Questions and Answers
Why did many Americans turn to check cashers instead of banks for quicker access to their funds?
Check cashers provided instant cash without delays
What factor made it difficult for Debbie to obtain a business loan and grow her business?
Her limited credit history
Why do many Americans rely on payday and title loans for unexpected expenses?
They require no credit checks for approval
What is the risk associated with renewing payday and title loans instead of paying off the principal?
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Why are Justin and Brittany trying to find individuals who trust their income history instead of credit history as home buyers?
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What is the approximate range of the person's monthly expenses?
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How many Americans lack access to the traditional financial system according to the text?
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What important financial lesson did the person learn from their mother?
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What unexpected challenges did Alex and Melissa face in their family according to the text?
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What industry did Alex have a career in before facing financial instability?
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Study Notes
- The person owes a significant balance of 360 dollars and has monthly expenses, primarily business expenses, ranging from $2,800 to $3,500.
- Expenses include miscellaneous items for the kids, electricity, insurance, medications, phones, and various other expenses.
- The person grew up with a tough past, having lived on welfare and food stamps, but has now built a small production company and wants to start a life with his girlfriend.
- Justin is one of 70 million Americans who lack access to the traditional financial system.
- The person's mother taught him the importance of paying what you owe and saving, and he has savings accounts, 401ks, and has put his daughter in private school to ensure her education.
- Tiffany worked as a nurse and built a nest egg for her daughter's future, but her life was turned upside down when her son was diagnosed with autism and she and her husband were diagnosed with multiple sclerosis.
- Melissa met Alex, who had a career in the music industry, and they hit it off and got married, starting a family with two children and two incomes. However, their reality changed when their son was diagnosed with autism and Alex was diagnosed with multiple sclerosis.- A family, Alex and Melissa, faced financial instability due to unexpected medical expenses for their children, Jonah and Alex, and the subsequent loss of income.
- Both parents had to quit their jobs to take care of their children, leaving them financially unstable and without savings or a contingency plan.
- Banks were earning profits from consumers by charging overdraft fees for bounced checks, leading some customers to turn to check cashers as an alternative.
- Check cashers offer instant cash for checks, but come with additional fees.
- Banks used to clear checks within three to five days, but many Americans found this unacceptable and turned to check cashers for quicker access to their funds.
- In the US, 30 million Americans use check cashers, and underserved Americans spend the same percentage of their income on fees and interests as the typical American family spends on groceries.
- A designer, Debbie, struggled to grow her business due to her limited credit history, caused by her decision to not accrue debt through credit cards.
- Banks use credit history to measure a person's ability to repay a loan, making it difficult for people without credit history to obtain loans or lines of credit.
- Debbie's student loans affected her credit score, making it difficult for her to obtain a business loan and limiting her growth.
- Banks and finance companies have largely disappeared, leaving a gap that was filled by payday and title loans, which come with high fees and the risk of losing assets if not repaid on time.
- Many Americans live paycheck to paycheck and cannot afford unexpected expenses, leading them to rely on payday and title loans as a short-term solution to their financial problems.
- Payday and title loans can lead to a cycle of debt, as the fees pile up and the original loan is never fully paid off.
- Americans on the edge financially often renew their loans rather than paying off the principal, leading to a long-term crisis.- Debbie, a bag entrepreneur, is receiving increasing interest from boutiques to sell her bags. This is good news as she couldn't afford a large contract.
- However, she is currently unable to produce enough bags due to limited materials. She has more orders than she can handle.
- Justin and Brittany are trying to convince a seller they are credible home buyers, needing to find individuals willing to trust their income history instead of credit history.
- Debbie has had to sell her car due to financial struggles, and ends her day with a long commute after a 14-hour day.
- The financial landscape is changing, with many households underserved and struggling to access banking services. However, new businesses and organizations are using innovation and technology to reimagine banking and provide better options for those in need.
- Tens of millions of hard-working Americans are striving to reach their potential but are held back when good options aren't available during times of financial need.
- Debbie reflects on past hardships and promises herself she won't be held back, recalling memories of waiting until her father was at the table before eating or drinking.
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