In what universe does a one percent check cashing fee exceed a $35 overdraft fee for overdrawing a checking account by $.01? (Photo: flickr.com)

In the 1960s and 1970s, many of America’s largest banks decided to go “where the money is” by pulling their branches out of the inner cities and focusing more on affluent areas. It may be sheer coincidence that infamous bank robber John Dillinger once gave that response to the question of why he robbed banks, but I’ll leave that for you to decide. Only in recent years has that trend begun to reverse.

What this exodus created was a growing population of “unbanked” individuals and families, people who depended upon everything from shoe boxes and coffee cans to store their money to check cashers for paycheck services and payday lenders for emergency cash. The traditional view society took of such people who depended upon check cashing and payday lending was that they were the “unsophisticated poor.” However, re-examination of this idea is advisable, as the truth may be that the unbanked are more knowledge about what the banking establishment is foisting upon consumers that we’re willing to admit.

Avoiding the World of High Fees

A recent New York Times article explores the phenomenon of why so many people are resorting to alternative measures rather than depending upon traditional checking accounts. While the journalist fails to produce any conclusive reasons, it doesn’t take much to read between the lines – the cracks in society’s pavement, if you will: overdraft fees of $35 per infraction for a checking account mistake are exorbitantly more expensive than a check casher’s fee of a few percentage points to cash a paycheck.

Jose Abreau Says “No”

A 37-year-old native of the Dominican Republic, Abreau denies the bank representatives who come to his New York coffee shop to recruit him into the world of traditional banking. He doesn’t see the point, as what money he earns beyond his immediate needs is sent to his family back home. He does this in spite of the fact that banks are credit unions are within easy reach. However, so are check cashing businesses.

A recent Pew poll indicates that 86 percent of licensed check cashers in Manhattan are located closer than four blocks from a bank or credit union. People like Jose Abreau actually walk past the banks and credit unions to get to the check cashing businesses and payday loan stores. Perhaps this is because many immigrants come from countries where friends or relatives lost money due to bank collapses or corruption (where there was no FDIC to step in and insure the deposits), but in reality there are a wide variety of reasons. Language barriers can exist, but community outreach groups are available to assist. Financial education is available for those who may not understand how traditional banking works. However, the way many banks treat consumers stands at the top of the list as to why someone would not want to rely upon the banking monolith.

Not So Unsophisticated, Are They?

Millions of Americans live from paycheck to paycheck. That’s a fact that the current recession has made painfully clear. Yet this does not mean that these consumers who are just making it are unsophisticated. On the contrary, they’re educated enough to see that if a surprise expense or miscalculation dips their checking balance into the red, the resulting overdraft fees are unconscionable. Rather than having such an organization hold their money hostage, many people feel more comfortable with check cashing, where all the money they have is right there in their hands. Check cashing fees are much lower than any overdraft fee or minimum balance penalty.

How Much Lower?

Consider this. Many banks extend customers the “courtesy” to use ATM machines to withdraw more than they actually have in their accounts. This comes with a heavy – and damningly silent – penalty. We’re talking 200 percent on overdraft fees or more. How is this no legal fraud? How can this be advertised as a courtesy? Is it any wonder that check cashing customers don’t want anything to do with such institutional treachery? If banks would charge no overdraft fees and simply not allow purchases that would create overdraft to go through, they’d probably draw more of a customer base. But banks depend upon overdraft fees for much of their operating profit, so it’s clear that they have little incentive to stop.

Imagine this scenario if you don’t already understand just how disillusioned some are with banks. If a working poor family bounces a single check – let’s say it’s for a mere $3 – there’s an overdraft fee of $35 or more. That could be a weekend’s worth of food for hungry children, plus diapers and subway fare. If the family doesn’t keep their balance above a certain figure, they could be paying even more. Yes, if overdraft fee policies were different, I’d be telling a different tale. And some banks and credit unions do offer free checking. But not everyone meets the credit or documentation requirements, or their local bank many not offer the service. For the transportationally challenged, that means taking what’s closest to home.

What Carrot Could Banks Possibly Offer?

Banks are crying out for customers in this recession, aren’t they? What kinds of incentives could they offer to make people want to use their services? Aside from being able to receive direct deposit or develop a credit history, it seems that people would like to earn a decent amount on their money. But savings accounts that offer .0125 percent interest don’t cut the mustard, let alone the artificial buttery spread. It’s better than nothing, but not by much. Factor in the fees and penalties and traditional banking can feel as good as a sock in the eye.

Hiding from “The Man”

Those who avoid traditional bank accounts for the services of check cashers may be hiding, too. I mention this not to justify the practice, but it’s something of which we should be aware. Without a checking account, bill collections and courts have one less option for skimming cash in the event that the consumer owes money. Of course wage garnishment is still a possibility. And what about those people who avoid traditional banking because their income is under the table? Being able to cash in on certain welfare benefits is a powerful lure, which could explain why some consumers don’t feel the compulsion to put their money in the bank where it can be detected so easily.

Not Such a Rosy Picture for Most

One reader commented on the New York Times article in a manner both poetic and bitingly real:

O, these great unwashed masses, unwilling to strap themselves to our glorious consumer banking system where they can know the joys of ATM fees, NSF fees, account maintenance fees, account research fees, etc. , all while enriching themselves on the 1.8 percent interest rate! What is wrong with these people? Don’t they want to be part of the American Dream?

Avoiding traditional banking is second nature for many, but steering clear of it entirely can have its disadvantages. Check cashing is an attractive option for those who can ill-afford the predatory practice of overdraft fees. Unfortunately, that would include most people. Many who have money do not understand just how much the deck is stacked against those with so little. Bank presidents think in terms of profits; bank customers hope not to run afoul of bank policy, as they have become increasingly unprofitable for consumers with each passing year.

Yep, it's worked that way for me, too. (Photo: flickr.com)

You’ve seen the disclaimer before about using cash advance loans responsibly. But what does that really mean? Sure, you’d be foolish to plan a trip to Las Vegas and go to the tables strictly with cash advance money. There is no guaranteed rate of return and the house always comes out ahead in the end. It would also not be advisable to use a cash advance to help train yourself for an ice cream-eating contest. Your waistline will already be paying for that little escapade with interest, so why would you want to also pay interest on the money used to purchase your ice cream and ice cream paraphernalia?

In general terms: a cash advance is there to help you during a small-scale financial emergency. It’s easy to sit back and want something, and it’s also easy to apply for a cash advance to scratch that itch. However, that doesn’t mean you should do it. A cash advance is a responsible way to deal with a difficult situation when your options are limited.

Struggling with temptation

It all sounds well and good, doesn’t it? You know as well as I do that temptation can strike at any time. Splurging once in a while is fine, but actually using short-term loan products like a cash advance to artificially inflate your budget is asking for trouble. I haven’t been in that exact situation, but I do remember a couple of instances where the strong impulse to buy overrode higher brain function.

Let’s go back to when I was a child. My father owned a trucking company, and as a result of that he was not around as much as I would have liked him to be. He knew this, and he felt guilty about it. He attempted to compensate by buying me things, particularly comic books. However one day I was out with my dad on the weekend running errands and we stopped at the local gas station convenience store. It had been a long day and we were both tired. My father and I went into the store so that we could buy drinks. I was hoping for my favorite slushy, cola flavored. Little did I know that that little convenience store would become one of the battlegrounds of my childhood. Next to register was a rack filled with cheap toys, the kind you find in convenience stores, grocery store toy aisles and in the back of drugstores. I spied a small puppet — it was a Raggedy Ann puppet as I recall — with no moving parts and a very cheap presentation this way of the dingiest Taiwanese toy factory/sweatshop. I had heard mom say that we needed to save money, but I would have none of that. I didn’t have a toy on hand to amuse myself for the rest of the car ride, so I insisted that daddy buy me the piece of junk puppet.

The line was drawn, and I wouldn’t give an inch

It was on this occasion that my father decided he would play at taking a stand. He would attempt to teach me a lesson about money by using all of the reasonable arguments, such as that the puppet was very cheap, it would break easily and I didn’t have to have a new toy every time I went outside. I wasn’t a baby when this happened, so logically I could understand all of the things he was saying. I wasn’t unintelligent, but the infantile mind I had when it came to valuing money took hold. I began to whine and drone on in my usual way about how I really wanted it, and I think I embarrassed my father in front of one of his friends, the shop owner. Rather than get angry, however, my dad caved like he usually did. By the time we got home that evening, my funny little puppet was already broken and forgotten. I could scream for money, but I didn’t appreciate it once I got it. I wanted a cash advance, but I had no true inkling of what it took to provide that money. I still feel guilt over what I put my parents through to this day, and I’m a grown man now. Cash advance for counseling… now that’s a more responsible way to use a short-term loan.

Sharing lessons learned with my young cousin

Skip ahead 12 years. I’m a young man on a family outing to the zoo. We had a great time calling to the hyenas, watching the alligators consume their daily meal and ducking as the gorillas flung their fecal matter across the enclosure. It was our family tradition that at the end of the visit, we would stop in the gift shop near the exit to the park. I am sure this tradition probably began with me wanting a toy, but I was no longer a little boy. Today, the little boy was my cousin Ryan. He was (and still is) a sweet kid with a very intuitive sense of how others are feeling, but on this day he was somewhat less than sweet. As he paced furiously up and down the aisles of the zoo gift shop, Ryan’s expression grew increasingly upset. He had his little coin purse in hand, and he was looking for a souvenir that he could afford. As it stood, all that was within his limited budget were some rather cheap toys (more plastic bits of stuff from Taiwan) that he didn’t even seem to be very excited about.

Yet some kind of compulsion was at work here. Ryan had to buy something, and the fact that there wasn’t anything that he truly wanted was unimportant. I recognized what was going on because I’d been there myself when I was a child masquerading as a consumer gremlin. Buying simply for the sake of buying was ultimately not fulfilling, and I wanted to teach Ryan some of that lesson. I wanted him to understand that it was okay to save his money for something he really wanted; spending for the sake of spending would put him in a position where he’d have junk instead of something he really wanted, like a new skateboard. A cash advance for the purpose of slating greed was no reason for him to break his bank.

Apply for a responsible cash advance here

I wasn’t able to convince Ryan to save his money, which I suppose is not surprising. Those kinds of lessons have to come at an early age, ideally from one’s parents. My parents didn’t do that for me. They were good parents on other fronts, but when it came to money, they weren’t much help. Ryan’s upbringing was probably similar.

So when you think about whether or not to take out a cash advance for your short-term financial issue, consider whether you are merely responding to a gut level decree, or whether you’re facing a problem that needs closure. Taking out a cash advance to solve a real problem is the more responsible way to go. Click the button above to apply here. I just hope you’ll use it responsibly.

Most of the time, I’m discovering ways to expand my knowledge and utilize my creativity. Sometimes, creating a world of wonder and victory around your living can eliminate work altogether, and replace it with resourcefulness and delight.

These bullet points are just 12 of many things involving the sentence, “I just hate doing this.”

• Going to work
• Babysitting
• Traffic
• Going to the doctor
• Nothing on TV
• Waking up early
• Being Broke
• Arguing with a lover
• Going to school
• Writing a paper
• Updating your resume
• Speaking in front of large crowds

There are many ways to look at those twelve dreaded activities (or lack thereof) and see the horror in them. But in order to ‘get it’ you must look past the negative and bring out the passion in you. How? I was hoping you’d ask.

Clear Everything Out!

When going into any activity or chore, make sure you clean out the area. I don’t mean this literally, but I do mean mentally. Before going to the doctor, for example, sit down in a straight backed chair (preferably no arms), or lie down on your back. A straight back chair or lying flat on your back insures your spine remains comfortable, and prevents slouching.

Spend about 5 minutes taking deep breaths. There is a correct way to take deep breaths, and I call it correct because it’s the most effective way. You simply breathe from your abdomen as you inhale as much air as possible. While you inhale, your stomach should expand like a pregnant woman’s belly or a balloon being filled with air. Once your lungs feel good and filled, hold it for a count of 4, and then exhale slowly. When done correctly for five minutes, your body will feel relaxed and your mind is cleared. Now we’ll move on to the cleaning process.

Out with the Old and In with the Possibilities

Now that your body is relaxed and your mind is cleared and focused, you’ve entered an alternate state of consciousness. This is a mind-set that most people tap into when they’re in deep prayer or meditation, like monks or when you are sleeping.

Did you know…?

When you are asleep, often times throughout your slumber you experience REM (rapid eye movement) sleep. This is the time when you are dreaming. Your mind plays a series of images streamed together similar to a movie. Some of these “movies” are more vivid than others, but all the while, you benefit from every one of them. Your brain gives you, your conscience, something to watch while it decides what events from the day to unpack and store or throw away as unimportant. Interesting brain you have in there.

A higher state of awareness

You’ve reached a higher state of awareness and it feels great. Just as great as receiving emergency payday loans to successfully take your family on a cruise. You float, as if in mid-air, dancing horizontally on an invisible veneer of misty clouds… Okay, well I embellished a little, but not by much.

Now, using the same going to the doctor example as above, bring up past events, images and feelings of visits to the doctor. Let’s say you have a terrible hate for syringes, needles, and cold doctor’s hands. Picture experiencing these incidences from the past and take note of your feelings and emotions while you’re performing these mental exercises.

Next, tell yourself that all of those feelings and emotions of fear and discomfort are nonexistent in you!

Then think of eating your favorite meal, having the time of your life with your friends, pleasing your children beyond controllable delight, or happy times spend with a loved one and take note of your feelings and emotions. After you’ve done this for about 2 minutes, or until you’re ready, say, “All of these feelings and emotions of happiness, love, and delight will replace all of the previous emotions in me.”

This part gets a little difficult, solely depending on each person’s level of fear, discomfort, or dislike, but with constant practice it works. Try to hold on to those feelings and emotions of happiness and joy. Feel the emotion of happiness and joy in your body; did you usually have heart palpitations or a tingling sensation over your body? Focus on any physical as well as emotion reaction to the thoughts of gladness. But now think of those things in the hospital room that frighten or disturb you and hold on to the emotions of joy and delight. At first this might go smoothly, but if it doesn’t just keep trying it. It gets easier.

If you practice this exercise everyday, apply the visual images needed to fit your issue, you’ll be able to go to the dentist and still have a bright and beautiful smile on your face, just like payday loans do.

The cash advance is quickly becoming a viable bill payment option in the current economy. With a struggling economy and businesses downsizing, many people are feeling the cash crunch when trying to get through their monthly bills. The quick cash advance is a solution. These advances are given by companies who circumvent the normal formalities of the loan process and are able to greatly decrease the time needed to apply and get approved.

The Economic Stimulus Package as passed by Congress

The Economic Stimulus Package includes a cash advance that is the most talked about and anticipated part of the bill. People making under $75,000 yearly with tax liability will receive a rebate check of $600. The IRS estimates that over 130 million households are going to benefit from these cash advances. Their hope is that consumers will put that money back into the economy, thus reinvigorating it and helping the country move out of the recession quicker.

There are other parts of the Stimulus Package that include tax rebates and incentives for businesses. Business expansion, job creation and U.S.-located ownership are all goals of the tax rebate portion of the bill. The hope is that if businesses are encouraged financially, they will create more jobs that will employ more Americans. It also is set to encourage businesses to keep their roots in the US and refrain from outsourcing. Again, the hope is that this will also jump-start the economy.

Can a cash advance save you?

A quick cash advance, whether as a tax incentive or private, can help in a time of financial need. When a bill needs to be paid, it’s a great option to have. Everyone has had that emergency bill they weren’t expecting, from a sudden car repair to a dental bill or an illness. You anticipate having money for them, but need a few days or weeks to get it. Sometimes you need the money upfront and a quick cash advance can be your potential solution.

If you have a good work history, are over 18 years of age and have an active checking account, you may be able to get approved sooner than you think. The easy application process only makes these types of loans more popular today. If you qualify, the money you need should be in your account within 48 hours, typically sooner.

How much can you receive?

Normally cash advances are from $100-$1500. Of course, the amount you qualify for depends on your paycheck. The loan company wants to make sure you can pay them back, so part of the application process involves detailed information on how much you make and how often. If you’re approved, the lender will calculate, based on that, how much you are qualified to borrow.

Cash advances working together

Cash advances are going to become increasingly popular as people are finding themselves in need of emergency money. As more and more people are feeling the adverse affects of the struggling economy, consumers are looking for ways to pay their bills. Lenders are more willing than ever to try to help approved-borrowers in difficult situations by supplying immediate cash.

It’s the wife’s day off today. Since that payday loan I took out before the weekend had helped me replace her cosmetics from that last fiasco, she had graciously remained in a good mood – so she decided to treat the kids to a day out of fun and good times. I had been up most of last night typing away on my writing job, so I looked forward to a solitary afternoon of napping on the couch and catching up on some well-deserved shut-eye.

No nap after all

However, being that the game plan for today’s doings involved Sesame Street on Ice, followed by a trip to Chuck-E-Cheese, then capped off with a trip to the local ice-cream parlor, it all seemed just a wee too “baby-ish” for our oldest, Orion, so he elected to stay home with me. Well, there goes my afternoon snooze on the couch.

Could I still sneak in a tiny five minute nap? We’ll see…

I had a nifty idea – I figured I could just pop on the TV, call up some old rerun episodes of M*A*S*H that I had recorded (Orion, like myself, is a big fan), and while he was glued to the set, I could set my watch’s alarm so that I could sneak in little cat naps of ten minutes or so, and have my watch wake me for the commercial breaks. I’m a genius, no?

So far, it had seemed to work well for a good two sessions. Like the expression, “third on a match” however, I wasn’t so lucky on the third attempt. Apparently, since the boy also heard my watch go off every now and again, he became wise to what I was doing, and decided to hop on the opportunity to exploit these little windows of time.

A horde of plastic army men can be a formidable foe indeed…

My watch beeped and my eyes opened like… well, like clockwork. However, all was not right. The boy’s accompanying giggling was my first unsettling clue. (Am I going to need another payday loan to replace something again?) Apparently, while I was lost in momentary, yet blissful slumber, this bright boy of mine had decided to carefully lay out what seemed to be an endless throng of little plastic army men (among his most favorite of all playthings) all over the couch, and my snoozing body, all arranged to be menacingly pointing their various types of weaponry at my face. The events that next took place seemed to run in slow motion for me, much like when one experiences an auto accident – but in reality, it all happened within about the span of a bee’s sneeze.

Who, in their infinite wisdom, came up with the glass coffee table?

At first glance, I did not realize that they were in fact, merely plastic army men. All that registered in that very first millisecond was that the couch and I were both COVERED in myriads of little green things, with legs, in threatening poses. I thought I was covered in… oh, I don’t know – locusts? I had then immediately leaped like a flea on a hot brick, sending little plastic army men flying every which-way, much to the insane laughter of my seven-year-old boy.

Some had fallen from the top of the back of the couch and had found their way under my back, skewering me with their tiny bazookas, rocket launchers and AK47s. I thought I was being bitten by insane insects, so I, convulsing with a mix of fear and shivering disgust, had fallen off of the couch and sent my hand right though the glass coffee table. Orion was startled in a rather large way, and looked to be in fear for his very life. Good call, kiddo.

It all seemed much more serious than it really was, thank goodness…

Fortunately, there were a couple of magazines on top, which had been between my hand and arm, and the glass of the table. I emerged unscathed. Orion however, looked as frightened as any seven-year-old boy would look, in such a situation. I realized that what he had initially done was quite harmless, and that my reaction couldn’t rightfully be blamed on him. Looking at him and wondering what to say next, I couldn’t help myself – I started to laugh out loud, much to his relief.

After we both laughed hard for a good ten minutes or so, I swept up all the glass, while mentally pondering the practicality of having a glass coffee table in the first place. Applying for another payday loan, within two hours I had the funds to go out and replace the coffee table (this time I got one with a thin, marble top) before the wife and the other kids got home. What’s the moral of this story? Don’t underestimate the collateral damage that can be done by a well-armed unit of plastic army men.

Jim Siegel of The Columbus Dispatch reports that the Ohio Department of Commerce will not regulate payday loans into oblivion. Great, but they’re on the verge of being taken away from the public as is, thanks to House Bill 545. It capped annual interest rates at 28 percent for the high risk, unsecured loans, which is not a workable profit model. It isn’t oblivion, but it’s close.

In order to save scores of employees from unemployment and keep options open for consumers who need emergency cash but have less than perfect credit, lenders who remain in Ohio are offering pay day loans under the state’s Small Loan Act. Ernie Davis, the commerce department’s legislative director admits that lenders ”are operating under licenses set in statute.” Yet meddling politicians – driven as if their masters’ whips are at their backs – are going to look again and again to make sure lenders are “abiding by terms set in the new law.”

What’s their main problem?

Some are claiming that the process payday lenders are using under the Small Loans Act – issuing a check payment, then charging a fee if the customer wants to cash the check there – is exploitative. This, of course, is ridiculous. They can cash elsewhere, such as at their bank (they can’t take out payday loans if they don’t have bank accounts). Furthermore, check cashing businesses charge a small fee to cash checks. Why should a payday lender do it for free?

Gov. Ted Strickland says that he’ll be willing to review the situation if the law is being violated, but otherwise, pointless legislative battles that waste the taxpayers’ money must not occur. Furthermore, the payday loans industry should not be squeezed any more than it already has. John Rabenold, VP of governmental affairs for Cincinnati-based Axcess Financial (parent company of Check ‘n Go) said that half of their 72 Ohio stores are no longer in operation, and “the rest are struggling.” Rabenold would welcome a return to the debate over House Bill 545, but only so long as politicians wake up and see that capping payday loans hurts consumers.

Payday loans are a private transaction for consumers who desire discretion during their emergency cash situations. Lots of people use them and appreciate the respect paid to their privacy, as credit checks are not typically required. But what happens when consumers who use an even more popular service like the online social marketing phenomenon Facebook? Is their privacy being respected?

Clearly, this is not the case. Adam Ostrow of Mashable reports at http://mashable.com/2009/02/17/facebook-terms-of-service-poll/ that CNET user opinion polls on Facebook’s recent changes to their Terms of Service (ToS) show that users are not satisfied with their privacy being invaded (56 percent). Only six percent are OK with the invasion, while a whopping 38 percent “don’t know.”

How can you not know? Form an opinion! Do some research! Don’t bow down to the trendy-friendy machine.

How would the ToS change?

Among other changes (see http://mashable.com/2009/02/16/facebook-tos-privacy/), the main problem is Facebook’s defense of holding on to a user’s data indefinitely. Facebook wants “irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license to use, copy, publish, stream, store, retain, publicly perform or display, transmit, scan, reformat, modify, edit, frame, translate, excerpt, adapt, create derivative works and distribute [your content].”

The group “People Against the new terms of service,” which is currently more than 60,000 Facebook users strong, has rallied against this abuse of information. The Electronic Privacy Information Center is prepared to file a complaint with the Federal Trade Commission.

This is not merely consent to receive third-party advertising. Facebook can do just about anything they want with your information, if you consider the above statement and its full implications. “I don’t know” simply isn’t good enough. If you cling to that answer, you need supervision if you’re going to be allowed outside (or back in cyberspace). Moreover, a loan until payday would not be advisable for you. You’d need to develop a modicum of critical thinking ability first.

CEO Zuckerberg speaks; “Sorry?”

Facebook CEO Mark Zuckerberg later stated on the Facebook blog that the heat in the kitchen was so intense that the old ToS will be brought back “while we resolve the issues that people have raised.” Smart move, but it does appear that the invading policy will merely be on hold for a future version of the social network. With different language. Because Zuckerberg wants to “reflect the principles and values of the people using the service.” He is committed to the change. Perhaps he should just be committed.

I say get out while you can, until Facebook can guarantee that information will not be used in the way people fear. When you apply through a pay day loan company, your information is not treated in a such a cavalier fashion. Is it kept safe and secure. Advertising messages are only sent with your consent. Payday loans, in this way, are much safer than using Facebook. Don’t even look for them through Facebook. Go to Personal Money Store, 24/7.

Related articles

• Facebook backs down on privacy terms (news.cnet.com)
• Facebook: Your Content is Ours To Sell (Maybe) (mediabullseye.com)
• Facebook still showing growing pains (bbc.co.uk)

It’s interesting that 12 people took the time to vent their “moral outrage” over changes in the Ohio payday loans industry. Interesting, in that it wasn’t until the 13th person commented on Sheryl Harris’ Cleveland Plain Dealer editorial that they noticed something wacky.

Here it is. The numbers have been left the same to preserve the editorial integrity of the source material:

So when payday lending was legal last year, CheckSmart customers paid $575 to walk out the door with $500 in cash.

Under the new licensing scheme, CheckSmart customers pay $575 to walk out the door with $500 in cash.

Shocker!

Sure, it must be a typo, but let’s move on.

If you didn’t already know, payday loans have been banned in Ohio. This ban came not only during a recession, but during a time when Ohio’s state of budget affairs was among the worst in the nation. Unemployment is high; kicking out legitimate businesses is a bad idea.

Harris draws our attention to House Bill 545, which she says was “supposed to help consumers by creating a Short-Term Loan Act that gave borrowers at least a month to pay off loans. More importantly, the new law was supposed to drive down the costs.” The crux of the argument Harris and people like her use against the payday loan industry is that the APR for a loan would be a “jaw-dropping” 391 percent.

But that’s not what’s really jaw-dropping!

What’s truly jaw dropping is that we’re expected to eat and like the spoon-fed rhetoric that payday loans are annual loans! Right-thinking people must stand up for the intellectual honest and stamp out these deceptively mild distortions of the truth. Sure, if a payday loan could be extrapolated out over an entire year, 391 percent in annual interest is possible. However, since they are two-week loans that charge $15 in many locations, You’re looking at 15 percent paid in interest, on top of the principal. For a short-term loan that is often given to clients with less than perfect credit, that is both a bargain and a price point that helps shelter lenders from risk.

What does Harris coo about, in honor of the misguided law? She yearns for a 28 percent APR, which would even one-up the supposed cap President Obama wants to put on payday loans at 36 percent APR. With Obama’s APR, the lender profits to the tune of $4.14 for a $300 loan made to a consumer. How is that anything other than insanity for a business? Furthermore, what kind of insanity afflicts people who think that today there are religious reasons for not charging interests on loans (they essentially coined the term “usury” and gave it boogieman status… similar to what was done to hide the original meaning of the word pagan… now it’s considered evil in the public eye, goat horns and all… it originally meant “country dweller” or “rustic”).

Facts are simple here. Payday loans help all sorts of consumers, particularly those who need emergency cash that can’t wait until their next payday. Few banks or credit unions offer micro loans, particularly for customers with less than perfect credit. Thus, the loans fill a need in society.

Payday loans help, but they aren’t the only way to grab emergency cash…

Tough economic times has all of us counting our pennies. You know you do it. Why should excess money sit around in mason jars instead of filling your wallet on a trip to the grocery store?

Speaking of grocery stores, I have some good financial news for you. Ever seen one of those Coinstar machines at the front of the store? Dump your coinage into the tray, the machine counts it and prints you a voucher with the total (minus a small service fee). You redeem the voucher at any register or the store’s customer service desk for more convenient paper money. It’s like emergency cash.

They’re in the money

Apparently, these machines have become increasingly popular with cash conscious consumers. As the Associated Press reports, Coinstar expects a first-quarter 2009 profit after a 2008 Q4 profit of $4.2 million. Shares in the company are expected to up anywhere from four to 10 cents per share on revenue of $260 to $270 million. Their Q4 profit translated to an extra 15 cents per share, based upon not only the success of its coin-counting machines, but Redbox DVD and money transfer products.

On the strength of the past two quarters’ revenue, Coinstar upped its 2009 projection to $1.3 billion. Analysts expect their annual revenue to be $1.09 billion. This blows away the previous year, when they lost $37.2 million.

By any means necessary, some companies find a way to fill the void during a recession. Coinstar has filled a need for consumers, just as payday loans have.

Related articles

• Market braces for ‘terrible,’ ‘awful’ news (money.cnn.com)
• A Tale of Two Companies (jeffnolan.com)

Why do people look for a payday loan now and then? It’s not just because it’s a fast, convenient and discreet way to obtain emergency cash. The simple fact is that the cost of living has made it difficult for many American families to stretch their budgets to cover surprise situations. And according to a recent Belleville News-Democrat editorial by Holly Sklar, it’s only gotten worse since 1973.

Yes, the rich get richer…

A glaring example of the workplace divide is what Merrill Lynch did while scores of workers were losing their jobs. Amidst the wreckage and broken dreams, Merrill Lynch paid a small group of employees (around 700) more than $1 million apiece in 2008 bonuses. This added up to $3.6 billion – all of it handed out while the company lost $27 billion.

Since 1973, workers have lost ground in the salary department. Adjusting for inflation, the average full-time workers made $41,198 in 1973 and $37,606 in 2008. CEOs, in the meantime, made 45 times more than workers in 1973. Today, that gap has widened to 300 times more. The tax rate for the top income groups has gone down from 70 to 35 percent, and capital gains tax has gone down from 36.5 percent to 15. This has played a large part in the current disproportionate distribution of wealth. So much so that people in the top income bracket may not even have to think about the aid a payday loan provides.

Brother, can you spare a few hundred thousand dimes?

Sklar bottom-lines it for us. She shares the latest IRS info regarding annual income for the top 400 taxpayers. The average adjusted gross income was $263 million each in 2006 (that’s more than $5 million per week), which was up from $221 million in 2005 and $67 million in 1992, all figures adjusted for inflation.

A lot of people are happy about President Obama’s plan to cap CEO pay at $500,000 for senior executives, but this will only apply to bailed out companies. Furthermore, various loopholes in the plan limit its effectiveness, according to Sklar. Cash Advance Mojo likes the idea Netflix CEO Reed Hastings had about a 50 percent income tax for CEOs who earn above $1 million.

Say you want a revolution

Here’s Sklars conclusion regarding this inequity. See what you think:

If we don’t start taxing the wealthy more now, then you can be sure that the mountain of debt created by tax cuts and the bailout will be used to drive “entitlement reform.” Workers’ last forms of security – Social Security and Medicare – will be on the chopping block to pay for the wreck the truly entitled made of our economy.

A payday loan can help a consumer absorb the shocks between their ever-shrinking paychecks. But a long-term solution to America’s disappearing middle class is needed. If the rich are not willing to submit to greater taxation and try to hide behind loopholes and shelters, they should be tracked down and forced to submit. For their own good and the good of all.

Related articles

• How Will Obama’s Tax Plan Affect Self Employed Americans? (internetbiztaxtips.com)
• Obama’s Old Solutions for a New Economy (spot-on.com)

The idea that short-term emergency cash can be obtained via payday loans is a real motivator for many consumers to apply. Money, it’s quite obvious, is a great motivator. According to Serena Gordon of U.S. News and World Report, some employers are using money to motivate their charges to be more healthy. Specifically, they want them to stop smoking.

A February 12, 2009 New England Journal of Medicine study shows that General Electric employees were offered up to $750 to kick their habit. After one year, 14.7 percent of the group that received extra cash were still free of the cancer sticks’ lure. Only 5 percent of employees who weren’t paid during the study managed to stay clean. Even though the former figure is low, it’s much higher than the success rate for most stop smoking methods.

Cashing in on behavior modification

Dr. Kevin Volpp of the University of Pennsylvania School of Medicine and Wharton School said that “Incentives do work in changing health behaviors, and they can be successful in people who have not succeeded using other approaches in the past.” Volpp believes the financial incentives provided both positive feedback and immediate gratification, which likely contributed to the method’s effectiveness.

Employers likely believe that programs of this nature will be financially fruitful for them, as it could increase worker productivity and decrease sick days and health care premium costs.

Is this the best way for companies to spend their money?

Similar studies have proven that cash can encourage other healthy habits. The American Journal of Preventive Medicine and RTI International in North Carolina are just a couple that Gordon notes. Cash Advance Mojo agrees that good health is vitally important, and that it sometimes takes a little push to set a difficult plan in motion. Money can be a motivator to change, and payday loans can be a motivator to budget more for life’s little surprises next time. However, I’d like to believe that people will more readily choose quality of life of their own accord. Then perhaps companies can use that money to improve their own bottom line and retain employees during this recession.

Related articles

• For Short-Term Weight Loss, Economic Incentives Work (medicalnewstoday.com)
• The biggest loser: Buying weight loss (sciam.com)

Payday loans have helped consumers before and during the current recession, and they will continue to be an emergency cash aid after it ends (Q3 2009?). America’s recession has darkened the doors of many businesses that couldn’t shoulder the burden of so much lost business. Or, if businesses don’t close outright, employee layoffs have been distressingly common.

However, not all small businesses have withered under the weight of the second-largest recession in American history. In fact, Stacy Perman of Business Week writes that “the recession has injected life” some small businesses that are doing well in spite of the downturn. In some cases, they may even be doing well because of it.

Consumers looking for value

Perhaps it’s to be expected that pawn shops and thrift stores have done well during this recession, as shoppers are looking to save money however they can. These kinds of stores have enjoyed higher business volume and a broadening customer base. National Association for Resale & Thrift Shops Executive Director Adele Meyer said that “More people are trying resale than may have done before. And once people shop resale they realize what value and quality they’re getting for the price. They become hooked, and this becomes their way of shopping.” The downside of this for these stores, of course, is that it’s difficult to maintain inventory during the traffic upturn.

Keep it running, keep it safe

According to Perman, auto mechanics and general repair stores have seen “record business in some cases” over the past half year or more. This indicates that more people than ever are looking to extend the life of the cars, appliances and tools they own, particularly in cases where repairs are significantly less expensive than purchasing a new one.

Unfortunately, as the recession causes some to resort to desperate measures, theft reports have risen. Thus, sales of home safes has been up and private investigators have found more work. Also unfortunately, desperate consumers who lose control of payments for homes, cars, boats and more have also found that repo men are out in force. Their business has, according to Perman, reached “record levels.”

Payday loans grease the wheels

Payday loans give many consumers the short-term bridge they need to make it from “Point A” to “Point B” during recession times. For some, payday loans can even be a way to temporarily pay down larger debt or bills to avoid expensive penalties. But spending as a whole is definitely down. This hurts most businesses, but for some little engines that could, recession greases the wheels.

Related articles

• Business Development Bank will get $350M injection, Clement says (cbc.ca)
• More consumers likely to seek help in 2009: debt counsellor (cbc.ca)
• Financial crisis: ‘iPod generation’ most at risk from credit crunch as one in five has £10k debts (telegraph.co.uk)

Your payday loan news source has been keeping an eye on the South Carolina legislature lately as it relates to short-term consumer lending. From the time that legislation was introduced to when it reached the House for a vote, we’ve been watching. House Speaker pro tem Harry Cato even published an opinion piece in a local South Carolina newspaper that was in favor of fair regulation.

Now, Seanna Adcox of the Associate Press reports that the bill was approved by the South Carolina House with a 93-16 vote. As a protection to consumers, the bill allows them to have one loan at a time, up to $600. In addition, an online database that will be operational by February 1, 2010 will record when loans are made. Cash advance lenders will be required to check this database each time a consumer applies for a loan. Customers who are approved will also have the option of an extended payment plan if they are unable to pay within the standard two week’s time.

Consumers use payday loans in moderation, not 10x in a row

Another part of the bill limits customers to 10 successive payday loans. After that, they must wait until at least one payday has passed before they can apply for another. Payday loan critics don’t feel these requirements aren’t strong enough. Cash Advance Mojo feels that if the most recent statistical research from the Federal Reserve is any indication, almost nobody is using 10 payday loans in a row. The cited payday loan study by the Federal Reserve’s Gregory Elliehausen indicates consumers only use the loans in a moderate fashion.

Yet there will always be naysayers. Rep. Joe Neal said legislators should be “ashamed for allowing payday lenders to exploit residents.” But fellow House members like Speaker Bobby Harrell know better:

Regulating the practice and enacting consumer safeguards is the right thing to do. These loans are meant to be short-term financial solutions for unforeseen expenses; capping the loan amount and creating a statewide database to ensure that someone can only have one loan at a time will help prevent individuals from falling into a bottomless cycle of debt.

A payday loan is indeed a short-term financial solution. There is no shame in making an informed choice about your finances when emergency cash is needed.

Payday loans should work for all. But a recent press release from Advance America today announced that they have settled a class action lawsuit in Georgia that resolves all claims against them in connection with any payday loan transactions in that state. Operations in Georgia had been suspended in 2004, to their detriment.

Tom Newell, the company’s VP of Legal and Regulatory Affairs, said this regarding the settlement:

We will continue to aggressively defend our products and services against these types of claims. However, a settlement like this one makes good business sense and brings value to our stakeholders by assuring certainty of outcome and eliminating continuing legal costs in a geographic market where we no longer conduct business. We are pleased to have reached a favorable result.

New Hampshire stealing legitimate jobs from taxpayers

Heading north, Advance America also announced the closure of its 24 New Hampshire stores. This decision comes after January 1, 2009 legislation took away consumer choice by effectively banning cash advance in that state. President and CEO Ken Compton pointed out that the 36 percent APR cap imposed on New Hampshire stores was devastating and unnecessary. Furthermore…

…Eliminating the payday loan product as an option does not eliminate the need for short-term credit in New Hampshire, it simply eliminates a sensible financial choice for thousands of hardworking people, and forces them into higher cost alternatives such as fees for bounced checks or late payments and other risky loans. We are disappointed that a majority of legislators and Governor Lynch chose to take away a viable, regulated short-term credit option from New Hampshire residents and put hundreds of employees out of work, particularly during a period of broad economic instability.

Payday loans are a choice people need

Outside of the closing costs such actions require, there are the inevitable jobs that are lost. How can New Hampshire legislators justify delivering such a devastating blows to families during a recession of this magnitude? For that matter, how could Georgia legislators in 2004? Simple. They don’t care about the individuals who scrape and claw to make a living, far outside the locked gates of their no-doubt palatial homes. The anti-faxless payday loan lobby may have just given them more money, which is normal politics in and of itself. However, they should care more about people retaining jobs in what has proven time and again to be a legitimate consumer finance field. Payday loans are a legitimate business and an emergency cash bridge for many consumers.

Related articles

• Payday loan company can settle class-action lawsuit (ctv.ca)
• The Cash Store Financial Services Inc. announces class action lawsuit settlement (newswire.ca)

To find an expert’s opinion on the matter, Jennifer Schonberger of The Motley Fool recently interviewed Liz Ann Sonders, chief investment strategist with Charles Schwab. According to Sonders, we’re more than halfway there.

And the worst part is now

Sonders’ best guess is that

Sometime in the third quarter of 2009, we’ll get the official word that it’s over — now keep in mind, given that it took the NBER [National Bureau of Economic Research] a year to tell us we were in one. The normal span of time between when recessions have ended historically, and when they’re declared in the end, has been 15 months. So if I’m right about the third quarter of 2009, we’ll probably get the word on that some time in 2010.

But right now America is at the bottom of the pit. Corporate inventories are going up because nobody is buying. Consumers are saving for a perpetual rainy day, but even then they’ll look to cash advance loans for added help. Unpurchased inventory stockpiles has caused an artificial inflation of the gross domestic product, making appear better than was expected.

What must still happen?

Fallout from that, Sonders feels, will cause first quarter 2009 readings to be dismal. Then the news will “become progressively less sad.” Since there has been relative calm following a volatile fourth quarter 2008 – largely because President Obama’s economic stimulus is about to go into effect – credit markets are beginning to become more fluid again.

Despite continued volatility in 2009, Sonders sees the stock market rising. But if that rise is to be meaningful, the $9.2 trillion in cash “sitting in nothing but short-term, safe investments like Treasuries, bank and savings accounts and money market funds” must move. It must flow. Since depressed asset prices are low, Sonders says that for some, it is time to buy.

However, she advises that all should assess how much risk their willing to tolerate. “If you’re now way under an asset band of, let’s say equities, and your circumstances haven’t changed, and your time horizon hasn’t changed, then absolutely you should be thinking of putting some money back in.” However, if a consumer already has significant money in stocks, an explosion of increased investment is discouraged.

Payday loans: your bridge to recession’s end?

While they are not a long-term solution to larger financial issues, payday loans can certainly be the right tool at the right time for your budget. Just the boost you need? Perhaps. During this recession and beyond, it always pays to shop around. If you need emergency cash fast and crave convenience and discretion, payday loans may be what you seek.

Related articles

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Payday loans of the gargantuan sort may or may not be enough to fix the trouble that America’s automobile industry is facing. It is no stretch of the truth to say that the automakers are responsible for the mess they’ve made, and most have been all too eager to beg at the door of big government for handouts to keep their parties of excess going.

Yet not all automakers prostrated themselves in a mock display before government. Ford, for instance, decided to gird up their loins and go it alone. And if Associated Press reports are an accurate indication, they may have found the sales light at the end of the tunnel.

Credit is available

Sales have been in a nosedive for months for Ford, which is hardly out of place in the current economic climate. However, Jim Farley, the automaker’s global marketing chief, has said that adjusted new sales demand has “held steady” since November. Used sales have come “roaring back” since January. The implication, notes Farley, is that credit, from bank loans to credit cards and cash advance,  is available for consumers.

According to the AP, U.S. new car and truck sales dropped by 37 percent in January 2009, so Ford’s optimistic outlook hasn’t caught on. However, one analyst (Erich Merkle) believes that we’ve reached a plateau. “We’re really at that crucial inflection point right now. And with all the money right now that’s being pumped into the system … I think that we’ll start to see some revival in our economy and we’ll start to see sales on a sequential basis exceed that of the first quarter,” Merkle said.

Second half of 2009?

That’s what Merkle predicts. Farley hasn’t been that specific, but he did acknowledge that February sales indicate a similar positive trend. Positive as in no continued drop, that is.

In January, Ford sales fell 40 percent in the United States, but  F-series pickups and Fusion sedans provided enough of a boost to continue their market share increase for the fourth straight month. New products like the Harley-Davidson F-150 and Transit Connect van have increased expectations, but perhaps their ace in the hole will be the much-improved 2010 Taurus. With EcoBoost technology, Ford claims the engine will combine V6 economy with V8 power.

Ford shares up; will they drive it home?

Of course, no automaker is out of the woods yet. It remains to be seen whether such gains will continue, or whether Ford will have to go to the government payday loans well like their less competent business competitors. Cash Advance Mojo wishes Ford well, and reminds you that if you find yourself in an emergency cash situation, payday loans can help until your next pay period.

Related articles

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Gregory Elliehausen of the Board of Governors of the Federal Reserve system recently produced a telling payday loan report entitled “An Analysis of Consumers’ Use of Payday Loans.” This report gives us a glimpse into the demographic characteristics of payday loan customers and shows us some of the key factors that go into the decision-making process of whether to use the loan product for emergency cash. For a convenient synopsis, consider the Payday Pundit’s outline here.

Payday loans: a cure, not an epidemic

This cutting edge payday lending study proves through survey data of payday loan customers that lenders provide “a desired service to lower and moderate income, middle-educated, young American families.” Unlike the bleating cries of those who criticize the industry – who claim that there’s a payday loan addict around every corner – Elliehausen clearly and non-judgmentally shows that only two percent of U.S. adults use payday loans at any one time.

Elliehausen makes it quite clear

Here’s a sampling of what is known about cash advance customers:

• Sixty-three percent of customers are the heads of young families
• Only 10 percent are 65 or older, indicating that the elderly are not being exploited or targeted as most critics claim
• Customers typically have “lower and middle incomes”; 41 percent earn $25,000 to $50,000 per year, while 39 percent earn $40,000 or more
• Higher income payday loan customers (those who earn above $50,000) make up a larger share than those in the lower bracket ($15,000 or less). This refutes the idea that the poor and destitute are being “targeted”
• Ninety percent of customers have a high school diploma or better, while 54 percent have attended college or have a higher education degree
• General indications are that payday loan customers have limited access to credit, yet still use payday loans sparingly
• A whopping “eighty-one percent of customers recalled receiving information on the annual percentage rate for their loan” and were aware of overall costs
• Even more telling, 86 percent of no fax payday loan customers said that the product was a “useful service”

Politicians, leave the payday loan alone… respect your constituency

Past academic studies have shown that the payday loan benefits consumers, and that taking them away leads to a decrease in financial well-being. Elliehausen’s study concludes that

In giving consumers access to additional credit for unexpected expenses or shortfalls in income, payday loans give the consumers a little control over their financial situations that they otherwise would not have.

A payday loan is a tool, a bridge and a temporary cure. Limiting consumer options by taking them away makes no sense in a society that values the abilities and opinions of its people.

Related articles

• Consumer credit drops for the third straight month (money.cnn.com)

Payday loans can help pay for that emergency trip to the doctor that you weren’t planning on. However, an ounce of prevention is always prudent. For instance, did you know that a lack of humidity helps the flu spread? And have you ever wondered why you’re more prone to the flu during winter?

Most people think it’s because of low temperatures, but that’s only part of the story. According to U.S. News and World Report, low humidity and the flu go together. And it just so happens that winter months fit the bill, according to Oregon State University researchers.

Blame it on absolute humidity

Previous studies have focused on relative humidity (the ratio of air water vapor content to the saturating level, which varies with temperature), but the link with influenza transmission has been weak. Absolute humidity (the actual amount of water in the air, irrespective of temperature) is apparently a much better indicator.

Study author Jeffrey Shaman said that, “The correlations were surprisingly strong. When absolute humidity is low, influenza virus survival is prolonged, and transmission rates go up.” Shaman and epidemiologist Melvin Kohn have concluded that “absolute humidity explains 90 percent of flu virus survival and 50 percent of transmission.”

Be prepared, be healthy

Shaman states that some areas of the country during summer can have “four times as much water vapor as a typical winter day — a difference that exists both indoors and outdoors.” This does not provide the optimal environment for influenza survival and transmission, which makes winter transmission much more common.

Needless to say, cover up during the winter months when you’re outside. In addition, wash your hands to help avoid contracting the germs. Payday loans can help when you need emergency cash for the doctor, but why make that trip necessary? Bundle up, be clean and be smart.

Related articles

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• Moist air dampens spread of flu (cbc.ca)
• Humidity Helps Fight Flu (sciam.com)

"I'm Robert Bobb, NOT Bob Bobb!"

Payday loans of a sort from the State of Michigan have been infused into the sagging Detroit Public Schools district.

Chastity Pratt Dawsey of the Detroit Free Press reports that Detroit Public Schools is going to have trouble making payroll. A lot of trouble. In fact, on March 17, they’ll be $21.6 million short of making payroll. On April 14, it will be $16.1 million; $17.4 million on May 12; and $21.3 on June 9. Not only that, but the school district has at least $42 million in overdue bills and $9.2 million in retirement payments to distribute. Be thankful if you aren’t one of the 13,633 employees of Detroit Public Schools.

Also, be thankful you aren’t Robert C. Bobb, who is slated to take control of Detroit Public Schools’ budget on March 2.

Options?

Dawsey touches upon a number of suggestions for how the district could approach this tremendous emergency cash situation:

• Borrow from a bank against future state aid payments
• Arrange to participate in a state borrowing pool
• Ask the state for an advance on state aid
• Work out a new payment schedule with unions

Unfortunately, none of these ideas are considered to be feasible solutions.

They’re bleeding cash… just like banks!

David Martell, Executive Director of Michigan School Business Officials, said that, “Most districts that are going to have a cash-flow problem…. borrow to make payroll. Who would want to loan them the money? That might be an issue.”

According to Dawsey, the past 10 years have been tough for the district. Enrollment has decreased by 45 percent, which has led directly to a $3.7-million deficit in 2007 and a $139-million deficit for 2008. They do not expect 2009 to buck this trend.

In the meantime, district employees are gritting their teeth. “People are not going to work for free,” said Detroit Federation of Teachers President Keith Johnson. If the state floats them what amounts to payday loans, when will the district be able to pay them back? Installment plans must be in their future…

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Harry Cato, the speaker pro tem of South Carolina’s House of Representatives, recently contributed an opinion piece to the Spartanburg Herald-Journal in which he agrees with the payday loan reform bill that has found heavy support in the General Assembly. He respects the value of the payday loan in society – helping people to “cope with personal financial difficulties” – but also wants to ensure that sufficient consumer protections are in place. Click here for more information on the specifics of the bill currently under consideration.

Essentially, the keys to the legislation would place a limit on how many cash advance loans a consumer can have at one time and ensure that an installment plan is available for those who have difficulty repaying on time. The former restriction would be enforced by a real-time independent database similar to those currently in place in Florida, Oklahoma, Illinois, Colorado and Michigan. Cato considers these measures, as well as others provided in the bill, to be “balanced.”

Need a payday loan, South Carolina?

Cato expects that talk of banning payday loans in South Carolina won’t go away, but he also expects that level heads will prevail. Thousands of South Carolinian’s (including Cato’s constituents) have a legitimate need for the product. Thus, any reform should ensure that accessibility and availability of the product are untouched. As he puts it, “reforming payday loans instead of banning them will ensure that South Carolina is protecting its citizens with additional regulations and consumer protections while still allowing access to needed short-term credit.”

No matter where you live in America, the right to a payday loan should be preserved. Government should be allowed to place reasonable safeguards that protect consumers in borrowing situations, but they should not be allowed to attempt to regulate behavior and responsibility. It is essential that citizens retain their conscious right to choose what they will do with their money and when they use products like the payday loan during emergency cash situations.