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.

Online Banks I've Been Recommended

With my tax refund on its way, I figure that I should get my savings account going again. I logged onto my online savings bank, and noticed that I was getting 1.85% APY. This is much smaller since the last time I looked. My balance of 3.47 is small as well. I thought it would be well over a million by now(that was a joke!). There was a time not long ago where online banks could have interest rates upwards of 5.00%. This is not the case nowadays. Online banks are averaging around 2.00% today. Still much better than the average savings rate of 0.42% that you can find at normal brick and mortar banks. Below is a list of three banks that I've been recommended, outside of the one I have open now.

1. Gmac Bank: APY of 2.75. Only $1.00 to open, and no minimum account balances.
2. Igobanking.com: APY of 2.00. Only $1.00 to open, and no minimums.
3. Bank of Internet USA: APY of 2.50. $100.00 to open, no minimums as well.

I have no experience with none of these banks myself. I have heard good reviews about each of them, and these 3 seem to help me out as far as minimums and start up balances. All stats were pulled from Bankrate.com. Hopefully soon the banks will be able to bounce back from this mess, and we'll all be able to benefit once again from high savings rates.

Taking a Sick Day

I was going to take a sick day from posting today. A virus that has been circling my family for a few weeks has finally hit me, and put me down for the count for the day. It got me to realize just what being broke and out of work is really like.

When sickness hits the poor and uninsured what are they to do? The best thing I think that can be done is go to the emergency room and hope for a cure while you are there, instead of the doctor seeing you and giving you a prescription that you can't afford in the first place. Doing this though, causes that medical bill to go right to your credit report, which just causes more damage in the long run. I've only spoken to one bank that does not hold medical bills against a person when applying for a line of credit.

There is no state benefits for someone perfectly able to work, only the disabled and children, which I'm not complaining about because of that fact that I am able to work and be offered insurance. So what's a person like me to do?Other than the above-mentioned E.R visit, there's only one thing to do, and that's say, "I'll be over it tomorrow... Hopefully."

Money Manager Ex and Budgeting

Money Manager Ex is a free tool that I use to set up my "spending plan." With it I assign every dollar to a different account to be deposited in from my checking account each week. This is the same as Envelope Budgeting. Money Manager Ex is a great program that reminds me a lot of a much more condensed Microsoft Money. Really worth a look if you need a program that does not cost any money and gets the job done. You can download it here.

For each of my expenses I have an account. Each week when I had a job, I would deposit 1/4th of the total monthly amount into the account(eg: 6.25 deposited four times would equal my rent payment of $25.00). When the bill comes due, I have the money to pay the bill in the account. I debit the account, and start over again the next month. In those months where there are 5 paychecks, I would withdrawl the money into a savings account.

On top all all this, I would deposit 10% of my earnings into a savings account as well. Anything left over is spending money, to buy household items and to just "blow."

Now, without employment, I am forced to throw that idea out of the window. I have to start from scratch again. Feel free to leave suggestions

My Current Financial Situation

I am going to give a break down of my current finances as of this day. Then I will be updating this as much as possible in new blog posts titled, "Today's Finances." Lets Begin.

Current Cash on Hand: $25.00
Current Checking Balance: $107.30

I have my last check coming this Friday, then that will be the last of my weekly income from a job.

Expenses:

1. Rent: $25.00 (Includes all Utilities)
2. Child Support: $190.00
3. Gasoline: approx. $80.00 Monthly

Except for Gasoline, those amounts are fixed at this moment. I have other needs as well, such as toiletries and baby items(diapers, baby wipes, etc.) that are not fixed expenses. These items may total in the area of $100.00 a month.

Where's the Food!? Thanks to the government, I do not have to pay for food at this time.

We watch movies that we borrow from people, so no cable bill. I have access to the internet through a wireless connection at the apartments that no one pays for. Although it is limited and hard to keep connected, it'll do for now. I have a fairly large(for me anyways) tax refund check around $7,300 dollars on it's way, should be getting that within two weeks. This is what is going to hold me over until I find employment. I do have to buy a vehicle and pay back a debt to my mother of $1000 out of this refund. But I should still have plenty.

Well, there's an overview of my finances. I will keep you updated as much as possible. Thank you for reading.

Welcome!

I am laid-off from my job. Can not receive unemployment benefits either. I won't be recalled.

I live in a very small town where jobs are limited. Used to not be that way, but the recession hit hard here in Kentucky. I was fortunate enough to know that I was going to be laid-off two months in advance, so I began a job search, but to no avail. I also applied for section 8 housing, which I received and got to move into a small 3 bedroom apartment last week. Because of my current employment status, my wife with no work, and 3 children, my rent including utilities is a whopping $25.00 a month. My car is also broke down, so I have been borrowing my mothers car for the last 4 months to get around.

I lived in a much larger 3 bedroom home, 15 miles away from town, 20 minutes away from my mother. Which if you can imagine, was a lot of driving when my mother had errands to complete and I was at home. Now I am located in the middle of town, so the stress has went down a little. My oldest child goes to school still in the town I did live in, so I still drive her there every other week(I have shared custody of her), since the year is almost out. Then she will be transferring to a closer school for me.

I am 25 years old. I should have had a career already. Therefore, since my rent is a lot cheaper now, me and my wife both will be going back to school. I plan to get whatever work I can find here in town, and go to school entirely online through the state school system.

In my next post I will be reviewing my financial situation for you to follow along with. Thanks for reading.