Ever get that sinking feeling in the pit of your stomach when the cash is running low and payday is still days away… again? It seems like there’s always something and the only way out is to head back to the payday loan joint. But hold up. Here are a few things to think about before you take that step.
The Convenience Of Getting A Payday Loan
One of the main reasons why people get payday loans is because of the convenience that they offer. With a payday loan, you can get the money you need without having to go through a lot of hassle. In some cases you can simply apply online and receive the money in your bank account within a few days. You don’t have to provide a lot of documentation or go through a long approval process. In many cases, you can get the money you need in just a few hours.
Payday loans also offer a lot of flexibility. You can use the money for whatever you want, and you don’t have to pay back the loan until your next
The Stated Cost Of A Payday Loan
One of the drawbacks of payday loans is that they come with a high interest rate. In most cases, you will have to pay back the loan plus interest and fees. This can amount to a lot of money, especially if you take out a loan for a long period of time.
Another drawback of payday loans is that they can be very expensive in the long run, too. If you can’t pay back the loan on time, you will have to pay additional fees and penalties. This can quickly spiral out of control and end up costing you a lot of money.
Before you apply for a payday loan, make sure you understand the terms and conditions. Make sure you know how much the loan will cost in total and be sure to factor this into your budget.
The Mindset Created By A Payday Loan
A payday loan can create a mindset of dependency and desperation. When you’re in a difficult financial situation, it can be tempting to take out a payday loan. But remember that the danger that these high interest rates pose and can be very expensive. It’s a common story where someone starts with one payday loan and end up getting themselves in financial trouble
The Dangers Of A Payday Loan Habit
The problem with payday loans is that they can quickly become a habit. Once people start using them to cover regular expenses, they can quickly snowball, eating more and more of your income. In addition, payday lenders can get aggressive with collections efforts, some quickly escalating to legal action, which can damage your credit score, making it harder to get approved rent, phone service or other common necessities.
This is why it’s important to consider all your options before applying for a payday loan. If you do decide to take out a payday loan, make sure you can afford it and that you have no other long-term debt.
Look At Your Options
There are a number of different options available to you when you need quick cash. Your employer might be able to give you an advance on your paycheck to tide you over until payday. You can ask family and friends for help or apply for a credit card to use for emergencies (it’s still debt, but the interest rate should be lower).
If you regularly find yourself at the door of payday lenders, you might need to consider a better job. The labor market has changed in favor of employees and you could likely find a better paying gig in the same area. You might also find opportunities today that seemed out of reach just a year or two ago.
Create A Budget
Creating a budget doesn’t have to be complicated. The fundamentals couldn’t be more simple.
- Determine how much money you have reliably coming in each month.
- Determine your total monthly expenses. Start with your fixed expenses that don’t change very much: Rent, electricity, internet, phone, water. Track how much you are spending on variable expenses each month: food, clothing, gas, etc. Finally, take your periodic expenses that you pay yearly or every few months, and divide them by the number of months in between (oil change, haircut, etc.).
- Whatever money is left over once your basic needs are accounted for is your disposable income. Assign this money a job. Put some towards Fun & Entertainment. Some toward paying more toward any debt you might have to get free faster.
If you don’t have anything left for disposable income (or worse, don’t have enough to make it to the bottom of your necessary expenses), then you have two options: (1) work to trim your expenses or (2) increase your monthly income.
See How Drastically You Can Cut Your Expenses For The Next 90 Days.
One way to reduce your expenses is to make it a challenge and turn it into a game: see how drastically you can cut them for the next 90 days. This could include things like eating out less, bringing your lunch and store-bought soft drinks to work, and turning off the lights when you’re not using them. You might also want to consider canceling some of your subscriptions or reducing your cable package. See what sort of things you really end up missing.
If living within your means feels unsustainable (and sometimes that’s just the reality we find ourselves living in), finding a better-paying job or other sources of revenue is your best bet. If a new job is something you’re open to, we’d love to talk. Click any of the banners on this page and you can check out any opportunities we have near you.