The Mafia was a great and respectable organization that loaned money to individuals at reasonable interest rates. That is true when you compare them to today’s payday loan stores. According to a study released in February by U law Professor Christopher Peterson and Steven M. Graves, an associate geography professor at California State University Northridge, the Mafia charged an interest rate of about 250 percent while today, PDL stores charge an average of 450 percent interest. You would have to be a meth addict to get involved with something like that8212;or a Christian, apparently.
According to the study, “Christian populations tend to host relatively greater numbers of payday loan locations per capita.”
This is especially true of Utah, which ranks ninth in the nation in terms of density of payday loan stores. This is consistent, considering the high population of Christians in Utah, including Evangelicals and members of The Church of Jesus Christ of Latter-day Saints. Members of the LDS church make up 62.4 percent of the state, according to church records.
Debt is a huge problem. One of the worst debts a person can have is to a PDL store where there are additional risks. According to Graves and Peterson, “approximately 90 percent of payday lending industry revenue is based on fees stripped from trapped borrowers.” When you get caught in the PDL trap it’s very difficult to get out.
Graves and Peterson’s study gives biblical evidence that usury is contrary to Christian beliefs; however, their study is silent on why so many Christians are going to these stores.
An article in Christianity Today by Larry Eskridge suggests why so many Christians get into debt: “One’s finances are a sure outside indicator of the faith commitment within.”
In the article, Eskridge interviews Christian Finance Planner Paul Swaes who said it’s a common practice among Christians to buy nice cars, houses, etc., even if their income doesn’t permit it. Christians are “great at creating illusions of wealth,” he said.
According to the Feb. 18, 2008 volume 121 of Maclean’s Magazine, the “total household debt in the United States stood at an all-time high of U.S. $13.6 trillion.”
Utah Christians need to start being smart with money. An interesting concept floating around is to stop buying things they can’t afford. There are people all around us who have to have a certain house or a certain car, not because they can afford it, but because they simply want it. We live in a time when being in debt is acceptable. It shouldn’t be. Make it a goal to buy everything with cash. With debit or credit cards it’s too easy to lose track of how much money you have and overspend. It’s OK to have nice things, but only when you can afford it. Have a budget and stick to it. Basic concepts of frugality can go a long way.
Dave Ramsey is a talk show radio host who specializes in advising people on how to get out of debt. On his Web site he advises those who have payday loans to “sell everything in your house until you get those things paid…you have to do this very, very fast and get these bloodsucking parasite ticks out of your life.”
Also, you should get three extra jobs even if that means getting only four hours of sleep a night. Some might say these suggestions are extreme. They are, but sometimes it’s necessary to take extreme measures to solve an extreme 450 percent interest rate problem.
Whatever the reason, borrowing in America in general needs to stop. It’s not just Christians. A lot of people are guilty, especially our government. In the last decade the national debt has increased by $4 trillion because of unwise government spending. As of April, the national debt reached $9.5 trillion, according to the U.S. Treasury Department.
We all need to take personal responsibility. It’s our job to become financially stable and independent. In America we are free to follow our dreams. The only thing that can take our freedom today is debt. After all, according to Proverbs 22:7, “the rich ruleth over the poor and the borrower is servant to the lender.”