The number of payday loans being taken out is increasing as the economy is weak and more conventional credit is harder to obtain.
Normally you take out a Payday loan to get you out of a tight spot, but really you are just moving the problem from one month to the next.
Customers are lured into taking out this form of credit due to the speed of payment, the promise of fast cash and the same day payday loan offers.
It can seem like a quick fix to an urgent problem, but the reality is that you could be setting the wheels in motion and putting yourself in an even worse position.
So the question is, how can you avoid the headache of payday loans? A good question indeed so let’s take a look at some ideas.
1. Make a Budget.
Making a budget is one thing. Sticking to it is another. However that being said you can do it with a little financial discipline. I was in a real financial mess a few years ago and a budget, along with tackling my debts has helped me on the road to recover. This blog also makes sure I stay on the straight and narrow as well.
Sticking to your budget can help when unexpected expenses pop up, because normally you will have budgeted money for this very purpose and stored it away in a savings account somewhere. Or if you don’t then start now.
A budget is all about planning and making sure you allow for all your expenses. I use the worst case scenario method, and if something is cheaper than I thought, I save the difference. At the end of the month I normally survive financially and the whole process starts again. The only difference being, I don’t have any payday loans to pay off.
2. Avoid Payday Loans
What if you haven’t stuck to your budget? What can you do? Avoid taking out a payday loan. You will just make things worse for yourself next month.
Instead, try to make savings within the remainder of your budget. If that’s not possible, perhaps you could sell things on eBay to raise some extra cash. In other words, don’t turn to a payday loan to solve the problem because you will only make things worse. Do everything you can to avoid it.
3. Other forms of Credit?
If you have a credit card then you could consider using that. However if you choose to do so make sure you pay it off next month in full, otherwise you will be paying interest on that. If your credit card charges a high interest rate then this is probably a no go as well. It’s not worth the risk.
Perhaps you could get an overdraft from your bank? Again though, make sure you will be able to comfortably repay what you borrow on your next payday.
If you are like me and are in Debt, credit is not an option for you, even if you can still get it. Whilst it might be tempting to take out credit, you need to remember that you are in debt. You should be decreasing your debt, not adding more onto it. Things will just get out of hand again and you could make things worse for yourself.
4. It’s all going wrong
If you are in a really bad way financially and need some help, no problem. I would recommend contacting someone like StepChange to get help. I have written a review of StepChange on this blog if you would like to find out more.