Staying safe with same day, payday, cash advance, or whatever you want to call them can be very challenging. These loans are definitely not a good choice for many people, but even for those that they are they can still be very challenging to stay on top of. Their high price and the penalties that are incurred if you don’t pay them back make same day loans an extremely risky venture. In this post I want to help you figure out if this style of loan is a good idea for you, how to manage paying them back, and some alternatives to high risk loans.
This is going to be pretty lengthy so stay with me, but I hope to break it into fairly logical sections so you can jump to wherever you need.
Are Payday Loans Right For You?
Being pressed for cash can put a ton of stress on you and your family, and the ease of same day cash loans is appealing to anyone facing that kind of stress. That is a huge part of why these loans are popular. Just about anyone can get approved, so they become the first choice for many. The problem is that people are getting burned by these loans all of the time, and end up in a situation that they simply can’t get out of!
How Do These Loans Work?
In order to qualify all you really need is a steady job that you’ve been at for a while. There isn’t any sort of credit check involved, so people with bad credit don’t have a problem getting a loan. Most lenders require that you have a checking account so they can deposit the money directly into it, and there is usually a minimum monthly income required (somewhere between $800 and $1000). You’ll also have to have ID, a Social Security number, and all the stuff to prove that you actually have your job. That’s all there is to it, so you can see that it’s easy for people to get screwed with these loans!
Is It A Good Choice?
In order to make this decision you can’t look at your current financial situation, you have to examine what it’s going to be like when the loan is supposed to be paid back. If you’re going to be just as broke two weeks from today, you’ll probably need another loan, or at the very least an extension. This is the beginning of the debt spiral with same day cash loans. The fees and penalties of getting an extension make an already expensive loan cost even more! Without you making a lot more money on your own, it will be nearly impossible to get the loan paid back and the lender off of your back.
It’s important to ask yourself if you’re realistically going to pay the loan back before you apply. When faced with a decision between food in your stomach or paying a loan back, I’m sure you’re going to eat. The key is to either not get the loan, or be prepared to pay it back with enough funds in the bank on its due date.
How To Pay Back A Cash Advance
Online loans will automatically deduct the money from your checking account and your local lender will cash the post dated check you wrote when you received the loan. In both of these cases you have to have money in your checking account because they’re going to take it whether it’s there or not! Should the check bounce, they’re coming after you for a lot more than you agreed to pay in the beginning!
To make all of this work, it’s time for financial planning 101. You probably have a good idea of how much you make, what your expenses are like, and how much it’s going to cost to pay the loan back. For the sake of an example, let’s say that from now until your loan is to be paid back your income is $1500, your expenses are $1200, and the loan is going to cost $500. You can probably already see that you’re going to be short, but in the case you don’t the formula goes:
Income-Expenses-Loan=Total or $1500-$1200-$500= $300 that you’re short!
So what are you going to do? Blank envelope the ATM? I hope not!
Instead, work to reduce your expenses as much as possible during this period, while doing everything you can to increase your income. It’s not tough to come up with an extra $300 over the course of two weeks.
Some simple ways to cover these expenses are:
- Eat at home
- Work overtime
- Walk instead of drive
- Babysit your neighbor’s kids
- Skip the smokes and beer
- Don’t go out on the weekend
- Sell stuff
- Recycle for cash
- Make coffee at home
- Drink more water
This may seem like a sacrifice, but had you have spent less cash in the first place this financial situation wouldn’t be such a big deal!
Alternatives To Cash Advances
There are a lot of other ways to get cash fast. All it takes is some creativity and resourcefulness.
My favorite way to do this is to purge all of the crap in my house by taking it to the pawn shop. It’s easy to make a lot of money there if you’re a pack rat like I am! I’ve learned that you can get a heck of a lot more cash by spending the time to clean up the stuff that you’re selling so that it looks as close to new as possible. That might mean tuning up a bike, cleaning tools, restringing a guitar, or polishing a necklace. Just remember that you don’t want a loan or anything from the pawn shop, you just want to sell off your stuff.
Another way to make some money is find jobs that pay cash.
Still Want A Payday Loan?
Like I said at the top of this marathon post, these loans are definitely not for everyone. If you’re not going to have a problem covering the repayment, go right ahead and get the loan. However, if it’s going to leave you as broke as you are now, or worse, it might be a good idea to find something else. The last thing I want you to do is to get in trouble from the ideas thrown around in this blog!
If you want more info, check out what the FTC has to say about payday loans here.
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