In today’s world, remaining financially stable can be challenging for many. The temptation to over-extend financially, even if for necessary reasons, can become almost inescapable.
Taking the quick payday and relying on credit may sound good initially, but it’s often a losing proposition. One that also requires payday debt help to recover. If you have already fallen into a payday loan debt spiral, you can still get back on track with the right plan.
How Do People Deal With Money Crunch Before Payday?
When working within a fixed budget, every dollar counts. Managing expenditures between paydays can seem like an impossible task at times.
Even when you’re on track, unexpected costs can pop up at the most inopportune times. To deal with the shortfalls that occur before another paycheck hits, there are a few different approaches most people default to.
Borrowing money from friends or family
Choosing to ask for financial help from family members or close friends can be a double-edged sword. On the one hand, if you’re fortunate enough to have people to loan you money for reasonable terms, your problems can be handled quickly and effectively.
At the same time, mixing friends and family with finances has been central to the end of many relationships. It’s highly advisable to have the terms of repayment clearly stated in writing for all parties involved to avoid any confusion later.
An effective, yet often more difficult, approach to controlling unnecessary spending is to follow a monthly budget. Creating a budget and sticking to it can be a challenge, though. Prices have risen as of late, though, so it’s even harder to make your money stretch.
Don’t spend impulsively, and look for deals when possible. Writing down what’s finished in a bank ledger or even a notebook can help to show how much each month costs. If you have to keep track, you’re less likely to splurge.
Quick and easy payday loans
Sometimes, tightening the budget or asking for help just won’t work, and more drastic choices might seem more appealing. Although some quick loan scenarios can work, others prey on unsuspecting consumers and their need for fast cash.
Why Payday Loans Are Not a Good Idea
Payday loans are designed to be short-term influxes of cash during a difficult time. After two weeks, when another payday rolls around, the loan has to be paid off, or interest rates and fees begin to pile up. If the loan is paid back within the original timeframe, this arrangement may work out for the recipient.
If the loan isn’t repaid on time, the interest rates and fees can compound, leaving the loan recipient in a far worse financial state from where they started.
Incredibly high-interest rates
Since payday loans are based on a two-week loan cycle, the interest rates may seem reasonable on the surface but are exceedingly higher when figuring them at an annual percentage rate.
For example, a payday loan amount of $100 can have a repayment fee of $15. Fifteen dollars doesn’t sound like much to pay. But, since the loan amount is not very large, this equates to a nearly 400% annual percentage rate. For comparison, a typical credit card holds an APR of around 16%.
Relentless debt collectors
Once you fall into a debt repayment cycle with a payday loan company, you can expect to receive calls and communications from the dreaded debt collectors. These companies and individuals have the singular task of following up and pestering consumers until they pay back their outstanding loan amounts.
Many debt collectors become excessively dogged in their attempts to collect and, in extreme cases, may pressure consumers into paying back more than they owe. Avoid these stressful interactions by resisting the urge to take a payday loan in the first place.
The risk of falling into a debt cycle
Most consumers who take payday loans aren’t usually in the best shape financially. Their assets are thin or nonexistent, and their credit scores may be too low to be able to qualify for more legitimate loan sources.
So, when the payday loan isn’t repaid in time, and the debt collectors start calling, the consumer finds themselves stuck in an almost inescapable cycle of compounding interest and fees. Furthermore, their already struggling credit scores will hit the skids, especially if the remaining solutions are as drastic as declaring bankruptcy. Rebuilding on a crumbling foundation is virtually impossible.
How to Deal With the Money Crunch Intelligently?
Unexpected or difficult financial times will happen now and then. How we manage and plan for these events can offer different results, all of which are better choices than the endless debt cycles.
Prioritize your needs and budget
One of the first steps for designing a better monthly spending plan is to write or type out your budget’s different wants, needs, and unavoidable costs. Try to prioritize what you have to spend versus what you want to buy. You may be surprised how much is spent on “wants” rather than “needs.”
Start an emergency fund
Emergencies occur when we least expect them. Not only do they often cause chaos, but they can also be expensive.
Try to stash some cash away for the proverbial rainy day. Even if you start small, find a place to save some money and commit yourself to leaving it alone until you need it. This kind of emergency savings plan is an excellent practice in self-control and financial responsibility, which pays off in the long run.
Use public transportation
Traveling for work, school, or other social events is often part of our daily lives. Having the freedom to drive your own vehicle is a bonus for many, but it can be seen as an added expense to others.
Especially in larger metropolitan cities which offer public transportation, consumers can save quite a bit in fuel and parking fees by choosing the public options. Taking the bus, subway, or train is a fraction of the cost of choosing to drive yourself or pay for rideshare programs.
Have fun “night outs” without going out
Everybody likes to splurge now and then and go out for a night on the town. The interaction and excitement with the general public and having someone cater to your needs can be a welcome break from the humdrum of everyday life.
Unfortunately, going out isn’t cheap. When a night is all said and done, you’ll likely spend hundreds of dollars on food, drinks, transportation, a babysitter, and countless other intangibles, which all add up.
Try planning a special event, but keep the party at home this time. Focus on one luxury, like some delicious food, but eliminate the other expenses surrounding leaving the house. You might find that your intimate party at home is far more fascinating and engaging than anyone you’ll meet elsewhere.
Borrow from friends and family instead of payday loans
As you may recall, we began discussing loans and payday debt help by considering alternatives to these risky ventures. Borrowing from friends and family is one alternative to consider, although mixing money with friends or family can be risky if certain precautions are necessary.
To begin, you and your friends or family should agree on how much you’ll borrow, how soon the loan needs to be paid back, and what additional fees or interest rates will be applied. Essentially, this loan scenario should be handled similarly to any legitimate loan agreement through a financial institution.
The good part about this agreement is the lender is more than likely sympathetic to your needs and is on your side. Negotiations and the agreed-upon results will be more beneficial than that of a bank and better than a payday loan.
Work hard to ensure the entire agreement is written down on paper or typed up, so the repayment can be handled without incident.
How to Deal With a Difficult Payday Loan?
Don’t give up hope if you’re in a bind with a payday loan you’re struggling to repay. There are reasonable options for recovery, namely in the form of loan consolidation.
Payday Loan Consolidation
When a consumer finds themselves unable to meet the terms of a payday loan, the best possible solution usually involves some form of payday loan consolidation. In essence, a third party offers to pay off a portion of or all of a consumer’s debt in exchange for a more reasonable repayment schedule that the consumer can successfully follow.
Companies such as Real PDL Help exist to help consumers find their way back out of the payday loan maze. Debt consolidation companies provide a needed service by offering real solutions that benefit the consumer and the payday loan company. Debt consolidation companies provide a needed service.
In turn, these consolidations help individuals and families to get back on their feet, improve credit scores, and return revenue to the nation’s economy. Contact Real PDL Help today to start exploring the numerous ways we can help revive your financial future.