Payday Loans: From Emergencies to the Mainstream
Not long ago, payday loans were thought of solely as emergency funding methods. People who were hard-pressed with an emergency medical bill or car repair sought out these types of loans as a means of finding quick cash. Their convenience is premiere because, if a consumer qualifies, he or she can have their funds in their account within a day, sometimes a few hours. Normally the requirements for a payday loan are merely that the applicant be employed, over 18 years of age and have an active checking account. If they qualify, they can then use the deposited funds and the lending company automatically deducts the total plus a fee from their account on a specified day. Nothing beats its convenience, and because it isn’t based on credit, even those with bad credit scores can potentially qualify.
Because of the recession, more and more qualified people have used payday loans to get through difficult financial times. It brought the loans a more mainstream acceptance in the world of finance. While credit companies closed their doors to applicants, payday loan companies welcomed anyone to apply and they were able to extend funds relatively easily if applicants met the necessary qualifications. That mainstream acceptance pushed payday loan companies to create outstanding benefits for their customers and programs that fit into almost every budget. The great thing about these loans is that they are flexible, quick and streamlined for the simplest payout and payback systems possible.
Social Security Disappearing
While payday loans have moved into the category of “reliable methods of funding,” Social Security has moved backwards. It’s no secret that the fund is in trouble. Nancy Altman, author of “The Battle for Social Security: From FDR’s Vision to Bush’s Gamble,” said that “Social Security is really the gold standard of retirement benefits.” Though this statement was true a few years ago, now it isn’t as accurate. Since 2002, there have been rumblings that Baby Boomers would be the generation to drain the Social Security surplus. However, back in 2002 no one could have predicted the recession of 2008-2009. The recession managed to speed up the process of draining the fund. As a result, there is a new break-even date projected. The break-even date is the date when Social Security will begin paying out more benefits that it takes in through payroll taxes. That date is set to happen in 2016.
That means that in just seven years, Social Security will have serious problems. That estimated year of turn-around is not set in stone, however. If the recession continues to hang on longer than expected or wreak havoc on the economy as it continues to level off, anticipate the break-even year to move even closer. Once that break-even point is reached, the system will automatically begin to dip into the $2.4 trillion trust fund set aside for that purpose. There is another problem though: the trust fund is held in government bonds that aren’t liquid. Redeeming the bonds may mean that the government has to increase federal taxes or use hefty spending cuts to make it all work.
Payday Loans Prove their Worth
Who would have thought that payday loans, a unique funding method, would end up being more reliable than Social Security? The reality is that they are more reliable. Social Security is here, but not for long without serious restructuring. On the other hand, payday loans are simple, short-term funding alternatives. They are an easy way of getting money for the qualified applicant and have proven their worth in the finances of millions, time and time again.