For first-time payday loan borrowers, it’s not just a quick cash fix. One payday loan turns into multiple payday loans and before you know it, you’re stuck in the cycle of rolling over payday loans month after month. Four out of five payday loans are either rolled over or renewed within 14 days. The payday loan trap is easy to fall into, and with average interest rates of 400% and higher, it’s next to impossible to get out of. So, before turning to payday loans, consider your other options.
Payday loans are typically used when you need quick cash fast, in between paychecks. They’re used as a buffer for financial emergencies or when you’re short on cash. There’s hundreds of reasons why people resort to payday loans, but there’s even more reasons why you should avoid needing them in the first place. So, today we’re sharing our top 8 tips for avoiding payday loans.
1. Use a budget
Create a budget that’s based on your monthly income. It’s easy to overspend when you’re not aware of how much you’re bringing in and how much is going out every month. Overspending leads to financial troubles … not having enough to pay the bills, running out of groceries before your next paycheck comes in, and relying on fast cash options, like payday loans. Creating a set budget gives you peace of mind and shows you how much money you actually have to spend each month.
Write down how much money you bring in each month. Then, make a list of all of your bills from the most important to the least important. Creating and using a budget can help you avoid needing quick cash payday loans.
Check out our guide for creating your first budget.
2. Make the “must haves” a priority
Focus on the necessities. Don’t get behind on your rent or mortgage, keep the heat/AC on, and keep food in your fridge. As much as we all like to head out for dinner, catch the latest movie, or grab the newest phone as soon as we can, those things aren’t necessities. They shouldn’t take precedent over your more important bills. By making your necessities a financial priority, you can make sure you have money set aside to cover those bills without relying on payday loans.
3. Stay employed
Maintaining a steady income is key to avoiding the need for quick cash payday loans. You not only have the peace of mind of a regular paycheck, but you also have the financial means to pay your bills. Some things, like layoffs, are outside of your control. However, make choices that don’t willingly put yourself in a position to be without employment. For instance, don’t leave your job without having another one lined up first.
If you find yourself unexpectedly unemployed, find opportunities to make extra money while looking for another job. There are tons of part-time opportunities, from delivering pizzas in the evenings to working part-time at a local coffee shop or restaurant. You can also get creative and find opportunities like dog-walking, pet-sitting, childcare, or even doing housework and yardwork for your neighbors.
4. Create a “rainy day” savings fund
Your car needs a new transmission. Your AC went out and it’s the middle of summer. You wound up in the hospital with some hefty unexpected medical bills. Emergencies happen. Unfortunately, there’s no way to avoid unexpected expenses or financial emergencies that leave you needing cash fast. But you can avoid getting stuck without enough money to cover those expense. Creating a savings fund that can help out when these unexpected emergency expenses pop up is key to avoiding payday loans and other unsafe quick cash options.
Set money aside every month for emergencies and for months when you need a little extra cash. Saving an extra $50-$100 every paycheck can add up. The key, though, is setting this money aside in a savings account before you actually need it.
5. Don’t get in over your head
Between the monthly bills, holidays, birthdays, and all of the kids’ activities, it can be easy to get in over your head and find yourself turning to payday loans to cover the bills and other unexpected expenses. It’s easy to take on too much all at once and find yourself overspending, with nothing left over at the end of the month. Using a budget will help you stay on track and plan ahead.
By planning ahead, you can better understand how much money you’re bringing in each month and how much you expect to spend. Using a budget will keep you from getting in over your head and resorting to quick cash payday loans.
6. Reach out to friends or family
If all else fails, and you need quick cash fast, reach out to a trusted friend or family member who may be willing to loan you the money. Seeking financial support from friends and family will help you avoid the 400%+ interest rates and unmanageable monthly payments that come with payday loans.
7. Get a short-term, part-time job
Finding a short-term, part-time job can be the difference between losing control of your finances and falling into the payday loan debt trap and staying in control of your finances with peace of mind. If you find yourself needing more money than you make in a month, find a short-term, part-time job to help cover your expenses.
There are dozens of opportunities. Offer to mow your neighbors’ lawns during the summer. Find a pet-sitting or dog-walking gig at rover.com. Find a second job during your off hours. Work at a coffee shop during early morning hours or deliver pizzas in the evenings and late nights. These are just a few options. So, get curious, get creative, and find opportunities.
8. Sell stuff
One of the easiest ways to find extra money is by looking around your house. You may be surprised at how much extra cash is just laying around. Chances are, your closets, drawers, garages, and rooms are full of things you don’t use and don’t need anymore. So, grab a box or some bags and start decluttering. Look for the things you don’t use anymore or the items you don’t need. Get rid of things you haven’t used in months.
Then, host a yard sale or garage sale. Post the items on Craigslist, or try eBay. You can use our list of 19 things you can sell to help get you started looking for items around your home.
Are you stuck in the payday loan debt trap, after seeking quick cash help? We can help you get rid of your payday loans! We’re your go-to payday loan consolidation team, and we provide one-payment programs for any budget. We specialize in stopping online payday lenders automatic debits from your checking accounts. If you’re stuck in the payday loan cycle, we can provide you with immediate relief. Contact us today to get started!