7 ms·

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live? People take

Isn't the problem less about predatory payday loans and more an existential issue around the fact that so many people can't afford to simply live? People take these bad loans because they literally have no other choice. They are using these loans to buy groceries and cover bills, not splurge on non-essentials.

rosser 8y ago
I grew up in a flyover state with a history of very creditor-friendly laws and (limited) legal gambling. It's boringly, heartbreakingly common there to see small, multi-tenant commercial buildings where one of the tenants is a payday loan place, and another (if not the other) is a "video lottery"/casino type joint. In the limited digging I ever bothered doing, both establishments (and often the building) were ultimately owned by the same party. So, no. Not predatory at all...
- MRD85 8y ago
  In Australia we have widespread legal gambling. We have all sorts of laws about where you can even place ATMs near gambling facilities. If the laws made it legal I'm positive we'd have loan shops next to gambling facilities.
andrewla 8y ago
I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, branch merges/integrations used to be very expensive (in cvs/subversion/perforce) and thus were done rarely, and were more expensive and difficult because changes had more time to accumulate, but with DVCSs the problem is flipped on it's head and now we merge branches routinely without fear. We need to fix payroll so that running it on a nearly continuous basis is possible. [1] https://twitter.com/ESYudkowsky/status/1093187875166797824 https://twitter.com/ESYudkowsky/status/1093187875166797824
- dawhizkid 8y ago
  Right - there are startups that are doing this i.e. https://www.crunchbase.com/organization/activehours https://www.crunchbase.com/organization/activehours has raised $190m and in the top 20 finance apps in the app store. I assume these customers have less a need to take out a payday loan, but it could also be the case that expenses > pay regardless of when you receive income throughout the month.
- knicholes 8y ago
  If I were paying a bunch of employees, I'd like to hold onto the money for a couple weeks before paying it out if only to mooch off of the small bank interest.
- numbsafari 8y ago
  Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.
  - andrewla 8y ago
    For point c this is completely untrue; you in fact can’t get a payday loan without a bank account, and many of the most sleazy practices of payday lenders (and all of the practices banned by the rule) are related to charging fees against bank accounts. A and b are both true but don’t seem especially relevant; payments can still be made on a daily or hourly basis based on the work they are doing rather than bundled up at the end of a pay cycle.
  - basementcat 8y ago
    I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.
    - numbsafari 8y ago
      From what I have seen, they typically only ask for your most recent pay stub.
kevin_thibedeau 8y ago
How many struggling people are spending $200+ monthly for overpriced cell and cable service?
- philjohn 8y ago
  Far fewer than you'd think. Your comment isn't a particularly helpful thing to say as it attempts to paint struggling people as frivolous, and undeserving of help. There are many people who are barely scraping by, they drive an old car (because public transport in many places is a joke), and they're just one expensive repair away from having to make hard decisions.
- minikites 8y ago
  Very few, the "welfare queen" idea is largely unsupported by actual evidence, despite chain emails claiming to document someone buying [luxury food] on food stamps.
  - SilasX 8y ago
    Food stamps can be used to purchase lobster. I don't know why you think that's impossible. Edit: I've even seen fast food places accept EBT.
    - mywittyname 8y ago
      People who seriously object to SNAP, or find it to be too generous should seriously spend a month on it. It's legitimately difficult to shop and budget around because it so restrictive and you don't get much. Yeah, you may technically be able buy some lobster with your SNAP, but it would cost several days worth of benefits to do so. But if someone is willing to go hungry for a few days in order to indulge in a modest luxury, then why not let them? The whole point of these "free market" welfare programs is that people know best how to spend their money.
      - SilasX 8y ago
        >But if someone is willing to go hungry for a few days in order to indulge in a modest luxury, then why not let them? The whole point of these "free market" welfare programs is that people know best how to spend their money. I completely agree, but the typical case isn't "hey, I rewarded myself for showing restraint in spending my benefits while I work myself out of poverty" (which I completely support) but "stars above, it wasn't enough, again, woe is me, I need more indefinitely and why change if they'll cut my benefits ones I have gainful employment?". But back to the original topic, it's fine to argue that the typical food stamp recipient isn't high on the hog. It's not fine to act like no luxury good has ever been bought on food stamps, and every recipient is a meticulous steward of taxpayer's largesse, ceaselessly working toward the day when they don't need public assistance.
untog 8y ago
Sure, but which one is easier to solve: predatory payday loans or the unaffordability of life? The instinct to want to solve the big problem is a good one, but it's a path to hell paved with good intentions. You'll end up struggling to ever solve the big problem, and ignore a series of effective, small fixes along the way.
- munk-a 8y ago
  It isn't so difficult to fix the unaffordability of life, the US government was, for a while, quite happy to experiment with programs that aided the working poor by providing financial relief so they could secure more stable employment and lives - Helsinki recently invested in a distributed free-housing campaign that has had a noticeable impact on poverty. The US is stuck in a silly "American Tough" outlook of people pulling themselves up by their bootstraps when a little bit of well targeted aide can help society immensely. There is a wonderful old MLK quote > We all too often have socialism for the rich and rugged free market capitalism for the poor so as a society we should closely examine the money that gets funneled to quantitative easing, subsidies for fossil fuels and other corporate bailouts, along with the reduction of progressive taxes like luxury and estate taxes... and consider how far that money would go if put into SNAP, CHIP and public housing.
basementcat 8y ago
I think a component of the "problem" (if one considers this to be a problem) is the low level of financial literacy of a large part of the adult population. An ecosystem of a variety of lending products is wonderful for a population of educated consumers that make smart financial decisions. It is painful for me to watch individuals who consistently make poor financial decisions spiral into providing the payday loan industry with a large amount of revenue. But is it really more painful than watching compulsive gamblers lose their pensions on card games or video poker or speculation on regulated index futures?
- towelr34dy 8y ago
  I didn't know freedom meant people doing stuff that sucks. Quote by someone.
WhompingWindows 8y ago
Why can they not afford to live? Payday loans may be a factor in some instances. Better to have a small piece of policy that does some good than no policy at all. Keep in mind Obama was limited by the GOP congress from 2011-2017, he couldn't have necessarily gotten larger steps through legislation. It's commonplace for modern presidents to try to fulfill their agenda via executive branches, as the other branches are often independent or adversarial.
srmatto 8y ago
My understanding is that in a lot of cases its that some emergency spending event sets these people back and there is almost no way for them to recover from that. In NYC Neighborhood Trust helped to develop this app in an effort to serve these people and help them avoid that type of circumstance. http://finlab.cfsinnovation.com/challenges/2015/paygoal/ http://finlab.cfsinnovation.com/challenges/2015/paygoal/
potta_coffee 8y ago
I'm sure that some people can't afford to live and take these loans. I've also personally known people who take them because they're terrible at managing money, and they make impulsive choices.
- towelr34dy 8y ago
  So what should be done?

rosser 8y ago

I grew up in a flyover state with a history of very creditor-friendly laws and (limited) legal gambling. It's boringly, heartbreakingly common there to see small, multi-tenant commercial buildings where one of the tenants is a payday loan place, and another (if not the other) is a "video lottery"/casino type joint. In the limited digging I ever bothered doing, both establishments (and often the building) were ultimately owned by the same party. So, no. Not predatory at all...

MRD85 8y ago
In Australia we have widespread legal gambling. We have all sorts of laws about where you can even place ATMs near gambling facilities. If the laws made it legal I'm positive we'd have loan shops next to gambling facilities.

andrewla 8y ago

I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, branch merges/integrations used to be very expensive (in cvs/subversion/perforce) and thus were done rarely, and were more expensive and difficult because changes had more time to accumulate, but with DVCSs the problem is flipped on it's head and now we merge branches routinely without fear. We need to fix payroll so that running it on a nearly continuous basis is possible. [1] https://twitter.com/ESYudkowsky/status/1093187875166797824 https://twitter.com/ESYudkowsky/status/1093187875166797824

dawhizkid 8y ago
Right - there are startups that are doing this i.e. https://www.crunchbase.com/organization/activehours https://www.crunchbase.com/organization/activehours has raised $190m and in the top 20 finance apps in the app store. I assume these customers have less a need to take out a payday loan, but it could also be the case that expenses > pay regardless of when you receive income throughout the month.
knicholes 8y ago
If I were paying a bunch of employees, I'd like to hold onto the money for a couple weeks before paying it out if only to mooch off of the small bank interest.
numbsafari 8y ago
Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.
- andrewla 8y ago
  For point c this is completely untrue; you in fact can’t get a payday loan without a bank account, and many of the most sleazy practices of payday lenders (and all of the practices banned by the rule) are related to charging fees against bank accounts. A and b are both true but don’t seem especially relevant; payments can still be made on a daily or hourly basis based on the work they are doing rather than bundled up at the end of a pay cycle.
- basementcat 8y ago
  I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.
  - numbsafari 8y ago
    From what I have seen, they typically only ask for your most recent pay stub.

kevin_thibedeau 8y ago

How many struggling people are spending $200+ monthly for overpriced cell and cable service?

philjohn 8y ago
Far fewer than you'd think. Your comment isn't a particularly helpful thing to say as it attempts to paint struggling people as frivolous, and undeserving of help. There are many people who are barely scraping by, they drive an old car (because public transport in many places is a joke), and they're just one expensive repair away from having to make hard decisions.
minikites 8y ago
Very few, the "welfare queen" idea is largely unsupported by actual evidence, despite chain emails claiming to document someone buying [luxury food] on food stamps.
- SilasX 8y ago
  Food stamps can be used to purchase lobster. I don't know why you think that's impossible. Edit: I've even seen fast food places accept EBT.
  - mywittyname 8y ago
    People who seriously object to SNAP, or find it to be too generous should seriously spend a month on it. It's legitimately difficult to shop and budget around because it so restrictive and you don't get much. Yeah, you may technically be able buy some lobster with your SNAP, but it would cost several days worth of benefits to do so. But if someone is willing to go hungry for a few days in order to indulge in a modest luxury, then why not let them? The whole point of these "free market" welfare programs is that people know best how to spend their money.
    - SilasX 8y ago
      >But if someone is willing to go hungry for a few days in order to indulge in a modest luxury, then why not let them? The whole point of these "free market" welfare programs is that people know best how to spend their money. I completely agree, but the typical case isn't "hey, I rewarded myself for showing restraint in spending my benefits while I work myself out of poverty" (which I completely support) but "stars above, it wasn't enough, again, woe is me, I need more indefinitely and why change if they'll cut my benefits ones I have gainful employment?". But back to the original topic, it's fine to argue that the typical food stamp recipient isn't high on the hog. It's not fine to act like no luxury good has ever been bought on food stamps, and every recipient is a meticulous steward of taxpayer's largesse, ceaselessly working toward the day when they don't need public assistance.

untog 8y ago

Sure, but which one is easier to solve: predatory payday loans or the unaffordability of life? The instinct to want to solve the big problem is a good one, but it's a path to hell paved with good intentions. You'll end up struggling to ever solve the big problem, and ignore a series of effective, small fixes along the way.

munk-a 8y ago
It isn't so difficult to fix the unaffordability of life, the US government was, for a while, quite happy to experiment with programs that aided the working poor by providing financial relief so they could secure more stable employment and lives - Helsinki recently invested in a distributed free-housing campaign that has had a noticeable impact on poverty. The US is stuck in a silly "American Tough" outlook of people pulling themselves up by their bootstraps when a little bit of well targeted aide can help society immensely. There is a wonderful old MLK quote > We all too often have socialism for the rich and rugged free market capitalism for the poor so as a society we should closely examine the money that gets funneled to quantitative easing, subsidies for fossil fuels and other corporate bailouts, along with the reduction of progressive taxes like luxury and estate taxes... and consider how far that money would go if put into SNAP, CHIP and public housing.

basementcat 8y ago

I think a component of the "problem" (if one considers this to be a problem) is the low level of financial literacy of a large part of the adult population. An ecosystem of a variety of lending products is wonderful for a population of educated consumers that make smart financial decisions. It is painful for me to watch individuals who consistently make poor financial decisions spiral into providing the payday loan industry with a large amount of revenue. But is it really more painful than watching compulsive gamblers lose their pensions on card games or video poker or speculation on regulated index futures?

towelr34dy 8y ago
I didn't know freedom meant people doing stuff that sucks. Quote by someone.

WhompingWindows 8y ago

Why can they not afford to live? Payday loans may be a factor in some instances. Better to have a small piece of policy that does some good than no policy at all. Keep in mind Obama was limited by the GOP congress from 2011-2017, he couldn't have necessarily gotten larger steps through legislation. It's commonplace for modern presidents to try to fulfill their agenda via executive branches, as the other branches are often independent or adversarial.

srmatto 8y ago

My understanding is that in a lot of cases its that some emergency spending event sets these people back and there is almost no way for them to recover from that. In NYC Neighborhood Trust helped to develop this app in an effort to serve these people and help them avoid that type of circumstance. http://finlab.cfsinnovation.com/challenges/2015/paygoal/ http://finlab.cfsinnovation.com/challenges/2015/paygoal/

potta_coffee 8y ago

I'm sure that some people can't afford to live and take these loans. I've also personally known people who take them because they're terrible at managing money, and they make impulsive choices.

towelr34dy 8y ago
So what should be done?