I Fell Into the Payday Loan Trap!

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I Fell Into the Payday Loan Trap!

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I Fell Into the Payday Loan Trap!
The coach stopped basketball practice in a gymnasium in rural Minnesota when my pass sailed by the intended target and the ball bounced out of bounds.  He ran onto the court, and got in my face making sure I understood perfectly what I had done wrong.  He turned around and as he walked back towards the bench he barked something that I will never forget:

"You're the dumbest smart kid I've ever met."  

Even though I got almost straight A's academically, I was not a gifted basketball player.  I had two left feet, couldn't dribble, and the plays just never clicked with me.  That was the last year I went out for basketball.

My adulthood has followed much the same path.  I excel in my career as a software engineer, I work hard to be a great father and husband, and I've found my groove as a long distance runner. 

But when I fail, I fail hard.

I trembled as I walked into the payday loan store.  I had seen commercials for places like this.  I knew they were bad news, but out of funds and the next payday a week away, I couldn't think of any other solution.  I just couldn't admit to my wife the situation we were in.  I couldn't admit how big of a failure I was at handling our finances. 

The young woman behind the counter smiled, sensing my uneasiness.  She walked me through a short application process, and less than 15 minutes later, I walked out the door with an envelope stuffed with cash.It seemed like a great idea for exactly seven days.  Then payday came, and I had to repay the loan, plus a hefty sum for fees and services.  There was no way I could just pay back the loan, so I took out a new loan for the exact same amount.

I found out about the payday loan trap the hard way.

For the first few cycles I told myself, "This is the last time."  But paydays came and went, and each time it just wasn't possible to not re-take the loan.  Then I started thinking that I'd gradually reduce the amount of the loan each time, but even that was too difficult.  Every two weeks, the process repeated.  Over and over, again and again. 

The words of my 7th grade basketball coach echoed inside my head.

Eventually I realized I was never going to break the cycle without some outside help. I finally admitted to Vonnie what I had done. 

We turned to a family member to borrow money to pay off the loan. 

She was also generous enough to allow us to pay her back slowly, without the ridiculous interest rate and fees.

The reason it was so hard to get out of the payday loan trap is they granted me a loan based on my income level with complete disregard for my existing financial commitments.  I was in no position to take on a loan, but I was able to do so in minutes.  We were lucky to have a family member that was able to help us; otherwise, I honestly don't know how we would have broken that vicious cycle. 

Don't worry coach, I've learned my lesson. I won't make that mistake again.

Related Links:

Being Reminded of my Financial Mistakes

Straight Talk on Debt: We all Make Mistakes

What I Have Learned From my Mistakes

 Travis Pizel, Debt Management Plan Customer with Leading Provider of Debt Relief, CareOne Services, Inc. Travis Pizel

Travis is a contributing writer for the My Journey out of Debt and A Straight Talk on Debt blogs. He is also a very active member of the CareOne community forums. Travis is currently enrolled in a CareOne Debt Management Plan (DMP). Travis candidly shares his personal journey to pay off his debt and the tips he's learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family in Minnesota. You can also read more from Travis on the Enemy of Debt blog, where he is a featured blogger. Compensated Blogger for CareOne Debt Relief Services.

Follow Travis on Twitter @DebtChronicles

To connect with Travis on Google+ click the Travis Pizel

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  • Oh Travis, I remember wanting to walk into one of those places many times.  I am soooo thankful I ended up finding and joining CareOne before I did.  I am glad you got  out of that cycle!!!  It amazes me how easy it is to get lured into that payday loan cycle.  You continue to amaze me!

  • I can honestly say I have not been into one of those places. Ummmm Hmmmm Yeah... OK FINE. I sat in the van and made Daryl go in by himself... several times. Ugggg. It feels HORRIBLE to do that. Once again - Great post. Things are rocky right now and I need to be on my toes so we don't lose ground. No matter what is going on I have to keep us from backsliding so we do not go back there. One of the hardest things about it for me is that is was such a blow to my husband's self esteem.

  • I think we all understand the trap of the pay day loan but what I need is numbers. For example (and these are #s am I pulling out of my ass) if you got paid $1000 every 2 weeks and you had some emergency and you borrowed $500 and on pay day $650 (see, #s out of my ass) was zapped out of your account, you still had $350 left for the next 2 weeks.  Was it because more than $350 was going to be zapped out by other bills (mortgage, gas, hydro, etc)? What caused the shortfall? Other bills or rampant spending?

    Everyone I know who has ever fallen into the pay day loan trap did so not because of an emergency like a broken down car, or a sick kid but so they could go buy beer or go out or buy a new pair of shoes. I tried telling someone that if they just stayed in for 13 days they would be out of the trap. No going out to dinner, no going out drinking, no trips to the mall. All they had to do was  sit at home and read a book or play a video game they already owned or watch a DVD or spend a week doing a long forgotten jigsaw puzzle! But no. They could not stay in a mere 13 days.

    Perhaps you can help me fill in the gaps?

    Remember #s are totally out of my ass. Well except for the 13 days thing. 13 days is still 13 days.

  • You know what they say, Monica (mdavis1964), if it's too good to be true, it probably is.  It's super easy to walk into a payday loan office and walk out with money.  It's the next trip (to pay it back) that's not so easy.

  • I can identify with it being a blow to self-esteem, Kimmer5000.  I've had writing this post in the back of my mind for a long time....it was a tough one to write because falling into this trap has been a hard thing to come clean about.  Hoping things get a little less rocky for you soon!

  • So here's the scenario, Slackerjo - using the same numbers.  A person gets paid $1000 every two weeks.  Emergency comes up that costs $500, so a payday loan is taken out, and on the next payday, $650 is taken out of the account (for repayment + interest and fees) leaving you with $350 for the next two weeks.  Except that the bills that were supposed to be paid out of that $1000 paycheck equaled $700.

    Our hypothetical person now doesn't have enough money to cover their expenses.  So what do they do?  Walk right back up to the counter and take out another 2 week payday loan....over and over.

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