Payday lenders charge up to 1,400% interest
June 27, 2008
Payday loans have grown exponentially in states where they're still legal. The Orlando Sentinel recently had a story about a lender who went way beyond what the law permits and charged 1,400% interest!
How can you know a payday lending operation if you see one? Well, they target people who are absolutely desperate for money. They're typically in well-lit storefronts and are staffed by friendly employees who work extended hours to loan money with no questions asked.
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CLARK'S TIP TOPICS
Find more consumer advice in Clark Howard's book, "Get Clark Smart" |
It's not unusual for a typical payday loan to have interest rates between 300% and 700%. That's a far cry from the 15% to 20% interest you may be paying on your credit card. The sad thing is that payday lenders aren't required to disclose their interest rates in states where their lobby has bought off legislators.
The military recently got Congress to protect soldiers from the threat of payday lenders; some servicemen and women had their finances demolished and weren't allowed to deploy. Now the rate on loans has been capped at 36% for military and their families. But Clark's heard anecdotally that certain payday lenders are ignoring this and sacrificing patriotism for profit.
Clark had the pleasure of testifying in a state legislative hearing when the payday industry was trying to get its practices legalized. He excused himself to the chairman several times and glared back at the audience, which was packed with payday lenders. Not that they cared. Payday lenders are sociopaths who financially kick you when you're down and don't care about the harm they visit to families.
So it comes back to you to be your own police officer, know the dangers and avoid them. Beware also that many payday lenders have migrated to the Internet.
People's economic expectations the worst they've ever been
June 26, 2008
A highly respected organization called the Conference Board is known for issuing reports that usually only appeal to pointy-headed economists. But right now their reports are getting a wider audience in regular newspapers because they're so headline grabbing.
Here's the latest scoop: People's expectations about the economy are the worst they've ever been since the Conference Board's survey started decades ago. In an unusual twist, people are really personalizing their worries. It's not just affecting the "guy down the street" anymore. A separate Bloomberg study reveals that 75% of people blame Pres. Bush for the economy's woes. Even among Republicans, there's a 2-to-1 ratio of people who say it's all Bush's fault. The truth is presidents are given too much credit when things are great and take too much blame when things go wrong.
Through it all, Clark remains optimistic for our country. We have inherent advantages. We run -- for the most part -- a clean economic system that's free of corruption. We have the rule of law. Many other places don't have either of these. We also have our entrepreneurial spirit.
If entrepreneurs listened to the naysayers when they had a new idea, nobody would ever get started. Clark opened his first travel agency in 1981 at the tender age of 25. At that time, a know-it-all who worked for Eastern Airlines tried to dissuade him. Well, Clark's business went on to boom and the know-it-all had to jump ship when Eastern collapsed.
The truth is that how we handle our wallet creates more insecurity than we need to have. You must spend less than you make -- period. Owing money to everyone is no way to live because it creates intense anxiety.
We've got to get into the mindset of de-leverage, which is a fancy term that means spending your own money instead of borrowing other people's money to spend.
Real estate developers used to be able to borrow 100% for their builds. Now it's a different story. The pendulum has swung back. Look for a decrease in the number of shopping centers, office buildings, speculative residential builds and more. This will help bring us back into balance.
For the time being, step back from the doom and gloom if you can.
Could you withstand a 50% decline in income?
June 24, 2008
According to Business Week, you now have a 1 in 4 chance of experiencing a 50% decline in your income because of a job loss. That puts most of us in a very difficult spot as the average American family is not saving and continues to live on borrowed money. ... More
Seniors racked with debt during the golden years
June 18, 2008
There's been a disturbing spike in bankruptcy filings among senior citizens. The Consumer Bankruptcy Project finds that bankruptcies are up a whopping 433% among older seniors and 125% among younger seniors. ... More
Clark continues to be impressed by Mint.com
June 18, 2008
Clark's now been using Mint.com for several months and loves it. Here's how it works: You register all your accounts with them and they analyze your spending to tell you if you'll meet your financial goals. ... More
More recent Money Management Tips from Clark:- Avoid the full-commission stock broker trap
- Avoid the full-commission stock broker trap
- Scams heat up when economy cools down
- The dangers of purchasing employer stock
- Free budgeting tools online!
- Clark explains confusing investment terms
- Avoid money-market funds that break the buck
- Don't let the state decide what to do with your estate!
- 75 million have no access to retirement-savings plans
- New rules coming for 401(k) investments
