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31Aug/180

Why a 33-year-old turned to Payday Loan when his baby’s premature birth left him broke

 

For one young couple in Texas, it was a cause for celebration — a pregnancy — that tipped them into debt.

Joshua Shroyer, 33, says his family managed to get by until they received the surprising news in 2016 that they were expecting their third son. After a difficult pregnancy, both mom and baby made it through, but the infant arrived premature at only 26 weeks.



Health issues accompanying the pregnancy forced Shroyer's wife, Ivonne, out of work for about about six months — most of that time without pay. A public school teacher, she earns the family's primary income; Shroyer makes just $15.75 an hour as a grocery store employee. Without her contribution, things began to fall apart.

"We have to be a two-income household: we've got the kids, the student loans, the mortgage," Shroyer says. As medical bills mounted, the family used up their emergency savings and started living off credit cards.



 

Once they had maxed out their cards, the Shroyers fell behind and eventually stopped paying. From there, the situation "snowballed," Shroyer says. Their credit scores fell, their interest rates soared and credit dried up. The Toyota dealership didn't want to lease them another car.

"I don't remember what the tipping point was, but one month we just didn't have enough to cover the basic bills," he says. With three boys counting on him to put food on the table, he needed a way to cover roughly $400 in expenses. So Shroyer went to one of the only places he says would work with him: a local payday loan center.



"You don't want to tell your kids you don't have eggs, or there's no milk in the cereal today. I'm not going to do that. I'm going to put food in the fridge and pay the extra money."

"YOU DON'T WANT TO TELL YOUR KIDS YOU DON'T HAVE EGGS, OR THERE'S NO MILK IN THE CEREAL TODAY. I'M NOT GOING TO DO THAT. I'M GOING TO PUT FOOD IN THE FRIDGE AND PAY THE EXTRA MONEY."

The Shroyers took out a type of short-term, unsecured loan that is known as a payday loan and is fairly easy to get. Unlike a mortgage, you don't need to put up anything as collateral. In most states, all you need is a valid ID, proof of income and a bank account.



Although he only needed $400, Shroyer was offered an $830 installment loan that he agreed to pay back over nine months. "I had about $400 worth of bills to cover, but they don't let you borrow just what you need; you have to take what they approve you for," Shroyer says. "Of course, you could just give back the extra the next day as a payment, but I didn't do that."

Culled from https://www.cnbc.com/2018/08/14/millions-of-millennials-are-taking-out-risky-payday-loans.html



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