My Payday Hub

Timely Personal Finances

About the importance of managing your finances in time, especially in good times, is the center of a column on GoUpstate.

Losing job is one of the common financial difficulties of our days and recession circumstances. Although many were caught unprepared by the financial crisis, for most, such an unfortunate experience helped by making them more aware about planning for the financial future, changing economic behavior and actually being free of debt.

The problem with many people is that instead of acting in time, we react just when the emergency is already taking place, when is late and the efforts needed for resolutions are much bigger.

Research for the first quarter of this year shows that financial help calls are:

• 44% debt related (38% in Q1 of 2008)
• 15% bankruptcy and foreclosure (5% in Q1 of 2008)
• 6% for retirement planning (14% in Q1 of 2008)

Instead of long-standing financial planning, we concentrate on daily finances.

The trend for people is to spend and not to save.

Responsible for the crisis are both the financial institutions and the consumers habits.

In order to stay out of debt, credit has to be used only for most important acquisitions and not for everyday expenses.

It is essential to develop basic financial planning education programs for high school student.

Research also shows that women compared with men are less familiar with the personal finances and planning. That is also because in the family men take responsibility of main financial possessions, while women take care of everyday expenses. However, it is important to make mutual decisions.

You can use loans such as payday loans for short-term economic troubles or other credit possibilities for different needs, nevertheless best is to plan carefully and timely for your financial immediate and long term future.

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Personal Finances and Solving Debt

How to get out of debt and manage personal finances in present economy is the focus of an article in Longview News-Journal.

About 80%, out of about 37 million consumers in debt collection mode, do not reply or make contact with the collectors.

Three typical kinds of debt:

• Unexpected debt due to unforeseen circumstances
• Predictable debt due to regularly spending more than the income
• Shock debt due to changes in the interest rate of a long-term loan

Resolving debt is a case-by-case solution. Here are some possible methods to get out of secured debt:

• Verify and validate your debt with the debt collection agencies
• For a secured debt, you can request for forbearance
• Arrange a repayment plan with the lender: modifying interest rates, monthly payment or type of loan
• Obtain a deed in lieu of foreclosure
• The alternative of selling short, where the bank accepts for the house a reduced amount of the initial price

In the case of unsecured debt:

• If possible, pay the debt in full
• Debt management, debt consolidation for 3 to 5 years
• Debt settlement only with legitimate businesses
• File for Chapter 7 or Chapter 13 bankruptcy, which is not good for the credit record

Some ways to deal with the debt collection agencies:

• Stop phone collection calls by sending a written letter
• Dispute the debt through a written letter
• Communicate and reciprocate with dignity and respect

All of the above represent possibilities of solving debt situations in the case of long-term credits such as mortgages and credit cards, not circumstances involving short-term loans such as payday loans.

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Payday Loan Arguments

Debatable arguments about payday loans

Critical aspects of the payday loan industry

• Report by the Center for Responsible Lending (CRL) claims that demand for payday loans is exaggerated.
  • Repeat borrowers equal more than 80% of the total volume of loans.
  • Fees related with the recurring loans total 3.5 billion per year.
• Borrowers who are taking out a payday loan to pay back a payday loan.
• Targets small income borrowers.
• Mires borrowers in cycles of debt.
• Digs you into thicker debt.
• The industry generates demand by trapping borrowers in insurmountable debt.
• Families using payday loans are likely to have less income, lower wealth, fewer assets and more debt.
• Tendency to be employed by minorities, single women, young and less educated people, and non-homeowners.
• High APR (Annual Percentage Rate) interest.

‘Positive’ characteristics about the payday advances

• Strong option to the other services.
• Key to short-term financial troubles.
• Bridge to get a borrower over an economic crisis.
• Reaches people systemically disregarded by the banking segment.
• Discharge the rising need for instant loans in low-income communities.
• Handy, lower-cost substitute to bouncing a check.
• Better than paying off service fees for a returned check.
• More effective than cumulating charges due to overdue bill payments.
• Easily approved for the loan.

Other facet of paycheck advances

• Sometimes one payday loan is not sufficient.

Other payday loan industry related information

• Justifies a close inspection by policymakers.
• Implement firm policies.
• Payday loan legislation should be balanced with more savings opportunities.
• Lower cost alternative loans to payday loans.
• Getting more informed about the specifics of payday loan borrowers and lenders.
• Californian bill would increase the payday loan maximum value from $300 to $500.
• CRL advocates restricting borrowers to no more than six loans per year.
• CRL advises retaining the present $300 loan limit.
• Bill proposal to restrict the APR for payday loans at 391%.
• Bill proposal to eradicate the industry.

Payday Loan Repeat Borrowers

Sources of the arguments:

RTO Online

The Washington Independent

Progress Illinois

Center for American Progress

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