“An ingenious substitute for the chain and whip of the slave-driver.”  This is quote from the “Devil’s Dictionary” by Ambrose Bierce, 1911, describing debt.

I read this in conjunction with commentary about pay-day loans. Right now, a very successful Muslim footballer, playing for my club Newcastle United is in talks with the club after refusing to wear the club shirt which has the name of the sponsor on the front. This sponsor is Wonga, a pay-day loans company. I wonder how far he will take this Muslim principle of not promoting lending against (excessive)  interest or if pragmatism will prevail. Interestingly enough, he did wear the shirt with the logo of the previous sponsor which is a bank (…).

Recently, the Office of Fair Trading in the UK said that over 2 million people tale out these loans to cover a cash crisis until pay-day, which carry interest rates of typically 25% per month.  This is not too bad if the loans are paid off in time, but according to the Office, 28% of the loans are not paid, sending the borrowers into a spiral of increasing debt.  These roll-over loans provide half the income of the industry which is worth 2 billion pounds in the UK.

The Daily Telegraph states that 1 in 20 families in the UK relies on payday loans!

The Bible says, “Just as the rich rule over the poor, so the borrower is a slave to the lender.” (Proverbs 22 verse 7)

The need to teach people to make a sound budget and help with the discipline to stay on it is more important than ever.  Make a realistic budget, including your monthly and daily expenditures, and plan, plan, plan. Try to avoid unnecessary purchases: the costs of small, every-day items like your favourite cup of coffee add up. At the same time, try to build some savings: small deposits do help. A savings plan — however modest — can help you avoid borrowing for emergencies.

Do all you can to avoid a payday loan.