How much should society control bad financial behavior?

[disneysteve]

HR Block is offering RAL- refund anticipation loan- to get refund now- I do not know the RAL terms.

I guess they must do a preliminary return based on YTD info. You can't do a final return because you don't have the data - W2, 1099s, etc. What a racket that is. They probably charge extra since they need to do the work now and then complete it once you have all the paperwork. Plus what they soak you for to get the loan.

ETA: I wonder if it is this they are referring to:H&R Block

[jIM_Ohio]

That's the program.

[Investing First Steps]

That's of course where it all goes wrong. Like several other industries, one of which recently ceased to exist, you have a problem when you have people spending time and energy to create products that are simply bad for other people. That's simply not good for the economy. I'm not sure how you create a disincentive for that kind of behavior, shy of making it illegal.

[cptacek]

Good post. I think it keeps coming back to what I've said. To borrow money, you need to be able to prove to the lender that you have the means to repay the loan.

If a business needs money, show the lender your books. Show where the money is going to come from to repay the loan. If you can do that, you get the money. If not, you don't.

I think this advice is spot on. But I don't think that there needs to be a law spelling this out. I just think that if a bank makes a bad judgment about lending you money and you can't pay it back, they should pay the price and they should KNOW they will pay the price. That in itself should allow the banks to self-regulate. This is exactly why I was/am against bailing out banks that made bad decisions...they should have done their homework and not lent to people who can't pay it back, but because they did and it bit them, they should pay the price. They did not learn any lesson about good business practices because we saved their hides, and bad lending continues.

DH and I have farm loans at a local bank and we have no trouble borrowing money. But we have to show our banker our balance sheet, our income, our cash flow and our net worth every time we go in there. We have to have collateral, and we have to do all our borrowing at that bank so they are first in line to get paid if we do get in trouble. My sister and my best friend also work at locally owned banks and they said the same thing...they are not hurting at all, and they can loan any amount of money to anyone who can show they will be able to pay it back.

[disneysteve]

The problem, cptacek, is that years ago, banks would lend money and service the loans. Today, they lend money and then turn around and sell the loans, so we've removed the incentive for them to self-regulate. They don't care if the loan gets repaid or not. It is someone else's problem. As long as they are able to find buyers for these loans, they make their money. Then those loans get split up into thousands of little pieces and bits of dozens or hundreds of loans get bundled together into investment devices that regular folks like retirees purchase for income.

[Morningsuccess]

First, you need to find out where your money is being spent. Write down all recurring monthly expenses. Next, write down all other expenditures, whatever they be. Once you find where your money is going, you can cut back in certain areas. For example, if you find that you are spending too much money on eating out or entertainment activities, you can cut back on those. Trust me, every little bit helps.The hardest part for me was be able to show where all my money went. If you list everything, I think you will be shocked at what you find. After you list everything, then you can decide where you want to make cut backs and start a monthly budget to adhere to.

[CoreAssets]

Society can't control it. It starts with the individual.

[Stuartthomas]

this thread on payday loans has bring up an important issue...I really appreciate people putting payday loan issues in perspective.

[SnoopyCool]

I'm glad this payday loan issue resurfaced. I just completed my first year at the big green square and I've never seen the likes of people that come in to get their money early, only to pay outrageous fees to do so. I really tried to explain to them how much money they were paying for the advance, but they absolutely did not care.

At one point, I had a couple that came in frantic, hoping they could get their W-2 online to get their refund that day, because they were about to be evicted. Yet they had more bling than Mr. T. I just wanted to yell "WAKE UP!"

[bjl584]

this thread on payday loans has bring up an important issue...I really appreciate people putting payday loan issues in perspective.

You must have dug deep into the archives for this one. This thread is a year and a half old.

[PrincessPerky]

Quite frankly if the constant increasing of schooling isn't working to make people 'smarter', and the constant addition of new regulations isn't making business' nicer. Maybe what is needed is less rather than more?

[Stuartthomas]

yes i agree with this that the government should stay out of it. Perhaps better financial literacy among the public would help many people avoid such poor decisions. But increasing knowledge among investors can actually lead to unintended negative consequencesI think that people should educate themselves and if they chose not to educate themselves, it's their own problem

[cschin4]

People can do whatever they want to do with their money and money they earned. Instead of worrying about controlling what individuals do who have every right to spend their money as they please, we should be more focused on the financial bad behavior of our politicians and leaders who are spending tax money that they did not earn and have the power to fritter away on total nonsense. In addition, it is time to put govt officials IN JAIL for their frauds and dealings. Funny how nobody went to jail over these bailouts, Fannie and Freddie, nor will they. The LAST thing you want to do is to allow the govt MORE CONTROL over your individual finances. To do so is personal, financial suicide of your own family.