There are numerous reasons a person might use a payday loan. Medical emergencies, family crises and home and auto repairs seem like the obvious situations that might arise and are understandably too expensive to prepare fully for. Many payday loan borrowers are using these loans as a supplement income source; which plunges some deeper into debt and creates an unending cycle of taking out, extending loans and not making timely repayments.

The desire to take out payday loans is obviously very tempting. Quick money is literally waiting around every corner for residents of some states. In California for instance, the number of payday loan locations outnumbers that of the top two fast food chains. It is conceivable that some people get a $500 loan and pick up a hamburger down the street with similar amounts of ease and convenience.

Scenarios of people in dire straights about, but a huge reason that many people find it necessary to acquire short term loans is that their savings plans are actually non existent. American save a lot less than most people of other industrialized nations, including Chinese and Indians, who save 40% of their income overall. Americans are spenders, by and large, and therefore can’t commit to properly budgeting their money. Last year, the rate of saving for American’s dipped to -0.5%; which means most Americans have more debt than they do assets. This is the lowest rate of saving since the Depression era. But why does it seem Americans are perpetual spenders rather than savers? The answer might be no farther than Hollywood.

Americans have long had an obsession with the glamour and opulence a famous life can bring so much so that many people will sacrifice their financial future to have the latest Gucci bag on their arm or drive the most expensive cars. Low income families who live in excess inevitably put themselves into debt at the expense of themselves and their children. Payday loans have gotten a bad name mainly because borrowers haven’t been able to handle the repayment. Even if a person is allowed to make regular payments towards a payday loan, say $20 weekly or bi-weekly, those payments will come no where close to paying off the whole debt, and will only cover transaction fees that are placed on that loan. And worse than high interest credit cards, payday loan companies can charge fees to an account without having to consider laws regarding usury.

An endless cycle of debt has begun to control the finances of Americans. Payday loans aren’t a good option for people who don’t have a good credit history. The fact that these loans are easily obtained should be an indication to most that the penalties for defaulting will be steeper than normal. Saving money should be a regular occurrence of any household, making high risk loans unnecessary. It seems the most effective way to make ends meet in an ever unsure world is by planning in advance for unexpected expenses; asking payday loans to be a financial stress reliever may be asking too much.