Today was a great lazy Sunday. I didn't do any "real" work at all. Still, even in down time, it's hard to escape financial topics.
That's what happened when I sat down tonight and actually read all of the New York Times magazine (and made a tentative attempt at the crossword puzzle). Two stories in the Sunday insert are definitely worth sharing.
A closer look at check cashing services: Check Cashers, Redeemed looks at the success of Nix Check Cashing. Douglas McGray writes:
Twenty or thirty years ago, traditional financial institutions fled neighborhoods like Watts, and guys like Tom Nix, co-founder of the biggest chain of check cashers and payday enders in Southern California, rushed into the vacuum. They built a whole new financial subculture, which now includes regional giants like Nix, national brands like Ace Cash Express, Advance America and Check ’n Go and thousands of local chains and anonymous corner stores — more outlets, in total, than all the McDonald’s restaurants in the United States plus all the Starbucks coffee shops. Inside, it’s like banking turned upside down. Poor customers are commodities, deposits are irrelevant, bad credit makes for a good loan candidate and recessions can be boom times. Add up all those small transactions and throw in businesses like pawnshops and auto-title lenders, and you’ve got a big industry — $100 billion annually and growing. Nix alone pulled in $28 million in fees last year.
Check cashing companies and like-minded payday loan companies get a lot of criticism. Much of it is well-founded. Low-income workers pay hundreds in fees to convert their paychecks to cash.
But the Times story sheds some light on why many continue to use these services even when they have other options.
And it examines why traditional banks aren't much better when it comes to raking in egregious amounts of money from customers.
In fact, say some Nix customers, at least the check cashing company is upfront about its fees.
Talking about money: Also in the magazine is Walter Kirn's tale of hearing about the Depression from his grandfather and now trying to explain today's economic troubles to his young children in What's a Depression, Daddy?
But talk of money troubles, notes Kirn, goes beyond his attempt to inform but not alarm his kids. Adults, both friends and strangers, now share their money woes.
"Talk may be cheap, but when the markets are falling, prices are rising and credit is tightening, it’s a uniquely affordable indulgence," says Kirn.
Kirn's magazine piece is a nice bookend to the Saturday Your Money feature in which Ron Lieber examines how adult children and parents can talk to each other about their financial situations.
Lieber offers two "form letters," from kids to parents and vice versa, that might help you broach this sensitive subject.
Family finances: Many years ago, I wrote a story on how adult kids can help their aging parents deal with potential money problems. The companion piece on how all family members can contribute lists some steps to take before things reach the crisis stage.
Things haven't changed much since these articles were first published. In fact, given today's economy, they're probably even more relevant.