Opinion

Disappointment, Hope, and Local Community

A new payday loan centre on Main and Dundurn might be exploiting inner-city poverty, but the question is: what exactly are we going to do about it?

By Ryan Janssen
Published January 17, 2014

For as long as I could remember, there was a Taco Bell on the corner of Dundurn and Main Street. While its closure elicited no emotion from me, the vacant property and empty windows consistently sent my imagination into gear each time I walked past it.

I entertained grandiose visions of what could be, and I envisioned a clean slate on which we might build something better (better as in contributing to the social and economic fabric of the downtown, not necessarily 'better' than Taco Bell... I've just never been a taco kind of guy).

Walking past it yesterday, I saw that it has become a Cash Money payday loan centre. Even though I study emotion-focused psychotherapy, I had a hard time pinning down just what emotion I felt. Sadness? Disappointment? Anger? All of the above?

Why Cash Money? Are the sixteen cash advance centres in the lower city between Dundurn and Wentworth generating so much business that we need even more just a few kilometres down the road?

A payday loan centre offers a small advance on your next paycheque. With proof of a source of income, "our advance experts will then help you determine how much money you'd like to borrow (from $50 - $1,500), and will give you your cash on the spot - no cheque, no card, just cold hard cash!" according to the CashMoney website.

With a post-dated cheque, the loan will then be taken off the individual's next paycheque.

The loan itself will cost $21 per each $100 borrowed, and the cost of failure to repay is even heftier: the APR, or annual percentage rate of interest the loan will accrue, is a whopping 443.21 percent - 651.79 percent. A loan of $100 can easily double in just a month if it goes unpaid.

Obviously, incentive is needed to pay loans back. Yes, that's common sense. But when you combine the service that the centre offers - small personal loans to cover 'emergency expenses' - with the demographic that the centre services, you encounter problems.

The majority of this service's patrons live below the poverty line, so every expense is an emergency expense. Flash a sign that says "FREE MONEY!" and promise that it's easy, secure, fast, etc., and you've guaranteed your business.

These loans are used to cover living expenses on a month-to-month basis, and the average borrower relies on these loans for five months of the year. This service is more than a crutch: it's a wheelchair cemented to the ground, not going anywhere.

The sixteen (now seventeen) payday loan stores in and around our downtown core are, intentionally or not, cementing the indebtedness of vulnerable populations in this city.

So what do we do? Take up arms against the store owners? Scream for legislative action removing them from our backyards? Cry? Give more money to panhandlers?

Do what you want; I don't want to prescribe action, nor do I want to imply that one action is 'better' than another. And on that note, think what you want. Maybe Cash Money isn't all that bad. Maybe it's actually driving economic improvement in our city. My fight, if I'm in a fight at all, is not against you. My fight is for love and against injustice.

The Cash Money, which is now in my neighbourhood, is servicing people in need who likely are also living in my neighbourhood. On the one hand, I can fight to banish this service, leaving my still-unknown-to-me neighbours left with a need and no means or knowledge to rectify it.

On the other hand, I can develop a relationship with the individuals who use this service on a month-to-month basis. Maybe, after developing a relationship and with their permission, I can help them develop a sustainable budget within their means, and maybe help end a cycle of growing debt - or maybe not, but at least they now have the choice.

One option is motivated out of anger by a rotten system. The other option is motivated out of love for beautiful people. In the former, I fight against my enemies; in the latter, I make a few new friends.

So I'm not going to vandalize the new Cash Money store. I'm not going to lobby City Hall to remove one, two, or seventeen cash advance stores in the lower city. I'm not going to give vehement diatribes from my soapbox about the pitfalls of predatory lending.

I'm going to get to know my local community. I'll start with the floor I live on in my mid-rise apartment. Maybe you can start on the street you live on, and let me know how it goes.

Ryan Janssen was born and raised here in Hamilton - living first in Dundas, then in Westdale, and now in the downtown core. He is currently finishing a Masters degree in Toronto, working in Mississauga, and living in Hamilton.

26 Comments

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By Jonathan Dalton (registered) | Posted January 17, 2014 at 15:08:57

Great article, and great attitude!

It hurts every time I see someone I care about use a payday loan. Sometimes I've even offered to lend a bit of money so they don't need another payday loan to recover from the last one.

I know first hand it is possible for someone with a low income to dig themselves out of hole. I had to figure things out pretty fast when I went from a stable job to working for myself and after a while realized I had no money.

What struck me was how much you can save by simply paying attention. Before you even start to cut back on discretionary spending, you can save on late fees, interest, bank fees, and services that are more expensive than they need to be. You can get fees reversed from banks and credit cards just by calling and asking nicely.

I'm not good at remembering to pay bills, so I switched everything to automatic payments. This saves hours of time each month (which I can spend working) and eliminates the mistake of thinking I have money just because the bills haven't been paid yet. I'm saving at least $100 a month just by not being an idiot anymore.

Basic financial survival is certainly not taught by the banks, credit card companies, or payday loan stores. They make a killing off of ignorance. It's up to us to stop the abuse.

Comment edited by Jonathan Dalton on 2014-01-17 15:39:05

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By Stinson (registered) | Posted January 17, 2014 at 15:54:11

Inspiring post. My tenants sign the back of their cheque from this type of "service" for their monthly rent. I promise to talk with my tenant to see how I can help him ween off this "dis-service". Thanks RJ.

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By RJanssen (anonymous) | Posted January 17, 2014 at 17:22:19 in reply to Comment 96921

Thanks Stinson!

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By movedtohamilton (registered) | Posted January 17, 2014 at 16:07:54

You wrote: "Do what you want; I don't want to prescribe action, nor do I want to imply that one action is 'better' than another. And on that note, think what you want. Maybe Cash Money isn't all that bad. ..."

I want these companies legislated out of existence. Meantime I want Hamilton's big-deal credit union, First Ontario, to welcome customers who aren't only middle-class. Offer banking services to people who don't fit the standard profile and the payday loan companies will suffer.

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By jamuel (anonymous) | Posted January 17, 2014 at 20:41:56 in reply to Comment 96923

you missed the point pretty much entirely. Legislate the places out of existence and the patrons will just go somewhere else to make their bad financial decisions. Your preferred credit unions that you 'want' to welcome customers aren't doing so. So do you also want to legislate that they do? Or maybe you didn't think one thought ahead in this argument.

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By Capitalist (anonymous) | Posted January 17, 2014 at 16:56:32 in reply to Comment 96923

I'm not crazy about these payday loan places either. It makes the DT look low end.

I think they could be a fallout of the fact that we just don't teach people basic life skills anymore - how to budget, cook healthy food etc.

I'm sure low income plays a significant part but I was told that many people use these services because the do not have (or don't want or cannot obtain) a bank account. Maybe someone could confirm?

I guess Cash Money is better then loan sharks.

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By Steve (registered) | Posted January 17, 2014 at 17:39:05 in reply to Comment 96924

"I guess Cash Money is better then loan sharks."

To paraphrase they are; Loan sharks, in sheep's clothing (or at least in a storefront).

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By RJanssen (anonymous) | Posted January 17, 2014 at 17:21:01 in reply to Comment 96924

Actually, there's two requirements for these places: that you have an income, and that you have a bank account.

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By movedtohamilton (registered) | Posted January 17, 2014 at 17:24:22 in reply to Comment 96925

RJanssen, a cheque-cashing place requires a bank account? Nope. Here's the Cash Money offer:

"Simple Cheque Cashing Process

If you're interested in cashing a cheque, bring it into any of our stores (and bring a photo ID if you have it) and receive your money in less than 5 minutes. Regardless of the cheque type and amount, we'll cash it at a low rate of 2.99%."

A 3% fee!!

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By RJanssen (anonymous) | Posted January 17, 2014 at 17:30:53 in reply to Comment 96927

Hey movedtohamilton - thanks for keeping me accountable! The Cheque Cashing doesn't require a bank account, but the payday loan or cash advance does - even still though, you're right! A 3% fee for receiving your own money... wild!

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By Steve (registered) | Posted January 17, 2014 at 17:42:05 in reply to Comment 96928

The sad thing is based on a low income 3% likely isn't much more than a bank would charge to maintain a retail bank account.

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By movedtohamilton (registered) | Posted January 17, 2014 at 18:07:25 in reply to Comment 96932

Exactly right, Steve. A low-ish monthly fee from a bank, not a % fee. The First Ontario credit union has a chequing account with no fees.

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By ThereIsOnlyOneGod (anonymous) | Posted January 17, 2014 at 20:52:27

All of this, that is gain through interest, or more properly, 'usury' has to stop.

To charge interest is essentially to profit from someone's need, which is, plainly, immoral.

If there is doubt that without a penalty the loan will not be repaid, then don't loan money out in the first place, or consider other ways to be repaid.

We are literally killing the planet, to pay off interest on debts. The amazon forest is being cut down, people can't breath, to pay off interest.

These cash money places, and their counterparts, the big banks should be seen as nothing other than criminal entities robbing the people, "banksters".

How is it they keep reporting record earnings whereas there's a disappearing middle class in this country. We need to wake up.

Usury is a sin in all major world traditions. Before any anti-religion folks get up in arms about the word sin, note in refers to 'missing the mark' in Old English, and is generally understood to be something that entails harm.

Interest is a great sin. Indeed there is great harm because of it.

Hamilton will truly be a model place if it can rid itself of these cash money places, and even challenge the corporate banking structures. Just because things are the way they are today doesn't mean they always were, or that they can't be changed.

Go to "moveyourmoneyproject.org'. We can and must do this my dear brothers and sisters in humanity.

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By ViennaCafe (registered) | Posted January 17, 2014 at 22:54:35

Payday loans and cheque cashing are symptoms of poverty. Address poverty and those other problems will solve themselves.

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By ViennaCafe (registered) | Posted January 17, 2014 at 23:10:01

Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

http://www.tomdispatch.com/blog/175543/

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By KevinLove (registered) | Posted January 17, 2014 at 23:51:31

Meanwhile, in England, Archbishop of Canterbury Justin Welby "..has pledged to drive Britain’s payday lenders out of business by supporting credit unions as an alternative to their high-interest loans intended to tide borrowers over until the next pay packet."

See:

http://blogs.reuters.com/faithworld/2014...

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By jeffzuk (registered) | Posted January 18, 2014 at 02:02:40

True, but at the same time these payday loans create poverty if not facilitate it.

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By A Smith (anonymous) | Posted January 19, 2014 at 13:47:10

"Payday Loans the Next Ponzi Subprime Debt Bubble to Implode?"

marketoracle.co.uk/Article37644.html

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By Willspireite (registered) - website | Posted January 20, 2014 at 11:22:18

In the UK we found that almost FOUR out of FIVE people (78%) who took out a payday loan did so to purchase groceries! 52% used it for hydro and gas, and 36% for rent or mortgage payments.

That's why Christians Against Poverty Canada is thrilled to be partnering with churches in Hamilton, Brantford, Burlington, Mississauga and beyond to offer hope and a solution for free to those who are dealing with budgeting difficulties and overwhelming debt.

We recently asked clients who had gone debt free how they were doing, and a massive 96% of them were still debt free.

That means hope and a solution, creating sustainable change.

If you know someone who is struggling with debt, they can contact us toll free on 1-855-214-9191 to arrange a free, confidential, at home visit from one of our Debt Coaches.

Check out www.capcanada.org for more information, or email info@capcanada.org

Comment edited by Willspireite on 2014-01-20 11:23:19

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By Robert D (anonymous) | Posted January 20, 2014 at 11:40:49

Financial problems are not limited to payday loan companies, and they are not limited to the "poor" (whatever you might view them to be). We as a society do a pretty poor job of financial literacy, and easy access to credit, combined with apathy, can have serious ramifications for individuals, including those in the middle and upper classes.

My question, what can we do to help these people? Is there some community organization that helps with financial literacy? Is there somewhere we can volunteer? Is there some community organization that can help these people with micro-loans without charging the exorbitant fees that payday loan companies do, while helping them with counselling so they are not perpetual clients?

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By Joshua W (anonymous) | Posted January 20, 2014 at 23:27:55

Robert D.,

There's a committee, with hope, being struck at Central Presbyterian Church to examine these questions.

Personally, building community and getting to know your physical neighbours, developing the relationships that are built on trust and understanding of another's life, would go a long way toward dismantling these cash loan facilities. So much, however, of social life is built around money these days that it's difficult to get to that part of the conversation and difficult for people to accept the charity of others; there's a sense of pride attached to self-sufficiency.

As far as community organizations go, churches and other places of worship might be a good place for these networks to begin. After all, most churches know that they are havens for people who need help, who come to ask for money for rent or food or whatever else is needful; it's a short step from there to coordinating with other churches and getting to know who is going where to get help. The benefit with such a network could be that it could happen off-the-grid, as it were, without the governmental oversight tied to Ontario Works or Ontario Disbility Support Payments, which are paltry enough.

My fear is that the middling classes, wherever and whatever they are these days, are beginning and continuing to feel the pinch of higher energy costs, higher insurance premiums (thanks to climate change), and higher inflation (heaven help us if our economy deflates, saith the International Monetary Fund's Lagarde), costs which they cannot escape. They are being priced from their homes and forced to downsize, to sell, to make bricks without straw; with the loss of physical land that is attendant to a home or to transportation infrastructure (what percentage of our land in Hamilton is a road versus greenspace?), people have less physical land to grow their own food, becoming more dependent on outside systems for assistance and help.

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By Willspireite (registered) - website | Posted January 21, 2014 at 10:19:45 in reply to Comment 97001

Hi Joshua If you're interested in running courses and offering practical assistance in financial advice then feel free to give us a shout. We'd love to connect with you and see you guys making a massive difference in the local community in a much needed area. Cheers Will

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By Jane Dough (anonymous) | Posted January 21, 2014 at 00:37:49

WOW! Some amazing conversation here. CFS is a non-profit that has been offering assistance with financial literacy /teaching budgeting skills /giving strategies for debt management to individuals/families and groups for over 60 years. Cost of service aims to be affordable (sliding fee schedule- min $5). Call or email their Intake Dept for info.

AND, there is a Bill in the works to lower the Criminal interest rate from the current 60% APR. Good news, IMO.

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By Sherman (anonymous) | Posted January 21, 2014 at 10:57:13

Hey RJ, this was great to read! It's so important to keep the focus where it belongs and not get caught up in anything other than the root of issues.
But I'm not completely convinced. On a societal level, yes, if we can somehow all love those around us, Payday Loan places would be gone, as would crime and poverty altogether. But for me right here right now, is that what I should settle for? It seems to me like that's fighting a losing battle. These places are powerful! Do you think it might be possible to advocate for legislation against these things in love? If so, do you think that would even be beneficial?
I'm still open to being convinced, by the way :)

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By RJanssen (anonymous) | Posted January 21, 2014 at 14:06:00 in reply to Comment 97009

Hey Sherman,

First: thanks for the great tone here! I feel like our culture has lost the ability to separate agreement and acceptance in our conversations and discussions: thanks for accepting my position without necessarily having to agree with it!

You've got a point - "lets love each other" is rather idealistic and, if we look at how it's worked out over history, tends to fall pretty flat. Especially against places with as much economic and political leverage/power as loan agencies, settling for "getting to know your neighbours" might not make much of a change.

Especially - and I know I'm 'arguing' against my point here, but I'll keep going anyways - when the marginalized demographic we're talking about here has a higher chance of mental illness, or of being a "shut-in" with little to no social capital. These people might be rather difficult to find, and who's to say that THEY really want to get to know me? The vision of a local community who all shares a meal every whatever night might be my vision, but that's probably not theirs.

So I wouldn't disagree with you that we might need to search out alternatives. Lobbying for legislation against these cash advance centres might be a legitimate alternative, but I would say that it should include direct involvement by the very people that this cash advance centre does a disservice to (but, that being said, if you've already recruited those affected, then they're probably not using the loans anymore... in which case the legislation might be a bit redundant). Whatever action we chose, I'm of the opinion that the solution should involve as much input as possible from those affected, which means getting to know them. That way, like I said above, I can avoid the pitfall of "fight[ing] to banish this service, leaving my still-unknown-to-me neighbours left with a need and no means or knowledge to rectify it."

Long answer for a short question. I'm looking forward to getting to know a few of the earlier posters, who are involved with organizations that help individuals get out of debt incurred by places like these... they've probably got a lot more experience with these issues than I do!

Thanks for the discussion!
Ryan

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By Joshua (registered) | Posted January 21, 2014 at 23:00:28

Jane Dough,

I didn't know there's a bill in the works to lower the usury rate. That'd be good to know more. I'm assuming that this'll be a federal bill, as the interest rate's set in the Bank Act and other federal law, eh? Personally, I think it's a great idea.

John,

Your question echoes my own. I had no idea that zoning could disallow certain types of businesses to be established, but I could see how those who espouse a free-market ideology would chafe at just such governmental regulation. It's a question of urban planning.

Ryan,

The micro-lending approach I wrote of above runs into some difficulties with the provincial Payday Loans Act, so that's something to consider. These difficulties include that loans under $5,000.00 need their lender to possess a lender's licence, something I'm sure many churches just don't want to do: something about keeping money out of the temple and over-turned tables may have something to do with such a position.

David Graeber's 'Debt: The First 5,000 Years' states that the common element of every revolutionary programme was two-fold: first, destroy all tax, debt, and property records and second, re-distribute the land.

Peace.

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