company than you actually paid for the item. So that brings me to say (as I have been before I have even been into personal finance as much as I am now), if you can't pay for it now, then obviously I can't afford to buy it.

This standard is exactly why I have no credit debt. Outside of a home, I believe nothing should ever be bought on credit. I do believe as well, in very certain circumstances, that a car note may be acceptable to have. Some people have no other option than to carry a note on a vehicle. Those being the ones that have decent enough credit, but no cash. They may wind up being swindled in a sense to a higher car payment, but they have what they need to get where they need to get. In a small town like mine, where there is no public transportation, a vehicle is almost a necessity.

I'm sure people believe that credit cards are necessary for emergencies, I just don't see where though. If you have your credit card, and your credit card is in your wallet, then where is your cash or bank card? What about next month, when the statement comes in, are you going to have the money to pay for your emergency? If you can pay off the balance every month, by all means, go for it and help your credit score, they are just not for me.

Now I'm not badgering the use of credit cards or the people that use them, I've just personally never seen the point in them. I've noticed a lot of people, including fellow personal finance bloggers, have accumulated tons of credit card debt. Will at mydebtcomeback has accumulated a whopping 647,000 dollars worth of debt. Tricia at bloggingawaydebt.com has shown to the public how far they've come from their 37,000 dollars worth of credit debt. While these numbers are outrageous, I envy these bloggers for paying down their debt, and trying to get rid of credit cards altogether out of their lives. These two blogs, however, aren't even a fraction of the personal finance blogs out there that speak about how the blogger themselves are in debt to credit cards. All of them are working towards a goal, and they are all using a different system for obtaining that goal. From Dave Ramsey's “Snowball” approach (more on that approach here), to an all out “throw everything towards debt” approach, they are paying it down, and each of them is going to be proud to say that they too are debt-free.

Can you live without credit-cards? Please feel free to enlighten me on the benefits of a credit card, besides helping your credit score.