Pay Day Loans are for Lazy People…Do This Instead!

Recently, I had a conversation at the Financial Blogger Conference and Pay Day Loans came up. First off, I was kind of surprised to hear a financial blogger say that these loans had their place because most bloggers agree that these types of loans are dangerous and avoidable. At the time my mind was spinning a hundred miles a minute but I said nothing because not only had I just arrived at the conference, but I know that debates like this are rarely productive (especially with a financial blogger). So I bit my tongue but I do have an opinion and thought I would start a discussion here instead.

I think pay day loans are for lazy people.

I do realize that statement may bother a few of you but I believe it is accurate and here’s why. These loans are unnecessary and I believe a majority of people who get them have not run through all of their options. To me it’s like filing bankruptcy because you don’t want to do the hard work it’ll take to pay off your debt. The easy way out is hardly the best option most of the time but I realize there might be an extremely small percentage of situations where this could be a last resort. But please notice my emphasis on EXTREMELY SMALL.

People will tell you that getting a loan of this nature is necessary because they need to pay their rent or mortgage, keep their utility services from getting shut off, or because they desperately need to put food on the table. These are all real needs that should be addressed but there are better solutions and alternatives to pay day loans.

The truth is that pay day loans generally “help” people who have not made the important financial decision to transform their finances, nor do they wish to address the problems and behaviors that caused their dire need in the first place. That is unfortunate and I refuse to ever suggest that these types of predatory loans have their place in a responsible decision making process. They usually end up causing a cycle of despair since the money borrowed must be repaid and when it is, the need for the missing cash still exists. This causes the person receiving the loan to get another loan and another and another. Do you see the danger?

Why is it that such an expensive route to solve a problem is considered acceptable by some? More so, why is it that people fail to observe the expensive nature of these loans and how they tend to make a bad financial situation even worse? I have seen it with my very own eyes within my very own family. The cycle is vicious and it doesn’t care if it destroys you or your future, it only cares about receiving the interest you agreed to pay. And pay you will.

In fact, The Federal Trade Commission says Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives. I have come up with a short list of alternatives I think are much more productive than the lazy approach.

Pay Day Loan Alternatives

How do people with real needs avoid using pay day loans? Here are a few things to consider before making the decision to sell your soul to a predatory agent of darkness. Yeah, I said it.

Pick up the phone.

You’d be surprised to find out how many people fail to pick up the phone when facing turbulent times. Sometimes the solution can be found in a simple phone call to the business you owe money. If you are behind on your rent, mortgage or utilities, communication can go a long way. I think we often get caught up in the fear of admitting we’ve fallen behind and our egos keep us from taking this step. Is that a good enough reason to pay outrageous fees and interest? I think not. The thing that causes businesses to come after their money aggressively is the lack of communication so keep this in mind before you choose to ignore your responsibility by dodging this easy alternative.

Visit a local church or food bank.

This is a powerful solution to filling an obvious need in the community, because after all, if there were no demand for pay day loans these companies wouldn’t exist. I made a quick call to my church to find out what kind of programs are in place locally that are designed to address this need. Not only is there a big network of churches who cooperate with a local organization but there are churches who do the same thing outside of this network. What’s even better is that these community services aren’t loan based at all. It’s simply an act of love and generosity from people who really care. After also doing a Google search for food banks in my area I quickly found more than a handful of places ready to help. For example, The Blue Ridge Food Bank locally serves on average about 92,000  people each month. These places exist for a reason and it bothers me that someone would resort to mating with Satan rather than visiting a food bank or a church to ask for help. Is it bad to say mating with Satan and church in the same sentence?

Work overtime or find a job on the side.

It amazes me at how many people over look this option. I certainly understand parents with kids who already work a lot and just don’t have the time or ability to do this (at least in the traditional sense), but I have known single people resorting to pay day loans instead of working an extra job or asking their boss for over time. With that said, there are all kinds of things people can do in any situation to make a few extra dollars. It may take some creativity but you would be surprised at how inventive your mind can be when you are in a pinch. Use that to your advantage.

Sell some stuff.

SELL. YOUR. STUFF. In other words, before selling your soul to the devil, sell your big screen television instead. Look around the house at all your material possessions and decide what you can do without. My wife uses craigslist and eBay religiously to constantly purge our home of unneeded crap but she also buys from yard sales and thrift stores to purposely resell. Give it a try and find out why it’s a much better solution to your immediate needs than getting gobbled up by a horrible financial product.

Cash advance from your employer.

If all else fails and you are having trouble with any of the above, a last resort could even be to ask your employer for a cash advance. Technically, this is the same thing but without the fees and interest and some employers will work out a payment plan so a little comes out of each check. Just don’t make this a habit because not only does it tell your employer you are in financial trouble but it also screams that you may not be management material.

If you fail to do any of the above before ringing the devil’s doorbell isn’t it out of pure laziness?

Photo Credit

About Brad Chaffee

14 Responses to “Pay Day Loans are for Lazy People…Do This Instead!”

Read below or add a comment...

  1. This is so true. There are many other ways to solve these types of problems. What really bothers me is the tenants who can’t afford the rent but have a bigger screen TV than me and an iPhone.

  2. Sassy says:

    I worked at a pay day loan place a few years ago. I have to agree with you. It is laziness! What really bothers me is that most of the users of these services don’t work out the numbers for the long run.

    We charged 7.5% per hundred, per week. Most people would borrow typically $300-$500 at a time (it was based off your income on how much you could borrow). So say someone borrows $300 til their next payday. $300 x7.5% for two weeks= 46.68 just in interest. And don’t think that these people are only intending to borrow it for the 2 weeks. You can just go in and roll it til the next payday by paying the interest charge. They were allowed 4 times to do this until they had to pay the full amount back. Once it is paid back in full, you can start the cycle again. If someone had actually accounted all the interest charges they were paying, I am sure they wouldn’t have continued the cycle. Pretty sad to me.

  3. Payday loans are insane. They don’t allow them in AZ anymore. They still have Title loans, but at least there is a worst case scenerio end to that… they take your car. There is also a smaller percentage of people who can use Title Loans since you have to have your car paid off. They’re bad, but they are slightly better than traditional payday loans.

    • Brad Chaffee says:

      Good for the state of Arizona, or should I say the citizens of that state? While I think there is a grey area in disallowing anyone to sell and charge whatever they want to in a free market, I think these kinds of loans are comparable to raising your prices on plywood because the town next door is about to get hit by a hurricane — above the normal changes due to supply and demand fluctuations of course. If they changed one thing I would be happy like the fact that they generally take the money out of the next check instead of spreading it out in a more reasonable period. Paying something off in one pay period as opposed to four pay periods makes it harder for the person in the bad situation from really getting out. It’s almost like a trap and that’s why I don’t like them! ENEMY OF PAY DAY LOANS baby! :)

      At least with title loans people have an idea that if they don’t pay by “said date” they will lose their car.

  4. This is right on point, when people factor in the use of payday loans they are just being lazy. Bravo to you for offering other options! I think Payday loans are the scam of the middle/lower income class in America, I wish all states would outlaw them like Arizona.

    • Brad Chaffee says:

      Yeah they are pretty retched. :) Sorry your comment took so long to appear, I had to dig it out of the spam folder for some reason. :(

      Glad I found it. Hopefully your comments won’t go there anymore. :)

  5. Linda says:

    This is BS. I have a friend who is a single mother of two children and works a full-time job, often working overtime. She went out of a town for the first time in ages to visit her sick mother and when she came back business was slow (tip-based job) and her first check was wayyyyyy lower than normal. I tried to talk her out of taking out a payday loan but she was so strapped for cash and bills she did it. She is the least laziest person I know. She does everything to help her family and is the best mother I know…so for you to call everyone lazy who takes out a mortgage payment is garbage and untrue.

    • Brad Chaffee says:

      Linda, as usual there is always one person WHO JUST DOESN’T GET IT!

      First off I didn’t say anyone who gets pay day loans isn’t a good mother, I said they are lazy. And not in the sense that they’re not willing to work but in the sense that they’re not willing to exhaust all other options before selling their future labor to the highest interest taker.

      A single mother should be more prudent than any other because their children’s future hangs in the balance. I’ve seen this cycle swallow people whole and once they get in it’s bad.

      Pay day loans are a rip off and if you read my post you would have seen my point. You likely read the title and wrote a comment based on your emotional response.

      Did you see the list of items I suggested people try before they take the Payday Loan plunge? Did “your friend” do that or anything else before she decided that the payday loan was the only option left? Did she try any other ways to make money? Did she go through her house to see if there was anything she could sell? I guess not because if she had she would have figured out a much better way to do so. That is why I used the word lazy.

      People do not take the time anymore to figure things out before doing something stupid AND unnecessary. People are impulsive. They just run out and get payday loans, file for bankruptcy without ever considering other options and that to me is giving up. It’s lazy!

      And from my experience helping people who find themselves at rock bottom financially, they almost ALWAYS are unwilling to sacrifice anything at all to change their situation. Not always the case but 9 times out of 10 it is.

      If you’re so desperate you need a payday loan to make ends meet, then you should also be able to come to the realization that you need to make some drastic changes in order to make things better. The problem is that doesn’t happen. I’ve seen it with my own eyes. I’ve listened to people explain to me they didn’t have anything to sell in their house all while their kids are watching cable on a big screen television with a Playstation 3, tons of games, and an entire rack full of home movies in the entertainment center.

      Pay day loans are the DUMBEST way to fix a financial situation that I can think of. The point was that there are options and people should look for them before they find themselves caught up in the payday loan cycle. End of story.

      Are there exceptions to everything? Absolutely, but they are called exceptions for a reason. The exceptions shouldn’t be the rule.

  6. Linda says:

    “My friend” actually is my friend. Thankfully, I’m a 22 year old finance graduate with no children. I know the dangers of payday loans. My friend isn’t the brightest, I’ll give you that – but that’s why I hate payday loans – they’re predatory and pick on the weak and uneducated who don’t know any better. Yes, lazy people too, but not always. My friend may not be the smartest, but she’s not lazy. I begged and begged for her to do something else but a payday loan, but in the end that’s what she did. I just feel a little insulted for it to be insinuated that all people that take out payday loans are lazy, when some are just greatly being taken advantage of and not the smartest. I hate payday loans and think they should be illegal. Sorry to offend you so much.

  7. Linda says:

    Oh, I even told her that payday loans can have annual rates up to 400%. As someone who has studied finance I know better than to eve take one out. She didn’t believe me and said, “from what I see they are fair and they told me the rates are fair.” She really believed it was the best decision. That’s why I got so angry – I hate seeing people being taken advantage of. I’m sorry.

    • Brad Chaffee says:

      Linda, I understand where you are coming from, I do, but your response — or should I say your friend’s response (not sarcasm) — only proves my point. She wasn’t even willing to take advice from someone who did know better. She saw the easy option and opted for that instead of seeking out other more beneficial options — options that do exist. She was in fact lazy in that regard. Her justification was just that — a justification for taking the easy road.

      People justify filing bankruptcy on $30,000 and say they had no other choice but let’s be real — they filed bankruptcy on $30,000! I know people who are working their tails off to get out of over $100,000 of debt when they could have said the same thing. It just takes work and if you’re unwilling to put in a little work and sacrifice — in my opinion — that says your lazy.

      Now I know that doesn’t apply to absolutely everyone but it definitely applies to the majority and in this case, I still think it applies to your friend. I doubt your friend got a payday loan because she’s not that smart, she got a payday loan because people naturally want to take the path of least resistance. (Payday Loans, Bankruptcy, Weight Loss pills and bariatric surgery etc). I know someone in my family that only had 30-40 pounds to lose and she got LapBand surgery in Mexico. I see it all the time.

      I’m guilty of taking the path of least resistance myself trust me.

      But when I stopped making excuses and justifying bad behaviors I got out of debt. When I stopped making excuses and justifications I lost 70 pounds. It’s not any different for anyone else, it’s just a matter of what they are willing to do to change their circumstances. Sadly, most people aren’t that willing to do what’s necessary.

      We definitely agree on what Payday loans are and that they prey on the poorest of society. That’s why you see them scattered in the poorest of neighborhoods. That is unfortunate but that’s exactly why I wrote this post. Personally I wanted to ruffle some feathers because in my opinion the truth really does set us free. My blog is subtitled Where Behavior Meets Reality because I don’t feel sugar coating the truth gets anyone anywhere.

      Had your friend come across a post telling her it was lazy to get a payday loan instead of seeking alternatives it may have knocked some sense into her.

      I apologize for responding the way I did by insinuating that your comment wasn’t about your friend at all. That was wrong. I suppose your comment did rub me the wrong way but mostly because I feel it’s so easy for people to overlook the point of an article because they’re caught up on one little circumstance or scenario that may not apply across the board.

      I still stand by my article though but I can agree that there might be some very dire circumstances that would require someone to get in bed with the payday loan sharks, they’re just so slim that I couldn’t tell you what they are. I think those circumstances are so slim because of the reasons I stated that I didn’t feel I should write to the minority.

      I do appreciate you responding back even though I was a bit unfair to you. Thanks! :D

  8. Michelle says:

    Hmm, I don’t like this post but do get where it’s coming from. I think I should write a post about payday loans sometime soon. Thanks for generating an interesting conversation on this topic. Can’t wait to tackle this subject and see what you think.

Leave a Comment...

*