Archive for April 2014
MIDDLETOWN The Orange County YWCA and SUNY Orange Career Services will host two wage-negotiation workshops specifically for women.
The first will be from 5:30 to 8 pm April 22 at the Gilman Center library, 115 South St., on the Middletown campus.
The second workshop will be from 5:30 to 8 pm April 24 at Room 201 of Kaplan Hall, 1 Washington Center, on the Newburgh campus.
The interactive workshops are designed to give young women just starting out in their careers the confidence and skills to ensure they earn fair compensation.
Topics will include benchmarking starting salaries and benefits, salary negotiation and personal budgeting to determine salary requirements. Workshops are free, but space is limited, so reservations are required. Email firstname.lastname@example.org or call 341-4444.
It appears the days of roping college students into applying for credit cards with the allure of free hoodies and water bottles are long gone.
Students used to be greeted at freshman orientation by a smorgasbord of credit card vendors vying for their business, but a recent report by the US Government Accountability Office found that todays campuses are largely devoid of such practices.
The report found that five out of nine large credit card companies say they no longer actively market their cards to college students, be it by on-campus enticements, direct mail or email campaigns.
Much of that likely has to do with the passing of the Credit Card Accountability Responsibility and Disclosure Act that regulated such practices in 2009, and seems to have pretty much stamped out credit card peddlers from local campuses.
Utica College officials say its been at least 10 years since a credit card vendor has marketed on its campus, and Doug Croft, the schools radio station adviser, said thats a welcome change from his time as a student.
Youd be walking outside of the cafeteria and theyd come right up and try to sign you up, said Croft, who was an undergraduate at Utica College from 1999 to 2003. I never did go for it, but I remember it making me feel uncomfortable and thinking it didnt seem right.
While Director of Media Relations Christine Leogrande said that UC has in essence banned the practice, its policy does allow for highly restricted exceptions, which is basically the same stance taken by SUNYIT and Mohawk Valley Community College.
All three schools also incorporate some form of financial management education into their freshman seminar programs to teach students things about saving, budgeting and managing debt.
It used to be credit cards were all over the place and people didnt really think about the consequences, said Melissa Rose, director of financial aid for SUNYIT. Now, we offer great tools to help students make informed decisions that will transcend their time here.
The Government Accountability Office study found that such measures have led to decreased credit card use among college students, and that 72 percent of those that do charge things pay off the $171 average monthly balance each month.
Thats what Utica College senior Tyler Stockham does.
The 21 year-old criminal justice major said she took it upon herself to sign up for her first credit card about four months ago, mainly to establish credit as she prepares to enter the working world.
Im responsible about it, Stockham said. Sometimes I might use it for gas, but I always pay it off. I know what the dangers are and what to avoid.
Garden City, NY (PRWEB) April 15, 2014
NAPW honors Debbie A. Land as a 2014 Professional Woman of the Year for leadership in accounting with this prestigious distinction. As the largest, most-recognized organization of women in the country, spanning virtually every industry and profession, the National Association of Professional Women is a vibrant networking community with over 600,000 members and nearly 400 Local Chapters.
I have a background in accounting, bookkeeping, payroll, computers, management and people skills, says Ms. Land, who has dedicated eight years to mastering countless personal budgeting and accounting software programs. Ms. Land has since used her advanced accounting knowledge to offer wide-ranging solutions to clients, co-workers, family and friends regarding their various financial issues.
More than ten years of experience as a software specialist and certified bookkeeper at Drake Enterprises has allowed Ms. Land to possess an all-encompassing knowledge of the companys premier accounting software, which generates payroll, bookkeeping and financial reports. A skilled customer service specialist, she provides continual support to customers to help them better grasp the softwares components and provides training and leadership to other customer service representatives that support the accounting software.
Ms. Lands current position with Drake Enterprises fully utilizes the dedication and aspirations for success that have earned her this recognition from NAPW. I hope this will give young women hope that if they work hard, someone will appreciate all of their hard work and possibly have a promising opportunity at a stage of their career that will provide an easier way than I have had, she says.
NAPW provides an exclusive, highly advanced networking forum to successful women executives, professionals and entrepreneurs where they can aspire, connect, learn and achieve. Through innovative resources, unique tools and progressive benefits, professional women interact, exchange ideas, advance their knowledge and empower each other.
Read the full story at http://www.prweb.com/releases/2014napw/accountingsoftware/prweb11730282.htm.
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How can you budget like a Zen master without tracking every dime you spend? How do you budget for those oddball expenses that pop up from time to time? As someone who goes in budgeting spurts, I’ve learned the hard way how to make our budget work.
Recently, this has been at the forefront of my mind as I’ve worked to refocus our family budget. I tend to go hot and cold with budgeting. Sometimes I’ll go months without a formal budget, and I always wind up regretting it.
This weekend I fired up my copy of YNAB (You Need a Budget). I’ve been very focused on budgeting lately. I want to control our spending so that there are no surprises at the end of the month.
It had been several months since I looked at our budget. In fact, I had to reset YNAB and start from scratch. In the process, I realized that there are certain shortcuts I take with our budget. These shortcuts do not diminish the effectiveness of our budget. They do diminish the headaches that can come with trying to track every dime you spend.
So with that in mind, I want to share with you these 7 tips that guide my approach to budgeting.
(If you get to the end of the list and have other great tips for budgeting like a Zen master, shoot me an email to let me know.)
1. Begin with the end in mind
This is probably the most important tip I can give you. You have to understand why you’re budgeting in the first place. If you understand that, you’ll have built-in answers to many of the questions that come up during the budgeting process.
For example, how many categories should you track? Which expenses are most important for you to track? Which tools, if any, should you use YNAB, Mint.com, Quicken, Excel, or an old-fashioned pencil and paper?
Before you can answer these questions, you need to consider why you’re on a budget in the first place. For my family and I think for most people a budget is a way to control spending. To do that, I need to understand, to a point, where our money is going.
I don’t need to track every single dime. I do need to have a good enough idea of where our money is going. So I need to have enough details in the budget that allow me to control spending. And I also need to know exactly how much money I have available to spend. For me, it’s not good enough to review my budget once a month. I need to have a good idea of where I stand in the middle of the month, as I make spending decisions.
For example, how do you budget for one-off expenses? That question came up for me this weekend. We had to renew our car registration. For us, this isn’t an annual expense. In Virginia you can renew two years at a time. So this expense only comes up every two years. I was surprised at how much it was. It was $134 for each year, so I spent over $260 to renew the license plate on my Camry for two years.
How do I deal with that expense in the budget? It’s not an insignificant expense, but it’s only going to come up once every two years. Do I want a separate car registration fee category? I could take that approach, but it would further complicate my budget.
Instead, I just have a general fees category that covers everything from car registration to postage. A lot of things go in that category. As an attorney, I have fees related to my law practice. And we pay $25 a year for our dog’s pet license fee. I don’t need to track all these fees individually to achieve the goals I’ve set for our budget. So I have a generic fees category that they all get tossed into. If I ever need to look deeper into exactly what went into that category, I can. I never do.
For the car registration fee, I have an overarching category for car expenses. It doesn’t include major repairs, which I’d put as part of a rainy day fund. But it includes the small fees registration fees, state inspection fees, license fees, emissions inspection fees, etc. Since I want to track how much our car costs us above and beyond periodic repairs I created a separate category for car-related expenses.
For me, it always comes back to the reason I’m budgeting to control spending. I’m not likely to spend $100 at the post office any time soon, so that’s fine to lump that expense into a larger category. But I do like to know how much our cars are costing us, so it’s worth my time to track car-related expenses separately.
2. Keep it simple
Regardless of why and how you budget, keep it simple. How many categories do you really need? The fewer the better.
For example, when I look at my categories, if we aren’t spending at least $100 per month in each category, I tend to lump it into a larger category. Maybe you’re on a tight budget and need to track down to $50 per category. Or maybe your numbers are higher, and you don’t need to worry about anything under $250 or $500.
We’re all different with different incomes and expenses. But whatever that number is for you, if you see a category that consistently only costs $20-$30 per month, you may be able to roll it into another category. Just combine them to make things simpler.
For instance, I combined our phone, internet, and cable bills into one budget category. For one, we have a bundled package right now for some of those services. But I also don’t need to separate out our home phone versus internet or cable because that doesn’t help me achieve our budgeting goals.
On the other hand, I do keep the cell phone bill as its own category. For one, it’s much more expensive than the other three utilities. I’m also currently on a warpath to get that cell phone bill down, so I want to keep it separate. Bottom line is to keep things as simple as you can.
Here’s one tip to help you keep a simple budgetI call it budgeting by the store.
I’m sure this has happened to you. You sent down to categorize your spending for a week or month. As you work through receipts from retail stores, you have no idea what was purchased. For example, a receipt from a pharmacy could be for a prescription, household goods, beauty products, or even groceries. It could also be for a combination of those categories of expenses. So how do you record that expense?
You can always get out the receipt and break it down. But to me, that’s just too much effort, and it doesn’t really move me towards my goals. So I budget by store.
For instance, I have a category called pharma, which just rolls in whatever pharmacies we might shop at Walgreens, CVS, Rite Air. Not everything we buy at a pharmacy is from the pharmacy, of course. But what we spend at those stores each month isn’t significant. So I just lump it all together and record it as pharma. If I want to drill down one month to see why we spent more than normal in that category, I can.
I do something similar with Home Depot and Lowes, both of which get categorized as home repair. I categorize purchases at grocery stores as groceries. The budget by store approach doesn’t hurt my ability to control my spending, but it does make budgeting a lot easier.
3. Have master categories
This is easiest in YNAB because it has master categories by default. The two most important master categories are fixed monthly bills (eg, rent, phone, internet, cable, utilities, a gym membership, etc.) and everyday expenses (eg, groceries, gas, spending money, clothing, restaurants, etc.). Master categories help me understand my spending quickly and focus my attention on problem areas.
I also want to focus on fixed monthly bills separately from everyday expenses because the way I control my spending in those two big categories is different. The one-n-done method of saving money, which I talk about in this podcast, generally applies to fixed monthly bills. I look at these bills and askHow can I lower those expenses? What changes can I make to lower the cost?
For everyday expenses, the questions I’m asking are different. Do I really need to spend that much money eating out? Why do we spend so much on groceries? Can we get better deals?
The approaches are a little different, so that’s why I like to have master categories for my budget. In my case, I have just a couple of master categories. I have a giving category where we give money to our church and other charities. I have one for fixed monthly bills, and one for everyday expenses. I also have a rainy day fund category, which includes periodic expenses like gifts, life insurance, car insurance, and car repairs. And then I have some savings goals.
That’s it. Those are my main categories. And sometimes, I can look at my budget at just that level. I can still drill down into the sub-categories, but having these master categories can be very useful.
4. Use your credit or debit card as much as possible
Using your credit card or debit card makes tracking your spending so much easier. On YNAB, I just download all of our credit card and checking account transactions and then upload them to YNAB. It takes just a couple of seconds. Then, I can go in and categorize spending much of which is actually automated. It’s very simple.
If you spend a lot of cash, though, you have to track your receipts, which is just more time consuming. It’s a headache. Plastic is more secure, and I earn rewards from credit card charges. And it’s easier to track.
Even if you use plastic, there will be times when you hit the ATM for some cash. How do you deal with ATM withdrawals without tracking every dime? We have a category called Spending Money for this purpose. I don’t track cash we spend beyond this one category. That works for us because we don’t have a lot of ATM withdrawals. If you do, you may need to track it more closely.
5. Master your cards
How do you deal with your credit cards in your budget? It’s important, so I’ve got three tips to give you:
Budget for existing debt
First, if you’re setting up a budget and you have some credit card debt you want to pay off, list it as a budget item. YNAB actually does this already. They call it pre-YNAB debt. Each month, you allocate a certain amount to pay down your existing credit card debt, just like you would with rent, mortgage, phone, or any other spending categorr. It’s a budget item no different than any other.
Budget for future expenses
What about future spending on credit cards for things like groceries and gas? The best way is to treat a credit card just like you would a checking account. I download the transactions from the credit card company, which is easy to do, and upload them to YNAB so I can categorize the transactions.
What’s interesting is that my budget will then show that I’m spending money as I allocate a credit card purchase to its relevant spending category. Because the expense was charged, however, I haven’t spent any of the money out of my checking account.
When it comes time to pay the credit card bill, that payment is not a budget item. It’s simply a transfer from my checking account to my credit card bill. I don’t have to put that payment into a budget category because I’ve already budgeted each of the transactions that make up my credit card bill as I’ve incurred them.
A little of both
Chances are that if you’re just starting a budget, you’ll have a little bit of both. Even if you usually pay your credit card bill in full each month, at any point in time, you could have a balance on a credit card. And then if you keep using the card, you’ll have both an existing balance and new expenses. So how do you deal with this situations?
With YNAB, when you set up your budget for the first time, you classify your existing balance whether you set up your budget at the beginning or in the middle of the month pre-YNAB debt. Even if you’re going to pay it off in full in a week, any existing debt counts as debt.
When you pay that debt, you’ll record it as a budget item. And eventually, that pre-YNAB debt will be gone. Then, as you continue to use that card for monthly purchases, you’ll categorize those expenses as you would if you were using a debit card. Then when it comes time to pay off your credit card bill, the actual payment doesn’t affect your budget. It’s just a transfer from one accountyour checking accountto anotheryour credit card.
Once you wrap your mind around this, it actually makes dealing with credit cards very simple. Here’s a video from YNAB that is worth your time if you want to handle budgeting credit card expenses like a zen master:
6. Budget for periodic expenses
I’ve touched on this a little, but you need to budget for your periodic expenses. For most people, this includes insurance, car and home repairs, gifts, and vacations. It’s important to set aside money for each of these things every month. The money will build up over time, of course. Some people leave that cash in their checking account until the expense comes due. If that’s too much temptation, move it to a savings account.
7. Review your budget weekly
Finally, review your budget at least weekly. There’s no one-size-fits-all here. You may not have to do that, but most people do need to check out the budget once a week to understand where money is going and how much is left for that month. I know I do.
My personal budgeting goal is to control my spending. A weekly budget review helps me do that. Again, with YNAB, Mint.com, Quicken, or even Excel, it’s easy. Whatever your budgeting tool of choice, I think it’s important to review it at least weekly.
So these are my seven tips for budgeting like a Zen master. If you have any other tips to add, leave them in the comments below.
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This week the Consumer Financial Protection Bureau focused on those little loans that come with triple-digit lending rates: payday loans. On March CFPB convened a public forum in Nashville that coincided with the Bureaus release of a new research report. After analyzing 11 months of borrowing at 12 million storefront locations, CFPBs findings again confirm that the industry relies not on individual borrowers ability to quickly repay, but on their inability to repay, resulting in individual borrowers taking out many loans each year.
In other words, the business model for payday lending is a debt trap. With numerous storefronts often concentrated in communities of color, many consumers are drawn in by convenient locations and promises of quick cash with no credit checks. All too often, borrowers discover that the terms of the small dollar loan cause even more financial stress and deepening debt.
Commenting on the Bureaus payday loan focus, Director Richard Cordray said, Our concern is that all too often those loans lead to a perpetuating sequence. That is where the consumer ends up being hurt rather than helped by this extremely high-cost loan product.
Unlike most lenders, the payday industry needs and relies upon customers who cannot repay their loans. For every payday borrower who must renew a loan, the lender can then with each renewal charge more lucrative fees. In many cases, borrowers are repaying more in fees alone than they initially received from the loan.
Connie Montgomery, Nicole Greeson, and Susanna McCrimmons, all formerly associated with Smith, Montgomery, and Associates, are proud to announce the opening of their new law firm Springfield Law Group, LLC.
As part of their client-based approach, Springfield Law Group offers free initial consultations for new clients, more attorney-client contact, and a responsive website which allows clients the option to make payments online.
The attorneys at Springfield Law Group have a combined legal experience of more than 40 years. Connie Montgomery is a Springfield-area native and obtained her law degree in 1985. Montgomery was partner and served as the managing attorney at Smith, Montgomery and Associates, where she practiced bankruptcy law for 18-plus years.
Nicole Greeson, managing partner for Springfield Law Group, is also a Springfield native. Aside from practicing law since 2005, Greeson has a business background having organized and managed a large trucking company that held multiple contracts with the federal government.
Greeson currently practices in the areas of business and personal bankruptcy and estate planning. Susanna McCrimmons began practicing law in 2008 and worked as an assistant attorney general for the Missouri Attorney General’s Office.
McCrimmons also has a background working in Social Services and Probate Court, having worked for the Greene County Public Administrator’s Office prior to obtaining her law degree. McCrimmons’ current practice focuses primarily in divorce and other types of family law cases. For information about Springfield Law Group or to schedule a free consultation, visit the firm’s website at springfieldlawgroup.com or contact the office at 823-9044.
New medical practice
Billy Holt, DO has opened VIP Medical Services at 1500 W. State Highway J, which will be the one of the area’s first direct primary care clinics. The clinic will be a membership or cash pay only (no insurance will be accepted). Direct Primary Care offers a membership-based approach to routine and preventive care that can reduce health care costs.
Members can access unlimited primary care visits, basic lab work, and a member’s only physician cell phone number for phone appointments, questions or after-hour emergencies. Office hours are 9 am-5 pm Monday-Friday. For information call 417-485-4847.
Port Hueneme City Councilwoman Sylvia Muñoz Schnopp filed for personal bankruptcy on March 12, the same day she dropped out of the race for a State Assembly seat.
Muñoz Schnopp, a Republican, had filed a statement of intent to run in the June primary for the 44th Assembly District. The district covers most of Ventura County, following the Highway 101 corridor from Thousand Oaks to Oxnard. Camarillo Republican Jeff Gorell holds the office now, but instead of running for a third and final term, he is taking on Julia Brownley, D-Oak Park, for her seat in the US House.
On March 12, the last day for candidates to file their final declarations of candidacy, Muñoz Schnopp announced she would not run for Assembly after all. The same day, she filed a Chapter 7 bankruptcy petition in federal court in Santa Barbara, declaring $463,793 in assets and $527,756 in debts.
Muñoz Schnopp said her financial trouble was “one of the reasons, but not the whole entire reason” that she dropped out of the Assembly race.
“I prayed about it, and the answer was that I should step aside,” she said.
That leaves three candidates in the race: Democrat Jacqui Irwin, a Thousand Oaks city councilwoman; and Republicans Rob McCoy, a Thousand Oaks pastor, and Mario de la Piedra, who owns an insurance agency in Camarillo.
During her brief candidacy, Muñoz Schnopp won the endorsement of Grow Elect, a political action committee that recruits, trains and supports Latino Republican candidates.
“She has been a successful local elected official in the district, and I think she impressed a lot of people,” Grow Elect President and CEO Ruben Borrales told the Business Times.
Grow Elect sees the 44th Assembly race as one of the most important in the state. Democrats outnumber Republicans in the district by a narrow margin and the population is more than 40 percent Latino.
With Muñoz Schnopp out of the race, Grow Elect is now supporting De la Piedra, Barrales said.
Muñoz Schnopp, 54, was elected to the Port Hueneme City Council in 2008 and re-elected in 2012. From 1993 to 2001, she worked at ATamp;T Wireless, eventually rising to the positions of regional director of marketing and public affairs and national director of multicultural initiatives. She was laid off in 2001, and since then she’s run her own consulting business, taught classes at Oxnard College and worked at outdoor gear retailer REI.
Muñoz Schnopp said the income from consulting, teaching and serving on the council never approached her salary with ATamp;T Wireless.
According to her bankruptcy filing, she has $2,054 in monthly income and $3,822 in monthly expenses. Her largest debts are $421,926 in three mortgages on her Port Hueneme home, and $85,830 in credit-card debt.
“It has been a very humbling experience,” she said. “It’s where I can stand shoulder-to-shoulder with my constituents and say, I know what it feels like to be laid off, I know what it feels like to go through these situations.”
She said she hasn’t decided yet whether to seek higher public office someday. For now, she’s dedicating herself to the Port Hueneme City Council.
“Thank goodness we live in a country that recognizes the need to start over, and gives people hope and a future,” she said. “It’s really the only option for me right now. … I believe that my doing what I need to do and getting a restart will allow me to look at other options in the future.”
Barrales said he thinks Muñoz Schnopp still has a bright future as both a City Council member and a potential candidate for state office. “So many Californians have gone through similar situations. It’s a tough economy,” he said. “The one thing I do know about Sylvia is she’s a fighter, she’s a survivor. I’m looking forward to her continuing to serve.”
If your boyfriend doesn’t have a credit history and you want to help, you can share one of your accounts with him. The account would show up on his credit report and his creditworthiness will build. However, there are two ways to share an account and it is crucial to know the difference between them. Plus, you do want to weigh the good with the bad when it comes to sharing an account in general.
Authorized user vs. joint account holder
As the first sharing method, adding your boyfriend as an authorized user grants him permission to use your account (with his own card), but he is not responsible for the bills and has no power to make changes to the account. The second method, making him a joint account holder, gives him equal responsibility for the account, including the bill, and gives him the power to make changes to the account. Since your boyfriend lacks experience with credit, we would not recommend adding him as a joint account holder.
Pros and cons to adding an authorized user
Making him an authorized user satisfies a happy medium: You can help your partner build his credit without losing autonomy of your finances. Still, consider if your help is necessary. This decision is not to be taken lightly, so weigh the following pros and cons.
- Help him build credit. Assuming you have good credit card habits (on-time payments, low debt-to-credit ratio, etc.), that will be reflected on his credit report and help him build good credit.
- Earn more points. If it’s a rewards card, his purchases will also count toward your rewards points, so you can get to your reward goals that much faster. Some credit card companies also give bonus points for adding an authorized user.
- You maintain control. As the account holder, you have the power to control his spending. You can accomplish this in one of two ways. First, don’t give him a physical credit card, and he can’t spend on your account at all. Some credit card companies will let you choose if you want a physical card for your authorized user. Otherwise, the authorized user’s card is mailed to the account holder, so you have the option of passing it along to him or not. Second, your credit card company may allow you to set spending limits for authorized users. If so, you can decide how much he is allowed to spend on your account. Since he has no power to make changes to the account, he cannot request a card for himself or change his spending limit.
- You are liable for his spending. If he has a card and you choose not to or are unable to set a spending limit for him, he might run up a lofty bill for you. Even if he has every intention of being responsible, people have a tendency to spend more money when it’s not their own. This is especially worrisome if you break up. If you don’t remove him from your account right away, he has the power to do a lot of damage to your finances. And he won’t be liable for any of it.It could hurt your credit. He could max out your card or even just put a high balance on it. Since one of the factors that affects your credit score is debt-to-credit ratio, that could have a negative impact on your credit.
- It could hurt his credit. On the flip side, if your credit card habits aren’t so great, it could hurt his credit. Missing or making payments late or racking up high balances yourself will have the same negative impact on his credit. Also, when he is removed from your account, there might be a dip in his credit score. Make sure that he opens his own credit card as soon as he begins to establish credit so he can continue building his own credit rating after you remove him.
If you take the proper precautions, you can easily add your boyfriend as an authorized user, help him build credit, and protect your credit at the same time. Without the proper precautions, though, it could just as easily hurt you both.
A Southern California attorney has been sentenced to prison for her role in helping a Gold River businessman conceal assets from his ex-wife.
Derian Eidson, 50, of Yorba Linda, a suspended member of the California bar, was sentenced Wednesday by US District Judge Troy L. Nunley in Sacramento to 10 years and one month in prison and fined $200,000 following her conviction at trial on two counts of money laundering. The court found that Eidson #x201C;betrayed the trust that she took when she swore to uphold the laws of the state of California and the United States,#x201D; according to a federal Department of Justice news release.
According to evidence presented during her trial, Eidson was an insurance defense lawyer in 2001 when she met Steven Zinnel, 50, of Gold River. The two began a romantic relationship and a nearly decadelong relationship transacting in assets that Zinnel had illegally concealed during child-support litigation and personal bankruptcy.
Testimony during the trial established that Zinnel#x2019;s motivation was to hide assets from his ex-wife and children. Eidson#x2019;s motivation was identified by the court as #x201C;greed.#x201D; As part of the scheme, prosecutors said, Eidson used her attorney-client trust account to conceal funds.
Together with Zinnel, Eidson established a shell company, Done Deal, for the purpose of receiving distributions from Zinnel#x2019;s silent partnership in a Carmichael-based electrical infrastructure company. Keeping Done Deal and the Done Deal bank account in Eidson#x2019;s name allowed Zinnel to conceal his ownership interest in the company from the bankruptcy court and family court, authorities said.
Once Zinnel#x2019;s debts were discharged, Zinnel and Eidson used the Done Deal account as #x201C;an ATM,#x201D; according to the court.
Zinnel was sentenced March 4 to 17 years and eight months in prison for his role in the scheme.
Call The Bee#x2019;s Cathy Locke, (916) 321-5287.
Read more articles by Cathy Locke
You live on a limited income, paycheck to paycheck. Now your next paycheck is in jeopardy, because your car won’t start. What to do?
There’s that payday lending store around the corner, so you go take out a loan and buy a new battery for your car. You give the lender a post-dated check for the amount of the loan, plus interest and fees. The lender cashes your check after you get paid. Done deal, right?
Not always, according to David Gray with the Louisiana Budget Project.
“That leaves insufficient funds for other necessities like groceries and rent,” Gray explains, and says that leads them into what advocates of payday lending reform refer to as “the debt trap.” “As a result, customers will oftentime take out a second payday loan to repay the first, and then a third to repay the second,” Gray adds.
That’s confirmed by a new report from the state Office of Financial Institutions. It says the average payday loan customer in Louisiana repeat borrows a dozen times in a year, and ends up paying over $800 in interest and fees on a $300 loan. The report, compiled in response to an act of the 2012 Legislature, also shows Louisiana residents took out 3,126,278 payday loans in 2013, and paid $145,665,345 in interest and fees. Of those fees, more than $2.5 million was assessed solely for bounced checks.
Several lawmakers have filed bills to cap payday loan interest–which currently averages 416% annually–at 36% APR. A Senate version of the bill was amended in committee to remove the cap, and instead simply limit borrowers to ten loans per year. The full Senate is scheduled to debate SB 84, by Senator Ben Nevers (D-Bogalusa) today.
Senator Danny Martiny (R-Kenner) explains why he pushed to change that bill.
“Are you going to make that two-week, $350 loan for 4 dollars and ten cents?” Martiny asks, acknowledging there’s little profit in a 36% interest cap. “If you pass the bill, a lot of people are just going to get out of the business.”
While the new report on the economic impact of payday lending in Louisiana may or may not be brought up on the Senate floor this afternoon, it’s sure to be brought up in the House Commerce Committee. That committee is scheduled to hear a House version of the bill to cap payday loan interest at 9:00 this morning.