Payback Time for Payday Loans – Contest Winner

March 6, 2007

Thanks to everyone that participated in the Payday Loan Payback contest! I’ve listed the two stories that were submitted below and have bolded some key points.

Charles Rady
I’ve used one in Florida…..right after hurricane “Charley” came through and wrecked my house. I needed the fast cash to do some immediate repairs, but ended up in a cycle due to the high interest and payed them over and over again until I could catch up a year later. The interest was just below 25% and you had to pay on time or you stood a chance of not getting another one or paying more.

I am currently trying to pay off a payday loan
. It started in October 06 when I went to visit my mom down south. I ended up going out with my brother and his family to more places than originally planned (more $), went to the mall and bought some clothes because it was too hot to wear the ones I brought down with me, my mom needed a couple of things repaired in her apartment, she’s on a fixed income and I paid for them. When I got home and tallied everything up, I had less money than I thought. I spent more than I should have. I took out a $400 payday loan to ease the pain. The biweekly “interest” on a $400 loan is $88. So, you have to either pay $488 to pay the loan off completely or pay $88 interest to “roll over”. After that my car broke down and I had to roll over the loan a few times. Then it was Christmas and I had no money, so of course, I ADDED to the loan – another $400 to cover the shortage. Now the interest payments are $176 every two weeks. I can’t afford to pay down the loan because the interest payments are eating up all my available money.

I’ve been saving a bit of money every day for the last couple of months, 3 dollars a day exactly, as suggested by Brian Flemming’s blog – the Million Dollar Club. About 3 weeks ago I put in overtime at work. Between the overtime and part of my little savings pile, I paid down half the loan. Last pay period I paid down an additional $100 towards the loan. Next pay period I will be paying off the rest of the loan even if it means $25 left for groceries!

The interest rates for these things are too high! If you need the loan, you will not be able to pay it back. At least not until you roll it over a bunch of times and pay a huge amount of interest. I didn’t have any money put aside for savings before this, I didn’t save enough for my trip, and I didn’t plan ahead for an unexpected expense and for Christmas. It was my lack of planning that caused me to pay all these fees. HOWEVER, the loan companies charge a huge interest rate. These companies are rolling in huge profits. And they even make you sign a paper stating the clerk has told you how much you are approved for. I don’t remember exactly, but I was approved for almost $1000 loan. Much more than I could ever pay back with those types of rollover fees/interest.

I’m now saving every day. I wish I would have saved the $176 every two weeks towards an emergency fund instead. My outlook and discipline has definitely changed. I’ve discovered personal finance blogs as a result. But it was a costly experience. Sorry, long post…

I’m flipping a coin, Emm heads, Charles tails. The winner is ….. Emm. Congratulations, I’ll email you to find out your PayPal email. Thank you Charles and Emm for sharing your stories, hopefully someone will learn from your experience.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to Payback Time for Payday Loans – Contest Winner

  • Payday Loan

    Payday loans can be a useful tool in the short run, but is fraught with pitfalls in the long run. For those that don’t know how payday loans work, the “payday loan” link will enlighten you.

  • ispf

    […] But when a pay day loan company approached Ben @ Money $mart Life and offered to pay $50 for a mention on his blog, Ben decided to get creative and it was payback time for payday loans. Like a modern day Robin Hood, he accepted the money from the payback loan company and offered it in a contest to someone who shared their story of dealing with payback loans. Here are the heart wrenching stories of Charles and Emm. Kudos to Ben for his resourcefulness and Charles for getting out of the trap, and good luck to Emm for paying off her payday loan and starting a savings fund. […]

  • Ben

    Emm, congrats on paying off the loan!

  • Emm

    Thank you Ben! The $50 is going straight into my ING savings account.

    I’m happy to report that yesterday I paid off the payday loan completely!! Yay! I’m so happy about that, it’s such a relief!


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