One family shows there is a way out from the payday loan cycle
July 15, 2006 - Albuquerque, New Mexico
Emily Bihn doesn't know what she and her young family would have done without payday loans.
Between August 2003 and January of this year, Bihn, her fiance and their two little girls depended on a series of loans averaging $200 each to pay for rent, food, gasoline, clothes -- the necessities.
Still, she gets queasy when she thinks of the $1,046 -- or 442 percent -- in interest she paid on those loans during that time.
"Think of all the food I could have bought with that," Bihn, a willowy 25-year-old, said while sitting in her southwest Albuquerque home. "Looking back at it, I feel pretty stupid. But when you need groceries, what are you going to do? I'd probably do it again if I had to."
If payday and car-title lenders did not charge triple-digit annual interest, Bihn said they might be a good thing for people who have no other place to turn.
"If they charged more reasonable interest rates, it wouldn't be so bad," she said. "But the people who can afford to pay them back don't need their loans in the first place. They are preying on people who are desperate for money, and I don't think they should be allowed to do that."
Last month, she and her family took part in a protest demonstration at the E-Z Payday Loans on west Central Avenue, the store where Bihn took out some of the loans.
"You guys took it, and you're crooked, so give it back," chanted some of the 20 or so people who took part in the rally, sponsored by the Association of Community Organizations for Reform Now (ACORN), a national organization of low- and moderate-income families.
To make a point, Bihn demanded a refund of $523, half the interest she paid on her loans.
E-Z Payday's area manager, Elizabeth Martinez, told the demonstrators she was not permitted to make refunds. Instead, she gave them the phone number of a company officer in St. Louis.
Martinez told The Tribune she has worked for E-Z Payday for six years, but this was the first time she had been confronted by demonstrators.
"It was very scary," she said.
Bihn said the point of the demonstration was to shake people up.
"They are charging you outrageous interest rates on money you need," Bihn said. "I think the more outraged we can get people about it, the more chance we have to change things."
Things have changed for Bihn and her family.
Bihn, her fiance, Jason Adams, 25, and their daughters, Serena, 5, and Madisen, 2, have broken out of the cycle of debt that chews away at many people who go to payday and car-title lenders.
They managed to pay off their loan because Adams got a raise in his job as a hotel desk manager.
And because Bihn -- even though she has two small kids to care for and has had to battle through a bout with lupus and keep up with college classes -- never gave up her work with developmentally disabled youngsters, a job she's had for six years.
"We still do the paycheck-to-paycheck thing," Bihn said, "but we are learning to budget more."
She smiled faintly and motioned to the TV in her living room.
"We don't have any savings, but we do have cable," she said.
The TV and the living room are in the three-bedroom, two-bathroom, double-garage home that Bihn and Adams started buying a year and a half ago because it made good sense to do so.
"One day we added up what we were paying on rent and couldn't believe it," Adams said.
Home ownership is cited as one of the two major roads leading out of the poverty zone.
Education is the other, and in June, Bihn completed her bachelor's degree in psychology at the University of New Mexico. She is counting on that turning into a better-paying job soon.
"I will be making more money, so I hope we don't have any more desperate family problems," she said.
Unexpected and costly problems like medical bills, car repairs or job layoffs can force families just getting by to turn to payday or car-title lenders.
Adams remembered when he and Bihn started out together with not much more than a milk crate and a TV to put on it.
That wasn't long after Bihn graduated from Sandia High School in 1999. Adams had dropped out of Highland High.
They lived for a time with Adams' mom and for a time with his aunt. They lived in a hotel and rented apartments and houses.
"We lived in an apartment in the worst neighborhood in Albuquerque," Bihn said. "I was afraid to stay there at night by myself. We never even moved all our stuff in, and we were there for just two weeks."
Adams and Bihn were making less than $10,000 and she was pregnant with Madisen, their second daughter, when they got their first payday loan to help pay for rent and food.
It was a $150 loan plus $25.50 in interest -- all due in two weeks.
"You don't realize how hard it is to come up with the extra money they are charging for interest," she said.
That got them into a cycle in which they were able to pay only the interest, which meant they had to renew or roll over the loan, then pay the interest again in two weeks, renew the loan again and on and on.
This would go on until some extra money -- tax returns or a student loan -- came along and they could pay it all off.
But then a week would come when they needed an extra $150 or $200, and it would start again.
In June 2004, things got worse when Bihn was diagnosed with lupus.
"I was pretty sick for two or three months, but I couldn't quit my job," she said. "I used up all my vacation time, and then I forced myself to go to work -- even when I could barely drive a car."
They depended on payday loans during those hard times because they didn't see any other way.
"Our line of credit at the bank was tapped out, we were paying on the car so we didn't have anything to use as collateral, and the pride thing kept me from asking for help," Bihn said. "I'm not going to say 'Mom, can I borrow $300 for the rent?' "
Pride also kept her from turning to welfare or housing assistance programs. She said those programs don't help working people much anyway.
"But we just kept on keeping on," she said.
And now that the payday loans are behind them, things are looking up in the new home Bihn, Adams, Serena and Madisen share with two dogs, a kitten, two leopard geckos, a parakeet and a pet tarantula.
"I definitely think we have a success story," Adams said.
It's easy to believe him because Bihn won't settle for the way it was -- or even the way it is.
"We have more potential in us," she said. "Once you meet one goal, you should always go one step farther. I want to go back and get my master's degree because I want to become a behavioral therapist. They make in a month what I make in a whole year."
She revels in the sense of accomplishment that comes with a new house and two cars.
"But I'm not going to settle," she said. "I don't want my kids to go to public schools. I love my beautiful home, but I don't want my kids to grow up in this neighborhood.
"I want to live on the East Side, where the schools are better and where Jason's family and my family are. This is good for now, but it's not where we're going to stay."
She definitely doesn't want to go back to a payday loan store.
"They do serve a purpose," she said. "They did loan me money when I needed it, and I don't think I should get it for free. But I believe in fair and reasonable rates. I believe we need some kind of regulation.
"And I know I'm not the only one who has fallen victim to them."
The Albuquerque Tribune, Ollie Reed Jr., Tribune Reporter
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- Consider options before going to a payday lender [July 15, 2006]
- One family shows there is a way out from the payday loan cycle [July 15, 2006]
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- New Mexico Payday Loan Regulation [May 29, 2006] -
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