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15.1.09

Payday Loans...

It was pretty ironic that on Good Morning America today their joking financial tip of the day was to take out a payday loan. At only 400% interest, its a bargain! And then again on my way to work, they were talking about payday loans and the nightmare it is to get into them.

So I figured I'd address this issue, maybe even declare January 15th as the unofficial Anti-Payday Loan Day! I'll have balloons up later. :)

Payday Loans/Payday Advance/Payday Loan Sharks--minus the knee breaking-- are all names for establishments that can provide cash on the spot to anyone that walks in with a steady job (usually 3+ months), active bank account (usually 3+ months) and the ability to repay. And now that its the start of the tax season, many of these establishments want your business bad. Why? Because you need the money now, before your taxes go through, and they can give it to you... with interest!

They are always quick to remind you why you should take out a payday loan:
-- An emergency car repair
-- Unexpected dental appointment
-- A check that is going to bounce
-- Bail money
-- Medical expenses

But searching on line, produces some other ways they try to get your business. Money for tuition, vacation, weddings... Its very personal and very wrong. Tuition, Vacation, Weddings, Medical expenses are all very costly investments that if you have to take out a drop of the hat payday loan to get, you shouldn't be making the decision immediately. You need to take a step back and plan more. Give yourself more time. In terms of Medical expenses, that can be pretty rough. You or a loved one is sick and needs help now, payday loans happen immediately, but its not worth the headache or the heartache because you're investing so much of yourself into a company that wants to drain you for every dollar you have.

The best place to take your concerns is to your bank or credit union. They can help you plan, budget and answer any questions you may have to get you going in the right direction. And your bank may be able to help you. Good advice on the radio today was "Never borrow money from anyone... but a bank." You know what you're getting yourself into and you have ample opportunity to payback usually with a low fixed interest rate. Banks don't target the poor or working class and they truly are there to help, unlike payday loan companies.

If you find yourself at the entrance to a payday loan business, do your research! Know more information about the business before you give them your business. There are Alternate Payday loans, the interest is still extreme (252%!), but if you absolutely have to go that route, better to be extreme than 400%+!

Here is an article the New York Times did about Non-Profit Payday Loans/Alternate Pay Day Loans

Make sure you have all your information straight:
-- Get a loan with all the realistic numbers in your head
-- Give a margin for two rollovers just in case
-- Admit you'll have to live on less until the loan is paid
-- Have plan A and B ready if an emergency crops up
-- Give up some luxuries and stick to a Spartan budget


And not to toot their horn any more, but GoodWill teamed up with Prospera Credit Union and founded the GoodMoney Program. If you are swimming in PayDay Loan debt, they can possibly help you.
Visit them here

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