LANSING, Mich. -- Critics of a bill being considered by lawmakers that would allow payday lenders to offer longer term, higher dollar loans say the legislation puts the most vulnerable Michiganders at risk.

House Bill 5097 would allow payday lenders in Michigan to make loans of up to $2,500 with no limit on the length of the loan.

Sandra Pearson, president and CEO of Habitat for Humanity of Michigan, says families don't always know what they're getting into when they take out a payday loan.

"Our financial coaches and counselors and educators are more and more interacting with families who are coming to us wanting help," she relates. "And probably about 30% of those coming to us are involved in payday lending loans that they're trapped in right now, and we're working toward helping them get out of this cycle."

Pearson adds that a borrower who took out a $2,500 loan would end up paying more than $7,000 to the lender at the end of a two-year period.

Several states, including Georgia, Colorado and Montana, have either banned payday lending or have strict caps on the annual interest charged.

Many people who walk through the doors of a payday lender are desperate for cash.

De'Angelo Boone works as a community outreach manager for Habitat for Humanity. He says when circumstances led him to take out a payday loan, he felt he had no other choice.

"Well, my experience is I ended up in a situation where I took custody of my younger brother, my younger sister and two other kids in the community," he explains. "I was also robbed by a family member, and I was put into a financial crisis.

"And it just kind of created a cycle, because you go back and you pay it back but then you pay back this high additional amount. And then you're trying to recover from the amount that you're paying back."

Pearson says borrowers who take out these loans often end up defaulting, closing their bank account and even filing for bankruptcy. She says residents should look elsewhere for assistance.

"Instead, reach out to your Habitat for Humanity, reach out to your local credit unions and even your church, take the time to reach out to your own network, your own resources, and people will help you," she urges.

Pearson says 70% of Michigan borrowers take out a new loan the same day they've paid off a previous loan.

House Bill 5097 would allow lenders to make loans to individuals who already have a high-cost loan, and would permit the rollover of short-term payday loans into a longer-term loan.


get more stories like this via email

April is Financial Literary Awareness Month and Hoosiers who are worried about inflation or watching their retirement account on the stock-market roller coaster may be wondering what they should do.

Many households are still recovering from the economic impact of the pandemic, according to the Indiana United Way.

Todd Christensen, education manager for the nonprofit Money Fit Financial, advised creating a spending plan and identifying priorities are good first steps. If you are considering buying a car or house, or taking a vacation, he noted a budget is about more than dollars and cents.

"Whatever it is that motivates you, set a purpose, is number one," Christensen recommended. "Number two is not to start adding income. That's usually where people start, but you've got to prioritize expenses. If you don't prioritize them, you will inevitably have to start eliminating expenses anyway. And you'll go with your emotions rather than with the rational part of your brain."

Christensen sees cash, credit cards and the popular "buy now, pay later" apps as convenient tools consumers often misuse. Convenience prompts human nature to kick in and encourage overspending. He suggested having two checking accounts, one for automatic bill payment and another for fun purchases, and a savings account for long and short-term goals.

Christensen supports teaching kids good money management habits before they earn spending cash as teens by mowing lawns, babysitting or doing chores. If they are not taught how to take care of small amounts of money as early as possible, he cautioned, they will be "terrible" with larger amounts as adults.

"By age two, children have been in their parents' arms going through a checkout stand enough times that they know that there's an exchange going on," Christensen observed. "They're learning that there's something magical about that plastic card or about the phone that they tap."

The Indiana Department of Education mandates all students in grades eight through 12 must have one semester of personal financial responsibility instruction, including lessons on debt management, savings, retirement and investment accounts.


get more stories like this via email

Washington is one of 25 states where people can use the online "IRS Direct File" system, to file their income-tax returns with the Internal Revenue Service. But the future of the program is at risk.

For years, taxpayers' advocates had pushed for a free, simple tax-filing option for people who don't need a third-party tax preparer. But the Trump administration has said Direct File may be a waste of IRS resources.

Casey Lantz, free tax preparation campaign coordinator with the United Way of King County, said it is time for people to voice their support for the program. She's used Direct File and says, since the program auto-fills tax information from forms like W-2s, filing her income taxes this year was the easiest it has ever been.

"I think it's exactly what people wish tax filing was like. And I think the only chance we have of stopping them from cutting it is if enough people say something," she explained.

Direct File guides users through simple questions in English or Spanish, and offers live chat support in both languages. People can check their eligibility and get more information online at 'DirectFile.IRS.gov.'

Adam Ruben, vice president of campaigns and political strategy with the Economic Security Project, said the process removes intermediary tax preparers and uses information the government already has to make it easier to file federal and state tax returns. Ruben explained Direct File is for people with straightforward tax situations, such as employees who get a W-2 from their employer.

"Direct File is not yet available for freelancers or gig workers, or people with complicated investments or who work across multiple states," he continued.

Lantz said even if you are not eligible for Direct File, you can still use it to file an income-tax extension by April 15.


get more stories like this via email

Pennsylvania is among a growing number of states offering residents access to the Internal Revenue Service's free tax filing system, Direct File.

The online tool was created to save people both time and money by allowing them to file directly with the IRS while removing the need for costly tax-preparation services.

Lucas DeBartolo of East Stroudsburg said using Direct File was easy and recommended it for people looking to take advantage of available tax credits.

"And it could be hundreds to thousands of dollars back in their pockets," he said, "and this software is really good at seeing what tax credits people qualify for."

It's estimated about 20% of eligible taxpayers don't claim the Earned Income Tax Credit. DeBartolo said using Direct File was quicker than other online tools he's used and appreciated his quick refund.

Americans on average spend at least 13 hours filing their taxes each year. Direct File cuts down on that time by autofilling information the government already has, allowing users to simply verify its accuracy.

Adam Ruben, vice president for campaigns and political strategy at the Economic Security Project, said the program is user-friendly with no hidden fees and is available in English or Spanish.

"If you get stuck, there's free live chat support in both languages," he said, "and importantly, unlike most other tax software, it will also help you file your state tax return for free."

Ruben said Direct File is not yet available for freelancers, gig workers, people with complicated investments or those who work across multiple states. He said people can check their eligibility and get more information at the IRS website.


get more stories like this via email