My innovative Service Project Idea

I sent this to my network of contacts on Dec. 30.

Hi Friend, 

Hope your holidays were delightful and solvent.

My request. I have several innovative financial education/dialogue ideas that I'd like to refine. I am reaching out to my network to share my ideas and help me connect to people who help fund or host a pilot test of the innovation. There is a lot that can be done, so if you have the inclination you can also partner with me to launch the project.

Background. Thanks to Gary Rivlin's Broke, USA I am getting the specifics on legit "industries" that prey on our poorest citizens. It has reminded me of what anyone with attentive eyes can see: many poor neighborhoods though lacking in legit banks have an abundance of check cashers, pay-day loan storefronts, pawn shops and rent-to-own stores. Wasn't always the case, but is the current situation. Dig a bit, and many of these stores or predatory mortgage lending companies are owned outright or financed by the largest banks in the nation—Wells Fargo, Citibank, Fleet, Bank of America, and, before it's demise, Washington Mutual. For shame.

Many people use a payday loan company once and feel so uncomfortable that they got themselves in such a bind or felt a need for fast money that they don't do it again. That's not who the payday loan companies make their money on. As with any business, these companies make their money off repeat customers. Multiple times a year repeat customers. Customers who don't pay the loan when it falls due pay a fee to keep the loan in play, but that fee isn't applied to the principal, it just stretches the due day another spell, usually 2 weeks, sometimes a month. One man began with $800 loan and paid rollover fees regularly on Tuesday for 10 years! His account rep showed him his total fees, over $9,000!

The companies like that their regulars pay and pay, upwards of 545% annual rate or more. But customers are shielded from this harsh fact most of the time, though you can find signs with this rate posted in the lobby or on the wall of many of these companies' storefront locations. Payday joints encourage customers to think they are paying fees, not interest. But many don't really seem to care, they just feel an urgent need for cash. One said a payday loan was better than crack!

Right now, in King County, there are 50,000 no-account adults. These adults do not have an account at either a bank or credit union. Banks, and also credit unions, experience a conflict of profits. Though they could promote programs to help their customers decrease overdrafts and encourage the proper use of regular accounts, their overdraft fees or competitive payday loan products bring in more money!

Service action. Of course, there are many ways one could address this: direct action such as protests at the stores may actually backfire because many customers say they like the stores. Political activism?? Pshaw! The legislature is made up of people from the comfortable classes. They know little about payday loans, have the state's own debts to sort, and are the targets of intense lobbying whenever these laws come forward. The predatory lending companies were able to defeat an effort a few years ago to cap interest rates in Washington.

So, what's left? A person always has authority for themselves. That autonomy can be awakened and supported to take responsible actions. It can always be asserted at any time. 

I want to nudge customers of these predatory lending practices to start thinking about their personal authority/autonomy over their spending and saving. And begin taking small, personal action steps to get out of their debt traps.

 

Email me to see more details and schedule a time to talk more about it.

I'll blog on this idea as I learn more and matters progress at ktc-sfc.blogspot.com

Happy holidays and much luck & prosperity in 2012.

John

Payday Loans

12/12/2011

Thanks to Gary Rivlin's Broke, USA I am getting the specifics on "industries" that prey on our poorest citizens. It has reminded me of what anyone with attentive eyes can see: poor neighborhoods are lacking in legit banks but have an abundance of check cashers, pay-day loan storefronts, pawn shops and rent-to-own stores. Wasn't always the case, but is the current situation.

Of course, there are many ways to begin to address this.

Direct action against the companies in terms of protests, etc. might backfire because the research I've found says their customers actually like the stores. Customers like the convenient hours, open early before work, open late after work. Friday night, driving in Lynnwood, Washington I counted two open at 8:45 PM.

Customers say they like that in less than half and hour you can walk out with cash.

Customers say they like knowing what they have to pay and when it's due.

This isn't a time to rile the customers up to defend the "financial services" industry!

Well ok, that's out, what about political activism? The legislature is made up of people from the comfortable classes. They know little about payday loans or the type of binds less well-off people find themselves. They get donations and intense lobbying from the financial services sector. Besides, they have a huge state debt to work their way out of.

So, what's left? A person always has authority for themselves. It's not always active before they take out that first loan, but it can always be asserted at any time. Many people use a payday loan company once and feel so uncomfortable that they got themselves in such a bind or felt a need for fast money that they don't do it again.

That's not who the payday loan companies make their money on. As with any business, these companies make their money off repeat customers. Multiple times a year repeat customers.

The companies like that their regulars pay and pay, upwards of 545% annual rate. But customers are shielded from this harsh fact most of the time, though you can find signs with this rate posted in the lobby or on the wall of many of them. Customers think they are paying fees, not interest. Customers pay a fee to keep the loan in play, but that fee isn't applied to the principal, just stretches the due day another spell, usually 2 weeks, sometimes a month. One can keep doing this while trying to scrap together the full loan to repay. And keep doing it. The fees keep rolling in. One man began with $800 loan and paid fees regularly on Tuesday for 10 years! His account rep showed him his total fees, over $10,000! And he had a mortgage-free home. What's up with this?

I want to nudge regular users to begin thinking about their personal authority over their spending and saving.

More in later posts. 

Just Gotta Find Friends

Friends! Where did all mine go? Did I let some lapse, did some drift away? Did I miss that one key chance go cement a friendship due to being too honest about my interests, energy level, time, cash flow?

I'm starting this blogging series to chronicle my steps to find hang-out buddies in Seattle. Building friendships is one of my 2011 goals. How am I going about it? First, I constructed a Kaipa pyramid for myself on this theme. You'll see in the article that Kaipa poses four questions. I will use a shorthand here and invite you to look over the article for the full question form.

1. What is my north star/my genius? I have skills for friendship—I enjoy most live events like music, theater, readings. I listen well and have spent much of my life creating and sustaining discussion and support groups of various types.

2. What is my core incompetence? Related to friendship, paradoxically, I am independent! I tell myself "not to wait for the herd." I'll go alone, I'll be the first of my group. I am the positive version of introversion: I am content enough alone. I can conjure a friend in my imagination and that is nearly as good as hearing his or her voice.

Another part to this, I feel if I lack a 'purpose' for the call I may be interrupting the person and wasting their time. But hanging out is just that, it's primarily sharing time & space without agenda.

3. What adds energy when I feel zapped? Getting together in realtime is fun, improvisational, and open to possibilities.

4. What saps my energy and provides brakes or alarms? Arranging is tedious. I am not interested in Faceb**k, and Twi**er. People forget to return my calls. In this region, there's a provisional nature to commitments that I find leaves me uncertain whether a planned meeting will actually happen. I'd rather not bother and just buy my tickets and go.

Of course, I'm not new to these insights, or most of them, and it's my personality.

Following the process Kaipa presents, I completed my pyramid ... (click link for easier to read version)
So, here I am with my pyramid and what I discovered about my inner DNA for this, but, what am I TO DO because of it?

This is where the pyramid meets my life. My activities need to tack against being solo (the solo mojo triangle) towards the comrade triangle. To get there I quickly touch on longing for friends and use that feeling as a springboard. This leaves inviting as the active side. Becoming comrades signals I've finished the cycle.

Goal: some hang-out and activity buddies. Specifically, I would like to share the Ballard Jazz Walk next Friday with someone.

When folded into a four-side pyramid, holding the inviting side away from me and "looking" through the point aimed at my body I "see" inviting from the perspective of independence. For me, this reminds to take initiative. Send out invites far and wide and still be prepared to go it alone a few times. It also has to traverse the other three sides: longing, comrade, and solo mojo.

I can also see if others have any invitations out that I can respond. I checked craigslist personals and meetup for jazz and nothing is listed. So now, I've broadcast invitations to several groups to which I belong and I've reached out to specific friends who live in the neighborhood.

And today, I'll go buy my single ticket and get ready for who may join me. Or not.

Interested in learning more about how to make these pyramids or even join me for the BJW, email me at johnp at ktchange dot com

John