Understand, I’m not speaking from personal experience: I’m too poor to qualify for ‘payday loans’. This may seem strange to those who think these loans have the most impact on the poorest of the poor. They don’t. They affect the ‘relatively poor’–the ‘working poor’, mainly, who can count on having a ‘payday’, but who can’t make it from one payday to the next without borrowing against their expectations. Emergencies arise. Transportation breaks down. Health problems come up. Accidents occur. Some ‘durable goods’ fail, and replacing them can’t wait.
People who have a dependable, (often barely) adequate income are the ones who have need of ‘payday loans’, and who can qualify for these loans. They find themselves caught up in a form of financial quicksand, in which interest payments put them further and further behind. And this is bad, but it doesn’t mostly directly affect those who are poorer yet.
But why are people unable to stretch the money until the next paycheck? The aforesaid emergencies are one problem. Another cause of the ‘too much month left at the end of our money’ phenomenon is that the money is too little. It’s not really possible to ration out the expenses until the next influx of money, because emergencies are NOT accounted for in setting income levels.
Some of this is deliberate finagling. For example, one contractor for a federal government agency included several rural counties in its expense calculations, although the main offices were downtown. This not only fails to include commuting costs for those who live outside downtown, it also fails to take into account the fact that some employees both live and work downtown–and their expenses for everything from rent to food are higher than for those who live in suburbs, exurbs, etc. Except, of course, for those external residents who eat downtown, who share in some of those higher expenses.
But there’s another factor. The paychecks are not only too small: they’re too far apart.
I’m not sure when it became the routine practice that everybody should be paid once a month. I’ve been in situations where paydays were more frequent: weekly, or biweekly. The exact period in which nearly all paychecks were switched to a monthly schedule is more than a little nebulous, and it probably varied from place to place. It may not even be universal yet.
But unlike paydays, bills can become due on any day of the month. And many of them come with a catch: if they’re not paid on their due date, fees and penalties apply. And some things are available only on a ‘pay-as-you-go’ basis.
So why not go back to paying people smaller amounts more often? True, it would mean that big-ticket items (like rent) would need to be paid for out of a smaller pool. But it would ALSO mean that people wouldn’t be caught short (as often) by unexpected midmonth expenses.
For today’s more obscure question, I’ve become more and more worried about the (apparently) burgeoning practice of fiscalizing ‘reverse mortgages’. A ‘reverse mortgage’ should be a family matter: a way of allowing elders to continue to live in their family homes, with a guaranteed income, while selling their home to THEIR OWN FAMILY.
In this way, the house stays in the family, the elders are supported, and the younger people are left with a dependable inheritance. The younger members have to come up with money to help support the elders: but they often have to do this anyway. whether or not they ultimately profit.
How does selling your home to a bank achieve these ends? I understand that in a neolocal society, the younger kinsfolk may not live in the same place as the elders. But if the younger family members inherit the family house, they can always sell the house, and use it as collateral for another house elsewhere–in a good real estate market, anyway.
Again, it’s no skin off my back. I’ve never owned a home, and the houses that once were passed down in our ancestral families are many of them now gone, and others are no longer in the family. But I just wonder whether the externalization of ‘reverse mortgages’ is having a reductive impact on familial wealth.
treraia 