Payday Loans — Don’t Do it!

So you have some bills due, or an important payment you have to make, like rent. And your next paycheck or unemployment check is not going to arrive or clear in time. You only need a few hundred dollars, but without the money you face disaster — eviction, repossession of your car, or your kid is kicked out of school because you can’t pay tuition.

You’re going to consider going to one of those sketchy payday loan places.

Don’t do it.

Payday loans (also called paycheck advances or payday advances) are small, short-term loans intended to cover a borrower’s expenses until his or her next payday. They are also intended to charge you an absurdly high interest rate.

The problem is, if you want to borrow $300, you’re going to pay as much as $50 in interest and fees. (You cut them a $300 check dated for after your next paycheck, and they give you $250 in cash.) This might seem acceptable, when you’re desperate. Bus imagine how you would feel if an ATM machine charged you $50 to take out $300.

Assuming a two week loan period, finance charges on payday loans are typically in the range of 15% to 30% of the loan amount, which translates to rates ranging from 390% to 780% when expressed as an annual percentage rate.

Yikes.

And these payday loan places are carefully designed to appear downscale, when in fact most are owned by major banks. These banks don’t want you in their regular branches, because you’re poor or unemployed or experiencing a financial crisis. But they’ll happily charge you usurious finance charges when you’re at your most vulnerable.

So what can you do instead?

Borrow from friends and family. Many people don’t want to do this, as it can strain relationships. But it’s better than a payday loan. And if you pay it back on time, there shouldn’t be any problem. If you’re not sure you can pay the loan back, then don’t take a loan short term from anyone, whether a friend or a payday loan joint. If you’re honest about your ability to repay, maybe that friend or family member can still help you.

Ask for a payday advance — at work. Some employers will give you a small loan against your paycheck. Just ask your boss or HR person. In this economic climate, you won’t be the only one asking.

Manage your money better. Obviously, this won’t help you now. And some people seem to think the only reason anyone ever gets into financial trouble is because they didn’t manage their money properly. This is ridiculous — anyone in America, who isn’t independently wealthy, is just a sexual harassment suit or major injury away from financial trouble. There are things for which you can’t plan.

But doing a better job taking care of your money can’t hurt, and might help enough to keep you from needing a short term loan in the future.

Tags: bad banks, financial advice, financial crisis, payday loans, unemployment advice, usury

Light at the End of the Tunnel

What’s topping the agenda for the President-elect? According to the Obama camp, it’s the economy, with the turmoil in the Mideast trailing closely behind. During his first full day in office, Obama is planning to meet with his top economic advisers. The goal is to map out a strategy for getting Congress to pass his stimulus plan–a stimulus plan that has now reached the dollar amount of $825 billion.

Despite Obama’s intention of getting his stimulus plan in action as quickly as possible, he has been reticent to promise major change in the economic situation any time in the near future. He has expressed his intentions to make an economic speech to a joint session of Congress to communicate that even if his economic recovery plan is passed into law during the first 100 days of his term, the financial crisis will likely continue for a long period of time. However, the one upside to the situation is that there appears to be worldwide consensus that the correct step to take in this situation is the one that Obama is pushing Congress to accept.

We need to be bailed out—and I mean literally!

The $825 billion bailout that Obama is sponsoring is expected to create three to four million new jobs. While that is a reassuring estimate, the problem remains—What can we do in the mean time?

The only real option is to find a way to outdo the competition. No one can argue that the best way to outdo the competition is to eliminate it. So why not let Hound sniff out the jobs that are not listed on other sites. By partnering with Hound you can gain access to thousands of jobs that few other people know about.

So until those new three to four million jobs are actually created, let Hound help you weather the economic storm.

Tags: Bailout, economic future, economy, economy 2009, Employment, financial crisis, Jobs, obama