LIVING OFF DIVIDENDS & PASSIVE INCOME

I’ve been talking about people who blog for money. Well I’ve been making some money off advertising at the bottom of my blog. Well I’ve been paid to post this article on Responsibility In Pay Day Loans. What do you guys think of people who monetize their blogs in this way?

Choice And Responsibility In PayDay Lending

As of December 20th, 2006 there have been a total of 11 states that have banned payday lending. The payday industry has become a target of state and federal agencies that believe that the high rates of interest on payday loans constitute predatory lending for low-income families. By cutting off this source of emergency cash, the state and federal government has decided it knows best when it comes to consumer lending even when payday lending has been a viable industry in 39 other states for much time now. The states and federal government have not offered a different alternative to meet the fiscal needs that the payday lenders were servicing, essentially leaving many poor families with no way to get emergency funds when they need them. They believe they are doing the right thing.

Individual Freedom To Choose

This issue is not a simple one, by any means. The right of the individual to live as they see fit has always been a basic liberty in the United States. The government knows that guns kill people, but they don’t ban them. They know that people die from not being able to get high-priced medicines, but they don’t lower the cost of the drug. They know that most people will require taking out massive debt to attend an institute of higher education, but they do not regulate the tuitions of private institutions. These are seen as private choices made by the private individual and government doesn’t interfere. With these choices comes the individual responsibility associated with those choices. So, why regulate the payday industry? Whereas in certain instances the individual’s right to choose is held as sacred, in other cases, such as payday loans, government makes what appears to be an arbitrary decision to choose for all its citizens.

What Drives People To Make Bad Loans?

When one examines the forces behind bad loans, one often finds someone who made a bad financial decision for themselves. There are many other people who understand our credit system and use it responsibly. They understand that non-payment of bills can give one a poor credit rating. A poor credit rating causes interest rates on future loans to shoot up or become entirely unobtainable. They know how to get their credit reports for free from Equifax, TransUnion, or Experian, and how to dispute the credit entries. They know how to negotiate with their lenders and how to build up a better credit history. They know how many loans they can budget and how to use them properly. Those that do not have this information make bad loans for themselves, not understanding the dynamics of the lending market in place.

Payday lenders typically do educate their consumer on the terms of repayment and the interest rate due. These are clearly outlined before the loan is made. The consumer is aware that the interest rate is high, but if a late bill poses a $30 late fee and a payday loan only takes $25, this is the better alternative in the short-run. Payday lenders will generally require that the borrower affirm that they do not have more than one other payday loan outstanding at the time they ask for a loan. If someone lies and has multiple loans and then gets in trouble paying them all back on time, it’s simply a case of people making bad loans for themselves. They are advised not to take out multiple loans at the same time, and they do so anyway.

Educating One’s Self Is The Key To Financial Prosperity

There are plenty of people who use payday loans responsibly. As with any lending product, there are others who get in trouble. However, it has always been an American concept to give the consumers the freedom to choose for themselves. It might be easy for people who have a good credit history and little trouble making their bills to decide that payday loans are not necessary. However, there are many low-income people with no other form of emergency cash that would disagree with this position. In the end, the individual earns the money and the individual chooses how to spend it. Instead of limiting people’s options, it might be wiser to increase their financial education.

This post was sponsored by NationalPayDay.com.

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