What is Economic Wellbeing?
According to the Council on Social Work Education, economic wellbeing is defined as having present and future financial security. Present financial security includes the ability of individuals, families, and communities to consistently meet their basic needs (including food, housing, utilities, health care, transportation, education, child care, clothing, and paid taxes), and have control over their day-to-day finances. It also includes the ability to make economic choices and feel a sense of security, satisfaction, and personal fulfillment with one’s personal finances and employment pursuits. Future financial security includes the ability to absorb financial shocks, meet financial goals, build financial assets, and maintain adequate income throughout the life-span.
Economic wellbeing may be achieved by individuals, families, and communities through public policies that ensure the ability to build financial knowledge and skills, access to safe and affordable financial products and economic resources, and opportunities for generating income and asset-building. It occurs within a context of economic justice within which labor markets provide opportunities for secure full-employment with adequate compensation and benefits for all.
The high cost and structure of a payday loan and auto title loans trap borrowers in a cycle of debt where they continually pay fees and interest—never paying down the loan. Despite the short initial term of the loan, borrowers can be stuck paying for months on end paying fees every two-weeks to one-month. At such high rates, it does not take long for the fees to add up to a damaging cycle of debt and poverty.
Texas currently has little to no oversight or regulation of the payday and auto title lending industry compared with many other states. In Texas, these loans often carry rates of 500 percent APR or higher.
Under current Texas law, there is no limit to the fees that payday lenders and auto title businesses can charge and no limit on the number of times they can charge high fees for essentially the same loan. Auto title loans are like payday loans, but the amount loaned is generally higher and a borrower who fails to make a payment could lose his means to get to work and take his kids to school.
ETHNN and the Tyler Economic Wellbeing Task Force are working closely with Texas Appleseed and are proud members of the Texas Fair Lending Alliance. We support fair, equitable interest and fee charges for payday, auto title and other small dollar loans. We are committed to creating sustainable community solutions to poverty by collaboratively fostering human potential through trusting relationships, empowerment, and education.