Payday loans are great when you need fast cash. However, they also come with high interest rates and other fees that can accumulate quickly if you are not careful.
If you find yourself going back to the payday lender on a regular basis, it may be a sign that you need to start reining in your expenses. How can you get your monthly expenses under control?
1. Find Things That You Can Cut Immediately
It can be difficult to part with things that you have grown accustomed to having. For example, it may be tough to downgrade to a basic cable package or get rid of your fancy sports car.
The good news is that you can save hundreds of dollars by parting with the things that you don’t need or downgrading to only the features of a product that you use.
If you only watch five or six channels out of 1500 that you are offered on your cable package, you are paying for something that you don’t use. That is wasted money that you can start to recoup right away.
2. Create a Long-Term Budget
Anyone who has money coming in from a job, disability settlement or any sort of pension should make a budget. This will give you a clear picture of how much you have coming in and where it needs to go each month.
As you get used to budgeting your money, it will become second nature to put money in the bank instead of spending it on new shoes or other collectibles for your house.
Over a period of a few months, you will start to see your savings increase and your need to rely on payday loans decrease.
3. Educate Yourself about Interest Rates
Loans may seem like free money if you don’t know any better. Taking financial literacy classes can be the best thing to help you control your spending and help you open your eyes as to how much goes out the window each month in interest payments alone.
When you realize that each $100 payment made to a payday lender could go into an account that earns interest for you instead of for the lender, you will stop using payday loans right away.
4. Find Ways to Consolidate Your Debt
Debts that you have already accumulated will need to be dealt with. While you could opt for bankruptcy, it isn’t something that is good for you in the long-term.Instead, you should talk to your creditors or a debt attorney about how you can consolidate your debts and lower your interest rate.
In addition to getting help with your debt, you cannot legally be contacted by your creditors when you give power of attorney to a third-party. This means that you are free from creditor harassment while you work on repaying your debt.
5. Get Rid of the Credit Cards
Those who find themselves racking up large credit card bills should cut up those cards or cancel them. A quick way to force yourself to stop using your credit card is to order a new one from your bank or credit union.
The old card will be deactivated right away. When the new card arrives in the mail, you can stop yourself from using it by not activating it. This gives you the added benefit of not hurting your credit score by cancelling your account.
6. Ask for Extra Compensation at Work
Your employer may have insurance or retirement plans that can help you save money and reduce expenses at the same time. By contributing to a 401k or IRA, you can reduce your tax burden for the year.
Enrolling in an employer sponsored health plan could reduce your doctor bills or the amount that you would need to pay to go to a hospital. If you have medical issues, this can be just what you need to get those medical bills under control. Anyone who itemizes on their income tax return may be eligible for further tax breaks.
If you find yourself running to the phone or the computer to apply for a payday loan, you should stop yourself from making a big mistake. While they are fine for emergencies, it is better for you to get a handle on your spending as opposed to applying for yet another loan with a high interest rate.