Instant Loan Article

There’s a world of bad choices out there for anyone with a bit of credit. Everywhere you look someone is encouraging you to lay out your hard earned money for a bit of instant gratification. And with the explosion of loan shops and once-in-a-lifetime credit offers it’s easier than ever for consumers to get their hands on borrowed cash.

Bill C-26 was tabled in Ottawa earlier this month to allow provinces to cap the amount payday lenders can charge for their services. It’s a measure intended to bring a bit of sanity back to the feeding frenzy creditors have made of our enjoy now, pay later consumer culture. But the proliferation of these despicable loan companies is a built on a popularity of their services, and despite any cap that may be imposed their unsavory practices will continue as long as customers demand it.

According to Statistics Canada a near majority of Canadians (47 per cent) spent more than their pre-tax income in 2001. A 2004 Industry Canada report described consumer bankruptcies as being on a “long-run upward trend” stating that there were “more than two-and-a-half times as many consumer bankruptcies in the 1990’s than during the previous decade.” This same report says that from the beginning of 1989 to the end of 2003 the debt-to-income ratio increased from 73.8 to 103.2 per cent, while the savings rate declined from 14.1 to 1.3 per cent.

In isolation any number of conclusions can be drawn from these numbers: that real earnings are down since the end of the 1980’s, that the cost of living is higher, or that taxation and economic policy have become a greater burden. For example decreases in post-secondary education funding in the early ‘90’s have seen today’s students take on a greater financial burden for the same amount of education a student in the 1980’s would face.

However one cannot simply blame government policy for this epidemic of personal debt. Equal partners in the decline of prudent and reasonable spending habits are the increasing ease of acquiring consumer credit, and a growing lack in the good judgment of the loan seeker.

In many cases the public has simply allowed savvy advertising firms and finance companies to take control of their financial decisions, forgoing an educated and balanced approach in the face of easy credit. In essence they have placed a great deal of trust in people who’s primary goal is to separate them from their money. There is no public education strategy or meaningful political action to counter the voodoo-like lure of modern marketing, and so the cycle of debt continues to grow unchecked.

There is another way. Despite having lived near the poverty-line for the balance of my adult life I have never found myself in dire financial straights. Having made a conscious decision to live within my limited means has enabled me to discover a path to living that avoids the trap of becoming a slave to creditors and the notions of class and convenience instilled by advertisers.

I am certain that my near asceticism won’t appeal to most, and I’m not advocating for a monastic life for the masses. But I do believe there is a lot more to be gained from practicing some prudence than any television commercial or payday loan agent would have you believe.

While it is true that many of my clothes were once someone else’s and that I’m not very up-to-date on the city’s finer dining establishments I do retain the freedom to make choices for myself without having to consult with my bankers, and am comfortable in the knowledge that my purpose in life has not become to my next car payment. I take the time to think, to breathe, and to be thankful for the things I have rather than run up another hill of debt when the next must-have item saunters past in a coat of shiny cellophane.

Having one’s thumbs screwed by unhappy collection agents and getting gouged at the instant loan shops is no way to get by. The true path to financial freedom is to balance what is truly needed against unnecessary wants disguised in a cloak of affordable monthly installments.