Why I Took a Payday Loan to Fix My AC During Houston's Heat Dome
James Whitmore
I was sitting in my apartment at 11 PM on a Saturday when the air conditioner made a sound like a dying cat and then stopped. The temperature inside was 88 degrees. The temperature outside was 96. The humidity was 82%. And I was suddenly without the one thing standing between me and heat exhaustion. I checked my bank account. $47. I got paid on Friday. After rent, groceries, gas, and the electric bill from last month, I had $47. An AC repair, I knew, would cost at least $300. Probably more. And I needed it fixed by morning. Because sleeping in 96-degree heat with 82% humidity is not uncomfortable. It's dangerous. So I did something I swore I would never do. I walked to the payday loan place on the corner. And I signed my name on a piece of paper that would cost me $600 to borrow $350.
I've been working at a warehouse in Houston for four years. I make $38,000 a year. I pay $950 in rent for a one-bedroom apartment. I have a car payment. I have student loans. I have no savings. Not because I'm irresponsible. Because $38,000 doesn't go far in Houston. And it goes even less when the heat dome hits and your electric bill doubles and your car battery dies from the heat and your groceries cost more because the supply chain melted. I had been treading water for months. The AC breakdown was the wave that pulled me under. And the payday loan was the anchor.
Here's how the math works on a payday loan. I borrowed $350. The fee was $50. The APR was 391%. I had two weeks to pay it back. If I couldn't pay it back, I could roll it over for another $50. And another. And another. I did the math. If I rolled it over three times, I would pay $200 in fees to borrow $350. That's 57% of the principal. In two months. If I rolled it over six times, I would pay $350 in fees. That's 100% of the principal. In three months. And if I defaulted? They would garnish my wages. They would sue me. They would add court costs and attorney fees. The $350 loan would become a $1,000 debt. And I would be worse off than when I started. But I didn't have a choice. Because the alternative was heat stroke. And heat stroke is worse than debt.
The AC repair cost $420. The compressor had failed. The technician told me it was heat-related. The unit was old. It had been running 18 hours a day for weeks. The compressor overheated and seized. He replaced it. He charged me. I paid with the payday loan plus $70 from my $47 bank account. I was now negative $23. With a $350 loan due in two weeks. And an electric bill coming that would be higher than last month's because the new compressor was less efficient. I was drowning. And the heat was the water.
I started talking to my coworkers about this. The woman on the loading dock told me she had taken three payday loans in the past year. All for heat-related emergencies. AC repair. Car battery. Medical bill for heat exhaustion. The guy in the break room told me he was paying $80 a month to a payday lender for a loan he took out two years ago. He had already paid $1,200 in fees. The principal was still $400. He would never pay it off. He was trapped. And he was not alone. The warehouse employed 120 people. I asked around. Twenty of them had used payday loans in the past year. For heat-related expenses. That's 17% of the workforce. In one warehouse. In one city. Extrapolate that to Houston. To Texas. To the South. And you're looking at millions of people trapped in debt because the climate changed and their wages didn't.
The payday loan industry knows this. They know that heat waves create emergencies. They know that emergencies create desperation. They know that desperation creates customers. And they position themselves accordingly. The loan place on my corner is open 24 hours. It has air conditioning. It has water. It has a friendly staff who knows your name. It's designed to be the oasis in the desert. The place you go when you're hot, broke, and scared. And it works. Because when you're sitting in 96-degree heat at 11 PM, the payday loan place looks like salvation. Even when you know it's a trap. Because the trap is air-conditioned. And your apartment is not.
I paid off the loan. I borrowed from my brother. I swallowed my pride. I called my mom. I did whatever I had to do. Because I was not going to let the payday loan place take another $50 from me. But I know that next summer, it will happen again. Something will break. The AC. The car. The refrigerator. Something that can't wait. Something that costs more than I have. And I'll be back at the corner. Or I'll be in the ER. Or I'll be sleeping in my car with the AC running because it's cooler than my apartment. The options are all bad. And the heat makes them worse.
The broader issue is that our economic system is not designed for climate emergencies. We have no safety net for heat-related expenses. No emergency assistance for AC repair. No low-interest loans for climate adaptation. No grants for weatherization. We have payday loans. We have credit cards. We have debt. And we have the heat. And the heat is winning. Because the heat doesn't care about your credit score. The heat doesn't care about your savings account. The heat doesn't care about your dignity. It just comes. And it breaks things. And it forces choices. And the choices are always between bad and worse.
I'm not giving up. I'm looking for alternatives. Credit unions. Community development financial institutions. Employer assistance programs. Church funds. Anything that doesn't charge 391% APR. And I'm saving. $20 a week. It's not much. But it's something. And next time, hopefully, I'll have enough to fix the AC without selling my future. But I'm not optimistic. Because the heat is getting worse. The emergencies are getting more frequent. And my wages are not keeping up. The math doesn't work. And the math is killing people.
So here's my advice. If you live in a hot climate, start an emergency fund now. Even if it's $10 a week. Even if it's $5. Because the heat will come. And it will break something. And when it does, you need options. You need choices. You need to avoid the payday loan place on the corner. Because it looks like salvation. But it's a trap. And the trap is air-conditioned. And your dignity is not.
Anyone else been forced into debt by the heat? Because I'm starting to think we need a Climate Emergency Relief Fund. And I'm willing to organize it.
