My Story: My Experience with Payday Loans

By: Kenneth M., Boston University

“Now, are you sure you understand the terms of this agreement sir?” The lady behind the counter looked at me through an inch of thick glass. “Sign right here.”

I remember nodding my head, signing on the dotted line, and stapling a completed check for a few hundred dollars to the paperwork, but not truly understanding anything. All I knew at the time was that I had a baby at home, that our WIC vouchers were gone for the month, and that I was leaving with my unit on a training mission for three weeks in the morning. What I understood in that moment was that if I did not get that payday advance I would be leaving my young wife with an empty fridge and a hungry baby. It was a horrible situation to be in and that was how I justified using payday loans to buy groceries and diapers, and put gas in our car.

That was 2004. I was an E-3 (PFC) in the Army, stationed in Hinesville, Georgia. I had completed one tour of duty in Iraq and, over the next few years, I would complete two more. After that initial payday loan, my wife and I fell into a pretty heavy cycle of using the payday lenders that seemed to be in every strip mall lining the roads that led onto my base. Because we would borrow against our next paycheck, at astronomical interest rates, when that paycheck arrived we would need to take out another payday loan in order to buy groceries or diapers. It took us about six to eight months to finally break the cycle. When we finally did I felt ashamed. Ashamed that I couldn’t manage a budget and that I needed to ask for help to make ends meet.

What I have learned since then is that my plight at that moment in time was not uncommon among American service members and, unfortunately, that it still isn’t. Payday lenders, predatory auto dealerships, shady annuity life insurance companies, and for-profit colleges are just a few of the groups trying to get access to what they see as a steady stream of income from a consistent source – the paychecks of those who serve our nation.

Like me, many young Americans join the military without a solid financial education. I was a high school dropout when I lifted my right hand to swear an oath to protect and defend our nation’s Constitution. My financial education was literally non-existent. I didn’t know how to develop a budget, I didn’t have an understanding of what interest rates were or how they operated, and I didn’t know how to manage my credit. Thankfully, I learned over time. Online resources like CashCourse were the way that I finally began to figure out how to build a secure financial future for my family and myself.

This experience helped to shape my future financial life by teaching me that I needed to be aware of interest rates and the reputation of businesses that I interacted with financially. Further, it taught me that my financial future can become more secure as I become more financially literate. Really though what the experience taught me was that there are countless veterans and service members out there who still need access to financial literacy resources like CashCourse and,unfortunately, that will need legal help in remedying unfavorable financial situations. I plan to use my degree, and my gained knowledge, to help them one day.

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