I suppose the folks at the Pentagon are just a bunch of sniveling whiners.
"The study co-authored by Christopher L. Peterson, an associate professor at UF’s Levin College of Law, and Steven M. Graves, an assistant professor of geography at California State University, surveyed more than 13,000 zip codes and found that payday loan companies clustered in areas near military bases.
The findings were cited in a report by the Pentagon, and last month Peterson testified before the Senate Banking, Housing and Urban Affairs Committee, during which Sen. Elizabeth Dole of North Carolina referred numerous times to the research done by Peterson and Graves. On Sept. 29, just 15 days after Peterson’s testimony, Congress agreed to legislation prohibiting lenders from imposing an interest rate of more than 36 percent on loans to members of the armed forces or their dependants."
Haggling (or bartering) was common in the country that I grew up in - I'm always surprised how willing Americans are to pay full price for stuff. I feel like a lot of Americans are afraid of appearing like they don't have enough money, which not the issue.
Businesses won't go out of business by giving you a discount on something - if your offer is going to break the bank, they won't sell it to you -s o don't be shy and ignore the idiots on here that seem to think that bartering means that you are ripping a paycheck out of the hands of a starving farmer. One important thing, though, is to repay the businesses who give you a good deal. They're doing so in hopes that you will become a repeat customer - if you get a good deal, go back to them and shop again. Tell your friends about how much you like doing business there.
Congrats, Jamie. You've really come up with a fantastic product. It's interesting that you can't fathom that the writer didn't have savings for a medical bill, and yet you claim to be a part of the industry who bilks people who don't have savings.
Oh, wait, did I say "interesting"? I meant "painfully stupid".
as to where you got the 96% satisfied customer rate.... I'll never forget the people that stood in line with me waiting to get their cash loans. The majority of them didn't know the first thing about other financial options they may have had. Being ignorant of their other choices doesn't mean they are satisfied.
And just in case you didn't know, the APR (or Annual Percentage Rate) was NOT listed on my contract. The loan rate for two weeks was. I doubt that anyone who had the APR of 390% presented to them wouldn't do a double-take at least.
While I appreciate hearing everyone's perspective (even the payday lender, as you have so clearly defined yourself), this precedure, in my opinion, of lending is no better the subprime mortgage lending . And we know where that got our economy.
I'm sure that's why many more states are declaring the practice as "sharking", and several other states are slated to declare the practice illegal. I'm just glad that I had the opportunity to let others know that while it may be legal, it is not financially bright.
I take full responsibility for my actions... that's why I wrote the article. My mistakes can be a learning opportunity for everyone.
(P.S.) In regards to your nasty comments about my bonus: Our company suffered a buyout, and all company bonuses were put back into the company to avoid having to cut back on jobs. I earned my bonus fair and square. Sometimes you just don't get paid what you are owed.
The point of this article, as I read it, was to warn people of the predatory lending patterns and dangers of payday loans. Nowhere in this article did the confessor actually blame the payday loan establishment and it seemed that the writer took full responsibility for poor financial management and poor decision making skills.
According to the writer, however, she was shown an interest rate chart that confirmed [her] calculations that [she] was paying a 15% interest rate. I seriously doubt the clerk actually went over the different between a flat interest rate (with no relation to time) and an annualized interest rate (the APR we're all so familiar with).
If you feel the need to try and justify the existence of payday loans you'll probably not find a very receptive audience on this site. I doubt many readers feel that a 200%-1200% APR is acceptable.
She fell short on cash as many people do and weighed her options. The penalties the electric company impose were expensive as was the credit card. She decided that a payday advance would work for her. "I didn't figure into the equation that it was a 2 weeks loan"?? How long did you think a 'payday loan' would be for? At the end of the mysterious 2 week period, you find yourself in a situation where you don't have the money and you weigh the other options of overdraft fees and bounced check charges that would have cost you $78. Again, the payday advance cost you $30 and no harm to your credit. Paycheck time, you got "stiffed" on your bonus? Really? Your employer just didn't pay you want you earned OR did you not meet the goals set for you to earn the bonus? Seems highly unlikely. You quote "It wasn’t until I did the math on all my loans and calculated that each loan had an annual percentage rate of 390%...". What math did you have to do? The APR was right on the loan ageement you signed. I love how the fact that you didn't have any savings to pay the medical bill in the first place, or that your didn't get a bonus, or that you were to embarrassed to ask for help, or that you abused the product by taking multiple loans, that you didn't read before signing, etc, becomes the fault of the payday lender. At what point do you, the consumer, take responsibility for your actions? What about the 96% of payday advance users that like our product? Should their choice be limited because you didn't use the product for it's intended purpose?
I received a letter from an attorney on an old debt. They said that I had agreed to send them the full amount of this debt almost $3000. By Sept. 28, and that it was considered late. They said that I entered into a voluntary agreement to installment payments. I have not talked to or sent any written agreement agreeing to any payments at all because the Statute of Limitations is up. Also this goes off of my credit report next year. Is this against the Fair debt collection practices act. As attorneys wouldn't they know better than to lie about this? What can I do about this false information? If I answer this will this start the Statute of Limitations all over again? I never agreed on any payment.
A local fast-food place closed a few years back, leaving a vacant storefront right across from my apartment complex. I kept wishing someone would open some sort of business there. I figured anything would be a plus to the neighborhood--an additional shopping choice for me, jobs for whoever worked there, extra bustle for the neighborhood benefiting all the other businesses with a little extra traffic.
So, what moved in there? A payday lender. I can't think of a more pernicious presence in our neighborhood--I'm not sure I wouldn't just as soon have a whorehouse or an opium den.
I've been meaning to stop in and find out what the terms would be on a small loan so I could write a piece myself. Guess I don't need to do that now--it's 15% every two weeks. Roll that loan over for a year and (according to my financial calculator) you'd owe $7571. Yikes!
They are everywhere in every small town! I remember when the first few opened up in my hometown - they were hailed as a great way for migrant workers to cash checks and "bank" without having to open a bank account. I'm assuming most of the migrant workers figured out the scam pretty quickly, but I know lots of people who never did.
Great suggestion on Quicken! I've never really used those programs so can't speak to them specifically, but I know many people who successfully organize and manage their finances that way.
As long as your receipts are filed in an organized manner (not imperative, but let me tell you it's way easier if you need to reference them again - read: audit)!
Everywhere I look, there is another payday loan lender setting up shop here in NE.. it amazes me that we don't allow so many things (casino gambling being one), but they are almost encouraged here.
Loved hearing your story, esp. about the interest rate quote that was so misleading. My state (North Carolina), like many others, have shut down payday lenders through the efforts of the attorney general (See "Payday lending on the way out in NC" - PDF) --though the process took many years.
You do need to have some idea what you're doing when you set out to distill your own booze. I grew up in an American community in Saudi Arabia, where alcohol was strictly verboten. A Kentucky moonshiner happened to work in the machine shop... :-) He built three stills, which, under cover of night, were traded around among the families in camp.
My father processed must from orange juice or raisins, which he put in large glass bottles that must have held 15 or 20 gallons. He got his hands on a wooden crate that had been used to ship an upright piano: perfect to put in the backyard as a "tool shed." With it padlocked shut, the Arabs were none the wiser. One day the fermentation got a bit out of hand and it exploded one of those glass jugs...and what a mess! Not something you'd want in the house.
More serious, one of the stills plugged up while it was simmering away on a homeowner's stove. The wife was standing in the kitchen when the still exploded. She was seriously burned and lucky not to have been killed.
Soooo.... If you're gunna do this, learn how to do it safely. Up front, not after the fact.
This is an excellent warning to people who are thinking of taking out payday loans. A friend of mine fell into this same trap when he took out a payday loan. In the end he had to borrow money from relatives to pay it off because of the very same reason listed in the article: his paycheck wasn't what he was 'expecting.'
Payday loans are absolutely terrible and they only prey on the poor and ignorant. I'm glad you shared this warning.
I have been a fan of Bach's writings for a few years now and have recommended them to many people. I also like his clean writing style and humor ~ I've read The Automatic Millionaire twice. He offers sound advice without speaking over your head. Most people I know fear the subject of personal finance because of feeling under-educated on the subject. I feel Bach takes away that fear factor and shows that these financial goals are easily attainable without having to be a CPA!
One Minute Dear, It is Okay that you find it diffcult or say you are not satisfied and just talking about its negative aspects, but just go through its advantages, Like you say how easily you got the loan, Lesser rate of interest. Even now there are companies which can help you on net as well.
Quicken works well for me. It has the advantage of being able to instantly see how you are doing for the last month, quarter, year, or whatever. I manually enter each transaction, but it is possible to set things up so your credit card transactions automatically download from your bank's web site. Quickbooks might be fancier, but Quicken is all I need for my little business. The Windows version is better than the Mac version.
There are online web apps that offer the same functions as Quicken. They might be convenient, but I don't trust those companies to stay in business and keep my data for the rest of my life. Quicken lets me back up unto a disk and keep a spare at my mom's house.
I suspect hotel rate structures vary from hotel to hotel and chain to chain. The hotel I worked at was a high-end metroplolitan hotel. The cheapest rate available to the public was the "walk-in" rate. It was roughly half the "rack" rate -- which was the highest. We also had various other rates somewhere in between.
Also, the break-even point on a standard room was $48.00. The front desk staff was instructed to rent rooms for as little as $50.00 if a) it was getting late, and b) occupancy was low. Since the "rack" rate on a standard room was $219.00 (and the "walk-in" rate was still $129.00), that's a substantial savings.
But we wouldn't offer the $50.00 rate. A customer would have to haggle for it. $50.00 is how low we would go to keep a customer from walking away.
You make an excellent point Penny Nickel. There are many factors in deciding whether it's time to buy (also discussed by Philip in "Renting is Cheaper", Jessica Harp in Are You Ready for Homeownership? and their commenters) including market conditions in your market and rental prices in your market.
But even though most loans are structured (reasonably so) so that you pay more interest at the beginning as the principal is higher, I think it's useful to consider that there could be a different way to structure a loan as Andrea wondered - that's how new products are invented. For example, if a builder developed a community and then did the financing, the builder could offer a loan that allowed the principal to be reduced early on (similar to how car manufacturers may offer 0% financing b/c they are making money from the sale of products and not just the interest), or as Nora suggested having a portable loan.
We have a rebate card too. It's 5 percent back on gas, utilities, biz / office supplies, etc. and 1 percent on everything else. Of course, with any of these programs, the discipline needs to come first. But if you have that and can pay them off every month, the savings can be huge. You also get to hang on to your money in an interest bearing account every month until you pay the statement. That system isn't for everyone, but we make it work for us and carve out a minimum of an extra 50 bucks a month this way. Not the largest amount, but better than a kick in the butt.
And I love your suggestion of an Amazon co-op. I can already see those cases of dried berries coming in handy for holiday sweetbread baking. We love to drop them off for hostess gifts when we visit.
I've just been sitting here over coffee feeling like I needed to go the extra mile with the information for taxes this year. We've taken on some new projects and some new investments with retirement and I've been feeling like it's just enough to tip the scales into driving me bonkers. I think your ideas might be that added little "streamline option" I needed. Thanks.
It's obvious that Derren Brown is an exceptional individual with finely developed skills. But, the more I'm exposed to his work, the more I wonder - exactly what skills are those? I once read an interview with DB conducted by a stage magic periodical in which the interviewer asked him to explain how telling the audience that he's doing something using NLP or "Photoreading" was any more ethical than telling them it was done using genuine psychic powers. The implication was that DB uses NLP, Photoreading, body language, and other "pop psychologies" as a form of conceptual misdirection. Once the audience has accepted the explanation, they stop looking for the real technique. In other words, he's using the same stage magic techniques of old, but has repackaged them in a more modern presentation. Those of you familiar with DB probably know that he's a strong advocate of critical thinking, which is why the interviewer was asking him to address the hypocrisy of criticizing other people for claiming psychic powers when he's similarly feeding the audience a different load of BS.
Makes you consider how the average person these days is probably much more willing to swallow an explanation couched in technical jargon borrowed from the field of psychology than an explanation based on the paranormal. Science is the new religion, etc. Anyways, sorry I can't find the link to that interview, but there's discussion of a similar nature out there on the web.
I suppose the folks at the Pentagon are just a bunch of sniveling whiners.
"The study co-authored by Christopher L. Peterson, an associate professor at UF’s Levin College of Law, and Steven M. Graves, an assistant professor of geography at California State University, surveyed more than 13,000 zip codes and found that payday loan companies clustered in areas near military bases.
The findings were cited in a report by the Pentagon, and last month Peterson testified before the Senate Banking, Housing and Urban Affairs Committee, during which Sen. Elizabeth Dole of North Carolina referred numerous times to the research done by Peterson and Graves. On Sept. 29, just 15 days after Peterson’s testimony, Congress agreed to legislation prohibiting lenders from imposing an interest rate of more than 36 percent on loans to members of the armed forces or their dependants."
http://www.law.ufl.edu/news/releases/061030.shtml
Will
Haggling (or bartering) was common in the country that I grew up in - I'm always surprised how willing Americans are to pay full price for stuff. I feel like a lot of Americans are afraid of appearing like they don't have enough money, which not the issue.
Businesses won't go out of business by giving you a discount on something - if your offer is going to break the bank, they won't sell it to you -s o don't be shy and ignore the idiots on here that seem to think that bartering means that you are ripping a paycheck out of the hands of a starving farmer. One important thing, though, is to repay the businesses who give you a good deal. They're doing so in hopes that you will become a repeat customer - if you get a good deal, go back to them and shop again. Tell your friends about how much you like doing business there.
Congrats, Jamie. You've really come up with a fantastic product. It's interesting that you can't fathom that the writer didn't have savings for a medical bill, and yet you claim to be a part of the industry who bilks people who don't have savings.
Oh, wait, did I say "interesting"? I meant "painfully stupid".
as to where you got the 96% satisfied customer rate.... I'll never forget the people that stood in line with me waiting to get their cash loans. The majority of them didn't know the first thing about other financial options they may have had. Being ignorant of their other choices doesn't mean they are satisfied.
And just in case you didn't know, the APR (or Annual Percentage Rate) was NOT listed on my contract. The loan rate for two weeks was. I doubt that anyone who had the APR of 390% presented to them wouldn't do a double-take at least.
While I appreciate hearing everyone's perspective (even the payday lender, as you have so clearly defined yourself), this precedure, in my opinion, of lending is no better the subprime mortgage lending . And we know where that got our economy.
I'm sure that's why many more states are declaring the practice as "sharking", and several other states are slated to declare the practice illegal. I'm just glad that I had the opportunity to let others know that while it may be legal, it is not financially bright.
I take full responsibility for my actions... that's why I wrote the article. My mistakes can be a learning opportunity for everyone.
(P.S.) In regards to your nasty comments about my bonus: Our company suffered a buyout, and all company bonuses were put back into the company to avoid having to cut back on jobs. I earned my bonus fair and square. Sometimes you just don't get paid what you are owed.
The point of this article, as I read it, was to warn people of the predatory lending patterns and dangers of payday loans. Nowhere in this article did the confessor actually blame the payday loan establishment and it seemed that the writer took full responsibility for poor financial management and poor decision making skills.
According to the writer, however, she was shown an interest rate chart that confirmed [her] calculations that [she] was paying a 15% interest rate. I seriously doubt the clerk actually went over the different between a flat interest rate (with no relation to time) and an annualized interest rate (the APR we're all so familiar with).
If you feel the need to try and justify the existence of payday loans you'll probably not find a very receptive audience on this site. I doubt many readers feel that a 200%-1200% APR is acceptable.
She fell short on cash as many people do and weighed her options. The penalties the electric company impose were expensive as was the credit card. She decided that a payday advance would work for her. "I didn't figure into the equation that it was a 2 weeks loan"?? How long did you think a 'payday loan' would be for? At the end of the mysterious 2 week period, you find yourself in a situation where you don't have the money and you weigh the other options of overdraft fees and bounced check charges that would have cost you $78. Again, the payday advance cost you $30 and no harm to your credit. Paycheck time, you got "stiffed" on your bonus? Really? Your employer just didn't pay you want you earned OR did you not meet the goals set for you to earn the bonus? Seems highly unlikely. You quote "It wasn’t until I did the math on all my loans and calculated that each loan had an annual percentage rate of 390%...". What math did you have to do? The APR was right on the loan ageement you signed. I love how the fact that you didn't have any savings to pay the medical bill in the first place, or that your didn't get a bonus, or that you were to embarrassed to ask for help, or that you abused the product by taking multiple loans, that you didn't read before signing, etc, becomes the fault of the payday lender. At what point do you, the consumer, take responsibility for your actions? What about the 96% of payday advance users that like our product? Should their choice be limited because you didn't use the product for it's intended purpose?
Also I forgot to say that I live in Florida. Reference #17
I received a letter from an attorney on an old debt. They said that I had agreed to send them the full amount of this debt almost $3000. By Sept. 28, and that it was considered late. They said that I entered into a voluntary agreement to installment payments. I have not talked to or sent any written agreement agreeing to any payments at all because the Statute of Limitations is up. Also this goes off of my credit report next year. Is this against the Fair debt collection practices act. As attorneys wouldn't they know better than to lie about this? What can I do about this false information? If I answer this will this start the Statute of Limitations all over again? I never agreed on any payment.
A local fast-food place closed a few years back, leaving a vacant storefront right across from my apartment complex. I kept wishing someone would open some sort of business there. I figured anything would be a plus to the neighborhood--an additional shopping choice for me, jobs for whoever worked there, extra bustle for the neighborhood benefiting all the other businesses with a little extra traffic.
So, what moved in there? A payday lender. I can't think of a more pernicious presence in our neighborhood--I'm not sure I wouldn't just as soon have a whorehouse or an opium den.
I've been meaning to stop in and find out what the terms would be on a small loan so I could write a piece myself. Guess I don't need to do that now--it's 15% every two weeks. Roll that loan over for a year and (according to my financial calculator) you'd owe $7571. Yikes!
They are everywhere in every small town! I remember when the first few opened up in my hometown - they were hailed as a great way for migrant workers to cash checks and "bank" without having to open a bank account. I'm assuming most of the migrant workers figured out the scam pretty quickly, but I know lots of people who never did.
It's so, so wrong. The entire industry.
Great suggestion on Quicken! I've never really used those programs so can't speak to them specifically, but I know many people who successfully organize and manage their finances that way.
As long as your receipts are filed in an organized manner (not imperative, but let me tell you it's way easier if you need to reference them again - read: audit)!
Everywhere I look, there is another payday loan lender setting up shop here in NE.. it amazes me that we don't allow so many things (casino gambling being one), but they are almost encouraged here.
Loved hearing your story, esp. about the interest rate quote that was so misleading. My state (North Carolina), like many others, have shut down payday lenders through the efforts of the attorney general (See "Payday lending on the way out in NC" - PDF) --though the process took many years.
You do need to have some idea what you're doing when you set out to distill your own booze. I grew up in an American community in Saudi Arabia, where alcohol was strictly verboten. A Kentucky moonshiner happened to work in the machine shop... :-) He built three stills, which, under cover of night, were traded around among the families in camp.
My father processed must from orange juice or raisins, which he put in large glass bottles that must have held 15 or 20 gallons. He got his hands on a wooden crate that had been used to ship an upright piano: perfect to put in the backyard as a "tool shed." With it padlocked shut, the Arabs were none the wiser. One day the fermentation got a bit out of hand and it exploded one of those glass jugs...and what a mess! Not something you'd want in the house.
More serious, one of the stills plugged up while it was simmering away on a homeowner's stove. The wife was standing in the kitchen when the still exploded. She was seriously burned and lucky not to have been killed.
Soooo.... If you're gunna do this, learn how to do it safely. Up front, not after the fact.
This is an excellent warning to people who are thinking of taking out payday loans. A friend of mine fell into this same trap when he took out a payday loan. In the end he had to borrow money from relatives to pay it off because of the very same reason listed in the article: his paycheck wasn't what he was 'expecting.'
Payday loans are absolutely terrible and they only prey on the poor and ignorant. I'm glad you shared this warning.
I have been a fan of Bach's writings for a few years now and have recommended them to many people. I also like his clean writing style and humor ~ I've read The Automatic Millionaire twice. He offers sound advice without speaking over your head. Most people I know fear the subject of personal finance because of feeling under-educated on the subject. I feel Bach takes away that fear factor and shows that these financial goals are easily attainable without having to be a CPA!
One Minute Dear, It is Okay that you find it diffcult or say you are not satisfied and just talking about its negative aspects, but just go through its advantages, Like you say how easily you got the loan, Lesser rate of interest. Even now there are companies which can help you on net as well.
Quicken works well for me. It has the advantage of being able to instantly see how you are doing for the last month, quarter, year, or whatever. I manually enter each transaction, but it is possible to set things up so your credit card transactions automatically download from your bank's web site. Quickbooks might be fancier, but Quicken is all I need for my little business. The Windows version is better than the Mac version.
There are online web apps that offer the same functions as Quicken. They might be convenient, but I don't trust those companies to stay in business and keep my data for the rest of my life. Quicken lets me back up unto a disk and keep a spare at my mom's house.
I suspect hotel rate structures vary from hotel to hotel and chain to chain. The hotel I worked at was a high-end metroplolitan hotel. The cheapest rate available to the public was the "walk-in" rate. It was roughly half the "rack" rate -- which was the highest. We also had various other rates somewhere in between.
Also, the break-even point on a standard room was $48.00. The front desk staff was instructed to rent rooms for as little as $50.00 if a) it was getting late, and b) occupancy was low. Since the "rack" rate on a standard room was $219.00 (and the "walk-in" rate was still $129.00), that's a substantial savings.
But we wouldn't offer the $50.00 rate. A customer would have to haggle for it. $50.00 is how low we would go to keep a customer from walking away.
You make an excellent point Penny Nickel. There are many factors in deciding whether it's time to buy (also discussed by Philip in "Renting is Cheaper", Jessica Harp in Are You Ready for Homeownership? and their commenters) including market conditions in your market and rental prices in your market.
But even though most loans are structured (reasonably so) so that you pay more interest at the beginning as the principal is higher, I think it's useful to consider that there could be a different way to structure a loan as Andrea wondered - that's how new products are invented. For example, if a builder developed a community and then did the financing, the builder could offer a loan that allowed the principal to be reduced early on (similar to how car manufacturers may offer 0% financing b/c they are making money from the sale of products and not just the interest), or as Nora suggested having a portable loan.
How about the slamming deals on the decorating sprinkles for baked goods? Holy cow!
We have a rebate card too. It's 5 percent back on gas, utilities, biz / office supplies, etc. and 1 percent on everything else. Of course, with any of these programs, the discipline needs to come first. But if you have that and can pay them off every month, the savings can be huge. You also get to hang on to your money in an interest bearing account every month until you pay the statement. That system isn't for everyone, but we make it work for us and carve out a minimum of an extra 50 bucks a month this way. Not the largest amount, but better than a kick in the butt.
And I love your suggestion of an Amazon co-op. I can already see those cases of dried berries coming in handy for holiday sweetbread baking. We love to drop them off for hostess gifts when we visit.
I've just been sitting here over coffee feeling like I needed to go the extra mile with the information for taxes this year. We've taken on some new projects and some new investments with retirement and I've been feeling like it's just enough to tip the scales into driving me bonkers. I think your ideas might be that added little "streamline option" I needed. Thanks.
It's obvious that Derren Brown is an exceptional individual with finely developed skills. But, the more I'm exposed to his work, the more I wonder - exactly what skills are those? I once read an interview with DB conducted by a stage magic periodical in which the interviewer asked him to explain how telling the audience that he's doing something using NLP or "Photoreading" was any more ethical than telling them it was done using genuine psychic powers. The implication was that DB uses NLP, Photoreading, body language, and other "pop psychologies" as a form of conceptual misdirection. Once the audience has accepted the explanation, they stop looking for the real technique. In other words, he's using the same stage magic techniques of old, but has repackaged them in a more modern presentation. Those of you familiar with DB probably know that he's a strong advocate of critical thinking, which is why the interviewer was asking him to address the hypocrisy of criticizing other people for claiming psychic powers when he's similarly feeding the audience a different load of BS.
Makes you consider how the average person these days is probably much more willing to swallow an explanation couched in technical jargon borrowed from the field of psychology than an explanation based on the paranormal. Science is the new religion, etc. Anyways, sorry I can't find the link to that interview, but there's discussion of a similar nature out there on the web.
Do you understand the concept of market? The small farmers don't _need_ to sell anything to you if they find your offer too low.