In this town of 35,000 residents (Casa Grande, Arizona) I counted 17 payday loan outlets and 13 real banks. Oh the unmitigated blessings of deregulation, another right wing fave. One of these parasites actually brags on their web site, “New customers pay 50% less, only $9.31 per $100.00!” Keep in mind this is a one or two week loan. Basically this is a hideous tax on people with little education and few resources. Screwing around with Excel, I come up with an annual rate of 7,000%. Nice.
Just another abuse of the poor by unbridled deregulation.
While I’m ranting, how hard would it be to add personal finance to high school curriculum? We are schooling a generation of financial idiots, unleashing them on a world with easy credit, credit cards practically forced on them and a great new bankruptcy bill that is tantamount to debtor’s prison.
How many times have I stood behind some moron taking out $20.00 from an ATM? There’s a $2.00 fee, so you’re basically taxing yourself an additional 10% in addition to any other taxes you’ve paid. Makes me want to grab them and give them a lecture on personal finance.
Sex and personal finance are two of the few things just about every one of us will have to deal with. Why don’t we teach about them?
4 comments:
The important thing to keep in mind is that the reason loans come with interest rates is, one, the time value of money, and two, the lender needs to be compensated for the risk that is assumed by extending credit.
I agree that it's hard to watch people take out loans at such tremendous interest rates. At the same time, the reason the interest rates are so high is because these people represent tremendous risk to the lender. Without these "payday loan" lenders, many of these poor people would have no access at all to capital. Payday loan lenders are extending credit to people who would otherwise have no access to credit. Furthermore, no one would ever take out such a loan unless he valued the money now more than he valued an even greater value of money in the future (to get back to the time value of money).
Personally, I think the best way to think about the situation is to consider what things these people have done to raise their risk level to such outrageous levels. It might not be pleasant to admit, but it's not the the payday loan lender who is the party who has failed to establish a good credit history, bounced checks, not paid his bills, hold down a steady job, and so on.
With all that said, you're right about the education. It's not a difficult concept to live within your means, and it's a shame that more people don't teach their children that simple lesson.
EVERYONE read 'America: Who Really Pays The Taxes?' by Donald L. Bartlett and James B. Steele. Then go on to read 'The Great American Tax Dodge'. These investigative reporters have researched and reported on our tax system for the last 30 years. Both books reiterate the theme of 'there is one tax law for you, another for others'. These guys really opened my eyes to what's been going on, and who's doing it (the fabulously wealthy), and who's supporting it (both elephants and donkeys!). It's enough to turn your skin inside out and free market socialist all over.
Despite an income that has ranged from $300,000 to $600,000 over the years since GWB hit office, I've owed no taxes since 2000. My nephew Nat made $9 an hour teaching school and paid more in taxes than me.
Something is terribly wrong.
But, wait a minute....
What is that drip, drip, drip I feel?
Is that a trickle coming down from someone's 600 thousand yearly income that I feel? Yes, it is!!! Thank you, Jeff for affording us this blog!
Just goes to show that Reagan was right after all - make a ton of mula, don't pay taxes, be generous - work hard at giving it away, pays off for some of us bottom feeders. Only problem is it's a hugical leap of faith for the majority of middle to low earners, waiting for that trickle that may or may not settle down, and be tossed our way. The way things are right now economically isn't a country fit for old men, young men, or anyone (except the minority in six-plus figures, of course) This economic Darwinism is wearing thin... Disadvantaged people don't die off, they resort to crime and worse, grassroots activism. Beware the tide of foreclosees...coming out of their american dream induced stupor...
Hey, Ben, Who is perpetuating the myth for needing more stuff? Who really benefits? What's gotten people so eager to get more credit, go deeper in debt, to overextend, what drives folks to 'raise their risk level'? The deregulated, greed-based, corporate cultural system, maybe? Ya think?
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